Docoh
Loading...

FCRD First Eagle Alternative Capital BDC

Filed: 6 May 21, 4:46pm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2021

OR

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

For the transition period from                      to                     

Commission file number 814-00789

FIRST EAGLE ALTERNATIVE CAPITAL BDC, INC.

(Exact Name of Registrant as Specified in Its Charter)  

 

 

 

Delaware

 

27-0344947

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

500 Boylston St., Suite 1200, Boston, MA

 

02116

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: 800-450-4424

 

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

 

Title of Each Class

Trading Symbols

 

Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share

FCRD

 

NASDAQ Global Select Market

6.75% Senior Notes due 2022

FCRZ

 

The New York Stock Exchange

6.125% Senior Notes due 2023

FCRW

 

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, as amended, 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      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

 

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 Securities Exchange Act of 1934).    Yes      No  

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding at May 6, 2021 was 30,109,384.

 

 

 


 

FIRST EAGLE ALTERNATIVE CAPITAL BDC, INC.

FORM 10-Q FOR THE QUARTER ENDED March 31, 2021

Table of Contents

 

 

 

INDEX

 

PAGE
NO.

PART I.

  

FINANCIAL INFORMATION

  

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Assets and Liabilities as of March 31, 2021 (unaudited) and December 31, 2020

 

4

 

 

 

 

 

 

 

Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 (unaudited)

 

5

 

 

 

 

 

 

 

Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2021 and 2020 (unaudited)

 

6

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (unaudited)

 

7

 

 

 

 

 

 

 

Consolidated Schedules of Investments as of March 31, 2021 (unaudited) and December 31, 2020

 

8

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

24

 

 

 

 

 

Item 2.

 

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

 

66

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

98

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

99

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

100

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

100

 

 

 

 

 

Item 1A.

 

Risk Factors

 

100

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

100

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

100

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

100

 

 

 

 

 

Item 5.

 

Other Information

 

100

 

 

 

 

 

Item 6.

 

Exhibits

 

101

 

 

 

 

 

SIGNATURES

 

102

 

 

2


 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report, and other statements that we may make, may contain forward-looking statements with respect to future financial or business performance, strategies or expectations, anticipated share repurchases or lack thereof, our plans and expectations about future investments, amount and timing of distributions, if any, and the future liquidity of the company. Forward-looking statements are typically identified by words or phrases such as “trend,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “potential,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions.

Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and we assume no duty to and do not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.

In addition to factors previously identified elsewhere in this filing, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance:

 

the introduction, withdrawal, success and timing of business initiatives and strategies;

 

changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in the value of our assets;

 

the relative and absolute investment performance and operations of our investment adviser;

 

the impact of increased competition;

 

the impact of future acquisitions and divestitures;

 

the resolution of legal proceedings;

 

our business prospects and the prospects of our portfolio companies;

 

the impact, extent and timing of technological changes and the adequacy of intellectual property protection;

 

the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us or First Eagle Alternative Credit, LLC (the “Advisor”);

 

the ability of the Advisor to identify suitable investments for us and to monitor and administer our investments;

 

our contractual arrangements and relationships with third parties;

 

any future financings by us;

 

the ability of the Advisor to attract and retain highly talented professionals;

 

fluctuations in foreign currency exchange rates;

 

the impact of changes to tax legislation and, generally, our tax position;

 

the impact of pandemics or other serious public health epidemics, such as the current novel coronavirus ("COVID-19") pandemic on our operations, our portfolio companies' business, or the global economy;

 

our ability to exit a control investment in a timely manner; and

 

the ability to fund Logan JV’s unfunded commitments to the extent approved by each member of the Logan JV investment committee.

 

3


 

First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Assets and Liabilities

(in thousands, except per share data)

 

 

 

 

March 31, 2021

(unaudited)

 

 

December 31, 2020

 

Assets:

 

 

 

 

 

 

 

Investments at fair value:

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments (cost of $266,047 and $250,928,

   respectively)

$

264,569

 

 

$

243,855

 

Controlled investments (cost of $148,856 and $148,373, respectively)

 

98,394

 

 

 

93,826

 

Non-controlled, affiliated investments (cost of $1 and $1, respectively)

 

1

 

 

 

1

 

Cash

 

13,197

 

 

 

7,615

 

Escrows and other receivables

 

2,336

 

 

 

3,508

 

Interest, dividends, and fees receivable

 

2,802

 

 

 

2,659

 

Deferred tax assets

 

2,229

 

 

 

2,222

 

Deferred financing costs

 

1,678

 

 

 

1,757

 

Distributions receivable

 

112

 

 

 

97

 

Prepaid expenses and other assets

 

685

 

 

 

628

 

Deferred offering costs

 

180

 

 

 

180

 

Due from affiliate

 

87

 

 

 

85

 

Total assets

$

386,270

 

 

$

356,433

 

Liabilities:

 

 

 

 

 

 

 

Loans payable

$

66,161

 

 

$

57,661

 

Notes payable ($111,607 and $111,607 face amounts, respectively, reported net of

   deferred financing costs of $1,738 and $1,932, respectively)

 

109,870

 

 

 

109,675

 

Payable for investments purchased

 

14,883

 

 

 

 

Accrued expenses and other liabilities

 

1,598

 

 

 

1,924

 

Deferred tax liability

 

2,011

 

 

 

1,673

 

Accrued incentive fees

 

 

 

 

156

 

Accrued interest and fees

 

74

 

 

 

149

 

Total liabilities

 

194,597

 

 

 

171,238

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

Net Assets:

 

 

 

 

 

 

 

Common stock, par value $.001 per share, 100,000 common shares authorized, 30,109

   and 30,109 shares issued and outstanding at March 31, 2021 and December 31, 2020,

   respectively

 

30

 

 

 

30

 

Paid-in capital in excess of par

 

418,379

 

 

 

418,379

 

Accumulated deficit

 

(226,736

)

 

 

(233,214

)

Total net assets

$

191,673

 

 

$

185,195

 

Total liabilities and net assets

$

386,270

 

 

$

356,433

 

Net asset value per share attributable to First Eagle Alternative Capital BDC, Inc.

$

6.37

 

 

$

6.15

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these consolidated financial statements.

 

4


 

First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

 

For the three months ended

March 31,

 

 

 

2021

 

 

2020

 

Investment Income:

 

 

 

 

 

 

 

 

From non-controlled, non-affiliated investments:

 

 

 

 

 

 

 

 

Cash interest income

 

$

5,113

 

 

$

4,936

 

PIK interest income

 

 

123

 

 

 

49

 

Other income

 

 

155

 

 

 

52

 

From non-controlled, affiliated investments:

 

 

 

 

 

 

 

 

Other income

 

 

41

 

 

 

82

 

From controlled investments:

 

 

 

 

 

 

 

 

Cash interest income

 

 

188

 

 

 

(276

)

Dividend income

 

 

1,568

 

 

 

3,007

 

Other income

 

 

 

 

 

38

 

Total investment income

 

 

7,188

 

 

 

7,888

 

Expenses:

 

 

 

 

 

 

 

 

Interest and fees on borrowings

 

 

2,366

 

 

 

2,703

 

Base management fees

 

 

879

 

 

 

1,024

 

Incentive fees

 

 

 

 

 

(411

)

Administrator expenses

 

 

221

 

 

 

327

 

Other general and administrative expenses

 

 

299

 

 

 

334

 

Amortization of deferred financing costs

 

 

408

 

 

 

651

 

Professional fees

 

 

416

 

 

 

371

 

Directors' fees

 

 

169

 

 

 

176

 

Total expenses

 

 

4,758

 

 

 

5,175

 

Management fee waiver

 

 

(879

)

 

 

 

Total expenses, net of fee waivers

 

 

3,879

 

 

 

5,175

 

Income tax provision, excise and other taxes

 

 

26

 

 

 

52

 

Net investment income

 

 

3,283

 

 

 

2,661

 

Realized (Loss) Gain and Change in Unrealized (Depreciation) Appreciation on Investments:

 

 

 

 

 

 

 

 

Net realized (loss) gain on investments:

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

(3,144

)

 

 

214

 

Non-controlled, affiliated investments

 

 

 

 

 

(1,565

)

Controlled investments

 

 

 

 

 

(263

)

Net realized loss on investments

 

 

(3,144

)

 

 

(1,614

)

Net change in unrealized (depreciation) appreciation on investments:

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

5,594

 

 

 

(24,973

)

Non-controlled, affiliated investments

 

 

-

 

 

 

 

Controlled investments

 

 

4,087

 

 

 

(42,700

)

Net change in unrealized appreciation (depreciation) on investments

 

 

9,681

 

 

 

(67,673

)

Net realized and unrealized gain (loss) from investments

 

 

6,537

 

 

 

(69,287

)

(Provision) benefit for taxes on unrealized gain/loss on investments

 

 

(331

)

 

 

470

 

Net increase (decrease) in net assets resulting from operations

 

$

9,489

 

 

$

(66,156

)

Net investment income per common share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.11

 

 

$

0.09

 

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

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.32

 

 

$

(2.22

)

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

30,109

 

 

 

29,813

 

 

See accompanying notes to these consolidated financial statements.

5


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Changes in Net Assets

(in thousands)

(unaudited) 

 

 

 

 

For the three months ended March 31,

 

 

 

2021

 

 

2020

 

Increase (decrease) in net assets from operations:

 

 

 

 

 

 

 

 

Net investment income

 

$

3,283

 

 

$

2,661

 

Net realized loss on investments

 

 

(3,144

)

 

 

(1,614

)

Net change in unrealized appreciation (depreciation) on investments

 

 

9,681

 

 

 

(67,673

)

(Provision) benefit for taxes on unrealized gain (loss) on investments

 

 

(331

)

 

 

470

 

Net increase (decrease) in net assets resulting from operations

 

 

9,489

 

 

 

(66,156

)

Distributions to stockholders:

 

 

 

 

 

 

 

 

Distributions to stockholders from net investment income

 

 

(3,011

)

 

 

(6,233

)

Total distributions to stockholders

 

 

(3,011

)

 

 

(6,233

)

Capital share transactions:

 

 

 

 

 

 

 

 

Repurchase of common stock

 

 

 

 

 

(2,161

)

Net decrease in net assets from capital share transactions

 

 

 

 

 

(2,161

)

Total increase (decrease) in net assets

 

 

6,478

 

 

 

(74,550

)

Net assets at beginning of period

 

 

185,195

 

 

 

229,455

 

Net assets at end of period

 

$

191,673

 

 

$

154,905

 

Common shares outstanding at end of period

 

 

30,109

 

 

 

29,680

 

Capital share activity:

 

 

 

 

 

 

 

 

Shares repurchased

 

 

-

 

 

 

341

 

 

 

See accompanying notes to these consolidated financial statements.

6


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

 

For the three months ended March 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net increase (decrease) in net assets resulting from operations

 

$

9,489

 

 

$

(66,156

)

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

 

 

 

 

 

 

 

 

Net change in unrealized depreciation on investments

 

 

(9,681

)

 

 

67,673

 

Net realized loss (gain) on investments

 

 

1,888

 

 

 

(112

)

Increase in investments due to interest paid-in-kind

 

 

(132

)

 

 

(35

)

Amortization of deferred financing costs

 

 

408

 

 

 

651

 

Accretion of discounts on investments and other fees

 

 

(300

)

 

 

(184

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(25,206

)

 

 

(33,178

)

Proceeds from sale and paydown of investments

 

 

8,154

 

 

 

38,276

 

(Increase) decrease in interest, dividends and fees receivable

 

 

(143

)

 

 

307

 

Decrease in escrows and other receivables

 

 

1,151

 

 

 

3,077

 

(Increase) decrease in due from affiliates

 

 

(2

)

 

 

71

 

Increase in deferred tax asset

 

 

(7

)

 

 

(48

)

(Increase) decrease in prepaid expenses and other assets

 

 

(57

)

 

 

9

 

Increase in payables for investments purchased

 

 

14,883

 

 

 

 

Decrease in accrued expenses and other liabilities

 

 

(326

)

 

 

(336

)

Decrease in accrued credit facility fees and interest

 

 

(75

)

 

 

(93

)

Increase (decrease) in deferred tax liability

 

 

338

 

 

 

(422

)

Decrease in base management fees payable, net

 

 

 

 

 

(79

)

Increase in other deferred liabilities

 

 

 

 

 

77

 

Decrease in accrued incentive fees payable, net

 

 

(156

)

 

 

(412

)

Net cash provided by operating activities

 

 

226

 

 

 

9,086

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Repurchase of common stock

 

 

 

 

 

(2,161

)

Borrowings under credit facility

 

 

18,000

 

 

 

15,500

 

Repayments under credit facility

 

 

(9,500

)

 

 

 

Distributions paid to stockholders

 

 

(3,011

)

 

 

(6,233

)

Financing and offering costs paid

 

 

(133

)

 

 

(6

)

Net cash provided by financing activities

 

 

5,356

 

 

 

7,100

 

Net increase in cash

 

 

5,582

 

 

 

16,186

 

Cash, beginning of period

 

 

7,615

 

 

 

5,890

 

Cash, end of period

 

$

13,197

 

 

$

22,076

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

 

 

Cash interest paid

 

$

2,280

 

 

$

2,563

 

PIK income earned

 

$

123

 

 

$

49

 

 

 

Non-cash Operating Activities:

See Note 5 in the notes to consolidated financial statements for non-cash restructurings.

See accompanying notes to these consolidated financial statements.

 

 

7


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

March 31, 2021

(dollar amounts in thousands)

 

 

 

 

 

 

 

 

 

Initial

 

Maturity/

 

Principal(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition

 

Dissolution

 

No. of Shares /

 

 

 

 

 

 

 

 

 

Type of Investment/Portfolio company (1)(2)(3)

 

Industry

 

Interest Rate(4)

 

Date

 

Date

 

No. of Units

 

 

Amortized Cost

 

 

Fair Value (6)

 

Non-controlled/non-affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—138.03% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First lien senior secured debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—123.190% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—3.57% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PDFTron Systems Inc. (7)

 

Services: Business

 

7.3% (LIBOR + 6.0%)

 

5/15/2019

 

5/15/2024

 

$

4,925

 

 

$

4,895

 

 

$

4,925

 

PDFTron Systems Inc. (7)(23)

 

Services: Business

 

7.3% (LIBOR + 6.0%)

 

5/15/2019

 

5/15/2024

 

 

1,083

 

 

 

1,077

 

 

 

1,083

 

PDFTron Systems Inc. (7)(23)

 

Services: Business

 

7.3% (LIBOR + 6.0%)

 

5/15/2019

 

5/15/2024

 

 

320

 

 

 

317

 

 

 

320

 

PDFTron Systems Inc. (7)

 

Services: Business

 

8.8% (LIBOR + 7.5%)

 

6/19/2020

 

5/15/2024

 

 

397

 

 

 

388

 

 

 

397

 

PDFTron Systems Inc. (7)(9)(22)

 

Services: Business

 

8.8% (LIBOR + 7.5%)

 

6/19/2020

 

5/15/2024

 

 

 

 

 

(10

)

 

 

 

PDFTron Systems Inc. (7)

 

Services: Business

 

8.8% (LIBOR + 7.5%)

 

3/31/2021

 

5/15/2024

 

 

136

 

 

 

134

 

 

 

134

 

PDFTron Systems Inc. (7)(9)(23)

 

Services: Business

 

8.8% (LIBOR + 7.5%)

 

3/31/2021

 

5/15/2024

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

Subtotal Canada

 

$

6,861

 

 

$

6,800

 

 

$

6,859

 

Midwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—12.53% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Web Technologies

 

Containers, Packaging, & Glass

 

7.0% (LIBOR + 6.0%)

 

12/17/2020

 

12/17/2026

 

$

2,048

 

 

$

2,009

 

 

$

2,007

 

Advanced Web Technologies (8)

 

Containers, Packaging, & Glass

 

7.0% (LIBOR + 6.0%)

 

12/17/2020

 

12/17/2026

 

 

80

 

 

 

74

 

 

 

78

 

Advanced Web Technologies (9)(23)

 

Containers, Packaging, & Glass

 

7.0% (LIBOR + 6.0%)

 

12/17/2020

 

12/17/2026

 

 

 

 

 

(15

)

 

 

 

Doxa Insurance Holdings, LLC

 

Insurance

 

7.3% (LIBOR + 6.3%)

 

12/4/2020

 

12/4/2026

 

 

1,596

 

 

 

1,558

 

 

 

1,556

 

Doxa Insurance Holdings, LLC (8)(9)

 

Insurance

 

7.3% (LIBOR + 6.3%)

 

12/4/2020

 

12/4/2026

 

 

 

 

 

(8

)

 

 

 

Doxa Insurance Holdings, LLC

 

Insurance

 

7.3% (LIBOR + 6.3%)

 

12/4/2020

 

12/4/2026

 

 

865

 

 

 

819

 

 

 

843

 

1-800 Hansons, LLC

 

High Tech Industries

 

10.5% (LIBOR + 8.5%) (8.5% Cash  + 1.0% PIK)

 

10/19/2017

 

10/19/2022

 

 

3,315

 

 

 

3,296

 

 

 

3,083

 

1-800 Hansons, LLC (8)

 

High Tech Industries

 

9.5% (LIBOR + 8.5%)

 

10/19/2017

 

10/19/2022

 

 

210

 

 

 

208

 

 

 

195

 

IRC Opco LLC

 

Healthcare & Pharmaceuticals

 

6.5% (LIBOR + 5.5%)

 

1/4/2019

 

1/4/2024

 

 

5,332

 

 

 

5,308

 

 

 

5,065

 

IRC Opco LLC (8)

 

Healthcare & Pharmaceuticals

 

6.5% (LIBOR + 5.5%)

 

1/4/2019

 

1/4/2024

 

 

818

 

 

 

815

 

 

 

777

 

Matilda Jane Holdings, Inc.

 

Consumer Goods: Non-Durable

 

9.5% (LIBOR + 8.5%)

 

4/28/2017

 

5/1/2022

 

 

12,103

 

 

 

12,033

 

 

 

10,409

 

Matilda Jane Holdings, Inc. (8)

 

Consumer Goods: Non-Durable

 

9.5% (LIBOR + 8.5%)

 

10/30/2020

 

5/1/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal midwest

 

$

26,367

 

 

$

26,097

 

 

$

24,013

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—31.34% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3SI Security Systems

 

Services: Consumer

 

6.8% (LIBOR + 5.8%)

 

12/17/2019

 

6/16/2023

 

$

4,065

 

 

$

4,039

 

 

$

4,004

 

Aurotech, LLC

 

High Tech Industries

 

8% (LIBOR + 7%)

 

10/30/2020

 

10/30/2025

 

 

3,065

 

 

 

3,008

 

 

 

3,004

 

Aurotech, LLC (8)(9)

 

High Tech Industries

 

8% (LIBOR + 7%)

 

10/30/2020

 

10/30/2025

 

 

 

 

 

(8

)

 

 

 

Certify, Inc.

 

Services: Business

 

6.8% (LIBOR + 5.8%)

 

2/28/2019

 

2/28/2024

 

 

1,544

 

 

 

1,531

 

 

 

1,544

 

Certify, Inc. (24)

 

Services: Business

 

6.8% (LIBOR + 5.8%)

 

2/28/2019

 

2/28/2024

 

 

211

 

 

 

208

 

 

 

211

 

Certify, Inc. (8)

 

Services: Business

 

6.8% (LIBOR + 5.8%)

 

2/28/2019

 

2/28/2024

 

 

18

 

 

 

17

 

 

 

18

 

See accompanying notes to these consolidated financial statements.

 

8


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

March 31, 2021

(dollar amounts in thousands)

 

Communication Technology Intermediate (7)

 

Telecommunications

 

8.5% (LIBOR + 7.5%)

 

10/13/2020

 

10/13/2025

 

 

8,452

 

 

 

8,282

 

 

 

8,451

 

Communication Technology Intermediate (7)(8)(9)

 

Telecommunications

 

8.5% (LIBOR + 7.5%)

 

10/13/2020

 

10/13/2025

 

 

 

 

 

(12

)

 

 

 

HealthDrive Corporation

 

Healthcare & Pharmaceuticals

 

6.8% (LIBOR + 5.8%)

 

12/21/2018

 

12/21/2023

 

 

9,775

 

 

 

9,721

 

 

 

9,433

 

HealthDrive Corporation (8)

 

Healthcare & Pharmaceuticals

 

6.8% (LIBOR + 5.8%)

 

12/21/2018

 

12/21/2023

 

 

1,761

 

 

 

1,751

 

 

 

1,699

 

Marlin DTC-LS Midco 2, LLC (8)(9)

 

Services: Consumer

 

7.5% (LIBOR + 6.5%)

 

3/5/2021

 

7/1/2025

 

 

 

 

 

(3

)

 

 

 

Marlin DTC-LS Midco 2, LLC

 

Services: Consumer

 

7.5% (LIBOR + 6.5%)

 

3/5/2021

 

7/1/2025

 

 

3,154

 

 

 

3,092

 

 

 

3,154

 

Multi Specialty Healthcare LLC

 

Healthcare & Pharmaceuticals

 

7.5% (LIBOR + 6.5%)

 

12/18/2020

 

12/18/2026

 

 

3,780

 

 

 

3,707

 

 

 

3,704

 

Multi Specialty Healthcare LLC (8)(9)

 

Healthcare & Pharmaceuticals

 

7.5% (LIBOR + 6.5%)

 

12/18/2020

 

12/18/2026

 

 

 

 

 

(14

)

 

 

 

Quartermaster Newco, LLC

 

Healthcare & Pharmaceuticals

 

7.8% (LIBOR + 6.5%)

 

7/31/2020

 

7/31/2025

 

 

3,120

 

 

 

3,093

 

 

 

3,120

 

Quartermaster Newco, LLC (8)(9)

 

Healthcare & Pharmaceuticals

 

7.8% (LIBOR + 6.5%)

 

7/31/2020

 

7/31/2025

 

 

 

 

 

(3

)

 

 

 

Revlon Consumer Products Corporation

 

Consumer Goods: Non-Durable

 

7.5% (LIBOR + 5.8%)

 

3/8/2021

 

6/8/2023

 

 

2,500

 

 

 

2,476

 

 

 

2,475

 

smarTours, LLC

 

Services: Consumer

 

7.8% (LIBOR + 6.8%)

 

12/21/2020

 

12/31/2024

 

 

475

 

 

 

475

 

 

 

475

 

smarTours, LLC (8)

 

Services: Consumer

 

8.8% (LIBOR+ 7.8%) (1.0% Cash + 7.8% PIK)

 

12/21/2020

 

12/31/2024

 

 

2,205

 

 

 

2,205

 

 

 

2,205

 

Urology Management Associates, LLC

 

Healthcare & Pharmaceuticals

 

6.0% (LIBOR + 5.0%)

 

8/31/2018

 

8/31/2024

 

 

8,328

 

 

 

8,235

 

 

 

8,287

 

Women's Health USA, Inc.

 

Healthcare & Pharmaceuticals

 

8.8% (LIBOR + 7.8%)

 

10/9/2018

 

10/9/2023

 

 

7,271

 

 

 

7,256

 

 

 

7,235

 

Women's Health USA, Inc. (8)

 

Healthcare & Pharmaceuticals

 

8.8% (LIBOR + 7.8%)

 

10/9/2018

 

10/9/2023

 

 

1,050

 

 

 

1,040

 

 

 

1,045

 

 

 

 

 

 

 

 

 

Subtotal northeast

 

$

60,774

 

 

$

60,096

 

 

$

60,064

 

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—14.07% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apex Services Partners, LLC

 

Capital Equipment

 

6.3% (LIBOR + 5.3%)

 

2/11/2020

 

7/31/2025

 

$

5,327

 

 

$

5,285

 

 

$

5,274

 

Apex Services Partners, LLC (23)

 

Capital Equipment

 

6.3% (LIBOR + 5.3%)

 

2/11/2020

 

7/31/2025

 

 

 

 

 

 

 

 

 

ECL Entertainment

 

Hotel, Gaming, & Leisure

 

8.3% (LIBOR + 7.5%)

 

3/31/2021

 

3/31/2028

 

 

3,000

 

 

 

2,971

 

 

 

2,998

 

GC EOS Buyer, Inc.

 

Automotive

 

6.8% (LIBOR + 5.8%)

 

3/31/2021

 

8/1/2025

 

 

4,000

 

 

 

3,971

 

 

 

3,978

 

Groundworks Operations, LLC

 

Construction & Building

 

6.0% (LIBOR + 5.0%)

 

7/9/2020

 

1/17/2026

 

 

1,942

 

 

 

1,908

 

 

 

1,943

 

Groundworks Operations, LLC (8)(9)

 

Construction & Building

 

6.0% (LIBOR + 5.0%)

 

7/9/2020

 

1/17/2026

 

 

 

 

 

(2

)

 

 

 

Groundworks Operations, LLC (23)

 

Construction & Building

 

6.0% (LIBOR + 5.0%)

 

7/9/2020

 

1/17/2026

 

 

855

 

 

 

842

 

 

 

855

 

Groundworks Operations, LLC (23)

 

Construction & Building

 

6.0% (LIBOR + 5.0%)

 

7/9/2020

 

1/17/2026

 

 

397

 

 

 

378

 

 

 

397

 

Groundworks Operations, LLC (9)

 

Construction & Building

 

6.0% (LIBOR + 5.0%)

 

3/18/2021

 

1/17/2026

 

 

 

 

 

(37

)

 

 

 

TTF Holdings, LLC (Soliant)

 

Healthcare & Pharmaceuticals

 

5.0% (LIBOR + 4.3%)

 

3/31/2021

 

3/25/2028

 

 

4,000

 

 

 

3,970

 

 

 

3,979

 

Whitney, Bradley & Brown, Inc.

 

Services: Business

 

8.5% (LIBOR + 7.5%)

 

10/18/2017

 

10/18/2022

 

 

7,461

 

 

 

7,434

 

 

 

7,535

 

 

 

 

 

 

 

 

 

Subtotal southeast

 

$

26,982

 

 

$

26,720

 

 

$

26,959

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—22.06% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allied Wireline Services, LLC (11)(25)

 

Energy: Oil & Gas

 

10.0% PIK

 

6/15/2020

 

6/15/2025

 

$

4,951

 

 

$

4,971

 

 

$

3,961

 

BCDI Rodeo Dental Buyer, LLC

 

Healthcare & Pharmaceuticals

 

6.0% (LIBOR + 5.0%)

 

5/14/2019

 

5/14/2025

 

 

5,715

 

 

 

5,675

 

 

 

5,686

 

BCDI Rodeo Dental Buyer, LLC (8)

 

Healthcare & Pharmaceuticals

 

6.0% (LIBOR + 5.0%)

 

5/14/2019

 

5/14/2025

 

 

1,615

 

 

 

1,604

 

 

 

1,607

 

BCDI Rodeo Dental Buyer, LLC (8)

 

Healthcare & Pharmaceuticals

 

6.0% (LIBOR + 5.0%)

 

5/14/2019

 

5/14/2025

 

 

1,304

 

 

 

1,293

 

 

 

1,297

 

Igloo Products Corp.

 

Consumer Goods: Non-Durable

 

11.5% (LIBOR + 10.0%)

 

3/28/2014

 

3/28/2023

 

 

21,567

 

 

 

21,554

 

 

 

21,567

 

Riveron Acquisition Holdings, Inc.

 

Finance

 

6.8% (LIBOR + 5.8%)

 

5/22/2019

 

5/22/2025

 

 

8,159

 

 

 

8,047

 

 

 

8,160

 

 

 

 

 

 

 

 

 

Subtotal southwest

 

$

43,311

 

 

$

43,144

 

 

$

42,278

 

See accompanying notes to these consolidated financial statements.

 

9


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

March 31, 2021

(dollar amounts in thousands)

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—39.63% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ABC Legal Services, Inc.

 

Finance

 

7% (LIBOR + 5.5%)

 

6/21/2019

 

6/21/2024

 

$

6,861

 

 

$

6,782

 

 

$

6,689

 

ABC Legal Services, Inc. (8)(9)

 

Finance

 

7% (LIBOR + 5.5%)

 

6/21/2019

 

6/21/2024

 

 

 

 

 

(8

)

 

 

 

Action Point, Inc (9)(23)

 

Chemicals, Plastics, & Rubber

 

7.5% (LIBOR + 6.5%)

 

12/17/2020

 

6/17/2026

 

 

 

 

 

(13

)

 

 

 

Action Point, Inc

 

Chemicals, Plastics, & Rubber

 

7.5% (LIBOR + 6.5%)

 

12/17/2020

 

6/17/2026

 

 

3,325

 

 

 

3,261

 

 

 

3,259

 

Alpine SG, LLC

 

High Tech Industries

 

6.8% (LIBOR + 5.8%)

 

4/9/2019

 

11/16/2022

 

 

1,316

 

 

 

1,310

 

 

 

1,316

 

Alpine SG, LLC

 

High Tech Industries

 

6.8% (LIBOR + 5.8%)

 

4/9/2019

 

11/16/2022

 

 

659

 

 

 

656

 

 

 

659

 

Alpine SG, LLC

 

High Tech Industries

 

7.5% (LIBOR + 6.5%)

 

11/2/2020

 

11/16/2022

 

 

1,500

 

 

 

1,464

 

 

 

1,500

 

Alpine SG, LLC

 

High Tech Industries

 

6.8% (LIBOR + 5.8%)

 

2/10/2021

 

11/16/2022

 

 

1,500

 

 

 

1,458

 

 

 

1,500

 

DTI Holdco, Inc.

 

Services: Business

 

5.8% (LIBOR + 4.8%)

 

3/31/2021

 

9/29/2023

 

 

3,949

 

 

 

3,840

 

 

 

3,821

 

EBS Intermediate LLC

 

Services: Consumer

 

6.0% (LIBOR + 5.0%)

 

10/2/2018

 

10/2/2023

 

 

7,765

 

 

 

7,696

 

 

 

7,765

 

EBS Intermediate LLC (8)(9)

 

Services: Consumer

 

6.0% (LIBOR + 5.0%)

 

10/2/2018

 

10/2/2023

 

 

 

 

 

(15

)

 

 

 

Evergreen Services Group, LLC

 

High Tech Industries

 

7.0% (LIBOR + 6.0%)

 

11/13/2018

 

6/6/2023

 

 

9,315

 

 

 

9,270

 

 

 

9,315

 

Finxera Intermediate, LLC

 

Finance

 

6.8% (LIBOR + 5.8%)

 

3/3/2020

 

8/27/2024

 

 

6,852

 

 

 

6,800

 

 

 

6,852

 

Gener8, LLC

 

Services: Business

 

6.5% (LIBOR + 5.5%)

 

8/14/2018

 

8/14/2023

 

 

5,842

 

 

 

5,799

 

 

 

5,842

 

Gener8, LLC (8)(9)

 

Services: Business

 

6.5% (LIBOR + 5.5%)

 

8/14/2018

 

8/14/2023

 

 

 

 

 

(11

)

 

 

 

Lash Opco LLC

 

Consumer Goods: Non-Durable

 

9.3 (LIBOR + 6.0%)

 

9/18/2020

 

3/18/2026

 

 

3,015

 

 

 

2,946

 

 

 

2,985

 

Lash Opco LLC (8)(9)

 

Consumer Goods: Non-Durable

 

9.3 (LIBOR + 6.0%)

 

9/18/2020

 

9/18/2025

 

 

 

 

 

(8

)

 

 

 

Lash Opco LLC

 

Consumer Goods: Non-Durable

 

9.3 (LIBOR + 6.0%)

 

12/31/2020

 

3/18/2026

 

 

998

 

 

 

973

 

 

 

988

 

MarkLogic Corporation

 

High Tech Industries

 

9.0% (LIBOR + 8.0%)

 

10/20/2020

 

10/20/2025

 

 

3,142

 

 

 

3,083

 

 

 

3,087

 

MarkLogic Corporation (9)(23)

 

High Tech Industries

 

9.0% (LIBOR + 8.0%)

 

10/20/2020

 

10/20/2025

 

 

 

 

 

(5

)

 

 

 

MeriCal, LLC

 

Consumer Goods: Non-Durable

 

6.5% (LIBOR + 5.5%)

 

11/16/2018

 

11/16/2021

 

 

7,396

 

 

 

7,396

 

 

 

7,396

 

SolutionReach, Inc.

 

Services: Consumer

 

6.8% (LIBOR + 5.8%)

 

1/17/2019

 

1/17/2024

 

 

6,238

 

 

 

6,168

 

 

 

6,239

 

SolutionReach, Inc. (8)(9)

 

Services: Consumer

 

6.8% (LIBOR + 5.8%)

 

1/17/2019

 

1/17/2024

 

 

 

 

 

(11

)

 

 

 

SRS Acquiom Holdings LLC

 

Finance

 

7.0% (LIBOR + 6.0%)

 

11/8/2018

 

11/8/2024

 

 

4,200

 

 

 

4,174

 

 

 

3,822

 

Trace3, LLC

 

High Tech Industries

 

7.8% (LIBOR + 6.8%)

 

11/4/2020

 

8/3/2024

 

 

3,007

 

 

 

2,922

 

 

 

2,917

 

 

 

 

 

 

 

 

 

Subtotal west

 

$

76,880

 

 

$

75,927

 

 

$

75,952

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal first lien senior secured debt

 

$

241,175

 

 

$

238,784

 

 

$

236,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second lien debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—6.42% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—6.42% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchants Capital Access, LLC (14)

 

Banking

 

11.5% (LIBOR + 10.5%)

 

4/20/2015

 

6/4/2021

 

$

12,000

 

 

$

11,998

 

 

$

11,880

 

smarTours, LLC

 

Services: Consumer

 

8.8% PIK (LIBOR + 7.8%)

 

12/21/2020

 

12/31/2024

 

 

1,327

 

 

 

575

 

 

 

418

 

 

 

 

 

 

 

 

 

Subtotal northeast

 

$

13,327

 

 

$

12,573

 

 

$

12,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal second lien debt

 

$

13,327

 

 

$

12,573

 

 

$

12,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subordinated debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—3.07% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these consolidated financial statements.

 

10


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

March 31, 2021

(dollar amounts in thousands)

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—3.07% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C&K Market, Inc.

 

Retail

 

11.0% (8% Cash + 3% PIK)

 

12/29/2020

 

12/29/2025

 

$

5,885

 

 

$

5,885

 

 

$

5,885

 

 

 

 

 

 

 

 

 

Subtotal west

 

$

5,885

 

 

$

5,885

 

 

$

5,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Subordinated debt

 

$

5,885

 

 

$

5,885

 

 

$

5,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—3.59% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midwest

 

 

 

 

 

��

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.07% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doxa Insurance Holdings, LLC (18)

 

Insurance

 

 

 

12/4/2020

 

 

 

 

129,187

 

 

$

129

 

 

$

129

 

Matilda Jane Holdings, Inc. (12)(17)

 

Consumer Goods: Non-Durable

 

 

 

4/28/2017

 

 

 

 

2,587,855

 

 

 

489

 

 

 

 

 

 

 

 

 

 

Subtotal midwest

 

 

 

 

 

$

618

 

 

$

129

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—2.63% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certify, Inc. (18)

 

Services: Business

 

 

 

2/28/2019

 

 

 

 

841

 

 

 

175

 

 

 

212

 

Specialty Brands Holdings, LLC (17)

 

Services: Business

 

 

 

6/29/2018

 

 

 

 

58

 

 

 

 

 

 

 

Specialty Brands Holdings, LLC (18)

 

Services: Business

 

 

 

6/29/2018

 

 

 

 

1,232

 

 

 

 

 

 

 

SPST Holdings, LLC (10)(13)(18)

 

Services: Consumer

 

 

 

12/21/2020

 

 

 

 

820,040

 

 

 

216

 

 

 

 

SPST Holdings, LLC (10)(13)(17)

 

Services: Consumer

 

 

 

12/21/2020

 

 

 

 

3,237

 

 

 

 

 

 

 

SPST Investors II, LLC (10)(13)(18)(26)

 

Services: Consumer

 

 

 

12/21/2020

 

 

 

 

51,095

 

 

 

51

 

 

 

 

Urology Management Associates, LLC (18)

 

Healthcare & Pharmaceuticals

 

 

 

8/31/2018

 

 

 

 

769

 

 

 

769

 

 

 

1,059

 

Wheels Up Partners, LLC (10)(13)(18)

 

Transportation: Consumer

 

 

 

1/31/2014

 

 

 

 

1,000,000

 

 

 

1,000

 

 

 

3,780

 

 

 

 

 

 

 

Subtotal northeast

 

 

 

 

 

$

2,211

 

 

$

5,051

 

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.02% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virtus Aggregator, LLC (10)(13)(18)

 

Healthcare & Pharmaceuticals

 

 

 

5/7/2020

 

 

 

 

10

 

 

$

32

 

 

$

32

 

 

 

 

 

 

 

Subtotal southeast

 

 

 

 

 

$

32

 

 

$

32

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.09% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allied Wireline Services, LLC (10)(13)(18)

 

Energy: Oil & Gas

 

 

 

6/15/2020

 

 

 

 

4,538

 

 

$

144

 

 

$

 

Allied Wireline Services, LLC (10)(13)(18)

 

Energy: Oil & Gas

 

 

 

6/15/2020

 

 

 

 

2,063

 

 

 

 

 

 

 

Igloo Products Corp. (18)

 

Consumer Goods: Non-Durable

 

 

 

4/30/2014

 

 

 

 

1,902

 

 

 

1,716

 

 

 

171

 

 

 

 

 

 

 

Subtotal southwest

 

 

 

 

 

$

1,860

 

 

$

171

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.78% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MeriCal, LLC (10) (12) (17)

 

Consumer Goods: Non-Durable

 

 

 

9/30/2016

 

 

 

 

521

 

 

$

505

 

 

$

718

 

MeriCal, LLC (10) (12) (18)

 

Consumer Goods: Non-Durable

 

 

 

9/30/2016

 

 

 

 

5,334

 

 

 

10

 

 

 

394

 

Sciens Building Solutions, LLC (10) (17)

 

Services: Business

 

 

 

7/12/2017

 

 

 

 

194

 

 

 

213

 

 

 

395

 

 

 

 

 

 

 

Subtotal west

 

 

 

 

 

$

728

 

 

$

1,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these consolidated financial statements.

 

11


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

March 31, 2021

(dollar amounts in thousands)

 

 

 

 

 

 

 

 

 

Subtotal equity

 

 

 

 

 

$

5,449

 

 

$

6,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.26% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.26% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C&K Market, Inc.

 

Retail

 

 

 

12/29/2020

 

 

 

 

1,063,221

 

 

$

 

 

$

500

 

 

 

 

 

 

 

 

 

Subtotal west

 

 

 

 

 

$

 

 

$

500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal warrants

 

 

 

 

 

$

 

 

$

500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—1.50% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—1.38% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Freeport Financial SBIC Fund LP (14)(21)

 

Investment Funds And Vehicles

 

 

 

6/14/2013

 

 

 

 

 

 

 

$

2,957

 

 

$

2,634

 

 

 

 

 

 

 

 

 

Subtotal midwest

 

 

 

 

 

$

2,957

 

 

$

2,634

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.12% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gryphon Partners 3.5, L.P. (14)(21)

 

Investment Funds And Vehicles

 

 

 

11/20/2012

 

 

 

 

 

 

 

$

399

 

 

$

238

 

 

 

 

 

 

 

 

 

Subtotal west

 

 

 

 

 

$

399

 

 

$

238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal investments in funds

 

 

 

 

 

$

3,356

 

 

$

2,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-controlled/non-affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—138.03% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

$

266,047

 

 

$

264,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlled investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—51.33% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First lien senior secured debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—8.81% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—4.07% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loadmaster Derrick & Equipment, Inc. (15)(19)(27)

 

Energy: Oil & Gas

 

11.3% (LIBOR + 10.3% PIK)

 

7/1/2016

 

12/31/2020

 

$

11,897

 

 

$

7,307

 

 

$

 

Loadmaster Derrick & Equipment, Inc. (15)(19)(27)

 

Energy: Oil & Gas

 

13.0% (LIBOR + 12.0% PIK)

 

7/1/2016

 

12/31/2020

 

 

2,838

 

 

 

1,053

 

 

 

 

Loadmaster Derrick & Equipment, Inc. (15)(19)(27)

 

Energy: Oil & Gas

 

11.3% (LIBOR+ 10.3% PIK)

 

1/17/2017

 

12/31/2020

 

 

9,758

 

 

 

7,200

 

 

 

7,807

 

 

 

 

 

 

 

 

 

Subtotal southeast

 

$

24,493

 

 

$

15,560

 

 

$

7,807

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these consolidated financial statements.

 

12


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

March 31, 2021

(dollar amounts in thousands)

 

—4.74% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OEM Group, LLC (15)(25)

 

Capital Equipment

 

8.5% (LIBOR + 7.5%)

 

9/30/2020

 

9/30/2025

 

$

9,076

 

 

$

9,076

 

 

$

9,076

 

 

 

 

 

 

 

 

 

Subtotal southwest

 

$

9,076

 

 

$

9,076

 

 

$

9,076

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal first lien senior secured debt

 

$

33,569

 

 

$

24,636

 

 

$

16,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second lien debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—5.25% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—5.25% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OEM Group, LLC (15)(25)

 

Capital Equipment

 

10.0% PIK

 

9/30/2020

 

9/30/2025

 

$

46,323

 

 

$

22,203

 

 

$

10,068

 

 

 

 

 

 

 

 

 

Subtotal southwest

 

$

46,323

 

 

$

22,203

 

 

$

10,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal second lien debt

 

$

46,323

 

 

$

22,203

 

 

$

10,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loadmaster Derrick & Equipment, Inc. (15)(17)

 

Energy: Oil & Gas

 

 

 

7/1/2016

 

 

 

 

2,956

 

 

$

1,114

 

 

$

 

Loadmaster Derrick & Equipment, Inc. (15)(18)

 

Energy: Oil & Gas

 

 

 

12/21/2016

 

 

 

 

12,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal southeast

 

 

 

 

 

$

1,114

 

 

$

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OEM Group, LLC (10) (12) (15) (20)

 

Capital Equipment

 

 

 

3/16/2016

 

 

 

 

20,000

 

 

$

8,890

 

 

$

 

 

 

 

 

 

 

 

 

Subtotal southwest

 

 

 

 

 

$

8,890

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal equity

 

 

 

 

 

$

10,004

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—37.27% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—37.27% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Eagle Logan JV, LLC (10)(14)(15)(16)(18)(21)

 

Investment Funds And Vehicles

 

 

 

12/3/2014

 

 

 

 

 

 

 

$

92,013

 

 

$

71,443

 

 

 

 

 

 

 

 

 

Subtotal northeast

 

 

 

 

 

$

92,013

 

 

$

71,443

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal investments in funds

 

 

 

 

 

$

92,013

 

 

$

71,443

 

Total controlled investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these consolidated financial statements.

 

13


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

March 31, 2021

(dollar amounts in thousands)

 

—51.33% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

$

148,856

 

 

$

98,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled/affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Eagle Greenway Fund II, LLC (10)(14)(18)(21)

 

Investment Funds And Vehicles

 

 

 

3/1/2013

 

 

 

 

 

 

 

$

1

 

 

$

1

 

 

 

 

 

 

 

 

 

Subtotal northeast

 

 

 

 

 

$

1

 

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal investments in funds

 

 

 

 

 

$

1

 

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-controlled/affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1

 

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments—189.37% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

$

414,904

 

 

$

362,965

 

(1)

All debt investments are income-producing, unless otherwise noted. Equity and member interests are non-income-producing unless otherwise noted. The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended, or the Securities Act. Its investments are therefore generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.

(2)

All investments are pledged as collateral under the Revolving Facility.

(3)

As of March 31, 2021, 30.1% and 28.7% of the Company’s total investments on a cost and fair value basis, respectively, are in non-qualifying assets. The Company may not acquire any non-qualifying assets unless, at the time of the acquisition, qualifying assets represent at least 70% of the Company’s total assets.

(4)

Variable interest rate investments bear interest in reference to London Interbank offer rate, or LIBOR, or Alternate Base Rate, or ABR, which are effective as of March 31, 2021. LIBOR loans are typically indexed to 30-day, 60-day, 90-day or 180-day LIBOR rates, at the borrower’s option, and ABR rates are typically indexed to the current prime rate or federal funds rate. Each of the LIBOR and ABR rates may be subject to interest floors. As of March 31, 2021, the 30-day, 60-day, 90-day and 180-day LIBOR rates were 0.11%, 0.13%, 0.19% and 0.21%, respectively. There were no ABR loans outstanding at March 31, 2021.

(5)

Principal includes accumulated PIK interest and is net of repayments.

(6)

Unless otherwise indicated, all investments are valued using significant unobservable inputs. Refer to Level 3 fair value measurements quantitative information table in Note 3 of the Consolidated Financial Statements for further detail.

(7)

Foreign company or foreign co-borrower at the time of investment and, as a result, is not a qualifying asset under Section 55(a) of the 1940 Act.

(8)

Company pays 0.50% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

(9)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.

(10)

Member interests of limited liability companies are the equity equivalents of the stock of corporations.

(11)

In certain instances, at the option of the issuer, interest can be paid in cash or cash and PIK. The percentage of PIK shown is the maximum PIK that can be elected by the company. As of March 31, 2021, there were no issuers with this option.

(12)

Equity ownership may be held in shares or units of companies related to the portfolio company.

(13)

Interest held by a wholly owned subsidiary of First Eagle Alternative Capital BDC, Inc.

See accompanying notes to these consolidated financial statements.

 

14


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

March 31, 2021

(dollar amounts in thousands)

 

(14)

Investments that the Company has determined are not “qualifying assets” under Section 55(a) of the 1940 Act. The status of these assets under the 1940 Act is subject to change. The Company monitors the status of these assets on an ongoing basis.

(15)

As defined in Section 2(a)(9) of the 1940 Act, the Company is deemed to control this portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities. See Schedule 12-14 in the accompanying notes to the consolidated financial statements for transactions for the three months ended March 31, 2021 in which the issuer was a portfolio company that the Company is deemed to control.

(16)

On December 3, 2014, the Company entered into an agreement with Perspecta (as described in Note 3 hereto) to create First Eagle Logan JV, LLC (formerly known as THL Credit Logan JV LLC), or Logan JV, a joint venture, which invests primarily in senior secured first lien term loans. All Logan JV investment decisions must be unanimously approved by the Logan JV investment committee consisting of one representative from each of the Company and Perspecta. Although the Company owns more than 25% of the voting securities of Logan JV, the Company does not believe that it has control over Logan JV (other than for purposes of the 1940 Act or otherwise).

(17)

Preferred stock.

(18)

Common stock and member interest.

(19)

Loan was on non-accrual as of March 31, 2021.

(20)

Includes $577 of cost and $0 of fair value related to a non-controlling interest as a result of consolidating a blocker corporation that holds equity in OEM Group, LLC as of March 31, 2021.

(21)

Investment is measured at fair value using net asset value.

(22)

Company pays 0.38% unfunded commitment fee on revolving loan facility.

(23)

Company pays 1.00% unfunded commitment fee on delayed draw term loan facility.

(24)

Company pays 0.25% unfunded commitment fee on revolving loan facility.

(25)

Restructured loan for which income is not being recognized as of March 31, 2021.

(26)

The underlying investment of SPST Investors II, LLC is SPST Holdings, LLC which the Company holds 0.40% ownership interest in SPST Holdings, LLC’s common shares, and 0.44% ownership interest in SPST Holdings, LLC’s preferred shares.

(27)

On January 1, 2021, the loan was placed in forbearance, with a forbearance termination date of December 31, 2021.

 

 

See accompanying notes to these consolidated financial statements.

 

15


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

December 31, 2020

(dollar amounts in thousands)

 

 

 

 

 

 

 

 

Initial

 

Maturity/

 

Principal(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition

 

Dissolution

 

No. of Shares /

 

 

 

 

 

 

 

 

 

Type of Investment/Portfolio company (1)(2)(3)

 

Industry

 

Interest Rate(4)

 

Date

 

Date

 

No. of Units

 

 

Amortized Cost

 

 

Fair Value (6)

 

Non-controlled/non-affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—131.65% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First lien senior secured debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—117.56% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—3.64% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PDFTron Systems Inc. (7)

 

Services: Business

 

7.3% (LIBOR + 6.0%)

 

5/15/2019

 

5/15/2024

 

$

4,938

 

 

$

4,903

 

 

$

4,938

 

PDFTron Systems Inc. (7)(23)

 

Services: Business

 

7.3% (LIBOR + 6.0%)

 

5/15/2019

 

5/15/2024

 

 

1,086

 

 

 

1,079

 

 

 

1,086

 

PDFTron Systems Inc. (7)(23)

 

Services: Business

 

7.3% (LIBOR + 6.0%)

 

5/15/2019

 

5/15/2024

 

 

320

 

 

 

316

 

 

 

320

 

PDFTron Systems Inc. (7)

 

Services: Business

 

8.8% (LIBOR + 7.5%)

 

6/19/2020

 

5/15/2024

 

 

398

 

 

 

389

 

 

 

398

 

PDFTron Systems Inc. (7)(9)(22)

 

Services: Business

 

8.8% (LIBOR + 7.5%)

 

6/19/2020

 

5/15/2024

 

 

 

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

Subtotal Canada

 

$

6,742

 

 

$

6,677

 

 

$

6,742

 

Midwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—12.88% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Web Technologies

 

Containers, Packaging, & Glass

 

7% (LIBOR + 6%)

 

12/17/2020

 

12/17/2026

 

$

2,053

 

 

$

2,012

 

 

$

2,012

 

Advanced Web Technologies (8)

 

Containers, Packaging, & Glass

 

7% (LIBOR + 6%)

 

12/17/2020

 

12/17/2026

 

 

46

 

 

 

39

 

 

 

45

 

Advanced Web Technologies (9)(23)

 

Containers, Packaging, & Glass

 

7% (LIBOR + 6%)

 

12/17/2020

 

12/17/2026

 

 

 

 

 

(16

)

 

 

 

Doxa Insurance Holdings, LLC

 

Insurance

 

7.3% (LIBOR + 6.3.0%)

 

12/4/2020

 

12/4/2026

 

 

1,600

 

 

 

1,560

 

 

 

1,560

 

Doxa Insurance Holdings, LLC (8)(9)

 

Insurance

 

7.3% (LIBOR + 6.3.0%)

 

12/4/2020

 

12/4/2026

 

 

 

 

 

(8

)

 

 

 

Doxa Insurance Holdings, LLC

 

Insurance

 

7.3% (LIBOR + 6.3.0%)

 

12/4/2020

 

12/4/2026

 

 

867

 

 

 

820

 

 

 

846

 

1-800 Hansons, LLC

 

High Tech Industries

 

7.5% (LIBOR + 6.5%) (6.5% Cash  + 1.0% PIK)

 

10/19/2017

 

10/19/2022

 

 

3,317

 

 

 

3,295

 

 

 

3,052

 

1-800 Hansons, LLC (8)

 

High Tech Industries

 

7.5% (LIBOR + 6.5%)

 

10/19/2017

 

10/19/2022

 

 

209

 

 

 

207

 

 

 

193

 

IRC Opco LLC

 

Healthcare & Pharmaceuticals

 

6.5% (LIBOR + 5.5%)

 

1/4/2019

 

1/4/2024

 

 

5,345

 

 

 

5,318

 

 

 

5,158

 

IRC Opco LLC (8)

 

Healthcare & Pharmaceuticals

 

6.5% (LIBOR + 5.5%)

 

1/4/2019

 

1/4/2024

 

 

818

 

 

 

814

 

 

 

790

 

Matilda Jane Holdings, Inc.

 

Consumer Goods: Non-Durable

 

9.5% (LIBOR + 8.5%)

 

4/28/2017

 

5/1/2022

 

 

12,307

 

 

 

12,239

 

 

 

10,211

 

Matilda Jane Holdings, Inc. (8)(9)

 

Consumer Goods: Non-Durable

 

9.5% (LIBOR + 8.5%)

 

10/30/2020

 

5/1/2022

 

 

 

 

 

(20

)

 

 

 

 

 

 

 

 

 

 

 

Subtotal midwest

 

$

26,562

 

 

$

26,260

 

 

$

23,867

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—29.61% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3SI Security Systems

 

Services: Consumer

 

6.8% (LIBOR + 5.8%)

 

12/17/2019

 

6/16/2023

 

$

4,065

 

 

$

4,036

 

 

$

3,902

 

AppFire Technologies, LLC

 

High Tech Industries

 

7.8% (LIBOR + 6.5%)

 

10/2/2020

 

10/2/2025

 

 

2,924

 

 

 

2,861

 

 

 

2,895

 

AppFire Technologies, LLC (8)(9)

 

High Tech Industries

 

7.8% (LIBOR + 6.5%)

 

10/2/2020

 

10/2/2025

 

 

 

 

 

(3

)

 

 

 

AppFire Technologies, LLC (23)

 

High Tech Industries

 

7.8% (LIBOR + 6.5%)

 

10/2/2020

 

10/2/2025

 

 

244

 

 

 

239

 

 

 

241

 

Aurotech, LLC

 

High Tech Industries

 

8% (LIBOR + 7%)

 

10/30/2020

 

10/30/2025

 

 

3,073

 

 

 

3,013

 

 

 

3,012

 

See accompanying notes to these consolidated financial statements.

 

16


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

December 31, 2020

(dollar amounts in thousands)

 

Aurotech, LLC (8)(9)

 

High Tech Industries

 

8% (LIBOR + 7%)

 

10/30/2020

 

10/30/2025

 

 

 

 

 

(8

)

 

 

 

Certify, Inc.

 

Services: Business

 

6.8% (LIBOR + 5.8%)

 

2/28/2019

 

2/28/2024

 

 

1,544

 

 

 

1,529

 

 

 

1,544

 

Certify, Inc. (24)

 

Services: Business

 

6.8% (LIBOR + 5.8%)

 

2/28/2019

 

2/28/2024

 

 

211

 

 

 

208

 

 

 

211

 

Certify, Inc. (8)

 

Services: Business

 

6.8% (LIBOR + 5.8%)

 

2/28/2019

 

2/28/2024

 

 

18

 

 

 

17

 

 

 

18

 

Communication Technology Intermediate (7)

 

Telecommunications

 

8.5% (LIBOR + 7.5.0%)

 

10/13/2020

 

10/13/2025

 

 

8,473

 

 

 

8,295

 

 

 

8,303

 

Communication Technology Intermediate (7)(8)(9)

 

Telecommunications

 

8.5% (LIBOR + 7.5.0%)

 

10/13/2020

 

10/13/2025

 

 

 

 

 

(13

)

 

 

 

HealthDrive Corporation

 

Healthcare & Pharmaceuticals

 

6.8% (LIBOR + 5.8%)

 

12/21/2018

 

12/21/2023

 

 

9,800

 

 

 

9,741

 

 

 

9,457

 

HealthDrive Corporation (8)

 

Healthcare & Pharmaceuticals

 

6.8% (LIBOR + 5.8%)

 

12/21/2018

 

12/21/2023

 

 

352

 

 

 

342

 

 

 

340

 

Multi Specialty Healthcare LLC

 

Healthcare & Pharmaceuticals

 

7.5% (LIBOR + 6.5%)

 

12/18/2020

 

12/18/2026

 

 

3,789

 

 

 

3,714

 

 

 

3,714

 

Multi Specialty Healthcare LLC (8)

 

Healthcare & Pharmaceuticals

 

7.5% (LIBOR + 6.5%)

 

12/18/2020

 

12/18/2026

 

 

 

 

 

(14

)

 

 

 

Quartermaster Newco, LLC

 

Healthcare & Pharmaceuticals

 

7.8% (LIBOR + 6.5.0%)

 

7/31/2020

 

7/31/2025

 

 

3,128

 

 

 

3,099

 

 

 

3,096

 

Quartermaster Newco, LLC (8)(9)

 

Healthcare & Pharmaceuticals

 

7.8% (LIBOR + 6.5.0%)

 

7/31/2020

 

7/31/2025

 

 

 

 

 

(3

)

 

 

 

smarTours, LLC

 

Services: Consumer

 

7.8% (LIBOR + 6.8%)

 

12/21/2020

 

12/31/2024

 

 

475

 

 

 

475

 

 

 

475

 

smarTours, LLC (8)(9)

 

Services: Consumer

 

8.8% (LIBOR + 7.8%)

 

12/21/2020

 

12/31/2024

 

 

2,158

 

 

 

2,158

 

 

 

2,158

 

Urology Management Associates, LLC

 

Healthcare & Pharmaceuticals

 

6.0% (LIBOR + 5.0%)

 

8/31/2018

 

8/31/2024

 

 

8,350

 

 

 

8,250

 

 

 

8,266

 

Women's Health USA, Inc.

 

Healthcare & Pharmaceuticals

 

8.8% (LIBOR + 7.8%)

 

10/9/2018

 

10/9/2023

 

 

7,290

 

 

 

7,273

 

 

 

7,217

 

Women's Health USA, Inc. (8)(9)

 

Healthcare & Pharmaceuticals

 

8.8% (LIBOR + 7.8%)

 

10/9/2018

 

10/9/2023

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

 

Subtotal northeast

 

$

55,894

 

 

$

55,198

 

 

$

54,849

 

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—8.66% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apex Services Partners, LLC

 

Capital Equipment

 

6.3% (LIBOR + 5.3%)

 

2/11/2020

 

7/31/2025

 

$

4,822

 

 

$

4,783

 

 

$

4,701

 

Apex Services Partners, LLC (23)

 

Capital Equipment

 

6.3% (LIBOR + 5.3%)

 

2/11/2020

 

7/31/2025

 

 

519

 

 

 

515

 

 

 

506

 

Groundworks Operations, LLC

 

Construction & Building

 

7.3% (LIBOR + 6.3%)

 

7/9/2020

 

1/17/2026

 

 

1,946

 

 

 

1,911

 

 

 

1,946

 

Groundworks Operations, LLC (8)(9)

 

Construction & Building

 

7.3% (LIBOR + 6.3%)

 

7/9/2020

 

1/17/2026

 

 

 

 

 

(2

)

 

 

 

Groundworks Operations, LLC (23)

 

Construction & Building

 

7.3% (LIBOR + 6.3%)

 

7/9/2020

 

1/17/2026

 

 

857

 

 

 

843

 

 

 

857

 

Groundworks Operations, LLC (23)

 

Construction & Building

 

7.3% (LIBOR + 6.3%)

 

7/9/2020

 

1/17/2026

 

 

398

 

 

 

378

 

 

 

398

 

Whitney, Bradley & Brown, Inc.

 

Services: Business

 

8.5% (LIBOR + 7.5%)

 

10/18/2017

 

10/18/2022

 

 

7,563

 

 

 

7,532

 

 

 

7,639

 

 

 

 

 

 

 

 

 

Subtotal southeast

 

$

16,105

 

 

$

15,960

 

 

$

16,047

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—24.28% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allied Wireline Services, LLC (11)(25)

 

Energy: Oil & Gas

 

10.0% PIK

 

6/15/2020

 

6/15/2025

 

$

4,951

 

 

$

4,971

 

 

$

3,961

 

BCDI Rodeo Dental Buyer, LLC

 

Healthcare & Pharmaceuticals

 

6.0% (LIBOR + 5.0%)

 

5/14/2019

 

5/14/2025

 

 

5,729

 

 

 

5,687

 

 

 

5,557

 

BCDI Rodeo Dental Buyer, LLC (8)

 

Healthcare & Pharmaceuticals

 

6.0% (LIBOR + 5.0%)

 

5/14/2019

 

5/14/2025

 

 

1,615

 

 

 

1,604

 

 

 

1,567

 

BCDI Rodeo Dental Buyer, LLC (8)

 

Healthcare & Pharmaceuticals

 

6.0% (LIBOR + 5.0%)

 

5/14/2019

 

5/14/2025

 

 

1,320

 

 

 

1,309

 

 

 

1,281

 

Igloo Products Corp.

 

Consumer Goods: Non-Durable

 

11.5% (LIBOR + 10.0%) (10.8% Cash + 0.8% PIK)

 

3/28/2014

 

3/28/2023

 

 

21,609

 

 

 

21,593

 

 

 

21,609

 

Neiman Marcus Group LTD LLC

 

Retail

 

9.5% (LIBOR + 8.5%)

 

9/25/2020

 

9/25/2024

 

 

3,000

 

 

 

2,942

 

 

 

2,940

 

Riveron Acquisition Holdings, Inc.

 

Finance

 

6.8% (LIBOR + 5.8%)

 

5/22/2019

 

5/22/2025

 

 

8,180

 

 

 

8,061

 

 

 

8,057

 

 

 

 

 

 

 

 

 

Subtotal southwest

 

$

46,404

 

 

$

46,167

 

 

$

44,972

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—38.49% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these consolidated financial statements.

 

17


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

December 31, 2020

(dollar amounts in thousands)

 

ABC Legal Services, Inc.

 

Finance

 

7% (LIBOR + 5.5%)

 

6/21/2019

 

6/21/2024

 

$

6,958

 

 

$

6,872

 

 

$

6,610

 

ABC Legal Services, Inc. (8)(9)

 

Finance

 

7% (LIBOR + 5.5%)

 

6/21/2019

 

6/21/2024

 

 

 

 

 

(8

)

 

 

 

Action Point, Inc (9)(23)

 

Chemicals, Plastics, & Rubber

 

7.5% (LIBOR + 6.5%)

 

12/17/2020

 

6/17/2026

 

 

 

 

 

(13

)

 

 

 

Action Point, Inc

 

Chemicals, Plastics, & Rubber

 

7.5% (LIBOR + 6.5%)

 

12/17/2020

 

6/17/2026

 

 

3,333

 

 

 

3,267

 

 

 

3,267

 

Alpine SG, LLC

 

High Tech Industries

 

6.8% (LIBOR + 5.8%)

 

4/9/2019

 

11/16/2022

 

 

1,316

 

 

 

1,309

 

 

 

1,316

 

Alpine SG, LLC

 

High Tech Industries

 

6.8% (LIBOR + 5.8%)

 

4/9/2019

 

11/16/2022

 

 

659

 

 

 

655

 

 

 

659

 

Alpine SG, LLC

 

High Tech Industries

 

7.5% (LIBOR + 6.5%)

 

11/2/2020

 

11/16/2022

 

 

1,500

 

 

 

1,459

 

 

 

1,500

 

EBS Intermediate LLC

 

Services: Consumer

 

6% (LIBOR + 5%)

 

10/2/2018

 

10/2/2023

 

 

7,788

 

 

 

7,712

 

 

 

7,788

 

EBS Intermediate LLC (8)(9)

 

Services: Consumer

 

6% (LIBOR + 5%)

 

10/2/2018

 

10/2/2023

 

 

-

 

 

 

(16

)

 

 

-

 

Evergreen Services Group, LLC

 

High Tech Industries

 

7.0% (LIBOR + 6.0%)

 

11/13/2018

 

6/6/2023

 

 

9,339

 

 

 

9,288

 

 

 

9,339

 

Finxera Intermediate, LLC

 

Finance

 

6.8% (LIBOR + 5.8%)

 

3/3/2020

 

8/27/2024

 

 

6,946

 

 

 

6,889

 

 

 

6,946

 

Gener8, LLC

 

Services: Business

 

6.5% (LIBOR + 5.5%)

 

8/14/2018

 

8/14/2023

 

 

5,857

 

 

 

5,810

 

 

 

5,857

 

Gener8, LLC (8)(9)

 

Services: Business

 

6.5% (LIBOR + 5.5%)

 

8/14/2018

 

8/14/2023

 

 

 

 

 

(12

)

 

 

 

Lash Opco LLC

 

Consumer Goods: Non-Durable

 

9.3% (PRIME + 6%)

 

9/18/2020

 

3/18/2026

 

 

3,022

 

 

 

2,950

 

 

 

2,947

 

Lash Opco LLC (8)(9)

 

Consumer Goods: Non-Durable

 

9.3% (PRIME + 6%)

 

9/18/2020

 

9/18/2025

 

 

 

 

 

(8

)

 

 

 

Lash Opco LLC

 

Consumer Goods: Non-Durable

 

9.3% (PRIME + 6%)

 

12/31/2020

 

3/18/2026

 

 

1,000

 

 

 

975

 

 

 

975

 

MarkLogic Corporation

 

High Tech Industries

 

9% (LIBOR + 8%)

 

10/20/2020

 

10/20/2025

 

 

3,150

 

 

 

3,089

 

 

 

3,087

 

MarkLogic Corporation (9)(23)

 

High Tech Industries

 

9% (LIBOR + 8%)

 

10/20/2020

 

10/20/2025

 

 

 

 

 

(5

)

 

 

 

MeriCal, LLC

 

Consumer Goods: Non-Durable

 

6.5% (LIBOR + 5.5%)

 

11/16/2018

 

11/16/2021

 

 

7,415

 

 

 

7,415

 

 

 

7,415

 

SolutionReach, Inc.

 

Services: Consumer

 

6.8% (LIBOR + 5.8%)

 

1/17/2019

 

1/17/2024

 

 

6,255

 

 

 

6,178

 

 

 

6,255

 

SolutionReach, Inc. (8)

 

Services: Consumer

 

6.8% (LIBOR + 5.8%)

 

1/17/2019

 

1/17/2024

 

 

700

 

 

 

688

 

 

 

700

 

SRS Acquiom Holdings LLC

 

Finance

 

6.8% (LIBOR + 5.8%)

 

11/8/2018

 

11/8/2024

 

 

4,200

 

 

 

4,173

 

 

 

3,696

 

Trace3, LLC

 

High Tech Industries

 

7.8% (LIBOR + 6.8%)

 

11/4/2020

 

8/3/2024

 

 

3,023

 

 

 

2,934

 

 

 

2,932

 

 

 

 

 

 

 

 

 

Subtotal west

 

$

72,461

 

 

$

71,601

 

 

$

71,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal first lien senior secured debt

 

$

224,168

 

 

$

221,863

 

 

$

217,766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second lien debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—6.63% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—6.63% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchants Capital Access, LLC (14)

 

Banking

 

11.5% (LIBOR + 10.5%)

 

4/20/2015

 

4/20/2021

 

$

12,000

 

 

$

11,988

 

 

$

11,880

 

smarTours, LLC

 

Services: Consumer

 

8.8% (LIBOR + 7.8%)

 

12/21/2020

 

12/31/2024

 

$

1,295

 

 

$

543

 

 

$

408

 

 

 

 

 

 

 

 

 

Subtotal northeast

 

$

13,295

 

 

$

12,531

 

 

$

12,288

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal second lien debt

 

$

13,295

 

 

$

12,531

 

 

$

12,288

 

See accompanying notes to these consolidated financial statements.

 

18


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

December 31, 2020

(dollar amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subordinated debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—3.15% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—3.15% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C&K Market, Inc.

 

Retail

 

11.0% (8% Cash + 3% PIK)

 

12/29/2020

 

12/29/2025

 

$

5,841

 

 

$

5,841

 

 

$

5,841

 

 

 

 

 

 

 

 

 

Subtotal west

 

$

5,841

 

 

$

5,841

 

 

$

5,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal Subordinated debt

 

$

5,841

 

 

$

5,841

 

 

$

5,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—2.74% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.07% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Doxa Insurance Holdings, LLC (18)

 

Insurance

 

 

 

12/4/2020

 

 

 

 

129,187

 

 

$

129

 

 

$

129

 

Matilda Jane Holdings, Inc. (12)(17)

 

Consumer Goods: Non-Durable

 

 

 

4/28/2017

 

 

 

 

2,587,855

 

 

 

489

 

 

 

 

 

 

 

 

 

 

Subtotal midwest

 

 

 

 

 

$

618

 

 

$

129

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—1.99% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alex Toys, LLC (10)(12)(13)(18)

 

Consumer Goods: Non-Durable

 

 

 

5/22/2015

 

 

 

 

154

 

 

$

1,000

 

 

$

 

Alex Toys, LLC (10)(12)(13) (17)

 

Consumer Goods: Non-Durable

 

 

 

6/22/2016

 

6/12/2021

 

 

121

 

 

 

888

 

 

 

 

Certify, Inc. (18)

 

Services: Business

 

 

 

2/28/2019

 

 

 

 

841

 

 

 

175

 

 

 

200

 

Specialty Brands Holdings, LLC (17)

 

Services: Business

 

 

 

6/29/2018

 

 

 

 

58

 

 

 

 

 

 

 

Specialty Brands Holdings, LLC (18)

 

Services: Business

 

 

 

6/29/2018

 

 

 

 

1,232

 

 

 

 

 

 

 

SPST Holdings, LLC (10)(13)(18)

 

Services: Consumer

 

 

 

12/21/2020

 

 

 

 

820,040

 

 

 

 

 

 

 

SPST Holdings, LLC (10)(13)(17)

 

Services: Consumer

 

 

 

12/21/2020

 

 

 

 

3,237

 

 

 

216

 

 

 

 

SPST Investors II, LLC (10)(13)(18)(26)

 

Services: Consumer

 

 

 

12/21/2020

 

 

 

 

51,095

 

 

 

51

 

 

 

 

Urology Management Associates, LLC (18)

 

Healthcare & Pharmaceuticals

 

 

 

8/31/2018

 

 

 

 

769

 

 

 

769

 

 

 

916

 

Wheels Up Partners, LLC (10)(13)(18)

 

Transportation: Consumer

 

 

 

1/31/2014

 

 

 

 

1,000,000

 

 

 

1,000

 

 

 

2,574

 

 

 

 

 

 

 

Subtotal northeast

 

 

 

 

 

$

4,099

 

 

$

3,690

 

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.02% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Virtus Aggregator, LLC (10)(13)(18)

 

Healthcare & Pharmaceuticals

 

 

 

5/7/2020

 

 

 

 

10

 

 

$

32

 

 

$

32

 

 

 

 

 

 

 

Subtotal southeast

 

 

 

 

 

$

32

 

 

$

32

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.02% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allied Wireline Services, LLC (10)(13)(18)

 

Energy: Oil & Gas

 

 

 

6/15/2020

 

 

 

 

4,538

 

 

$

144

 

 

$

 

Allied Wireline Services, LLC (10)(13)(18)

 

Energy: Oil & Gas

 

 

 

6/15/2020

 

 

 

 

2,063

 

 

 

 

 

 

 

Igloo Products Corp. (18)

 

Consumer Goods: Non-Durable

 

 

 

4/30/2014

 

 

 

 

1,902

 

 

 

1,716

 

 

 

40

 

See accompanying notes to these consolidated financial statements.

 

19


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

December 31, 2020

(dollar amounts in thousands)

 

 

 

 

 

 

 

Subtotal southwest

 

 

 

 

 

$

1,860

 

 

$

40

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.64% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MeriCal, LLC (10) (12) (17)

 

Consumer Goods: Non-Durable

 

 

 

9/30/2016

 

 

 

 

521

 

 

$

505

 

 

$

701

 

MeriCal, LLC (10) (12) (18)

 

Consumer Goods: Non-Durable

 

 

 

9/30/2016

 

 

 

 

5,334

 

 

 

10

 

 

 

97

 

Sciens Building Solutions, LLC (10) (17)

 

Services: Business

 

 

 

7/12/2017

 

 

 

 

194

 

 

 

213

 

 

 

381

 

 

 

 

 

 

 

Subtotal west

 

 

 

 

 

$

728

 

 

$

1,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal equity

 

 

 

 

 

$

7,337

 

 

$

5,070

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C&K Market, Inc.

 

Retail

 

 

 

12/29/2020

 

 

 

 

1,063,221

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

Subtotal southwest

 

 

 

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal warrants

 

 

 

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—1.56% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Midwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—1.43% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Freeport Financial SBIC Fund LP (14)(21)

 

Finance

 

 

 

6/14/2013

 

 

 

 

 

 

 

$

2,957

 

 

$

2,652

 

 

 

 

 

 

 

 

 

Subtotal midwest

 

 

 

 

 

$

2,957

 

 

$

2,652

 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.13% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gryphon Partners 3.5, L.P. (14)(21)

 

Finance

 

 

 

11/20/2012

 

 

 

 

 

 

 

$

399

 

 

$

238

 

 

 

 

 

 

 

 

 

Subtotal west

 

 

 

 

 

$

399

 

 

$

238

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal investments in funds

 

 

 

 

 

$

3,356

 

 

$

2,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-controlled/non-affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—131.65% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

$

250,928

 

 

$

243,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlled investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—50.65% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First lien senior secured debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these consolidated financial statements.

 

20


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

December 31, 2020

(dollar amounts in thousands)

 

—8.57% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—3.98% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loadmaster Derrick & Equipment, Inc. (15)(19)

 

Energy: Oil & Gas

 

11.3% (LIBOR + 10.3% PIK)

 

7/1/2016

 

12/31/2020

 

$

11,576

 

 

$

7,307

 

 

$

 

Loadmaster Derrick & Equipment, Inc. (15)(19)

 

Energy: Oil & Gas

 

13.0% (LIBOR + 12.0% PIK)

 

7/1/2016

 

12/31/2020

 

 

2,750

 

 

 

1,053

 

 

 

 

Loadmaster Derrick & Equipment, Inc. (15)(19)

 

Energy: Oil & Gas

 

11.3% (LIBOR+ 10.3% PIK)

 

1/17/2017

 

12/31/2020

 

 

9,214

 

 

 

7,182

 

 

 

7,370

 

 

 

 

 

 

 

 

 

Subtotal southeast

 

$

23,540

 

 

$

15,542

 

 

$

7,370

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—4.59% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OEM Group, LLC (15)(25)

 

Capital Equipment

 

8.5% (LIBOR + 7.5%)

 

9/30/2020

 

9/30/2025

 

$

8,500

 

 

$

8,500

 

 

$

8,500

 

 

 

 

 

 

 

 

 

Subtotal southwest

 

$

8,500

 

 

$

8,500

 

 

$

8,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal first lien senior secured debt

 

$

32,040

 

 

$

24,042

 

 

$

15,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second lien debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—5.3.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—5.3.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OEM Group, LLC (15) (25)

 

Capital Equipment

 

10.0% PIK

 

9/30/2020

 

9/30/2025

 

$

45,198

 

 

$

22,203

 

 

$

9,823

 

 

 

 

 

 

 

 

 

Subtotal southwest

 

$

45,198

 

 

$

22,203

 

 

$

9,823

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal second lien debt

 

$

45,198

 

 

$

22,203

 

 

$

9,823

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Southeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loadmaster Derrick & Equipment, Inc. (15)(17)

 

Energy: Oil & Gas

 

 

 

7/1/2016

 

 

 

 

2,956

 

 

$

1,114

 

 

$

 

Loadmaster Derrick & Equipment, Inc. (15)(18)

 

Energy: Oil & Gas

 

 

 

12/21/2016

 

 

 

 

12,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal southeast

 

 

 

 

 

$

1,114

 

 

$

 

Southwest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OEM Group, LLC (10) (12) (15) (20)

 

Capital Equipment

 

 

 

3/16/2016

 

 

 

 

20,000

 

 

$

8,890

 

 

$

 

 

 

 

 

 

 

 

 

Subtotal southwest

 

 

 

 

 

$

8,890

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal equity

 

 

 

 

 

$

10,004

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to these consolidated financial statements.

 

21


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

December 31, 2020

(dollar amounts in thousands)

 

Investments in funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—36.78% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—36.78% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Eagle Logan JV, LLC (10)(14)(15)(16)(18)(21)

 

Investment Funds And Vehicles

 

 

 

12/3/2014

 

 

 

 

 

 

 

$

92,124

 

 

$

68,133

 

 

 

 

 

 

 

 

 

Subtotal northeast

 

 

 

 

 

$

92,124

 

 

$

68,133

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal investments in funds

 

 

 

 

 

$

92,124

 

 

$

68,133

 

Total controlled investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—50.65% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

$

148,373

 

 

$

93,826

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-controlled/affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northeast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Eagle Greenway Fund II, LLC (10)(14)(18)(21)

 

Investment Funds And Vehicles

 

 

 

3/1/2013

 

 

 

 

 

 

 

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

Subtotal northeast

 

 

 

 

 

$

1

 

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal investments in funds

 

 

 

 

 

$

1

 

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-controlled/affiliated investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—0.00% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1

 

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total investments—182.3% of net asset value

 

 

 

 

 

 

 

 

 

 

 

 

 

$

399,302

 

 

$

337,682

 

 

 

(1)

All debt investments are income-producing, unless otherwise noted. Equity and member interests are non-income-producing unless otherwise noted. The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended, or the Securities Act. Its investments are therefore generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.

(2)

All investments are pledged as collateral under the Revolving Facility.

(3)

As of December 31, 2020, 30.7% and 29.0% of the Company’s total investments on a cost and fair value basis, respectively, are in non-qualifying assets. The Company may not acquire any non-qualifying assets unless, at the time of the acquisition, qualifying assets represent at least 70% of the Company’s total assets.

(4)

Variable interest rate investments bear interest in reference to London Interbank offer rate, or LIBOR, or Alternate Base Rate, or ABR, which are effective as of December 31, 2020. LIBOR loans are typically indexed to 30-day, 60-day, 90-day or 180-day LIBOR rates, at the borrower’s option, and ABR rates are typically indexed to the current prime rate or federal funds rate. Each of LIBOR and ABR rates may be subject to interest floors. As of December 31, 2020, the 30-day, 60-day, 90-day and 180-day LIBOR rates were 0.14%, 0.19%, 0.24% and 0.26%, respectively.

See accompanying notes to these consolidated financial statements.

 

22


First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Consolidated Schedules of Investments

December 31, 2020

(dollar amounts in thousands)

 

(5)

Principal includes accumulated PIK interest and is net of repayments.

(6)

Unless otherwise indicated, all investments are valued using significant unobservable inputs. Refer to Level 3 fair value measurements quantitative information table in Note 3 of the Consolidated Financial Statements for further detail.

(7)

Foreign company or foreign co-borrower at the time of investment and, as a result, is not a qualifying asset under Section 55(a) of the 1940 Act.

(8)

Company pays 0.50% unfunded commitment fee on delayed draw term loan and/or revolving loan facilities.

(9)

The negative cost is the result of the capitalized discount being greater than the principal amount outstanding on the loan.

(10)

Member interests of limited liability companies are the equity equivalents of the stock of corporations.

(11)

In certain circumstances, at the option of the issuer, interest can be paid in cash or cash and PIK. The percentage of PIK shown is the maximum PIK that can be elected by the company. As of December 31, 202, there were no issuers with this option.

(12)

Equity ownership may be held in shares or units of companies related to the portfolio company.

(13)

Interest held by a wholly owned subsidiary of First Eagle Alternative Capital BDC, Inc.

(14)

Investments that the Company has determined are not “qualifying assets” under Section 55(a) of the 1940 Act. The status of these assets under the 1940 Act is subject to change. The Company monitors the status of these assets on an ongoing basis.

(15)

As defined in Section 2(a)(9) of the 1940 Act, the Company is deemed to control this portfolio company because it owns more than 25% of the portfolio company’s outstanding voting securities.

(16)

On December 3, 2014, the Company entered into an agreement with Perspecta (as described in Note 3 hereto) to create First Eagle Logan JV, LLC (formerly known as THL Credit Logan JV LLC), or Logan JV, a joint venture, which invests primarily in senior secured first lien term loans. All Logan JV investment decisions must be unanimously approved by the Logan JV investment committee consisting of one representative from each of the Company and Perspecta. Although the Company owns more than 25% of the voting securities of Logan JV, the Company does not believe that it has control over Logan JV (other than for purposes of the 1940 Act or otherwise).

(17)

Preferred stock.

(18)

Common stock and member interest.

(19)

Loan was on non-accrual as of December 31, 2020.

(20)

Includes $577 of cost and $0 of fair value related to a non-controlling interest as a result of consolidating a blocker corporation that holds equity in OEM Group, LLC as of December 31, 2020.

(21)

Investment is measured at fair value using net asset value.

(22)

Company pays 0.38% unfunded commitment fee on revolving loan facility.

(23)

Company pays 1.00% unfunded commitment fee on delayed draw term loan facility.

(24)

Company pays 0.25% unfunded commitment fee on revolving loan facility.

(25)

Restructured loan for which income is not being recognized as of December 31, 2020.

(26)  

The underlying investment of SPST Investors II, LLC is SPST Holdings, LLC which the Company holds 0.40% ownership interest in SPST Holdings, LLC’s common shares, and 0.44% ownership interest in SPST Holdings, LLC’s preferred shares.

 

 

See accompanying notes to these consolidated financial statements.

 

23


 

 

First Eagle Alternative Capital BDC, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2021

(in thousands, except per share data)

(unaudited)

1. Organization

First Eagle Alternative Capital BDC, Inc. (formerly known as THL Credit, Inc.), or the Company, was organized as a Delaware corporation on May 26, 2009. The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or 1940 Act. The Company has elected to be treated for tax purposes as a regulated investment company, or RIC, under the Internal Revenue Code of 1986, as amended, or the Code. The Company’s investment objective is to generate both current income and capital appreciation, primarily through privately negotiated investments in debt and equity securities of middle market companies.

The Company has established from time to time wholly owned subsidiaries or other subsidiaries that are structured as Delaware entities, or as tax 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). Corporate subsidiaries are not consolidated for income tax purposes and may incur income tax expense as a result of their ownership of portfolio companies.

The Company has a wholly owned subsidiary, First Eagle Alternative Capital Agent, Inc., which serves as the administrative agent on certain investment transactions.

2. Significant Accounting Policies and Recent Accounting Pronouncements

Basis of Presentation

The Company is an investment company following the accounting and reporting guidance under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services—Investment Companies.

The consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. In accordance with Article 6 of Regulation S-X under the Securities Act of 1933, as amended, and the Securities and Exchange Act of 1934, as amended, the Company generally will not consolidate its interest in any company other than majority owned investment company subsidiaries and controlled operating companies substantially all of whose business consists of providing services to the Company.

The accompanying consolidated financial statements of the Company have been presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. In the opinion of management, the unaudited financial results included herein contain all adjustments, consisting solely of normal accruals, considered necessary for the fair statement of financial statements for the interim period included herein. The current period’s results of operations are not necessarily indicative of the operating results to be expected for the period ending December 31, 2021.

The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 5, 2021. The financial results of the Company’s portfolio companies are not consolidated in the financial statements.

The accounting records of the Company are maintained in U.S. dollars.

Consolidation

The Company follows the guidance in ASC Topic 946 Financial Services—Investment Companies and will not generally consolidate its investment in a company other than substantially owned investment company subsidiaries or a controlled operating company whose business consists of providing services to the Company. The Company consolidated the results of its substantially owned subsidiaries in its consolidated financial statements. The Company does not consolidate its non-controlling interest in First Eagle Logan JV, LLC (formerly known as THL Credit Logan JV LLC) or Logan JV. See also the disclosure under the heading, First Eagle Logan JV, LLC.

24


 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that may affect the reported amounts and disclosures in the financial statements. Changes in the economic environment, financial markets, creditworthiness of the Company’s portfolio companies and any other parameters used in determining these estimates could cause actual results to differ and these differences could be material.

Cash

Cash consists of funds held in demand deposit accounts at two financial institutions and, at certain times, balances may exceed the Federal Deposit Insurance Corporation insured limit and is therefore subject to credit risk. There were no cash equivalents as of March 31, 2021 and December 31, 2020.

Deferred Financing Costs

Deferred financing costs consist of fees and expenses paid in connection with the closing and amendments of the Revolving Facility (as defined in Note 7 hereto) and public offering of Notes (as defined in Note 7 hereto) including legal, accounting, printing fees and other related expenses, as well as costs incurred in connection with the filing of a shelf registration statement. These costs are capitalized at the time of payment and are amortized using the straight line and effective yield methods over the term of the Revolving Facility and Notes, respectively.

Under the Notes payable, if there is a substantial modification of the terms of the existing agreement (greater than 10% change in the present value of cash flows under the old and new amended facilities) then the change would result in a debt extinguishment and any unamortized deferred financing costs would be expensed during that period. Third party costs under the new arrangement would be capitalized and amortized over the term of the new arrangement. Under the Revolving Facility, if the borrowing capacity of the new arrangement is lower than the borrowing capacity of the old arrangement evaluated on a lender by lender basis, then any unamortized deferred financing costs would be expensed during the period in proportion to the decrease in the old arrangement for that lender. Any remaining unamortized deferred financing costs relating to the old arrangement would be deferred and amortized over the term of the new arrangement along with any costs associated with the new arrangement.

Capitalized deferred financing costs related to the Notes are presented net against the respective balances outstanding on the Consolidated Statements of Assets and Liabilities. Capitalized deferred financing costs related to the Revolving Facility are presented separately on the Company’s Consolidated Statements of Assets and Liabilities. See also the disclosure in Note 7, Borrowings.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash, accounts payable and accrued expenses, approximate fair value due to their short-term nature. The carrying amounts and fair values of the Company’s long-term debt obligations are disclosed in Note 7, Borrowings.

Valuation of Investments

The Company accounts for its Investment Portfolio at fair value. As a result, the Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

Investments, for which market quotations are readily available and reliable, are valued using market quotations, which are generally obtained from an independent pricing service or broker-dealers or market makers. Debt and equity securities, for which market quotations are not readily available or are determined to be unreliable are valued at fair value as determined in good faith by the Company’s board of directors. Because the Company expects that there will not be a readily available market value for many of the investments in the Company’s portfolio, it is expected that many of the Company’s portfolio investments’ values will be determined in good faith by the Company’s board of directors in accordance with a documented valuation policy that has been reviewed and approved by the Company’s board of directors and in accordance with GAAP. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

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

 

the Company’s quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals responsible for managing portfolio investments;

25


 

 

preliminary valuation conclusions are then documented and are reviewed with the pricing committee of First Eagle Alternative Credit, LLC, or the Advisor;

 

to the extent determined by the audit committee of the Company’s board of directors, independent valuation firms are used to conduct independent appraisals of all “Level 3” investments and review the Advisor’s preliminary valuations in light of their own independent assessment unless the amounts are immaterial or have closed near quarter-end;

 

the audit committee of the Company’s board of directors reviews the preliminary valuations approved by the pricing committee of the Advisor and independent valuation firms and, if necessary, responds and supplements the valuation recommendation of the independent valuation firms to reflect any comments; and

 

the Company’s board of directors discusses valuations and determines the fair value of each investment in the Company’s portfolio in good faith based on the input of the Advisor, the respective independent valuation firms and the audit committee.

The types of factors that the Company may take into account in fair value pricing its investments include, as relevant, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, comparison to publicly traded securities and other relevant factors. The Company generally utilizes an income approach to value its debt investments and a combination of income and market approaches to value its equity investments. With respect to unquoted securities, the Advisor and the Company’s board of directors, in consultation with the Company’s independent third party valuation firms, values each investment considering, among other measures, discounted cash flow models, comparisons of financial ratios of peer companies that are public and other factors, which valuation is then approved by the board of directors.

Debt Investments

For debt investments, the Company generally determines the fair value using an income, or yield, approach that analyzes the discounted cash flows of interest and principal for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of each portfolio investment. The Company’s estimate of the expected repayment date is generally the legal maturity date of the investment. The yield analysis considers changes in leverage levels, credit quality, portfolio company performance and other factors. The enterprise value, a market approach, is used to determine the value of equity and debt investments that are credit impaired, close to maturity or where the Company also holds a controlling equity interest. The method for determining enterprise value uses a multiple analysis, whereby appropriate multiples are applied to the portfolio company’s revenues or net income before net interest expense, income tax expense, depreciation and amortization, or EBITDA.

 

Escrow and Other Receivables

Escrow and other receivables are categorized within Level 3 of the fair value hierarchy where the net realizable value of the escrow and other receivables approximates fair value. The fair value is determined using probability weighted scenario analysis.

Equity

The Company generally uses the market approach to value its equity investments. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that the Company may take into account in fair value pricing the Company’s investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, the current investment performance rating, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, transaction comparables, the Company’s principal market as the reporting entity and enterprise values, among other factors.

Investment in Funds

In circumstances in which net asset value per share of an investment is determinative of fair value, the Company estimates the fair value of an investment in an investment company using the net asset value per share of the investment (or its equivalent) without further adjustment if the net asset value per share of the investment is determined in accordance with the specialized accounting guidance for investment companies as of the reporting entity’s measurement date.

26


 

Security Transactions, Payment-in-Kind, Income Recognition, Realized/Unrealized Gains or Losses

Security transactions are recorded on a trade-date basis. The Company measures realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, using the specific identification method. Net realized gains and losses reflect the impact of investments written off during the period, if any. The Company reports changes in fair value of investments that are measured at fair value as a component of net change in unrealized appreciation or depreciation on investments in the Consolidated Statements of Operations.

Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis to the extent that the Company expects to collect such amounts. Original issue discount, representing the estimated fair value of detachable equity or warrants obtained in conjunction with the acquisition of debt securities and market discount or premium are capitalized and accreted or amortized into interest income over the life of the respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion/amortization of discounts and premiums and upfront loan origination fees.

Dividend income on preferred equity investments is recorded on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity investments is recorded on the record date for private portfolio companies and on the ex-dividend date for publicly traded portfolio companies. Distributions received from a limited liability company or limited partnership investment are evaluated to determine if the distribution should be recorded as dividend income or a return of capital.

Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more and/or when it is no longer probable that principal or interest will be collected. However, the Company may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection. The Company records the reversal of any previously accrued income against the same income category reflected in the Consolidated Statement of Operations. As of March 31, 2021, the Company had loans on non-accrual status with an amortized cost basis of $15,560 and fair value of $7,806. As of December 31, 2020, the Company had loans on non-accrual status with an amortized cost basis of $15,542 and fair value of $7,370.

In certain instances, the Company may enter into an agreement to restructure a loan, where the Company determined the full balance of principal or interest may not be collectible at the date of origination. As a result of this determination, the Company does not recognize interest income on these balances. As of March 31, 2021, the Company had restructured loans with an amortized cost basis of $27,174 and fair value of $14,028, which meet the above criteria. As of December 31, 2020, the Company had restructured loans with an amortized cost basis of $27,174 and fair value of $13,782.

The Company has investments in its portfolio which contain a contractual paid-in-kind, or PIK, interest provision. PIK interest is computed at the contractual rate specified in each investment agreement, is added to the principal balance of the investment, and is recorded as income. The Company will cease accruing PIK interest if there is insufficient value to support the accrual or if the Company does not expect amounts to be collectible and will generally only begin to recognize PIK income again when all principal and interest have been paid or upon the restructuring of the investment where the interest is deemed collectable. To maintain the Company’s status as a RIC, PIK interest income, which is considered investment company taxable income, must be paid out to stockholders in the form of dividends even though the Company has not yet collected the cash. Amounts necessary to pay these dividends may come from available cash.

The following shows a rollforward of PIK income activity for the three months ended March 31, 2021 and 2020:

 

 

 

Three months ended                                                                                        March 31,

 

 

 

 

 

2021

 

 

2020

 

 

 

Accumulated PIK balance, beginning of period

 

$

1,160

 

 

$

3,587

 

 

 

PIK income capitalized/receivable

 

 

123

 

 

 

49

 

 

 

PIK received in cash from repayments

 

 

 

 

 

(6

)

 

 

Accumulated PIK balance, end of period

 

$

1,283

 

 

$

3,630

 

 

 

 

The Company capitalizes and amortizes upfront loan origination fees received in connection with the closing of investments. The unearned income from such fees is accreted into interest income over the contractual life of the loan based on the effective interest method. Upon prepayment of a loan or debt security, any prepayment premiums, unamortized upfront loan origination fees, and unamortized discounts are recorded as interest income.

The Company will recognize any earned exit or back-end fees into income when it believes the amounts will ultimately become collected by using either the beneficial interest model or other appropriate income recognition frameworks.

27


 

In certain investment transactions, the Company may provide advisory services. For services that are separately identifiable and external evidence exists to substantiate fair value, income is recognized as earned. The Company had no income from advisory services related to portfolio companies for the three months ended March 31, 2021 and 2020.

The Company may also generate revenue in the form of fees from the management of First Eagle Greenway Fund II, LLC (formerly known as THL Credit Greenway Fund II LLC), or Greenway II, prepayment premiums, commitment, loan origination, structuring or due diligence fees, exit fees, portfolio company administration fees, fees for providing significant managerial assistance and consulting fees.

U.S. Federal Income Taxes, Including Excise Tax

The Company has elected to be taxed as a RIC under Subchapter M of the Code and currently qualifies, and intends to continue to qualify each year, as a RIC under the Code. Accordingly, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed to stockholders.

In order to qualify for favorable tax treatment as a RIC, the Company is required to distribute annually to its stockholders at least 90% of its investment company taxable income, as defined by the Code. To avoid a 4% U.S. federal excise tax on undistributed earnings, the Company is required to distribute each calendar year the sum of (i) 98% of its ordinary income for such calendar year, (ii) 98.2% of its capital gain net income for the one-year period ending October 31 of that calendar year and (iii) any income recognized, but not distributed, in preceding years and on which the Company paid no U.S. federal income tax. The Company, at its discretion, may choose not to distribute all of its taxable income for the calendar year and pay a non-deductible 4% excise tax on this undistributed income. If the Company chooses to do so, all other things being equal, this would increase expenses and reduce the amount available to be distributed to stockholders. 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 from such taxable income, the Company accrues excise taxes on estimated excess taxable income as taxable income is earned using an annual effective excise tax rate.

The annual effective excise tax rate is determined by dividing the estimated annual excise tax by the estimated annual taxable income. See also the disclosure in Note 10, Distributions, for a summary of recent dividends paid. For the three months ended March 31, 2021 and 2020, the Company incurred U.S. federal excise tax and other tax (benefits) expenses of $26 and $52, respectively.

Certain consolidated subsidiaries of the Company are subject to U.S. federal and state income taxes. These taxable entities are not consolidated for income tax purposes and may generate income tax liabilities or assets from permanent and temporary differences in the recognition of items for financial reporting and income tax purposes at the subsidiaries.

The following shows the breakdown of deferred income tax (provisions) benefits for the three months ended March 31, 2021 and 2020. There were no current income tax (provisions) benefits during the respective periods.

 

 

 

For the three months ended

March 31,

 

 

 

2021

 

 

2020

 

Benefit (provision) for taxes on unrealized gain on investments

 

 

(331

)

 

 

470

 

 

These current and deferred income taxes are determined from taxable income estimates provided by portfolio companies organized as pass-through entities where the Company holds equity or equity-like investments in its corporate subsidiaries. These tax estimates may be subject to further change once tax information is finalized for the year. As of March 31, 2021 and December 31, 2020, $5 and $5, respectively, of income tax receivable was included in prepaid expenses and other assets on the Consolidated Statements of Assets and Liabilities. As of March 31, 2021 and December 31, 2020, $2,011 and $1,673, respectively, were included in deferred tax liability on the Consolidated Statements of Assets and Liabilities primarily relating to deferred taxes on unrealized gains on investments and other temporary book to tax differences held in its corporate subsidiaries. As of March 31, 2021 and December 31, 2020, $2,229 (net of $8,433 allowance) and $2,222 (net of $8,433 allowance), respectively of deferred tax assets were included in deferred tax assets on the Consolidated Statements of Assets and Liabilities relating to net operating loss carryforwards and unrealized losses on investments and other temporary book to tax differences that are expected to be used in future periods.

Under the RIC Modernization Act, the Company is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010, for an unlimited period. However, any losses incurred during post-enactment taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under the rules applicable to pre-enactment capital losses.

28


 

Because U.S. federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

The Company follows the provisions under the authoritative guidance on accounting for and disclosure of uncertainty in tax positions. The provisions require management to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions not meeting the more likely than not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. There are no unrecognized tax benefits or obligations in the accompanying consolidated financial statements. Although the Company files U.S. federal and state tax returns, the Company’s major tax jurisdiction is U.S. federal. The Company’s U.S. federal tax years subsequent to 2016 remain subject to examination by taxing authorities.

Distributions

Distributions to stockholders are recorded on the applicable record date. The amount to be paid out as a dividend is determined by the Company’s board of directors on a quarterly basis. Net realized capital gains, if any, are generally distributed at least annually out of assets legally available for such distributions, although the Company may decide to retain such capital gains for investment.

Capital transactions in connection with the Company’s dividend reinvestment plan are recorded when shares are issued.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848),” which provides optional expedients and exceptions for applying GAAP to contracts and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022, at the Company’s election.

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848),” which clarifies certain optional expedients and exceptions for applying GAAP to derivatives affected by reference rate reform.  ASU 2021-01 is effective as of January 7, 2021 through December 31, 2022, at the Company’s election.

The Company does not believe that the adoption of ASU 2020-04 and ASU 2021-01 will have a material impact on its consolidated financial statements.

3. Investments

The following is a summary of the levels within the fair value hierarchy in which the Company invests as of March 31, 2021:

 

Description

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

First lien senior secured debt

 

$

253,008

 

 

$

 

 

$

7,798

 

 

$

245,210

 

Second lien debt

 

 

22,366

 

 

 

 

 

 

 

 

 

22,366

 

Equity investments

 

 

7,390

 

 

 

 

 

 

 

 

 

7,390

 

Subordinated debt

 

 

5,885

 

 

 

 

 

 

 

 

 

5,885

 

Investment in Logan JV (1)

 

 

71,443

 

 

 

 

 

 

 

 

 

 

Investments in funds (1)

 

 

2,873

 

 

 

 

 

 

 

 

 

 

Total investments

 

$

362,965

 

 

$

 

 

$

7,798

 

 

$

280,851

 

 

(1)

Certain investments that are measured at fair value using net asset value totaling $74,316 have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities.

29


 

 

The following is a summary of the levels within the fair value hierarchy in which the Company invests as of December 31, 2020:

Description

 

Fair Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

First lien senior secured debt

 

$

233,636

 

 

$

 

 

$

 

 

$

233,636

 

Second lien debt

 

 

22,111

 

 

 

 

 

 

 

 

 

22,111

 

Subordinated debt

 

 

5,841

 

 

 

 

 

 

 

 

 

5,841

 

Equity investments

 

 

5,070

 

 

 

 

 

 

 

 

 

5,070

 

Investment in Logan JV (1)

 

 

68,133

 

 

 

 

 

 

 

 

 

 

Investments in funds (1)

 

 

2,891

 

 

 

 

 

 

 

 

 

 

Total investments

 

$

337,682

 

 

$

 

 

$

 

 

$

266,658

 

 

(1)

Certain investments that are measured at fair value using net asset value totaling $71,024 have not been categorized in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statements of Assets and Liabilities.

The following is a summary of the industry classification in which the Company invests as of March 31, 2021:

Industry

 

Amortized Cost

 

 

Fair Value

 

 

% of Total

Portfolio

 

 

% of Net

Assets

 

Investment Funds And Vehicles

 

$

95,370

 

 

$

74,316

 

 

 

20.48

%

 

 

38.76

%

Healthcare & Pharmaceuticals

 

 

54,252

 

 

 

54,025

 

 

 

14.88

%

 

 

28.19

%

Consumer Goods: Non-Durable

 

 

50,090

 

 

 

47,103

 

 

 

12.98

%

 

 

24.57

%

Finance

 

 

25,795

 

 

 

25,523

 

 

 

7.03

%

 

 

13.32

%

High Tech Industries

 

 

26,662

 

 

 

26,576

 

 

 

7.32

%

 

 

13.87

%

Services: Business

 

 

26,006

 

 

 

26,437

 

 

 

7.28

%

 

 

13.79

%

Capital Equipment

 

 

45,454

 

 

 

24,418

 

 

 

6.73

%

 

 

12.74

%

Services: Consumer

 

 

24,488

 

 

 

24,260

 

 

 

6.68

%

 

 

12.66

%

Banking

 

 

11,998

 

 

 

11,880

 

 

 

3.27

%

 

 

6.20

%

Energy: Oil & Gas

 

 

21,789

 

 

 

11,768

 

 

 

3.24

%

 

 

6.14

%

Telecommunications

 

 

8,270

 

 

 

8,451

 

 

 

2.33

%

 

 

4.41

%

Retail

 

 

5,885

 

 

 

6,385

 

 

 

1.76

%

 

 

3.33

%

Automotive

 

 

3,971

 

 

 

3,978

 

 

 

1.10

%

 

 

2.08

%

Transportation: Consumer

 

 

1,000

 

 

 

3,780

 

 

 

1.04

%

 

 

1.97

%

Chemicals, Plastics, & Rubber

 

 

3,248

 

 

 

3,259

 

 

 

0.90

%

 

 

1.70

%

Construction & Building

 

 

3,089

 

 

 

3,195

 

 

 

0.88

%

 

 

1.67

%

Hotel, Gaming, & Leisure

 

 

2,971

 

 

 

2,998

 

 

 

0.83

%

 

 

1.56

%

Insurance

 

 

2,498

 

 

 

2,528

 

 

 

0.70

%

 

 

1.32

%

Containers, Packaging, & Glass

 

 

2,068

 

 

 

2,085

 

 

 

0.57

%

 

 

1.09

%

Total Investments

 

$

414,904

 

 

$

362,965

 

 

 

100.00

%

 

 

189.37

%

 

30


 

 

The following is a summary of the industry classification in which the Company invests as of December 31, 2020:  

Industry

 

Amortized Cost

 

 

Fair Value

 

 

% of Total

Portfolio

 

 

% of Net

Assets

 

Investment Funds And Vehicles

 

$

92,125

 

 

$

68,134

 

 

 

20.18

%

 

 

36.79

%

Healthcare & Pharmaceuticals

 

 

47,924

 

 

 

47,391

 

 

 

14.03

%

 

 

25.59

%

Consumer Goods: Non-Durable

 

 

49,752

 

 

 

43,995

 

 

 

13.03

%

 

 

23.76

%

High Tech Industries

 

 

28,333

 

 

 

28,226

 

 

 

8.36

%

 

 

15.24

%

Finance

 

 

29,343

 

 

 

28,199

 

 

 

8.35

%

 

 

15.23

%

Capital Equipment

 

 

44,891

 

 

 

23,530

 

 

 

6.97

%

 

 

12.71

%

Services: Business

 

 

22,149

 

 

 

22,592

 

 

 

6.69

%

 

 

12.20

%

Services: Consumer

 

 

22,041

 

 

 

21,686

 

 

 

6.42

%

 

 

11.71

%

Banking

 

 

11,988

 

 

 

11,880

 

 

 

3.52

%

 

 

6.41

%

Energy: Oil & Gas

 

 

21,771

 

 

 

11,331

 

 

 

3.36

%

 

 

6.12

%

Retail

 

 

8,783

 

 

 

8,781

 

 

 

2.60

%

 

 

4.74

%

Telecommunications

 

 

8,282

 

 

 

8,303

 

 

 

2.46

%

 

 

4.48

%

Chemicals, Plastics, & Rubber

 

 

3,254

 

 

 

3,267

 

 

 

0.97

%

 

 

1.76

%

Construction & Building

 

 

3,130

 

 

 

3,201

 

 

 

0.95

%

 

 

1.73

%

Transportation: Consumer

 

 

1,000

 

 

 

2,574

 

 

 

0.76

%

 

 

1.39

%

Insurance

 

 

2,501

 

 

 

2,535

 

 

 

0.75

%

 

 

1.37

%

Containers, Packaging, & Glass

 

 

2,035

 

 

 

2,057

 

 

 

0.61

%

 

 

1.11

%

Total Investments

 

$

399,302

 

 

$

337,682

 

 

 

100.00

%

 

 

182.34

%

 

The following is a summary of the geographical concentration of the Company’s investment portfolio as of March 31, 2021:

Region

 

Amortized Cost

 

 

Fair Value

 

 

% of Total

Portfolio

 

 

% of Net

Assets

 

United States

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northeast

 

$

166,894

 

 

$

148,857

 

 

 

41.00

%

 

 

77.67

%

West

 

 

82,939

 

 

 

84,082

 

 

 

23.17

%

 

 

43.87

%

Southwest

 

 

85,173

 

 

 

61,593

 

 

 

16.97

%

 

 

32.13

%

Southeast

 

 

43,426

 

 

 

34,798

 

 

 

9.59

%

 

 

18.15

%

Midwest

 

 

29,672

 

 

 

26,776

 

 

 

7.38

%

 

 

13.97

%

Canada

 

 

6,800

 

 

 

6,859

 

 

 

1.89

%

 

 

3.58

%

Total Investments

 

$

414,904

 

 

$

362,965

 

 

 

100.00

%

 

 

189.37

%

 

The following is a summary of the geographical concentration of the Company’s investment portfolio as of December 31, 2020:

Region

 

Amortized Cost

 

 

Fair Value

 

 

% of Total

Portfolio

 

 

% of Net

Assets

 

United States

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Northeast

 

$

163,953

 

 

$

138,961

 

 

 

41.15

%

 

 

75.02

%

West

 

 

78,569

 

 

 

78,547

 

 

 

23.26

%

 

 

42.40

%

Southwest

 

 

87,620

 

 

 

63,335

 

 

 

18.76

%

 

 

34.19

%

Midwest

 

 

29,835

 

 

 

26,648

 

 

 

7.89

%

 

 

14.39

%

Southeast

 

 

32,648

 

 

 

23,449

 

 

 

6.94

%

 

 

12.66

%

Canada

 

 

6,677

 

 

 

6,742

 

 

 

2.00

%

 

 

3.64

%

Total Investments

 

$

399,302

 

 

$

337,682

 

 

 

100.00

%

 

 

182.30

%

 

 

In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the Company discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). If any transfers occur between the levels or categories of the fair value hierarchy, they are assumed to have occurred at the beginning of the period. The guidance establishes three levels of the fair value hierarchy as follows:

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2—Quoted prices in markets that are not considered to be active or financial instruments for which significant inputs are observable, either directly or indirectly;

Level 3—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

31


 

The level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by management.

The Company considers whether the volume and level of activity for the asset or liability have significantly decreased and identifies transactions that are not orderly in determining fair value. Accordingly, if the Company determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value. Valuation techniques such as an income approach might be appropriate to supplement or replace a market approach in those circumstances.

The Company has adopted the authoritative guidance under GAAP for estimating the fair value of investments in investment companies that have calculated net asset value per share in accordance with the specialized accounting guidance for investment companies. Accordingly, in circumstances in which net asset value per share of an investment is determinative of fair value, the Company estimates the fair value of an investment in an investment company using the net asset value per share of the investment (or its equivalent) without further adjustment if the net asset value per share of the investment is determined in accordance with the specialized accounting guidance for investment companies as of the reporting entity’s measurement date. Redemptions are not generally permitted in the Company’s investments in funds. The remaining term of the Company’s investments in funds is expected to be within seven months to three years.

32


 

The following provides quantitative information about Level 3 fair value measurements as of March 31, 2021:

 

Description

 

Fair Value

 

 

Valuation Technique

 

Unobservable Inputs

 

Weighted Range (Average) (1)

 

First lien senior secured debt (2)

 

$

194,289

 

 

Discounted cash flows (income approach)

 

Comparative Yield

 

7%

 

-

9%

 

(8%)

 

 

 

 

27,060

 

 

Market comparable companies (market approach)

 

EBITDA Multiple

 

 

8.0

x

-

 

8.5

x

 

(8.3

x)

 

 

 

9,076

 

(3)

Discounted cash flows (income approach)

 

Royalty Payment Discount Rate

 

Minimum Payment Discount Rate

 

Revenue Growth Rate

 

7.5%

 

 

4.5%

 

 

32.1%

 

-

 

 

-

 

 

-

12.5%

 

 

4.5%

 

 

32.1%

 

(9.1%)

 

 

(4.5%)

 

 

(32.1%)

 

 

 

 

7,807

 

 

Market comparable companies (market approach)

 

Revenue Multiple

 

 

0.4

x

-

 

0.9

x

 

(0.6

x)

Second lien debt

 

 

11,880

 

 

Discounted cash flows (income approach)

 

Comparative Yield

 

13%

 

-

14%

 

(14%)

 

 

 

 

10,068

 

(3)

Discounted cash flows (income approach)

 

Royalty Payment Discount Rate

 

Minimum Payment Discount Rate

 

Revenue Growth Rate

 

7.5%

 

 

4.5%

 

 

32.1%

 

-

 

 

-

 

 

-

12.5%

 

 

4.5%

 

 

32.1%

 

(9.1%)

 

 

(4.5%)

 

 

(32.1%)

 

 

 

 

418

 

 

Market comparable companies (market approach)

 

EBITDA Multiple

 

 

5.3

x

-

 

5.8

x

 

(5.5

x)

Subordinated debt

 

 

5,885

 

 

Market comparable companies (market approach)

 

EBITDA Multiple

 

 

2.6

x

-

 

3.1

x

 

(2.8

x)

Equity investments (2)

 

 

3,367

 

 

Market comparable companies (market approach)

 

EBITDA Multiple

 

 

10.9

x

-

 

12.1

x

 

(11.5

x)

 

 

 

3,992

 

 

Market comparable companies (market approach)

 

Revenue Multiple

 

 

2.8

x

-

 

3.1

x

 

(3.0

x)

Total Level 3 Investments

 

$

273,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Averages were determined using a weighted average based upon the fair value of the investments in each investment category.

(2)

Excluded from the presentation is $6,977 of first lien senior secured debt and $32 of equity for which the Advisor did not develop the unobservable inputs for the determination of fair value.

(3)

Investment relates to the Company's remaining investment in OEM Group, Inc.

33


 

The following provides quantitative information about Level 3 fair value measurements as of December 31, 2020:

 

Description

 

Fair Value

 

 

Valuation Technique

 

Unobservable Inputs

 

Weighted Range (Average) (1)

 

First lien senior secured debt (2)

 

$

188,981

 

 

Discounted cash flows (income approach)

 

Comparative Yield

 

8%

 

-

9%

 

(8%)

 

 

 

 

16,808

 

 

Market comparable companies (market approach)

 

EBITDA Multiple

 

 

5.1

x

-

 

5.6

x

 

(5.4

x)

 

 

 

8,500

 

(3)

Discounted cash flows (income approach)

 

Royalty Payment Discount Rate

 

Minimum Payment Discount Rate

 

Revenue Growth Rate

 

7.5%

 

 

4.5%

 

 

32.1%

 

-

 

 

-

 

 

-

12.5%

 

 

4.5%

 

 

32.1%

 

(9.1%)

 

 

(4.5%)

 

 

(32.1%)

 

 

 

 

7,370

 

 

Market comparable companies (market approach)

 

Revenue Multiple

 

 

0.4

x

-

 

0.9

x

 

(0.6

x)

 

 

 

2,940

 

 

Recoverability

 

Liquidation Proceeds (4)

 

$

866

 

-

$

866

 

$

(866

)

Second lien debt

 

 

11,880

 

 

Discounted cash flows (income approach)

 

Comparative Yield

 

14%

 

-

14%

 

(14%)

 

 

 

 

9,823

 

(3)

Discounted cash flows (income approach)

 

Royalty Payment Discount Rate

 

Minimum Payment Discount Rate

 

Revenue Growth Rate

 

7.5%

 

 

4.5%

 

 

32.1%

 

-

 

 

-

 

 

-

12.5%

 

 

4.5%

 

 

32.1%

 

(9.1%)

 

 

(4.5%)

 

 

(32.1%)

 

 

 

 

408

 

 

Market comparable companies (market approach)

 

EBITDA Multiple

 

 

5.5

x

-

 

6.0

x

 

(5.7

x)

Subordinated debt

 

 

5,841

 

 

Market comparable companies (market approach)

 

EBITDA Multiple

 

 

2.9

x

-

 

3.4

x

 

(3.1

x)

Equity investments (2)

 

 

2,265

 

 

Market comparable companies (market approach)

 

EBITDA Multiple

 

 

9.7

x

-

 

10.6

x

 

(10.2

x)

 

 

 

2,773

 

 

Market comparable companies (market approach)

 

Revenue Multiple

 

 

2.1

x

-

 

2.6

x

 

(2.4

x)

Total Level 3 Investments

 

$

257,589

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Averages were determined using a weighted average based upon the fair value of the investments in each investment category.

(2)

Excluded from the presentation is $9,037 of first lien senior secured debt and $32 of equity for which the Advisor did not develop the unobservable inputs for the determination of fair value.

(3)

Investment relates to the Company's remaining investment in OEM Group, Inc.

(4)

There are various, company specific inputs used in the valuation analysis that relate to the liquidation value of a company's assets. The significant unobservable inputs used in the valuation model were liquidation proceeds.

34


 

The two primary significant unobservable inputs used in the fair value measurement of the Company’s debt securities (first lien secured debt, second lien debt and subordinated debt), including income-producing investments in funds and income producing securities and payment rights, and excluding the Company’s investment in debt securities of OEM Group, Inc., is the weighted average cost of capital, or WACC, and the comparative yield. Significant increases (decreases) in the WACC or in the comparative yield in isolation would result in a significantly lower (higher) fair value measurement. In determining the WACC, for the income, or yield approach, the Company considers current market yields and multiples, portfolio company performance, leverage levels, credit quality, among other factors, including U.S. federal tax rates, in its analysis. In the case of tax receivable agreements or TRAs, the Company considers the risks associated with changes in tax rates, the performance of the portfolio company and the expected term of the investment. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate WACC to use in the income approach. In determining the comparative yield, for the income, or yield approach, the Company considers current market yields and multiples, weighted average cost of capital, portfolio company performance, leverage levels, credit quality, among other factors, including U.S. federal tax rates, in its analysis. In the case of tax receivable agreements or TRAs, the Company considers the risks associated with changes in tax rates, the performance of the portfolio company and the expected term of the investment. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate comparative yield to use in the income approach.

The primary significant unobservable inputs used in the fair value measurement of the Company’s investment in the first lien secured debt and second lien debt of OEM Group, Inc. are royalty payment discount rate, minimum payment discount rate, and revenue growth.  Significant increases (decreases) in the royalty payment discount rate or minimum payment discount rate in isolation would result in a significantly lower (higher) fair value measurement.  Significant increases (decreases) in the revenue growth rates in isolation would result in a significantly higher (lower) fair value measurement. To determine royalty payments discount rate and minimum payment discount rates, the Company considers current cost of capital of the payor, expected term of investment, anticipated risk in the projections, among other factors.  To determine revenue growth rates, the Company principally considers historical and current performance coupled with industry growth rates. The Company also considers current purchase orders, inflation rate adjustments that consider macroeconomic research, among other factors in evaluating growth rates.  

The primary significant unobservable input used in the fair value measurement of the Company’s equity investments, investments in warrants, debt investments where the Company has a controlling equity investment, and other debt investments using a market approach is the EBITDA multiple adjusted by management for differences between the investment and referenced comparables, or the multiple. Significant increases (decreases) in the multiple in isolation would result in a significantly higher (lower) fair value measurement. To determine the multiple for the market approach, the Company considers current market trading and/or transaction multiples, portfolio company performance (financial ratios) relative to public and private peer companies and leverage levels, among other factors. Changes in one or more of these factors can have a similar directional change on other factors in determining the appropriate multiple to use in the market approach. The following table rolls forward the changes in fair value during the three months ended March 31, 2021 for investments classified within Level 3:

 

 

First lien

senior

secured

debt

 

 

 

 

Second lien

debt

 

 

Subordinated

debt

 

 

 

 

 

Equity

investments

 

 

Totals

 

Beginning balance, January 1, 2021

$

233,636

 

 

 

 

$

22,111

 

 

$

5,841

 

 

 

 

 

$

5,070

 

 

$

266,658

 

Purchases (1)

 

17,913

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

17,913

 

Sales and repayments (1)

 

(8,552

)

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

(8,552

)

Unrealized appreciation (depreciation)(2)

 

1,868

 

 

 

 

 

213

 

 

 

(1

)

 

 

 

 

 

4,208

 

 

 

6,288

 

Realized (loss) gain

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

(1,888

)

 

 

(1,888

)

Net amortization of premiums, discounts and fees

 

290

 

 

 

 

 

10

 

 

 

-

 

 

 

 

 

 

-

 

 

 

300

 

PIK

 

55

 

 

 

 

 

32

 

 

 

45

 

 

 

 

 

 

-

 

 

 

132

 

Ending balance, March 31, 2021

$

245,210

 

 

 

 

$

22,366

 

 

$

5,885

 

 

 

 

 

$

7,390

 

 

$

280,851

 

Net change in unrealized appreciation (depreciation) from investments still held as of the reporting date

$

1,904

 

 

 

 

$

214

 

 

$

(1

)

 

 

 

 

$

4,209

 

 

$

6,326

 

 

(1)

Includes reorganizations and restructuring of investments.

(2)

All unrealized appreciation (depreciation) in the table above is reflected in the accompanying Consolidated Statements of      Operations.

35


 

The following table rolls forward the changes in fair value during the three months ended March 31, 2020 for investments classified within Level 3:

 

First lien

senior

secured

debt

 

 

 

 

Second lien

debt

 

 

Equity

investments

 

 

 

 

 

Totals

 

 

Beginning balance, January 1, 2020

$

240,098

 

 

 

 

$

12,000

 

 

$

21,515

 

 

 

 

 

$

273,613

 

 

Purchases

 

33,176

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

33,176

 

 

Sales and repayments

 

(5,043

)

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

(5,043

)

 

Unrealized appreciation (depreciation)(1)

 

(30,831

)