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WhiteHorse Finance (WHF)

Filed: 10 May 22, 4:47pm

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, 2022

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: 814-00967

WHITEHORSE FINANCE, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

    

45-4247759

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

 

 

1450 Brickell Avenue, 31st Floor

 

Miami, Florida

33131

(Address of Principal Executive Offices)

(Zip Code)

(305) 381-6999

(Registrant’s Telephone Number, Including Area Code)

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

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which
Registered

Common Stock, par value $0.001 per share

WHF

The Nasdaq Stock Market LLC

 

 

(Nasdaq Global Select Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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 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

As of May 5, 2022 the Registrant had 23,243,088 shares of common stock, $0.001 par value, outstanding.



Part I. Financial Information

Item 1. Financial Statements

WhiteHorse Finance, Inc.

Consolidated Statements of Assets and Liabilities

(in thousands, except share and per share data)

    

March 31, 2022

    

December 31, 2021

(Unaudited)

Assets

 

 

  

Investments, at fair value

 

  

 

  

Non-controlled/non-affiliate company investments

$

686,253

$

736,727

Non-controlled affiliate company investments

13,342

6,874

Controlled affiliate company investments

100,776

75,607

Total investments, at fair value (amortized cost $798,251 and $831,960, respectively)

800,371

819,208

Cash and cash equivalents

2,454

12,185

Restricted cash and cash equivalents

18,262

9,814

Restricted foreign currency (cost of $550 and $464, respectively)

556

469

Interest and dividend receivable

6,767

7,521

Amounts receivable on unsettled investment transactions

7,916

Escrow receivable

1,309

515

Prepaid expenses and other receivables

879

1,307

Receivable for common stock issued

247

Total assets

$

838,761

$

851,019

Liabilities

  

Debt

$

467,857

$

475,958

Distributions payable

8,234

8,222

Management fees payable

3,952

3,766

Incentive fees payable

5,445

7,958

Interest payable

3,548

2,087

Accounts payable and accrued expenses

1,136

2,438

Advances received from unfunded credit facilities

666

839

Unrealized depreciation on foreign currency forward contracts

4

Total liabilities

490,842

501,268

Commitments and contingencies (See Note 8)

  

  

Net assets

  

  

Common stock, 23,211,413 and 23,162,667 shares issued and outstanding, par value $0.001 per share, respectively, and 100,000,000 shares authorized

23

23

Paid-in capital in excess of par

339,856

339,161

Accumulated earnings

8,040

10,567

Total net assets

347,919

349,751

Total liabilities and total net assets

$

838,761

$

851,019

Number of shares outstanding

23,211,413

23,162,667

Net asset value per share

$

14.99

$

15.10

See notes to the consolidated financial statements

3


WhiteHorse Finance, Inc.

Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

Three months ended March 31, 

    

2022

2021

Investment income

From non-controlled/non-affiliate company investments

 

  

 

  

Interest income

$

16,741

$

14,812

Fee income

462

771

Dividend income

89

44

From non-controlled affiliate company investments

Interest income

60

Dividend income

131

250

From controlled affiliate company investments

Interest income

1,127

719

Dividend income

1,424

1,374

Total investment income

20,034

17,970

Expenses

  

  

Interest expense

4,774

3,802

Base management fees

3,952

3,344

Performance-based incentive fees

1,427

2,042

Administrative service fees

171

171

General and administrative expenses

947

821

Total expenses

11,271

10,180

Net investment income before excise tax

8,763

7,790

Excise tax

224

190

Net investment income after excise tax

8,539

7,600

Realized and unrealized gains (losses) on investments and foreign currency transactions

  

  

Net realized gains (losses)

  

  

Non-controlled/non-affiliate company investments

(18,184)

8,160

Non-controlled affiliate company investments

Foreign currency transactions

(281)

1

Foreign currency forward contracts

Net realized gains (losses)

(18,465)

8,161

Net change in unrealized appreciation (depreciation)

  

  

Non-controlled/non-affiliate company investments

17,117

(6,975)

Non-controlled affiliate company investments

(1,621)

(434)

Controlled affiliate company investments

169

(120)

Translation of assets and liabilities in foreign currencies

(28)

(62)

Foreign currency forward contracts

(4)

(1)

Net change in unrealized appreciation (depreciation)

15,633

(7,592)

Net realized and unrealized gains (losses) on investments and foreign currency transactions

(2,832)

569

Net increase in net assets resulting from operations

$

5,707

$

8,169

Per Common Share Data

Basic and diluted earnings per common share

$

0.25

$

0.40

Dividends and distributions declared per common share

$

0.36

$

0.36

Basic and diluted weighted average common shares outstanding

23,190,656

20,551,565

See notes to the consolidated financial statements

4


WhiteHorse Finance, Inc.

Consolidated Statements of Changes in Net Assets (Unaudited)

(in thousands, except share and per share data)

Common Stock

    

Shares

    

Par amount

    

Paid-in Capital in Excess of Par

    

Accumulated Underdistributed/ (Overdistributed) Earnings

    

Total Net Assets

Balance at December 31, 2021

 

23,162,667

$

23

$

339,161

$

10,567

$

349,751

Stock issued in connection with at-the-market offering

 

16,678

197

197

Stock issued in connection with distribution reinvestment plan

 

32,068

498

498

Net increase in net assets resulting from operations:

 

  

  

  

  

  

Net investment income after excise tax

 

8,539

8,539

Net realized gains (losses) on investments

 

(18,465)

(18,465)

Net change in unrealized appreciation (depreciation) on investments

 

15,633

15,633

Distributions declared

 

(8,234)

(8,234)

Balance at March 31, 2022

 

23,211,413

$

23

$

339,856

$

8,040

$

347,919

Common Stock

Shares

    

Par amount

    

Paid-in Capital in Excess of Par

    

Accumulated Underdistributed/ (Overdistributed) Earnings

    

Total Net Assets

Balance at December 31, 2020

 

20,546,032

$

21

$

300,002

$

12,874

$

312,897

Stock issued in connection with at-the-market offering

 

37,803

590

590

Stock issued in connection with distribution reinvestment plan

 

Net increase in net assets resulting from operations:

 

  

  

  

  

  

Net investment income after excise tax

 

7,600

7,600

Net realized gains (losses) on investments

 

8,161

8,161

Net change in unrealized appreciation (depreciation) on investments

 

(7,592)

(7,592)

Distributions declared

 

(7,307)

(7,307)

Balance at March 31, 2021

 

20,583,835

$

21

$

300,592

$

13,736

$

314,349

See notes to the consolidated financial statements

5


WhiteHorse Finance, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

Three months ended March 31, 

    

2022

    

2021

Cash flows from operating activities

Net increase in net assets resulting from operations

$

5,707

$

8,169

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

  

Paid-in-kind income

(532)

(494)

Net realized (gains) losses on investments

18,184

(8,160)

Net unrealized depreciation (appreciation) on investments

(15,665)

7,529

Net unrealized (appreciation) depreciation on translation of assets and liabilities in foreign currencies

28

62

Net unrealized (appreciation) depreciation on foreign currency forward contracts

4

1

Accretion of discount

(1,345)

(2,561)

Amortization of deferred financing costs

367

329

Acquisition of investments

(103,590)

(72,388)

Proceeds from principal payments and sales of portfolio investments

63,330

125,200

Proceeds from sales of portfolio investments to STRS JV

57,661

24,623

Net changes in operating assets and liabilities:

  

Interest and dividend receivable

754

(815)

Escrow receivable

(1,939)

Prepaid expenses and other receivables

428

(71)

Amounts receivable on unsettled investment transactions

(7,916)

(13,902)

Amounts payable on unsettled investment transactions

(497)

Management fees payable

186

(9)

Incentive fees payable

(2,513)

375

Accounts payable and accrued expenses

(1,301)

191

Interest payable

1,461

379

Advances received from unfunded credit facilities

(173)

(15)

Net cash provided by operating activities

15,075

66,007

Cash flows from financing activities

  

  

Proceeds from issuance of common stock, net of offering costs

(50)

582

Borrowings

49,997

35,049

Repayments of debt

(58,200)

(85,801)

Deferred financing costs

(582)

(20)

Distributions paid to common stockholders, net of distributions reinvested

(7,724)

(7,294)

Net cash used in financing activities

(16,559)

(57,484)

Effect of exchange rate changes on cash

288

5

Net change in cash, cash equivalents and restricted cash

(1,196)

8,528

Cash, cash equivalents and restricted cash at beginning of period

22,468

15,946

Cash, cash equivalents and restricted cash at end of period

$

21,272

$

24,474

Supplemental and non-cash disclosure of cash flow information:

  

  

Interest paid

$

2,947

$

2,651

Distributions reinvested

498

Value of shares issued pursuant to the ATM Program

247

8

Non-cash exchanges of investments

25,000

4,320

See notes to the consolidated financial statements

6


WhiteHorse Finance, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

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

As of March 31, 

    

2022

    

2021

Cash and cash equivalents

$

2,454

$

7,701

Restricted cash and cash equivalents

18,262

16,342

Restricted foreign currency

556

431

Total cash, cash equivalents and restricted cash presented in consolidated statements of cash flows

$

21,272

$

24,474

See notes to the consolidated financial statements

7


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

North America

Debt Investments

Asset Management & Custody Banks

JZ Capital Partners Ltd.(4)(5)

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.00%

01/26/22

01/26/27

10,286

$

10,087

$

10,087

2.90

%

JZ Capital Partners Ltd.(4)(5)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.00%

8.00%

01/26/22

01/26/27

10,087

10,087

2.90

Air Freight & Logistics

Access USA Shipping, LLC (d/b/a MyUS.com)

First Lien Secured Term Loan

1.50%

L+ 8.00%

9.50%

02/08/19

02/08/24

4,864

4,837

4,864

1.40

Motivational Marketing, LLC (d/b/a Motivational Fulfillment)

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.25%

07/12/21

07/12/26

11,461

11,265

11,347

3.26

Motivational Marketing, LLC (d/b/a Motivational Fulfillment)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.25%

7.25%

07/12/21

07/12/26

8

16,102

16,219

4.66

Application Software

Atlas Purchaser, Inc. (d/b/a Aspect Software)

Second Lien Secured Term Loan

0.75%

L+ 9.00%

9.75%

05/03/21

05/07/29

15,000

14,600

14,850

4.26

Education Networks of America, Inc.

First Lien Secured Term Loan

1.00%

L+ 5.50%

6.50%

11/30/21

10/27/26

4,680

4,483

4,680

1.35

Naviga Inc. (f/k/a Newscycle Solutions, Inc.)

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.01%

06/14/19

12/29/22

3,205

3,191

3,205

0.92

Naviga Inc. (f/k/a Newscycle Solutions, Inc.)(7)

First Lien Secured Revolving Loan

1.00%

L+ 7.00%

8.00%

06/14/19

12/29/22

169

168

169

0.05

22,442

22,904

6.58

Automotive Retail

Team Car Care Holdings, LLC (Heartland Auto)(12)

First Lien Secured Term Loan

1.00%

Base rate+ 7.98%

9.02%

02/16/18

06/28/24

15,055

14,973

14,980

4.31

14,973

14,980

4.31

Broadcasting

Coastal Television Broadcasting Group LLC

First Lien Secured Term Loan

1.00%

SF+ 6.50%

7.50%

12/30/21

12/30/26

8,191

8,035

8,035

2.31

Coastal Television Broadcasting Group LLC(7)

First Lien Secured Revolving Loan

1.00%

SF+ 6.50%

7.50%

12/30/21

12/30/26

8,035

8,035

2.31

Building Products

PFB Holdco, Inc. (d/b/a PFB Corporation)(13)

First Lien Secured Term Loan

1.00%

C+ 6.50%

7.50%

12/17/21

12/17/26

9,004

6,911

7,069

2.02

PFB Holdco, Inc. (d/b/a PFB Corporation)(7)(13)

First Lien Secured Revolving Loan

1.00%

C+ 6.50%

7.50%

12/17/21

12/17/26

PFB Holdco, Inc. (d/b/a PFB Corporation)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

12/17/21

12/17/26

2,193

2,151

2,151

0.62

PFB Holdco, Inc. (d/b/a PFB Corporation)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.50%

7.50%

12/17/21

12/17/26

Trimlite Buyer LLC (d/b/a Trimlite LLC)(5)(13)

First Lien Secured Term Loan

1.00%

C+ 6.50%

7.71%

07/27/21

07/27/26

22,833

17,881

18,249

5.25

Trimlite Buyer LLC (d/b/a Trimlite LLC)(5)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.50%

7.50%

07/27/21

07/27/26

491

482

508

0.15

27,425

27,977

8.04

Cable & Satellite

Bulk Midco, LLC(15)

First Lien Secured Term Loan

1.00%

L+ 7.64%

9.13%

06/08/18

06/08/23

14,922

14,869

14,475

4.16

14,869

14,475

4.16

Commodity Chemicals

Flexitallic Group SAS

First Lien Secured Term Loan

1.00%

L+ 7.50%

8.51% (8.01% Cash + 0.50% PIK)

10/28/19

10/29/26

15,702

15,062

15,337

4.41

15,062

15,337

4.41

Construction & Engineering

Tensar Corporation

First Lien Secured Term Loan

1.00%

L+ 6.75%

7.76%

11/20/20

08/20/25

6,913

6,789

7,051

2.03

6,789

7,051

2.03

Construction Materials

Claridge Products and Equipment, LLC

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.51%

12/30/20

12/29/25

7,621

7,506

7,468

2.14

Claridge Products and Equipment, LLC(7)(12)

First Lien Secured Revolving Loan

1.00%

Base rate+ 5.64%

9.21%

12/30/20

12/29/25

596

588

584

0.17

8,094

8,052

2.31

Consumer Finance

Maxitransfers Blocker Corp.

First Lien Secured Term Loan

1.00%

L+ 8.50%

9.51%

10/07/20

10/07/25

8,478

8,337

8,478

2.44

Maxitransfers Blocker Corp.(4)(7)

First Lien Secured Revolving Loan

1.00%

L+ 8.50%

9.51%

10/07/20

10/07/25

17

8,337

8,495

2.44

See notes to the consolidated financial statements

8


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Data Processing & Outsourced Services

Escalon Services Inc.

First Lien Secured Term Loan

1.00%

L+ 10.30%

11.30% (10.60% Cash + 0.70% PIK)

12/04/20

12/04/25

17,259

$

16,471

$

16,991

4.88

%

Future Payment Technologies, L.P.

First Lien Secured Term Loan

1.00%

L+ 8.25%

9.25%

12/23/16

06/07/24

23,845

23,668

23,785

6.84

40,139

40,776

11.72

Department Stores

Mills Fleet Farm Group, LLC

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.25%

10/24/18

10/24/24

13,538

13,342

13,538

3.89

13,342

13,538

3.89

Distributors

Crown Brands LLC(19)

Second Lien Secured Term Loan

1.50%

L+ 10.50%

12.00%

12/15/20

01/08/26

4,383

4,304

3,507

1.01

Crown Brands LLC(19)

Second Lien Secured Delayed Draw Loan

1.50%

L+ 10.50%

12.00%

12/15/20

01/08/26

651

651

521

0.15

4,955

4,028

1.16

Diversified Chemicals

Manchester Acquisition Sub LLC (d/b/a Draslovka Holding AS)

First Lien Secured Term Loan

0.75%

SF+ 5.75%

6.50%

11/16/21

11/16/26

7,980

7,582

7,712

2.22

Sklar Holdings, Inc. (d/b/a Starco)

First Lien Secured Term Loan

1.00%

L+ 9.75%

10.75% (8.75% Cash + 2.00% PIK)

11/13/19

05/13/23

7,390

7,307

7,020

2.02

14,889

14,732

4.24

Diversified Support Services

NNA Services, LLC

First Lien Secured Term Loan

1.00%

L+ 6.75%

7.76%

08/27/21

08/27/26

11,521

11,394

11,465

3.30

11,394

11,465

3.30

Education Services

EducationDynamics, LLC

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.00% (7.50% Cash + 0.50% PIK)

09/15/21

09/15/26

13,251

13,015

13,004

3.73

EducationDynamics, LLC(4)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.00%

8.00% (7.50% Cash + 0.50% PIK)

09/15/21

09/15/26

(1)

EducationDynamics, LLC(7)

First Lien Secured Revolving Loan

1.00%

P+ 5.50%

9.00%

09/15/21

09/15/26

240

236

235

0.07

EducationDynamics, LLC(4)

Subordinated Unsecured Term Loan

N/A

4.00%

4.00%

09/15/21

03/15/27

167

167

167

0.05

13,418

13,405

3.85

Electric Utilities

CleanChoice Energy, Inc. (d/b/a CleanChoice)

First Lien Secured Term Loan

1.00%

L+ 7.25%

8.25%

10/12/21

10/12/26

10,500

10,310

10,290

2.96

10,310

10,290

2.96

Environmental & Facilities Services

Industrial Specialty Services USA LLC

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.26%

12/31/21

12/31/26

11,977

11,750

11,750

3.38

Industrial Specialty Services USA LLC(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.25%

7.25%

12/31/21

12/31/26

709

696

696

0.20

RLJ Pro-Vac, Inc. (d/b/a Pro-Vac)

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.26%

12/31/21

12/31/26

8,753

8,587

8,587

2.47

RLJ Pro-Vac, Inc. (d/b/a Pro-Vac)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.25%

7.26%

12/31/21

12/31/26

21,033

21,033

6.05

Health Care Facilities

Bridgepoint Healthcare, LLC

First Lien Secured Term Loan

1.00%

L+ 7.75%

8.75%

10/05/21

10/05/26

10,840

10,644

10,731

3.08

Bridgepoint Healthcare, LLC(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.75%

8.75%

10/05/21

10/05/26

6

Bridgepoint Healthcare, LLC(7)

First Lien Secured Revolving Loan

1.00%

L+ 7.75%

8.75%

10/05/21

10/05/26

13

10,644

10,750

3.08

See notes to the consolidated financial statements

9


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Health Care Services

CHS Therapy, LLC

First Lien Secured Term Loan A

1.50%

L+ 9.00%

10.50% (10.00% Cash + 0.50% PIK)

06/14/19

06/14/24

7,203

$

7,143

$

7,203

2.07

%

CHS Therapy, LLC

First Lien Secured Term Loan C

1.50%

L+ 9.00%

10.50% (10.00% Cash + 0.50% PIK)

10/07/20

06/14/24

886

876

886

0.25

IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)

First Lien Secured Term Loan

1.00%

L+ 6.75%

7.75%

12/04/20

12/04/24

17,322

17,098

17,322

4.98

IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.75%

7.75%

12/04/20

12/04/24

2,908

2,873

2,883

0.83

IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)(7)

First Lien Secured Revolving Loan

1.00%

P+ 5.75%

9.25%

12/04/20

12/04/24

142

140

147

0.04

Lab Logistics, LLC

First Lien Secured Term Loan

1.00%

L+ 7.25%

8.25%

10/16/19

09/25/23

1,153

1,139

1,153

0.33

Lab Logistics, LLC

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.25%

8.25%

10/16/19

09/25/23

5,170

5,156

5,170

1.49

PG Dental New Jersey Parent, LLC

First Lien Secured Term Loan

1.00%

L+ 9.75%

10.75% (9.25% Cash + 1.50% PIK)

11/25/20

11/25/25

15,177

14,932

13,963

4.01

PG Dental New Jersey Parent, LLC

First Lien Secured Revolving Loan

1.00%

L+ 9.75%

10.75% (9.25% Cash + 1.50% PIK)

11/25/20

11/25/25

704

692

647

0.19

50,049

49,374

14.19

Health Care Supplies

ABB/Con-cise Optical Group LLC (d/b/a ABB Optical Group, LLC)

First Lien Secured Term Loan

0.75%

L+ 7.50%

8.26%

02/23/22

02/23/28

21,736

21,202

21,202

6.09

ABB/Con-cise Optical Group LLC (d/b/a ABB Optical Group, LLC)(7)

First Lien Secured Revolving Loan

0.75%

Base rate+ 6.83%

9.77%

02/23/22

02/23/28

838

817

817

0.23

22,019

22,019

6.32

Heavy Electrical Equipment

PPS CR Acquisition, Inc. (d/b/a Power Plant Services)

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.26%

06/25/21

06/25/26

11,095

10,906

10,984

3.16

PPS CR Acquisition, Inc. (d/b/a Power Plant Services)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.25%

7.26%

06/25/21

06/25/24

104

103

118

0.03

11,009

11,102

3.19

Home Furnishings

Sleep OpCo LLC (d/b/a Brooklyn Bedding LLC)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

10/12/21

10/12/26

19,984

19,622

19,739

5.67

Sleep OpCo LLC (d/b/a Brooklyn Bedding LLC)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.50%

7.50%

10/12/21

10/12/26

15

Sure Fit Home Products, LLC

First Lien Secured Term Loan

1.00%

L+ 9.75%

10.76%

04/12/21

07/13/23

4,877

4,807

4,146

1.19

24,429

23,900

6.86

Household Products

The Kyjen Company, LLC (d/b/a Outward Hound)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

04/05/21

04/05/26

11,374

11,237

11,374

3.27

The Kyjen Company, LLC (d/b/a Outward Hound)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.50%

7.50%

04/05/21

04/05/26

258

255

266

0.08

11,492

11,640

3.35

Interactive Media & Services

What If Holdings, LLC (d/b/a What If Media Group, LLC)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

10/02/19

10/02/24

18,725

18,509

18,725

5.38

18,509

18,725

5.38

Internet & Direct Marketing Retail

BBQ Buyer, LLC (d/b/a BBQ Guys)

First Lien Secured Term Loan

1.50%

L+ 10.00%

11.50% (9.50% Cash + 2.00% PIK)

08/28/20

08/28/25

12,654

12,435

12,527

3.60

BBQ Buyer, LLC (d/b/a BBQ Guys)(7)

First Lien Secured Delayed Draw Loan

1.50%

L+ 10.00%

11.50% (9.50% Cash + 2.00% PIK)

12/02/21

08/28/25

2,580

2,532

2,561

0.74

Luxury Brand Holdings, Inc. (d/b/a Ross-Simons, Inc.)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

12/04/20

06/04/26

5,925

5,835

5,925

1.70

Potpourri Group, Inc.

First Lien Secured Term Loan

1.50%

L+ 8.25%

9.75%

07/03/19

07/03/24

17,034

16,861

17,034

4.90

37,663

38,047

10.94

Investment Banking & Brokerage

JVMC Holdings Corp. (fka RJO Holdings Corp)

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.00%

02/28/19

02/28/24

12,512

12,464

12,512

3.60

12,464

12,512

3.60

IT Consulting & Other Services

ATSG, Inc.

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

11/12/21

11/12/26

13,965

13,707

13,713

3.94

13,707

13,713

3.94

See notes to the consolidated financial statements

10


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Leisure Facilities

Honors Holdings, LLC (d/b/a Orange Theory)(16)

First Lien Secured Term Loan

1.00%

L+ 7.92%

8.92% (8.42% Cash + 0.50% PIK)

09/06/19

09/06/24

9,440

$

9,322

$

9,345

2.69

%

Honors Holdings, LLC (d/b/a Orange Theory)(16)

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.63%

8.63% (8.05% Cash + 0.58% PIK)

09/06/19

09/06/24

4,649

4,613

4,603

1.32

Lift Brands, Inc. (d/b/a Snap Fitness)

First Lien Secured Term Loan A

1.00%

L+ 7.50%

8.50%

06/29/20

06/29/25

5,617

5,560

5,581

1.60

Lift Brands, Inc. (d/b/a Snap Fitness)

First Lien Secured Term Loan B

N/A

9.50%

9.50% (0.00% Cash + 9.50% PIK)

06/29/20

06/29/25

1,309

1,291

1,274

0.37

Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)(9)

First Lien Secured Term Loan C

N/A

9.50%

9.50% (0.00% Cash + 9.50% PIK)

06/29/20

NA

1,268

1,265

1,227

0.35

22,051

22,030

6.33

Leisure Products

Playmonster Group LLC(6)(20)(22)

First Lien Secured Term Loan

1.00%

L+ 8.00%

9.00% (0.00% Cash + 9.00% PIK)

01/24/22

06/08/26

2,985

2,985

2,985

0.86

PlayMonster LLC(6)(7)

First Lien Secured Revolving Loan

0.25%

L+ 1.75%

2.10%

01/24/22

06/08/26

1,044

1,044

1,044

0.30

4,029

4,029

1.16

Life Sciences Tools & Services

LSCS Holdings, Inc. (d/b/a Eversana Life Science Services, LLC)

Second Lien Secured Term Loan

0.50%

L+ 8.00%

8.50%

11/23/21

12/16/29

5,000

4,928

4,902

1.41

4,928

4,902

1.41

Office Services & Supplies

American Crafts, LC

First Lien Secured Term Loan

1.00%

L+ 8.50%

9.50%

05/28/21

05/28/26

8,351

8,248

8,238

2.37

American Crafts, LC

First Lien Secured Delayed Draw Loan

1.00%

L+ 8.50%

9.50%

01/25/22

05/28/26

1,403

1,376

1,376

0.40

Empire Office, Inc.

First Lien Secured Term Loan

1.50%

L+ 6.50%

8.00%

04/12/19

04/12/24

12,443

12,313

12,350

3.55

Empire Office, Inc.(4)(7)

First Lien Secured Delayed Draw Loan

1.50%

L+ 6.50%

8.00%

08/17/21

04/12/24

(40)

(0.01)

21,937

21,924

6.31

Packaged Foods & Meats

Lenny & Larry's, LLC(17)

First Lien Secured Term Loan

1.00%

L+ 7.83%

8.83% (7.68% Cash + 1.15% PIK)

05/15/18

05/15/23

11,185

11,137

10,907

3.14

11,137

10,907

3.14

Personal Products

Inspired Beauty Brands, Inc.

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.00%

12/30/20

12/30/25

12,117

11,935

12,117

3.48

Inspired Beauty Brands, Inc.(7)

First Lien Secured Revolving Loan

1.00%

L+ 7.00%

8.00%

12/30/20

12/30/25

8

11,935

12,125

3.48

Research & Consulting Services

Aeyon LLC

First Lien Secured Term Loan

1.00%

SF+ 8.88%

9.88%

02/10/22

02/10/27

8,978

8,803

8,801

2.53

ALM Media, LLC

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.51%

11/25/19

11/25/24

13,978

13,830

13,838

3.98

Nelson Worldwide, LLC

First Lien Secured Term Loan

1.00%

L+ 10.25%

11.25% (10.25% Cash + 1.00% PIK)

01/09/18

01/09/23

9,719

9,682

9,547

2.74

32,315

32,186

9.25

Specialized Consumer Services

Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

11/16/21

11/16/27

12,968

12,722

12,729

3.66

Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)(4)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.50%

7.50%

11/16/21

11/16/27

2

HC Salon Holdings, Inc. (d/b/a Hair Cuttery)

First Lien Secured Term Loan

1.00%

L+ 8.00%

9.01%

09/30/21

09/30/26

11,608

11,399

11,384

3.27

HC Salon Holdings, Inc. (d/b/a Hair Cuttery)(7)

First Lien Secured Revolving Loan

1.00%

L+ 8.00%

9.01%

09/30/21

09/30/26

(1)

True Blue Car Wash, LLC

First Lien Secured Term Loan

1.00%

SF+ 6.88%

7.88%

10/17/19

10/17/24

10,101

9,984

10,018

2.88

True Blue Car Wash, LLC(7)

First Lien Secured Delayed Draw Loan

1.00%

SF+ 6.50%

7.50%

10/17/19

10/17/24

1,845

1,817

1,831

0.53

35,922

35,963

10.34

See notes to the consolidated financial statements

11


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Specialized Finance

WHF STRS Ohio Senior Loan Fund LLC(4)(5)(9)(14)

Subordinated Note

N/A

L+ 6.50%

6.94%

07/19/19

N/A

80,000

$

80,000

$

80,000

22.99

%

80,000

80,000

22.99

Systems Software

Arcstor Midco, LLC (d/b/a Arcserve (USA), LLC

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.01%

03/16/21

03/16/27

19,305

18,986

18,919

5.44

18,986

18,919

5.44

Technology Hardware, Storage & Peripherals

Telestream Holdings Corporation

First Lien Secured Term Loan

1.00%

L+ 8.75%

9.75%

10/15/20

10/15/25

15,041

14,699

15,041

4.32

Telestream Holdings Corporation(7)

First Lien Secured Revolving Loan

1.00%

L+ 8.75%

9.75%

10/15/20

10/15/25

30

0.01

14,699

15,071

4.33

Total Debt Investments

$

751,619

$

752,717

216.35

%

Equity Investments(23)

Advertising

Avision Holdings, LLC (d/b/a Avision Sales Group)(4)

Class A LLC Interests

N/A

N/A

N/A

12/15/21

N/A

200

$

250

$

208

0.06

%

250

208

0.06

Air Freight & Logistics

Motivational CIV, LLC (d/b/a Motivational Fulfillment)(4)

Class B Units

N/A

N/A

N/A

07/12/21

N/A

1,250

1,250

863

0.25

1,250

863

0.25

Building Products

PFB Holdco, Inc. (d/b/a PFB Corporation)(4)(13)

Class A Units

N/A

N/A

N/A

12/17/21

N/A

1

423

432

0.12

423

432

0.12

Data Processing & Outsourced Services

Escalon Services Inc.(4)

Warrants

N/A

N/A

N/A

12/04/20

N/A

709

476

1,644

0.47

476

1,644

0.47

Diversified Support Services

Quest Events, LLC(4)

Preferred Units

N/A

N/A

N/A

12/28/18

12/08/25

317

317

71

0.02

ImageOne Industries, LLC(4)

Common A Units

N/A

N/A

N/A

09/20/19

N/A

225

122

0.04

317

193

0.06

Education Services

Eddy Acquisitions, LLC (d/b/a EducationDynamics, LLC)(4)

Preferred Units

N/A

12.00%

12.00%

09/15/21

N/A

167

167

156

0.04

167

156

0.04

Environmental & Facilities Services

BPII-JL Group Holdings LP (d/b/a Juniper Landscaping Holdings LLC)(4)

Class A Units

N/A

N/A

N/A

12/29/21

N/A

83

825

825

0.24

825

825

0.24

Health Care Services

Lab Logistics, LLC(4)(21)

Preferred Units

N/A

14.00%

14.00% PIK

10/29/19

N/A

2

857

915

0.26

857

915

0.26

Industrial Machinery

BL Products Parent, LP (d/b/a Bishop Lifting Products, Inc.)(4)

Class A Units

N/A

N/A

N/A

02/01/22

N/A

667

667

667

0.19

667

667

0.19

Interactive Media & Services

What If Media Group, LLC(4)

Common Units

N/A

N/A

N/A

07/02/21

N/A

8

850

1,439

0.41

850

1,439

0.41

See notes to the consolidated financial statements

12


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Internet & Direct Marketing Retail

BBQ Buyer, LLC (d/b/a BBQ Guys)(4)

Shares

N/A

N/A

N/A

08/28/20

N/A

1,100

$

1,100

$

2,266

0.65

%

Ross-Simons Topco, LP (d/b/a Ross-Simons, Inc.)(4)

Preferred Units

N/A

8.00%

8.00% PIK

12/04/20

N/A

600

514

1,246

0.36

1,614

3,512

1.01

Investment Banking & Brokerage

Arcole Holding Corporation(4)(5)(6)(18)

Shares

N/A

N/A

N/A

10/01/20

N/A

6,944

7,045

2.02

6,944

7,045

2.02

IT Consulting & Other Services

CX Holdco LLC (d/b/a Cennox Inc.)(4)

Common Units

N/A

N/A

N/A

05/04/21

N/A

972

972

1,584

0.46

Keras Holdings, LLC (d/b/a KSM Consulting, LLC)(4)

Shares

N/A

N/A

N/A

12/31/20

N/A

496

496

496

0.14

1,468

2,080

0.60

Leisure Facilities

Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)(4)

Class A Common Stock

N/A

N/A

N/A

06/29/20

N/A

2

1,941

199

0.06

Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)(4)

Warrants

N/A

N/A

N/A

06/29/20

06/28/28

1

793

81

0.02

2,734

280

0.08

Leisure Products

Playmonster Group Equity, Inc. (d/b/a PlayMonster LLC)(4)(6)(8)(22)

Preferred Stock

N/A

14.00%

14.00% PIK

01/24/22

N/A

36

3,600

2,268

0.66

Playmonster Group Equity, Inc. (d/b/a PlayMonster LLC)(4)(6)(22)

Common Stock

N/A

N/A

N/A

01/24/22

N/A

72

460

4,060

2,268

0.66

Other Diversified Financial Services

SFS Global Holding Company (d/b/a Sigue Corporation)(4)

Warrants

N/A

N/A

N/A

06/28/18

12/28/25

Sigue Corporation(4)

Warrants

N/A

N/A

N/A

06/28/18

12/28/25

22

2,890

3,490

1.00

2,890

3,490

1.00

Specialized Consumer Services

Camp Facility Services Parent, LLC (d/b/a Camp Construction Services, Inc.)(4)

Preferred Units

N/A

10.00%

10.00% PIK

11/16/21

N/A

15

840

861

0.26

840

861

0.26

Specialized Finance

WHF STRS Ohio Senior Loan Fund(4)(5)(14)

LLC Interests

N/A

N/A

N/A

07/19/19

N/A

20,000

20,000

20,776

5.97

20,000

20,776

5.97

Total Equity Investments

$

46,632

$

47,654

13.70

%

Total Investments

$

798,251

$

800,371

230.05

%

Forward Currency Contracts

Counterparty

    

Currency to be sold

    

Currency to be purchased

    

Settlement date

    

Unrealized
appreciation

    

Unrealized
depreciation

Morgan Stanley

C$

400 CAD

$

317 USD

4/28/22

$

$

(4)

Total

$

$

(4)


(1)Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the “1940 Act”), and provide collateral for the Company’s credit facility.

See notes to the consolidated financial statements

13


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments (Unaudited)

March 31, 2022

(in thousands)

(2)The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), which resets monthly, quarterly or semiannually, the Secured Overnight Financing Rate (“SOFR” or “SF”), the Canadian Dollar Offered Rate (“CDOR” or “C”), Canada Prime Rate (“CP”) or the U.S. Prime Rate (“Prime” or “P”). The one, three and six-month USD LIBOR were 0.45%, 0.96% and 1.47%, respectively, as of March 31, 2022. The SOFR, CDOR, CP and Prime were 0.29%, 1.26%, 2.70% and 3.50%, respectively, as of March 31, 2022.
(3)The interest rate is the “all-in-rate” including the current index and spread, the fixed rate, and the payment-in-kind (“PIK”) interest rate, as the case may be.
(4)The investment or a portion of the investment does not provide collateral for the Company’s credit facility.
(5)Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets. Qualifying assets represented 83.7% of total assets as of the date of the consolidated schedule of investments.
(6)Investment is a non-controlled affiliate investment as defined by the 1940 Act.
(7)The investment has an unfunded commitment in addition to any amounts presented in the consolidated schedule of investments as of March 31, 2022. See Note 8.
(8)Preferred equity investment is a non-income producing security.
(9)Security is perpetual with no defined maturity date.
(10)Except as otherwise noted, all of the Company’s portfolio company investments, which as of the date of the consolidated schedule of investments represented 230.0% of the Company’s net assets or 95.4% of the Company’s total assets, are subject to legal restrictions on sales.
(11)The fair value of each investment was determined using significant unobservable inputs. See Note 5.
(12)The investment was comprised of two contracts, which were indexed to different base rates, L and P, respectively. The Floor, Spread Above Index and Interest Rate presented represent the weighted average of both contracts.
(13)Principal amount is non-USD denominated and is based in Canadian dollars.
(14)Investment is a controlled affiliate investment as defined by the 1940 Act. On January 14, 2019, the Company entered into an agreement (as described in Note 4 hereto) with State Teachers Retirement System of Ohio, a public pension fund established under Ohio law (“STRS Ohio”), to create WHF STRS Ohio Senior Loan Fund, LLC (“STRS JV”), a joint venture, which invests primarily in senior secured first and second lien term loans.
(15)In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 2.75% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.
(16)In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.50% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.
(17)In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.00% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.
(18)On October 1, 2020, as part of a restructuring agreement between the Company and Arcole Acquisition Corp, the Company’s investments in first lien secured term loans to Arcole Acquisition Corp were converted into common shares of Arcole Holding Corp.
(19)At the option of the issuer, interest can be paid in cash or cash and PIK. The issuer may elect to pay up to 2.00% PIK.
(20)At the option of the issuer, interest can be paid in cash or cash and PIK. The issuer may elect to pay up to 9.00% PIK.
(21)Investment earns 14.00% that converts to PIK on an annual basis and is recorded in interest and dividend receivable in the consolidated statements of assets and liabilities.
(22)On January 24, 2022, as part of a restructuring agreement between the Company and PlayMonster LLC, the Company’s first lien secured term loan and delayed draw loan investments to PlayMonster LLC were converted into a new first lien secured term loan, preferred stock and common stock of Playmonster Group LLC.
(23)Ownership of certain equity investments may occur through a holding company or partnership.

See notes to the consolidated financial statements

14


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

North America

Debt Investments

Advertising

I&I Sales Group, LLC (d/b/a Avision Sales Group)

First Lien Secured Term Loan

1.00%

L+ 6.00%

7.00%

12/15/21

12/15/26

9,286

$

9,102

$

9,100

2.60

%

I&I Sales Group, LLC (d/b/a Avision Sales Group)(4)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.00%

7.00%

12/15/21

12/15/26

396

388

388

0.11

I&I Sales Group, LLC (d/b/a Avision Sales Group)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.00%

7.00%

12/15/21

12/15/26

9,490

9,488

2.71

Air Freight & Logistics

Access USA Shipping, LLC (d/b/a MyUS.com)

First Lien Secured Term Loan

1.50%

L+ 8.00%

9.50%

02/08/19

02/08/24

4,937

4,906

4,937

1.41

ITS Buyer Inc. (d/b/a ITS Logistics, LLC)

First Lien Secured Term Loan

1.00%

L+ 6.00%

7.00%

12/22/21

06/15/26

3,612

3,540

3,539

1.01

ITS Buyer Inc. (d/b/a ITS Logistics, LLC)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.00%

7.00%

12/22/21

06/15/26

Motivational Marketing, LLC (d/b/a Motivational Fulfillment)

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.25%

07/12/21

07/12/26

11,789

11,575

11,646

3.33

Motivational Marketing, LLC (d/b/a Motivational Fulfillment)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.25%

7.25%

07/12/21

07/12/26

7

20,021

20,129

5.75

Application Software

Atlas Purchaser, Inc. (d/b/a Aspect Software)

Second Lien Secured Term Loan

0.75%

L+ 9.00%

9.75%

05/03/21

05/07/29

15,000

14,586

14,700

4.20

Education Networks of America, Inc.

First Lien Secured Term Loan

1.00%

L+ 5.50%

6.50%

11/30/21

10/27/26

4,719

4,511

4,508

1.29

Naviga Inc. (f/k/a Newscycle Solutions, Inc.)

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.00%

06/14/19

12/29/22

3,213

3,195

3,213

0.92

Naviga Inc. (f/k/a Newscycle Solutions, Inc.)(7)

First Lien Secured Revolving Loan

1.00%

L+ 7.00%

8.00%

06/14/19

12/29/22

169

168

169

0.05

22,460

22,590

6.46

Automotive Retail

Team Car Care Holdings, LLC (Heartland Auto)(12)

First Lien Secured Term Loan

1.03%

Base rate+ 7.98%

9.02%

02/16/18

06/28/24

15,286

15,193

15,286

4.37

15,193

15,286

4.37

Broadcasting

Coastal Television Broadcasting Group LLC

First Lien Secured Term Loan

1.00%

SF+ 6.50%

7.50%

12/30/21

12/30/26

8,191

8,027

8,027

2.30

Coastal Television Broadcasting Group LLC(7)

First Lien Secured Revolving Loan

1.00%

SF+ 6.50%

7.50%

12/30/21

12/30/26

8,027

8,027

2.30

Building Products

Drew Foam Companies Inc.

First Lien Secured Term Loan

1.00%

L+ 6.00%

7.00%

11/05/20

11/05/25

7,207

7,094

7,183

2.05

LHS Borrower, LLC (d/b/a Leaf Home, LLC)

First Lien Secured Term Loan

1.00%

L+ 6.75%

7.75%

09/30/20

09/30/25

9,506

9,346

9,416

2.69

LHS Borrower, LLC (d/b/a Leaf Home, LLC)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.75%

7.75%

09/30/20

09/30/25

4

PFB Holdco, Inc. (d/b/a PFB Corporation)(13)

First Lien Secured Term Loan

2.45%

CP+ 5.50%

7.95%

12/17/21

12/17/26

9,027

6,923

6,998

2.00

PFB Holdco, Inc. (d/b/a PFB Corporation)(7)(13)

First Lien Secured Revolving Loan

2.45%

CP+ 5.50%

7.95%

12/17/21

12/17/26

PFB Holdco, Inc. (d/b/a PFB Corporation)

First Lien Secured Term Loan

3.25%

P+ 5.50%

8.75%

12/17/21

12/17/26

2,198

2,154

2,154

0.62

PFB Holdco, Inc. (d/b/a PFB Corporation)(7)

First Lien Secured Revolving Loan

3.25%

P+ 5.50%

8.75%

12/17/21

12/17/26

Trimlite Buyer LLC (d/b/a Trimlite LLC)(5)(13)

First Lien Secured Term Loan

1.00%

C+ 6.50%

7.50%

07/27/21

07/27/26

22,977

17,975

17,841

5.10

Trimlite Buyer LLC (d/b/a Trimlite LLC)(5)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.50%

7.50%

07/27/21

07/27/26

164

161

161

0.05

43,653

43,757

12.51

Cable & Satellite

Bulk Midco, LLC(15)

First Lien Secured Term Loan

1.00%

L+ 7.24%

8.24%

06/08/18

06/08/23

15,000

14,936

14,526

4.15

14,936

14,526

4.15

Commodity Chemicals

Flexitallic Group SAS

First Lien Secured Term Loan

1.00%

L+ 7.50%

8.50% (8.00% Cash + 0.50% PIK)

10/28/19

10/29/26

15,722

15,047

15,172

4.34

15,047

15,172

4.34

See notes to the consolidated financial statements

15


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Construction & Engineering

Road Safety Services, Inc.

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

12/30/21

03/18/25

4,099

$

4,017

$

4,017

1.15

%

Tensar Corporation

First Lien Secured Term Loan

1.00%

L+ 6.75%

7.75%

11/20/20

08/20/25

6,930

6,797

7,069

2.02

10,814

11,086

3.17

Construction Materials

Claridge Products and Equipment, LLC

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

12/30/20

12/29/25

7,640

7,518

7,469

2.14

Claridge Products and Equipment, LLC(7)

First Lien Secured Revolving Loan

3.25%

P+ 5.50%

8.75%

12/30/20

12/29/25

211

207

204

0.06

7,725

7,673

2.20

Consumer Finance

Maxitransfers Blocker Corp.

First Lien Secured Term Loan

1.00%

L+ 8.50%

9.50%

10/07/20

10/07/25

8,590

8,436

8,590

2.46

Maxitransfers Blocker Corp.(4)

First Lien Secured Revolving Loan

1.00%

L+ 8.50%

9.50%

10/07/20

10/07/25

1,038

1,019

1,038

0.30

9,455

9,628

2.76

Data Processing & Outsourced Services

Escalon Services Inc.

First Lien Secured Term Loan

1.00%

L+ 13.50%

14.50% (13.00% Cash + 1.50% PIK)

12/04/20

12/04/25

8,046

7,490

8,046

2.30

Future Payment Technologies, L.P.

First Lien Secured Term Loan

1.00%

L+ 8.25%

9.25%

12/23/16

06/07/24

24,000

23,811

23,925

6.84

31,301

31,971

9.14

Department Stores

Mills Fleet Farm Group, LLC

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.25%

10/24/18

10/24/24

13,538

13,331

13,538

3.87

13,331

13,538

3.87

Distributors

Crown Brands LLC(19)

Second Lien Secured Term Loan

1.50%

L+ 10.50%

12.00%

12/15/20

01/08/26

4,382

4,299

3,505

1.00

Crown Brands LLC(19)

Second Lien Secured Delayed Draw Loan

1.50%

L+ 10.50%

12.00%

12/15/20

01/08/26

650

650

520

0.15

4,949

4,025

1.15

Diversified Chemicals

Manchester Acquisition Sub LLC (d/b/a Draslovka Holding AS)

First Lien Secured Term Loan

0.75%

SF+ 5.75%

6.50%

11/16/21

11/16/26

12,000

11,348

11,340

3.24

Sklar Holdings, Inc. (d/b/a Starco)

First Lien Secured Term Loan

1.00%

L+ 7.75%

8.75%

11/13/19

05/13/23

7,389

7,295

7,020

2.01

18,643

18,360

5.25

Diversified Support Services

NNA Services, LLC

First Lien Secured Term Loan

1.00%

L+ 6.75%

7.75%

08/27/21

08/27/26

11,594

11,459

11,460

3.28

11,459

11,460

3.28

Education Services

EducationDynamics, LLC

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.00% (7.50% Cash + 0.50% PIK)

09/15/21

09/15/26

13,318

13,068

13,064

3.74

EducationDynamics, LLC(4)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.00%

8.00% (7.50% Cash + 0.50% PIK)

09/15/21

09/15/26

EducationDynamics, LLC(7)

First Lien Secured Revolving Loan

1.00%

L+ 7.00%

8.00% (7.50% Cash + 0.50% PIK)

09/15/21

09/15/26

EducationDynamics, LLC(4)

Subordinated Unsecured Term Loan

N/A

4.00%

4.00%

09/15/21

03/15/27

167

167

167

0.05

13,235

13,231

3.79

Electric Utilities

CleanChoice Energy, Inc. (d/b/a CleanChoice)

First Lien Secured Term Loan

1.00%

L+ 7.25%

8.25%

10/12/21

10/12/26

10,500

10,299

10,296

2.94

10,299

10,296

2.94

Electronic Equipment & Instruments

LMG Holdings, Inc.

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

04/30/21

04/30/26

6,802

6,684

6,687

1.91

LMG Holdings, Inc.(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.50%

7.50%

04/30/21

04/30/26

6,684

6,687

1.91

See notes to the consolidated financial statements

16


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Environmental & Facilities Services

Industrial Specialty Services USA LLC

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.25%

12/31/21

12/31/26

12,007

$

11,767

$

11,767

3.36

%

Industrial Specialty Services USA LLC(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.25%

7.25%

12/31/21

12/31/26

Juniper Landscaping Holdings LLC

First Lien Secured Term Loan

1.00%

L+ 6.00%

7.00%

12/29/21

12/29/26

11,420

11,221

11,220

3.21

Juniper Landscaping Holdings LLC(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.00%

7.00%

12/29/21

12/29/26

Juniper Landscaping Holdings LLC(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.00%

7.00%

12/29/21

12/29/26

597

586

586

0.17

RLJ Pro-Vac, Inc. (d/b/a Pro-Vac)

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.25%

12/31/21

12/31/26

8,775

8,600

8,600

2.46

RLJ Pro-Vac, Inc. (d/b/a Pro-Vac)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.25%

7.25%

12/31/21

12/31/26

32,174

32,173

9.20

Health Care Facilities

Bridgepoint Healthcare, LLC

First Lien Secured Term Loan

1.00%

L+ 7.75%

8.75%

10/05/21

10/05/26

10,979

10,770

10,769

3.08

Bridgepoint Healthcare, LLC(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.75%

8.75%

10/05/21

10/05/26

Bridgepoint Healthcare, LLC(7)

First Lien Secured Revolving Loan

1.00%

L+ 7.75%

8.75%

10/05/21

10/05/26

Epiphany Business Services, LLC (d/b/a Epiphany Dermatology, PA)

First Lien Secured Term Loan

1.00%

L+ 7.50%

8.50%

12/04/20

06/22/23

4,278

4,214

4,235

1.21

Epiphany Business Services, LLC (d/b/a Epiphany Dermatology, PA)

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.50%

8.50%

12/04/20

06/22/23

3,052

3,008

3,027

0.87

Epiphany Business Services, LLC (d/b/a Epiphany Dermatology, PA)(7)

First Lien Secured Revolving Loan

1.00%

L+ 7.50%

8.50%

12/04/20

06/22/23

3

Grupo HIMA San Pablo, Inc.(7)

Superpriority Delayed Draw Loan

N/A

12.00%

12.00%

11/24/21

11/24/23

568

568

568

0.16

Grupo HIMA San Pablo, Inc.(8)(21)

Amended Term Loan

1.50%

9.00%

10.50% (0.00% Cash + 10.50% PIK)

11/24/21

11/24/23

1,708

1,704

1,708

0.49

Grupo HIMA San Pablo, Inc.(8)

First Lien Secured Term Loan A

N/A

L+ 9.00%

9.13%

05/05/19

04/30/19

3,476

3,476

1,169

0.33

Grupo HIMA San Pablo, Inc.(8)

First Lien Secured Term Loan B

1.50%

L+ 9.00%

10.50%

02/01/13

04/30/19

12,185

12,185

4,097

1.17

Grupo HIMA San Pablo, Inc.(8)

Second Lien Secured Term Loan

N/A

L+ 15.75%

15.75% (13.75% Cash + 2.00% PIK)

02/01/13

07/31/18

1,028

1,024

36,949

25,576

7.31

Health Care Services

CHS Therapy, LLC

First Lien Secured Term Loan A

1.50%

L+ 9.00%

10.50% (10.00% Cash + 0.50% PIK)

06/14/19

06/14/24

7,242

7,175

7,242

2.07

CHS Therapy, LLC

First Lien Secured Term Loan C

1.50%

L+ 9.00%

10.50% (10.00% Cash + 0.50% PIK)

10/07/20

06/14/24

891

879

891

0.25

DCA Investment Holding, LLC (d/b/a Dental Care Alliance, LLC)

First Lien Secured Term Loan

0.75%

L+ 6.25%

7.00%

03/12/21

03/12/27

7,025

6,933

6,988

2.00

DCA Investment Holding, LLC (d/b/a Dental Care Alliance, LLC)(7)

First Lien Secured Delayed Draw Loan

0.75%

L+ 6.25%

7.00%

03/12/21

03/12/27

678

672

688

0.20

IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)

First Lien Secured Term Loan

1.00%

L+ 6.75%

7.75%

12/04/20

12/04/24

17,366

17,121

17,366

4.97

IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.75%

7.75%

12/04/20

12/04/24

2,550

2,517

2,534

0.72

IvyRehab Intermediate II, LLC (d/b/a Ivy Rehab)(7)

First Lien Secured Revolving Loan

3.25%

P+ 5.75%

9.00%

12/04/20

12/04/24

142

139

147

0.04

Lab Logistics, LLC

First Lien Secured Term Loan

1.00%

L+ 7.25%

8.25%

10/16/19

09/25/23

1,155

1,140

1,155

0.33

Lab Logistics, LLC

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.25%

8.25%

10/16/19

09/25/23

5,183

5,166

5,183

1.48

PG Dental New Jersey Parent, LLC

First Lien Secured Term Loan

1.00%

L+ 9.25%

10.25% (8.75% Cash + 1.50% PIK)

11/25/20

11/25/25

15,448

15,178

14,212

4.06

PG Dental New Jersey Parent, LLC(7)

First Lien Secured Revolving Loan

1.00%

L+ 9.25%

10.25% (8.75% Cash + 1.50% PIK)

11/25/20

11/25/25

702

689

631

0.18

57,609

57,037

16.30

Heavy Electrical Equipment

PPS CR Acquisition, Inc. (d/b/a Power Plant Services)

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.25%

06/25/21

06/25/26

11,123

10,924

10,975

3.14

PPS CR Acquisition, Inc. (d/b/a Power Plant Services)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.25%

7.25%

06/25/21

06/25/24

104

103

113

0.03

11,027

11,088

3.17

See notes to the consolidated financial statements

17


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Home Furnishings

Sleep OpCo LLC (d/b/a Brooklyn Bedding LLC)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

10/12/21

10/12/26

20,034

$

19,651

$

19,645

5.62

%

Sleep OpCo LLC (d/b/a Brooklyn Bedding LLC)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.50%

7.50%

10/12/21

10/12/26

Sure Fit Home Products, LLC

First Lien Secured Term Loan

1.00%

L+ 9.75%

10.75%

04/12/21

07/13/23

4,912

4,828

4,372

1.25

24,479

24,017

6.87

Household Products

The Kyjen Company, LLC (d/b/a Outward Hound)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

04/05/21

04/05/26

11,403

11,257

11,383

3.25

The Kyjen Company, LLC (d/b/a Outward Hound)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.50%

7.50%

04/05/21

04/05/26

385

380

390

0.11

11,637

11,773

3.36

Interactive Media & Services

What If Holdings, LLC (d/b/a What If Media Group, LLC)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

10/02/19

10/02/24

18,848

18,609

18,759

5.36

18,609

18,759

5.36

Internet & Direct Marketing Retail

BBQ Buyer, LLC (d/b/a BBQ Guys)

First Lien Secured Term Loan

1.50%

L+ 10.00%

11.50% (9.50% Cash + 2.00% PIK)

08/28/20

08/28/25

12,623

12,388

12,623

3.61

BBQ Buyer, LLC (d/b/a BBQ Guys)(7)

First Lien Secured Delayed Draw Loan

1.50%

L+ 10.00%

11.50% (9.50% Cash + 2.00% PIK)

12/02/21

08/28/25

2,573

2,523

2,523

0.72

Luxury Brand Holdings, Inc. (d/b/a Ross-Simons, Inc.)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

12/04/20

06/04/26

5,940

5,844

5,940

1.70

Marlin DTC-LS Midco 2, LLC (d/b/a Clarus Commerce, LLC)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

08/06/21

07/01/25

4,277

4,200

4,206

1.20

Potpourri Group, Inc.

First Lien Secured Term Loan

1.50%

L+ 8.25%

9.75%

07/03/19

07/03/24

17,148

16,955

17,148

4.90

41,910

42,440

12.13

Investment Banking & Brokerage

JVMC Holdings Corp. (fka RJO Holdings Corp)

First Lien Secured Term Loan

1.00%

L+ 6.75%

7.75%

02/28/19

02/28/24

12,729

12,674

12,729

3.64

12,674

12,729

3.64

IT Consulting & Other Services

AST-Applications Software Technology LLC

First Lien Secured Term Loan

1.00%

L+ 8.00%

9.00% (8.00% Cash + 1.00% PIK)

01/10/17

01/10/23

3,958

3,943

3,958

1.13

ATSG, Inc.

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

11/12/21

11/12/26

14,008

13,736

13,736

3.93

17,679

17,694

5.06

Leisure Facilities

Honors Holdings, LLC (d/b/a Orange Theory)(16)

First Lien Secured Term Loan

1.00%

L+ 7.96%

8.96% (8.46% Cash + 0.50% PIK)

09/06/19

09/06/24

9,440

9,315

9,296

2.66

Honors Holdings, LLC (d/b/a Orange Theory)(16)

First Lien Secured Delayed Draw Loan

1.00%

L+ 7.58%

8.58% (8.08% Cash + 0.50% PIK)

09/06/19

09/06/24

4,649

4,611

4,578

1.31

Lift Brands, Inc. (d/b/a Snap Fitness)

First Lien Secured Term Loan A

1.00%

L+ 7.50%

8.50%

06/29/20

06/29/25

5,631

5,570

5,546

1.59

Lift Brands, Inc. (d/b/a Snap Fitness)

First Lien Secured Term Loan B

N/A

9.50%

9.50% (0.00% Cash + 9.50% PIK)

06/29/20

06/29/25

1,279

1,259

1,239

0.35

Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)(9)

First Lien Secured Term Loan C

N/A

9.50%

9.50% (0.00% Cash + 9.50% PIK)

06/29/20

NA

1,268

1,265

1,219

0.35

22,020

21,878

6.26

Leisure Products

PlayMonster LLC(8)

First Lien Secured Term Loan

1.00%

L+ 6.00%

7.00%

06/07/21

06/07/26

6,000

5,894

3,900

1.12

PlayMonster LLC(7)(8)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.00%

7.00%

06/07/21

06/07/26

224

221

(828)

(0.24)

6,115

3,072

0.88

Life Sciences Tools & Services

LSCS Holdings, Inc. (d/b/a Eversana Life Science Services, LLC)

Second Lien Secured Term Loan

0.50%

L+ 8.00%

8.50%

11/23/21

12/16/29

5,000

4,925

4,925

1.41

4,925

4,925

1.41

See notes to the consolidated financial statements

18


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Office Services & Supplies

American Crafts, LC

First Lien Secured Term Loan

1.00%

L+ 8.50%

9.50%

05/28/21

05/28/26

8,434

$

8,325

$

8,325

2.38

%

Empire Office, Inc.

First Lien Secured Term Loan

1.50%

L+ 6.75%

8.25%

04/12/19

04/12/24

12,656

12,507

12,589

3.60

Empire Office, Inc.(4)(7)

First Lien Secured Delayed Draw Loan

1.50%

L+ 6.75%

8.25%

08/17/21

04/12/24

7

20,832

20,921

5.98

Packaged Foods & Meats

Lenny & Larry's, LLC(17)

First Lien Secured Term Loan

1.00%

L+ 8.40%

9.40% (7.68% Cash + 1.72% PIK)

05/15/18

05/15/23

11,142

11,084

10,862

3.11

11,084

10,862

3.11

Personal Products

Inspired Beauty Brands, Inc.

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.00%

12/30/20

12/30/25

12,252

12,055

12,252

3.50

Inspired Beauty Brands, Inc.(7)

First Lien Secured Revolving Loan

1.00%

L+ 7.00%

8.00%

12/30/20

12/30/25

8

12,055

12,260

3.50

Real Estate Operating Companies

HRG Management, LLC (d/b/a HomeRiver Group, LLC)

First Lien Secured Term Loan

1.00%

L+ 6.25%

7.25%

10/19/21

10/19/26

4,875

4,781

4,780

1.37

HRG Management, LLC (d/b/a HomeRiver Group, LLC)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.25%

7.25%

10/19/21

10/19/26

653

644

651

0.19

HRG Management, LLC (d/b/a HomeRiver Group, LLC)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.25%

7.25%

10/19/21

10/19/26

5,425

5,431

1.56

Research & Consulting Services

ALM Media, LLC

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.00%

11/25/19

11/25/24

14,175

14,011

13,996

4.00

Nelson Worldwide, LLC

First Lien Secured Term Loan

1.00%

L+ 10.25%

11.25% (10.25% Cash + 1.00% PIK)

01/09/18

01/09/23

10,027

9,976

9,826

2.81

23,987

23,822

6.81

Specialized Consumer Services

Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

11/16/21

11/16/27

13,000

12,745

12,742

3.64

Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)(4)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.50%

7.50%

11/16/21

11/16/27

(1)

Camp Facility Services Holdings, LLC (d/b/a Camp Construction Services, Inc.)(7)

First Lien Secured Revolving Loan

1.00%

L+ 6.50%

7.50%

11/16/21

11/16/27

HC Salon Holdings, Inc. (d/b/a Hair Cuttery)

First Lien Secured Term Loan

1.00%

L+ 8.00%

9.00%

09/30/21

09/30/26

11,638

11,417

11,416

3.26

HC Salon Holdings, Inc. (d/b/a Hair Cuttery)(7)

First Lien Secured Revolving Loan

1.00%

L+ 8.00%

9.00%

09/30/21

09/30/26

True Blue Car Wash, LLC

First Lien Secured Term Loan

1.00%

L+ 6.82%

7.82%

10/17/19

10/17/24

8,203

8,087

8,130

2.32

True Blue Car Wash, LLC(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.82%

7.82%

10/17/19

10/17/24

3,103

3,073

3,098

0.89

35,322

35,385

10.11

Specialized Finance

WHF STRS Ohio Senior Loan Fund LLC(4)(5)(9)(14)

Subordinated Note

N/A

L+ 6.50%

6.61%

07/19/19

N/A

60,000

60,000

60,000

17.16

60,000

60,000

17.16

Systems Software

Arcstor Midco, LLC (d/b/a Arcserve (USA), LLC

First Lien Secured Term Loan

1.00%

L+ 7.00%

8.00%

03/16/21

03/16/27

19,354

19,018

19,160

5.48

19,018

19,160

5.48

Technology Hardware, Storage & Peripherals

Source Code Holdings, LLC (d/b/a Source Code Corporation)

First Lien Secured Term Loan

1.00%

L+ 6.50%

7.50%

07/30/21

07/30/27

7,629

7,487

7,489

2.14

Source Code Holdings, LLC (d/b/a Source Code Corporation)(7)

First Lien Secured Delayed Draw Loan

1.00%

L+ 6.50%

7.50%

07/30/21

07/30/27

Telestream Holdings Corporation

First Lien Secured Term Loan

1.00%

L+ 8.75%

9.75%

10/15/20

10/15/25

15,079

14,713

15,079

4.31

Telestream Holdings Corporation(7)

First Lien Secured Revolving Loan

1.00%

L+ 8.75%

9.75%

10/15/20

10/15/25

530

517

549

0.16

22,717

23,117

6.61

Total Debt Investments

$

794,969

$

781,049

223.32

%

See notes to the consolidated financial statements

19


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Equity Investments

Advertising

Avision Holdings, LLC (d/b/a Avision Sales Group)(4)

Class A LLC Interests

N/A

N/A

N/A

12/15/21

N/A

200

$

250

$

250

0.07

%

250

250

0.07

Air Freight & Logistics

Motivational CIV, LLC (d/b/a Motivational Fulfillment)(4)

Class B Units

N/A

N/A

N/A

07/12/21

N/A

1,250

1,250

1,250

0.36

1,250

1,250

0.36

Data Processing & Outsourced Services

PFB Holdco, Inc. (d/b/a PFB Corporation)(4)(13)

Class A Units

N/A

N/A

N/A

12/17/21

N/A

1

423

427

0.12

423

427

0.12

Data Processing & Outsourced Services

Escalon Services Inc.(4)

Warrants

N/A

N/A

N/A

12/04/20

N/A

709

476

893

0.26

476

893

0.26

Diversified Support Services

Quest Events, LLC(4)

Preferred Units

N/A

N/A

N/A

12/28/18

12/08/25

317

317

ImageOne Industries, LLC(4)

Common A Units

N/A

N/A

N/A

09/20/19

N/A

225

158

0.05

317

158

0.05

Education Services

Eddy Acquisitions, LLC (d/b/a EducationDynamics, LLC)(4)

Preferred Units

N/A

12.00%

12.00%

09/15/21

N/A

167

167

167

0.05

167

167

0.05

Environmental & Facilities Services

BPII-JL Group Holdings LP (d/b/a Juniper Landscaping Holdings LLC)(4)

Class A Units

N/A

N/A

N/A

12/29/21

N/A

83

825

825

0.24

825

825

0.24

Health Care Services

Lab Logistics, LLC(4)(20)

Preferred Units

N/A

14.00%

14.00% PIK

10/29/19

N/A

2

857

1,018

0.29

857

1,018

0.29

Interactive Media & Services

What If Media Group, LLC(4)

Common Units

N/A

N/A

N/A

07/02/21

N/A

8

850

1,398

0.40

850

1,398

0.40

Internet & Direct Marketing Retail

BBQ Buyer, LLC (d/b/a BBQ Guys)(4)

Shares

N/A

N/A

N/A

08/28/20

N/A

1,100

1,100

2,442

0.70

Ross-Simons Topco, LP(4)

Preferred Units

N/A

8.00%

8.00% PIK

12/04/20

N/A

600

600

786

0.22

1,700

3,228

0.92

Investment Banking & Brokerage

Arcole Holding Corporation(4)(5)(6)(18)

Shares

N/A

N/A

N/A

10/01/20

N/A

6,944

6,874

1.97

6,944

6,874

1.97

IT Consulting & Other Services

CX Holdco LLC (d/b/a Cennox Inc.)(4)

Common Units

N/A

N/A

N/A

05/04/21

N/A

972

972

972

0.28

Keras Holdings, LLC (d/b/a KSM Consulting, LLC)(4)

Shares

N/A

N/A

N/A

12/31/20

N/A

496

496

496

0.14

1,468

1,468

0.42

Leisure Facilities

Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)(4)

Class A Common Stock

N/A

N/A

N/A

06/29/20

N/A

2

1,941

188

0.05

Snap Fitness Holdings, Inc. (d/b/a Lift Brands, Inc.)(4)

Warrants

N/A

N/A

N/A

06/29/20

06/28/28

1

793

76

0.02

2,734

264

0.07

Other Diversified Financial Services

SFS Global Holding Company(4)

Warrants

N/A

N/A

N/A

06/28/18

12/28/25

Sigue Corporation(4)

Warrants

N/A

N/A

N/A

06/28/18

12/28/25

22

2,890

3,492

1.00

2,890

3,492

1.00

See notes to the consolidated financial statements

20


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)

Issuer

   

Investment Type(1)

   

Floor

   

Spread
Above
Index(2)

   

Interest
Rate(3)

   

Acquisition
Date(10)

   

Maturity
Date

   

Principal/
Share
Amount

   

Amortized
Cost

   

Fair
Value(11)

   

Fair Value
As A
Percentage
of Net
Assets

   

Specialized Consumer Services

Camp Facility Services Parent, LLC (d/b/a Camp Construction Services, Inc.)(4)

Preferred Units

N/A

10.00%

10.00% PIK

11/16/21

N/A

15

$

840

$

840

0.24

%

840

840

0.24

Specialized Finance

WHF STRS Ohio Senior Loan Fund(4)(5)(14)

LLC Interests

N/A

N/A

N/A

07/19/19

N/A

15,000

15,000

15,607

4.46

15,000

15,607

4.46

Total Equity Investments

$

36,991

$

38,159

10.92

%

Total Investments

$

831,960

$

819,208

234.24

%


(1)Except as otherwise noted, all investments are non-controlled/non-affiliate investments as defined by the Investment Company Act of 1940, as amended (the “1940 Act”), and provide collateral for the Company’s credit facility.
(2)The investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), which resets monthly, quarterly or semiannually, the Secured Overnight Financing Rate (“SOFR” or “SF”), the Canadian Dollar Offered Rate (“CDOR” or “C”), Canada Prime Rate (“CP”), or the U.S. Prime Rate (“Prime” or “P”). The one, three and six-month USD LIBOR were 0.10%, 0.21% and 0.34%, respectively, as of December 31, 2021. The SOFR, CDOR, Canadian Prime and Prime were 0.05%, 0.52%, 2.45% and 3.25%, respectively, as of December 31, 2021.
(3)The interest rate is the “all-in-rate” including the current index and spread, the fixed rate, and the payment-in-kind (“PIK”) interest rate, as the case may be.
(4)The investment or a portion of the investment does not provide collateral for the Company’s credit facility.
(5)Not a qualifying asset under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of total assets. Qualifying assets represented 88.2% of total assets as of the date of the consolidated schedule of investments.
(6)Investment is a non-controlled/affiliate investment as defined by the 1940 Act.
(7)The investment has an unfunded commitment in addition to any amounts presented in the consolidated schedule of investments as of December 31, 2021. See Note 8.
(8)The investment is on non-accrual status.
(9)Security is perpetual with no defined maturity date.
(10)Except as otherwise noted, all of the Company’s portfolio company investments, which as of the date of the consolidated schedule of investments represented 234.2% of the Company’s net assets or 96.3% of the Company’s total assets, are subject to legal restrictions on sales.
(11)The fair value of each investment was determined using significant unobservable inputs. See Note 5.
(12)The investment was comprised of two contracts, which were indexed to different base rates, L and P, respectively. The Floor, Spread Above Index and Interest Rate presented represent the weighted average of both contracts.
(13)Principal amount is non-USD denominated and is based in Canadian dollars.
(14)Investment is a controlled affiliate investment as defined by the 1940 Act. On January 14, 2019, the Company entered into an agreement (as described in Note 4 hereto) with State Teachers Retirement System of Ohio, a public pension fund established under Ohio law (“STRS Ohio”), to create WHF STRS Ohio Senior Loan Fund, LLC (“STRS JV”), a joint venture, which invests primarily in senior secured first and second lien term loans.

See notes to the consolidated financial statements

21


WhiteHorse Finance, Inc.

Consolidated Schedule of Investments

December 31, 2021

(in thousands)

(15)In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 2.75% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.
(16)In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.50% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.
(17)In addition to the interest earned based on the stated interest rate of this security, the Company is entitled to receive an additional interest in the amount of 3.00% on its “last out” tranche of the portfolio company’s senior term debt, which was previously syndicated into “first out” and “last out” tranches, whereby the “first out” tranche will have priority as to the “last out” tranche with respect to payments of principal, interest and any other amounts due thereunder.
(18)On October 1, 2020, as part of a restructuring agreement between the Company and Arcole Acquisition Corp, the Company’s investments in first lien secured term loans to Arcole Acquisition Corp were converted into common shares of Arcole Holding Corp.
(19)At the option of the issuer, interest can be paid in cash or cash and PIK. The issuer may elect to pay up to 2.00% PIK.
(20)Investment earns 14.00% that converts to PIK on an annual basis and is recorded in interest and dividend receivable in the consolidated statements of assets and liabilities.

(21)A portion of the existing Grupo HIMA San Pablo, Inc. First Lien Secured Term Loan A and First Lien Secured Term Loan B investments were converted into an Amended Term Loan, which is pari passu with the Grupo HIMA San Pablo, Inc. Superpriority Delayed Draw Loan commitment in a liquidation event.

See notes to the consolidated financial statements

22


WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

NOTE 1 - ORGANIZATION

WhiteHorse Finance, Inc. (“WhiteHorse Finance” and, together with its subsidiaries, the “Company”) is an externally managed, non-diversified, closed-end management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes, WhiteHorse Finance elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). WhiteHorse Finance’s common stock trades on the Nasdaq Global Select Market under the symbol “WHF.”

The Company’s investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries that typically carry a floating interest rate based on a risk-free index rate such as LIBOR or SOFR and have a term of three to six years. While the Company focuses principally on originating senior secured loans to lower middle market companies, it may also opportunistically make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests and may receive warrants to purchase common stock in connection with its debt investments.

WhiteHorse Finance’s investment activities are managed by H.I.G. WhiteHorse Advisers, LLC (“WhiteHorse Advisers” or the “Investment Adviser”). H.I.G. WhiteHorse Administration, LLC (“WhiteHorse Administration” or the “Administrator”) provides administrative services necessary for the Company to operate.

Engaging in commodity interest transactions such as swap transactions or futures contracts for the Company may cause WhiteHorse Advisers to fall within the definition of “commodity pool operator” under the Commodity Exchange Act (the “CEA”) and related regulations promulgated by the U.S. Commodity Futures Trading Commission (the “CFTC”). On January 23, 2020, WhiteHorse Advisers claimed an exclusion from the definition of the term “commodity pool operator” under the CEA and the CFTC regulations in connection with its management of the Company (the “Exclusion”) and, therefore, WhiteHorse Advisers is not subject to CFTC registration or regulation under the CEA as a commodity pool operator with respect to its management of the Company. WhiteHorse Advisers has affirmed the Exclusion on February 17, 2022 and intends to continue to affirm the Exclusion on an annual basis.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of WhiteHorse Finance and its wholly owned subsidiaries, WhiteHorse Finance Credit I, LLC (“WhiteHorse Credit”), and its subsidiary WhiteHorse Finance (CA), LLC (“WhiteHorse California”), WHF PMA Holdco Blocker, LLC, WhiteHorse RCKC Holdings, LLC and WhiteHorse Finance Holdings, LLC. The Company meets the definition of an investment company under Accounting Standards Codification (“ASC”) Topic 946, Financial Services - Investment Companies, and therefore applies the accounting and reporting guidance discussed therein to its consolidated financial statements. All significant intercompany balances and transactions have been eliminated.

Additionally, the accompanying consolidated financial statements and related financial information have been prepared pursuant to the requirements for reporting on Form 10-K and Articles 6, 10 and 12 of Regulation S-X. In the opinion of management, the consolidated financial statements reflect all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial results as of and for the periods presented.

Principles of Consolidation: Under the investment company rules and regulations pursuant to ASC Topic 946, WhiteHorse Finance is precluded from consolidating any entity other than another investment company. As provided under ASC Topic 946, WhiteHorse Finance generally consolidates any investment company when it owns 100% of its partners’ or members’ capital or equity units. The Company does not consolidate its investment in STRS JV. See further description in Note 4.

23


WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements. Actual results could differ from those estimates.

Fair Value of Financial Instruments: The Company determines the fair value of its financial instruments in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. ASC Topic 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC Topic 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

Investments are measured at fair value as determined in good faith by the Investment Adviser’s investment committee (the “Investment Committee”), generally on a quarterly basis, and such valuations are reviewed by the audit committee of the Company’s board of directors and ultimately approved by the Company’s board of directors, based on, among other factors, consistently applied valuation procedures on each measurement date. Any changes to the valuation methodology are reviewed by management and the Company’s board of directors to confirm that the changes are justified. The Company continues to review and refine its valuation procedures in response to market changes.

The Company engages independent external valuation firms to periodically review material investments. These external reviews are used by the Company’s board of directors to review the Company’s internal valuation of each investment over the year.

Investment Transactions: The Company records investment transactions on a trade date basis. These transactions may settle subsequent to the trade date depending on the transaction type. Certain expenses related to legal and tax consultation, due diligence, rating fees, valuation expenses and independent collateral appraisals may arise when the Company makes certain investments. These expenses are recognized in the consolidated statements of operations as they are incurred.

Foreign currency translation: The Company’s books and records are maintained in U.S. dollars. Any foreign currency amounts are translated into U.S. dollars on the following basis:

(1)cash and cash equivalents, restricted cash and cash equivalents, fair value of investments, interest receivable, and other assets and liabilities — at the spot exchange rate on the last business day of the period; and
(2)purchases and sales of investments, income and expenses — at the exchange rates prevailing on the respective dates of such transactions.

Although net assets and fair values are presented based on the applicable foreign exchange rates described above, the Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in fair values of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. Fluctuations arising from the translation of assets other than investments and liabilities are included with the net change in unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies on the consolidated statements of operations.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with investing in U.S. companies. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices to be more volatile than those of comparable U.S. companies or U.S. government securities.

24


WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

Revenue Recognition: The Company’s revenue recognition policies are as follows:

Sales: Realized gains or losses on the sales of investments are calculated by using the specific identification method.

Investment Income: Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. The Company may also receive closing, commitment, prepayment, amendment and other fees from portfolio companies in the ordinary course of business.

Dividend income is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Closing fees associated with investments in portfolio companies are deferred and recognized as interest income over the respective terms of the applicable loans. Upon the prepayment of a loan or debt security, any unamortized loan closing fees are recorded as part of interest income. Commitment fees are based upon the undrawn portion committed by the Company and are recorded as interest income on an accrual basis. Prepayment, amendment and other fees are recognized when earned, generally when such fees are receivable, and are included in fee income on the consolidated statements of operations.

The Company may invest in loans that contain a PIK interest rate provision. PIK interest is accrued at the contractual rates and added to loan principal on the reset dates to the extent such amounts are expected to be collected.

Non-accrual loans: Loans are placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected. The Company may conclude that non-accrual status is not required if the loan has sufficient collateral value and is in the process of collection. Accrued interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.

Cash and Cash Equivalents: Cash and cash equivalents include cash, deposits with financial institutions, and short-term liquid investments in money market funds with original maturities of three months or less.

Restricted Cash and Cash Equivalents: Restricted cash and cash equivalents include amounts that are collected and held by the trustee appointed as custodian of the assets securing the Credit Facility (as defined in Note 6). Restricted cash is held by the trustee for the payment of interest expense and principal on the outstanding borrowings or reinvestment into new assets. Restricted cash that represents interest or fee income is transferred to unrestricted cash accounts by the trustee generally once a quarter after the payment of operating expenses and amounts due under the Credit Facility.

Offering Costs: The Company may incur legal, accounting, regulatory, investment banking and other costs in relation to equity offerings. Offering costs are deferred and charged against paid-in capital in excess of par on completion of the related offering.

Deferred Financing Costs: Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. These amounts are amortized and are included in interest expense in the consolidated statements of operations over the estimated life of the borrowings. Deferred financing costs are presented in the consolidated statements of assets and liabilities as a direct reduction from the carrying amount of the related debt liability.

Income Taxes: The Company elected to be treated as a RIC under Subchapter M of the Code. In order to maintain its status as a RIC, among other requirements, the Company is required to distribute dividends for U.S. federal income tax purposes to its stockholders each taxable year generally of an amount at least equal to 90% of the sum of ordinary

25


WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. In addition, the Company will incur a nondeductible excise tax equal to 4% of the amount by which (1) 98% of ordinary income for the calendar year (taking into account certain deferrals and elections), (2) 98.2% of capital gains in excess of capital losses, adjusted for certain ordinary losses, for the one-year period ending on October 31 of the calendar year and (3) any ordinary income and capital gain income for preceding years that were not distributed during such years and on which the Company incurred no U.S. federal income tax exceed distributions for the year. The Company accrues estimated excise tax on the amount, if any, that estimated taxable income is expected to exceed the level of stockholder distributions described above.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statement is the largest benefit or expense that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Any tax positions not deemed to satisfy the more likely than not threshold are reversed and recorded as tax benefit or tax expense, as appropriate, in the current year. Management has analyzed the Company’s tax positions, and the Company has concluded that the Company did not have any unrecognized tax benefits or unrecognized tax liabilities related to uncertain tax positions as of March 31, 2022 and December 31, 2021.

Penalties or interest that may be assessed related to any income taxes would be classified as general and administrative expenses on the consolidated statements of operations. The Company had no amounts accrued for interest or penalties as of March 31, 2022 or December 31, 2021. The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next twelve months. The Company’s tax returns are subject to examination by federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretations under U.S. federal and state income tax laws and regulations, the amounts reported in the accompanying consolidated financial statements may be subject to change at a later date by the respective taxing authorities. Tax returns for each of the federal tax years since 2018 remain subject to examination by the Internal Revenue Service.

As of March 31, 2022 and December 31, 2021, the cost of investments for federal income tax purposes was $800,053 and $835,502 resulting in net unrealized appreciation of $319 and gross unrealized depreciation of $16,293, respectively. This is comprised of gross unrealized appreciation of $14,763 and $10,770, and gross unrealized depreciation of $14,444 and $27,062, on a tax basis, as of March 31, 2022 and December 31, 2021, respectively.

Dividends and Distributions: Dividends and distributions to common stockholders are recorded on the ex-dividend date. Quarterly distribution payments are determined by the Company’s board of directors and are paid from taxable earnings estimated by management and may include a return of capital and/or capital gains. Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment.

The Company maintains an “opt out” dividend reinvestment plan (“DRIP”) for common stockholders. As a result, if the Company declares a distribution or other dividend, stockholders’ cash distributions will be automatically reinvested in additional shares of common stock, unless they specifically “opt out” of the DRIP so as to receive cash distributions.

Earnings per Share: The Company calculates earnings per share as earnings available to stockholders divided by the weighted average number of shares outstanding during the period.

Risks and Uncertainties: In the normal course of business, the Company encounters primarily two significant types of economic risks: credit and market. Credit risk is the risk of default on the Company’s investments that result from an issuer’s, borrower’s or derivative counterparty’s inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of investments due to changes in interest rates, spreads or other market factors, including the value of the collateral underlying investments held by the Company. Refer to “COVID-19 Developments” section in Note 8. Management believes that the carrying value of the Company’s investments are fairly stated, taking into consideration these risks along with estimated collateral values, payment histories and other market information.

26


WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

Reclassifications: Certain amounts in the consolidated financial statements have been reclassified. These reclassifications had no material impact on the Company’s consolidated financial position, results of operations or cash flows as previously reported.

Recent Accounting Pronouncements: In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting if certain criteria are met. The guidance is effective from March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of the adoption of ASU 2020-04 on its consolidated financial statements.

NOTE 3 - FORWARD CURRENCY CONTRACTS

The Company may enter into foreign currency forward contracts from time to time to facilitate settlement of purchases and sales of investments denominated in foreign currencies and to economically hedge the impact that an adverse change in foreign exchange rates would have on the value of the Company’s investments denominated in foreign currencies. A foreign currency forward contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. These contracts are marked-to-market by recognizing the difference between the contract forward exchange rate and the forward market exchange rate on the last day of the period presented as unrealized appreciation or depreciation. Realized gains or losses are recognized when forward contracts are settled. Risks arise as a result of the potential inability of the counterparties to meet the terms of their contracts. The Company attempts to limit counterparty risk by only dealing with well-known counterparties.

The Company utilizes forward foreign currency exchange contracts to protect itself against fluctuations in exchange rates. The Company may choose to renew contracts quarterly unless otherwise settled by the Company or the counterparty.

The following table provides a breakdown of our forward currency contracts for the three months ended March 31, 2022 and 2021:

For the three months ended

For the three months ended

March 31, 2022

March 31, 2021

Realized gain (loss) on forward currency contracts

$

$

Unrealized appreciation (depreciation) on forward currency contracts

(4)

(1)

Total net realized and unrealized gains (losses) on forward currency contracts

$

(4)

$

(1)

The value associated with unrealized loss on open contracts is included in unrealized appreciation or depreciation on forward currency contracts within the consolidated statements of assets and liabilities. Open contracts as of March 31, 2022 were as follows:

Counterparty

    

Currency to be sold

    

Currency to be purchased

    

Settlement date

    

Unrealized
appreciation

    

Unrealized
depreciation

Morgan Stanley

C$

400 CAD

$

317 USD

4/28/22

$

$

(4)

Total

$

$

(4)

The following table is a summary of the average USD notional exposure to foreign currency forward contracts for the three months ended March 31, 2022 and 2021:

Three months ended March 31, 

Average USD notional outstanding

    

2022

2021

Forward currency contracts

$

228,630

$

44,093

27


WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

The foreign currency forward contracts open at the end of the period are generally indicative of the volume of activity during the period. The value associated with unrealized gain or loss on open contracts is included in unrealized appreciation or depreciation on forward currency contracts within the consolidated statements of assets and liabilities.

Offsetting of Derivative Instruments

The Company has derivative instruments that are subject to master netting agreements. These agreements include provisions to offset positions with the same counterparty in the event of default by one of the parties. The Company’s unrealized appreciation or depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the consolidated statements of assets and liabilities. The following tables present the Company’s assets and liabilities related to derivatives by counterparty, net of amounts available for offset under a master netting arrangement and net of any collateral received or pledged by the Company for such assets and liabilities as of March 31, 2022.

As of March 31, 2022

Counterparty ($ in thousands)

    

Derivative Assets
Subject to Master
Netting Agreement

    

Derivative
Liabilities Subject
to Master Netting
Agreement

    

Derivatives
Available for
Offset

    

Non-cash
Collateral
Received

    

Non-cash
Collateral
Pledged(1)

    

Cash Collateral
Received(1)

    

Cash Collateral
Pledged(1)

    

Net Amount of
Derivative
Assets(2)

    

Net Amount of
Derivative
Liabilities(3)

Morgan Stanley

$

$

4

$

$

$

$

$

$

$

4

Total

$

$

4

$

$

$

$

$

$

$

4


(1)In some instances, the actual amount of the collateral received and/or pledged may be more than the amount shown due to overcollateralization.
(2)Net amount of derivative assets represents the net amount due from the counterparty to the Company in the event of default.
(3)Net amount of derivative liabilities represents the net amount due from the Company to the counterparty in the event of default.

As of December 31, 2021, the Company did not have any outstanding derivative instruments.

NOTE 4 - INVESTMENTS

Investments consisted of the following:

As of March 31, 2022

As of December 31, 2021

    

Amortized Cost

    

Fair Value

    

Amortized Cost

    

Fair Value

First lien secured loans

$

646,969

$

648,770

$

709,318

$

697,232

Second lien secured loans

 

24,483

 

23,780

 

25,484

 

23,650

Subordinated unsecured loans

167

 

167

167

 

167

Subordinated Note to STRS JV

 

80,000

 

80,000

 

60,000

 

60,000

Equity (excluding STRS JV)

 

26,632

 

26,878

 

21,991

 

22,552

Equity in STRS JV

 

20,000

 

20,776

 

15,000

 

15,607

Total

$

798,251

$

800,371

$

831,960

$

819,208

28


WhiteHorse Finance, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2022

(in thousands, except share and per share data)

The following table shows the portfolio composition by industry grouping at fair value:

Industry ($ in thousands)

As of March 31, 2022

As of December 31, 2021

Advertising

    

$

208

    

0.0

%  

$

9,738

    

1.3

%

Air Freight & Logistics

17,082

2.4

21,379

2.9

Application Software