10-Q 1 tv526383_10q.htm FORM 10-Q

 

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

 

 

 

FORM 10-Q

 

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the quarterly period ended June 30, 2019
   
  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)

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which
registered
Common Stock, par value $0.001 per share SCM New York Stock Exchange
5.75% Notes Due 2022 SCA New York Stock Exchange

  

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.

 

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 August 7, 2019 was 18,905,959.

 

 

 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION  
Item 1. Financial Statements 2
  Consolidated Statements of Assets and Liabilities as of June 30, 2019 (unaudited) and December 31, 2018 2
  Consolidated Statements of Operations for the three and six-month periods ended June 30, 2019 and 2018 (unaudited) 3
  Consolidated Statements of Changes in Net Assets for the three and six-month periods ended June 30, 2019 and 2018 (unaudited) 4
  Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2019 and 2018 (unaudited) 5
  Consolidated Schedules of Investments as of June 30, 2019 (unaudited) and December 31, 2018 6
  Notes to Unaudited Consolidated Financial Statements 22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 55
Item 3. Quantitative and Qualitative Disclosures About Market Risk 72
Item 4. Controls and Procedures 73
PART II. OTHER INFORMATION  
Item 1. Legal Proceedings 74
Item 1A. Risk Factors 74
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 74
Item 3. Defaults Upon Senior Securities 74
Item 4. Mine Safety Disclosures 74
Item 5. Other Information 74
Item 6. Exhibits 74

  

i 

 

 

PART I — FINANCIAL INFORMATION

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

 

   June 30,     
   2019   December 31, 
   (Unaudited)   2018 
ASSETS          
Non-controlled, affiliated investments, at fair value (amortized cost of $0 and $52,185, respectively)  $—   $50,000 
Non-controlled, non-affiliated investments, at fair value  (amortized cost of $535,894,646 and $502,691,464, respectively)   531,120,396    504,433,668 
Cash and cash equivalents   18,218,303    17,467,146 
Receivable for sales and repayments of investments   90,259    99,213 
Interest receivable   3,441,077    3,788,684 
Other receivables   25,495    85,246 
Deferred offering costs   56,510    18,673 
Prepaid expenses   222,115    344,621 
Total Assets  $553,174,155   $526,287,251 
LIABILITIES          
Notes payable  $47,806,634   $47,641,797 
Credit facility payable   77,736,217    98,237,227 
SBA-guaranteed debentures   146,687,496    146,387,802 
Dividends payable   2,142,048    1,807,570 
Management fees payable   1,804,362    2,183,975 
Income incentive fees payable   1,618,170    1,936,538 
Capital gains incentive fees payable   1,358,651    81,038 
Interest payable   2,156,204    1,863,566 
Unearned revenue   327,944    410,593 
Administrative services payable   464,134    392,191 
Deferred tax liability   107,854    67,953 
Income tax payable   380,000    316,092 
Other accrued expenses and liabilities   458,778    115,902 
Total Liabilities  $283,048,492   $301,442,244 
Commitments and contingencies (Note 7)          
Net Assets  $270,125,663   $224,845,007 
NET ASSETS          
Common stock, par value $0.001 per share (200,000,000 shares authorized; 18,905,959 and 15,953,810 issued and outstanding, respectively)  $18,906   $15,954 
Paid-in capital   269,461,428    228,160,491 
Distributable earnings   645,329    (3,331,438)
Net Assets  $270,125,663   $224,845,007 
Total Liabilities and Net Assets  $553,174,155   $526,287,251 
Net Asset Value Per Share  $14.29   $14.09 

  

 2 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

   For the   For the   For the   For the 
   three   three   six   six 
   months ended   months ended   months ended   months ended 
   June 30,   June 30,   June 30,   June 30, 
   2019   2018   2019   2018 
INVESTMENT INCOME                    
Interest income  $13,605,861   $12,214,766   $27,231,260   $22,945,514 
Other income   564,394    404,891    773,924    585,924 
Total Investment Income  $14,170,255   $12,619,657   $28,005,184   $23,531,438 
OPERATING EXPENSES                    
Management fees  $2,304,362   $2,049,023   $4,527,007   $3,797,919 
Valuation fees   21,628    20,307    128,950    154,717 
Administrative services expenses   415,506    308,163    820,905    659,392 
Income incentive fees   1,382,814    1,312,314    2,756,668    2,281,140 
Capital gains incentive fees   115,856    522,019    1,277,613    522,019 
Professional fees   329,541    224,121    673,881    693,259 
Directors' fees   113,000    79,000    217,000    171,000 
Insurance expense   86,649    86,649    172,346    172,346 
Interest expense and other fees   3,359,270    3,012,644    7,034,057    5,477,624 
Income tax expense   342,384    —    355,128    — 
Other general and administrative expenses   283,845    278,181    292,570    399,407 
Total Operating Expenses  $8,754,855   $7,892,421   $18,256,125   $14,328,823 
Net Investment Income  $5,415,400   $4,727,236   $9,749,059   $9,202,615 
Net realized gain on non-controlled, non-affiliated investments   $2,696,138   $1,075,964   $12,942,236   $2,411,233 
Net change in unrealized appreciation (depreciation) on non- controlled, non-affiliated investments  $(2,089,555)  $1,809,240   $(6,516,454)  $3,414,706 
Net change in unrealized appreciation (depreciation) on non- controlled, affiliated investments   —    —    2,185    (72,185)
Provision for taxes on net unrealized gain on investments  $(27,300)  $(9,194)  $(39,901)  $(9,194)
Net Increase in Net Assets Resulting from Operations  $5,994,683   $7,603,246   $16,137,125   $14,947,175 
Net Investment Income Per Share  $0.29   $0.30   $0.55   $0.58 
Net Increase in Net Assets Resulting from Operations Per Share  $0.32   $0.48   $0.92   $0.94 
Weighted Average Shares of Common Stock Outstanding   18,883,745    15,953,810    17,624,385    15,953,328 
Distributions Per Share  $0.34   $0.34   $0.68   $0.68 

  

 3 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

 

   For the   For the   For the   For the 
   three   three   six   six 
   months ended   months ended   months ended   months ended 
   June 30,   June 30,   June 30,   June 30, 
   2019   2018   2019   2018 
Increase in Net Assets Resulting from Operations                    
Net investment income  $5,415,400   $4,727,236   $9,749,059   $9,202,615 
Net realized gain on investments    2,696,138    1,075,964    12,942,236    2,411,233 
Net change in unrealized appreciation (depreciation) on non-controlled, non-affiliated investments   (2,089,556)   1,809,240    (6,516,454)   3,414,706 
Net change in unrealized appreciation on non-controlled, affiliated investments   —    —   2,185    (72,185)
Provision for taxes on unrealized appreciation on investments   (27,300)   (9,194)   (39,901)   (9,194)
Net Increase in Net Assets Resulting from Operations  $5,994,682   $7,603,246   $16,137,125   $14,947,175 
                     
Decrease in Net Assets from Stockholder Distributions  $(6,426,108)  $(5,422,682)  $(12,160,358)  $(10,845,182)
Capital Share Transactions                    
Issuance of common stock  $2,917,010   $—   $42,599,510   $94,788 
Sales load   (68,731)   —    (1,003,731)   — 
Offering costs   (90,181)   —    (293,072)   — 
Partial share transactions   (254)   (241)   1,181    (568)
Net Increase in Net Assets Resulting From Capital Share Transactions  $2,757,844   $(241)  $41,303,888   $94,220 
Total Increase in Net Assets  $2,326,419   $2,180,323   $45,280,656   $4,196,213 
Net Assets at Beginning of Period  $267,799,244   $222,263,132   $224,845,007   $220,247,242 
Net Assets at End of Period  $270,125,663   $224,443,455   $270,125,663   $224,443,455 

 

 4 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

   For the   For the 
   six   six 
   months ended   months ended 
   June 30,   June 30, 
   2019   2018 
Cash flows from operating activities          
Net Increase in net assets resulting from operations  $16,137,125   $14,947,175 
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:          
Purchases of investments   (78,149,872)   (166,916,853)
Proceeds from sales and repayments of investments   58,832,731    45,807,477 
Net change in unrealized depreciation (appreciation) on investments   6,514,269    (3,342,521)
Increase in investments due to PIK   (65,356)   (297,965)
Amortization of premium and accretion of discount, net   (817,309)   (736,268)
Deferred tax provision   39,901    9,194 
Amortization of loan structure fees   248,990    170,335 
Amortization of deferred financing costs   164,837    167,316 
Amortization of loan fees on SBA-guaranteed debentures   299,694    280,605 
Net realized gain on investments   (12,942,236)   (2,411,233)
Changes in other assets and liabilities          
Decrease (increase) in interest receivable   347,607    (880,444)
Decrease (increase) in other receivable   59,751    (37,647)
Decrease in prepaid expenses   122,506    145,518 
Decrease in management fees payable   (379,613)   (72,569)
Increase (decrease) in incentive fees payable   (318,368)   1,153,673 
Increase in capital gains incentive fees payable   1,277,613    522,019 
Increase in administrative services payable   71,943    541 
Increase in interest payable   292,638    521,659 
Increase (decrease) in unearned revenue   (82,649)   72,806 
Increase in income tax payable   63,908    — 
Increase in other accrued expenses and liabilities   342,876    496,892 
Net Cash Used in Operating Activities  $(7,939,014)  $(110,400,290)
Cash flows from Financing Activities          
Proceeds from the issuance of common stock  $42,599,510   $— 
Sales load for common stock issued   (1,003,731)   — 
Offering costs paid for common stock   (330,909)   — 
Stockholder distributions paid   (11,825,880)   (10,749,495)
Proceeds from SBA Debentures   —    40,000,000 
Financing costs paid on SBA Debentures   —    (1,570,000)
Borrowings under Credit Facility   78,750,000    175,300,000 
Repayments of Credit Facility   (99,500,000)   (96,750,000)
Partial share transactions   1,181    (568)
Net Cash Provided by Financing Activities  $8,690,171   $106,229,937 
Net Increase (Decrease) in Cash and Cash Equivalents  $751,157   $(4,170,353)
Cash and cash equivalents balance at beginning of period   17,467,146    25,110,718 
Cash and Cash Equivalents Balance at End of Period  $18,218,303   $20,940,365 
Supplemental and Non-Cash Activities          
Cash paid for interest expense  $6,027,898   $4,297,709 
Excise tax paid   280,000    27,717 
Shares issued pursuant to Dividend Reinvestment Plan   —    94,788 
Increase in distribution payable   334,478    899 
Increase in deferred offering costs   37,837    — 

 

 5 

 

 

Stellus Capital Investment Corporation
 
Consolidated Schedule of Investments (unaudited)

 

June 30, 2019

 

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, 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%   12.83%       9/5/2014  3/5/2021  Chemicals, Plastics, & Rubber  $5,325,237   $5,307,213   $4,766,088    1.76%
APE Holdings, LLC Class A Common Units  (4)  Equity                    9/5/2014         375,000 units    375,000    80,000    0.03%
Total                                        $5,682,213   $4,846,088    1.79%
Adams Publishing Group, LLC  (3)                             Greenville, TN                    
Term Loan  (12)  First Lien  3M L+7.50%   1.00%   10.08%       8/3/2018  6/30/2023  Media: Broadcasting & Subscription  $6,213,328    6,160,853    6,089,061    2.25%
Delayed Draw Term Loan  (12)  First Lien  3M L+7.50%   1.00%   9.85%       8/3/2018  6/30/2023     $196,154    196,154    192,231    0.07%
Total                                        $6,357,007   $6,281,292    2.32%
Advanced Barrier Extrusions, LLC  (8)                             Rhinelander, WI                    
Term Loan (SBIC)  (2)(12)  First Lien  3M L+5.75%   1.00%   8.08%       8/8/2018  8/8/2023  Containers, Packaging & Glass  $11,343,000    11,151,162    10,889,280    4.03%
GP ABX Holdings Partnership, L.P. Common Stock  (4)  Equity                    8/8/2018         250,000 units    250,000    220,000    0.08%
Total                                        $11,401,162   $11,109,280    4.11%
Apex Environmental Resources Holdings, LLC                                Amsterdam, OH                    
Common Units  (4)  Equity                    10/30/2015     Environmental Industries   945 shares    945    0    0.00%
Preferred Units  (4)  Equity                    10/30/2015         945 shares    945,179    350,000    0.13%
Total                                        $946,124   $350,000    0.13%
APG Intermediate Sub 2 Corp.                                Castle Rock, CO                    
Term Loan  (13)(22)  First Lien  3M L+6.00%   1.00%   9.64%       11/30/2018  11/30/2023  Services: Business  $9,950,000    9,746,335    9,651,500    3.57%
APG Holdings, LLC Class A Preferred Units  (4)  Equity                    11/30/2018         1,000,000 units    1,000,000    870,000    0.32%
Total                                        $10,746,335   $10,521,500    3.89%
Atmosphere Aggregator Holdings II, LP                                Atlanta, GA                    
Common Units  (4)  Equity                    1/26/2016     Services: Business   254,250 units    254,250    1,320,000    0.49%
Atmosphere Aggregator Holdings, LP Common Units  (4)  Equity                    6/30/2015         750,000 units    750,000    3,910,000    1.45%
Total                                        $1,004,250   $5,230,000    1.94%
ASC Communications, LLC  (7)                             Chicago, IL                    
Term Loan (SBIC)  (2)(12)  First Lien  1M L+6.25%   1.00%   8.65%       6/29/2017  6/29/2023  Healthcare & Pharmaceuticals  $4,691,358    4,660,813    4,667,901    1.73%
Term Loan  (12)  First Lien  1M L+6.25%   1.00%   8.65%       2/4/2019  6/29/2023     $7,975,309    7,883,665    7,935,432    2.94%
ASC Communications Holdings, LLC Class A Preferred Units (SBIC)  (2)(4)  Equity                    6/29/2017         73,529 shares    109,249    600,000    0.22%
Total                                        $12,653,727   $13,203,333    4.89%
Beneplace Holdings, LLC                                Austin TX                    
Preferred Units  (4)  Equity                    3/27/2017     FIRE: Insurance   500,000 units    500,000    650,000    0.24%

 

 6 

 

 

Stellus Capital Investment Corporation
 
Consolidated Schedule of Investments (unaudited)

 

June 30, 2019

 

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%   8.58%       4/2/2018  9/26/2023  Services: Business  $1,466,993    1,466,993    1,430,318    0.53%
Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.25%   1.00%   8.58%       4/2/2018  9/26/2023     $11,651,925    11,510,350    11,360,627    4.21%
Bonded Filter Co. LLC, Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.25%   1.00%   8.58%       4/2/2018  9/26/2023     $1,210,880    1,196,168    1,180,608    0.44%
Total                                        $14,173,511   $13,971,553    5.18%
BW DME Acquisition, LLC                                Tempe, AZ                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+6.00%   1.00%   9.99%       8/24/2017  8/24/2022  Healthcare & Pharmaceuticals  $16,695,804    16,343,604    16,361,888    6.06%
BW DME Holdings, LLC, Term Loan  (6)  Unsecured  17.50%             17.50%  6/1/2018  12/31/2019     $289,616    289,616    289,616    0.11%
BW DME Holdings, LLC Class A-1 Preferred Units  (4)  Equity                    8/24/2017         1,000,000 shares    1,000,000    1,150,000    0.43%
BW DME Holdings, LLC Class A-2 Preferred Units  (4)  Equity                    1/26/2018         937,261 shares    937,261    1,080,000    0.40%
Total                                        $18,570,481   $18,881,504    7.00%
C.A.R.S. Protection Plus, Inc.                                Murrysville, PA                    
Term Loan  (12)  First Lien  3M L+8.50%   0.50%   10.83%       12/31/2015  12/31/2020  Automotive  $94,003    93,343    94,003    0.03%
Term Loan (SBIC)  (2)(12)  First Lien  3M L+8.50%   0.50%   10.83%       12/31/2015  12/31/2020     $7,332,210    7,280,727    7,332,210    2.71%
CPP Holdings LLC Class A Common Units  (4)  Equity                    12/31/2015         149,828 shares    149,828    230,000    0.09%
Total                                        $7,523,898   $7,656,213    2.83%
Catapult Learning, Inc.                                Camden, NJ                    
Term Loan  (13)(22)  First Lien  3M L+6.35%   1.00%   11.11%       6/27/2018  4/24/2023  Education  $20,856,549    20,507,097    20,126,570    7.45%
Delayed Draw Term Loan  (13)(22)  First Lien  3M L+6.35%   1.00%   11.15%       6/27/2018  4/24/2023     $1,143,451    1,143,451    1,103,430    0.41 
Total                                        $21,650,548   $21,230,000    7.86%
Colford Capital Holdings, LLC                                New York, NY                    
Preferred Units  (4)(5)  Equity                    8/20/2015     Finance   38,893 units    209,478    40,000    0.01%
Condor Borrower, LLC                                Clifton, NJ                    
Term Loan  (12)  Second Lien  3M L+8.75%   1.00%   11.33%       10/27/2017  4/27/2025  Services: Business  $13,750,000    13,519,517    13,337,500    4.94%
Condor Top Holdco Limited Convertible Preferred Shares  (4)  Equity                    10/27/2017         500,000 shares    442,197    310,000    0.11%
Condor Holdings Limited Preferred Shares, Class B  (4)  Equity                    10/27/2017         500,000 shares    57,804    40,000    0.01%
Total                                        $14,019,518   $13,687,500    5.06%
Convergence Technologies, Inc.                                Indianpolis, IN                    
Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.75%   1.50%   9.08%       8/31/2018  8/30/2024  Services: Business  $7,089,286    6,963,078    7,053,839    2.61%
Term Loan  (12)  First Lien  3M L+6.75%   1.50%   9.08%       2/28/2019  8/30/2024     $1,425,000    1,397,867    1,417,875    0.52%
Delayed Draw Term Loan  (12)  First Lien  3M L+6.75%   1.50%   9.08%       8/31/2018  8/30/2024     $5,330,357    5,330,357    5,303,705    1.96%
Tailwind Core Investor, LLC Class A Preferred Units  (4)  Equity                    8/31/2018         4,275 units    429,614    440,000    0.16%
Total                                        $14,120,916   $14,215,419    5.25%
Data Centrum Communications, Inc.                                Montvale, NJ                    
                                                      
Term Loan  (12)  First Lien  3M L+5.50%   1.00%   8.02%       5/15/2019  5/15/2024  Healthcare & Pharmaceuticals  $16,250,000    15,933,935    15,933,125    5.90%
Health Monitor Holdings, LLC Seires A Preferred Units  (4)  Equity                    5/15/2019         1,000,000 shares    1,000,000    1,000,000    0.37%
Total                                        $16,933,935   $16,933,125    6.27%
Douglas Products Group, LP                                Liberty, MO                    
Class A Common Units  (4)  Equity                    12/27/2018     Chemicals, Plastics, & Rubber   322 shares    139,656    630,000    0.23%

 

 7 

 

 

Stellus Capital Investment Corporation
 
Consolidated Schedule of Investments (unaudited)

 

June 30, 2019

 

Investments  Footnotes  Security  Coupon  LIBOR
floor		   Cash   PIK   Investment
Date		  Maturity 

Headquarters/

Industry

  Principal
Amount/
Shares		   Amortized
Cost		  

Fair

Value (1)

   % of
Net
Assets		 
Dream II Holdings, LLC                                Boca Raton, FL                    
Common Units  (4)  Equity                    10/20/2014     Services: Consumer   250,000 units    242,304    0    0.00%
DTE Enterprises, LLC  (18)                             Roselle, IL                    
Term Loan  (12)  First Lien  3M L+7.50%   1.50%   10.11%       4/13/2018  4/13/2023  Energy: Oil & Gas  $11,741,941    11,554,840    11,741,941    4.35%
DTE Holding Company, LLC Common Shares, Class A-2  (4)  Equity                    4/13/2018         776,316 shares    466,204    1,350,000    0.50%
DTE Holding Company, LLC Preferred Shares, Class AA  (4)  Equity                    4/13/2018         723,684 shares    723,684    1,260,000    0.47%
Total                                        $12,744,728   $14,351,941    5.32%
Empirix Inc.                                Billerica, MA                    
Empirix Holdings I, Inc. Common Shares, Class A  (4)  Equity                    11/1/2013     Software   1,304 shares    1,304,232    920,000    0.34%
Empirix Holdings I, Inc. Common Shares, Class B  (4)  Equity                    11/1/2013         1,317,406 shares    13,174    10,000    0.00%
Total                                        $1,317,406   $930,000    0.34%
Energy Labs Inc.                                Houston, TX                    
Energy Labs Holding Corp. Common Stock  (4)  Equity                    9/29/2016     Energy: Oil & Gas   598 shares    598,182    640,000    0.24%
Exacta Land Surveyors, LLC  (14)(25)                             Cleveland, OH                    
Term Loan (SBIC)  (2)(12)  First Lien  3M L+5.75%   1.50%   8.08%       2/8/2019  2/8/2024  Services: Business  $17,000,000    16,679,393    16,660,000    6.17%
SP ELS Holdings LLC, Class A Common Units  (4)  Equity                    2/8/2019         1,069,143 shares    1,069,143    1,200,000    0.44%
Total                                        $17,748,536   $17,860,000    6.61%
EOS Fitness OPCO Holdings, LLC                                Phoenix, AZ                    
EOS Fitness Holdings, LLC Preferred Units  (4)  Equity                    12/30/2014     Hotel, Gaming, & Leisure   118 shares    0    430,000    0.16%
EOS Fitness Holdings, LLC Class B Common Units  (4)  Equity                    12/30/2014         3,017 shares    0    10,000    0.00%
Total                                        $0   $440,000    0.16 
Fast Growing Trees, LLC  (16)                             Fort Mill, SC                    
Term Loan (SBIC)  (2)(12)  First Lien  3M L+7.75%   1.00%   10.08%       2/5/2018  02/05/23  Retail  $19,192,490    18,900,099    18,328,828    6.79%
SP FGT Holdings, LLC, Class A Common  (4)  Equity                    2/5/2018         1,000,000 shares    1,000,000    530,000    0.20%
Total                                        $19,900,099   $18,858,828    6.99%
Furniture Factory Outlet, LLC                                Fort Smith, AR                    
Term Loan  (12)  First Lien  3M L+8.00%   0.50%   10.33%       6/10/2016  6/10/2021  Consumer Goods: Durable  $14,801,785    14,640,416    13,691,651    5.07%
Furniture Factory Holdings, LLC Term Loan  (6)  Unsecured  11.00%             11.00%  6/10/2016  2/3/2021     $147,231    147,231    50,795    0.02%
Furniture Factory Ultimate Holdings, LP Common Units  (4)  Equity                    6/10/2016         13,445 shares    94,569    0    0.00%
Total                                        $14,882,216   $13,742,446    5.09%
GK Holdings, Inc.                                Cary, NC                    
Term Loan  (12)  Second Lien  3M L+10.25%   1.00%   12.58%       1/30/2015  1/30/2022  Education  $5,000,000    4,954,053    4,450,000    1.65%
General LED OPCO, LLC                                San Antonio, TX                    
Term Loan  (12)  Second Lien  3M L+9.00%   1.50%   11.33%       5/1/2018  11/1/2023  Services: Business  $4,500,000    4,425,151    4,185,000    1.55%
Good Source Solutions, Inc.                                Carlsbad, CA                    
Term Loan  (13)(22)  First Lien  3M L+6.00%   1.00%   10.59%       6/29/2018  6/29/2023  Beverage, Food, & Tobacco  $18,500,000    18,188,479    17,667,500    6.54%
HV GS Acquisition, LLC Class A Preferred Units  (4)  Equity                    6/29/2018         1,000 shares    1,000,000    760,000    0.28%
HV GS Acquisition, LLC Class B Common Units  (4)  Equity                    6/29/2018         28,125 shares    0    0    0.00%
Total                                        $19,188,479   $18,427,500    6.82%

 

 8 

 

 

Stellus Capital Investment Corporation
 
Consolidated Schedule of Investments (unaudited)

 

June 30, 2019

  

Investments  Footnotes  Security  Coupon  LIBOR
floor		   Cash   PIK   Investment
Date		  Maturity 

Headquarters/

Industry

  Principal
Amount/
Shares		   Amortized
Cost		  

Fair

Value (1)

   % of
Net
Assets		 
Grupo HIMA San Pablo, Inc., et al                                San Juan, PR                    
Term Loan  (12)(27) First Lien  3M L+7.00%   1.50%   9.58%       2/1/2013  1/31/2018  Healthcare & Pharmaceuticals  $4,565,290    4,565,290    4,177,241    1.55%
Term Loan  (15)(27) Second Lien  13.75%        0.00%       2/1/2013  7/31/2018    $4,109,524    4,109,524    904,095    0.33%
Total                                        $8,674,814   $5,081,336    1.88%
ICD Intermediate Holdco 2, LLC                                San Francisco, CA                    
Term Loan (SBIC)  (2)(5)(12)  Second Lien  3M L+9.00%   1.00%   11..33%       1/1/2018  7/1/2024  Finance  $10,000,000    9,834,974    10,000,000    3.70%
ICD Holdings, LLC, Class A Preferred  (4)(5)  Equity                    1/1/2018         9,962 shares    496,405    1,010,000    0.37%
Total                                        $10,331,379   $11,010,000    4.07%
J.R. Watkins, LLC                                San Francisco, CA                    
Revolver  (12)  First Lien  3M L+6.50%   1.25%   8.83%       12/22/2017  12/22/2022  Consumer Goods: non-durable  $1,750,000    1,750,000    1,653,750    0.61%
Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.50%   1.25%   8.83%       12/22/2017  12/22/2022     $12,312,500    12,129,830    11,635,313    4.31%
J.R. Watkins Holdings, Inc. Class A Preferred  (4)  Equity                    12/22/2017         1,076 shares    1,075,758    800,000    0.30%
Total                                        $14,955,588   $14,089,063    5.22%
Jurassic Acquisiton Corp.                                Sparks, MD                    
Term Loan  (12)  First Lien  1M L+5.50%   0.00%   7.88%       12/28/2018  11/15/2024  Consumer Goods: Durable  $17,412,500    17,170,092    17,412,500    6.45 
Kelleyamerit Holdings, Inc.                                Walnut Creek, CA                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+7.50%   1.00%   10.45%       3/30/2018  3/30/2023  Automotive  $9,750,000    9,594,188    9,506,250    3.52%
Keais Records Service, LLC                                Houston, TX                    
Keais Holdings, LLC Class A Units  (4)  Equity                    12/22/2016     Services: Business   148,335 units    735,198    1,060,000    0.39%
KidKraft, Inc.                                Dallas, TX                    
                                                      
Term Loan  (6)  Second Lien  12.00%        11.00%   1.00%  9/30/2016  3/30/2022  Consumer Goods: Durable  $9,455,410    9,346,256    9,171,748    3.40%
Madison Logic, Inc.                                New York, NY                    
Term Loan (SBIC)  (2)(12)  First Lien  1M L+8.00%   0.50%   10.40%       11/30/2016  11/30/2021  Media: Broadcasting & Subscription  $4,638,772    4,613,831    4,615,579    1.71%
Madison Logic Holdings, Inc. Common Stock (SBIC)  (2)(4)  Equity                    11/30/2016         5,000 shares    50,000    50,000    0.02%
Madison Logic Holdings, Inc. Series A Preferred Stock (SBIC)  (2)(4)  Equity                    11/30/2016         4,500 shares    450,000    410,000    0.15%
Total                                        $5,113,831   $5,075,579    1.88%
Mobileum, Inc.                                Santa Clara, CA                    
Term Loan  (12)  Second Lien  3M L+10.25%   0.75%   12.58%       11/1/2016  5/1/2022  Software  $21,500,000    21,205,555    21,500,000    7.96%
Mobile Acquisition Holdings, LP Class A Common Units  (4)  Equity                    11/1/2016         750 units    455,385    1,140,000    0.42%
Total                                        $21,660,940   $22,640,000    8.38%
Munch's Supply, LLC  (20)                             New Lenox, IL                    
Term Loan  (12)  First Lien  3M L+6.25%   1.00%   8.89%       4/11/2019  4/11/2024  Capital Equipment  $8,000,000    7,923,265    7,923,200    2.93%
Cool Supply Holdings, LLC Class A Common Units  (4)  Equity                    4/11/2019         500,000 units    500,000    500,000    0.19%
Total                                        $8,423,265   $8,423,200    3.12%

 

 9 

 

 

Stellus Capital Investment Corporation
 
Consolidated Schedule of Investments (unaudited)

 

June 30, 2019

  

Investments  Footnotes  Security  Coupon  LIBOR
floor		   Cash   PIK   Investment
Date		  Maturity 

Headquarters/

Industry

  Principal
Amount/
Shares		   Amortized
Cost		  

Fair

Value (1)

   % of
Net
Assets		 
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    9,891,076    9,950,000    3.68%
NTS Investors, LP Class A Common Units  (4)  Equity                    3/31/2017         2,335 units    500,000    440,000    0.16%
Total                                        $10,391,076   $10,390,000    3.84%
NGS US Finco, LLC                                Bradford, PA                    
Term Loan (SBIC)  (2)(12)  Second Lien  1M L+8.50%   1.00%   10.90%       10/1/2018  4/1/2026  Utilities: Oil & Gas  $10,000,000    9,860,562    9,500,000    3.52%
NS412, LLC                                Dallas, TX                    
Term Loan  (12)  Second Lien  3M L+8.50%   1.00%   10.83%       5/6/2019  11/6/2025  Services: Consumer  $7,615,000    7,465,508    7,465,746    2.76%
NS Group Holding Company, LLC Class A Common Units  (4)  Equity                    5/6/2019         750 shares    750,000    750,000    0.28%
Total                                        $8,215,508   $8,215,746    3.04%
Nutritional Medicinals, LLC  (24)                             Centerville, OH                    
Term Loan  (12)  First Lien  3M L+6.00%   1.00%   8.33%       11/15/2018  11/15/2023  Healthcare & Pharmaceuticals  $15,422,500    15,148,164    14,882,713    5.51%
Functional Aggregator, LLC Common Units  (4)  Equity                    11/15/2018         12,500 shares    1,250,000    1,200,000    0.44%
Total                                        $16,398,164   $16,082,713    5.95%
PCP MT Aggregator Holdings, L.P.                                Oak Brook, IL                    
Common LP Units  (4)  Equity                    3/29/2019     Finance   750,000 shares    0    750,000    0.28%
Premiere Digital Services, Inc.                                Los Angeles, CA                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+5.50%   1.50%   9.10%       10/18/2018  10/18/2023  Media: Broadcasting & Subscription  $8,250,000    8,038,463    7,878,750    2.92%
Term Loan  (13)(22)  First Lien  3M L+5.50%   1.50%   9.10%       10/18/2018  10/18/2023     $2,428,772    2,366,496    2,319,478    0.86%
Premiere Digital Holdings, Inc., Common Stock  (4)  Equity                    10/18/2018         5,000 shares    50,000    50,000    0.02%
Premiere Digital Holdings, Inc., Preferred Stock  (4)  Equity                    10/18/2018         4,500 shares    450,000    470,000    0.17%
Total