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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, 2019

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)
____________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol
Name of each exchange on which registered
Common stock, $0.001 par value
ARCC
NASDAQ Global Select Market

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 13(a) 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, 2019
Common stock, $0.001 par value
 
427,193,597





ARES CAPITAL CORPORATION
 
INDEX
 
Part I.
Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

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


 
As of
 
September 30, 2019

December 31, 2018

(unaudited)

 
ASSETS
 

 
Investments at fair value
 


 

Non-controlled/non-affiliate company investments
$
11,829


$
10,478

Non-controlled affiliate company investments
294


292

Controlled affiliate company investments
1,769


1,647

Total investments at fair value (amortized cost of $14,263 and $12,754, respectively)
13,892


12,417

Cash and cash equivalents
253


296

Interest receivable
121


91

Operating lease right-of-use asset
99

 

Other assets
89

 
79

Receivable for open trades
4


12

Total assets
$
14,458


$
12,895

LIABILITIES
 



Debt
$
6,598


$
5,214

Base management fees payable
52


45

Income based fees payable
39


36

Capital gains incentive fees payable
55


112

Interest and facility fees payable
44

 
64

Operating lease liabilities
128

 
33

Accounts payable and other liabilities
169


66

Payable for open trades

 
25

Total liabilities
7,085


5,595

Commitments and contingencies (Note 7)





STOCKHOLDERS’ EQUITY





Common stock, par value $0.001 per share, 600 common shares authorized; 427 and 426 common shares issued and outstanding, respectively



Capital in excess of par value
7,194


7,173

Accumulated undistributed earnings
179


127

Total stockholders’ equity
7,373


7,300

Total liabilities and stockholders’ equity
$
14,458


$
12,895

NET ASSETS PER SHARE
$
17.26


$
17.12


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,
 
2019
 
2018
 
2019
 
2018
INVESTMENT INCOME:
 
 
 
 
 
 
 
From non-controlled/non-affiliate company investments:
 
 
 
 
 
 
 
Interest income from investments (excluding payment-in-kind (“PIK”) interest income)
$
242

 
$
211

 
$
704

 
$
618

PIK interest income from investments
14

 
11

 
42

 
35

Capital structuring service fees
40

 
39

 
107

 
85

Dividend income
19

 
9

 
55

 
24

Other income
7

 
5

 
23

 
31

Total investment income from non-controlled/non-affiliate company investments
322

 
275

 
931

 
793

From non-controlled affiliate company investments:
 
 
 
 
 
 
 

Interest income from investments (excluding PIK interest income)
2

 
4

 
10


12

PIK interest income from investments
2

 
1

 
4

 
3

Capital structuring service fees

 

 
2

 

Dividend income
2

 
1

 
3

 
4

Total investment income from non-controlled affiliate company investments
6

 
6

 
19

 
19

From controlled affiliate company investments:
 
 
 
 
 
 
 

Interest income from investments (excluding PIK interest income)
35

 
29

 
109

 
92

PIK interest income from investments
4

 
6

 
15

 
18

Capital structuring service fees
1

 
3

 
15

 
11

Dividend income
18

 
15

 
50

 
43

Other income
1

 
8

 
3

 
16

Total investment income from controlled affiliate company investments
59

 
61

 
192

 
180

Total investment income
387

 
342

 
1,142

 
992

EXPENSES:
 
 
 
 
 
 
 

Interest and credit facility fees
76

 
59

 
212

 
180

Base management fees
52

 
44

 
151

 
135

Income based fees
49

 
45

 
146

 
123

Capital gains incentive fees
(8
)
 
5

 
(7
)
 
43

Administrative fees
4

 
3

 
11

 
10

Other general and administrative
7

 
5

 
25

 
23

Total expenses
180

 
161

 
538

 
514

Waiver of income based fees
(10
)
 
(10
)
 
(30
)

(30
)
Total expenses, net of waiver of income based fees
170

 
151

 
508

 
484

NET INVESTMENT INCOME BEFORE INCOME TAXES
217

 
191

 
634

 
508

Income tax expense, including excise tax
5

 
6

 
13

 
17

NET INVESTMENT INCOME
212

 
185

 
621

 
491

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

Net realized gains (losses):
 
 
 
 
 
 
 
Non-controlled/non-affiliate company investments
(88
)
 
54

 
(63
)
 
78

Non-controlled affiliate company investments

 
(15
)
 

 
(15
)
Controlled affiliate company investments
14

 
324

 
14

 
322

Foreign currency and other transactions
11

 
10

 
63

 
3

Net realized gains (losses)
(63
)
 
373

 
14

 
388

Net unrealized gains (losses):
 
 
 
 
 
 
 

Non-controlled/non-affiliate company investments
50

 
(29
)
 
(17
)
 
(19
)
Non-controlled affiliate company investments
(1
)
 
19

 
8

 
16

Controlled affiliate company investments
(25
)
 
(331
)
 
(30
)
 
(182
)
Foreign currency and other transactions
2

 
(8
)
 
(7
)
 
11

Net unrealized gains (losses)
26

 
(349
)
 
(46
)
 
(174
)
Net realized and unrealized gains (losses) on investments, foreign currency and other transactions
(37
)
 
24

 
(32
)
 
214

NET INCREASE IN STOCKHOLDERS’ EQUITY RESULTING FROM OPERATIONS
$
175

 
$
209

 
$
589

 
$
705

BASIC AND DILUTED EARNINGS PER COMMON SHARE (see Note 10)
$
0.41

 
$
0.49

 
$
1.38

 
$
1.66

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING (see Note 10)
427

 
426

 
426

 
426


See accompanying notes to consolidated financial statements.


4

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of September 30, 2019
(dollar amounts in millions)
(unaudited)


Company(1)
 
Business Description
 
Investment
 
Interest(5)(9)
 
Acquisition
Date
 
Amortized
Cost
 
Fair
Value
 
Percentage
of Net
Assets
Business Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accommodations Plus Technologies LLC and Accommodations Plus Technologies Holdings LLC (19)
 
Provider of outsourced crew accommodations and logistics management solutions to the airline industry
 
Class A common units (236,358 units)
 
 
 
5/11/2018
 
$
4.3

 
$
6.6

 
 
 
Achilles Acquisition LLC (19)
 
Benefits broker and outsourced workflow automation platform provider for brokers
 
First lien senior secured loan ($8.3 par due 10/2025)
 
6.06% (Libor + 4.00%/M)
 
10/11/2018
 
8.3

 
8.3

(2)
 
 
 
 
 
 
First lien senior secured loan ($10.6 par due 10/2025)
 
6.06% (Libor + 4.00%/M)
 
10/11/2018
 
10.6

 
10.6

(2)
 
 
 
 
 
 
 
 
 
 
 
 
18.9

 
18.9

 
 
 
Alera Group Intermediate Holdings, Inc. (19)
 
Insurance service provider
 
Second lien senior secured loan ($18.5 par due 3/2026)
 
10.60% (Libor + 8.50%/M)
 
3/5/2019
 
18.5

 
18.5

(2)
 
 
 
 
 
 
Second lien senior secured loan ($4.5 par due 3/2026)
 
10.54% (Libor + 8.50%/M)
 
3/5/2019
 
4.5

 
4.5

(2)
 
 
 
 
 
 
Second lien senior secured loan ($26.2 par due 3/2026)
 
10.54% (Libor + 8.50%/M)
 
3/5/2019
 
26.2

 
26.2

(3)
 
 
 
 
 
 
 
 
 
 
 
 
49.2

 
49.2

 
 
 
Anaqua Parent Holdings, Inc. & Astorg VII Co-Invest Anaqua (19)
 
Provider of IP management lifecycle software
 
First lien senior secured loan ($4.1 par due 4/2026)
 
5.75% (EURIBOR + 5.75%/Q)
 
4/10/2019
 
4.2

 
4.0

(2)(8)
 
 
 
 
 
 
First lien senior secured loan ($0.5 par due 4/2026)
 
5.75% (EURIBOR + 5.75%/Q)
 
4/10/2019
 
0.5

 
0.5

(2)(8)
 
 
 
 
 
 
First lien senior secured loan ($7.4 par due 4/2026)
 
7.86% (Libor + 5.50%/Q)
 
4/10/2019
 
7.4

 
7.3

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($0.3 par due 4/2026)
 
7.60% (Libor + 5.50%/Q)
 
4/10/2019
 
0.3

 
0.3

(2)(15)
 
 
 
 
 
 
Limited partnership units (4,400,000 units)
 
 
 
6/13/2019
 
5.0

 
5.0

(2)
 
 
 
 
 
 
 
 
 
 
 
 
17.4

 
17.1

 
 
 
Apptio, Inc. (19)
 
Provider of cloud-based technology business management solutions
 
First lien senior secured loan ($62.2 par due 1/2025)
 
9.56% (Libor + 7.25%/Q)
 
1/10/2019
 
62.2

 
61.6

(2)(15)
 
 
AQ Sunshine, Inc. (19)
 
Specialized insurance broker
 
First lien senior secured revolving loan ($0.1 par due 4/2024)
 
7.61% (Libor + 5.50%/Q)
 
4/15/2019
 
0.1

 

(2)(15)(18)
 
 
 
 
 
 
First lien senior secured loan ($1.0 par due 4/2025)
 
7.60% (Libor + 5.50%/Q)
 
4/15/2019
 
1.0

 
1.0

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($6.6 par due 4/2025)
 
7.60% (Libor + 5.50%/Q)
 
4/15/2019
 
6.6

 
6.4

(2)(15)
 
 
 
 
 
 
 
 
 
 
 
 
7.7

 
7.4

 
 
 
Avetta, LLC (19)
 
Supply chain risk management SaaS platform for global enterprise clients
 
First lien senior secured loan ($36.2 par due 4/2024)
 
7.55% (Libor + 5.50%/M)
 
4/10/2018
 
36.2

 
36.2

(2)(15)
 
 
Bearcat Buyer, Inc. and Bearcat Parent, Inc. (19)
 
Provider of central institutional review boards over clinical trials
 
First lien senior secured loan ($42.2 par due 7/2026)
 
6.35% (Libor + 4.25%/Q)
 
9/10/2019
 
42.2

 
41.7

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($2.0 par due 7/2026)
 
6.35% (Libor + 4.25%/Q)
 
7/9/2019
 
2.0

 
2.0

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($31.0 par due 7/2026)
 
6.35% (Libor + 4.25%/Q)
 
7/9/2019
 
31.0

 
30.7

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($12.7 par due 7/2027)
 
10.35% (Libor + 8.25%/Q)
 
9/10/2019
 
12.7

 
12.6

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($5.3 par due 7/2027)
 
10.35% (Libor + 8.25%/Q)
 
7/9/2019
 
5.3

 
5.2

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($64.2 par due 7/2027)
 
10.35% (Libor + 8.25%/Q)
 
7/9/2019
 
64.2

 
63.5

(2)(15)
 
 
 
 
 
 
Common stock (4,211 shares)
 
 
 
7/9/2019
 
4.2

 
4.2

(2)
 
 
 
 
 
 
 
 
 
 
 
 
161.6

 
159.9

 
 
 
Blue Campaigns Intermediate Holding Corp. and Elevate Parent, Inc. (dba EveryAction) (19)
 
Provider of fundraising and organizing efforts and digital services to non-profits and political campaigns
 
First lien senior secured loan ($40.8 par due 8/2023)
 
8.89% (Libor + 6.75%/Q)
 
8/20/2018
 
40.8

 
40.8

(2)(15)
 
 

5

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of September 30, 2019
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(9)
 
Acquisition
Date
 
Amortized
Cost
 
Fair
Value
 
Percentage
of Net
Assets
 
 
 
 
Series A preferred stock (150,000 shares)
 
 
 
9/26/2018
 
1.5

 
1.8

 
 
 
 
 
 
 
 
 
 
 
 
 
42.3

 
42.6

 
 
 
CallMiner, Inc.
 
Provider of cloud-based conversational analytics solutions
 
Warrant to purchase up to 2,350,636 shares of Series 1 preferred stock (expires 7/2024)
 
 
 
7/23/2014
 

 

(2)
 
 
Clearwater Analytics, LLC (19)
 
Provider of integrated cloud-based investment portfolio management, accounting, reporting and analytics software
 
First lien senior secured loan ($8.0 par due 9/2022)
 
9.22% (Libor + 7.00%/Q)
 
7/3/2019
 
8.0

 
8.0

(2)(15)
 
 
CMW Parent LLC (fka Black Arrow, Inc.)
 
Multiplatform media firm
 
Series A units (32 units)
 
 
 
9/11/2015
 

 

(2)
 
 
Command Alkon Incorporated (19)
 
Software solutions provider to the ready-mix concrete industry
 
First lien senior secured revolving loan ($1.5 par due 9/2022)
 
10.25% (Base Rate + 5.00%/Q)
 
9/1/2017
 
1.5

 
1.4

(2)(15)(18)
 
 
 
 
 
 
First lien senior secured loan ($20.2 par due 9/2023)
 
8.09% (Libor + 6.00%/M)
 
9/1/2017
 
20.2

 
19.6

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($33.8 par due 3/2024)
 
12.09% (Libor + 10.00%/M)
 
9/1/2017
 
33.8

 
31.8

(2)(15)
 
 
 
 
 
 
 
 
 
 
 
 
55.5

 
52.8

 
 
 
Compuware Software Group LLC
 
Web and mobile cloud performance testing and monitoring services provider
 
Preferred units (4,132 units)
 
9.00% PIK
 
7/31/2019
 
0.8

 
0.8

(2)
 
 
 
 
 
 
Common units (744,569 units)
 
 
 
7/31/2019
 

 
2.4

(2)
 
 
 
 
 
 
 
 
 
 
 
 
0.8

 
3.2

 
 
 
Cority Software Inc. and Project Falcon Parent, Inc. (8)(19)
 
Provider of environmental, health and safety software to track compliance data
 
First lien senior secured loan ($14.4 par due 7/2026)
 
7.82% (Libor + 5.50%/Q)
 
7/2/2019
 
14.4

 
14.2

(2)
 
 
 
 
 
 
Preferred stock (198 shares)
 
9.00% PIK
 
7/2/2019
 
0.2

 
0.2

(2)
 
 
 
 
 
 
Common stock (190,143 shares)
 
 
 
7/2/2019
 

 

(2)
 
 
 
 
 
 
 
 
 
 
 
 
14.6

 
14.4

 
 
 
Directworks, Inc. and Co-Exprise Holdings, Inc.
 
Provider of cloud-based software solutions for direct materials sourcing and supplier management for manufacturers
 
First lien senior secured loan ($1.8 par due 4/2018)
 
 
 
12/19/2014
 
1.3

 

(2)(14)
 
 
 
 
 
 
Warrant to purchase up to 1,875,000 shares of Series 1 preferred stock (expires 12/2024)
 
 
 
12/19/2014
 

 

(2)
 
 
 
 
 
 
 
 
 
 
 
 
1.3

 

 
 
 
Display Holding Company, Inc., Saldon Holdings, Inc. and Fastsigns Holdings Inc. (19)
 
Provider of visual communications solutions
 
First lien senior secured loan ($2.6 par due 3/2025)
 
7.69% (Libor + 5.65%/M)
 
8/27/2019
 
2.6

 
2.6

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($16.4 par due 3/2025)
 
7.69% (Libor + 5.65%/M)
 
3/13/2019
 
16.4

 
16.2

(3)(15)
 
 
 
 
 
 
Common units (600 units)
 
 
 
3/13/2019
 
0.6

 
0.7

(2)
 
 
 
 
 
 
 
 
 
 
 
 
19.6

 
19.5

 
 
 
Doxim Inc. (8)
 
Enterprise content management provider
 
First lien senior secured loan ($6.8 par due 2/2024)
 
8.15% (Libor + 6.00%/Q)
 
2/28/2018
 
6.8

 
6.8

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($10.2 par due 2/2024)
 
8.33% (Libor + 6.00%/Q)
 
2/28/2018
 
10.1

 
10.2

(2)(11)(15)
 
 
 
 
 
 
 
 
 
 
 
 
16.9

 
17.0

 
 
 
DRB Holdings, LLC (19)
 
Provider of integrated technology solutions to car wash operators
 
First lien senior secured revolving loan ($2.0 par due 10/2023)
 
8.31% (Libor + 6.00%/Q)
 
10/6/2017
 
2.0

 
1.9

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($23.5 par due 10/2023)
 
8.20% (Libor + 6.00%/Q)
 
10/6/2017
 
23.5

 
22.8

(3)(15)
 
 
 
 
 
 
 
 
 
 
 
 
25.5

 
24.7

 
 
 
DTI Holdco, Inc. and OPE DTI Holdings, Inc. (19)
 
Provider of legal process outsourcing and managed services
 
First lien senior secured revolving loan ($1.3 par due 9/2021)
 
6.54% (Libor + 4.50%/M)
 
9/23/2016
 
1.3

 
1.2

(2)(22)
 
 

6

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of September 30, 2019
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(9)
 
Acquisition
Date
 
Amortized
Cost
 
Fair
Value
 
Percentage
of Net
Assets
 
 
 
 
First lien senior secured revolving loan ($2.2 par due 9/2021)
 
6.54% (Libor + 4.50%/M)
 
9/23/2016
 
2.2

 
2.0

(2)(22)
 
 
 
 
 
 
First lien senior secured revolving loan ($1.3 par due 9/2021)
 
8.50% (Base Rate + 3.50%/M)
 
9/23/2016
 
1.3

 
1.2

(2)(22)
 
 
 
 
 
 
Class A common stock (7,500 shares)
 
 
 
8/19/2014
 
7.5

 
6.2

(2)
 
 
 
 
 
 
Class B common stock (7,500 shares)
 
 
 
8/19/2014
 

 

(2)
 
 
 
 
 
 
 
 
 
 
 
 
12.3

 
10.6

 
 
 
Dynatrace, Inc.
 
Web and mobile cloud performance testing and monitoring services provider
 
Common stock (917,855 shares)


 
 
 
8/5/2019
 
3.4

 
17.1

(2)(22)
 
 
Emergency Communications Network, LLC (19)
 
Provider of mission critical emergency mass notification solutions
 
First lien senior secured revolving loan ($5.4 par due 6/2022)
 
8.32% (Libor + 6.25%/M)
 
6/1/2017
 
5.4

 
4.9

(2)(15)
 
 
 
 
 
 
First lien senior secured revolving loan ($1.1 par due 6/2022)
 
10.25% (Base Rate + 5.25%/M)
 
6/1/2017
 
1.1

 
1.0

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($24.9 par due 6/2023)
 
8.29% (Libor + 6.25%/M)
 
6/1/2017
 
24.8

 
22.4

(15)
 
 
 
 
 
 
First lien senior secured loan ($19.6 par due 6/2023)
 
8.29% (Libor + 6.25%/M)
 
6/1/2017
 
19.5

 
17.6

(4)(15)
 
 
 
 
 
 
 
 
 
 
 
 
50.8

 
45.9

 
 
 
Episerver Inc. and Goldcup 17308 AB (19)
 
Provider of web content management and digital commerce solutions
 
First lien senior secured loan ($5.9 par due 10/2024)
 
6.00% (EURIBOR + 6.00%/M)
 
3/22/2019
 
6.1

 
5.9

(2)(8)
 
 
 
 
 
 
First lien senior secured loan ($27.5 par due 10/2024)
 
7.79% (Libor + 5.75%/M)
 
10/9/2018
 
27.5

 
27.2

(2)(15)
 
 
 
 
 
 
 
 
 
 
 
 
33.6

 
33.1

 
 
 
EZ Elemica Holdings, Inc. & Elemica Parent, Inc (19)
 
SaaS based supply chain management software provider focused on chemical markets
 
First lien senior secured revolving loan ($0.7 par due 9/2025)
 
7.55% (Libor + 5.50%/M)
 
9/18/2019
 
0.7

 
0.7

(2)
 
 
 
 
 
 
First lien senior secured revolving loan ($3.5 par due 9/2025)
 
7.65% (Libor + 5.50%/M)
 
9/18/2019
 
3.5

 
3.4

(2)
 
 
 
 
 
 
First lien senior secured loan ($59.7 par due 9/2025)
 
7.65% (Libor + 5.50%/Q)
 
9/18/2019
 
59.7

 
59.1

(2)
 
 
 
 
 
 
Preferred Equity (4,599 shares)
 
 
 
9/18/2019
 
4.6

 
4.6

 
 
 
 
 
 
 
 
 
 
 
 
 
68.5

 
67.8

 
 
 
First Insight, Inc.
 
Software company providing merchandising and pricing solutions to companies worldwide
 
Warrant to purchase up to 122,827 units of Series C preferred stock (expires 3/2024)
 
 
 
3/20/2014
 

 

(2)
 
 
Foundation Risk Partners, Corp. (19)
 
Full service independent insurance agency
 
First lien senior secured revolving loan ($4.2 par due 11/2023)
 
6.79% (Libor + 4.75%/M)
 
11/10/2017
 
4.2

 
4.2

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($6.0 par due 11/2023)
 
6.85% (Libor + 4.75%/Q)
 
5/1/2019
 
6.0

 
6.0

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($0.7 par due 11/2023)
 
6.93% (Libor + 4.75%/Q)
 
5/1/2019
 
0.7

 
0.7

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($9.0 par due 11/2023)
 
6.88% (Libor + 4.75%/Q)
 
5/1/2019
 
9.0

 
9.0

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($1.4 par due 11/2023)
 
6.85% (Libor + 4.75%/Q)
 
5/1/2019
 
1.4

 
1.4

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($7.7 par due 11/2023)
 
6.85% (Libor + 4.75%/Q)
 
5/1/2019
 
7.7

 
7.7

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($22.1 par due 11/2023)
 
6.85% (Libor + 4.75%/Q)
 
11/10/2017
 
22.1

 
22.1

(3)(15)
 
 
 
 
 
 
Second lien senior secured loan ($21.7 par due 11/2024)
 
10.60% (Libor + 8.50%/Q)
 
8/9/2018
 
21.7

 
21.7

(2)(15)
 
 

7

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of September 30, 2019
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(9)
 
Acquisition
Date
 
Amortized
Cost
 
Fair
Value
 
Percentage
of Net
Assets
 
 
 
 
Second lien senior secured loan ($19.1 par due 11/2024)
 
10.60% (Libor + 8.50%/Q)
 
8/9/2018
 
19.1

 
19.1

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($0.3 par due 11/2024)
 
10.68% (Libor + 8.50%/Q)
 
5/1/2019
 
0.3

 
0.3

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($6.8 par due 11/2024)
 
10.63% (Libor + 8.50%/Q)
 
5/1/2019
 
6.8

 
6.8

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($1.1 par due 11/2024)
 
10.60% (Libor + 8.50%/Q)
 
5/1/2019
 
1.1

 
1.1

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($2.3 par due 11/2024)
 
10.60% (Libor + 8.50%/Q)
 
5/1/2019
 
2.3

 
2.3

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($5.6 par due 11/2024)
 
10.60% (Libor + 8.50%/Q)
 
5/1/2019
 
5.6

 
5.6

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($27.5 par due 11/2024)
 
10.60% (Libor + 8.50%/Q)
 
11/10/2017
 
27.5

 
27.5

(2)(15)
 
 
 
 
 
 
 
 
 
 
 
 
135.5

 
135.5

 
 
 
Genesis Acquisition Co. and Genesis Holding Co. (19)
 
Child care management software and services provider
 
First lien senior secured revolving loan ($0.5 par due 7/2024)
 
6.11% (Libor + 4.00%/Q)
 
7/31/2018
 
0.5

 
0.5

(2)
 
 
 
 
 
 
Second lien senior secured loan ($25.8 par due 7/2025)
 
9.82% (Libor + 7.50%/Q)
 
7/31/2018
 
25.8

 
25.8

(2)
 
 
 
 
 
 
Class A common stock (8 shares)
 
 
 
7/31/2018
 
0.8

 
1.0

(2)
 
 
 
 
 
 
 
 
 
 
 
 
27.1

 
27.3

 
 
 
Graphpad Software, LLC (19)
 
Provider of data analysis, statistics, and visualization software solutions for scientific research applications
 
First lien senior secured loan ($3.7 par due 12/2023)
 
8.20% (Libor + 6.00%/Q)
 
12/21/2017
 
3.7

 
3.7

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($1.5 par due 12/2023)
 
8.30% (Libor + 6.00%/Q)
 
12/21/2017
 
1.5

 
1.5

(2)(15)
 
 
 
 
 
 
 
 
 
 
 
 
5.2

 
5.2

 
 
 
GTCR-Ultra Holdings III, LLC and GTCR-Ultra Holdings LLC (19)
 
Provider of payment processing and merchant acquiring solutions
 
Class A-2 units (911 units)
 
 
 
8/1/2017
 
0.9

 
2.4

(2)
 
 
 
 
 
 
Class B units (2,878,372 units)
 
 
 
8/1/2017
 

 

(2)
 
 
 
 
 
 
 
 
 
 
 
 
0.9

 
2.4

 
 
 
HAI Acquisition Corporation and Aloha Topco, LLC (19)
 
Professional employer organization offering human resources, compliance and risk management services
 
First lien senior secured loan ($62.4 par due 11/2024)
 
7.71% (Libor + 5.50%/Q)
 
11/1/2017
 
62.4

 
62.4

(3)(15)
 
 
 
 
 
 
Class A units (16,980 units)
 
 
 
11/1/2017
 
1.7

 
2.6

(2)
 
 
 
 
 
 
 
 
 
 
 
 
64.1

 
65.0

 
 
 
Huskies Parent, Inc. (19)
 
Insurance software provider
 
First lien senior secured loan ($0.8 par due 7/2026)
 
6.26% (Libor + 4.00%/Q)
 
7/18/2019
 
0.8

 
0.8

(2)(22)
 
 
IfByPhone Inc.
 
Voice-based marketing automation software provider
 
Warrant to purchase up to 124,300 shares of Series C preferred stock (expires 10/2022)
 
 
 
10/15/2012
 
0.1

 
0.1

(2)
 
 
Infinite Electronics International, Inc. (19)
 
Manufacturer and distributor of radio frequency and microwave electronic components
 
First lien senior secured revolving loan ($0.3 par due 7/2023)
 
6.09% (Libor + 4.00%/Q)
 
7/2/2018
 
0.3

 
0.3

(2)(18)
 
 
 
 
 
 
First lien senior secured loan ($16.3 par due 7/2025)
 
6.33% (Libor + 4.00%/Q)
 
7/2/2018
 
16.3

 
16.2

(2)
 
 
 
 
 
 
 
 
 
 
 
 
16.6

 
16.5

 
 
 
Infogix, Inc. and Infogix Parent Corporation (19)
 
Enterprise data analytics and integrity software solutions provider
 
First lien senior secured revolving loan ($1.6 par due 4/2024)
 
8.65% (Libor + 6.50%/Q)
 
4/18/2018
 
1.6

 
1.5

(2)(15)
 
 
 
 
 
 
Series A preferred stock (2,475 shares)
 
 
 
1/3/2017
 
2.6

 
1.5

 
 
 
 
 
 
 
Common stock (1,297,768 shares)
 
 
 
1/3/2017
 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
4.2

 
3.0

 
 
 

8

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of September 30, 2019
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(9)
 
Acquisition
Date
 
Amortized
Cost
 
Fair
Value
 
Percentage
of Net
Assets
Inmar, Inc.
 
Technology-driven solutions provider for retailers, wholesalers and manufacturers
 
First lien senior secured loan ($15.7 par due 5/2024)
 
6.10% (Libor + 4.00%/Q)
 
1/31/2019
 
15.0

 
14.9

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($28.3 par due 5/2025)
 
10.10% (Libor + 8.00%/Q)
 
4/25/2017
 
28.0

 
27.5

(2)(15)
 
 
 
 
 
 
 
 
 
 
 
 
43.0

 
42.4

 
 
 
InterVision Systems, LLC and InterVision Holdings, LLC
 
Provider of cloud based IT solutions, infrastructure and services
 
First lien senior secured loan ($41.2 par due 5/2022)
 
8.54% (Libor + 6.50%/M)
 
5/31/2017
 
41.2

 
39.1

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($10.0 par due 5/2022)
 
8.54% (Libor + 6.50%/M)
 
5/31/2017
 
10.0

 
9.5

(4)(15)
 
 
 
 
 
 
Class A membership units (1,000 units)
 
 
 
5/31/2017
 
1.0

 

 
 
 
 
 
 
 
 
 
 
 
 
 
52.2

 
48.6

 
 
 
Invoice Cloud, Inc. (19)
 
Provider of electronic payment processing solutions
 
First lien senior secured loan ($32.9 par due 2/2024)
 
8.68% (Libor + 6.50%/Q)
 
2/11/2019
 
32.9

 
32.9

(2)(15)
 
 
IRI Holdings, Inc., IRI Group Holdings, Inc. and IRI Parent, L.P.
 
Market research company focused on the consumer packaged goods industry
 
First lien senior secured loan ($34.7 par due 12/2025)
 
6.62% (Libor + 4.50%/Q)
 
11/30/2018
 
34.4

 
34.7

(3)
 
 
 
 
 
 
First lien senior secured loan ($21.5 par due 12/2025)
 
6.62% (Libor + 4.50%/Q)
 
11/30/2018
 
21.4

 
21.5

(4)
 
 
 
 
 
 
Second lien senior secured loan ($86.8 par due 11/2026)
 
10.12% (Libor + 8.00%/Q)
 
11/30/2018
 
85.4

 
86.8

(2)
 
 
 
 
 
 
Series A-1 preferred shares (46,900 shares)
 
12.62% PIK (Libor + 10.50%/Q)
 
11/30/2018
 
51.6

 
52.3

(2)(15)
 
 
 
 
 
 
Class A-1 common units (90,500 units)
 
 
 
11/30/2018
 
9.1

 
9.4

(2)
 
 
 
 
 
 
 
 
 
 
 
 
201.9

 
204.7

 
 
 
K2 Insurance Services, LLC and K2 Holdco LP (19)
 
Specialty insurance and managing general agency
 
First lien senior secured revolving loan
 
 
 
7/1/2019
 

 

(2)(17)
 
 
 
 
 
 
First lien senior secured loan ($61.1 par due 7/2024)
 
7.21% (Libor + 5.00%/Q)
 
7/1/2019
 
61.1

 
60.5

(2)(15)
 
 
 
 
 
 
Common Equity (799,000 units)
 
 
 
7/1/2019
 
0.8

 
0.9

(2)
 
 
 
 
 
 
 
 
 
 
 
 
61.9

 
61.4

 
 
 
Kaufman, Hall & Associates, LLC (19)
 
Provider of specialty advisory services and software solutions to the healthcare market
 
First lien senior secured loan ($8.1 par due 5/2025)
 
7.28% (Libor + 5.25%/M)
 
11/9/2018
 
8.1

 
8.1

(4)(15)
 
 
 
 
 
 
First lien senior secured loan ($6.8 par due 5/2025)
 
7.29% (Libor + 5.25%/M)
 
11/9/2018
 
6.8

 
6.8

(4)(15)
 
 
 
 
 
 
 
 
 
 
 
 
14.9

 
14.9

 
 
 
Kene Acquisition, Inc. and Kene Holdings, L.P. (19)
 
National utility services consulting firm
 
First lien senior secured revolving loan ($1.1 par due 8/2024)
 
6.44% (Libor + 4.25%/Q)
 
8/8/2019
 
1.1

 
1.1

(2)(15)(18)
 
 
 
 
 
 
First lien senior secured loan ($59.9 par due 8/2026)
 
6.44% (Libor + 4.25%/Q)
 
8/8/2019
 
59.9

 
59.3

(2)(15)
 
 
 
 
 
 
Class A units (4,549,000 units)
 
 
 
8/8/2019
 
4.5

 
4.5

(2)
 
 
 
 
 
 
 
 
 
 
 
 
65.5

 
64.9

 
 
 
Labstat International Inc. (8)(19)
 
Lab testing services for nicotine containing products
 
First lien senior secured loan ($5.1 par due 6/2024)
 
8.22% (CIBOR + 6.25%/Q)
 
10/19/2018
 
5.1

 
5.1

(2)
 
 
 
 
 
 
First lien senior secured loan ($19.6 par due 6/2024)
 
8.22% (CIBOR + 6.25%/Q)
 
6/25/2018
 
19.5

 
19.6

(2)
 
 
 
 
 
 
 
 
 
 
 
 
24.6

 
24.7

 
 
 
LLSC Holdings Corporation (dba Lawrence Merchandising Services) (7)
 
Marketing services provider
 
Series A preferred stock (9,000 shares)
 
 
 
1/3/2017
 
1.8

 
0.4

 
 
 
 
 
 
 
Common stock (1,000 shares)
 
 
 
1/3/2017
 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
1.8

 
0.4

 
 
 

9

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of September 30, 2019
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(9)
 
Acquisition
Date
 
Amortized
Cost
 
Fair
Value
 
Percentage
of Net
Assets
Masergy Holdings, Inc. (19)
 
Provider of software-defined solutions for enterprise global networks, cyber security, and cloud communications
 
First lien senior secured revolving loan ($0.2 par due 12/2021)
 
8.00% (Base Rate + 2.50%/Q)
 
2/8/2018
 
0.2

 
0.2

(2)(15)(18)
 
 
Ministry Brands, LLC and MB Parent HoldCo, L.P. (dba Community Brands) (19)
 
Software and payment services provider to faith-based institutions
 
First lien senior secured revolving loan ($2.2 par due 12/2022)
 
7.04% (Libor + 5.00%/M)
 
12/2/2016
 
2.2

 
2.2

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($4.9 par due 12/2022)
 
6.04% (Libor + 4.00%/M)
 
8/22/2017
 
4.9

 
4.8

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($9.4 par due 12/2022)
 
6.04% (Libor + 4.00%/M)
 
4/6/2017
 
9.4

 
9.3

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($16.6 par due 6/2023)
 
11.34% (Libor + 9.25%/Q)
 
12/2/2016
 
16.6

 
16.3

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($17.9 par due 6/2023)
 
11.34% (Libor + 9.25%/Q)
 
8/22/2017
 
17.9

 
17.5

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($4.7 par due 6/2023)
 
11.34% (Libor + 9.25%/Q)
 
4/6/2017
 
4.7

 
4.6

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($10.3 par due 6/2023)
 
10.09% (Libor + 8.00%/Q)
 
4/18/2018
 
10.3

 
10.1

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($9.2 par due 6/2023)
 
11.34% (Libor + 9.25%/Q)
 
4/6/2017
 
9.2

 
9.0

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($38.6 par due 6/2023)
 
10.09% (Libor + 8.00%/Q)
 
4/18/2018
 
38.6

 
37.9

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($75.0 par due 6/2023)
 
11.34% (Libor + 9.25%/Q)
 
12/2/2016
 
74.6

 
73.5

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($15.0 par due 6/2023)
 
11.34% (Libor + 9.25%/Q)
 
12/2/2016
 
14.9

 
14.7

(3)(15)
 
 
 
 
 
 
Class A units (500,000 units)
 
 
 
12/2/2016
 
5.0

 
6.9

(2)
 
 
 
 
 
 
 
 
 
 
 
 
208.3

 
206.8

 
 
 
MVL Group, Inc. (7)
 
Marketing research provider
 
Common stock (560,716 shares)
 
 
 
4/1/2010
 

 

(2)
 
 
NAS, LLC, Nationwide Marketing Group, LLC and Nationwide Administrative Services, Inc.
 
Buying and marketing services organization for appliance, furniture and consumer electronics dealers
 
Second lien senior secured loan ($6.0 par due 12/2021)
 
11.08% (Libor + 8.75%/Q)
 
6/1/2015
 
6.0

 
6.0

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($25.1 par due 12/2021)
 
11.08% (Libor + 8.75%/Q)
 
6/1/2015
 
25.1

 
25.1

(2)(15)
 
 
 
 
 
 
 
 
 
 
 
 
31.1

 
31.1

 
 
 
Novetta Solutions, LLC
 
Provider of advanced analytics solutions for the government, defense and commercial industries
 
First lien senior secured loan ($8.6 par due 10/2022)
 
7.05% (Libor + 5.00%/M)
 
1/3/2017
 
8.4

 
8.3

(4)(15)
 
 
 
 
 
 
Second lien senior secured loan ($31.0 par due 10/2023)
 
10.55% (Libor + 8.50%/M)
 
1/3/2017
 
29.3

 
27.9

(2)(15)
 
 
 
 
 
 
 
 
 
 
 
 
37.7

 
36.2

 
 
 
NSM Insurance Group, LLC
 
Insurance program administrator
 
First lien senior secured loan ($4.5 par due 5/2024)
 
6.60% (Libor + 4.50%/Q)
 
3/27/2019
 
4.5

 
4.5

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($13.0 par due 5/2024)
 
6.60% (Libor + 4.50%/Q)
 
5/11/2018
 
13.0

 
13.0

(3)(15)
 
 
 
 
 
 
First lien senior secured loan ($5.6 par due 5/2024)
 
6.60% (Libor + 4.50%/Q)
 
6/28/2019
 
5.6

 
5.6

(2)(15)
 
 
 
 
 
 
 
 
 
 
 
 
23.1

 
23.1

 
 
 
PayNearMe, Inc.
 
Electronic cash payment system provider
 
Warrant to purchase up to 195,726 shares of Series E preferred stock (expires 3/2023)
 
 
 
3/11/2016
 
0.2

 

(2)
 
 
PaySimple, Inc. (19)
 
Provider of business management solutions
 
First lien senior secured loan ($11.3 par due 8/2025)
 
7.55% (Libor + 5.50%/M)
 
8/23/2019
 
11.1

 
11.2

(2)
 
 

10

ARES CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
As of September 30, 2019
(dollar amounts in millions)
(unaudited)

Company(1)
 
Business Description
 
Investment
 
Interest(5)(9)
 
Acquisition
Date
 
Amortized
Cost
 
Fair
Value
 
Percentage
of Net
Assets
PDI TA Holdings, Inc., Peachtree Parent, Inc. and Insight PDI Holdings, LLC (19)
 
Provider of enterprise management software for the convenience retail and petroleum wholesale market
 
First lien senior secured revolving loan ($1.8 par due 10/2024)
 
6.65% (Libor + 4.50%/Q)
 
3/19/2019
 
1.8

 
1.8

(2)(15)
 
 
 
 
 
 
First lien senior secured revolving loan ($5.8 par due 10/2024)
 
8.50% (Base Rate + 3.50%/Q)
 
3/19/2019
 
5.8

 
5.8

(2)(15)
 
 
 
 
 
 
First lien senior secured loan ($54.7 par due 10/2024)
 
6.66% (Libor + 4.50%/Q)
 
3/19/2019
 
54.7

 
54.7

(2)(15)
 
 
 
 
 
 
Second lien senior secured loan ($70.1 par due 10/2025)
 
10.66% (Libor + 8.50%/Q)
 
3/19/2019
 
70.1

 
70.1

(2)(15)