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Section 1: 10-Q (10-Q)

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


 

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

 

For the Quarter Ended March 31, 2014

 

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

 


 

Commission
File Number

 

Exact name of registrants as specified in their charters, addresses of principal executive
offices, telephone numbers and states or other jurisdictions of incorporation or organization

 

I.R.S. Employer
Identification Number

814-00839

 

New Mountain Finance Holdings, L.L.C.

787 Seventh Avenue, 48th Floor
New York, New York 10019
Telephone: (212) 720-0300
State of Incorporation: Delaware

 

26-3633318

 

 

 

 

 

814-00832

 

New Mountain Finance Corporation

787 Seventh Avenue, 48th Floor
New York, New York 10019
Telephone: (212) 720-0300
State of Incorporation: Delaware

 

27-2978010

 


 

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 and (2) has been subject to such filing requirements for the past 90 days.

 

New Mountain Finance Holdings, L.L.C.

Yes x No o

New Mountain Finance Corporation

Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

New Mountain Finance Holdings, L.L.C.

Yes o No o

New Mountain Finance Corporation

Yes o No o

 

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

 

New Mountain Finance Holdings, L.L.C.

Large accelerated filer o

Accelerated filer x

 

Non-accelerated filer o

Smaller reporting company o

New Mountain Finance Corporation

Large accelerated filer o

Accelerated filer x

 

Non-accelerated filer o

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

New Mountain Finance Holdings, L.L.C.

Yes o No x

New Mountain Finance Corporation

Yes o No x

 

Registrants

 

Description

 

Shares / Units as of
May 7, 2014

New Mountain Finance Holdings, L.L.C.

 

Common membership units

 

51,993,000

New Mountain Finance Corporation

 

Common stock, $0.01 par value

 

51,993,000

 

This combined Form 10-Q is filed separately by two registrants: New Mountain Finance Holdings, L.L.C. and New Mountain Finance Corporation (collectively, the “New Mountain Finance Registrant(s)” or the “Registrant(s)”). Information contained herein relating to any New Mountain Finance Registrant is filed by such registrant solely on its own behalf. Each New Mountain Finance Registrant makes no representation as to information relating exclusively to the other registrants.

 

 

 



Table of Contents

 

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2014

TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

PART I. FINANCIAL INFORMATION

3

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

New Mountain Finance Holdings, L.L.C.

 

 

Consolidated Statements of Assets, Liabilities and Members’ Capital as of March 31, 2014 (unaudited) and December 31, 2013

3

 

Consolidated Statements of Operations for the three months ended March 31, 2014 (unaudited) and March 31, 2013 (unaudited)

4

 

Consolidated Statements of Changes in Members’ Capital for the three months ended March 31, 2014 (unaudited) and March 31, 2013 (unaudited)

5

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2014 (unaudited) and March 31, 2013 (unaudited)

6

 

Consolidated Schedule of Investments as of March 31, 2014 (unaudited)

7

 

Consolidated Schedule of Investments as of December 31, 2013

13

 

New Mountain Finance Corporation

 

 

Statements of Assets and Liabilities as of March 31, 2014 (unaudited) and December 31, 2013

20

 

Statements of Operations for the three months ended March 31, 2014 (unaudited) and March 31, 2013 (unaudited)

21

 

Statements of Changes in Net Assets for the three months ended March 31, 2014 (unaudited) and March 31, 2013 (unaudited)

22

 

Statements of Cash Flows for the three months ended March 31, 2014 (unaudited) and March 31, 2013 (unaudited)

23

 

New Mountain Finance AIV Holdings Corporation

 

 

Statements of Assets and Liabilities as of January 29, 2014 (end of operations) (unaudited) and December 31, 2013

24

 

Statements of Operations from January 1, 2014 to January 29, 2014 (end of operations) (unaudited) and for the three months ended March 31, 2013 (unaudited)

25

 

Statements of Changes in Net Assets from January 1, 2014 to January 29, 2014 (end of operations) (unaudited) and for the three months ended March 31, 2013 (unaudited)

26

 

Statements of Cash Flows from January 1, 2014 to January 29, 2014 (end of operations) (unaudited) and for the three months ended March 31, 2013 (unaudited)

27

 

 

 

 

Combined Notes to the Consolidated Financial Statements of New Mountain Finance Holdings, L.L.C., the Financial Statements of New Mountain Finance Corporation and the Financial Statements of New Mountain Finance AIV Holdings Corporation

28

 

 

 

 

Report of Independent Registered Public Accounting Firm

52

 

 

 

Item 2.

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

53

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

72

Item 4.

Controls and Procedures

73

 

 

 

PART II. OTHER INFORMATION

73

 

 

 

Item 1.

Legal Proceedings

73

Item 1A.

Risk Factors

73

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

73

Item 3.

Defaults Upon Senior Securities

73

Item 4.

Mine Safety Disclosures

74

Item 5.

Other Information

74

Item 6.

Exhibits

74

 

Signatures

79

 

2



Table of Contents

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

New Mountain Finance Holdings, L.L.C.

 

Consolidated Statements of Assets, Liabilities and Members’ Capital

(in thousands, except units and per unit data)

 

 

 

March 31, 2014

 

December 31, 2013

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

Investments at fair value (cost of $1,153,821 and $1,094,080, respectively)

 

$

1,180,206

 

$

1,115,651

 

Cash and cash equivalents

 

13,327

 

14,981

 

Interest and dividend receivable

 

12,049

 

10,531

 

Receivable from unsettled securities sold

 

7,418

 

 

Deferred credit facility costs (net of accumulated amortization of $3,980 and $3,562, respectively)

 

4,361

 

4,727

 

Receivable from affiliate

 

383

 

459

 

Other assets

 

1,660

 

1,492

 

Total assets

 

$

1,219,404

 

$

1,147,841

 

Liabilities

 

 

 

 

 

Holdings Credit Facility

 

271,825

 

221,849

 

SLF Credit Facility

 

215,000

 

214,668

 

Payable for unsettled securities purchased

 

15,175

 

3,690

 

Capital gains incentive fee payable

 

8,050

 

7,636

 

Incentive fee payable

 

4,443

 

4,104

 

Management fee payable

 

4,176

 

3,856

 

Interest payable

 

937

 

814

 

Payable to affiliate

 

10

 

80

 

Other liabilities

 

2,640

 

2,628

 

Total liabilities

 

522,256

 

459,325

 

Members’ Capital

 

697,148

 

688,516

 

Total liabilities and members’ capital

 

$

1,219,404

 

$

1,147,841

 

Outstanding common membership units

 

47,968,000

 

47,896,693

 

Capital per unit

 

$

14.53

 

$

14.38

 

 

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

 

3



Table of Contents

 

New Mountain Finance Holdings, L.L.C.

 

Consolidated Statements of Operations

(in thousands)

(unaudited)

 

 

 

Three months ended

 

 

 

March 31, 2014

 

March 31, 2013

 

Investment income

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

28,139

 

$

25,043

 

Dividend income

 

2,095

 

 

Other income

 

684

 

275

 

Total investment income

 

30,918

 

25,318

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

Incentive fee

 

4,443

 

3,458

 

Capital gains incentive fee

 

1,527

 

2,682

 

Total incentive fee

 

5,970

 

6,140

 

Management fee

 

4,176

 

3,568

 

Interest and other credit facility expenses

 

3,413

 

3,071

 

Professional fees

 

862

 

572

 

Administrative expenses

 

596

 

759

 

Other general and administrative expenses

 

390

 

410

 

Total expenses

 

15,407

 

14,520

 

Less: expenses waived and reimbursed (See Note 5)

 

(774

)

(829

)

Net expenses

 

14,633

 

13,691

 

Net investment income

 

16,285

 

11,627

 

 

 

 

 

 

 

Net realized gains on investments

 

2,780

 

1,044

 

Net change in unrealized appreciation (depreciation) of investments

 

4,814

 

11,890

 

Net increase in members’ capital resulting from operations

 

$

23,879

 

$

24,561

 

 

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

 

4



Table of Contents

 

New Mountain Finance Holdings, L.L.C.

 

Consolidated Statements of Changes in Members’ Capital

(in thousands)

(unaudited)

 

 

 

Three months ended

 

 

 

March 31, 2014

 

March 31, 2013

 

Increase in members’ capital resulting from operations:

 

 

 

 

 

Net investment income

 

$

16,285

 

$

11,627

 

Net realized gains on investments

 

2,780

 

1,044

 

Net change in unrealized appreciation (depreciation) of investments

 

4,814

 

11,890

 

Net increase in members’ capital resulting from operations

 

23,879

 

24,561

 

Net contributions

 

 

28,400

 

Dividends declared

 

(16,285

)

(13,797

)

Offering costs

 

 

(75

)

Reinvestment of dividends

 

1,038

 

1,450

 

Net increase in members’ capital

 

8,632

 

40,539

 

Members’ capital at beginning of period

 

688,516

 

569,939

 

Members’ capital at end of period

 

$

697,148

 

$

610,478

 

 

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

 

5



Table of Contents

 

New Mountain Finance Holdings, L.L.C.

 

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Three months ended

 

 

 

March 31, 2014

 

March 31, 2013

 

Cash flows from operating activities

 

 

 

 

 

Net increase in members’ capital resulting from operations

 

$

23,879

 

$

24,561

 

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

 

 

 

 

 

Net realized gains on investments

 

(2,780

)

(1,044

)

Net change in unrealized (appreciation) depreciation of investments

 

(4,814

)

(11,890

)

Amortization of purchase discount

 

(712

)

(1,103

)

Amortization of deferred credit facility costs

 

418

 

357

 

Non-cash interest income

 

(573

)

(114

)

(Increase) decrease in operating assets:

 

 

 

 

 

Purchase of investments

 

(158,292

)

(112,005

)

Proceeds from sales and paydowns of investments

 

102,436

 

85,110

 

Cash received for purchase of undrawn portion of revolving credit or delayed draw facilities

 

126

 

 

Cash paid for purchase of drawn portion of revolving credit or delayed draw facilities

 

(516

)

 

Cash repayments on drawn revolvers

 

570

 

 

Interest and dividend receivable

 

(1,518

)

(3,209

)

Receivable from unsettled securities sold

 

(7,418

)

9,962

 

Receivable from affiliate

 

76

 

39

 

Other assets

 

(168

)

(157

)

Increase (decrease) in operating liabilities:

 

 

 

 

 

Payable for unsettled securities purchased

 

11,485

 

(9,700

)

Capital gains incentive fee payable

 

414

 

2,682

 

Incentive fee payable

 

339

 

68

 

Management fee payable

 

320

 

346

 

Interest payable

 

123

 

98

 

Payable to affiliate

 

(70

)

5

 

Other liabilities

 

56

 

238

 

Net cash flows used in operating activities

 

(36,619

)

(15,756

)

Cash flows from financing activities

 

 

 

 

 

Net contributions

 

 

28,400

 

Dividends paid

 

(15,247

)

(18,023

)

Offering costs paid

 

(78

)

(224

)

Proceeds from Holdings Credit Facility

 

93,076

 

65,425

 

Repayment of Holdings Credit Facility

 

(43,100

)

(57,200

)

Proceeds from SLF Credit Facility

 

332

 

3,238

 

Repayment of SLF Credit Facility

 

 

(2,500

)

Deferred credit facility costs paid

 

(18

)

(234

)

Net cash flows provided by financing activities

 

34,965

 

18,882

 

Net (decrease) increase in cash and cash equivalents

 

(1,654

)

3,126

 

Cash and cash equivalents at the beginning of the period

 

14,981

 

12,752

 

Cash and cash equivalents at the end of the period

 

$

13,327

 

$

15,878

 

Supplemental disclosure of cash flow information

 

 

 

 

 

Interest paid

 

$

2,714

 

$

2,545

 

Non-cash financing activities:

 

 

 

 

 

Dividends declared and payable

 

$

 

$

5,516

 

Value of members’ capital issued in connection with dividend reinvestment plan

 

1,038

 

1,450

 

Accrual for offering costs

 

690

 

828

 

Accrual for deferred credit facility costs

 

55

 

64

 

 

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

 

6



Table of Contents

 

New Mountain Finance Holdings, L.L.C.

 

Consolidated Schedule of Investments

 

March 31, 2014
(in thousands, except shares)

(unaudited)

 

Portfolio Company, Location and Industry(1)

 

Type of
Investment

 

Interest Rate

 

Maturity
Date

 

Principal
Amount,

Par Value
or Shares

 

Cost

 

Fair Value

 

Percent of
Members’
Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded Debt Investments - Australia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Project Sunshine IV Pty Ltd**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media

 

First lien (2)

 

8.00% (Base Rate + 7.00%)

 

2/28/2019

 

$

12,500

 

$

12,377

 

$

12,656

 

1.82

%

Total Funded Debt Investments - Australia

 

 

 

 

 

 

 

$

12,500

 

$

12,377

 

$

12,656

 

1.82

%

Funded Debt Investments - Bermuda

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stratus Technologies Bermuda Holdings Ltd.(4)**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stratus Technologies Bermuda Ltd. / Stratus Technologies, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Information Technology

 

First lien (2)(7)

 

12.00%

 

3/29/2015

 

$

6,497

 

$

6,385

 

$

7,244

 

1.04

%

Total Funded Debt Investments - Bermuda

 

 

 

 

 

 

 

$

6,497

 

$

6,385

 

$

7,244

 

1.04

%

Funded Debt Investments - Cayman Islands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pinnacle Holdco S.à r.l. / Pinnacle (US) Acquisition Co Limited**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.50% (Base Rate + 9.25%)

 

7/30/2020

 

$

35,000

 

$

34,537

 

$

35,613

 

5.11

%

Total Funded Debt Investments - Cayman Islands

 

 

 

 

 

 

 

$

35,000

 

$

34,537

 

$

35,613

 

5.11

%

Funded Debt Investments - United States

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McGraw-Hill Global Education Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (2)

 

9.75%

 

4/1/2021

 

$

24,500

 

$

24,351

 

$

27,930

 

 

 

 

 

First lien (3)

 

5.75% (Base Rate + 4.75%)

 

3/22/2019

 

14,963

 

14,574

 

15,086

 

 

 

 

 

 

 

 

 

 

 

39,463

 

38,925

 

43,016

 

6.17

%

Deltek, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.00% (Base Rate + 8.75%)

 

10/10/2019

 

41,000

 

40,979

 

41,820

 

6.00

%

Global Knowledge Training LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Second lien (2)

 

11.00% (Base Rate + 9.75%)

 

10/21/2018

 

41,450

 

41,088

 

41,650

 

5.97

%

Novell, Inc. (fka Attachmate Corporation, NetIQ Corporation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

First lien (3)

 

7.25% (Base Rate + 5.75%)

 

11/22/2017

 

6,514

 

6,422

 

6,571

 

 

 

 

 

Second lien (2)

 

11.00% (Base Rate + 9.50%)

 

11/22/2018

 

33,321

 

32,832

 

33,383

 

 

 

 

 

 

 

 

 

 

 

39,835

 

39,254

 

39,954

 

5.73

%

Kronos Incorporated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

9.75% (Base Rate + 8.50%)

 

4/30/2020

 

37,641

 

37,332

 

39,084

 

5.61

%

UniTek Global Services, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (2)

 

15.00% (Base Rate + 9.50% + 4.00% PIK)*

 

4/15/2018

 

26,584

 

25,750

 

25,291

 

 

 

 

 

First lien (2)

 

15.00% (Base Rate + 9.50% + 4.00% PIK)*

 

4/15/2018

 

6,436

 

6,234

 

6,123

 

 

 

 

 

First lien (2)

 

15.00% (Base Rate + 9.50% + 4.00% PIK)*

 

4/15/2018

 

5,350

 

5,182

 

5,090

 

 

 

 

 

 

 

 

 

 

 

38,370

 

37,166

 

36,504

 

5.24

%

SRA International, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (2)

 

6.50% (Base Rate + 5.25%)

 

7/20/2018

 

34,750

 

33,835

 

34,923

 

5.01

%

YP Holdings LLC (8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YP LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media

 

First lien (2)

 

8.03% (Base Rate + 6.72%)

 

6/4/2018

 

34,096

 

33,677

 

34,459

 

4.94

%

Edmentum, Inc.(fka Plato, Inc.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Second lien (2)

 

11.25% (Base Rate + 9.75%)

 

5/17/2019

 

31,150

 

30,703

 

31,462

 

4.51

%

Rocket Software, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.25% (Base Rate + 8.75%)

 

2/8/2019

 

30,875

 

30,739

 

31,081

 

4.46

%

Tolt Solutions, Inc. (13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (2)

 

7.00% (Base Rate + 6.00%)

 

3/7/2019

 

15,000

 

15,000

 

15,000

 

 

 

 

 

First lien (2)

 

12.00% (Base Rate + 11.00%)

 

3/7/2019

 

15,000

 

15,000

 

15,000

 

 

 

 

 

 

 

 

 

 

 

30,000

 

30,000

 

30,000

 

4.30

%

JHCI Acquisition, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

First lien (3)

 

7.00% (Base Rate + 5.75%)

 

7/11/2019

 

19,123

 

18,863

 

19,553

 

 

 

 

 

Second lien (2)

 

11.00% (Base Rate + 9.75%)

 

7/11/2020

 

10,000

 

9,721

 

10,013

 

 

 

 

 

 

 

 

 

 

 

29,123

 

28,584

 

29,566

 

4.24

%

CompassLearning, Inc. (12)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (2)

 

8.00% (Base Rate + 6.75%)

 

11/26/2018

 

30,000

 

29,293

 

29,250

 

4.20

%

Transtar Holding Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

Second lien (2)

 

10.00% (Base Rate + 8.75%)

 

10/9/2019

 

28,300

 

27,859

 

28,017

 

4.02

%

KeyPoint Government Solutions, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (3)

 

7.25% (Base Rate + 6.00%)

 

11/13/2017

 

19,918

 

19,538

 

19,719

 

 

 

 

 

First lien (2)

 

7.25% (Base Rate + 6.00%)

 

11/13/2017

 

6,607

 

6,514

 

6,541

 

 

 

 

 

 

 

 

 

 

 

26,525

 

26,052

 

26,260

 

3.77

%

 

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

 

7



Table of Contents

 

New Mountain Finance Holdings, L.L.C.

 

Consolidated Schedule of Investments (Continued)

 

March 31, 2014
(in thousands, except shares)

(unaudited)

 

Portfolio Company, Location and Industry(1)

 

Type of
Investment

 

Interest Rate

 

Maturity
Date

 

Principal
Amount,

Par Value
or Shares

 

Cost

 

Fair Value

 

Percent of
Members’
Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Meritas Schools Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

7.00% (Base Rate + 5.75%)

 

6/25/2019

 

$

19,900

 

$

19,722

 

$

20,049

 

 

 

 

 

First lien (2)

 

7.00% (Base Rate + 5.75%)

 

6/25/2019

 

5,905

 

5,853

 

5,950

 

 

 

 

 

 

 

 

 

 

 

25,805

 

25,575

 

25,999

 

3.73

%

Sierra Hamilton LLC / Sierra Hamilton Finance, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

First lien (2)

 

12.25%

 

12/15/2018

 

25,000

 

25,000

 

25,688

 

3.68

%

Permian Tank & Manufacturing, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

First lien (2)

 

10.50%

 

1/15/2018

 

24,500

 

24,742

 

25,051

 

3.59

%

Aderant North America, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.00% (Base Rate + 8.75%)

 

6/20/2019

 

24,000

 

23,742

 

24,479

 

3.51

%

McGraw-Hill School Education Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

6.25% (Base Rate + 5.00%)

 

12/18/2019

 

19,950

 

19,757

 

20,115

 

 

 

 

 

First lien (2)

 

6.25% (Base Rate + 5.00%)

 

12/18/2019

 

1,995

 

1,976

 

2,011

 

 

 

 

 

 

 

 

 

 

 

21,945

 

21,733

 

22,126

 

3.17

%

Aspen Dental Management, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

First lien (3)

 

7.00% (Base Rate + 5.50%)

 

10/6/2016

 

21,023

 

20,791

 

21,089

 

3.03

%

LM U.S. Member LLC (and LM U.S. Corp Acquisition Inc.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (3)

 

9.50% (Base Rate + 8.25%)

 

10/26/2020

 

20,000

 

19,739

 

20,363

 

2.92

%

American Pacific Corporation**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialty Chemicals and Materials

 

First lien (3)

 

7.00% (Base Rate + 6.00%)

 

2/27/2019

 

16,000

 

15,881

 

16,180

 

 

 

 

 

First lien (2)

 

7.00% (Base Rate + 6.00%)

 

2/27/2019

 

4,000

 

3,970

 

4,045

 

 

 

 

 

 

 

 

 

 

 

20,000

 

19,851

 

20,225

 

2.90

%

First American Payment Systems, L.P.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (3)

 

10.75% (Base Rate + 9.50%)

 

4/12/2019

 

20,000

 

19,667

 

20,200

 

2.90

%

Envision Acquisition Company, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Second lien (2)

 

9.75% (Base Rate + 8.75%)

 

11/4/2021

 

20,000

 

19,613

 

20,150

 

2.89

%

ARSloane Acquisition, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (3)

 

7.50% (Base Rate + 6.25%)

 

10/1/2019

 

19,900

 

19,714

 

20,037

 

2.87

%

Distribution International, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

First lien (2)

 

7.50% (Base Rate + 6.50%)

 

7/16/2019

 

19,850

 

19,491

 

19,899

 

2.85

%

eResearchTechnology, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

First lien (3)

 

6.00% (Base Rate + 4.75%)

 

5/2/2018

 

19,701

 

19,034

 

19,824

 

2.84

%

Insight Pharmaceuticals LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Products

 

Second lien (3)

 

13.25% (Base Rate + 11.75%)

 

8/25/2017

 

19,310

 

18,799

 

19,117

 

2.74

%

Acrisure, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (2)

 

11.50% (Base Rate + 10.50%)

 

3/9/2020

 

17,675

 

17,500

 

17,498

 

2.51

%

St. George’s University Scholastic Services LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

8.50% (Base Rate + 7.00%)

 

12/20/2017

 

15,939

 

15,689

 

16,078

 

2.31

%

MailSouth, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media

 

First lien (3)

 

6.76% (Base Rate + 4.96%)

 

12/14/2016

 

17,723

 

16,884

 

15,951

 

2.29

%

Ascend Learning, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

6.00% (Base Rate + 5.00%)

 

7/31/2019

 

14,963

 

14,889

 

15,187

 

2.18

%

Confie Seguros Holding II Co.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Services

 

Second lien (3)

 

10.25% (Base Rate + 9.00%)

 

5/8/2019

 

14,886

 

14,766

 

15,016

 

2.15

%

Smile Brands Group Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

First lien (3)

 

7.50% (Base Rate + 6.25%)

 

8/16/2019

 

14,428

 

14,240

 

14,495

 

2.08

%

Brock Holdings III, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Services

 

Second lien (2)

 

10.00% (Base Rate + 8.25%)

 

3/16/2018

 

14,000

 

13,843

 

14,224

 

2.04

%

Vision Solutions, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

9.50% (Base Rate + 8.00%)

 

7/23/2017

 

14,000

 

13,957

 

14,140

 

2.03

%

Packaging Coordinators, Inc. (10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Products

 

Second lien (2)

 

9.50% (Base Rate + 8.25%)

 

11/10/2020

 

14,000

 

13,872

 

14,100

 

2.02

%

Asurion, LLC (fka Asurion Corporation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (2)

 

8.50% (Base Rate + 7.50%)

 

3/3/2021

 

10,000

 

9,851

 

10,348

 

1.48

%

Vertafore, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

9.75% (Base Rate + 8.25%)

 

10/27/2017

 

10,000

 

9,941

 

10,216

 

1.47

%

 

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

 

8



Table of Contents

 

New Mountain Finance Holdings, L.L.C.

 

Consolidated Schedule of Investments (Continued)

 

March 31, 2014
(in thousands, except shares)

(unaudited)

 

Portfolio Company, Location and Industry(1)

 

Type of
Investment

 

Interest Rate

 

Maturity
Date

 

Principal
Amount,

Par Value
or Shares

 

Cost

 

Fair Value

 

Percent of
Members’
Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vitera Healthcare Solutions, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

First lien (3)

 

6.00% (Base Rate + 5.00%)

 

11/4/2020

 

$

1,995

 

$

1,976

 

$

1,991

 

 

 

 

 

Second lien (3)

 

9.25% (Base Rate + 8.25%)

 

11/4/2021

 

7,000

 

6,899

 

7,105

 

 

 

 

 

 

 

 

 

 

 

8,995

 

8,875

 

9,096

 

1.30

%

Sotera Defense Solutions, Inc. (Global Defense Technology & Systems, Inc.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (3)

 

7.50% (Base Rate + 6.00%)

 

4/21/2017

 

10,287

 

10,185

 

9,027

 

1.30

%

Harley Marine Services, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

Second lien (3)

 

10.50% (Base Rate + 9.25%)

 

12/20/2019

 

9,000

 

8,826

 

8,910

 

1.28

%

Virtual Radiologic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Information Technology

 

First lien (3)

 

7.25% (Base Rate + 5.50%)

 

12/22/2016

 

13,528

 

13,429

 

8,455

 

1.21

%

Physio-Control International, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Products

 

First lien (3)

 

9.88%

 

1/15/2019

 

6,651

 

6,651

 

7,499

 

1.08

%

Alion Science and Technology Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (2)(7)

 

12.00% (10.00% + 2.00% PIK)*

 

11/1/2014

 

6,447

 

6,378

 

6,365

 

0.91

%

Immucor, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Subordinated (3)(7)

 

11.13%

 

8/15/2019

 

3,000

 

2,962

 

3,405

 

 

 

 

 

Subordinated (2)(7)

 

11.13%

 

8/15/2019

 

2,000

 

1,988

 

2,270

 

 

 

 

 

 

 

 

 

 

 

5,000

 

4,950

 

5,675

 

0.82

%

Learning Care Group (US), Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Subordinated (2)

 

15.00% PIK*

 

5/8/2020

 

4,371

 

4,228

 

4,371

 

 

 

 

 

Subordinated (2)

 

15.00% PIK*

 

5/8/2020

 

800

 

745

 

800

 

 

 

 

 

 

 

 

 

 

 

5,171

 

4,973

 

5,171

 

0.74

%

Education Management LLC**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

8.25% (Base Rate + 7.00%)

 

3/30/2018

 

4,990

 

4,881

 

4,665

 

0.67

%

GCA Services Group, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (2)

 

9.25% (Base Rate + 8.00%)

 

11/1/2020

 

4,000

 

3,965

 

4,059

 

0.58

%

CRC Health Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Second lien (2)

 

9.00% (Base Rate + 8.00%)

 

9/28/2021

 

4,000

 

3,920

 

3,920

 

0.56

%

Sophia Holding Finance LP / Sophia Holding Finance Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Subordinated (2)

 

9.63%

 

12/1/2018

 

3,500

 

3,503

 

3,684

 

0.53

%

Synarc-Biocore Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Second lien (2)

 

9.25% (Base Rate + 8.25%)

 

3/10/2022

 

2,500

 

2,475

 

2,475

 

0.36

%

ATI Acquisition Company (fka Ability Acquisition, Inc.) (11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (2)

 

17.25% (Base Rate + 10.00% + 4.00% PIK) (5)*

 

6/30/2012 - Past Due

 

1,665

 

1,434

 

233

 

 

 

 

 

First lien (2)

 

17.25% (Base Rate + 10.00% + 4.00% PIK) (5)*

 

6/30/2012 - Past Due

 

103

 

94

 

103

 

 

 

 

 

 

 

 

 

 

 

1,768

 

1,528

 

336

 

0.05

%

Total Funded Debt Investments - United States

 

 

 

 

 

 

 

$

 1,057,063

 

$

 1,042,948

 

$

1,057,883

 

151.74

%

Total Funded Debt Investments

 

 

 

 

 

 

 

$

 1,111,060

 

$

 1,096,247

 

$

1,113,396

 

159.71

%

Equity - Bermuda

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stratus Technologies Bermuda Holdings Ltd.(4)**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Information Technology

 

Ordinary shares (2)

 

 

 

156,247

 

$

65

 

$

33

 

 

 

 

 

Preferred shares (2)

 

 

 

35,558

 

15

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

80

 

41

 

0.01

%

Total Shares - Bermuda

 

 

 

 

 

 

 

 

 

$

80

 

$

41

 

0.01

%

Equity - United States

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crowley Holdings Preferred, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

Preferred shares (2)

 

12.00% (10.00% + 2.00% PIK)*

 

 

35,191

 

$

35,191

 

$

35,191

 

5.04

%

Black Elk Energy Offshore Operations, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

Preferred shares (2)

 

17.00%

 

 

20,000,000

 

20,000

 

20,000

 

2.87

%

Global Knowledge Training LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Ordinary shares (2)

 

 

 

2

 

 

3

 

 

 

 

 

Preferred shares (2)

 

 

 

2,423

 

 

3,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,812

 

0.55

%

Packaging Coordinators, Inc. (10)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Packaging Coordinators Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Products

 

Ordinary shares (2)

 

 

 

19,427

 

636

 

755

 

0.11

%

 

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

 

9



Table of Contents

 

New Mountain Finance Holdings, L.L.C.

 

Consolidated Schedule of Investments (Continued)

 

March 31, 2014
(in thousands, except shares)

(unaudited)

 

Portfolio Company, Location and Industry(1)

 

Type of
Investment

 

Interest Rate

 

Maturity
Date

 

Principal
Amount,

Par Value
or Shares

 

Cost

 

Fair Value

 

Percent of
Members’
Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ancora Acquisition LLC (11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Preferred shares (2)

 

 

 

372

 

$

83

 

$

83

 

0.01

%

Total Shares - United States

 

 

 

 

 

 

 

 

 

$

55,910

 

$

59,841

 

8.58

%

Total Shares

 

 

 

 

 

 

 

 

 

$

55,990

 

$

59,882

 

8.59

%

Warrants - United States

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Learning Care Group (US), Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Warrants (2)

 

 

 

844

 

$

194

 

$

561

 

 

 

 

 

Warrants (2)

 

 

 

3,589

 

61

 

2,384