10-Q 1 fsc-20130630x10q.htm 10-Q FSC- 2013.06.30-10Q
 

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 June 30, 2013
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 121,126,462 shares of common stock outstanding as of August 6, 2013.
 

 







FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2013
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





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,
2013
 
September 30,
2012
                         ASSETS
 
 
 
Investments at fair value:

 
 
Control investments (cost June 30, 2013: $162,784; cost September 30, 2012: $58,557)
$
171,618

 
$
53,240

Affiliate investments (cost June 30, 2013: $30,564; cost September 30, 2012: $29,496)
32,350

 
31,187

Non-control/Non-affiliate investments (cost June 30, 2013: $1,582,731; cost September 30, 2012: $1,180,436)
1,598,133

 
1,203,681

Total investments at fair value (cost June 30, 2013: $1,776,079; cost September 30, 2012: $1,268,489)
1,802,101

 
1,288,108

Cash and cash equivalents
59,618

 
74,393

Interest and fees receivable
12,257

 
7,652

Due from portfolio company
3,098

 
3,292

Receivables from unsettled transactions

 
1,750

Deferred financing costs
18,994

 
13,751

Other assets
780

 
56

Total assets
$
1,896,848

 
$
1,389,002

 
 
 
 
                                 LIABILITIES AND NET ASSETS
 
 
 
Liabilities:
 
 
 
Accounts payable, accrued expenses and other liabilities
$
1,969

 
$
978

Base management fee payable
8,164

 
6,573

Incentive fee payable
7,343

 
5,579

Due to FSC, Inc.
1,626

 
1,630

Interest payable
6,462

 
4,219

Payments received in advance from portfolio companies
16

 
40

Offering costs payable

 
162

Credit facilities payable
216,000

 
201,251

SBA debentures payable
181,750

 
150,000

Unsecured convertible notes payable
115,000

 
115,000

Unsecured notes payable
161,250

 

Total liabilities
699,580

 
485,432

Commitments and contingencies (Note 3)
 
 
 
Net assets:
 
 
 
Common stock, $0.01 par value, 250,000 and 150,000 shares authorized, at June 30, 2013 and September 30, 2012, respectively; 120,996 and 91,048 shares issued and outstanding at June 30, 2013 and September 30, 2012, respectively
1,210

 
910

Additional paid-in-capital
1,329,448

 
1,019,053

Net unrealized appreciation on investments
26,400

 
19,998

Net realized loss on investments and interest rate swap
(145,034
)
 
(128,062
)
Accumulated overdistributed net investment income
(14,756
)
 
(8,329
)
Total net assets (equivalent to $9.90 and $9.92 per common share at June 30, 2013 and September 30, 2012, respectively) (Note 12)
1,197,268

 
903,570

Total liabilities and net assets
$
1,896,848

 
$
1,389,002

 
 
 
 
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
June 30, 2013

Three months
ended
June 30, 2012

Nine months
ended
June 30, 2013

Nine months
ended
June 30, 2012
Interest income:
 
 
 
 
 
 
 
Control investments
$
1,279

 
$
2

 
$
3,037

 
$
434

Affiliate investments
741

 
835

 
2,050

 
2,229

Non-control/Non-affiliate investments
40,356

 
27,822

 
109,829

 
85,131

Interest on cash and cash equivalents
6

 
11

 
15

 
29

Total interest income
42,382

 
28,670

 
114,931

 
87,823

PIK interest income:
 
 
 
 
 
 
 
Control investments
719

 
211

 
936

 
249

Affiliate investments
316

 
158

 
1,080

 
467

Non-control/Non-affiliate investments
3,009

 
3,557

 
9,795

 
9,516

Total PIK interest income
4,044

 
3,926

 
11,811

 
10,232

Fee income:
 
 
 
 
 
 
 
Control investments
3,379

 

 
3,592

 

Affiliate investments
12

 
377

 
36

 
630

Non-control/Non-affiliate investments
7,656

 
7,954

 
32,138

 
23,744

Total fee income
11,047

 
8,331

 
35,766

 
24,374

Dividend and other income:
 
 
 
 
 
 
 
Non-control/Non-affiliate investments
577

 
81

 
2,012

 
154

Total dividend and other income
577

 
81

 
2,012

 
154

Total investment income
58,050

 
41,008

 
164,520


122,583

Expenses:
 
 
 
 
 
 
 
Base management fee
9,186

 
6,094

 
26,123

 
17,226

Incentive fee
7,343

 
5,477

 
20,983

 
16,422

Professional fees
959

 
619

 
2,931

 
2,310

Board of Directors fees
173

 
30

 
423

 
156

Interest expense
9,154

 
5,611

 
24,072

 
16,936

Administrator expense
695

 
690

 
2,294

 
2,214

General and administrative expenses
1,168

 
807

 
3,762

 
3,201

Total expenses
28,678

 
19,328

 
80,588

 
58,465

    Base management fee waived
(1,022
)
 

 
(2,321
)
 

Net expenses
27,656

 
19,328

 
78,267

 
58,465

Gain on extinguishment of unsecured convertible notes

 
230

 

 
1,571

Net investment income
30,394

 
21,910

 
86,253

 
65,689

Unrealized appreciation (depreciation) on investments:
 
 
 
 
 
 
 
Control investments
10,680

 
(2,493
)
 
14,151

 
(1,404
)
Affiliate investments
158

 
322

 
94

 
9,649

Non-control/Non-affiliate investments
2,224

 
2,350

 
(7,843
)
 
5,815

Net unrealized appreciation on investments
13,062

 
179

 
6,402


14,060

Realized gain (loss) on investments:
 
 
 
 
 
 
 
Control investments
(11,223
)
 

 
(11,223
)
 

Affiliate investments

 

 

 
(10,620
)
Non-control/Non-affiliate investments
(6,227
)
 

 
(5,748
)
 
(16,800
)
Net realized loss on investments
(17,450
)
 

 
(16,971
)

(27,420
)
Net increase in net assets resulting from operations
$
26,006

 
$
22,089

 
$
75,684

 
$
52,329

Net investment income per common share — basic
$
0.26

 
$
0.27

 
$
0.81

 
$
0.84

Earnings per common share — basic
$
0.22

 
$
0.27

 
$
0.71

 
$
0.67

Weighted average common shares outstanding — basic
118,271


82,421


106,353


78,089

Net investment income per common share — diluted
$
0.25

 
$
0.26

 
$
0.78

 
$
0.80

Earnings per common share — diluted
$
0.22

 
$
0.26

 
$
0.69

 
$
0.64

Weighted average common shares outstanding — diluted
126,061

 
90,279

 
114,143

 
86,325

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)
 
 
Nine months
ended
June 30, 2013
 
Nine months
ended
June 30, 2012
Operations:
 
 
 
Net investment income
$
86,253

 
$
65,689

Net unrealized appreciation on investments
6,402

 
14,060

Net realized loss on investments
(16,971
)
 
(27,420
)
Net increase in net assets resulting from operations
75,684

 
52,329

Stockholder transactions:
 
 
 
Distributions to stockholders
(92,680
)
 
(69,555
)
Net decrease in net assets from stockholder transactions
(92,680
)
 
(69,555
)
Capital share transactions:
 
 
 
Issuance of common stock, net
302,673

 
99,815

Issuance of common stock under dividend reinvestment plan
8,021

 
855

Net increase in net assets from capital share transactions
310,694

 
100,670

Total increase in net assets
293,698

 
83,444

Net assets at beginning of period
903,570

 
728,627

Net assets at end of period
$
1,197,268

 
$
812,071

Net asset value per common share
$
9.90

 
$
9.85

Common shares outstanding at end of period
120,996

 
82,462

See notes to Consolidated Financial Statements.
 

3


Fifth Street Finance Corp.
Consolidated Statements of Cash Flows
(in thousands, except per share amounts)
(unaudited)
 
 
Nine months
ended
June 30, 2013
 
Nine months
ended
June 30, 2012
Cash flows from operating activities:
 
 
 
Net increase in net assets resulting from operations
$
75,684

 
$
52,329

Adjustments to reconcile net increase in net assets resulting from operations to net cash used by operating activities:
 
 
 
Gain on extinguishment of convertible notes

 
(1,571
)
Net unrealized appreciation on investments
(6,402
)
 
(14,060
)
Net realized loss on investments
16,971

 
27,420

PIK interest income
(11,811
)
 
(10,232
)
Recognition of fee income
(35,766
)
 
(24,374
)
Accretion of original issue discount on investments
(448
)
 
(1,367
)
Amortization of deferred financing costs
3,896

 
3,241

Changes in operating assets and liabilities:
 
 
 
Fee income received
29,852

 
19,336

(Increase) decrease in interest and fees receivable
(3,976
)
 
385

Decrease in due from portfolio company
194

 
103

Decrease in receivables from unsettled transactions
1,750

 

(Increase) decrease in other assets
(724
)
 
151

Increase (decrease) in accounts payable, accrued expenses and other liabilities
991

 
(29
)
Increase in base management fee payable
1,591

 
384

Increase in incentive fee payable
1,764

 
480

Increase (decrease) in due to FSC, Inc.
(4
)
 
672

Increase (decrease) in interest payable
2,243

 
(704
)
Decrease in payments received in advance from portfolio companies
(24
)
 
(1
)
Purchases of investments and net revolver activity, net of syndications
(972,155
)
 
(407,854
)
Principal payments received on investments (scheduled payments)
36,593

 
32,795

Principal payments received on investments (payoffs)
368,590

 
283,966

PIK interest income received in cash
5,492

 
5,007

Proceeds from the sale of investments
54,461

 
11,549

Net cash used by operating activities
(431,238
)
 
(22,374
)
Cash flows from financing activities:
 
 
 
Distributions paid in cash
(84,658
)
 
(68,699
)
Borrowings under SBA debentures payable
31,750

 

Borrowings under credit facilities
887,548


409,297

Repayments of borrowings under credit facilities
(872,799
)

(358,780
)
Proceeds from the issuance of unsecured notes
155,824

 

Repurchases of unsecured convertible notes

 
(17,939
)
Proceeds from the issuance of common stock
303,502

 
100,700

Deferred financing costs paid
(3,713
)
 
(3,279
)
Offering costs paid
(991
)
 
(876
)
Net cash provided by financing activities
416,463

 
60,424

Net increase (decrease) in cash and cash equivalents
(14,775
)
 
38,050

Cash and cash equivalents, beginning of period
74,393

 
67,644

Cash and cash equivalents, end of period
$
59,618

 
$
105,694

Supplemental information:
 
 
 
Cash paid for interest
$
18,230

 
$
14,720

Non-cash financing activities:
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
$
8,021

 
$
855

 
See notes to Consolidated Financial Statements.

4

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
June 30, 2013
(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 8/10/2015
 
 
 
$14,384
 
$
14,362

 
$
14,419

LC Facility, 8.5% cash due 8/10/2015 (10)
 
 
 
 
 
(8
)
 

746,114 Series A Preferred Units
 
 
 
 
 
12,390

 
15,495

746,114 Common Stock Units
 
 
 
 
 
5,316

 
11,454

 
 
 
 
 
 
32,060

 
41,368

TransTrade Operators, Inc. (14)
 
Air freight and logistics
 
 
 
 
 
 
First Lien Term Loan, 11% cash 3% PIK due 5/31/2016
 
 
 
13,556
 
13,556

 
13,507

596.67 Series A Common Units in TransTrade Holding LLC
 
 
 
 
 

 

3,033,333.33 Preferred Units in TransTrade Holding LLC
 
 
 
 
 
3,033

 
2,608

 
 
 
 
 
 
16,589

 
16,115

HFG Holdings, LLC
 
Specialized finance
 
 
 
 
 
 
First Lien Term Loan, 6% cash 4% PIK due 6/10/2019
 
 
 
92,194
 
92,194

 
92,194

860,000 Class A Units
 
 
 
 
 
21,941

 
21,941

 
 
 
 
 
 
114,135

 
114,135

Total Control Investments (14.3% of net assets)
 
 
 
 
 
$
162,784

 
$
171,618

Affiliate Investments (4)
 
 
 
 
 
 
 
 
Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
1,080,399 shares of Series A Preferred Stock
 
 
 
 
 
$
1,080

 
$
3,035

 
 
 
 
 
 
1,080

 
3,035

Ambath/Rebath Holdings, Inc. (9)
 
Home improvement retail
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7% (3% floor) cash due 12/30/2014
 
 
 
$4,315
 
4,308

 
4,284

First Lien Term Loan B, 12.5% cash 2.5% PIK due 12/30/2014
 
 
 
25,193
 
25,176

 
25,031

4,668,788 shares of Preferred Stock
 
 
 
 
 

 

 
 
 
 
 
 
29,484

 
29,315

Total Affiliate Investments (2.7% of net assets)
 
 
 
 
 
$
30,564

 
$
32,350

Non-Control/Non-Affiliate Investments (7)
 
 
 
 
 
 
 
 
Fitness Edge, LLC
 
Leisure Facilities
 
 
 
 
 
 
1,000 Common Units (6)
 
 
 
 
 
$
43

 
$
195

 
 
 
 
 
 
43

 
195

Capital Equipment Group, Inc. (9)
 
Industrial machinery
 
 
 
 
 
 
Second Lien Term Loan, 12% cash 2.75% PIK due 12/27/2015
 
 
 
$3,980
 
3,980

 
3,980

33,786 shares of Common Stock
 
 
 
 
 
345

 
1,078

 
 
 
 
 
 
4,325

 
5,058

Western Emulsions, Inc.
 
Construction materials
 
 
 
 
 
 
Second Lien Term Loan, 12.5% cash 2.5% PIK due 6/30/2014
 
 
 
7,154
 
7,115

 
7,281

 
 
 
 
 
 
7,115

 
7,281

Storyteller Theaters Corporation
 
Movies & entertainment
 
 
 
 
 
 
1,692 shares of Common Stock
 
 
 
 
 

 
62

20,000 shares of Preferred Stock
 
 
 
 
 
89

 
89

 
 
 
 
 
 
89

 
151

HealthDrive Corporation (9)
 
Healthcare services
 
 
 
 
 
 
First Lien Term Loan A, 10% cash due 7/17/2013
 
 
 
4,201
 
4,197

 
4,265

First Lien Term Loan B, 12% cash 1% PIK due 7/17/2013
 
 
 
10,519
 
10,519

 
10,525

First Lien Revolver, 12% cash due 7/17/2013
 
 
 
2,379
 
2,379

 
2,390

 
 
 
 
 
 
17,095

 
17,180



See notes to Consolidated Financial Statements.



5

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
June 30, 2013
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)
 
Cost
 
Fair Value
Cenegenics, LLC
 
Healthcare services
 
 
 
 
 
 
414,419 Common Units (6)
 
 
 
 
 
598

 
1,304

 
 
 
 
 
 
598

 
1,304

Riverlake Equity Partners II, LP
 
Multi-sector holdings
 
 
 
 
 
 
1.78% limited partnership interest (12)
 
 
 
 
 
362

 
373

 
 
 
 
 
 
362

 
373

Riverside Fund IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.34% limited partnership interest (6)(12)
 
 
 
 
 
731

 
676

 
 
 
 
 
 
731

 
676

Tegra Medical, LLC (9)
 
Healthcare equipment
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7% (3% floor) cash due 12/31/2014
 
 
 
16,908
 
16,801

 
17,044

First Lien Term Loan B, 12% cash 2% PIK due 12/31/2014
 
 
 
23,633
 
23,507

 
23,691

First Lien Term Loan C, 30% PIK due 12/31/2014
 
 
 
1,383
 
1,383

 
1,364

First Lien Revolver, LIBOR+7% (3% floor) cash due 12/31/2014
 
 
 
2,500
 
2,477

 
2,512

 
 
 
 
 
 
44,168

 
44,611

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 4/30/2015
 
 
 
7,351
 
7,286

 
7,431

First Lien Term Loan B, LIBOR+9% (3% floor) cash 1.5% PIK due 4/30/2015
 
 
 
9,388
 
9,316

 
9,490

First Lien Revolver, LIBOR+6% (3% floor) cash due 4/30/2015 (10)
 
 
 
 
 
(15
)
 

 
 
 
 
 
 
16,587

 
16,921

Eagle Hospital Physicians, Inc. (9)(13)
 
Healthcare services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+8.75% (3% floor) cash due 8/11/2015
 
 
 
24,256
 
23,966

 
17,592

First Lien Revolver, LIBOR+5.75% (3% floor) cash due 8/11/2015
 
 
 
1,100
 
1,075

 

 
 
 
 
 
 
25,041

 
17,592

Enhanced Recovery Company, LLC
 
Diversified support services
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7% (2% floor) cash due 8/13/2015
 
 
 
8,633
 
8,545

 
8,649

First Lien Term Loan B, LIBOR+10% (2% floor) cash 1% PIK due 8/13/2015
 
 
 
11,080
 
10,986

 
11,049

First Lien Revolver, LIBOR+7% (2% floor) cash due 8/13/2015 (10)
 
 
 
 
 
(34
)
 

 
 
 
 
 
 
19,497

 
19,698

Specialty Bakers LLC (13)
 
Food distributors
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+8.5% cash due 9/15/2015
 
 
 
3.836
 
3,701

 
3,837

First Lien Term Loan B, LIBOR+11% (2.5% floor) cash due 9/15/2015
 
 
 
11,000
 
10,877

 
10,991

First Lien Revolver, LIBOR+8.5% cash due 9/15/2015
 
 
 
2,750
 
2,705

 
987

 
 
 
 
 
 
17,283

 
15,815

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

 
7,892

 
 
 
 
 
 
3,393

 
7,892




See notes to Consolidated Financial Statements.














6

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
June 30, 2013
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)
 
Cost
 
Fair Value
Miche Bag, LLC
 
Apparel, accessories & luxury goods
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+9% (3% floor) cash due 12/7/2013
 
 
 
5,466
 
5,421

 
5,449

First Lien Term Loan B, LIBOR+10% (3% floor) 3% PIK due 12/7/2015
 
 
 
18,379
 
16,962

 
18,213

First Lien Revolver, LIBOR+7% (3% floor) cash due 12/7/2015
 
 
 
1,482
 
1,446

 
1,468

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

 
809

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

 
16

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

 

 
 
 
 
 
 
26,465

 
25,955

Bunker Hill Capital II (QP), LP
 
Multi-sector holdings
 
 
 
 
 
 
0.51% limited partnership interest (12)
 
 
 
 
 
214

 
126

 
 
 
 
 
 
214

 
126

Drugtest, Inc. (9)
 
Human resources & employment services
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7.5% (0.75% floor) cash due 12/30/2015
 
 
 
39,300
 
39,179

 
39,280

First Lien Term Loan B, LIBOR+10% (1% floor) 1.5% PIK due 12/30/2015
 
 
 
15,711
 
15,628

 
15,721

First Lien Revolver, LIBOR+6% (1% floor) cash due 12/30/2015 (10)
 
 
 
 
 
(40
)
 

 
 
 
 
 
 
54,767

 
55,001

Saddleback Fence and Vinyl Products, Inc. (9)
 
Building products
 
 
 
 
 
 
First Lien Term Loan, 8% cash due 11/30/2013
 
 
 
635
 
635

 
633

First Lien Revolver, 8% cash due 11/30/2013
 
 
 
100
 
100

 
100

 
 
 
 
 
 
735

 
733

Physicians Pharmacy Alliance, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+9% cash 1.5% PIK due 1/4/2016
 
 
 
11,437
 
11,240

 
11,366

First Lien Revolver, LIBOR+6% cash due 1/4/2016 (10)
 
 
 
 
 
(23
)
 

 
 
 
 
 
 
11,217

 
11,366

Cardon Healthcare Network, LLC
 
Diversified support services
 
 
 
 
 
 
65,903 Class A Units
 
 
 
 
 
250

 
521

 
 
 
 
 
 
250

 
521

Phoenix Brands Merger Sub LLC (9)
 
Household products
 
 
 
 
 
 
Senior Term Loan, LIBOR+5% (1.5% floor) cash due 1/31/2016
 
 
 
5,642
 
5,547

 
5,555

Subordinated Term Loan, 10% cash 3.875% PIK due 2/1/2017
 
 
 
21,401
 
21,093

 
20,811

Senior Revolver, LIBOR+5% (1.5% floor) cash due 1/31/2016
 
 
 
3,000
 
2,913

 
2,965

 
 
 
 
 
 
29,553

 
29,331

U.S. Collections, Inc.
 
Diversified support services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+5.25% (1.75% floor) cash due 3/31/2016
 
 
 
9,068
 
8,982

 
9,070

 
 
 
 
 
 
8,982

 
9,070

CCCG, LLC (9)
 
Oil & gas equipment services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+8% (1.75% floor) cash 1% PIK due 7/29/2015
 
 
 
35,057
 
34,580

 
35,337

 
 
 
 
 
 
34,580

 
35,337

Maverick Healthcare Group, LLC
 
Healthcare equipment
 
 
 
 
 
 
First Lien Term Loan, LIBOR+9% (1.75% floor) cash due 12/31/2016
 
 
 
24,375
 
23,998

 
24,389

 
 
 
 
 
 
23,998

 
24,389

Refac Optical Group
 
Specialty stores
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7.5% cash due 3/23/2016
 
 
 
10,145
 
9,953

 
10,260

First Lien Term Loan B, LIBOR+8.5% cash 1.75% PIK due 3/23/2016
 
 
 
20,443
 
20,115

 
20,641

First Lien Revolver, LIBOR+7.5% cash due 3/23/2016 (10)
 
 
 
 
 
(80
)
 

1,000 Shares of Common Stock in Refac Holdings, Inc.
 
 
 
 
 
1

 

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

 
491

 
 
 
 
 
 
30,988

 
31,392


See notes to Consolidated Financial Statements.


7

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
June 30, 2013
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)
 
Cost
 
Fair Value
GSE Environmental, Inc. (formerly Gundle/SLT Environmental, Inc.)
 
Environmental & facilities services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+5.5% (1.5% floor) cash due 5/27/2016
 
 
 
8,835
 
8,773

 
8,832

 
 
 
 
 
 
8,773

 
8,832

Titan Fitness, LLC
 
Leisure facilities
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+8.75% (1.25% floor) cash due 6/30/2016
 
 
 
25,091
 
24,998

 
25,003

First Lien Term Loan B, LIBOR+10.75% (1.25% floor) cash 1.5% PIK due 6/30/2016
 
 
 
17,966
 
17,889

 
18,146

First Lien Revolver, LIBOR+8.75% (1.25% floor) cash due 6/30/2016 (10)
 
 
 
 
 
(23
)
 

 
 
 
 
 
 
42,864

 
43,149

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

 
733

 
 
 
 
 
 
649

 
733

Charter Brokerage, LLC
 
Oil & gas equipment services
 
 
 
 
 
 
Senior Term Loan, LIBOR+6.5% (1.5% floor) cash due 7/13/2016
 
 
 
29,295
 
29,197

 
29,817

Subordinated Term Loan, 11.75% cash 2% PIK due 7/13/2017
 
 
 
11,916
 
11,856

 
11,906

Senior Revolver, LIBOR+6.5% (1.5% floor) cash due 7/13/2016
 
 
 
1,600
 
1,556

 
1,685

 
 
 
 
 
 
42,609

 
43,408

Stackpole Powertrain International ULC
 
Auto parts & equipment
 
 
 
 
 
 
1,000 Common Units (12)
 
 
 
 
 
1,000

 
3,016

 
 
 
 
 
 
1,000

 
3,016

Discovery Practice Management, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7.5% cash due 8/8/2016
 
 
 
5,959
 
5,913

 
5,964

First Lien Term Loan B, 12% cash 3% PIK due 8/8/2016
 
 
 
6,572
 
6,529

 
6,571

First Lien Revolver, LIBOR+7% cash due 8/8/2016
 
 
 
2,100
 
2,078

 
2,087

 
 
 
 
 
 
14,520

 
14,622

CTM Group, Inc.
 
Leisure products
 
 
 
 
 
 
Subordinated Term Loan A, 11% cash 2% PIK due 2/10/2017
 
 
 
10,911
 
10,834

 
10,932

Subordinated Term Loan B, 18.4% PIK due 2/10/2017
 
 
 
4,348
 
4,326

 
4,428

 
 
 
 
 
 
15,160

 
15,360

Milestone Partners IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
1.36% limited partnership interest (6)(12)
 
 
 
 
 
586

 
637

 
 
 
 
 
 
586

 
637

Insight Pharmaceuticals LLC
 
Pharmaceuticals
 
 
 
 
 
 
Second Lien Term Loan, LIBOR+11.75% (1.5% floor) cash due 8/25/2017
 
 
 
13,517
 
13,432

 
13,751

 
 
 
 
 
 
13,432

 
13,751

National Spine and Pain Centers, LLC
 
Healthcare services
 
 
 
 
 
 
Subordinated Term Loan, 11% cash 1.6% PIK due 9/27/2017
 
 
 
29,144
 
28,954

 
29,714

317,282.97 Class A Units
 
 
 
 
 
317

 
342

 
 
 
 
 
 
29,271

 
30,056

RCPDirect, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.91% limited partnership interest (6)(12)
 
 
 
 
 
476

 
562

 
 
 
 
 
 
476

 
562

The MedTech Group, Inc. (9)
 
Healthcare equipment
 
 
 
 
 
 
Senior Term Loan, LIBOR+5.5% (1.5% floor) cash due 9/7/2016
 
 
 
12,529
 
12,454

 
12,547

 
 
 
 
 
 
12,454

 
12,547




See notes to Consolidated Financial Statements.


8

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
June 30, 2013
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)
 
Cost
 
Fair Value
Digi-Star Acquisition Holdings, Inc.
 
Industrial machinery
 
 
 
 
 
 
Subordinated Term Loan, 12% cash 1.5% PIK due 11/18/2017
 
 
 
12,269
 
12,179

 
12,391

264.37 Class A Preferred Units
 
 
 
 
 
264

 
298

2,954.87 Class A Common Units
 
 
 
 
 
36

 
209

 
 
 
 
 
 
12,479

 
12,898

CPASS Acquisition Company
 
Internet software & services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+9% (1.5% floor) cash 1% PIK due 11/21/2016
 
 
 
8,151
 
8,076

 
8,226

First Lien Revolver, LIBOR+9% (1.5% floor) cash due 11/21/2016 (10)
 
 
 
 
 
(13
)
 

 
 
 
 
 
 
8,063

 
8,226

Genoa Healthcare Holdings, LLC
 
Pharmaceuticals
 
 
 
 
 
 
Senior Term Loan, LIBOR+5.25% (1.25% floor) cash due 12/1/2016
 
 
 
8,888
 
8,888

 
8,884

Subordinated Term Loan, 12% cash 2% PIK due 6/1/2017
 
 
 
12,907
 
12,818

 
13,109

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

 

500,000 Preferred units (6)
 
 
 
 
 
261

 
268

500,000 Class A Common Units
 
 
 
 
 
25

 
395

 
 
 
 
 
 
21,992

 
22,656

ACON Equity Partners III, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.31% limited partnership interest (6)(12)
 
 
 
 
 
232

 
216

 
 
 
 
 
 
232

 
216

CRGT, Inc.
 
IT consulting & other services
 
 
 
 
 
 
Subordinated Term Loan, 12.5% cash 3% PIK due 3/9/2018
 
 
 
26,537
 
26,339

 
27,261

 
 
 
 
 
 
26,339

 
27,261

Riverside Fund V, LP
 
Multi-sector holdings
 
 
 
 
 
 
0.48% limited partnership interest (12)
 
 
 
 
 
249

 
219

 
 
 
 
 
 
249

 
219

World 50, Inc.
 
Research & consulting services
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+6.25% (1.5% floor) cash due 3/30/2017
 
 
 
10,899
 
10,794

 
10,963

First Lien Term Loan B, 12.5% cash due 3/30/2017
 
 
 
7,000
 
6,936

 
7,045

Senior Revolver, LIBOR+6.25% (1.5% floor) cash due 3/30/2017 (10)
 
 
 
 
 
(46
)
 

 
 
 
 
 
 
17,684

 
18,008

Nixon, Inc.
 
Apparel, accessories & luxury goods
 
 
 
 
 
 
First Lien Term Loan, 8.75% cash 2.75% PIK due 4/16/2018
 
 
 
10,341
 
10,262

 
10,584

 
 
 
 
 
 
10,262

 
10,584

JTC Education, Inc. (9)
 
Education services
 
 
 
 
 
 
Subordinated Term Loan, 13% cash due 11/1/2017
 
 
 
14,500
 
14,409

 
14,498

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

 
220

17,391 Shares of Common Stock
 
 
 
 
 
187

 

 
 
 
 
 
 
14,909

 
14,718





See notes to Consolidated Financial Statements.


9

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
June 30, 2013
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)
 
Cost
 
Fair Value
BMC Acquisition, Inc.
 
Diversified financial services
 
 
 
 
 
 
Senior Term Loan, LIBOR+5.5% (1% floor) cash due 5/1/2017
 
 
 
5,410
 
5,378

 
5,378

Senior Revolver, LIBOR+5% (1% floor) cash due 5/1/2017
 
 
 
35
 
28

 
63

500 Series A Preferred Shares
 
 
 
 
 
500

 
453

50,000 Common Shares
 
 
 
 
 
1

 

 
 
 
 
 
 
5,907

 
5,894

Ansira Partners, Inc.
 
Advertising
 
 
 
 
 
 
First Lien Term Loan, LIBOR+5.5% (1.5% floor) cash due 5/4/2017
 
 
 
10,867
 
10,797

 
10,864

First Lien Revolver, LIBOR+5.5% (1.5% floor) cash due 5/4/2017 (10)
 
 
 
 
 
(7
)
 

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

 
296

 
 
 
 
 
 
11,040

 
11,160

MX USA, Inc.
 
Healthcare services
 
 
 
 
 
 
Second Lien Term Loan, LIBOR+10.5% (1.25% floor) cash due 10/31/2017
 
 
 
27,000
 
26,842

 
27,740

 
 
 
 
 
 
26,842

 
27,740

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

 
17,167

 
 
 
 
 
 
17,000

 
17,167

I Drive Safely, LLC
 
Education services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+8.5% (1.5% floor) cash due 5/25/2017
 
 
 
27,000
 
26,965

 
27,549

First Lien Revolver, LIBOR+6.5% (1.5% floor) cash due 5/25/2017 (10)
 
 
 
 
 
(7
)
 

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

 
697

 
 
 
 
 
 
27,708

 
28,246

Yeti Acquisition, LLC (9)
 
Leisure products
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+8% (1.25% floor) cash due 6/15/2017
 
 
 
24,590
 
24,551

 
24,871

First Lien Term Loan B, LIBOR+11.25% (1.25% floor) cash 1% PIK due 6/15/2017
 
 
 
12,000
 
11,984

 
12,045

First Lien Revolver, LIBOR+8% (1.25% floor) cash due 6/15/2017 (10)
 
 
 
 
 
(14
)
 

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

 
3,622

 
 
 
 
 
 
38,021

 
40,538

Specialized Education Services, Inc.
 
Education services
 
 
 
 
 
 
Senior Term Loan, LIBOR+5.5% (1.5% floor) cash due 6/28/2017
 
 
 
9,084
 
9,084

 
9,105

Subordinated Term Loan, 11% cash 1.5% PIK due 6/28/2018
 
 
 
17,770
 
17,770

 
18,024

 
 
 
 
 
 
26,854

 
27,129

InvestRx Corporation
 
Diversified support services
 
 
 
 
 
 
First Lien Term Loan A, LIBOR+7.75% (1.25% floor) cash due 7/2/2017
 
 
 
23,830
 
23,830

 
23,823

First Lien Term Loan B, LIBOR+9.75% (1.25% floor) cash 1% PIK due 7/2/2017
 
 
 
18,371
 
18,371

 
18,749

First Lien Revolver, LIBOR+7.75% (1.25% floor) cash due 7/2/2017
 
 
 
1,300
 
1,300

 
1,301

First Lien Delayed Draw Term Loan, LIBOR+8.25% (1.25% floor) cash due 7/2/2014
 
 
 
 
 

 

 
 
 
 
 
 
43,501

 
43,873

PC Helps Support, LLC
 
IT consulting & other services
 
 
 
 
 
 
Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
18,732
 
18,732

 
18,951

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

 
733

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

 
57

 
 
 
 
 
 
19,482

 
19,741

Ikaria Acquisition, Inc.
 
Healthcare services
 
 
 
 
 
 
First Lien Term Loan, LIBOR+6.5% (1.25% floor) cash due 9/25/2017
 
 
 
9,925
 
9,925

 
10,023

 
 
 
 
 
 
9,925

 
10,023



See notes to Consolidated Financial Statements.


10

Fifth Street Finance Corp.
Consolidated Schedule of Investments
(dollar amounts in thousands)
June 30, 2013
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)
 
Industry
 
Principal (8)
 
Cost
 
Fair Value
Olson + Co., Inc.
 
Advertising
 
 
 
 
 
 
First Lien Term Loan, LIBOR+5.5% (1.5% floor) cash due 9/30/2017
 
 
 
13,113
 
13,113

 
13,057

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