0001414932-14-000058.txt : 20140508 0001414932-14-000058.hdr.sgml : 20140508 20140507212545 ACCESSION NUMBER: 0001414932-14-000058 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20140331 FILED AS OF DATE: 20140508 DATE AS OF CHANGE: 20140507 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Fifth Street Finance Corp. CENTRAL INDEX KEY: 0001414932 IRS NUMBER: 261219283 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 814-00755 FILM NUMBER: 14822743 BUSINESS ADDRESS: STREET 1: 10 BANK STREET STREET 2: 12TH FLOOR CITY: WHITE PLAINS STATE: NY ZIP: 10606 BUSINESS PHONE: (914) 286-6800 MAIL ADDRESS: STREET 1: 10 BANK STREET STREET 2: 12TH FLOOR CITY: WHITE PLAINS STATE: NY ZIP: 10606 FORMER COMPANY: FORMER CONFORMED NAME: Fifth Street Finance Corp DATE OF NAME CHANGE: 20071012 10-Q 1 fsc-20140331x10q.htm 10-Q FSC- 2014.03.31-10Q
 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
 
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2014
OR
 
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
COMMISSION FILE NUMBER: 1-33901
Fifth Street Finance Corp.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
 
 
 
DELAWARE
 
26-1219283
(State or jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
10 Bank Street, 12th Floor
White Plains, NY
 
10606
(Address of principal executive office)
 
(Zip Code)
REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE:
(914) 286-6800
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 periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES   þ     NO   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   ¨   NO   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  þ
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
 
 
 
 
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)    YES  ¨     NO  þ
The registrant had 139,137,757 shares of common stock outstanding as of May 7, 2014.
 

 







FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2014
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 5.





PART I – FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements.
Fifth Street Finance Corp.
Consolidated Statements of Assets and Liabilities
(in thousands, except per share amounts)
(unaudited)
 
March 31,
2014
 
September 30,
2013
                         ASSETS
 
 
 
Investments at fair value:
 
 
 
Control investments (cost March 31, 2014: $273,078; cost September 30, 2013: $207,518)
$
283,614

 
$
215,502

Affiliate investments (cost March 31, 2014: $38,624; cost September 30, 2013: $29,807)
41,715

 
31,932

Non-control/Non-affiliate investments (cost March 31, 2014: $2,347,502; cost September 30, 2013: $1,622,326)
2,358,969

 
1,645,612

Total investments at fair value (cost March 31, 2014: $2,659,204; cost September 30, 2013: $1,859,651)
2,684,298

 
1,893,046

Cash and cash equivalents
45,396

 
147,359

Interest and fees receivable
18,950

 
10,379

Due from portfolio company
6,095

 
1,814

Receivables from unsettled transactions
14,788

 

Deferred financing costs
22,244

 
19,548

Other assets
544

 
187

Total assets
$
2,792,315

 
$
2,072,333

 
 
 
 
                                 LIABILITIES AND NET ASSETS
 
 
 
Liabilities:
 
 
 
Accounts payable, accrued expenses and other liabilities
$
4,089

 
$
1,166

Base management fee payable
13,501

 
9,625

Incentive fee payable
8,500

 
7,175

Due to FSC CT, Inc.
2,008

 
840

Interest payable
4,907

 
2,939

Payables from unsettled transactions
3,937

 
35,716

Amounts payable to syndication partners
8,028

 

Advances received from portfolio companies
7,729

 

Credit facilities payable
576,681

 
188,000

SBA debentures payable
225,000

 
181,750

Unsecured convertible notes payable
115,000

 
115,000

Unsecured notes payable
409,878

 
161,250

Secured borrowings at fair value (proceeds of $47,750 and $0 at March 31, 2014 and September 30, 2013, respectively)
47,760

 

Total liabilities
1,427,018

 
703,461

Commitments and contingencies (Note 3)
 
 
 
Net assets:
 
 
 
Common stock, $0.01 par value, 250,000 shares authorized; 139,138 and 139,041 shares issued and outstanding at March 31, 2014 and September 30, 2013, respectively
1,391

 
1,390

 Additional paid-in-capital
1,510,547

 
1,509,546

 Net unrealized appreciation on investments and secured borrowings
25,084

 
33,395

 Net realized loss on investments and interest rate swap
(152,925
)
 
(154,591
)
 Accumulated overdistributed net investment income

(18,800
)
 
(20,868
)
Total net assets (equivalent to $9.81 and $9.85 per common share at March 31, 2014 and September 30, 2013, respectively) (Note 12)
1,365,297

 
1,368,872

Total liabilities and net assets
$
2,792,315

 
$
2,072,333

 
 
 
 
See notes to Consolidated Financial Statements.

1




Fifth Street Finance Corp.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
 
Three months
ended
March 31, 2014
 
Three months
ended
March 31, 2013
 
Six months
ended
March 31, 2014

Six months
ended
March 31, 2013

Interest income:
 
 
 
 
 
 
 
 
Control investments
$
3,194

 
$
876

 
$
5,613

 
$
1,758

 
Affiliate investments
1,098

 
725

 
1,864

 
1,309

 
Non-control/Non-affiliate investments
49,699

 
36,019

 
94,995

 
69,473

 
Interest on cash and cash equivalents
3

 
5

 
6

 
8

 
Total interest income
53,994

 
37,625

 
102,478

 
72,548

 
PIK interest income:
 
 
 
 
 
 
 
 
Control investments
2,542

 
108

 
4,950

 
216

 
Affiliate investments
207

 
308

 
542

 
765

 
Non-control/Non-affiliate investments
2,721

 
3,631

 
5,592

 
6,786

 
Total PIK interest income
5,470

 
4,047

 
11,084

 
7,767

 
Fee income:
 
 
 
 
 
 
 
 
Control investments
1,967

 
114

 
2,534

 
213

 
Affiliate investments
12

 
12

 
181

 
24

 
Non-control/Non-affiliate investments
10,508

 
11,800

 
26,909

 
24,483

 
Total fee income
12,487

 
11,926

 
29,624

 
24,720

 
Dividend and other income:
 
 
 
 
 
 
 
 
Non-control/Non-affiliate investments
181

 
1,089

 
276

 
1,435

 
Total dividend and other income
181

 
1,089

 
276

 
1,435

 
Total investment income
72,132

 
54,687

 
143,462

 
106,470

 
Expenses:
 
 
 
 
 
 
 
 
Base management fee
13,735

 
8,891

 
25,794

 
16,937

 
Incentive fee
8,500

 
7,001

 
17,554

 
13,640

 
Professional fees
887

 
784

 
1,912

 
1,972

 
Board of Directors fees
141

 
122

 
296

 
251

 
Interest expense
12,833

 
7,761

 
23,046

 
14,917

 
Administrator expense
538

 
670

 
1,391

 
1,600

 
General and administrative expenses
1,499

 
1,455

 
3,252

 
2,594

 
Total expenses
38,133

 
26,684

 
73,245

 
51,911

 
Base management fee waived
(234
)
 
(1,300
)
 
(234
)
 
(1,300
)
 
Net expenses
37,899

 
25,384

 
73,011

 
50,611

 
Net investment income
34,233


29,303

 
70,451

 
55,859

 
Unrealized appreciation (depreciation) on investments:
 
 
 
 
 
 
 
 
Control investments
2,132

 
4,693

 
2,552

 
3,471

 
Affiliate investments
182

 
93

 
965

 
(63
)
 
Non-control/Non-affiliate investments
(4,897
)
 
(2,106
)
 
(11,818
)
 
(10,067
)
 
Net unrealized appreciation (depreciation) on investments
(2,583
)
 
2,680

 
(8,301
)
 
(6,659
)
 
Net unrealized appreciation on secured borrowings
(10
)
 

 
(10
)
 

 
Realized gain (loss) on investments:
 
 
 
 
 
 
 
 
Non-control/Non-affiliate investments
(1,540
)
 
(149
)
 
1,666

 
478

 
Net realized gain (loss) on investments
(1,540
)
 
(149
)
 
1,666

 
478

 
Net increase in net assets resulting from operations
$
30,100

 
$
31,834

 
$
63,806

 
$
49,678

 
Net investment income per common share — basic
$
0.25

 
$
0.28

 
$
0.51

 
$
0.56

 
Earnings per common share — basic
$
0.22

 
$
0.30

 
$
0.46

 
$
0.49

 
Weighted average common shares outstanding — basic
139,138


106,022

 
139,132

 
100,394


Net investment income per common share — diluted
$
0.24

 
$
0.27

 
$
0.50

 
$
0.54

 
Earnings per common share — diluted
$
0.21

 
$
0.29

 
$
0.45

 
$
0.48

 
Weighted average common shares outstanding — diluted
146,928

 
113,812

 
146,922

 
108,266

 
Distributions per common share
$
0.25

 
$
0.29

 
$
0.49

 
$
0.58

 
See notes to Consolidated Financial Statements.

2


Fifth Street Finance Corp.
Consolidated Statements of Changes in Net Assets
(in thousands, except per share amounts)
(unaudited)
 
 
Six months
ended
March 31, 2014
 
Six months
ended
March 31, 2013
Operations:
 
 
 
Net investment income
$
70,451

 
$
55,859

Net unrealized depreciation on investments
(8,301
)
 
(6,659
)
Net unrealized appreciation on secured borrowings
(10
)
 

Net realized gains on investments
1,666

 
478

Net increase in net assets resulting from operations
63,806

 
49,678

Stockholder transactions:
 
 
 
Distributions to stockholders from ordinary income
(68,383
)
 
(58,063
)
Net decrease in net assets from stockholder transactions
(68,383
)
 
(58,063
)
Capital share transactions:
 
 
 
Issuance of common stock, net

 
151,309

Issuance of common stock under dividend reinvestment plan
6,189

 
4,467

Repurchases of common stock under stock repurchase program
(406
)
 

Repurchases of common stock under dividend reinvestment program
(4,781
)
 

Net increase in net assets from capital share transactions
1,002

 
155,776

Total increase (decrease) in net assets
(3,575
)
 
147,391

Net assets at beginning of period
1,368,872

 
903,570

Net assets at end of period
$
1,365,297

 
$
1,050,961

Net asset value per common share
$
9.81

 
$
9.90

Common shares outstanding at end of period
139,138

 
106,209

See notes to Consolidated Financial Statements.
 

3

Fifth Street Finance Corp.
Consolidated Statements of Cash Flows
(in thousands, except per share amounts)
(unaudited)



 
Six months
ended
March 31, 2014
 
Six months
ended
March 31, 2013
Cash flows from operating activities:
 
 
 
Net increase in net assets resulting from operations
$
63,806

 
$
49,678

Adjustments to reconcile net increase in net assets resulting from operations to net cash used by operating activities:
 
 
 
Net unrealized depreciation on investments
8,301

 
6,659

Net unrealized appreciation on secured borrowings
10

 

Net realized gains on investments
(1,666
)
 
(478
)
PIK interest income
(11,084
)
 
(7,767
)
Recognition of fee income
(29,624
)
 
(24,720
)
Accretion of original issue discount on investments
(388
)
 
(283
)
Amortization of deferred financing costs
3,441

 
2,623

Changes in operating assets and liabilities:
 
 
 
Fee income received
28,922

 
21,148

Increase in interest and fees receivable
(8,298
)
 
(2,596
)
(Increase) decrease in due from portfolio company
(4,281
)
 
2,437

(Increase) decrease in receivables from unsettled transactions
(14,788
)
 
1,750

(Increase) decrease in other assets
187

 
(680
)
Increase in accounts payable, accrued expenses and other liabilities
2,925

 
900

Increase in base management fee payable
3,876

 
1,018

Increase in incentive fee payable
1,325

 
1,422

Increase (decrease) in due to FSC CT, Inc.
1,168

 
(378
)
Increase (decrease) in interest payable
1,968

 
(1,877
)
Decrease in payables from unsettled transactions
(31,780
)
 
(16
)
Increase in amounts payable to syndication partners
8,028

 

Increase in advances received from portfolio companies
7,729

 

Purchases of investments and net revolver activity
(1,108,320
)
 
(735,531
)
Principal payments received on investments (scheduled payments)
23,992

 
22,328

Principal payments received on investments (payoffs)
106,710

 
198,463

PIK interest income received in cash
5,714

 
4,598

Proceeds from the sale of investments
185,916

 
54,461

Net cash used by operating activities
(756,211
)
 
(406,841
)
Cash flows from financing activities:
 
 
 
Distributions paid in cash
(62,194
)
 
(53,595
)
Borrowings under SBA debentures payable
43,250

 
31,750

Borrowings under credit facilities
804,338


575,548

Repayments of borrowings under credit facilities
(415,657
)

(403,251
)
Proceeds from the issuance of unsecured notes
244,403

 
72,465

Proceeds from the issuance of common stock

 
151,667

Proceeds from secured borrowings
47,750

 

Repurchases of common stock under stock repurchase program
(406
)
 

Repurchases of common stock under dividend reinvestment plan
(4,781
)
 

Deferred financing costs paid
(1,913
)
 
(3,445
)
Offering costs paid
(542
)
 
(522
)
Net cash provided by financing activities
654,248

 
370,617

Net decrease in cash and cash equivalents
(101,963
)
 
(36,224
)
Cash and cash equivalents, beginning of period
147,359

 
74,393

Cash and cash equivalents, end of period
$
45,396

 
$
38,169

Supplemental information:

 
 
Cash paid for interest
$
17,814

 
$
14,371

Non-cash financing activities:
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
$
6,189

 
$
4,467

 See notes to Consolidated Financial Statements.

4

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)

 
Cost

 
Fair Value

Control Investments (3)
 
 
 
 
 
 
 
 
 Traffic Solutions Holdings, Inc.
 
Construction and engineering
 
 
 
 
 
 
 Second Lien Term Loan, 12% cash 3% PIK due 12/31/2016
 
 
 
$
14,716

 
$
14,712

 
$
14,769

 LC Facility, 8.5% cash due 12/31/2016 (10)
 
 
 
 
 
(1
)
 

 746,114 Series A Preferred Units
 
 
 
 
 
13,600

 
16,705

 746,114 Class A Common Stock Units
 
 
 
 
 
5,316

 
9,916

 
 
 
 
 
 
33,627

 
41,390

TransTrade Operators, Inc. (9)
 
Air freight and logistics
 
 
 
 
 
 
 First Lien Term Loan, 11% cash 3% PIK due 5/31/2016
 
 
 
14,656

 
14,656

 
11,494

First Lien Revolver, 8% cash due 5/31/2016
 
 
 

 

 

 596.67 Series A Common Units in TransTrade Holding LLC
 
 
 
 
 

 

5,200,000 Preferred Units in TransTrade Holding LLC
 
 
 
 
 
5,200

 

 
 
 
 
 
 
19,856

 
11,494

 HFG Holdings, LLC
 
Specialized finance
 
 
 
 
 
 
 First Lien Term Loan, 6% cash 4% PIK due 6/10/2019
 
 
 
95,028

 
95,028

 
95,127

 860,000 Class A Units (12)
 
 
 
 
 
22,347

 
27,874

 
 
 
 
 
 
117,375

 
123,001

 First Star Aviation LLC
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 1/9/2018
 
 
 
33,862

 
33,862

 
33,966

10,104,401 Common Units
 
 
 
 
 
10,105

 
13,393

 
 
 
 
 
 
43,967

 
47,359

 First Star Speir Aviation 1 Limited
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash due 7/30/2018 (12)
 
 
 
20,600

 
20,600

 
20,600

1,087,445 Common Units (12)
 
 
 
 
 
1,087

 
1,087

 
 
 
 
 
 
21,687

 
21,687

 First Star Bermuda Aviation Limited
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 8/19/2018 (12)
 
 
 
11,801

 
11,801

 
11,801

4,256,042 Common Units (12)
 
 
 
 
 
4,256

 
4,256

 
 
 
 
 
 
16,057

 
16,057

 Eagle Hospital Physicians, LLC
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 8% PIK due 8/1/2016
 
 
 
11,608

 
11,608

 
11,576

 First Lien Term Loan B, 8.1% PIK due 8/1/2016
 
 
 
3,168

 
3,168

 
3,167

 First Lien Revolver, 8% cash due 8/1/2016
 
 
 
1,633

 
1,633

 
1,633

 4,100,000 Class A Common Units
 
 
 
 
 
4,100

 
6,250

 
 
 
 
 
 
20,509

 
22,626

 Total Control Investments (20.8% of net assets)
 
 
 
 
 
$
273,078

 
$
283,614

 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 
 
 
$
9,053

 
$
9,053

 
$
9,020

 1,080,399 shares of Series A Preferred Stock
 
 
 
 
 
1,080

 
3,578

 
 
 
 
 
 
10,133

 
12,598

 AmBath/ReBath Holdings, Inc. (9)
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7% (3% floor) cash due 4/30/2016 (14)
 
 
 
2,522

 
2,511

 
2,547

 First Lien Term Loan B, 12.5% cash 2.5% PIK due 4/30/2016
 
 
 
26,005

 
25,980

 
25,979

 4,668,788 Shares of Preferred Stock
 
 
 
 
 

 
591

 
 
 
 
 
 
28,491

 
29,117

 Total Affiliate Investments (3.1% of net assets)
 
 
 
 
 
$
38,624

 
$
41,715

 Non-Control/Non-Affiliate Investments (7)
 
 
 
 
 
 
 
 
 Fitness Edge, LLC
 
Leisure facilities
 
 
 
 
 
 
 1,000 Common Units
 
 
 
 
 
$
43

 
$
211

 
 
 
 
 
 
43

 
211

Thermoforming Technology Group LLC (formerly Capital Equipment Group, Inc.)
 
Industrial machinery
 
 
 
 
 
 
2.28% membership interest
 
 
 
 
 
849

 
837

 
 
 
 
 
 
849

 
837

See notes to Consolidated Financial Statements.

5

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)

 
Cost

 
Fair Value

 HealthDrive Corporation (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 10% cash due 7/17/2014
 
 
 
$
4,227

 
$
4,225

 
$
4,150

 First Lien Term Loan B, 12% cash 1% PIK due 7/17/2014
 
 
 
11,008

 
11,008

 
11,013

 First Lien Revolver, 12% cash due 7/17/2014
 
 
 
2,266

 
2,266

 
2,267

 
 
 
 
 
 
17,499

 
17,430

Cenegenics, LLC
 
Healthcare services
 
 
 
 
 
 
First Lien Term Loan, 9.75% cash due 9/30/2019
 
 
 
32,750

 
32,735

 
32,795

414,419 Common Units (6)
 
 
 
 
 
598

 
1,252

 
 
 
 
 
 
33,333

 
34,047

Riverlake Equity Partners II, LP
 
Multi-sector holdings
 
 
 
 
 
 
1.78% limited partnership interest (12)
 
 
 
 
 
436

 
340

 
 
 
 
 
 
436

 
340

Riverside Fund IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.34% limited partnership interest (6)(12)
 
 
 
 
 
678

 
620

 
 
 
 
 
 
678

 
620

Psilos Group Partners IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
2.35% limited partnership interest (11)(12)
 
 
 
 
 

 

 
 
 
 
 
 

 

Mansell Group, Inc. (9)
 
Advertising
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7% (3% floor) cash due 12/31/2015 (14)
 
 
 
5,446

 
5,414

 
5,449

First Lien Term Loan B, LIBOR+9% (3% floor) cash 1.5% PIK due 12/31/2015 (14)
 
 
 
9,496

 
9,453

 
9,507

 
 
 
 
 
 
14,867

 
14,956

Enhanced Recovery Company, LLC
 
Diversified support services
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7% (2% floor) cash due 8/13/2015 (14)
 
 
 
11,250

 
11,185

 
11,246

First Lien Term Loan B, LIBOR+10% (2% floor) cash 1% PIK due 8/13/2015 (14)
 
 
 
16,014

 
15,947

 
15,966

First Lien Revolver, LIBOR+7% (2% floor) cash due 8/13/2015 (14)
 
 
 
2,500

 
2,476

 
2,500

 
 
 
 
 
 
29,608

 
29,712

Specialty Bakers LLC
 
Food distributors
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+8.5% cash due 9/15/2015 (14)
 
 
 
2,906

 
2,821

 
2,905

First Lien Term Loan B, LIBOR+11% (2.5% floor) cash due 9/15/2015 (14)
 
 
 
11,000

 
10,916

 
10,998

First Lien Revolver, LIBOR+8.5% cash due 9/15/2015 (14)
 
 
 
4,000

 
3,969

 
4,000

 
 
 
 
 
 
17,706

 
17,903

Welocalize, Inc.
 
Internet software & services
 
 
 
 
 
 
3,393,060 Common Units in RPWL Holdings, LLC
 
 
 
 
 
3,393

 
7,438

 
 
 
 
 
 
3,393

 
7,438

Miche Bag, LLC (9)
 
Apparel, accessories & luxury goods
 
 
 
 
 
 
First Lien Term Loan B, LIBOR+10% (3% floor) cash 3% PIK due 12/7/2015 (14)
 
 
 
17,755

 
16,778

 
14,316

First Lien Revolver, LIBOR+7% (3% floor) cash due 12/7/2015 (10)(14)
 
 
 
 
 
(25
)
 

10,371 Series A Preferred Equity units in Miche Bag Holdings, LLC
 
 
 
 
 
1,037

 

1,358.854 Series C Preferred Equity units in Miche Bag Holdings, LLC
 
 
 
 
 
136

 

19,417 Series A Common Equity units in Miche Bag Holdings, LLC
 
 
 
 
 

 

146,289 Series D Common Equity units in Miche Bag Holdings, LLC
 
 
 
 
 
1,463

 

 
 
 
 
 
 
19,389

 
14,316

Bunker Hill Capital II (QP), LP
 
Multi-sector holdings
 
 
 
 
 
 
0.51% limited partnership interest (12)
 
 
 
 
 
361

 
263

 
 
 
 
 
 
361

 
263

Drugtest, Inc. (9)
 
Human resources & employment services
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7.5% (0.75% floor) cash due 6/27/2018 (14)
 
 
 
25,487

 
25,372

 
25,652

First Lien Term Loan B, LIBOR+10% (1% floor) cash 1.5% PIK due 6/27/2018 (14)
 
 
 
13,327

 
13,261

 
13,301

Acquisition Line, LIBOR+5.75% cash due 6/27/2015 (14)
 
 
 
9,100

 
9,100

 
9,100

First Lien Revolver, LIBOR+6% (1% floor) cash due 6/27/2018 (10)(14)
 
 
 


 
(32
)
 

 
 
 
 
 
 
47,701

 
48,053


See notes to Consolidated Financial Statements.


6

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)

 
Cost

 
Fair Value

Physicians Pharmacy Alliance, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+9% cash 1.5% PIK due 1/4/2016 (14)
 
 
 
$
11,330

 
$
11,168

 
$
11,297

 
 
 
 
 
 
11,168

 
11,297

Cardon Healthcare Network, LLC
 
Diversified support services
 
 
 
 
 
 
69,487 Class A Units
 
 
 
 
 
265

 
452

 
 
 
 
 
 
265

 
452

Phoenix Brands Merger Sub LLC (9)
 
Household products
 
 
 
 
 
 
Senior Term Loan, LIBOR+5% (1.5% floor) cash due 1/31/2016 (15)
 
 
 
5,197

 
5,133

 
5,152

Subordinated Term Loan, 10% cash 3.875% PIK due 2/1/2017
 
 
 
22,030

 
21,786

 
21,306

Senior Revolver, LIBOR+5% (1.5% floor) cash due 1/31/2016 (15)
 
 
 
3,000

 
2,938

 
3,000

 
 
 
 
 
 
29,857

 
29,458

CCCG, LLC (9)
 
Oil & gas equipment services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+8% (1.75% floor) cash 1% PIK due 12/29/2017 (15)
 
 
 
34,223

 
33,850

 
33,510

First Lien Revolver, LIBOR+5.5% (1.75% floor) cash due 12/31/2014 (15)
 
 
 
 
 

 

 
 
 
 
 
 
33,850

 
33,510

Maverick Healthcare Group, LLC
 
Healthcare equipment
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+5.5% (1.75% floor) cash due 12/31/2016 (16)
 
 
 
16,894

 
16,208

 
16,924

First Lien Term Loan B, LIBOR+9% (1.75% floor) cash due 12/31/2016 (16)
 
 
 
38,700

 
38,393

 
38,648

CapEx Line, LIBOR+5.75% (1.75% floor) cash due 12/31/2016 (16)
 
 
 
1,266

 
1,143

 
1,266

 
 
 
 
 
 
55,744

 
56,838

Refac Optical Group
 
Specialty stores
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (17)
 
 
 
23,017

 
22,857

 
22,838

First Lien Term Loan B, LIBOR+8.5% cash 1.75% PIK due 9/30/2018 (17)
 
 
 
33,111

 
32,819

 
32,623

First Lien Term Loan C, 12% cash due 12/31/2014
 
 
 
5,528

 
5,528

 
5,535

First Lien Revolver, LIBOR+7.5% cash due 9/30/2018 (17)
 
 
 
4,400

 
4,336

 
4,400

1,550.9435 Shares of Common Stock in Refac Holdings, Inc.
 
 
 
 
 
1

 

500.9435 Shares of Series A-2 Preferred Stock in Refac Holdings, Inc.
 
 
 
 
 
305

 

1,000 Shares of Series A Preferred Stock in Refac Holdings, Inc.
 
 
 
 
 
999

 
546

 
 
 
 
 
 
66,845

 
65,942

Baird Capital Partners V, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.40% limited partnership interest (12)
 
 
 
 
 
649

 
708

 
 
 
 
 
 
649

 
708

Charter Brokerage, LLC
 
Oil & gas equipment services
 
 
 
 
 
 
Senior Term Loan, LIBOR+6.5% (1.5% floor) cash due 10/10/2016 (16)
 
 
 
28,153

 
28,087

 
28,162

Subordinated Term Loan, 11.75% cash 2% PIK due 10/10/2017
 
 
 
12,096

 
12,051

 
12,007

Senior Revolver, LIBOR+6.5% (1.5% floor) cash due 10/10/2016 (16)
 
 
 
533

 
500

 
533

 
 
 
 
 
 
40,638

 
40,702

Discovery Practice Management, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+9.75% cash due 11/4/2018 (14)
 
 
 
20,308

 
20,230

 
20,251

First Lien Revolver, LIBOR+6% cash due 11/4/2018 (14)
 
 
 
750

 
732

 
750

Capex Line, LIBOR+7% cash due 11/4/2018 (14)
 
 
 
250

 
250

 
250

 
 
 
 
 
 
21,212

 
21,251

Milestone Partners IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.85% limited partnership interest (12)
 
 
 
 
 
709

 
756

 
 
 
 
 
 
709

 
756

Insight Pharmaceuticals LLC
 
Pharmaceuticals
 
 
 
 
 
 
Second Lien Term Loan, LIBOR+11.75% (1.5% floor) cash due 8/25/2017 (15)
 
 
 
13,517

 
13,452

 
13,561

 
 
 
 
 
 
13,452

 
13,561

National Spine and Pain Centers, LLC
 
Healthcare services
 
 
 
 
 
 
Subordinated Term Loan, 11% cash 1.6% PIK due 9/27/2017
 
 
 
29,500

 
29,344

 
29,666

317,282.97 Class A Units
 
 
 
 
 
317

 
377

 
 
 
 
 
 
29,661

 
30,043

RCPDirect, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.91% limited partnership interest (6)(12)
 
 
 
 
 
750

 
897

 
 
 
 
 
 
750

 
897

See notes to Consolidated Financial Statements.

7

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)

 
Cost

 
Fair Value

The MedTech Group, Inc. (9)
 
Healthcare equipment
 
 
 
 
 
 
Senior Term Loan, LIBOR+5.5% (1.5% floor) cash due 9/7/2016 (15)
 
 
 
$
12,285

 
$
12,228

 
$
12,291

 
 
 
 
 
 
12,228

 
12,291

Digi-Star Acquisition Holdings, Inc.
 
Industrial machinery
 
 
 
 
 
 
Subordinated Term Loan, 12% cash 1.5% PIK due 11/18/2017
 
 
 
16,571

 
16,496

 
16,657

264.37 Class A Preferred Units
 
 
 
 
 
115

 
117

2,954.87 Class A Common Units (6)
 
 
 
 
 
36

 
425

 
 
 
 
 
 
16,647

 
17,199

CPASS Acquisition Company
 
Internet software & services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+9% (1.5% floor) cash 1% PIK due 11/21/2016 (14)
 
 
 
7,800

 
7,734

 
7,847

First Lien Revolver, LIBOR+9% (1.5% floor) cash due 11/21/2016 (14)
 
 
 
750

 
740

 
750

 
 
 
 
 
 
8,474

 
8,597

Genoa Healthcare Holdings, LLC
 
Pharmaceuticals
 
 
 
 
 
 
Senior Term Loan, LIBOR+5.25% (1.25% floor) cash due 12/1/2016 (15)
 
 
 
8,550

 
8,550

 
8,572

Subordinated Term Loan, 12% cash 2% PIK due 6/1/2017
 
 
 
13,104

 
13,032

 
13,258

Senior Revolver, LIBOR+5.25% (1.25% floor) cash due 12/1/2016 (15)
 
 
 
167

 
167

 
167

500,000 Preferred Units (6)
 
 
 
 
 
261

 
289

500,000 Class A Common Units
 
 
 
 
 
25

 
804

 
 
 
 
 
 
22,035

 
23,090

ACON Equity Partners III, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.13% limited partnership interest (6)(12)
 
 
 
 
 
518

 
333

 
 
 
 
 
 
518

 
333

CRGT, Inc.
 
IT consulting & other services
 
 
 
 
 
 
Subordinated Term Loan, 12.5% cash 3% PIK due 3/9/2018
 
 
 
27,149

 
26,983

 
27,646

 
 
 
 
 
 
26,983

 
27,646

Riverside Fund V, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.48% limited partnership interest (12)
 
 
 
 
 
418

 
354

 
 
 
 
 
 
418

 
354

World 50, Inc.
 
Research & consulting services
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (18)
 
 
 
10,355

 
10,268

 
10,464

First Lien Term Loan B, 12.5% cash due 3/30/2017
 
 
 
7,000

 
6,947

 
7,037

Senior Revolver, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (10)(18)
 
 
 
 
 
(38
)
 

 
 
 
 
 
 
17,177

 
17,501

Nixon, Inc.
 
Apparel, accessories & luxury goods
 
 
 
 
 
 
First Lien Term Loan, 8.75% cash 2.75% PIK due 4/16/2018
 
 
 
8,960

 
8,894

 
8,985

 
 
 
 
 
 
8,894

 
8,985

JTC Education, Inc. (9)
 
Education services
 
 
 
 
 
 
Subordinated Term Loan, 13% cash due 11/1/2017
 
 
 
14,500

 
14,425

 
14,506

17,391 Shares of Series A-1 Preferred Stock
 
 
 
 
 
313

 
403

17,391 Shares of Common Stock
 
 
 
 
 
187

 
50

 
 
 
 
 
 
14,925

 
14,959

BMC Acquisition, Inc.
 
Diversified financial services
 
 
 
 
 
 
500 Series A Preferred Shares
 
 
 
 
 
499

 
532

50,000 Common Shares
 
 
 
 
 
1

 

 
 
 
 
 
 
500

 
532

Ansira Partners, Inc. (9)
 
Advertising
 
 
 
 
 
 
First Lien Term Loan, LIBOR+5.5% (1.5% floor) cash due 5/4/2017 (15)
 
 
 
10,046

 
9,992

 
9,993

First Lien Revolver, LIBOR+5.5% (1.5% floor) cash due 5/4/2017 (10)(15)
 
 
 
 
 
(6
)
 

250 Preferred Units & 250 Class A Common Units of Ansira Holdings, LLC
 
 
 
 
 
250

 
298

 
 
 
 
 
 
10,236

 
10,291

 Edmentum, Inc.
 
Education services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.75% (1.5% floor) cash due 5/17/2019 (15)
 
 
 
17,000

 
17,000

 
17,156

 
 
 
 
 
 
17,000

 
17,156

See notes to Consolidated Financial Statements.

8

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
March 31, 2014
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)

 
Cost

 
Fair Value

I Drive Safely, LLC
 
Education services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+8.5% (1.5% floor) cash due 5/25/2017 (17)
 
 
 
$
27,000

 
$
26,996

 
$
27,479

First Lien Revolver, LIBOR+6.5% (1.5% floor) cash due 5/25/2017 (10)(17)
 
 
 
 
 
(1
)
 

75,000 Class A Common Units of IDS Investments, LLC
 
 
 
 
 
750

 
655

 
 
 
 
 
 
27,745

 
28,134

Yeti Acquisition, LLC (9)
 
Leisure products
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+8% (1.25% floor) cash due 6/15/2017 (14)
 
 
 
17,856

 
17,849

 
18,022

First Lien Term Loan B, LIBOR+11.25% (1.25% floor) cash 1% PIK due 6/15/2017 (14)
 
 
 
12,000

 
11,997

 
12,082

First Lien Revolver, LIBOR+8% (1.25% floor) cash due 6/15/2017 (14)
 
 
 
1,000

 
997

 
1,000

1,500 Common Stock Units of Yeti Holdings, Inc.
 
 
 
 
 
1,500

 
2,835

 
 
 
 
 
 
32,343

 
33,939

Specialized Education Services, Inc.
 
Education services
 
 
 
 
 
 
Senior Term Loan, LIBOR+7% (1.5% floor) cash due 6/28/2017 (15)
 
 
 
8,795

 
8,795

 
8,758

Subordinated Term Loan, 11% cash 1.5% PIK due 6/28/2018
 
 
 
17,974

 
17,974

 
18,069

 
 
 
 
 
 
26,769

 
26,827

Vitalyst Holdings, Inc. (formerly known as PC Helps Support, LLC)
 
IT consulting & other services
 
 
 
 
 
 
Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
18,947

 
18,947

 
19,033

675 Series A Preferred Units of PCH Support Holdings, Inc.
 
 
 
 
 
675

 
573

7,500 Class A Common Stock Units of PCH Support Holdings, Inc.
 
 
 
 
 
75

 

 
 
 
 
 
 
19,697

 
19,606

Olson + Co., Inc. (9)
 
Advertising
 
 
 
 
 
 
First Lien Term Loan, LIBOR+5.5% (1.5% floor) cash due 9/30/2017 (15)
 
 
 
13,506

 
13,506

 
13,510

First Lien Revolver, LIBOR+5.5% (1.5% floor) cash due 9/30/2017 (15)
 
 
 
 
 

 

 
 
 
 
 
 
13,506

 
13,510

Beecken Petty O’Keefe Fund IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
0.5% limited partnership interest (12)
 
 
 
 
 
391

 
370

 
 
 
 
 
 
391

 
370

Deltek, Inc. (9)
 
IT consulting & other services
 
 
 
 
 
 
Second Lien Term Loan, LIBOR+8.75% (1.25% floor) cash due 10/10/2019 (15)
 
 
 
25,000

 
25,000

 
25,463

First Lien Revolver, LIBOR+4.75% (1.25% floor) cash due 10/10/2017 (15)
 
 
 


 

 

 
 
 
 
 
 
25,000

 
25,463

First American Payment Systems, LP
 
Diversified support services
 
 
 
 
 
 
Second Lien Term Loan, LIBOR+9.5% (1.25% floor) cash due 4/12/2019 (15)
 
 
 
25,000

 
25,000

 
25,486

First Lien Revolver, LIBOR+4.5% (1.25% floor) cash due 10/12/2017 (15)
 
 
 


 

 

 
 
 
 
 
 
25,000

 
25,486

Dexter Axle Company
 
Auto parts & equipment
 
 
 
 
 
 
1,500 Common Shares in Dexter Axle Holding Company
 
 
 
 
 
1,500

 
2,281

 
 
 
 
 
 
1,500

 
2,281

SumTotal Systems, LLC
 
Internet software & services
 
 
 
 
 
 
Second Lien Term Loan, LIBOR+9% (1.25% floor) cash due 5/16/2019 (15)
 
 
 
20,000

 
20,000

 
19,973

 
 
 
 
 
 
20,000

 
19,973

Comprehensive Pharmacy Services, LLC
 
Pharmaceuticals
 
 
 
 
 
 
Subordinated Term Loan, 11.25% cash 1.5% PIK due 11/30/2019
 
 
 
14,255

 
14,255

 
14,563

20,000 Common Shares in MCP CPS Group Holdings, Inc. (6)
 
 
 
 
 
2,000

 
2,578