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Saratoga Investment (SAR)

Filed: 7 Oct 20, 4:00pm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_______________________________

Form 10-Q

_______________________________

 

S

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended August 31, 2020

  

£

 

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 814-00732

_______________________________

SARATOGA INVESTMENT CORP.

(Exact name of registrant as specified in its charter)

_______________________________

Maryland

 

20-8700615

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification Number)

535 Madison Avenue

New York, New York 10022

(Address of principal executive offices)

(212) 906-7800

(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

 

SAR

 

The New York Stock Exchange

6.25% Notes due 2025

 

SAF

 

The New York Stock Exchange

7.25% Notes due 2025

 

SAK

 

The New York Stock Exchange

_______________________________

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 S    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 £    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 filer

 

S

  

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 Act).    Yes £    No S

The number of outstanding common shares of the registrant as of October 7, 2020 was 11,174,322.

 

i

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Saratoga Investment Corp.

Consolidated Statements of Assets and Liabilities

 

August 31,
2020

 

February 29,
2020

  

(unaudited)

  

ASSETS

 

 

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

 

 

 

Non-control/Non-affiliate investments (amortized cost of $452,233,107 and $418,006,725, respectively)

 

$

440,847,945

 

 

$

420,442,928

 

Affiliate investments (amortized cost of $26,051,719 and $23,998,917, respectively)

 

 

18,731,636

 

 

 

18,485,854

 

Control investments (amortized cost of $45,869,421 and $44,293,619, respectively)

 

 

48,537,411

 

 

 

46,703,192

 

Total investments at fair value (amortized cost of $524,154,247 and $486,299,261, respectively)

 

 

508,116,992

 

 

 

485,631,974

 

Cash and cash equivalents

 

 

39,052,320

 

 

 

24,598,905

 

Cash and cash equivalents, reserve accounts

 

 

26,342,863

 

 

 

14,851,447

 

Interest receivable (net of reserve of $1,729,764 and $1,238,049, respectively)

 

 

4,396,518

 

 

 

4,810,456

 

Management fee receivable

 

 

284,122

 

 

 

272,207

 

Other assets

 

 

619,543

 

 

 

701,007

 

Total assets

 

$

578,812,358

 

 

$

530,865,996

 

  

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Revolving credit facility

 

$

 

 

$

 

Deferred debt financing costs, revolving credit facility

 

 

(466,094

)

 

 

(512,628

)

SBA debentures payable

 

 

170,000,000

 

 

 

150,000,000

 

Deferred debt financing costs, SBA debentures payable

 

 

(2,729,422

)

 

 

(2,561,495

)

6.25% Notes Payable 2025

 

 

60,000,000

 

 

 

60,000,000

 

Deferred debt financing costs, 6.25% notes payable 2025

 

 

(1,859,372

)

 

 

(2,046,735

)

7.25% Notes Payable 2025

 

 

43,125,000

 

 

 

 

Deferred debt financing costs, 7.25% notes payable 2025

 

 

(1,561,533

)

 

 

 

7.75% Notes Payable 2025

 

 

5,000,000

 

 

 

 

Deferred debt financing costs, 7.75% notes payable 2025

 

 

(266,420

)

 

 

 

Base management and incentive fees payable

 

 

3,738,729

 

 

 

15,800,097

 

Deferred tax liability

 

 

1,194,700

 

 

 

1,347,363

 

Accounts payable and accrued expenses

 

 

1,816,618

 

 

 

1,713,157

 

Interest and debt fees payable

 

 

2,287,313

 

 

 

2,234,042

 

Directors fees payable

 

 

59,500

 

 

 

61,500

 

Due to manager

 

 

295,981

 

 

 

543,842

 

Total liabilities

 

 

280,635,000

 

 

 

226,579,143

 

  

 

 

 

 

 

 

 

Commitments and contingencies (See Note 8)

 

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

 

 

 

Common stock, par value $0.001, 100,000,000 common shares authorized, 11,174,322 and 11,217,545 common shares issued and outstanding, respectively

 

 

11,174

 

 

 

11,218

 

Capital in excess of par value

 

 

288,699,868

 

 

 

289,476,991

 

Total distributable earnings

 

 

9,466,316

 

 

 

14,798,644

 

Total net assets

 

 

298,177,358

 

 

 

304,286,853

 

Total liabilities and net assets

 

$

578,812,358

 

 

$

530,865,996

 

NET ASSET VALUE PER SHARE

 

$

26.68

 

 

$

27.13

 

See accompanying notes to consolidated financial statements.

1

Saratoga Investment Corp.

Consolidated Statements of Operations

(unaudited)

 

For the three months ended

 

For the six months ended

  

August 31,
2020

 

August 31,
2019

 

August 31,
2020

 

August 31,
2019

INVESTMENT INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate investments

 

$

10,207,720

 

 

$

8,585,609

 

 

$

20,163,282

 

 

$

17,113,349

 

Affiliate investments

 

 

388,052

 

 

 

267,533

 

 

 

786,422

 

 

 

516,858

 

Control investments

 

 

1,249,972

 

 

 

1,678,326

 

 

 

2,383,556

 

 

 

3,326,472

 

Payment-in-kind interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate investments

 

 

328,938

 

 

 

179,847

 

 

 

910,884

 

 

 

331,744

 

Affiliate investments

 

 

48,018

 

 

 

41,265

 

 

 

94,241

 

 

 

81,415

 

Control investments

 

 

37,771

 

 

 

989,367

 

 

 

72,553

 

 

 

1,975,236

 

Total interest from investments

 

 

12,260,471

 

 

 

11,741,947

 

 

 

24,410,938

 

 

 

23,345,074

 

Interest from cash and cash equivalents

 

 

1,610

 

 

 

145,793

 

 

 

13,406

 

 

 

197,152

 

Management fee income

 

 

625,436

 

 

 

629,745

 

 

 

1,260,008

 

 

 

1,259,261

 

Structuring and advisory fee income*

 

 

940,000

 

 

 

1,047,350

 

 

 

1,253,306

 

 

 

1,363,725

 

Other income*

 

 

28,060

 

 

 

323,378

 

 

 

215,060

 

 

 

474,185

 

Total investment income

 

 

13,855,577

 

 

 

13,888,213

 

 

 

27,152,718

 

 

 

26,639,397

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and debt financing expenses

 

 

3,328,447

 

 

 

3,866,722

 

 

 

5,892,323

 

 

 

7,731,298

 

Base management fees

 

 

2,209,052

 

 

 

1,997,240

 

 

 

4,369,580

 

 

 

3,809,409

 

Incentive management fees expense (benefit)

 

 

1,529,677

 

 

 

2,085,486

 

 

 

(328,633

)

 

 

4,198,655

 

Professional fees

 

 

367,553

 

 

 

384,874

 

 

 

754,441

 

 

 

780,000

 

Administrator expenses

 

 

602,083

 

 

 

518,750

 

 

 

1,158,333

 

 

 

1,018,750

 

Insurance

 

 

67,727

 

 

 

64,619

 

 

 

135,453

 

 

 

129,238

 

Directors fees and expenses

 

 

75,000

 

 

 

97,500

 

 

 

135,000

 

 

 

157,500

 

General & administrative

 

 

333,824

 

 

 

382,873

 

 

 

684,638

 

 

 

641,474

 

Income tax expense (benefit)

 

 

7,501

 

 

 

(465,925

)

 

 

(1,444

)

 

 

(463,789

)

Total operating expenses

 

 

8,520,864

 

 

 

8,932,139

 

 

 

12,799,691

 

 

 

18,002,535

 

NET INVESTMENT INCOME

 

 

5,334,713

 

 

 

4,956,074

 

 

 

14,353,027

 

 

 

8,636,862

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) from investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate investments

 

 

11,929

 

 

 

1,870,089

 

 

 

20,409

 

 

 

1,870,089

 

Net realized gain (loss) from investments

 

 

11,929

 

 

 

1,870,089

 

 

 

20,409

 

 

 

1,870,089

 

Net change in unrealized appreciation (depreciation) on investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate investments

 

 

10,601,529

 

 

 

365,541

 

 

 

(13,821,365

)

 

 

2,758,732

 

Affiliate investments

 

 

637,232

 

 

 

731,304

 

 

 

(1,807,020

)

 

 

901,248

 

Control investments

 

 

5,341,640

 

 

 

361,027

 

 

 

258,417

 

 

 

1,787,022

 

Net change in unrealized appreciation (depreciation) on investments

 

 

16,580,401

 

 

 

1,457,872

 

 

 

(15,369,968

)

 

 

5,447,002

 

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments

 

 

(116,521

)

 

 

(704,263

)

 

 

151,219

 

 

 

(725,193

)

Net realized and unrealized gain (loss) on investments

 

 

16,475,809

 

 

 

2,623,698

 

 

 

(15,198,340

)

 

 

6,591,898

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

$

21,810,522

 

 

$

7,579,772

 

 

$

(845,313

)

 

$

15,228,760

 

WEIGHTED AVERAGE – BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE

 

$

1.95

 

 

$

0.91

 

 

$

(0.08

)

 

$

1.89

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED

 

 

11,207,142

 

 

 

8,333,570

 

 

 

11,212,315

 

 

 

8,041,365

 

____________

*        Certain prior period amounts have been reclassified to conform to current period presentation.

See accompanying notes to consolidated financial statements.

2

Saratoga Investment Corp.

Consolidated Statements of Changes in Net Assets

(unaudited)

 

For the six months ended

  

August 31,
2020

 

August 31,
2019

INCREASE (DECREASE) FROM OPERATIONS:

 

 

 

 

 

 

 

 

Net investment income

 

$

14,353,027

 

 

$

8,636,862

 

Net realized gain from investments

 

 

20,409

 

 

 

1,870,089

 

Net change in unrealized appreciation (depreciation) on investments

 

 

(15,369,968

)

 

 

5,447,002

 

Net change in provision for deferred taxes on unrealized (appreciation) depreciation on investments

 

 

151,219

 

 

 

(725,193

)

Net increase (decrease) in net assets resulting from operations

 

 

(845,313

)

 

 

15,228,760

 

  

 

 

 

 

 

 

 

DECREASE FROM SHAREHOLDER DISTRIBUTIONS:

 

 

 

 

 

 

 

 

Total distributions to shareholders

 

 

(4,487,015

)

 

 

(8,512,358

)

Net decrease in net assets from shareholder distributions

 

 

(4,487,015

)

 

 

(8,512,358

)

  

 

 

 

 

 

 

 

CAPITAL SHARE TRANSACTIONS:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

 

 

 

35,875,017

 

Stock dividend distribution

 

 

774,990

 

 

 

1,381,918

 

Repurchases of common stock

 

 

(1,550,417

)

 

 

 

Repurchase fees

 

 

(1,740

)

 

 

 

 

Offering costs

 

 

 

 

 

(511,957

)

Net increase in net assets from capital share transactions

 

 

(777,167

)

 

 

36,744,978

 

Total increase (decrease) in net assets

 

 

(6,109,495

)

 

 

43,461,380

 

Net assets at beginning of period

 

 

304,286,853

 

 

 

180,875,187

 

Net assets at end of period

 

$

298,177,358

 

 

$

224,336,567

 

See accompanying notes to consolidated financial statements.

3

Saratoga Investment Corp.

Consolidated Statements of Cash Flows

(unaudited)

 

For the six months ended

  

August 31,
2020

 

August 31,
2019

Operating activities

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

$

(845,313

)

 

$

15,228,760

 

ADJUSTMENTS TO RECONCILE NET INCREASE (DECREASE) IN NET ASSETS RESULTING

 

 

 

 

 

 

 

 

FROM OPERATIONS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Payment-in-kind and other adjustments to cost

 

 

846,330

 

 

 

(3,077,640

)

Net accretion of discount on investments

 

 

(605,955

)

 

 

(480,989

)

Amortization of deferred debt financing costs

 

 

622,164

 

 

 

681,292

 

Income tax expense (benefit)

 

 

(1,444

)

 

 

 

Net realized (gain) loss from investments

 

 

(20,409

)

 

 

(1,870,089

)

Net change in unrealized (appreciation) depreciation on investments

 

 

15,369,968

 

 

 

(5,447,002

)

Net change in provision for deferred taxes on unrealized appreciation (depreciation) on investments

 

 

(151,219

)

 

 

725,193

 

Proceeds from sales and repayments of investments

 

 

32,632,779

 

 

 

45,921,615

 

Purchases of investments

 

 

(70,707,731

)

 

 

(119,906,398

)

(Increase) decrease in operating assets:

 

 

 

 

 

 

 

 

Interest receivable

 

 

413,938

 

 

 

(1,150,165

)

Due from affiliate

 

 

 

 

 

1,673,747

 

Management and incentive fee receivable

 

 

(11,915

)

 

 

262,134

 

Other assets

 

 

61,775

 

 

 

(82,701

)

Deferred tax asset

 

 

 

 

 

(463,789

)

Increase (decrease) in operating liabilities:

 

 

 

 

 

 

 

 

Base management and incentive fees payable

 

 

(12,061,368

)

 

 

1,948,683

 

Accounts payable and accrued expenses

 

 

103,461

 

 

 

(111,576

)

Interest and debt fees payable

 

 

53,271

 

 

 

(24,161

)

Directors fees payable

 

 

(2,000

)

 

 

13,000

 

Due to manager

 

 

(247,861

)

 

 

(16,389

)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

 

(34,551,529

)

 

 

(66,176,475

)

Financing activities

 

 

 

 

 

 

 

 

Borrowings on debt

 

 

20,000,000

 

 

 

4,200,000

 

Paydowns on debt

 

 

 

 

 

(4,200,000

)

Issuance of notes

 

 

48,125,000

 

 

 

 

Payments of deferred debt financing costs

 

 

(2,364,458

)

 

 

(45,132

)

Proceeds from issuance of common stock

 

 

 

 

 

35,875,017

 

Payments of cash dividends

 

 

(3,712,025

)

 

 

(7,130,440

)

Repurchases of common stock

 

 

(1,550,417

)

 

 

 

Repurchases fees

 

 

(1,740

)

 

 

 

Payments of offering costs

 

 

 

 

 

(498,939

)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

 

60,496,360

 

 

 

28,200,506

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS

 

 

25,944,831

 

 

 

(37,975,969

)

CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, BEGINNING OF PERIOD

 

 

39,450,352

 

 

 

62,094,394

 

CASH AND CASH EQUIVALENTS AND CASH AND CASH EQUIVALENTS, RESERVE ACCOUNTS, END OF PERIOD

 

$

65,395,183

 

 

$

24,118,425

 

Supplemental information:

 

 

 

 

 

 

 

 

Interest paid during the period

 

$

5,216,888

 

 

$

7,074,168

 

Cash paid for taxes

 

 

13,830

 

 

 

16,022

 

Supplemental non-cash information:

 

 

 

 

 

 

 

 

Payment-in-kind interest income

 

 

(846,330

)

 

 

3,077,640

 

Net accretion of discount on investments

 

 

605,955

 

 

 

480,989

 

Amortization of deferred debt financing costs

 

 

622,164

 

 

 

681,292

 

Stock dividend distribution

 

 

774,990

 

 

 

1,381,918

 

See accompanying notes to consolidated financial statements.

4

Saratoga Investment Corp.

Consolidated Schedule of Investments

August 31, 2020

(unaudited)

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 147.8%(b)

       

 

  

 

  

 

   

 

CoConstruct, LLC

 

Construction Management Services

 

First Lien Term Loan (3M USD LIBOR+7.50%), 10.00% Cash, 7/5/2024

 

7/5/2019

 

$

4,200,000

 

$

4,164,825

 

$

4,146,240

 

1.4

%

CoConstruct, LLC

 

Construction Management Services

 

Delayed Draw Term Loan (3M USD LIBOR+7.50%), 10.00% Cash, 7/5/2024

 

7/5/2019

 

$

3,500,000

 

 

3,470,000

 

 

3,455,200

 

1.2

%

    

Total Construction Management Services

   

 

  

 

7,634,825

 

 

7,601,440

 

2.6

%

Targus Holdings, Inc.(d),(h)

 

Consumer Products

 

Common Stock

 

12/31/2009

 

 

210,456

 

 

1,589,630

 

 

417,596

 

0.1

%

    

Total Consumer Products

   

 

  

 

1,589,630

 

 

417,596

 

0.1

%

My Alarm Center, LLC(k)

 

Consumer Services

 

Preferred Equity Class A Units 8.00% PIK

 

7/14/2017

 

 

2,227

 

 

2,357,879

 

 

 

0.0

%

My Alarm Center, LLC(h)

 

Consumer Services

 

Preferred Equity Class B Units

 

7/14/2017

 

 

1,797

 

 

1,796,880

 

 

 

0.0

%

My Alarm Center, LLC(h)

 

Consumer Services

 

Preferred Equity Class Z Units

 

9/12/2018

 

 

676

 

 

712,343

 

 

1,526,993

 

0.5

%

My Alarm Center, LLC(h)

 

Consumer Services

 

Common Stock

 

7/14/2017

 

 

96,224

 

 

 

 

 

0.0

%

    

Total Consumer Services

   

 

  

 

4,867,102

 

 

1,526,993

 

0.5

%

Passageways, Inc.

 

Corporate Governance

 

First Lien Term Loan (3M USD LIBOR+7.00%), 8.75% Cash, 7/5/2023

 

7/5/2018

 

$

5,000,000

 

 

4,965,370

 

 

4,927,500

 

1.7

%

Passageways, Inc.(j)

 

Corporate Governance

 

Delayed Draw Term Loan (3M USD LIBOR+7.00%), 8.75% Cash, 7/5/2023

 

1/3/2020

 

$

2,000,000

 

 

1,992,171

 

 

1,927,500

 

0.5

%

Passageways, Inc.(h)

 

Corporate Governance

 

Series A Preferred Stock

 

7/5/2018

 

 

2,027,205

 

 

1,000,000

 

 

2,165,329

 

0.7

%

    

Total Corporate Governance

   

 

  

 

7,957,541

 

 

9,020,329

 

2.9

%

C2 Educational Systems(d)

 

Education Services

 

First Lien Term Loan (3M USD LIBOR+7.00%), 8.50% Cash, 5/31/2021

 

5/31/2017

 

$

16,000,000

 

 

15,988,956

 

 

13,030,400

 

4.4

%

Texas Teachers of Tomorrow, LLC(h),(i)

 

Education Services

 

Common Stock

 

12/2/2015

 

 

750,000

 

 

750,000

 

 

721,272

 

0.2

%

Texas Teachers of Tomorrow, LLC(d)

 

Education Services

 

First Lien Term Loan (3M USD LIBOR+7.25%), 9.75% Cash, 6/28/2024

 

6/28/2019

 

$

18,798,424

 

 

18,643,928

 

 

18,037,773

 

6.0

%

    

Total Education Services

   

 

  

 

35,382,884

 

 

31,789,445

 

10.6

%

Destiny Solutions Inc.(d)

 

Education Software

 

First Lien Term Loan (3M USD LIBOR+7.50%), 9.50% Cash, 10/24/2024

 

5/16/2018

 

$

38,000,000

 

 

37,707,843

 

 

36,856,200

 

12.4

%

Destiny Solutions Inc.(h),(i)

 

Education Software

 

Limited Partner Interests

 

5/16/2018

 

 

2,342

 

 

2,468,464

 

 

2,952,770

 

1.0

%

See accompanying notes to consolidated financial statements.

5

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

August 31, 2020

(unaudited)

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 147.8%(b) (continued)

       

 

  

 

  

 

 

 

  

 

Identity Automation
System
s(d)

 

Education Software

 

First Lien Term Loan (3M USD LIBOR+9.24%), 10.99% Cash, 5/8/2024

 

8/25/2014

 

$

17,335,000

 

$

17,311,905

 

$

16,905,093

 

 

5.7

%

Identity Automation
Syste
ms(h)

 

Education Software

 

Common Stock Class A-2 Units

 

8/25/2014

 

 

232,616

 

 

232,616

 

 

697,848

 

 

0.2

%

Identity Automation
Syste
ms(h)

 

Education Software

 

Common Stock Class A-1 Units

 

3/6/2020

 

 

43,715

 

 

171,571

 

 

178,387

 

 

0.1

%

EMS LINQ, Inc.

 

Education Software

 

First Lien Term Loan (1M USD LIBOR+8.50%), 9.75% Cash, 8/9/2024

 

8/9/2019

 

$

14,850,000

 

 

14,738,355

 

 

14,551,515

 

 

4.9

%

GoReact

 

Education Software

 

First Lien Term Loan (3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025

 

1/17/2020

 

$

5,000,000

 

 

4,936,199

 

 

4,922,500

 

 

1.7

%

GoReact(j)

 

Education Software

 

Delayed Draw Term Loan (3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025

 

1/17/2020

 

$

 

 

 

 

(31,000

)

 

0.0

%

Kev Software Inc.(a)

 

Education Software

 

First Lien Term Loan (1M USD LIBOR+8.63%), 9.63% Cash, 9/13/2023

 

9/13/2018

 

$

21,124,419

 

 

20,999,214

 

 

20,397,739

 

 

6.8

%

    

Total Education Software

   

 

  

 

98,566,167

 

 

97,431,052

 

 

32.8

%

Davisware, LLC

 

Field Service Management

 

First Lien Term Loan (3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024

 

9/6/2019

 

$

3,000,000

 

 

2,974,552

 

 

2,923,200

 

 

1.0

%

Davisware, LLC(j)

 

Field Service Management

 

Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024

 

9/6/2019

 

$

977,790

 

 

969,055

 

 

926,590

 

 

0.3

%

Service Fusion

 

Field Service Management

 

First Lien Term Loan (3M USD LIBOR+9.50%), 10.50% Cash, 8/4/2025

 

8/4/2020

 

$

3,000,000

 

 

2,970,022

 

 

2,970,000

 

 

1.0

%

Service Fusion

 

Field Service Management

 

Delayed Draw Term Loan (3M USD LIBOR+9.50%), 10.50% Cash, 8/4/2025

 

8/4/2020

 

$

 

 

 

 

(20,000

)

 

0.0

%

    

Total Field Service Management

   

 

  

 

6,913,629

 

 

6,799,790

 

 

2.3

%

GDS Software Holdings, LLC(h)

 

Financial Services

 

Common Stock Class A Units

 

8/23/2018

 

 

250,000

 

 

250,000

 

 

423,771

 

 

0.1

%

    

Total Financial Services

   

 

  

 

250,000

 

 

423,771

 

 

0.1

%

Ohio Medical, LLC(h)

 

Healthcare Products Manufacturing

 

Common Stock

 

1/15/2016

 

 

5,000

 

 

500,000

 

 

771,701

 

 

0.3

%

Ohio Medical, LLC

 

Healthcare Products Manufacturing

 

Senior Subordinated Note 12.00% Cash, 6/30/2022

 

1/15/2016

 

 

7,300,000

 

 

7,283,038

 

 

7,300,000

 

 

2.4

%

    

Total Healthcare Products Manufacturing

   

 

  

 

7,783,038

 

 

8,071,701

 

 

2.7

%

See accompanying notes to consolidated financial statements.

6

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

August 31, 2020

(unaudited)

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 147.8%(b) – (continued)

       

 

  

 

  

 

   

 

Axiom Parent Holdings,
LL
C(h)

 

Healthcare Services

 

Common Stock Class A Units

 

6/19/2018

 

 

400,000

 

$

400,000

 

$

1,368,304

 

0.5

%

Axiom Purchaser, Inc.(d)

 

Healthcare Services

 

First Lien Term Loan (3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023

 

6/19/2018

 

$

10,000,000

 

 

9,943,942

 

 

10,002,000

 

3.4

%

Axiom Purchaser, Inc.(d)

 

Healthcare Services

 

Delayed Draw Term Loan (3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023

 

6/19/2018

 

$

4,000,000

 

 

3,972,518

 

 

4,000,800

 

1.3

%

ComForCare Health Care

 

Healthcare Services

 

First Lien Term Loan (3M USD LIBOR+7.50%), 8.50% Cash, 1/31/2022

 

1/31/2017

 

$

15,000,000

 

 

14,944,776

 

 

14,862,000

 

5.0

%

    

Total Healthcare Services

   

 

  

 

29,261,236

 

 

30,233,104

 

10.2

%

TRC HemaTerra, LLC(h)

 

Healthcare Software

 

Class D Membership Interests

 

4/15/2019

 

 

2,000,000

 

 

2,000,000

 

 

2,322,780

 

0.8

%

HemaTerra Holding Company, LLC

 

Healthcare Software

 

First Lien Term Loan (3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024

 

4/15/2019

 

$

6,000,000

 

 

5,949,617

 

 

5,937,600

 

2.0

%

HemaTerra Holding Company, LLC(d),(j)

 

Healthcare Software

 

Delayed Draw Term Loan (3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024

 

4/15/2019

 

$

12,000,000

 

 

11,901,778

 

 

11,854,400

 

4.0

%

PDDS Buyer, LLC

 

Healthcare Software

 

First Lien Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 7/15/2024

 

7/15/2019

 

$

14,000,000

 

 

13,881,612

 

 

13,953,800

 

4.7

%

PDDS Buyer, LLC

 

Healthcare Software

 

Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 7/15/2024

 

7/15/2019

 

$

7,000,000

 

 

6,930,830

 

 

6,976,900

 

2.3

%

PDDS Buyer, LLC

 

Healthcare Software

 

Series A-1 Preferred Shares

 

8/10/2020

 

 

1,755,831

 

 

2,000,000

 

 

2,000,000

 

0.7

%

    

Total Healthcare Software

   

 

  

 

42,663,837

 

 

43,045,480

 

14.5

%

Roscoe Medical, Inc.(d),(h)

 

Healthcare Supply

 

Common Stock

 

3/26/2014

 

 

5,081

 

 

508,077

 

 

 

0.0

%

Roscoe Medical, Inc.(k)

 

Healthcare Supply

 

Second Lien Term Loan 11.25% Cash, 3/28/2021

 

3/26/2014

 

$

4,200,000

 

 

4,200,000

 

 

3,488,451

 

1.2

%

    

Total Healthcare Supply

   

 

  

 

4,708,077

 

 

3,488,451

 

1.2

%

Knowland Group, LLC

 

Hospitality/Hotel

 

Second Lien Term Loan (3M USD LIBOR+8.00%), 10.00% Cash, 5/9/2024

 

11/9/2018

 

$

15,767,918

 

 

15,767,918

 

 

13,355,426

 

4.4

%

Sceptre Hospitality Resources, LLC

 

Hospitality/Hotel

 

First Lien Term Loan (1M USD LIBOR+9.00%), 10.00% Cash, 4/27/2025

 

4/27/2020

 

$

3,000,000

 

 

2,971,552

 

 

2,970,000

 

1.0

%

    

Total Hospitality/Hotel

   

 

  

 

18,739,470

 

 

16,325,426

 

5.4

%

Vector Controls Holding Co., LLC(d)

 

Industrial Products

 

First Lien Term Loan 10.50% (9.00% Cash/1.50% PIK), 3/6/2022

 

3/6/2013

 

$

7,849,846

 

 

7,849,215

 

 

7,712,474

 

2.6

%

See accompanying notes to consolidated financial statements.

7

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

August 31, 2020

(unaudited)

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 147.8%(b) – (continued)

       

 

  

 

  

 

   

 

Vector Controls Holding Co., LLC(d),(h)

 

Industrial Products

 

Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027

 

5/31/2015

 

 

343

 

$

 

$

1,955,572

 

0.7

%

    

Total Industrial Products

   

 

  

 

7,849,215

 

 

9,668,046

 

3.3

%

CLEO Communications Holding, LLC(d)

 

IT Services

 

First Lien Term Loan (3M USD LIBOR+8.00%), 9.00% Cash/2.00% PIK, 3/31/2022

 

3/31/2017

 

$

13,933,269

 

 

13,918,409

 

 

13,933,269

 

4.7

%

CLEO Communications Holding, LLC(d),(j)

 

IT Services

 

Delayed Draw Term Loan (3M USD LIBOR+8.00%), 9.00% Cash/2.00% PIK, 3/31/2022

 

3/31/2017

 

$

20,247,304

 

 

20,153,018

 

 

20,247,304

 

6.8

%

Erwin, Inc.(d)

 

IT Services

 

Second Lien Term Loan (3M USD LIBOR+11.50%), 12.50% Cash/1.00% PIK, 8/28/2021

 

2/29/2016

 

$

16,131,047

 

 

16,092,273

 

 

16,131,047

 

5.4

%

LogicMonitor, Inc.

 

IT Services

 

First Lien Term Loan (3M USD LIBOR+5.00), 6.00% Cash, 5/17/2023

 

3/20/2020

 

$

18,000,000

 

 

17,881,562

 

 

17,566,200

 

5.9

%

    

Total IT Services

   

 

  

 

68,045,262

 

 

67,877,820

 

22.8

%

inMotionNow, Inc.

 

Marketing Services

 

First Lien Term Loan (3M USD LIBOR+7.50), 10.00% Cash, 5/15/2024

 

5/15/2019

 

$

12,200,000

 

 

12,105,156

 

 

11,974,300

 

4.0

%

inMotionNow, Inc.

 

Marketing Services

 

Delayed Draw Term Loan (3M USD LIBOR+7.50) 10.00% Cash, 5/15/2024

 

5/15/2019

 

$

5,000,000

 

 

4,954,516

 

 

4,907,500

 

1.6

%

    

Total Marketing Services

   

 

  

 

17,059,672

 

 

16,881,800

 

5.6

%

Omatic Software, LLC

 

Non-profit Services

 

First Lien Term Loan (3M USD LIBOR+8.00%), 9.75% Cash, 5/29/2023

 

5/29/2018

 

$

5,500,000

 

 

5,464,983

 

 

5,474,700

 

1.8

%

    

Total Non-profit Services

   

 

  

 

5,464,983

 

 

5,474,700

 

1.8

%

Emily Street Enterprises, L.L.C.

 

Office Supplies

 

Senior Secured Note (3M USD LIBOR+8.50%), 10.00% Cash, 12/31/2020

 

12/28/2012

 

$

3,300,000

 

 

3,299,985

 

 

3,254,130

 

1.1

%

Emily Street Enterprises, L.L.C.(h)

 

Office Supplies

 

Warrant Membership Interests Expires 12/28/2022

 

12/28/2012

 

 

49,318

 

 

400,000

 

 

354,472

 

0.1

%

    

Total Office Supplies

   

 

  

 

3,699,985

 

 

3,608,602

 

1.2

%

Apex Holdings Software Technologies, LLC

 

Payroll Services

 

First Lien Term Loan (3M USD LIBOR+8.00%), 9.00% Cash, 9/21/2021

 

9/21/2016

 

$

18,000,000

 

 

17,964,080

 

 

17,314,200

 

5.8

%

Apex Holdings Software Technologies, LLC

 

Payroll Services

 

Delayed Draw Term Loan (3M USD LIBOR+8.00%), 9.00% Cash, 9/21/2021

 

10/1/2018

 

$

1,500,000

 

 

1,494,136

 

 

1,442,850

 

0.5

%

    

Total Payroll Services

   

 

  

 

19,458,216

 

 

18,757,050

 

6.3

%

See accompanying notes to consolidated financial statements.

8

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

August 31, 2020

(unaudited)

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 147.8%(b) – (continued)

       

 

  

 

  

 

   

 

Village Realty Holdings LLC

 

Property Management

 

First Lien Term Loan (3M USD LIBOR+6.75%), 9.00% Cash, 10/8/2024

 

10/8/2019

 

$

7,250,000

 

$

7,185,395

 

$

7,016,292

 

2.4

%

Village Realty Holdings
L
LC(j)

 

Property Management

 

Delayed Draw Term Loan (3M USD LIBOR+6.75%), 9.00% Cash, 10/8/2024

 

10/8/2019

 

$

3,876,322

 

 

3,842,870

 

 

3,715,144

 

1.3

%

V Rental Holdings LLC(h)

 

Property Management

 

Class A-1 Membership Units

 

10/8/2019

 

 

116,700

 

 

338,229

 

 

447,215

 

0.1

%

    

Total Property Management

   

 

  

 

11,366,494

 

 

11,178,651

 

3.8

%

Buildout, Inc.

 

Real Estate Services

 

First Lien Term Loan (1D USD LIBOR+7.75%), 9.25% Cash, 7/9/2025

 

7/9/2020

 

$

14,000,000

 

 

13,860,179

 

 

13,860,000

 

4.6

%

Buildout, Inc.(i)

 

Real Estate Services

 

Limited Partner Interests

 

7/9/2020

 

 

999

 

 

999,000

 

 

999,000

 

0.3

%

    

Total Real Estate Services

   

 

  

 

14,859,179

 

 

14,859,000

 

4.9

%

TMAC Acquisition Co.,
L
LC(k)

 

Restaurant

 

Unsecured Term Loan 8.00% PIK, 9/01/2023

 

3/1/2018

 

$

2,261,017

 

 

2,261,017

 

 

1,879,523

 

0.6

%

    

Total Restaurant

   

 

  

 

2,261,017

 

 

1,879,523

 

0.6

%

ArbiterSports, LLC(d)

 

Sports Management

 

First Lien Term Loan (3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025

 

2/21/2020

 

$

26,000,000

 

 

25,782,401

 

 

24,018,800

 

8.1

%

ArbiterSports, LLC(d)

 

Sports Management

 

Delayed Draw Term Loan (3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025

 

2/21/2020

 

$

1,000,000

 

 

1,000,000

 

 

923,800

 

0.3

%

    

Total Sports Management

   

 

  

 

26,782,401

 

 

24,942,600

 

8.4

%

Avionte Holdings, LLC(h)

 

Staffing Services

 

Class A Units

 

1/8/2014

 

 

100,000

 

 

100,000

 

 

672,475

 

0.2

%

    

Total Staffing Services

   

 

  

 

100,000

 

 

672,475

 

0.2

%

National Waste Partners(d)

 

Waste Services

 

Second Lien Term Loan 10.00% Cash, 2/13/2022

 

2/13/2017

 

$

9,000,000

 

 

8,969,247

 

 

8,873,100

 

3.0

%

    

Total Waste Services

   

 

  

 

8,969,247

 

 

8,873,100

 

3.0

%

Sub Total Non-control/Non-affiliate investments

       

 

  

 

452,233,107

 

 

440,847,945

 

147.8

%

See accompanying notes to consolidated financial statements.

9

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

August 31, 2020

(unaudited)

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Affiliate investments – 6.3%(b)

       

 

  

 

  

 

   

 

GreyHeller LLC(f)

 

Cyber Security

 

First Lien Term Loan (3M USD LIBOR+11.00%), 12.00% Cash, 11/16/2021

 

11/17/2016

 

$

7,000,000

 

$

6,978,843

 

$

7,000,000

 

2.3

%

GreyHeller LLC(f),(h)

 

Cyber Security

 

Series A Preferred Units

 

11/17/2016

 

 

850,000

 

 

850,000

 

 

3,225,397

 

1.1

%

    

Total Cyber Security

   

 

  

 

7,828,843

 

 

10,225,397

 

3.4

%

Top Gun Pressure Washing, LLC(f)

 

Facilities Maintenance

 

First Lien Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 8/12/2024

 

8/12/2019

 

$

5,000,000

 

 

4,957,008

 

 

4,852,000

 

1.7

%

Top Gun Pressure Washing, LLC(f),(j)

 

Facilities Maintenance

 

Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 8/12/2024

 

8/12/2019

 

$

1,825,000

 

 

1,808,439

 

 

1,770,980

 

0.7

%

TG Pressure Washing Holdings, LLC(f),(h)

 

Facilities Maintenance

 

Preferred Equity

 

8/12/2019

 

 

488,148

 

 

488,148

 

 

310,846

 

0.1

%

    

Total Facilities Maintenance

   

 

  

 

7,253,595

 

 

6,933,826

 

2.5

%

Elyria Foundry Company, L.L.C.(d),(f),(h)

 

Metals

 

Common Stock

 

7/30/2010

 

 

60,000

 

 

9,685,028

 

 

425,190

 

0.1

%

Elyria Foundry Company, L.L.C.(d),(f)

 

Metals

 

Second Lien Term Loan 15.00% PIK, 8/10/2022

 

7/30/2010

 

$

1,284,253

 

 

1,284,253

 

 

1,147,223

 

0.3

%

    

Total Metals

   

 

  

 

10,969,281

 

 

1,572,413

 

0.4

%

Sub Total Affiliate investments

       

 

  

 

26,051,719

 

 

18,731,636

 

6.3

%

Control
investments – 16.3%
(b)

       

 

  

 

  

 

   

 

Netreo Holdings, LLC(g)

 

IT Services

 

First Lien Term Loan (3M USD LIBOR +6.25%), 9.00% Cash/2.75% PIK, 7/3/2023

 

7/3/2018

 

$

5,234,684

 

 

5,198,930

 

 

5,235,208

 

1.8

%

Netreo Holdings, LLC(g)

 

IT Services

 

Delayed Draw Term Loan (3M USD LIBOR +6.25%), 9.00% Cash/2.75% PIK, 7/3/2023

 

5/26/2020

 

$

1,208,915

 

 

1,197,539

 

 

1,209,036

 

0.4

%

Netreo Holdings, LLC(g),(h)

 

IT Services

 

Common Stock Class A Unit

 

7/3/2018

 

 

3,150,000

 

 

3,150,000

 

 

6,355,440

 

2.2

%

    

Total IT Services

   

 

  

 

9,546,469

 

 

12,799,684

 

4.4

%

Saratoga Investment Corp. CLO 2013-1, Ltd.(a),(e),(g)

 

Structured Finance Securities

 

Other/Structured Finance Securities 19.26%, 1/20/2030

 

1/22/2008

 

$

69,500,000

 

 

21,322,952

 

 

21,577,477

 

7.2

%

Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Note(a),(g)

 

Structured Finance Securities

 

Other/Structured Finance Securities (3M USD LIBOR+8.75%), 8.99%, 1/20/2030

 

12/14/2018

 

$

2,500,000

 

 

2,500,000

 

 

2,343,750

 

0.7

%

See accompanying notes to consolidated financial statements.

10

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

August 31, 2020

(unaudited)

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Control
investments – 16.3%
(b) – (continued)

       

 

  

 

  

 

   

 

Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Note(a),(g)

 

Structured Finance Securities

 

Other/Structured Finance Securities (3M USD LIBOR+10.00%), 10.24%, 1/20/2030

 

12/14/2018

 

$

7,500,000

 

$

7,500,000

 

$

7,174,500

 

2.4

%

Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd.(a),(g),(j)

 

Structured Finance Securities

 

Unsecured Loan (3M USD LIBOR+7.50%), 7.74%, 8/20/2021

 

2/18/2020

 

$

5,000,000

 

 

5,000,000

 

 

4,642,000

 

1.6

%

    

Total Structured Finance Securities

 

 

  

 

36,322,952

 

 

35,737,727

 

11.9

%

Sub Total Control investments

     

 

  

 

45,869,421

 

 

48,537,411

 

16.3

%

TOTAL INVESTMENTS – 170.4%(b)

     

 

  

$

524,154,247

 

$

508,116,992

 

170.4

%

   

Number of Shares

 

Cost

 

Fair Value

 

% of
Net
Assets

Cash and cash equivalents and cash and cash equivalents, reserve accounts – 21.9%(b)

     

 

  

 

   

 

U.S. Bank Money Market(l)

   

65,395,183

 

$

65,395,183

 

$

65,395,183

 

21.9

%

Total cash and cash equivalents and cash and cash equivalents, reserve accounts

   

65,395,183

 

$

65,395,183

 

$

65,395,183

 

21.9

%

____________

(a)      Represents an ineligible investment as defined under Section 55(a) of the Investment Company Act of 1940, as amended. As of August 31, 2020, non-qualifying assets represent 11.0% of the Company’s portfolio at fair value. As a BDC, the Company can only invest 30% of its portfolio in non-qualifying assets.

(b)      Percentages are based on net assets of $298,177,358 as of August 31, 2020.

(c)      Because there is no readily available market value for these investments, the fair values of these investments were determined using significant unobservable inputs and approved in good faith by our board of directors. These investments have been included as Level 3 in the Fair Value Hierarchy (see Note 3 to the consolidated financial statements).

(d)      These securities are either fully or partially pledged as collateral under a senior secured revolving credit facility (see Note 7 to the consolidated financial statements).

(e)      This investment does not have a stated interest rate that is payable thereon. As a result, the 19.26% interest rate in the table above represents the effective interest rate currently earned on the investment cost and is based on the current cash interest and other income generated by the investment.

See accompanying notes to consolidated financial statements.

11

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

August 31, 2020

(unaudited)

(f)      As defined in the Investment Company Act, this portfolio company is an Affiliate as we own between 5.0% and 25.0% of the voting securities. Transactions during the six months ended August 31, 2020 in which the issuer was an Affiliate are as follows:

Company

 

Purchases

 

Sales

 

Total
Interest from
Investments

 

Management
Fee Income

 

Net Realized
Gain
(Loss) from
Investments

 

Net Change
in Unrealized
Appreciation
(Depreciation)

Elyria Foundry Company, L.L.C.

 

$

 

$

 

$

94,241

 

$

 

$

 

$

(1,651,640

)

GreyHeller LLC

 

 

 

 

 

 

450,507

 

 

 

 

 

 

236,160

 

Top Gun Pressure Washing, LLC

 

 

1,806,750

 

 

 

 

335,915

 

 

 

 

 

 

(214,238

)

TG Pressure Washing Holdings, LLC

 

 

138,148

 

 

 

 

 

 

 

 

 

 

(177,302

)

Total

 

$

1,944,898

 

$

 

$

880,663

 

$

 

$

 

$

(1,807,020

)

(g)      As defined in the Investment Company Act, we “Control” this portfolio company because we own more than 25% of the portfolio company’s outstanding voting securities. Transactions during the six months ended August 31, 2020 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:

Company

 

Purchases

 

Sales

 

Total
Interest from
Investments

 

Management
Fee Income

 

Net Realized
Gain
(Loss) from
Investments

 

Net Change
in Unrealized
Appreciation
(Depreciation)

Netreo Holdings, LLC

 

$

1,188,000

 

$

 

$

345,635

 

$

 

$

 

$

(502,255

)

Saratoga Investment Corp. CLO 2013-1, Ltd.

 

 

 

 

 

 

1,356,121

 

 

1,260,008

 

 

 

 

1,217,713

 

Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Notes

 

 

 

 

 

 

126,108

 

 

 

 

 

 

(134,250

)

Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Notes

 

 

 

 

 

 

426,239

 

 

 

 

 

 

(260,250

)

Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd.(j)

 

 

2,500,000

 

 

 

 

202,006

 

 

 

 

 

 

(62,541

)

Total

 

$

3,688,000

 

$

 

$

2,456,109

 

$

1,260,008

 

$

 

$

258,417

 

(h)      Non-income producing at August 31, 2020.

(i)      Includes securities issued by an affiliate of the Company.

(j)      All or a portion of this investment has an unfunded commitment as of August 31, 2020. (see Note 8 to the consolidated financial statements).

(k)      As of August 31, 2020, the investment was on non-accrual status. The fair value of these investments was approximately $5.4 million, which represented 1.1% of the Company’s portfolio (see Note 2 to the consolidated financial statements).

(l)      Included within cash and cash equivalents and cash and cash equivalents, reserve accounts in the Company’s consolidated statements of assets and liabilities as of August 31, 2020.

LIBOR — London Interbank Offered Rate

1M USD LIBOR — The 1 month USD LIBOR rate as of August 31, 2020 was 0.16%.

3M USD LIBOR — The 3 month USD LIBOR rate as of August 31, 2020 was 0.24%.

PIK — Payment-in-Kind (see Note 2 to the consolidated financial statements).

See accompanying notes to consolidated financial statements.

12

Saratoga Investment Corp.

Consolidated Schedule of Investments

February 29, 2020*

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 138.2%(b)

       

 

  

 

  

 

   

 

CoConstruct, LLC

 

Construction Management Services

 

First Lien Term Loan (3M USD LIBOR+7.50%), 10.00% Cash, 7/5/2024

 

7/5/2019

 

$

4,200,000

 

$

4,161,917

 

$

4,284,000

 

1.4

%

CoConstruct, LLC(j)

 

Construction Management Services

 

Delayed Draw Term Loan (3M USD LIBOR+7.50%), 10.00% Cash, 7/5/2024

 

7/5/2019

 

$

 

 

 

 

 

0.0

%

    

Total Construction Management Services

   

 

  

 

4,161,917

 

 

4,284,000

 

1.4

%

Targus Holdings, Inc.(h)

 

Consumer Products

 

Common Stock

 

12/31/2009

 

 

210,456

 

 

1,589,630

 

 

417,619

 

0.1

%

    

Total Consumer Products

   

 

  

 

1,589,630

 

 

417,619

 

0.1

%

My Alarm Center, LLC(k)

 

Consumer Services

 

Preferred Equity Class A Units 8.00% PIK

 

7/14/2017

 

 

2,227

 

 

2,357,879

 

 

 

0.0

%

My Alarm Center, LLC(h)

 

Consumer Services

 

Preferred Equity Class B Units

 

7/14/2017

 

 

1,797

 

 

1,796,880

 

 

 

0.0

%

My Alarm Center, LLC(h)

 

Consumer Services

 

Preferred Equity Class Z Units

 

9/12/2018

 

 

676

 

 

712,343

 

 

1,997,158

 

0.6

%

My Alarm Center, LLC(h)

 

Consumer Services

 

Common Stock

 

7/14/2017

 

 

96,224

 

 

 

 

 

0.0

%

    

Total Consumer Services

   

 

  

 

4,867,102

 

 

1,997,158

 

0.60

%

Passageways, Inc.

 

Corporate Governance

 

First Lien Term Loan (3M USD LIBOR+7.00%), 8.75% Cash, 7/5/2023

 

7/5/2018

 

$

5,000,000

 

 

4,961,214

 

 

5,034,500

 

1.7

%

Passageways, Inc.(j)

 

Corporate Governance

 

Delayed Draw Term Loan (3M USD LIBOR+7.00%), 8.75% Cash, 7/5/2023

 

1/3/2020

 

$

2,000,000

 

 

1,991,001

 

 

2,013,800

 

0.7

%

Passageways, Inc.(h)

 

Corporate Governance

 

Series A Preferred Stock

 

7/5/2018

 

 

2,027,205

 

 

1,000,000

 

 

2,042,180

 

0.8

%

    

Total Corporate Governance

   

 

  

 

7,952,215

 

 

9,090,480

 

0.03

%

C2 Educational Systems(d)

 

Education Services

 

First Lien Term Loan (3M USD LIBOR+7.00%), 8.50% Cash, 5/31/2020

 

5/31/2017

 

$

16,000,000

 

 

15,981,853

 

 

16,000,000

 

5.3

%

Texas Teachers of Tomorrow, LLC(h),(i)

 

Education Services

 

Common Stock

 

12/2/2015

 

 

750,000

 

 

750,000

 

 

703,910

 

0.2

%

Texas Teachers of Tomorrow, LLC(d)

 

Education Services

 

First Lien Term Loan (3M USD LIBOR+7.25%), 9.75% Cash, 6/28/2024

 

6/28/2019

 

$

19,661,200

 

 

19,483,213

 

 

19,661,200

 

6.5

%

    

Total Education Services

   

 

  

 

36,215,066

 

 

36,365,110

 

12.0

%

Destiny Solutions Inc.(d)

 

Education Software

 

First Lien Term Loan (3M USD LIBOR+7.25%), 9.25% Cash, 10/23/2024

 

5/16/2018

 

$

36,000,000

 

 

35,686,318

 

 

35,888,400

 

11.8

%

Destiny Solutions Inc.(h),(i)

 

Education Software

 

Limited Partner Interests

 

5/16/2018

 

 

2,342

 

 

2,468,464

 

 

2,805,839

 

0.9

%

Identity Automation
Syste
ms(h)

 

Education Software

 

Common Stock Class A Units

 

8/25/2014

 

 

232,616

 

 

232,616

 

 

860,269

 

0.4

%

Identity Automation
Syst
ems(d)

 

Education Software

 

First Lien Term Loan (3M USD LIBOR+9.24%), 10.99% Cash, 5/8/2024

 

8/25/2014

 

$

15,422,500

 

 

15,389,090

 

 

15,524,289

 

5.1

%

See accompanying notes to consolidated financial statements.

13

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

February 29, 2020*

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 138.2%(b) – (continued)

       

 

  

 

  

 

   

 

EMS LINQ, Inc.

 

Education Software

 

First Lien Term Loan (1M USD LIBOR+8.50%), 10.02% Cash, 8/9/2024

 

8/9/2019

 

$

14,925,000

 

$

14,780,293

 

$

14,823,510

 

4.8

%

GoReact

 

Education Software

 

First Lien Term Loan (3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025

 

1/17/2020

 

$

5,000,000

 

 

4,930,819

 

 

4,950,000

 

1.6

%

GoReact(j)

 

Education Software

 

Delayed Draw Term Loan (3M USD LIBOR+7.50%), 9.50% Cash, 1/17/2025

 

1/17/2020

 

$

 

 

 

 

 

0.0

%

Kev Software Inc.(a)

 

Education Software

 

First Lien Term Loan (1M USD LIBOR+8.63%), 10.15% Cash, 9/13/2023

 

9/13/2018

 

$

21,231,923

 

 

21,086,573

 

 

21,202,198

 

7.0

%

    

Total Education Software

   

 

  

 

94,574,173

 

 

96,054,505

 

31.6

%

Davisware, LLC

 

Field Service Management

 

First Lien Term Loan (3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024

 

9/6/2019

 

$

3,000,000

 

 

2,971,896

 

 

2,970,000

 

1.0

%

Davisware, LLC(j)

 

Field Service Management

 

Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.00% Cash, 7/31/2024

 

9/6/2019

 

$

 

 

 

 

 

0.0

%

    

Total Field Service Management

   

 

  

 

2,971,896

 

 

2,970,000

 

1.0

%

GDS Holdings US, Inc.(d)

 

Financial Services

 

First Lien Term Loan (3M USD LIBOR+7.00%), 8.50% Cash, 8/23/2023

 

8/23/2018

 

$

7,500,000

 

 

7,444,170

 

 

7,650,000

 

2.5

%

GDS Holdings US, Inc.(d)

 

Financial Services

 

Delayed Draw Term Loan (3M USD LIBOR+7.00%), 8.50% Cash, 8/23/2023

 

8/23/2018

 

$

1,000,000

 

 

990,526

 

 

1,020,000

 

0.3

%

GDS Software Holdings, LLC(h)

 

Financial Services

 

Common Stock Class A Units

 

8/23/2018

 

 

250,000

 

 

250,000

 

 

421,291

 

0.1

%

FMG Suite Holdings,
LLC
(d)

 

Financial Services

 

Second Lien Term Loan (1M USD LIBOR+8.00%), 9.52% Cash, 11/16/2023

 

5/16/2018

 

$

23,000,000

 

 

22,863,835

 

 

23,000,000

 

7.6

%

    

Total Financial Services

   

 

  

 

31,548,531

 

 

32,091,291

 

10.5

%

Ohio Medical, LLC(h)

 

Healthcare Products Manufacturing

 

Common Stock

 

1/15/2016

 

 

5,000

 

 

500,000

 

 

416,550

 

0.1

%

Ohio Medical, LLC

 

Healthcare Products Manufacturing

 

Senior Subordinated Note 12.00% Cash, 7/15/2021

 

1/15/2016

 

$

7,300,000

 

 

7,274,482

 

 

7,300,000

 

2.4

%

    

Total Healthcare Products Manufacturing

   

 

  

 

7,774,482

 

 

7,716,550

 

2.5

%

Axiom Parent Holdings, LLC(h)

 

Healthcare Services

 

Common Stock Class A Units

 

6/19/2018

 

 

400,000

 

 

400,000

 

 

428,706

 

0.1

%

Axiom Purchaser, Inc.(d)

 

Healthcare Services

 

First Lien Term Loan (3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023

 

6/19/2018

 

$

10,000,000

 

 

9,936,612

 

 

9,944,000

 

3.3

%

See accompanying notes to consolidated financial statements

14

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

February 29, 2020*

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 138.2%(b) – (continued)

       

 

  

 

  

 

   

 

Axiom Purchaser, Inc.(d),(j)

 

Healthcare Services

 

Delayed Draw Term Loan (3M USD LIBOR+6.00%), 7.75% Cash, 6/19/2023

 

6/19/2018

 

$

3,000,000

 

$

2,977,619

 

$

2,983,200

 

1.0

%

ComForCare Health Care

 

Healthcare Services

 

First Lien Term Loan (3M USD LIBOR+7.50%), 8.96% Cash, 1/31/2022

 

1/31/2017

 

$

15,000,000

 

 

14,929,216

 

 

15,099,000

 

5.0

%

    

Total Healthcare Services

   

 

  

 

28,243,447

 

 

28,454,906

 

9.4

%

HemaTerra Holding Company, LLC

 

Healthcare Software

 

First Lien Term Loan (3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024

 

4/15/2019

 

$

6,000,000

 

 

5,944,473

 

 

6,120,000

 

2.0

%

HemaTerra Holding Company, LLC(j)

 

Healthcare Software

 

Delayed Draw Term Loan (3M USD LIBOR+6.75%), 9.25% Cash, 4/15/2024

 

4/15/2019

 

$

10,000,000

 

 

9,912,295

 

 

10,200,000

 

3.4

%

TRC HemaTerra, LLC(h)

 

Healthcare Software

 

Class D Membership Interests

 

4/15/2019

 

 

2,000,000

 

 

2,000,000

 

 

2,259,190

 

0.7

%

PDDS Buyer, LLC

 

Healthcare Software

 

First Lien Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 7/15/2024

 

7/15/2019

 

$

12,000,000

 

 

11,888,585

 

 

12,184,800

 

4.0

%

PDDS Buyer, LLC(j)

 

Healthcare Software

 

Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 7/15/2024

 

7/15/2019

 

$

 

 

 

 

 

0.0

%

    

Total Healthcare Software

   

 

  

 

29,745,353

 

 

30,763,990

 

10.1

%

Roscoe Medical, Inc.(h)

 

Healthcare Supply

 

Common Stock

 

3/26/2014

 

 

5,081

 

 

508,077

 

 

 

0.0

%

Roscoe Medical, Inc.(k)

 

Healthcare Supply

 

Second Lien Term Loan 11.25% Cash, 3/28/2021

 

3/26/2014

 

$

4,200,000

 

 

4,200,000

 

 

2,136,960

 

0.7

%

    

Total Healthcare Supply

   

 

  

 

4,708,077

 

 

2,136,960

 

0.7

%

Knowland Group, LLC

 

Hospitality/Hotel

 

Second Lien Term Loan (3M USD LIBOR+8.00%), 10.00% Cash, 5/9/2024

 

11/9/2018

 

$

15,000,000

 

 

15,000,000

 

 

14,893,500

 

4.9

%

    

Total Hospitality/Hotel

   

 

  

 

15,000,000

 

 

14,893,500

 

4.9

%

Vector Controls Holding Co., LLC(d)

 

Industrial Products

 

First Lien Term Loan 10.50% (9.00% Cash/1.50% PIK), 3/6/2022

 

3/6/2013

 

$

7,849,846

 

 

7,849,846

 

 

7,928,345

 

2.6

%

Vector Controls Holding Co., LLC(h)

 

Industrial Products

 

Warrants to Purchase Limited Liability Company Interests, Expires 11/30/2027

 

5/31/2015

 

 

343

 

 

 

 

2,850,231

 

0.9

%

    

Total Industrial Products

   

 

  

 

7,849,846

 

 

10,778,576

 

3.5

%

CLEO Communications Holding, LLC

 

IT Services

 

First Lien Term Loan (3M USD LIBOR+8.00%), 9.46% Cash/2.00% PIK, 3/31/2022

 

3/31/2017

 

$

13,791,686

 

 

13,773,206

 

 

14,048,211

 

4.6

%

See accompanying notes to consolidated financial statements.

15

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

February 29, 2020*

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 138.2%(b) – (continued)

       

 

  

 

  

 

   

 

CLEO Communications Holding, LLC

 

IT Services

 

Delayed Draw Term Loan (3M USD LIBOR+8.00%), 9.46% Cash/2.00% PIK, 3/31/2022

 

3/31/2017

 

$

20,041,560

 

$

19,919,746

 

$

20,414,333

 

6.7

%

Erwin, Inc.(d)

 

IT Services

 

Second Lien Term Loan (3M USD LIBOR+11.50%), 12.96% Cash/1.00% PIK, 8/28/2021

 

2/29/2016

 

$

16,049,804

 

 

15,990,286

 

 

16,049,804

 

5.3

%

    

Total IT Services

   

 

  

 

49,683,238

 

 

50,512,348

 

16.6

%

inMotionNow, Inc.

 

Marketing Services

 

First Lien Term Loan (3M USD LIBOR+7.25), 9.75% Cash, 5/15/2024

 

5/15/2019

 

$

12,200,000

 

 

12,094,364

 

 

12,200,000

 

4.1

%

inMotionNow, Inc.(j)

 

Marketing Services

 

Delayed Draw Term Loan (3M USD LIBOR+7.25) 9.75% Cash, 5/15/2024

 

5/15/2019

 

$

2,000,000

 

 

1,981,329

 

 

2,000,000

 

0.0

%

    

Total Marketing Services

   

 

  

 

14,075,693

 

 

14,200,000

 

4.1

%

Omatic Software, LLC

 

Non-profit Services

 

First Lien Term Loan (3M USD LIBOR+8.00%), 9.75% Cash, 5/29/2023

 

5/29/2018

 

$

5,500,000

 

 

5,459,192

 

 

5,554,999

 

1.9

%

Omatic Software, LLC(j)

 

Non-profit Services

 

Delayed Draw Term Loan (3M USD LIBOR+8.00%), 9.75% Cash, 5/29/2023

 

5/29/2018

 

$

 

 

 

 

 

0.0

%

    

Total Non-profit Services

   

 

  

 

5,459,192

 

 

5,554,999

 

1.9

%

Emily Street Enterprises, L.L.C.

 

Office Supplies

 

Senior Secured Note (3M  USD LIBOR+8.50%), 10.00% Cash, 4/22/2020

 

12/28/2012

 

$

3,300,000

 

 

3,299,987

 

 

3,300,000

 

1.1

%

Emily Street Enterprises, L.L.C.(h)

 

Office Supplies

 

Warrant Membership Interests Expires 12/28/2022

 

12/28/2012

 

 

49,318

 

 

400,000

 

 

499,464

 

0.2

%

    

Total Office Supplies

   

 

  

 

3,699,987

 

 

3,799,464

 

1.3

%

Apex Holdings Software Technologies, LLC

 

Payroll Services

 

First Lien Term Loan (3M USD LIBOR+8.00%), 9.46% Cash, 9/21/2021

 

9/21/2016

 

$

18,000,000

 

 

17,951,463

 

 

17,589,600

 

5.8

%

Apex Holdings Software Technologies, LLC

 

Payroll Services

 

Delayed Draw Term Loan (3M USD LIBOR+8.00%), 9.46% Cash, 9/21/2021

 

10/1/2018

 

$

1,500,000

 

 

1,491,938

 

 

1,465,800

 

0.5

%

    

Total Payroll Services

   

 

  

 

19,443,401

 

 

19,055,400

 

6.3

%

Village Realty
Holdings LLC

 

Property Management

 

First Lien Term Loan (3M USD LIBOR+6.50%), 8.75% Cash, 10/8/2024

 

10/8/2019

 

$

7,250,000

 

 

7,180,560

 

 

7,264,500

 

2.4

%

Village Realty Holdings LLC(j)

 

Property Management

 

Delayed Draw Term Loan (3M USD LIBOR+6.50%), 8.75% Cash, 10/8/2024

 

10/8/2019

 

$

3,876,322

 

 

3,838,783

 

 

3,884,075

 

1.4

%

See accompanying notes to consolidated financial statements.

16

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

February 29, 2020*

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Non-control/Non-affiliate investments – 138.2%(b) – (continued)

       

 

  

 

  

 

   

 

V Rental Holdings LLC(h)

 

Property Management

 

Class A-1 Membership Units

 

10/8/2019

 

 

116,700

 

$

338,229

 

$

354,280

 

0.1

%

    

Total Property Management

   

 

  

 

11,357,572

 

 

11,502,855

 

3.9

%

TMAC Acquisition
Co., LLC

 

Restaurant

 

Unsecured Term Loan 8.00% PIK, 9/01/2023

 

3/1/2018

 

$

2,261,017

 

 

2,261,017

 

 

2,140,880

 

0.7

%

    

Total Restaurant

   

 

  

 

2,261,017

 

 

2,140,880

 

0.7

%

ArbiterSports, LLC

 

Sports Management

 

First Lien Term Loan (3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025

 

2/21/2020

 

$

26,000,000

 

 

25,765,288

 

 

25,740,000

 

8.6

%

Arbiter Sports, LLC(j)

 

Sports Management

 

Delayed Draw Term Loan (3M USD LIBOR+6.50%), 8.25% Cash, 2/21/2025

 

2/21/2020

 

$

 

 

 

 

 

0.0

%

    

Total Sports Management

   

 

  

 

25,765,288

 

 

25,740,000

 

8.6

%

Avionte Holdings, LLC(h)

 

Staffing Services

 

Class A Units

 

1/8/2014

 

 

100,000

 

 

100,000

 

 

922,337

 

0.3

%

    

Total Staffing Services

   

 

  

 

100,000

 

 

922,337

 

0.3

%

National Waste Partners(d)

 

Waste Services

 

Second Lien Term Loan 10.00% Cash, 2/13/2022

 

2/13/2017

 

$

9,000,000

 

 

8,959,602

 

 

9,000,000

 

3.0

%

    

Total Waste Services

   

 

  

 

8,959,602

 

 

9,000,000

 

3.0

%

Sub Total Non-control/Non-affiliate
investments

       

 

  

 

418,006,725

 

 

420,442,928

 

138.2

%

Affiliate
investments – 6.0%
(b)

       

 

  

 

  

 

   

 

GreyHeller LLC(f)

 

Cyber Security

 

First Lien Term Loan (3M USD LIBOR+11.00%), 12.46% Cash, 11/16/2021

 

11/17/2016

 

$

7,000,000

 

 

6,971,109

 

 

7,000,000

 

2.2

%

GreyHeller LLC(f),(h)

 

Cyber Security

 

Series A Preferred Units

 

11/17/2016

 

 

850,000

 

 

850,000

 

 

2,981,503

 

1.0

%

    

Total Cyber Security

   

 

  

 

7,821,109

 

 

9,981,503

 

3.2

%

Top Gun Pressure Washing, LLC(f)

 

Facilities Maintenance

 

First Lien Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 8/12/2024

 

8/12/2019

 

$

5,000,000

 

 

4,952,729

 

 

5,024,500

 

1.7

%

Top Gun Pressure Washing, LLC(f),(j)

 

Facilities Maintenance

 

Delayed Draw Term Loan (3M USD LIBOR+7.00%), 9.50% Cash, 8/12/2024

 

8/12/2019

 

$

 

 

 

 

 

0.0

%

TG Pressure Washing Holdings, LLC(f),(h)

 

Facilities Maintenance

 

Preferred Equity

 

8//12/2019

 

 

350,000

 

 

350,000

 

 

350,000

 

0.1

%

    

Total Facilities Maintenance

   

 

  

 

5,302,729

 

 

5,374,500

 

1.8

%

Elyria Foundry Company, L.L.C.(f),(h)

 

Metals

 

Common Stock

 

7/30/2010

 

 

60,000

 

 

9,685,028

 

 

1,939,800

 

0.6

%

Elyria Foundry Company, L.L.C.(d),(f)

 

Metals

 

Second Lien Term Loan 15.00% PIK, 8/10/2022

 

7/30/2010

 

$

1,190,051

 

 

1,190,051

 

 

1,190,051

 

0.4

%

    

Total Metals

   

 

  

 

10,875,079

 

 

3,129,851

 

1.0

%

Sub Total Affiliate investments

       

 

  

 

23,998,917

 

 

18,485,854

 

6.0

%

See accompanying notes to consolidated financial statements.

17

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

February 29, 2020*

Company

 

Industry

 

Investment Interest
Rate/Maturity

 

Original
Acquisition
Date

 

Principal/
Number of
Shares

 

Cost

 

Fair Value(c)

 

% of
Net
Assets

Control
investments – 15.4%
(b)

       

 

  

 

  

 

   

 

Netreo Holdings, LLC(g)

 

IT Services

 

First Lien Term Loan (3M USD LIBOR +6.25%), 9.00% Cash/2.00% PIK, 7/3/2023

 

7/3/2018

 

$

5,162,734

 

$

5,123,191

 

$

5,265,989

 

1.7

%

Netreo Holdings, LLC(g),(h)

 

IT Services

 

Common Stock Class A Unit

 

7/3/2018

 

 

3,150,000

 

 

3,150,000

 

 

6,762,672

 

2.3

%

    

Total IT Services

   

 

  

 

8,273,191

 

 

12,028,661

 

4.0

%

Saratoga Investment Corp. CLO 2013-1, Ltd.(a),(e),(g)

 

Structured Finance Securities

 

Other/Structured Finance Securities 10.97%, 1/20/2030

 

1/22/2008

 

$

69,500,000

 

 

23,520,428

 

 

22,557,240

 

7.4

%

Saratoga Investment Corp. CLO 2013-1, Ltd.
Class F-R-2 Note
(a),(g)

 

Structured Finance Securities

 

Other/Structured Finance Securities (3M USD LIBOR+8.75%), 10.21%, 1/20/2030

 

12/14/2018

 

$

2,500,000

 

 

2,500,000

 

 

2,478,000

 

0.8

%

Saratoga Investment Corp. CLO 2013-1, Ltd.
Class G-R-2 Note
(a),(g)

 

Structured Finance Securities

 

Other/Structured Finance Securities (3M USD LIBOR+10.00%), 11.46%, 1/20/2030

 

12/14/2018

 

$

7,500,000

 

 

7,500,000

 

 

7,434,750

 

2.4

%

Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd.(a),(g),(j)

 

Structured Finance Securities

 

Unsecured Loan (3M USD LIBOR+7.50%), 8.96%, 8/20/2021

 

2/18/2020

 

$

2,500,000

 

 

2,500,000

 

 

2,204,541

 

0.8

%

    

Total Structured Finance Securities

 

 

  

 

36,020,428

 

 

34,674,531

 

11.4

%

Sub Total Control investments

     

 

  

 

44,293,619

 

 

46,703,192

 

15.4

%

TOTAL INVESTMENTS – 159.6%(b)

     

 

  

$

486,299,261

 

$

485,631,974

 

159.6

%

   

Number of
Shares

 

Cost

 

Fair Value

 

% of
Net
Assets

Cash and cash equivalents and cash and cash equivalents, reserve accounts – 13.0%(b)

     

 

  

 

   

 

U.S. Bank Money Market(l)

   

39,450,352

 

$

39,450,352

 

$

39,450,352

 

13.0

%

Total cash and cash equivalents and cash and cash equivalents, reserve accounts

   

39,450,352

 

$

39,450,352

 

$

39,450,352

 

13.0

%

____________

*        Certain reclassifications have been made to previously reported industry groupings to show results on a consistent basis across periods.

(a)      Represents a non-qualifying investment as defined under Section 55(a) of the Investment Company Act of 1940, as amended. As of February 29, 2020, non-qualifying assets represent 11.5% of the Company’s portfolio at fair value. As a BDC, the Company can only invest 30% of its portfolio in non-qualifying assets.

(b)      Percentages are based on net assets of $304,286,853 as of February 29, 2020.

(c)      Because there is no readily available market value for these investments, the fair values of these investments were determined using significant unobservable inputs and approved in good faith by our board of directors. These investments have been included as Level 3 in the Fair Value Hierarchy (see Note 3 to the consolidated financial statements).

(d)      These securities are either fully or partially pledged as collateral under a senior secured revolving credit facility (see Note 7 to the consolidated financial statements).

(e)       This investment does not have a stated interest rate that is payable thereon. As a result, the 10.97% interest rate in the table above represents the effective interest rate currently earned on the investment cost and is based on the current cash interest and other income generated by the investment.

See accompanying notes to consolidated financial statements.

18

Saratoga Investment Corp.

Consolidated Schedule of Investments — (continued)

February 29, 2020*

(f)      As defined in the Investment Company Act, this portfolio company is an Affiliate as we own between 5.0% and 25.0% of the voting securities. Transactions during the year ended February 29, 2020 in which the issuer was an Affiliate are as follows:

Company

 

Purchases

 

Sales

 

Total
Interest from
Investments

 

Management
Fee Income

 

Net Realized
Gain
(Loss) from
Investments

 

Net Change
in Unrealized
Appreciation
(Depreciation)

GreyHeller LLC

 

$

 

$

 

$

961,322

 

$

 

$

 

$

1,331,201

Elyria Foundry Company, L.L.C.

 

 

 

 

 

 

167,835

 

 

 

 

 

 

135,600

Top Gun Pressure Washing, LLC

 

 

4,950,000

 

 

 

 

269,257

 

 

 

 

 

 

71,771

TG Pressure Washing Holdings, LLC

 

 

350,000

 

 

 

 

 

 

 

 

 

 

Total

 

$

5,300,000

 

$

 

$

1,398,414

 

$

 

$

 

$

1,538,572

(g)      As defined in the Investment Company Act, we “Control” this portfolio company because we own more than 25% of the portfolio company’s outstanding voting securities. Transactions during the year ended February 29, 2020 in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:

Company

 

Purchases

 

Sales

 

Total
Interest from
Investments

 

Management
Fee Income

 

Net Realized
Gain
(Loss) from
Investments

 

Net Change
in Unrealized
Appreciation
(Depreciation)

Easy Ice, LLC

 

$

 

$

(65,219,080

)

 

$

3,335,320

 

$

 

$

31,225,165

 

$

(3,816,610

)

Easy Ice Masters, LLC

 

 

 

 

(4,169,121

)

 

 

382,066

 

 

 

 

 

 

(51,436

)

Netreo Holdings, LLC

 

 

 

 

 

 

 

578,617

 

 

 

 

 

 

1,654,603

 

Saratoga Investment Corp. CLO 2013-1, Ltd.

 

 

 

 

 

 

 

4,058,715

 

 

2,503,804

 

 

 

 

(2,840,298

)

Saratoga Investment Corp. CLO 2013-1, Ltd. Class F-R-2 Notes

 

 

 

 

 

 

 

280,689

 

 

 

 

 

 

(5,500

)

Saratoga Investment Corp. CLO 2013-1, Ltd. Class G-R-2 Notes

 

 

 

 

 

 

 

937,378

 

 

 

 

 

 

(15,750

)

Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd(j)

 

 

2,500,000

 

 

 

 

 

7,642

 

 

 

 

 

 

(295,459

)

Total

 

$

2,500,000

 

$

(69,388,201

)

 

$

9,580,427

 

$

2,503,804

 

$

31,225,165

 

$

(5,370,450

)

(h)      Non-income producing at February 29, 2020.

(i)      Includes securities issued by an affiliate of the Company.

(j)      All or a portion of this investment has an unfunded commitment as of February 29, 2020. (see Note 8 to the consolidated financial statements).

(k)      As of February 29, 2020, the investment was on non-accrual status. The fair value of these investments was approximately $2.1 million, which represented 0.4% of the Company’s portfolio (see Note 2 to the consolidated financial statements).

(l)      Included within cash and cash equivalents and cash and cash equivalents, reserve accounts in the Company’s consolidated statements of assets and liabilities as of February 29, 2020.

LIBOR — London Interbank Offered Rate

1M USD LIBOR — The 1 month USD LIBOR rate as of February 29, 2020 was 1.52%.

3M USD LIBOR — The 3 month USD LIBOR rate as of February 29, 2020 was 1.46%.

PIK — Payment-in-Kind (see Note 2 to the consolidated financial statements).

See accompanying notes to consolidated financial statements.

19

SARATOGA INVESTMENT CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2020

(unaudited)

Note 1. Organization

Saratoga Investment Corp. (the “Company”, “we”, “our” and “us”) is a non-diversified closed end management investment company incorporated in Maryland that has elected to be treated and is regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company commenced operations on March 23, 2007 as GSC Investment Corp. and completed its initial public offering (“IPO”) on March 28, 2007. 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”). The Company expects to continue to qualify and to elect to be treated, for tax purposes, as a RIC. The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation from its investments.

GSC Investment, LLC (the “LLC”) was organized in May 2006 as a Maryland limited liability company. As of February 28, 2007, the LLC had not yet commenced its operations and investment activities.

On March 21, 2007, the Company was incorporated and concurrently therewith the LLC was merged with and into the Company, with the Company as the surviving entity, in accordance with the procedure for such merger in the LLC’s limited liability company agreement and Maryland law. In connection with such merger, each outstanding limited liability company interest of the LLC was converted into a share of common stock of the Company.

On July 30, 2010, the Company changed its name from “GSC Investment Corp.” to “Saratoga Investment Corp.” in connection with the consummation of a recapitalization transaction.

The Company is externally managed and advised by the investment adviser, Saratoga Investment Advisors, LLC (the “Manager” or “Saratoga Investment Advisors”), pursuant to an investment advisory and management agreement (the “Management Agreement”). Prior to July 30, 2010, the Company was managed and advised by GSCP (NJ), L.P.

The Company has established wholly-owned subsidiaries, SIA-Avionte, Inc., SIA-GH, Inc., SIA-MAC, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc. and SIA-VR, Inc., which are structured as Delaware entities, or tax blockers (“Taxable Blockers”), to hold equity or equity-like investments in portfolio companies organized as limited liability companies, or LLCs (or other forms of pass through entities). Tax Blockers are consolidated for accounting purposes, but are not consolidated for U.S. federal income tax purposes and may incur U.S. federal income tax expenses as a result of their ownership of portfolio companies.

On February 11, 2020, the Company entered into an unsecured loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with Saratoga Investment Corp. CLO 2013-1 Warehouse 2, Ltd. (“CLO 2013-1 Warehouse 2”), a wholly-owned subsidiary of Saratoga Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”), pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%. As of August 31, 2020, the Company’s investment in the CLO 2013-1 Warehouse 2 had a fair value of $4.6 million.

On March 28, 2012, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC, LP (“SBIC LP”), received a Small Business Investment Company (“SBIC”) license from the Small Business Administration (“SBA”). On August 14, 2019, our wholly-owned subsidiary, Saratoga Investment Corp. SBIC II LP (“SBIC II LP”), also received an SBIC license from the SBA. The new license will provide up to $175.0 million in additional long- term capital in the form of SBA debentures.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”), are stated in U.S. Dollars and include the accounts of the Company and its special purpose financing subsidiaries, Saratoga Investment Funding,

20

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 2. Summary of Significant Accounting Policies (cont.)

LLC (previously known as GSC Investment Funding LLC), SBIC LP, SBIC II LP, SIA-Avionte, Inc., SIA-GH, Inc., SIA-MAC, Inc., SIA-TG, Inc., SIA-TT, Inc., SIA-Vector, Inc. and SIA-VR, Inc. All intercompany accounts and transactions have been eliminated in consolidation. All references made to the “Company,” “we,” and “us” herein include Saratoga Investment Corp. and its consolidated subsidiaries, except as stated otherwise.

The Company, SBIC LP and SBIC II LP are all considered to be investment companies for financial reporting purposes and have applied the guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, “Financial Services — Investment Companies” (“ASC 946”). There have been no changes to the Company, SBIC LP or SBIC II LP’s status as investment companies during the three months ended August 31, 2020.

Use of Estimates in the Preparation of Financial Statements

The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and income, gains (losses) and expenses during the period reported. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in a money market fund. Cash and cash equivalents are carried at cost which approximates fair value. Per section 12(d)(1)(A) of the 1940 Act, the Company may not invest in another registered investment company such as, a money market fund if such investment would cause the Company to exceed any of the following limitations:

•        we were to own more than 3.0% of the total outstanding voting stock of the money market fund;

•        we were to hold securities in the money market fund having an aggregate value in excess of 5.0% of the value of our total assets, except as allowed pursuant to Rule 12d1-1 of Section 12(d)(1) of the 1940 Act which is designed to permit “cash sweep” arrangements rather than investments directly in short-term instruments; or

•        we were to hold securities in money market funds and other registered investment companies and BDCs having an aggregate value in excess of 10.0% of the value of our total assets.

As of August 31, 2020, the Company did not exceed any of these limitations.

Cash and Cash Equivalents, Reserve Accounts

Cash and cash equivalents, reserve accounts include amounts held in designated bank accounts in the form of cash and short-term liquid investments in money market funds, representing payments received on secured investments or other reserved amounts associated with the Company’s $45.0 million senior secured revolving credit facility with Madison Capital Funding LLC. The Company is required to use these amounts to pay interest expense, reduce borrowings, or pay other amounts in accordance with the terms of the senior secured revolving credit facility.

In addition, cash and cash equivalents, reserve accounts also include amounts held in designated bank accounts, in the form of cash and short-term liquid investments in money market funds, within our wholly-owned subsidiaries, SBIC LP and SBIC II LP.

The statements of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents when reconciling the beginning-of-period and end-of-period total amounts.

21

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 2. Summary of Significant Accounting Policies (cont.)

The following table provides a reconciliation of cash and cash equivalents and cash and cash equivalents, reserve accounts reported within the consolidated statements of assets and liabilities that sum to the total of the same such amounts shown in the consolidated statements of cash flows:

 

August 31,
2020

 

August 31,
2019

Cash and cash equivalents

 

$

39,052,320

 

$

2,846,767

Cash and cash equivalents, reserve accounts

 

 

26,342,863

 

 

21,271,658

Total cash and cash equivalents and cash and cash equivalents, reserve
accounts

 

$

65,395,183

 

$

24,118,425

Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control Investments” are defined as investments in companies in which we own more than 25.0% of the voting securities or maintain greater than 50.0% of the board representation. Under the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which we own between 5.0% and 25.0% of the voting securities. Under the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments.

Investment Valuation

The Company accounts for its investments at fair value in accordance with the FASB ASC Topic 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that its investments are to be sold or its liabilities are to be transferred at the balance sheet date in the principal market to independent market participants, or in the absence of a principal market, in the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact.

Investments for which market quotations are readily available are fair valued at such market quotations obtained from independent third-party pricing services and market makers subject to any decision by our board of directors to approve a fair value determination to reflect significant events affecting the value of these investments. We value investments for which market quotations are not readily available at fair value as approved, in good faith, by our board of directors based on input from our Manager, the audit committee of our board of directors and a third-party independent valuation firm. Determinations of fair value may involve subjective judgments and estimates. The types of factors that may be considered in determining the fair value of our investments include the nature and realizable value of any collateral, the portfolio company’s ability to make payments, market yield trend analysis, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flow and other relevant factors.

The Company undertakes a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available, as described below:

•        Each investment is initially valued by the responsible investment professionals of the Manager and preliminary valuation conclusions are documented, reviewed and discussed with our senior management; and

•        An independent valuation firm engaged by our board of directors independently reviews a selection of these preliminary valuations each quarter so that the valuation of each investment for which market quotes are not readily available is reviewed by the independent valuation firm at least once each fiscal year.

22

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 2. Summary of Significant Accounting Policies (cont.)

In addition, all our investments are subject to the following valuation process:

•        The audit committee of our board of directors reviews and approves each preliminary valuation and our Manager and independent valuation firm (if applicable) will supplement the preliminary valuation to reflect any comments provided by the audit committee; and

•        Our board of directors discusses the valuations and approves the fair value of each investment, in good faith, based on the input of our Manager, independent valuation firm (to the extent applicable) and the audit committee of our board of directors.

The Company’s investment in Saratoga Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”) is carried at fair value, which is based on a discounted cash flow model that utilizes prepayment, re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by our Manager and recommended to our board of directors. Specifically, we use Intex cash flow models, or an appropriate substitute, to form the basis for the valuation of our investment in Saratoga CLO. The models use a set of assumptions including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations. The assumptions are based on available market data and projections provided by third parties as well as management estimates. The Company uses the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine the valuation for our investment in Saratoga CLO.

Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, they may fluctuate over short periods of time and may be based on estimates. The determination of fair value may differ materially from the values that would have been used if a ready market for these investments existed. The Company’s net asset value could be materially affected if the determinations regarding the fair value of our investments were materially higher or lower than the values that we ultimately realize upon the disposal of such investments.

Derivative Financial Instruments

The Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”). ASC 815 requires recognizing all derivative instruments as either assets or liabilities on the consolidated statements of assets and liabilities at fair value. The Company values derivative contracts at the closing fair value provided by the counterparty. Changes in the values of derivative contracts are included in the consolidated statements of operations.

Investment Transactions and Income Recognition

Purchases and sales of investments and the related realized gains or losses are recorded on a trade-date basis. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that such amounts are expected to be collected. The Company stops accruing interest on its investments when it is determined that interest is no longer collectible. Discounts and premiums on investments purchased are accreted/amortized using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts over the life of the investment and amortization of premiums on investments up to the earliest call date.

Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reserved when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as a reduction in principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may make exceptions to

23

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 2. Summary of Significant Accounting Policies (cont.)

this general rule if the loan has sufficient collateral value and is in the process of collection. At August 31, 2020, certain investments in three portfolio companies, including preferred equity interests, were on non-accrual status with a fair value of approximately $5.4 million, or 1.1% of the fair value of our portfolio. At February 29, 2020, certain investments in two portfolio companies, including preferred equity interests, were on non-accrual status with a fair value of approximately $2.1 million, or 0.4% of the fair value of our portfolio.

Interest income on our investment in Saratoga CLO is recorded using the effective interest method in accordance with the provisions of ASC Topic 325, Investments-Other, Beneficial Interests in Securitized Financial Assets, (“ASC 325”), based on the anticipated yield and the estimated cash flows over the projected life of the investment. Yields are revised when there are changes in actual or estimated cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing. Changes in estimated yield are recognized as an adjustment to the estimated yield over the remaining life of the investment from the date the estimated yield was changed.

Payment-in-Kind Interest

The Company holds debt and preferred equity investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision. The PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is generally recorded on the accrual basis to the extent such amounts are expected to be collected. The Company stops accruing PIK interest if it is expected that the issuer will not be able to pay all principal and interest when due.

Structuring and Advisory Fee Income

Structuring and advisory fee income represents various fee income earned and received performing certain investment structuring and advisory activities during the closing of new investments.

Other Income

Other income includes dividends received, origination and monitoring fees and prepayment income fees and is recorded in the consolidated statements of operations when earned.

Deferred Debt Financing Costs

Financing costs incurred in connection with our credit facility and notes are deferred and amortized using the straight-line method over the life of the respective facility and debt securities. Financing costs incurred in connection with our SBA debentures are deferred and amortized using the straight-line method over the life of the debentures.

The Company presents deferred debt financing costs on the balance sheet as a contra-liability as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.

Contingencies

In the ordinary course of business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote. Therefore, the Company has not accrued any liabilities in connection with such indemnifications.

In the ordinary course of business, the Company may directly or indirectly be a defendant or plaintiff in legal actions with respect to bankruptcy, insolvency or other types of proceedings. Such lawsuits may involve claims that could adversely affect the value of certain financial instruments owned by the Company.

24

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 2. Summary of Significant Accounting Policies (cont.)

Income Taxes

The Company has elected to be treated for tax purposes as a RIC under the Code and, among other things, intends to make the requisite distributions to its stockholders which will relieve the Company from federal income taxes. Therefore, no provision has been recorded for federal income taxes, except as related to the Taxable Blockers when applicable.

In order to qualify as a RIC, among other requirements, the Company is required to timely distribute to its stockholders at least 90.0% of its investment company taxable income, as defined by the Code, for each fiscal tax year. The Company will be subject to a nondeductible U.S. federal excise tax of 4.0% on undistributed income if it does not distribute at least 98.0% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31.

Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year dividend distributions into the next tax year and pay a 4.0% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

In accordance with certain applicable U.S. Treasury regulations and private letter rulings issued by the Internal Revenue Service (“IRS”), a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder may elect to receive his or her entire distribution in either cash or stock of the RIC subject to a limitation on the aggregate amount of cash to be distributed to all stockholders, which limitation must be at least 20.0% of the aggregate declared distribution. If too many stockholders elect to receive cash, each stockholder electing to receive cash will receive a pro rata amount of cash (with the balance of the distribution paid in stock). In no event will any stockholder, electing to receive cash, receive less than 20.0% of his or her entire distribution in cash. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock.

The Company may utilize wholly-owned holding companies taxed under Subchapter C of the Code or tax blockers, when making equity investments in portfolio companies taxed as pass-through entities to meet its source-of-income requirements as a RIC. Taxable Blockers are consolidated in the Company’s U.S. GAAP financial statements and may result in current and deferred federal and state income tax expense with respect to income derived from those investments. Such income, net of applicable income taxes, is not included in the Company’s tax-basis net investment income until distributed by the Taxable Blocker, which may result in timing and character differences between the Company’s U.S. GAAP and tax-basis net investment income and realized gains and losses. Income tax expense or benefit from Taxable Blockers related to net investment income are included in total operating expenses, while any expense or benefit related to federal or state income tax originated for capital gains and losses are included together with the applicable net realized or unrealized gain or loss line item. Deferred tax assets of the Taxable Blockers are reduced by a valuation allowance when, in the opinion of management, it is more-likely than-not that some portion or all of the deferred tax assets will not be realized.

FASB ASC Topic 740, Income Taxes, (“ASC 740”), provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet a “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense on the consolidated statements of operations. During the fiscal year ended February 29, 2020, the Company did not incur any interest or penalties. Although we file federal and state tax returns, our major tax jurisdiction is federal. The 2017, 2018 and 2019 federal tax years for the Company remain subject to examination by the IRS. As of August 31, 2020 and February 29, 2020, there were no uncertain tax positions. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.

25

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 2. Summary of Significant Accounting Policies (cont.)

Dividends

Dividends to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by the board of directors. Net realized capital gains, if any, are generally distributed at least annually, although we may decide to retain such capital gains for reinvestment.

We have adopted a dividend reinvestment plan (“DRIP”) that provides for reinvestment of our dividend distributions on behalf of our stockholders unless a stockholder elects to receive cash. As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not “opted out” of the DRIP by the dividend record date will have their cash dividends automatically reinvested into additional shares of our common stock, rather than receiving the cash dividends. We have 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.

Capital Gains Incentive Fee

The Company records an expense accrual on the consolidated statements of operations, relating to the capital gains incentive fee payable on the consolidated statements of assets and liabilities, by the Company to the Manager when the net realized and unrealized gain on its investments exceed all net realized and unrealized capital losses on its investments given the fact that a capital gains incentive fee would be owed to the Manager if the Company were to liquidate its investment portfolio at such time.

The actual incentive fee payable to the Company’s Manager related to capital gains will be determined and payable in arrears at the end of each fiscal year and only reflected those realized capital gains net of realized and unrealized losses for the period.

New Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying 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 does not believe this optional guidance has a material impact on the Company’s consolidated financial statements and disclosures.

SEC Rule 12b-2 Update

In March 2020, the SEC adopted a final rule under SEC Release No. 34-88365 (the “Final Rule”), amending the accelerated filer and large accelerated filer definitions in Exchange Act Rule 12b-2. The amendments include a provision under which a BDC will be excluded from the “accelerated filer” and “large accelerated filer” definitions if the BDC has (1) a public float of $75 million or more, but less than $700 million, and (2) has annual investment income of less than $100 million. In addition, BDCs are subject to the same transition provisions for accelerated filer and large accelerated filer status as other issuers, but instead substituting investment income for revenue. The amendments will reduce the number of issuers required to comply with the auditor attestation on the internal control over financial reporting requirement provided under Section 404(b) of the Sarbanes-Oxley Act of 2002. The Final Rule applies to annual report filings due on or after April 27, 2020. The Company is currently assessing this Final Rule, but believes it most likely will no longer be an accelerated filer.

Risk Management

In the ordinary course of its business, the Company manages a variety of risks, including market risk and credit risk. Market risk is the risk of potential adverse changes to the value of investments because of changes in market conditions such as interest rate movements and volatility in investment prices.

26

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 2. Summary of Significant Accounting Policies (cont.)

Credit risk is the risk of default or non-performance by portfolio companies, equivalent to the investment’s carrying amount. The Company is also exposed to credit risk related to maintaining all of its cash and cash equivalents, including those in reserve accounts, at a major financial institution and credit risk related to any of its derivative counterparties.

The Company has investments in lower rated and comparable quality unrated high yield bonds and bank loans. Investments in high yield investments are accompanied by a greater degree of credit risk. The risk of loss due to default by the issuer is significantly greater for holders of high yield securities, because such investments are generally unsecured and are often subordinated to other creditors of the issuer.

Note 3. Investments

As noted above, the Company values all investments in accordance with ASC 820. ASC 820 requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. As defined in ASC 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.

ASC 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 quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

•        Level 2 — Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information. Investments which are generally included in this category include illiquid debt securities and less liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.

•        Level 3 — Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs may be based on the Company’s own assumptions about how market participants would price the asset or liability or may use Level 2 inputs, as adjusted, to reflect specific investment attributes relative to a broader market assumption. These inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data for comparable performance or valuation measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level 3 if any significant data point that is not also market observable (private company earnings, cash flows, etc.) is used in the valuation methodology.

In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the board of directors that is consistent with ASC 820 and the 1940 Act (see Note 2). Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value.

27

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 3. Investments (cont.)

The following table presents fair value measurements of investments, by major class, as of August 31, 2020 (dollars in thousands), according to the fair value hierarchy:

 

Fair Value Measurements

  

Level 1

 

Level 2

 

Level 3

 

Total

First lien term loans

 

$

 

$

 

$

389,912

 

$

389,912

Second lien term loans

 

 

 

 

 

 

50,295

 

 

50,295

Unsecured term loans

 

 

 

 

 

 

6,522

 

 

6,522

Structured finance securities

 

 

 

 

 

 

31,096

 

 

31,096

Equity interests

 

 

 

 

 

 

30,292

 

 

30,292

Total

 

$

 

$

 

$

508,117

 

$

508,117

The following table presents fair value measurements of investments, by major class, as of February 29, 2020 (dollars in thousands), according to the fair value hierarchy:

 

Fair Value Measurements

  

Level 1   

 

Level 2

 

Level 3  

 

Total

First lien term loans

 

$

 

$

 

$

346,233

 

$

346,233

Second lien term loans

 

 

 

 

 

 

73,570

 

 

73,570

Unsecured term loans

 

 

 

 

 

 

4,346

 

 

4,346

Structured finance securities

 

 

 

 

 

 

32,470

 

 

32,470

Equity interests

 

 

 

 

 

 

29,013

 

 

29,013

Total

 

$

 

$

 

$

485,632

 

$

485,632

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended August 31, 2020 (dollars in thousands):

 

First lien
term loans

 

Second lien
term loans

 

Unsecured
term loans

 

Structured
finance
securities

 

Equity
interests

 

Total

Balance as of February 29, 2020

 

$

346,233

 

 

$

73,570

 

 

$

4,346

 

 

$

32,470

 

 

$

29,013

 

 

$

485,632

 

Payment-in-kind and other adjustments to cost

 

 

408

 

 

 

943

 

 

 

 

 

 

(2,197

)

 

 

 

 

 

(846

)

Net accretion of discount on investments

 

 

431

 

 

 

175

 

 

 

 

 

 

 

 

 

 

 

 

606

 

Net change in unrealized appreciation (depreciation) on investments

 

 

(12,446

)

 

 

(1,393

)

 

 

(324

)

 

 

823

 

 

 

(2,030

)

 

 

(15,370

)

Purchases

 

 

64,899

 

 

 

 

 

 

2,500

 

 

 

 

 

 

3,309

 

 

 

70,708

 

Sales and repayments

 

 

(9,633

)

 

 

(23,000

)

 

 

 

 

 

 

 

 

 

 

 

(32,633

)

Net realized gain (loss) from investments

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

 

Balance as of August 31, 2020

 

$

389,912

 

 

$

50,295

 

 

$

6,522

 

 

$

31,096

 

 

$

30,292

 

 

$

508,117

 

Net change in unrealized appreciation (depreciation) for the period relating to those Level 3 assets that were still held by the Company at the end of the period

 

$

(12,211

)

 

$

(1,345

)

 

$

(324

)

 

$

822

 

 

$

(2,028

)

 

$

(15,086

)

28

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 3. Investments (cont.)

Purchases and other adjustments to cost include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK interests.

Sales and repayments represent net proceeds received from investments sold, and principal paydowns received during the period.

Transfers and restructurings, if any, are recognized at the beginning of the period in which they occur. There were no transfers or restructures in or out of Levels 1, 2 or 3 during the six months ended August 31, 2020.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended August 31, 2019 (dollars in thousands):

 

First lien term loans

 

Second lien term loans

 

Unsecured term loans

 

Structured finance securities

 

Equity interests

 

Total

Balance as of February 28, 2019

 

$

202,846

 

 

$

125,786

 

 

$

2,100

 

 

$

35,328

 

 

$

35,960

 

 

$

402,020

 

Payment-in-kind and other adjustments to cost

 

 

309

 

 

 

1,795

 

 

 

 

 

 

2,040

 

 

 

(1,066

)

 

 

3,078

 

Net accretion of discount on investments

 

 

257

 

 

 

224

 

 

 

 

 

 

 

 

 

 

 

 

481

 

Net change in unrealized appreciation (depreciation) on investments

 

 

(175

)

 

 

225

 

 

 

(26

)

 

 

(1,474

)

 

 

6,897

 

 

 

5,447

 

Purchases

 

 

116,631

 

 

 

 

 

 

 

 

 

 

 

 

3,275

 

 

 

119,906

 

Sales and repayments

 

 

(15,669

)

 

 

(28,000

)

 

 

 

 

 

 

 

 

(2,253

)

 

 

(45,922

)

Net realized gain (loss) from investments

 

 

60

 

 

 

 

 

 

 

 

 

 

 

 

1,810

 

 

 

1,870

 

Balance as of August 31, 2019

 

$

304,259

 

 

$

100,030

 

 

$

2,074

 

 

$

35,894

 

 

$

44,623

 

 

$

486,880

 

Net change in unrealized appreciation (depreciation) for the year relating to those
Level 3 assets that were still held by the Company at the end of the period

 

$

(175

)

 

$

71

 

 

$

(26

)

 

$

(1,473

)

 

$

3,726

 

 

$

2,123

 

Transfers and restructurings, if any, are recognized at the beginning of the period in which they occur. There were no transfers or restructures in or out of Levels 1, 2 or 3 during the six months ended August 31, 2020.

29

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 3. Investments (cont.)

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets as of August 31, 2020 were as follows (dollars in thousands):

 

Fair Value

 

Valuation Technique

 

Unobservable Input

 

Range

 

Weighted Average*

First lien term loans

 

$

389,912

 

Market Comparables

 

Market Yield (%)

 

7.0% – 38.1%

 

11.3%

  

 

    

EBITDA Multiples (x)

 

0.0x

 

0.0x

Second lien term loans

 

 

50,295

 

Market Comparables

 

Market Yield (%)

 

11.1% – 46.6%

 

16.2%

  

 

    

EBITDA Multiples (x)

 

5.0x

 

5.0x

Unsecured term loans

 

 

6,522

 

Market Comparables

 

Market Yield (%)

 

15.8% – 25.1%

 

18.5%

  

 

    

EBITDA Multiples (x)

 

5.2x

 

5.2x

Structured finance securities

 

 

31,096

 

Discounted Cash Flow

 

Discount Rate (%)

 

11.75% – 22.00%

 

19.2%

  

 

    

Recovery Rate (%)

 

35% – 70%

 

70.0%

  

 

    

Prepayment Rate (%)

 

10.0%

 

10.0%

Equity interests

 

 

30,292

 

Market Comparables

 

EBITDA Multiples (x)

 

4.0x – 14.0x

 

7.0x

  

 

    

Revenue Multiples (x)

 

1.0x – 38.3x

 

6.7x

Total

 

$

508,117

        

____________

*        The weighted average in the table above is calculated based on each investment’s fair value weighting, using the applicable unobservable input.

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets as of February 29, 2020 were as follows (dollars in thousands):

 

Fair Value

 

Valuation Technique

 

Unobservable Input

 

Range

 

Weighted Average*

First lien term loans

 

$

346,233

 

Market Comparables

 

Market Yield (%)

 

7.8% – 12.5%

 

9.7%

  

 

    

EBITDA Multiples (x)

 

0.0x

 

0.0x

Second lien term loans

 

 

73,570

 

Market Comparables

 

Market Yield (%)

 

9.5% – 85.1%

 

13.0%

  

 

    

EBITDA Multiples (x)

 

5.0x

 

5.0x

Unsecured term loans

 

 

4,346

 

Market Comparables

 

Market Yield (%)

 

18.3% – 21.3%

 

19.8%

  

 

    

EBITDA Multiples (x)

 

5.2x

 

5.2x

Structured finance securities

 

 

32,470

 

Discounted Cash Flow

 

Discount Rate (%)

 

9.25% – 16.00%

 

14.2%

  

 

    

Recovery Rate (%)

 

35.0% – 70.0%

 

70.0%

  

 

    

Prepayment Rate (%)

 

20.0%

 

20.0%

Equity interests

 

 

29,013

 

Market Comparables

 

EBITDA Multiples (x)

 

4.0x – 14.0x

 

6.5x

  

 

    

Revenue Multiples (x)

 

1.0x – 40.7x

 

7.3x

Total

 

$

485,632

        

____________

*        The weighted average in the table above is calculated based on each investment’s fair value weighting, using the applicable unobservable input.

For investments utilizing a market comparables valuation technique, a significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the earnings before interest, tax, depreciation and amortization (“EBITDA”) or revenue valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement. For

30

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 3. Investments (cont.)

investments utilizing a discounted cash flow valuation technique, a significant increase (decrease) in the discount rate and prepayment rate, in isolation, would result in a significantly lower (higher) fair value measurement while a significant increase (decrease) in recovery rate, in isolation, would result in a significantly higher (lower) fair value measurement. For investments utilizing a market quote in deriving a value, a significant increase (decrease) in the market quote, in isolation, would result in a significantly higher (lower) fair value measurement.

The composition of our investments as of August 31, 2020 at amortized cost and fair value was as follows (dollars in thousands):

 

Investments at
Amortized Cost

 

Amortized Cost
Percentage of
Total Portfolio

 

Investments at
Fair Value

 

Fair Value
Percentage of
Total Portfolio

First lien term loans

 

$

399,226

 

76.2

%

 

$

389,912

 

76.7

%

Second lien term loans

 

 

53,596

 

10.2

 

 

 

50,295

 

9.9

 

Unsecured term loans

 

 

7,261

 

1.4

 

 

 

6,522

 

1.3

 

Structured finance securities

 

 

31,323

 

6.0

 

 

 

31,096

 

6.1

 

Equity interests

 

 

32,748

 

6.2

 

 

 

30,292

 

6.0

 

Total

 

$

524,154

 

100.0

%

 

$

508,117

 

100.0

%

The composition of our investments as of February 29, 2020 at amortized cost and fair value was as follows (dollars in thousands):

 

Investments at
Amortized Cost

 

Amortized Cost
Percentage of
Total Portfolio

 

Investments at
Fair Value

 

Fair Value
Percentage of
Total Portfolio

First lien term loans

 

$

343,100

 

70.5

%

 

$

346,233

 

71.3

%

Second lien term loans

 

 

75,478

 

15.5

 

 

 

73,570

 

15.1

 

Unsecured term loans

 

 

4,761

 

1.0

 

 

 

4,346

 

0.9

 

Structured finance securities

 

 

33,521

 

6.9

 

 

 

32,470

 

6.7

 

Equity interests

 

 

29,439

 

6.1

 

 

 

29,013

 

6.0

 

Total

 

$

486,299

 

100.0

%

 

$

485,632

 

100.0

%

For loans and debt securities for which market quotations are not available, we determine their fair value based on third party indicative broker quotes, where available, or the assumptions that a hypothetical market participant would use to value the security in a current hypothetical sale using a market yield valuation methodology. In applying the market yield valuation methodology, we determine the fair value based on such factors as market participant assumptions including synthetic credit ratings, estimated remaining life, current market yield and interest rate spreads of similar securities as of the measurement date. If, in our judgment, the market yield methodology is not sufficient or appropriate, we may use additional methodologies such as an asset liquidation or expected recovery model.

For equity securities of portfolio companies and partnership interests, we determine the fair value based on the market approach with value then attributed to equity or equity like securities using the enterprise value waterfall valuation methodology. Under the enterprise value waterfall valuation methodology, we determine the enterprise fair value of the portfolio company and then waterfall the enterprise value over the portfolio company’s securities in order of their preference relative to one another. To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional market valuation methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value. The methodologies for performing investments may be based on, among other things: valuations of comparable public companies, recent sales of private and public comparable companies, discounting the forecasted cash flows of the portfolio company, third party valuations of the portfolio company, considering offers from third parties to buy the company, estimating the value to potential strategic buyers and considering the value of recent investments in the equity securities of the portfolio company. For

31

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 3. Investments (cont.)

non-performing investments, we may estimate the liquidation or collateral value of the portfolio company’s assets and liabilities. We also take into account historical and anticipated financial results.

Our investment in Saratoga CLO is carried at fair value, which is based on a discounted cash flow model that utilizes prepayment, re-investment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow, and comparable yields for equity interests in collateralized loan obligation funds similar to Saratoga CLO, when available, as determined by our Manager and recommended to our board of directors. Specifically, we use Intex cash flow models, or an appropriate substitute, to form the basis for the valuation of our investment in Saratoga CLO. The models use a set of assumptions including projected default rates, recovery rates, reinvestment rates and prepayment rates in order to arrive at estimated valuations. The assumptions are based on available market data and projections provided by third parties as well as management estimates. In connection with the refinancing of the Saratoga CLO liabilities, we ran Intex models based on assumptions about the refinanced Saratoga CLO’s structure, including capital structure, cost of liabilities and reinvestment period. We use the output from the Intex models (i.e., the estimated cash flows) to perform a discounted cash flow analysis on expected future cash flows to determine a valuation for our investment in Saratoga CLO at August 31, 2020. The inputs at August 31, 2020 for the valuation model include:

•        Default rate: 2.0%

•        Recovery rate: 35% – 70%

•        Discount rate: 22.0%

•        Prepayment rate: 10.0%

•        Reinvestment rate / price: L+375bps / $97.00

Investment Concentration

Set forth is a brief description of each portfolio company in which the fair value of our investment represents greater than 5% of our total assets as of August 31, 2020.

CLEO Communications Holding, LLC

CLEO Communications Holding, LLC (“Cleo”) is a provider of technology enabled data communication and integration platform for daily business transactions. Cleo’s platform allows for the automation of business-to-business transaction information for customers operating in the retail, manufacturing, logistics and the healthcare verticals. The platform also allows for internal application-to-application communication, allowing customers’ core enterprise software applications to easily share and transfer data.

Destiny Solutions Inc.

Destiny Solutions provides a SaaS-based student lifecycle management (“SLM”) software solution used by higher education institutions to manage their continuing education (“CE”) and non-degree educational programs for “non-traditional” students who fall outside of the “traditional” student profile. Traditional students are full-time students working toward an undergraduate, graduate, or doctorate degree. Destiny’s software acts as the ERP, CRM, e-commerce platform, and student information management system for non-traditional student programs.

Saratoga Investment Corp. CLO 2013-1, Ltd.

The Company has a collateral management agreement with Saratoga CLO, pursuant to which the Company acts as its collateral manager. The Saratoga CLO invests primarily in senior secured first lien term loans. The

32

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 3. Investments (cont.)

Company also holds an investment in the subordinated note and Class F-R-2 and G-R-2 notes of the Saratoga CLO. In addition, the Company entered into an unsecured loan agreement with CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO, in order to provide capital necessary to support warehouse activities.

Note 4. Investment in Saratoga Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”)

On January 22, 2008, the Company entered into a collateral management agreement with Saratoga CLO, pursuant to which the Company acts as its collateral manager. The Saratoga CLO was initially refinanced in October 2013 with its reinvestment period extended to October 2016. On November 15, 2016, the Company completed a second refinancing of the Saratoga CLO with its reinvestment period extended to October 2018.

On December 14, 2018, the Company completed a third refinancing and upsize of the Saratoga CLO (the “2013-1 Reset CLO Notes”). The third Saratoga CLO refinancing, among other things, extended its reinvestment period to January 2021, and extended its legal maturity date to January 2030. A non-call period ending January 2020 was also added. Following this refinancing, the Saratoga CLO portfolio increased from approximately $300.0 million in aggregate principal amount to approximately $500.0 million of predominantly senior secured first lien term loans. In addition to refinancing its liabilities, the Company invested an additional $13.8 million in all of the newly issued subordinated notes of the Saratoga CLO and also purchased $2.5 million in aggregate principal amount of the Class F-R-2 and $7.5 million aggregate principal amount of the Class G-R-2 notes tranches at par, with a coupon of 3M USD LIBOR plus 8.75% and 3M USD LIBOR plus 10.00%, respectively. As part of this refinancing, the Company also redeemed our existing $4.5 million aggregate amount of the Class F notes tranche at par.

On February 11, 2020, the Company entered into an unsecured loan agreement (“CLO 2013-1 Warehouse 2 Loan”) with CLO 2013-1 Warehouse 2, a wholly-owned subsidiary of Saratoga CLO, pursuant to which CLO 2013-1 Warehouse 2 may borrow from time to time up to $20.0 million from the Company in order to provide capital necessary to support warehouse activities. The CLO 2013-1 Warehouse 2 Loan, which expires on August 20, 2021, bears interest at an annual rate of 3M USD LIBOR + 7.5%. As of August 31, 2020, the aggregate principal amount and fair value of the Company’s investment in the CLO 2013-1 Warehouse 2 Loan was $5.0 million and $4.6 million, respectively.

The Saratoga CLO remains 100.0% owned and managed by the Company. We receive a base management fee of 0.10% per annum and a subordinated management fee of 0.40% per annum of the outstanding principal amount of Saratoga CLO’s assets, paid quarterly to the extent of available proceeds. Following the third refinancing and the issuance of the 2013-1 Reset CLO Notes on December 14, 2018, we are no longer entitled to an incentive management fee equal to 20.0% of excess cash flow to the extent the Saratoga CLO subordinated notes receive an internal rate of return paid in cash equal to or greater than 12.0%.

For the three months ended August 31, 2020 and August 31, 2019, we accrued management fee income of $0.6 million and $0.6 million, respectively, and interest income of $0.7 million and $1.1 million, respectively, from the Saratoga CLO.

For the six months ended August 31, 2020 and August 31, 2019, we accrued management fee income of $1.3 million and $1.3 million, respectively, and interest income of $1.4 million and $2.2 million, respectively, from the Saratoga CLO.

As of August 31, 2020, the aggregate principal amounts of the Company’s investments in the subordinated notes, Class F-R-2 Notes and Class G-R-2 Notes of the Saratoga CLO was $69.5 million, $2.5 million and $7.5 million, respectively, which had a corresponding fair value of $21.6 million, $2.3 million and $7.2 million, respectively. The Company determines the fair value of its investment in the subordinated notes of Saratoga CLO based on the present value of the projected future cash flows of the subordinated notes over the life of Saratoga

33

SARATOGA INVESTMENT CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2020

(unaudited)

Note 4. Investment in Saratoga Investment Corp. CLO 2013-1, Ltd. (“Saratoga CLO”) (cont.)

CLO. As of August 31, 2020, Saratoga CLO had investments with a principal balance of $521.6 million and a weighted average spread over LIBOR of 3.9% and had debt with a principal balance of $489.2 million with a weighted average spread over LIBOR of 2.2%. As a result, Saratoga CLO earns a “spread” between the interest income it receives on its investments and the interest expense it pays on its debt and other operating expenses, which is distributed quarterly to the Company as the holder of its subordinated notes. As of August 31, 2020, the present value of the projected future cash flows of the subordinated notes was approximately $ 22.0 million, using a 22.0% discount rate. The Company’s total investment in the subordinate notes of Saratoga CLO is $43.8 million, which is comprised of the initial investment of $30.0 million in January 2008 plus the additional investment of $13.8 million in December 2018, and to date the Company has since received distributions of $63.9 million, management fees of $23.4 million and incentive fees of $1.2 million. In conjunction with the third refinancing of the 2013-1 Reset CLO Notes on December 14, 2018, the Company is no longer entitled to receive an incentive management fee from Saratoga CLO.

As of February 29, 2020, the Company determined that the fair value of its investment in the subordinated notes of Saratoga CLO was $22.6 million. The Company determines the fair value of its investment in the subordinated notes of Saratoga CLO based on the present value of the projected future cash flows of the subordinated notes over the life of Saratoga CLO. As of February 29, 2020, the fair value of its investment in the Class F-R-2 Notes and G-R-2 Notes of Saratoga CLO was $2.5 million and $7.4 million, respectively. As of February 29, 2020, Saratoga CLO had investments with a principal balance of $528.4 million and a weighted average spread over LIBOR of 4.0% and had debt with a principal balance of $475.1 million with a weighted average spread over LIBOR of 2.2%. As of February 29, 2020, the present value of the projected future cash flows of the subordinated notes was approximately $22.9 million, using a 16.0% discount rate.

Below is certain financial information from the separate financial statements of Saratoga CLO as of August 31, 2020 (unaudited) and February 29, 2020 and for the three and six months ended August 31, 2020 (unaudited) and August 31, 2019 (unaudited).

34

Saratoga Investment Corp. CLO 2013-1, Ltd.

Statements of Assets and Liabilities

 

August 31,
2020

 

February 29,
2020

  

(unaudited)

  

ASSETS

 

 

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

 

 

 

Loans at fair value (amortized cost of $513,438,299 and $523,438,207, respectively)

 

$

486,024,173

 

 

$

500,999,677

 

Equities at fair value (amortized cost of $2,708,549 and $2,566,752, respectively)

 

 

 

 

 

257

 

Total investments at fair value (amortized cost of $516,146,848 and $526,004,959, respectively)

 

 

486,024,173

 

 

 

500,999,934

 

Cash and cash equivalents

 

 

5,108,193

 

 

 

9,081,041

 

Receivable from open trades

 

 

5,146,467

 

 

 

10,419,700

 

Interest receivable (net of reserve of $370,149 and $307,705, respectively)

 

 

1,645,239

 

 

 

1,294,523

 

Prepaid expenses and other assets

 

 

28,898

 

 

 

84,526

 

Total assets

 

$

497,952,970

 

 

$

521,879,724

 

  

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Interest payable

 

$

1,500,259

 

 

$

2,090,188

 

Payable from open trades

 

 

9,852,500

 

 

 

36,673,471

 

Accrued base management fee

 

 

56,825

 

 

 

54,441

 

Accrued subordinated management fee

 

 

227,298

 

 

 

217,766

 

Accounts payable and accrued expenses

 

 

69,290

 

 

 

81,822

 

Loan payable, related party

 

 

5,000,000

 

 

 

2,500,000

 

Loan payable, third party

 

 

14,161,707

 

 

 

2,600,000

 

Saratoga Investment Corp. CLO 2013-1, Ltd. Notes:

 

 

 

 

 

 

 

 

Class A-1FL-R-2 Senior Secured Floating Rate Notes

 

 

255,000,000

 

 

 

255,000,000

 

Class A-1FXD-R-2 Senior Secured Fixed Rate Notes

 

 

25,000,000

 

 

 

25,000,000

 

Class-A-2-R-2 Senior Secured Floating Rate Notes

 

 

40,000,000

 

 

 

40,000,000

 

Class B-R-2 Senior Secured Floating Rate Notes

 

 

59,500,000

 

 

 

59,500,000

 

Class C-R-2 Deferrable Mezzanine Floating Rate Notes

 

 

22,500,000

 

 

 

22,500,000

 

Discount on Class C-R-2 Notes

 

 

(502,993

)

 

 

(530,448

)

Class D-R-2 Deferrable Mezzanine Floating Rate Notes

 

 

31,000,000

 

 

 

31,000,000

 

Discount on Class D-R-2 Notes

 

 

(915,299

)

 

 

(965,259

)

Class E-1-R-2 Deferrable Mezzanine Floating Rate Notes

 

 

27,000,000

 

 

 

27,000,000

 

Class E-2-R-2 Deferrable Mezzanine Fixed Rate Notes

 

 

 

 

 

 

Class F-R-2 Deferrable Junior Floating Rate Notes

 

 

2,500,000

 

 

 

2,500,000

 

Class G-R-2 Deferrable Junior Floating Rate Notes

 

 

7,500,000

 

 

 

7,500,000

 

Deferred debt financing costs

 

 

(2,222,411

)

 

 

(2,340,764

)

Subordinated Notes

 

 

69,500,000

 

 

 

69,500,000

 

Discount on Subordinated Notes

 

 

(21,714,099

)

 

 

(22,899,324

)

Total liabilities

 

$

545,013,077

 

 

$

556,981,893

 

NET ASSETS

 

 

 

 

 

 

 

 

Ordinary equity, par value $1.00, 250 ordinary shares authorized, 250 and 250 common shares issued and outstanding, respectively

 

$

250

 

 

$

250

 

Total distributable earnings (loss)

 

 

(47,060,357

)

 

 

(35,102,419

)

Total net assets

 

 

(47,060,107

)

 

 

(35,102,169

)

Total liabilities and net assets

 

$

497,952,970

 

 

$

521,879,724

 

35

Saratoga Investment Corp. CLO 2013-1, Ltd.

Statements of Operations

(unaudited)

 

For the three months ended

 

For the six months ended

  

August 31,
2020

 

August 31,
2019

 

August 31,
2020

 

August 31,
2019

INVESTMENT INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest from investments

 

$

6,437,801.0

 

 

 

8,304,492

 

 

$

13,651,290

 

 

$

16,508,199

 

Interest from cash and cash equivalents

 

 

214

 

 

 

26,440

 

 

 

3,501

 

 

 

33,803

 

Other income

 

 

184,969

 

 

 

40,845

 

 

 

294,610

 

 

 

180,968

 

Total investment income

 

 

6,622,984

 

 

 

8,371,777

 

 

 

13,949,401

 

 

 

16,722,970

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and debt financing expenses

 

 

5,769,357

 

 

 

6,748,508

 

 

 

13,057,925

 

 

 

13,167,316

 

Base management fee

 

 

126,481

 

 

 

125,949

 

 

 

252,002

 

 

 

251,852

 

Subordinated management fee

 

 

505,921

 

 

 

503,796

 

 

 

1,008,006

 

 

 

1,007,409

 

Professional fees

 

 

94,782

 

 

 

88,204

 

 

 

183,272

 

 

 

212,712

 

Trustee expenses

 

 

53,876

 

 

 

118,136

 

 

 

105,734

 

 

 

138,015

 

Other expense

 

 

12,228

 

 

 

11,196

 

 

 

40,280

 

 

 

43,734

 

Total expenses

 

 

6,562,645

 

 

 

7,595,789

 

 

 

14,647,219

 

 

 

14,821,038

 

NET INVESTMENT INCOME (LOSS)

 

 

60,339

 

 

 

775,988

 

 

 

(697,818

)

 

 

1,901,932

 

REALIZED AND UNREALIZED LOSS ON INVESTMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized loss from investments

 

 

(4,338,586

)

 

 

(1,218,364

)

 

 

(6,142,470

)

 

 

(2,162,298

)

Net change in unrealized depreciation on investments

 

 

26,457,779

 

 

 

(2,174,060

)

 

 

(5,117,650

)

 

 

(4,380,055

)

Net realized and unrealized gain (loss) on investments

 

 

22,119,193.00

 

 

 

(3,392,424

)

 

 

(11,260,120

)

 

 

(6,542,353

)

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

$

22,179,532

 

 

$

(2,616,436

)

 

$

(11,957,938

)

 

$

(4,640,421

)

36

Saratoga Investment Corp. CLO 2013-1, Ltd.

Schedule of Investments

August 31, 2020

(unaudited)

Issuer Name

 

Industry

 

Asset Name

 

Asset
Type

 

Reference
Rate/Spread

 

LIBOR
Floor

 

Current
Rate
(All In)

 

Maturity
Date

 

Principal/
Number of Shares

 

Cost

 

Fair Value

Education Management II LLC(b)

 

Services: Consumer

 

Education Management II A-2 Preferred Shares

 

Equity

 

 

0.00

%

 

0.00

%

 

0.00

%

 

 

 

18,975

 

$

1,897,538

 

$

Education Management II LLC(b)

 

Services: Consumer

 

Education Management II A-1 Preferred Shares

 

Equity

 

 

0.00

%

 

0.00

%

 

0.00

%

 

 

 

6,692

 

 

669,214

 

 

McDermott International (Americas) Inc.

 

Construction & Building

 

McDermott International - Class A C/S (07/20)

 

Equity

 

 

0.00

%

 

0.00

%

 

0.00

%

 

 

 

141,797

 

 

141,797

 

 

1011778 B.C. Unlimited Liability Company

 

Beverage Food & Tobacco

 

Term Loan B4

 

Loan

 

1M USD LIBOR+

 

1.75

%

 

0.00

%

 

1.91

%

 

11/19/2026

 

$

1,492,500

 

 

1,451,681

 

 

1,434,666

ABB Con-Cise Optical Group LLC

 

Consumer goods: Non-durable

 

Term Loan B

 

Loan

 

6M USD LIBOR+

 

5.00

%

 

1.00

%

 

6.00

%

 

6/15/2023

 

 

2,071,167

 

 

2,054,288

 

 

1,734,603

ADMI Corp.

 

Services: Consumer

 

Term Loan B

 

Loan

 

1M USD LIBOR+

 

2.75

%

 

0.00

%

 

2.91

%

 

4/30/2025

 

 

1,960,276

 

 

1,953,089

 

 

1,885,550

Advantage Sales & Marketing Inc.

 

Services: Business

 

First Lien Term Loan

 

Loan

 

3M USD LIBOR+

 

3.25

%

 

1.00

%

 

4.25

%

 

7/23/2021

 

 

2,358,618

 

 

2,357,934

 

 

2,240,687

Advantage Sales & Marketing Inc.

 

Services: Business

 

Term Loan B Incremental

 

Loan

 

3M USD LIBOR+

 

3.25

%

 

1.00

%

 

4.25

%

 

7/23/2021

 

 

487,437

 

 

484,632

 

 

461,847

Advisor Group Holdings Inc

 

Banking Finance Insurance & Real Estate

 

Term Loan (7/19)

 

Loan

 

1M USD LIBOR+

 

5.00

%

 

0.00

%

 

5.16

%

 

7/31/2026

 

 

497,500

 

 

496,345

 

 

480,709

Aegis Toxicology Sciences Corporation

 

Healthcare & Pharmaceuticals

 

Term Loan

 

Loan

 

3M USD LIBOR+

 

5.50

%

 

1.00

%

 

6.50

%

 

5/9/2025

 

 

3,930,000

 

 

3,902,756

 

 

3,178,388

Agiliti Health Inc.

 

Healthcare & Pharmaceuticals

 

Term Loan (1/19)

 

Loan

 

1M USD LIBOR+

 

3.00

%

 

0.00

%

 

3.16

%

 

1/5/2026

 

 

493,750

 

 

493,750

 

 

482,641

AI Convoy (Luxembourg) S.a.r.l.

 

Aerospace & Defense

 

Term Loan

 

Loan

 

6M USD LIBOR+

 

3.50

%

 

1.00

%

 

4.50

%

 

1/15/2027

 

 

1,496,250

 

 

1,489,146

 

 

1,458,844

AI Mistral (Luxembourg) Subco Sarl

 

High Tech Industries

 

Term Loan

 

Loan

 

1M USD LIBOR+

 

3.00

%

 

1.00

%

 

4.00

%

 

3/11/2024

 

 

483,750

 

 

483,750

 

 

357,975

AIS Holdco LLC

 

Services: Business

 

Term Loan

 

Loan

 

3M USD LIBOR+

 

5.00

%

 

0.00

%

 

5.24

%

 

8/15/2025

 

 

2,390,625

 

 

2,381,617

 

 

2,079,844

Alchemy Copyrights LLC

 

Media: Diversified & Production

 

Term Loan B

 

Loan

 

Prime+

 

2.25

%

 

0.75

%

 

3.00

%

 

8/14/2027

 

 

500,000

 

 

496,270

 

 

497,500

Alchemy US Holdco 1 LLC

 

Metals & Mining

 

Term Loan

 

Loan

 

1M USD LIBOR+

 

5.50

%

 

0.00

%

 

5.66

%

 

10/10/2025

 

 

1,925,000

 

 

1,902,423

 

 

1,780,625

Alion Science and Technology Corporation

 

Aerospace & Defense

 

Term Loan 7/20

 

Loan

 

1M USD LIBOR+

 

3.75

%

 

1.00

%

 

4.75

%

 

7/23/2024

 

 

4,000,000

 

 

3,982,197

 

 

4,013,320

Allen Media LLC

 

Media: Advertising Printing & Publishing

 

Term Loan B (1/20)

 

Loan

 

3M USD LIBOR+

 

5.50

%

 

0.00

%

 

5.74

%

 

2/10/2027

 

 

2,992,027

 

 

2,978,282

 

 

2,876,086

Altisource S.a r.l.

 

Banking Finance Insurance & Real Estate

 

Term Loan B (03/18)

 

Loan

 

3M USD LIBOR+

 

4.00

%

 

1.00

%

 

5.00

%

 

4/3/2024

 

 

1,454,005

 

 

1,447,377

 

 

1,066,265

Altra Industrial Motion Corp.

 

Capital Equipment

 

Term Loan

 

Loan

 

1M USD LIBOR+

 

2.00

%

 

0.00

%

 

2.16

%

 

10/1/2025

 

 

1,686,566

 

 

1,683,362

 

 

1,650,204

37

Saratoga Investment Corp. CLO 2013-1, Ltd.

Schedule of Investments — (continued)

August 31, 2020

(unaudited)

Issuer Name

 

Industry

 

Asset Name

 

Asset
Type

 

Reference
Rate/Spread

 

LIBOR
Floor

 

Current
Rate
(All In)

 

Maturity
Date

 

Principal/
Number of Shares

 

Cost

 

Fair Value

American Greetings Corporation

 

Media: Advertising Printing & Publishing

 

Term Loan

 

Loan

 

1M USD LIBOR+

 

4.50

%

 

1.00

%

 

5.50

%

 

4/5/2024

 

4,693,527

 

$

4,690,468

 

$

4,517,520

American Residential Services LLC

 

Services: Consumer

 

Term Loan B

 

Loan

 

1M USD LIBOR+

 

4.00

%

 

1.00

%

 

5.00

%

 

6/30/2022

 

3,905,209

 

 

3,897,455

 

 

3,983,313

Amerilife Holdings LLC

 

Banking Finance Insurance & Real Estate

 

Unfunded Commitment

 

Loan

 

1M USD LIBOR+

 

4.00

%

 

0.00

%

 

4.16

%

 

3/18/2027

 

113,636

 

 

60,606

 

 

60,606

Amerilife Holdings LLC

 

Banking Finance Insurance & Real Estate

 

Term loan

 

Loan

 

1M USD LIBOR+

 

4.00

%

 

0.00

%

 

4.16

%

 

3/18/2027

 

1,386,364

 

 

1,376,801

 

 

1,362,102

Amynta Agency Borrower Inc.

 

Banking Finance Insurance & Real Estate

 

Term Loan

 

Loan

 

1M USD LIBOR+

 

4.50

%

 

0.00

%

 

4.66

%

 

2/28/2025

 

3,444,786

 

 

3,411,261

 

 

3,097,069

Anastasia Parent LLC

 

Consumer goods: Non-durable

 

Term Loan

 

Loan

 

3M USD LIBOR+

 

3.75

%

 

0.00

%

 

3.99

%

 

8/11/2025

 

982,500

 

 

978,802

 

 

404,869

Anchor Glass Container Corporation

 

Containers Packaging & Glass

 

Term Loan (07/17)

 

Loan

 

1M USD LIBOR+

 

2.75

%

 

1.00

%

 

3.75

%

 

12/7/2023

 

482,575

 

 

481,256

 

 

370,806

Api Group DE Inc

 

Services: Business

 

Term Loan B

 

Loan

 

1M USD LIBOR+

 

2.50

%

 

0.00

%

 

2.66

%

 

10/1/2026

 

995,000

 

 

990,443

 

 

975,926

APLP Holdings Limited Partnership

 

Utilities

 

Term Loan B (01/20)

 

Loan

 

1M USD LIBOR+

 

2.50

%

 

1.00

%

 

3.50

%

 

4/11/2025

 

1,815,789

 

 

1,815,789

 

 

1,786,846

Aramark Services Inc.

 

Services: Consumer

 

Term Loan

 

Loan

 

1M USD LIBOR+

 

1.75

%

 

0.00

%

 

1.91

%

 

1/15/2027

 

2,493,750

 

 

2,407,504

 

 

2,373,427

Arctic Glacier U.S.A. Inc.

 

Beverage Food & Tobacco

 

Term Loan (3/18)

 

Loan

 

3M USD LIBOR+

 

3.50

%

 

1.00

%

 

4.50

%

 

3/20/2024

 

3,350,967

 

 

3,334,451

 

 

2,736,266

Aretec Group Inc.

 

Banking Finance Insurance & Real Estate

 

Term Loan (10/18)

 

Loan

 

1M USD LIBOR+

 

4.25

%

 

0.00

%

 

4.41

%

 

10/1/2025

 

1,970,000

 

 

1,966,202

 

 

1,827,175

Aristocrat International PTY Ltd

 

Hotel Gaming & Leisure

 

Term Loan (5/20)

 

Loan

 

3M USD LIBOR+

 

3.75

%

 

1.00

%

 

4.75

%

 

10/21/2024

 

1,000,000

 

 

981,030

 

 

1,002,500

ASG Technologies Group Inc.

 

High Tech Industries

 

Term Loan

 

Loan

 

1M USD LIBOR+

 

3.50

%

 

1.00

%

 

4.50

%

 

7/31/2024

 

463,892

 

 

462,437

 

 

431,651

Asplundh Tree Expert LLC

 

Services: Business

 

Term Loan

 

Loan

 

3M USD LIBOR+

 

2.50

%

 

0.00

%

 

2.74

%

 

8/19/2027

 

1,000,000

 

 

995,000

 

 

1,000,310

AssetMark Financial Holdings Inc.

 

Banking Finance Insurance & Real Estate

 

Term Loan

 

Loan

 

3M USD LIBOR+

 

3.00

%

 

0.00

%

 

3.24

%

 

11/14/2025

 

1,237,500

 

 

1,235,762

 

 

1,225,125

Asurion LLC

 

Banking Finance Insurance & Real Estate

 

Term Loan B-4 (Replacement)

 

Loan

 

1M USD LIBOR+

 

3.00

%

 

0.00

%

 

3.16

%

 

8/4/2022

 

868,184

 

 

866,338

 

 

858,052

Asurion LLC

 

Banking Finance Insurance & Real Estate

 

Term Loan B6

 

Loan

 

1M USD LIBOR+

 

3.00

%

 

0.00

%

 

3.16

%

 

11/3/2023

 

490,182

 

 

487,591

 

 

481,197

Athenahealth Inc.

 

Healthcare & Pharmaceuticals

 

Term Loan B

 

Loan

 

3M USD LIBOR+

 

4.50

%

 

0.00

%

 

4.74

%

 

2/11/2026