10-Q 1 fsc-063016x10xq.htm 10-Q Document

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 June 30, 2016
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
(State or jurisdiction of
incorporation or organization)
 
26-1219283
(I.R.S. Employer
Identification No.)
 
 
 
777 West Putnam Avenue, 3rd Floor
Greenwich, CT
(Address of principal executive office)
 
06830
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(203) 681-3600
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 145,304,222 shares of common stock outstanding as of August 8, 2016.




FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2016
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 3.
Item 4.
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)
 
 
June 30, 2016
 
September 30, 2015
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost June 30, 2016: $453,520; cost September 30, 2015: $333,520)
 
$
396,022

 
$
318,893

Affiliate investments (cost June 30, 2016: $35,240; cost September 30, 2015: $36,637)
 
40,110

 
40,606

Non-control/Non-affiliate investments (cost June 30, 2016: $1,903,313; cost September 30, 2015: $2,102,781)
 
1,811,323

 
2,042,996

Total investments at fair value (cost June 30, 2016: $2,392,073; cost September 30, 2015: $2,472,938)
 
2,247,455

 
2,402,495

Cash and cash equivalents
 
138,111

 
138,377

Restricted cash
 
19,975

 
5,107

Interest, dividends and fees receivable
 
18,797

 
15,687

Due from portfolio companies
 
4,994

 
2,641

Receivables from unsettled transactions
 
12,395

 
5,168

Deferred financing costs
 
12,345

 
16,051

Insurance recoveries receivable
 
19,079

 

Other assets
 
877

 
131

Total assets
 
$
2,474,028

 
$
2,585,657

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
4,029

 
$
5,006

Base management fee and Part I incentive fee payable
 
17,832

 
16,531

Due to FSC CT
 
1,906

 
2,965

Interest payable
 
9,762

 
4,300

Amounts payable to syndication partners
 
14,608

 
1,316

Payables from unsettled transactions
 

 
3,648

Legal settlements payable
 
19,150

 

Credit facilities payable
 
568,295

 
427,295

SBA debentures payable
 
225,000

 
225,000

Unsecured convertible notes payable
 

 
115,000

Unsecured notes payable
 
410,519

 
410,320

Secured borrowings at fair value (proceeds June 30, 2016: $19,289; proceeds September 30, 2015: $21,787)
 
18,551

 
21,182

Total liabilities
 
1,289,652

 
1,232,563

Commitments and contingencies (Note 16)
 

 
 
Net assets:
 
 
 
 
Common stock, $0.01 par value, 250,000 shares authorized; 145,304 and 150,668 shares issued and outstanding at June 30, 2016 and September 30, 2015, respectively
 
1,453

 
1,507

Additional paid-in-capital
 
1,603,947

 
1,631,523

Treasury stock, 423 shares at September 30, 2015
 

 
(2,538
)
Net unrealized depreciation on investments and secured borrowings
 
(143,880
)
 
(69,838
)
Net realized loss on investments and secured borrowings
 
(251,058
)
 
(180,945
)
Accumulated overdistributed net investment income
 
(26,086
)
 
(26,615
)
Total net assets (equivalent to $8.15 and $9.00 per common share at June 30, 2016 and September 30, 2015, respectively) (Note 12)
 
1,184,376

 
1,353,094

Total liabilities and net assets
 
$
2,474,028

 
$
2,585,657

See notes to Consolidated Financial Statements.

3


Fifth Street Finance Corp.
Consolidated Statements of Operations
(in thousands, except per share amounts) (unaudited)
 
 
Three months ended
June 30, 2016
 
Three months ended
June 30, 2015
(see Note 2)
 
Nine months
ended
June 30, 2016
 
Nine months ended
June 30, 2015 (see Note 2)
Interest income:
 
 
 
 
 
 
 
 
Control investments
 
$
4,863

 
$
4,190

 
$
12,518

 
$
12,073

Affiliate investments
 
1,016

 
1,085

 
3,092

 
3,254

Non-control/Non-affiliate investments
 
43,650

 
49,388

 
134,265

 
148,583

Interest on cash and cash equivalents
 
111

 
16

 
262

 
35

Total interest income
 
49,640

 
54,679

 
150,137

 
163,945

PIK interest income:
 
 
 
 
 
 
 
 
Control investments
 
1,517

 
1,340

 
3,577

 
4,079

Affiliate investments
 
203

 
216

 
618

 
643

Non-control/Non-affiliate investments
 
1,820

 
1,582

 
5,772

 
5,675

Total PIK interest income
 
3,540

 
3,138

 
9,967

 
10,397

Fee income:
 
 
 
 
 
 
 
 
Control investments
 
1,183

 
561

 
2,402

 
1,569

Affiliate investments
 
37

 
12

 
308

 
36

Non-control/Non-affiliate investments
 
2,220

 
7,500

 
14,730

 
15,670

Total fee income
 
3,440

 
8,073

 
17,440

 
17,275

Dividend and other income:
 
 
 
 
 
 
 
 
Control investments
 
2,255

 
3,581

 
6,373

 
9,179

Non-control/Non-affiliate investments
 
5,151

 
429

 
4,795

 
909

Total dividend and other income
 
7,406

 
4,010

 
11,168

 
10,088

Total investment income
 
64,026

 
69,900

 
188,712

 
201,705

Expenses:
 
 
 
 
 
 
 
 
Base management fee
 
10,049

 
12,145

 
31,847

 
39,364

Part I incentive fee
 
7,864

 
8,035

 
15,689

 
21,562

Professional fees
 
1,971

 
849

 
13,395

 
2,995

Board of Directors fees
 
176

 
175

 
775

 
544

Interest expense
 
13,149

 
14,191

 
41,034

 
42,995

Administrator expense
 
488

 
611

 
1,602

 
2,606

General and administrative expenses
 
1,233

 
1,822

 
3,525

 
5,259

Loss on legal settlements
 
19,150

 

 
19,150

 

Total expenses
 
54,080

 
37,828

 
127,017

 
115,325

Base management fee waived
 
(81
)
 
(179
)
 
(258
)
 
(401
)
Insurance recoveries
 
(19,079
)
 

 
(19,079
)
 

Net expenses
 
34,920

 
37,649

 
107,680

 
114,924

Net investment income
 
29,106

 
32,251

 
81,032

 
86,781

Unrealized appreciation (depreciation) on investments:
 
 
 
 
 
 
 
 
Control investments
 
(24,024
)
 
(1,271
)
 
(42,872
)
 
(16,552
)
Affiliate investments
 
1,237

 
1,184

 
901

 
1,381

Non-control/Non-affiliate investments
 
33,651

 
(1,480
)
 
(32,204
)
 
(25,512
)
Net unrealized appreciation (depreciation) on investments
 
10,864

 
(1,567
)
 
(74,175
)
 
(40,683
)
Net unrealized (appreciation) depreciation on secured borrowings
 
(374
)
 
79

 
133

 
184

Realized gain (loss) on investments and secured borrowings:
 
 
 
 
 
 
 
 
Control investments
 

 
(4,384
)
 
(8,148
)
 
(4,384
)
Affiliate investments
 
3

 

 
3

 
72

Non-control/Non-affiliate investments
 
(44,817
)
 
(5,868
)
 
(61,968
)
 
(24,186
)
Net realized loss on investments and secured borrowings
 
(44,814
)
 
(10,252
)
 
(70,113
)
 
(28,498
)
Net increase (decrease) in net assets resulting from operations
 
$
(5,218
)
 
$
20,511

 
$
(63,123
)
 
$
17,784

Net investment income per common share — basic
 
$
0.20

 
$
0.21

 
$
0.55

 
$
0.57

Earnings (loss) per common share — basic
 
$
(0.04
)
 
$
0.13

 
$
(0.43
)
 
$
0.12

Weighted average common shares outstanding — basic
 
145,569

 
153,340

 
148,354

 
153,340

Net investment income per common share — diluted
 
$
0.20

 
$
0.21

 
$
0.53

 
$
0.56

Earnings (loss) per common share — diluted (Note 5)
 
$
(0.04
)
 
$
0.13

 
$
(0.43
)
 
$
0.12

Weighted average common shares outstanding — diluted
 
145,569

 
161,130

 
153,585

 
161,130

Distributions per common share
 
$
0.18

 
$
0.18

 
$
0.54

 
$
0.61

See notes to Consolidated Financial Statements.

4



Fifth Street Finance Corp.
Consolidated Statements of Changes in Net Assets
(in thousands, except per share amounts)
(unaudited)
 
 
 
Nine months
ended
June 30, 2016
 
Nine months
ended
June 30, 2015
(see Note 2)
Operations:
 
 
 
 
Net investment income
 
$
81,032

 
$
86,781

Net unrealized depreciation on investments
 
(74,175
)
 
(40,683
)
Net unrealized depreciation on secured borrowings
 
133

 
184

Net realized loss on investments and secured borrowings
 
(70,113
)
 
(28,498
)
Net increase (decrease) in net assets resulting from operations
 
(63,123
)
 
17,784

Stockholder transactions:
 
 
 
 
Distributions to stockholders
 
(80,503
)
 
(93,046
)
Net decrease in net assets from stockholder transactions
 
(80,503
)
 
(93,046
)
Capital share transactions:
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
5,095

 
4,334

Repurchases of common stock under stock repurchase program
 
(25,092
)
 

Repurchases of common stock under dividend reinvestment program
 
(5,095
)
 
(4,334
)
Net decrease in net assets from capital share transactions
 
(25,092
)
 

Total decrease in net assets
 
(168,718
)
 
(75,262
)
Net assets at beginning of period
 
1,353,094

 
1,478,475

Net assets at end of period
 
$
1,184,376

 
$
1,403,213

Net asset value per common share
 
$
8.15

 
$
9.15

Common shares outstanding at end of period
 
145,304

 
153,340



See notes to Consolidated Financial Statements.


5

Fifth Street Finance Corp.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)


 
 
Nine months
ended
June 30, 2016
 
Nine months
ended
June 30, 2015
(see Note 2)
Operating activities:
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
$
(63,123
)
 
$
17,784

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided (used) by operating activities:
 
 
 
 
Net unrealized depreciation on investments
 
74,175

 
40,683

Net unrealized depreciation on secured borrowings
 
(133
)
 
(184
)
Net realized loss on investments and secured borrowings
 
70,113

 
28,498

PIK interest income
 
(9,967
)
 
(10,397
)
Recognition of fee income
 
(17,440
)
 
(17,275
)
Accretion of original issue discount on investments
 
(2,821
)
 
(6,192
)
Accretion of original issue discount on unsecured notes payable
 
199

 
376

Amortization of deferred financing costs
 
3,706

 
3,863

Changes in operating assets and liabilities:
 

 
 
Fee income received
 
16,874

 
16,698

(Increase) decrease in restricted cash
 
(14,868
)
 
21,144

(Increase) decrease in interest, dividends and fees receivable
 
(2,982
)
 
1,658

(Increase) decrease in due from portfolio companies
 
(2,353
)
 
19,958

Increase in receivables from unsettled transactions
 
(7,227
)
 
(56,195
)
Increase in insurance recoveries receivable
 
(19,079
)
 

Increase in other assets
 
(746
)
 
(319
)
Increase (decrease) in accounts payable, accrued expenses and other liabilities
 
(977
)
 
265

Increase (decrease) in base management fee and Part I incentive fee payable
 
1,301

 
(4,207
)
Increase (decrease) in due to FSC CT
 
(1,059
)
 
663

Increase in interest payable
 
5,462

 
4,878

Increase (decrease) in payables from unsettled transactions
 
(3,648
)
 
74,301

Increase in legal settlements payable
 
19,150

 

Increase in amounts payable to syndication partners
 
13,292

 
6,452

Purchases of investments and net revolver activity
 
(633,561
)
 
(1,133,116
)
Principal payments received on investments (scheduled payments)
 
23,913

 
20,998

Principal payments received on investments (payoffs)
 
404,004

 
577,699

PIK interest income received in cash
 
1,480

 
1,783

Proceeds from the sale of investments
 
228,142

 
641,724

Net cash provided by operating activities
 
81,827

 
251,540

Financing activities:
 
 
 
 
Distributions paid in cash
 
(75,408
)
 
(88,712
)
Borrowings under credit facilities
 
591,000

 
621,400

Repayments of borrowings under credit facilities
 
(450,000
)
 
(623,500
)
Repayments of secured borrowings
 
(2,498
)
 
(62,549
)
Repayments of unsecured convertible notes
 
(115,000
)
 

Repurchases of common stock under stock repurchase program
 
(25,092
)
 

Repurchases of common stock under dividend reinvestment plan
 
(5,095
)
 
(4,334
)
Net cash used by financing activities
 
(82,093
)
 
(157,695
)
Net increase (decrease) in cash and cash equivalents
 
(266
)
 
93,845

Cash and cash equivalents, beginning of period
 
138,377

 
86,731

Cash and cash equivalents, end of period
 
$
138,111

 
$
180,576

Supplemental information:
 
 
 
 
Cash paid for interest
 
$
31,667

 
$
33,992

Non-cash operating activities:
 
 
 
 
Purchases of investments from restructurings
 
$
(78,834
)
 
$

Proceeds from investment restructurings
 
$
78,834

 
$

Non-cash financing activities:
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
5,095

 
$
4,334

See notes to Consolidated Financial Statements.

6

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value
Control Investments (3)
 
 
 
 
 
 
 
 
 Traffic Solutions Holdings, Inc.
 
Construction and engineering
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash 2% PIK due 4/1/2021 (13)
 
 
 
$
36,083

 
$
36,041

 
$
36,083

 First Lien Revolver, LIBOR+7% (1% floor) cash due 4/1/2021 (13)
 
 
 
1,500

 
1,495

 
1,500

 LC Facility, 6.0% cash due 4/1/2021
 
 
 
1,444

 
1,438

 
1,444

 746,114 Series A Preferred Units
 
 
 
 
 
17,930

 
16,843

 746,114 Common Stock Units
 
 
 
 
 
5,316

 

 
 
 
 
 
 
62,220

 
55,870

 TransTrade Operators, Inc. (9)
 
Air freight & logistics
 
 
 
 
 
 
 First Lien Term Loan, 11% cash 3% PIK due 5/31/2016
 
 
 
15,973

 
15,572

 
6,937

 First Lien Revolver, 8% cash due 5/31/2016
 
 
 
5,615

 
5,615

 

 596.67 Series A Common Units
 
 
 
 
 

 

 4,000,000 Series A Preferred Units in TransTrade Holdings LLC
 
 
 
 
 
4,000

 

 5,200,000 Series B Preferred Units in TransTrade Holdings LLC
 
 
 
 
 
5,200

 

 
 
 
 
 
 
30,387

 
6,937

 First Star Aviation, LLC (16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 1/9/2018
 
 
 
3,389

 
3,389

 
3,305

 10,104,401 Common Units (6)
 
 
 
 
 
10,104

 
6,891

 
 
 
 
 
 
13,493

 
10,196

 First Star Speir Aviation 1 Limited (11)(16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash due 12/15/2020
 
 
 
55,395

 
52,419

 
53,339

 2,058,411.64 Common Units (6)
 
 
 
 
 

 
1,363

 
 
 
 
 
 
52,419

 
54,702

 First Star Bermuda Aviation Limited (11)(16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 8/19/2018
 
 
 
11,868

 
11,868

 
11,822

 4,293,736 Common Units (6)
 
 
 
 
 
2,137

 
2,880

 
 
 
 
 
 
14,005

 
14,702

 Eagle Hospital Physicians, LLC
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 8% PIK due 8/1/2016
 
 
 
13,609

 
13,610

 
13,508

 First Lien Term Loan B, 8.1% PIK due 8/1/2016
 
 
 
3,809

 
3,809

 
3,784

 First Lien Revolver, 8% cash due 8/1/2016
 
 
 
1,913

 
1,913

 
1,913

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

 
6,690

 
 
 
 
 
 
23,432

 
25,895

 Senior Loan Fund JV I, LLC (11)(15)(17)
 
Multi-sector holdings
 
 
 
 
 
 
 Subordinated Notes, LIBOR+8% cash due 5/2/2021 (13)
 
 
 
144,841

 
144,841

 
131,040

 87.5% LLC equity interest (6)
 
 
 
 
 
16,093

 
12,297

 
 
 
 
 
 
160,934

 
143,337

 Express Group Holdings LLC (18)
 
Oil & gas equipment services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 9/3/2019 (13)
 
 
 
12,073

 
12,073

 
12,022

 First Lien Revolver, LIBOR+4.5% (1% floor) cash due 3/4/2019 (13)
 
 
 
3,267

 
3,267

 
3,267

 14,033,391 Series B Preferred Units
 
 
 
 
 
3,982

 
3,659

 280,668 Series A Preferred Units
 
 
 
 
 
1,593

 
1,464

 1,456,344 Common Stock Units
 
 
 
 
 

 

 
 
 
 
 
 
20,915

 
20,412

 Ameritox Ltd. (19)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 (13)
 
 
 
31,021

 
30,974

 
31,021

 14,090,126.4 Class A Preferred Units in Ameritox Holdings II, LLC
 
 
 


 
14,090

 
14,716

 1,602,260.83 Class B Preferred Units in Ameritox Holdings II, LLC
 
 
 


 
1,602

 
1,673

 4,930.03 Class A Units in Ameritox Holdings II, LLC
 
 
 


 
29,049

 
16,561

 
 
 
 
 
 
$
75,715

 
$
63,971

 Total Control Investments (33.4% of net assets)
 
 
 
 
 
$
453,520

 
$
396,022

 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 
 
 
9,475

 
$
9,475

 
$
9,404

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

 
4,053

 
 
 
 
 
 
10,555

 
13,457

See notes to Consolidated Financial Statements.

7

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Non-Control/Non-Affiliate Investments (7)
 
 
 
 
 
 
 
 
 AmBath/ReBath Holdings, Inc.
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan B, 12.5% cash 2.5% PIK due 8/31/2017
 
 
 
24,709

 
24,685

 
24,481

 4,668,788 Shares of Preferred Stock
 
 
 
 
 

 
2,172

 
 
 
 
 
 
24,685

 
26,653

 Total Affiliate Investments (3.4% of net assets)
 
 
 
 
 
$
35,240

 
$
40,110

 
 
 
 
 
 
 
 
 
 HealthDrive Corporation (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 10% cash due 12/31/2016
 
 
 
$
4,158

 
$
4,158

 
$
4,156

 First Lien Term Loan B, 12% cash 1% PIK due 12/31/2016
 
 
 
11,877

 
11,877

 
11,875

 First Lien Revolver, 12% cash due 12/31/2016
 
 
 
666

 
666

 
666

 
 
 
 
 
 
16,701

 
16,697

 Cenegenics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash due 9/30/2019
 
 
 
29,961

 
29,954

 
29,743

 First Lien Revolver, 15% cash due 9/30/2019
 
 
 
600

 
600

 
600

 452,914.87 Common Units in Cenegenics, LLC
 
 
 
 
 
598

 
1,288

 345,380.141 Preferred Units in Cenegenics, LLC
 
 
 
 
 
300

 
300

 
 
 
 
 
 
31,452

 
31,931

 Riverlake Equity Partners II, LP
 
Multi-sector holdings
 
 
 
 
 
 
 1.78% limited partnership interest
 
 
 
 
 
823

 
689

 
 
 
 
 
 
823

 
689

 Riverside Fund IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.34% limited partnership interest
 
 
 
 
 
643

 
435

 
 
 
 
 
 
643

 
435

 JTC Education, Inc. (9)
 
Education services
 
 
 
 
 
 
 Subordinated Term Loan, 13% cash due 11/1/2017
 
 
 
16,006

 
14,436

 

 First Lien Term Loan, LIBOR+5% (1% floor) cash due 5/1/2017 (13)
 
 
 
40,180

 
1,304

 
5,765

 First Lien Revolver, LIBOR+5% cash due 5/1/2017 (13)
 
 
 
9,715

 
315

 

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

 

 17,391 Shares of Common Stock
 
 
 
 
 
187

 

 
 
 
 
 
 
16,555

 
5,765

 Mansell Group, Inc.
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan B, LIBOR+9% (3% floor) cash 1.5% PIK due 4/1/2017 (13)
 
 
 
7,773

 
7,773

 
7,615

 
 
 
 
 
 
7,773

 
7,615

 Bunker Hill Capital II (QP), L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.51% limited partnership interest
 
 
 
 
 
810

 
739

 
 
 
 
 
 
810

 
739

 Cardon Healthcare Network, LLC
 
Diversified support services
 
 
 
 
 
 
 69,487 Class A Units
 
 
 
 
 
241

 
1,113

 
 
 
 
 
 
241

 
1,113

 Phoenix Brands Merger Sub LLC (9)
 
Household products
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5% (1.5% floor) cash due 9/14/2016 (13)
 
 
 

 

 

 Subordinated Term Loan, 10% cash 3.875% PIK due 2/1/2017
 
 
 
42,014

 
31,389

 

 First Lien Revolver, LIBOR+5% (1.5% floor) cash due 9/14/2016 (13)
 
 
 
4,986

 
4,986

 
4,901

 DIP Facility, L+7.5% (1% floor) cash due 9/14/2016 (13)
 
 
 
 
 

 

 
 
 
 
 
 
36,375

 
4,901


See notes to Consolidated Financial Statements.


8

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Maverick Healthcare Group, LLC (9)
 
Healthcare equipment
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5.5% cash (1.75% floor) cash due 12/31/2016 (13)
 
 
 
$
16,154

 
$
16,046

 
$
16,160

 First Lien Term Loan B, LIBOR+9% cash (1.75% floor) cash due 12/31/2016 (13)
 
 
 
38,379

 
38,310

 
37,693

 CapEx Line, LIBOR+5.75% (1.75% floor) cash due 12/31/2016 (13)
 
 
 
1,256

 
1,237

 
1,241

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 4/30/2017
 
 
 
4,406

 
4,406

 
4,406

 
 
 
 
 
 
59,999

 
59,500

 Refac Optical Group
 
Specialty stores
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
6,832

 
6,768

 
6,805

 First Lien Term Loan B, LIBOR+8.5% cash, 1.75% PIK due 9/30/2018 (13)
 
 
 
34,208

 
34,042

 
34,158

 First Lien Term Loan C, 12% cash due 9/30/2018
 
 
 
3,416

 
3,416

 
3,395

 First Lien Revolver, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
1,600

 
1,599

 
1,600

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

 

 550.9435 Series A-2 Preferred Stock in Refac Holdings, Inc.
 
 
 
 
 
305

 

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

 
718

 
 
 
 
 
 
47,130

 
46,676

 Baird Capital Partners V, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.4% limited partnership interest (11)
 
 
 
 
 
1,000

 
576

 
 
 
 
 
 
1,000

 
576

 Discovery Practice Management, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+7.5% cash due 11/4/2018 (13)
 
 
 
25,115

 
25,080

 
25,106

 Senior Revolver, LIBOR+7% cash due 11/4/2018 (13)
 
 
 
2,000

 
1,999

 
2,000

 Capex Line A, LIBOR+7% cash due 11/4/2018 (13)
 
 
 
1,125

 
1,125

 
1,125

 Capex Line B, LIBOR+7% cash due 11/4/2018 (13)
 
 
 
2,000

 
2,000

 
2,000

 
 
 
 
 
 
30,204

 
30,231

 Milestone Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.85% limited partnership interest (11)
 
 
 
 
 
1,727

 
1,887

 
 
 
 
 
 
1,727

 
1,887

 National Spine and Pain Centers, LLC
 
Healthcare services
 
 
 
 
 
 
 Mezzanine Term Loan, 11% cash 1.6% PIK due 9/27/2020
 
 
 
30,595

 
30,542

 
30,596

 317,282.97 Class A Units
 
 
 
 
 
317

 
545

 
 
 
 
 
 
30,859

 
31,141

 RCPDirect, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.91% limited partnership interest (11)
 
 
 
 
 
802

 
991

 
 
 
 
 
 
802

 
991

 Riverside Fund V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.48% limited partnership interest (11)
 
 
 
 
 
1,147

 
771

 
 
 
 
 
 
1,147

 
771

See notes to Consolidated Financial Statements.

9

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 ACON Equity Partners III, LP
 
 
 
 
 
 
 
 
 0.13% limited partnership interest
 
Multi-sector holdings
 
 
 
$
806

 
$
612

 
 
 
 
 
 
806

 
612

 BMC Acquisition, Inc.
 
Other diversified financial services
 
 
 
 
 
 
 500 Series A Preferred Shares
 
 
 
 
 
500

 
644

 50,000 Common Shares
 
 
 
 
 
1

 

 
 
 
 
 
 
501

 
644

 Ansira Partners, Inc.
 
Advertising
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.5% (1% floor) cash due 4/5/2021 (13)
 
 
 
$
38,000

 
38,000

 
37,764

 250 Preferred Units of Ansira Holdings, LLC (6)
 
 
 
 
209

 
227

 250 Class A Common Units of Ansira Holdings, LLC
 
 
 
 
 

 
301

 
 
 
 
 
 
38,209

 
38,292

 Edmentum, Inc.
 
Education services
 
 
 
 
 
 
 Unsecured Senior PIK Note, 8.5% PIK due 6/9/2020
 
 
 
2,187

 
2,187

 
2,061

 Unsecured Junior PIK Note, 10% PIK due 6/9/2020
 
 
9,972

 
9,972

 
8,238

 Unsecured Revolver, 5% cash due 6/9/2020
 
 
 
2,184

 
2,184

 
2,184

 126,127.80 Class A Common Units
 
 
 
 
 
126

 

 
 
 
 
 
 
14,469

 
12,483

 I Drive Safely, LLC
 
Education services
 
 
 
 
 
 
125,079 Class A Common Units of IDS Investments, LLC
 
 
 
 
 
1,000

 
700

 
 
 
 
 
 
1,000

 
700

 Yeti Acquisition, LLC
 
Leisure products
 
 
 
 
 
 
 1,500 Common Stock Units of Yeti Holdings, Inc. (6)
 
 
 
 
 

 
27,463

 
 
 
 
 
 

 
27,463

 Vitalyst Holdings, Inc.
 
IT consulting & other services
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
19,606

 
19,606

 
19,457

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

 
432

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

 

 
 
 
 
 
 
20,356

 
19,889

 Beecken Petty O'Keefe Fund IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.5% limited partnership interest
 
 
 
 
 
1,302

 
1,397

 
 
 
 
 
 
1,302

 
1,397

 First American Payment Systems, LP
 
Diversified support services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.5% (1.25% floor) cash due 4/12/2019 (13)
 
 
 
23,304

 
23,304

 
22,488

 First Lien Revolver, LIBOR+4.5% (1.25% floor) cash due 10/12/2017 (13)
 
 
 
2,625

 
2,625

 
2,590

 
 
 
 
 
 
25,929

 
25,078

 Dexter Axle Company
 
Auto parts & equipment
 
 
 
 
 
 
 1,500 Common Shares in Dexter Axle Holding Company
 
 
 
 
 
1,643

 
2,980

 
 
 
 
 
 
1,643

 
2,980

 Comprehensive Pharmacy Services LLC
 
Pharmaceuticals
 
 
 
 
 
 
 Mezzanine Term Loan, 11.25% cash 1.5% PIK due 11/30/2019
 
 
 
14,743

 
14,743

 
14,707

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

 
2,210

 
 
 
 
 
 
16,743

 
16,917

See notes to Consolidated Financial Statements.


10

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Garretson Firm Resolution Group, Inc.
 
Diversified support services
 
 
 
 
 
 
 First Lien Revolver, LIBOR+6.5% (1% floor) cash due 5/22/2020 (13)
 
 
 
 
 
$

 
$

 4,950,000 Preferred Units in GRG Holdings, LP
 
 
 
 
 
495

 
652

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
5

 
120

 
 
 
 
 
 
500

 
772

 Teaching Strategies, LLC
 
Education services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (13)
 
 
 
$
7,300

 
7,297

 
7,297

 Senior Revolver, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (13)
 
 
 
480

 
480

 
480

 
 
 
 
 
 
7,777

 
7,777

 Omniplex World Services Corporation (9)
 
Security & alarm services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 8/19/2021
 
 
 
11,166

 
11,166

 
11,240

 500 units of Class A Common Units in Omniplex Holdings Corp.
 
 
 
 
 
500

 
517

 64.041 units of Class A-1 Common Units in Omniplex Holdings Corp.
 
 
 
 
 
104

 
33

 
 
 
 
 
 
11,770

 
11,790

 Dominion Diagnostics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 2% PIK due 10/8/2019
 
 
 
16,277

 
16,195

 
1,228

 
 
 
 
 
 
16,195

 
1,228

 AdVenture Interactive, Corp. (9)
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (13)
 
 
 
89,814

 
89,782

 
86,351

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (10)(13)
 
 
 
 
 
(1
)
 

 2,599.32 Preferred Units of AVI Holdings, L.P.
 
 
 
 
 
1,820

 
4

 
 
 
 
 
 
91,601

 
86,355

 Sterling Capital Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.2% limited partnership interest
 
 
 
 
 
1,587

 
1,325

 
 
 
 
 
 
1,587

 
1,325

 RP Crown Parent, LLC
 
Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+5.5% (1.25% floor) cash due 12/21/2017 (10)(13)
 
 
 


 
(229
)
 

 
 
 
 
 
 
(229
)
 

 Advanced Pain Management
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.5% (1.25% floor) cash due 2/26/2018 (13)
 
 
 
24,000

 
24,000

 
23,814

 
 
 
 
 
 
24,000

 
23,814

 Rocket Software, Inc.
 
Internet & software services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.75% (1.5% floor) cash due 2/8/2019 (13)
 
 
 
10,475

 
10,455

 
10,455

 
 
 
 
 
 
10,455

 
10,455

See notes to Consolidated Financial Statements.


11

Fifth Street Finance Corp.
Consolidated Schedule of Investments
June 30, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 TravelClick, Inc.
 
Internet software & services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.75% (1% floor) cash due 11/6/2021 (13)
 
 
 
$
4,450

 
$
3,970

 
$
4,139

 
 
 
 
 
 
3,970

 
4,139

 Pingora MSR Opportunity Fund I-A, LP
 
Thrift & mortgage finance
 
 
 
 
 
 
 1.9% limited partnership interest
 
 
 
 
 
8,522

 
8,904

 
 
 
 
 
 
8,522

 
8,904

 Credit Infonet, Inc. (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 10/26/2018
 
 
 
13,713

 
13,713

 
13,073

 
 
 
 
 
 
13,713

 
13,073

 Bracket Holding Corp. (9)
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 2/15/2020 (9)(13)
 
 
 
32,000

 
32,000

 
31,243

 50,000 Common Units in AB Group Holdings, LP
 
 
 
 
 
500

 
758

 
 
 
 
 
 
32,500

 
32,001

 HealthEdge Software, Inc.
 
Application software
 
 
 
 
 
 
 482,453 Series A-3 Preferred Stock Warrants (exercise price $1.450918)
 
 
 
 
 
213

 
643

 
 
 
 
 
 
213

 
643

 InMotion Entertainment Group, LLC
 
Consumer electronics
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
13,122

 
13,114

 
12,950

 First Lien Term Loan B, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
5,720

 
5,531

 
5,617

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
4,604

 
4,603

 
4,604

 CapEx Line, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
850

 
848

 
850

 1,000,000 Class A Units in InMotion Entertainment Holdings, LLC
 
 
 
 
 
1,000

 
1,160

 
 
 
 
 
 
25,096

 
25,181

 BMC Software Finance, Inc.
 
Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+4% (1% floor) cash due 9/10/2018 (13)
 
 
 
 
 

 

 
 
 
 
 
 

 

 Thing5, LLC (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 10/11/2018 (12)(13)