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Section 1: 10-Q (10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

ý       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018

OR

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____         

Commission File No. 814-00663 
ARES CAPITAL CORPORATION
(Exact name of Registrant as specified in its charter) 
Maryland
 
33-1089684
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification Number)

245 Park Avenue, 44th Floor, New York, NY 10167
(Address of principal executive office)   (Zip Code)
(212) 750-7300
(Registrant’s telephone number, including area code)
____________________________________________________________________
N/A
(Former name, former address and former fiscal year, if changed since last report)
_____________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   Yes  ý  No  o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes o  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): 
Large accelerated filer x
 
Accelerated filer o
Non-accelerated filer o
 
Smaller reporting company o
 
 
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
 
Outstanding at October 24, 2018
Common stock, $0.001 par value
 
426,298,200





ARES CAPITAL CORPORATION
 
INDEX
 
Part I.
Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions, except per share data)

 
As of
 
September 30, 2018

December 31, 2017

(unaudited)

 

ASSETS
 

 
Investments at fair value
 


 

Non-controlled/non-affiliate company investments
$
9,275


$
10,010

Non-controlled affiliate company investments
306


216

Controlled affiliate company investments
1,639


1,615

Total investments at fair value (amortized cost of $11,473 and $11,905, respectively)
11,220


11,841

Cash and cash equivalents
799


316

Interest receivable
93


93

Receivable for open trades
61


1

Other assets
82


96

Total assets
$
12,255


$
12,347

LIABILITIES
 



Debt
$
4,546


$
4,854

Base management fees payable
44


44

Income based fees payable
35


27

Capital gains incentive fees payable
122


79

Accounts payable and other liabilities
114


181

Interest and facility fees payable
42


64

Payable for open trades
39

 

Total liabilities
4,942


5,249

Commitments and contingencies (Note 7)





STOCKHOLDERS’ EQUITY





Common stock, par value $0.001 per share, 600 common shares authorized; 426 common shares issued and outstanding



Capital in excess of par value
7,192


7,192

Accumulated overdistributed net investment income
(80
)

(81
)
Accumulated undistributed net realized gains on investments, foreign currency transactions, extinguishment of debt and other assets
460


72

Net unrealized losses on investments, foreign currency and other transactions
(259
)

(85
)
Total stockholders’ equity
7,313


7,098

Total liabilities and stockholders’ equity
$
12,255


$
12,347

NET ASSETS PER SHARE
$
17.16


$
16.65


See accompanying notes to consolidated financial statements.


3



ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
(unaudited)

 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
INVESTMENT INCOME:
 

 
 

 
 
 
 
From non-controlled/non-affiliate company investments:
 

 
 

 
 
 
 
Interest income from investments (excluding payment-in-kind (“PIK”) interest income)
$
211

 
$
189

 
$
618

 
$
511

PIK interest income from investments
11

 
11

 
35

 
28

Capital structuring service fees
39

 
28

 
85

 
64

Dividend income
9

 
8

 
24

 
20

Other income
5

 
4

 
31

 
13

Total investment income from non-controlled/non-affiliate company investments
275

 
240

 
793

 
636

From non-controlled affiliate company investments:
 

 
 

 
 
 
 

Interest income from investments (excluding PIK interest income)
4


3


12


9

Dividend income
1

 

 
4

 

PIK interest income from investments
1

 
1

 
3

 
3

Total investment income from non-controlled affiliate company investments
6

 
4

 
19

 
12

From controlled affiliate company investments:
 

 
 

 
 
 
 

Interest income from investments (excluding PIK interest income)
29

 
28

 
92

 
136

PIK interest income from investments
6

 
6

 
18

 
13

Capital structuring service fees
3

 
4

 
11

 
9

Dividend income
15

 
10

 
43

 
38

Other income
8

 
2

 
16

 
9

Total investment income from controlled affiliate company investments
61

 
50

 
180

 
205

Total investment income
342

 
294

 
992

 
853

EXPENSES:
 
 
 

 
 
 
 

Interest and credit facility fees
59

 
56

 
180

 
166

Base management fees
44

 
44

 
135

 
127

Income based fees
45

 
35

 
123

 
97

Capital gain incentive fees
5

 
(3
)
 
43

 
23

Administrative fees
3

 
3

 
10

 
9

Professional fees and other costs related to the American Capital Acquisition
1

 
4

 
3

 
42

Other general and administrative
4

 
7

 
20

 
24

Total expenses
161

 
146

 
514

 
488

Waiver of income based fees
(10
)

(10
)

(30
)

(20
)
Total expenses, net of waiver of income based fees
151

 
136

 
484

 
468

NET INVESTMENT INCOME BEFORE INCOME TAXES
191

 
158

 
508

 
385

Income tax expense, including excise tax
6

 
5

 
17

 
14

NET INVESTMENT INCOME
185

 
153

 
491

 
371

REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS, FOREIGN CURRENCY AND OTHER TRANSACTIONS:
 

 
 

 
 
 
 

Net realized gains (losses):
 

 
 

 
 
 
 
Non-controlled/non-affiliate company investments
54

 
(3
)
 
78

 
70

Non-controlled affiliate company investments
(15
)
 

 
(15
)
 

Controlled affiliate company investments
324

 
45

 
322

 
97

Foreign currency and other transactions
10

 
(7
)
 
3

 
(20
)
Net realized gains
373

 
35

 
388

 
147

Net unrealized gains (losses):
 

 
 

 
 
 
 

Non-controlled/non-affiliate company investments
(29
)
 
(39
)
 
(19
)
 
(138
)
Non-controlled affiliate company investments
19

 
(9
)
 
16

 
(10
)
Controlled affiliate company investments
(331
)
 
1

 
(182
)
 
75

Foreign currency and other transactions
(8
)
 
(2
)
 
11

 
(6
)
Net unrealized losses
(349
)
 
(49
)
 
(174
)
 
(79
)
Net realized and unrealized gains (losses) from investments, foreign currency and other transactions
24

 
(14
)
 
214

 
68


4



 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
REALIZED LOSSES ON EXTINGUISHMENT OF DEBT

 

 

 
(4
)
NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS
$
209

 
$
139

 
$
705

 
$
435

BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 10)
$
0.49

 
$
0.33

 
$
1.66

 
$
1.02

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING (see Note 10)
426

 
426

 
426

 
425


See accompanying notes to consolidated financial statements.


5

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of September 30, 2018
(dollar amounts in millions)
(unaudited)


Company(1)
 
Business Description
 
Investment
 
Interest(5)(10)
 
Acquisition
Date
 
Amortized
Cost
 
Fair 
Value
 
Percentage
of Net
Assets
Healthcare Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Absolute Dental Management LLC and ADM Equity, LLC
 
Dental services provider
 
First lien senior secured loan ($19.1 par due 1/2022)
 
11.67% (Libor + 9.28%/Q)
 
1/5/2016
 
$
19.1

 
$
17.0

(2)(17)
 
 
 
 
 
First lien senior secured loan ($5.1 par due 1/2022)
 
11.67% (Libor + 9.28%/Q)
 
1/5/2016
 
5.1

 
4.5

(4)(17)
 
 
 
 
 
Class A preferred units (4,000,000 units)
 
 
 
1/5/2016
 
4.0

 
0.3

(2)
 
 
 
 
 
Class A common units (4,000,000 units)
 
 
 
1/5/2016
 

 

(2)
 
 
 
 
 
 
 
 
 
 
 
28.2

 
21.8

 
 
Acessa Health Inc. (fka HALT Medical, Inc.)
 
Medical supply provider
 
Common stock (569,823 shares)
 
 
 
6/22/2017
 
0.1

 

 
 
ADCS Billings Intermediate Holdings, LLC (21)
 
Dermatology practice
 
First lien senior secured revolving loan ($2.5 par due 5/2022)
 
8.04% (Libor + 5.75%/Q)
 
5/18/2016
 
2.5

 
2.4

(2)(17)(20)
 
ADG, LLC and RC IV GEDC Investor LLC (21)
 
Dental services provider
 
First lien senior secured revolving loan ($2.1 par due 9/2022)
 
6.99% (Libor + 4.75%/M)
 
9/28/2016
 
2.1

 
2.0

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($1.0 par due 9/2022)
 
6.90% (Libor + 4.75%/M)
 
9/28/2016
 
1.0

 
1.0

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($4.1 par due 9/2022)
 
9.00% (Base Rate + 3.75%/M)
 
9/28/2016
 
4.1

 
4.0

(2)(17)
 
 
 
 
 
Second lien senior secured loan ($87.5 par due 3/2024)
 
11.24% (Libor + 9.00%/M)
 
9/28/2016
 
87.5

 
79.6

(2)(17)
 
 
 
 
 
Membership units (3,000,000 units)
 
 
 
9/28/2016
 
3.0

 
1.2

(2)
 
 
 
 
 
 
 
 
 
 
 
97.7

 
87.8

 
 
Air Medical Group Holdings, Inc. and Air Medical Buyer Corp.
 
Emergency air medical services provider
 
Senior subordinated loan ($182.7 par due 3/2026)
 
10.04% (Libor + 7.88%/M)
 
3/14/2018
 
182.7

 
182.7

(2)(17)
 
 
 
 
 
Warrant to purchase up to 115,733 units of common stock (expires 3/2028)
 
 
 
3/14/2018
 
0.9

 
1.7

(2)
 
 
 
 
 
 
 
 
 
 
 
183.6

 
184.4

 
 
Alcami Corporation and ACM Holdings I, LLC (21)
 
Outsourced drug development services provider
 
First lien senior secured loan ($30.2 par due 7/2025)
 
6.40% (Libor + 4.25%/M)
 
7/12/2018
 
30.0

 
30.0

(2)(17)
 
 
 
 
 
Second lien senior secured loan ($77.5 par due 7/2026)
 
10.14% (Libor + 8.00%/M)
 
7/12/2018
 
76.7

 
76.7

(2)(17)
 
 
 
 
 
Common units (3,269,900 units)
 
 
 
7/12/2018
 
32.7

 
32.7

(2)
 
 
 
 
 
 
 
 
 
 
 
139.4

 
139.4

 
 
Alteon Health, LLC
 
Provider of physician management services
 
First lien senior secured loan ($3.0 par due 9/2022)
 
8.74% (Libor + 6.50%/M)
 
5/15/2017
 
3.0

 
2.6

(2)(17)
 
American Academy Holdings, LLC (21)
 
Provider of education, training, certification, networking, and consulting services to medical coders and other healthcare professionals
 
First lien senior secured revolving loan ($0.9 par due 12/2022)
 
8.64% (Libor + 6.25%/Q)
 
12/15/2017
 
0.9

 
0.9

(2)(17)
 
 
 
 
 
First lien senior secured loan ($108.4 par due 12/2022)
 
8.64% (Libor + 6.25%/Q)
 
12/15/2017
 
108.4

 
108.4

(2)(17)
 
 
 
 
 
First lien senior secured loan ($72.4 par due 12/2022)
 
8.64% (Libor + 6.25%/Q)
 
12/15/2017
 
72.4

 
72.4

(3)(17)
 
 
 
 
 
Senior subordinated loan ($78.7 par due 6/2023)
 
16.33% (Libor + 8.00% Cash, 6.00% PIK/Q)
 
12/15/2017
 
78.7

 
78.7

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
260.4

 
260.4

 
 
Bambino CI Inc. (21)
 
Manufacturer and provider of single-use obstetrics products
 
First lien senior secured revolving loan ($2.8 par due 10/2022)
 
8.24% (Libor + 6.00%/M)
 
10/17/2017
 
2.8

 
2.8

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($1.4 par due 10/2022)
 
8.14% (Libor + 6.00%/M)
 
10/17/2017
 
1.4

 
1.4

(2)(17)
 
 
 
 
 
First lien senior secured loan ($31.0 par due 10/2023)
 
8.24% (Libor + 6.00%/M)
 
10/17/2017
 
31.0

 
31.0

(3)(17)
 
 
 
 
 
 
 
 
 
 
 
35.2

 
35.2

 
 

6



As of September 30, 2018
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(10)
 
Acquisition
Date
 
Amortized
Cost
 
Fair 
Value
 
Percentage
of Net
Assets
Care Hospice, Inc (21)
 
Provider of hospice services
 
First lien senior secured revolving loan ($0.4 par due 4/2022)
 
7.09% (Libor + 4.75%/Q)
 
2/8/2018
 
0.4

 
0.4

(2)(17)
 
CCS-CMGC Holdings, Inc. (21)
 
Correctional facility healthcare operator
 
First lien senior secured revolving loan ($4.1 par due 7/2019)
 
8.25% (Base Rate + 3.00%/Q)
 
7/23/2014
 
4.1

 
4.1

(2)(17)(20)
 
 
 
 
 
First lien senior secured loan ($35.0 par due 10/2025)
 
7.89% (Libor + 5.50%/Q)
 
9/25/2018
 
34.7

 
34.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($6.5 par due 7/2021)
 
8.25% (Base Rate + 3.00%/Q)
 
7/23/2014
 
6.5

 
6.5

(2)(17)
 
 
 
 
 
First lien senior secured loan ($48.8 par due 9/2021)
 
10.50% (Libor + 8.17%/Q)
 
9/29/2015
 
48.8

 
48.8

(3)(17)
 
 
 
 
 
First lien senior secured loan ($3.1 par due 9/2021)
 
10.50% (Libor + 8.17%/Q)
 
9/29/2015
 
3.1

 
3.1

(2)(17)
 
 
 
 
 
Second lien senior secured loan ($135.0 par due 7/2022)
 
10.69% (Libor + 8.38%/Q)
 
7/23/2014
 
134.4

 
135.0

(2)(17)
 
 
 
 
 
Class A units (1,000,000 units)
 
 
 
8/19/2010
 

 
0.1

(2)
 
 
 
 
 
 
 
 
 
 
 
231.6

 
232.4

 
 
Comprehensive EyeCare Partners, LLC (21)
 
Vision care practice management company
 
First lien senior secured loan ($5.4 par due 2/2024)
 
6.89% (Libor + 4.50%/Q)
 
2/14/2018
 
5.4

 
5.4

(2)(17)
 
CSHM LLC (7)
 
Dental services provider
 
Class A membership units (1,979 units)
 
 
 
1/3/2017
 

 

 
 
D4C Dental Brands HoldCo, Inc. and Bambino Group Holdings, LLC (21)
 
Dental services provider
 
First lien senior secured revolving loan ($1.5 par due 12/2022)
 
10.50% (Base Rate + 5.25%/Q)
 
12/21/2016
 
1.5

 
1.5

(2)(17)
 
 
 
 
 
Class A preferred units (1,000,000 units)
 
 
 
12/21/2016
 
1.0

 
1.2

(2)
 
 
 
 
 
 
 
 
 
 
 
2.5

 
2.7

 
 
Datix Bidco Limited (8)
 
Global healthcare software company that provides software solutions for patient safety and risk management
 
First lien senior secured loan ($2.9 par due 4/2025)
 
6.73% (Libor + 4.50%/S)
 
4/27/2018
 
2.9

 
2.9

(2)(17)
 
 
 
 
 
First lien senior secured loan ($2.9 par due 4/2025)
 
7.02% (Libor + 4.50%/S)
 
4/27/2018
 
2.9

 
2.9

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
5.8

 
5.8

 
 
DCA Investment Holding, LLC (21)
 
Multi-branded dental practice management
 
First lien senior secured revolving loan
 
 
7/2/2015
 

 

(19)
 
 
 
 
 
First lien senior secured loan ($18.6 par due 7/2021)
 
7.64% (Libor + 5.25%/Q)
 
7/2/2015
 
18.5

 
18.6

(4)(17)
 
 
 
 
 
 
 
 
 
 
 
18.5

 
18.6

 
 
Emerus Holdings, Inc. (21)
 
Freestanding 24-hour emergency care micro-hospitals operator
 
First lien senior secured revolving loan ($3.0 par due 9/2020)
 
6.89% (Libor + 4.50%/Q)
 
3/14/2017
 
3.0

 
2.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($3.2 par due 9/2021)
 
6.89% (Libor + 4.50%/Q)
 
3/14/2017
 
2.9

 
2.9

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
5.9

 
5.7

 
 
GHX Ultimate Parent Corporation, Commerce Parent, Inc. and Commerce Topco, LLC
 
On-demand supply chain automation solutions provider to the healthcare industry
 
Second lien senior secured loan ($34.5 par due 6/2025)
 
10.39% (Libor + 8.00%/Q)
 
6/30/2017
 
34.2

 
34.5

(2)(17)
 
 
 
 
 
Series A preferred stock (110,425 shares)
 
13.14% PIK (Libor + 10.75%/Q)
 
6/30/2017
 
129.2

 
129.2

(2)(17)
 
 
 
 
 
Class A units (14,013,303 units)
 
 
 
6/30/2017
 
14.0

 
19.0

(2)
 
 
 
 
 
 
 
 
 
 
 
177.4

 
182.7

 
 
Greenphire, Inc. and RMCF III CIV XXIX, L.P
 
Software provider for clinical trial management
 
Limited partnership interest (99.90% interest)
 
 
 
12/19/2014
 
1.0

 
2.8

(2)
 
Hygiena Borrower LLC (21)
 
Adenosine triphosphate testing technology provider
 
First lien senior secured loan ($8.8 par due 8/2022)
 
6.39% (Libor + 4.00%/Q)
 
6/29/2018
 
8.8

 
8.7

(2)(17)
 
 
 
 
 
First lien senior secured loan ($0.7 par due 8/2022)
 
6.31% (Libor + 4.00%/Q)
 
6/29/2018
 
0.7

 
0.7

(2)(17)
 
 
 
 
 
Second lien senior secured loan ($11.1 par due 8/2023)
 
10.14% (Libor + 7.75%/Q)
 
6/29/2018
 
11.1

 
11.0

(2)(17)
 
 
 
 
 
Second lien senior secured loan ($0.6 par due 8/2023)
 
10.06% (Libor + 7.75%/Q)
 
6/29/2018
 
0.6

 
0.6

(2)(17)
 

7



As of September 30, 2018
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(10)
 
Acquisition
Date
 
Amortized
Cost
 
Fair 
Value
 
Percentage
of Net
Assets
 
 
 
 
Second lien senior secured loan ($10.0 par due 8/2023)
 
11.39% (Libor + 9.00%/Q)
 
8/26/2016
 
10.0

 
9.9

(2)(17)
 
 
 
 
 
Second lien senior secured loan ($10.7 par due 8/2023)
 
11.39% (Libor + 9.00%/Q)
 
2/27/2017
 
10.7

 
10.6

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
41.9

 
41.5

 
 
JDC Healthcare Management, LLC (21)
 
Dental services provider
 
First lien senior secured revolving loan ($3.6 par due 4/2022)
 
8.99% (Libor + 6.75%/M)
 
4/10/2017
 
3.6

 
3.5

(2)(17)
 
 
 
 
 
First lien senior secured loan ($4.2 par due 4/2023)
 
9.01% (Libor + 6.75%/Q)
 
4/10/2017
 
4.2

 
4.0

(2)(17)
 
 
 
 
 
First lien senior secured loan ($9.9 par due 4/2023)
 
8.99% (Libor + 6.75%/M)
 
4/10/2017
 
9.9

 
9.4

(2)(17)
 
 
 
 
 
First lien senior secured loan ($19.8 par due 4/2023)
 
8.99% (Libor + 6.75%/M)
 
4/10/2017
 
19.8

 
18.8

(4)(17)
 
 
 
 
 
 
 
 
 
 
 
37.5

 
35.7

 
 
KBHS Acquisition, LLC (d/b/a Alita Care, LLC) (21)
 
Provider of behavioral health services
 
First lien senior secured revolving loan ($0.6 par due 3/2022)
 
7.15% (Libor + 5.00%/M)
 
3/17/2017
 
0.6

 
0.6

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($0.7 par due 3/2022)
 
7.16% (Libor + 5.00%/M)
 
3/17/2017
 
0.7

 
0.7

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($0.1 par due 3/2022)
 
7.17% (Libor + 5.00%/M)
 
3/17/2017
 
0.1

 
0.1

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($2.1 par due 3/2022)
 
7.24% (Libor + 5.00%/M)
 
3/17/2017
 
2.1

 
2.1

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($0.6 par due 3/2022)
 
9.25% (Base Rate + 4.00%/M)
 
3/17/2017
 
0.6

 
0.6

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
4.1

 
4.1

 
 
Key Surgical LLC (21)
 
Provider of sterile processing, operating room and instrument care supplies for hospitals
 
First lien senior secured revolving loan ($0.6 par due 6/2022)
 
9.00% (Base Rate + 3.75%/Q)
 
6/1/2017
 
0.6

 
0.6

(2)(17)
 
 
 
 
 
First lien senior secured loan ($17.3 par due 6/2023)
 
5.75% (EURIBOR + 4.75%/Q)
 
6/1/2017
 
16.7

 
17.3

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
17.3

 
17.9

 
 
MB2 Dental Solutions, LLC (21)
 
Dental services provider
 
First lien senior secured loan ($5.9 par due 9/2023)
 
7.09% (Libor + 4.75%/Q)
 
9/29/2017
 
5.9

 
5.9

(2)(17)
 
MCH Holdings, Inc. and MC Acquisition Holdings I, LLC
 
Healthcare professional provider
 
First lien senior secured loan ($65.3 par due 1/2020)
 
7.66% (Libor + 5.50%/M)
 
7/26/2017
 
65.3

 
65.3

(2)(17)
 
 
 
 
 
First lien senior secured loan ($73.8 par due 1/2020)
 
7.74% (Libor + 5.50%/M)
 
7/26/2017
 
73.8

 
73.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($10.2 par due 1/2020)
 
7.74% (Libor + 5.50%/M)
 
7/26/2017
 
10.2

 
10.2

(4)(17)
 
 
 
 
 
First lien senior secured loan ($9.0 par due 1/2020)
 
7.66% (Libor + 5.50%/M)
 
7/26/2017
 
9.0

 
9.0

(4)(17)
 
 
 
 
 
Class A units (1,438,643 shares)
 
 
 
1/17/2014
 
1.5

 
1.2

(2)
 
 
 
 
 
 
 
 
 
 
 
159.8

 
159.5

 
 
MW Dental Holding Corp. (21)
 
Dental services provider
 
First lien senior secured revolving loan ($7.0 par due 4/2021)
 
8.99% (Libor + 6.75%/M)
 
4/12/2011
 
7.0

 
7.0

(2)(17)
 
 
 
 
 
First lien senior secured loan ($0.8 par due 4/2021)
 
9.12% (Libor + 6.75%/Q)
 
3/19/2018
 
0.8

 
0.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($13.7 par due 4/2021)
 
9.14% (Libor + 6.75%/Q)
 
3/19/2018
 
13.7

 
13.7

(2)(17)
 
 
 
 
 
First lien senior secured loan ($58.4 par due 4/2021)
 
9.14% (Libor + 6.75%/Q)
 
4/12/2011
 
58.4

 
58.4

(2)(17)
 
 
 
 
 
First lien senior secured loan ($46.4 par due 4/2021)
 
9.14% (Libor + 6.75%/Q)
 
4/12/2011
 
46.4

 
46.4

(3)(17)
 
 
 
 
 
First lien senior secured loan ($19.2 par due 4/2021)
 
9.14% (Libor + 6.75%/Q)
 
4/12/2011
 
19.2

 
19.2

(4)(17)
 
 
 
 
 
 
 
 
 
 
 
145.5

 
145.5

 
 
My Health Direct, Inc.
 
Healthcare scheduling exchange software solution provider
 
Warrant to purchase up to 4,548 shares of Series D preferred stock (expires 9/2024)
 
 
 
9/18/2014
 

 

(2)
 

8



As of September 30, 2018
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(10)
 
Acquisition
Date
 
Amortized
Cost
 
Fair 
Value
 
Percentage
of Net
Assets
New Trident Holdcorp, Inc. and Trident Holding Company, LLC
 
Outsourced mobile diagnostic healthcare service provider
 
Second lien senior secured loan ($24.9 par due 7/2022)
 
8.24% (Base Rate + 3.00%/M)
 
8/1/2013
 
19.6

 
15.2

(2)(17)
 
 
 
 
 
Second lien senior secured loan ($87.6 par due 7/2020)
 
 
 
8/1/2013
 
76.7

 
13.4

(2)(13)(16)
 
 
 
 
 
Senior subordinated loan ($9.1 par due 7/2020)
 
 
 
11/29/2017
 
8.8

 

(2)(16)
 
 
 
 
 
 
 
 
 
 
 
105.1

 
28.6

 
 
NMSC Holdings, Inc. and ASP NAPA Holdings, LLC
 
Anesthesia management services provider
 
Second lien senior secured loan ($72.8 par due 10/2023)
 
12.59% (Libor + 10.00%/Q)
 
4/19/2016
 
72.8

 
68.4

(2)(17)
 
 
 
 
 
Class A units (25,277 units)
 
 
 
4/19/2016
 
2.5

 
0.8

(2)
 
 
 
 
 
 
 
 
 
 
 
75.3

 
69.2

 
 
Nodality, Inc.
 
Biotechnology company
 
First lien senior secured loan ($3.0 par due 8/2016)
 
 
 
11/12/2015
 
2.1

 

(2)(16)
 
 
 
 
 
First lien senior secured loan ($14.3 par due 8/2016)
 
 
 
4/25/2014
 
9.7

 

(2)(16)
 
 
 
 
 
Warrant to purchase up to 3,736,255 shares of common stock (expires 3/2026)
 
 
 
5/1/2016
 

 

(2)
 
 
 
 
 
 
 
 
 
 
 
11.8

 

 
 
NSM Sub Holdings Corp. (21)
 
Provider of customized mobility, rehab and adaptive seating systems
 
First lien senior secured loan ($0.2 par due 10/2022)
 
6.84% (Libor + 4.50%/Q)
 
6/1/2018
 
0.2

 
0.2

(2)(17)
 
 
 
 
 
First lien senior secured loan ($4.9 par due 10/2022)
 
6.89% (Libor + 4.50%/Q)
 
6/1/2018
 
4.9

 
4.9

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
5.1

 
5.1

 
 
nThrive, Inc. (fka Precyse Acquisition Corp.)
 
Provider of healthcare information management technology and services
 
Second lien senior secured loan ($10.0 par due 4/2023)
 
11.99% (Libor + 9.75%/M)
 
4/20/2016
 
9.7

 
9.9

(2)(17)
 
NueHealth Performance, LLC (21)
 
Developer, builder and manager of specialty surgical hospitals and ambulatory surgery centers
 
First lien senior secured loan ($10.0 par due 9/2023)
 
8.73% (Libor + 6.50%/Q)
 
9/27/2018
 
10.0

 
10.0

(2)(17)
 
OmniSYS Acquisition Corporation, OmniSYS, LLC, and OSYS Holdings, LLC
 
Provider of technology-enabled solutions to pharmacies
 
Limited liability company membership interest (1.57%)
 
 
 
11/21/2013
 
1.0

 
0.6

(2)
 
Pathway Vet Alliance, LLC (21)
 
Operator of freestanding veterinary hospitals
 
First lien senior secured loan ($0.2 par due 10/2024)
 
6.49% (Libor + 4.25%/M)
 
10/4/2017
 
0.2

 
0.2

(2)(17)
 
 
 
 
 
First lien senior secured loan ($0.7 par due 10/2024)
 
6.49% (Libor + 4.25%/M)
 
5/24/2018
 
0.7

 
0.7

(2)(17)
 
 
 
 
 
First lien senior secured loan ($0.1 par due 10/2024)
 
6.33% (Libor + 4.25%/M)
 
5/24/2018
 
0.1

 
0.1

(2)(17)
 
 
 
 
 
First lien senior secured loan ($1.4 par due 10/2024)
 
6.49% (Libor + 4.25%/M)
 
10/4/2017
 
1.4

 
1.4

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
2.4

 
2.4

 
 
Patterson Medical Supply, Inc.
 
Distributor of rehabilitation supplies and equipment
 
Second lien senior secured loan ($78.0 par due 8/2023)
 
10.84% (Libor + 8.50%/Q)
 
9/2/2015
 
76.6

 
68.6

(2)(17)
 
PhyMED Management LLC
 
Provider of anesthesia services
 
Second lien senior secured loan ($47.2 par due 5/2021)
 
11.07% (Libor + 8.75%/Q)
 
12/18/2015
 
46.9

 
45.3

(2)(17)
 
Practice Insight, LLC (21)
 
Revenue cycle management provider to the emergency healthcare industry
 
First lien senior secured loan ($12.4 par due 8/2022)
 
7.24% (Libor + 5.00%/M)
 
8/23/2017
 
12.4

 
12.4

(2)(17)
 
Premise Health Holding Corp. and OMERS Bluejay Investment Holdings LP (21)
 
Provider of employer-sponsored onsite health and wellness clinics and pharmacies
 
First lien senior secured revolving loan ($6.0 par due 7/2023)
 
5.84% (Libor + 3.50%/Q)
 
7/10/2018
 
6.0

 
6.0

(2)(17)
 
 
 
 
 
First lien senior secured loan ($20.8 par due 7/2025)
 
6.14% (Libor + 3.75%/Q)
 
7/10/2018
 
20.7

 
20.7

(2)(17)
 
 
 
 
 
Second lien senior secured loan ($67.1 par due 7/2026)
 
9.89% (Libor + 7.50%/Q)
 
7/10/2018
 
66.5

 
66.4

(2)(17)
 
 
 
 
 
Class A units (9,775 units)
 
 
 
7/10/2018
 
9.8

 
9.8

(2)
 
 
 
 
 
 
 
 
 
 
 
103.0

 
102.9

 
 

9



As of September 30, 2018
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(10)
 
Acquisition
Date
 
Amortized
Cost
 
Fair 
Value
 
Percentage
of Net
Assets
ProVation Medical, Inc.
 
Provider of documentation and coding software for GI physicians
 
First lien senior secured loan ($13.1 par due 3/2024)
 
9.33% (Libor + 7.00%/Q)
 
3/9/2018
 
12.8

 
13.1

(2)(17)
 
RecoveryDirect Acquisition, L.L.C. (21)
 
Outpatient physical therapy provider
 
First lien senior secured revolving loan ($0.8 par due 1/2023)
 
6.65% (Libor + 4.50%/M)
 
1/3/2018
 
0.8

 
0.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($6.9 par due 1/2024)
 
6.89% (Libor + 4.50%/Q)
 
1/3/2018
 
6.9

 
6.9

(2)(17)
 
 
 
 
 
First lien senior secured loan ($14.8 par due 1/2024)
 
6.64% (Libor + 4.50%/Q)
 
1/3/2018
 
14.8

 
14.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($19.9 par due 1/2024)
 
6.64% (Libor + 4.50%/Q)
 
1/3/2018
 
19.9

 
19.9

(4)(17)
 
 
 
 
 
 
 
 
 
 
 
42.4

 
42.4

 
 
Respicardia, Inc.
 
Developer of implantable therapies to improve cardiovascular health
 
Warrant to purchase up to 99,094 shares of Series C preferred stock (expires 6/2022)
 
 
 
6/28/2012
 

 

(2)
 
Salter Labs (21)
 
Developer, manufacturer and supplier of consumable products for medical device customers
 
First lien senior secured revolving loan ($0.4 par due 3/2020)
 
6.59% (Libor + 4.25%/Q)
 
2/8/2018
 
0.4

 
0.4

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($0.6 par due 3/2020)
 
6.58% (Libor + 4.25%/Q)
 
2/8/2018
 
0.6

 
0.6

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($0.5 par due 3/2020)
 
6.35% (Libor + 4.25%/Q)
 
2/8/2018
 
0.5

 
0.5

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
1.5

 
1.5

 
 
SCSG EA Acquisition Company, Inc. (21)
 
Provider of outsourced clinical services to hospitals and health systems
 
First lien senior secured revolving loan
 
 
9/1/2017
 

 

(19)
 
SiroMed Physician Services, Inc. and SiroMed Equity Holdings, LLC (21)
 
Outsourced anesthesia provider
 
First lien senior secured loan ($17.5 par due 3/2024)
 
7.14% (Libor + 4.75%/Q)
 
3/26/2018
 
17.5

 
17.3

(2)(17)
 
 
 
 
 
Common units (171,784 units)
 
 
 
3/26/2018
 
4.6

 
4.3

(2)
 
 
 
 
 
 
 
 
 
 
 
22.1

 
21.6

 
 
SM Wellness Holdings, Inc. and SM Holdco, Inc. (21)
 
Breast cancer screening provider
 
First lien senior secured revolving loan ($0.7 par due 8/2024)
 
7.74% (Libor + 5.50%/M)
 
8/1/2018
 
0.7

 
0.7

(2)(17)
 
 
 
 
 
First lien senior secured loan ($7.1 par due 8/2024)
 
7.74% (Libor + 5.50%/M)
 
8/1/2018
 
7.1

 
7.1

(2)(17)
 
 
 
 
 
Series A preferred stock (44,975 shares)
 
12.64% (Libor + 10.25%/Q)
 
8/1/2018
 
45.9

 
45.9

(2)(17)
 
 
 
 
 
Series A units (7,475 units)
 
 
 
8/1/2018
 
7.5

 
0.1

(2)
 
 
 
 
 
Series B units (747,500 units)
 
 
 
8/1/2018
 

 
7.4

(2)
 
 
 
 
 
 
 
 
 
 
 
61.2

 
61.2

 
 
Symmetry Surgical, Inc (21)
 
Marketer and distributor of medical devices focused on the general surgery market
 
First lien senior secured revolving loan ($1.7 par due 7/2021)
 
6.08% (Libor + 4.00%/M)
 
2/8/2018
 
1.7

 
1.7

(2)(17)
 
Synergy HomeCare Franchising, LLC and NP/Synergy Holdings, LLC (21)
 
Franchisor of private-pay home care for the elderly
 
First lien senior secured loan ($16.1 par due 4/2024)
 
8.14% (Libor + 5.75%/Q)
 
4/2/2018
 
16.1

 
16.0

(2)(17)
 
 
 
 
 
Common units (550 units)
 
 
 
4/2/2018
 
0.6

 
0.6

 
 
 
 
 
 
 
 
 
 
 
 
16.7

 
16.6

 
 
TerSera Therapeutics LLC (21)
 
Acquirer and developer of specialty therapeutic pharmaceutical products
 
First lien senior secured loan ($2.2 par due 3/2024)
 
7.64% (Libor + 5.25%/Q)
 
7/12/2018
 
2.2

 
2.2

(2)(17)
 
 
 
 
 
First lien senior secured loan ($2.1 par due 3/2023)
 
7.63% (Libor + 5.25%/Q)
 
9/27/2018
 
2.1

 
2.1

(2)(17)
 
 
 
 
 
First lien senior secured loan ($5.2 par due 3/2023)
 
7.64% (Libor + 5.25%/Q)
 
5/3/2017
 
5.2

 
5.2

(4)(17)
 
 
 
 
 
 
 
 
 
 
 
9.5

 
9.5

 
 
U.S. Anesthesia Partners, Inc.
 
Anesthesiology service provider
 
Second lien senior secured loan ($71.8 par due 6/2025)
 
9.49% (Libor + 7.25%/M)
 
6/16/2017
 
70.9

 
71.8

(2)(17)
 

10



As of September 30, 2018
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(10)
 
Acquisition
Date
 
Amortized
Cost
 
Fair 
Value
 
Percentage
of Net
Assets
Urgent Cares of America Holdings I, LLC and FastMed Holdings I, LLC (21)
 
Operator of urgent care clinics
 
Preferred units (7,696,613 units)
 
 
 
6/11/2015
 
7.7

 
1.9

 
 
 
 
 
 
Series A common units (2,000,000 units)
 
 
 
6/11/2015
 
2.0

 

 
 
 
 
 
 
Series C common units (5,288,427 units)
 
 
 
6/11/2015
 

 

 
 
 
 
 
 
 
 
 
 
 
 
9.7

 
1.9

 
 
Urology Management Associates, LLC and JWC/UMA Holdings, L.P.
 
Urology private practice
 
First lien senior secured loan ($9.9 par due 8/2024)
 
7.24% (Libor + 5.00%/M)
 
8/31/2018
 
9.7

 
9.8

(2)(17)
 
 
 
 
 
Limited partnership interests (3.64% interest)
 
 
 
8/31/2018
 
4.8

 
4.8

(2)
 
 
 
 
 
 
 
 
 
 
 
14.5

 
14.6

 
 
Verscend Holding Corp. (21)
 
Healthcare analytics solutions provider
 
First lien senior secured loan ($100.0 par due 8/2025)
 
6.74% (Libor + 4.50%/M)
 
8/27/2018
 
99.3

 
99.5

(2)(17)
 
VistaPharm, Inc. and Vertice Pharma UK Parent Limited (8)
 
Manufacturer and distributor of generic pharmaceutical products
 
Preferred shares (40,662 shares)
 
 
 
12/21/2015
 
0.3

 
0.7

 
 
West Dermatology, LLC (21)
 
Dermatology practice platform
 
First lien senior secured revolving loan ($3.2 par due 4/2022)
 
7.89% (Libor + 5.50%/Q)
 
2/8/2018
 
3.2

 
3.2

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($0.6 par due 4/2022)
 
7.81% (Libor + 5.50%/Q)
 
2/8/2018
 
0.6

 
0.6

(2)(17)
 
 
 
 
 
First lien senior secured loan ($4.1 par due 4/2023)
 
7.89% (Libor + 5.50%/Q)
 
4/2/2018
 
4.1

 
4.1

(2)(17)
 
 
 
 
 
First lien senior secured loan ($0.9 par due 4/2023)
 
7.84% (Libor + 5.50%/Q)
 
4/2/2018
 
0.9

 
0.9

(2)(17)
 
 
 
 
 
First lien senior secured loan ($0.8 par due 4/2023)
 
7.82% (Libor + 5.50%/Q)
 
4/2/2018
 
0.8

 
0.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($7.7 par due 4/2023)
 
7.89% (Libor + 5.50%/Q)
 
4/2/2018
 
7.7

 
7.7

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
17.3

 
17.3

 
 
WIRB - Copernicus Group, Inc. (21)
 
Provider of regulatory, ethical, and safety review services for clinical research involving human subjects
 
First lien senior secured revolving loan
 
 
2/8/2018
 

 

(19)
 
WSHP FC Acquisition LLC (21)
 
Provider of biospecimen products
 
First lien senior secured revolving loan ($2.5 par due 3/2024)
 
8.89% (Libor + 6.50%/Q)
 
3/30/2018
 
2.5

 
2.5

(2)(17)
 
 
 
 
 
First lien senior secured revolving loan ($0.8 par due 3/2024)
 
8.81% (Libor + 6.50%/Q)
 
3/30/2018
 
0.8

 
0.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($6.0 par due 3/2024)
 
8.81% (Libor + 6.50%/Q)
 
3/30/2018
 
6.0

 
6.0

(2)(17)
 
 
 
 
 
First lien senior secured loan ($28.5 par due 3/2024)
 
8.89% (Libor + 6.50%/Q)
 
3/30/2018
 
28.5

 
28.5

(2)(17)
 
 
 
 
 
 
 
 
 
 
 
37.8

 
37.8

 
 
 
 
 
 
 
 
 
 
 
 
2,487.6

 
2,366.8

 
32.36
%
Business Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accommodations Plus Technologies LLC and Accommodations Plus Technologies Holdings LLC (21)
 
Provider of outsourced crew accommodations and logistics management solutions to the airline industry
 
First lien senior secured loan ($12.6 par due 5/2024)
 
7.39% (Libor + 5.00%/Q)
 
5/11/2018
 
12.6

 
12.4

(2)(17)
 
 
 
 
 
Class A common units (236,358 units)
 
 
 
5/11/2018
 
4.5

 
5.5

 
 
 
 
 
 
 
 
 
 
 
 
17.1

 
17.9

 
 
Achilles Acquisition LLC (21)
 
Benefits broker and outsourced workflow automation platform provider for brokers
 
First lien senior secured loan ($2.8 par due 6/2023)
 
8.24% (Libor + 6.00%/M)
 
6/6/2017
 
2.8

 
2.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($12.7 par due 6/2023)
 
8.24% (Libor + 6.00%/M)
 
2/2/2018
 
12.7

 
12.8

(2)(17)
 
 
 
 
 
First lien senior secured loan ($2.9 par due 6/2023)
 
8.24% (Libor + 6.00%/M)
 
6/6/2017
 
2.9

 
2.9

(4)(17)
 
 
 
 
 
 
 
 
 
 
 
18.4

 
18.5

 
 

11



As of September 30, 2018
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(10)
 
Acquisition
Date
 
Amortized
Cost
 
Fair 
Value
 
Percentage
of Net
Assets
Acrisure, LLC, Acrisure Investors FO, LLC and Acrisure Investors SO, LLC (9)
 
Retail insurance advisor and brokerage
 
Membership interests (0.95% interest)
 
 
 
11/18/2016
 
3.7

 
4.5

(2)
 
 
 
 
 
Membership interests (1.91% interest)
 
 
 
11/18/2016
 
11.0

 
15.0

(2)
 
 
 
 
 
 
 
 
 
 
 
14.7

 
19.5

 
 
BeyondTrust Software, Inc.
 
Management software solutions provider
 
First lien senior secured loan ($45.8 par due 11/2023)
 
8.60% (Libor + 6.25%/Q)
 
11/21/2017
 
45.1