UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

For the quarterly period ended June 30, 2019March 31, 2020

 

OR

 

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

 

Commission file number: 814-00866

 

MONROE CAPITAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

Maryland27-4895840
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer
Identification No.)
  
311 South Wacker Drive, Suite 6400
Chicago, Illinois		60606
(Address of Principal Executive Office)(Zip Code)

 

(312) 258-8300

(Registrant’s Telephone Number, Including Area Code) 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share
5.75% Notes due 2023		 MRCC
MRCCL		 The Nasdaq Global Select Market
The Nasdaq Global Select Market

 

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x  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.

 

Large accelerated filer¨Accelerated filerx
    
Non-accelerated filer¨Smaller reporting company¨
    
Emerging growth 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 ¨    No x

 

As of August 5, 2019,May 7, 2020, the registrant had 20,444,564 shares of common stock, $0.001 par value, outstanding.

 

 

 

 

TABLE OF CONTENTS

 

  Page
PART I. FINANCIAL INFORMATION3
   
Item 1.Consolidated Financial Statements3
   
 Consolidated Statements of Assets and Liabilities as of June 30, 2019March 31, 2020 (unaudited) and December 31, 201820193
   
 Consolidated Statements of Operations for the three and six months ended June 30,March 31, 2020 and 2019 (unaudited) and 2018 (unaudited)4
   
 Consolidated Statements of Changes in Net Assets for the three and six months ended June 30,March 31, 2020 and 2019 (unaudited) and 2018 (unaudited)5
   
 Consolidated Statements of Cash Flows for the sixthree months ended June 30,March 31, 2020 and 2019 (unaudited) and 2018 (unaudited)6
   
 Consolidated Schedules of Investments as of June 30, 2019March 31, 2020 (unaudited) and December 31, 201820197
   
 Notes to Consolidated Financial Statements (unaudited)2720
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations5145
   
Item 3.Quantitative and Qualitative Disclosures About Market Risk6964
   
Item 4.Controls and Procedures7064
   
PART II. OTHER INFORMATION71
   
Item 1.Legal Proceedings7165
   
Item 1A.Risk Factors7165
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds7269
   
Item 3.Defaults Upon Senior Securities7269
   
Item 4.Mine Safety Disclosures7269
   
Item 5.Other Information7269
   
Item 6.Exhibits7370
   
Signatures 7471

 

 2 

 

Part I. Financial Information

Item 1. Consolidated Financial Statements

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except per share data)

 

 June 30, 2019 December 31, 2018  March 31, 2020  December 31, 2019 
 (unaudited)      (unaudited)    
ASSETS             
Investments, at fair value:                
Non-controlled/non-affiliate company investments $533,779  $468,720  $501,494  $513,959 
Non-controlled affiliate company investments  61,081   57,267   58,018   59,860 
Controlled affiliate company investments  35,944   27,634   31,325   42,412 
Total investments, at fair value (amortized cost of: $644,141 and $564,124, respectively)  630,804   553,621 
Total investments, at fair value (amortized cost of: $654,491 and $634,736, respectively)  590,837   616,231 
Cash  2,985   3,744   9,320   2,234 
Restricted cash  23,884   13,982   9,892   27,409 
Unrealized gain on foreign currency forward contracts  23   16   39   — 
Interest receivable  10,330   7,774   9,568   8,689 
Other assets  537   692   759   495 
Total assets  668,563   579,829   620,415   655,058 
                
LIABILITIES                
Debt:                
Revolving credit facility  188,640   136,026   192,046   180,294 
2023 Notes  109,000   69,000   109,000   109,000 
SBA debentures payable  115,000   115,000   115,000   115,000 
Total debt  412,640   320,026   416,046   404,294 
Less: Unamortized deferred financing costs  (8,797)  (6,262)  (7,569)  (8,053)
Total debt, less unamortized deferred financing costs  403,843   313,764   408,477   396,241 
Interest payable  2,681   2,550   1,807   2,763 
Unrealized loss on foreign currency forward contracts  —   59 
Management fees payable  2,723   2,318   2,551   2,751 
Incentive fees payable  883   —   —   1,374 
Accounts payable and accrued expenses  2,545   2,430   2,193   2,513 
Directors' fees payable  35   — 
Total liabilities  412,675   321,062   415,063   405,701 
Net assets $255,888  $258,767  $205,352  $249,357 
                
Commitments and contingencies (See Note 11)                
                
ANALYSIS OF NET ASSETS                
Common stock, $0.001 par value, 100,000 shares authorized, 20,445 and 20,445 shares issued and outstanding, respectively $20  $20  $20  $20 
Capital in excess of par value  288,911   288,911   288,850   288,850 
Accumulated undistributed (overdistributed) earnings  (33,043)  (30,164)  (83,518)  (39,513)
Total net assets $255,888  $258,767  $205,352  $249,357 
                
Net asset value per share $12.52  $12.66  $10.04  $12.20 

See Notes to Consolidated Financial Statements.

3

MONROE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

  Three months ended March 31, 
  2020  2019 
Investment income:        
Non-controlled/non-affiliate company investments:        
Interest income $12,347  $12,830 
Payment-in-kind interest income  71   98 
Dividend income  16   13 
Fee income  198   569 
Total investment income from non-controlled/non-affiliate company investments  12,632   13,510 
Non-controlled affiliate company investments:        
Interest income  190   923 
Dividend income  25   — 
Payment-in-kind interest income  1,005   956 
Total investment income from non-controlled affiliate company investments  1,220   1,879 
Controlled affiliate company investments:        
Dividend income  1,150   770 
Total investment income from controlled affiliate company investments  1,150   770 
Total investment income  15,002   16,159 
         
Operating expenses:        
Interest and other debt financing expenses  4,830   4,354 
Base management fees  2,551   2,521 
Incentive fees  —   1,600 
Professional fees  215   289 
Administrative service fees  338   347 
General and administrative expenses  231   227 
Directors' fees  35   35 
Expenses before incentive fee waiver  8,200   9,373 
Incentive fee waiver  —   (281)
Total expenses, net of incentive fee waiver  8,200   9,092 
Net investment income before income taxes  6,802   7,067 
Income taxes, including excise taxes  20   (7)
Net investment income  6,782   7,074 
         
Net gain (loss):        
Net realized gain (loss):        
Non-controlled/non-affiliate company investments  94   — 
Foreign currency forward contracts  (4)  (8)
Foreign currency and other transactions  (15)  (1)
Net realized gain (loss)  75   (9)
         
Net change in unrealized gain (loss):        
Non-controlled/non-affiliate company investments  (20,355)  2,288 
Non-controlled affiliate company investments  (13,707)  (1,754)
Controlled affiliate company investments  (11,087)  323 
Foreign currency forward contracts  98   (65)
Foreign currency and other transactions  1,344   (416)
Net change in unrealized gain (loss)  (43,707)  376 
         
Net gain (loss)  (43,632)  367 
         
Net increase (decrease) in net assets resulting from operations $(36,850) $7,441 
         
Per common share data:        
Net investment income per share - basic and diluted $0.33  $0.35 
Net increase (decrease) in net assets resulting from operations per share - basic and diluted $(1.81) $0.36 
Weighted average common shares outstanding - basic and diluted  20,445   20,445 

 

See Notes to Consolidated Financial Statements.

 

 3

MONROE CAPITAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

  Three months ended June 30,  Six months ended June 30, 
  2019  2018  2019  2018 
Investment income:                
Non-controlled/non-affiliate company investments:                
Interest income $13,743  $11,662  $26,573  $23,488 
Payment-in-kind interest income  115   126   213   263 
Dividend income  13   265   26   525 
Fee income  60   583   629   1,307 
Total investment income from non-controlled/non-affiliate company investments  13,931   12,636   27,441   25,583 
Non-controlled affiliate company investments:                
Interest income  767   1,550   1,690   3,186 
Payment-in-kind interest income  1,146   201   2,102   393 
Fee income  —   83   —   83 
Total investment income from non-controlled affiliate company investments  1,913   1,834   3,792   3,662 
Controlled affiliate company investments:                
Dividend income  875   350   1,645   525 
Total investment income from controlled affiliate company investments  875   350   1,645   525 
Total investment income  16,719   14,820   32,878   29,770 
                 
Operating expenses:                
Interest and other debt financing expenses  5,107   2,836   9,461   5,542 
Base management fees  2,723   2,202   5,244   4,365 
Incentive fees  1,168   990   2,768   1,751 
Professional fees  272   302   561   609 
Administrative service fees  319   322   666   646 
General and administrative expenses  285   225   512   401 
Excise taxes  17   —   10   11 
Directors' fees  40   37   75   74 
Expenses before incentive fee waiver  9,931   6,914   19,297   13,399 
Incentive fee waiver  (285)  —   (566)  — 
Total expenses, net of incentive fee waiver  9,646   6,914   18,731   13,399 
Net investment income  7,073   7,906   14,147   16,371 
                 
Net gain (loss):                
Net realized gain (loss):                
Non-controlled/non-affiliate company investments  35   —   35   — 
Foreign currency forward contracts  2   —   (6)  — 
Foreign currency and other transactions  (1)  (9)  (2)  3 
Net realized gain (loss)  36   (9)  27   3 
                 
Net change in unrealized gain (loss):                
Non-controlled/non-affiliate company investments  (2,749)  (515)  (461)  (680)
Non-controlled affiliate company investments  (1,054)  (4,157)  (2,808)  (11,080)
Controlled affiliate company investments  112   260   435   703 
Foreign currency forward contracts  72   —   7   — 
Foreign currency and other transactions  502   795   86   353 
Net change in unrealized gain (loss)  (3,117)  (3,617)  (2,741)  (10,704)
                 
Net gain (loss)  (3,081)  (3,626)  (2,714)  (10,701)
                 
Net increase (decrease) in net assets resulting from operations $3,992  $4,280  $11,433  $5,670 
                 
Per common share data:                
Net investment income per share - basic and diluted $0.35  $0.39  $0.69  $0.81 
Net increase (decrease) in net assets resulting from operations per share - basic and diluted $0.20  $0.21  $0.56  $0.28 
Weighted average common shares outstanding - basic and diluted  20,445   20,244   20,445   20,242 

See Notes to Consolidated Financial Statements. 

4 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

(in thousands)

 

(in thousands)

  Common Stock  Capital in  Accumulated undistributed   
  Number of
shares		  Par
value		  excess of par
value		  (overdistributed)
earnings		  Total
net assets		 
Balances at March 31, 2018  20,240  $20  $286,141  $(13,156) $273,005 
Net investment income  —   —   —   7,906   7,906 
Net realized gain (loss)  —   —   —   (9)  (9)
Net change in unrealized gain (loss)  —   —   —   (3,617)  (3,617)

Issuance of common stock, net of offering and underwriting costs

  17   —   209   —   209 
Distributions to stockholders  22   —   301   (7,087)  (6,786)
Balances at June 30, 2018  20,279  $20  $286,651  $(15,963) $270,708 
                     
Balances at March 31, 2019  20,445  $20  $288,911  $(29,879) $259,052 
Net investment income  —   —   —   7,073   7,073 
Net realized gain (loss)  —   —   —   36   36 
Net change in unrealized gain (loss)  —   —   —   (3,117)  (3,117)

Issuance of common stock, net of offering and underwriting costs

  —   —   —   —   — 
Distributions to stockholders  —   —   —   (7,156)  (7,156)
Balances at June 30, 2019  20,445  $20  $288,911  $(33,043) $255,888 

 Common Stock Capital in Accumulated undistributed   Common Stock       
 Number of
shares		  Par
value		 excess of par
value		 (overdistributed)
earnings		 Total
net assets		 
Balances at December 31, 2017  20,240  $20  $286,141  $(7,462) $278,699 
Net investment income  —   —   —   16,371   16,371 
Net realized gain (loss)  —   —   —   3   3 
Net change in unrealized gain (loss)  —   —   —   (10,704)  (10,704)

Issuance of common stock, net of offering and underwriting costs

  17   —   209   —   209 
Distributions to stockholders  22   —   301   (14,171)  (13,870)
Balances at June 30, 2018  20,279  $20  $286,651  $(15,963) $270,708 
                     Number of
shares		 Par
value		 

Capital in

excess

of par value

 

Accumulated

undistributed

(overdistributed)

earnings

 

Total

net assets

 
Balances at December 31, 2018  20,445  $20  $288,911  $(30,164) $258,767  20,445 $20 $288,911 $(30,164) $258,767 
Net investment income  —   —   —   14,147   14,147  — — — 7,074 7,074 
Net realized gain (loss)  —   —   —   27   27  — — — (9) (9)
Net change in unrealized gain (loss)  —   —   —   (2,741)  (2,741) — — — 376 376 

Issuance of common stock, net of offering and underwriting costs

  —   —   —   —   — 
Distributions to stockholders  —   —   —   (14,312)  (14,312)  —  —  —  (7,156)  (7,156)
Balances at June 30, 2019  20,445  $20  $288,911  $(33,043) $255,888 
Balances at March 31, 2019  20,445 $20 $288,911 $(29,879) $259,052 
           
Balances at December 31, 2019 20,445 $20 $288,850 $(39,513) $249,357 
Net investment income — — — 6,782 6,782 
Net realized gain (loss) — — — 75 75 
Net change in unrealized gain (loss) — — — (43,707) (43,707)
Distributions to stockholders  —  —  —  (7,155)  (7,155)
Balances at March 31, 2020  20,445 $20 $288,850 $(83,518) $205,352 

 

See Notes to Consolidated Financial Statements.

 

 5 

 

MONROE CAPITAL CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

 

(in thousands)

  Three months ended March 31, 
  2020  2019 
       
Cash flows from operating activities:        
Net increase (decrease) in net assets resulting from operations $(36,850) $7,441 
Adjustments to reconcile net increase (decrease) in net assets resulting from        
operations to net cash provided by (used in) operating activities:        
Net realized (gain) loss on investments  (94)  — 
Net realized (gain) loss on foreign currency forward contracts  4   8 
Net realized (gain) loss on foreign currency and other transactions  15   1 
Net change in unrealized (gain) loss on investments  45,149   (857)
Net change in unrealized (gain) loss on foreign currency forward contracts  (98)  65 
Net change in unrealized (gain) loss on foreign currency and other transactions  (1,344)  416 
Payment-in-kind interest income  (1,076)  (1,054)
Net accretion of discounts and amortization of premiums  (344)  (426)
Purchases of investments  (71,088)  (70,122)
Proceeds from principal payments, sales of investments and settlement of forward contracts  52,843   29,127 
Amortization of deferred financing costs  484   433 
Changes in operating assets and liabilities:        
Interest receivable  (879)  (1,202)
Other assets  (264)  104 
Interest payable  (956)  (618)
Management fees payable  (200)  203 
Incentive fees payable  (1,374)  1,319 
Accounts payable and accrued expenses  (320)  99 
Directors' fees payable  35   35 
Net cash provided by (used in) operating activities  (16,357)  (35,028)
         
Cash flows from financing activities:        
Borrowings on revolving credit facility  51,700   210,850 
Repayments of revolving credit facility  (38,600)  (200,950)
Proceeds from 2023 Notes  —   40,000 
Payments of deferred financing costs  —   (3,436)
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $0 and $0, respectively  (7,155)  (7,156)
Net cash provided by (used in) financing activities  5,945   39,308 
         
Net increase (decrease) in Cash and Restricted Cash  (10,412)  4,280 
Effect of foreign currency exchange rates  (19)  (1)
Cash and Restricted Cash, beginning of period  29,643   17,726 
Cash and Restricted Cash, end of period $19,212  $22,005 
         
Supplemental disclosure of cash flow information:        
Cash interest paid during the period $5,294  $4,845 
Cash paid (refund received) for excise taxes during the period $85  $130 

  

  Six months ended June 30, 
  2019  2018 
       
Cash flows from operating activities:        
Net increase (decrease) in net assets resulting from operations $11,433  $5,670 
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:        
Net realized (gain) loss on investments  (35)  — 
Net realized (gain) loss on foreign currency forward contracts  6   — 
Net realized (gain) loss on foreign currency and other transactions  2   (3)
Net change in unrealized (gain) loss on investments  2,834   11,057 
Net change in unrealized (gain) loss on foreign currency forward contracts  (7)  — 
Net change in unrealized (gain) loss on foreign currency and other transactions  (86)  (353)
Payment-in-kind interest income  (2,315)  (656)
Payment-in-kind dividend income  —   (522)
Net accretion of discounts and amortization of premiums  (819)  (1,556)
Proceeds from principal payments, sales of investments and settlement of forward contracts  53,797   60,368 
Purchases of investments  (130,651)  (72,788)
Amortization of deferred financing costs  901   596 
Changes in operating assets and liabilities:        
Interest receivable  (2,556)  (1,904)
Other assets  155   (338)
Interest payable  131   122 
Management fees payable  405   138 
Incentive fees payable  883   (167)
Accounts payable and accrued expenses  115   (23)
Net cash provided by (used in) operating activities  (65,807)  (359)
         
Cash flows from financing activities:        
Borrowings on revolving credit facility  264,450   67,107 
Repayments of revolving credit facility  (211,750)  (58,350)
Proceeds from 2023 Notes  40,000   — 
SBA debentures borrowings  —   5,480 
Payments of deferred financing costs  (3,436)  (388)
Proceeds from shares sold, net of offering and underwriting costs  —   209 
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $0 and $301, respectively  (14,312)  (13,870)
Net cash provided by (used in) financing activities  74,952   188 
         
Net increase (decrease) in Cash and Restricted Cash  9,145   (171)
Effect of foreign currency exchange rates  (2)  3 
Cash and Restricted Cash, beginning of period  17,726   7,199 
Cash and Restricted Cash, end of period $26,869  $7,031 
         
Supplemental disclosure of cash flow information:        
Cash interest paid during the period $8,391  $4,786 
Cash paid (refunded) for excise taxes during the period $(13) $91 

 

The following table providestables provide a reconciliation of cash and restricted cash reported withinon the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts inon the Consolidated Statements of Cash Flows:

 

 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
Cash $2,985  $3,744  $9,320  $2,234 
Restricted cash  23,884   13,982   9,892   27,409 
Total cash and restricted cash shown in the Consolidated Statements of Cash Flows $26,869  $17,726 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows $19,212  $29,643 
                
  June 30, 2018   December 31, 2017 
Cash $2,779  $4,332 
Restricted cash  4,252   2,867 
Total cash and restricted cash shown in the Consolidated Statements of Cash Flows $7,031  $7,199 

  March 31, 2019  December 31, 2018 
Cash $4,690  $3,744 
Restricted cash  17,315   13,982 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows $22,005  $17,726 

 

See Notes to Consolidated Financial Statements.

 6 

 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

June 30, 2019March 31, 2020

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Non-Controlled/Non-Affiliate Company Investments                          
Senior Secured Loans                          
Automotive                          
Hastings Manufacturing Company L+ 8.25% 10.65% 4/24/2018 4/24/2023   2,888  $2,840  $2,720   1.1% 
Magneto & Diesel Acquisition, Inc. L+ 5.50% 7.90% 12/18/2018 12/18/2023   4,975   4,895   5,007   1.9% 
Magneto & Diesel Acquisition, Inc. (Revolver)(f) L+ 5.50% 7.90% 12/18/2018 12/18/2023   500    —   —   0.0% 
             8,363   7,735   7,727   3.0% 
Banking, Finance, Insurance & Real Estate                         
777 SPV I LLC (Delayed Draw)(g) (h) L+ 8.50% 10.90% 4/15/2019 4/14/2023   5,252   5,189   5,270   2.0% 
Echelon Funding I, LLC (Delayed Draw)(f) (g) (h) L+ 7.50% 9.94% 2/24/2017 2/24/2022   18,900   16,533   16,541   6.5% 
HFZ Capital Group, LLC(h) L+ 10.17% 12.59% Cash/
0.17% PIK		(i) 10/20/2017 10/21/2019   18,000   17,930   18,000   7.0%
HFZ Member RB Portfolio LLC (Delayed Draw)(f) (g) (h) L+ 12.00% 14.59% 10/30/2018 10/29/2021   9,000   5,164   5,156   2.0%
Liftforward SPV II, LLC(f) (g) (h) L+ 10.75% 13.15% 11/10/2016 11/10/2020   10,000   3,994   4,021   1.6%
PKS Holdings, LLC(h) L+ 10.50% 12.94% 11/30/2017 11/30/2022   1,710   1,568   1,694   0.7%
PKS Holdings, LLC (Revolver)(f) (h) L+ 10.50% 12.94% 11/30/2017 11/30/2022   80   —   —   0.0% 
             62,942   50,378   50,682   19.8% 
Beverage, Food & Tobacco                          
California Pizza Kitchen, Inc. L+ 6.00% 8.53% 8/19/2016 8/23/2022   6,808   6,764   6,671   2.6% 
Toojay's Management LLC L+ 5.50% 7.90% 10/26/2018 10/26/2022   3,483   3,423   3,474   1.4% 
Toojay's Management LLC L+ 5.50% 7.90% 10/26/2018 10/26/2022   477   477   476   0.2% 
Toojay's Management LLC (Revolver)(f) L+ 5.50% 7.90% 10/26/2018 10/26/2022   159   80   79   0.0% 
             10,927   10,744   10,700   4.2% 
Chemicals, Plastics & Rubber                          
Midwest Composite Technologies, LLC L+ 6.25% 8.65% 8/31/2018 8/31/2023   893   878   911   0.4%
Midwest Composite Technologies, LLC (Delayed Draw)(f) (g) L+ 6.25% 8.65% 8/31/2018 8/31/2023   600   60   61   0.0%
Midwest Composite Technologies, LLC (Revolver)(f) L+ 6.25% 8.65% 8/31/2018 8/31/2023   90   —   —   0.0%
Valudor Products, LLC L+ 7.50% 9.90% 6/18/2018 6/19/2023   1,584   1,557   1,562   0.6%
Valudor Products, LLC(j) L+ 7.50% 9.90% 6/18/2018 6/19/2023   211   206   208   0.1%
Valudor Products, LLC (Revolver)(f) L+ 9.50% 11.90% 6/18/2018 6/19/2023   818   336   333   0.1%
             4,196   3,037   3,075   1.2%
Construction & Building                          
Cali Bamboo, LLC L+ 7.00% 9.40% 7/10/2015 7/10/2020   7,896   7,836   7,896   3.1% 
Cali Bamboo, LLC (Revolver)(f) L+ 7.00% 9.40% 7/10/2015 7/10/2020   2,165   —   —   0.0%
Construction Supply Acquisition, LLC L+ 6.00% 8.41% 11/27/2018 6/30/2023   4,509   4,489   4,498   1.8%
Dude Solutions Holdings, Inc. L+ 7.00% 9.40% 6/14/2019 6/13/2025   10,000   9,777   9,775   3.8%
Dude Solutions Holdings, Inc. (Revolver)(f) L+ 7.00% 9.40% 6/14/2019 6/13/2025   1,304   365   357   0.1%
             25,874   22,467   22,526   8.8%
Consumer Goods: Durable                          
Nova Wildcat Amerock, LLC L+ 5.75% 8.15% 10/12/2018 10/12/2023   9,453   9,285   9,358   3.7%
Nova Wildcat Amerock, LLC (Revolver)(f) L+ 5.75% 8.15% 10/12/2018 10/12/2023   931   —   —   0.0% 
Parterre Flooring & Surface Systems, LLC(k) L+ 9.00% 11.40% 8/22/2017 8/22/2022   9,030   8,906   8,606   3.4%
Parterre Flooring & Surface Systems, LLC (Revolver) L+ 9.00% 11.40% 8/22/2017 8/22/2022   696   696   660   0.2% 
             20,110   18,887   18,624   7.3% 
Consumer Goods: Non-Durable                          
Quirch Foods Holdings, LLC L+ 6.00% 8.40% 2/14/2019 12/19/2025   1,990   1,971   1,990   0.8% 
             1,990   1,971   1,990   0.8% 
Energy: Oil & Gas                          
BJ Services, LLC L+ 7.00% 9.59% 1/28/2019 1/3/2023   4,500   4,460   4,502   1.7% 
Landpoint, LLC L+ 10.00% 12.40% 12/17/2013 12/20/2019   2,069   2,067   2,069   0.8% 
Landpoint, LLC (Revolver)(f) L+ 10.00% 12.40% 12/17/2013 12/20/2019   313   156   156   0.1% 
             6,882   6,683   6,727   2.6% 

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c) 		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of
Net Assets(e)		 
Non-Controlled/Non-Affiliate Company Investments                     
Senior Secured Loans                     
Automotive                     
Hastings Manufacturing Company  L+10.25% 9.25% Cash/
2.00% PIK		  4/24/2018 4/24/2023   2,812  $2,773  $2,709   1.3%
Magneto & Diesel Acquisition, Inc.  L+5.50% 6.50%  12/18/2018 12/18/2023   4,937   4,869   4,671   2.3%
Magneto & Diesel Acquisition, Inc. (Revolver)(f)  L+5.50% 6.50%  12/18/2018 12/18/2023   500   250   236   0.1%
             8,249   7,892   7,616   3.7%
Banking, Finance, Insurance & Real Estate                          
777 SPV I, LLC (Delayed Draw)(g) (h)  L+8.50% 10.25%  4/15/2019 4/14/2023   5,204   5,152   5,217   2.5%
Echelon Funding I, LLC(h)  L+10.25% 11.83%  12/31/2019 1/11/2021   2,004   2,004   2,004   1.0%
Echelon Funding I, LLC (Delayed Draw)(f) (g) (h)  L+10.25% 11.83%  2/24/2017 1/11/2021   14,175   8,844   8,842   4.3%
HFZ Capital Group, LLC(h)  L+12.50% 14.41%  10/20/2017 11/25/2020   18,000   18,000   17,800   8.7%
HFZ Member RB Portfolio, LLC(h)  L+12.00% 13.91%  10/30/2018 10/29/2021   9,780   9,767   9,639   4.7%
Kudu Investment Holdings, LLC(h)  L+6.25% 7.70%  12/23/2019 12/23/2025   5,500   5,407   5,372   2.6%
Kudu Investment Holdings, LLC (Delayed Draw)(f) (g) (h)  L+6.25% 7.68%  12/23/2019 12/23/2025   3,667   1,158   1,131   0.6%
Kudu Investment Holdings, LLC (Revolver)(f) (h)  L+6.25% 7.70%  12/23/2019 12/23/2025   482   —   —   0.0%
Liftforward SPV II, LLC(h)  L+10.75% 11.74%  11/10/2016 11/10/2020   2,568   2,565   2,556   1.2%
PKS Holdings, LLC(h)  L+15.00% 16.58%  11/30/2017 11/30/2022   1,645   1,514   1,661   0.8%
PKS Holdings, LLC (Revolver)(f) (h)  L+15.00% 16.58%  11/30/2017 11/30/2022   80   —   —   0.0%
TCP-NG (U.S.), LLC(h)  L+7.25% 8.75%  8/23/2019 8/22/2024   2,850   2,808   2,769   1.3%
TCP-NG (U.S.), LLC (Revolver)(f) (h)  L+7.25% 8.75%  8/23/2019 8/22/2024   180   —   —   0.0%
             66,135   57,219   56,991   27.7%
Beverage, Food & Tobacco                          
California Pizza Kitchen, Inc.  L+6.00% 7.62%  8/19/2016 8/23/2022   6,755   6,724   3,415   1.6%
LX/JT Intermediate Holdings, Inc.(i)  L+6.00% 7.50%  3/11/2020 3/11/2025   10,000   9,801   9,800   4.8%
LX/JT Intermediate Holdings, Inc. (Revolver)(f)  L+6.00% 7.50%  3/11/2020 3/11/2025   833   —   —   0.0%
Toojay's Management, LLC  L+5.50% 6.50%  10/26/2018 10/26/2022   3,465   3,417   3,224   1.6%
Toojay's Management, LLC  L+5.50% 6.50%  10/26/2018 10/26/2022   475   475   442   0.2%
Toojay's Management, LLC (Revolver)  L+5.50% 6.50%  10/26/2018 10/26/2022   159   159   148   0.1%
             21,687   20,576   17,029   8.3%
Capital Equipment                          
MCP Shaw Acquisitionco, LLC(i)  L+6.50% 8.11%  2/28/2020 11/28/2025   10,000   9,804   9,790   4.8%
MCP Shaw Acquisitionco, LLC (Revolver)  L+6.50% 8.02%  2/28/2020 11/28/2025   1,784   1,784   1,746   0.8%
             11,784   11,588   11,536   5.6%
Chemicals, Plastics & Rubber                          
Midwest Composite Technologies, LLC(i)  L+6.75% 7.75%  12/2/2019 8/31/2023   14,925   14,648   14,081   6.9%
Midwest Composite Technologies, LLC  L+6.75% 7.75%  8/31/2018 8/31/2023   887   873   836   0.4%
Midwest Composite Technologies, LLC (Delayed Draw)(f) (g)  L+6.75% 7.75%  8/31/2018 8/31/2023   509   59   56   0.0%
Midwest Composite Technologies, LLC (Revolver)  L+6.75% 7.75%  8/31/2018 8/31/2023   90   90   85   0.0%
Valudor Products, LLC  L+7.50% 8.50%  6/18/2018 6/19/2023   1,553   1,531   1,479   0.7%
Valudor Products, LLC(j)  L+7.50% 8.50%  6/18/2018 6/19/2023   211   206   200   0.1%
Valudor Products, LLC (Revolver)(f)  L+9.50% 10.50%  6/18/2018 6/19/2023   818   401   384   0.2%
             18,993   17,808   17,121   8.3%
Construction & Building                          
Cali Bamboo, LLC  L+7.00% 7.99%  7/10/2015 7/10/2020   7,834   7,817   7,161   3.5%
Cali Bamboo, LLC (Revolver)(f)  L+7.00% 7.99%  7/10/2015 7/10/2020   2,165   930   850   0.4%
Dude Solutions Holdings, Inc.  L+7.50% 8.57%  6/14/2019 6/13/2025   10,000   9,794   9,830   4.8%
Dude Solutions Holdings, Inc. (Revolver)(f)  L+7.50% 8.57%  6/14/2019 6/13/2025   1,304   348   342   0.2%
             21,303   18,889   18,183   8.9%
Consumer Goods: Durable                          
Franchise Group Intermediate Holdco, LLC  L+9.00% 10.65%  2/24/2020 2/14/2025   4,000   3,922   3,852   1.9%
Nova Wildcat Amerock, LLC  L+5.75% 6.75%  10/12/2018 10/12/2023   9,078   8,939   8,785   4.3%
Nova Wildcat Amerock, LLC (Revolver)(f)  L+5.75% 6.75%  10/12/2018 10/12/2023   931   466   451   0.2%
Parterre Flooring & Surface Systems, LLC(i)  L+9.00% 10.00%  8/22/2017 8/22/2022   7,920   7,835   6,130   3.0%
Parterre Flooring & Surface Systems, LLC (Revolver)  L+9.00% 10.00%  8/22/2017 8/22/2022   696   696   539   0.3%
             22,625   21,858   19,757   9.7%
Consumer Goods: Non-Durable                          
Quirch Foods Holdings, LLC  L+6.00% 6.96%  2/14/2019 12/19/2025   1,975   1,958   1,728   0.8%
             1,975   1,958   1,728   0.8%
Energy: Oil & Gas                          
BJ Services, LLC  L+7.00% 8.50%  1/28/2019 1/3/2023   4,275   4,243   4,203   2.0%
             4,275   4,243   4,203   2.0%
Environmental Industries                          
StormTrap, LLC  L+5.50% 6.50%  12/10/2018 12/8/2023   7,920   7,810   7,400   3.6%
StormTrap, LLC (Revolver)(f)  L+5.50% 6.50%  12/10/2018 12/8/2023   432   —   —   0.0%
Synergy Environmental Corporation(i)  L+8.00% 8.99%  4/29/2016 9/30/2021   2,893   2,872   2,852   1.4%
Synergy Environmental Corporation(i)  L+8.00% 8.99%  4/29/2016 9/30/2021   484   480   477   0.2%
Synergy Environmental Corporation  L+8.00% 8.99%  4/29/2016 9/30/2021   827   827   815   0.4%
Synergy Environmental Corporation (Revolver)(f)  L+8.00% 8.99%  4/29/2016 9/30/2021   671   270   266   0.1%
             13,227   12,259   11,810   5.7%

 

 7 

 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

June 30, 2019March 31, 2020

(in thousands, except for shares and units)

 

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Environmental Industries                          
StormTrap, LLC L+ 5.50% 7.90% 12/10/2018 12/8/2023   7,960   $7,833   $7,896   3.1% 
StormTrap, LLC (Revolver)(f) L+ 5.50% 7.90% 12/10/2018 12/8/2023   432   108   108   0.0% 
Synergy Environmental Corporation(k) L+ 7.00% 9.40% 4/29/2016 4/29/2021   2,893   2,861   2,885   1.1% 
Synergy Environmental Corporation(k) L+ 7.00% 9.40% 4/29/2016 4/29/2021   484   479   482   0.2% 
Synergy Environmental Corporation (Delayed Draw)(f) (g) L+ 7.00% 9.40% 4/29/2016 4/29/2021   1,310   827   824   0.3% 
Synergy Environmental Corporation (Revolver)(f) L+ 7.00% 9.40% 4/29/2016 4/29/2021   671   437   436   0.2% 
             13,750   12,545   12,631   4.9% 
Healthcare & Pharmaceuticals                          
American Optics Holdco, Inc.(h) (l) L+ 7.00% 9.40% 9/13/2017 9/13/2022   4,267   4,206   4,250   1.7%
American Optics Holdco, Inc.(h) (l) L+ 7.00% 9.40% 9/13/2017 9/13/2022   1,664   1,637   1,658   0.6%
American Optics Holdco, Inc. (Revolver)(f) (h) (l) L+ 7.00% 9.40% 9/13/2017 9/13/2022 �� 440   —   —   0.0%
American Optics Holdco, Inc. (Revolver)(f) (h) (l) L+ 7.00% 9.40% 9/13/2017 9/13/2022   440   —   —   0.0%
Apotheco, LLC L+ 5.50% 7.90% 4/8/2019 4/8/2024   3,500   3,433   3,493   1.4%
Apotheco, LLC (Delayed Draw)(f) (g) L+ 5.50% 7.90% 4/8/2019 4/8/2024   1,647   —   —   0.0%
Apotheco, LLC (Revolver)(f) L+ 5.50% 7.90% 4/8/2019 4/8/2024   909   159   159   0.1%
Familia Dental Group Holdings, LLC(k) L+ 8.00% 10.40% 4/8/2016 4/8/2021   5,019   4,985   4,715   1.8%
Familia Dental Group Holdings, LLC L+ 8.00% 10.40% 4/8/2016 4/8/2021   483   483   454   0.2%
Familia Dental Group Holdings, LLC (Revolver)(f) L+ 8.00% 10.40% 4/8/2016 4/8/2021   573   372   350   0.1%
Rockdale Blackhawk, LLC (DIP Facility) n/a 15.10% 8/30/2018 n/a(m)   198   198   198   0.1%
Rockdale Blackhawk, LLC (DIP Facility) n/a 15.10% 8/6/2018 n/a(m)   8,877   8,877   8,877   3.5%
Rockdale Blackhawk, LLC L+ 13.00% 15.40%(n)3/31/2015 3/31/2020   10,923   10,465   8,826   3.4% 
             38,940   34,815   32,980   12.9% 
High Tech Industries                          
Host Analytics, Inc. L+ 6.00% 8.44% 12/28/2018 12/28/2023   9,500   9,325   9,538   3.7%
Host Analytics, Inc. (Revolver)(f) L+ 6.00% 8.44% 12/28/2018 12/28/2023   442   —   —   0.0%
Mindbody, Inc. L+ 7.00% 9.39% 2/15/2019 2/14/2025   6,333   6,216   6,330   2.5%
Mindbody, Inc. (Revolver)(f) L+ 7.00% 9.39% 2/15/2019 2/14/2025   667   —   —   0.0%
Newforma, Inc.(k) L+ 5.50% 7.83% 6/30/2017 6/30/2022   13,382   13,254   13,382   5.2%
Newforma, Inc. (Revolver)(f) L+ 5.50% 7.83% 6/30/2017 6/30/2022   1,250   —   —   0.0% 
Prototek Sheetmetal Fabrication, LLC L+ 7.00% 9.40% 12/11/2017 12/12/2022   3,377   3,327   3,353   1.3%
Prototek Sheetmetal Fabrication, LLC L+ 7.00% 9.40% 6/27/2019 12/12/2022   1,604   1,572   1,593   0.6%
Prototek Sheetmetal Fabrication, LLC (Delayed Draw)(f) (g) L+ 7.00% 9.40% 12/11/2017 12/12/2022   2,306   1,723   1,711   0.7%
Prototek Sheetmetal Fabrication, LLC (Revolver)(f) L+ 7.00% 9.40% 12/11/2017 12/12/2022   233   —   —   0.0%
RPL Bidco Limited  (h) (l) (o) L+ 7.50% 8.29% 11/9/2017 11/9/2023   13,667   14,090   13,804   5.4%
RPL Bidco Limited (Delayed Draw)(f) (g) (h) (l) (o) L+ 7.50% 8.29% 5/22/2018 11/9/2023   2,031   —   —   0.0%
RPL Bidco Limited (Revolver)(f) (h) (l) (o) L+ 7.50% 8.29% 11/9/2017 11/9/2023   508   —   —   0.0%
WillowTree, LLC L+ 5.50% 7.90% 10/9/2018 10/9/2023   7,940   7,817   7,976   3.1%
WillowTree, LLC (Revolver)(f) L+ 5.50% 7.90% 10/9/2018 10/9/2023   1,000   920   920   0.4%
             64,240   58,244   58,607   22.9%
Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c) 		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of
Net Assets(e)		 
Healthcare & Pharmaceuticals                          
American Optics Holdco, Inc.(h) (k)  L+7.00% 8.00%  9/13/2017 9/13/2022   4,210  $ 4,163  $4,184   2.0%
American Optics Holdco, Inc.(h) (k)  L+7.00% 8.00%  9/13/2017 9/13/2022   1,637   1,616   1,627   0.8%
American Optics Holdco, Inc. (Revolver)(f) (h) (k)  L+7.00% 8.00%  9/13/2017 9/13/2022   440   —   —   0.0%
American Optics Holdco, Inc. (Revolver)(f) (h) (k)  L+7.00% 8.00%  9/13/2017 9/13/2022   440   —   —   0.0%
Apotheco, LLC  L+5.50% 6.50%  4/8/2019 4/8/2024   3,474   3,415   3,233   1.6%
Apotheco, LLC (Delayed Draw)(f) (g)  L+5.50% 6.50%  4/8/2019 4/8/2024   1,647   —   —   0.0%
Apotheco, LLC (Revolver)  L+5.50% 6.50%  4/8/2019 4/8/2024   909   909   846   0.4%
Familia Dental Group Holdings, LLC(i)  L+8.75% 9.00% Cash/
0.75% PIK		  4/8/2016 4/8/2021   5,030   5,008   4,438   2.2%
Familia Dental Group Holdings, LLC  L+8.75% 9.00% Cash/
0.75% PIK		  4/8/2016 4/8/2021   484   484   427   0.2%
Familia Dental Group Holdings, LLC (Revolver)(f)  L+8.75% 9.00% Cash/
0.75% PIK		  4/8/2016 4/8/2021   573   373   329   0.2%
Rockdale Blackhawk, LLC (DIP Facility)  n/a 15.10%  8/30/2018  n/a(l)  198   198   198   0.1%
Rockdale Blackhawk, LLC (DIP Facility)  n/a 15.10%  8/6/2018  n/a(l)  8,877   8,877   10,169   5.0%
Rockdale Blackhawk, LLC  L+13.00% 14.00%(m) 3/31/2015  n/a(l)  10,923   10,465   19,188   9.3%
             38,842   35,508   44,639   21.8%
High Tech Industries                          
Mindbody, Inc.  L+7.00% 8.00%  2/15/2019 2/14/2025   6,333   6,229   6,023   2.9%
Mindbody, Inc. (Revolver)  L+7.00% 8.07%  2/15/2019 2/14/2025   667   667   634   0.3%
Mnine Holdings, Inc.  P+7.75%11.00%  11/2/2018 11/2/2023   10,587   10,463   10,303   5.0%
Mnine Holdings, Inc. (Revolver)(f)  P+3.00% 6.25%  1/17/2020 11/2/2023   533   20   18   0.0%
Newforma, Inc.(i)  L+5.50% 6.95%  6/30/2017 6/30/2022   13,157   13,057   13,048   6.4%
Newforma, Inc. (Revolver)(f)  L+5.50% 6.95%  6/30/2017 6/30/2022   1,250   —   —   0.0%
Planful, Inc.  L+6.00% 7.58%  12/28/2018 12/28/2023   9,500   9,349   9,239   4.5%
Planful, Inc. (Revolver)  L+6.00% 7.00%  12/28/2018 12/28/2023   442   442   430   0.2%
Prototek Sheetmetal Fabrication, LLC  L+7.50% 8.50%  6/27/2019 12/12/2022   1,592   1,566   1,550   0.8%
Prototek Sheetmetal Fabrication, LLC  L+7.50% 8.50%  12/11/2017 12/12/2022   3,351   3,311   3,263   1.6%
Prototek Sheetmetal Fabrication, LLC  L+7.50% 8.50%  12/11/2017 12/12/2022   2,289   2,289   2,230   1.1%
Prototek Sheetmetal Fabrication, LLC (Revolver)  L+7.50% 8.50%  12/11/2017 12/12/2022   233   233   227   0.1%
Recorded Future, Inc.  L+6.25% 7.25%  7/3/2019 7/3/2025   7,333   7,198   7,347   3.6%
Recorded Future, Inc. (Delayed Draw)(f) (g)  L+6.25% 7.25%  7/3/2019 7/3/2025   587   —   —   0.0%
Recorded Future, Inc. (Revolver)(f)  L+6.25% 7.25%  7/3/2019 7/3/2025   880   587   587   0.3%
RPL Bidco Limited  (h) (k) (n)  L+7.50% 8.23%  11/9/2017 11/9/2023   13,272   14,008   12,750   6.2%
RPL Bidco Limited(h) (k) (n)  L+7.50% 8.23%  5/22/2018 11/9/2023   1,615   1,639   1,549   0.8%
RPL Bidco Limited (Revolver)(h) (k) (n)  L+7.50% 8.56%  11/9/2017 11/9/2023   497   497   477   0.2%
             74,118   71,555   69,675   34.0%
Media: Advertising, Printing & Publishing                          
AdTheorent, Inc.  L+8.50% 10.08%  12/22/2016 12/22/2021   3,335   3,309   3,275   1.6%
Destination Media, Inc.(i)  L+5.50% 6.50%  4/7/2017 4/7/2022   4,624   4,592   4,554   2.2%
Destination Media, Inc. (Revolver)(f)  L+5.50% 6.50%  4/7/2017 4/7/2022   542   434   427   0.2%
MC Sign Lessor Corp.  L+7.00% 8.58%  12/22/2017 8/30/2024   15,681   15,606   15,123   7.4%
MC Sign Lessor Corp. (Revolver)(f)  L+7.00% 8.58%  12/22/2017 8/30/2024   3,490   349   337   0.2%
XanEdu Publishing, Inc.  L+6.50% 7.50%  1/28/2020 1/28/2025   1,900   1,863   1,885   0.9%
XanEdu Publishing, Inc. (Revolver)(f)  L+6.50% 7.50%  1/28/2020 1/28/2025   495   494   490   0.2%
             30,067   26,647   26,091   12.7%
Media: Broadcasting & Subscription                          
Vice Group Holding, Inc.  L+12.00% 5.92% Cash/
8.00% PIK		  5/2/2019 11/2/2022   1,276   1,266   1,257   0.6%
Vice Group Holding, Inc.  L+12.00% 5.92% Cash/
8.00% PIK		  11/4/2019 11/2/2022   245   241   241   0.1%
Vice Group Holding, Inc.  L+12.00% 13.77%  5/2/2019 11/2/2022   400   400   394   0.2%
Vice Group Holding, Inc. (Delayed Draw)(f) (g)   L+12.00% 13.77%  5/2/2019 11/2/2022   160   —   —   0.0%
             2,081   1,907   1,892   0.9%
Media: Diversified & Production                          
Attom Intermediate Holdco, LLC  L+5.75% 6.75%  1/4/2019 1/4/2024   1,975   1,944   1,928   0.9%
Attom Intermediate Holdco, LLC (Revolver)  L+5.75% 6.75%  1/4/2019 1/4/2024   320   320   312   0.2%
Crownpeak Technology, Inc.  L+6.25% 7.83%  2/28/2019 2/28/2024   4,000   3,935   3,905   1.9%
Crownpeak Technology, Inc.  L+6.25% 7.83%  2/28/2019 2/28/2024   60   60   59   0.0%
Crownpeak Technology, Inc. (Revolver)(f)  L+6.25% 7.83%  2/28/2019 2/28/2024   167   —   —   0.0%
             6,522   6,259   6,204   3.0%
Retail                          
Bluestem Brands, Inc.  P+6.50% 9.75%(m) 6/26/2015 11/6/2020   2,275   2,272   1,353   0.7%
Forman Mills, Inc.(i)  L+9.50% 8.50% Cash/
2.00% PIK		  1/14/2020 10/4/2021   1,308   1,308   1,278   0.6%
Forman Mills, Inc.(i)  L+9.50% 8.50% Cash/
2.00% PIK		  10/4/2016 10/4/2021   744   738   727   0.4%
Forman Mills, Inc.(i)  L+9.50% 8.50% Cash/
2.00% PIK		  10/4/2016 10/4/2021   7,459   7,405   4,587   2.2%
LuLu's Fashion Lounge, LLC  L+9.00% 10.07%  8/21/2017 8/29/2022   4,156   4,088   3,554   1.7%
The Worth Collection, Ltd.(i)  L+8.50% 9.49%(m) 9/29/2016 9/29/2021   10,587   10,248   958   0.5%
             26,529   26,059   12,457   6.1%

 8 

 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

June 30, 2019March 31, 2020

(in thousands, except for shares and units)

 

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Hotels, Gaming & Leisure                          
TRG, LLC L+ 13.63% 9.94% Cash/
6.13% PIK		(p)  12/23/2014 2/14/2020   17,096  $ 17,069  $ 18,617   7.2% 
TRG, LLC (CapEx) L+ 9.50% 9.94% Cash/
2.00% PIK		  9/1/2015 2/14/2020   1,364   1,362   1,486   0.6% 
TRG, LLC (Revolver)(f) L+ 9.50% 11.94% 12/23/2014 2/14/2020   262   131   143   0.1%
             18,722   18,562   20,246   7.9%
Media: Advertising, Printing & Publishing                          
AdTheorent, Inc. L+ 8.50% 10.94% 12/22/2016 12/22/2021   3,523   3,484   3,519   1.4% 
Destination Media, Inc.(k) L+ 5.50% 7.90% 4/7/2017 4/7/2022   5,024   4,979   5,070   2.0% 
Destination Media, Inc. (Revolver)(f) L+ 5.50% 7.90% 4/7/2017 4/7/2022   542   —   —   0.0% 
MC Sign Lessor Corp. L+ 7.00% 9.44% 12/22/2017 12/22/2022   9,134   8,997   9,225   3.6% 
MC Sign Lessor Corp. L+ 7.00% 9.44% 12/22/2017 12/22/2022   2,078   2,078   2,099   0.8%
MC Sign Lessor Corp. (Revolver) L+ 7.00% 9.40% 12/22/2017 12/22/2022   625   625   625   0.2%
             20,926   20,163   20,538   8.0%
Media: Broadcasting & Subscription                          
Vice Group Holding Inc. L+ 12.00% 6.62% Cash/
8.00% PIK		  5/2/2019 11/2/2022   1,200   1,188   1,193   0.5%
Vice Group Holding Inc. (Delayed Draw)(f) (g) L+ 9.00% 11.62% 5/2/2019 11/2/2022   400   —   —   0.0%
Vice Group Holding Inc. (Delayed Draw)(f) (g) L+ 9.00% 11.62% 5/2/2019 11/2/2022   400   —   —   0.0%
             2,000   1,188   1,193   0.5%
Media: Diversified & Production                          
Attom Intermediate Holdco, LLC L+ 5.75% 8.15% 1/4/2019 1/4/2024   1,990   1,954   1,987   0.8%
Attom Intermediate Holdco, LLC (Revolver)(f) L+ 5.75% 8.15% 1/4/2019 1/4/2024   320   —   —   0.0%
Crownpeak Technology, Inc. L+ 6.25% 8.69% 2/28/2019 2/28/2024   4,000   3,925   4,012   1.5%
Crownpeak Technology, Inc. (Delayed Draw)(f) (g) L+ 6.25% 8.69% 2/28/2019 2/28/2024   333   —   —   0.0%
Crownpeak Technology, Inc. (Revolver)(f) L+ 6.25% 8.69% 2/28/2019 2/28/2024   167   —   —   0.0%
             6,810   5,879   5,999   2.3%
Retail                          
Bluestem Brands, Inc. L+ 7.50% 9.90% 6/26/2015 11/6/2020   2,355   2,348   1,796   0.7%
Forman Mills, Inc.(k) L+ 9.50% 9.90% Cash/
2.00% PIK		  10/4/2016 10/4/2021   8,256   8,171   7,859   3.1%
LuLu's Fashion Lounge, LLC L+ 9.00% 11.40% 8/21/2017 8/29/2022   4,344   4,254   4,294   1.7%
The Worth Collection, Ltd.(k) L+ 8.50% 6.65% Cash/
4.25% PIK		  9/29/2016 9/29/2021   10,588   10,480   7,379   2.9%
Yandy Holding, LLC L+ 11.00% 13.40% 9/30/2014 9/30/2019   3,643   3,640   3,635   1.4%
Yandy Holding, LLC (Revolver)(f) L+ 11.00% 13.40% 9/30/2014 9/30/2019   907   —   —   0.0%
             30,093   28,893   24,963   9.8%
Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c) 		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of
Net Assets(e)		 
Services: Business                          
Arcserve (USA), LLC  L+5.50% 7.41%  5/1/2019 5/1/2024   4,724  $4,643  $4,538   2.2%
Atlas Sign Industries of FLA, LLC(i)  L+11.50% 11.50% Cash/
1.00% PIK		  5/14/2018 5/15/2023   3,536   3,341   3,170   1.5%
Burroughs, Inc.(i)  L+8.00% 9.08% Cash/
0.50% PIK		  12/22/2017 12/22/2022   5,722   5,665   5,371   2.6%
Burroughs, Inc. (Revolver)(f)  L+8.00% 9.08% Cash/
0.50% PIK		  12/22/2017 12/22/2022   1,219   1,167   1,095   0.5%
Certify, Inc.  L+5.75% 6.75%  2/28/2019 2/28/2024   9,000   8,888   8,905   4.3%
Certify, Inc. (Delayed Draw)(f) (g)   L+5.75% 6.75%  2/28/2019 2/28/2024   1,227   818   810   0.4%
Certify, Inc. (Revolver)(f)  L+5.75% 6.75%  2/28/2019 2/28/2024   409   61   61   0.0%
HS4 Acquisitionco, Inc.  L+6.75% 8.20%  7/9/2019 7/9/2025   10,050   9,866   9,738   4.8%
HS4 Acquisitionco, Inc. (Revolver)(f)  L+6.75% 7.75%  7/9/2019 7/9/2025   817   470   455   0.2%
IT Global Holding, LLC  L+9.00% 10.00%  11/15/2018 11/10/2023   10,172   10,010   9,648   4.7%
IT Global Holding, LLC  L+9.00% 10.00%  7/19/2019 11/10/2023   3,791   3,723   3,596   1.8%
IT Global Holding, LLC (Revolver)  L+9.00% 10.00%  11/15/2018 11/10/2023   875   875   830   0.5%
Kaseya Traverse, Inc.  L+7.00% 5.91% Cash/
3.00% PIK		  5/3/2019 5/2/2025   6,475   6,360   6,185   3.0%
Kaseya Traverse, Inc. (Delayed Draw)(f) (g)  L+7.00% 5.91% Cash/
3.00% PIK		  5/3/2019 5/2/2025   723   94   90   0.0%
Kaseya Traverse, Inc. (Delayed Draw)(f) (g)  L+7.00% 5.91% Cash/
3.00% PIK		  3/4/2020 3/4/2022   289   —   —   0.0%
Kaseya Traverse, Inc. (Revolver)(f)  L+6.50% 7.50%  5/3/2019 5/2/2025   506   501   479   0.3%
Madison Logic, Inc.(i)  L+7.50% 8.49%  11/30/2016 11/30/2021   9,561   9,482   9,341   4.5%
Madison Logic, Inc. (Revolver)(f)  L+7.50% 8.49%  11/30/2016 11/30/2021   988   —   —   0.0%
RedZone Robotics, Inc.  L+8.25% 7.75% Cash/
1.50% PIK		  6/1/2018 6/5/2023   621   612   558   0.3%
RedZone Robotics, Inc. (Revolver)(f)  L+6.75% 7.75%  6/1/2018 6/5/2023   158   —   —   0.0%
Security Services Acquisition Sub Corp.(i)  L+6.00% 7.00%  2/15/2019 2/15/2024   3,465   3,410   3,422   1.7%
Security Services Acquisition Sub Corp. (Delayed Draw)(f) (g) (i)  L+6.00% 7.00%  2/15/2019 2/15/2024   2,487   1,758   1,736   0.9%
Security Services Acquisition Sub Corp. (Delayed Draw)(f) (g) (i)  L+6.00% 7.00%  2/15/2019 2/15/2024   2,184   1,064   1,051   0.5%
Security Services Acquisition Sub Corp. (Revolver)   L+6.00% 7.00%  2/15/2019 2/15/2024   1,563   1,563   1,543   0.8%
TRP Construction Group, LLC(i)  L+6.50% 7.50%  10/5/2017 10/5/2022   7,860   7,773   7,612   3.7%
TRP Construction Group, LLC  L+6.50% 7.50%  9/5/2018 10/5/2022   6,657   6,657   6,447   3.1%
TRP Construction Group, LLC (Revolver)  L+6.50% 7.50%  10/5/2017 10/5/2022   2,133   2,133   2,066   1.0%
VPS Holdings, LLC  L+7.00% 8.00%  10/5/2018 10/4/2024   4,506   4,431   4,204   2.0%
VPS Holdings, LLC  L+7.00% 8.00%  10/5/2018 10/4/2024   3,675   3,675   3,428   1.7%
VPS Holdings, LLC (Revolver)(f)  L+7.00% 8.00%  10/5/2018 10/4/2024   1,000   100   93   0.0%
             106,393   99,140   96,472   47.0%
Services: Consumer                          
Mammoth Holdings, LLC  L+6.00% 7.91%  10/16/2018 10/16/2023   1,975   1,945   1,950   1.0%
Mammoth Holdings, LLC  L+6.00% 7.91%  10/16/2018 10/16/2023   4,146   4,146   4,094   2.0%
Mammoth Holdings, LLC (Revolver)   L+6.00% 7.00%  10/16/2018 10/16/2023   500   500   494   0.2%
             6,621   6,591   6,538   3.2%
Wholesale                          
Nearly Natural, Inc.(i)  L+7.00% 8.45%  12/15/2017 12/15/2022   6,816   6,735   6,491   3.2%
Nearly Natural, Inc. (Delayed Draw)(f) (g) (i)  L+7.00% 8.45%  8/28/2019 12/15/2022   1,915   1,390   1,323   0.6%
Nearly Natural, Inc. (Revolver)  L+7.00% 8.45%  12/15/2017 12/15/2022   1,522   1,522   1,449   0.7%
             10,253   9,647   9,263   4.5%
Total Non-Controlled/Non-Affiliate Senior Secured Loans            491,679   457,603   439,205   213.9%
                           
Unitranche Secured Loans(o)                          
Chemicals, Plastics & Rubber                          
MFG Chemical, LLC(i)  L+6.00% 6.99%  6/23/2017 6/23/2022   9,232  9,161  8,383   4.1%
MFG Chemical, LLC  L+6.00% 6.99%  3/15/2018 6/23/2022   985   985   894   0.4%
             10,217   10,146   9,277   4.5%
Consumer Goods: Durable                          
RugsUSA, LLC  L+6.50% 7.96%  5/2/2018 4/28/2023   4,000   3,973   3,888   1.9%
             4,000   3,973   3,888   1.9%
Healthcare & Pharmaceuticals                          
Priority Ambulance, LLC(p)  L+6.50% 7.95%  7/18/2018 4/12/2022   10,015   10,015   9,850   4.8%
Priority Ambulance, LLC(q)  L+6.50% 7.95%  4/12/2017 4/12/2022   1,253   1,235   1,233   0.6%
Priority Ambulance, LLC (Delayed Draw)(f) (g)  L+6.50% 7.95%  12/13/2018 4/12/2022   2,474   685   674   0.3%
             13,742   11,935   11,757   5.7%
High Tech Industries                          
Energy Services Group, LLC  L+8.42% 9.42%  5/4/2017 5/4/2022   4,115   4,088   4,006   2.0%
Energy Services Group, LLC(h) (n)  L+8.42% 9.42%  5/4/2017 5/4/2022   4,605   4,880   4,515   2.2%
Energy Services Group, LLC  L+8.42% 9.42%  5/4/2017 5/4/2022   1,171   1,157   1,140   0.6%
WillowTree, LLC  L+5.00% 6.00%  10/9/2018 10/9/2023   7,900   7,795   7,683   3.7%
             17,791   17,920   17,344   8.5%
Total Non-Controlled/Non-Affiliate Unitranche Secured Loans            45,750   43,974   42,266   20.6%

 

 9 

 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

June 30, 2019March 31, 2020

(in thousands, except for shares and units)

 

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Services: Business                          
APCO Worldwide, Inc. L+ 8.00% 10.40% 6/30/2017 6/30/2022   4,750  $ 4,687   $4,691   1.8%
Arcserve (USA) LLC L+ 6.00% 8.52% 5/1/2019 5/1/2024   5,000   4,902   5,000   2.0%
Arcserve (USA) LLC (Revolver)(f) L+ 6.00% 8.52% 5/1/2019 5/1/2024   641   —   —   0.0%
Atlas Sign Industries of FLA, LLC(k) L+ 11.50% 12.90% Cash/
1.00% PIK		  5/14/2018 5/15/2023   3,509   3,314   3,353   1.3%
Burroughs, Inc.(k) L+ 8.50% 9.94% Cash/
1.00% PIK		  12/22/2017 12/22/2022   5,813   5,749   5,746   2.2%
Burroughs, Inc. (Revolver) L+ 8.50% 9.94% Cash/
1.00% PIK		  12/22/2017 12/22/2022   1,215   1,125   1,125   0.4%
Certify, Inc. L+ 5.75% 8.15% 2/28/2019 2/28/2024   9,000   8,872   8,924   3.5%
Certify, Inc. (Delayed Draw)(f) (g) L+ 5.75% 8.15% 2/28/2019 2/28/2024   1,227   205   203   0.1%
Certify, Inc. (Revolver)(f) L+ 5.75% 8.15% 2/28/2019 2/28/2024   409   —   —   0.0%
First Call Resolution, LLC(k) L+ 7.00% 9.44% 9/22/2017 9/22/2022   3,733   3,688   3,771   1.5%
First Call Resolution, LLC L+ 7.00% 9.44% 9/28/2018 9/22/2022   9,077   8,952   9,167   3.6%
HaystackID LLC L+ 6.50% 8.90% 1/14/2019 1/12/2024   4,975   4,884   4,965   1.9%
HaystackID LLC (Revolver)(f) L+ 6.50% 8.90% 1/14/2019 1/12/2024   403   161   161   0.1%
IT Global Holding LLC L+ 7.00% 9.40% 11/15/2018 11/10/2023   10,369   10,182   10,400   4.0%
IT Global Holding LLC (Revolver)(f) L+ 7.00% 9.40% 11/15/2018 11/10/2023   875   263   263   0.1% 
Kaseya Traverse, Inc. L+ 6.50% 7.94% Cash/
1.00% PIK		  5/3/2019 5/2/2025   6,005   5,887   6,038   2.4%
Kaseya Traverse, Inc. (Delayed Draw)(f) (g) L+ 5.50% 7.94% 5/3/2019 5/2/2025   723   —   —   0.0%
Kaseya Traverse, Inc. (Revolver)(f) L+ 6.50% 8.94% 5/3/2019 5/2/2025   506   —   —   0.0%
Madison Logic, Inc.(k) L+ 8.00% 10.40% 11/30/2016 11/30/2021   9,741   9,634   9,741   3.8%
Madison Logic, Inc. (Revolver)(f) L+ 8.00% 10.40% 11/30/2016 11/30/2021   988   —   —   0.0%
RedZone Robotics, Inc. L+ 7.75% 9.15% Cash/
1.00% PIK		  6/1/2018 6/5/2023   755   743   679   0.3%
RedZone Robotics, Inc. (Revolver)(f) (g) L+ 6.75% 9.15% 6/1/2018 6/5/2023   158   —   —   0.0%
Security Services Acquisition Sub Corp.(k) L+ 6.00% 8.39% 2/15/2019 2/15/2024   3,491   3,427   3,486   1.4%
Security Services Acquisition Sub Corp. (Delayed Draw)(f) (g) (k) L+ 6.00% 8.39% 2/15/2019 2/15/2024   2,500   —   —   0.0%
Security Services Acquisition Sub Corp. (Delayed Draw)(f) (g) (k) L+ 6.00% 8.39% 2/15/2019 2/15/2024   2,188   —   —   0.0%
Security Services Acquisition Sub Corp. (Revolver)(f) L+ 6.00% 8.39% 2/15/2019 2/15/2024   1,042   —   —   0.0%
TRP Construction Group, LLC(k) L+ 7.00% 9.40% 10/5/2017 10/5/2022   7,863   7,752   7,819   3.1%
TRP Construction Group, LLC L+ 7.00% 9.40% 9/5/2018 10/5/2022   6,741   6,741   6,704   2.6%
TRP Construction Group, LLC (Revolver)(f) L+ 7.00% 9.40% 10/5/2017 10/5/2022   2,133   —   —   0.0%
VPS Holdings, LLC L+ 7.00% 9.40% 10/5/2018 10/4/2024   4,938   4,847   4,977   1.9%
VPS Holdings, LLC L+ 7.00% 9.40% 10/5/2018 10/4/2024   4,000   4,000   4,032   1.6%
VPS Holdings, LLC (Revolver)(f) L+ 7.00% 9.40% 10/5/2018 10/4/2024   1,000   100   100   0.0%
             115,768   100,115   101,345   39.6%
Services: Consumer                          
Mammoth Holdings, LLC L+ 6.00% 8.59% 10/16/2018 10/16/2023   1,990   1,956   1,983   0.8%
Mammoth Holdings, LLC (Delayed Draw)(f) (g) L+ 6.00% 8.55% 10/16/2018 10/16/2023   4,167   2,827   2,817   1.1%
Mammoth Holdings, LLC (Revolver)(f) L+ 6.00% 8.59% 10/16/2018 10/16/2023   500   —   —   0.0%
PeopleConnect Intermediate, LLC L+ 6.50% 9.10% 7/1/2015 7/1/2020   4,168   4,146   4,159   1.6%
PeopleConnect Intermediate, LLC L+ 12.50% 15.10% 7/1/2015 7/1/2020   4,584   4,558   4,567   1.8%
PeopleConnect Intermediate, LLC (Revolver)(f) L+ 9.50% 12.10% 7/1/2015 7/1/2020   236   118   118   0.0%
             15,645   13,605   13,644   5.3%
Wholesale                          
Mid-West Wholesale Hardware Co.(q) L+ 8.00% 10.40% 2/9/2017 2/9/2022   19,472   19,214   19,443   7.6%
Mid-West Wholesale Hardware Co. (Revolver)(f) L+ 8.00% 10.40% 2/9/2017 2/9/2022   5,491   3,844   3,838   1.5%
Nearly Natural, Inc.(k) L+ 7.00% 9.33% 12/15/2017 12/15/2022   6,895   6,794   6,854   2.7% 
Nearly Natural, Inc. (Revolver)(f) L+ 7.00% 9.33% 12/15/2017 12/15/2022   1,522   457   457   0.2%
             33,380   30,309   30,592   12.0%
  Total Non-Controlled/Non-Affiliate Senior Secured Loans       501,558   446,220   444,789   173.8% 
                           
  Unitranche Secured Loans(r)                          
Chemicals, Plastics & Rubber                          
MFG Chemical, LLC(k) L+ 6.00% 8.40% 6/23/2017 6/23/2022   10,477   10,373   10,257   4.0%
MFG Chemical, LLC L+ 6.00% 8.40% 3/15/2018 6/23/2022   1,126   1,126   1,103   0.4%
             11,603   11,499   11,360   4.4%
Construction & Building                          
Inland Pipe Rehabilitation LLC L+ 5.50% 7.83% 12/27/2018 12/26/2024   12,438   12,202   12,487   4.9%
             12,438   12,202   12,487   4.9%
Consumer Goods: Durable                          
RugsUSA, LLC L+ 6.00% 8.33% 5/2/2018 4/28/2023   4,000   3,969   4,008   1.6%
             4,000   3,969   4,008   1.6%
Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c) 		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of
Net Assets(e)		 
Junior Secured Loans                          
Beverage, Food & Tobacco                          
CSM Bakery Supplies, LLC  L+7.75% 9.62%  5/23/2013 7/5/2021   5,792  $5,792  $4,518   2.2%
             5,792   5,792   4,518   2.2%
Capital Equipment                          
ALTA Enterprises, LLC  L+8.00% 9.80%  2/14/2020 8/13/2025   4,000   3,863   3,889   1.9%
             4,000   3,863   3,889   1.9%
High Tech Industries                          
Micro Holdings Corp.  L+7.50% 8.57%  8/16/2017 8/18/2025   3,000   2,976   2,535   1.2%
             3,000   2,976   2,535   1.2%
Services: Consumer                          
Education Corporation of America  L+11.00% 

6.95% Cash/

5.50% PIK 

(m)  9/3/2015 n/a(l)  833   831   762   0.4%
             833   831   762   0.4%
Total Non-Controlled/Non-Affiliate Junior Secured Loans            13,625   13,462   11,704   5.7%
                           
Equity Securities  (r) (s)                          
Banking, Finance, Insurance & Real Estate                          
PKS Holdings, LLC (warrant to purchase up to 0.8% of the equity)(h) — —(t) 11/30/2017 11/30/2027   —  116  428   0.2%
                 116   428   0.2%
Capital Equipment                          
MCP Shaw Acquisitionco, LLC (118,906 Class A-2 units) — —(t) 2/28/2020 —   —   119   109   0.1%
                 119   109   0.1%
Chemicals, Plastics & Rubber                          
Valudor Products, LLC (501,014 Class A-1 units)  n/a 10.00% PIK  6/18/2018 —   —   501   —   0.0%
                 501   —   0.0%
High Tech Industries                          
Answers Finance, LLC (76,539 shares of common stock) — —(t) 4/14/2017 —   —   2,344   54   0.0%
Planful, Inc. (441,860 Class A units) — —(t) 12/28/2018 —   —   442   479   0.2%
Recorded Future, Inc. (80,080 Class A units)(u) — —(t) 7/3/2019 —   —   80   85   0.1%
                 2,866   618   0.3%
Media: Advertising, Printing & Publishing                          
AdTheorent, Inc. (128,866 Class A voting units) — —(t) 12/22/2016 —   —   129   397   0.2%
MC Sign Lessor Corp. (686 shares of common units) — —(t) 8/30/2019 —   —   872   645   0.3%
InMobi Pte, Ltd. (warrant to purchase up to 2.8% of the equity)(h) (k) — —(t) 9/18/2015 9/18/2025   —   —   188   0.1%
XanEdu Publishing, Inc. (49,479 Class A units)  n/a 8.00% PIK  1/28/2020 —   —   49   51   0.0%
                 1,050   1,281   0.6%
Media: Diversified & Production                          
Attom Intermediate Holdco, LLC (260,000 Class A units) — —(t) 1/4/2019 —   —   260   246   0.1%
                 260   246   0.1%
Retail                          
Forman Mills, Inc. (warrant to purchase up to 2.6% of the equity) — —(t) 1/14/2020 1/14/2029   —   —   —   0.0% 

The Tie Bar Operating Company, LLC - Class A Preferred Units (1,275 units)

— —(t)  6/25/2013 —   —   87   63   0.0%

The Tie Bar Operating Company, LLC - Class B Preferred Units (1,275 units)

— —(t)  6/25/2013 —   —   —   —   0.0%
                 87   63   0.0%
Services: Business                          
APCO Worldwide, Inc. (100 Class A voting common stock) — —(t) 11/1/2017 —   —   395   282   0.1%

Atlas Sign Industries of FLA, LLC (warrant to purchase up to 0.8% of the equity)

— —(t) 5/14/2018 5/14/2026   —   125   31   0.0%
                 520   313   0.1%
Services: Consumer                          

Education Corporation of America - Series G Preferred Stock (8,333 shares)

 n/a 12.00% PIK(m) 9/3/2015 —   —   7,492   5,117   2.5%
                 7,492   5,117   2.5%
Wholesale                          
Nearly Natural, Inc. (152,174 Class A units) — —(t) 12/15/2017 —   —   152   144   0.1%
                 152   144   0.1%
Total Non-Controlled/Non-Affiliate Equity Securities                13,163   8,319   4.0%
Total Non-Controlled/Non-Affiliate Company Investments               $528,202  $501,494   244.2%
                           
Non-Controlled Affiliate Company Investments(v)                          
Senior Secured Loans                          
Banking, Finance, Insurance & Real Estate                          
American Community Homes, Inc.  L+10.00% 11.50% PIK  7/22/2014 12/31/2020   9,096  $9,089  $6,259   3.0%
American Community Homes, Inc.  L+14.50% 16.00% PIK  7/22/2014 12/31/2020   5,834   5,830   4,014   2.0%
American Community Homes, Inc.  L+10.00% 11.50% PIK  3/17/2016 12/31/2020   688   688   474   0.2%
American Community Homes, Inc.  L+10.00% 11.50% PIK  5/24/2017 12/31/2020   551   550   379   0.2%
American Community Homes, Inc.  L+14.50% 16.00% PIK  5/24/2017 12/31/2020   314   313   216   0.1%
American Community Homes, Inc.  L+10.00% 11.50% PIK  8/10/2018 12/31/2020   1,970   1,970   1,355   0.7%
American Community Homes, Inc.  L+10.00% 11.50% PIK  3/29/2019 12/31/2020   3,693   3,693   2,541   1.2%
American Community Homes, Inc.  L+10.00% 11.50% PIK  9/30/2019 12/31/2020   15   15   10   0.0%
American Community Homes, Inc.  L+10.00% 11.50% PIK  12/30/2019 12/31/2020   84   84   58   0.0%
American Community Homes, Inc. (Revolver)(f)  L+10.00% 9.50% Cash/
2.00% PIK		  3/30/2020 12/31/2020   2,500   1,667   1,147   0.6%
             24,745   23,899   16,453   8.0%

 10 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

June 30, 2019March 31, 2020

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Healthcare & Pharmaceuticals                          
Collaborative Neuroscience Network, LLC L+ 11.50% 13.90% 12/27/2012 n/a(m)   6,120  $ 6,108  $6,096   2.4%
Collaborative Neuroscience Network, LLC n/a 12.00% Cash/
3.00% PIK		  4/14/2016 n/a(m)   308   308   308   0.1%
Collaborative Neuroscience Network, LLC (Revolver) L+ 10.00% 12.40% 5/25/2017 n/a(m)   200   193   200   0.1%
Priority Ambulance, LLC(s) L+ 6.50% 8.83% 7/18/2019 4/12/2022   10,015   10,015   10,000   3.9%
Priority Ambulance, LLC(t) L+ 6.50% 8.83% 4/12/2017 4/12/2022   1,253   1,230   1,251   0.5%
Priority Ambulance, LLC (Delayed Draw)(f) (g) L+ 6.50% 8.83% 7/18/2019 4/12/2022   246   —   —   0.0%
Priority Ambulance, LLC (Delayed Draw)(f) (g) L+ 6.50% 8.83% 12/13/2018 4/12/2022   2,482   693   692   0.3%
             20,624   18,547   18,547   7.3%
High Tech Industries                          
Energy Services Group, LLC L+ 8.42% 10.82% 5/4/2017 5/4/2022   4,281   4,244   4,275   1.6%
Energy Services Group, LLC(h) (o) L+ 8.42% 9.42% 5/4/2017 5/4/2022   4,896   5,061   4,896   1.9%
Energy Services Group, LLC L+ 8.42% 10.82% 5/4/2017 5/4/2022   1,219   1,204   1,217   0.5%
Mnine Holdings, Inc. L+ 6.75% 9.16% 11/2/2018 11/2/2023   7,960   7,817   7,861   3.1%
             18,356   18,326   18,249   7.1%
  Total Non-Controlled/Non-Affiliate Unitranche Secured Loans     67,021   64,543   64,651   25.3%
                           
  Junior Secured Loans                          
Beverage, Food & Tobacco                          
CSM Bakery Supplies, LLC L+ 7.75% 10.34% 5/23/2013 7/5/2021   5,792   5,792   5,392   2.1% 
             5,792   5,792   5,392   2.1%
High Tech Industries                          
Micro Holdings Corp. L+ 7.50% 9.90% 8/16/2017 8/18/2025   3,000   2,973   3,015   1.2%
             3,000   2,973   3,015   1.2%
Media: Broadcasting & Subscription                          
Mergermarket Bidco Limited L+ 7.25% 9.64% 7/26/2017 8/4/2025   4,500   4,459   4,483   1.7%
             4,500   4,459   4,483   1.7%
Media: Diversified & Production                          
The Octave Music Group, Inc. L+ 8.25% 10.68% 5/29/2015 5/27/2022   4,355   4,322   4,355   1.7%
             4,355   4,322   4,355   1.7%
Services: Consumer                          
Education Corporation of America L+ 11.00% 7.83% Cash/
5.50% PIK		(n)  9/3/2015 3/31/2020   833   831   813   0.3%
             833   831   813   0.3%
Total Non-Controlled/Non-Affiliate Junior Secured Loans      18,480   18,377   18,058   7.0%
                           
Equity Securities  (u) (v)                          
Banking, Finance, Insurance & Real Estate                          
PKS Holdings, LLC (warrant to purchase up to 0.8% of the equity)(h) — —(w)  11/30/2017 11/30/2027   —   116   —   0.0% 
                 116    —   0.0%
Chemicals, Plastics & Rubber                          
Valudor Products, LLC (501,014 class A-1 units)  n/a 10.00% PIK  6/18/2018 —   —   501   351   0.1%
                 501   351   0.1%
Healthcare & Pharmaceuticals                          
Collaborative Neuroscience Network, LLC (warrant to purchase up to 1.5% of the equity) — —(w)  12/27/2012 12/27/2022   —   —   234   0.1%
Collaborative Neuroscience Network, LLC (warrant to purchase up to 2.1% of the equity) — —(w)  7/19/2016 12/31/2027   —   —   —   0.0%
                 —   234   0.1%
High Tech Industries                          
Answers Finance, LLC (76,539 shares of common stock) — —(w)  4/14/2017 —   —   2,413   126   0.1%
Host Analytics, Inc. (441,860 class A Units) — —(w)  12/28/2018 —   —   442   543   0.2%
                 2,855   669   0.3% 
Hotels, Gaming & Leisure                          
Playtime, LLC - Preferred Units (8,665 units) — —(w)  12/4/2012 —   —   200   —   0.0%
                 200   —   0.0%
Media: Advertising, Printing & Publishing                          
AdTheorent, Inc. (128,866 class A voting units) — —(w)  12/22/2016 —   —   129   332   0.1%
InMobi Pte, Ltd. (warrant to purchase up to 2.8% of the equity)(h) (l) — —(w)  9/18/2015 9/18/2025   —    —   209   0.1%
                 129   541   0.2%
Media: Diversified & Production                          
Attom Intermediate Holdco, LLC (260,000 class A units) — —(w)  1/4/2019 —   —   260   257   0.1%
                 260   257   0.1%

 

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c) 		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of
Net Assets(e)		 
Containers, Packaging & Glass                          
Summit Container Corporation  L+8.00% 9.00%  12/5/2013 1/6/2021   3,259  $3,269  $ 2,800   1.4%
Summit Container Corporation (Revolver)(f)   L+8.00% 9.00%  6/15/2018 1/6/2021   7,000   4,302   4,217   2.0%
             10,259   7,571   7,017   3.4%
Healthcare & Pharmaceuticals                          
Ascent Midco, LLC(i)  L+5.75% 6.75%  2/5/2020 2/5/2025   6,983   6,847   6,717   3.3%
Ascent Midco, LLC (Delayed Draw)(f) (g) (i)  L+5.75% 6.75%  2/5/2020 2/5/2025   2,838   —   —   0.0%
Ascent Midco, LLC (Revolver)(f)  L+5.75% 6.75%  2/5/2020 2/5/2025   1,129   734   706   0.3%
SHI Holdings, Inc.(i)  L+10.75% 11.74% PIK(m) 7/10/2014 12/31/2020   2,899   2,897   1,180   0.6%
SHI Holdings, Inc. (Revolver)(f)   L+10.75% 11.74% PIK(m) 7/10/2014 12/31/2020   4,667   4,585   1,868   0.9%
             18,516   15,063   10,471   5.1%
Retail                          
Luxury Optical Holdings Co.  L+8.00% 9.00% PIK(m) 9/12/2014 9/30/2020   4,953   4,949   2,957   1.4%
Luxury Optical Holdings Co.  L+11.50% 12.50%(m) 9/29/2017 9/30/2020   624   624   615   0.3%
Luxury Optical Holdings Co. (Revolver)  L+8.00% 9.00% PIK(m) 9/12/2014 9/30/2020   228   228   136   0.1%
             5,805   5,801   3,708   1.8%
Services: Business                          
Curion Holdings, LLC(i)  n/a 14.00% PIK(m) 5/2/2017 5/2/2022   4,226   4,189   3,011   1.5%
Curion Holdings, LLC (Revolver)(f)  n/a 14.00% PIK(m) 5/2/2017 5/2/2022   594   451   440   0.2%
             4,820   4,640   3,451   1.7%
Services: Consumer                          
New England College of Business and Finance, LLC (Revolver)(f)  L+11.00% 12.58%  6/25/2019 6/30/2021   1,305   1,260   1,260   0.6%
             1,305   1,260   1,260   0.6%
Total Non-Controlled Affiliate Senior Secured Loans            65,450   58,234   42,360   20.6%
                           
Unitranche Secured Loans(o)                          
Consumer Goods: Non-Durable                          
Incipio, LLC(w)  L+8.50% 10.08% PIK(m) 12/26/2014 8/22/2022   14,701  14,677  6,027   2.9%
Incipio, LLC(x)  L+8.50% 10.08% PIK  3/9/2018 8/22/2022   3,914   3,914   3,811   1.9%
Incipio, LLC  L+8.50% 10.08% PIK  7/6/2018 8/22/2022   1,663   1,663   1,631   0.8%
Incipio, LLC  L+8.50% 10.08% PIK  1/15/2020 8/22/2022   1,423   1,423   1,395   0.7%
Incipio, LLC  L+8.50% 10.08% PIK  4/17/2019 8/22/2022   710   710   696   0.3%
             22,411   22,387   13,560   6.6%
Total Non-Controlled Affiliate Unitranche Secured Loans            22,411   22,387   13,560   6.6%
                           
Junior Secured Loans                          
Consumer Goods: Non-Durable                          
Incipio, LLC(y)  n/a 10.70% PIK(m) 6/18/2018 8/22/2022   3,766   —   —   0.0%
Incipio, LLC(z)  n/a 10.70% PIK(m) 6/18/2018 8/22/2022   7,194   —   —   0.0%
             10,960   —   —   0.0%
Services: Business                          
Curion Holdings, LLC(i)  n/a 15.00% PIK(m) 8/17/2018 1/2/2023   1,720   1   —   0.0%
Curion Holdings, LLC(i)  n/a 15.00% PIK(m) 8/17/2018 1/2/2023   44   —   —   0.0%
             1,764   1   —   0.0%
Total Non-Controlled Affiliate Company Junior Secured Loans            12,724   1   —   0.0%
                           
Equity Securities(s) (v)                          
Banking, Finance, Insurance & Real Estate                          

American Community Homes, Inc. (warrant to purchase up to 22.3% of the

equity)

— —(t) 10/9/2014 12/18/2024   —   —   —   0.0%
                 —   —   0.0%
Consumer Goods: Non-Durable                          
Incipio, LLC (1,774 shares of Series C common units) — —(t) 7/6/2018 —   —   —   —   0.0%
                 —   —   0.0%
Containers, Packaging & Glass                          

Summit Container Corporation (warrant to purchase up to 19.5% of the

equity)

— —(t) 1/6/2014 1/6/2024   —   —   —   0.0%
                 —   —   0.0%
Healthcare & Pharmaceuticals                          
Ascent Midco, LLC (2,032,258 Class A units)  n/a 8.00% PIK  2/5/2020 —   —   2,032   1,978   1.0%
SHI Holdings, Inc. (24 shares of common stock) — —(t) 12/14/2016 —   —   27   —   0.0%
                 2,059   1,978   1.0%
Retail                          
Luxury Optical Holdings Co. (86 shares of common stock) — —(t) 9/29/2017 —   —   —   —   0.0%
                 —   —   0.0%
Services: Business                          
Curion Holdings, LLC (58,779 shares of common stock) — —(t) 8/17/2018 —   —   —   —   0.0%
                 —   —   0.0%
Services: Consumer                          
New England College of Business and Finance, LLC (20.8% of units) — —(t) 6/21/2019 —   —   1,458   120   0.1%
                 3,517   2,098   1.1%
Total Non-Controlled Affiliate Equity Securities                3,517   2,098   1.1%
Total Non-Controlled Affiliate Company Investments               $84,139  $58,018   28.3%
                           
Controlled Affiliate Company Investments(aa)                          
Equity Securities                          
Investment Funds & Vehicles                          
MRCC Senior Loan Fund I, LLC (50.0% of the equity interests)(h)  — —  10/31/2017 —   —  $ 42,150  $ 31,325   15.2%
Total Controlled Affiliate Equity Securities                42,150   31,325   15.2%
Total Controlled Affiliate Company Investments               $42,150  $31,325   15.2%
TOTAL INVESTMENTS               $654,491  $590,837   287.7%

 11 

 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

June 30, 2019

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Retail                          
The Tie Bar Operating Company, LLC - Class A Preferred Units (1,275 units) — — 6/25/2013 —   —  $ 87  $ 110   0.0%
The Tie Bar Operating Company, LLC - Class B Preferred Units (1,275 units) — — 6/25/2013 —   —   —   —   0.0%
                 87   110   0.0%
Services: Business                          
APCO Worldwide, Inc. (100 class A voting common stock) — —(w)  11/1/2017 —   —   395   311   0.1%
Atlas Sign Industries of FLA, LLC (warrants to purchase up to 0.8% of the equity) — —(w)  5/14/2018 5/14/2026   —   125   86   0.1%
                 520   397   0.2%
Services: Consumer                          
Education Corporation of America - Series G Preferred Stock (8,333 shares) n/a 12.00% PIK(n)  9/3/2015 —   —   7,492   3,571   1.4%
                 7,492   3,571   1.4%
Wholesale                          
Nearly Natural, Inc. (152,174 class A units) — —(w)  12/15/2017 —   —   152   151   0.1%
                 152   151   0.1%
Total Non-Controlled/Non-Affiliate Equity Securities           12,312   6,281   2.5%
Total Non-Controlled/Non-Affiliate Company Investments          $541,452  $533,779   208.6% 
                           
Non-Controlled Affiliate Company Investments(x)                    
Senior Secured Loans                          
Banking, Finance, Insurance & Real Estate                          
American Community Homes, Inc. L+ 10.00% 12.40% PIK  7/22/2014 12/31/2020   8,302   $8,290  $ 6,202   2.4%
American Community Homes, Inc. L+ 14.50% 16.90% PIK  7/22/2014 12/31/2020   5,145   5,140   3,844   1.5%
American Community Homes, Inc. L+ 10.00% 12.40% PIK  3/17/2016 12/31/2020   628   627   469   0.2%
American Community Homes, Inc. L+ 10.00% 12.40% PIK  5/24/2017 12/31/2020   503   501   376   0.2%
American Community Homes, Inc. L+ 14.50% 16.90% PIK  5/24/2017 12/31/2020   277   276   207   0.1%
American Community Homes, Inc. L+ 8.00% 10.40% PIK  8/10/2018 12/31/2020   1,825   1,825   1,363   0.5%
American Community Homes, Inc. L+ 8.00% 10.40% PIK  3/29/2019 12/31/2020   3,422   3,422   2,557   1.0%
             20,102   20,081   15,018   5.9%
Containers, Packaging & Glass                          
Summit Container Corporation(k) L+ 8.00% 10.40% 12/5/2013 1/6/2021   3,259   3,269   3,026   1.2%
Summit Container Corporation (Revolver)(f) (k) L+ 8.00% 10.40% 6/15/2018 1/6/2021   8,000   5,369   5,305   2.0%
             11,259   8,638   8,331   3.2%
Healthcare & Pharmaceuticals                          
SHI Holdings, Inc.(k) L+ 10.25% 12.65% PIK  7/10/2014 12/31/2020   2,723   2,721   2,680   1.1%
SHI Holdings, Inc. (Revolver)(f) L+ 10.25% 12.65% PIK  7/10/2014 12/31/2020   4,413   3,656   3,608   1.4%
             7,136   6,377   6,288   2.5%
Retail                          
Luxury Optical Holdings Co. L+ 8.00% 10.40% PIK  9/12/2014 9/12/2019   4,953   4,949   4,346   1.7%
Luxury Optical Holdings Co. (Delayed Draw)(f) (g) L+ 11.50% 13.90% 9/29/2017 9/12/2019   1,059   624   623   0.2%
Luxury Optical Holdings Co. (Revolver) L+ 8.00% 10.40% PIK  9/12/2014 9/12/2019   228   228   200   0.1%
             6,240   5,801   5,169   2.0%
Services: Business                          
Curion Holdings, LLC(k) n/a 14.00% PIK  5/2/2017 5/2/2022   4,226   4,189   3,602   1.4%
Curion Holdings, LLC (Revolver)(f) n/a 14.00% PIK  5/2/2017 5/2/2022   478   344   335   0.1%
             4,704   4,533   3,937   1.5%
Services: Consumer                          
New England College of Business and Finance, LLC (Revolver)(f) L+ 11.00% 13.40% 6/25/2019 12/31/2019   450   150   150   0.1%
             450   150   150   0.1%
Total Non-Controlled Affiliate Senior Secured Loans       49,891   45,580   38,893   15.2%
                           
Unitranche Secured Loans(r)                          
Consumer Goods: Non-Durable                          
Incipio, LLC(y) L+ 8.72% 10.94% Cash/
0.22% PIK		(z)  12/26/2014 8/22/2022   13,803   13,777   12,941   5.1%
Incipio, LLC(aa) L+ 8.50% 10.94% 3/9/2018 8/22/2022   3,613   3,613   3,568   1.4%
Incipio, LLC L+ 8.50% 10.94% 7/6/2018 8/22/2022   1,535   1,535   1,530   0.6%
Incipio, LLC L+ 8.50% 10.94% 4/17/2019 8/22/2022   656   656   653   0.2%
             19,607   19,581   18,692   7.3%
Total Non-Controlled Affiliate Unitranche Secured Loans     19,607   19,581   18,692   7.3%

12

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

June 30, 2019

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Junior Secured Loans                          
Consumer Goods: Non-Durable                          
Incipio, LLC(ab) n/a 10.70% PIK(n)   6/18/2018 8/22/2022   3,766  $ —  $ 800   0.3%
Incipio, LLC(ac) n/a 10.70% PIK(n)  6/18/2018 8/22/2022   7,194   —   —   0.0%
             10,960   —   800   0.3%
Services: Business                          
Curion Holdings, LLC(k) n/a 15.00% PIK(n)  8/17/2018 1/2/2023   1,720   1   —   0.0%
Curion Holdings, LLC(k) n/a 15.00% PIK(n)  8/17/2018 1/2/2023   44   —   —   0.0%
             1,764   1   —   0.0%
Total Non-Controlled Affiliate Company Junior Secured Loans     12,724   1   800   0.3%
                           
Equity Securities(v) (x)                          
Banking, Finance, Insurance & Real Estate                          
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity) — —(w)  10/9/2014 12/18/2024   —   —   —   0.0%
                 —   —   0.0%
Consumer Goods: Non-Durable                          
Incipio, LLC (1,774 shares of series C common units) — —(w)  7/6/2018 —   —   —   —   0.0%
Millennial Brands LLC (10 preferred units) — —(w)  5/2/2014 —   —   967   —   0.0%
Millennial Brands LLC (75,502 common units) — —(w)  5/2/2014 —   —   —   —   0.0%
                 967   —   0.0%
Containers, Packaging & Glass                          
Summit Container Corporation (warrant to purchase up to 19.5% of the equity) — —(w)  1/6/2014 1/6/2024   —   —   —   0.0%
                 —   —   0.0%
Healthcare & Pharmaceuticals                          
SHI Holdings, Inc. (24 shares of common stock) — —(w)  12/14/2016 —   —   27   102   0.1%
                 27   102   0.1%
Retail                          
Luxury Optical Holdings Co. (86 shares of common stock) — —(w)  9/29/2017 —   —   —   —   0.0%
                 —   —   0.0%
Services: Business                          
Curion Holdings, LLC (58,779 shares of common stock) — —(w)  8/17/2018 —   —   —   —   0.0%
                 —   —   0.0%
Services: Consumer                          
New England College of Business and Finance, LLC (20.8% of units) — —(w)  6/21/2019 —   —   1,458   2,594   1.0%
                 1,458   2,594   1.0%
Total Non-Controlled Affiliate Equity Securities           2,452   2,696   1.1%
Total Non-Controlled Affiliate Company Investments        $67,614  $61,081   23.9% 
                           
Controlled Affiliate Company Investments(ad)                          
Equity Securities                          
Investment Funds & Vehicles                          
MRCC Senior Loan Fund I, LLC (50.0% of the equity interests)(h) — —  10/31/2017 —   —   $35,075  $35,944   14.0%
Total Controlled Affiliate Equity Securities              35,075   35,944   14.0%
Total Controlled Affiliate Company Investments          $35,075  $35,944   14.0%
                           
TOTAL INVESTMENTS               $644,141  $630,804   246.5% 

13

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

June 30, 2019March 31, 2020

(in thousands, except for shares and units)

 

Derivative Instruments

 

Foreign currency forward contracts

 

 Notional Amount Notional Amount   Unrealized Gain  Notional Amount Notional Amount    Unrealized Gain 
Description to be Purchased  to be Sold  Counterparty Settlement Date (Loss)  to be Purchased  to be Sold  Counterparty Settlement Date (Loss) 
Foreign currency forward contract $53  £41  Bannockburn Global Forex, LLC 7/1/2019 $1  $132  £103  Bannockburn Global Forex, LLC 4/1/2020 $4 
Foreign currency forward contract $294  £230  Bannockburn Global Forex, LLC 8/30/2019  3  $130  £102  Bannockburn Global Forex, LLC 5/5/2020  4 
Foreign currency forward contract $134  £105  Bannockburn Global Forex, LLC 10/1/2019  1  $295  £230  Bannockburn Global Forex, LLC 5/29/2020  9 
Foreign currency forward contract $295  £230  Bannockburn Global Forex, LLC 11/29/2019  3  $34  £27  Bannockburn Global Forex, LLC 6/1/2020  1 
Foreign currency forward contract $133  £104  Bannockburn Global Forex, LLC 1/2/2020  1  $296  £230  Bannockburn Global Forex, LLC 8/28/2020  9 
Foreign currency forward contract $296  £231  Bannockburn Global Forex, LLC 2/28/2020  3  $35  £28  Bannockburn Global Forex, LLC 9/3/2020  1 
Foreign currency forward contract $132  £103  Bannockburn Global Forex, LLC 4/1/2020  1  $294  £229  Bannockburn Global Forex, LLC 11/30/2020  10 
Foreign currency forward contract $130  £102  Bannockburn Global Forex, LLC 5/5/2020  1  $34  £26  Bannockburn Global Forex, LLC 12/2/2020  1 
Foreign currency forward contract $296  £230  Bannockburn Global Forex, LLC 5/29/2020  3 
Foreign currency forward contract $295  £230  Bannockburn Global Forex, LLC 8/28/2020  3 
Foreign currency forward contract $294  £229  Bannockburn Global Forex, LLC 11/30/2020  3 
         $23            $39 

 

(a)All of our investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of our investments are issued by U.S. portfolio companies unless otherwise noted.
(b)The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at June 30, 2019.March 31, 2020. Certain investments are subject to a LIBOR or Prime interest rate floor, or rate cap.
(c)Except as otherwise noted, all of the Company’s portfolio company investments, which as of June 30, 2019March 31, 2020 represented 246.5%287.7% of the Company’s net assets or 94.4%95.2% of the Company’s total assets, are subject to legal restrictions on sales.
(d)Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith using significant unobservable inputs by our board of directors as required by the Investment Company Act of 1940.1940 Act. (See Note 4 in the accompanying notes to the consolidated financial statements.)
(e)Percentages are based on net assets of $255,888$205,352 as of June 30, 2019.March 31, 2020.
(f)All or a portion of this commitment was unfunded at June 30, 2019.March 31, 2020. As such, interest is earned only on the funded portion of this commitment.
(g)This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings.
(h)This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of June 30, 2019,March 31, 2020, non-qualifying assets totaled 16.7%18.4% of the Company’s total assets.
(i)The PIK portion of the interest rate for HFZ Capital Group, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 0.17% per annum.
(j)This investment represents a note convertible to preferred shares of the borrower.
(k)All of this loan is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(l)(j)This investment represents a note convertible to preferred shares of the borrower.
(k)This is an international company.
(m)(l)This is a demand note with no stated maturity.
(n)(m)This position was on non-accrual status as of June 30, 2019,March 31, 2020, meaning that the Company has ceased accruing interest income on the position. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company’s accounting policies.
(o)(n)This loan is denominated in Great Britain pounds and is translated into U.S. dollars as of the valuation date.
(p)A portion of the PIK interest rate for TRG, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 4.13% per annum.
(q)A portion of this loan (principal of $17,218) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.

14

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

June 30, 2019

(in thousands, except for shares and units)

(r)(o)The Company structures its unitranche secured loans as senior secured loans. The Company obtains security interests in the assets of these portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of a portfolio company. Generally, the Company syndicates a “first out” portion of the loan to an investor and retains a “last out” portion of the loan, in which case the “first out” portion of the loan will generally receive priority with respect to payments of principal, interest and any other amounts due thereunder. Unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans and the Company’s unitranche secured loans will expose the Company to the risks associated with second lien and subordinated loans and may limit the Company’s recourse or ability to recover collateral upon a portfolio company’s bankruptcy. Unitranche secured loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche secured loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In many cases the Company, together with its affiliates, are the sole or majority lender of these unitranche secured loans, which can afford the Company additional influence with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.
(s)(p)A portion of this loan (principal of $9,258) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(t)(q)A portion of this loan (principal of $525) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(u)(r)Represents less than 5% ownership of the portfolio company’s voting securities.
(v)(s)Ownership of certain equity investments may occur through a holding company or partnership.
(w)(t)Represents a non-income producing security.
(x)(u)As of March 31, 2020, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $16.
(v)As defined in the 1940 Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns 5% or more of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).
(y)(w)A portion of this loan (principal of $5,061)$5,390) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(z)The PIK portion of the interest rate for Incipio Technologies, Inc. is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 0.22% per annum.
(aa)(x)A portion of this loan (principal of $46)$49) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ab)(y)A portion of this loan (principal of $1,015) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ac)(z)A portion of this loan (principal of $1,938) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ad)(aa)As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” of and to “Control” this portfolio company as it owns more than 25% in company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control.

n/a-a - not applicable

 

See Notes to Consolidated Financial Statements.

12

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2019

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Non-Controlled/Non-Affiliate Company Investments                          
Senior Secured Loans                          
Automotive                          
Hastings Manufacturing Company L+8.25% 10.05% 4/24/2018 4/24/2023   2,812  $2,771  $2,705   1.0%
Magneto & Diesel Acquisition, Inc. L+5.50% 7.30% 12/18/2018 12/18/2023   4,950   4,877   4,957   2.0%
Magneto & Diesel Acquisition, Inc. (Revolver)(f) L+5.50% 7.30% 12/18/2018 12/18/2023   500   125   125   0.1%
             8,262   7,773   7,787   3.1%
Banking, Finance, Insurance & Real Estate                          
777 SPV I LLC (Delayed Draw)(g) (h) L+8.50% 10.30% 4/15/2019 4/14/2023   5,325   5,267   5,341   2.1%
Echelon Funding I, LLC(h) L+7.50% 9.28% 12/31/2019 1/11/2021   2,205   2,172   2,204   0.9%
Echelon Funding I, LLC (Delayed Draw)(f) (g) (h) L+7.50% 9.19% 2/24/2017 1/11/2021   14,175   10,200   10,197   4.1%
HFZ Capital Group, LLC(h) L+10.00% 12.10% 10/20/2017 11/25/2020   18,000   17,991   17,995   7.2%
HFZ Member RB Portfolio, LLC(h) L+12.00% 14.10% 10/30/2018 10/29/2021   9,780   9,765   9,765   3.9%
Kudu Investment Holdings, LLC(h) L+6.25% 8.18% 12/23/2019 12/23/2025   5,500   5,404   5,404   2.2%
Kudu Investment Holdings, LLC (Delayed Draw)(f) (g) (h) L+6.25% 8.18% 12/23/2019 12/23/2025   3,667   —   —   0.0%
Kudu Investment Holdings, LLC (Revolver)(f) (h) L+6.25% 8.18% 12/23/2019 12/23/2025   482   —   —   0.0%
Liftforward SPV II, LLC(h) L+10.75% 12.55% 11/10/2016 11/10/2020   3,240   3,235   3,240   1.3%
PKS Holdings, LLC(h) L+14.25% 15.94% 11/30/2017 11/30/2022   1,645   1,512   1,656   0.7%
PKS Holdings, LLC (Revolver)(f) (h) L+14.25% 15.94% 11/30/2017 11/30/2022   80   —   —   0.0%
TCP-NG (U.S.), LLC(h) L+7.25% 9.21% 8/23/2019 8/22/2024   2,925   2,880   2,919   1.2%
TCP-NG (U.S.), LLC (Revolver)(f) (h) L+7.25% 9.21% 8/23/2019 8/22/2024   180   —   —   0.0%
             67,204   58,426   58,721   23.6%
Beverage, Food & Tobacco                          
California Pizza Kitchen, Inc. L+6.00% 7.91% 8/19/2016 8/23/2022   6,772   6,737   5,910   2.4%
Toojay's Management LLC L+5.50% 7.30% 10/26/2018 10/26/2022   3,465   3,413   3,472   1.4%
Toojay's Management LLC L+5.50% 7.30% 10/26/2018 10/26/2022   476   476   476   0.2%
Toojay's Management LLC (Revolver)(f) L+5.50% 7.30% 10/26/2018 10/26/2022   318   239   238   0.1%
             11,031   10,865   10,096   4.1%
Chemicals, Plastics & Rubber                          
Midwest Composite Technologies, LLC(i) L+6.50% 8.30% 12/2/2019 8/31/2023   14,962   14,667   14,980   6.0%
Midwest Composite Technologies, LLC L+6.50% 8.30% 8/31/2018 8/31/2023   889   876   890   0.4%
Midwest Composite Technologies, LLC (Delayed Draw)(f) (g) L+6.50% 8.30% 8/31/2018 8/31/2023   510   60   60   0.0%
Midwest Composite Technologies, LLC (Revolver)(f) L+6.50% 8.30% 8/31/2018 8/31/2023   90   —   —   0.0%
Valudor Products, LLC L+7.50% 9.30% 6/18/2018 6/19/2023   1,563   1,539   1,522   0.6%
Valudor Products, LLC(j) L+7.50% 9.30% 6/18/2018 6/19/2023   211   206   205   0.1%
Valudor Products, LLC (Revolver)(f) L+9.50% 11.30% 6/18/2018 6/19/2023   818   325   318   0.1%
             19,043   17,673   17,975   7.2%
Construction & Building                          
Cali Bamboo, LLC L+7.00% 8.80% 7/10/2015 7/10/2020   7,855   7,822   7,602   3.0%
Cali Bamboo, LLC (Revolver)(f) L+7.00% 8.80% 7/10/2015 7/10/2020   2,165   930   900   0.4%
Dude Solutions Holdings, Inc. L+7.00% 8.80% 6/14/2019 6/13/2025   10,000   9,787   9,970   4.0%
Dude Solutions Holdings, Inc. (Revolver)(f) L+7.00% 8.80% 6/14/2019 6/13/2025   1,304   —   —   0.0%
             21,324   18,539   18,472   7.4%
Consumer Goods: Durable                          
Nova Wildcat Amerock, LLC L+5.75% 7.55% 10/12/2018 10/12/2023   9,182   9,033   9,138   3.7%
Nova Wildcat Amerock, LLC (Revolver)(f) L+5.75% 7.55% 10/12/2018 10/12/2023   931   —   —   0.0%
Parterre Flooring & Surface Systems, LLC(i) L+9.00% 10.80% 8/22/2017 8/22/2022   8,550   8,448   7,486   3.0%
Parterre Flooring & Surface Systems, LLC (Revolver) L+9.00% 10.80% 8/22/2017 8/22/2022   696   696   609   0.2%
             19,359   18,177   17,233   6.9%
Consumer Goods: Non-Durable                          
Quirch Foods Holdings, LLC L+6.00% 7.79% 2/14/2019 12/19/2025   1,980   1,962   1,980   0.8%
             1,980   1,962   1,980   0.8%
Energy: Oil & Gas                          
BJ Services, LLC L+7.00% 8.91% 1/28/2019 1/3/2023   4,331   4,296   4,306   1.7%
             4,331   4,296   4,306   1.7%
Environmental Industries                          
StormTrap, LLC L+5.50% 7.30% 12/10/2018 12/8/2023   7,920   7,804   7,609   3.0%
StormTrap, LLC (Revolver)(f) L+5.50% 7.30% 12/10/2018 12/8/2023   432   —   —   0.0%
Synergy Environmental Corporation(i) L+8.00% 9.80% 4/29/2016 9/30/2021   2,893   2,869   2,884   1.2%
Synergy Environmental Corporation(i) L+8.00% 9.80% 4/29/2016 9/30/2021   484   479   482   0.2%
Synergy Environmental Corporation L+8.00% 9.80% 4/29/2016 9/30/2021   827   827   824   0.3%
Synergy Environmental Corporation (Revolver)(f) L+8.00% 9.80% 4/29/2016 9/30/2021   671   203   202   0.1%
             13,227   12,182   12,001   4.8%

13

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2019

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value (d)		  % of Net
Assets(e)		 
Healthcare & Pharmaceuticals                          
American Optics Holdco, Inc.(h) (k) L+7.00% 8.80% 9/13/2017 9/13/2022   4,210  $ 4,159  $4,185   1.7%
American Optics Holdco, Inc.(h) (k) L+7.00% 8.80% 9/13/2017 9/13/2022   1,637   1,614  1,627   0.7%
American Optics Holdco, Inc. (Revolver)(f) (h) (k) L+7.00% 8.80% 9/13/2017 9/13/2022   440   —   —   0.0%
American Optics Holdco, Inc. (Revolver)(f) (h) (k) L+7.00% 8.80% 9/13/2017 9/13/2022   440   —   —   0.0%
Apotheco, LLC L+5.50% 7.30% 4/8/2019 4/8/2024   3,482   3,420   3,482   1.4%
Apotheco, LLC (Delayed Draw)(f) (g) L+5.50% 7.30% 4/8/2019 4/8/2024   1,647   —   —   0.0%
Apotheco, LLC (Revolver)(f) L+5.50% 7.30% 4/8/2019 4/8/2024   909   341   341   0.1%
Familia Dental Group Holdings, LLC(i) L+8.75% 9.80% Cash/
0.75% PIK		  4/8/2016 4/8/2021   5,019   4,993   4,726   1.9%
Familia Dental Group Holdings, LLC L+8.75% 9.80% Cash/
0.75% PIK		  4/8/2016 4/8/2021   483   483   455   0.2%
Familia Dental Group Holdings, LLC (Revolver)(f) L+8.75% 9.80% Cash/
0.75% PIK		  4/8/2016 4/8/2021   573   372   351   0.1%
Rockdale Blackhawk, LLC (DIP Facility) n/a 15.10% 8/30/2018 n/a(l)   198   198   198   0.1%
Rockdale Blackhawk, LLC (DIP Facility) n/a 15.10% 8/6/2018 n/a(l)  8,877   8,877   10,169   4.1%
Rockdale Blackhawk, LLC L+13.00% 14.80%(m) 3/31/2015 3/31/2020   10,923   10,465   19,171   7.7%
             38,838   34,922   44,705   18.0%
High Tech Industries                          
Host Analytics, Inc. L+6.00% 7.69% 12/28/2018 12/28/2023   9,500   9,340   9,519   3.8%
Host Analytics, Inc. (Revolver)(f) L+6.00% 7.69% 12/28/2018 12/28/2023   442   —   —   0.0%
Mindbody, Inc. L+7.00% 8.79% 2/15/2019 2/14/2025   6,333   6,223   6,311   2.5%
Mindbody, Inc. (Revolver)(f) L+7.00% 8.79% 2/15/2019 2/14/2025   667   —   —   0.0%
Newforma, Inc.(i) L+5.50% 7.46% 6/30/2017 6/30/2022   13,251   13,139   13,251   5.3%
Newforma, Inc. (Revolver)(f) L+5.50% 7.46% 6/30/2017 6/30/2022   1,250   —   —   0.0%
Prototek Sheetmetal Fabrication, LLC L+7.50% 9.30% 12/11/2017 12/12/2022   3,360   3,316   3,335   1.3%
Prototek Sheetmetal Fabrication, LLC L+7.50% 9.30% 6/27/2019 12/12/2022   1,596   1,568   1,584   0.6%
Prototek Sheetmetal Fabrication, LLC L+7.50% 9.30% 12/11/2017 12/12/2022   2,295   2,295   2,277   0.9%
Prototek Sheetmetal Fabrication, LLC (Revolver)(f) L+7.50% 9.30% 12/11/2017 12/12/2022   233   —   —   0.0%
Recorded Future, Inc. L+6.75% 8.55% 7/3/2019 7/3/2025   7,333   7,193   7,331   3.0%
Recorded Future, Inc. (Delayed Draw)(f) (g) L+6.75% 8.55% 7/3/2019 7/3/2025   587   —   —   0.0%
Recorded Future, Inc. (Revolver)(f) L+6.75% 8.55% 7/3/2019 7/3/2025   880   —   —   0.0%
RPL Bidco Limited  (h) (k) (n) L+7.50% 8.28% 11/9/2017 11/9/2023   14,225   14,062   14,225   5.7%
RPL Bidco Limited(h) (k) (n) L+7.50% 8.28% 5/22/2018 11/9/2023   1,723   1,639   1,723   0.7%
RPL Bidco Limited (Revolver)(f) (h) (k) (n) L+7.50% 8.28% 11/9/2017 11/9/2023   530   —   —   0.0%
WillowTree, LLC L+5.50% 7.30% 10/9/2018 10/9/2023   7,900   7,788   7,916   3.2%
WillowTree, LLC (Revolver)(f) L+5.50% 7.30% 10/9/2018 10/9/2023   1,000   945   945   0.4%
             73,105   67,508   68,417   27.4%
Media: Advertising, Printing & Publishing                          
AdTheorent, Inc. L+8.50% 10.19% 12/22/2016 12/22/2021   3,398   3,367   3,393   1.4%
Destination Media, Inc.(i) L+5.50% 7.30% 4/7/2017 4/7/2022   4,725   4,687   4,772   1.9%
Destination Media, Inc. (Revolver)(f) L+5.50% 7.30% 4/7/2017 4/7/2022   542   —   —   0.0%
MC Sign Lessor Corp. L+7.00% 8.69% 12/22/2017 8/30/2024   15,720   15,639   15,674   6.3%
MC Sign Lessor Corp. (Revolver)(f) L+7.00% 8.69% 12/22/2017 8/30/2024   3,490   1,047   1,047   0.4%
             27,875   24,740   24,886   10.0%
Media: Broadcasting & Subscription                          
Vice Group Holding, Inc. L+12.00% 5.92% Cash/
8.00% PIK		  5/2/2019 11/2/2022   1,250   1,240   1,251   0.5%
Vice Group Holding, Inc. L+12.00% 5.92% Cash/
8.00% PIK		  11/4/2019 11/2/2022   240   235   240   0.1%
Vice Group Holding, Inc. (Delayed Draw)(f) (g) L+12.00% 13.92% 5/2/2019 11/2/2022   400   —   —   0.0%
Vice Group Holding, Inc. (Delayed Draw)(f) (g) L+12.00% 13.92% 5/2/2019 11/2/2022   160   —   —   0.0%
             2,050   1,475   1,491   0.6%
Media: Diversified & Production                          
Attom Intermediate Holdco, LLC L+5.75% 7.55% 1/4/2019 1/4/2024   1,980   1,947   1,971   0.8%
Attom Intermediate Holdco, LLC (Revolver)(f) L+5.75% 7.55% 1/4/2019 1/4/2024   320   —   —   0.0%
Crownpeak Technology, Inc. L+6.25% 7.94% 2/28/2019 2/28/2024   4,000   3,931   4,011   1.6%
Crownpeak Technology, Inc. (Delayed Draw)(f) (g) L+6.25% 7.94% 2/28/2019 2/28/2024   333   60   60   0.0%
Crownpeak Technology, Inc. (Revolver)(f) L+6.25% 7.94% 2/28/2019 2/28/2024   167   —   —   0.0%
             6,800   5,938   6,042   2.4%
Retail                          
Bluestem Brands, Inc. L+7.50% 9.30% 6/26/2015 11/6/2020   2,275   2,270   1,707   0.7%
Forman Mills, Inc.(i) L+9.50% 9.30% Cash/
2.00% PIK		  10/4/2016 10/4/2021   8,202   8,133   5,885   2.4%
LuLu's Fashion Lounge, LLC L+9.00% 10.80% 8/21/2017 8/29/2022   4,156   4,082   4,073   1.6%
The Worth Collection, Ltd.(i) L+8.50% 

6.05% Cash/

4.25% PIK

(m)  9/29/2016 9/29/2021   10,587   10,248   1,034   0.4%
             25,220   24,733   12,699   5.1%

14

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2019

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Services: Business                          
APCO Worldwide, Inc. L+8.00% 9.80% 6/30/2017 6/30/2022   4,625  $4,572  $4,590   1.8%
Arcserve (USA), LLC L+6.00% 7.91% 5/1/2019 5/1/2024   4,755   4,668   4,785   1.9%
Atlas Sign Industries of FLA, LLC(i) L+11.50% 12.30% Cash/
1.00% PIK		  5/14/2018 5/15/2023   3,527   3,332   3,255   1.3%
Burroughs, Inc.(i) L+7.50% 9.19% 12/22/2017 12/22/2022   5,757   5,698   5,635   2.3%
Burroughs, Inc. (Revolver)(f) L+7.50% 9.19% 12/22/2017 12/22/2022   1,219   1,129   1,129   0.5%
Certify, Inc. L+5.75% 7.55% 2/28/2019 2/28/2024   9,000   8,882   8,938   3.6%
Certify, Inc. (Delayed Draw)(f) (g) L+5.75% 7.55% 2/28/2019 2/28/2024   1,227   614   609   0.2%
Certify, Inc. (Revolver)(f) L+5.75% 7.55% 2/28/2019 2/28/2024   409   61   61   0.0%
HaystackID, LLC L+6.50% 8.30% 1/14/2019 1/12/2024   4,950   4,867   4,965   2.0%
HaystackID, LLC (Revolver)(f) L+6.50% 8.30% 1/14/2019 1/12/2024   403   40   40   0.0%
HS4 Acquisitionco, Inc. L+6.75% 8.71% 7/9/2019 7/9/2025   10,050   9,859   10,010   4.0%
HS4 Acquisitionco, Inc. (Revolver)(f) L+6.75% 8.54% 7/9/2019 7/9/2025   817   123   122   0.0%
IT Global Holding, LLC L+8.50% 10.30% 11/15/2018 11/10/2023   10,237  10,066   10,160   4.1%
IT Global Holding, LLC L+8.50% 10.30% 7/19/2019 11/10/2023   3,816   3,743   3,787   1.5%
IT Global Holding, LLC (Revolver) L+8.50% 10.30% 11/15/2018 11/10/2023   875   875   875   0.4%
Kaseya Traverse, Inc. L+6.50% 7.72% Cash/
1.00% PIK		  5/3/2019 5/2/2025   6,026   5,913   6,011   2.5%
Kaseya Traverse, Inc. (Delayed Draw)(f) (g) L+6.50% 7.69% Cash/
1.00% PIK		  5/3/2019 5/2/2025   723   94   94   0.0%
Kaseya Traverse, Inc. (Revolver)(f) L+6.50% 8.30% 5/3/2019 5/2/2025   506   289   289   0.1%
Madison Logic, Inc.(i) L+8.00% 9.80% 11/30/2016 11/30/2021   9,621   9,531   9,621   3.9%
Madison Logic, Inc. (Revolver)(f) L+8.00% 9.80% 11/30/2016 11/30/2021   988   —   —   0.0%
RedZone Robotics, Inc. L+8.75% 8.55% Cash/
2.00% PIK		  6/1/2018 6/5/2023   646   636   596   0.2%
RedZone Robotics, Inc. (Revolver)(f) L+6.75% 8.55% 6/1/2018 6/5/2023   158   —   —   0.0%
Security Services Acquisition Sub Corp.(i) L+6.00% 7.74% 2/15/2019 2/15/2024   3,474   3,416   3,479   1.4%
Security Services Acquisition Sub Corp. (Delayed Draw)(f) (g) (i) L+6.00% 7.74% 2/15/2019 2/15/2024   2,491   1,762   1,765   0.7%
Security Services Acquisition Sub Corp. (Delayed Draw)(f) (g) (i) L+6.00% 7.74% 2/15/2019 2/15/2024   2,186   1,065   1,067   0.4%
Security Services Acquisition Sub Corp. (Revolver)(f) L+6.00% 7.74% 2/15/2019 2/15/2024   1,563   104   104   0.0%
TRP Construction Group, LLC(i) L+7.00% 8.80% 10/5/2017 10/5/2022   7,863   7,767   7,815   3.1%
TRP Construction Group, LLC L+7.00% 8.80% 9/5/2018 10/5/2022   6,682   6,682   6,642   2.7%
TRP Construction Group, LLC (Revolver)(f) L+7.00% 8.80% 10/5/2017 10/5/2022   2,133   —   —   0.0%
VPS Holdings, LLC L+7.00% 8.80% 10/5/2018 10/4/2024   4,537   4,459   4,448   1.8%
VPS Holdings, LLC L+7.00% 8.80% 10/5/2018 10/4/2024   3,700   3,700   3,627   1.5%
VPS Holdings, LLC (Revolver)(f) L+7.00% 8.80% 10/5/2018 10/4/2024   1,000   100   100   0.0%
             115,964   104,047   104,619   41.9%
Services: Consumer                          
Mammoth Holdings, LLC L+6.00% 8.10% 10/16/2018 10/16/2023   1,980   1,948   1,984   0.8%
Mammoth Holdings, LLC L+6.00% 7.79% 10/16/2018 10/16/2023   4,156   4,156   4,165   1.7%
Mammoth Holdings, LLC (Revolver)(f) L+6.00% 8.10% 10/16/2018 10/16/2023   500   —   —   0.0%
PeopleConnect Intermediate, LLC L+6.50% 8.45% 7/1/2015 7/1/2020   4,030   4,019   4,030   1.6%
PeopleConnect Intermediate, LLC L+12.50% 14.45% 7/1/2015 7/1/2020   4,515   4,500   4,515   1.8%
PeopleConnect Intermediate, LLC (Revolver)(f) L+9.50% 11.45% 7/1/2015 7/1/2020   236   —   —   0.0%
             15,417   14,623   14,694   5.9%
Wholesale                          
Nearly Natural, Inc.(i) L+7.00% 8.96% 12/15/2017 12/15/2022   6,860   6,771   6,771   2.7%
Nearly Natural, Inc. (Delayed Draw)(f) (g) (i) L+7.00% 8.96% 8/28/2019 12/15/2022   1,924   349   344   0.1%
Nearly Natural, Inc. (Revolver)(f) L+7.00% 8.96% 12/15/2017 12/15/2022   1,522   761   761   0.3%
             10,306   7,881   7,876   3.1%
Total Non-Controlled/Non-Affiliate Senior Secured Loans            481,336   435,760   434,000   174.0%

 15 

 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 20182019

(in thousands, except for shares and units)

 

Portfolio Company(a) Spread
Above
 Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of Net
Assets(d)		 
Non-Controlled/Non-Affiliate Company Investments                        
Senior Secured Loans                        
Automotive                        
Hastings Manufacturing Company L+8.25%  10.76% 4/24/2023  2,944  $2,891  $2,883   1.1%
Hastings Manufacturing Company (Delayed Draw)(e) (f) L+8.25%  10.76% 4/24/2023  899   —   —   0.0%
Magneto & Diesel Acquisition, Inc. L+5.50%  8.01% 12/18/2023  5,000   4,913   4,913   1.9%
Magneto & Diesel Acquisition, Inc. (Revolver)(e) L+5.50%  8.01% 12/18/2023  500   83   82   0.0%
           9,343   7,887   7,878   3.0%
Banking, Finance, Insurance & Real Estate                        
Echelon Funding I, LLC (Delayed Draw) (e) (f) (g) L+7.50%  9.85% 2/24/2021  15,750   15,253   15,146   5.9%
HFZ Capital Group, LLC(g) L+10.17%  12.39% Cash/
0.17% PIK		(h)  10/21/2019  18,000   17,819   18,009   7.0%
HFZ Member RB Portfolio LLC (Delayed Draw) (e) (f) (g) L+12.00%  14.54% 10/29/2021  9,000   3,708   3,706   1.4%
Liftforward SPV II, LLC(e) (g) L+10.75%  13.27% 11/10/2020  10,000   4,088   4,132   1.6%
PKS Holdings, LLC(g) L+10.00%  12.35% 11/30/2022  1,755   1,605   1,675   0.6%
PKS Holdings, LLC (Revolver)(e) (g) L+10.00%  12.35% 11/30/2022  80   —   —   0.0%
           54,585   42,473   42,668   16.5%
Beverage, Food & Tobacco                        
California Pizza Kitchen, Inc. L+6.00%  8.53% 8/23/2022  6,843   6,793   6,654   2.6%
Toojay's Management LLC L+5.50%  8.01% 10/26/2022  3,500   3,433   3,497   1.4%
Toojay's Management LLC (Delayed Draw)(e) (f) L+5.50%  8.01% 10/26/2022  477   —   —   0.0%
Toojay's Management LLC (Revolver)(e) L+5.50%  8.01% 10/26/2022  159   79   79   0.0%
           10,979   10,305   10,230   4.0%
Chemicals, Plastics & Rubber                        
Midwest Composite Technologies, LLC L+6.75%  9.26% 8/31/2023  898   881   907   0.4%
Midwest Composite Technologies, LLC (Delayed Draw)(e) (f) L+6.75%  9.26% 8/31/2023  600   —   —   0.0%
Midwest Composite Technologies, LLC (Revolver)(e) L+6.75%  9.26% 8/31/2023  90   —   —   0.0%
Valudor Products LLC L+7.50%  10.01% 6/19/2023  1,604   1,575   1,600   0.6%
Valudor Products LLC(i) L+7.50%  10.01% 6/19/2023  211   205   210   0.1%
Valudor Products LLC (Revolver)(e) L+9.50%  12.01% 6/19/2023  818   606   607   0.2%
           4,221   3,267   3,324   1.3%

Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Unitranche Secured Loans(o)                          
Chemicals, Plastics & Rubber                          
MFG Chemical, LLC(i) L+6.00% 7.80% 6/23/2017 6/23/2022   10,477  $10,388  $10,173   4.1%
MFG Chemical, LLC L+6.00% 7.80% 3/15/2018 6/23/2022   1,121   1,121   1,088   0.4%
             11,598   11,509   11,261   4.5%
Construction & Building                          
Inland Pipe Rehabilitation LLC L+5.50% 7.46% 12/27/2018 12/26/2024   12,375   12,156   12,415   5.0%
             12,375   12,156   12,415   5.0%
Consumer Goods: Durable                          
RugsUSA, LLC L+6.50% 8.45% 5/2/2018 4/28/2023   4,000   3,971   4,004   1.6%
             4,000   3,971   4,004   1.6%
Healthcare & Pharmaceuticals                          
Priority Ambulance, LLC(p) L+6.50% 8.46% 7/18/2018 4/12/2022   10,015   10,015   10,015   4.0%
Priority Ambulance, LLC(q) L+6.50% 8.46% 4/12/2017 4/12/2022   1,253   1,234   1,256   0.5%
Priority Ambulance, LLC (Delayed Draw)(f) (g) L+6.50% 8.46% 12/13/2018 4/12/2022   2,480   689   691   0.3%
             13,748   11,938   11,962   4.8%
High Tech Industries                          
Energy Services Group, LLC L+8.42% 10.22% 5/4/2017 5/4/2022   4,170   4,139   4,154   1.6%
Energy Services Group, LLC(h) (n) L+8.42% 9.42% 5/4/2017 5/4/2022   4,979   4,941   4,965   2.0%
Energy Services Group, LLC L+8.42% 10.22% 5/4/2017 5/4/2022   1,187   1,172   1,182   0.5%
Mnine Holdings, Inc. P+7.75% 12.50% 11/2/2018 11/2/2023   7,940   7,809   7,919   3.2%
             18,276   18,061   18,220   7.3%
Total Non-Controlled/Non-Affiliate Unitranche Secured Loans            59,997   57,635   57,862   23.2%
                           
Junior Secured Loans                          
Beverage, Food & Tobacco                          
CSM Bakery Supplies, LLC L+7.75% 9.78% 5/23/2013 7/5/2021   5,792   5,792   5,538   2.2%
             5,792   5,792   5,538   2.2%
High Tech Industries                          
Micro Holdings Corp. L+7.50% 9.30% 8/16/2017 8/18/2025   3,000   2,974   3,009   1.2%
             3,000   2,974   3,009   1.2%
Media: Diversified & Production                          
The Octave Music Group, Inc. L+8.25% 9.95% 5/29/2015 5/27/2022   4,355   4,325   4,355   1.8%
             4,355   4,325   4,355   1.8%
Services: Consumer                          
Education Corporation of America L+11.00% 7.46% Cash/
5.50% PIK		(m)  9/3/2015 3/31/2020   833   831   774   0.3%
             833   831   774   0.3%
Total Non-Controlled/Non-Affiliate Junior Secured Loans            13,980  $13,922  $13,676   5.5%

 16 

 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 20182019

(in thousands, except for shares and units)

 

Portfolio Company(a) Spread
Above
 Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of Net
Assets(d)		 
Construction & Building                        
Cali Bamboo, LLC L+6.25%  8.76% 7/10/2020  5,264  $5,231  $5,264   2.0%
Cali Bamboo, LLC (Revolver)(e) L+6.25%  8.76% 7/10/2020  2,165   1,689   1,689   0.7%
Construction Supply Acquisition, LLC L+6.00%  8.62% 6/30/2023  4,791   4,767   4,779   1.8%
Cornerstone Detention Products, Inc.(j) L+11.83%  11.01% Cash/
3.33% PIK		(k)  4/8/2019  3,350   3,346   3,350   1.3%
Cornerstone Detention Products, Inc. (Revolver)(e) L+8.50%  11.01% 4/8/2019  1,000   200   200   0.1%
Inland Pipe Rehabilitation LLC L+5.50%  8.29% 12/26/2024  12,500   12,251   12,250   4.7%
Inland Pipe Rehabilitation LLC (Revolver)(e) L+5.50%  7.87% 12/26/2024  4,118   2,305   2,259   0.9%
           33,188   29,789   29,791   11.5%
Consumer Goods: Durable                        
Nova Wildcat Amerock, LLC L+5.75%  8.26% 10/12/2023  9,500   9,317   9,372   3.6%
Nova Wildcat Amerock, LLC (Revolver)(e) L+5.75%  8.26% 10/12/2023  931   292   288   0.1%
Parterre Flooring & Surface Systems, LLC(l) L+7.25%  9.76% 8/22/2022  11,250   11,076   10,879   4.2%
Parterre Flooring & Surface Systems, LLC (Revolver)  (e) L+7.25%  9.76% 8/22/2022  2,400   696   671   0.3%
           24,081   21,381   21,210   8.2%
Energy: Oil & Gas                        
Landpoint, LLC L+12.75%  

13.01% Cash/

2.25% PIK

(m)  12/20/2019  2,256   2,253   2,244   0.9%
Landpoint, LLC (Revolver)(e) L+10.50%  13.01% 12/20/2019  313   274   272   0.1%
           2,569   2,527   2,516   1.0%
Environmental Industries                        
StormTrap, LLC L+5.50%  8.01% 12/8/2023  8,000   7,861   7,860   3.0%
StormTrap, LLC (Revolver)(e) L+5.50%  8.01% 12/8/2023  432   —   —   0.0%
Synergy Environmental Corporation(l) L+6.50%  9.01% 4/29/2021  2,932   2,893   2,919   1.1%
Synergy Environmental Corporation(l) L+6.50%  9.01% 4/29/2021  490   484   488   0.2%
Synergy Environmental Corporation (Delayed Draw)(e) (f) L+6.50%  9.01% 4/29/2021  1,320   837   834   0.3%
Synergy Environmental Corporation (Revolver)(e) L+6.50%  9.01% 4/29/2021  671   94   94   0.0%
           13,845   12,169   12,195   4.6%
Healthcare & Pharmaceuticals                        
American Optics Holdco, Inc.(g) (n) L+8.00%  10.51% 9/13/2022  4,076   4,012   4,127   1.6%
American Optics Holdco, Inc.(g) (n) L+8.00%  10.51% 9/13/2022  750   738   759   0.3%
American Optics Holdco, Inc. (Revolver)(e) (g) (n) L+8.00%  10.51% 9/13/2022  440   242   242   0.1%
American Optics Holdco, Inc. (Revolver)(e) (g) (n) L+8.00%  10.51% 9/13/2022  440   165   165   0.1%
Familia Dental Group Holdings, LLC(l) L+8.00%  10.51% 4/8/2021  5,053   5,011   5,083   2.0%
Familia Dental Group Holdings, LLC L+8.00%  10.51% 4/8/2021  486   486   489   0.2%
Familia Dental Group Holdings, LLC (Revolver)(e) L+8.00%  10.51% 4/8/2021  573   229   229   0.1%
Rockdale Blackhawk, LLC (DIP Facility) n/a  15.10% n/a(o)  226   226   226   0.1%
Rockdale Blackhawk, LLC (DIP Facility) n/a  15.10% n/a(o)  8,877   8,877   8,877   3.4%
Rockdale Blackhawk, LLC L+13.00%  15.51%(p) 3/31/2020  10,923   10,465   8,667   3.3%
           31,844   30,451   28,864   11.2%
Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Equity Securities  (r) (s)                          
Banking, Finance, Insurance & Real Estate                          
PKS Holdings, LLC (warrant to purchase up to 0.8% of the equity)(h) — —(t) 11/30/2017 11/30/2027   —  $ 116  $ 14   0.0%
                 116   14   0.0%
Chemicals, Plastics & Rubber                          
Valudor Products, LLC (501,014 Class A-1 units) n/a 10.00% PIK  6/18/2018 —   —   501   273   0.1%
                 501   273   0.1%
High Tech Industries                          
Answers Finance, LLC (76,539 shares of common stock) — —(t) 4/14/2017 —   —   2,344   52   0.0%
Host Analytics, Inc. (441,860 Class A units) — —(t) 12/28/2018 —   —   442   603   0.3%
Recorded Future, Inc. (80,080 Class A units)(u) — —(t) 7/3/2019 —   —   80   84   0.0%
                 2,866   739   0.3%
Media: Advertising, Printing & Publishing                          
AdTheorent, Inc. (128,866 Class A voting units) — —(t) 12/22/2016 —   —   129   395   0.2%
MC Sign Lessor Corp. (686 shares of common units) — —(t) 8/30/2019 —   —   872   864   0.3%
InMobi Pte, Ltd. (warrant to purchase up to 2.8% of the equity)(h) (k) — —(t) 9/18/2015 9/18/2025   —   —   188   0.1%
                 1,001   1,447   0.6%
Media: Diversified & Production                          
Attom Intermediate Holdco, LLC (260,000 Class A units) — —(t) 1/4/2019 —   —   260   255   0.1%
                 260   255   0.1%
Retail                          
The Tie Bar Operating Company, LLC - Class A Preferred Units (1,275 units) — —  6/25/2013 —   —   87   63   0.0%
The Tie Bar Operating Company, LLC - Class B Preferred Units (1,275 units) — —  6/25/2013 —   —   —   —   0.0%
                 87   63   0.0%
Services: Business                          
APCO Worldwide, Inc. (100 Class A voting common stock) — —(t) 11/1/2017 —   —   395   281   0.1%
Atlas Sign Industries of FLA, LLC (warrant to purchase up to 0.8% of the equity) — —(t) 5/14/2018 5/14/2026   —   125   84   0.0%
                 520   365   0.1%
Services: Consumer                          
Education Corporation of America - Series G Preferred Stock (8,333 shares) n/a 12.00% PIK(m) 9/3/2015 —   —   7,492   5,117   2.1%
                 7,492   5,117   2.1%
Wholesale                          
Nearly Natural, Inc. (152,174 Class A units) — —(t) 12/15/2017 —   —   152   148   0.1%
                 152   148   0.1%
Total Non-Controlled/Non-Affiliate Equity Securities                12,995   8,421   3.4%
Total Non-Controlled/Non-Affiliate Company Investments               $520,312  $513,959   206.1%
                           
Non-Controlled Affiliate Company Investments(v)                          
Senior Secured Loans                          
Banking, Finance, Insurance & Real Estate                          
American Community Homes, Inc. L+10.00% 11.80% PIK  7/22/2014 12/31/2020   8,830  $8,821  $6,764   2.7%
American Community Homes, Inc. L+14.50% 16.30% PIK  7/22/2014 12/31/2020   5,599   5,594   4,289   1.7%
American Community Homes, Inc. L+10.00% 11.80% PIK  3/17/2016 12/31/2020   668   667   512   0.2%
American Community Homes, Inc. L+10.00% 11.80% PIK  5/24/2017 12/31/2020   535   534   410   0.2%
American Community Homes, Inc. L+14.50% 16.30% PIK  5/24/2017 12/31/2020   301   300   230   0.1%
American Community Homes, Inc. L+8.00% 9.80% PIK  8/10/2018 12/31/2020   1,922   1,922   1,472   0.6%
American Community Homes, Inc. L+8.00% 9.80% PIK  3/29/2019 12/31/2020   3,603   3,603   2,760   1.1%
American Community Homes, Inc. L+8.00% 9.80% PIK  9/30/2019 12/31/2020   14   14   11   0.0%
American Community Homes, Inc. L+8.00% 9.80% PIK  12/30/2019 12/31/2020   1,186   1,186   1,168   0.5%
             22,658   22,641   17,616   7.1%
Containers, Packaging & Glass                          
Summit Container Corporation(i) L+8.00% 9.80% 12/5/2013 1/6/2021   3,259   3,269   2,971   1.1%
Summit Container Corporation (Revolver)(f) (i) L+8.00% 9.80% 6/15/2018 1/6/2021   7,300   5,475   5,406   2.2%
             10,559   8,744   8,377   3.3%
Healthcare & Pharmaceuticals                          
SHI Holdings, Inc.(i) L+10.25% 12.05% PIK  7/10/2014 12/31/2020   2,899   2,897   2,459   1.0%
SHI Holdings, Inc. (Revolver)(f) L+10.25% 12.05% PIK  7/10/2014 12/31/2020   4,667   4,240   3,601   1.4%
             7,566   7,137   6,060   2.4%
Retail                          
Luxury Optical Holdings Co. L+8.00% 9.80% PIK(m)  9/12/2014 9/30/2020   4,953   4,949   3,457   1.4%
Luxury Optical Holdings Co. (Delayed Draw)(g) L+11.50% 13.30%(m)  9/29/2017 9/30/2020   624   624   620   0.2%
Luxury Optical Holdings Co. (Revolver) L+8.00% 9.80% PIK(m)  9/12/2014 9/30/2020   228   228   159   0.1%
             5,805   5,801   4,236   1.7%
Services: Business                          
Curion Holdings, LLC(i) n/a 14.00% PIK(m)  5/2/2017 5/2/2022   4,226   4,189   3,279   1.3%
Curion Holdings, LLC (Revolver)(f) n/a 14.00% PIK(m)  5/2/2017 5/2/2022   478   451   441   0.2%
             4,704   4,640   3,720   1.5%
Services: Consumer                          
New England College of Business and Finance, LLC (Revolver)(f) L+11.00% 12.69% 6/25/2019 6/30/2021   1,275   1,148   1,148   0.5%
             1,275   1,148   1,148   0.5%
Total Non-Controlled Affiliate Senior Secured Loans            52,567   50,111   41,157   16.5%

 

 17 

 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 20182019

(in thousands, except for shares and units)

 

Portfolio Company(a) Spread
Above
 Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of Net
Assets(d)		 
High Tech Industries                        
Corbett Technology Solutions, Inc.(l) L+7.00%  9.51% 11/8/2021  4,917  $ 4,868  $ 4,956   1.9%
Corbett Technology Solutions, Inc. (Revolver)(e) L+7.00%  9.51% 11/8/2021  867   —   —   0.0%
Energy Services Group, LLC L+8.42%  10.94% 5/4/2022  4,393   4,349   4,404   1.7%
Energy Services Group, LLC(g) (q) L+8.42%  9.42% 5/4/2022  5,046   5,186   5,033   1.9%
Energy Services Group, LLC L+8.42%  10.94% 5/4/2022  1,250   1,235   1,253   0.5%
Host Analytics, Inc. L+6.00%  8.51% 12/28/2023  9,500   9,310   9,310   3.6%
Host Analytics, Inc. (Revolver)(e) L+6.00%  8.51% 12/28/2023  442   —   —   0.0%
Newforma, Inc.(l) L+5.50%  8.31% 6/30/2022  14,813   14,649   14,961   5.8%
Newforma, Inc. (Revolver)(e) L+5.50%  8.31% 6/30/2022  1,250   —   —   0.0%
Prototek Sheetmetal Fabrication, LLC L+7.00%  9.51% 12/12/2022  3,465   3,408   3,451   1.3%
Prototek Sheetmetal Fabrication, LLC (Delayed Draw)(e) (f) L+7.00%  9.51% 12/12/2022  2,329   813   809   0.3%
Prototek Sheetmetal Fabrication, LLC (Revolver)(e) L+7.00%  9.51% 12/12/2022  233   —   —   0.0%
RPL Bidco Limited  (g) (n) (q) L+7.50%  8.39% 11/9/2023  13,774   14,122   13,912   5.4%
RPL Bidco Limited (Delayed Draw)(e) (f) (g) (n) (q) L+7.50%  8.39% 11/9/2023  2,041   —   —   0.0%
RPL Bidco Limited (Revolver)(e) (g) (n) (q) L+7.50%  8.39% 11/9/2023  510   —   —   0.0%
WillowTree, LLC L+5.50%  8.01% 10/9/2023  7,980   7,846   7,972   3.1%
WillowTree, LLC (Revolver)(e) L+5.50%  8.01% 10/9/2023  1,000   480   479   0.2%
           73,810   66,266   66,540   25.7%
Hotels, Gaming & Leisure                        
TRG, LLC L+12.79%  9.85% Cash/
5.29% PIK		(r)  3/31/2021  17,144   17,086   18,636   7.2%
TRG, LLC (CapEx) L+9.50%  9.85% Cash/
2.00% PIK		  3/31/2021  1,367   1,363   1,486   0.6%
TRG, LLC (Revolver)(e) L+9.50%  11.85% 3/31/2021  262   131   142   0.1%
           18,773   18,580   20,264   7.9%
Media: Advertising, Printing & Publishing                        
AdTheorent, Inc. L+8.50%  10.85% 12/22/2021  4,092   4,039   4,098   1.6%
Destination Media, Inc.(l) L+6.50%  9.01% 4/7/2022  7,366   7,289   7,421   2.9%
Destination Media, Inc. (Revolver)(e) L+6.50%  9.01% 4/7/2022  542   —   —   0.0%
MC Sign Lessor Corp. L+7.00%  9.35% 12/22/2022  9,925   9,760   10,024   3.9%
MC Sign Lessor Corp. (Delayed Draw)(e) (f) L+7.00%  9.35% 12/22/2022  2,083   —   —   0.0%
MC Sign Lessor Corp. (Revolver)(e) L+7.00%  9.35% 12/22/2022  625   —   —   0.0%
           24,633   21,088   21,543   8.4%
Portfolio Company(a) Spread
Above
Index(b)		 Interest
Rate		  Acquisition
Date(c)		 Maturity  Principal  Amortized
Cost		  Fair
Value(d)		  % of Net
Assets(e)		 
Unitranche Secured Loans(o)                          
Consumer Goods: Non-Durable                          
Incipio, LLC(w) L+8.72% 10.41% PIK(x)  12/26/2014 8/22/2022   14,573  $14,549  $12,343   5.0%
Incipio, LLC(y) L+8.50% 10.19% PIK  3/9/2018 8/22/2022   3,815   3,815   3,750   1.5%
Incipio, LLC L+8.50% 10.19% PIK  7/6/2018 8/22/2022   1,621   1,621   1,606   0.6%
Incipio, LLC L+8.50% 10.19% PIK  4/17/2019 8/22/2022   692   692   686   0.3%
             20,701   20,677   18,385   7.4%
Total Non-Controlled Affiliate Unitranche Secured Loans            20,701   20,677   18,385   7.4%
                           
Junior Secured Loans                          
Consumer Goods: Non-Durable                          
Incipio, LLC(z) n/a 10.70% PIK(m)  6/18/2018 8/22/2022   3,766   —   —   0.0%
Incipio, LLC(aa) n/a 10.70% PIK(m)  6/18/2018 8/22/2022   7,194   —   —   0.0%
             10,960   —   —   0.0%
Services: Business                          
Curion Holdings, LLC(i) n/a 15.00% PIK(m)  8/17/2018 1/2/2023   1,720   1   —   0.0%
Curion Holdings, LLC(i) n/a 15.00% PIK(m)  8/17/2018 1/2/2023   44   —   —   0.0%
             1,764   1   —   0.0%
Total Non-Controlled Affiliate Junior Secured Loans            12,724   1   —   0.0%
                           
Equity Securities(s) (v)                          
Banking, Finance, Insurance & Real Estate                          
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity) — —(t) 10/9/2014 12/18/2024   —   —   —   0.0%
                 —   —   0.0%
Consumer Goods: Non-Durable                          
Incipio, LLC (1,774 shares of Series C common units) — —(t) 7/6/2018 —   —   —   —   0.0%
                 —   —   0.0%
Containers, Packaging & Glass                          
Summit Container Corporation (warrant to purchase up to 19.5% of the equity) — —(t) 1/6/2014 1/6/2024   —   —   —   0.0%
                 —   —   0.0%
Healthcare & Pharmaceuticals                          
SHI Holdings, Inc. (24 shares of common stock) — —(t) 12/14/2016 —   —   27   —   0.0%
                 27   —   0.0%
Retail                          
Luxury Optical Holdings Co. (86 shares of common stock) — —(t) 9/29/2017 —   —   —   —   0.0%
                 —   —   0.0%
Services: Business                          
Curion Holdings, LLC (58,779 shares of common stock) — —(t) 8/17/2018 —   —   —   —   0.0%
                 —   —   0.0%
Services: Consumer                          
New England College of Business and Finance, LLC (20.8% of units) — —(t) 6/21/2019 —   —   1,458   318   0.1%
                 1,458   318   0.1%
Total Non-Controlled Affiliate Equity Securities                1,485   318   0.1%
Total Non-Controlled Affiliate Company Investments            $72,274  $59,860   24.0%
                           
Controlled Affiliate Company Investments(ab)                          
Equity Securities                          
Investment Funds & Vehicles                          
MRCC Senior Loan Fund I, LLC (50.0% of the equity interests)(h) — —  10/31/2017 —   —  $42,150  $42,412   17.0%
Total Controlled Affiliate Equity Securities                42,150   42,412   17.0%
Total Controlled Affiliate Company Investments               $42,150  $42,412   17.0%
                           
TOTAL INVESTMENTS               $634,736  $616,231   247.1%

 

Derivative Instruments

Foreign currency forward contracts

  Notional Amount  Notional Amount      Unrealized Gain 
Description to be Purchased  to be Sold  Counterparty Settlement Date (Loss) 
Foreign currency forward contract $133  £104  Bannockburn Global Forex, LLC 1/2/2020 $ (5)
Foreign currency forward contract $296  £231  Bannockburn Global Forex, LLC 2/28/2020  (10)
Foreign currency forward contract $35  £27  Bannockburn Global Forex, LLC 3/2/2020  (1)
Foreign currency forward contract $132  £103  Bannockburn Global Forex, LLC 4/1/2020  (5)
Foreign currency forward contract $130  £102  Bannockburn Global Forex, LLC 5/5/2020  (4)
Foreign currency forward contract $295  £230  Bannockburn Global Forex, LLC 5/29/2020  (10)
Foreign currency forward contract $34  £27  Bannockburn Global Forex, LLC 6/1/2020  (1)
Foreign currency forward contract $296  £230  Bannockburn Global Forex, LLC 8/28/2020  (10)
Foreign currency forward contract $35  £28  Bannockburn Global Forex, LLC 9/3/2020  (2)
Foreign currency forward contract $294  £229  Bannockburn Global Forex, LLC 11/30/2020  (10)
Foreign currency forward contract $34  £26  Bannockburn Global Forex, LLC 12/2/2020  (1)
              $(59)

 18 

 

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 20182019

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
 Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of Net
Assets(d)		 
Retail                        
Bluestem Brands, Inc. L+7.50%  10.03% 11/6/2020  2,436  $2,426  $1,575   0.6%
Forman Mills, Inc.(l) L+9.50%  10.01% Cash/
2.00% PIK		 10/4/2021  8,362   8,261   8,149   3.1%
LuLu's Fashion Lounge, LLC L+7.00%  9.52% 8/29/2022  4,531   4,426   4,606   1.8%
The Worth Collection, Ltd.(l) L+8.50%  11.01% 9/29/2021  10,588   10,459   8,639   3.3%
Yandy Holding, LLC L+11.00%  13.51% 9/30/2019  3,643   3,633   3,632   1.4%
Yandy Holding, LLC (Revolver)(e) L+11.00%  13.51% 9/30/2019  907   —   —   0.0%
           30,467   29,205   26,601   10.2%
Services: Business                        
APCO Worldwide, Inc. L+8.00%  10.51% 6/30/2022  4,875   4,802   4,790   2.0%
Atlas Sign Industries of FLA, LLC(l) L+10.50%  13.01% 5/15/2023  3,500   3,305   3,336   1.3%
Burroughs, Inc.(l) L+7.50%  9.85% 12/22/2022  5,888   5,814   5,767   2.2%
Burroughs, Inc. (Revolver)(e) L+7.50%  9.85% 12/22/2022  1,215   975   975   0.4%
First Call Resolution, LLC(l) L+7.00%  9.35% 9/22/2022  4,097   4,042   4,101   1.6%
First Call Resolution, LLC L+7.00%  9.35% 9/22/2022  10,000   9,842   10,010   3.8%
IT Global Holding LLC L+7.00%  9.51% 11/10/2023  10,500   10,294   10,421   4.0%
IT Global Holding LLC (Revolver)(e) L+7.00%  9.51% 11/10/2023  875   263   263   0.1%
Madison Logic, Inc.(l) L+8.00%  10.51% 11/30/2021  9,933   9,805   9,933   3.7%
Madison Logic, Inc. (Revolver)(e) L+8.00%  10.51% 11/30/2021  988   —   —   0.0%
RedZone Robotics, Inc. L+6.75%  9.26% 6/5/2023  946   929   868   0.3%
RedZone Robotics, Inc. (Revolver)(e) L+6.75%  9.26% 6/5/2023  158   —   —   0.0%
TRP Construction Group, LLC(l) L+6.50%  9.01% 10/5/2022  7,960   7,834   7,920   3.1%
TRP Construction Group, LLC (Delayed Draw)(e) (f) L+6.50%  9.01% 10/5/2022  7,000   5,684   5,656   2.2%
TRP Construction Group, LLC (Revolver)(e) L+6.50%  9.01% 10/5/2022  2,133   —   —   0.0%
VPS Holdings, LLC L+7.00%  9.51% 10/4/2024  5,000   4,902   4,960   1.9%
VPS Holdings, LLC (Delayed Draw)(e) (f) L+7.00%  9.51% 10/4/2024  4,000   —   —   0.0%
VPS Holdings, LLC (Revolver)(e) L+7.00%  9.51% 10/4/2024  1,000   100   100   0.0%
           80,068   68,591   69,100   26.6%
Services: Consumer                        
Mammoth Holdings, LLC L+6.00%  8.44% 10/16/2023  2,000   1,961   1,997   0.8%
Mammoth Holdings, LLC (Delayed Draw)(e) (f) L+6.00%  8.44% 10/16/2023  4,167   —   —   0.0%
Mammoth Holdings, LLC (Revolver)(e) L+6.00%  8.44% 10/16/2023  500   —   —   0.0%
PeopleConnect Intermediate, LLC L+6.50%  9.30% 7/1/2020  4,272   4,239   4,253   1.6%
PeopleConnect Intermediate, LLC L+12.50%  15.30% 7/1/2020  4,636   4,597   4,603   1.8%
PeopleConnect Intermediate, LLC (Revolver)(e) L+9.50%  12.30% 7/1/2020  236   118   118   0.0%
           15,811   10,915   10,971   4.2%

19

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2018

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
 Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of Net
Assets(d)		 
Wholesale                        
Mid-West Wholesale Hardware Co.(l) L+8.00%  10.51% 2/9/2022  16,402  $16,173  $16,312   6.3%
Mid-West Wholesale Hardware Co. (Revolver)(e) L+8.00%  10.51% 2/9/2022  4,421   3,789   3,767   1.5%
Nearly Natural, Inc.(l) L+7.00%  9.81% 12/15/2022  6,930   6,816   6,906   2.7%
Nearly Natural, Inc. (Revolver)(e) L+7.00%  9.81% 12/15/2022  1,522   609   609   0.2%
           29,275   27,387   27,594   10.7%
Total Non-Controlled/Non-Affiliate Senior Secured Loans    457,492   402,281   401,289   155.0%
                         
Unitranche Secured Loans(s)                        
Chemicals, Plastics & Rubber                        
MFG Chemical, LLC(l) L+6.00%  8.51% 6/23/2022  10,477   10,359   10,319   4.0%
MFG Chemical, LLC L+6.00%  8.51% 6/23/2022  1,132   1,132   1,115   0.4%
           11,609   11,491   11,434   4.4%
Consumer Goods: Durable                        
RugsUSA, LLC L+6.50%  9.31% 4/28/2023  4,000   3,964   4,002   1.5%
           4,000   3,964   4,002   1.5%
Healthcare & Pharmaceuticals                        
Collaborative Neuroscience Network, LLC L+11.50%  14.01% n/a(o)  6,120   6,096   5,894   2.3%
Collaborative Neuroscience Network, LLC n/a  12.00% Cash/
3.00% PIK		  n/a(o)  304   304   304   0.1%
Collaborative Neuroscience Network, LLC (Revolver) L+10.00%  12.51% n/a(o)  200   193   200   0.1%
Priority Ambulance, LLC(t) L+6.50%  9.31% 4/12/2022  10,015   10,015   9,905   3.8%
Priority Ambulance, LLC(u) L+6.50%  9.31% 4/12/2022  1,253   1,226   1,240   0.5%
Priority Ambulance, LLC (Delayed Draw)(e) (f) L+6.50%  9.31% 4/12/2022  246   —   —   0.0%
Priority Ambulance, LLC (Delayed Draw)(e) (f) L+6.50%  9.31% 4/12/2022  2,485   —   —   0.0%
           20,623   17,834   17,543   6.8%
High Tech Industries                        
Mnine Holdings, Inc. L+6.75%  9.31% 11/2/2023  8,000   7,843   7,952   3.1%
           8,000   7,843   7,952   3.1%
Total Non-Controlled/Non-Affiliate Unitranche Secured Loans  44,232   41,132   40,931   15.8%
                         
Junior Secured Loans                        
Beverage, Food & Tobacco                        
CSM Bakery Supplies, LLC L+7.75%  10.16% 7/5/2021  5,792   5,792   5,314   2.1%
           5,792   5,792   5,314   2.1%
High Tech Industries                        
Micro Holdings Corp. L+7.50%  10.00% 8/18/2025  3,000   2,972   2,805   1.1%
           3,000   2,972   2,805   1.1%

 

20

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2018

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
 Index(b)		  Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of Net
Assets(d)		 
Media: Broadcasting & Subscription                        
Mergermarket Bidco Limited L+7.25%  9.76%  8/4/2025  4,500  $4,458  $ 4,483   1.7%
           4,500   4,458   4,483   1.7%
Media: Diversified & Production                        
The Octave Music Group, Inc. L+8.25%  10.63%  5/27/2022  5,000   4,957   5,000   1.9%
           5,000   4,957   5,000   1.9%
Services: Consumer                        
Education Corporation of America L+11.00%  8.31% Cash/
5.50% PIK		 (p)  3/31/2020  2,292   2,288   2,292   0.9%
           2,292   2,288   2,292   0.9%
Total Non-Controlled/Non-Affiliate Junior Secured Loans  20,584   20,467   19,894   7.7%
                         
Equity Securities  (v) (w)                        
Banking, Finance, Insurance & Real Estate                        
PKS Holdings, LLC (warrant to purchase up to 0.8% of the equity)(g) —  —(x)  11/30/2027  —   116   18   0.0%
               116   18   0.0%
Chemicals, Plastics & Rubber                        
Valudor Products, LLC (501,014 class A-1 units)  n/a   10.00% PIK  —  —   501   213   0.1%
               501   213   0.1%
Healthcare & Pharmaceuticals                        
Collaborative Neuroscience Network, LLC (warrant to purchase up to 1.5% of the equity) —  —(x)  12/27/2022  —   —   115   0.0%
Collaborative Neuroscience Network, LLC (warrant to purchase up to 2.1% of the equity) —  —(x)  12/31/2027  —   —   —   0.0%
               —   115   0.0%
High Tech Industries                        
Answers Finance, LLC (76,539 shares of common stock) —  —(x)  —  —   2,413   215   0.1%
Host Analytics, Inc. (441,860 class A Units) —  —(x)  —  —   442   442   0.2%
               2,855   657   0.3%
Hotels, Gaming & Leisure                        
Playtime, LLC - Preferred Units (8,665 units) —  —(x)  —  —   200   —   0.0%
               200   —   0.0%
Media: Advertising, Printing & Publishing                        
AdTheorent, Inc. (128,866 class A voting units) —  —(x)  —  —   129   156   0.1%
InMobi Pte, Ltd. (warrant to purchase up to 2.8% of the equity)(g) (n) —  —(x)  9/18/2025  —   —   209   0.1%
               129   365   0.2%
Retail                        
The Tie Bar Operating Company, LLC - Class A Preferred Units (1,275 units) —  —  —  —   87   109   0.0%
The Tie Bar Operating Company, LLC - Class B Preferred Units (1,275 units) —  —  —  —   —   —   0.0%
               87   109   0.0% 

21

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2018

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
 Index(b)		  Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of Net
Assets(d)		 
Services: Business                        
APCO Worldwide, Inc. (100 shares class A voting common stock) —  —(x)  —  —  $ 395   $317   0.1%
Atlas Sign Industries of FLA, LLC (warrants to purchase up to 0.8% of the equity) —  —(x)   5/14/2026  —   125   83   0.0%
               520   400   0.1%
Services: Consumer                        
Education Corporation of America - Series G Preferred Stock (8,333 shares)  n/a  12.00% PIK(p)  —  —   7,492   4,583   1.8%
               7,492   4,583   1.8%
Wholesale                        
Nearly Natural, Inc. (152,174 class A units) —  —(x)  —  —   152   146   0.1%
               152   146   0.1%
Total Non-Controlled/Non-Affiliate Equity Securities      12,052   6,606   2.6%
Total Non-Controlled/Non-Affiliate Company Investments     $475,932  $468,720   181.1%
                         
Non-Controlled Affiliate Company Investments(y)                
Senior Secured Loans                        
Banking, Finance, Insurance & Real Estate                
American Community Homes, Inc. L+10.00%  12.51% PIK  7/22/2019  7,797  $7,770  $6,596   2.5%
American Community Homes, Inc. L+14.50%  17.01% PIK  7/22/2019  4,725   4,711   3,997   1.5%
American Community Homes, Inc. L+10.00%  12.51% PIK  7/22/2019  590   587   499   0.2%
American Community Homes, Inc. L+10.00%  12.51% PIK  7/22/2019  473   469   400   0.2%
American Community Homes, Inc. L+14.50%  17.01% PIK  7/22/2019  254   252   215   0.1%
American Community Homes, Inc. L+8.00%  10.51% PIK  7/22/2019  1,710   1,710   1,446   0.6%
           15,549   15,499   13,153   5.1%
Containers, Packaging & Glass                        
Summit Container Corporation(l) L+8.00%  10.51%  1/6/2021  3,259   3,269   3,034   1.2%
Summit Container Corporation (Revolver)(e) (l) L+8.00%  10.51%  1/6/2021  8,000   6,714   6,660   2.5%
           11,259   9,983   9,694   3.7%
Healthcare & Pharmaceuticals                        
SHI Holdings, Inc.(l) L+10.25%  12.76%  7/10/2019  2,598   2,592   2,598   1.0%
SHI Holdings, Inc. (Revolver)(e) L+10.25%  12.76%  7/10/2019  4,227   3,339   3,342   1.3%
           6,825   5,931   5,940   2.3%
Retail                        
Luxury Optical Holdings Co. L+8.00%  10.51% PIK  9/12/2019  4,698   4,684   4,334   1.7%
Luxury Optical Holdings Co. (Delayed Draw)(e) (f) L+11.50%  14.01%  9/12/2019  1,059   624   622   0.2%
Luxury Optical Holdings Co. (Revolver) L+8.00%  10.51% PIK  9/12/2019  217   217   200   0.1%
           5,974   5,525   5,156   2.0%

22

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2018

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
 Index(b)		  Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of Net
Assets(d)		 
Services: Business                        
Curion Holdings, LLC(l)  n/a  4.00% Cash/
10.00% PIK		  5/2/2022  3,953  $ 3,912   $3,592   1.4%
Curion Holdings, LLC (Revolver)(e)  n/a  14.00%  5/2/2022  308   250   244   0.1%
           4,261   4,162   3,836   1.5%
Total Non-Controlled Affiliate Senior Secured Loans  43,868   41,100   37,779   14.6%
                         
Unitranche Secured Loans(s)                        
Consumer Goods: Non-Durable                        
Incipio, LLC(z) L+9.06%  11.01% Cash/
0.56% PIK		(aa)  7/1/2019  13,803   13,749   12,830   5.0%
Incipio, LLC(ab) L+8.50%  11.01%  7/1/2019  3,613   3,613   3,573   1.4%
Incipio, LLC L+8.50%  11.01%  7/1/2019  1,535   1,535   1,518   0.6%
           18,951   18,897   17,921   7.0%
Total Non-Controlled Affiliate Unitranche Secured Loans 18,951   18,897   17,921   7.0%
                         
Junior Secured Loans                        
Consumer Goods: Non-Durable                        
Incipio, LLC(ac) n/a  10.70% PIK(p)  12/31/2020  3,766   —   1,260   0.4%
Incipio, LLC(ad) n/a  10.70% PIK(p)  12/31/2020  7,194   —   —   0.0%
           10,960   —   1,260   0.4%
Services: Business                        
Curion Holdings, LLC(l) n/a  15.00% PIK(p)  1/2/2023  1,720   1   —   0.0%
Curion Holdings, LLC(l) n/a  15.00% PIK(p)  1/2/2023  44   —   —   0.0%
           1,764   1   —   0.0%
Total Non-Controlled Affiliate Company Junior Secured Loans 12,724   1   1,260   0.4%
                         
Equity Securities(w) (y)                        
Banking, Finance, Insurance & Real Estate                
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity) —  —(x)  12/18/2024  —   —   —   0.0%
               —   —   0.0%
Consumer Goods: Non-Durable                        
Incipio, LLC (1,774 shares of series C common units) —  — (x)  —  —   —   —   0.0%
Millennial Brands LLC (10 preferred units) —  — (x)  —  —   967   —   0.0%
Millennial Brands LLC (75,502 common units) —  — (x)  —  —   —   —   0.0%
               967   —   0.0% 
Containers, Packaging & Glass                        
Summit Container Corporation (warrant to purchase up to 19.5% of the equity) —  — (x)  1/6/2024  —   —   —   0.0%
               —   —   0.0% 

23

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2018

(in thousands, except for shares and units)

Portfolio Company(a) Spread
Above
 Index(b)		 Interest
Rate		  Maturity Principal  Amortized
Cost		  Fair
Value(c)		  % of Net
Assets(d)		 
Healthcare & Pharmaceuticals                        
SHI Holdings, Inc. (24 shares of common stock) —  —(x)  —  —  $ 27   $307   0.1%
               27   307   0.1%
Retail                        
Luxury Optical Holdings Co. (86 shares of common stock) —  —(x)  —  —   —   —   0.0%
               —   —   0.0%
Services: Business                        
Curion Holdings, LLC (58,779 shares of common stock) —  —(x)  —  —   —   —   0.0%
               —   —   0.0%
Total Non-Controlled Affiliate Equity Securities      994   307   0.1%
Total Non-Controlled Affiliate Company Investments     $60,992  $57,267   22.1%
                         
Controlled Affiliate Company Investments(ae)                        
Equity Securities                        
Investment Funds & Vehicles                        
MRCC Senior Loan Fund I, LLC (50.0% of the equity interests)(g) —  —  —  —  $27,200  $27,634   10.7%
Total Controlled Affiliate Equity Securities      27,200   27,634   10.7%
Total Controlled Affiliate Company Investments     $27,200  $27,634   10.7%
                         
                         
TOTAL INVESTMENTS             $564,124  $553,621   213.9%

Derivative Instruments

Foreign currency forward contracts     
              
  Notional Amount  Notional Amount      Unrealized Gain 
Description to be Purchased  to be Sold  Counterparty Settlement Date (Loss) 
Foreign currency forward contract $137  £107  Bannockburn Global Forex, LLC 1/2/2019 $1 
Foreign currency forward contract $292  £228  Bannockburn Global Forex, LLC 2/28/2019 1 
Foreign currency forward contract $136  £106  Bannockburn Global Forex, LLC 4/1/2019 1 
Foreign currency forward contract $293  £229  Bannockburn Global Forex, LLC 5/31/2019 1 
Foreign currency forward contract $136  £106  Bannockburn Global Forex, LLC 7/1/2019 1 
Foreign currency forward contract $294  £230  Bannockburn Global Forex, LLC 8/30/2019 1 
Foreign currency forward contract $134  £105  Bannockburn Global Forex, LLC 10/1/2019 1 
Foreign currency forward contract $295  £230  Bannockburn Global Forex, LLC 11/29/2019 1 
Foreign currency forward contract $133  £104  Bannockburn Global Forex, LLC 1/2/2020 1 
Foreign currency forward contract $296  £231  Bannockburn Global Forex, LLC 2/28/2020 1 
Foreign currency forward contract $132  £103  Bannockburn Global Forex, LLC 4/1/2020 1 
Foreign currency forward contract $130  £102  Bannockburn Global Forex, LLC 5/5/2020 1 
Foreign currency forward contract $296  £230  Bannockburn Global Forex, LLC 5/29/2020 1 
Foreign currency forward contract $295  £230  Bannockburn Global Forex, LLC 8/28/2020 1 
Foreign currency forward contract $294  £229  Bannockburn Global Forex, LLC 11/30/2020 2 
              $ 16 

24

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2018

(in thousands, except for shares and units)

(a)All of our investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of our investments are issued by U.S. portfolio companies unless otherwise noted.
(b)The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at December 31, 2018.2019. Certain investments are subject to a LIBOR or Prime interest rate floor, or rate cap.
(c)(c)Except as otherwise noted, all of the Company’s portfolio company investments, which as of December 31, 2019 represented 247.1% of the Company’s net assets or 94.1% of the Company’s total assets, are subject to legal restrictions on sales.
(d)Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith using significant unobservable inputs by our board of directors as required by the Investment Company Act of 1940.1940 Act. (See Note 4 in the accompanying notes to the consolidated financial statements.)
(d)(e)Percentages are based on net assets of $258,767$249,357 as of December 31, 2018.2019.
(e)(f)All or a portion of this commitment was unfunded at December 31, 2018.2019. As such, interest is earned only on the funded portion of this commitment.
(f)(g)This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings.
(g)(h)This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2018,2019, non-qualifying assets totaled 16.36%19.6% of the Company’s total assets.
(h)The PIK portion of the interest rate for HFZ Capital Group, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 0.17% per annum.
(i)This investment represents a note convertible to preferred shares of the borrower.
(j)A portion of this loan (principal of $2,010) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(k)A portion of the PIK interest rate for Cornerstone Detention Products, Inc. is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 2.33% per annum.
(l)All of this loan is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(j)(m)The PIK portionThis investment represents a note convertible to preferred shares of the interest rate for Landpoint, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 2.25% per annum.borrower.
(n)(k)This is an international company.
(o)(l)This is a demand note with no stated maturity.
(p)(m)This position was on non-accrual status as of December 31, 2018,2019, meaning that the Company has ceased accruing interest income on the position. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company’s accounting policies.
(q)(n)This loan is denominated in Great Britain pounds and is translated into U.S. dollars as of the valuation date.
(r)A portion of the PIK interest rate for TRG, LLC is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 3.29% per annum.
(s)(o)The Company structures its unitranche secured loans as senior secured loans. The Company obtains security interests in the assets of these portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of a portfolio company. Generally, the Company syndicates a “first out” portion of the loan to an investor and retains a “last out” portion of the loan, in which case the “first out” portion of the loan will generally receive priority with respect to payments of principal, interest and any other amounts due thereunder. Unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans and the Company’s unitranche secured loans will expose the Company to the risks associated with second lien and subordinated loans and may limit the Company’s recourse or ability to recover collateral upon a portfolio company’s bankruptcy. Unitranche secured loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche secured loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In many cases the Company, together with its affiliates, are the sole or majority lender of these unitranche secured loans, which can afford the Company additional influence with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.
(t)(p)A portion of this loan (principal of $9,258) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(u)(q)A portion of this loan (principal of $525) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.

25

MONROE CAPITAL CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2018

(in thousands, except for shares and units)

(v)(r)Represents less than 5% ownership of the portfolio company’s voting securities.
(w)(s)Ownership of certain equity investments may occur through a holding company or partnership.
(x)(t)Represents a non-income producing security.
(u)(y)As of December 31, 2019, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $16.
(v)As defined in the 1940 Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns 5% or more of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).
(z)(w)A portion of this loan (principal of $5,061)$5,343) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(x)(aa)The PIKA portion of the PIK interest rate for Incipio Technologies, Inc. is structured as a fee paid upon the termination of the commitment. The fee currently accrues at 0.56%0.22% per annum.
(ab)(y)A portion of this loan (principal of $46)$48) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ac)(z)A portion of this loan (principal of $1,015) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ad)(aa)A portion of this loan (principal of $1,938) is held in the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP, and is therefore not collateral to the Company’s revolving credit facility.
(ae)(ab)As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” of and to “Control” this portfolio company as it owns more than 25% inof the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was both an Affiliated Person and a portfolio company that the Company is deemed to Control.

n/a - not applicable

 

See Notes to Consolidated Financial Statements.

 2619 

 

MONROE CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, except share and per share data)

 

Note 1. Organization and Principal Business

 

Monroe Capital Corporation (together with its subsidiaries, the “Company”) is an externally managed, non-diversified, closed-end management investment company and has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation through investment in senior secured, junior secured and unitranche secured (a combination of senior secured and junior secured debt in the same facility in which the Company syndicates a “first out” portion of the loan to an investor and retains a “last out” portion of the loan) debt and, to a lesser extent, unsecured subordinated debt and equity investments. The Company is managed by Monroe Capital BDC Advisors, LLC (“MC Advisors”), a registered investment adviser under the Investment Advisers Act of 1940, as amended. In addition, for U.S. federal income tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

 

On February 28, 2014, the Company’s wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP (“MRCC SBIC”), a Delaware limited partnership, received a license from the Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Act of 1958, as amended. MRCC SBIC commenced operations on September 16, 2013. See Note 7 for additional information.

 

On September 12, 2018, the Company closed a public offering of $69,000 in aggregate principal amount of senior unsecured notes (“2023 Notes”). On March 20, 2019, the Company completed a registered direct offering of $40,000 in additional aggregate principal amount of the 2023 Notes. See Note 7 for additional information.

Note 2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 orand 10 of Regulation S-X. The Company has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 -– Financial Services -– Investment Companies (“ASC Topic 946”). Certain prior period amounts have been reclassified to conform to the current period presentation.

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Consolidation

 

As permitted under ASC Topic 946, the Company will generally not consolidate its investment in a portfolio company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly-owned subsidiaries, MRCC SBIC and its wholly-owned general partner MCC SBIC GP, LLC, MRCC Holding Company I, LLC, MRCC Holding Company II, LLC, MRCC Holding Company III, LLC, MRCC Holding Company IV, LLC, MRCC Holding Company V, LLC, MRCC Holding Company VI, LLC and MRCC Holding Company IV,VII, LLC, in its consolidated financial statements. All intercompany balances and transactions have been eliminated. The Company does not consolidate its non-controlling interest in MRCC Senior Loan Fund I, LLC (“SLF”). See further description of the Company’s investment in SLF in Note 3.

 

Fair Value of Financial Instruments

 

The Company applies fair value to substantially all of its financial instruments in accordance with ASC Topic 820 - –Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value, and requires disclosures for fair value measurements, including the categorization of financial instruments into a three-level hierarchy based on the transparency of valuation inputs. See Note 4 for further discussion regarding the fair value measurements and hierarchy.

 

27

ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments.

20

 

Revenue Recognition

 

The Company’s revenue recognition policies are as follows:

 

Investments and related investment income:Interest and dividend income is recorded on the accrual basis to the extent that the Company expects to collect such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. The Company records fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service has been completed.

 

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. For the three and six months ended June 30,March 31, 2020 and 2019, the Company did not receive return of capital distributions from its preferred equity investments and its investment in LLC equity interestsinterest in SLF. For the three and six months ended June 30, 2018, the Company received return of capital distributions from its preferred equity investments and its investment in LLC equity interests in SLF of zero and $9,500, respectively.

 

The Company has certain investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision, which represents contractual interest or dividends that are added to the principal balance and recorded as income. The Company stops accruing PIK interest or PIK dividenddividends when it is determined that PIK interest or PIK dividend isdividends are no longer collectible. To maintain RIC tax treatment, and to avoid corporate tax, substantially all of this income must be paid out to stockholders in the form of distributions, even though the Company has not yet collected the cash.

 

Loan origination fees, original issue discount and market discount or premiums are capitalized, and the Company then amortizes such amounts using the effective interest method as interest income over the life of the investment. Unamortized discounts and loan origination fees totaled $5,455$6,170 and $5,172$6,279 as of June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. Upfront loan origination and closing fees received for the three and six months ended June 30,March 31, 2020 and 2019, totaled $884$975 and $1,800, respectively. Upfront loan origination and closing fees received for the three and six months ended June 30, 2018 totaled $623 and $939,$916, respectively. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees are recorded as interest income.

 

The components of the Company’s investment income were as follows:

 

 Three months ended June 30,  Three months ended March 31, 
 2019  2018  2020  2019 
Interest income $14,026  $12,376  $11,979  $13,214 
PIK interest income  1,261   327   1,076   1,054 
Dividend income(1)  888   615   1,191   783 
Fee income  60   666   198   569 
Prepayment gain (loss)  91   312   214   113 
Accretion of discounts and amortization of premium  393   524   344   426 
Total investment income $16,719  $14,820  $15,002  $16,159 

 

  Six months ended June 30, 
  2019  2018 
Interest income $27,240  $24,673 
PIK interest income  2,315   656 
Dividend income(2)  1,671   1,050 
Fee income  629   1,390 
Prepayment gain (loss)  204   445 
Accretion of discounts and amortization of premium  819   1,556 
Total investment income $32,878  $29,770 

 

(1)Includes PIK dividends of $13$41 and $265,$13, respectively.
(2)Includes PIK dividends of $26 and $525, respectively.

28

 

Investment transactions are recorded on a trade-date basis. Realized gains or losses on portfolio investments are calculated based upon the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized. Realized gains and losses are recorded within net realized gain (loss) inon investments on the consolidated statements of operations. Changes in the fair value of investments from the prior period, as determined by the Company’s board of directors (the “Board”) through the application of the Company’s valuation policy, are included within net change in unrealized gain (loss) inon investments on the consolidated statements of operations.

 

Non-accrual: Loans or preferred equity securities are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or dividends will be collected. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal, interest, or dividends are paid, and, in management’s judgment are likely to remain current. The fair value of the Company’s investments on non-accrual status totaled $14,010$43,612 and $16,802$34,052 at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.

 

Partial loan sales: The Company follows the guidance in ASC Topic 860 -Transfers and Servicing (“ASC Topic 860”), when accounting for loan participations and other partial loan sales. Such guidance requires a participation or other partial loan sale to meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment on the Company’s consolidated statements of assets and liabilities and the proceeds are recorded as a secured borrowing in the liabilities section of the consolidated statements of assets and liabilities until the definition of a sale is met. For these partial loan sales, the interest earned on the entire loan balance is recorded within “interest income” and the interest earned by the buyer in the partial loan sale is recorded within “interest and other debt financing expenses” in the accompanying consolidated statements of operations. Changes in the fair value of secured borrowings from the prior period, as determined by the Board through the application of the Company’s valuation policy, are included as changes in unrealized gain (loss) on secured borrowings in the consolidated statements of operations. There were no partial loan sales for the periods reported.

21

 

Distributions

 

Distributions to common stockholders are recorded on the record date. The amount, if any, to be distributed is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are generally distributed at least annually.

 

The determination of the tax attributes for the Company’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on qualified 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 capital gains, but may also include qualified dividends or return of capital.

 

TheIn October 2012, the Company has adopted a dividend reinvestment plan (“DRIP”) that provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, ifWhen the Company declares a cash dividend, the Company’s stockholders who have not “opted out” of the DRIP at least three days prior to the dividend payment date will have their cash dividend automatically reinvested into additional shares of the Company’s common stock. The Company has the option to satisfy the share requirements of the DRIP through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares are valued based upon the final closing price of the Company’s common stock on a date determined by the Board. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other costs. See Note 9 for additional information on the Company’s distributions.

 

Earnings per Share

 

In accordance with the provisions of ASC Topic 260 -– Earnings per Share (“ASC Topic 260”), basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. The weighted average shares outstanding utilized in the calculation of earnings per share take into account share issues on the issuance date and the Company’s repurchases of its common stock on the repurchase date. See Note 10 for additional information on the Company’s share activity. For the periods presented in these consolidated financial statements, there were no potentially dilutive common shares issued.

   

Segments

 

In accordance with ASC Topic 280 -– Segment Reporting, the Company has determined that it has a single reporting segment and operating unit structure.

29

 

Cash

 

The Company deposits its cash in a financial institution and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits.

 

Restricted Cash

 

Restricted cash includes amounts held within MRCC SBIC. Cash held within an SBIC is generally restricted to the originations of new loans from the SBIC and the payment of SBA debentures and related interest expense.

 

Unamortized Deferred Financing Costs

 

Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company had unamortized deferred financing costs of $8,797$7,569 and $6,262,$8,053, respectively, presented as a direct reduction of the carrying amount of debt on the consolidated statements of assets and liabilities. These amounts are amortized and included in interest and other debt financing expenses inon the consolidated statements of operations over the estimated average life of the borrowings. Amortization of deferred financing costs for the three and six months ended June 30,March 31, 2020 and 2019 was $468$484 and $901,$433, respectively. Amortization of deferred financing costs for the three and six months ended June 30, 2018 was $315 and $596, respectively.

22

 

Offering Costs

 

Offering costs include, among other things, fees paid in relation to legal, accounting, regulatory and printing work completed in preparation of debt and equity offerings. Offering costs from equity offerings are charged against the proceeds from the offering within the consolidated statements of changes in net assets. Offering costs from debt offerings are reclassified to unamortized deferred financing costs on the consolidated statements of assets and liabilities as noted above. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, other assets on the consolidated statements of assets and liabilities included $275$378 and $328,$378, respectively, of deferred offering costs which will be charged against the proceeds from future debt or equity offerings when completed.

 

Investments Denominated in Foreign Currency

 

As of both June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company held investments in two portfolio companies that were denominated in Great Britain pounds.

 

At each balance sheet date, portfolio company investments denominated in foreign currencies are translated into U.S. dollars using the spot exchange rate on the last business day of the period. Purchases and sales of foreign portfolio company investments, and any income from such investments, are translated into U.S. dollars using the rates of exchange prevailing on the respective dates of such transactions.

 

Although the fair values of foreign portfolio company investments and the fluctuation in such fair values are translated into U.S. dollars using the applicable foreign exchange rates described above, the Company does not isolate the portion of the change in fair value resulting from foreign currency exchange rates fluctuations from the change in fair value of the underlying investment. All fluctuations in fair value are included in net change in unrealized gain (loss) inon investments on the Company’s consolidated statements of operations.

 

Investments denominated in foreign currencies and foreign currency transactions may involve certain consideration and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. dollar.

 

Derivative Instruments

 

The Company may enter into foreign currency forward contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations. In a foreign currency forward contract, the Company agrees to receive or deliver a fixed quantity of one currency for another, at a pre-determined price at a future date. Foreign currency forward contracts are marked-to-market based on the difference between the forward rate and the exchange rate at the current period end. Unrealized gain (loss) on foreign currency forward contracts are recorded on the Company’s consolidated statements of assets and liabilities by counterparty on a net basis.

 

The Company does not utilize hedge accounting and as such values its foreign currency forward contracts at fair value with the change in unrealized gain or loss recorded in net change in unrealized gain (loss) fromon foreign currency forward contracts and the realized gain or loss recorded in net realized gain (loss) fromon foreign currency forward contracts inon the Company’s consolidated statements of operations.

 

Income Taxes

 

The Company has elected to be treated as a RIC under Subchapter M of the Code and operates in a manner so as to qualify for the tax treatment available to RICs. To maintain qualification as a RIC, the Company must, among other things, meet certain source-of-income and asset diversification requirements and distribute to stockholders, for each taxable year, at least 90% of the Company’s “investment company taxable income,” which is generally the Company’s net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses. If the Company qualifies as a RIC and satisfies the annual distribution requirement, the Company will not have to pay corporate-level federal income taxes on any income that the Company distributes to its stockholders. The Company intends to make distributions in an amount sufficient to maintain RIC status each year and to avoid any federal income taxes on income. The Company is also subject to nondeductible federal excise taxes if the Company does not distribute at least 98% of net ordinary income, 98.2% of any capital gain net income, if any, and any recognized and undistributed income from prior years for which it paid no federal income taxes. To the extent that the Company determines that its estimated current year annual taxable income may exceed estimated current year dividend distributions, the Company accrues excise tax, calculated as 4% of the estimated excess taxable income, if any, as taxable income is earned. For the three and six months ended June 30,March 31, 2020 and 2019, $17the Company recorded a net expense on the consolidated statements of operations of $20 and $10,($7), respectively, werefor U.S. federal excise tax. As of March 31, 2020 and December 31, 2019, the Company had a receivable of $42 and a payable of $23 for excise taxes, respectively.

Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state corporate-level income taxes. For both the three months ended March 31, 2020 and 2019, the Company recorded a net tax expense of zero on the consolidated statements of operations for U.S. federal excise taxes. For the three and six months ended June 30, 2018, zero and $11, respectively, were recorded on the consolidated statements of operations for U.S. federal excise taxes.these subsidiaries. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, payables for excisecorporate-level income taxes of $23zero and zero,$7, respectively, were included in accounts payable and accrued expenses on the consolidated statements of assets and liabilities.

 

30

The Company accounts for income taxes in conformity with ASC Topic 740 -– Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in the consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no material uncertain income tax positions through June 30, 2019.March 31, 2020. The 20152016 through 20182019 tax years remain subject to examination by U.S. federal and state tax authorities.

 

23

Subsequent Events

 

The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the sixthree months ended June 30, 2019.March 31, 2020, except as disclosed in Note 13.

 

Recent Accounting Pronouncements

 

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”). The primary objective of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements in the notes to the financial statements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted. Management is currently evaluatingThe Company has adopted ASU 2018-13 and the adoption did not have a significant impact these changes will have on the Company’s consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04,Reference Rate Reform. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the impact of the optional guidance on the Company’s consolidated financial statements and disclosures. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the three months ended March 31, 2020.

   

Note 3. Investments

 

The following tables show the composition of the investment portfolio, at amortized cost and fair value (with corresponding percentage of total portfolio investments):

 

 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
Amortized Cost:                                
Senior secured loans $491,800   76.3% $443,381   78.6% $515,837   78.8% $485,871   76.6%
Unitranche secured loans  84,124   13.1   60,029   10.7   66,361   10.1   78,312   12.3 
Junior secured loans  18,378   2.9   20,468   3.6   13,463   2.1   13,923   2.2 
LLC equity interest in SLF  35,075   5.4   27,200   4.8   42,150   6.4   42,150   6.6 
Equity securities  14,764   2.3   13,046   2.3   16,680   2.6   14,480   2.3 
Total $644,141   100.0% $564,124   100.0% $654,491   100.0% $634,736   100.0%

 

 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
Fair Value:                  
Senior secured loans $483,682   76.7% $439,068   79.3% $481,565   81.5% $475,157   77.1%
Unitranche secured loans  83,343   13.2   58,852   10.6   55,826   9.4   76,247   12.4 
Junior secured loans  18,858   3.0   21,154   3.8   11,704   2.0   13,676   2.2 
LLC equity interest in SLF  35,944   5.7   27,634   5.0   31,325   5.3   42,412   6.9 
Equity securities  8,977   1.4   6,913   1.3   10,417   1.8   8,739   1.4 
Total $630,804   100.0% $553,621   100.0% $590,837   100.0% $616,231   100.0%

 

The following tables show the composition of the investment portfolio by geographic region, at amortized cost and fair value (with corresponding percentage of total portfolio investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business:

 

 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
Amortized Cost:                                
International $19,933   3.1% $19,279   3.4% $21,923   3.3% $21,474   3.4%
Midwest  147,638   22.9   127,364   22.6   152,268   23.3   135,258   21.3 
Northeast  149,243   23.2   129,417   22.9   149,451   22.8   160,184   25.3 
Southeast  140,207   21.8   121,312   21.5   158,059   24.2   150,486   23.7 
Southwest  57,473   8.9   52,272   9.3   60,073   9.2   57,971   9.1 
West  129,647   20.1   114,480   20.3   112,717   17.2   109,363   17.2 
Total $644,141   100.0% $564,124   100.0% $654,491   100.0% $634,736   100.0%

 

  March 31, 2020  December 31, 2019 
Fair Value:            
International $20,587   3.5% $21,760   3.5%
Midwest  127,814   21.6   127,532   20.7 
Northeast  133,413   22.6   147,673   24.0 
Southeast  149,910   25.4   147,634   23.9 
Southwest  68,864   11.6   68,205   11.1 
West  90,249   15.3   103,427   16.8 
Total $590,837   100.0% $616,231   100.0%

 3124 

 

  June 30, 2019  December 31, 2018 
Fair Value:                
International $ 19,712   3.1% $19,205   3.5%
Midwest   142,626   22.6   124,667   22.5 
Northeast   145,573   23.1   127,607   23.0 
Southeast   137,847   21.9   118,161   21.3 
Southwest   56,231   8.9   50,657   9.2 
West   128,815   20.4   113,324   20.5 
Total $ 630,804   100.0% $553,621   100.0%

 

The following tables show the composition of the investment portfolio by industry, at amortized cost and fair value (with corresponding percentage of total portfolio investments):

 

 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
Amortized Cost:                                
Automotive $7,735   1.2% $7,887   1.4% $7,892   1.2% $7,773   1.2%
Banking, Finance, Insurance & Real Estate  70,575   11.0   58,088   10.3   81,234   12.4   81,183   12.8 
Beverage, Food & Tobacco  16,536   2.6   16,097   2.9   26,368   4.0   16,657   2.6 
Capital Equipment  15,570   2.4   —   — 
Chemicals, Plastics & Rubber  15,037   2.3   15,259   2.7   28,455   4.4   29,683   4.7 
Construction & Building  34,669   5.4   29,789   5.3   18,889   2.9   30,695   4.8 
Consumer Goods: Durable  22,856   3.6   25,345   4.5   25,831   3.9   22,148   3.5 
Consumer Goods: Non-Durable  22,519   3.5   19,864   3.5   24,345   3.7   22,639   3.6 
Containers, Packaging & Glass  8,638   1.3   9,983   1.8   7,571   1.2   8,744   1.4 
Energy: Oil & Gas  6,683   1.0   2,527   0.4   4,243   0.6   4,296   0.7 
Environmental Industries  12,545   1.9   12,169   2.2   12,259   1.9   12,182   1.9 
Healthcare & Pharmaceuticals  59,766   9.3   54,243   9.6   64,565   9.9   54,024   8.5 
High Tech Industries  82,398   12.8   79,936   14.2   95,317   14.6   91,409   14.4 
Hotels, Gaming & Leisure  18,762   2.9   18,780   3.3 
Investment Funds & Vehicles  35,075   5.4   27,200   4.8   42,150   6.4   42,150   6.6 
Media: Advertising, Printing & Publishing  20,292   3.2   21,217   3.8   27,697   4.2   25,741   4.1 
Media: Broadcasting & Subscription  5,647   0.9   4,458   0.8   1,907   0.3   1,475   0.2 
Media: Diversified & Production  10,461   1.6   4,957   0.9   6,519   1.0   10,523   1.7 
Retail  34,781   5.4   34,817   6.1   31,947   4.9   30,621   4.8 
Services: Business  105,169   16.3   73,274   13.0   104,301   15.9   109,208   17.2 
Services: Consumer  23,536   3.7   20,695   3.6   17,632   2.7   25,552   4.0 
Wholesale  30,461   4.7   27,539   4.9   9,799   1.5   8,033   1.3 
Total $644,141   100.0% $564,124   100.0% $654,491   100.0% $634,736   100.0%

 

  June 30, 2019  December 31, 2018 
Fair Value:            
Automotive $7,727   1.2% $7,878   1.4%
Banking, Finance, Insurance & Real Estate  65,700   10.4   55,839   10.1 
Beverage, Food & Tobacco  16,092   2.6   15,544   2.8 
Chemicals, Plastics & Rubber  14,786   2.3   14,971   2.7 
Construction & Building  35,013   5.6   29,791   5.4 
Consumer Goods: Durable  22,632   3.6   25,212   4.5 
Consumer Goods: Non-Durable  21,482   3.4   19,181   3.5 
Containers, Packaging & Glass  8,331   1.3   9,694   1.8 
Energy: Oil & Gas  6,727   1.1   2,516   0.4 
Environmental Industries  12,631   2.0   12,195   2.2 
Healthcare & Pharmaceuticals  58,151   9.2   52,769   9.5 
High Tech Industries  80,540   12.8   77,954   14.1 
Hotels, Gaming & Leisure  20,246   3.2   20,264   3.7 
Investment Funds & Vehicles  35,944   5.7   27,634   5.0 
Media: Advertising, Printing & Publishing  21,079   3.3   21,908   4.0 
Media: Broadcasting & Subscription  5,676   0.9   4,483   0.8 
Media: Diversified & Production  10,611   1.7   5,000   0.9 
Retail  30,242   4.8   31,866   5.8 
Services: Business  105,679   16.7   73,336   13.2 
Services: Consumer  20,772   3.3   17,846   3.2 
Wholesale  30,743   4.9   27,740   5.0 
Total $630,804   100.0% $553,621   100.0%

32

  March 31, 2020  December 31, 2019 
Fair Value:                
Automotive $ 7,616   1.3% $7,787   1.3%
Banking, Finance, Insurance & Real Estate   73,872   12.5   76,351   12.4 
Beverage, Food & Tobacco   21,547   3.6   15,634   2.5 
Capital Equipment   15,534   2.6   —   — 
Chemicals, Plastics & Rubber   26,398   4.5   29,509   4.8 
Construction & Building   18,183   3.1   30,887   5.0 
Consumer Goods: Durable   23,645   4.0   21,237   3.4 
Consumer Goods: Non-Durable   15,288   2.6   20,365   3.3 
Containers, Packaging & Glass  7,017   1.2   8,377   1.4 
Energy: Oil & Gas   4,203   0.7   4,306   0.7 
Environmental Industries   11,810   2.0   12,001   1.9 
Healthcare & Pharmaceuticals   68,845   11.7   62,727   10.2 
High Tech Industries   90,172   15.3   90,385   14.7 
Investment Funds & Vehicles   31,325   5.3   42,412   6.9 
Media: Advertising, Printing & Publishing   27,372   4.6   26,333   4.3 
Media: Broadcasting & Subscription  1,892   0.3   1,491   0.2 
Media: Diversified & Production   6,450   1.1   10,652   1.7 
Retail   16,228   2.7   16,998   2.8 
Services: Business   100,236   17.0   108,704   17.6 
Services: Consumer   13,797   2.3   22,051   3.6 
Wholesale   9,407   1.6   8,024   1.3 
Total $590,837   100.0% $616,231   100.0%

  

MRCC Senior Loan Fund I, LLC

 

The Company co-invests with NLV Financial Corporation (“NLV”) in senior secured loans through SLF, an unconsolidated Delaware LLC. SLF is capitalized as underlying investment transactions are completed, taking into account available debt and equity commitments available for funding these investments. All portfolio and investment decisions in respect to SLF must be approved by the SLF investment committee, consisting of one representative from the Company and one representative from NLV. SLF may cease making new investments upon notification of either member but operations will continue until all investments have been sold or paid-off in the normal course of business. Investments held by SLF are measured at fair value using the same valuation methodologies as described in Note 4. The Company’s investment is illiquid in nature as SLF does not allow for withdrawal from the LLC or the sale of a member’s interest unless approved by the board of members of SLF. The full withdrawal of a member would result in an orderly wind-down of SLF.

25

 

SLF’s profits and losses are allocated to the Company and NLV in accordance with their respective ownership interests. As of both June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company and NLV each owned 50.0% of the LLC equity interests of SLF. As of June 30,both March 31, 2020 and December 31, 2019, SLF had $100,000 in equity commitments from its members (in the aggregate), of which $70,150 was funded. As of December 31, 2018, SLF had $100,000 in commitments from its members (in the aggregate), of which $54,400$84,300 was funded.

 

As of both June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company had committed to fund $50,000 of LLC equity interest subscriptions to SLF. As of June 30, 2019both March 31, 2020 and December 31, 2018, $35,075 and $27,2002019, $42,150 of the Company’s LLC equity interest subscriptions to SLF had been called and contributed, net of return of capital distributions subject to recall, respectively.recall.

 

For the three and six months ended June 30,March 31, 2020 and 2019, the Company received $1,150 and $770 of dividend income of $875 and $1,645 from its LLC equity interest in SLF, respectively. For the three and six months ended June 30, 2018, the Company received dividend income of $350 and $525 from its LLC equity interest in SLF, respectively.

 

SLF has entered into a senior secured revolving credit facility (as amended, the “SLF Credit Facility”) with Capital One, N.A., through its wholly-owned subsidiary MRCC Senior Loan Fund I Financing SPV, LLC (“SLF SPV”), which as of June 30, 2019March 31, 2020 allowed SLF SPV to borrow up to $170,000 at any one time, subject to leverage and borrowing base restrictions. On January 9, 2019, the SLF SPV closed a $20,000 upsize to the SLF Credit Facility, bringing the maximum amount the SLF SPV is able to borrow up to the now current $170,000. Borrowings under the SLF Credit Facility bear interest at an annual rate of LIBOR (three-month) plus 2.25%. The maturity date on the SLF Credit Facility is March 22, 2023.

 

SLF does not pay any fees to MC Advisors or its affiliates; however, SLF has entered into an administration agreement with Monroe Capital Management Advisors, LLC (“MC Management”), pursuant to which certain loan servicing and administrative functions are delegated to MC Management. SLF may reimburse MC Management for its allocable share of overhead and other expenses incurred by MC Management. For the three and six months ended June 30,March 31, 2020 and 2019, SLF incurred $47$56 and $93,$46, respectively, of allocable expenses. SLF did not incur any allocable expenses for the three and six months ended June 30, 2018. There are no agreements or understandings by which the Company guarantees any SLF obligations.

 

As of June 30, 2019March 31, 2020 and December 31, 2018,2019, SLF had total assets at fair value of $240,757$222,505 and $177,122,$245,469, respectively. As of both June 30, 2019March 31, 2020 and December 31, 2018,2019, SLF had zero portfolio company investments on non-accrual status. The portfolio companies in SLF are in industries and geographies similar to those in which the Company may invest directly. Additionally, as of June 30, 2019March 31, 2020 and December 31, 2018,2019, SLF had $7,199$3,049 and $5,466,$4,861, respectively, in outstanding commitments to fund investments under undrawn revolvers and delayed draw commitments.

 

Below is a summary of SLF’s portfolio, followed by a listing of the individual investments in SLF’s portfolio as of June 30, 2019March 31, 2020 and December 31, 2018:2019:

 

 As of  As of 
 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
Senior secured loans(1)  237,875   174,267   243,373   243,778 
Weighted average current interest rate on senior secured loans(2)  7.5%  7.6%  6.5%  7.0%
Number of borrowers in SLF  63   50   63   64 
Largest portfolio company investment(1)  6,895   6,930   7,280   6,860 
Total of five largest portfolio company investments(1)  29,591   27,489   29,557   28,880 

 

 

(1)Represents outstanding principal amount, excluding unfunded commitments.

(2)Computed as the (a) annual stated interest rate on accruing senior secured loans divided by (b) total senior secured loans at outstanding principal amount.

 

 3326 

 

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

June 30, 2019March 31, 2020

(in thousands)

 

Portfolio Company(a) Spread Above
Index (b)		 Interest
Rate(b)		  Maturity Principal  Fair
Value		 
Non-Controlled/Non-Affiliate Company Investments                
Senior Secured Loans                
Aerospace & Defense                
IMIA Holdings, Inc. L+4.50%  6.83% 10/28/2024  4,298  $4,324 
IMIA Holdings, Inc. (Revolver)(c) L+4.50%  6.83% 10/28/2024  680   — 
MAG Aerospace Industries, Inc. L+4.75%  7.15% 6/6/2025  3,267   3,251 
Novaria Holding, LLC L+4.75%  7.15% 12/19/2024  4,312   4,312 
Trident Maritime SH, Inc. L+5.50%  7.83% 6/4/2024  4,435   4,381 
Trident Maritime SH, Inc. (Revolver)(c) L+5.50%  7.83% 6/4/2024  340   — 
           17,332   16,268 
Automotive                
Innovative Aftermarket Systems L+5.50%  7.90% 1/25/2021  1,947   1,945 
Wheel Pros, LLC L+4.75%  7.15% 4/4/2025  4,957   4,914 
           6,904   6,859 
Banking, Finance, Insurance & Real Estate                
Avison Young (USA) Inc. L+5.00%  7.33% 1/30/2026  4,975   4,901 
Lightbox Intermediate, L.P. L+5.00%  7.45% 5/11/2026  5,000   4,950 
Minotaur Acquisition, Inc. L+5.00%  7.40% 3/27/2026  2,992   2,950 
Nuvei Technologies Corp. P+3.50%  9.00% 9/26/2025  4,138   4,108 
Nuvei Technologies Corp. (Delayed Draw)(c) L+4.50%  6.89% 9/26/2025  837   708 
RMS Holding Company, LLC L+6.00%  8.58% 11/16/2022  3,991   3,974 
Zenith Merger Sub, Inc. L+5.25%  7.58% 12/13/2024  4,724   4,702 
Zenith Merger Sub, Inc. (Delayed Draw)(c) L+5.25%  7.58% 12/13/2024  265   — 
           26,922   26,293 
Beverage, Food & Tobacco                
Il Fornaio (America) Corporation L+6.50%  8.90% 11/10/2022  4,840   4,748 
SW Ingredients Holdings, LLC L+4.00%  6.54% 7/3/2025  3,722   3,722 
US Salt, LLC L+4.75%  7.15% 1/16/2026  2,743   2,747 
           11,305   11,217 
Capital Equipment                
Analogic Corporation L+6.00%  8.40% 6/24/2024  4,963   4,861 
           4,963   4,861 
Chemicals, Plastics & Rubber                
Loparex International B.V. L+4.25%  6.65% 4/11/2025  437   437 
Peach State Labs, LLC L+6.50%  8.94% 6/30/2021  2,836   2,794 
           3,273   3,231 
Construction & Building                
The Cook & Boardman Group, LLC L+5.75%  8.37% 10/20/2025  2,985   2,970 
           2,985   2,970 
Consumer Goods: Durable                
International Textile Group, Inc. L+5.00%  7.44% 5/1/2024  1,828   1,700 
SSH Group Holdings, Inc. L+4.25%  6.83% 7/30/2025  2,316   2,305 
           4,144   4,005 
Consumer Goods: Non-Durable                
PH Beauty Holdings III, Inc. L+5.00%  7.40% 9/26/2025  2,480   2,465 
           2,480   2,465 
Containers, Packaging & Glass                
Liqui-Box Holdings, Inc.(d) L+4.50%  6.90% 6/3/2026  4,333   4,298 
Polychem Acquisition, LLC L+5.00%  7.40% 3/17/2025  2,993   3,002 
Port Townsend Holdings Company, Inc. L+4.75%  7.15% 4/3/2024  4,862   4,856 
PVHC Holding Corp L+4.75%  7.08% 8/5/2024  3,300   3,218 
PVHC Holding Corp (Delayed Draw)(c) L+4.75%  7.08% 8/5/2024  425   — 
           15,913   15,374 
Energy: Oil & Gas                
Drilling Info Holdings, Inc. L+4.25%  6.65% 7/30/2025  4,617   4,599 
Drilling Info Holdings, Inc. (Delayed Draw)(c) L+4.25%  6.65% 7/30/2025  16   — 
Offen, Inc.(d) L+5.00%  7.40% 6/22/2026  2,448   2,424 
Offen, Inc. (Delayed Draw)(c) (d) L+5.00%  7.40% 6/22/2026  885   — 
           7,966   7,023 
Healthcare & Pharmaceuticals                
LSCS Holdings, Inc. L+4.25%  6.58% 3/17/2025  2,328   2,316 
LSCS Holdings, Inc. L+4.25%  6.58% 3/17/2025  601   598 
P&L Developments, LLC(d) L+7.50%  9.90% 6/28/2024  3,000   2,925 
Radiology Partners, Inc. L+4.75%  7.34% 7/9/2025  4,975   4,974 
Solara Medical Supplies, LLC L+6.00%  8.40% 2/27/2024  5,543   5,543 
Solara Medical Supplies, LLC (Delayed Draw)(c) L+6.00%  8.40% 2/27/2024  1,072   429 
Solara Medical Supplies, LLC (Revolver)(c) L+6.00%  8.40% 2/27/2024  714   — 
           18,233   16,785 
High Tech Industries                
AQA Acquisition Holding, Inc. L+4.25%  6.58% 5/24/2023  3,308   3,292 
Corel Corporation L+5.00%  7.52% 6/4/2024  3,642   3,642 
Corel Corporation(d) L+5.00%  7.40% 7/2/2026  2,500   2,394 
Datto, Inc. L+4.25%  6.58% 4/2/2026  3,333   3,354 
Gigamon, Inc. L+4.25%  6.65% 12/27/2024  2,955   2,881 
LW Buyer, LLC(d) L+5.00%  7.40% 12/30/2024  5,000   4,950 
Perforce Software, Inc. L+4.50%  6.93% 12/27/2024  1,990   1,986 
Perforce Software, Inc.(d) L+4.50%  6.90% 7/1/2026  3,333   3,333 
TGG TS Acquisition Company L+6.50%  8.93% 12/12/2025  4,290   4,274 
           30,351   30,106 
Hotels, Gaming & Leisure                
Tait LLC L+5.00%  7.41% 3/28/2025  4,231   4,146 
Tait LLC (Revolver)(c) L+5.00%  7.41% 3/28/2025  769   — 
           5,000   4,146 
Media: Advertising, Printing & Publishing                
Cadent, LLC L+5.25%  7.63% 9/11/2023  4,975   4,962 
Cadent, LLC (Revolver)(c) L+5.25%  7.63% 9/11/2023  167   — 
Digital Room Holdings, Inc. L+5.00%  7.40% 5/21/2026  4,428   4,318 
           9,570   9,280 
Media: Diversified & Production                
Research Now Group, Inc. and Survey Sampling International, LLC L+5.50%  8.08% 12/20/2024  6,895   6,886 
Stats Intermediate Holding, LLC(d) L+5.25%  7.65% 7/12/2026  5,000   4,950 
           11,895   11,836 
Services: Business                
CHA Holdings, Inc. L+4.50%  6.83% 4/10/2025  2,033   2,030 
CHA Holdings, Inc. (Delayed Draw)(c) L+4.50%  6.81% 4/10/2025  446   428 
Eliassen Group, LLC L+4.50%  6.90% 11/5/2024  3,040   3,040 
Engage2Excel, Inc. L+6.50%  9.36% 3/7/2023  4,320   4,286 
Engage2Excel, Inc. L+6.50%  9.12% 3/7/2023  779   773 
Engage2Excel, Inc. (Delayed Draw)(c) L+6.50%  9.12% 3/7/2023  500   — 
Engage2Excel, Inc. (Revolver)(c) P+5.50%  11.00% 3/7/2023  545   159 
GI Revelation Acquisition LLC L+5.00%  7.40% 4/16/2025  1,386   1,376 
North Haven CA Holdings, Inc. L+4.50%  6.83% 10/2/2023  4,618   4,618 
Orbit Purchaser LLC L+4.50%  7.19% 10/21/2024  2,500   2,489 
Orbit Purchaser LLC L+4.50%  7.05% 10/21/2024  1,931   1,922 
Orbit Purchaser LLC L+4.50%  7.19% 10/21/2024  565   562 
Output Services Group, Inc. L+4.25%  6.65% 3/27/2024  4,940   4,470 
SIRVA Worldwide, Inc. L+5.50%  7.90% 8/4/2025  1,975   1,922 
The Kleinfelder Group, Inc. L+4.75%  7.12% 11/29/2024  2,488   2,474 
           32,066   30,549 
Services: Consumer                
Cambium Learning Group, Inc. L+4.50%  7.08% 12/18/2025  4,975   4,932 
LegalZoom.com, Inc. L+4.50%  6.90% 11/21/2024  2,735   2,754 
WeddingWire, Inc. L+4.50%  6.90% 12/19/2025  1,161   1,165 
           8,871   8,851 
Telecommunications                
Intermedia Holdings, Inc. L+6.00%  8.40% 7/21/2025  1,824   1,829 
Mavenir Systems, Inc. L+6.00%  8.42% 5/8/2025  3,960   3,957 
           5,784   5,786 
Transportation: Cargo                
GlobalTranz Enterprises LLC L+5.00%  7.39% 5/15/2026  3,312   3,217 
GlobalTranz Enterprises LLC (Delayed Draw)(c) L+5.00%  7.39% 5/15/2026  855   — 
           4,167   3,217 
Utilities: Oil & Gas                
NGS US Finco, LLC L+4.25%  6.65% 10/1/2025  1,741   1,740 
           1,741   1,740 
Wholesale                
AmeriLife Group, LLC L+4.50%  6.90% 6/12/2026  2,924   2,929 
AmeriLife Group, LLC (Delayed Draw)(c) L+4.50%  6.90% 6/12/2026  410   — 
BMC Acquisition, Inc. L+5.25%  7.65% 12/30/2024  4,925   4,925 
HALO Buyer, Inc. L+4.50%  6.90% 6/27/2025  4,950   4,901 
           13,209   12,755 
                 
TOTAL INVESTMENTS             $235,617 
Portfolio Company(a) Spread
Above
Index(b)		  Interest
Rate(b)		  Maturity Principal  Fair
Value		 
Non-Controlled/Non-Affiliate Company Investments                 
Senior Secured Loans                 
Aerospace & Defense                 
Bromford Industries Limited  (e) L+5.25%   6.70% 11/5/2025  2,793  $2,646 
Bromford Industries Limited  (e) L+5.25%   6.70% 11/5/2025  1,862   1,764 
IMIA Holdings, Inc. L+4.50%   5.95% 10/28/2024  4,266   4,204 
IMIA Holdings, Inc. (Revolver)(c) L+4.50%   5.50% 10/28/2024  680   340 
MAG Aerospace Industries, Inc. L+4.75%   6.35% 6/6/2025  3,242   3,161 
Trident Maritime SH, Inc. L+5.50%   6.50% 6/4/2024  4,435   4,344 
Trident Maritime SH, Inc. (Revolver)(c) L+5.50%   6.25% 6/4/2024  340   166 
            17,618   16,625 
Automotive                 
Innovative Aftermarkets Systems L+5.50%   6.50% 1/25/2021  1,867   1,864 
Truck-Lite Co., LLC L+6.25%   7.32% 12/14/2026  1,739   1,722 
Truck-Lite Co., LLC (Delayed Draw)(c) L+6.25%   7.32% 12/14/2026  256   — 
Wheel Pros, LLC L+4.75%   5.82% 4/4/2025  4,920   3,567 
            8,782   7,153 
Banking, Finance, Insurance & Real Estate                 
Avison Young (USA), Inc.(e) L+5.00%   6.45% 1/30/2026  4,938   4,065 
Lightbox Intermediate, L.P. L+5.00%   5.80% 5/11/2026  4,963   4,888 
Minotaur Acquisition, Inc. L+5.00%   5.99% 3/27/2026  2,970   2,520 
Nuvei Technologies Corp.(e) L+5.00%   6.00% 9/26/2025  4,657   4,238 
Zenith Merger Sub, Inc. L+5.25%   6.70% 12/13/2024  4,688   4,477 
Zenith Merger Sub, Inc. (Delayed Draw)(c) L+5.25%   6.70% 12/13/2024  264   63 
            22,480   20,251 
Beverage, Food & Tobacco                 
CBC Restaurant Corp. L+6.50%   7.95% 11/10/2022  2,537   2,389 
SW Ingredients Holdings, LLC L+4.00%   5.91% 7/3/2025  3,684   3,616 
            6,221   6,005 
Capital Equipment                 
Analogic Corporation L+5.25%   6.25% 6/24/2024  4,836   4,624 
            4,836   4,624 
Chemicals, Plastics & Rubber                 
Polymer Solutions Group L+6.75%   7.75% 6/30/2021  1,244   1,218 
            1,244   1,218 
Construction & Building                 
ISC Purchaser, LLC P+4.00%   7.25% 7/11/2025  4,975   4,873 
The Cook & Boardman Group, LLC L+5.75%   7.67% 10/20/2025  2,963   2,489 
            7,938   7,362 
Consumer Goods: Durable                 
International Textile Group, Inc. L+5.00%   6.58% 5/1/2024  1,793   1,228 
            1,793   1,228 
Consumer Goods: Non-Durable                 
PH Beauty Holdings III, Inc. L+5.00%   6.07% 9/26/2025  2,461   1,907 
            2,461   1,907 
Containers, Packaging & Glass                 
Liqui-Box Holdings, Inc. L+4.50%   6.15% 2/26/2027  4,333   3,748 
Polychem Acquisition, LLC L+5.00%   6.08% 3/17/2025  2,970   2,970 
Port Townsend Holdings Company, Inc. L+4.75%   5.75% 4/3/2024  4,721   4,249 
PVHC Holding Corp. L+4.75%   6.18% 8/5/2024  3,275   2,718 
PVHC Holding Corp. (Delayed Draw)(c) L+4.75%   6.18% 8/5/2024  425   — 
            15,724   13,685 
Energy: Oil & Gas                 
Drilling Info Holdings, Inc. L+4.25%   5.24% 7/30/2025  4,598   3,678 
Offen, Inc. L+5.00%   6.07% 6/22/2026  2,430   2,255 
Offen, Inc. (Delayed Draw)(c)  L+5.00%   6.07% 6/22/2026  885   — 
            7,913   5,933 
Healthcare & Pharmaceuticals                 
LSCS Holdings, Inc. L+4.25%   5.32% 3/17/2025  2,316   2,143 
LSCS Holdings, Inc. L+4.25%   5.32% 3/17/2025  598   553 
P&L Developments, LLC L+7.50%   9.50% 6/28/2024  2,985   2,612 
Radiology Partners, Inc. L+4.25%   5.99% 7/9/2025  4,760   3,989 
Solara Medical Supplies, LLC L+6.00%   7.45% 2/27/2024  5,501   5,313 
Solara Medical Supplies, LLC L+6.00%   7.45% 2/27/2024  1,065   1,029 
Solara Medical Supplies, LLC (Revolver) L+6.00%   7.00% 2/27/2024  714   714 
            17,939   16,353 

27

 

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2020

Portfolio Company(a) Spread
Above
Index(b)		  Interest
Rate(b)		  Maturity Principal  Fair
Value		 
High Tech Industries                 
AQA Acquisition Holding, Inc. L+4.25%   5.70% 5/24/2023  3,283  $ 3,266 
Corel, Inc.(e)  L+5.00%   6.61% 7/2/2026  3,975   3,528 
LW Buyer, LLC L+5.00%   5.99% 12/30/2024  4,963   4,491 
TGG TS Acquisition Company L+6.50%   7.50% 12/12/2025  4,028   3,363 
            16,249   14,648 
Hotels, Gaming & Leisure                 
Excel Fitness Holdings, Inc. L+5.25%   6.25% 10/7/2025  4,239   3,286 
North Haven Spartan US Holdco, LLC L+5.00%   6.00% 6/6/2025  2,338   2,052 
Tait, LLC L+4.50%   6.11% 3/28/2025  4,199   3,815 
Tait, LLC (Revolver) P+3.50%   6.75% 3/28/2025  769   699 
            11,545   9,852 
Media: Advertising, Printing & Publishing                 
Cadent, LLC L+5.25%   6.70% 9/11/2023  4,925   4,913 
Cadent, LLC (Revolver)(c) L+5.25%   6.25% 9/11/2023  167   65 
Digital Room Holdings, Inc. L+5.00%   6.07% 5/21/2026  4,395   3,835 
Monotype Imaging Holdings Corp.(d) L+5.50%   6.95% 10/9/2026  5,000   3,875 
            14,487   12,688 
Media: Diversified & Production                 
Research Now Group, Inc. and Survey Sampling International, LLC L+5.50%   7.26% 12/20/2024  6,843   6,158 
Stats Intermediate Holding, LLC L+5.25%   6.96% 7/10/2026  4,988   4,165 
The Octave Music Group, Inc. L+5.25%   6.86% 5/29/2025  5,000   4,450 
            16,831   14,773 
Services: Business                 
AQ Carver Buyer, Inc.(d) L+5.00%   6.37% 9/23/2025  4,975   3,856 
CHA Holdings, Inc. L+4.50%   5.57% 4/10/2025  2,018   1,866 
CHA Holdings, Inc. L+4.50%   5.57% 4/10/2025  425   393 
Eliassen Group, LLC L+4.50%   5.49% 11/5/2024  3,029   2,834 
Engage2Excel, Inc. L+6.50%   8.40% 3/7/2023  4,288   3,884 
Engage2Excel, Inc. L+6.50%   8.42% 3/7/2023  773   701 
Engage2Excel, Inc. (Delayed Draw)(c) L+6.50%   8.42% 3/7/2023  500   — 
Engage2Excel, Inc. (Revolver)(c) P+5.50%   8.75% 3/7/2023  545   338 
GI Revelation Acquisition, LLC L+5.00%   5.99% 4/16/2025  1,376   1,087 
Legility, LLC L+6.00%   6.84% 12/17/2025  5,000   4,900 
Orbit Purchaser, LLC L+4.50%   5.96% 10/21/2024  2,475   2,359 
Orbit Purchaser, LLC L+4.50%   5.96% 10/21/2024  1,911   1,821 
Orbit Purchaser, LLC L+4.50%   5.96% 10/21/2024  559   533 
Output Services Group, Inc. L+4.50%   6.11% 3/27/2024  4,902   4,191 
SIRVA Worldwide, Inc. L+5.50%   6.49% 8/4/2025  1,938   1,453 
Teneo Holdings, LLC L+5.25%   6.25% 7/11/2025  4,975   4,080 
The Kleinfelder Group, Inc. L+4.75%   5.95% 11/29/2024  2,469   2,368 
            42,158   36,664 
Services: Consumer                 
Cambium Learning Group, Inc. L+4.50%   5.95% 12/18/2025  4,938   4,073 
LegalZoom.com, Inc. L+4.50%   5.49% 11/21/2024  2,715   2,396 
            7,653   6,469 
Telecommunications                 
Intermedia Holdings, Inc. L+6.00%   7.00% 7/21/2025  1,810   1,657 
Mavenir Systems, Inc. L+6.00%   7.00% 5/8/2025  3,930   3,419 
            5,740   5,076 
Transportation: Cargo                 
GlobalTranz Enterprises, LLC L+5.00%   5.93% 5/15/2026  3,287   2,408 
            3,287   2,408 
Utilities: Oil & Gas                 
NGS US Finco, LLC L+4.25%   5.25% 10/1/2025  1,728   1,408 
            1,728   1,408 
Wholesale                 
BMC Acquisition, Inc. L+5.25%   7.17% 12/30/2024  4,888   4,826 
HALO Buyer, Inc. L+4.50%   5.50% 6/30/2025  4,913   4,028 
PT Intermediate Holdings III, LLC L+5.50%   6.95% 10/15/2025  1,995   1,985 
            11,796   10,839 
                  
TOTAL INVESTMENTS              $217,169 

 

(a)All investments are U.S. companies except for Loparex International B.V.unless otherwise noted.

(b)The majority of investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime (“P”) which reset daily, monthly, quarterly or semiannually. The Company has provided the spread over LIBOR or Prime and the current contractual rate of interest in effect at June 30, 2019.March 31, 2020. Certain investments are subject to a LIBOR or Prime interest rate floor.

(c)All or a portion of this commitment was unfunded as of June 30, 2019.March 31, 2020. As such, interest is earned only on the funded portion of this commitment. Principal reflects the commitment outstanding.

(d)Investment position or portion thereof unsettled as of June 30, 2019.March 31, 2020.

(e)This is an international company.

 3428 

 

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2018

(in thousands)2019

 

Portfolio Company(a) Spread Above
Index(b)		 Interest
Rate(b)		  Maturity Principal  Fair
Value		 
Non-Controlled/Non-Affiliate Company Investments                
Senior Secured Loans                
Aerospace & Defense                
IMIA Holdings, Inc. L+4.50%  7.30% 10/28/2024  4,320  $4,341 
IMIA Holdings, Inc. (Revolver)(c) L+4.50%  7.30% 10/28/2024  680   — 
MAG Aerospace Industries, Inc. L+4.75%  7.27% 6/6/2025  3,284   3,267 
Novaria Holding, LLC(d) L+4.75%  7.27% 12/19/2024  4,333   4,290 
The KEYW Corporation L+4.50%  6.89% 5/8/2024  1,488   1,473 
Trident Maritime SH, Inc. L+5.50%  8.30% 6/4/2024  4,637   4,623 
Trident Maritime SH, Inc. (Revolver)(c) L+5.50%  8.30% 6/4/2024  340   — 
           19,082   17,994 
Automotive                
Wheel Pros, LLC L+4.75%  7.27% 4/4/2025  3,980   3,920 
           3,980   3,920 
Banking, Finance, Insurance & Real Estate                
Kestra Financial, Inc.(d) L+4.25%  6.77% 6/24/2022  3,564   3,537 
MTC Intermediate Holdco, Inc. L+4.50%  7.02% 1/30/2023  4,963   4,963 
Pivotal Payments Inc. P+3.50%  9.00% 9/26/2025  2,902   2,873 
Pivotal Payments Inc. (Delayed Draw)(c) L+4.50%  6.98% 9/26/2025  841   518 
Zenith Merger Sub, Inc. L+5.50%  8.30% 12/13/2023  3,713   3,701 
           15,983   15,592 
Beverage, Food & Tobacco                
Il Fornaio (America) Corporation L+6.50%  9.02% 11/10/2022  4,894   4,847 
SW Ingredients Holdings, LLC L+4.25%  7.05% 7/3/2025  3,731   3,709 
US Salt, LLC L+4.75%  7.27% 11/30/2023  3,474   3,474 
           12,099   12,030 
Capital Equipment                
Analogic Corporation L+6.00%  8.52% 6/24/2024  4,988   4,786 
           4,988   4,786 
Chemicals, Plastics & Rubber                
Loparex International B.V. L+4.25%  7.05% 4/11/2025  498   490 
Peach State Labs, LLC L+6.50%  8.85% 6/30/2021  2,850   2,825 
           3,348   3,315 
Construction & Building                
Fastener Acquisition, Inc. L+4.25%  7.05% 3/28/2025  1,323   1,256 
The Cook & Boardman Group, LLC L+5.75%  8.55% 10/20/2025  3,000   2,978 
           4,323   4,234 
Consumer Goods: Durable                
International Textile Group, Inc. L+5.00%  7.35% 5/1/2024  1,852   1,819 
SSH Group Holdings, Inc. L+4.25%  6.77% 7/30/2025  2,327   2,240 
           4,179   4,059 
Consumer Goods: Non-Durable                
PH Beauty Holdings III, Inc. L+5.00%  7.52% 9/26/2025  1,995   1,925 
           1,995   1,925 
Containers, Packaging & Glass                
Port Townsend Holdings Company, Inc. L+4.75%  7.27% 4/3/2024  4,887   4,893 
PVHC Holding Corp L+4.75%  7.57% 8/5/2024  3,317   3,333 
PVHC Holding Corp (Delayed Draw)(c) L+4.75%  7.57% 8/5/2024  425   — 
           8,629   8,226 
Energy: Oil & Gas                
Drilling Info Holdings, Inc. L+4.25%  6.77% 7/30/2025  4,307   4,296 
Drilling Info Holdings, Inc. (Delayed Draw)(c) L+4.25%  6.77% 7/30/2025  350   — 
           4,657   4,296 
Healthcare & Pharmaceuticals                
LSCS Holdings, Inc. L+4.25%  6.77% 3/17/2025  2,328   2,316 
LSCS Holdings, Inc. L+4.25%  6.96% 3/17/2025  601   598 
Radiology Partners, Inc. L+4.25%  6.87% 7/9/2025  4,988   4,900 
Solara Medical Supplies, LLC L+6.00%  8.52% 5/31/2023  5,571   5,594 
Solara Medical Supplies, LLC (Delayed Draw)(c) L+6.00%  8.52% 5/31/2023  1,071   — 
Solara Medical Supplies, LLC (Revolver)(c) L+6.00%  8.52% 5/31/2023  714   — 
           15,273   13,408 
High Tech Industries                
AQA Acquisition Holding, Inc. L+4.25%  7.05% 5/24/2023  3,325   3,308 
Corel Corporation(d) L+5.00%  7.71% 6/4/2024  3,786   3,749 
Gigamon, Inc. L+4.25%  7.05% 12/27/2024  2,970   2,933 
TGG TS Acquisition Company(d) L+6.50%  9.02% 12/12/2025  4,400   4,241 
           14,481   14,231 
Media: Advertising, Printing & Publishing                
Cadent, LLC L+5.25%  7.71% 9/11/2023  4,988   4,975 
Cadent, LLC (Revolver)(c) L+5.25%  7.71% 9/11/2023  167   — 
           5,155   4,975 
Media: Diversified & Production                
Research Now Group, Inc. and Survey Sampling International, LLC L+5.50%  8.02% 12/20/2024  6,930   6,817 
           6,930   6,817 
Services: Business                
CHA Holdings, Inc. L+4.50%  7.30% 4/10/2025  2,043   2,041 
CHA Holdings, Inc. (Delayed Draw)(c) L+4.50%  7.30% 4/10/2025  446   — 
Eliassen Group, LLC L+4.50%  7.02% 11/5/2024  2,500   2,475 
Engage2Excel, Inc. L+6.50%  8.93% 3/7/2023  4,342   4,320 
Engage2Excel, Inc. (Revolver)(c) L+6.50%  8.95% 3/7/2023  545   155 
GI Revelation Acquisition LLC L+5.00%  7.52% 4/16/2025  1,393   1,374 
North Haven CA Holdings, Inc. L+4.50%  7.02% 9/29/2023  5,000   4,972 
Orbit Purchaser LLC L+4.50%  7.17% 10/21/2024  1,931   1,919 
Orbit Purchaser LLC (Delayed Draw)(c) L+4.50%  7.17% 10/21/2024  565   — 
Output Services Group, Inc. L+4.25%  6.77% 3/27/2024  4,965   4,828 
SIRVA Worldwide, Inc. L+5.50%  8.02% 8/4/2025  2,000   1,965 
The Kleinfelder Group, Inc.(d) L+4.75%  7.27% 11/29/2024  2,500   2,475 
           28,230   26,524 
Services: Consumer                
Cambium Learning Group, Inc.(d) L+4.50%  7.02% 12/18/2025  5,000   4,769 
LegalZoom.com, Inc. L+4.50%  7.00% 11/21/2024  2,749   2,708 
WeddingWire, Inc.(d) L+4.50%  7.02% 12/19/2025  1,167   1,149 
           8,916   8,626 
Telecommunications                
Intermedia Holdings, Inc. L+6.00%  8.52% 7/21/2025  1,833   1,831 
Mavenir Systems, Inc. L+6.00%  8.39% 5/8/2025  3,980   3,968 
           5,813   5,799 
Utilities: Oil & Gas                
NGS US Finco, LLC L+4.25%  6.76% 10/1/2025  1,750   1,746 
           1,750   1,746 
Wholesale                
BMC Acquisition, Inc. L+5.25%  8.13% 12/30/2024  4,950   4,962 
Halo Buyer, Inc. L+4.50%  7.02% 6/27/2025  3,501   3,431 
Halo Buyer, Inc. L+4.50%  7.02% 6/27/2025  1,474   1,445 
           9,925   9,838 
                 
TOTAL INVESTMENTS             $172,341 
Portfolio Company(a) Spread Above
Index (b)		  Interest
Rate(b)		  Maturity Principal  Fair
Value		 
Non-Controlled/Non-Affiliate Company Investments                 
Senior Secured Loans                 
Aerospace & Defense                 
Bromford Industries Limited(e) L+5.25%   7.14% 11/5/2025  2,800  $2,772 
Bromford Industries Limited(e) L+5.25%   7.14% 11/5/2025  1,867   1,848 
IMIA Holdings, Inc. L+4.50%   6.44% 10/28/2024  4,277   4,277 
IMIA Holdings, Inc. (Revolver)(c) L+4.50%   6.44% 10/28/2024  680   — 
MAG Aerospace Industries, Inc. L+4.75%   6.55% 6/6/2025  3,251   3,234 
Novaria Holdings, LLC L+4.75%   6.55% 12/19/2024  4,290   4,288 
Trident Maritime SH, Inc. L+5.50%   7.30% 6/4/2024  4,435   4,404 
Trident Maritime SH, Inc. (Revolver)(c) L+5.50%   7.30% 6/4/2024  340   — 
            21,940   20,823 
Automotive                 
Innovative Aftermarkets Systems L+5.50%   7.30% 1/25/2021  1,893   1,891 
Wheel Pros, LLC L+4.75%   6.55% 4/4/2025  4,933   4,875 
            6,826   6,766 
Banking, Finance, Insurance & Real Estate                 
Avison Young (USA), Inc.(e) L+5.00%   6.94% 1/30/2026  4,950   4,874 
Lightbox Intermediate, L.P. L+5.00%   6.74% 5/11/2026  4,975   4,913 
Minotaur Acquisition, Inc. L+5.00%   6.80% 3/27/2026  2,978   2,940 
Nuvei Technologies Corp.(e) L+5.00%   6.80% 9/26/2025  4,657   4,692 
Zenith Merger Sub, Inc. L+5.25%   7.19% 12/13/2024  4,700   4,700 
Zenith Merger Sub, Inc. (Delayed Draw)(c) L+5.25%   7.19% 12/13/2024  265   66 
            22,525   22,185 
Beverage, Food & Tobacco                 
CBC Restaurant Corp. L+6.50%   8.30% 11/10/2022  2,537   2,502 
SW Ingredients Holdings, LLC L+4.00%   6.21% 7/3/2025  3,694   3,688 
US Salt, LLC L+4.75%   6.55% 1/16/2026  2,729   2,743 
            8,960   8,933 
Capital Equipment                 
Analogic Corporation L+6.00%   7.80% 6/24/2024  4,874   4,854 
            4,874   4,854 
Chemicals, Plastics & Rubber                 
Polymer Solutions Group L+6.75%   8.45% 6/30/2021  1,271   1,271 
            1,271   1,271 
Construction & Building                 
ISC Purchaser, LLC L+5.00%   6.94% 7/11/2025  4,988   4,988 
The Cook & Boardman Group, LLC L+5.75%   7.67% 10/20/2025  2,970   2,866 
            7,958   7,854 
Consumer Goods: Durable                 
International Textile Group, Inc. L+5.00%   6.69% 5/1/2024  1,805   1,498 
            1,805   1,498 
Consumer Goods: Non-Durable                 
PH Beauty Holdings III, Inc. L+5.00%   6.80% 9/26/2025  2,468   2,356 
            2,468   2,356 
Containers, Packaging & Glass                 
Liqui-Box Holdings, Inc.(d) L+4.50%   6.30% 6/3/2026  4,333   4,241 
Polychem Acquisition, LLC L+5.00%   6.95% 3/17/2025  2,978   2,978 
Port Townsend Holdings Company, Inc. L+4.75%   6.55% 4/3/2024  4,838   4,777 
PVHC Holding Corp. L+4.75%   6.69% 8/5/2024  3,283   2,947 
PVHC Holding Corp. (Delayed Draw)(c) L+4.75%   6.69% 8/5/2024  425   — 
            15,857   14,943 
Energy: Oil & Gas                 
Drilling Info Holdings, Inc. L+4.25%   6.05% 7/30/2025  4,609   4,586 
Offen, Inc. L+5.00%   6.94% 6/22/2026  2,436   2,436 
Offen, Inc. (Delayed Draw)(c) L+5.00%   6.94% 6/22/2026  885   — 
            7,930   7,022 
Healthcare & Pharmaceuticals                 
LSCS Holdings, Inc. L+4.25%   6.19% 3/17/2025  2,322   2,299 
LSCS Holdings, Inc. L+4.25%   6.19% 3/17/2025  599   593 
P&L Developments, LLC L+7.50%   9.50% 6/28/2024  2,993   2,978 
Radiology Partners, Inc. L+4.75%   6.62% 7/9/2025  4,938   4,970 
Solara Medical Supplies, LLC L+6.00%   7.94% 2/27/2024  5,515   5,515 
Solara Medical Supplies, LLC L+6.00%   7.94% 2/27/2024  1,068   1,068 
Solara Medical Supplies, LLC (Revolver)(c) L+6.00%   7.94% 2/27/2024  714   — 
            18,149   17,423 

29

 

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2019 

Portfolio Company(a) Spread Above
Index (b)		  Interest
Rate(b)		  Maturity Principal  Fair
Value		 
High Tech Industries                 
AQA Acquisition Holding, Inc. L+4.25%   6.19% 5/24/2023  3,291  $ 3,275 
Corel, Inc.(e) L+5.00%   6.91% 7/2/2026  4,000   3,875 
Gigamon, Inc. L+4.25%   6.04% 12/27/2024  2,940   2,914 
LW Buyer, LLC L+5.00%   6.80% 12/30/2024  4,975   4,938 
Perforce Software, Inc. L+4.50%   6.30% 7/1/2026  3,325   3,331 
TGG TS Acquisition Company L+6.50%   8.24% 12/12/2025  4,058   4,037 
            22,589   22,370 
Hotels, Gaming & Leisure                 
Excel Fitness Holdings, Inc. L+5.25%   7.05% 10/7/2025  4,250   4,255 
North Haven Spartan US Holdco, LLC L+5.00%   6.89% 6/6/2025  2,344   2,343 
Tait, LLC L+4.50%   6.61% 3/28/2025  4,210   4,210 
Tait, LLC (Revolver)(c) L+4.50%   6.61% 3/28/2025  769   — 
            11,573   10,808 
Media: Advertising, Printing & Publishing                 
Cadent, LLC L+5.25%   7.05% 9/11/2023  4,938   4,925 
Cadent, LLC (Revolver)(c) L+5.25%   7.05% 9/11/2023  167   — 
Digital Room Holdings, Inc. L+5.00%   6.80% 5/21/2026  4,406   4,186 
Monotype Imaging Holdings Corp.(d) L+5.50%   7.30% 10/9/2026  5,000   4,825 
            14,511   13,936 
Media: Diversified & Production                 
Research Now Group, Inc. and Survey Sampling International, LLC L+5.50%   7.41% 12/20/2024  6,860   6,869 
Stats Intermediate Holding, LLC L+5.25%   7.30% 7/10/2026  5,000   4,894 
            11,860   11,763 
Services: Business                 
AQ Carver Buyer, Inc.(d) L+5.00%   6.80% 9/24/2025  5,000   4,925 
CHA Holdings, Inc. L+4.50%   6.44% 4/10/2025  2,023   2,020 
CHA Holdings, Inc. L+4.50%   6.44% 4/10/2025  426   426 
Eliassen Group, LLC L+4.50%   6.30% 11/5/2024  3,032   3,022 
Engage2Excel, Inc. L+6.50%   8.71% 3/7/2023  4,298   4,181 
Engage2Excel, Inc. L+6.50%   8.42% 3/7/2023  775   754 
Engage2Excel, Inc. (Delayed Draw)(c) L+6.50%   8.42% 3/7/2023  500   — 
Engage2Excel, Inc. (Revolver)(c) P+5.50%   10.25% 3/7/2023  545   354 
GI Revelation Acquisition, LLC L+5.00%   6.80% 4/16/2025  1,379   1,305 
Orbit Purchaser, LLC L+4.50%   6.45% 10/21/2024  2,481   2,479 
Orbit Purchaser, LLC L+4.50%   6.45% 10/21/2024  1,916   1,914 
Orbit Purchaser, LLC L+4.50%   6.45% 10/21/2024  560   560 
Output Services Group, Inc. L+4.50%   6.30% 3/27/2024  4,916   4,166 
SIRVA Worldwide, Inc. L+5.50%   7.30% 8/4/2025  1,950   1,931 
Teneo Holdings, LLC L+5.25%   6.99% 7/11/2025  4,988   4,757 
The Kleinfelder Group, Inc. L+4.75%   6.37% 11/29/2024  2,475   2,474 
            37,264   35,268 
Services: Consumer                 
Cambium Learning Group, Inc. L+4.50%   6.30% 12/18/2025  4,950   4,801 
LegalZoom.com, Inc. L+4.50%   6.30% 11/21/2024  2,722   2,747 
            7,672   7,548 
Telecommunications                 
Intermedia Holdings, Inc. L+6.00%   7.80% 7/21/2025  1,815   1,820 
Mavenir Systems, Inc. L+6.00%   7.91% 5/8/2025  3,940   3,920 
            5,755   5,740 
Transportation: Cargo                 
GlobalTranz Enterprises, LLC L+5.00%   6.79% 5/15/2026  3,295   3,032 
            3,295   3,032 
Utilities: Oil & Gas                 
NGS US Finco, LLC L+4.25%   6.05% 10/1/2025  1,733   1,733 
            1,733   1,733 
Wholesale                 
BMC Acquisition, Inc. L+5.25%   7.17% 12/30/2024  4,900   4,888 
Halo Buyer, Inc. L+4.50%   6.30% 6/30/2025  4,925   4,827 
PT Intermediate Holdings III, LLC L+5.50%   7.44% 10/15/2025  2,000   1,995 
            11,825   11,710 
                  
TOTAL INVESTMENTS              $239,836 

 

(a)(a)All investments are U.S. companies except for Loparex International B.V.unless otherwise noted.

(b)The majority of investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime Rate (“Prime” or “P”P”) which reset daily, monthly, quarterly or semiannually. The Company has provided the spread over LIBOR or Prime and the current contractual rate of interest in effect at December 31, 2018.2019. Certain investments are subject to a LIBOR or Prime interest rate floor.

(c)All or a portion of this commitment was unfunded as of December 31, 2018.2019. As such, interest is earned only on the funded portion of this commitment. Principal reflects the commitment outstanding.

(d)Investment position or portion thereof unsettled as of December 31, 2018.2019.

(e)This is an international company.

 

 3530 

 

 

Below is certain summarized financial information for SLF as of June 30, 2019March 31, 2020 and December 31, 20182019 and for the three and six months ended June 30, 2019March 31, 2020 and 2018:2019:

  June 30, 2019  December 31, 2018 
  (unaudited)     
Assets        
Investments, at fair value $235,617  $172,341 
Cash  145   448 
Restricted cash  4,159   3,838 
Interest receivable  806   456 
Other assets  30   39 
Total assets $240,757  $177,122 
Liabilities        
Revolving credit facility $143,254  $101,060 
Less: Unamortized deferred financing costs  (1,627)  (1,625)
Total debt, less unamortized deferred financing costs  141,627   99,435 
Payable for open trades  26,387   21,746 
Interest payable  566   457 
Accounts payable and accrued expenses  289   216 
Total liabilities  168,869   121,854 
Members’ capital  71,888   55,268 
Total liabilities and members’ capital $240,757  $177,122 

 

  Three months ended June 30,  Six months ended June 30, 
  2019  2018  2019  2018 
  (unaudited)  (unaudited) 
Investment income:                
Interest income $3,887  $1,399  $7,335  $2,179 
Total investment income  3,887   1,399   7,335   2,179 
Expenses:                
Interest and other debt financing expenses  1,771   605   3,369   649 
Organizational costs  —   5   —   11 
Professional fees  164   22   340   62 
Total expenses  1,935   632   3,709   722 
Net investment income (loss)  1,952   767   3,626   1,457 
Net gain (loss):                
Net change in unrealized gain (loss)  21   454   533   999 
Net gain (loss)  21   454   533   999 
Net increase (decrease) in members’ capital $1,973  $1,221  $4,159  $2,456 
  March 31, 2020  December 31, 2019 
  (unaudited)    
Assets        
Investments, at fair value $217,169  $239,836 
Cash  430   446 
Restricted cash  4,157   4,226 
Interest receivable  724   920 
Other assets  25   41 
Total assets $222,505  $245,469 
Liabilities        
Revolving credit facility $150,697  $147,232 
Less: Unamortized deferred financing costs  (1,298)  (1,407)
Total debt, less unamortized deferred financing costs  149,399   145,825 
Payable for open trades  9,625   13,940 
Interest payable  493   533 
Accounts payable and accrued expenses  338   346 
Total liabilities  159,855   160,644 
Members’ capital  62,650   84,825 
Total liabilities and members’ capital $222,505  $245,469 

 

36

  Three months ended March 31, 
  2020  2019 
  (unaudited) 
Investment income:        
Interest income $4,253  $3,448 
Total investment income  4,253   3,448 
Expenses:        
Interest and other debt financing expenses  1,614   1,598 
Professional fees  184   176 
Total expenses  1,798   1,774 
Net investment income (loss)  2,455   1,674 
Net gain (loss):        
Net change in unrealized gain (loss)  (22,329)  512 
Net gain (loss)  (22,329)  512 
Net increase (decrease) in members’ capital $(19,874) $2,186 

 

Note 4. Fair Value Measurements

 

Investments

 

The Company values all investments in accordance with ASC Topic 820. ASC Topic 820 requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the assets’ or liabilities’ complexity.

 

ASC Topic 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

 

Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:

 

 ·Level 1 -– Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

31

 

 ·Level 2 -– Valuations based on inputs other than quoted prices in active markets, including quoted prices for similar assets or liabilities, which are either directly or indirectly observable.

 

 ·Level 3 -– Valuations based on inputs that are unobservable and significant to the overall fair value measurement. This includes situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant management judgment or estimation.

 

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or liability’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. All investments, with the exception of investments measured at fair value using net asset value (“NAV”), as of June 30, 2019March 31, 2020 and December 31, 20182019 were categorized as Level 3 investments.

 

With respect to investments for which market quotations are not readily available, the Company’s Board undertakes a multi-step valuation process each quarter, as described below:

 

 ·the quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment professionals of MC Advisors responsible for the credit monitoring of the portfolio investment;
   
 ·the Board engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of investments for which market quotations are not readily available. The Company will consult with independent valuation firm(s) relative to each portfolio company at least once in every calendar year, but the independent appraisals are generally received quarterly;

 

 ·to the extent an independent valuation firm is not engaged to conduct an investment appraisal on an investment for which market quotations are not readily available, the investment will be valued by the MC Advisors investment professional responsible for the credit monitoring;
   
 ·preliminary valuation conclusions are then documented and discussed with the investment committee of the Company;
   
 ·the audit committee of the Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and responds andMC Advisors adjusts or further supplements the valuation recommendations to reflect any comments;comments provided by the audit committee; and
   
 ·the Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of MC Advisors, the independent valuation firm(s) and the audit committee.

 

37

The accompanying consolidated schedules of investments held by the Company consist primarily of private debt instruments (“Level 3 debt”). The Company generally uses the income approach to determine fair value for loansLevel 3 debt where market quotations are not readily available, as long as it is appropriate. If there is deterioration in credit quality or a debt investment is in workout status, the Company may consider other factors in determining the fair value, including the value attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. This liquidation analysis may include probability weighting of alternative outcomes. The Company generally considers its Level 3 debt to be performing loans if the borrower is not in default, the borrower is remitting payments in a timely manner; the loan is in covenant compliance or is otherwise not deemed to be impaired. In determining the fair value of the performing Level 3 debt, the Company considers fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions and other relevant factors, both qualitative and quantitative. In the event that a Level 3 debt instrument is not performing, as defined above, the Company will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the Level 3 debt instrument.

 

Under the income approach, the Company uses discounted cash flow models are utilized to determine the present value of the future cash flow streams of its debt investments, based on future interest and principal payments as set forth in the associated loan agreements. In determining fair value under the income approach, the Company also considers the following factors: applicable market yields and leverage levels, credit quality, prepayment penalties, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.

 

Under the market approach, the Company typically uses the enterprise value methodology is typically utilized to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one portfolio company, enterprise value is generally best expressed as a range of values, from which the Company derives a single estimate of enterprise value. In estimating the enterprise value of a portfolio company, the Company analyzes various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio company’s historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public. Typically, the enterprise values of private companies are based on multiples of earnings before interest, income taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value.

 

32

In addition, for certain debt investments, the Company may base its valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that the Company and others may be willing to pay. Ask prices represent the lowest price that the Company and others may be willing to accept. The Company generally uses the midpoint of the bid/ask range as its best estimate of fair value of such investment.

 

The Board approved the fair value of the Company’s investment portfolio as of March 31, 2020 and these valuations were determined in accordance with the Company's valuation policy based on information known or knowable as of the valuation date. The COVID-19 pandemic is an unprecedented circumstance that materially impacts the fair value of the Company’s investments. As a result, the fair value of the Company’s portfolio investments may be further negatively impacted after March 31, 2020 by circumstances and events that are not yet known.

Foreign Currency Forward Contracts

 

The valuation for the Company’s foreign currency forward contracts is based on the difference between the exchange rate associated with the forward contract and the exchange rate at the current period end. Foreign currency forward contracts are categorized as Level 2 in the fair value hierarchy.

 

Fair Value Disclosures

 

The following table presents fair value measurements of investments and foreign currency forward contracts, by major class, as of June 30, 2019,March 31, 2020, according to the fair value hierarchy:

 

 Fair Value Measurements  Fair Value Measurements 
 Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total 
Investments:                  
Senior secured loans $—  $—  $483,682  $483,682  $—  $—  $481,565  $481,565 
Unitranche secured loans  —   —   83,343   83,343   —   —   55,826   55,826 
Junior secured loans  —   —   18,858   18,858   —   —   11,704   11,704 
Equity securities  —   —   8,977   8,977   —   —   10,417   10,417 
Investments measured at NAV(1) (2)  —   —   —   35,944   —   —   —   31,325 
Total investments $—  $—  $594,860  $630,804  $—  $—  $559,512  $590,837 
Foreign currency forward contracts asset (liability) $—  $23  $—  $23  $—  $39  $—  $39 
                

 

(1)Certain investments that are measured at fair value using the NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented inon the consolidated statements of assets and liabilities.

(2)Represents the Company’s investment in LLC equity interests in SLF. The fair value of this investment has been determined using the NAV of the Company’s ownership interest in members’ capital.

 

38

The following table presents fair value measurements of investments and foreign currency forward contracts, by major class, as of December 31, 2018,2019, according to the fair value hierarchy:

 

 Fair Value Measurements  Fair Value Measurements 
 Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total 
Investments:                  
Senior secured loans $—  $—  $439,068  $439,068  $—  $—  $475,157  $475,157 
Unitranche secured loans  —   —   58,852   58,852   —   —   76,247   76,247 
Junior secured loans  —   —   21,154   21,154   —   —   13,676   13,676 
Equity securities  —   —   6,913   6,913   —   —   8,739   8,739 
Investments measured at NAV(1) (2)  —   —   —   27,634   —   —   —   42,412 
Total investments $—  $—  $525,987  $553,621  $—  $—  $573,819  $616,231 
Foreign currency forward contracts asset (liability) $—  $16  $—  $16  $—  $(59) $—  $(59)

 

 

(1)Certain investments that are measured at fair value using the NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented inon the consolidated statements of assets and liabilities.

(2)Represents the Company’s investment in LLC equity interests in SLF. The fair value of this investment has been determined using the NAV of the Company’s ownership interest in members’ capital.

   

Senior secured, unitranche secured and junior secured loans are collateralized by tangible and intangible assets of the borrowers. These investments include loans to entities that have some level of challenge in obtaining financing from other, more conventional institutions, such as a bank. Interest rates on these loans are either fixed or floating, and are based on current market conditions and credit ratings of the borrower. Excluding loans on non-accrual, the contractual interest rates on the loans ranged between 7.83%from 6.00% to 16.90%16.58% at June 30, 2019March 31, 2020 and 7.87%7.30% to 17.01%16.30% at December 31, 2018.2019. The maturity dates on the loans outstanding at June 30, 2019March 31, 2020 range between September 2019July 2020 and December 2025.

 

33

The following tables provide a reconciliation of the beginning and ending balances for investments at fair value that use Level 3 inputs for the three and six months ended June 30,March 31, 2020 and 2019:

 

  Investments 
  Senior
secured loans		  Unitranche
secured loans		  Junior
secured loans		  Equity
securities		  Total
investments		 
Balance as of March 31, 2019 $466,300  $70,126  $21,266  $7,221  $564,913 
Net change in unrealized gain (loss)   (3,821)   33    (313)   298    (3,803)
Purchases of investments and other adjustments to cost(1)   57,438    942   3   —    58,383 
Proceeds from principal payments and sales on investments(2)   (23,838)   (190)   (640)  —    (24,668)
Net realized gain (loss) on investments   35   —   —   —    35 
Reclassifications  (12,432)  12,432    (1,458)   1,458   — 
Balance as of June 30, 2019 $483,682  $83,343  $18,858  $8,977  $594,860 
  Investments 
  Senior
secured loans		  Unitranche
secured loans		  Junior
secured loans		  Equity
securities		  Total
investments		 
Balance as of December 31, 2019 $475,157  $76,247  $13,676  $8,739  $573,819 
Net realized gain (loss) on investments  5   89   —   —   94 
Net change in unrealized gain (loss) on investments  (23,542)  (8,487)  (1,510)  (523)  (34,062)
Purchases of investments and other adjustments to cost(1)  64,703   1,739   3,865   2,201   72,508 
Proceeds from principal payments and sales of investments(2)  (34,761)  (13,759)  (4,327)  —   (52,847)
Reclassifications(3)  3   (3)  —   —   — 
Balance as of March 31, 2020 $481,565  $55,826  $11,704  $10,417  $559,512 

  Investments 
  Senior
secured loans		  Unitranche
secured loans		  Junior
secured loans		  Equity
securities		  Total
investments		 
Balance as of December 31, 2018 $439,068  $58,852  $21,154  $6,913  $525,987 
Net realized gain (loss) on investments  —   —   —   —   — 
Net change in unrealized gain (loss) on investments  142   236   108   48   534 
Purchases of investments and other adjustments to cost(1)  66,757   506   4   260   67,527 
Proceeds from principal payments and sales of investments(2)  (28,977)  (158)  —   —   (29,135)
Reclassifications(3)  (10,690)  10,690   —   —   — 
Balance as of March 31, 2019 $466,300  $70,126  $21,266  $7,221  $564,913 

 

  Investments 
  Senior
secured loans		  Unitranche
secured loans		  Junior
secured loans		  Equity
securities		  Total
investments		 
Balance as of December 31, 2018 $439,068  $58,852  $21,154  $6,913  $525,987 
Net change in unrealized gain (loss)   (3,679)   269    (205)   346    (3,269)
Purchases of investments and other adjustments to cost(1)   124,195    1,448    7    260    125,910 
Proceeds from principal payments and sales on investments(2)   (52,815)   (348)   (640)  —    (53,803)
Net realized gain (loss) on investments   35   —   —   —    35 
Reclassifications   (23,122)   23,122    (1,458)   1,458   — 
Balance as of June 30, 2019 $483,682  $83,343  $18,858  $8,977  $594,860 

 

(1)Includes purchases of new investments, effects of refinancing and restructurings, premium and discount accretion and amortization and PIK interest.

(2)Represents net proceeds from investments sold and principal paydowns received.

39

The following tables provide a reconciliation of the beginning and ending balances for investments at fair value that use Level 3 inputs for the three and six months ended June 30, 2018: 

  Investments 
  Senior
secured loans		  Unitranche
secured loans		  Junior
secured loans		  Equity
securities		  Total
investments		 
Balance as of March 31, 2018 $380,115  $45,976  $38,578  $15,032  $479,701 
Net change in unrealized gain (loss)  (1,559)  109   796   (4,018)  (4,672)
Purchases of investments and other adjustments to cost(1)  32,886   5,501   46   889   39,322 
Proceeds from principal payments and sales on investments(2)  (23,803)  (101)  (10,905)  —   (34,809)
Net realized gain (loss) on investments  —   —   —   —   — 
Reclassifications  —   —   —   —   — 
Balance as of June 30, 2018 $387,639  $51,485  $28,515  $11,903  $479,542 

  Investments 
  Senior
secured loans		  Unitranche
secured loans		  Junior
secured loans		  Equity
securities		  Total
investments		 
Balance as of December 31, 2017 $387,874  $40,295  $38,549  $17,780  $484,498 
Net change in unrealized gain (loss)  (5,486)  (27)  779   (7,026)  (11,760)
Purchases of investments and other adjustments to cost(1)  44,910   11,520   93   1,149   57,672 
Proceeds from principal payments and sales on investments(2)  (39,659)  (303)  (10,906)  —   (50,868)
Net realized gain (loss) on investments  —   —   —   —   — 
Reclassifications  —   —   —   —   — 
Balance as of June 30, 2018 $387,639  $51,485  $28,515  $11,903  $479,542 

(1)Includes purchases of new investments, effects of refinancing and restructurings, premium and discount accretion and amortization and PIK interest.

(2)(3)Represents net proceeds fromnon-cash reclassification of investment type due to the restructuring of the investments sold and principal paydowns received.in portfolio companies.

 

The total net change in unrealized gain (loss) on investments included inon the consolidated statements of operations for the three and six months ended June 30,March 31, 2020 and 2019, attributable to Level 3 investments still held at June 30,March 31, 2020 and 2019, was ($3,803)33,632) and ($3,224), respectively. The total net change in unrealized gain (loss) included in the consolidated statements of operations within net change in unrealized gain (loss) on investments for the three and six months ended June 30, 2018, attributable to Level 3 investments still held at June 30, 2018, was ($4,331) and ($10,580),$626, respectively. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of Level 3 as of the beginning of the period which the reclassifications occur. There were no transfers among Levels 1, 2 and 3 during the three and six months ended June 30, 2019March 31, 2020 and 2018.2019.

 

Significant Unobservable Inputs

 

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. Disclosure of this information is not required in circumstances where a valuation (unadjusted) is obtained from a third-party pricing service and the information regarding the unobservable inputs is not reasonably available to the Company and as such, the disclosures provided below exclude those investments valued in that manner. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company. 

 

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of March 31, 2020 were as follows:

         Weighted       
         Average  Range 
  Fair Value  Valuation Technique Unobservable  Input Mean  Minimum  Maximum 
Assets:                    
Senior secured loans $281,346  Discounted cash flow EBITDA multiples  6.4x  4.3x  13.5x
        Market yields  10.7%  7.5%  17.6%
Senior secured loans  110,771  Discounted cash flow Revenue multiples  4.9x  0.2x  10.3x
        Market yields  9.2%  7.3%  18.5%
Senior secured loans  31,773  Liquidation Probability weighting of alternative outcomes  147.6%  9.1%  175.7%
Senior secured loans  17,756  Enterprise value EBITDA multiples  5.9x  4.3x  7.5x
Senior secured loans  19,222  Enterprise value Book value multiples  1.4x  1.3x  1.4x
Senior secured loans  10,646  Enterprise value Revenue multiples  0.6x  0.2x  1.1x
Unitranche secured loans  42,266  Discounted cash flow EBITDA multiples  8.3x  6.0x  11.5x
        Market yields  10.4%  9.0%  12.8%
Unitranche secured loans  7,533  Discounted cash flow Revenue multiples  0.5x  0.5x  0.5x
        Market yields  11.2%  11.0%  11.5%
Unitranche secured loans  6,027  Enterprise value Revenue multiples  0.5x  0.5x  0.5x
Junior secured loans  3,889  Discounted cash flow EBITDA multiples  5.3x  5.3x  5.3x
        Market yields  11.2%  11.2%  11.2%
Junior secured loans  762  Liquidation Probability weighting of alternative outcomes  51.7%  51.7%  51.7%
Equity securities  5,237  Liquidation Probability weighting of alternative outcomes  53.6%  8.2%  54.6%
Equity securities  4,343  Enterprise value EBITDA multiples  7.8x  5.0x  12.5x
Equity securities  783  Enterprise value Revenue multiples  3.8x  0.7x  10.3x
Total Level 3 Assets $542,354(1)                

(1)Excludes loans of $17,158 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is not required.

 4034 

 

 

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of June 30,December 31, 2019 were as follows:

 

     Unobservable Weighted
Average		 Range        Weighted Range 
 Fair Value Valuation Technique Input Mean Minimum Maximum  Fair Value Valuation Technique Unobservable
Input		 Average
Mean		 Minimum Maximum 
Assets:                          
Senior secured loans $343,889 Discounted cash flow EBITDA multiples 6.7x 4.0x 13.9x $287,776 Discounted cash flow EBITDA multiples 7.0x 4.0x 14.0x
   Market yields 10.6% 7.0% 22.0%   Market yields 10.0% 6.5% 17.5%
Senior secured loans 73,556 Discounted cash flow Revenue multiples 5.6x 2.4x 10.0x 94,468 Discounted cash flow Revenue multiples 5.7x 0.7x 11.8x
   Market yields 8.1% 6.5% 11.5%   Market yields 8.2% 6.5% 15.8%
Senior secured loans 17,901 Liquidation Probability weighting of alternative outcomes 90.5% 80.8% 100.0% 31,720 Liquidation Probability weighting of alternative outcomes 147.4% 9.8% 175.5%
Senior secured loans 15,018 Enterprise value Tangible book value multiples 1.5x 1.5x 1.5x 17,616 Enterprise value Book value multiples 1.6x 1.6x 1.6x
Senior secured loans 10,984 Enterprise value EBITDA multiples 7.3x 7.0x 8.5x 20,742 Enterprise value EBITDA multiples 6.6x 4.8x 8.5x
Senior secured loans 7,379 Enterprise value Revenue multiples 0.4x 0.4x 0.4x 9,164 Enterprise value Revenue multiples 0.4x 0.2x 0.7x
Unitranche secured loans 62,233 Discounted cash flow EBITDA multiples 7.9x 4.4x 10.3x 49,943 Discounted cash flow EBITDA multiples 8.6x 7.8x 10.5x
   Market yields 10.1% 8.2% 15.9% Market yields 9.0% 7.4% 10.8%
Unitranche secured loans 13,249 Enterprise value EBITDA multiples 4.4x 4.4x 7.5x 13,961 Discounted cash flow Revenue multiples 2.3x 0.6x 3.6x
   Market yields 10.9% 10.7% 11.5%
Unitranche secured loans 7,861 Discounted cash flow Revenue multiples 4.7x 4.7x 4.7x 12,343 Enterprise value Revenue multiples 0.6x 0.6x 0.6x
   Market yields 10.3% 10.3% 10.3%
Junior secured loans 813 Liquidation Probability weighting of alternative outcomes 54.3% 54.3% 54.3%
Junior secured loans 800 Enterprise value EBITDA multiples 4.4x 4.4x 7.5x 774 Liquidation Probability weighting of alternative outcomes 52.4% 52.4% 52.4%
Equity securities 4,528 Enterprise value EBITDA multiples 8.1x 4.0x 13.8x 5,435 Liquidation Probability weighting of alternative outcomes 52.7% 21.8% 54.6%
Equity securities 3,571 Liquidation Probability weighting of alterative outcomes 38.4% 38.4% 38.4% 2,375 Enterprise value EBITDA multiples 6.7x 4.0x 10.5x
Equity securities  752 Enterprise value Revenue multiples 3.8x 2.0x 4.5x  877 Enterprise value Revenue multiples 4.4x 1.5x 11.8x
Total Level 3 Assets $562,534(1)           $547,194(1)       

 

 

(1)Excludes loans of $32,326$26,625 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is not required.

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of December 31, 2018 were as follows:

       Unobservable Weighted
Average		  Range 
  Fair Value  Valuation Technique Input Mean  Minimum  Maximum 
Assets:                    
Senior secured loans $337,840  Discounted cash flow EBITDA multiples   6.8x   3.8x   13.0x
        Market yields  11.1%  7.4%  19.0%
Senior secured loans  38,183  Discounted cash flow Revenue multiples   3.5x   3.1x   4.5x
        Market yields  8.1%  7.7%  8.5%
Senior secured loans  17,770  Liquidation Probability weighting of alternative outcomes  90.0%  79.4%  100.0%
Senior secured loans  13,153  Enterprise value Tangible book value multiples   1.5x   1.5x   1.5x
Senior secured loans  10,474  Enterprise value EBITDA multiples   7.5x   6.5x   8.3x
Senior secured loans  8,639  Enterprise value Revenue multiples   0.4x   0.4x   0.4x
Unitranche secured loans  37,766  Discounted cash flow EBITDA multiples   7.3x   4.5x   8.5x
        Market yields  12.6%  10.0%  20.2%
Unitranche secured loans  13,134  Enterprise value EBITDA multiples   4.6x   4.5x   8.5x
Unitranche secured loans  7,952  Enterprise value Revenue multiples  4.5x  4.5x  4.5x
Junior secured loans  2,292  Liquidation Probability weighting of alternative outcomes  78.5%  78.5%  78.5%
Junior secured loans  1,260  Enterprise value EBITDA multiples   4.5x   4.5x   4.5x
Equity securities  4,583  Liquidation Probability weighting of alternative outcomes  59.0%  59.0%  59.0%
Equity securities  1,465  Enterprise value EBITDA multiples   7.2x   4.5x   10.5x
Equity securities  650  Enterprise value Revenue multiples   3.7x   2.0x   4.5x
Total Level 3 Assets $495,161(1)                 

(1)Excludes loans of $30,826 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is not required.

41

 

The significant unobservable inputs used in the income approach of fair value measurement of the Company’s investments is the discount rate used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Increases (decreases) in the discount rate would result in a decrease (increase) in the fair value estimate of the investment. Included in the consideration and selection of discount rates are the following factors: risk of default, rating of the investment and comparable investments, and call provisions.

 

The significant unobservable inputs used in the market approach of fair value measurement of the Company’s investments are the market multiples of EBITDA or revenue of the comparable guideline public companies. The Company selects a population of public companies for each investment with similar operations and attributes of the portfolio company. Using these guideline public companies’ data, a range of multiples of enterprise value to EBITDA or revenue is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on said multiple and generally the latest twelve months EBITDA or revenue of the portfolio company (or other meaningful measure). Increases (decreases) in the multiple will result in an increase (decrease) in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment.

 

Other Financial Assets and Liabilities

 

ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments. Fair value of the Company’s revolving credit facility is estimated by discounting remaining payments using applicable market rates or market quotes for similar instruments at the measurement date, if applicable. TheAs of both March 31, 2020 and December 31, 2019, the Company believes that the carrying value of its revolving credit facility approximates fair value. As of June 30, 2019,March 31, 2020, the senior unsecured notes (“2023 NotesNotes”) were trading on The Nasdaq Global Select Market for $25.25$19.80 per unit at par value. The par value at underwriting for the 2023 Notes was $25.00 per unit. Based on this Level 1 input, the fair value of the $109,000 in principal outstanding 2023 Notes was $110,090.$86,328. As of December 31, 2018,2019, the 2023 Notes were trading on The Nasdaq Global Select Market for $23.50$25.70 per unit at par value. Based on this Level 1 input, the fair value of the $69,000$109,000 in principal outstanding 2023 Notes was $64,860.$112,052. SBA debentures are carried at cost and with their longer maturity dates, fair value is estimated by discounting remaining payments using current market rates for similar instruments and considering such factors as the legal maturity date and the ability of market participants to prepay the debentures. As of both June 30, 2019March 31, 2020 and December 31, 2018,2019, the fair value ofCompany believes that the Company’s SBA debentures using Level 3 inputs were estimated at $115,000, which is the same as the Company’s carrying value of the SBA debentures.debentures approximates fair value.

35

 

Note 5. Transactions with Affiliated Companies

 

An affiliated company is a company in which the Company has an ownership interest of 5% or more of its voting securities. A controlled affiliate company is a company in which the Company has an ownership interest of more than 25% of its voting securities. Please see the Company’s consolidated schedule of investments for the type of investment, principal amount, interest rate including the spread, and the maturity date. Transactions related to the Company’s investments with affiliates for the sixthree months ended June 30,March 31, 2020 and 2019 and 2018 were as follows:

 

Portfolio Company Fair value at
December 31, 2018		  Transfers
in (out)		  Purchases
(cost)		  Sales and
paydowns
(cost)		  PIK
interest
(cost)		  Discount
accretion		  Net
realized
gain (loss)		  Net
unrealized
gain (loss)		  Fair value at
June 30, 2019		 
Non-controlled affiliate company investments:                                    
American Community Homes, Inc. $6,596  $—  $—  $—  $505  $15  $—  $(914) $6,202 
American Community Homes, Inc.  3,997   —   —   —   421   8   —   (582)  3,844 
American Community Homes, Inc.  499   —   —   —   39   1   —   (70)  469 
American Community Homes, Inc.  400   —   —   —   30   2   —   (56)  376 
American Community Homes, Inc.  215   —   —   —   23   1   —   (32)  207 
American Community Homes, Inc.  1,446   —   —   —   115   —   —   (198)  1,363 
American Community Homes, Inc.  —   —   3,333   —   89   —   —   (865)  2,557 
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity)  —   —   —   —   —   —   —   —   — 
   13,153   —   3,333   —   1,222   27   —   (2,717)  15,018 
                                     
Curion Holdings, LLC  3,592   —   —   —   273   4   —   (267)  3,602 
Curion Holdings, LLC (Revolver)  244   —   77   —   17   —   —   (3)  335 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (58,779 shares of common stock)  —   —   —   —   —   —   —   —   — 
   3,836   —   77   —   290   4   —   (270)  3,937 
                                     
Incipio, LLC  12,830   —   —   —   —   28   —   83   12,941 
Incipio, LLC  3,573   —   —   —   —   —   —   (5)  3,568 
Incipio, LLC  1,518   —   —   —   —   —   —   12   1,530 
Incipio, LLC  —   —   656   —   —   —   —   (3)  653 
Incipio, LLC (Junior secured loan)  1,260   —   —   —   —   —   —   (460)  800 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (1,774 shares of Series C common units)  —   —   —   —   —   —   —   —   — 
   19,181   —   656   —   —   28   —   (373)  19,492 
                                     
Luxury Optical Holdings Co.  4,334   —   —   —   255   10   —   (253)  4,346 
Luxury Optical Holdings Co. (Delayed Draw)  622   —   —   —   —   —   —   1   623 
Luxury Optical Holdings Co. (Revolver)  200   —   —   —   11   —   —   (11)  200 
Luxury Optical Holdings Co. (86 shares of common stock)  —   —   —   —   —   —   —   —   — 
   5,156   —   —   —   266   10   —   (263)  5,169 
                                     
Millennial Brands LLC (10 preferred units)  —   —   —   —   —   —   —   —   — 
Millennial Brands LLC (75,502 common units)  —   —   —   —   —   —   —   —   — 
   —   —   —   —   —   —   —   —   — 
                                     
New England College of Business and Finance, LLC (Revolver)(1)  —   —   150   —   —   —   —   —   150 
New England College of Business and Finance, LLC (20.8% of units)(1)  —   1,458   —   —   —   —   —   1,136   2,594 
   —   1,458   150   —   —   —   —   1,136   2,744 
                                     
SHI Holdings, Inc.  2,598   —   —   (14)  139   4   —   (47)  2,680 
SHI Holdings, Inc. (Revolver)  3,342   —   137   —   185   (5)  —   (51)  3,608 
SHI Holdings, Inc. (24 shares of common stock)  307   —   —   —   —   —   —   (205)  102 
   6,247   —   137   (14)  324   (1)  —   (303)  6,390 
                                     
Summit Container Corporation  3,034   —   —   —   —   —   —   (8)  3,026 
Summit Container Corporation (Revolver)  6,660   —   16,800   (18,145)  —   —   —   (10)  5,305 
Summit Container Corporation (warrant to purchase up to 19.5% of the equity)  —   —   —   —   —   —   —   —   — 
   9,694   —   16,800   (18,145)  —   —   —   (18)  8,331 
Total non-controlled affiliate company investments $57,267  $1,458  $21,153  $(18,159) $2,102  $68  $—  $(2,808) $61,081 
                                     
Controlled affiliate company investments:                                    
MRCC Senior Loan Fund I, LLC $27,634  $—  $7,875  $—  $—  $—  $—  $435  $35,944 
   27,634   —   7,875   —   —   —   —   435   35,944 
Total controlled affiliate company investments $27,634  $—  $7,875  $—  $—  $—  $—  $435  $35,944 

Portfolio Company Fair value at
December 31, 2019		  Transfers
in (out)		  Purchases
(cost)		  Sales and
paydowns
(cost)		  PIK
interest
(cost)		  Discount
accretion		  Net
realized
gain
(loss)		  Net
unrealized
gain (loss)		  Fair value at
March 31, 2020		 
Non-controlled affiliate company investment:                                    
American Community Homes, Inc. $6,764  $—  $—  $—  $266  $2  $—  $(773) $6,259 
American Community Homes, Inc.  4,289   —   —   —   235   1   —   (511)  4,014 
American Community Homes, Inc.  512   —   —   —   21   —   —   (59)  474 
American Community Homes, Inc.  410   —   —   —   16   —   —   (47)  379 
American Community Homes, Inc.  230   —   —   —   13   —   —   (27)  216 
American Community Homes, Inc.  1,472   —   —   —   48   —   —   (165)  1,355 
American Community Homes, Inc.  2,760   —   —   —   90   —   —   (309)  2,541 
American Community Homes, Inc.  11   —   —   —   1   —   —   (2)  10 
American Community Homes, Inc.  1,168   —   —   (1,111)  9   —   —   (8)  58 
American Community Homes, Inc. (Revolver)  —   —   1,667   —   —   —   —   (520)  1,147 
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity)  —   —   —   —   —   —   —   —   — 
   17,616   —   1,667   (1,111)  699   3   —   (2,421)  16,453 
                                     
Ascent Midco, LLC  —   —   6,860   (17) —   4   —   (130)  6,717 
Ascent Midco, LLC (Delayed Draw)  —   —   —   —   —   —   —   —   — 
Ascent Midco, LLC (Revolver)  —   —   734   —   —   —   —   (28)  706 
Ascent Midco, LLC (2,032,258 Class A units)  —   —   2,032   —   —   —   —   (54)  1,978 
   —   —   9,626   (17)  —   4   —   (212)  9,401 
                                     
Curion Holdings, LLC  3,279   —   —   —   —   —   —   (268)  3,011 
Curion Holdings, LLC (Revolver)  441   —   —   —   —   —   —   (1)  440 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (58,779 shares of common stock)  —   —   —   —   —   —   —   —   — 
   3,720   —   —   —   —   —   —   (269)  3,451 
                                     
Incipio, LLC  12,343   —   —   —   128   —   —   (6,444)  6,027 
Incipio, LLC  3,750   —   —   —   99   —   —   (38)  3,811 
Incipio, LLC  1,606   —   —   —   42   —   —   (17)  1,631 
Incipio, LLC  686   —   —   —   18   —   —   (8)  696 
Incipio, LLC  —   —   1,404   —   19   —   —   (28)  1,395 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (1,774 shares of Series C common units)  —   —   —   —   —   —   —   —   — 
   18,385   —   1,404   —   306   —   —   (6,535)  13,560 
                                     
Luxury Optical Holdings Co.  3,457   —   —   —   —   —   —   (500)  2,957 
Luxury Optical Holdings Co. (Delayed Draw)  620   —   —   —   —   —   —   (5)  615 
Luxury Optical Holdings Co. (Revolver)  159   —   —   —   —   —   —   (23)  136 
Luxury Optical Holdings Co. (86 shares of common stock)  —   —   —   —   —   —   —   —   — 
   4,236   —   —   —   —   —   —   (528)  3,708 
                                     
New England College of Business and Finance, LLC (Revolver)  1,148   —   112   —   —   —   —   —   1,260 
New England College of Business and Finance, LLC (20.8% of units)  318   —   —   —   —   —   —   (198)  120 
   1,466   —   112   —   —   —   —   (198)  1,380 
                                     
SHI Holdings, Inc.  2,459   —   —   —   —   —   —   (1,279)  1,180 
SHI Holdings, Inc. (Revolver)  3,601   —   345   —   —   —   —   (2,078)  1,868 
SHI Holdings, Inc. (24 shares of common stock)  —   —   —   —   —   —   —   —   — 
   6,060   —   345   —   —   —   —   (3,357)  3,048 
                                     
Summit Container Corporation  2,971   —   —   —   —   —   —   (171)  2,800 
Summit Container Corporation (Revolver)  5,406   —   8,236   (9,409)  —   —   —   (16)  4,217 
Summit Container Corporation (warrant to purchase up to 19.5% of the equity)  —   —   —   —   —   —   —   —   — 
   8,377   —   8,236   (9,409)  —   —   —   (187)  7,017 
Total non-controlled affiliate company investments $59,860  $—  $21,390  $(10,537) $1,005  $7  $—  $(13,707) $58,018 
                                     
Controlled affiliate company investments:                                    
MRCC Senior Loan Fund I, LLC $42,412  $—  $—  $—  $—  $—  $—  $(11,087) $31,325 
   42,412   —   —   —   —   —   —   (11,087)  31,325 
Total controlled affiliate company investments $42,412  $—  $—  $—  $—  $—  $—  $(11,087) $31,325 

 

 4236

Portfolio Company Fair value at
December 31, 2018		  Transfers
in (out)		  Purchases
(cost)		  Sales and
paydowns
(cost)		  PIK
interest
(cost)		  Discount
accretion		  Net
realized
gain (loss)		  Net
unrealized
gain (loss)		  Fair value at
March 31, 2019		 
Non-controlled affiliate company investments:                                    
American Community Homes, Inc. $6,596  $—  $—  $—  $249  $12  $—  $(283) $6,574 
American Community Homes, Inc.  3,997   —   —   —   206   6   —   (181)  4,028 
American Community Homes, Inc.  499   —   —   —   19   1   —   (22)  497 
American Community Homes, Inc.  400   —   —   —   15   2   —   (18)  399 
American Community Homes, Inc.  215   —   —   —   11   1   —   (10)  217 
American Community Homes, Inc.  1,446   —   —   —   68   —   —   (62)  1,452 
American Community Homes, Inc.  —   —   3,333   —   —   —   —   (610)  2,723 
American Community Homes, Inc. (warrant to purchase up to 22.3% of the equity)  —   —   —   —   —   —   —   —   — 
   13,153   —   3,333   —   568   22   —   (1,186)  15,890 
                                     
Curion Holdings, LLC  3,592   —   —   —   127   2   —   2   3,723 
Curion Holdings, LLC (Revolver)  244   —   —   —   6   —   —   —   250 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Curion Holdings, LLC (58,779 shares of common stock)  —   —   —   —   —   —   —   —   — 
   3,836   —   —   —   133   2   —   2   3,973 
                                     
Incipio, LLC  12,830   —   —   —   —   28   —   (173)  12,685 
Incipio, LLC  3,573   —   —   —   —   —   —   26   3,599 
Incipio, LLC  1,518   —   —   —   —   —   —   11   1,529 
Incipio, LLC (Junior secured loan)  1,260   —   —   —   —   —   —   (151)  1,109 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   —   —   —   — 
Incipio, LLC (1,774 shares of Series C common units)  —   —   —   —   —   —   —   —   — 
   19,181   —   —   —   —   28   —   (287)  18,922 
                                     
Luxury Optical Holdings Co.  4,334   —   —   —   126   5   —   (36)  4,429 
Luxury Optical Holdings Co. (Delayed Draw)  622   —   —   —   —   —   —   —   622 
Luxury Optical Holdings Co. (Revolver)  200   —   —   —   5   —   —   (1)  204 
Luxury Optical Holdings Co. (86 shares of common stock)  —   —   —   —   —   —   —   —   — 
   5,156   —   —   —   131   5   —   (37)  5,255 
                                     
Millennial Brands LLC (10 preferred units)  —   —   —   —   —   —   —   —   — 
Millennial Brands LLC (75,502 common units)  —   —   —   —   —   —   —   —   — 
   —   —   —   —   —   —   —   —   — 
                                     
SHI Holdings, Inc.  2,598   —   —   (14)  53   3   —   (28)  2,612 
SHI Holdings, Inc. (Revolver)  3,342   —   136   —   71   1   —   (35)  3,515 
SHI Holdings, Inc. (24 shares of common stock)  307   —   —   —   —   —   —   (181)  126 
   6,247   —   136   (14)  124   4��  —   (244)  6,253 
                                     
Summit Container Corporation  3,034   —   —   —   —   —   —   (5)  3,029 
Summit Container Corporation (Revolver)  6,660   —   8,541   (9,570)  —   —   —   3   5,634 
Summit Container Corporation (warrant to purchase up to 19.5% of the equity)  —   —   —   —   —   —   —   —   — 
   9,694   —   8,541   (9,570)  —   —   —   (2)  8,663 
Total non-controlled affiliate company investments $57,267  $—  $12,010  $(9,584) $956  $61  $—  $(1,754) $58,956 
                                     
Controlled affiliate company investments:                                    
MRCC Senior Loan Fund I, LLC $27,634  $—  $4,075  $—  $—  $—  $—  $323  $32,032 
   27,634   —   4,075   —   —   —   —   323   32,032 
Total controlled affiliate company investments $27,634  $—  $4,075  $—  $—  $—  $—  $323  $32,032 

37 

 

 

  For the three months ended March 31, 
  2020  2019 
Portfolio Company Interest
Income		  Dividend
Income		  Fee
Income		  Interest
Income		  Dividend
Income		  Fee
Income		 
Non-controlled affiliate company investments:                        
American Community Homes, Inc. $265  $—  $—  $258  $—  $— 
American Community Homes, Inc.  233   —   —   210   —   — 
American Community Homes, Inc.  20   —   —   20   —   — 
American Community Homes, Inc.  16   —   —   17   —   — 
American Community Homes, Inc.  13   —   —   12   —   — 
American Community Homes, Inc.  47   —   —   47   —   — 
American Community Homes, Inc.  101   —   —   3   —   — 
American Community Homes, Inc.  1   —   —   —   —   — 
American Community Homes, Inc.  9   —   —   —   —   — 
American Community Homes, Inc. (Revolver)  1   —   —   —   —   — 
American Community Homes, Inc. (Warrant)  —   —   —   —   —   — 
   706   —   —   567   —   — 
                         
Ascent Midco, LLC  84  —   —    n/a    n/a    n/a 
Ascent Midco, LLC (Delayed Draw)  3   —   —    n/a    n/a    n/a 
Ascent Midco, LLC (Revolver)  1   —   —    n/a    n/a    n/a 
Ascent Midco, LLC (Class A units)  —   25   —    n/a    n/a    n/a 
   88   25   —    n/a    n/a    n/a 
                         
Curion Holdings, LLC  —   —   —   142   —   — 
Curion Holdings, LLC (Revolver)  —   —   —   9   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   — 
Curion Holdings, LLC (Junior secured loan)  —   —   —   —   —   — 
Curion Holdings, LLC (Common units)  —   —   —   —   —   — 
   —   —   —   151   —   — 
                         
Incipio, LLC  (52)  —   —   426   —   — 
Incipio, LLC  101   —   —   102   —   — 
Incipio, LLC  42   —   —   42   —   — 
Incipio, LLC  18   —   —   —   —   — 
Incipio, LLC  31   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   — 
Incipio, LLC (Junior secured loan)  —   —   —   —   —   — 
Incipio, LLC (Common units)  —   —   —   —   —   — 
   140   —   —   570   —   — 
                         
Luxury Optical Holdings Co.  —   —   —   129   —   — 
Luxury Optical Holdings Co.  (Delayed Draw)  21   —   —   22   —   — 
Luxury Optical Holdings Co. (Revolver)  —   —   —   6   —   — 
Luxury Optical Holdings Co. (Common stock)  —   —   —   —   —   — 
   21   —   —   157   —   — 
                         
Millennial Brands LLC (Preferred units)   n/a     n/a     n/a    —   —   — 
Millennial Brands LLC (Common units)   n/a     n/a     n/a    —   —   — 
    n/a     n/a     n/a    —   —   — 
                         
New England College of Business and Finance, LLC (Revolver)  39   —   —    n/a     n/a     n/a  
New England College of Business and Finance, LLC (LLC units)  —   —   —    n/a     n/a     n/a  
   39   —   —    n/a     n/a     n/a  
                         
Rockdale Blackhawk, LLC   n/a     n/a     n/a    —   —   — 
Rockdale Blackhawk, LLC (Capex)   n/a     n/a     n/a    —   —   — 
Rockdale Blackhawk, LLC (Revolver)   n/a     n/a     n/a    —   —   — 
Rockdale Blackhawk, LLC (Revolver)   n/a     n/a     n/a    —   —   — 
Rockdale Blackhawk, LLC (Revolver)   n/a     n/a     n/a    —   —   — 
Rockdale Blackhawk, LLC (LLC interest)   n/a     n/a     n/a    —   —   — 
    n/a     n/a     n/a    —   —   — 
                         
SHI Holdings, Inc.  (2)  —   —   86   —   — 
SHI Holdings, Inc. (Revolver)  (3)  —   —   113   —   — 
SHI Holdings, Inc. (Common stock)  —   —   —   —   —   — 
   (5)  —   —   199   —   — 
                         
Summit Container Corporation  80   —   —   86   —   — 
Summit Container Corporation  —   —   —   —   —   — 
Summit Container Corporation (Revolver)  126   —   —   149   —   — 
Summit Container Corporation (Warrant)  —   —   —   —   —   — 
   206   —   —   235   —   — 
                         
Total non-controlled affiliate company investments $1,195  $25  $—  $1,879  $—  $— 
                         
Controlled affiliate company investments:                        
MRCC Senior Loan Fund I, LLC $—  $1,150  $—  $—  $770  $— 
   —   1,150   —   —   770   — 
Total controlled affiliate company investments $—  $1,150  $—  $—  $770  $— 

Portfolio Company Fair value at
December 31, 2017		  Transfers
in (out)		  Purchases
(cost)		  Sales and
paydowns
(cost)		  PIK
interest
(cost)		  Discount
accretion		  

Net

 realized
gain (loss)

  

Net 

unrealized
gain (loss)

  Fair value at
June 30, 2018		 
Non-controlled affiliate company investments:                                    
American Community Homes, Inc. $7,441  $—  $—  $(331) $—  $22  $—  $183  $7,315 
American Community Homes, Inc.  4,329   —   —   (165)  99   10   —   57   4,330 
American Community Homes, Inc.  542   —   —   —   13   1   —   (1)  555 
American Community Homes, Inc.  431   —   —   —   —   2   —   11   444 
American Community Homes, Inc.  224   —   —   —   5   2   —   2   233 
American Community Homes, Inc. (Delayed Draw)  —   —   —   —   —   —   —   —   — 
American Community Homes, Inc. (Delayed Draw)  —   —   —   —   —   —   —   —   — 
American Community Homes, Inc. (warrant to purchase up to 9.0% of the equity)  353   —   —   —   —   —   —   (192)  161 
   13,320   —   —   (496)  117   37   —   60   13,038 
                                     
Luxury Optical Holdings Co.  3,697   —   —   —   214   9   —   (17)  3,903 
Luxury Optical Holdings Co. (Delayed Draw)  741   —   —   (118)  —   —   —   (1)  622 
Luxury Optical Holdings Co. (Revolver)  170   —   —   —   10   —   —   —   180 
Luxury Optical Holdings Co. (86 shares of common stock)  —   —   —   —   —   —   —   —   — 
   4,608   —   —   (118)  224   9   —   (18)  4,705 
                                     
Millennial Brands LLC  —   —   —   —   —   —   —   —   — 
Millennial Brands LLC  —   —   —   —   —   —   —   —   — 
Millennial Brands LLC  —   —   —   —   —   —   —   —   — 
Millennial Brands LLC  550   —   —   —   —   —   —   (362)  188 
Millennial Brands LLC  —   —   —   —   —   —   —   —   — 
Millennial Brands LLC (10 preferred units)  —   —   —   —   —   —   —   —   — 
Millennial Brands LLC (75,502 common units)  —   —   —   —   —   —   —   —   — 
   550   —   —   —   —   —   —   (362)  188 
                                     
Rockdale Blackhawk, LLC  10,594   —   —   —   —   110   —   2,049   12,753 
Rockdale Blackhawk, LLC (Capex)  533   —   —   —   —   —   —   108   641 
Rockdale Blackhawk, LLC (Revolver)  1,797   —   —   —   —   —   —   362   2,159 
Rockdale Blackhawk, LLC (Revolver)  3,145   —   —   —   —   —   —   633   3,778 
Rockdale Blackhawk, LLC (Revolver)  —   —   2,288   —   —   —   —   384   2,672 
Rockdale Blackhawk, LLC – LLC Units (22.7% of the LLC interest) (2)  5,673   —   —   —   —   —   —   (5,673)  — 
   21,742   —   2,288   —   —   110   —   (2,137)  22,003 
                                     
SHI Holdings, Inc.  2,625   —   —   (13)  —   6   —   (7)  2,611 
SHI Holdings, Inc. (Revolver)  2,226   —   614   —   —   3   —   (4)  2,839 
SHI Holdings, Inc. (24 shares of common stock)  786   —   —   —   —   —   —   (230)  556 
   5,637   —   614   (13)  —   9   —   (241)  6,006 
                                     
Summit Container Corporation  3,421   —   —   —   37   13   —   24   3,495 
Summit Container Corporation  1,507   —   —   (1,523)  15   —   —   1   — 
Summit Container Corporation (Revolver)  —   —   7,253   (2,366)  —   —   —   —   4,887 
Summit Container Corporation (warrant to purchase up to 19.5% of the equity)  —   —   —   —   —   —   —   —   — 
   4,928   —   7,253   (3,889)  52   13   —   25   8,382 
                                     
TPP Operating, Inc.(3)  —   —   —   —   —   —   —   —   — 
TPP Operating, Inc.(3)  3,373   724   63   (42)  —   —   —   (4,118)  — 
TPP Operating, Inc.(3)  4,593   (724)  467   (47)  —   —   —   (4,289)  — 
TPP Operating, Inc. (24 shares of common stock) (3)   —   —   —   —   —   —   —   —   — 
TPP Operating, Inc. (16 shares of common stock) (3)   —   —   —   —   —   —   —   —   — 
   7,966   —   530   (89)  —   —   —   (8,407)  — 
Total non-controlled affiliate company investments $58,751  $—  $10,685  $(4,605) $393  $178  $—  $(11,080) $54,322 
                                     
Controlled affiliate company investments:                                    
MRCC Senior Loan Fund I, LLC $9,640  $—  $17,850  $(9,500) $—  $—  $—  $703  $18,693 
   9,640   —   17,850   (9,500)  —   —   —   703   18,693 
Total controlled affiliate company investments $9,640  $—  $17,850  $(9,500) $—  $—  $—  $703  $18,693 

 

(1)During the three months ended June 30, 2019, the Company participated in a credit bid to acquire the assets of New England College of Business (“NECB”), which was a subsidiary of Education Corporation of America (“ECA”). As a result, the Company obtained a 20.8% equity stake in NECB in exchange for a $1,458 reduction of secured loan position in ECA. The Company also provided a follow-on revolver commitment to NECB.
(2)The Company provided a follow-on investment to Rockdale Blackhawk, LLC (“Rockdale”) during the six months ended June 30, 2018. In conjunction with the follow-on investment, the Company also received an additional 4.6% of the equity of Rockdale, increasing total equity ownership to 22.7%. On July 20, 2018, the Company put back its 22.7% equity investment in Rockdale in advance of a bankruptcy filing and therefore it is no longer an affiliated investment.
(3)In December 2017, the Company transferred 16.0% of the equity interest in TPP Operating, Inc. (“TPP”) shares to a wholly-owned entity, MCC Holdco Equity Manager I, LLC (“MCC Holdco”), which has an independent manager who has full control over the operations of MCC Holdco, including the right to vote the shares of TPP Holdco LLC, the holding company which owns the Company’s equity interest in TPP. As a result, the Company then only controlled 24.0% of the voting interests in TPP, which is presented as a non-controlled affiliate company investment. During the year ended December 31, 2018, TPP ceased operations and the Company, along with the other owners, appointed an assignee and pursuant to Delaware state law completed a General Assignment for the Benefit of Creditors to the assignee. The purpose of the assignment was to wind down the TPP business and distribute the assets to its creditors. The assignee has informed the Company that it will have de minimis assets, if any, to distribute to its creditors. As a result, the Company fully realized a loss on TPP of $24,503 during the year ended December 31, 2018.

 4338 

 

  For the six months ended June 30, 
  2019  2018 
Portfolio Company Interest
income		  Dividend
income		  Fee
income		  Interest
income		  Dividend
income		  Fee
income		 
Non-controlled affiliate company investments:                        
American Community Homes, Inc. $ 517  $—  $—  $568  $—  $— 
American Community Homes, Inc.   427   —   —   426   —   — 
American Community Homes, Inc.   40   —   —   54   —   — 
American Community Homes, Inc.   32   —   —   35   —   — 
American Community Homes, Inc.   24   —   —   23   —   — 
American Community Homes, Inc.   94   —   —   —   —   — 
American Community Homes, Inc.   92   —   —   —   —   — 
American Community Homes, Inc. (Warrant)   —   —   —   —   —   — 
    1,226   —   —   1,106   —   — 
                         
Curion Holdings, LLC   291   —   —   n/a   n/a   n/a 
Curion Holdings, LLC (Revolver)   20   —   —   n/a   n/a   n/a 
Curion Holdings, LLC(Junior secured loan)   —   —   —   n/a   n/a   n/a 
Curion Holdings, LLC (Junior secured loan)   —   —   —   n/a   n/a   n/a 
Curion Holdings, LLC (Common Stock)   —   —   —   n/a   n/a   n/a 
    311   —   —   n/a   n/a   n/a 
                         
Incipio, LLC   768   —   —   n/a   n/a   n/a 
Incipio, LLC   196   —   —   n/a   n/a   n/a 
Incipio, LLC  85   —   —   n/a   n/a   n/a 
Incipio, LLC  15   —   —   n/a   n/a   n/a 
Incipio, LLC(Junior secured loan)   —   —   —   n/a   n/a   n/a 
Incipio, LLC (Junior secured loan)   —   —   —   n/a   n/a   n/a 
Incipio, LLC (Common Stock)   —   —   —   n/a   n/a   n/a 
    1,064   —   —   n/a   n/a   n/a 
                         
Luxury Optical Holdings Co.   263   —   —   222   —   — 
Luxury Optical Holdings Co. (Delayed Draw)   44   —   —   44   —   — 
Luxury Optical Holdings Co. (Revolver)   12   —   —   10   —   — 
Luxury Optical Holdings Co. (Common Stock)   —   —   —   —   —   — 
    319   —   —   276   —   — 
                         
Millennial Brands LLC (Preferred Units)  —   —   —   —   —   — 
Millennial Brands LLC (Common Units)  —   —   —   —   —   — 
   —   —   —   —   —   — 
                         
New England College of Business and Finance, LLC (Revolver)  —   —   —   n/a   n/a   n/a 
New England College of Business and Finance, LLC (20.8% of Units)  —   —   —   n/a   n/a   n/a 
   —   —   —   n/a   n/a   n/a 
                         
Rockdale Blackhawk, LLC  n/a   n/a   n/a   920   —   — 
Rockdale Blackhawk, LLC (Capex)  n/a   n/a   n/a   41   —   — 
Rockdale Blackhawk, LLC (Revolver)  n/a   n/a   n/a   137   —   — 
Rockdale Blackhawk, LLC (Revolver)  n/a   n/a   n/a   240   —   — 
Rockdale Blackhawk, LLC (Revolver)  n/a   n/a   n/a   104   —   — 
Rockdale Blackhawk, LLC (LLC interest)  n/a   n/a   n/a   —   —   — 
   n/a   n/a   n/a   1,442   —   — 
                         
SHI Holdings, Inc.   173   —   —   165   —   — 
SHI Holdings, Inc. (Revolver)   223   —   —   155   —   — 
SHI Holdings, Inc. (Common Stock)   —   —   —   —   —   — 
    396   —   —   320   —   — 
                         
Summit Container Corporation   172   —   —   304   —   83 
Summit Container Corporation   —   —   —   108   —   — 
Summit Container Corporation (Revolver)   304   —   —   23   —   — 
Summit Container Corporation (Warrant)   —   —   —   —   —   — 
    476   —   —   435   —   83 
                         
TPP Operating, Inc.  n/a   n/a   n/a   —   —   — 
TPP Operating, Inc.  n/a   n/a   n/a   —   —   — 
TPP Operating, Inc.  n/a   n/a   n/a   —   —   — 
TPP Operating, Inc. (Common Stock)  n/a   n/a   n/a   —   —   — 
TPP Operating, Inc. (Common Stock)  n/a   n/a   n/a   —   —   — 
   n/a   n/a   n/a   —   —   — 
Total non-controlled affiliate company investments $3,792  $—  $—  $3,579  $—  $83 
                         
Controlled affiliate company investments:                        
MRCC Senior Loan Fund I, LLC $—  $ 1,645  $—  $—  $525  $— 
   —    1,645   —   —   525   — 
Total controlled affiliate company investments $—  $ 1,645  $—  $—  $525  $— 

44

 

Note 6. Transactions with Related Parties

 

The Company has entered into an investment advisory and management agreement with MC Advisors (the “Investment Advisory Agreement”), under which MC Advisors, subject to the overall supervision of the Board, provides investment advisory services to the Company. The Company pays MC Advisors a fee for its services under the Investment Advisory Agreement consisting of two components - a base management fee and an incentive fee. The cost of both the base management fee and the incentive fee are borne by the Company’s stockholders, unless such fees are waived by MC Advisors.

On November 4, 2019, the Board approved a change to the Investment Advisory Agreement to amend the base management fee structure. Effective July 1, 2019, the base management fee is calculated initially at an annual rate equal to 1.75% of average invested assets (calculated as total assets excluding cash, which includes assets financed using leverage); provided, however, the base management fee is calculated at an annual rate equal to 1.00% of the Company’s average invested assets (calculated as total assets excluding cash, which includes assets financed using leverage) that exceeds the product of (i) 200% and (ii) the Company’s average net assets. For the avoidance of doubt, the 200% is calculated in accordance with the asset coverage limitation as defined in the 1940 Act to give effect to the Company’s exemptive relief with respect to MRCC SBIC’s SBA debentures. This change has the effect of reducing the Company’s base management fee rate on assets in excess of regulatory leverage of 1:1 debt to equity to 1.00% per annum. The base management fee is payable quarterly in arrears.

Prior to July 1, 2019, the base management fee was calculated at an annual rate equal to 1.75% of average invested assets (calculated as total assets excluding cash, which included assets financed using leverage) and was payable quarterly in arrears.

Base management fees for the three and six months ended June 30,March 31, 2020 and 2019 were $2,723$2,551 and $5,244,$2,521, respectively. Base management fees for the three and six months ended June 30, 2018 were $2,202 and $4,365, respectively.

 

The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 20% of “pre-incentive fee net investment income” for the immediately preceding quarter, subject to a 2% (8% annualized) preferred return, or “hurdle,” and a “catch up” feature. The foregoing incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of pre-incentive fee net investment income will be payable except to the extent that 20% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative incentive fees accrued and/or paid for the 11 preceding calendar quarters (the “Incentive Fee Limitation”). Therefore, any ordinary income incentive fee that is payable in a calendar quarter will be limited to the lesser of (1) 20% of the amount by which pre-incentive fee net investment income for such calendar quarter exceeds the 2% hurdle, subject to the “catch-up” provision, and (2) (x) 20% of the cumulative net increase in net assets resulting from operations for the then current and 11 preceding calendar quarters minus (y) the cumulative incentive fees accrued and/or paid for the 11 preceding calendar quarters. For the foregoing purpose, the “cumulative net increase in net assets resulting from operations” is the sum of pre-incentive fee net investment income, realized gains and losses and unrealized gains and losses for the then current and 11 preceding calendar quarters. The second part of the incentive fee is determined and payable in arrears as of the end of each fiscal year in an amount equal to 20% of realized capital gains, if any, on a cumulative basis from inception through the end of the year, computed net of all realized capital losses on a cumulative basis and unrealized depreciation, less the aggregate amount of any previously paid capital gain incentive fees.

 

The composition of the Company’s incentive fees was as follows:

 

 Three months ended June 30,  Six months ended June 30,  For the three months ended March 31, 
 2019  2018  2019  2018  2020   2019 
Part one incentive fees(1) $1,592  $1,780  $3,270  $3,625  $1,356  $1,678 
Part two incentive fees(2)  —   —   —   —   —   — 
Incentive Fee Limitation  (424)  (790)  (502)  (1,874)  (1,356)  (78)
Incentive fees, excluding the impact of the incentive fee waiver  1,168   990   2,768   1,751   —   1,600 
Incentive fee waiver(3)  (285)  —   (566)  —   —   (281)
Total incentive fees, net of incentive fee waiver $883  $990  $2,202  $1,751  $—  $1,319 

 

 

(1)Based on pre-incentive fee net investment income.

(2)Based upon net realized and unrealized gains and losses, or capital gains. The Company accrues, but does not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. If, on a cumulative basis, the sum of net realized gain (loss) plus net unrealized gain (loss) decreases during a period, the Company will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than 20% of the sum of net realized gain (loss) plus net unrealized gain (loss).

(3)Represents part one incentive fees waived by MC Advisors.

  

The Company has entered into an administration agreement with MC Management (the “Administration Agreement”), under which the Company reimburses MC Management, subject to the review and approval of the Board, for its allocable portion of overhead and other expenses, including the costs of furnishing the Company with office facilities and equipment and providing clerical, bookkeeping, record-keeping and other administrative services at such facilities, and the Company’s allocable portion of the cost of the chief financial officer and chief compliance officer and their respective staffs. To the extent that MC Management outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis, without incremental profit to MC Management. For the three and six months ended June 30,March 31, 2020 and 2019, the Company incurred $876$784 and $1,739,$863, respectively, in administrative expenses (included within Professional fees, Administrative service fees and General and administrative expenses on the consolidated statements of operations) under the Administration Agreement, of which $319$338 and $666, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. For the three and six months ended June 30, 2018, the Company incurred $849 and $1,656, respectively, in administrative expenses (included within Professional fees, Administrative service fees and General and administrative expenses on the consolidated statements of operations) under the Administration Agreement, of which $322 and $646,$347, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. As of June 30, 2019March 31, 2020 and December 31, 2018, $3192019, $338 and $342,$322, respectively, of expenses were due to MC Management under this agreement and are included in accounts payable and accrued expenses on the consolidated statements of assets and liabilities.

39

 

The Company has entered into a license agreement with Monroe Capital LLC under which Monroe Capital LLC has agreed to grant the Company a non-exclusive, royalty-free license to use the name “Monroe Capital” for specified purposes in its business. Under this agreement, the Company has the right to use the “Monroe Capital” name at no cost, subject to certain conditions, for so long as MC Advisors or one of its affiliates remains its investment adviser. Other than with respect to this limited license, the Company has no legal right to the “Monroe Capital” name or logo.

 

45

As of March 31, 2020 and December 31, 2019, the Company had accounts payable to members of the Board of $35 and zero, respectively, representing accrued and unpaid fees for their services.

 

Note 7. Borrowings

 

On June 20, 2018, the Company’s stockholders approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) ofIn accordance with the 1940 Act, to the Company. As a result of this approval, the Company is now permitted to borrow amounts such that its asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing (if certain requirements are met), rather than 200%, as previously required.borrowing. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company’s asset coverage ratio based on aggregate borrowings outstanding was 183%168% and 223%183%, respectively.

 

Revolving Credit Facility:Facility On March 1, 2019, the: The Company amended and restated itshas a $255,000 revolving credit facility (as amended and restated and further amended on March 20, 2019, the “Amended Credit Agreement”) with ING Capital LLC, as agent. Among other things, the Amended Credit Agreement increased the size of theThe revolving credit facility from $200,000 to $255,000 (withhas an accordion feature thatwhich permits the Company, under certain circumstances to increase the size of the facility up to $400,000), extended the period during which the Company may make draws under the revolving credit facility from expiring on December 14, 2019 to expiring on March 1, 2023, extended the final maturity date from December 14, 2020 to March 1, 2024, lowered the interest rate margins (a) for LIBOR loans (which may be one, three or six month, at the Company’s option), from 2.75% to 2.375% and (b) for alternate base rate loans, from 1.75% to 1.375%, reduced the asset coverage covenant from 2.1 to 1 to 1.5 to 1, replaced the consolidated interest coverage ratio with a minimum senior debt coverage ratio of 2 to 1 (in addition to the asset coverage ratio noted above), and increased the advance rate against certain types of assets in the Company’s portfolio. The Company incurred expenses of $1,751 in conjunction with the amendment which have been capitalized within unamortized deferred financing costs and are amortized into interest expense over the estimated average life of the borrowings.

As of June 30, 2019, the maximum amount the Company was able to borrow was $255,000 and this borrowing can be increased to $400,000 pursuant to an accordion feature (subject to maintaining 150% asset coverage, as defined by the 1940 Act). The revolving credit facility is secured by a lien on all of the Company’s assets, including cash on hand, but excluding the assets of the Company’s wholly-owned subsidiary, MRCC SBIC. The Company may make draws under the revolving credit facility to make or purchase additional investments through March 1, 2023 and for general working capital purposes until March 1, 2024, the maturity date of the revolving credit facility.

 

The Company’s ability to borrow under the revolving credit facility is subject to availability under the borrowing base, which permits the Company to borrow up to 72.5% of the fair market value of its portfolio company investments depending on the type of the investment the Company holds and whether the investment is quoted. The Company’s ability to borrow is also subject to certain concentration limits, and continued compliance with the representations, warranties and covenants given by the Company under the facility. The revolving credit facility contains certain financial and restrictive covenants, including, but not limited to, the Company’s maintenance of: (1) a minimum consolidated total net assets at least equal to $175,000 plus 65% of the net proceeds to the Company from sales of its equity securities after March 1, 2019; (2) a ratio of total assets (less total liabilities other than indebtedness) to total indebtedness of not less than 1.5 to 1; and (3) a senior debt coverage ratio of at least 2 to 1. The revolving credit facility also requires the Company to undertake customary indemnification obligations with respect to ING Capital LLC and other members of the lending group and to reimburse the lenders for expenses associated with entering into the credit facility. The revolving credit facility also has customary provisions regarding events of default, including events of default for nonpayment, change in control transactions at both Monroe Capital Corporation and MC Advisors, failure to comply with financial and negative covenants, and failure to maintain the Company’s relationship with MC Advisors. If the Company incurs an event of default under the revolving credit facility and fails to remedy such default under any applicable grace period, if any, then the entire revolving credit facility could become immediately due and payable, which would materially and adversely affect the Company’s liquidity, financial condition, results of operations and cash flows.

 

The Company’s revolving credit facility also imposes certain conditions that may limit the amount of the Company’s distributions to stockholders. Distributions payable in the Company’s common stock under the DRIP are not limited by the revolving credit facility. Distributions in cash or property other than common stock are generally limited to 115% of the amount of distributions required to maintain the Company’s status as a RIC.

 

40

As of June 30, 2019,March 31, 2020, the Company had U.S. dollar borrowings of $169,850$172,050 and non-U.S. dollar borrowings denominated in Great Britain pounds of £14,800£16,100 ($18,79019,996 in U.S. dollars) under the revolving credit facility. As of December 31, 2018,2019, the Company had U.S. dollar borrowings of $117,150$158,950 and non-U.S. dollar borrowings denominated in Great Britain pounds of £14,800£16,100 ($18,87621,344 in U.S. dollars) under the revolving credit facility. The borrowings denominated in Great Britain pounds may be positively or negatively affected by movements in the rate of exchange between the U.S. dollar and the Great Britain pound. These movements are beyond the control of the Company and cannot be predicted. The borrowings denominated in Great Britain pounds are translated into U.S. dollars based on the spot rate at each balance sheet date. The impact resulting from changes in foreign currency borrowings is included in net change in unrealized gain (loss) on foreign currency and other transactions inon the Company’s consolidated statements of operations and totaled $502$1,348 and $86($416) for the three and six months ended June 30,March 31, 2020 and 2019, and $795 and $353 for the three and six months ended June 30, 2018, respectively.

 

Borrowings under the revolving credit facility bear interest, at the Company’s election, at an annual rate of LIBOR (one-month, three-month or six-month at the Company’s discretion based on the term of the borrowing) plus 2.375% or at a daily rate equal to 1.375% per annum plus the greater of the prime interest rate, the federal funds rate plus 0.5% or LIBOR plus 1.0%. In addition to the stated interest rate on borrowings under the revolving credit facility, the Company is required to pay a fee of 0.5% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is less than 35% of the then available maximum borrowing or a fee of 1.0% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is greater than or equal to 35% of the then available maximum borrowing. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the outstanding borrowings were accruing at a weighted average interest rate of 4.7%3.3% and 5.0%4.0%, respectively.

 

46

2023 Notes: On September 12, 2018, theThe Company closed a public offering of 2,760,000 unitshas issued $109,000 in aggregate principal amount of senior unsecured notes at a public offering price of $25.00 per unit, resulting in aggregate principal and gross proceeds of $69,000. Aggregate underwriters’ discounts and commissions were $2,156 and deferred financing costs were $450, resulting in net proceeds of approximately $66,394. On March 20, 2019, the Company closed a registered direct offering of 1,600,000 units of 2023 Notes at an offering price of $24.75 per unit, resulting in additional aggregate principal of $40,000 and gross proceeds of $39,600. Placement agent fees were $530 and deferred financing costs were $754, resulting in net proceeds of approximately $38,316. The 2023 Notesthat mature on October 31, 2023. Interest on the 2023 Notes is paid quarterly on January 31, April 30, July 31, and October 31, at an annual rate of 5.75%. The Company may redeem the 2023 Notes in whole or in part at any time or from time to time on or after October 31, 2020. The 2023 Notes are general, unsecured obligations and rank equal in right of payment with all of the Company’s existing and future unsecured indebtedness. The 2023 Notes are listed on The Nasdaq Global Select Market under the trading symbol MRCCL.

 

SBA Debentures: On February 28, 2014, the Company’s wholly-owned subsidiary, MRCC SBIC received a license from the SBA to operate as a SBIC under Section 301(c) of the Small Business Investment Act of 1958, as amended. MRCC SBIC commenced operations on September 16, 2013.

 

The SBIC license allows MRCC SBIC to obtain leverage by issuing SBA debentures, subject to the issuance of a leverage commitment by the SBA and other customary procedures. SBA debentures are non-recourse, interest only debentures with interest payable semi-annually and have a ten-year10-year maturity. The principal amount of SBA debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA debentures is fixed on a semi-annual basis (pooling date) at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, has a superior claim to MRCC SBIC’s assets over the Company’s stockholders in the event the Company liquidates MRCC SBIC, or the SBA exercises its remedies upon an event of default. As of June 30, 2019,March 31, 2020, MRCC SBIC had $23,884$9,892 in cash and $148,131$143,439 in investments at fair value. As of December 31, 2018,2019, MRCC SBIC had $13,982$27,409 in cash and $161,014$133,982 in investments at fair value.

 

SBA regulations currently limit the amount that an individual SBIC may borrow to a maximum of $175,000 when it has at least $87,500 in regulatory capital, receives a leverage commitment from the SBA and has been through an audit examination by the SBA subsequent to licensing. The SBA also limits a related group of SBICs (commonly referred to as a “family of funds”) to a maximum of $350,000 in total borrowings.

 

As of both June 30, 2019March 31, 2020 and December 31, 2018,2019, MRCC SBIC had $57,624 in leverageable capital and the following SBA debentures outstanding:

 

Maturity Date Interest Rate  Amount 
September 2024  3.4% $12,920 
March 2025  3.3%  14,800 
March 2025  2.9%  7,080 
September 2025  3.6%  5,200 
March 2027  3.5%  20,000 
September 2027  3.2%  32,100 
March 2028  3.9%  18,520 
September 2028  4.2%  4,380 
Total     $115,000 

  

On October 2, 2014, theThe Company washas been granted exemptive relief from the SEC for permission to exclude the debt of MRCC SBIC guaranteed by the SBA from the asset coverage test under the 1940 Act. The receipt of this exemption for this SBA debt increases flexibility under the asset coverage test.

 

41

Components of interest expense: The components of the Company’s interest expense and other debt financing expenses, average outstanding balances and average stated interest rates (i.e. the rate in effect plus spread) were as follows:

 

  Three months ended June 30, 
  2019  2018 
Interest expense – revolving credit facility $2,092  $1,551 
Interest expense – 2023 Notes  1,566   — 
Interest expense – SBA debentures  981   970 
Amortization of deferred financing costs  468   315 
Total interest and other debt financing expenses $5,107  $2,836 
Average outstanding balance $390,293  $238,110 
Average stated interest rate  4.7%  4.2%

  Six months ended June 30, 
  2019  2018 
Interest expense – revolving credit facility $3,987  $3,108 
Interest expense – 2023 Notes  2,622   — 
Interest expense – SBA debentures  1,951   1,838 
Amortization of deferred financing costs  901   596 
Total interest and other debt financing expenses $9,461  $5,542 
Average outstanding balance $364,659  $237,567 
Average stated interest rate  4.7%  4.2%

47

  Three months ended March, 
  2020  2019 
Interest expense – revolving credit facility $1,798  $1,895 
Interest expense – 2023 Notes  1,567   1,056 
Interest expense – SBA debentures  981   970 
Amortization of deferred financing costs  484   433 
Total interest and other debt financing expenses $4,830  $4,354 
Average outstanding balance $400,453  $338,741 
Average stated interest rate  4.4%  4.7%

 

Note 8. Derivative Instruments

 

The Company enters into foreign currency forward contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on future interest cash flows from the Company’s investments denominated in foreign currencies. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the counterparty to these foreign currency forward contracts was Bannockburn Global Forex, LLC. Net unrealized gain or loss on foreign currency forward contracts are included in net change in unrealized gain (loss) fromon foreign currency forward contracts and net realized gain or loss on forward currency forward contracts are included in net realized gain (loss) fromon foreign currency forward contracts inon the accompanying consolidated statements of operations.

 

Certain information related to the Company’s foreign currency forward contracts is presented below as of June 30, 2019March 31, 2020 and December 31, 2018.2019.  

 

 As of June 30, 2019 As of March 31, 2020
 

Notional

Amount to be
Sold

 

Settlement

Date

 

Gross
Amount of

Unrealized
Gain

 

Gross

Amount of

Unrealized

Loss

  Balance Sheet location of Net Amounts Notional
Amount to be
Sold		 Settlement
Date		 Gross
Amount of
Unrealized
Gain		 Gross
Amount of
Unrealized
Loss		  Balance Sheet location of Net Amounts
Foreign currency forward contract £41  7/1/2019 $1  $—  Unrealized gain on foreign currency forward contracts £103  4/1/2020 $4  $—  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £230  8/30/2019  3   —  Unrealized gain on foreign currency forward contracts £102  5/5/2020  4   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £105  10/1/2019  1   —  Unrealized gain on foreign currency forward contracts £230  5/29/2020  9   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £230  11/29/2019  3   —  Unrealized gain on foreign currency forward contracts £27  6/1/2020  1   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £104  1/2/2020  1   —  Unrealized gain on foreign currency forward contracts £230  8/28/2020  9   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £231  2/28/2020  3   —  Unrealized gain on foreign currency forward contracts £28  9/3/2020  1   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £103  4/1/2020  1   —  Unrealized gain on foreign currency forward contracts £229  11/30/2020  10   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £102  5/5/2020  1   —  Unrealized gain on foreign currency forward contracts £26  12/2/2020  1   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £230  5/29/2020  3   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £230  8/28/2020  3   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £229  11/30/2020  3   —  Unrealized gain on foreign currency forward contracts
Total £1,835    $23  $—   £975    $39  $—  

 

 As of December 31, 2018 As of December 31, 2019
 

Notional

Amount to be
Sold

 

Settlement

Date

 

Gross
Amount of

Unrealized
Gain

 

Gross

Amount of

Unrealized

Loss

  Balance Sheet location of Net Amounts Notional
Amount to be
Sold		 Settlement
Date		 Gross
Amount of
Unrealized
Gain		 Gross
Amount of
Unrealized
Loss		  Balance Sheet location of Net Amounts
Foreign currency forward contract £107  1/2/2019 $1  $—  Unrealized gain on foreign currency forward contracts £104  1/2/2020 $—  $(5) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £228  2/28/2019  1   —  Unrealized gain on foreign currency forward contracts £231  2/28/2020  —   (10) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £106  4/1/2019  1   —  Unrealized gain on foreign currency forward contracts £27  3/2/2020  —   (1) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £229  5/31/2019  1   —  Unrealized gain on foreign currency forward contracts £103  4/1/2020  —   (5) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £106  7/1/2019  1   —  Unrealized gain on foreign currency forward contracts £102  5/5/2020  —   (4) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £230  8/30/2019  1   —  Unrealized gain on foreign currency forward contracts £230  5/29/2020  —   (10) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £105  10/1/2019  1   —  Unrealized gain on foreign currency forward contracts £27  6/1/2020  —   (1) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £230  11/29/2019  1   —  Unrealized gain on foreign currency forward contracts £230  8/28/2020  —   (10) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £104  1/2/2020  1   —  Unrealized gain on foreign currency forward contracts £28  9/3/2020  —   (2) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £231  2/28/2020  1   —  Unrealized gain on foreign currency forward contracts £229  11/30/2020  —   (10) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £103  4/1/2020  1   —  Unrealized gain on foreign currency forward contracts £26  12/2/2020  —   (1) Unrealized loss on foreign currency forward contracts
Foreign currency forward contract £102  5/5/2020  1   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £230  5/29/2020  1   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £230  8/28/2020  1   —  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract £229  11/30/2020  2   —  Unrealized gain on foreign currency forward contracts
Total £2,570    $16  $—   £1,337    $—  $(59) 

 

For the three and six months ended June 30,March 31, 2020 and 2019, the Company recognized net change in unrealized gain (loss) on foreign currency forward contracts of $72$98 and $7,($65), respectively. For the three and six months ended June 30,March 31, 2020 and 2019, the Company recognized net realized gain (loss) on foreign currency forward contracts of $2($4) and ($6)8), respectively. There were no derivatives outstanding during the three and six months ended June 30, 2018.

 

 4842 

 

 

Note 9. Distributions

 

The Company’s distributions are recorded on the record date. The following table summarizes distributions declared during the sixthree months ended June 30, 2019March 31, 2020 and 2018:2019:

 

Date
Declared		 Record
Date		 Payment
Date		 Amount
Per Share		  Cash
Distribution		  DRIP
Shares
Issued		  DRIP
Shares
Value		  DRIP Shares
Repurchased
in the Open
Market		  Cost of
DRIP Shares
Repurchased		 
Six months ended June 30, 2019:                            
March 5, 2019 March 15, 2019 March 29, 2019 $0.35  $7,156   —  $—   27,498  $342 
May 31, 2019 June 14, 2019 June 28, 2019  0.35   7,156   —   —   30,802   363 
Total distributions declared     $0.70  $14,312   —  $—   58,300  $705 
                             
Six months ended June 30, 2018:                            
March 1, 2018 March 16, 2018 March 30, 2018 $0.35  $7,084   —  $—   23,908  $301 
June 1, 2018 June 15, 2018 June 29, 2018  0.35   6,786   22,308   301   —   — 
Total distributions declared     $0.70  $13,870   22,308  $301   23,908  $301 
Date
Declared		 Record
Date		 Payment
Date		 Amount
Per Share		  Cash
Distribution		  DRIP
Shares
Issued		  DRIP
Shares
Value		  DRIP Shares
Repurchased
in the Open
Market		  Cost of
DRIP Shares
Repurchased		 
Three months ended March 31, 2020:                            
March 3, 2020 March 16, 2020 March 31, 2020 $0.35  $7,155   —  $—   55,938  $374 
Total distributions declared     $0.35  $7,155   —  $—   55,938  $374 
                             
Three months ended March 31, 2019:                            
March 5, 2019 March 15, 2019 March 29, 2019 $0.35  $7,156   —  $—   27,498  $342 
Total distributions declared     $0.35  $7,156   —  $—   27,498  $342 

 

Note 10. Stock Issuances and Repurchases

 

Stock Issuances:On May 12, 2017, the Company entered into its current at-the-market (“ATM”) securities offering program with JMP Securities LLC (“JMP”) and FBR Capital Markets & Co. (“FBR”) (the “ATM Program”). During the six months ended June 30, 2018, the Company sold 17,140 shares at an average price of $14.21 per share for gross proceeds of $243 under the ATM program. Aggregate underwriter’s discounts and commissions were $3 and offering costs were $31, resulting in net proceeds of approximately $209. There were no stock issuances through the ATM Program during the sixthree months ended June 30,March 31, 2020 and 2019.

 

Note 11. Commitments and Contingencies

 

Commitments: As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company had $56,767$38,304 and $56,041,$44,208, respectively, in outstanding commitments to fund investments under undrawn revolvers, capital expenditure loans, and delayed draw commitments.commitments and subscription agreements (excluding SLF). As described in Note 3, the Company had unfunded commitments of $14,925$7,850 and $22,800,$7,850, respectively, to SLF as of June 30, 2019March 31, 2020 and December 31, 20182019 that may be contributed primarily for the purpose of funding new investments approved by the SLF investment committee. Drawdowns of the commitments to SLF require authorization from one of the Company’s representatives on SLF’s board of managers. Management believes that the Company’s available cash balances and/or ability to draw on the revolving credit facility provide sufficient funds to cover its unfunded commitments as of June 30, 2019.March 31, 2020.

 

Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnifications. The Company’s maximum exposure under these agreements is unknown, as these involve future claims that may be made against the Company but that have not occurred. The Company expects the risk of any future obligations under these indemnifications to be remote.

 

Concentration of credit and counterparty risk: Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms of the contract. In the event that the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparties or issuers of the instruments. It is the Company’s policy to review, as necessary, the credit standing of each counterparty.

 

Market risk: The Company’s investments and borrowings are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments and borrowings are traded.

 

Legal proceedings: In the normal course of business, the Company may be subject to legal and regulatory proceedings that are generally incidental to its ongoing operations. While there can be no assurance of the ultimate disposition of any such proceedings, the Company is not currently aware of any such proceedings or disposition that would have a material adverse effect on the Company’s consolidated financial statements.

 

 4943 

 

 

Note 12. Financial Highlights

 

The following is a schedule of financial highlights for the sixthree months ended June 30, 2019March 31, 2020 and 2018:2019:

 

 June 30, 2019  June 30, 2018  March 31, 2020  March 31, 2019 
Per share data:                
Net asset value at beginning of period $12.66  $13.77  $12.20  $12.66 
Net investment income(1)  0.69   0.81   0.33   0.35 
Net gain (loss)(1)  (0.13)  (0.53)  (2.14)  0.01 
Net increase in net assets from operations(1)  0.56   0.28 
Net increase (decrease) in net assets resulting from operations(1)  (1.81)  0.36 
Stockholder distributions - income(2)  (0.70)  (0.70)  (0.35)  (0.35)
Net asset value at end of period $12.52  $13.35  $10.04  $12.67 
Net assets at end of period $255,888  $270,708  $205,352  $259,052 
Shares outstanding at end of period  20,444,564   20,279,405   20,444,564   20,444,564 
Per share market value at end of period $11.54  $13.48  $7.10  $12.14 
Total return based on market value(3)  27.26%  3.38%  (31.20)%  30.02%
Total return based on average net asset value(4)  4.43%  2.07%  (16.21)%  2.87%
Ratio/Supplemental data:                
Ratio of net investment income to average net assets(5)  11.93%  12.69%  12.00%  12.64%
Ratio of total expenses, net of incentive fee waiver, to average net assets(5) (6)  13.77%  9.21%  14.54%  12.67%
Portfolio turnover(7)  9.06%  12.17%  8.76%  5.06%

 

 

(1)  Calculated using the weighted average shares outstanding during the periods presented.
(2)Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Company’s taxable earnings fall below the total amount of the Company’s distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company’s stockholders. The tax character of distributions will be determined at the end of the fiscal year. However, if the character of such distributions were determined as of June 30,March 31, 2020 and 2019, and 2018, none of the distributions would have been characterized as a tax return of capital to the Company’s stockholders; this tax return of capital may differ from the return of capital calculated with reference to net investment income for financial reporting purposes.
(3)Total return based on market value is calculated assuming a purchase of common shares at the market value on the first day and a sale at the market value on the last day of the periods reported. Distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the Company’s DRIP. Total return based on market value does not reflect brokerage commissions. Return calculations are not annualized.
(4)Total return based on average net asset value is calculated by dividing the net increase in net assets resulting from operations by the average net asset value. Return calculations are not annualized.
(5)Ratios are annualized. Incentive fees included within the ratio are not annualized.
(6)The following is a schedule of supplemental ratios for the sixthree months ended June 30, 2019March 31, 2020 and 2018.2019. These ratios have been annualized unless otherwise noted.

 

 June 30, 2019  June 30, 2018  March 31, 2020  March 31, 2019 
Ratio of interest and other debt financing expenses to average net assets  7.40%  4.08%  8.54%  6.82%
Ratio of total expenses (without incentive fees) to average net assets  12.92%  8.57%  14.54%  12.16%
Ratio of incentive fees, net of incentive fee waiver, to average net assets(7) (8)   0.85%  0.64%  0.00%  0.51%

 

(7)Ratios are not annualized.
(8)The ratio of waived incentive fees to average net assets was 0.22%zero and zero0.11% for sixthree months ended June 30,March 31, 2020 and 2019, and 2018, respectively.

 

Note 13. Subsequent Events

The Company has evaluated subsequent events through May 8, 2020, the date on which the consolidated financial statements were issued.

In May 2020, an arbitrator issued a final award in favor of the estate of Rockdale (the “Estate”) in the legal proceeding between the Estate and a national insurance carrier. The final award updated the interim award received in January 2020 to include certain attorneys’ fees, interest and other amounts. At this time, Management believes that the Company’s share of the net proceeds from the award will exceed the cost basis of the Company’s investment due to its right to receive excess proceeds pursuant to the terms of a sharing agreement between the lenders and the Estate. The lenders to Rockdale, including the Company, will share in the proceeds of this arbitration award with the Estate once it is paid. At this time, it is also unclear whether, or to what extent, the national insurance carrier may seek to appeal the adverse ruling against it. Management believes that any such appeal is unlikely to be successful based on the appellate standard for arbitration.

On May 8, 2020, the Board declared a quarterly distribution of $0.25 per share payable on June 30, 2020 to holders of record on June 15, 2020.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Except as otherwise specified, references to “we,” “us” and “our” refer to Monroe Capital Corporation and its consolidated subsidiaries; MC Advisors refers to Monroe Capital BDC Advisors, LLC, our investment adviser and a Delaware limited liability company; MC Management refers to Monroe Capital Management Advisors, LLC, our administrator and a Delaware limited liability company; and Monroe Capital refers to Monroe Capital LLC, a Delaware limited liability company, and its subsidiaries and affiliates.affiliates; and SLF refers to MRCC Senior Loan Fund I, LLC, an unconsolidated Delaware limited liability company, in which we co-invest with NLV Financial Corporation (“NLV”) primarily in senior secured loans. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing in our annual report on Form 10-K (the “Annual Report”) for the year ended December 31, 2018,2019, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 5, 2019.3, 2020. The information contained in this section should also be read in conjunction with our unaudited consolidated financial statements and related notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q (the “Quarterly Report”).

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to future events or our future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry, our beliefs and our assumptions. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties, including statements as to:

 

our future operating results;

 

our business prospects and the prospects of our portfolio companies;

 

the dependence of our future success on the general economy and its impact on the industries in which we invest;

 

the impact of a protracted decline in the liquidity of credit markets on our business;

•the impact of global health epidemics, such as the current novel coronavirus (“COVID-19”) pandemic, on our or our portfolio companies’ business and the global economy;
•the impact of a protracted decline in the liquidity of credit markets on our business;
•the impact of changes inLondon Interbank Offered Rate(“LIBOR”) on our operating results;

 

the impact of increased competition;

 

the impact of fluctuations in interest rates on our business and our portfolio companies;

 

our contractual arrangements and relationships with third parties;

 

the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

 

actual and potential conflicts of interest with MC Advisors, MC Management and other affiliates of Monroe Capital;

 

the ability of our portfolio companies to achieve their objectives;

 

the use of borrowed money to finance a portion of our investments;

 

the adequacy of our financing sources and working capital;

 

the timing of cash flows, if any, from the operations of our portfolio companies;

 

the ability of MC Advisors to locate suitable investments for us and to monitor and administer our investments;

 

the ability of MC Advisors or its affiliates to attract and retain highly talented professionals;

 

our ability to qualify and maintain our qualification as a regulated investment company and as a business development company; and

 

the impact of future legislation and regulation on our business and our portfolio companies.

 

We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates,” “targets” and similar expressions to identify forward-looking statements. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Part I-Item 1A. Risk Factors” in our Annual Report and “Part II-Item 1A. Risk Factors” in this Quarterly Report.

 

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statementstatements in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved.

 

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We have based the forward-looking statements included in this Quarterly Report on information available to us on the date of this Quarterly Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the SEC, including Annual Reports on Form 10-K, Quarterly Reportsquarterly reports on Form 10-Q and current reports on Form 8-K.

 

Overview

 

Monroe Capital Corporation is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for U.S. federal income tax purposes, we have elected to be treated as a regulated investment company (“RIC”) under the subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). We are a specialty finance company focused on providing financing solutions primarily to lower middle-market companies in the United States and Canada. We provide customized financing solutions focused primarily on senior secured, junior secured and unitranche secured (a combination of senior secured and junior secured debt in the same facility in which we syndicate a “first out” portion of the loan to an investor and retain a “last out” portion of the loan) debt and, to a lesser extent, unsecured subordinated debt and equity, including equity co-investments in preferred and common stock, and warrants.

 

Our shares are currently listed on the NASDAQ Global Select Market under the symbol “MRCC”.

 

Our investment objective is to maximize the total return to our stockholders in the form of current income and capital appreciation through investment in senior secured, unitranche secured and junior secured debt and, to a lesser extent, subordinated debt and equity investments. We seek to use our extensive leveraged finance origination infrastructure and broad expertise in sourcing loans to invest in primarily senior secured, unitranche secured and junior secured debt of middle-market companies. Our investments will generally range between $2.0 million and $18.0 million each, although this investment size may vary proportionately with the size of our capital base. As of June 30, 2019,March 31, 2020, our portfolio included approximately 76.7%81.5% senior secured debt, 13.2%9.4% unitranche secured debt, 3.0%2.0% junior secured debt and 7.1% equity securities, compared to December 31, 2018,2019, when our portfolio included approximately 79.3%77.1% senior secured debt, 10.6%12.4% unitranche secured debt, 3.8%2.2% junior secured debt and 6.3%8.3% equity securities. We expect that the companies in which we invest may be leveraged, often as a result of leveraged buy-outs or other recapitalization transactions, and, in certain cases, will not be rated by national ratings agencies. If such companies were rated, we believe that they would typically receive a rating below investment grade (between BB and CCC under the Standard & Poor’s system) from the national rating agencies.

 

While our primary focus is to maximize current income and capital appreciation through debt investments in thinly traded or private U.S. companies, we may invest a portion of the portfolio in opportunistic investments in order to seek to enhance returns to stockholders. Such investments may include investments in high-yield bonds, distressed debt, private equity or securities of public companies that are not thinly traded and securities of middle-market companies located outside of the United States. We expect that these public companies generally will have debt securities that are non-investment grade.

 

On February 28, 2014, our wholly-owned subsidiary, Monroe Capital Corporation SBIC, LP (“MRCC SBIC”), a Delaware limited partnership, received a license from the Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Act of 1958. MRCC SBIC commenced operations on September 16, 2013. See “SBA Debentures” below for more information.

 

On September 12, 2018, we closed a public offering of $69.0 million in aggregate principal amount of senior unsecured notes (“2023 Notes”). On March 20, 2019, we completed a registered direct offering of $40.0 million in additional aggregate principal amount of our 2023 Notes. See “2023 Notes” below for more information.

Investment income

 

We generate interest income on the debt investments in portfolio company investments that we originate or acquire. Our debt investments, whether in the form of senior secured, unitranche secured or junior secured debt, typically have an initial term of three to seven years and bear interest at a fixed or floating rate. In some instances, we receive payments on our debt investment based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. In some cases, our investments provide for deferred interest of payment-in-kind (“PIK”) interest. In addition, we may generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums and prepayment gains (losses) on loans as interest income. As the frequency or volume of the repayments which trigger these prepayment premiums and prepayment gains (losses) may fluctuate significantly from period to period, the associated interest income recorded may also fluctuate significantly from period to period. Interest and fee income is recorded on the accrual basis to the extent we expect to collect such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. We record fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service has been completed.

 

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Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. The frequency and volume of the distributions on common equity securities and LLC and LP investments may fluctuate significantly from period to period.

 

Expenses

 

Our primary operating expenses include the payment of base management and incentive fees to MC Advisors, under the investment advisory and management agreement (the “Investment Advisory Agreement”), the payment of fees to MC Management for our allocable portion of overhead and other expenses under the administration agreement (the “Administration Agreement”) and other operating costs. See Note 6 to our consolidated financial statements and “Related Party Transactions” below for additional information on our Investment Advisory Agreement and Administration Agreement. Our expenses also include interest expense on our various forms of indebtedness. We bear all other out-of-pocket costs and expenses of our operations and transactions.

 

Net gain (loss)

 

We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the cost basis of the investment without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments, foreign currency forward contracts, foreign currency and other transactions within net change in unrealized gain (loss) inon the consolidated statements of operations.

 

Portfolio and Investment Activity

 

During the three months ended June 30, 2019,March 31, 2020, we invested $31.0$41.3 million in six new portfolio companies and $29.5$29.8 million in 2134 existing portfolio companies and had $24.7$52.8 million in aggregate amount of sales and principal repayments, resulting in net investments of $35.8$18.3 million for the period.

  

During the sixthree months ended June 30,March 31, 2019, we invested $67.2$36.2 million in 14eight new portfolio companies and $63.4$33.9 million in 2921 existing portfolio companies and had $53.8$29.1 million in aggregate amount of sales and principal repayments, resulting in net investments of $76.8 million for the period.

During the three months ended June 30, 2018, we invested $13.6 million in five new portfolio company and $26.7 million in 14 existing portfolio companies and had $34.8 million in aggregate amount of sales and principal repayments, resulting in net investments of $5.5 million for the period.

During the six months ended June 30, 2018, we invested $18.5 million in six new portfolio company and $54.3 million in 19 existing portfolio companies and had $60.4 million in aggregate amount of sales and principal repayments, resulting in net investments of $12.4$41.0 million for the period.

 

The following table shows portfolio yield by security type:

 

 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
 Weighted Average
Annualized
Contractual
Coupon
Yield(1)		  Weighted
Average
Annualized
Effective
Yield(2)		  Weighted Average
Annualized
Contractual
Coupon
Yield(1)		  Weighted
Average
Annualized
Effective
Yield(2)		  Weighted Average
Annualized
Contractual
Coupon
Yield(1)		  Weighted
Average
Annualized
Effective
Yield(2)		  Weighted Average
Annualized
Contractual
Coupon
Yield(1)		  Weighted
Average
Annualized
Effective
Yield(2)		 
Senior secured loans  10.0%  10.0%  10.2%  10.2%  8.4%  8.4%  8.9%  8.9%
Unitranche secured loans  9.7   10.1   10.3   10.8   6.3   6.6   9.3   9.8 
Junior secured loans  10.7   10.7   9.0   9.0   8.9   8.9   9.1   9.1 
Preferred equity securities  0.5   0.5   0.5   0.5   1.8   1.8   0.5   0.5 
Total  9.9%  9.9%  10.0%  10.0%  8.0%  8.1%  8.8%  8.9%

 

 

(1)The weighted average annualized contractual coupon yield at period end is computed by dividing (a) the interest income on debt investments and preferred equity investments (with a stated coupon rate) at the period end contractual coupon rate for each investment by (b) the par value of our debt investments (excluding debt investments acquired for no cost in a restructuring on non-accrual status) and the cost basis of our preferred equity investments. We exclude loans acquired for no cost in a restructuring on non-accrual status within this metric as management believes this disclosure provides a better indication of return on invested capital. This exclusion impacts only the junior secured loans and total disclosed above. The weighted average contractual coupon yield including debt investments acquired for no cost in a restructuring on non-accrual status was 6.1%4.6% for junior secured loans and 9.7%7.8% in total as of June 30, 2019.March 31, 2020. The weighted average contractual coupon yield including debt investments acquired for no cost in a restructuring on non-accrual status was 5.6%4.8% for junior secured loans and 9.8%8.6% in total as of December 31, 2018.2019.
(2)The weighted average annualized effective yield on portfolio investments at period end is computed by dividing (a) interest income on debt investments and preferred equity investments (with a stated coupon rate) at the period end effective rate for each investment by (b) the par value of our debt investments (excluding debt investments acquired for no cost in a restructuring on non-accrual status) and the cost basis of our preferred equity investments. We exclude loans acquired for no cost in a restructuring on non-accrual status within this metric as management believes this disclosure provides a better indication of return on invested capital. This exclusion impacts only the junior secured loans and total disclosed above. The weighted average effective yield including debt investments acquired for no cost in a restructuring on non-accrual status was 6.1%4.6% for junior secured loans and 9.7%7.9% in total as of June 30, 2019.March 31, 2020. The weighted average effective yield including debt investments acquired for no cost in a restructuring on non-accrual status was 5.6%4.8% for junior secured loans and 9.8%8.7% in total as of December 31, 2018.2019. The weighted average annualized effective yield on portfolio investments is a metric on the investment portfolio alone and does not represent a return to stockholders. This metric is not inclusive of our fees and expenses, the impact of leverage on the portfolio or sales load that may be paid by investors.

 

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The following table shows the composition of our investment portfolio (in thousands):

 

 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
Fair Value:                  
Senior secured loans $483,682   76.7% $439,068   79.3% $481,565   81.5% $475,157   77.1%
Unitranche secured loans  83,343   13.2   58,852   10.6   55,826   9.4   76,247   12.4 
Junior secured loans  18,858   3.0   21,154   3.8   11,704   2.0   13,676   2.2 
LLC equity interest in SLF  35,944   5.7   27,634   5.0   31,325   5.3   42,412   6.9 
Equity securities  8,977   1.4   6,913   1.3   10,417   1.8   8,739   1.4 
Total $630,804   100.0% $553,621   100.0% $590,837   100.0% $616,231   100.0%

 

Our portfolio composition remained relatively consistent with December 31, 2018.2019, with the largest shifts in portfolio composition resulting from the funding of senior secured loans and unrealized losses on SLF during the three months ended March 31, 2020. The slight decrease in total contractual and effective yields on the portfolio during the six months ended June 30, 2019 was primarily attributed to general decreases in LIBOR combined with market spread compression, as new portfolioand moving additional investments were at a slightly lower average spread thanto non-accrual status during the average spread in the existing portfolio.three months ended March 31, 2020.

 

The following table shows theour portfolio composition by industry grouping (in thousands):

 

  June 30, 2019  December 31, 2018 
Fair Value:            
Automotive $7,727   1.2% $7,878   1.4%
Banking, Finance, Insurance & Real Estate  65,700   10.4   55,839   10.1 
Beverage, Food & Tobacco  16,092   2.6   15,544   2.8 
Chemicals, Plastics & Rubber  14,786   2.3   14,971   2.7 
Construction & Building  35,013   5.6   29,791   5.4 
Consumer Goods: Durable  22,632   3.6   25,212   4.5 
Consumer Goods: Non-Durable  21,482   3.4   19,181   3.5 
Containers, Packaging & Glass  8,331   1.3   9,694   1.8 
Energy: Oil & Gas  6,727   1.1   2,516   0.4 
Environmental Industries  12,631   2.0   12,195   2.2 
Healthcare & Pharmaceuticals  58,151   9.2   52,769   9.5 
High Tech Industries  80,540   12.8   77,954   14.1 
Hotels, Gaming & Leisure  20,246   3.2   20,264   3.7 
Investment Funds & Vehicles  35,944   5.7   27,634   5.0 
Media: Advertising, Printing & Publishing  21,079   3.3   21,908   4.0 
Media: Broadcasting & Subscription  5,676   0.9   4,483   0.8 
Media: Diversified & Production  10,611   1.7   5,000   0.9 
Retail  30,242   4.8   31,866   5.8 
Services: Business  105,679   16.7   73,336   13.2 
Services: Consumer  20,772   3.3   17,846   3.2 
Wholesale  30,743   4.9   27,740   5.0 
Total $630,804   100.0% $553,621   100.0%

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  March 31, 2020  December 31, 2019 
Fair Value:            
Automotive $7,616   1.3% $7,787   1.3%
Banking, Finance, Insurance & Real Estate  73,872   12.5   76,351   12.4 
Beverage, Food & Tobacco  21,547   3.6   15,634   2.5 
Capital Equipment  15,534   2.6   —   — 
Chemicals, Plastics & Rubber  26,398   4.5   29,509   4.8 
Construction & Building  18,183   3.1   30,887   5.0 
Consumer Goods: Durable  23,645   4.0   21,237   3.4 
Consumer Goods: Non-Durable  15,288   2.6   20,365   3.3 
Containers, Packaging & Glass  7,017   1.2   8,377   1.4 
Energy: Oil & Gas  4,203   0.7   4,306   0.7 
Environmental Industries  11,810   2.0   12,001   1.9 
Healthcare & Pharmaceuticals  68,845   11.7   62,727   10.2 
High Tech Industries  90,172   15.3   90,385   14.7 
Investment Funds & Vehicles  31,325   5.3   42,412   6.9 
Media: Advertising, Printing & Publishing  27,372   4.6   26,333   4.3 
Media: Broadcasting & Subscription  1,892   0.3   1,491   0.2 
Media: Diversified & Production  6,450   1.1   10,652   1.7 
Retail  16,228   2.7   16,998   2.8 
Services: Business  100,236   17.0   108,704   17.6 
Services: Consumer  13,797   2.3   22,051   3.6 
Wholesale  9,407   1.6   8,024   1.3 
Total $590,837   100.0% $616,231   100.0%

 

Portfolio Asset Quality

 

MC Advisors’ portfolio management staff closely monitors all credits, with senior portfolio managers covering agented and more complex investments. MC Advisors segregates our capital markets investments by industry. The MC Advisors’ monitoring process and projections developed by Monroe Capital both have daily, weekly, monthly and quarterly components and related reports, each to evaluate performance against historical, budget and underwriting expectations. MC Advisors’ analysts will monitor performance using standard industry software tools to provide consistent disclosure of performance. When necessary, MC Advisors will update our internal risk ratings, borrowing base criteria and covenant compliance reports.

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As part of the monitoring process, MC Advisors regularly assesses the risk profile of each of our investments and rates each of them based on an internal proprietary system that uses the categories listed below, which we refer to as MC Advisors’ investment performance rating. For any investment rated in grades 3, 4 or 5, MC Advisors, through its internal Portfolio Management Group (“PMG”), will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions. The PMG is responsible for oversight and management of any investments rated in grades 3, 4, or 5. MC Advisors monitors and, when appropriate, changes the investment ratings assigned to each investment in our portfolio. In connection with our valuation process, MC Advisors reviews these investment ratings on a quarterly basis, and our board of directors (the “Board”) reviews and affirms such ratings. A definition of thebasis. The investment performance rating system is described as follows:

 

Investment
Performance
Risk Rating		 Summary Description
Grade 1 Includes investments exhibiting the least amount of risk in our portfolio. The issuer is performing above expectations or the issuer’s operating trends and risk factors are generally positive.
   
Grade 2 Includes investments exhibiting an acceptable level of risk that is similar to the risk at the time of origination. The issuer is generally performing as expected or the risk factors are neutral to positive.
   
Grade 3 Includes investments performing below expectations and indicates that the investment’s risk has increased somewhat since origination. The issuer may be out of compliance with debt covenants; however, scheduled loan payments are generally not past due.
   
Grade 4 Includes an issuer performing materially below expectations and indicates that the issuer’s risk has increased materially since origination. In addition to the issuer being generally out of compliance with debt covenants, scheduled loan payments may be past due (but generally not more than six months past due).
   
Grade 5 Indicates that the issuer is performing substantially below expectations and the investment risk has substantially increased since origination. Most or all of the debt covenants are out of compliance or payments are substantially delinquent. Investments graded 5 are not anticipated to be repaid in full.

 

Our investment performance risk ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or reflect or represent any third-party assessment of any of our investments.

 

In the event of a delinquency or a decision to rate an investment grade 4 or grade 5, the PMG, in consultation with the investment committee, will develop an action plan. Such a plan may require a meeting with the borrower’s management or the lender group to discuss reasons for the default and the steps management is undertaking to address the under-performance, as well as amendments and waivers that may be required. In the event of a dramatic deterioration of a credit, MC Advisors and the PMG will form a team or engage outside advisors to analyze, evaluate and take further steps to preserve our value in the credit. In this regard, we would expect to explore all options, including in a private equity sponsored investment, assuming certain responsibilities for the private equity sponsor or a formal sale of the business with oversight of the sale process by us. The PMG and the investment committee have extensive experience in running debt work-out transactions and bankruptcies.

 

The following table shows the distribution of our investments on the 1 to 5 investment performance risk rating scale as of June 30, 2019March 31, 2020 (in thousands):

 

Investment Performance Risk Rating Investments at
Fair Value		 Percentage of
Total Investments		  Investments at
Fair Value		  Percentage of
Total Investments		 
1 $— —% $—   —%
2  517,797 82.1   490,546   83.0 
3  73,159  11.6   84,888   14.4 
4  39,848  6.3   14,445   2.4 
5  —  —   958   0.2 
Total $ 630,804  100.0% $590,837   100.0%

 

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The following table shows the distribution of our investments on the 1 to 5 investment performance risk rating scale as of December 31, 20182019 (in thousands):

 

Investment Performance Risk Rating Investments at
Fair Value		 Percentage of
Total Investments		  Investments at
Fair Value		  Percentage of
Total Investments		 
1 $— —% $—   —%
2 452,549 81.8   517,597   84.0 
3 57,741 10.4   83,701   13.6 
4 43,331 7.8   13,899   2.2 
5  —  —   1,034   0.2 
Total $553,621  100.0% $616,231   100.0%

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As of June 30,March 31, 2020, we had eight borrowers with loans or preferred equity securities on non-accrual status (Bluestem Brands, Inc., Curion Holdings, LLC (“Curion”), Education Corporation of America (“ECA”), Incipio, LLC (“Incipio”) last out term loan and third lien tranches, Luxury Optical Holdings Co. (“LOH”), Rockdale Blackhawk, LLC (“Rockdale”) pre-petition debt, SHI Holdings, Inc., and The Worth Collection, Ltd. (“Worth”)), and these investments totaled $43.6 million in fair value, or 7.4% of our total investments at fair value. As of December 31, 2019, we had fivesix borrowers with loans or preferred equity securities on non-accrual status (Curion, Holdings, LLC (“Curion”) promissory notes, Education Corporation of America (“ECA”),ECA, Incipio LLC (“Incipio”) third lien tranches, Millennial Brands LLC (“Millennial”),LOH, Rockdale pre-petition debt, and Rockdale Blackhawk, LLC (“Rockdale”) pre-petition debt)Worth), and these investments totaled $14.0$34.1 million in fair value, or 2.2% of our total investments at fair value. As of December 31, 2018, we had five borrowers with loans or preferred equity securities on non-accrual status (Curion promissory notes, ECA, Incipio third lien tranches, Millennial, and Rockdale pre-petition debt), and these investments totaled $16.8 million in fair value, or 3.0%5.5% of our total investments at fair value. The Curion promissory notes and the Incipio third lien tranches were obtained in restructurings during the year ended December 31, 2018 for no cost. Loans or preferred equity securities are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or dividends will be collected.

  

Results of Operations

 

Operating results were as follows (in thousands):

 

 Three months ended June 30,  Three months ended March 31, 
 2019  2018  2020  2019 
Total investment income $16,719  $14,820  $15,002  $16,159 
Total expenses, net of incentive fee waiver  9,646   6,914   8,200   9,092 
Net investment income before income taxes  6,802   7,067 
Income taxes, including excise taxes  20   (7)
Net investment income  7,073   7,906   6,782   7,074 
Net realized gain (loss) on investments  35   —   94   — 
Net realized gain (loss) on foreign currency forward contracts  2   —   (4)  (8)
Net realized gain (loss) on foreign currency and other transactions  (1)  (9)  (15)  (1)
Net realized gain (loss)  36   (9)  75   (9)
Net change in unrealized gain (loss) on investments  (3,691)  (4,412)  (45,149)  857 
Net change in unrealized gain (loss) on foreign currency forward contracts  72   —   98   (65)
Net change in unrealized gain (loss) on foreign currency and other transactions  502   795   1,344   (416)
Net change in unrealized gain (loss)  (3,117)  (3,617)  (43,707)  376 
Net increase (decrease) in net assets resulting from operations $3,992  $4,280  $(36,850) $7,441 

 

  Six months ended June 30, 
  2019  2018 
Total investment income $32,878  $29,770 
Total expenses, net of incentive fee waiver  18,731   13,399 
Net investment income  14,147   16,371 
Net realized gain (loss) on investments  35   — 
Net realized gain (loss) on foreign currency forward contracts  (6)  — 
Net realized gain (loss) on foreign currency and other transactions  (2)  3 
Net realized gain (loss)  27   3 
Net change in unrealized gain (loss) on investments  (2,834)  (11,057)
Net change in unrealized gain (loss) on foreign currency forward contracts  7   — 
Net change in unrealized gain (loss) on foreign currency and other transactions  86   353 
Net change in unrealized gain (loss)  (2,741)  (10,704)
Net increase (decrease) in net assets resulting from operations $11,433  $5,670 

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Investment Income

 

The composition of our investment income was as follows (in thousands):

 

  Three months ended June 30, 
  2019  2018 
Interest income $14,026  $12,376 
Payment-in-kind interest income  1,261   327 
Dividend income(1)  888   615 
Fee income  60   666 
Prepayment gain (loss)  91   312 
Accretion of discounts and amortization of premium  393   524 
Total investment income $16,719  $14,820 

 Six months ended June 30,  Three months ended March 31, 
 2019  2018  2020  2019 
Interest income $27,240  $24,673  $11,979  $13,214 
Payment-in-kind interest income  2,315   656 
PIK interest income  1,076   1,054 
Dividend income(2)(1)  1,671   1,050   1,191   783 
Fee income  629   1,390   198   569 
Prepayment gain (loss)  204   445   214   113 
Accretion of discounts and amortization of premium  819   1,556   344   426 
Total investment income $32,878  $29,770  $15,002  $16,159 

 

 

(1)Includes PIK dividends of $13 thousand$41 and $265 thousand, respectively.
(2)Includes PIK dividends of $26 thousand and $525 thousand,$13, respectively.

  

The increasedecrease in investment income of $1.9 million and $3.1$1.2 million during the three and six months ended June 30, 2019March 31, 2020 as compared to the three and six months ended June 30, 2018, respectively,March 31, 2019, is primarily the result of an increasea decline in interestthe effective rate on the portfolio, driven by decreases in LIBOR and the placement of additional investments on non-accrual status, and a decrease in fee income, (including payment-in-kind interest income) due to an increase in average outstanding loan balances andpartially offset by an increase in dividend income from our investment in SLF, partially offset by a decrease in fee income and prepayment gain (loss).SLF.

   

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Operating Expenses

 

The composition of our operating expenses was as follows (in thousands):

 

  Three months ended June 30, 
  2019  2018 
Interest and other debt financing expenses $5,107  $2,836 
Base management fees  2,723   2,202 
Incentive fees, net of incentive fee waiver (1)  883   990 
Professional fees  272   302 
Administrative service fees  319   322 
General and administrative expenses  285   225 
Excise taxes  17   — 
Directors’ fees  40   37 
Total expenses, net of incentive fee waiver $9,646  $6,914 

 Six months ended June 30,  Three months ended March 31, 
 2019  2018  2020 2019 
Interest and other debt financing expenses $9,461  $5,542  $4,830 $4,354 
Base management fees  5,244   4,365  2,551 2,521 
Incentive fees, net of incentive fee waiver (1)  2,202   1,751  — 1,319 
Professional fees  561   609  215 289 
Administrative service fees  666   646  338 347 
General and administrative expenses  512   401  231 227 
Excise taxes  10   11 
Directors’ fees  75   74   35  35 
Total expenses, net of incentive fee waiver $18,731  $13,399  $8,200 $9,092 

 

 

(1)During the three and six months ended June 30,March 31, 2020 and 2019, MC Advisors waived part one incentive fees (based on net investment income) of $285zero and $281 thousand, and $566 thousand, respectively. During the three and six months ended June 30, 2018, no incentive fees were waived. Incentive fees during the three and six months ended June 30,March 31, 2020 and 2019 were limited by $424 thousand$1.4 million and $502 thousand, respectively, due to the Incentive Fee Limitation. During the three and six months ended June 30, 2018, incentive fees were limited by $790 thousand and $1,874$78 thousand, respectively, due to the Incentive Fee Limitation. See Note 6 in our attached consolidated financial statements for additional information on the Incentive Fee Limitation.

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The composition of our interest and other debt financing expenses, average outstanding balances and average stated interest rates (i.e. the rate in effect plus spread) were as follows (in thousands): 

 

  Three months ended June 30, 
  2019  2018 
Interest expense – revolving credit facility $2,092  $1,551 
Interest expense – 2023 Notes  1,566   — 
Interest expense – SBA debentures  981   970 
Amortization of deferred financing costs  468   315 
Total interest and other debt financing expenses $5,107  $2,836 
Average outstanding balance $390,293  $238,110 
Average stated interest rate  4.7%  4.2%

 Six months ended June 30,  Three months ended March, 
 2019  2018  2020  2019 
Interest expense – revolving credit facility $3,987  $3,108  $1,798  $1,895 
Interest expense – 2023 Notes  2,622   —   1,567   1,056 
Interest expense – SBA debentures  1,951   1,838   981   970 
Amortization of deferred financing costs  901   596   484   433 
Total interest and other debt financing expenses $9,461  $5,542  $4,830  $4,354 
Average outstanding balance $364,659  $237,567 
Average debt outstanding $400,453  $338,741 
Average stated interest rate  4.7%  4.2%  4.4%  4.7%

 

The increasedecrease in expenses of $2.7 million and $5.3$0.9 million during the three and six months ended June 30, 2019,March 31, 2020, as compared to the three and six months ended June 30, 2018, respectively,March 31, 2019, is primarily the result of a decrease in incentive fees due to the Incentive Fee Limitation, partially offset by an increase in interest expense as a result of additional borrowings (primarily the on our senior unsecured notes (“2023 Notes and revolving credit facility) to support the larger average portfolio size and an increase in base management fees due to the growth in invested assets.Notes”).

 

Income Taxes, Including Excise Taxes

We have elected to be treated as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the tax treatment available to RICs. To maintain qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and distribute to stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses.

Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend distributions from such current year taxable income into the next year and pay a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year annual taxable income may exceed estimated current year dividend distributions, we accrue excise tax, if any, on estimated excess taxable income as such taxable income is earned. For the three months ended March 31, 2020 and 2019, we recorded a net expense on the consolidated statements of operations of $20 thousand and ($7) thousand, respectively, for U.S. federal excise tax.

Certain of our consolidated subsidiaries are subject to U.S. federal and state corporate-level income taxes. For both the three months ended March 31, 2020 and 2019, we recorded a net tax expense of zero on the consolidated statements of operations for these subsidiaries.

Net Realized Gain (Loss)

 

During the three months ended June 30,March 31, 2020 and 2019, and 2018, we had sales of investments of $0.7$13.1 million and zero, respectively, resulting in $35$94 thousand and zero of net realized gain (loss), respectively. During the six months ended June 30, 2019 and 2018, we had sales of on investments, of $0.7 million and zero, respectively, resulting in $35 thousand and zero of net realized gain (loss), respectively.

 

We may enter into foreign currency forward contracts to reduce our exposure to foreign currency exchange rate fluctuations. During the three months ended June 30,March 31, 2020 and 2019, and 2018, we had $2($4) thousand and zero($8) thousand of net realized gain (loss) on foreign currency forward contracts, respectively. For the six months ended June 30, 2019 and 2018, the Company recognized net realized gain (loss) on foreign currency forward contracts of ($6) thousand and zero, respectively. During the three months ended June 30,March 31, 2020 and 2019, and 2018, we had ($1)15) thousand and ($9)1) thousand of net realized gain (loss) on foreign currency and other transactions, respectively. During the six months ended June 30, 2019 and 2018, we had ($2) thousand and $3 thousand of net realized gain (loss) on foreign currency and other transactions, respectively. 

 

Net Change in Unrealized Gain (Loss)

 

For the three months ended June 30,March 31, 2020 and 2019, and 2018, our investments had ($3.7)45.1) million and ($4.4)$0.9 million of net change in unrealized gain (loss), respectively. TheDuring the three months ended March 31, 2020, our operating results were negatively impacted by the uncertainty surrounding the COVID-19 pandemic which has caused severe disruptions in the global economy and negatively impacted the fair value and performance of our investment portfolio.

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We estimate approximately $25.6 million of the net change in unrealized gain (loss) includes both unrealized gain on investments in our portfolio with mark-to-market gains during the period and unrealized loss on investments during the three months ended March 31, 2020 was attributable to broad market movements and widening credit spreads in the loan markets as market participants expected a higher yield on similar investments given the significant market volatility generated by the COVID-19 pandemic. Approximately $14.5 million of these net unrealized losses were attributable to investments held in the portfolio directly, while approximately $11.1 million of these losses were attributable to our investment in SLF. The SLF’s underlying investments are loans to middle-market borrowers that are generally larger than the rest of our portfolio with mark-to-market losseswhich is focused on lower middle-market companies. These upper middle-market loans held within the SLF experienced higher volatility in valuation during the period. period than the rest of our portfolio. Additionally, we estimate the remaining approximately $19.5 million of the net unrealized losses this period were attributable to specific credit or fundamental performance of the underlying portfolio companies, a significant portion of which is as a result of the impact of the COVID-19 pandemic on individual credit performance. The fair value of our portfolio investments may be further negatively impacted after March 31, 2020 by circumstances and events that are not yet known.

For the three months ended June 30,March 31, 2020 and 2019, and 2018, our foreign currency forward contracts had $0.1 million$98 thousand and zero($65) thousand of net change in unrealized gain (loss), respectively. For the three months ended June 30,March 31, 2020 and 2019, and 2018, our foreign currency borrowings had $0.5$1.3 million and $0.8($0.4) million of net change in unrealized gain (loss), respectively.

 

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For the six months ended June 30, 2019 and 2018, our investments had ($2.8) million and ($11.1) million of net change in unrealized gain (loss), respectively. The net change in unrealized gain (loss) includes both unrealized gain on investments in our portfolio with mark-to-market gains during the period and unrealized loss on investments in our portfolio with mark-to-market losses during the period. For the six months ended June 30, 2019 and 2018, our foreign currency forward contracts had $7 thousand and zero of net change in unrealized gain (loss), respectively. For the six months ended June 30, 2019 and 2018, our foreign currency borrowings had $0.1 million and $0.4 million of net change in unrealized gain (loss), respectively.

Net Increase (Decrease) in Net Assets Resulting from Operations

For the three months ended June 30,March 31, 2020 and 2019, and 2018, the net increase (decrease) in net assets resulting from operations was $4.0($36.9) million and $4.3$7.4 million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended June 30,March 31, 2020 and 2019, and 2018, our per share net increase (decrease) in net assets resulting from operations was $0.20($1.81) and $0.21,$0.36, respectively. The $0.3($44.3) million decrease during the three months ended June 30, 2019March 31, 2020 as compared to the three months ended June 30, 2018,March 31, 2019, is primarily the result of a decrease in net investment income, partially offset by a decreasean increase in net unrealized mark-to-market losses on investments in the portfolio.

   

For the six months ended June 30, 2019 and 2018, the net increase (decrease) in net assets from operations was $11.4 million and $5.7 million, respectively. Based on the weighted average shares of common stock outstanding for the six months ended June 30, 2019 and 2018, our per share net increase (decrease) in net assets resulting from operations was $0.56 and $0.28, respectively. The $5.7 million increase during the six months ended June 30, 2019 as compared to the six months ended June 30, 2018, is primarily the result of a decrease in net unrealized mark-to-market losses on investments in the portfolio, partially offset by a decrease in net investment income.

Liquidity and Capital Resources

 

As of June 30, 2019,March 31, 2020, we had $3.0$9.3 million in cash, $23.9$9.9 million in cash at MRCC SBIC, $188.6$192.0 million of total debt outstanding on our revolving credit facility, $109.0 million in 2023 Notes and $115.0 million in outstanding SBA debentures. We had $66.4$63.0 million available for additional borrowings on our revolving credit facility.facility, subject to borrowing base availability. See “Borrowings” below for additional information.

 

Cash Flows

 

For the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, we experienced a net increase (decrease) in cash and restricted cash of $9.1($10.4) million and ($0.2)$4.3 million, respectively. For the sixthree months ended June 30, 2019,March 31, 2020, operating activities used $65.8$16.3 million, primarily as a result of purchases of portfolio investments and net investment income, partially offset by principal repayments on portfolio investments. For the sixthree months ended June 30, 2018,March 31, 2019, operating activities used $0.4$35.0 million, primarily as a result of purchases of portfolio investments, partially offset by principal repayments on portfolio investments. During the sixthree months ended June 30,March 31, 2020, we generated $5.9 million from financing activities, primarily as a result of net proceeds from net borrowings on our revolving credit facility partially offset by distributions to stockholders. During the three months ended March 31, 2019, we generated $75.0$39.3 million from financing activities, primarily as a result of net proceeds from net borrowings on our revolving credit facility and 2023 Notes, partially offset by distributions to stockholders. During the six months ended June 30, 2018, we generated $0.2 million from financing activities, primarily as a result of net proceeds from net borrowings on our revolving credit facility and SBA debenture borrowings, partially offset by distributions to stockholders.

 

Capital Resources

 

As a BDC, we distribute substantially all of our net income to our stockholders and have an ongoing need to raise additional capital for investment purposes. We intend to generate additional cash primarily from future offerings of securities, future borrowings and cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be to invest in portfolio companies and make cash distributions to our stockholders. We may also use available funds to repay outstanding borrowings.

 

As a BDC, we are generally not permitted to issue and sell our common stock at a price below net asset value (“NAV”) per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current net asset valueNAV per share of our common stock if our Board,board of directors (the “Board”) , including independent directors, determines that such sale is in the best interests of us and our stockholders, and if our stockholders have approved such sales. On June 19, 2019, our stockholders voted to allow us to sell or otherwise issue common stock at a price below net asset valueNAV per share for a period of one year, subject to certain limitations. As of June 30, 2019both March 31, 2020 and December 31, 2018,2019, we had 20,444,564 and 20,444,564 shares outstanding, respectively.outstanding.

 

On June 24, 2015, our stockholders approved a proposal to authorize us to issue warrants, options or rights to subscribe to, convert to, or purchase our common stock in one or more offerings. This is a standing authorization and does not require annual re-approval by our stockholders.

 

On June 20, 2018, our stockholders approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) ofIn accordance with the 1940 Act. As a result of this approval,Act, we are now permitted to borrow amounts such that our asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing (if certain requirements are met), rather than 200%, as previously required.borrowing. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, our asset coverage ratio based on aggregate borrowings outstanding was 183%168% and 223%183%, respectively.

 

Stock Issuances: On May 12, 2017, we entered into our current at-the-market (“ATM”) securities offering program with JMP Securities LLC (“JMP”) and FBR Capital Markets & Co. (“FBR”) (the “ATM Program”). During the six months ended June 30, 2018, we sold 17,140 shares at an average price of $14.21 per share for gross proceeds of $0.2 million under the ATM. Aggregate underwriter’s discounts and commissions were $3 thousand and offering costs were $31 thousand, resulting in net proceeds of approximately $0.2 million. There were no stock issuances through the ATM Program during the sixthree months ended June 30,March 31, 2020 and 2019.

 

 5952 

 

Borrowings

 

Revolving Credit Facility:Facility On March 1, 2019, we amended and restated our: We have a $255.0 million revolving credit facility (as amended and restated and further amended on March 20, 2019, the “Amended Credit Agreement”) with ING Capital LLC, as agent. Among other things, the Amended Credit Agreement increased the size of theThe revolving credit facility from $200.0 million to $255.0 million (withhas an accordion feature thatwhich permits us, under certain circumstances to increase the size of the facility up to $400.0 million), extended the period during which we may make draws under the revolving credit facility from expiring on December 14, 2019 to expiring on March 1, 2023, extended the final maturity date from December 14, 2020 to March 1, 2024, lowered the interest rate margins (a) for LIBOR loans (which may be one, three or six month, at the Company’s option), from 2.75% to 2.375% and (b) for alternate base rate loans, from 1.75% to 1.375%, reduced the asset coverage covenant from 2.1 to 1 to 1.5 to 1, replaced the consolidated interest coverage ratio with a minimum senior debt coverage ratio of 2 to 1 (in addition to the asset coverage ratio noted above), and increased the advance rate against certain types of assets in our portfolio. We incurred expenses of $1.8 million in conjunction with the amendment which have been capitalized within unamortized deferred financing costs and are amortized into interest expense over the estimated average life of the borrowings.

As of June 30, 2019, the maximum amount we are able to borrow was $255.0 million and this borrowing can be increased to $400.0 million pursuant to an accordion feature (subject to maintaining 150% asset coverage, as defined by the 1940 Act). The revolving credit facility is secured by a lien on all of our assets, including cash on hand, but excluding the assets of our wholly-owned subsidiary, MRCC SBIC. We may make draws under the revolving credit facility to make or purchase additional investments through March 1, 2023 and for general working capital purposes until March 1, 2024, the maturity date of the revolving credit facility.

 

Our ability to borrow under the revolving credit facility is subject to availability under the borrowing base, which permits us to borrow up to 72.5% of the fair market value of our portfolio company investments depending on the type of the investment we hold and whether the investment is quoted. Our ability to borrow is also subject to certain concentration limits, and continued compliance with the representations, warranties and covenants given by us under the facility. The revolving credit facility contains certain financial and restrictive covenants, including, but not limited to, our maintenance of: (1) a minimum consolidated total net assets at least equal to $175.0 million plus 65% of the net proceeds to us from sales of our equity securities after March 1, 2019; (2) a ratio of total assets (less total liabilities other than indebtedness) to total indebtedness of not less than 1.5 to 1; and (3) a senior debt coverage ratio of at least 2 to 1. The revolving credit facility also requires us to undertake customary indemnification obligations with respect to ING Capital LLC and other members of the lending group and to reimburse the lenders for expenses associated with entering into the credit facility. The revolving credit facility also has customary provisions regarding events of default, including events of default for nonpayment, change in control transactions at both Monroe Capital Corporation and MC Advisors, failure to comply with financial and negative covenants, and failure to maintain our relationship with MC Advisors. If we incur an event of default under the revolving credit facility and fail to remedy such default under any applicable grace period, if any, then the entire revolving credit facility could become immediately due and payable, which would materially and adversely affect our liquidity, financial condition, results of operations and cash flows.

 

Our revolving credit facility also imposes certain conditions that may limit the amount of our distributions to stockholders. Distributions payable in our common stock under the DRIP are not limited by the revolving credit facility. Distributions in cash or property other than common stock are generally limited to 115% of the amount of distributions required to maintain our status as a RIC.

 

As of June 30, 2019,March 31, 2020, we had U.S. dollar borrowings of $169.8$172.0 million and non-U.S. dollar borrowings denominated in Great Britain pounds of £14.8£16.1 million ($18.820.0 million in U.S. dollars) under the revolving credit facility. As of December 31, 2018,2019, we had U.S. dollar borrowings of $117.1$159.0 million and non-U.S. dollar borrowings denominated in Great Britain pounds of £14.8£16.1 million ($18.921.3 million in U.S. dollars) under the revolving credit facility. The borrowings denominated in Great Britain pounds may be positively or negatively affected by movements in the rate of exchange between the U.S. dollar and the Great Britain pound. These movements are beyond our control and cannot be predicted. The borrowings denominated in Great Britain pounds are translated into U.S. dollars based on the spot rate at each balance sheet date. The impact resulting from changes in foreign currency borrowings is included in net change in unrealized gain (loss) on foreign currency and other transactions on our consolidated statements of operations and totaled $0.5$1.3 million and $0.1($0.4) million for the three and six months ended June 30,March 31, 2020 and 2019, and $0.8 million and $0.4 million for the three and six months ended June 30, 2018, respectively.

 

Borrowings under the revolving credit facility bear interest, at our election, at an annual rate of LIBOR (one-month, three-month or six-month at our discretion based on the term of the borrowing) plus 2.375% or at a daily rate equal to 1.375% per annum plus the greater of the prime interest rate, the federal funds rate plus 0.5% or LIBOR plus 1.0%. In addition to the stated interest rate on borrowings under the revolving credit facility, we are required to pay a fee of 0.5% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is less than 35% of the then available maximum borrowing or a fee of 1.0% per annum on any unused portion of the revolving credit facility if the unused portion of the facility is greater than or equal to 35% of the then available maximum borrowing. As of June 30, 2019March 31, 2020 and December 31, 2018,2019, the outstanding borrowings were accruing at a weighted average interest rate of 4.7%3.3% and 5.0%4.0%, respectively.

 

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2023 Notes:On September 12, 2018, we closed a public offering of 2,760,000 unitsWe have issued $109.0 million in aggregate principal amount of senior unsecured notes at a public offering price of $25.00 per unit, resulting in aggregate principal and gross proceeds of $69.0 million. Aggregate underwriter’s discounts and commissions were $2.2 million and deferred financing costs were $0.4 million, resulting in net proceeds of approximately $66.4 million. On March 20, 2019, we closed a registered direct offering of 1,600,000 units of 2023 Notes at an offering price of $24.75 per unit, resulting in additional aggregate principal of $40.0 million and gross proceeds of $39.6 million. Placement agent fees were $0.5 million and deferred financing costs were $0.8 million, resulting in net proceeds of approximately $38.3 million. The 2023 Notesthat mature on October 31, 2023. Interest on the 2023 Notes is paid quarterly on January 31, April 30, July 31, and October 31, at an annual rate of 5.75%. We may redeem the 2023 Notes in whole or in part at any time or from time to time on or after October 31, 2020. The 2023 Notes are general, unsecured obligations and rank equal in right of payment with all of our existing and future unsecured indebtedness. The 2023 Notes are listed on The Nasdaq Global Select Market under the trading symbol MRCCL.

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SBA Debentures: On February 28, 2014, our wholly-owned subsidiary, MRCC SBIC, received a license from the SBA to operate as a SBIC under Section 301(c) of the Small Business Investment Act of 1958, as amended. MRCC SBIC commenced operations on September 16, 2013.

  

The SBIC license allows MRCC SBIC to obtain leverage by issuing SBA debentures, subject to the issuance of a leverage commitment by the SBA and other customary procedures. SBA debentures are non-recourse, interest only debentures with interest payable semi-annually and have a ten-year maturity. The principal amount of SBA debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA debentures is fixed on a semi-annual basis (pooling date) at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, has a superior claim to MRCC SBIC’s assets over our stockholders in the event we liquidate MRCC SBIC, or the SBA exercises its remedies upon an event of default. As of June 30, 2019,March 31, 2020, MRCC SBIC had $23.9$9.9 million in cash and $148.1$143.4 million in investments at fair value. As of December 31, 2018,2019, MRCC SBIC had $14.0$27.4 million in cash and $161.0$134.0 million in investments at fair value.

 

SBA regulations currently limit the amount that an individual SBIC may borrow to a maximum of $175.0 million when it has at least $87.5 million in regulatory capital, receives a leverage commitment from the SBA and has been through an audit examination by the SBA subsequent to licensing. The SBA also limits a related group of SBICs (commonly referred to as a “family of funds”) to a maximum of $350.0 million in total borrowings.

 

As of both June 30, 2019March 31, 2020 and December 31, 2018,2019, MRCC SBIC had $57.6 million in leverageable capital and the following SBA debentures outstanding (in thousands):

 

Maturity Date Interest Rate  Amount 
September 2024  3.4% $12,920 
March 2025  3.3%  14,800 
March 2025  2.9%  7,080 
September 2025  3.6%  5,200 
March 2027  3.5%  20,000 
September 2027  3.2%  32,100 
March 2028  3.9%  18,520 
September 2028  4.2%  4,380 
Total     $115,000 

 

On October 2, 2014, weWe were granted exemptive relief from the SEC for permission to exclude the debt of MRCC SBIC guaranteed by the SBA from the asset coverage test under the 1940 Act. The receipt of this exemption for this SBA debt increases flexibility under the asset coverage test.

 

Distributions

 

Our Board will determine the timing and amount, if any, of our distributions. We intend to pay distributions on a quarterly basis. In order to avoid corporate-level tax on the income we distribute as a RIC, we must distribute to our stockholders at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, on an annual basis out of the assets legally available for such distributions. In addition, we also intend to distribute any realized net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) at least annually out of the assets legally available for such distributions. Distributions to stockholders for the three and six months ended June 30,March 31, 2020 and 2019, totaled $7.1$7.2 million ($0.35 per share) and $14.3$7.2 million ($0.70 per share), respectively. Distributions to stockholders for the three and six months ended June 30, 2018, totaled $7.1 million ($0.35 per share) and $14.2 million ($0.70 per share), respectively. The tax character of such distributions is determined at the end of the fiscal year. However, if the character of such distributions were determined as of June 30,March 31, 2020 and 2019, and 2018, no portion of these distributions would have been characterized as a tax return of capital to stockholders.

 

We haveIn October 2012, we adopted an “opt out” dividend reinvestment plan (“DRIP”) for our common stockholders. As a result, ifWhen we declare a distribution, our stockholders’ cash distributions will automatically be automatically reinvested in additional shares of our common stock unless a stockholder specifically “opts out” of our DRIP. If a stockholder opts out, that stockholder will receive cash distributions. Although distributions paid in the form of additional shares of our common stock will generally be subject to U.S. federal, state and local taxes in the same manner as cash distributions, stockholders participating in our DRIP will not receive any corresponding cash distributions with which to pay any such applicable taxes.

 

61

MRCC Senior Loan Fund I, LLC

 

We co-invest with NLV Financial Corporation (“NLV”), in senior secured loans through SLF, an unconsolidated Delaware LLC. SLF is capitalized as underlying investment transactions are completed, taking into account available debt and equity commitments available for funding these investments. All portfolio and investment decisions in respect to SLF must be approved by the SLF investment committee, consisting of one representative of each of us and NLV. SLF may cease making new investments upon notification of either member but operations will continue until all investments have been sold or paid-off in the normal course of business. Investments held by SLF are measured at fair value using the same valuation methodologies as described below. Our investment is illiquid in nature as SLF does not allow for withdrawal from the LLC or the sale of a member’s interest unless approved by the board of members of SLF. The full withdrawal of a member would result in an orderly wind-down of SLF.

 

54

SLF’s profits and losses are allocated to us and NLV in accordance with the respective ownership interests. As of both June 30, 2019March 31, 2020 and December 31, 2018,2019, we and NLV each owned 50.0% of the LLC equity interests of SLF. As of June 30,both March 31, 2020 and December 31, 2019, SLF had $100.0 million in equity commitments from its members (in the aggregate), of which $70.2 million was funded. As of December 31, 2018, SLF had $100.0 million in equity commitments from its members (in the aggregate), of which $54.4$84.3 million was funded.

  

As of both June 30, 2019March 31, 2020 and December 31, 2018,2019, we have committed to fund $50.0 million of LLC equity interest subscriptions to SLF. As of June 30, 2019both March 31, 2020 and December 31, 2018, $35.1 million and $27.22019, $42.2 million of our LLC equity interest subscriptions to SLF had been called and contributed, net of return of capital distributions subject to recall, respectively.recall.

 

For the three and six months ended June 30,March 31, 2020 and 2019, we received $0.9$1.2 million and $1.7 million of dividend income from our LLC equity interest in SLF, respectively. For the three and six months ended June 30, 2018, we received $0.3 million and $0.5$0.8 million of dividend income from our LLC equity interest in SLF, respectively.

 

SLF has entered into a senior secured revolving credit facility (as amended, the “SLF Credit Facility”) with Capital One, N.A., through its wholly-owned subsidiary MRCC Senior Loan Fund I Financing SPV, LLC (“SLF SPV”), which as of June 30, 2019March 31, 2020 allowed SLF SPV to borrow up to $170.0 million at any one time, subject to leverage and borrowing base restrictions. On January 9, 2019, the SLF SPV closed a $20.0 million upsize to the SLF Credit Facility, bringing the maximum amount the SLF SPV is able to borrow up to the now current $170.0 million. Borrowings under the SLF Credit Facility bear interest at an annual rate of LIBOR (three-month) plus 2.25%. The maturity date on the SLF Credit Facility is March 22, 2023.

 

SLF does not pay any fees to MC Advisors or its affiliates; however, SLF has entered into an administration agreement with Monroe Capital Management Advisors, LLC (“MC Management,Management”), pursuant to which certain loan servicing and administrative functions are delegated to MC Management. SLF may reimburse MC Management for its allocable share of overhead and other expenses incurred by MC Management. For the three and six months ended June 30,March 31, 2020 and 2019, SLF incurred $47$56 thousand and $93$46 thousand, respectively, of allocable expenses. SLF did not incur any allocable expenses for the three and six months ended June 30, 2018. There are no agreements or understandings by which we guarantee any SLF obligations.

  

As of June 30, 2019March 31, 2020 and December 31, 2018,2019, SLF had total assets at fair value of $240.8$222.5 million and $177.1$245.5 million, respectively. As of June 30, 2019both March 31, 2020 and December 31, 2018,2019, SLF had zero and zero portfolio company investments on non-accrual status, respectively.status. The portfolio companies in SLF are in industries and geographies similar to those in which we may invest directly. Additionally, as of June 30, 2019March 31, 2020 and December 31, 2018,2019, SLF had $3.0 million and $4.9 million, respectively, in outstanding commitments to fund variousinvestments under undrawn revolvers and delayed draw loans to its portfolio companies totaling $7.2 million and $5.5 million, respectively.commitments.

 

Below is a summary of SLF’s portfolio, followed by a listing of the individual investments in SLF’s portfolio as of June 30, 2019March 31, 2020 and December 31, 2018:2019: 

 

 As of  As of 
 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
Senior secured loans(1)  237,875   174,267   243,373   243,778 
Weighted average current interest rate on senior secured loans(2)  7.5%  7.6%  6.5%  7.0%
Number of borrowers in SLF  63   50   63   64 
Largest portfolio company investment(1)  6,895   6,930   7,280   6,860 
Total of five largest portfolio company investments(1)  29,591   27,489   29,557   28,880 

 

 

(1)Represents outstanding principal amount, excluding unfunded commitments. Principal amounts in thousands.
(2)Computed as the (a) annual stated interest rate on accruing senior secured loans divided by (b) total senior secured loans at outstanding principal amount.

 

 6255 

 

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

June 30, 2019March 31, 2020

(in thousands)

 

Portfolio Company(a) Spread Above
Index (b)		 Interest
Rate(b)		  Maturity Principal  Fair
Value		 
Non-Controlled/Non-Affiliate Company Investments                
Senior Secured Loans                
Aerospace & Defense                
IMIA Holdings, Inc. L+4.50%  6.83% 10/28/2024  4,298  $4,324 
IMIA Holdings, Inc. (Revolver)(c) L+4.50%  6.83% 10/28/2024  680   — 
MAG Aerospace Industries, Inc. L+4.75%  7.15% 6/6/2025  3,267   3,251 
Novaria Holding, LLC L+4.75%  7.15% 12/19/2024  4,312   4,312 
Trident Maritime SH, Inc. L+5.50%  7.83% 6/4/2024  4,435   4,381 
Trident Maritime SH, Inc. (Revolver)(c) L+5.50%  7.83% 6/4/2024  340   — 
           17,332   16,268 
Automotive                
Innovative Aftermarket Systems L+5.50%  7.90% 1/25/2021  1,947   1,945 
Wheel Pros, LLC L+4.75%  7.15% 4/4/2025  4,957   4,914 
           6,904   6,859 
Banking, Finance, Insurance & Real Estate                
Avison Young (USA) Inc. L+5.00%  7.33% 1/30/2026  4,975   4,901 
Lightbox Intermediate, L.P. L+5.00%  7.45% 5/11/2026  5,000   4,950 
Minotaur Acquisition, Inc. L+5.00%  7.40% 3/27/2026  2,992   2,950 
Nuvei Technologies Corp. P+3.50%  9.00% 9/26/2025  4,138   4,108 
Nuvei Technologies Corp. (Delayed Draw)(c) L+4.50%  6.89% 9/26/2025  837   708 
RMS Holding Company, LLC L+6.00%  8.58% 11/16/2022  3,991   3,974 
Zenith Merger Sub, Inc. L+5.25%  7.58% 12/13/2024  4,724   4,702 
Zenith Merger Sub, Inc. (Delayed Draw)(c) L+5.25%  7.58% 12/13/2024  265   — 
           26,922   26,293 
Beverage, Food & Tobacco                
Il Fornaio (America) Corporation L+6.50%  8.90% 11/10/2022  4,840   4,748 
SW Ingredients Holdings, LLC L+4.00%  6.54% 7/3/2025  3,722   3,722 
US Salt, LLC L+4.75%  7.15% 1/16/2026  2,743   2,747 
           11,305   11,217 
Capital Equipment                
Analogic Corporation L+6.00%  8.40% 6/24/2024  4,963   4,861 
           4,963   4,861 
Chemicals, Plastics & Rubber                
Loparex International B.V. L+4.25%  6.65% 4/11/2025  437   437 
Peach State Labs, LLC L+6.50%  8.94% 6/30/2021  2,836   2,794 
           3,273   3,231 
Construction & Building                
The Cook & Boardman Group, LLC L+5.75%  8.37% 10/20/2025  2,985   2,970 
           2,985   2,970 
Consumer Goods: Durable                
International Textile Group, Inc. L+5.00%  7.44% 5/1/2024  1,828   1,700 
SSH Group Holdings, Inc. L+4.25%  6.83% 7/30/2025  2,316   2,305 
           4,144   4,005 
Consumer Goods: Non-Durable                
PH Beauty Holdings III, Inc. L+5.00%  7.40% 9/26/2025  2,480   2,465 
           2,480   2,465 
Containers, Packaging & Glass                
Liqui-Box Holdings, Inc.(d) L+4.50%  6.90% 6/3/2026  4,333   4,298 
Polychem Acquisition, LLC L+5.00%  7.40% 3/17/2025  2,993   3,002 
Port Townsend Holdings Company, Inc. L+4.75%  7.15% 4/3/2024  4,862   4,856 
PVHC Holding Corp L+4.75%  7.08% 8/5/2024  3,300   3,218 
PVHC Holding Corp (Delayed Draw)(c) L+4.75%  7.08% 8/5/2024  425   — 
           15,913   15,374 
Energy: Oil & Gas                
Drilling Info Holdings, Inc. L+4.25%  6.65% 7/30/2025  4,617   4,599 
Drilling Info Holdings, Inc. (Delayed Draw)(c) L+4.25%  6.65% 7/30/2025  16   — 
Offen, Inc.(d) L+5.00%  7.40% 6/22/2026  2,448   2,424 
Offen, Inc. (Delayed Draw)(c) (d) L+5.00%  7.40% 6/22/2026  885   — 
           7,966   7,023 
Healthcare & Pharmaceuticals                
LSCS Holdings, Inc. L+4.25%  6.58% 3/17/2025  2,328   2,316 
LSCS Holdings, Inc. L+4.25%  6.58% 3/17/2025  601   598 
P&L Developments, LLC(d) L+7.50%  9.90% 6/28/2024  3,000   2,925 
Radiology Partners, Inc. L+4.75%  7.34% 7/9/2025  4,975   4,974 
Solara Medical Supplies, LLC L+6.00%  8.40% 2/27/2024  5,543   5,543 
Solara Medical Supplies, LLC (Delayed Draw)(c) L+6.00%  8.40% 2/27/2024  1,072   429 
Solara Medical Supplies, LLC (Revolver)(c) L+6.00%  8.40% 2/27/2024  714   — 
           18,233   16,785 
High Tech Industries                
AQA Acquisition Holding, Inc. L+4.25%  6.58% 5/24/2023  3,308   3,292 
Corel Corporation L+5.00%  7.52% 6/4/2024  3,642   3,642 
Corel Corporation(d) L+5.00%  7.40% 7/2/2026  2,500   2,394 
Datto, Inc. L+4.25%  6.58% 4/2/2026  3,333   3,354 
Gigamon, Inc. L+4.25%  6.65% 12/27/2024  2,955   2,881 
LW Buyer, LLC(d) L+5.00%  7.40% 12/30/2024  5,000   4,950 
Perforce Software, Inc. L+4.50%  6.93% 12/27/2024  1,990   1,986 
Perforce Software, Inc.(d) L+4.50%  6.90% 7/1/2026  3,333   3,333 
TGG TS Acquisition Company L+6.50%  8.93% 12/12/2025  4,290   4,274 
           30,351   30,106 
Hotels, Gaming & Leisure                
Tait LLC L+5.00%  7.41% 3/28/2025  4,231   4,146 
Tait LLC (Revolver)(c) L+5.00%  7.41% 3/28/2025  769   — 
           5,000   4,146 
Media: Advertising, Printing & Publishing                
Cadent, LLC L+5.25%  7.63% 9/11/2023  4,975   4,962 
Cadent, LLC (Revolver)(c) L+5.25%  7.63% 9/11/2023  167   — 
Digital Room Holdings, Inc. L+5.00%  7.40% 5/21/2026  4,428   4,318 
           9,570   9,280 
Media: Diversified & Production                
Research Now Group, Inc. and Survey Sampling International, LLC L+5.50%  8.08% 12/20/2024  6,895   6,886 
Stats Intermediate Holding, LLC(d) L+5.25%  7.65% 7/12/2026  5,000   4,950 
           11,895   11,836 
Services: Business                
CHA Holdings, Inc. L+4.50%  6.83% 4/10/2025  2,033   2,030 
CHA Holdings, Inc. (Delayed Draw)(c) L+4.50%  6.81% 4/10/2025  446   428 
Eliassen Group, LLC L+4.50%  6.90% 11/5/2024  3,040   3,040 
Engage2Excel, Inc. L+6.50%  9.36% 3/7/2023  4,320   4,286 
Engage2Excel, Inc. L+6.50%  9.12% 3/7/2023  779   773 
Engage2Excel, Inc. (Delayed Draw)(c) L+6.50%  9.12% 3/7/2023  500   — 
Engage2Excel, Inc. (Revolver)(c) P+5.50%  11.00% 3/7/2023  545   159 
GI Revelation Acquisition LLC L+5.00%  7.40% 4/16/2025  1,386   1,376 
North Haven CA Holdings, Inc. L+4.50%  6.83% 10/2/2023  4,618   4,618 
Orbit Purchaser LLC L+4.50%  7.19% 10/21/2024  2,500   2,489 
Orbit Purchaser LLC L+4.50%  7.05% 10/21/2024  1,931   1,922 
Orbit Purchaser LLC L+4.50%  7.19% 10/21/2024  565   562 
Output Services Group, Inc. L+4.25%  6.65% 3/27/2024  4,940   4,470 
SIRVA Worldwide, Inc. L+5.50%  7.90% 8/4/2025  1,975   1,922 
The Kleinfelder Group, Inc. L+4.75%  7.12% 11/29/2024  2,488   2,474 
           32,066   30,549 
Services: Consumer                
Cambium Learning Group, Inc. L+4.50%  7.08% 12/18/2025  4,975   4,932 
LegalZoom.com, Inc. L+4.50%  6.90% 11/21/2024  2,735   2,754 
WeddingWire, Inc. L+4.50%  6.90% 12/19/2025  1,161   1,165 
           8,871   8,851 
Telecommunications                
Intermedia Holdings, Inc. L+6.00%  8.40% 7/21/2025  1,824   1,829 
Mavenir Systems, Inc. L+6.00%  8.42% 5/8/2025  3,960   3,957 
           5,784   5,786 
Transportation: Cargo                
GlobalTranz Enterprises LLC L+5.00%  7.39% 5/15/2026  3,312   3,217 
GlobalTranz Enterprises LLC (Delayed Draw)(c) L+5.00%  7.39% 5/15/2026  855   — 
           4,167   3,217 
Utilities: Oil & Gas                
NGS US Finco, LLC L+4.25%  6.65% 10/1/2025  1,741   1,740 
           1,741   1,740 
Wholesale                
AmeriLife Group, LLC L+4.50%  6.90% 6/12/2026  2,924   2,929 
AmeriLife Group, LLC (Delayed Draw)(c) L+4.50%  6.90% 6/12/2026  410   — 
BMC Acquisition, Inc. L+5.25%  7.65% 12/30/2024  4,925   4,925 
HALO Buyer, Inc. L+4.50%  6.90% 6/27/2025  4,950   4,901 
           13,209   12,755 
                 
TOTAL INVESTMENTS             $235,617 
Portfolio Company(a) Spread
Above
Index(b)		  Interest
Rate(b)		  Maturity Principal  Fair
Value		 
Non-Controlled/Non-Affiliate Company Investments                 
Senior Secured Loans                 
Aerospace & Defense                 
Bromford Industries Limited  (e) L+5.25%   6.70% 11/5/2025  2,793  $2,646 
Bromford Industries Limited  (e) L+5.25%   6.70% 11/5/2025  1,862   1,764 
IMIA Holdings, Inc. L+4.50%   5.95% 10/28/2024  4,266   4,204 
IMIA Holdings, Inc. (Revolver)(c) L+4.50%   5.50% 10/28/2024  680   340 
MAG Aerospace Industries, Inc. L+4.75%   6.35% 6/6/2025  3,242   3,161 
Trident Maritime SH, Inc. L+5.50%   6.50% 6/4/2024  4,435   4,344 
Trident Maritime SH, Inc. (Revolver)(c) L+5.50%   6.25% 6/4/2024  340   166 
            17,618   16,625 
Automotive                 
Innovative Aftermarkets Systems L+5.50%   6.50% 1/25/2021  1,867   1,864 
Truck-Lite Co., LLC L+6.25%   7.32% 12/14/2026  1,739   1,722 
Truck-Lite Co., LLC (Delayed Draw)(c) L+6.25%   7.32% 12/14/2026  256   — 
Wheel Pros, LLC L+4.75%   5.82% 4/4/2025  4,920   3,567 
            8,782   7,153 
Banking, Finance, Insurance & Real Estate                 
Avison Young (USA), Inc.(e) L+5.00%   6.45% 1/30/2026  4,938   4,065 
Lightbox Intermediate, L.P. L+5.00%   5.80% 5/11/2026  4,963   4,888 
Minotaur Acquisition, Inc. L+5.00%   5.99% 3/27/2026  2,970   2,520 
Nuvei Technologies Corp.(e) L+5.00%   6.00% 9/26/2025  4,657   4,238 
Zenith Merger Sub, Inc. L+5.25%   6.70% 12/13/2024  4,688   4,477 
Zenith Merger Sub, Inc. (Delayed Draw)(c) L+5.25%   6.70% 12/13/2024  264   63 
            22,480   20,251 
Beverage, Food & Tobacco                 
CBC Restaurant Corp. L+6.50%   7.95% 11/10/2022  2,537   2,389 
SW Ingredients Holdings, LLC L+4.00%   5.91% 7/3/2025  3,684   3,616 
            6,221   6,005 
Capital Equipment                 
Analogic Corporation L+5.25%   6.25% 6/24/2024  4,836   4,624 
            4,836   4,624 
Chemicals, Plastics & Rubber                 
Polymer Solutions Group L+6.75%   7.75% 6/30/2021  1,244   1,218 
            1,244   1,218 
Construction & Building                 
ISC Purchaser, LLC P+4.00%   7.25% 7/11/2025  4,975   4,873 
The Cook & Boardman Group, LLC L+5.75%   7.67% 10/20/2025  2,963   2,489 
            7,938   7,362 
Consumer Goods: Durable                 
International Textile Group, Inc. L+5.00%   6.58% 5/1/2024  1,793   1,228 
            1,793   1,228 
Consumer Goods: Non-Durable                 
PH Beauty Holdings III, Inc. L+5.00%   6.07% 9/26/2025  2,461   1,907 
            2,461   1,907 
Containers, Packaging & Glass                 
Liqui-Box Holdings, Inc. L+4.50%   6.15% 2/26/2027  4,333   3,748 
Polychem Acquisition, LLC L+5.00%   6.08% 3/17/2025  2,970   2,970 
Port Townsend Holdings Company, Inc. L+4.75%   5.75% 4/3/2024  4,721   4,249 
PVHC Holding Corp. L+4.75%   6.18% 8/5/2024  3,275   2,718 
PVHC Holding Corp. (Delayed Draw)(c) L+4.75%   6.18% 8/5/2024  425   — 
            15,724   13,685 
Energy: Oil & Gas                 
Drilling Info Holdings, Inc. L+4.25%   5.24% 7/30/2025  4,598   3,678 
Offen, Inc. L+5.00%   6.07% 6/22/2026  2,430   2,255 
Offen, Inc. (Delayed Draw)(c)  L+5.00%   6.07% 6/22/2026  885   — 
            7,913   5,933 
Healthcare & Pharmaceuticals                 
LSCS Holdings, Inc. L+4.25%   5.32% 3/17/2025  2,316   2,143 
LSCS Holdings, Inc. L+4.25%   5.32% 3/17/2025  598   553 
P&L Developments, LLC L+7.50%   9.50% 6/28/2024  2,985   2,612 
Radiology Partners, Inc. L+4.25%   5.99% 7/9/2025  4,760   3,989 
Solara Medical Supplies, LLC L+6.00%   7.45% 2/27/2024  5,501   5,313 
Solara Medical Supplies, LLC L+6.00%   7.45% 2/27/2024  1,065   1,029 
Solara Medical Supplies, LLC (Revolver) L+6.00%   7.00% 2/27/2024  714   714 
            17,939   16,353 

56

 

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2020

(in thousands) 

Portfolio Company(a) Spread
Above
Index(b)		  Interest
Rate(b)		  Maturity Principal  Fair
Value		 
High Tech Industries                 
AQA Acquisition Holding, Inc. L+4.25%   5.70% 5/24/2023  3,283  $ 3,266 
Corel, Inc.(e)  L+5.00%   6.61% 7/2/2026  3,975   3,528 
LW Buyer, LLC L+5.00%   5.99% 12/30/2024  4,963   4,491 
TGG TS Acquisition Company L+6.50%   7.50% 12/12/2025  4,028   3,363 
            16,249   14,648 
Hotels, Gaming & Leisure                 
Excel Fitness Holdings, Inc. L+5.25%   6.25% 10/7/2025  4,239   3,286 
North Haven Spartan US Holdco, LLC L+5.00%   6.00% 6/6/2025  2,338   2,052 
Tait, LLC L+4.50%   6.11% 3/28/2025  4,199   3,815 
Tait, LLC (Revolver) P+3.50%   6.75% 3/28/2025  769   699 
            11,545   9,852 
Media: Advertising, Printing & Publishing                 
Cadent, LLC L+5.25%   6.70% 9/11/2023  4,925   4,913 
Cadent, LLC (Revolver)(c) L+5.25%   6.25% 9/11/2023  167   65 
Digital Room Holdings, Inc. L+5.00%   6.07% 5/21/2026  4,395   3,835 
Monotype Imaging Holdings Corp.(d) L+5.50%   6.95% 10/9/2026  5,000   3,875 
            14,487   12,688 
Media: Diversified & Production                 
Research Now Group, Inc. and Survey Sampling International, LLC L+5.50%   7.26% 12/20/2024  6,843   6,158 
Stats Intermediate Holding, LLC L+5.25%   6.96% 7/10/2026  4,988   4,165 
The Octave Music Group, Inc. L+5.25%   6.86% 5/29/2025  5,000   4,450 
            16,831   14,773 
Services: Business                 
AQ Carver Buyer, Inc.(d) L+5.00%   6.37% 9/23/2025  4,975   3,856 
CHA Holdings, Inc. L+4.50%   5.57% 4/10/2025  2,018   1,866 
CHA Holdings, Inc. L+4.50%   5.57% 4/10/2025  425   393 
Eliassen Group, LLC L+4.50%   5.49% 11/5/2024  3,029   2,834 
Engage2Excel, Inc. L+6.50%   8.40% 3/7/2023  4,288   3,884 
Engage2Excel, Inc. L+6.50%   8.42% 3/7/2023  773   701 
Engage2Excel, Inc. (Delayed Draw)(c) L+6.50%   8.42% 3/7/2023  500   — 
Engage2Excel, Inc. (Revolver)(c) P+5.50%   8.75% 3/7/2023  545   338 
GI Revelation Acquisition, LLC L+5.00%   5.99% 4/16/2025  1,376   1,087 
Legility, LLC L+6.00%   6.84% 12/17/2025  5,000   4,900 
Orbit Purchaser, LLC L+4.50%   5.96% 10/21/2024  2,475   2,359 
Orbit Purchaser, LLC L+4.50%   5.96% 10/21/2024  1,911   1,821 
Orbit Purchaser, LLC L+4.50%   5.96% 10/21/2024  559   533 
Output Services Group, Inc. L+4.50%   6.11% 3/27/2024  4,902   4,191 
SIRVA Worldwide, Inc. L+5.50%   6.49% 8/4/2025  1,938   1,453 
Teneo Holdings, LLC L+5.25%   6.25% 7/11/2025  4,975   4,080 
The Kleinfelder Group, Inc. L+4.75%   5.95% 11/29/2024  2,469   2,368 
            42,158   36,664 
Services: Consumer                 
Cambium Learning Group, Inc. L+4.50%   5.95% 12/18/2025  4,938   4,073 
LegalZoom.com, Inc. L+4.50%   5.49% 11/21/2024  2,715   2,396 
            7,653   6,469 
Telecommunications                 
Intermedia Holdings, Inc. L+6.00%   7.00% 7/21/2025  1,810   1,657 
Mavenir Systems, Inc. L+6.00%   7.00% 5/8/2025  3,930   3,419 
            5,740   5,076 
Transportation: Cargo                 
GlobalTranz Enterprises, LLC L+5.00%   5.93% 5/15/2026  3,287   2,408 
            3,287   2,408 
Utilities: Oil & Gas                 
NGS US Finco, LLC L+4.25%   5.25% 10/1/2025  1,728   1,408 
            1,728   1,408 
Wholesale                 
BMC Acquisition, Inc. L+5.25%   7.17% 12/30/2024  4,888   4,826 
HALO Buyer, Inc. L+4.50%   5.50% 6/30/2025  4,913   4,028 
PT Intermediate Holdings III, LLC L+5.50%   6.95% 10/15/2025  1,995   1,985 
            11,796   10,839 
                  
TOTAL INVESTMENTS              $217,169 

 

(a)All investments are U.S. companies except for Loparex International B.V.unless otherwise noted.

(b)The majority of investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime (“P”) which reset daily, monthly, quarterly or semiannually. The Company hasWe have provided the spread over LIBOR or Prime and the current contractual rate of interest in effect at June 30, 2019.March 31, 2020. Certain investments are subject to a LIBOR or Prime interest rate floor.

(c)All or a portion of this commitment was unfunded as of June 30, 2019.March 31, 2020. As such, interest is earned only on the funded portion of this commitment. Principal reflects the commitment outstanding.

(d)Investment position or portion thereof unsettled as of June 30, 2019.March 31, 2020.

(e)This is an international company.

 6357 

 

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 20182019

(in thousands)

 

Portfolio Company(a) Spread Above
Index (b)		 Interest
Rate(b)		  Maturity Principal  Fair
Value		 
Non-Controlled/Non-Affiliate Company Investments                
Senior Secured Loans                
Aerospace & Defense                
IMIA Holdings, Inc. L+4.50%  7.30% 10/28/2024  4,320  $4,341 
IMIA Holdings, Inc. (Revolver)(c) L+4.50%  7.30% 10/28/2024  680   — 
MAG Aerospace Industries, Inc. L+4.75%  7.27% 6/6/2025  3,284   3,267 
Novaria Holding, LLC(d) L+4.75%  7.27% 12/19/2024  4,333   4,290 
The KEYW Corporation L+4.50%  6.89% 5/8/2024  1,488   1,473 
Trident Maritime SH, Inc. L+5.50%  8.30% 6/4/2024  4,637   4,623 
Trident Maritime SH, Inc. (Revolver)(c) L+5.50%  8.30% 6/4/2024  340   — 
           19,082   17,994 
Automotive                
Wheel Pros, LLC L+4.75%  7.27% 4/4/2025  3,980   3,920 
           3,980   3,920 
Banking, Finance, Insurance & Real Estate                
Kestra Financial, Inc.(d) L+4.25%  6.77% 6/24/2022  3,564   3,537 
MTC Intermediate Holdco, Inc. L+4.50%  7.02% 1/30/2023  4,963   4,963 
Pivotal Payments Inc. P+3.50%  9.00% 9/26/2025  2,902   2,873 
Pivotal Payments Inc. (Delayed Draw)(c) L+4.50%  6.98% 9/26/2025  841   518 
Zenith Merger Sub, Inc. L+5.50%  8.30% 12/13/2023  3,713   3,701 
           15,983   15,592 
Beverage, Food & Tobacco                
Il Fornaio (America) Corporation L+6.50%  9.02% 11/10/2022  4,894   4,847 
SW Ingredients Holdings, LLC L+4.25%  7.05% 7/3/2025  3,731   3,709 
US Salt, LLC L+4.75%  7.27% 11/30/2023  3,474   3,474 
           12,099   12,030 
Capital Equipment                
Analogic Corporation L+6.00%  8.52% 6/24/2024  4,988   4,786 
           4,988   4,786 
Chemicals, Plastics & Rubber                
Loparex International B.V. L+4.25%  7.05% 4/11/2025  498   490 
Peach State Labs, LLC L+6.50%  8.85% 6/30/2021  2,850   2,825 
           3,348   3,315 
Construction & Building                
Fastener Acquisition, Inc. L+4.25%  7.05% 3/28/2025  1,323   1,256 
The Cook & Boardman Group, LLC L+5.75%  8.55% 10/20/2025  3,000   2,978 
           4,323   4,234 
Consumer Goods: Durable                
International Textile Group, Inc. L+5.00%  7.35% 5/1/2024  1,852   1,819 
SSH Group Holdings, Inc. L+4.25%  6.77% 7/30/2025  2,327   2,240 
           4,179   4,059 
Consumer Goods: Non-Durable                
PH Beauty Holdings III, Inc. L+5.00%  7.52% 9/26/2025  1,995   1,925 
           1,995   1,925 
Containers, Packaging & Glass                
Port Townsend Holdings Company, Inc. L+4.75%  7.27% 4/3/2024  4,887   4,893 
PVHC Holding Corp L+4.75%  7.57% 8/5/2024  3,317   3,333 
PVHC Holding Corp (Delayed Draw)(c) L+4.75%  7.57% 8/5/2024  425   — 
           8,629   8,226 
Energy: Oil & Gas                
Drilling Info Holdings, Inc. L+4.25%  6.77% 7/30/2025  4,307   4,296 
Drilling Info Holdings, Inc. (Delayed Draw)(c) L+4.25%  6.77% 7/30/2025  350   — 
           4,657   4,296 
Healthcare & Pharmaceuticals                
LSCS Holdings, Inc. L+4.25%  6.77% 3/17/2025  2,328   2,316 
LSCS Holdings, Inc. L+4.25%  6.96% 3/17/2025  601   598 
Radiology Partners, Inc. L+4.25%  6.87% 7/9/2025  4,988   4,900 
Solara Medical Supplies, LLC L+6.00%  8.52% 5/31/2023  5,571   5,594 
Solara Medical Supplies, LLC (Delayed Draw)(c) L+6.00%  8.52% 5/31/2023  1,071   — 
Solara Medical Supplies, LLC (Revolver)(c) L+6.00%  8.52% 5/31/2023  714   — 
           15,273   13,408 
High Tech Industries                
AQA Acquisition Holding, Inc. L+4.25%  7.05% 5/24/2023  3,325   3,308 
Corel Corporation(d) L+5.00%  7.71% 6/4/2024  3,786   3,749 
Gigamon, Inc. L+4.25%  7.05% 12/27/2024  2,970   2,933 
TGG TS Acquisition Company(d) L+6.50%  9.02% 12/12/2025  4,400   4,241 
           14,481   14,231 
Media: Advertising, Printing & Publishing                
Cadent, LLC L+5.25%  7.71% 9/11/2023  4,988   4,975 
Cadent, LLC (Revolver)(c) L+5.25%  7.71% 9/11/2023  167   — 
           5,155   4,975 
Media: Diversified & Production                
Research Now Group, Inc. and Survey Sampling International, LLC L+5.50%  8.02% 12/20/2024  6,930   6,817 
           6,930   6,817 
Services: Business                
CHA Holdings, Inc. L+4.50%  7.30% 4/10/2025  2,043   2,041 
CHA Holdings, Inc. (Delayed Draw)(c) L+4.50%  7.30% 4/10/2025  446   — 
Eliassen Group, LLC L+4.50%  7.02% 11/5/2024  2,500   2,475 
Engage2Excel, Inc. L+6.50%  8.93% 3/7/2023  4,342   4,320 
Engage2Excel, Inc. (Revolver)(c) L+6.50%  8.95% 3/7/2023  545   155 
GI Revelation Acquisition LLC L+5.00%  7.52% 4/16/2025  1,393   1,374 
North Haven CA Holdings, Inc. L+4.50%  7.02% 9/29/2023  5,000   4,972 
Orbit Purchaser LLC L+4.50%  7.17% 10/21/2024  1,931   1,919 
Orbit Purchaser LLC (Delayed Draw)(c) L+4.50%  7.17% 10/21/2024  565   — 
Output Services Group, Inc. L+4.25%  6.77% 3/27/2024  4,965   4,828 
SIRVA Worldwide, Inc. L+5.50%  8.02% 8/4/2025  2,000   1,965 
The Kleinfelder Group, Inc.(d) L+4.75%  7.27% 11/29/2024  2,500   2,475 
           28,230   26,524 
Services: Consumer                
Cambium Learning Group, Inc.(d) L+4.50%  7.02% 12/18/2025  5,000   4,769 
LegalZoom.com, Inc. L+4.50%  7.00% 11/21/2024  2,749   2,708 
WeddingWire, Inc.(d) L+4.50%  7.02% 12/19/2025  1,167   1,149 
           8,916   8,626 
Telecommunications                
Intermedia Holdings, Inc. L+6.00%  8.52% 7/21/2025  1,833   1,831 
Mavenir Systems, Inc. L+6.00%  8.39% 5/8/2025  3,980   3,968 
           5,813   5,799 
Utilities: Oil & Gas                
NGS US Finco, LLC L+4.25%  6.76% 10/1/2025  1,750   1,746 
           1,750   1,746 
Wholesale                
BMC Acquisition, Inc. L+5.25%  8.13% 12/30/2024  4,950   4,962 
Halo Buyer, Inc. L+4.50%  7.02% 6/27/2025  3,501   3,431 
Halo Buyer, Inc. L+4.50%  7.02% 6/27/2025  1,474   1,445 
           9,925   9,838 
                 
TOTAL INVESTMENTS             $172,341 
Portfolio Company(a) Spread Above
Index (b)		  Interest
Rate(b)		  Maturity Principal  Fair
Value		 
Non-Controlled/Non-Affiliate Company Investments                 
Senior Secured Loans                 
Aerospace & Defense                 
Bromford Industries Limited(e) L+5.25%   7.14% 11/5/2025  2,800  $2,772 
Bromford Industries Limited(e) L+5.25%   7.14% 11/5/2025  1,867   1,848 
IMIA Holdings, Inc. L+4.50%   6.44% 10/28/2024  4,277   4,277 
IMIA Holdings, Inc. (Revolver)(c) L+4.50%   6.44% 10/28/2024  680   — 
MAG Aerospace Industries, Inc. L+4.75%   6.55% 6/6/2025  3,251   3,234 
Novaria Holdings, LLC L+4.75%   6.55% 12/19/2024  4,290   4,288 
Trident Maritime SH, Inc. L+5.50%   7.30% 6/4/2024  4,435   4,404 
Trident Maritime SH, Inc. (Revolver)(c) L+5.50%   7.30% 6/4/2024  340   — 
            21,940   20,823 
Automotive                 
Innovative Aftermarkets Systems L+5.50%   7.30% 1/25/2021  1,893   1,891 
Wheel Pros, LLC L+4.75%   6.55% 4/4/2025  4,933   4,875 
            6,826   6,766 
Banking, Finance, Insurance & Real Estate                 
Avison Young (USA), Inc.(e) L+5.00%   6.94% 1/30/2026  4,950   4,874 
Lightbox Intermediate, L.P. L+5.00%   6.74% 5/11/2026  4,975   4,913 
Minotaur Acquisition, Inc. L+5.00%   6.80% 3/27/2026  2,978   2,940 
Nuvei Technologies Corp.(e) L+5.00%   6.80% 9/26/2025  4,657   4,692 
Zenith Merger Sub, Inc. L+5.25%   7.19% 12/13/2024  4,700   4,700 
Zenith Merger Sub, Inc. (Delayed Draw)(c) L+5.25%   7.19% 12/13/2024  265   66 
            22,525   22,185 
Beverage, Food & Tobacco                 
CBC Restaurant Corp. L+6.50%   8.30% 11/10/2022  2,537   2,502 
SW Ingredients Holdings, LLC L+4.00%   6.21% 7/3/2025  3,694   3,688 
US Salt, LLC L+4.75%   6.55% 1/16/2026  2,729   2,743 
            8,960   8,933 
Capital Equipment                 
Analogic Corporation L+6.00%   7.80% 6/24/2024  4,874   4,854 
            4,874   4,854 
Chemicals, Plastics & Rubber                 
Polymer Solutions Group L+6.75%   8.45% 6/30/2021  1,271   1,271 
            1,271   1,271 
Construction & Building                 
ISC Purchaser, LLC L+5.00%   6.94% 7/11/2025  4,988   4,988 
The Cook & Boardman Group, LLC L+5.75%   7.67% 10/20/2025  2,970   2,866 
            7,958   7,854 
Consumer Goods: Durable                 
International Textile Group, Inc. L+5.00%   6.69% 5/1/2024  1,805   1,498 
            1,805   1,498 
Consumer Goods: Non-Durable                 
PH Beauty Holdings III, Inc. L+5.00%   6.80% 9/26/2025  2,468   2,356 
            2,468   2,356 
Containers, Packaging & Glass                 
Liqui-Box Holdings, Inc.(d) L+4.50%   6.30% 6/3/2026  4,333   4,241 
Polychem Acquisition, LLC L+5.00%   6.95% 3/17/2025  2,978   2,978 
Port Townsend Holdings Company, Inc. L+4.75%   6.55% 4/3/2024  4,838   4,777 
PVHC Holding Corp. L+4.75%   6.69% 8/5/2024  3,283   2,947 
PVHC Holding Corp. (Delayed Draw)(c) L+4.75%   6.69% 8/5/2024  425   — 
            15,857   14,943 
Energy: Oil & Gas                 
Drilling Info Holdings, Inc. L+4.25%   6.05% 7/30/2025  4,609   4,586 
Offen, Inc. L+5.00%   6.94% 6/22/2026  2,436   2,436 
Offen, Inc. (Delayed Draw)(c) L+5.00%   6.94% 6/22/2026  885   — 
            7,930   7,022 
Healthcare & Pharmaceuticals                 
LSCS Holdings, Inc. L+4.25%   6.19% 3/17/2025  2,322   2,299 
LSCS Holdings, Inc. L+4.25%   6.19% 3/17/2025  599   593 
P&L Developments, LLC L+7.50%   9.50% 6/28/2024  2,993   2,978 
Radiology Partners, Inc. L+4.75%   6.62% 7/9/2025  4,938   4,970 
Solara Medical Supplies, LLC L+6.00%   7.94% 2/27/2024  5,515   5,515 
Solara Medical Supplies, LLC L+6.00%   7.94% 2/27/2024  1,068   1,068 
Solara Medical Supplies, LLC (Revolver)(c) L+6.00%   7.94% 2/27/2024  714   — 
            18,149   17,423 

58

 

MRCC SENIOR LOAN FUND I, LLC

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2019 

(in thousands) 

Portfolio Company(a) Spread Above
Index (b)		  Interest
Rate(b)		  Maturity Principal  Fair
Value		 
High Tech Industries                 
AQA Acquisition Holding, Inc. L+4.25%   6.19% 5/24/2023  3,291  $ 3,275 
Corel, Inc.(e) L+5.00%   6.91% 7/2/2026  4,000   3,875 
Gigamon, Inc. L+4.25%   6.04% 12/27/2024  2,940   2,914 
LW Buyer, LLC L+5.00%   6.80% 12/30/2024  4,975   4,938 
Perforce Software, Inc. L+4.50%   6.30% 7/1/2026  3,325   3,331 
TGG TS Acquisition Company L+6.50%   8.24% 12/12/2025  4,058   4,037 
            22,589   22,370 
Hotels, Gaming & Leisure                 
Excel Fitness Holdings, Inc. L+5.25%   7.05% 10/7/2025  4,250   4,255 
North Haven Spartan US Holdco, LLC L+5.00%   6.89% 6/6/2025  2,344   2,343 
Tait, LLC L+4.50%   6.61% 3/28/2025  4,210   4,210 
Tait, LLC (Revolver)(c) L+4.50%   6.61% 3/28/2025  769   — 
            11,573   10,808 
Media: Advertising, Printing & Publishing                 
Cadent, LLC L+5.25%   7.05% 9/11/2023  4,938   4,925 
Cadent, LLC (Revolver)(c) L+5.25%   7.05% 9/11/2023  167   — 
Digital Room Holdings, Inc. L+5.00%   6.80% 5/21/2026  4,406   4,186 
Monotype Imaging Holdings Corp.(d) L+5.50%   7.30% 10/9/2026  5,000   4,825 
            14,511   13,936 
Media: Diversified & Production                 
Research Now Group, Inc. and Survey Sampling International, LLC L+5.50%   7.41% 12/20/2024  6,860   6,869 
Stats Intermediate Holding, LLC L+5.25%   7.30% 7/10/2026  5,000   4,894 
            11,860   11,763 
Services: Business                 
AQ Carver Buyer, Inc.(d) L+5.00%   6.80% 9/24/2025  5,000   4,925 
CHA Holdings, Inc. L+4.50%   6.44% 4/10/2025  2,023   2,020 
CHA Holdings, Inc. L+4.50%   6.44% 4/10/2025  426   426 
Eliassen Group, LLC L+4.50%   6.30% 11/5/2024  3,032   3,022 
Engage2Excel, Inc. L+6.50%   8.71% 3/7/2023  4,298   4,181 
Engage2Excel, Inc. L+6.50%   8.42% 3/7/2023  775   754 
Engage2Excel, Inc. (Delayed Draw)(c) L+6.50%   8.42% 3/7/2023  500   — 
Engage2Excel, Inc. (Revolver)(c) P+5.50%   10.25% 3/7/2023  545   354 
GI Revelation Acquisition, LLC L+5.00%   6.80% 4/16/2025  1,379   1,305 
Orbit Purchaser, LLC L+4.50%   6.45% 10/21/2024  2,481   2,479 
Orbit Purchaser, LLC L+4.50%   6.45% 10/21/2024  1,916   1,914 
Orbit Purchaser, LLC L+4.50%   6.45% 10/21/2024  560   560 
Output Services Group, Inc. L+4.50%   6.30% 3/27/2024  4,916   4,166 
SIRVA Worldwide, Inc. L+5.50%   7.30% 8/4/2025  1,950   1,931 
Teneo Holdings, LLC L+5.25%   6.99% 7/11/2025  4,988   4,757 
The Kleinfelder Group, Inc. L+4.75%   6.37% 11/29/2024  2,475   2,474 
            37,264   35,268 
Services: Consumer                 
Cambium Learning Group, Inc. L+4.50%   6.30% 12/18/2025  4,950   4,801 
LegalZoom.com, Inc. L+4.50%   6.30% 11/21/2024  2,722   2,747 
            7,672   7,548 
Telecommunications                 
Intermedia Holdings, Inc. L+6.00%   7.80% 7/21/2025  1,815   1,820 
Mavenir Systems, Inc. L+6.00%   7.91% 5/8/2025  3,940   3,920 
            5,755   5,740 
Transportation: Cargo                 
GlobalTranz Enterprises, LLC L+5.00%   6.79% 5/15/2026  3,295   3,032 
            3,295   3,032 
Utilities: Oil & Gas                 
NGS US Finco, LLC L+4.25%   6.05% 10/1/2025  1,733   1,733 
            1,733   1,733 
Wholesale                 
BMC Acquisition, Inc. L+5.25%   7.17% 12/30/2024  4,900   4,888 
Halo Buyer, Inc. L+4.50%   6.30% 6/30/2025  4,925   4,827 
PT Intermediate Holdings III, LLC L+5.50%   7.44% 10/15/2025  2,000   1,995 
            11,825   11,710 
                  
TOTAL INVESTMENTS              $239,836 

 

(a)(a)All investments are U.S. companies except for Loparex International B.V.unless otherwise noted.

(b)The majority of investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”) or Prime (“P”) which reset daily, monthly, quarterly or semiannually. We have provided the spread over LIBOR or Prime and the current contractual rate of interest in effect at December 31, 2018.2019. Certain investments are subject to a LIBOR or Prime interest rate floor.

(c)All or a portion of this commitment was unfunded as of December 31, 2018.2019. As such, interest is earned only on the funded portion of this commitment. Principal reflects the commitment outstanding.

(d)Investment position or portion thereof unsettled as of December 31, 2018.2019.

(e)This is an international company.

  

 6459 

 

 

Below is certain summarized financial information for SLF as of June 30, 2019March 31, 2020 and December 31, 20182019 and for the three and six months ended June 30,March 31, 2020 and 2019 and 2018 (in thousands):

 

 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
 (unaudited)      (unaudited)    
Assets                
Investments, at fair value $235,617  $172,341  $217,169  $239,836 
Cash  145   448   430   446 
Restricted cash  4,159   3,838   4,157   4,226 
Interest receivable  806   456   724   920 
Other assets  30   39   25   41 
Total assets $240,757  $177,122  $222,505  $245,469 
Liabilities                
Revolving credit facility $143,254  $101,060  $150,697  $147,232 
Less: Unamortized deferred financing costs  (1,627)  (1,625)  (1,298)  (1,407)
Total debt, less unamortized deferred financing costs  141,627   99,435   149,399   145,825 
Payable for open trades  26,387   21,746   9,625   13,940 
Interest payable  566   457   493   533 
Accounts payable and accrued expenses  289   216   338   346 
Total liabilities  168,869   121,854   159,855   160,644 
Members’ capital  71,888   55,268   62,650   84,825 
Total liabilities and members’ capital $240,757  $177,122  $222,505  $245,469 

 

 Three months ended June 30,  Six months ended June 30,  Three months ended March 31, 
 2019  2018  2019  2018  2020  2019 
 (unaudited) (unaudited)  (unaudited) 
Investment income:                        
Interest income $3,887  $1,399  $7,335  $2,179  $4,253  $3,448 
Total investment income  3,887   1,399   7,335   2,179   4,253   3,448 
Expenses:                        
Interest and other debt financing expenses  1,771   605   3,369   649   1,614   1,598 
Organizational costs  —   5   —   11 
Professional fees  164   22   340   62   184   176 
Total expenses  1,935   632   3,709   722   1,798   1,774 
Net investment income (loss)  1,952   767   3,626   1,457   2,455   1,674 
Net gain (loss):                        
Net change in unrealized gain (loss)  21   454   533   999   (22,329)  512 
Net gain (loss)  21   454   533   999   (22,329)  512 
Net increase (decrease) in members’ capital $1,973  $1,221  $4,159  $2,456  $(19,874) $2,186 

 

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Related Party Transactions

 

We have a number of business relationships with affiliated or related parties, including the following:

 

 ·We have an Investment Advisory Agreement with MC Advisors, an investment advisor registered with the SEC, to manage our day-to-day operating and investing activities. We pay MC Advisors a fee for its services under the Investment Advisory Agreement consisting of two components - a base management fee and an incentive fee. On November 4, 2019, we amended the base management fee under the Investment Advisory Agreement, effective July 1, 2019. See Note 6 to our consolidated financial statements and “Significant Accounting Estimates and Critical Accounting Policies -Capital Gains Incentive Fee” for additional information.

 

 ·We have an Administration Agreement with MC Management to provide us with the office facilities and administrative services necessary to conduct our day-to-day operations. See Note 6 to our consolidated financial statements for additional information.

 

 ·SLF has an administration agreement with MC Management to provide SLF with certain loan servicing and administrative functions. SLF may reimburse MC Management for its allocable share of overhead and other expenses incurred by MC Management. See Note 3 to our consolidated financial statements and “Liquidity and Capital Resources -MRCC Senior Loan Fund I, LLC” for additional information.

 

 ·Theodore L. Koenig, our Chief Executive Officer and Chairman of our Board is also a manager of MC Advisors and the President and Chief Executive Officer of MC Management. Aaron D. Peck, our Chief Financial Officer and Chief Investment Officer, serves as a director on our Board and is also a managing director of MC Management.

 

 ·We have a license agreement with Monroe Capital LLC, under which Monroe Capital LLC has agreed to grant us a non-exclusive, royalty-free license to use the name “Monroe Capital” for specified purposes in our business.

 

In addition, we have adopted a formal code of ethics that governs the conduct of MC Advisors’ officers, directors and employees. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and Maryland General Corporation Law.

 

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Commitments and Contingencies and Off-Balance Sheet Arrangements

 

Commitments and Contingencies

 

As of June 30, 2019,March 31, 2020 and December 31, 2018,2019, we had outstanding commitments to fund investments under undrawn revolvers, capital expenditure loans, delayed draw commitments and subscription agreements, excluding investments in SLF, totaling $56.8$38.3 million and $56.0$44.2 million, respectively. As of June 30, 2019,March 31, 2020 and December 31, 2018,2019, we had unfunded commitments to SLF of $14.9$7.8 million and $22.8$7.8 million, respectively, that may be contributed primarily for the purpose of funding new investments approved by the SLF investment committee. Drawdowns of the commitments to SLF require authorization from one of our representatives on SLF’s board of managers. Additionally, we have entered into certain contracts with other parties that contain a variety of indemnifications. Our maximum exposure under these arrangements is unknown. However, we have not experienced claims or losses pursuant to these contracts and believe the risk of loss related to such indemnifications to be remote.

 

Off-Balance Sheet Arrangements

 

WeOther than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have noany off-balance sheet arrangements that havefinancings or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.liabilities.

 

Market Trends

 

In late 2019 and early 2020, COVID-19 emerged in China and spread rapidly across the world, including to the United States. This outbreak has led to disruptions in local, regional, national and global markets and economies affected thereby and will continue to cause disruptions for an unknown and potentially significant amount of time. To date, cross border commercial activity and market sentiment have been negatively impacted by the outbreak and government and other measures seeking to contain its spread. The federal government and the Federal Reserve, as well as foreign governments and central banks, have implemented significant fiscal and monetary policies in response to these disruptions, and additional government and regulatory responses may be possible. It is currently impossible to determine the scope of this or any future outbreak, how long any such outbreak and market disruption, volatility or uncertainty may last, the effect any governmental actions and changes in base interest rates will have or the full potential impact on us, our industry and our portfolio companies.

We have also identified the following general trends that may affect our business:

 

Target Market: We believe that small and middle-market companies in the United States with annual revenues between $10.0 million and $2.5 billion represent a significant growth segment of the U.S. economy and often require substantial capital investments to grow. Middle-market companies have generated a significant number of investment opportunities for investment funds managed or advised by Monroe Capital, and we believe that this market segment will continue to produce significant investment opportunities for us.

 

Specialized Lending Requirements: We believe that several factors render many U.S. financial institutions ill-suited to lend to U.S. middle-market companies. For example, based on the experience of our management team, lending to U.S. middle-market companies (1) is generally more labor intensive than lending to larger companies due to the smaller size of each investment and the fragmented nature of information for such companies, (2) requires due diligence and underwriting practices consistent with the demands and economic limitations of the middle-market and (3) may also require more extensive ongoing monitoring by the lender. 

 

Demand for Debt Capital: We believe there is a large pool of uninvested private equity capital for middle-market companies. We expect private equity firms will seek to leverage their investments by combining equity capital with senior secured loans and mezzanine debt from other sources, such as us.

  

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Competition from Other Lenders: We believe that many traditional bank lenders, in recent years, de-emphasized their service and product offerings to middle-market businesses in favor of lending to large corporate clients and managing capital market transactions. In addition, many commercial banks face significant balance sheet constraints as they seek to build capital and meet future regulatory capital requirements. These factors may result in opportunities for alternative funding sources to middle-market companies and therefore drive increased new investment opportunities for us. Conversely, there has been a significant amount of capital raised over the past several years dedicated to middle market lending which has increased competitive pressure in the BDC and investment company marketplace for senior and subordinated debt which could result in lower yields and weaker financial covenants for new assets.

 

Pricing and Deal Structures: We believe that the volatility in global markets over the last several years and current macroeconomic issues including changes in bank regulations for middle-market banks has reduced access to, and availability of, debt capital to middle-market companies, causing a reduction in competition and generally more favorable capital structures and deal terms. Recent capital raises in the BDC and investment company marketplace have created increased competition; however, we believe that current market conditions may continue to create favorable opportunities to invest at attractive risk-adjusted returns.

Recent Developments

On March 11, 2020, the World Health Organization declared the novel coronavirus COVID-19 as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The Company is actively monitoring the situation and continues to assess what additional adverse financial and operational consequences may result from the global spread of COVID-19 and the associated economic turbulence, however, the extent of such consequences remains uncertain as of the filing of this Form 10-Q.

In May 2020, an arbitrator issued a final award in favor of the estate of Rockdale (the “Estate”) in the legal proceeding between the Estate and a national insurance carrier. The final award updated the interim award received in January 2020 to include certain attorneys’ fees, interest and other amounts. At this time, we believe that our share of the net proceeds from the award will exceed the cost basis of our investment due to our right to receive excess proceeds pursuant to the terms of a sharing agreement between the lenders and the Estate. The lenders to Rockdale, including the Company, will share in the proceeds of this arbitration award with the Estate once it is paid. At this time, it is also unclear whether, or to what extent, the national insurance carrier may seek to appeal the adverse ruling against it. We believe that any such appeal is unlikely to be successful based on the appellate standard for arbitration.

On May 8, 2020, the Board declared a quarterly distribution of $0.25 per share payable on June 30, 2020 to holders of record on June 15, 2020.

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Significant Accounting Estimates and Critical Accounting Policies

 

Revenue Recognition

 

We record interest and fee income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, we do not accrue PIK interest if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue as a receivable interest on loans and debt securities if we have reason to doubt our ability to collect such interest. Loan origination fees, original issue discount and market discount or premium are capitalized, and then we amortize such amounts using the effective interest method as interest income over the life of the investment. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees are recorded as interest income. We record prepayment premiums on loans and debt securities as interest income when we receive such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. We record fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service has been completed.

 

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from LLC and LP investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

 

Valuation of Portfolio Investments

 

As a BDC, we generally invest in illiquid securities including debt and, to a lesser extent, equity securities of middle-market companies. Under procedures established by our Board, we value investments for which market quotations are readily available and within a recent date at such market quotations. When doing so, we determine whether the quote obtained is sufficient in accordance with generally accepted accounting principles in the United States of America (“GAAP”) to determine the fair value of the security. Debt and equity securities that are not publicly traded or whose market prices are not readily available or whose market prices are not regularly updated are valued at fair value as determined in good faith by our Board. Such determination of fair values may involve subjective judgments and estimates. Investments purchased within 60 days of maturity are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value.

  

Our Board is ultimately and solely responsible for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily available on a quarterly basis in good faith or any other situation where portfolio investments require a fair value determination. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by our Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

  

67

With respect to investments for which market quotations are not readily available, our Board undertakes a multi-step valuation process each quarter, as described below:

 

 ·the quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment professionals of MC Advisors responsible for the credit monitoring of the portfolio investment;

 

 ·theour Board engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of investments for which market quotations are not readily available. The CompanyWe will consult with independent valuation firm(s) relative to each portfolio company at least once in every calendar year, but the independent appraisals are generally received quarterly;

 

 ·to the extent an independent valuation firm is not engaged to conduct an investment appraisal on an investment for which market quotations are not readily available, the investment will be valued by the MC Advisors investment professional responsible for the credit monitoring;

 

 ·preliminary valuation conclusions are then documented and discussed with the investment committee;

 

 ·the audit committee of our Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and responds andMC Advisors adjusts or further supplements the valuation recommendations to reflect any comments;comments provided by the audit committee; and

 

 ·our Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of MC Advisors, the independent valuation firm(s) and the audit committee.

 

The Board

62

We generally usesuse the income approach to determine fair value for loans where market quotations are not readily available, as long as it is appropriate. If there is deterioration in credit quality or a debt investment is in workout status, we may consider other factors in determining the fair value, including the value attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. This liquidation analysis may also include probability weighting of alternative outcomes. We generally consider our Level 3 debt to be performing loans if the borrower is not in default, the borrower is remitting payments in a timely manner, the loan is in covenant compliance and is otherwise not deemed to be impaired. In determining the fair value of the performing Level 3 debt, we consider fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions and other relevant factors, both qualitative and quantitative. In the event that a Level 3 debt instrument is not performing, as defined above, we will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the Level 3 debt instrument.

 

Under the income approach, we utilize discounted cash flow models are utilized to determine the present value of the future cash flow streams of our debt investments, based on future interest and principal payments as set forth in the associated loan agreements. In determining fair value under the income approach, we also consider the following factors: applicable market yields and leverage levels, credit quality, prepayment penalties, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.

 

Under the market approach, we typically use the enterprise value methodology is typically utilized to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one portfolio company, enterprise value is generally best expressed as a range of values, from which we derive a single estimate of enterprise value. In estimating the enterprise value of a portfolio company, we analyze various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio company’s historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public. Typically, the enterprise values of private companies are based on multiples of earnings before interest, income taxes, depreciation and amortization, (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value.

 

In addition, for certain debt investments, we may base our valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that we and others may be willing to pay. Ask prices represent the lowest price that we and others may be willing to accept. We generally use the midpoint of the bid/ask range as our best estimate of fair value of such investment.

Our Board approved the fair value of our investment portfolio as of March 31, 2020 and these valuations were determined in accordance with our valuation policy based on information known or knowable as of the valuation date. The COVID-19 pandemic is an unprecedented circumstance that materially impacts the fair value of our investments. As a result, the fair value of our portfolio investments may be further negatively impacted after March 31, 2020 by circumstances and events that are not yet known.

 

Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss 

 

We measure realized gain or loss by the difference between the net proceeds from the sale and the amortized cost basis of the investment, without regard to unrealized gain or loss previously recognized. Net change in unrealized gain or loss reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gain or loss, when gain or loss is realized. Additionally, we do not isolate the portion of the change in fair value resulting from foreign currency exchange rate fluctuations from the changes in fair values of the underlying investment. All fluctuations in fair value are included in net change in unrealized gain (loss) on our consolidated statements of operations. We report changes in the fair value of secured borrowings that are measured at fair value as a component of the net change in unrealized gain (loss) on secured borrowings inon the consolidated statements of operations. The impact resulting from changes in foreign exchange rates on the revolving credit facility borrowings is included in net change in unrealized gain (loss) on foreign currency and other transactions.

  

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Capital Gains Incentive Fee

 

Pursuant to the terms of the Investment Advisory Agreement with MC Advisors, the incentive fee on capital gains earned on liquidated investments of our portfolio is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory and Administrative Agreement). This fee equals 20% of our incentive fee capital gains (i.e., our realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, we accrue for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

 

While the Investment Advisory Agreement with MC Advisors neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, we include unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to MC Advisors if our entire portfolio was liquidated at its fair value as of the balance sheet date even though MC Advisors is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

 

During the three and six months ended June 30,March 31, 2020 and 2019, and 2018, we did not have any further reductions in accrued capital gains incentive fees as they were already at zero, primarily as a result of accumulated realized and unrealized losses on the portfolio.

 

New Accounting Pronouncements

 

In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”). The primary objective of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements in the notes to the financial statements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted. We are currently evaluatinghave adopted ASU 2018-13 and the adoption did not have a significant impact these changes will have on our consolidated financial statements and disclosures.

In March 2020, the FASB issued ASU 2020-04,Reference Rate Reform. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact of the optional guidance on our consolidated financial statements and disclosures. We did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the three months ended March 31, 2020.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are subject to financial market risks, including changes in interest rates. rates and the valuations of our investment portfolio. Uncertainty with respect to the economic effects of the COVID-19 outbreak has introduced significant volatility in the financial markets, and the effects of this volatility could materially impact our market risks. For additional information concerning the COVID-19 pandemic and its potential impact on our business and our operating results, see Part II – Other Information, Item 1A. Risk Factors, “Risk Factors – The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.”

The majority of the loans in our portfolio have floating interest rates, and we expect that our loans in the future may also have floating interest rates. These loans are usually based on a floating LIBOR and typically have interest rate re-set provisions that adjust applicable interest rates under such loans to current market rates on a monthly or quarterly basis. The majority of the loans in our current portfolio have interest rate floors which will effectively convert the loans to fixed rate loans in the event interest rates decrease. In addition, our revolving credit facility has a floating interest rate provision, whereas our SBA debentures and the 2023 Notes have fixed interest rates until maturity. We expect that other credit facilities into which we may enter in the future may also have floating interest rate provisions.

The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to phase out LIBOR by the end of 2021. It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. At this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or any other reforms to LIBOR that may be enacted. The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. In addition, if LIBOR ceases to exist, we may need to renegotiate agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate, in order to replace LIBOR with the new standard that is established, which may have an adverse effect on our overall financial condition or results of operations. Following the replacement of LIBOR, some or all of these agreements may bear interest a lower interest rate, which could have an adverse impact on our results of operations. Moreover, if LIBOR ceases to exist, we may need to renegotiate certain terms of our credit facilities. If we are unable to do so, amounts drawn under our credit facilities may bear interest at a higher rate, which would increase the cost of our borrowings and, in turn, affect our results of operations.

 

Assuming that the consolidated statement of assets and liabilities as of June 30, 2019 wereMarch 31, 2020 was to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates (in thousands):

 

 

Increase 

(decrease) in

 

Increase 

(decrease) in

 

Net increase 

(decrease) in net

  Increase 
(decrease) in		 Increase 
(decrease) in		 Net increase 
(decrease) in net		 
Change in Interest Rates interest income interest expense  investment income  interest income interest expense investment income 
Down 25 basis points $(1,423) $(472) $(951) $(574) $(480) $(94)
Up 100 basis points 5,261 1,886 3,735  3,372 1,920 1,452 
Up 200 basis points 11,362 3,773 7,589  8,763 3,841 4,922 
Up 300 basis points 17,103 5,659 11,444  14,154 5,761 8,393 

 

Although we believe that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments, including borrowing under the credit facility or other borrowings that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.

 

We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts to the extent permitted under the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates or interest rate floors.

 

We may also have exposure to foreign currencies (currently the Great Britain pound) related to certain investments. Such investments are translated into U.S. dollars based on the spot rate at each balance sheet date, exposing us to movements in the exchange rate. In order to reduce our exposure to fluctuations in exchange rates, we generally borrow in Great Britain pounds under our revolving credit facility to finance such investments. As of June 30, 2019,March 31, 2020, we have non-U.S. dollar borrowings denominated in Great Britain pounds of £14.8£16.1 million ($18.820.0 million U.S. dollars) outstanding under the revolving credit facility. We may also enter into foreign currency forward contracts to mitigate foreign currency exposure. As of June 30, 2019,March 31, 2020, we had foreign currency forward contracts in place for £1.8£1.0 million associated with future interest payments on certain investments.

 

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ITEM 4. CONTROLS AND PROCEDURES

 

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that, at the end of the period covered by our Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

 

No change occurred in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended June 30, 2019March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II

 

OTHER INFORMATION

Item 1. Legal Proceedings

 

Neither we nor our investment adviser are currently subject to any material legal proceedings.

 

Item 1A. Risk Factors

 

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 20182019 filed with the SEC on March 5, 2019,3, 2020, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K 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. Other than as set forth below, there have been no material changes during the three months ended June 30, 2019March 31, 2020 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018.2019.

The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.

In late 2019 and early 2020, COVID-19 emerged in China and spread rapidly to across the world, including to the United States. This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby. With respect to the U.S. credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things: (i) government imposition of various forms of “stay at home” orders and the closing of “non-essential” businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses. This outbreak is having, and any future outbreaks could have, an adverse impact on our portfolio companies and us and on the markets and the economy in general, and that impact could be material. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter.

The COVID-19 pandemic (including the preventative measures taken in response thereto) has to date (i) created significant business disruption issues for certain of our portfolio companies, and (ii) adversely impacted the value and performance of certain of our portfolio companies. The COVID-19 pandemic is continuing as of the filing date of this Quarterly Report, and its extended duration may have further adverse impacts on our portfolio companies after March 31, 2020, including for the reasons described below. As a result of this disruption and the pressures on their liquidity, certain of our portfolio companies have been, or may continue to be, incentivized to draw on most, if not all, of the unfunded portion of any revolving or delayed draw term loans made by us, subject to availability under the terms of such loans.

The effects described above on our portfolio companies have, for certain of our portfolio companies to date, impacted their ability to make payments on their loans on a timely basis and in some cases have required us to amend certain terms, including payment terms. In addition, an extended duration of the COVID-19 pandemic may impact the ability of our portfolio companies to continue making their loan payments on a timely basis or meeting their loan covenants. The inability of portfolio companies to make timely payments or meet loan covenants may in the future require us to undertake similar amendment actions with respect to other of our investments or to restructure our investments. The amendment or restructuring of our investments may include the need for us to make additional investments in our portfolio companies (including debt or equity investments) beyond any existing commitments, exchange debt for equity, or change the payment terms of our investments to permit a portfolio company to pay a portion of its interest through payment-in-kind, which would defer the cash collection of such interest and add it to the principal balance, which would generally be due upon repayment of the outstanding principal.

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The COVID-19 pandemic has adversely impacted the fair value of our investments as of March 31, 2020 and the values assigned as of this date may differ materially from the values that we may ultimately realize with respect to our investments. Our Board approved the fair value of our investment portfolio as of March 31, 2020 and these valuations were determined in accordance with our valuation policy based on information known or knowable as of the valuation date. As a result, the long term impacts of the COVID-19 pandemic may not yet be fully reflected in the valuation of our investments and the fair value of our portfolio investments may be further negatively impacted after March 31, 2020 by circumstances and events that are not yet known, including the complete or continuing impact of the COVID-19 pandemic and the resulting measures taken in response thereto. In addition, write downs in the value of our investments have reduced, and any additional write downs may further reduce, our net asset value (and, as a result, our asset coverage calculation). Accordingly, we may continue to incur additional net unrealized losses or may incur realized losses after March 31, 2020, which could have a material adverse effect on our business, financial condition and results of operations.

The volatility and disruption to the global economy from the COVID-19 pandemic has affected, and is expected to continue to affect, the pace of our investment activity, which may have a material adverse impact on our results of operations. Such volatility and disruption have also led to the increased credit spreads in the private debt capital markets.

Further, from an operational perspective, MC Advisor’s investment professionals are currently working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. In addition, we are highly dependent on third party service providers for certain communication and information systems. As a result, we rely upon the successful implementation and execution of the business continuity planning of such providers in the current environment. If one or more of these third parties to whom we outsource certain critical business activities experience operational failures as a result of the impacts from the spread of COVID-19, or claim that they cannot perform due to a force majeure, it may have a material adverse effect on our business, financial condition, results of operations, liquidity and cash flows.

We are currently operating in a period of capital markets disruption and economic uncertainty.

The U.S. capital markets have experienced extreme volatility and disruption following the spread of COVID-19 in the United States. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a long-term world-wide economic downturn. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments.

The market price of our securities may fluctuate significantly.

The market price and liquidity of the market for our securities may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors may include:

·significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which is not necessarily related to the operating performance of these companies;

·changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs;

·loss of RIC or BDC status;

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·the ability of MRCC SBIC, or any other SBIC subsidiary we may form to obtain and maintain an SBIC license;

·changes or perceived changes in earnings or variations in operating results;

·changes or perceived changes in the value of our portfolio of investments;

·changes in accounting guidelines governing valuation of our investments;

·any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts;

·departure of MC Advisors’ key personnel;

·the occurrence of one or more natural disasters, pandemic outbreaks or other health crises (including but not limited to the COVID-19 outbreak);

·operating performance of companies comparable to us;

·general economic trends and other external factors, including the current COVID-19 pandemic; and

·loss of a major funding source.

 

Recently-enacted legislationIf the current period of capital market disruption and instability continues for an extended period of time, there is a risk that our stockholders may not receive distributions or that our distributions may decline over time and a portion of our distributions to you may be a return of capital for U.S. federal income tax purposes.

We intend to make distributions to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make or maintain a specified level of cash distributions and we may choose to pay a portion of dividends in our own stock. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in this report, including the COVID-19 pandemic described above. For example, if the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories in the jurisdictions, including the United States, affected by the COVID-19 pandemic were to continue for an extended period of time it could result in reduced cash flows to us from our existing portfolio companies, which could reduce cash available for distribution to our stockholders. In addition, due to the asset coverage test applicable to us as a BDC, we may be limited in our ability to make distributions. Our revolving credit facility may also limit our ability to declare dividends if we default under certain provisions. Further, if we invest a greater amount of assets in equity securities that do not pay current dividends, it could reduce the amount available for distribution. The above referenced restrictions on distributions may also inhibit our ability to make required interest payments to holders of our debt, which may cause a default under the terms of our debt agreements. Such a default could materially increase our cost of raising capital, as well as cause us to incur penalties under the terms of our debt agreements.

The distributions we pay to our stockholders in a year may exceed our taxable income for that year and, accordingly, a portion of such distributions may constitute a return of capital for U.S. federal income tax purposes that would reduce a stockholder’s adjusted tax basis in its shares of our common stock or preferred stock and correspondingly increase such stockholder’s gain, or reduce such stockholder’s loss, on disposition of such shares. Distributions in excess of a stockholder’s adjusted tax basis in its shares of our common stock or preferred stock will constitute capital gains to such stockholder.

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The 1940 Act allows us to incur additional leverage, which could increase the risk of investing in us.

 

The 1940 Act generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our total assets). However, on March 23, 2018, the Small Business Credit Availability Act (the “SBCAA”) was signed into law, which included various changes to regulations under the federal securities laws that impact BDCs. The SBCAA amended the 1940 Act to allow BDCs to decrease their asset coverage requirement from 200% to 150% (i.e. the amount of debt may not exceed 66.7% of the value of our total assets), if certain requirements are met. Under the SBCAA, BDCs are allowed to reduce their asset coverage requirement to 150%, and thereby increase leverage capacity, if stockholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so. If a BDC receives stockholder approval, it would be allowed to reduce its asset coverage requirement to 150% on the first day after such approval. Alternatively, the SBCAA allows the majority of a BDCs independent directors to approve the reduction in its asset coverage requirement to 150%, and such approval would become effective after one year. In either case, a BDC would be required to make certain disclosures on its website and in SEC filings regarding, among other things, the receipt of approval to reduce its asset coverage requirement to 150%, its leverage capacity and usage, and risks related to leverage.

 

On March 27, 2018, our board of directors unanimously approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the SBCAA. On March 27, 2018, our board of directors also recommended the submission of a proposal for stockholders to approve the application of the 150% minimum asset coverage requirements at our annual meeting of stockholders held on June 20, 2018. At the annual meeting, our stockholders approved this proposal, and we became subject to the 150% minimum asset coverage ratio, effective June 21, 2018.

 

Leverage is generally considered a speculative investment technique and increasesmay increase the risk of investing in our securities. Leverage magnifies the potential for loss on investments in our indebtedness and on invested equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. If the value of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to pay distributions, scheduled debt payments or other payments related to our securities. The effects of leverage would cause any decrease in net asset value for any losses to be greater than any increase in net asset value for any corresponding gains. If we incur additional leverage, you will experience increased risks of investing in our common stock. 

 

We maintain a revolving credit facility and use other borrowed funds to make investments or fund our business operations, which exposes us to risks typically associated with leverage and increases the risk of investing in us.

 

We maintain a revolving credit facility, have issued debt securities and may borrow money, including through the issuance of additional debt securities or preferred stock, to leverage our capital structure, which is generally considered a speculative investment technique. As a result:

 

our common stock is exposed to an increased risk of loss because a decrease in the value of our investments would have a greater negative impact on the value of our common stock than if we did not use leverage;
·our common stock is exposed to an increased risk of loss because a decrease in the value of our investments would have a greater negative impact on the value of our common stock than if we did not use leverage;

 

if we do not appropriately match the assets and liabilities of our business, adverse changes in interest rates could reduce or eliminate the incremental income we make with the proceeds of any leverage;
·if we do not appropriately match the assets and liabilities of our business, adverse changes in interest rates could reduce or eliminate the incremental income we make with the proceeds of any leverage;

 

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our ability to pay distributions on our common stock may be restricted if our asset coverage ratio, as provided in the 1940 Act, is not at least 150% and any amounts used to service indebtedness or preferred stock would not be available for such distributions;
·our ability to pay distributions on our common stock may be restricted if our asset coverage ratio, as provided in the 1940 Act, is not at least 150% and any amounts used to service indebtedness or preferred stock would not be available for such distributions;

 

any credit facility is subject to periodic renewal by its lenders, whose continued participation cannot be guaranteed;
·any credit facility is subject to periodic renewal by its lenders, whose continued participation cannot be guaranteed;

 

our revolving credit facility with ING Capital LLC, as agent, is, and any other credit facility we may enter into would be, subject to various financial and operating covenants, including that our portfolio of investments satisfies certain eligibility and concentration limits as well as valuation methodologies;
·our revolving credit facility with ING Capital LLC, as agent, is, and any other credit facility we may enter into would be, subject to various financial and operating covenants, including that our portfolio of investments satisfies certain eligibility and concentration limits as well as valuation methodologies;

 

such securities would be governed by an indenture or other instrument containing covenants restricting our operating flexibility;
·such securities would be governed by an indenture or other instrument containing covenants restricting our operating flexibility;

 

we bear the cost of issuing and paying interest or distributions on such securities, which costs are entirely borne by our common stockholders; and
·we bear the cost of issuing and paying interest or distributions on such securities, which costs are entirely borne by our common stockholders; and

 

any convertible or exchangeable securities that we issue may have rights, preferences and privileges more favorable than those of our common stock.
·any convertible or exchangeable securities that we issue may have rights, preferences and privileges more favorable than those of our common stock.

 

The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

 

  

Assumed Return on Our Portfolio
(Net of Expenses)(1)

 
  -10%  -5%  0%  5%  10% 
Corresponding return to common stockholder(2)(3)  -33.29%  -20.16%  -7.03%  6.11%  19.24%

  

Assumed Return on Our Portfolio

(Net of Expenses)(1)

 
  -10%  -5%  0%  5%  10% 
Corresponding return to common stockholder(2)(3)  -28.11%  -16.91%  -5.71%  5.50%  16.70%

 

(1)The assumed return on our portfolio is required by regulation of the SEC to assist investors in understanding the effects of leverage and is not a prediction of, and does not represent, our projected or actual performance.

(2)Assumes $579.8$655.1 million in total assets, $321.0$405.7 million in debt outstanding, of which $205.0$289.3 million is senior securities outstanding, $258.8$249.4 million in net assets and an average cost of funds of 4.60%4.32%, which was the weighted average interest rate of borrowing on our revolving credit facility, SBA debentures and 2023 Notes as of December 31, 2018.2019. The interest rate on our revolving credit facility is a variable rate. Actual interest payments may be different.  

(3)In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 20182019 total portfolio assets of at least 2.55%2.68%.

 

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

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

 

None.

 

Item 3.Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4.Mine Safety Disclosures

Item 4. Mine Safety Disclosures

 

None.

 

Item 5.Other Information

Item 5. Other Information

 

None.

 

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Item 6. Exhibits

 

Exhibit  
Number Description of Document
   
3.1 Amended and Restated Articles of Incorporation of Monroe Capital Corporation (Incorporated by reference to Exhibit (a)(1) of the Registrant’s Pre-Effective Amendment No. 8 to the Registration Statement on Form N-2 (File No. 333-172601) filed on October 18, 2012)
   
3.2 Bylaws of Monroe Capital Corporation (Incorporated by reference to Exhibit (b)(1) of the Registrant’s Pre-Effective Amendment No. 8 to the Registration Statement on Form N-2 (File No. 333-172601) filed on October 18, 2012)
   
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
   
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
   
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

 

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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.

 

Date: August 6, 2019May 8, 2020By/s/ Theodore L. Koenig
  Theodore L. Koenig
  Chairman, Chief Executive Officer and Director
  (Principal Executive Officer)
  Monroe Capital Corporation
   
Date: August 6, 2019May 8, 2020By/s/ Aaron D. Peck
  Aaron D. Peck
  Chief Financial Officer, Chief Investment Officer and Director
  (Principal Financial and Accounting Officer)
  Monroe Capital Corporation

 

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