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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 September 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
November 5, 2014

 

New Mountain Finance Corporation

 

Common stock, $0.01 par value

 

57,918,320

 

 

 

 



Table of Contents

 

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

TABLE OF CONTENTS

 

 

 

PAGE

 

 

 

PART I. FINANCIAL INFORMATION

3

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

New Mountain Finance Corporation

 

 

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

3

 

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

4

 

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

5

 

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

6

 

Consolidated Schedule of Investments as of September 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

44

 

 

 

Item 2.

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

45

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

68

Item 4.

Controls and Procedures

69

 

 

 

PART II. OTHER INFORMATION

69

 

 

 

Item 1.

Legal Proceedings

69

Item 1A.

Risk Factors

69

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

69

Item 3.

Defaults Upon Senior Securities

69

Item 4.

Mine Safety Disclosures

69

Item 5.

Other Information

70

Item 6.

Exhibits

70

 

Signatures

74

 

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)

 

 

 

September 30, 2014

 

December 31, 2013

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-controlled/non-affiliated investments (cost of $1,324,380 and $0, respectively)

 

$

1,338,512

 

$

 

Non-controlled/affiliated investments (cost $15,210 and $0, respectively)

 

15,157

 

 

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

 

 

650,107

 

Total investments at fair value (cost $1,339,590 and $633,835, respectively)

 

1,353,669

 

650,107

 

Cash and cash equivalents

 

17,857

 

 

Restricted cash and cash equivalents

 

1,784

 

 

Interest and dividend receivable

 

13,471

 

 

Deferred financing costs (net of accumulated amortization of $5,183 and $0, respectively)

 

8,858

 

 

Receivable from affiliates

 

183

 

 

Other assets

 

2,319

 

 

Total assets

 

$

1,398,141

 

$

650,107

 

Liabilities

 

 

 

 

 

Holdings Credit Facility

 

258,962

 

 

SLF Credit Facility

 

204,867

 

 

Convertible Notes

 

115,000

 

 

Payable for unsettled securities purchased

 

25,222

 

 

NMFC Credit Facility

 

22,000

 

 

Capital gains incentive fee payable

 

6,669

 

 

Incentive fee payable

 

4,520

 

 

Management fee payable

 

5,021

 

 

Interest payable

 

2,783

 

 

Deferred tax liability

 

271

 

 

Payable to affiliates

 

254

 

 

Other liabilities

 

5,115

 

 

Total liabilities

 

650,684

 

 

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 52,168,320 and 45,224,755 shares issued and outstanding, respectively

 

522

 

452

 

Paid in capital in excess of par

 

734,062

 

633,383

 

Accumulated undistributed net investment income

 

2,474

 

 

Accumulated undistributed net realized gains on investments

 

7,078

 

5,056

 

Net unrealized appreciation of investments (net of provision for taxes of $271 and $0, respectively)

 

3,321

 

11,216

 

Total net assets

 

$

747,457

 

$

650,107

 

Total liabilities and net assets

 

$

1,398,141

 

$

650,107

 

Number of shares outstanding

 

52,168,320

 

45,224,755

 

Net asset value per share

 

$

14.33

 

$

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

 

Nine months ended

 

 

 

September 30, 2014

 

September 30, 2013

 

September 30, 2014

 

September 30, 2013

 

Investment income(1)

 

 

 

 

 

 

 

 

 

From non-controlled/non-affiliated investments:

 

 

 

 

 

 

 

 

 

Interest income

 

$

32,353

 

$

 

$

51,141

 

$

 

Dividend income

 

214

 

 

1,186

 

 

Other income

 

1,667

 

 

2,372

 

 

From non-controlled/affiliated investments:

 

 

 

 

 

 

 

 

 

Dividend income

 

297

 

 

297

 

 

Other income

 

175

 

 

179

 

 

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

 

 

 

 

 

 

 

 

 

Interest income

 

 

23,190

 

40,515

 

59,220

 

Dividend income

 

 

(1,391

)

2,368

 

3,334

 

Other income

 

 

213

 

795

 

1,539

 

Total investment income

 

34,706

 

22,012

 

98,853

 

64,093

 

Expenses

 

 

 

 

 

 

 

 

 

Incentive fee(1)

 

4,520

 

 

7,267

 

 

Capital gains incentive fee(1)

 

(2,667

)

 

(1,904

)

 

Total incentive fees(1)

 

1,853

 

 

5,363

 

 

Management fee(1)

 

5,021

 

 

7,763

 

 

Interest and other financing expenses(1)

 

5,237

 

 

7,796

 

 

Professional fees(1)

 

890

 

 

1,530

 

 

Administrative expenses(1)

 

549

 

 

909

 

 

Other general and administrative expenses(1)

 

448

 

 

687

 

 

Income tax expense(1)

 

230

 

 

230

 

 

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

 

 

11,209

 

20,808

 

28,398

 

Total expenses

 

14,228

 

11,209

 

45,086

 

28,398

 

Less: expenses waived and reimbursed (see Note 5)(1)

 

(322

)

 

(380

)

 

Net expenses

 

13,906

 

11,209

 

44,706

 

28,398

 

Net investment income

 

20,800

 

10,803

 

54,147

 

35,695

 

Net realized gains (losses):

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliated investments(1)

 

768

 

 

(299

)

 

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

 

 

4,403

 

8,568

 

7,567

 

Net change in unrealized (depreciation) appreciation:

 

 

 

 

 

 

 

 

 

Non-controlled/non-affiliated investments(1)

 

(14,220

)

 

(8,512

)

 

Non-controlled/affiliated investments(1)

 

(52

)

 

(52

)

 

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

 

 

2,269

 

940

 

753

 

Investment in New Mountain Finance Holdings, L.L.C.(2)

 

 

(8

)

 

(40

)

Benefit (provision) for taxes(1)

 

115

 

 

(271

)

 

Net increase in net assets resulting from operations

 

$

7,411

 

$

17,467

 

$

54,521

 

$

43,975

 

Basic earnings per share

 

$

0.14

 

$

0.46

 

$

1.09

 

$

1.38

 

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

 

52,071,071

 

38,159,320

 

50,262,656

 

31,952,623

 

Diluted earnings per share

 

$

0.14

 

$

0.46

 

$

1.05

 

$

1.40

 

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

 

59,290,154

 

44,731,258

 

53,594,541

 

42,847,638

 

Dividends declared and paid per share

 

$

0.46

 

$

0.46

 

$

1.14

 

$

1.14

 

 


(1) For the nine months ended September 30, 2014, the amounts reported relate to the period from May 8, 2014 to September 30, 2014.

(2) For the nine months ended September 30, 2014, the amounts reported relate 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)

 

 

 

Nine months ended

 

 

 

September 30, 2014

 

September 30, 2013

 

Increase (decrease) in net assets resulting from operations:

 

 

 

 

 

Net investment income(1)

 

$

31,277

 

$

 

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

 

22,870

 

35,695

 

Net realized losses on investments(1)

 

(299

)

 

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

 

8,568

 

7,567

 

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

 

(8,564

)

 

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

 

940

 

753

 

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

 

 

(40

)

Provision for taxes(1)

 

(271

)

 

Net increase in net assets resulting from operations

 

54,521

 

43,975

 

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

)

Deferred offering costs

 

(126

)

 

Value of shares issued for exchanged units

 

38,840

 

137,384

 

Dividends declared to stockholders from net investment income

 

(51,673

)

(35,695

)

Dividends declared to stockholders from net realized gains

 

(6,247

)

(794

)

Reinvestment of dividends

 

3,641

 

4,109

 

Total net increase in net assets resulting from capital transactions

 

42,829

 

161,821

 

Net increase in net assets

 

97,350

 

205,796

 

Net assets at the beginning of the period

 

650,107

 

341,926

 

Net assets at the end of the period

 

$

747,457

 

$

547,722

 

 


(1) For the nine months ended September 30, 2014, the amounts reported relate to the period from May 8, 2014 to September 30, 2014.

(2) For the nine months ended September 30, 2014, the amounts reported relate 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)

 

 

 

Nine months ended

 

 

 

September 30, 2014

 

September 30, 2013

 

Cash flows from operating activities

 

 

 

 

 

Net increase in net assets resulting from operations

 

$

54,521

 

$

43,975

 

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

)

(35,695

)

Net realized losses on investments(1)

 

299

 

 

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

 

(8,568

)

(7,567

)

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

 

8,564

 

 

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

 

(940

)

(753

)

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

 

 

40

 

Amortization of purchase discount(1)

 

(1,073

)

 

Amortization of deferred financing costs(1)

 

1,029

 

 

Non-cash investment income(1)

 

(1,029

)

 

(Increase) decrease in operating assets:

 

 

 

 

 

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

 

957

 

 

Purchase of investments(1)

 

(325,038

)

 

Proceeds from sales and paydowns of investments(1)

 

159,792

 

 

Cash received for purchase of undrawn portion of revolving credit or delayed draw facilities(1)

 

29

 

 

Cash paid for purchase of drawn portion of revolving credit or delayed draw facilities(1)

 

(2,548

)

 

Cash repayments on drawn revolvers(1)

 

380

 

 

Restricted cash and cash equivalents(1)

 

(1,784

)

 

Interest and dividend receivable(1)

 

(1,934

)

 

Receivable from affiliates(1)

 

201

 

 

Other assets(1)

 

(167

)

 

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

 

35,785

 

Increase (decrease) in operating liabilities(1):

 

 

 

 

 

Capital gains incentive fee payable

 

(1,904

)

 

Incentive fee payable

 

(1,805

)

 

Management fee payable

 

(1,034

)

 

Payable for unsettled securities purchased

 

15,816

 

 

Interest payable

 

2,690

 

 

Payable to affiliates

 

21

 

 

Deferred tax liability

 

271

 

 

Other liabilities

 

1,859

 

 

Net cash flows used in operating activities

 

(167,662

)

(21,235

)

Cash flows from financing activities

 

 

 

 

 

Net proceeds from shares sold

 

58,644

 

57,020

 

Dividends paid

 

(54,279

)

(35,785

)

Offering costs paid(1)

 

(264

)

 

Proceeds from Holdings Credit Facility(1)

 

247,830

 

 

Repayment of Holdings Credit Facility(1)

 

(188,100

)

 

Proceeds from SLF Credit Facility(1)

 

19,867

 

 

Repayment of SLF Credit Facility(1)

 

(30,000

)

 

Proceeds from Convertible Notes(1)

 

115,000

 

 

Proceeds from NMFC Credit Facility(1)

 

22,000

 

 

Deferred financing costs paid(1)

 

(5,179

)

 

Net cash flows provided by financing activities

 

185,519

 

21,235

 

Net increase (decrease) in cash and cash equivalents

 

17,857

 

 

Cash and cash equivalents at the beginning of the period

 

 

 

Cash and cash equivalents at the end of the period

 

$

17,857

 

$

 

Supplemental disclosure of cash flow information

 

 

 

 

 

Cash interest paid

 

$

3,866

 

$

 

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

 

3,641

 

4,109

 

Accrual for offering costs(1)

 

729

 

 

Accrual for deferred financing costs(1)

 

576

 

 

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

 

(250

)

(203

)

 


(1) For the nine months ended September 30, 2014, the amounts reported relate to the period from May 8, 2014 to September 30, 2014.

(2) For the nine months ended September 30, 2014, the amounts reported relate 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

 

September 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%)

 

9/23/2019

 

$

20,000

 

$

19,887

 

$

20,100

 

2.69

%

Total Funded Debt Investments - Australia

 

 

 

 

 

 

 

$

20,000

 

$

19,887

 

$

20,100

 

2.69

%

Funded Debt Investments - Luxembourg

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.50% (Base Rate + 9.25%)

 

7/30/2020

 

$

24,630

 

$

24,313

 

$

24,660

 

 

 

 

 

Second lien (4)

 

10.50% (Base Rate + 9.25%)

 

7/30/2020

 

8,204

 

8,316

 

8,214

 

 

 

 

 

 

 

 

 

 

 

32,834

 

32,629

 

32,874

 

4.40

%

Evergreen Skills Lux S.À R.L.**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Second lien (4)

 

9.25% (Base Rate + 8.25%)

 

4/28/2022

 

5,000

 

4,875

 

4,875

 

0.65

%

Total Funded Debt Investments - Luxembourg

 

 

 

 

 

 

 

$

37,834

 

$

37,504

 

$

37,749

 

5.05

%

Funded Debt Investments - United States

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ascend Learning, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

6.00% (Base Rate + 5.00%)

 

7/31/2019

 

$

14,888

 

$

14,821

 

$

14,953

 

 

 

 

 

Second lien (4)

 

9.50% (Base Rate + 8.50%)

 

11/30/2020

 

29,000

 

28,877

 

29,362

 

 

 

 

 

 

 

 

 

 

 

43,888

 

43,698

 

44,315

 

5.93

%

McGraw-Hill Global Education Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (2)(10)

 

9.75%

 

4/1/2021

 

24,500

 

24,358

 

27,195

 

 

 

 

 

First lien (3)

 

5.75% (Base Rate + 4.75%)

 

3/22/2019

 

14,888

 

14,535

 

14,939

 

 

 

 

 

 

 

 

 

 

 

39,388

 

38,893

 

42,134

 

5.64

%

Global Knowledge Training LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Second lien (2)

 

11.00% (Base Rate + 9.75%)

 

10/21/2018

 

41,450

 

41,120

 

41,557

 

5.56

%

Deltek, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.00% (Base Rate + 8.75%)

 

10/10/2019

 

40,000

 

39,990

 

40,400

 

 

 

 

 

Second lien (4)

 

10.00% (Base Rate + 8.75%)

 

10/10/2019

 

1,000

 

990

 

1,010

 

 

 

 

 

 

 

 

 

 

 

41,000

 

40,980

 

41,410

 

5.54

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

First lien (3)

 

7.25% (Base Rate + 5.75%)

 

11/22/2017

 

6,514

 

6,434

 

6,538

 

 

 

 

 

Second lien (2)

 

11.00% (Base Rate + 9.50%)

 

11/22/2018

 

33,321

 

32,874

 

33,841

 

 

 

 

 

 

 

 

 

 

 

39,835

 

39,308

 

40,379

 

5.40

%

Tenawa Resource Holdings LLC (17)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenawa Resource Management LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

First lien (4)

 

10.50% (Base Rate + 8.00%)

 

5/12/2019

 

40,000

 

39,831

 

39,820

 

5.33

%

Kronos Incorporated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

9.75% (Base Rate + 8.50%)

 

4/30/2020

 

32,641

 

32,398

 

33,702

 

 

 

 

 

Second lien (4)

 

9.75% (Base Rate + 8.50%)

 

4/30/2020

 

5,000

 

4,954

 

5,163

 

 

 

 

 

 

 

 

 

 

 

37,641

 

37,352

 

38,865

 

5.20

%

Tolt Solutions, Inc. (16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (2)

 

7.00% (Base Rate + 6.00%)

 

3/7/2019

 

18,631

 

18,631

 

18,374

 

 

 

 

 

First lien (2)

 

12.00% (Base Rate + 11.00%)

 

3/7/2019

 

18,800

 

18,800

 

18,657

 

 

 

 

 

 

 

 

 

 

 

37,431

 

37,431

 

37,031

 

4.95

%

Hill International, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (3)

 

9.00% (Base Rate + 5.75%)

 

9/26/2020

 

20,000

 

19,800

 

19,800

 

 

 

 

 

First lien (2)

 

9.00% (Base Rate + 5.75%)

 

9/26/2020

 

15,000

 

14,850

 

14,850

 

 

 

 

 

 

 

 

 

 

 

35,000

 

34,650

 

34,650

 

4.64

%

Meritas Schools Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

7.00% (Base Rate + 5.75%)

 

6/25/2019

 

16,744

 

16,605

 

16,827

 

 

 

 

 

First lien (2)

 

7.00% (Base Rate + 5.75%)

 

6/25/2019

 

4,969

 

4,929

 

4,994

 

 

 

 

 

Second lien (2)

 

10.00% (Base Rate + 9.00%)

 

1/23/2021

 

12,000

 

11,941

 

12,210

 

 

 

 

 

 

 

 

 

 

 

33,713

 

33,475

 

34,031

 

4.55

%

SRA International, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (2)

 

6.50% (Base Rate + 5.25%)

 

7/20/2018

 

25,725

 

25,116

 

25,757

 

 

 

 

 

First lien (3)

 

6.50% (Base Rate + 5.25%)

 

7/20/2018

 

7,080

 

6,914

 

7,089

 

 

 

 

 

 

 

 

 

 

 

32,805

 

32,030

 

32,846

 

4.39

%

Envision Acquisition Company, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Second lien (2)

 

9.75% (Base Rate + 8.75%)

 

11/4/2021

 

26,000

 

25,602

 

26,195

 

 

 

 

 

Second lien (4)

 

9.75% (Base Rate + 8.75%)

 

11/4/2021

 

5,250

 

5,285

 

5,288

 

 

 

 

 

 

 

 

 

 

 

31,250

 

30,887

 

31,483

 

4.21

%

Edmentum, Inc.(fka Plato, Inc.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

Second lien (2)

 

11.25% (Base Rate + 9.75%)

 

5/17/2019

 

25,000

 

24,700

 

25,250

 

 

 

 

 

Second lien (4)

 

11.25% (Base Rate + 9.75%)

 

5/17/2019

 

6,150

 

6,037

 

6,212

 

 

 

 

 

 

 

 

 

 

 

31,150

 

30,737

 

31,462

 

4.21

%

Rocket Software, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.25% (Base Rate + 8.75%)

 

2/8/2019

 

30,875

 

30,750

 

31,126

 

4.16

%

Acrisure, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (2)

 

11.50% (Base Rate + 10.50%)

 

3/31/2020

 

30,425

 

30,134

 

30,751

 

4.11

%

 

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)

 

September 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

 

$

30,025

 

$

29,695

 

$

30,175

 

4.04

%

UniTek Global Services, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (2)

 

17.00% PIK (Base Rate + 13.50% PIK + 2.00% Default PIK Interest)(8)*

 

4/15/2018

 

19,591

 

19,069

 

13,816

 

 

 

 

 

First lien (4)

 

17.00% PIK (Base Rate + 13.50% PIK + 2.00% Default PIK Interest)(8)*

 

4/15/2018

 

7,393

 

7,161

 

5,214

 

 

 

 

 

First lien (2)

 

17.00% PIK (Base Rate + 13.50% PIK + 2.00% Default PIK Interest)(8)*

 

4/15/2018

 

5,965

 

5,800

 

4,207

 

 

 

 

 

First lien (4)

 

17.00% PIK (Base Rate + 13.50% PIK + 2.00% Default PIK Interest)(8)*

 

4/15/2018

 

568

 

550

 

400

 

 

 

 

 

First lien (2)

 

17.00% PIK (Base Rate + 13.50% PIK + 2.00% Default PIK Interest)(8)*

 

4/15/2018

 

4,958

 

4,821

 

3,497

 

 

 

 

 

First lien (4)

 

17.00% PIK (Base Rate + 13.50% PIK + 2.00% Default PIK Interest)(8)*

 

4/15/2018

 

472

 

457

 

333

 

 

 

 

 

First lien (4)(12) - Drawn

 

12.25% (Base Rate + 5.00% + 4.25% PIK + 2.00% Default PIK Interest)*

 

4/15/2016

 

2,571

 

2,571

 

2,571

 

 

 

 

 

 

 

 

 

 

 

41,518

 

40,429

 

30,038

 

4.02

%

CompassLearning, Inc. (15)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (2)

 

8.00% (Base Rate + 6.75%)

 

11/26/2018

 

30,000

 

29,358

 

29,146

 

3.90

%

Transtar Holding Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

Second lien (2)

 

10.00% (Base Rate + 8.75%)

 

10/9/2019

 

28,300

 

27,890

 

28,088

 

3.76

%

Sierra Hamilton LLC / Sierra Hamilton Finance, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

First lien (2)

 

12.25%

 

12/15/2018

 

25,000

 

25,000

 

26,250

 

3.51

%

KeyPoint Government Solutions, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (3)

 

7.25% (Base Rate + 6.00%)

 

11/13/2017

 

19,355

 

19,036

 

19,367

 

 

 

 

 

First lien (2)

 

7.25% (Base Rate + 6.00%)

 

11/13/2017

 

6,420

 

6,337

 

6,424

 

 

 

 

 

 

 

 

 

 

 

25,775

 

25,373

 

25,791

 

3.45

%

Pelican Products, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Products

 

Second lien (4)

 

9.25% (Base Rate + 8.25%)

 

4/9/2021

 

15,500

 

15,534

 

15,645

 

 

 

 

 

Second lien (2)

 

9.25% (Base Rate + 8.25%)

 

4/9/2021

 

10,000

 

10,125

 

10,094

 

 

 

 

 

 

 

 

 

 

 

25,500

 

25,659

 

25,739

 

3.44

%

Permian Tank & Manufacturing, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy

 

First lien (2)

 

10.50%

 

1/15/2018

 

24,500

 

24,714

 

25,113

 

3.36

%

Aderant North America, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

10.00% (Base Rate + 8.75%)

 

6/20/2019

 

24,000

 

23,762

 

24,300

 

3.25

%

TASC, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Services

 

First lien (2)

 

6.50% (Base Rate + 5.50%)

 

5/22/2020

 

24,938

 

24,581

 

24,119

 

3.23

%

Aricent Technologies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (3)

 

9.50% (Base Rate + 8.50%)

 

4/14/2022

 

20,000

 

19,869

 

20,000

 

 

 

 

 

Second lien (4)

 

9.50% (Base Rate + 8.50%)

 

4/14/2022

 

2,550

 

2,555

 

2,550

 

 

 

 

 

 

 

 

 

 

 

22,550

 

22,424

 

22,550

 

3.02

%

McGraw-Hill School Education Holdings, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

6.25% (Base Rate + 5.00%)

 

12/18/2019

 

19,850

 

19,673

 

19,887

 

 

 

 

 

First lien (2)

 

6.25% (Base Rate + 5.00%)

 

12/18/2019

 

1,985

 

1,967

 

1,989

 

 

 

 

 

 

 

 

 

 

 

21,835

 

21,640

 

21,876

 

2.93

%

Aspen Dental Management, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

First lien (3)

 

7.00% (Base Rate + 5.50%)

 

10/6/2016

 

20,916

 

20,727

 

20,811

 

2.78

%

Weston Solutions, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Subordinated (5)

 

16.00% (11.50% + 4.50% PIK)*

 

7/3/2019

 

20,225

 

20,225

 

20,225

 

2.71

%

American Pacific Corporation**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialty Chemicals and Materials

 

First lien (3)

 

7.00% (Base Rate + 6.00%)

 

2/27/2019

 

19,900

 

19,765

 

20,024

 

2.68

%

Distribution International, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

First lien (2)

 

7.50% (Base Rate + 6.50%)

 

7/16/2019

 

19,750

 

19,421

 

19,799

 

2.65

%

Novitex Acquisition, LLC (fka ARSloane Acquisition, LLC)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

First lien (3)

 

7.50% (Base Rate + 6.25%)

 

7/7/2020

 

20,000

 

19,631

 

19,699

 

2.64

%

eResearchTechnology, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

First lien (3)

 

6.00% (Base Rate + 4.75%)

 

5/2/2018

 

19,059

 

18,485

 

19,107

 

2.56

%

Confie Seguros Holding II Co.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Services

 

Second lien (3)

 

10.25% (Base Rate + 9.00%)

 

5/8/2019

 

18,886

 

18,791

 

19,074

 

2.55

%

First American Payment Systems, L.P.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (3)

 

10.75% (Base Rate + 9.50%)

 

4/12/2019

 

18,643

 

18,357

 

18,644

 

2.49

%

AgKnowledge Holdings Company, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (2)

 

9.25% (Base Rate + 8.25%)

 

7/23/2020

 

18,500

 

18,320

 

18,315

 

2.45

%

MailSouth, Inc. (d/b/a Mspark)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Media

 

First lien (3)

 

6.75% (Base Rate + 4.98%)

 

12/14/2016

 

17,107

 

16,436

 

16,081

 

2.15

%

GSDM Holdings Corp.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

Subordinated (5)

 

10.00%

 

6/23/2020

 

15,000

 

14,855

 

14,761

 

1.97

%

Smile Brands Group Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare Services

 

First lien (3)

 

7.50% (Base Rate + 6.25%)

 

8/16/2019

 

14,355

 

14,183

 

14,081

 

1.88

%

Vision Solutions, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

9.50% (Base Rate + 8.00%)

 

7/23/2017

 

14,000

 

13,963

 

13,895

 

1.86

%

 

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)

 

September 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

 

Asurion, LLC (fka Asurion Corporation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services

 

Second lien (2)

 

8.50% (Base Rate + 7.50%)

 

3/3/2021

 

$

5,000

 

$

4,930

 

$

5,075

 

 

 

 

 

Second lien (4)

 

8.50% (Base Rate + 7.50%)

 

3/3/2021

 

5,000

 

4,930

 

5,075

 

 

 

 

 

 

 

 

 

 

 

10,000

 

9,860

 

10,150

 

1.36

%

Vertafore, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

Second lien (2)

 

9.75% (Base Rate + 8.25%)

 

10/27/2017

 

10,000

 

9,948

 

10,106

 

1.35

%

Learning Care Group (US) Inc. (18)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Learning Care Group (US) No. 2 Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (3)

 

5.50% (Base Rate + 4.50%)

 

5/5/2021

 

9,476

 

9,386

 

9,518

 

1.27

%

Brock Holdings III, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Services

 

Second lien (2)

 

10.00% (Base Rate + 8.25%)

 

3/16/2018

 

9,000

 

8,910

 

8,972

 

1.20

%

Vitera Healthcare Solutions, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

First lien (3)

 

6.00% (Base Rate + 5.00%)

 

11/4/2020

 

1,985

 

1,967

 

1,982

 

 

 

 

 

Second lien (3)

 

9.25% (Base Rate + 8.25%)

 

11/4/2021

 

7,000

 

6,903

 

6,965

 

 

 

 

 

 

 

 

 

 

 

8,985

 

8,870

 

8,947

 

1.20

%

Harley Marine Services, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution & Logistics

 

Second lien (3)

 

10.50% (Base Rate + 9.25%)

 

12/20/2019

 

9,000

 

8,837

 

8,910

 

1.19

%

McKissock, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QC McKissock Investment, LLC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Education

 

First lien (2)

 

7.50% (Base Rate + 6.50%)

 

8/5/2019

 

4,934

 

4,886

 

4,885

 

 

 

 

 

First lien (2)