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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 June 30, 2014

 

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

 


 

Commission
File Number

 

Exact name of registrant as specified in its charter, address of principal executive
offices, telephone numbers and states or other jurisdictions of incorporation or organization

 

I.R.S. Employer
Identification Number

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 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 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 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 Corporation

Yes o No x

 

Registrant

 

Description

 

Shares as of 
August 6, 2014

 

New Mountain Finance Corporation

 

Common stock, $0.01 par value

 

52,062,237

 

 

 

 



Table of Contents

 

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2014

TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

PART I. FINANCIAL INFORMATION

3

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

New Mountain Finance Corporation

3

 

Consolidated Statements of Assets and Liabilities as of June 30, 2014 (unaudited) and December 31, 2013 (unaudited)

3

 

Consolidated Statements of Operations for the three months and six months ended June 30, 2014 (unaudited) and June 30, 2013 (unaudited)

4

 

Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2014 (unaudited) and June 30, 2013 (unaudited)

5

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2014 (unaudited) and June 30, 2013 (unaudited)

6

 

Consolidated Schedule of Investments as of June 30, 2014 (unaudited)

7

 

Consolidated Schedule of Investments as of December 31, 2013

13

 

 

 

 

 Notes to the Consolidated Financial Statements of New Mountain Finance Corporation

17

 

 

 

 

Report of Independent Registered Public Accounting Firm

41

 

 

 

Item 2.

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

42

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

64

Item 4.

Controls and Procedures

65

 

 

 

PART II. OTHER INFORMATION

65

 

 

 

Item 1.

Legal Proceedings

65

Item 1A.

Risk Factors

65

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

65

Item 3.

Defaults Upon Senior Securities

65

Item 4.

Mine Safety Disclosures

66

Item 5.

Other Information

66

Item 6.

Exhibits

66

 

Signatures

70

 

2



Table of Contents

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

New Mountain Finance Corporation

 

Consolidated Statements of Assets and Liabilities

(in thousands, except shares and per share data)

(unaudited)

 

 

 

June 30, 2014

 

December 31, 2013

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliated investments (cost of $1,271,021 and $0, respectively)

 

$

1,299,372

 

$

 

Non-controlled/affiliated investments (cost $11,500 and $0, respectively)

 

11,500

 

 

Investment in New Mountain Finance Holdings, L.L.C. (cost of $0 and $633,835, respectively)

 

 

650,107

 

Total investments at fair value (cost $1,282,521 and $633,835, respectively)

 

1,310,872

 

650,107

 

Cash and cash equivalents

 

21,665

 

 

Interest and dividend receivable

 

12,918

 

 

Deferred financing costs (net of accumulated amortization of $4,490 and $0, respectively)

 

8,795

 

 

Receivable from affiliates

 

6

 

 

Other assets

 

3,856

 

 

Total assets

 

$

1,358,112

 

$

650,107

 

Liabilities

 

 

 

 

 

Holdings Credit Facility

 

238,101

 

 

SLF Credit Facility

 

215,000

 

 

Convertible Notes

 

115,000

 

 

Capital gains incentive fee payable

 

9,336

 

 

Incentive fee payable

 

4,630

 

 

Management fee payable

 

4,621

 

 

Payable for unsettled securities purchased

 

2,978

 

 

Interest payable

 

1,288

 

 

Payable to affiliates

 

502

 

 

Deferred tax liability

 

386

 

 

Other liabilities

 

3,715

 

 

Total liabilities

 

595,557

 

 

Commitments and contingencies (See Note 9)

 

 

 

 

 

Net assets

 

 

 

 

 

Preferred stock, par value $0.01 per share, 2,000,000 shares authorized, none issued

 

 

 

Common stock, par value $0.01 per share 100,000,000 shares authorized, and 52,062,237 and 45,224,755 shares issued and outstanding, respectively

 

521

 

452

 

Paid in capital in excess of par

 

732,614

 

633,383

 

Accumulated undistributed net realized gains on investments

 

11,942

 

5,056

 

Net unrealized appreciation of investments (net of provision for taxes of $386 and $0, respectively)

 

17,478

 

11,216

 

Total net assets

 

$

762,555

 

$

650,107

 

Total liabilities and net assets

 

$

1,358,112

 

$

650,107

 

Number of shares outstanding

 

52,062,237

 

45,224,755

 

Net asset value per share

 

$

14.65

 

$

14.38

 

 

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

 

3



Table of Contents

 

New Mountain Finance Corporation

 

Consolidated Statements of Operations

(in thousands, except shares and per share data)

(unaudited)

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2013

 

Investment income(1)

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliated investments:

 

 

 

 

 

 

 

 

 

Interest income

 

$

18,788

 

$

 

$

18,788

 

$

 

Dividend income

 

972

 

 

972

 

 

Other income

 

705

 

 

705

 

 

From non-controlled/affiliated investments:

 

 

 

 

 

 

 

 

 

Other income

 

4

 

 

4

 

 

Investment income allocated from New Mountain Finance Holdings, L.L.C.(2)

 

 

 

 

 

 

 

 

 

Interest income

 

12,847

 

20,534

 

40,515

 

36,030

 

Dividend income

 

279

 

4,727

 

2,368

 

4,725

 

Other income

 

113

 

1,139

 

795

 

1,326

 

Total investment income

 

33,708

 

26,400

 

64,147

 

42,081

 

Expenses(1)

 

 

 

 

 

 

 

 

 

Incentive fee

 

2,747

 

 

2,747

 

 

Capital gains incentive fee

 

763

 

 

763

 

 

Total incentive fees

 

3,510

 

 

3,510

 

 

Management fee

 

2,742

 

 

2,742

 

 

Interest and other financing expenses

 

2,559

 

 

2,559

 

 

Professional fees

 

640

 

 

640

 

 

Administrative expenses

 

360

 

 

360

 

 

Other general and administrative expenses

 

239

 

 

239

 

 

Net expenses allocated from New Mountain Finance Holdings, L.L.C.(2)

 

6,427

 

8,726

 

20,808

 

17,189

 

Total expenses

 

16,477

 

8,726

 

30,858

 

17,189

 

Less: expenses waived and reimbursed (see Note 5)

 

(58

)

 

(58

)

 

Net expenses

 

16,419

 

8,726

 

30,800

 

17,189

 

Net investment income

 

17,289

 

17,674

 

33,347

 

24,892

 

Net realized losses on investments(1)

 

(1,067

)

 

(1,067

)

 

Net realized gains on investment allocated from New Mountain Finance Holdings, L.L.C.(2)

 

5,860

 

2,478

 

8,568

 

3,164

 

Net change in unrealized appreciation (depreciation) of investments(1)

 

5,708

 

 

5,708

 

 

Provision for taxes on unrealized appreciation of investments(1)

 

(386

)

 

(386

)

 

Net change in unrealized (depreciation) appreciation of investments allocated from New Mountain Finance Holdings, L.L.C.(2)

 

(3,742

)

(9,159

)

940

 

(1,516

)

Net change in unrealized (depreciation) appreciation of investment in New Mountain Finance Holdings, L.L.C.(2)

 

 

(1

)

 

(32

)

Net increase in net assets resulting from operations

 

$

23,662

 

$

10,992

 

$

47,110

 

$

26,508

 

Basic earnings per share

 

$

0.46

 

$

0.34

 

$

0.95

 

$

0.92

 

Weighted average shares of common stock outstanding—basic (See Note 11)

 

51,595,684

 

32,289,758

 

49,343,462

 

28,797,837

 

Diluted earnings per share

 

$

0.44

 

$

0.35

 

$

0.94

 

$

0.94

 

Weighted average shares of common stock outstanding—diluted (See Note 11)

 

54,292,924

 

42,933,124

 

50,699,533

 

41,890,217

 

Dividends declared and paid per share

 

$

0.34

 

$

0.34

 

$

0.68

 

$

0.68

 

 


(1) The allocations for the three and six months ended June 30, 2014 are related to the period from May 8, 2014 to June 30, 2014.

(2) The allocations for the three months ended June 30, 2014 are related to the period from April 1, 2014 to May 7, 2014 and the allocations for the six months ended June 30, 2014 are related to the period from January 1, 2014 to May 7, 2014.

 

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

 

4



Table of Contents

 

New Mountain Finance Corporation

 

Consolidated Statements of Changes in Net Assets

(in thousands)

(unaudited)

 

 

 

Six months ended

 

 

 

June 30, 2014

 

June 30, 2013

 

Increase (decrease) in net assets resulting from operations:

 

 

 

 

 

Net investment income(1)

 

$

10,477

 

$

 

Net investment income allocated from New Mountain Finance Holdings, L.L.C.(2)

 

22,870

 

24,892

 

Net realized losses on investments(1)

 

(1,067

)

 

Net realized gains on investments allocated from New Mountain Finance Holdings, L.L.C.(2)

 

8,568

 

3,164

 

Net change in unrealized appreciation (depreciation) of investments(1)

 

5,708

 

 

Provision for taxes on unrealized appreciation of investments(1)

 

(386

)

 

Net change in unrealized appreciation (depreciation) of investments allocated from New Mountain Finance Holdings, L.L.C.(2)

 

940

 

(1,516

)

Net change in unrealized (depreciation) appreciation of investment in New Mountain Finance Holdings, L.L.C.(2)

 

 

(32

)

Net increase in net assets resulting from operations

 

47,110

 

26,508

 

Capital transactions

 

 

 

 

 

Net proceeds from shares sold

 

58,644

 

57,020

 

Deferred offering costs allocated from New Mountain Finance Holdings, L.L.C.

 

(250

)

(203

)

Value of shares issued for exchanged units

 

38,840

 

137,384

 

Dividends declared to stockholders from net investment income

 

(33,347

)

(18,931

)

Dividends declared to stockholders from net realized gains

 

(615

)

 

Reinvestment of dividends

 

2,066

 

2,496

 

Total net increase in net assets resulting from capital transactions

 

65,338

 

177,766

 

Net increase in net assets

 

112,448

 

204,274

 

Net assets at the beginning of the period

 

650,107

 

341,926

 

Net assets at the end of the period

 

$

762,555

 

$

546,200

 

 


(1) The allocations for the six months ended June 30, 2014 are related to the period from May 8, 2014 to June 30, 2014.

(2) The allocations for the six months ended June 30, 2014 are related to the period from January 1, 2014 to May 7, 2014.

 

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

 

5



Table of Contents

 

New Mountain Finance Corporation

 

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Six months ended

 

 

 

June 30, 2014

 

June 30, 2013

 

Cash flows from operating activities

 

 

 

 

 

Net increase in net assets resulting from operations

 

$

47,110

 

$

26,508

 

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

 

 

 

 

 

Net investment income allocated from New Mountain Finance Holdings, L.L.C.(2)

 

(22,870

)

(24,892

)

Net realized losses on investments(1)

 

1,067

 

 

Net realized gains on investments allocated from New Mountain Finance Holdings, L.L.C.(2)

 

(8,568

)

(3,164

)

Net change in unrealized (appreciation) depreciation of investments(1)

 

(5,708

)

 

Net change in unrealized (appreciation) depreciation of investments allocated from New Mountain Finance Holdings, L.L.C.(2)

 

(940

)

1,516

 

Net change in unrealized depreciation (appreciation) in New Mountain Finance Holdings, L.L.C.(2)

 

 

32

 

Amortization of purchase discount(1)

 

(405

)

 

Amortization of deferred financing costs(1)

 

336

 

 

Non-cash investment income(1)

 

(261

)

 

(Increase) decrease in operating assets:

 

 

 

 

 

Cash and cash equivalents from New Mountain Finance Holdings, L.L.C.(3)

 

957

 

 

Purchase of investments(1)

 

(128,598

)

 

Proceeds from sales and paydowns of investments(1)

 

15,698

 

 

Cash repayments on drawn revolvers(1)

 

380

 

 

Interest and dividend receivable(1)

 

(1,381

)

 

Receivable from affiliates(1)

 

378

 

 

Other assets(1)

 

(1,112

)

 

Purchase of investment in New Mountain Finance Holdings, L.L.C.(2)

 

(58,644

)

(57,020

)

Distributions from New Mountain Finance Holdings, L.L.C.(2)

 

15,247

 

19,840

 

Increase (decrease) in operating liabilities(1):

 

 

 

 

 

Capital gains incentive fee payable

 

763

 

 

Incentive fee payable

 

(1,695

)

 

Management fee payable

 

(1,434

)

 

Payable for unsettled securities purchased

 

(6,428

)

 

Interest payable

 

1,195

 

 

Payable to affiliates

 

269

 

 

Deferred tax liability

 

386

 

 

Other liabilities

 

(306

)

 

Net cash flows used in operating activities

 

(154,564

)

(37,180

)

Cash flows from financing activities

 

 

 

 

 

Net proceeds from shares sold

 

58,644

 

57,020

 

Dividends paid

 

(31,896

)

(19,840

)

Offering costs paid(1)

 

(166

)

 

Proceeds from Holdings Credit Facility(1)

 

108,469

 

 

Repayment of Holdings Credit Facility(1)

 

(69,600

)

 

Proceeds from Convertible Notes(1)

 

115,000

 

 

Deferred financing costs paid(1)

 

(4,222

)

 

Net cash flows provided by financing activities

 

176,229

 

37,180

 

Net increase (decrease) in cash and cash equivalents

 

21,665

 

 

Cash and cash equivalents at the beginning of the period

 

 

 

Cash and cash equivalents at the end of the period

 

$

21,665

 

$

 

Supplemental disclosure of cash flow information

 

 

 

 

 

Cash interest paid

 

$

965

 

$

 

Non-cash financing activities:

 

 

 

 

 

New Mountain Finance AIV Holdings Corporation exchange of New Mountain Finance Holdings, L.L.C. units for shares

 

$

38,840

 

$

137,384

 

Value of shares issued in connection with dividend reinvestment plan

 

2,066

 

2,496

 

Accrual for offering costs(1)

 

1,293

 

 

Accrual for deferred financing costs(1)

 

776

 

 

Deferred offering costs allocated from New Mountain Finance Holdings, L.L.C(2)

 

(250

)

(203

)

 


(1) The allocations for the six months ended June 30, 2014 are related to the period from May 8, 2014 to June 30, 2014.

(2) The allocations for the six months ended June 30, 2014 are related to the period from January 1, 2014 to May 7, 2014.

(3) Refer to the New Mountain Finance Holdings, L.L.C.’s Consolidated Statements of Cash Flows for the period January 1, 2014 to May 7, 2014 included in an exhibit attached hereto.

 

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

 

6



Table of Contents

 

New Mountain Finance Corporation

Consolidated Schedule of Investments

June 30, 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
Net
Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Controlled/Non-Affiliated Investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funded Debt Investments - Australia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Project Sunshine IV Pty Ltd**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media

 

First lien (2)

 

8.00% (Base Rate + 7.00%)

 

2/28/2019

 

$

9,226

 

$

9,139

 

$

9,353

 

1.23

%

Total Funded Debt Investments - Australia

 

 

 

 

 

 

 

$

9,226

 

$

9,139

 

$

9,353

 

1.23

%

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

 

$

34,551

 

$

35,560

 

4.66

%

Total Funded Debt Investments - Cayman Islands

 

 

 

 

 

 

 

$

  35,000

 

$

  34,551

 

$

  35,560

 

4.66

%

Funded Debt Investments - United States

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McGraw-Hill Global Education Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (2)(10)

 

9.75%

 

4/1/2021

 

$

24,500

 

$

24,354

 

$

28,236

 

 

 

 

 

First lien (3)

 

5.75% (Base Rate + 4.75%)

 

3/22/2019

 

14,925

 

14,555

 

15,191

 

 

 

 

 

 

 

 

 

 

 

39,425

 

38,909

 

43,427

 

5.69

%

Deltek, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.00% (Base Rate + 8.75%)

 

10/10/2019

 

40,000

 

39,989

 

40,883

 

 

 

 

 

Second lien (4)

 

10.00% (Base Rate + 8.75%)

 

10/10/2019

 

1,000

 

990

 

1,022

 

 

 

 

 

 

 

 

 

 

 

41,000

 

40,979

 

41,905

 

5.50

%

Global Knowledge Training LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Second lien (2)

 

11.00% (Base Rate + 9.75%)

 

10/21/2018

 

41,450

 

41,104

 

41,592

 

5.45

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

First lien (3)

 

7.25% (Base Rate + 5.75%)

 

11/22/2017

 

6,514

 

6,428

 

6,579

 

 

 

 

 

Second lien (2)

 

11.00% (Base Rate + 9.50%)

 

11/22/2018

 

33,321

 

32,853

 

33,793

 

 

 

 

 

 

 

 

 

 

 

39,835

 

39,281

 

40,372

 

5.29

%

Ascend Learning, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

6.00% (Base Rate + 5.00%)

 

7/31/2019

 

14,925

 

14,855

 

15,136

 

 

 

 

 

Second lien (4)

 

9.50% (Base Rate + 8.50%)

 

11/30/2020

 

25,000

 

24,827

 

25,155

 

 

 

 

 

 

 

 

 

 

 

39,925

 

39,682

 

40,291

 

5.28

%

Tenawa Resource Holdings LLC (17)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenawa Resource Management LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

First lien (4)

 

10.50% (Base Rate + 8.00%)

 

5/12/2019

 

40,000

 

39,824

 

39,820

 

5.22

%

Kronos Incorporated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

9.75% (Base Rate + 8.50%)

 

4/30/2020

 

32,641

 

32,389

 

33,838

 

 

 

 

 

Second lien (4)

 

9.75% (Base Rate + 8.50%)

 

4/30/2020

 

5,000

 

4,952

 

5,183

 

 

 

 

 

 

 

 

 

 

 

37,641

 

37,341

 

39,021

 

5.12

%

UniTek Global Services, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (2)

 

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

 

4/15/2018

 

19,451

 

18,900

 

19,241

 

 

 

 

 

First lien (4)

 

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

 

4/15/2018

 

7,340

 

7,097

 

7,262

 

 

 

 

 

First lien (2)

 

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

 

4/15/2018

 

5,923

 

5,749

 

5,859

 

 

 

 

 

First lien (4)

 

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

 

4/15/2018

 

564

 

545

 

558

 

 

 

 

 

First lien (2)

 

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

 

4/15/2018

 

4,923

 

4,779

 

4,870

 

 

 

 

 

First lien (4)

 

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

 

4/15/2018

 

469

 

453

 

464

 

 

 

 

 

 

 

 

 

 

 

38,670

 

37,523

 

38,254

 

5.02

%

Tolt Solutions, Inc. (16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (2)

 

7.00% (Base Rate + 6.00%)

 

3/7/2019

 

18,725

 

18,725

 

18,725

 

 

 

 

 

First lien (2)

 

12.00% (Base Rate + 11.00%)

 

3/7/2019

 

18,800

 

18,800

 

18,800

 

 

 

 

 

 

 

 

 

 

 

37,525

 

37,525

 

37,525

 

4.92

%

SRA International, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (2)

 

6.50% (Base Rate + 5.25%)

 

7/20/2018

 

25,725

 

25,081

 

25,854

 

 

 

 

 

First lien (3)

 

6.50% (Base Rate + 5.25%)

 

7/20/2018

 

7,080

 

6,905

 

7,116

 

 

 

 

 

 

 

 

 

 

 

32,805

 

31,986

 

32,970

 

4.32

%

 

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

 

7



Table of Contents

 

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

June 30, 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
Net
Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YP Holdings LLC (11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YP LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media

 

First lien (2)

 

8.00% (Base Rate + 6.75%)

 

6/4/2018

 

$

32,315

 

$

31,938

 

$

32,577

 

4.27

%

Edmentum, Inc.(fka Plato, Inc.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Second lien (2)

 

11.25% (Base Rate + 9.75%)

 

5/17/2019

 

25,000

 

24,686

 

25,250

 

 

 

 

 

Second lien (4)

 

11.25% (Base Rate + 9.75%)

 

5/17/2019

 

6,150

 

6,033

 

6,212

 

 

 

 

 

 

 

 

 

 

 

31,150

 

30,719

 

31,462

 

4.13

%

Rocket Software, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.25% (Base Rate + 8.75%)

 

2/8/2019

 

30,875

 

30,745

 

31,338

 

4.11

%

CompassLearning, Inc. (15)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (2)

 

8.00% (Base Rate + 6.75%)

 

11/26/2018

 

30,000

 

29,325

 

29,406

 

3.86

%

JHCI Acquisition, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

First lien (3)

 

7.00% (Base Rate + 5.75%)

 

7/11/2019

 

18,709

 

18,466

 

18,943

 

 

 

 

 

Second lien (2)

 

11.00% (Base Rate + 9.75%)

 

7/11/2020

 

10,000

 

9,729

 

10,125

 

 

 

 

 

 

 

 

 

 

 

28,709

 

28,195

 

29,068

 

3.81

%

Transtar Holding Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

Second lien (2)

 

10.00% (Base Rate + 8.75%)

 

10/9/2019

 

28,300

 

27,874

 

28,158

 

3.69

%

Sierra Hamilton LLC / Sierra Hamilton Finance, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

First lien (2)

 

12.25%

 

12/15/2018

 

25,000

 

25,000

 

26,281

 

3.45

%

KeyPoint Government Solutions, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (3)

 

7.25% (Base Rate + 6.00%)

 

11/13/2017

 

19,637

 

19,287

 

19,649

 

 

 

 

 

First lien (2)

 

7.25% (Base Rate + 6.00%)

 

11/13/2017

 

6,513

 

6,425

 

6,517

 

 

 

 

 

 

 

 

 

 

 

26,150

 

25,712

 

26,166

 

3.43

%

Meritas Schools Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

7.00% (Base Rate + 5.75%)

 

6/25/2019

 

19,850

 

19,679

 

19,998

 

 

 

 

 

First lien (2)

 

7.00% (Base Rate + 5.75%)

 

6/25/2019

 

5,890

 

5,840

 

5,935

 

 

 

 

 

 

 

 

 

 

 

25,740

 

25,519

 

25,933

 

3.40

%

Permian Tank & Manufacturing, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

First lien (2)

 

10.50%

 

1/15/2018

 

24,500

 

24,728

 

25,297

 

3.32

%

TASC, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (2)

 

6.50% (Base Rate + 5.50%)

 

5/22/2020

 

25,000

 

24,629

 

24,640

 

3.23

%

Aderant North America, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.00% (Base Rate + 8.75%)

 

6/20/2019

 

24,000

 

23,752

 

24,510

 

3.21

%

McGraw-Hill School Education Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

6.25% (Base Rate + 5.00%)

 

12/18/2019

 

19,900

 

19,714

 

20,149

 

 

 

 

 

First lien (2)

 

6.25% (Base Rate + 5.00%)

 

12/18/2019

 

1,990

 

1,973

 

2,015

 

 

 

 

 

 

 

 

 

 

 

21,890

 

21,687

 

22,164

 

2.91

%

Aspen Dental Management, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

First lien (3)

 

7.00% (Base Rate + 5.50%)

 

10/6/2016

 

20,969

 

20,760

 

21,048

 

2.76

%

First American Payment Systems, L.P.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (3)

 

10.75% (Base Rate + 9.50%)

 

4/12/2019

 

20,000

 

19,680

 

20,300

 

2.66

%

Envision Acquisition Company, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Second lien (2)

 

9.75% (Base Rate + 8.75%)

 

11/4/2021

 

20,000

 

19,622

 

20,251

 

2.66

%

American Pacific Corporation**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialty Chemicals and Materials

 

First lien (3)

 

7.00% (Base Rate + 6.00%)

 

2/27/2019

 

19,950

 

19,808

 

20,249

 

2.66

%

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

 

19,745

 

20,200

 

2.65

%

ARSloane Acquisition, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (3)

 

7.50% (Base Rate + 6.25%)

 

10/1/2019

 

19,850

 

19,672

 

20,011

 

2.62

%

Distribution International, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

First lien (2)

 

7.50% (Base Rate + 6.50%)

 

7/16/2019

 

19,800

 

19,456

 

19,850

 

2.60

%

Insight Pharmaceuticals LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Products

 

Second lien (3)

 

13.25% (Base Rate + 11.75%)

 

8/25/2017

 

19,310

 

18,830

 

19,503

 

2.56

%

eResearchTechnology, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

First lien (3)

 

6.00% (Base Rate + 4.75%)

 

5/2/2018

 

19,059

 

18,449

 

19,137

 

2.51

%

Acrisure, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (2)

 

11.50% (Base Rate + 10.50%)

 

3/9/2020

 

17,675

 

17,505

 

17,895

 

2.35

%

 

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

 

8



Table of Contents

 

New Mountain Finance Corporation

Consolidated Schedule of Investments (Continued)

June 30, 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
Net
Assets

 

MailSouth, Inc. (d/b/a Mspark)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media

 

First lien (3)

 

6.76% (Base Rate + 4.96%)

 

12/14/2016

 

$

17,723

 

$

16,955

 

$

16,395

 

2.15

%

St. George’s University Scholastic Services LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

8.50% (Base Rate + 7.00%)

 

12/20/2017

 

14,979

 

14,758

 

15,082

 

1.98

%

Confie Seguros Holding II Co.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Services

 

Second lien (3)

 

10.25% (Base Rate + 9.00%)

 

5/8/2019

 

14,886

 

14,771

 

15,016

 

1.97

%

Aricent Technologies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (2)

 

9.50% (Base Rate + 8.50%)

 

4/14/2022

 

15,000

 

14,852

 

15,000

 

1.97

%

GSDM Holdings Corp.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Subordinated (5)

 

10.00%

 

6/23/2020

 

15,000

 

14,850

 

14,850

 

1.95

%

Brock Holdings III, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Services

 

Second lien (2)

 

10.00% (Base Rate + 8.25%)

 

3/16/2018

 

14,000

 

13,852

 

14,143

 

1.85

%

Vision Solutions, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

9.50% (Base Rate + 8.00%)

 

7/23/2017

 

14,000

 

13,960

 

14,070

 

1.85

%

Smile Brands Group Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

First lien (3)

 

7.50% (Base Rate + 6.25%)

 

8/16/2019

 

14,391

 

14,211

 

14,031

 

1.84

%

Packaging Coordinators, Inc. (13)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Products

 

Second lien (2)

 

9.50% (Base Rate + 8.25%)

 

11/10/2020

 

14,000

 

13,875

 

13,971

 

1.83

%

Asurion, LLC (fka Asurion Corporation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (2)

 

8.50% (Base Rate + 7.50%)

 

3/3/2021

 

5,000

 

4,928

 

5,197

 

 

 

 

 

Second lien (4)

 

8.50% (Base Rate + 7.50%)

 

3/3/2021

 

5,000

 

4,928

 

5,197

 

 

 

 

 

 

 

 

 

 

 

10,000

 

9,856

 

10,394

 

1.36

%

Vertafore, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

9.75% (Base Rate + 8.25%)

 

10/27/2017

 

10,000

 

9,944

 

10,203

 

1.34

%

Learning Care Group (US) Inc. (18)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Learning Care Group (US) No. 2 Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (2)

 

6.05% (Base Rate + 4.06%)

 

5/5/2021

 

9,500

 

9,406

 

9,618

 

1.26

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (3)

 

10.00% (Base Rate + 8.50%)

 

4/21/2017

 

10,258

 

10,164

 

9,541

 

1.25

%

Vitera Healthcare Solutions, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

First lien (3)

 

6.00% (Base Rate + 5.00%)

 

11/4/2020

 

1,990

 

1,972

 

1,992

 

 

 

 

 

Second lien (3)

 

9.25% (Base Rate + 8.25%)

 

11/4/2021

 

7,000

 

6,900

 

7,088

 

 

 

 

 

 

 

 

 

 

 

8,990

 

8,872

 

9,080

 

1.19

%

Harley Marine Services, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

Second lien (3)

 

10.50% (Base Rate + 9.25%)

 

12/20/2019

 

9,000

 

8,831

 

8,910

 

1.17

%

Virtual Radiologic Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Information Technology

 

First lien (3)

 

7.25% (Base Rate + 5.50%)

 

12/22/2016

 

10,500

 

10,430

 

7,665

 

1.01

%

Physio-Control International, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Products

 

First lien (3)

 

9.88%

 

1/15/2019

 

6,651

 

6,651

 

7,383

 

0.97

%

Immucor, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Subordinated (3)(10)

 

11.13%

 

8/15/2019

 

3,000

 

2,963

 

3,360

 

 

 

 

 

Subordinated (2)(10)

 

11.13%

 

8/15/2019

 

2,000

 

1,989

 

2,240

 

 

 

 

 

 

 

 

 

 

 

5,000

 

4,952

 

5,600

 

0.73

%

Pelican Products, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Products

 

Second lien (4)

 

9.25% (Base Rate + 8.25%)

 

4/9/2021

 

5,500

 

5,460

 

5,583

 

0.73

%

GCA Services Group, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (4)

 

9.25% (Base Rate + 8.00%)

 

11/1/2020

 

4,000

 

3,966

 

4,057

 

0.53

%

CRC Health Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Second lien (4)

 

9.00% (Base Rate + 8.00%)

 

9/28/2021

 

4,000

 

3,922

 

4,042

 

0.53

%

Sophia Holding Finance LP / Sophia Holding Finance Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Subordinated (4)

 

9.63%

 

12/1/2018

 

3,500

 

3,503

 

3,658

 

0.48

%

Education Management LLC**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

8.25% (Base Rate + 7.00%)

 

3/30/2018

 

3,903

 

3,830

 

2,865

 

 

 

 

 

First lien (4)