10-Q 1 tv505535_10q.htm FORM 10-Q

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

 

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2018

 

OR

 

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

COMMISSION FILE NUMBER: 1-35730

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

( Exact Name of Registrant as Specified in Its Charter)

 

 

Maryland

   46-0937320
(State or other Jurisdiction of
Incorporation or Organization)		   (I.R.S. Employer
Identification No.)

 

4400 Post Oak Parkway, Suite 2200
Houston, Texas 77027

(Address of Principal Executive Offices) (Zip Code)

(713) 292-5400

(Registrant’s Telephone Number, Including Area Code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ¨ No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨   Accelerated filer x
Non-accelerated filer ¨   Smaller reporting company ¨

Emerging growth company

 ¨      

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes ¨ No x

 

The number of shares of the issuer’s Common Stock, $0.001 par value per share, outstanding as of November 5, 2018 was 15,953,810.

 

 

 

  

 

STELLUS CAPITAL INVESTMENT CORPORATION
TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION  
Item 1. Financial Statements
  Consolidated Statements of Assets and Liabilities as of September 30, 2018 (unaudited) and December 31, 2017 2
  Consolidated Statements of Operations for the three and nine-month periods ended September 30, 2018 and 2017 (unaudited) 3
  Consolidated Statements of Changes in Net Assets for the nine-month periods ended September 30, 2018 and 2017 (unaudited) 4
  Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2018 and 2017 (unaudited) 5
  Consolidated Schedules of Investments as of September 30, 2018 (unaudited) and December 31, 2017 6
  Notes to Unaudited Consolidated Financial Statements 20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 52
Item 3. Quantitative and Qualitative Disclosures About Market Risk 67
Item 4. Controls and Procedures 68
PART II. OTHER INFORMATION  
Item 1. Legal Proceedings 69
Item 1A. Risk Factors 69
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 69
Item 3. Defaults Upon Senior Securities 69
Item 4. Mine Safety Disclosures 69
Item 5. Other Information 69
SIGNATURES 71

 

 i 

 

PART I — FINANCIAL INFORMATION

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

 

   September 30,     
   2018   December 31, 
   (Unaudited)   2017 
ASSETS          
Non-controlled, affiliated investments, at fair value (amortized cost of $52,184 and $1,052,185, respectively)  $55,000   $990,000 
Non-controlled, non-affiliated investments, at fair value (amortized cost of $470,695,036 and $367,401,021, respectively)   477,949,195    370,849,772 
Cash and cash equivalents   29,882,423    25,110,718 
Receivable for sales and repayments of investments   81,683    26,891 
Interest receivable   3,110,008    2,922,204 
Other receivables   135,246    — 
Deferred offering costs   17,898    — 
Prepaid expenses   125,970    361,270 
Total Assets  $511,357,423   $400,260,855 
LIABILITIES          
Notes payable  $47,558,013   $47,306,488 
Credit facility payable   81,901,962    39,332,479 
SBA-guaranteed debentures   146,235,472    87,818,813 
Dividends payable   1,807,570    1,806,671 
Management fees payable   1,422,948    1,621,592 
Income incentive fees payable   1,795,933    371,647 
Capital gains incentive fees payable   1,173,250    — 
Interest payable   679,293    1,021,173 
Unearned revenue   304,061    139,304 
Administrative services payable   385,417    327,033 
Deferred tax liability   34,353    — 
Other accrued expenses and liabilities   154,067    268,413 
Total Liabilities  $283,452,339   $180,013,613 
Commitments and contingencies (Note 7)          
Net Assets  $227,905,084   $220,247,242 
NET ASSETS          
Common Stock, par value $0.001 per share (200,000,000 shares and 100,000,000 shares authorized; 15,953,810 and 15,945,879 issued and outstanding, respectively)  $15,954   $15,946 
Paid-in capital   228,160,772    228,066,762 
Accumulated net realized loss from investments, net of cumulative dividends of $4,246,819 for both periods   (5,603,190)   (10,786,240)
Distributions in excess of net investment income   (1,891,073)   (435,794)
Net Unrealized appreciation on non-controlled, non-affiliated investments and cash equivalents, net of provision for taxes of $34,353 and $0, respectively   7,219,806    3,448,753 
Net Unrealized appreciation (depreciation) on non-controlled, affiliated investments   2,815    (62,185)
Net Assets  $227,905,084   $220,247,242 
Total Liabilities and Net Assets  $511,357,423   $400,260,855 
Net Asset Value Per Share  $14.29   $13.81 

 

 2 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

   For the   For the   For the   For the 
   three   three   nine   nine 
   months ended   months ended   months ended   months ended 
   September 30,   September 30,   September 30,   September 30, 
   2018   2017   2018   2017 
INVESTMENT INCOME                    
Interest income  $13,859,431   $9,728,749   $36,804,945   $28,847,532 
Other income   628,192    249,596    1,214,116    1,389,158 
Total Investment Income  $14,487,623   $9,978,345   $38,019,061   $30,236,690 
OPERATING EXPENSES                    
Management fees  $2,172,948   $1,546,781   $5,970,867   $4,634,318 
Valuation fees   132,325    137,445    287,042    326,839 
Administrative services expenses   348,901    313,256    1,008,293    933,214 
Income incentive fees   1,565,301    462,743    3,846,441    2,718,586 
Capital gains incentive fees   651,231    —    1,173,250    — 
Professional fees   289,125    356,654    982,384    803,818 
Directors' fees   73,000    83,000    244,000    254,000 
Insurance expense   87,601    111,680    259,947    331,398 
Interest expense and other fees   3,440,115    2,042,608    8,917,739    5,892,047 
Other general and administrative expenses   117,102    145,494    516,509    481,700 
Total Operating Expenses  $8,877,649   $5,199,661   $23,206,472   $16,375,920 
Loss on extinguishment of debt   —    302,732    —    302,732 
Net Investment Income  $5,609,974   $4,475,952   $14,812,589   $13,558,038 
Net Realized Gain on Non-Controlled, Non-Affiliated Investments and Cash Equivalents  $2,771,817   $5,211,960   $5,183,050   $4,499,963 
Net Change in Unrealized Appreciation (Depreciation) on Non-Controlled, Non-Affiliated Investments and Cash Equivalents  $529,552   $(4,011,314)  $3,805,406   $(248,293)
Net Change in Unrealized Appreciation (Depreciation) on Non-Controlled, Affiliated Investments and Cash Equivalents   (1,667)   (40,000)   65,000    (112,185)

Benefit (provision) for Taxes on Net Unrealized Gain (Loss) on

   Investments

  $(25,159)  $-   $(34,353)  $8,593 
Net Increase in Net Assets Resulting from Operations  $8,884,517   $5,636,598   $23,831,692   $17,706,116 
Net Investment Income Per Share  $0.35   $0.29   $0.93   $0.93 
Net Increase in Net Assets Resulting from Operations Per Share  $0.56   $0.36   $1.49   $1.22 
Weighted Average Shares of Common Stock Outstanding   15,953,810    15,668,415    15,953,491    14,510,408 
Distributions Per Share  $0.34   $0.34   $1.02   $1.02 

 

 3 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

 

   For the   For the 
   nine   nine 
   months ended   months ended 
   September 30,   September 30, 
   2018   2017 
Increase in Net Assets Resulting from Operations          
Net investment income  $14,812,589   $13,558,038 
Net realized gain on investments and cash equivalents   5,183,050    4,499,963 
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments and cash equivalents   3,805,406    (248,293)
Net change in unrealized appreciation (depreciation) on non-controlled, affiliated investments and cash equivalents   65,000    (112,185)
Benefit (provision) for taxes on unrealized appreciation on investments   (34,353)   8,593 
Net Increase in Net Assets Resulting from Operations  $23,831,692   $17,706,116 
Stockholder distributions          
Net investment income   (16,267,868)   (14,903,394)
Total Distributions  $(16,267,868)  $(14,903,394)
Capital share transactions          
Issuance of common stock  $94,788   $47,491,626 
Sales load   —    (1,340,131)
Offering costs   —    (299,960)
Partial Share Redemption   (770)   — 
Net increase in net assets resulting from capital share transactions  $94,018   $45,851,535 
Total increase in net assets  $7,657,842   $48,654,257 
Net assets at beginning of period  $220,247,242   $170,881,785 
Net assets at end of period (includes $1,891,073 and $1,781,150 of distributions in excess of net investment income, respectively)  $227,905,084   $219,536,042 

 

 4 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

   For the   For the 
   nine   nine 
   months ended   months ended 
   September 30,   September 30, 
   2018   2017 
   (Unaudited)   (Unaudited) 
Cash flows from operating activities          
Net Increase in net assets resulting from operations  $23,831,692    17,706,116 
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:          
Purchases of investments   (198,335,218)   (117,683,094)
Proceeds from sales and repayments of investments   102,813,575    133,380,057 
Net change in unrealized depreciation (appreciation) on investments   (3,870,406)   360,478 
Increase in investments due to PIK   (491,628)   (347,482)
Amortization of premium and accretion of discount, net   (1,152,487)   (881,710)
Deferred tax provision (benefit)   34,353    (8,593)
Amortization of loan structure fees   329,483    372,820 
Amortization of deferred financing costs   251,525    165,763 
Amortization of loan fees on SBA-guaranteed debentures   471,658    243,306 
Net realized gain on investments   (5,183,050)   (4,499,963)
Loss on extinguishment of debt   —    302,732 
Changes in other assets and liabilities          
Decrease (increase) in interest receivable   (187,804)   457,744 
Increase in other receivable   (135,246)   (3,058)
Decrease in prepaid expenses   235,300    318,054 
Decrease in management fees payable   (198,644)   (61,514)
Increase (decrease) in incentive fees payable   1,424,286    (733,654)
Increase in capital gains incentive fees payable   1,173,250    — 
Increase in directors' fees payable   —    83,000 
Increase in administrative services payable   58,384    41,084 
Decrease in interest payable   (341,880)   (278,895)
Increase in unearned revenue   164,757    108,139 
Decrease in other accrued expenses and liabilities   (114,346)   (37,706)
Net cash provided by (used in) operating activities  $(79,222,446)  $29,003,624 
Cash flows from financing activities          
Proceeds from the issuance of common stock  $—   $47,491,626 
Sales load for common stock issued   —    (1,340,131)
Offering costs paid for common stock issued   (17,898)   (299,961)
Proceeds from notes issued   —    48,875,000 
Financing costs paid for Notes issued   —    (1,688,961)
Repayments on Notes issued   —    (25,000,000)
Stockholder distributions paid   (16,172,181)   (14,521,068)
Proceeds from SBA Debentures   60,000,000    — 
Financing costs paid on SBA Debentures   (2,055,000)   — 
Borrowings under Credit Facility   188,300,000    116,000,000 
Repayments of Credit Facility   (145,750,000)   (196,000,000)
Financing costs paid on Credit facility   (310,000)   (47,453)
Partial Share Redemption   (770)   — 
Net cash provided by (used in) financing activities  $83,994,151   $(26,530,948)
Net increase in cash and cash equivalents  $4,771,705   $2,472,676 
Cash and cash equivalents balance at beginning of period   25,110,718    9,194,129 
Cash and cash equivalents balance at end of period  $29,882,423   $11,666,805 
Supplemental and non-cash financing activities          
Interest expense paid  $8,201,952   $5,384,053 
Excise tax paid   27,717    37,648 
Shares issued pursuant to Dividend Reinvestment Plan   94,788    — 
Conversion from debt to equity   —    864,101 
Increase in Distribution Payable   899    382,326 

 

 5 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)

 

September 30, 2018

 

Investments  Footnotes  Security  Coupon 

LIBOR

floor

   Cash   PIK 

Investment

Date

  Maturity 

Headquarters/

Industry

 

Principal

Amount/ Shares

 

Amortized

Cost

 

Fair

Value (1)

 

% of Net

Assets

 
                                           
Non-controlled, affiliated investments  (2)                                            
Glori Energy Production Inc.                              Houston, TX                 
Glori Energy Production, LLC Class A Common Units  (4)  Equity                  2/1/2017     Energy: Oil & Gas   1,000 shares   52,185   55,000   0.02%
Subtotal Non-controlled, affiliated investments                                      52,185   55,000   0.02%
                                                 
Non-controlled, non-affiliated investments  (2)                                             
Abrasive Products & Equipment, LLC, et al                              Deer Park, TX                 
Term Loan (SBIC)  (2)(12)(20)  Second Lien  3M L+10.50%   1.00%   0.00%     9/5/2014  3/5/2020  Chemicals, Plastics, & Rubber  $5,325,237  $5,289,025  $4,710,000   2.07%
APE Holdings, LLC Class A Common Units  (4)  Equity                  9/5/2014         375,000 units   375,000   10,000   0.00%
Total                                      5,664,025   4,720,000   2.07%
Adams Publishing Group, LLC  (3)                           Greenville, TN                 
Term Loan  (12)  First Lien  3M L+7.5%   1.00%   9.93%     8/3/2018  6/30/2023  Media: Broadcasting & Subscription  $7,312,500   7,241,375   7,240,000   3.18%
Advanced Barrier Extrusions, LLC                              Rhinelander, WI                 
Revolver  (11)(12)  First Lien  3M L+5.75%   1.00%   8.14%     8/8/2018  8/8/2023  Containers, Packaging, & Glass  $100,000   100,000   100,000   0.04%
Term Loan (SBIC)  (2)(12)  First Lien  3M L+5.75%   1.00%   8.14%     8/8/2018  8/8/2023     $11,400,000   11,178,228   11,180,000   4.91%
GP ABX Holdings Partnership, L.P. Common Stock  (4)  Equity                  8/8/2018         250,000 units   250,000   250,000   0.11%
Total                                      11,528,228   11,530,000   5.02%
Apex Environmental Resources Holdings, LLC                              Amsterdam, OH                 
Common Units  (4)  Equity                  10/30/2015     Environmental Industries   945 shares   945   460   0.00%
Preferred Units  (4)  Equity                            945 shares   945,179   459,540   0.20%
Total                        10/30/2015             946,124   460,000   0.20%
Atmosphere Aggregator Holdings II, LP                              Atlanta, GA                 
Common Units  (4)  Equity                  6/30/2015     Services: Business   254,250 units   254,250   1,113,966   0.49%
Atmosphere Aggregator Holdings, LP Common Units  (4)  Equity                  6/30/2015         750,000 units   750,000   3,286,034   1.44%
Total                                      1,004,250   4,400,000   1.93%
ASC Communications, LLC  (7)                           Chicago, IL                 
Term Loan (SBIC)  (2)(12)  First Lien  1M L+5.75%   1.00%   7.99%     6/29/2017  6/29/2022  Healthcare & Pharmaceuticals  $5,333,333   5,291,303   5,330,000   2.34%
ASC Communications Holdings, LLC Class A Preferred Units (SBIC)  (2)(4)  Equity                  6/29/2017         73,529 shares   485,638   760,000   0.33%
Total                                      5,776,941   6,090,000   2.67%
Beneplace, LLC                              Austin TX                 
Term Loan (SBIC)  (2)(12)  Second Lien  3M L+10.00%   1.00%   12.39%     3/27/2017  9/27/2022  FIRE: Insurance  $5,000,000   4,921,369   5,000,000   2.19%
Beneplace Holdings, LLC Preferred Units  (4)  Equity                  3/27/2017         500,000 units   500,000   480,000   0.21%
Total                                      5,421,369   5,480,000   2.40%

 

 6 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited)  – (continued)

 

September 30, 2018

 

Investments  Footnotes  Security  Coupon 

LIBOR

floor

   Cash   PIK 

Investment

Date

  Maturity 

Headquarters/

Industry

 

Principal

Amount/ Shares

 

Amortized

Cost

 

Fair

Value (1)

 

% of Net

Assets

 
                                           
BFC Solmetex, LLC  (23)                           Nashville, TN                 
Revolver  (12)(19)  First Lien  3M L+6.25%   1.00%   8.64%     9/24/2018  9/26/2023  Services: Business  $244,499   244,499   240,000   0.11%
Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.25%   1.00%   8.64%     4/2/2018  9/26/2023     $11,760,391   11,594,126   11,590,000   5.09%
Bonded Filter Co. LLC, Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.25%   1.00%   8.64%     4/2/2018  9/26/2023     $1,222,494   1,205,211   1,210,000   0.53%
Total                                      13,043,836   13,040,000   5.73%
BW DME Acquisition, LLC                              Tempe, AZ                 
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+6.00%   1.00%   10.09%     8/24/2017  8/24/2022  Healthcare & Pharmaceuticals  $16,695,804   16,275,014   16,695,804   7.33%
BW DME Holdings, LLC, Term Loan   (6)  Unsecured  17.50%            17.50%  6/1/2018  12/31/2019     $265,906   265,906   265,906   0.12%
BW DME Holdings, LLC Class A-1 Preferred Units  (4)  Equity                  8/24/2017         1,000,000 shares   1,000,000   996,252   0.44%
BW DME Holdings, LLC Class A-2 Preferred Units  (4)  Equity                  1/26/2018         937,261 shares   937,261   933,748   0.41%
Total                                      18,478,181   18,891,710   8.30%
C.A.R.S. Protection Plus, Inc.                              Murrysville, PA                 
Term Loan  (12)  First Lien  3M L+8.50%   0.50%   10.82%     12/23/2015  12/31/2020  Automotive  $98,746   97,741   98,746   0.04%
Term Loan (SBIC)  (2)(12)  First Lien  3M L+8.50%   0.50%   10.82%     12/23/2015  12/31/2020     $7,702,191   7,623,819   7,702,191   3.38%
CPP Holdings LLC Class A Common Units  (4)  Equity                  12/23/2015         149,828 shares   149,828   140,000   0.06%
Total                                      7,871,388   7,940,937   3.48%
Catapult Learning, Inc.  (8)                           Camden, NJ                 
Term Loan  (13)(22)  First Lien  2M L+6.35%   1.00%   10.76%     6/27/2018  4/24/2023  Education  $20,856,549   20,455,585   20,460,000   8.98%
Colford Capital Holdings, LLC                              New York, NY                 
 Preferred Units  (4)(5)  Equity                  8/20/2015     Finance   38,893 units   247,817   62,742   0.03%
Condor Borrower, LLC                              Clifton, NJ                 
Term Loan  (12)  Second Lien  3M L+8.75%   1.00%   11.11%     10/11/2017  4/27/2025  Services: Business  $13,750,000   13,498,556   13,750,000   6.03%
Condor Top Holdco Limited Convertible Preferred Shares  (4)  Equity                  10/11/2017         500,000 shares   442,197   353,757   0.16%
Condor Holdings Limited Preferred Shares, Class B  (4)  Equity                  10/11/2017         500,000 shares   57,804   46,243   0.02%
Total                                      13,998,557   14,150,000   6.21%
Convergence Technologies, Inc.  (14)                           Indianpolis, IN                 
Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.75%   1.50%   9.14%     8/31/2018  8/30/2024  Services: Business  $7,142,857   7,001,519   7,000,000   3.07%
Tailwind Core Investor, LLC Class A Preferred Units  (4)  Equity                  8/31/2018         3,750 units   375,000   375,000   0.16%
Total                                      7,376,519   7,375,000   3.23%
Dream II Holdings, LLC                              Boca Raton, FL                 
Class A Common Units  (4)  Equity                  10/20/2014     Services: Consumer   250,000 units   242,304   210,000   0.09%
DTE Enterprises, LLC  (18)                           Roselle, IL                 
Term Loan  (12)  First Lien  3M L+7.50%   1.50%   9.84%     4/13/2018  4/13/2023  Energy: Oil & Gas  $13,241,941   12,997,876   13,040,000   5.72%
DTE Holding Company, LLC Common Shares, Class A-2  (4)  Equity                  4/13/2018         776,316 shares   776,313   1,304,212   0.57%
DTE Holding Company, LLC Preferred Shares, Class AA  (4)  Equity                  4/13/2018         723,684 shares   613,794   1,215,789   0.53%
Total                                      14,387,983   15,560,001   6.82%
Empirix Inc.                              Billerica, MA                 
Empirix Holdings I, Inc. Common Shares, Class A  (4)  Equity                  11/1/2013     Software   1,304 shares   1,304,232   1,722,600   0.76%
Empirix Holdings I, Inc. Common Shares, Class B  (4)  Equity                  11/1/2013         1,317,406 shares   13,174   17,400   0.01%
Total                                      1,317,406   1,740,000   0.77%

 

 7 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited) – (continued)

 

September 30, 2018

 

Investments  Footnotes  Security  Coupon 

LIBOR

floor

   Cash   PIK 

Investment

Date

  Maturity 

Headquarters/

Industry

 

Principal

Amount/ Shares

 

Amortized

Cost

 

Fair

Value (1)

 

% of Net

Assets

 
                                           
Energy Labs Inc.                              Houston, TX                 
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+7.00%   0.50%   12.24%     9/29/2016  9/29/2021  Energy: Oil & Gas  $8,442,748   8,317,818   8,440,000   3.70%
Energy Labs Holding Corp. Common Stock  (4)  Equity                  9/29/2016         500 shares   500,000   390,000   0.17%
Total                                      8,817,818   8,830,000   3.87%
EOS Fitness OPCO Holdings, LLC                              Phoenix, AZ                 
Term Loan (SBIC)  (2)(12)  First Lien  1M L+8.25%   0.75%   10.36%     12/30/2014  12/30/2019  Hotel, Gaming, & Leisure  $3,064,655   3,046,142   3,060,000   1.34%
EOS Fitness Holdings, LLC Class A Preferred Units  (4)  Equity                  12/30/2014         118 shares   117,670   321,750   0.14%
EOS Fitness Holdings, LLC Class B Common Units  (4)  Equity                  12/30/2014         3,017 shares   3,017   8,250   0.00%
Total                                      3,166,829   3,390,000   1.48 
Fast Growing Tree, LLC  (16)                           Fort Mill, SC                 
Term Loan (SBIC)  (2)(12)  First Lien  3M L+7.75%   1.00%   10.14%     2/5/2018  02/05/23  Retail  $20,310,000   19,947,774   20,110,000   8.82%
SP FGT Holdings, LLC, Class A Common  (4)  Equity                  2/5/2018         1,000,000 shares   1,000,000   1,290,000   0.57%
Total                                      20,947,774   21,400,000   9.39%
Fumigation Holdings, Inc.                              Liberty, MO                 
Class A Common Stock  (4)  Equity                  6/30/2015     Chemicals, Plastics, & Rubber   250 shares   0   310,000   0.14%
Furniture Factory Outlet, LLC                              Fort Smith, AR                 
Term Loan  (12)  First Lien  3M L+8.00%   0.50%   10.39%     6/10/2016  6/10/2021  Consumer Goods: Durable  $15,163,885   14,943,951   15,160,000   6.65%
Furniture Factory Holdings, LLC Term Loan  (6)  Unsecured  11.00%            11.00%  6/10/2016  2/3/2021     $140,056   140,056   140,000   0.06%
Furniture Factory Ultimate Holdings, LP Common Units  (4)  Equity                  6/10/2016         13,445 shares   94,569   310,000   0.14%
Total                                      15,178,576   15,610,000   6.85%
GK Holdings, Inc.                              Cary, NC                 
Term Loan  (12)  Second Lien  3M L+10.25%   1.00%   12.64%     2/6/2015  1/30/2022  Education  $5,000,000   4,942,955   4,580,000   2.01%
General LED OPCO, LLC                              San Antonio, TX                 
Term Loan  (12)  Second Lien  3M L+9.00%   1.50%   11.39%     5/1/2018  11/1/2023  Services: Business  $4,500,000   4,415,190   4,430,000   1.94%
Good Source Solutions, Inc.                              Carlsbad, CA                 
Term Loan  (13)(22)  First Lien  3M L+6.00%   1.00%   10.71%     6/29/2018  6/29/2023  Beverage, Food, & Tobacco  $28,500,000   27,951,589   27,950,000   12.26%
HV GS Acquisition, LLC Class A Preferred Units  (4)  Equity                  6/29/2018         1,000 shares   1,000,000   1,000,000   0.44%
HV GS Acquisition, LLC Class B Common Units  (4)  Equity                  6/29/2018         28,125 shares   0   0   0.00%
Total                                      28,951,589   28,950,000   12.70%
Grupo HIMA San Pablo, Inc., et al                              San Juan, PR                 
Term Loan  (12)  First Lien  3M L+7.00%   1.50%   9.34%     2/1/2013  1/31/2018  Healthcare & Pharmaceuticals  $4,750,000   4,750,000   4,180,000   1.83%
Term Loan  (15)  Second Lien  13.75%        0.00%     2/1/2013  7/31/2018     $4,109,524   4,109,524   900,000   0.39%
Total                                      8,859,524   5,080,000   2.22%
Hostway Corporation                              Chicago, IL                 
Term Loan  (12)  Second Lien  3M L+4.25%   1.25%   6.59%     12/27/2013  12/13/2020  High Tech Industries  $6,750,000   6,695,579   6,080,000   2.67%
ICD Intermediate Holdco 2, LLC                              San Francisco, CA                 
Term Loan (SBIC)  (2)(5)(12)  Second Lien  3M L+9.00%   1.00%   11.39%     1/2/2018  7/1/2024  Finance  $10,000,000   9,816,807   9,950,000   4.37%
ICD Holdings, LLC, Class A Preferred  (4)(5)  Equity                  1/2/2018         9,962 shares   496,409   660,000   0.29%
Total                                      10,313,216   10,610,000   4.66%

 

 8 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited) – (continued)

 

September 30, 2018

 

Investments  Footnotes  Security  Coupon 

LIBOR

floor

   Cash   PIK 

Investment

Date

  Maturity 

Headquarters/

Industry

 

Principal

Amount/ Shares

 

Amortized

Cost

 

Fair

Value (1)

 

% of Net

Assets

 
                                           
J.R. Watkins, LLC                              San Francisco, CA                 
Revolver  (9)(12)  First Lien  3M L+6.50%   1.25%   8.89%     7/5/2018  12/22/2022  Consumer Goods: non-durable  $750,000   750,000   750,000   0.33%
Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.50%   1.25%   8.89%     12/22/2017  12/22/2022     $12,406,250   12,189,171   12,340,000   5.41%
J.R. Watkins Holdings, Inc. Class A Preferred  (4)  Equity                  12/22/2017         1,000 shares   1,000,000   960,000   0.42%
Total                                      13,939,171   14,050,000   6.16%
Kelleyamerit Holdings, Inc.                              Walnut Creek, CA                 
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+7.50%   1.50%   10.58%     3/30/2018  3/30/2023  Automotive  $9,750,000   9,570,031   9,600,000   4.21%
Keais Records Service, LLC                              Houston, TX                 
Term Loan  (12)  Second Lien  3M L+10.50%   0.50%   12.89%     6/30/2016  6/30/2022  Services: Business  $7,750,000   7,652,410   7,750,000   3.40%
Keais Holdings, LLC Class A Units  (4)  Equity                  6/30/2016         148,335 units   736,595   740,000   0.32%
Total                                      8,389,005   8,490,000   3.72%
KidKraft, Inc.                              Dallas, TX                 
Term Loan  (6)  Second Lien  12.00%        11.00%  1.00%  9/30/2016  3/30/2022  Consumer Goods: Durable  $9,385,040   9,252,875   9,100,000   3.99%
Livingston International, Inc.                              Toronto, Ontario                 
Term Loan  (5)(12)  Second Lien  3M L+8.25%   1.25%   10.64%     4/23/2013  4/18/2020  Transportation: Cargo  $6,841,739   6,802,534   6,840,000   3.00%
Madison Logic, Inc.                              New York, NY                 
Term Loan (SBIC)  (2)(12)  First Lien  1M L+8.00%   0.50%   10.24%     11/30/2016  11/30/2021  Media: Broadcasting & Subscription  $4,761,236   4,728,728   4,760,000   2.09%
Madison Logic Holdings, Inc. Common Stock (SBIC)  (2)(4)  Equity                  11/30/2016         5,000 shares   50,000   58,000   0.03%
Madison Logic Holdings, Inc. Series A Preferred Stock (SBIC)  (2)(4)  Equity                  11/30/2016         4,500 shares   450,000   522,000   0.23%
Total                                      5,228,728   5,340,000   2.35%
Magdata Intermediate Holdings, LLC                              Austin TX                 
Term Loan  (12)  Second Lien  3M L+9.50%   1.00%   11.89%     10/13/2017  4/16/2024  Software  $14,750,000   14,481,867   14,680,000   6.44%
Mobileum, Inc.                              Santa Clara, CA                 
Term Loan  (12)  Second Lien  3M L+10.25%   0.75%   12.64%     11/1/2016  5/1/2022  Software  $21,500,000   21,144,190   21,500,000   9.43%
Mobile Acquisition Holdings, LP Class A-2 Common Units  (4)  Equity                  11/1/2016         750 units   455,385   660,000   0.29%
Total                                      21,599,575   22,160,000   9.72%
MTC Parent, L.P.                              Oak Brook, IL                 
Class A-2 Common Units  (4)  Equity                  12/1/2015     Finance   750,000 shares   0   3,200,000   1.40%
National Trench Safety, LLC, et al                              Houston, TX                 
Term Loan (SBIC)  (2)  Second Lien  11.50%        11.50%     3/31/2017  3/31/2022  Construction & Building  $10,000,000   9,867,057   9,800,000   4.30%
NTS Investors, LP Class A Common Units  (4)  Equity                  3/31/2017         2,335 units   500,000   400,000   0.18%
Total                                      10,367,057   10,200,000   4.48%
OGS Holdings, Inc.                              Chantilly, Virginia                 
Series A Convertible Preferred Stock  (4)  Equity                  4/22/2014     Services: Government   11,521 shares   50,001   140,000   0.06%

 

 9 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited) – (continued)

 

September 30, 2018

 

Investments  Footnotes  Security  Coupon 

LIBOR

floor

   Cash   PIK 

Investment

Date

  Maturity 

Headquarters/

Industry

 

Principal

Amount/ Shares

 

Amortized

Cost

 

Fair

Value (1)

 

% of Net

Assets

 
                                           
Price for Profit, LLC  (17)                           Cleveland, OH                 
Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.50%   1.00%   8.89%     1/31/2018  1/31/2023  Services: Business  $8,931,250   8,772,540   8,840,000   3.88%
I2P Holdings, LLC, Series A Preferred  (4)  Equity                  1/31/2018         750,000 shares   750,000   1,210,000   0.53%
Total                                      9,522,540   10,050,000   4.41%
Protect America, Inc.                              Austin TX                 
Term Loan (SBIC)  (2)(6)(12)  Second Lien  3M L+9.75%   1.00%   10.19%  2.00%  8/30/2017  10/30/2020  Services: Consumer  $17,886,343   17,583,766   17,800,000   7.81%
Refac Optical Group, et al                              Blackwood, NJ                 
Revolver  (10)(12)  First Lien  1M L+8.00%        10.26%     11/7/2012  9/30/2018  Retail  $880,000   880,000   880,000   0.39%
Term A Loan  (12)  First Lien  1M L+8.00%        10.26%     11/7/2012  9/30/2018     $590,568   590,568   590,568   0.26%
Term B Loan  (6)(12)  First Lien  1M L+10.75%        11.26%  1.75%  11/7/2012  9/30/2018     $6,519,422   6,519,422   6,519,422   2.86%
Total                                      7,989,990   7,989,990   3.51 
Resolute Industrial, LLC                              Wheeling, IL                 
Resolute Industrial Holdings, LLC  Class A Preferred Units  (4)  Equity                  7/26/2017     Capital Equipment   601 units   750,000   1,200,000   0.53%
Total                                              % 
Roberts-Gordon, LLC                              Buffalo, NY                 
Term Loan  (12)  Second Lien  3M L+10.00%   1.00%   12.39%     6/30/2017  1/1/2022  Construction & Building  $7,200,000   7,088,072   7,200,000   3.16%
Specified Air Solutions, LLC Class A Common Units  (4)  Equity                  6/30/2017         3,846 shares   500,045   850,000   0.37%
Total                                      7,588,117   8,050,000   3.53%
Skopos Financial, LLC                              Irving, TX                 
Term Loan  (5)  Unsecured  12.00%        12.00%     1/31/2014  1/31/2020  Finance  $17,500,000   17,469,716   17,410,000   7.64%
Skopos Financial Group, LLC Class A Units  (4)(5)  Equity                  1/31/2014         1,120,684 units   1,162,544   1,160,000   0.51%
Total                                      18,632,260   18,570,000   8.15%
SQAD, LLC                              Tarrytown, NY                 
Term Loan (SBIC)  (2)  First Lien  3M L+6.50   1.00%   8.89%     12/22/2017  12/22/2022  Media: Broadcasting & Subscription  $14,884,500   14,815,172   14,880,000   6.53%
SQAD Holdco, Inc. Preferred Shares, Series A (SBIC)  (2)(4)  Equity                  10/31/2013         5,624 shares   156,001   295,467   0.13%
SQAD Holdco, Inc. Common Shares (SBIC)  (2)(4)  Equity                  10/31/2013         5,800 shares   62,485   118,348   0.05%
Total                                      15,033,658   15,293,815   6.71%
TechInsights, Inc.                              Ottawa, Ontario                 
Term Loan  (5)(13)(22)  First Lien  3M L+6.50%   1.00%   9.10%     8/16/2017  8/16/2022  High Tech Industries  $18,290,925   17,917,432   18,290,000   8.03%
Time Manufacturing Acquisition, LLC                              Waco, TX                 
Term Loan  (6)  Unsecured  11.50%        10.75%  0.75%  2/3/2017  8/3/2023  Capital Equipment  $6,397,021   6,293,793   6,270,000   2.75%
Time Manufacturing Investments, LLC Class A Common  Units  (4)  Equity                  2/3/2017         5,000 units   500,000   540,000   0.24%
Total                                      6,793,793   6,810,000   2.99%
TFH Reliability, LLC                              Houston, TX                 
Term Loan (SBIC)  (2)(12)  Second Lien  3M L+10.75%   0.50%   13.14%     10/20/2016  4/21/2022  Chemicals, Plastics, & Rubber  $5,875,000   5,789,300   5,875,000   2.58%
TFH Reliability Group, LLC Class A Common Units  (4)  Equity                  10/20/2016         250,000 shares   231,521   450,000   0.20%
Total                                      6,020,821   6,325,000   2.78%
U.S. Auto Sales, Inc. et al                              Lawrenceville, GA                 
Term Loan  (5)(12)  Second Lien  1M L+10.50%   1.00%   12.61%     6/8/2015  6/8/2020  Finance  $4,500,000   4,481,996   4,500,000   1.97%
USASF Blocker II, LLC Common Units  (4)(5)  Equity                  6/8/2015         441 units   441,000   546,840   0.24%
USASF Blocker III, LLC Series C Preferred Units  (4)(5)  Equity                  2/13/2018         50 Units   50,000   62,000   0.03 
USASF Blocker LLC Common Units  (4)(5)  Equity                  6/8/2015         9,000 units   9,000   11,160   0.00%
Total                                      4,981,996   5,120,000   2.24%

 10 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments (unaudited) – (continued)

 

September 30, 2018

 

Investments  Footnotes  Security  Coupon 

LIBOR

floor

   Cash   PIK 

Investment

Date

  Maturity 

Headquarters/

Industry

 

Principal

Amount/ Shares

 

Amortized

Cost

 

Fair

Value (1)

 

% of Net

Assets

 
                                           
VRI Intermediate Holdings, LLC                             Franklin, OH                 
Term Loan (SBIC)  (2)(12)  Second Lien  3M L+9.25%   1.00%   11.64%     5/31/2017  10/31/2020  Healthcare & Pharmaceuticals  $9,000,000   8,882,395   9,000,000   3.95%
VRI Ultimate Holdings, LLC Class A Preferred Units  (4)  Equity                  5/31/2017         326,797 shares   500,000   490,000   0.22%
Total                                      9,382,395   9,490,000   4.17%
Wise Holding Corporation                              Salt Lake City, UT                 
Term Loan  (12)(20)  Unsecured  3M L+11.00%   1.00%   0.00%     6/30/2016  12/31/2021  Beverage, Food, & Tobacco  $1,250,000   1,237,422   310,000   0.14%
Delayed Draw Term Loan  (12)(21)  First Lien  1M L+6.5%   1.00%   8.74%     8/27/2018  6/30/2021     $230,469   230,469   230,000   0.10%
Wise Parent Company, LLC Membership Units  (4)  Equity                  6/30/2016         1 units   58,594   0   0.00%
Total                                      1,526,485   540,000   0.24%
                                                 
Total Non-controlled, non-affiliated investments                                      470,695,035   477,949,195   209.71%
Net Investments                                      470,747,220   478,004,195   209.74%
LIABILITIES IN EXCESS OF OTHER ASSETS                                          (250,099,111)  (109.74)%
NET ASSETS                                          227,905,084   100.00%

 

(1)See Note 1 of the Notes to the Consolidated Financial Statements for a discussion of the methodologies used to value securities in the portfolio.

 

(2)Investments held by the SBIC subsidiary, which include $21,123,982 of cash and $204,910,435 of investments (at cost) are excluded from the obligations to the lenders of the Credit Facility. The Company’s obligations to the lenders of the Credit Facility, as defined in Note 9, are secured by a first priority security interest in all investments and cash and cash equivalents, except for investments held by the SBIC Subsidiary.

 

(3)Excluded from the investment is an undrawn commitment in an amount not to exceed $865,385, with an interest rate of LIBOR plus 7.50% and a maturity of June 30, 2023. This investment is accruing an unused commitment fee of 0.375% per annum.

 

(4)Security is non-income producing.

 

(5)The investment is not a qualifying asset under the Investment Company Act of 1940, as amended. The Company may not acquire any non-qualifying assets unless, at the time of the acquisition, qualifying assets represent at least 70% of the Company’s total assets. Qualifying assets represent approximately 88% of the Company’s total assets as of September 30, 2018.

 

(6)Represents a PIK security. At the option of the issuer, interest can be paid in cash or cash and PIK. The percentage of PIK shown is the maximum PIK that can be elected by the issuer.

 

(7)Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $666,666, with an interest rate of LIBOR plus 5.75% and a maturity of June 29, 2022. This investment is accruing an unused commitment fee of 0.50% per annum.

 

(8)Excluded from the investment is an undrawn delayed draw term loan commitment in an amount not to exceed $1,143,451, with an interest rate of LIBOR plus 6.35% and a maturity of April 23, 2023. This investment is accruing an unused commitment fee of 1.00% per annum.

 

 11 

 

 

Stellus Capital Investment Corporation

  

Consolidated Schedule of Investments (unaudited) – (continued)

 

September 30, 2018

 

(9)Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $1,000,000, with an interest rate of LIBOR plus 6.50% and a maturity of December 22, 2022. This investment is accruing an unused commitment fee of 0.50% per annum.

 

(10)Excluded from the investment is an undrawn commitment in an amount not to exceed $520,000, with an interest rate of LIBOR plus 8.00% and a maturity of September 30, 2018. This investment is accruing an unused commitment fee of 0.50% per annum.

 

(11)Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $1,900,000, with an interest rate of LIBOR plus 5.75% and a maturity of August 8, 2023. This investment is accruing an unused commitment fee of 0.50% per annum.

 

(12)These loans have LIBOR floors that are lower than the applicable LIBOR rates; therefore, the floors are not in effect.

 

(13)These loans are last-out term loans with contractual rates higher than the applicable LIBOR rates; therefore, the floors are not in effect.

 

(14)Excluded from the investment is an undrawn commitment in an amount not to exceed $5,357,143, with an interest rate of LIBOR plus 6.75% and a maturity of August 30, 2024. This investment is accruing an unused commitment fee of 0.50% per annum.

 

(15)Investment has been on non-accrual since November 1, 2017.

 

(16)Excluded from the investment is an undrawn commitment in an amount not to exceed $1,000,000, with an interest rate of LIBOR plus 7.75% and a maturity of February 5, 2023. This investment is accruing an unused commitment fee of 0.50% per annum.

 

(17)Excluded from the investment is an undrawn commitment in an amount not to exceed $1,500,000, with an interest rate of LIBOR plus 6.50% and a maturity of January 31, 2023. This investment is accruing an unused commitment fee of 0.50% per annum.

 

(18)Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $750,000, with an interest rate of LIBOR plus 7.50% and a maturity of April 13, 2023. This investment is accruing an unused commitment fee of 0.50% per annum.

 

(19)Excluded from the investment is an undrawn revolver commitment in an amount not to exceed $1,283,619, with an interest rate of LIBOR plus 6.25% and a maturity of September 26, 2023. This investment is accruing an unused commitment fee of 0.50% per annum.

 

(20)Investment has been on non-accrual since March 29, 2018.

 

(21)Excluded from the investment is an undrawn commitment in an amount not to exceed $23,438, with an interest rate of LIBOR plus 6.50% and a maturity of June 30, 2021. This investment is not accruing an unused commitment fee.

 

(22)This loan is a unitranche investment.

 

(23)Excluded from the investment is an undrawn commitment in an amount not to exceed $1,662,592, with an interest rate of LIBOR plus 6.25% and a maturity of September 26, 2023. This investment is accruing an unused commitment fee of 0.50% per annum.

 

Abbreviation Legend

PIK — Payment-In-Kind

L — LIBOR

Euro — Euro Dollar

 

 12 

 

 

Stellus Capital Investment Corporation
 
Consolidated Schedule of Investments
December 31, 2017

  

Investments  Footnotes  Security  Coupon    LIBOR
floor		   Cash  

PIK

     Initial Investment Date     Maturity  Headquarters/
Industry		  Principal
Amount/
Shares		   Amortized
Cost		   Fair
Value(1)		   % of
Net
Assets		 
Non-controlled, affiliated investments  (2)                                                            
Glori Energy Production Inc.                                          Houston, TX                    
Glori Energy Production, LLC Class A Common Units  (4)  Equity                           2/1/2017        Energy: Oil & Gas   1,000 shares   $1,052,185   $990,000    0.45%
Subtotal Non-controlled, affiliated investments                                                   1,052,185    990,000    0.45%
Non-controlled, non-affiliated investments  (2)                                                            
Abrasive Products & Equipment, LLC, et al                                        Deer Park, TX                    
Term Loan (SBIC)  (2)(12)  Second Lien    3M
L+10.50%		     1.00%   12.20%          9/5/2014     3/5/2020  Chemicals, Plastics, & Rubber  $5,325,237    5,272,397    5,220,000    2.37%
APE Holdings, LLC Class A Common Units  (4)  Equity                           9/5/2014            375,000 units    375,000    180,000    0.08%
Total                                                   5,647,397    5,400,000    2.45%
Apex Environmental Resources Holdings,
LLC		                                          Amsterdam, OH                    
Common Units  (4)  Equity                           10/30/2015        Environmental Industries   766 shares    766    579    0.00%
Preferred Units  (4)  Equity                           10/30/2015            766 shares    765,676    579,421    0.26%
Total                                                   766,442    580,000    0.26%
Atmosphere Aggregator Holdings II, LP                                          Atlanta, GA                    
Common Units  (4)  Equity                           6/30/2015        Services: Business   254,250 units    254,250    820,284    0.37%
Atmosphere Aggregator Holdings, LP Common Units  (4)  Equity                           6/30/2015            750,000 units    750,000    2,419,714    1.10%
Total                                                   1,004,250    3,239,998    1.47%
ASC Communications, LLC  (7)                                       Chicago, IL                    
Term Loan (SBIC)  (2)(12)  First Lien    3M
L+6.25%		     1.00%   7.94%          6/29/2017     6/29/2022  Healthcare & Pharmaceuticals  $6,879,167    6,816,044    6,879,167    3.12%
ASC Communications Holdings, LLC Class A Preferred Units (SBIC)  (2)(4)  Equity                           6/29/2017            73,529 shares    500,000    620,000    0.28%
Total                                                   7,316,044    7,499,167    3.40%
Beneplace, LLC                                          Austin TX                    
Term Loan (SBIC)  (2)(12)  Second
Lien		    3M
L+10.00%		     1.00%   11.70%          3/27/2017     9/27/2022  Insurance  $5,000,000    4,910,226    5,000,000    2.27%
Beneplace Holdings, LLC Preferred Units  (4)  Equity                           3/27/2017            500,000 units    500,000    500,000    0.23%
Total                                                   5,410,226    5,500,000    2.50%
Binder & Binder National Social Security Disability Advocates, LLC  (8)                                       Hauppauge, NY                    
Residual claim from Term Loan  (4)  Unsecured                           11/7/2012        Services: Consumer  $400,000    400,000    380,000    0.17%
BW DME Acquisition, LLC                                          Tempe, AZ                    
Term Loan (SBIC)  (2)(12)(13)(17)  First Lien    3M
L+6.00%		     1.00%   9.43%          8/24/2017     8/24/2022  Healthcare & Pharmaceuticals  $9,550,000    9,281,016    9,310,000    4.23%
BW DME Holdings, LLC Class A Preferred Units  (4)  Equity                           8/24/2017            1,000,000 shares    1,000,000    1,110,000    0.50%
Total                                                   10,281,016    10,420,000    4.73%

 

 13 

 

 

Stellus Capital Investment Corporation
 
Consolidated Schedule of Investments – (continued)
December 31, 2017 

 

Investments  Footnotes  Security  Coupon    LIBOR
floor		   Cash    PIK     Initial Investment Date    Maturity  Headquarters/
Industry		  Principal
Amount/
Shares		   Amortized
Cost		   Fair
Value(1)		   % of
Net
Assets		 
C.A.R.S. Protection Plus, Inc.                                          Murrysville, PA                    
Term Loan  (12)  First Lien    3M
L+8.50%		     0.50%   9.74%           12/23/2015    12/31/2020  Automotive  $98,746   $97,451   $98,746    0.04%
Term Loan (SBIC)  (2)(12)  First Lien    3M
L+8.50%		     0.50%   9.74%           12/23/2015    12/31/2020     $7,702,191    7,601,191    7,700,000    3.50%
CPP Holdings LLC Class A Common Units  (4)  Equity                            12/23/2015           149,828 shares    149,828    260,000    0.12%
Total                                                   7,848,470    8,058,746    3.66%
Catapult Learning, LLC et al                                          Camden, NJ                    
Term Loan  (13)(17)  First Lien    3M
L+6.50%		     1.00%   9.30%           8/6/2015    7/16/2020  Education  $12,335,526    12,264,670    12,335,526    5.60%
Colford Capital Holdings, LLC                                          New York, NY                    
Preferred Units  (4)(5)  Equity                            8/20/2015       Finance   38,893 units    497,388    470,000    0.21%
Condor Borrower, LLC                                          Clifton, NJ                    
Term Loan  (12)  Second Lien    3M
L+8.75%		     1.00%   10.12%           10/27/2017    4/27/2025  Services: Business  $13,750,000    13,479,122    13,480,000    6.12%
Condor Top Holdco Limited Convertible Preferred Shares  (4)  Equity                            10/27/2017           500,000 shares    442,197    442,197    0.20%
Condor Holdings Limited Preferred Shares, Class B  (4)  Equity                            10/27/2017           500,000 shares    57,804    57,804    0.03%
Total                                                   13,979,123    13,980,001    6.35%
Douglas Products & Packaging Company, LLC                                          Liberty, MO                    
Term Loan (SBIC)  (2)(12)  Second Lien    3M
L+10.50%		     0.50%   12.20%           6/30/2015    12/31/2020  Chemicals, Plastics, & Rubber  $9,000,000    8,902,087    9,000,000    4.09%
Fumigation Holdings, Inc. Class A Common Stock  (4)  Equity                            6/30/2015           250 shares    250,000    530,000    0.24%
Total                                                   9,152,087    9,530,000    4.33%
Dream II Holdings, LLC                                          Boca Raton, FL                    
Class A Common Units  (4)  Equity                            10/20/2014       Services: Consumer   250,000 units    242,304    420,000    0.19%
Empirix Inc.                                          Billerica, MA                    
Term Loan  (12)  Second Lien    3M
L+9.50%		     1.00%   10.88%           11/1/2013    5/1/2020  Software  $11,657,850    11,554,734    11,657,850    5.29%
Term Loan (SBIC)  (2)(12)  Second Lien    3M
L+9.50%		     1.00%   10.88%           5/14/2013    5/1/2020     $9,750,000    9,662,051    9,750,000    4.43%
Empirix Holdings I, Inc. Common Shares, Class A  (4)  Equity                            11/1/2013           1,304 shares    1,304,232    831,600    0.38%
Empirix Holdings I, Inc. Common Shares, Class B  (4)  Equity                            11/1/2013           1,317,406 shares    13,174    8,400    0.00%
Total                                                   22,534,191    22,247,850    10.10%
Energy Labs Inc.                                          Houston, TX                    
Term Loan (SBIC)  (2)(13)(17)  First Lien    3M
L+7.00%		     0.50%   11.58%           9/29/2016    9/29/2021  Energy: Oil & Gas  $5,300,000    5,214,783    5,300,000    2.41%
Energy Labs Holding Corp. Common Stock  (4)  Equity                            9/29/2016           500 shares    500,000    410,000    0.19%
Total                                                   5,714,783    5,710,000    2.60%
EOS Fitness OPCO Holdings, LLC                                          Phoenix, AZ                    
Term Loan (SBIC)  (2)(12)  First Lien    1M
L+8.25%		     0.75%   9.62%           12/30/2014    12/30/2019  Hotel, Gaming, & Leisure  $3,193,890    3,164,255    3,190,000    1.45%
EOS Fitness Holdings, LLC Class A Preferred Units  (4)  Equity                            12/30/2014           118 shares    117,670    224,250    0.10%

 

 14 

 

 

Stellus Capital Investment Corporation
 
Consolidated Schedule of Investments – (continued)
December 31, 2017

 

Investments  Footnotes  Security  Coupon   LIBOR
floor		   Cash   PIK    Initial
Investment
Date		    Maturity  Headquarters/
Industry		  Principal
Amount/
Shares		   Amortized
Cost		   Fair
Value(1)		   % of
Net
Assets		 
EOS Fitness Holdings, LLC Class B Common Units  (4)  Equity                       12/30/2014           3,017 shares   $3,017   $5,750    0.00%
Total                                              3,284,942    3,420,000    1.55 
Furniture Factory Outlet, LLC                                     Fort Smith, AR                    
Term Loan  (12)  First Lien   3M
L+9.00%		    0.50%   10.70%        6/10/2016    6/10/2021  Consumer Goods: Durable  $7,288,484    7,180,489    7,288,484    3.31%
Furniture Factory Holdings, LLC Term Loan  (11)  Unsecured   11.00%                   6/10/2016    2/3/2021     $122,823    122,823    120,000    0.05%
Sun Furniture Factory, LP Common Units  (4)  Equity                       6/10/2016           13,445 shares    94,569    210,000    0.10%
Total                                              7,397,881    7,618,484    3.46%
GK Holdings, Inc.                                     Cary, NC                    
Term Loan  (12)  Second
Lien		   3M
L+10.25%		    1.00%   11.94%        2/6/2015    1/30/2022  Education  $5,000,000    4,932,726    5,000,000    2.27%
Good Source Solutions, Inc.                                     Carlsbad, CA                    
Term Loan  (13)(17)  First Lien   3M
L+7.25%		    0.50%   11.96%        7/15/2016    7/15/2021  Beverage, Food, & Tobacco  $1,350,000    1,329,398    1,350,000    0.61%
Term Loan (SBIC)  (2)(13)(17)  First Lien   3M
L+7.25%		    0.50%   11.96%        7/15/2016    7/15/2021     $1,200,000    1,181,687    1,200,000    0.54%
Good Source Holdings, LLC Class A Preferred Units  (4)  Equity                       7/15/2016           159 shares    159,375    150,000    0.07%
Good Source Holdings, LLC Class B Common Units  (4)  Equity                       7/15/2016           4,482 shares    0    0    0.00%
Total                                              2,670,460    2,700,000    1.22%
Grupo HIMA San Pablo, Inc., et al                                     San Juan, PR                    
Term Loan  (3)  First Lien   3M
L+7.00%		    1.50%   8.50%        2/1/2013    1/31/2018  Healthcare & Pharmaceuticals  $4,750,000    4,748,168    4,180,000    1.90%
Term Loan  (15)  Second Lien   13.75%         0.00%        2/1/2013    7/31/2018     $4,109,524    4,079,696    900,000    0.41%
Total                                              8,827,864    5,080,000    2.31%
Hostway Corporation                                     Chicago, IL                    
Term Loan  (12)  Second Lien   3M
L+10.00%		    1.25%   5.94%        12/27/2013    12/13/2020  High Tech Industries  $6,750,000    6,680,080    5,910,000    2.68%
J.R. Watkins, LLC  (9)                                  San Francisco, CA                    
Term Loan (SBIC)  (2)(12)  First Lien   3M
L+6.50%		    1.25%   8.16%        12/22/2017    12/22/2022  Consumer Goods: non-durable  $12,500,000    12,250,000    12,250,000    5.56%
J.R. Watkins Holdings, Inc. Class A Preferred  (4)  Equity                       12/22/2017           1,000 shares    1,000,000    1,000,000    0.45%
Total                                              13,250,000    13,250,000    6.01%
Keais Records Service, LLC                                     Houston, TX                    
Term Loan  (12)  Second Lien   3M
L+10.50%		    0.50%   12.20%        6/30/2016    6/30/2022  Services: Business  $7,750,000    7,637,741    7,750,000    3.52%
Keais Holdings, LLC Class A Units  (4)  Equity                       6/30/2016           148,335 units    765,600    780,000    0.35%
Total                                              8,403,341    8,530,000    3.87%
KidKraft, Inc.                                     Dallas, TX                    
Term Loan  (6)  Second Lien   12.00%         11.00%   1.00%   9/30/2016    3/30/2022  Consumer Goods: Durable  $9,315,194    9,162,066    9,180,000    4.17%
Livingston International, Inc.                                     Toronto, Ontario                    
Term Loan  (5)(12)  Second Lien   3M
L+8.25%		    1.25%   9.94%        4/23/2013    4/18/2020  Transportation: Cargo  $6,841,739    6,785,894    6,840,000    3.11%

 

 15 

 

 

Stellus Capital Investment Corporation
 
Consolidated Schedule of Investments – (continued)
December 31, 2017

 

Investments  Footnotes  Security  Coupon   LIBOR
floor		   Cash   PIK    Initial
Investment
Date		    Maturity  Headquarters/
Industry		  Principal
Amount/
Shares		   Amortized
Cost		   Fair
Value(1)		   % of
Net
Assets		 
Madison Logic, Inc.                                     New York, NY                    
Term Loan (SBIC)  (2)(12)  First Lien   1M
L+8.00%		    0.50%   9.57%        11/30/2016    11/30/2021  Media: Broadcasting & Subscription  $4,875,000   $4,835,088   $4,875,000    2.21%
Madison Logic Holdings, Inc. Common Stock (SBIC)  (2)(4)  Equity                       11/30/2016           5,000 shares    50,000    56,000    0.03%
Madison Logic Holdings, Inc. Series A Preferred Stock (SBIC)  (2)(4)  Equity                       11/30/2016           4,500 shares    450,000    504,000    0.23%
Total                                              5,335,088    5,435,000    2.47%
Magdata Intermediate Holdings, LLC                                     Austin TX                    
Term Loan  (12)  Second Lien   3M
L+9.50%		    1.00%   11.20%        10/16/2017    4/16/2024  Software  $12,500,000    12,254,448    12,250,000    5.56%
Mobileum, Inc.                                     Santa Clara, CA                    
Term Loan  (12)  Second Lien   3M
L+10.25%		    0.75%   11.95%        11/1/2016    5/1/2022  Software  $9,000,000    8,849,293    9,000,000    4.09%
Mobile Acquisition Holdings, LP Class A-2 Common Units  (4)  Equity                       11/1/2016           750 units    750,000    980,000    0.44%
Total                                              9,599,293    9,980,000    4.53%
MBS Holdings, Inc.                                     Birmingham, AL                    
Series E Preferred Stock  (4)  Equity                       3/10/2014       Media: Broadcasting & Subscription   2,774,695
shares		    1,000,000    2,386,710    1.08%
Series F Preferred Stock  (4)  Equity                       12/21/2015           399,308 shares    206,682    493,290    0.22%
Total                                              1,206,682    2,880,000    1.30%
MTC Parent, L.P.                                     Oak Brook, IL                    
Class A-2 Common Units  (4)  Equity                       12/1/2015       Finance   750,000 shares    28,842    2,200,000    1.00%
National Trench Safety, LLC, et al                                     Houston, TX                    
Term Loan (SBIC)  (2)  Second Lien   11.50%         11.50%        3/31/2017    3/31/2022  Construction & Building  $10,000,000    9,845,090    9,900,000    4.49%
NTS Investors, LP Class A Common Units  (4)  Equity                       3/31/2017           2,335 units    500,000    350,000    0.16%
Total                                              10,345,090    10,250,000    4.65%
OGS Holdings, Inc.                                     Chantilly, Virginia                    
Series A Convertible Preferred Stock  (4)  Equity                       4/22/2014       Services: Government   11,521 shares    50,001    100,000    0.05%
Protect America, Inc.                                     Austin TX                    
Term Loan (SBIC)  (2)(6)(12)  Second Lien   3M
L+9.75%		    1.00%   9.50%   2.00%   8/30/2017    10/30/2020  Services: Consumer  $17,617,786    17,220,312    17,270,000    7.84%
Refac Optical Group, et al                                     Blackwood, NJ                    
Revolver  (10)(12)  First Lien   1M
L+8.00%		         9.56%        11/7/2012    9/30/2018  Retail  $880,000    880,000    880,000    0.40%
Term A Loan  (12)  First Lien   1M
L+8.00%		         9.56%        11/7/2012    9/30/2018     $943,367    943,367    940,000    0.43%
Term B Loan  (6)(12)  First Lien   1M
L+10.75%		         10.56%   1.75%   11/7/2012    9/30/2018     $6,464,716    6,464,716    6,460,000    2.93%
Total                                              8,288,083    8,280,000    3.76 
Resolute Industrial, LLC  (14)                                  Wheeling, IL                    
Term Loan  (12)(16)(17)  First Lien   3M
L+7.62%		    1.00%   8.95%        7/26/2017    7/26/2022  Capital Equipment  $3,797,222    3,731,397    3,740,000    1.70%
Term Loan (SBIC)  (2)(12)(16)(17)  First Lien   3M
L+7.62%		    1.00%   8.95%        7/26/2017    7/26/2022     $13,290,278    13,059,850    13,090,000    5.94%
Resolute Industrial Holdings, LLC Class A Preferred Units  (4)  Equity                       7/26/2017           601 units    750,000    760,000    0.35%
Total                                              17,541,247    17,590,000    7.99%
Roberts-Gordon, LLC                                     Buffalo, NY                    
Term Loan  (12)  Second Lien   3M
L+10.00%		    1.00%