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Section 1: 10-Q (10-Q)

Document

 
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 Quarter Ended September 30, 2018
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
 
27-2978010
 
 
787 Seventh Avenue, 48th Floor
New York, New York 10019
Telephone: (212) 720-0300
State of Incorporation: Delaware
 
 
 
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 (the "Exchange Act") during the preceding 12 months 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 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.
 
Large accelerated filer ý
 
Accelerated filer o
 
 
Non-accelerated filer o (Do not check if a smaller reporting company)
 
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 13(a) of the Exchange 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.
Description
 
Shares as of November 7, 2018
Common stock, par value $0.01 per share
 
76,106,372
 


Table of Contents

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2018
TABLE OF CONTENTS
 
PAGE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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, 2018
 
December 31, 2017
Assets
 

 
 

Investments at fair value
 

 
 

Non-controlled/non-affiliated investments (cost of $1,754,348 and $1,438,889, respectively)
$
1,755,572

 
$
1,462,182

Non-controlled/affiliated investments (cost of $178,262 and $180,380, respectively)
190,569

 
178,076

Controlled investments (cost of $328,406 and $171,958, respectively)
348,618

 
185,402

Total investments at fair value (cost of $2,261,016 and $1,791,227, respectively)
2,294,759

 
1,825,660

Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively)
25,200

 
25,212

Cash and cash equivalents
146,345

 
34,936

Interest and dividend receivable
49,964

 
31,844

Receivable from unsettled securities sold
1,283

 

Receivable from affiliates
295

 
343

Other assets
3,928

 
10,023

Total assets
$
2,521,774

 
$
1,928,018

Liabilities
 

 
 

Borrowings
 
 
 
     Holdings Credit Facility
$
465,963

 
$
312,363

     Unsecured Notes
335,000

 
145,000

     Convertible Notes
270,329

 
155,412

     SBA-guaranteed debentures
165,000

 
150,000

     NMFC Credit Facility
135,000

 
122,500

     Deferred financing costs (net of accumulated amortization of $20,646 and $16,578, respectively)
(16,906
)
 
(15,777
)
Net borrowings
1,354,386

 
869,498

Payable for unsettled securities purchased
80,781

 

Management fee payable
16,058

 
7,065

Incentive fee payable
13,210

 
6,671

Interest payable
8,919

 
5,107

Deferred tax liability
1,880

 
894

Payable to affiliates
988

 
863

Other liabilities
12,022

 
2,945

Total liabilities
1,488,244

 
893,043

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, 76,106,372 and 75,935,093 shares issued and outstanding, respectively
761

 
759

Paid in capital in excess of par
1,055,796

 
1,053,468

Accumulated undistributed net investment income
40,227

 
39,165

Accumulated undistributed net realized losses on investments
(79,830
)
 
(76,681
)
Net unrealized appreciation (depreciation) (net of provision for taxes of $1,880 and $894, respectively)
16,576

 
18,264

Total net assets
$
1,033,530

 
$
1,034,975

Total liabilities and net assets
$
2,521,774

 
$
1,928,018

Number of shares outstanding
76,106,372

 
75,935,093

Net asset value per share
$
13.58

 
$
13.63


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, 2018
 
September 30, 2017
 
September 30, 2018
 
September 30, 2017
Investment income
 
 
 
 
 
 
 
From non-controlled/non-affiliated investments:
 
 
 
 
 
 
 
Interest income
$
38,332

 
$
38,511

 
$
112,278

 
$
107,905

Dividend income

 

 
486

 
159

Non-cash dividend income
1,491

 
59

 
4,254

 
72

Other income
4,669

 
1,196

 
8,550

 
5,545

From non-controlled/affiliated investments:
 
 
 
 
 
 
 
Interest income
817

 
718

 
1,129

 
2,077

Dividend income
787

 
816

 
2,423

 
2,662

Non-cash dividend income
4,024

 
3,994

 
12,050

 
8,625

Other income
315

 
294

 
1,529

 
888

From controlled investments:
 
 
 
 
 
 
 
Interest income
1,771

 
409

 
4,342

 
1,293

Dividend income
5,925

 
3,659

 
14,755

 
11,739

Non-cash dividend income
1,721

 
1,342

 
4,683

 
3,016

Other income
617

 
238

 
1,477

 
581

Total investment income
60,469

 
51,236

 
167,956

 
144,562

Expenses
 
 
 
 
 
 
 
Incentive fee
6,780

 
6,573

 
19,644

 
18,430

Management fee
10,018

 
8,422

 
28,011

 
24,311

Interest and other financing expenses
14,759

 
9,509

 
38,873

 
26,930

Professional fees
2,053

 
819

 
3,455

 
2,391

Administrative expenses
846

 
652

 
2,607

 
2,022

Other general and administrative expenses
437

 
346

 
1,365

 
1,214

Total expenses
34,893

 
26,321

 
93,955

 
75,298

Less: management and incentive fees waived (See Note 5)
(1,766
)
 
(1,483
)
 
(4,583
)
 
(6,124
)
Less: expenses waived and reimbursed (See Note 5)

 

 
(276
)
 
(474
)
Net expenses
33,127

 
24,838

 
89,096

 
68,700

Net investment income before income taxes
27,342

 
26,398

 
78,860

 
75,862

Income tax expense
225

 
106

 
286

 
341

Net investment income
27,117

 
26,292

 
78,574

 
75,521

Net realized gains (losses):
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
3,254

 
(14,216
)
 
(3,149
)
 
(39,843
)
Net change in unrealized appreciation (depreciation):
 
 
 
 
 
 
 
Non-controlled/non-affiliated investments
(4,048
)
 
19,755

 
(22,069
)
 
54,365

Non-controlled/affiliated investments
829

 
(3,807
)
 
10,908

 
(4,401
)
Controlled investments
(390
)
 
(1,305
)
 
10,471

 
(1,264
)
Securities purchased under collateralized agreements to resell

 
(1,549
)
 
(12
)
 
(2,382
)
(Provision) benefit for taxes
(2
)
 
(394
)
 
(986
)
 
525

Net realized and unrealized gains (losses)
(357
)
 
(1,516
)
 
(4,837
)
 
7,000

Net increase in net assets resulting from operations
$
26,760

 
$
24,776

 
$
73,737

 
$
82,521

Basic earnings per share
$
0.35

 
$
0.33

 
$
0.97

 
$
1.12

Weighted average shares of common stock outstanding - basic (See Note 11)
76,106,372

 
75,688,429

 
75,994,068

 
73,618,794

Diluted earnings per share
$
0.32

 
$
0.31

 
$
0.91

 
$
1.04

Weighted average shares of common stock outstanding - diluted (See Note 11)
89,388,999

 
85,512,556

 
86,983,697

 
83,442,921

Distributions declared and paid per share
$
0.34

 
$
0.34

 
$
1.02

 
$
1.02


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, except shares and per share data)
(unaudited)
 
Nine Months Ended
 
September 30, 2018
 
September 30, 2017
Increase (decrease) in net assets resulting from operations:
 
 
 
Net investment income
$
78,574

 
$
75,521

Net realized losses on investments
(3,149
)
 
(39,843
)
Net change in unrealized (depreciation) appreciation of investments
(690
)
 
48,700

Net change in unrealized depreciation of securities purchased under collateralized agreements to resell
(12
)
 
(2,382
)
(Provision) benefit for taxes
(986
)
 
525

Net increase in net assets resulting from operations
73,737

 
82,521

Capital transactions
 
 
 
Net proceeds from shares sold

 
81,478

Deferred offering costs

 
(172
)
Distributions declared to stockholders from net investment income
(77,512
)
 
(75,132
)
Reinvestment of distributions
2,330

 
4,907

Other

 
(81
)
Total net (decrease) increase in net assets resulting from capital transactions
(75,182
)
 
11,000

Net (decrease) increase in net assets
(1,445
)
 
93,521

Net assets at the beginning of the period
1,034,975

 
938,562

Net assets at the end of the period
$
1,033,530

 
$
1,032,083

 
 
 
 
Capital share activity
 
 
 
Shares sold

 
5,750,000

Shares issued from the reinvestment of distributions
171,279

 
299,632

Shares reissued from repurchase program in connection with the reinvestment of distributions

 
37,573

Net increase in shares outstanding
171,279

 
6,087,205




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, 2018
 
September 30, 2017
Cash flows from operating activities
 
 
 
Net increase in net assets resulting from operations
$
73,737

 
$
82,521

Adjustments to reconcile net (increase) decrease in net assets resulting from operations to net cash provided by (used in) operating activities:
 
 
 
Net realized losses on investments
3,149

 
39,843

Net change in unrealized (appreciation) depreciation of investments
690

 
(48,700
)
Net change in unrealized depreciation of securities purchased under collateralized agreements to resell
12

 
2,382

Amortization of purchase discount
(3,924
)
 
(6,458
)
Amortization of deferred financing costs
4,068

 
3,054

Amortization of premium on Convertible Notes
(83
)
 
(83
)
Non-cash investment income
(13,469
)
 
(6,236
)
(Increase) decrease in operating assets:
 
 
 
Purchase of investments and delayed draw facilities
(1,046,015
)
 
(810,119
)
Proceeds from sales and paydowns of investments
599,218

 
542,563

Cash received for purchase of undrawn portion of revolving credit or delayed draw facilities
978

 
339

Cash paid for purchase of drawn portion of revolving credit facilities
(11,631
)
 

Cash paid on drawn revolvers
(19,609
)
 
(11,387
)
Cash repayments on drawn revolvers
21,514

 
12,929

Interest and dividend receivable
(18,120
)
 
(9,967
)
Receivable from unsettled securities sold
(1,283
)
 
(2,506
)
Receivable from affiliates
48

 
7

Other assets
5,350

 
(2,954
)
Increase (decrease) in operating liabilities:
 
 
 
Payable for unsettled securities purchased
80,781

 
64,759

Management fee payable
8,993

 
1,087

Incentive fee payable
6,539

 
828

Interest payable
3,812

 
2,926

Deferred tax liability
986

 
(525
)
Payable to affiliates
125

 
650

Other liabilities
9,416

 
585

Net cash flows used in operating activities
(294,718
)
 
(144,462
)
Cash flows from financing activities
 
 
 
Net proceeds from shares sold

 
81,478

Distributions paid
(75,182
)
 
(70,225
)
Offering costs paid

 
(441
)
Proceeds from Holdings Credit Facility
382,500

 
435,750

Repayment of Holdings Credit Facility
(228,900
)
 
(393,100
)
Proceeds from Convertible Notes
115,000

 

Proceeds from Unsecured Notes
190,000

 
55,000

Proceeds from SBA-guaranteed debentures
15,000

 
22,255

Proceeds from NMFC Credit Facility
255,000

 
251,100

Repayment of NMFC Credit Facility
(242,500
)
 
(242,100
)
Deferred financing costs paid
(4,791
)
 
(1,456
)
Other

 
(81
)
Net cash flows provided by financing activities
406,127

 
138,180

Net increase (decrease) in cash and cash equivalents
111,409

 
(6,282
)
Cash and cash equivalents at the beginning of the period
34,936

 
45,928

Cash and cash equivalents at the end of the period
$
146,345

 
$
39,646

Supplemental disclosure of cash flow information
 
 
 
Cash interest paid
$
30,162

 
$
20,064

Income taxes paid
213

 
175

Non-cash operating activities:
 
 
 
Non-cash activity on investments
$
1,346

 
$
12,858

Non-cash financing activities:
 
 
 
Value of shares issued in connection with the distribution reinvestment plan
$
2,330

 
$
4,347

Value of shares reissued from repurchase program in connection with the distribution reinvestment plan

 
560

Accrual for offering costs
335

 
944

Accrual for deferred financing costs
373

 
158



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, 2018
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate(9)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Non-Controlled/Non-Affiliated Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dentalcorp Perfect Smile ULC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
Second lien (3)
 
9.74% (L + 7.50%/M)
 
6/1/2018
 
6/8/2026
 
$
19,630

 
$
19,466

 
$
19,753

 
 
 
 
Second lien (3)(11) - Drawn
 
9.74% (L + 7.50%/M)
 
6/1/2018
 
6/8/2026
 
1,247

 
1,236

 
1,254

 
 
 
 
 
 
 
 
 
 
 
 
20,877

 
20,702

 
21,007

 
2.03
 %
Total Funded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
$
20,877

 
$
20,702

 
$
21,007

 
2.03
 %
Funded Debt Investments - United Kingdom
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shine Acquisition Co. S.à.r.l / Boing US Holdco Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Services
 
Second lien (3)
 
9.84% (L + 7.50%/Q)
 
9/25/2017
 
10/3/2025
 
$
43,853

 
$
43,610

 
$
43,990

 
4.26
 %
Air Newco LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)
 
6.88% (L + 4.75%/M)
 
5/25/2018
 
5/31/2024
 
20,176

 
20,127

 
20,377

 
1.97
 %
Total Funded Debt Investments - United Kingdom
 
 
 
 
 
 
 
 
 
$
64,029

 
$
63,737

 
$
64,367

 
6.23
 %
Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benevis Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
8.51% (L + 6.32%/M)
 
3/15/2018
 
3/15/2024
 
$
58,676

 
$
58,676

 
$
58,676

 
 
 
 
First lien (3)(10)
 
8.51% (L + 6.32%/M)
 
3/15/2018
 
3/15/2024
 
20,639

 
20,639

 
20,639

 
 
 
 
 
 
 
 
 
 
 
 
79,315

 
79,315

 
79,315

 
7.67
 %
Integro Parent Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)
 
8.07% (L + 5.75%/Q)
 
10/9/2015
 
10/31/2022
 
51,377

 
51,066

 
51,377

 
 
 
 
Second lien (3)
 
11.57% (L + 9.25%/Q)
 
10/9/2015
 
10/30/2023
 
10,000

 
9,927

 
9,950

 
 
 
 
First lien (3)(11) - Drawn
 
6.86% (L + 4.50%/Q)
 
6/8/2018
 
10/30/2021
 
464

 
461

 
464

 
 
 
 
 
 
 
 
 
 
 
 
$
61,841

 
$
61,454

 
$
61,791

 
5.98
 %
CentralSquare Technologies, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (3)
 
9.74% (L + 7.50%/M)
 
8/15/2018
 
8/31/2026
 
55,338

 
54,632

 
55,891

 
5.41
 %
PhyNet Dermatology LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)
 
7.66% (L + 5.50%/M)
 
9/17/2018
 
8/16/2024
 
51,007

 
50,500

 
50,497

 
4.89
 %
NM GRC Holdco, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
7.89% (L + 5.50%/Q)
 
2/9/2018
 
2/9/2024
 
38,833

 
38,655

 
38,639

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.89% (L + 5.50%/Q)
 
2/9/2018
 
2/9/2024
 
10,792

 
10,739

 
10,766

 
 
 
 
 
 
 
 
 
 
 
 
49,625

 
49,394

 
49,405

 
4.78
 %
Nomad Buyer, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)
 
7.10% (L + 5.00%/M)
 
8/3/2018
 
8/1/2025
 
49,075

 
47,615

 
47,358

 
4.58
 %
Associations, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Services
 
First lien (2)(10)
 
11.25% (P + 3.00% + 3.00% PIK/Q)*
 
7/30/2018
 
7/30/2024
 
40,828

 
40,579

 
40,573

 
 
 
 
First lien (3)(10)(11) - Drawn
 
11.25% (P + 3.00% + 3.00% PIK/Q)*
 
7/30/2018
 
7/30/2024
 
3,624

 
3,601

 
3,601

 
 
 
 
 
 
 
 
 
 
 
 
44,452

 
44,180

 
44,174

 
4.27
 %
Quest Software US Holdings Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (2)
 
10.57% (L + 8.25%/Q)
 
5/17/2018
 
5/18/2026
 
43,697

 
43,272

 
43,468

 
4.21
 %

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, 2018
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate(9)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Tenawa Resource Holdings LLC (13)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenawa Resource Management LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
First lien (3)(10)
 
10.50% (Base + 8.00%/Q)
 
5/12/2014
 
10/30/2024
 
$
39,600

 
$
39,541

 
$
39,600

 
3.83
 %
Salient CRGT Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Services
 
First lien (2)
 
7.99% (L + 5.75%/M)
 
1/6/2015
 
2/28/2022
 
38,541

 
38,166

 
39,119

 
3.78
 %
Frontline Technologies Group Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
First lien (4)(10)
 
8.74% (L + 6.50%/M)
 
9/18/2017
 
9/18/2023
 
22,443

 
22,299

 
22,443

 
 
 
 
First lien (2)(10)
 
8.74% (L + 6.50%/M)
 
9/18/2017
 
9/18/2023
 
16,624

 
16,517

 
16,624

 
 
 
 
 
 
 
 
 
 
 
 
39,067

 
38,816

 
39,067

 
3.78
 %
Peraton Holding Corp. (fka MHVC Acquisition Corp.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Services
 
First lien (2)
 
7.64% (L + 5.25%/Q)
 
4/25/2017
 
4/29/2024
 
38,963

 
38,799

 
38,768

 
3.75
 %
Trader Interactive, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
8.74% (L + 6.50%/M)
 
6/15/2017
 
6/17/2024
 
37,353

 
37,130

 
37,353

 
3.61
 %
Kronos Incorporated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (2)
 
10.59% (L + 8.25%/Q)
 
10/26/2012
 
11/1/2024
 
36,000

 
35,547

 
36,939

 
3.57
 %
TDG Group Holding Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Services
 
First lien (2)(10)
 
7.89% (L + 5.50%/Q)
 
5/22/2018
 
5/31/2024
 
30,188

 
30,044

 
30,037

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.89% (L + 5.50%/Q)
 
5/22/2018
 
5/31/2024
 
3,363

 
3,346

 
3,346

 
 
 
 
First lien (3)(10)
 
7.74% (L + 5.50%/M)
 
5/22/2018
 
5/31/2024
 
2,055

 
2,045

 
2,045

 
 
 
 
 
 
 
 
 
 
 
 
35,606

 
35,435

 
35,428

 
3.43
 %
Finalsite Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (4)
 
7.72% (L + 5.50%/M)
 
9/28/2018
 
9/25/2024
 
22,500

 
22,331

 
22,331

 
 
 
 
First lien (2)
 
7.72% (L + 5.50%/M)
 
9/28/2018
 
9/25/2024
 
11,113

 
11,030

 
11,030

 
 
 
 
 
 
 
 
 
 
 
 
33,613

 
33,361

 
33,361

 
3.23
 %
Navicure, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
Second lien (3)
 
9.74% (L + 7.50%/M)
 
10/23/2017
 
10/31/2025
 
31,970

 
31,890

 
31,970

 
3.09
 %
iCIMS, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)
 
8.64% (L + 6.50%/M)
 
9/12/2018
 
9/12/2024
 
31,636

 
31,322

 
31,320

 
3.03
 %
Ansira Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)
 
7.99% (L + 5.75%/M)
 
12/19/2016
 
12/20/2022
 
25,725

 
25,629

 
25,661

 

 
 
First lien (3)
 
7.99% (L + 5.75%/M)
 
4/16/2018
 
12/20/2022
 
2,092

 
2,083

 
2,086

 
 
 
 
First lien (3)(11) - Drawn
 
7.99% (L + 5.75%/M)
 
12/19/2016
 
12/20/2022
 
1,793

 
1,797

 
1,788

 
 
 
 
 
 
 
 
 
 
 
 
29,610

 
29,509

 
29,535

 
2.86
 %
Brave Parent Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (5)
 
9.89% (L + 7.50%/Q)
 
4/17/2018
 
4/17/2026
 
22,500

 
22,391

 
22,613

 
 
 
 
Second lien (3)
 
9.89% (L + 7.50%/Q)
 
7/18/2018
 
4/17/2026
 
6,837

 
6,803

 
6,871

 
 
 
 
 
 
 
 
 
 
 
 
29,337

 
29,194

 
29,484

 
2.85
 %
Wirepath LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution & Logistics
 
First lien (2)
 
6.74% (L + 4.50%/M)
 
7/31/2017
 
8/5/2024
 
27,523

 
27,403

 
27,712

 
2.68
 %
EN Engineering, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
6.71% (L + 4.50%/M)
 
7/30/2015
 
6/30/2021
 
23,407

 
23,275

 
23,407

 
 
 
 
First lien (2)(10)
 
6.71% (L + 4.50%/M)
 
7/30/2015
 
6/30/2021
 
1,354

 
1,346

 
1,354

 
 
 
 
 
 
 
 
 
 
 
 
24,761

 
24,621

 
24,761

 
2.40
 %

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, 2018
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate(9)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Keystone Acquisition Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)
 
7.64% (L + 5.25%/Q)
 
5/10/2017
 
5/1/2024
 
$
19,800

 
$
19,633

 
$
19,936

 
 
 
 
Second lien (3)
 
11.64% (L + 9.25%/Q)
 
5/10/2017
 
5/1/2025
 
4,500

 
4,460

 
4,539

 
 
 
 
 
 
 
 
 
 
 
 
24,300

 
24,093

 
24,475

 
2.37
 %
SW Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (4)(10)
 
11.14% (L + 8.75%/Q)
 
6/30/2015
 
12/30/2021
 
18,161

 
18,044

 
18,161

 
 
 
 
Second lien (3)(10)
 
11.14% (L + 8.75%/Q)
 
4/16/2018
 
12/30/2021
 
6,181

 
6,126

 
6,181

 
 
 
 
 
 
 
 
 
 
 
 
24,342

 
24,170

 
24,342

 
2.36
 %
iPipeline, Inc. (Internet Pipeline, Inc.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (4)(10)
 
7.00% (L + 4.75%/M)
 
8/4/2015
 
8/4/2022
 
17,451

 
17,344

 
17,451

 
 
 
 
First lien (4)(10)
 
7.00% (L + 4.75%/M)
 
6/16/2017
 
8/4/2022
 
4,543

 
4,525

 
4,543

 
 
 
 
First lien (2)(10)
 
7.00% (L + 4.75%/M)
 
9/25/2017
 
8/4/2022
 
1,152

 
1,148

 
1,152

 
 
 
 
First lien (4)(10)
 
7.00% (L + 4.75%/M)
 
9/25/2017
 
8/4/2022
 
507

 
505

 
507

 
 
 
 
 
 
 
 
 
 
 
 
23,653

 
23,522

 
23,653

 
2.29
 %
AAC Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
First lien (2)(10)
 
10.36% (L + 8.25%/M)
 
9/30/2015
 
9/30/2020
 
22,592

 
22,440

 
22,184

 
2.15
 %
CRCI Longhorn Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (3)
 
9.37% (L + 7.25%/M)
 
8/2/2018
 
8/10/2026
 
21,849

 
21,767

 
21,958

 
2.12
 %
Avatar Topco, Inc. (23)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EAB Global, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Second lien (3)
 
10.00% (L + 7.50%/Q)
 
11/17/2017
 
11/17/2025
 
21,450

 
21,153

 
21,236

 
2.05
 %
Help/Systems Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (5)
 
9.99% (L + 7.75%/M)
 
3/23/2018
 
3/27/2026
 
20,231

 
20,134

 
20,332

 
1.97
 %
DCA Investment Holding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
7.64% (L + 5.25%/Q)
 
7/2/2015
 
7/2/2021
 
17,319

 
17,232

 
17,319

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.64% (L + 5.25%/Q)
 
12/20/2017
 
7/2/2021
 
2,901

 
2,784

 
2,901

 
 
 
 
 
 
 
 
 
 
 
 
20,220

 
20,016

 
20,220

 
1.96
 %
SSH Group Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Second lien (2)
 
10.59% (L + 8.25%/Q)
 
7/26/2018
 
7/30/2026
 
20,116

 
20,017

 
20,116

 
1.95
 %
DiversiTech Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution & Logistics
 
Second lien (3)
 
9.89% (L + 7.50%/Q)
 
5/18/2017
 
6/2/2025
 
19,500

 
19,328

 
19,403

 
1.88
 %
FR Arsenal Holdings II Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
9.63% (L + 7.25%/Q)
 
9/29/2016
 
9/8/2022
 
18,592

 
18,443

 
18,592

 
1.80
 %
AgKnowledge Holdings Company, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (2)(10)
 
10.50% (L + 8.25%/M)
 
7/23/2014
 
7/23/2020
 
18,500

 
18,433

 
18,500

 
1.79
 %
Integral Ad Science, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)
 
9.50% (L + 6.00% + 1.25% PIK/Q)*
 
7/19/2018
 
7/19/2024
 
18,617

 
18,436

 
18,431

 
1.78
 %
BackOffice Associates Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
9.75% (L + 7.50%/M)
 
8/25/2017
 
8/25/2023
 
18,388

 
18,251

 
16,470

 
1.59
 %
Navex Topco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (2)
 
9.12% (L + 7.00%/M)
 
8/9/2018
 
9/4/2026
 
16,807

 
16,723

 
16,933

 
1.64
 %
TIBCO Software Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Subordinated (3)
 
11.38%/S
 
11/24/2014
 
12/1/2021
 
15,000

 
14,759

 
16,031

 
1.55
 %
Hill International, Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
8.14% (L + 5.75%/Q)
 
6/21/2017
 
6/21/2023
 
15,603

 
15,538

 
15,603

 
1.51
 %

The accompanying notes are an integral part of these consolidated financial statements.
9

Table of Contents
New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
September 30, 2018
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate(9)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
QC McKissock Investment, LLC (14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
McKissock, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
First lien (2)(10)
 
8.14% (L + 5.75%/Q)
 
8/6/2014
 
8/5/2021
 
$
6,367

 
$
6,344

 
$
6,367

 
 
 
 
First lien (2)(10)
 
8.14% (L + 5.75%/Q)
 
8/24/2018
 
8/5/2021
 
3,658

 
3,623

 
3,658

 
 
 
 
First lien (2)(10)
 
8.14% (L + 5.75%/Q)
 
8/6/2014
 
8/5/2021
 
3,035

 
3,026

 
3,035

 
 
 
 
First lien (2)(10)
 
8.14% (L + 5.75%/Q)
 
8/6/2014
 
8/5/2021
 
980

 
976

 
980

 
 
 
 
First lien (2)(10)
 
8.14% (L + 5.75%/Q)
 
8/3/2018
 
8/5/2021
 
844

 
836

 
844

 
 
 
 
First lien (2)(10)
 
8.14% (L + 5.75%/Q)
 
5/23/2018
 
8/5/2021
 
574

 
565

 
574

 
 
 
 
 
 
 
 
 
 
 
 
15,458

 
15,370

 
15,458

 
1.50
 %
OEConnection LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (3)
 
10.25% (L + 8.00%/M)
 
11/22/2017
 
11/22/2025
 
15,160

 
14,966

 
15,160

 
1.47
 %
Netsmart Inc. / Netsmart Technologies, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Information Technology
 
Second lien (2)
 
9.84% (L + 7.50%/Q)
 
4/18/2016
 
10/19/2023
 
15,000

 
14,716

 
14,925

 
1.44
 %
Xactly Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (4)(10)
 
9.50% (L + 7.25%/M)
 
7/31/2017
 
7/29/2022
 
14,690

 
14,570

 
14,690

 
1.42
 %
Transcendia Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Packaging
 
Second lien (3)
 
10.24% (L + 8.00%/M)
 
6/28/2017
 
5/30/2025
 
14,500

 
14,324

 
14,391

 
1.39
 %
NorthStar Financial Services Group, LLC