10-Q 1 tm2211927d1_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 March 31, 2022

 

OR

 

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

 

Commission file number: 814-01301

 

MONROE CAPITAL INCOME PLUS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

Maryland   83-0711022
(State or Other Jurisdiction of
Incorporation or Organization)		   (I.R.S. Employer
Identification No.)
     
311 South Wacker Drive, Suite 6400
Chicago, Illinois		   60606
(Address of Principal Executive Office)   (Zip Code)

 

(312) 258-8300

(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
None   N/A   N/A

 

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   x 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 the 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 ¨
       
Non-accelerated filer x Smaller reporting company ¨
       
Emerging growth company x    

 

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

 

As of May 11, 2022, the registrant had 48,314,481 shares of common stock, $0.001 par value, outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
PART I. FINANCIAL INFORMATION 3
     
Item 1. Consolidated Financial Statements 3
     
  Consolidated Statements of Assets and Liabilities as of March 31, 2022 (unaudited) and December 31, 2021 3
     
  Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 (unaudited) 4
     
  Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2022 and 2021 (unaudited) 5
     
  Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited) 6
     
  Consolidated Schedules of Investments as of March 31, 2022 (unaudited) and December 31, 2021 7
     
  Notes to Consolidated Financial Statements (unaudited) 25
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 44
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 59
     
Item 4. Controls and Procedures 60
     
PART II. OTHER INFORMATION 61
     
Item 1. Legal Proceedings 61
     
Item 1A. Risk Factors 61
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 64
     
Item 3. Defaults Upon Senior Securities 64
     
Item 4. Mine Safety Disclosures 64
     
Item 5. Other Information 64
     
Item 6. Exhibits 65
     
Signatures    

 

2

 

 

Part I. Financial Information

Item 1. Consolidated Financial Statements

 

MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share data)
         
   March 31, 2022   December 31, 2021 
   (unaudited)     
ASSETS        
Investments, at fair value:          
Non-controlled/non-affiliate company investments  $754,026   $693,036 
Non-controlled affiliate company investments   12,668    11,854 
Total investments, at fair value (amortized cost of: $754,817 and $695,916, respectively)   766,694    704,890 
Cash   3,294    4,998 
Restricted cash   12,137    8,973 
Unrealized gain on foreign currency forward contracts   52    585 
Interest receivable   5,487    4,803 
Other assets   98    12 
Total assets   787,762    724,261 
           
LIABILITIES          
Debt:          
Revolving credit facility   281,200    348,600 
Less: Unamortized deferred financing costs   (3,677)   (3,615)
Total debt, less unamortized deferred financing costs   277,523    344,985 
Interest payable   2,856    2,184 
Management fees payable   2,796    2,366 
Incentive fees payable   3,256    1,808 
Accounts payable and accrued expenses   3,705    3,470 
Directors' fees payable   15    — 
Total liabilities   290,151    354,813 
Net assets  $497,611   $369,448 
           
Commitments and contingencies (See Note 11)          
           
ANALYSIS OF NET ASSETS          
Common stock, $0.001 par value, 100,000 shares authorized, 48,956 and 36,565 shares issued and outstanding, respectively  $49   $37 
Capital in excess of par value   486,091    360,955 
Accumulated undistributed (overdistributed) earnings   11,471    8,456 
Total net assets  $497,611   $369,448 
           
Net asset value per share  $10.16   $10.10 

 

See Notes to Consolidated Financial Statements.

 

3

 

 

MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
         
   Three months ended March 31, 
   2022   2021 
Investment income:        
Non-controlled/non-affiliate company investments:          
Interest, fee and dividend income  $16,223   $4,655 
Total investment income from non-controlled/non-affiliate company investments   16,223    4,655 
Non-controlled affiliate company investments:          
Interest income   164    — 
Total investment income from non-controlled affiliate company investments   164    — 
Total investment income   16,387    4,655 
           
Operating expenses:          
Interest and other debt financing expenses   3,280    699 
Base management fees   2,796    814 
Incentive fees   1,823    961 
Professional fees   145    89 
Administrative service fees   203    111 
General and administrative expenses   210    80 
Directors' fees   15    15 
Expenses before fee waivers   8,472    2,769 
Base management fee waivers   —    (814)
Incentive fee waivers   —    (543)
Total expenses, net of fee waivers   8,472    1,412 
Net investment income before income taxes   7,915    3,243 
Income taxes, including excise taxes   —    — 
Net investment income   7,915    3,243 
           
Net gain (loss):          
Net realized gain (loss):          
Non-controlled/non-affiliate company investments   25    43 
Foreign currency forward contracts   18    (3)
Foreign currency and other transactions   —    (40)
Net realized gain (loss)   43    —
           
Net change in unrealized gain (loss):          
Non-controlled/non-affiliate company investments   2,903    2,722 
Foreign currency forward contracts   (533)   170 
Net change in unrealized gain (loss)   2,370    2,892 
           
Net gain (loss)   2,413    2,892 
           
Net increase (decrease) in net assets resulting from operations  $10,328   $6,135 
           
Per common share data:          
Net investment income per share - basic and diluted  $0.20   $0.22 
Net increase (decrease) in net assets resulting from operations per share - basic and diluted  $0.27   $0.41 
Weighted average common shares outstanding - basic and diluted   38,729    14,786 

 

See Notes to Consolidated Financial Statements.

 

4

 

 

MONROE CAPITAL INCOME PLUS CORPORATION 

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

(in thousands)

 

               Accumulated     
 Common Stock       undistributed     
   Number of shares   Par
value		   Capital in excess of
par value		   (overdistributed)
earnings		   Total
net assets		 
Balances at December 31, 2020   13,828   $14   $135,636   $1,863   $137,513 
Net investment income   —    —    —    3,243    3,243 
Net realized gain (loss)   —    —    —    —    — 
Net change in unrealized gain (loss)   —    —    —    2,892    2,892 
Issuance of common stock   5,302    5    51,634    —    51,639 
Distributions declared to stockholders   —    —    —    (2,766)   (2,766)
Stock issued in connection with dividend reinvestment plan   77    —    771    —    771 
Balances at March 31, 2021   19,207   $19   $188,041   $5,232   $193,292 
                          
Balances at December 31, 2021   36,565   $37   $360,955   $8,456   $369,448 
Net investment income   —    —    —    7,915    7,915 
Net realized gain (loss)   —    —    —    43    43 
Net change in unrealized gain (loss)   —    —    —    2,370    2,370 
Issuance of common stock   12,174    12    122,941    —    122,953 
Distributions declared to stockholders   —    —    —    (7,313)   (7,313)
Stock issued in connection with dividend reinvestment plan   217    —    2,195    —    2,195 
Balances at March 31, 2022   48,956   $49   $486,091   $11,471   $497,611 

 

See Notes to Consolidated Financial Statements.

 

5

 

 

MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
         
   Three months ended March 31, 
   2022   2021 
Cash flows from operating activities:          
Net increase (decrease) in net assets resulting from operations  $10,328   $6,135 
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:          
Net realized (gain) loss on investments   (25)   (43)
Net realized (gain) loss on foreign currency forward contracts   (18)   3 
Net realized (gain) loss on foreign currency and other transactions   —    40 
Net change in unrealized (gain) loss on investments   (2,903)   (2,722)
Net change in unrealized (gain) loss on foreign currency forward contracts   533    (170)
Payment-in-kind interest income   (679)   (176)
Net accretion of discounts and amortization of premiums   (643)   (189)
Purchases of investments   (79,826)   (51,050)
Proceeds from principal payments and sale of investments and settlement of forward contracts   22,290    18,779 
Amortization of deferred financing costs   385    125 
Changes in operating assets and liabilities:          
Interest receivable   (684)   (461)
Other assets   (86)   136 
Interest payable   672    148 
Payable for unsettled trades   —    6,410 
Management fees payable   430    (93)
Incentive fees payable   1,448    418 
Accounts payable and accrued expenses   235    (204)
Directors' fees payable   15    15 
Net cash provided by (used in) operating activities   (48,528)   (22,899)
           
Cash flows from financing activities:          
Borrowings on revolving credit facility   75,500    50,900 
Repayments of revolving credit facility   (142,900)   (67,500)
Payments of deferred financing costs   (447)   (303)
Proceeds from issuance of common stock   122,953    51,639 
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $2,195 and $771, respectively   (5,118)   (1,995)
Net cash provided by (used in) financing activities   49,988    32,741 
           
Net increase (decrease) in Cash and Restricted cash   1,460    9,842 
Effect of foreign currency exchange rates   —    (40)
Cash and Restricted cash, beginning of period   13,971    6,120 
Cash and Restricted cash, end of period  $15,431   $15,922 
           
Supplemental disclosure of cash flow information:          
Cash interest paid during the period  $2,223   $426 
Cash paid for income taxes, including excise taxes, during the period  $—   $66 
   

 

The following tables provide a reconciliation of cash and restricted cash reported on the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts on the Consolidated Statements of Cash Flows:

 

   March 31, 2022   December 31, 2021 
Cash  $3,294   $4,998 
Restricted cash   12,137    8,973 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows  $15,431   $13,971 

 

   March 31, 2021   December 31, 2020 
Cash  $3,487   $2,443 
Restricted cash   12,435    3,677 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows  $15,922   $6,120 

 

See Notes to Consolidated Financial Statements.    

 

6

 

  

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

March 31, 2022

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
 Index (b)		  Interest
Rate		   Acquisition
Date (c)		  Maturity   Principal    Amortized
Cost		   Fair
Value (d)		   % of Net
Assets (e)		 
Non-Controlled/Non-Affiliate Company Investments                                  
Senior Secured Loans                                  
Aerospace & Defense                                  
API Holdings III Corp. (f)  L+4.25%  4.71%  5/2/2019  5/8/2026   1,653    $1,648   $1,525    0.3%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)  L+6.00%  7.00%  7/25/2019  7/25/2025   1,950     1,925    1,950    0.4%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)  L+6.00%  7.00%  12/24/2019  7/25/2025   1,018     1,005    1,018    0.2%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)  L+6.00%  7.00%  2/17/2021  7/25/2025   1,760     1,755    1,760    0.4%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)  L+6.00%  7.00%  6/15/2021  7/25/2025   1,032     1,013    1,032    0.2%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)  L+6.00%  7.00%  8/10/2021  7/25/2025   1,007     990    1,007    0.2%
SI Holdings, Inc. (Integrated Polymer Solutions) (Revolver) (g)  L+6.00%  7.00%  7/25/2019  7/25/2024   316     40    40    0.0%
                 8,736     8,376    8,332    1.7%
Automotive                                  
Born To Run, LLC (f)  L+6.00%  7.01%  4/1/2021  4/1/2027   8,933     8,779    8,980    1.8%
Born To Run, LLC (Delayed Draw) (g) (h)  L+6.00%  7.01%  4/1/2021  4/1/2027   1,463     86    86    0.0%
Lifted Trucks Holdings, LLC (f)  L+5.75%  6.75%  8/2/2021  8/2/2027   9,975     9,793    9,935    2.0%
Lifted Trucks Holdings, LLC (Delayed Draw) (g) (h)  L+5.75%  6.75%  8/2/2021  8/2/2027   2,000     —    —    0.0%
Lifted Trucks Holdings, LLC (Revolver) (g)  L+5.75%  6.75%  8/2/2021  8/2/2027   2,381     —    —    0.0%
Truck-Lite Co., LLC (f)  L+6.25%  7.26%  3/11/2020  12/14/2026   3,409     3,384    3,426    0.7%
Truck-Lite Co., LLC (f)  L+6.25%  7.26%  11/23/2021  12/14/2026   633     633    636    0.2%
Truck-Lite Co., LLC (f)  L+6.25%  7.26%  3/11/2020  12/14/2026   505     505    508    0.1%
Truck-Lite Co., LLC (f)  L+6.25%  7.26%  11/23/2021  12/14/2026   561     561    564    0.1%
Truck-Lite Co., LLC (Delayed Draw) (g) (h)  L+6.25%  7.26%  11/23/2021  12/14/2026   718     —    —    0.0%
                 30,578     23,741    24,135    4.9%
Banking                                  
MV Receivables II, LLC (Delayed Draw) (g) (h) (i)  L+9.75%  11.25%  7/29/2021  7/29/2026   10,000     2,118    2,496    0.5%
StarCompliance MidCo, LLC (f)  L+6.75%  7.75%  1/12/2021  1/12/2027   3,000     2,951    3,000    0.6%
StarCompliance MidCo, LLC (f)  L+6.75%  7.75%  10/12/2021  1/12/2027   503     494    503    0.1%
StarCompliance MidCo, LLC (Revolver) (g)  L+6.75%  7.75%  1/12/2021  1/12/2027   484     —    —    0.0%
                 13,987     5,563    5,999    1.2%
Beverage, Food & Tobacco                                  
Huff Hispanic Food Holdings, LLC (f)  L+5.50%  6.50%  10/18/2019  10/18/2024   5,422     5,363    5,397    1.1%
Huff Hispanic Food Holdings, LLC (f)  L+5.50%  6.50%  10/18/2019  10/18/2024   307     307    305    0.1%
Huff Hispanic Food Holdings, LLC (Revolver) (g)  L+5.50%  6.50%  10/18/2019  10/18/2024   1,286     574    572    0.1%
LVF Holdings, Inc. (f)  L+6.25%  7.26%  6/10/2021  6/10/2027   3,491     3,429    3,491    0.7%
LVF Holdings, Inc. (f)  L+6.25%  7.26%  6/10/2021  6/10/2027   3,341     3,341    3,341    0.7%
LVF Holdings, Inc. (Delayed Draw) (g) (h)  L+6.25%  7.26%  6/10/2021  6/10/2027   802     —    —    0.0%
LVF Holdings, Inc. (Revolver) (g)  L+6.25%  7.26%  6/10/2021  6/10/2027   554     344    344    0.1%
LX/JT Intermediate Holdings, Inc. (f)  SF+6.00%  7.50%  3/11/2020  3/11/2025   3,311     3,269    3,254    0.6%
LX/JT Intermediate Holdings, Inc. (Revolver) (g)  SF+6.00%  7.50%  3/11/2020  3/11/2025   500     —    —    0.0%
                 19,014     16,627    16,704    3.4%
Capital Equipment                                  
MCP Shaw Acquisitionco, LLC (f)  SF+6.50%  7.50%  2/28/2020  11/28/2025   7,786     7,683    7,767    1.5%
MCP Shaw Acquisitionco, LLC (f)  SF+6.50%  7.50%  12/29/2021  11/28/2025   2,396     2,351    2,390    0.5%
MCP Shaw Acquisitionco, LLC (Delayed Draw) (g) (h)  SF+6.50%  7.50%  12/29/2021  11/28/2025   786     —    —    0.0%
MCP Shaw Acquisitionco, LLC (Revolver) (g)  SF+6.50%  7.50%  2/28/2020  11/28/2025   1,427     476    476    0.1%
                 12,395     10,510    10,633    2.1%
Construction & Building                                  
Premier Roofing L.L.C. (f)  L+6.50%  7.50%  8/31/2020  8/29/2025   3,456     3,407    3,378    0.7%
Premier Roofing L.L.C. (Revolver) (g)  L+6.50%  7.50%  8/31/2020  8/29/2025   1,199     959    937    0.2%
TCFIII Owl Buyer LLC (f)  L+6.00%  7.00%  4/19/2021  4/17/2026   4,466     4,401    4,466    0.9%
TCFIII Owl Buyer LLC (f)  L+6.00%  7.00%  4/19/2021  4/17/2026   5,453     5,453    5,453    1.1%
TCFIII Owl Buyer LLC (f)  L+6.00%  7.00%  12/17/2021  4/17/2026   4,894     4,813    4,894    1.0%
                 19,468     19,033    19,128    3.9%
Consumer Goods: Durable                                  
Independence Buyer, Inc. (f)  L+5.75%  6.75%  8/3/2021  8/3/2026   12,469     12,248    12,469    2.5%
Independence Buyer, Inc. (Revolver) (g)  L+5.75%  6.75%  8/3/2021  8/3/2026   2,964     —    —    0.0%
Recycled Plastics Industries, LLC (f)  L+6.75%  7.75%  8/4/2021  8/4/2026   5,473     5,375    5,452    1.1%
Recycled Plastics Industries, LLC (Revolver) (g)  L+6.75%  7.75%  8/4/2021  8/4/2026   743     520    518    0.1%
                 21,649     18,143    18,439    3.7%
Consumer Goods: Non-Durable                                  
Arizona Natural Resources, LLC (f)  L+5.75%  6.75%  5/18/2021  5/18/2026   13,930     13,693    13,909    2.8%
Arizona Natural Resources, LLC (f)  L+5.75%  6.75%  12/15/2021  5/18/2026   2,557     2,509    2,553    0.5%
Arizona Natural Resources, LLC (Revolver)  L+5.75%  6.75%  5/18/2021  5/18/2026   1,111     1,111    1,109    0.2%
The Kyjen Company, LLC (f)  L+6.50%  7.50%  5/14/2021  4/3/2026   2,970     2,944    2,982    0.6%
The Kyjen Company, LLC (Revolver) (g)  L+6.50%  7.50%  5/14/2021  4/3/2026   315     87    87    0.0%
Thrasio, LLC (f)  L+7.00%  8.01%  12/18/2020  12/18/2026   4,928     4,868    4,909    1.0%
                 25,811     25,212    25,549    5.1%
Containers, Packaging & Glass                                  
Polychem Acquisition, LLC (f)  L+5.00%  6.50%  4/8/2019  3/17/2025   1,940     1,936    1,939    0.4%
Port Townsend Holdings Company, Inc. and Crown Corrugated Company  L+7.75%  5.75% Cash/
3.00% PIK		   10/16/2020  6/30/2022   203     203    203    0.0%
                 2,143     2,139    2,142    0.4%
Energy: Oil & Gas                                  
Liquid Tech Solutions Holdings, LLC (f)  L+4.75%  5.75%  3/18/2021  3/17/2028   2,265     2,256    2,260    0.4%
Par Petroleum, LLC (f)  L+6.75%  6.99%  1/27/2020  1/12/2026   895     900    894    0.2%
                 3,160     3,156    3,154    0.6%
Environmental Industries                                  
Quest Resource Management Group, LLC (f)  L+6.50%  7.50%  10/19/2020  10/20/2025   988     922    987    0.2%
Quest Resource Management Group, LLC (f)  L+6.50%  7.50%  10/19/2020  10/20/2025   1,084     1,084    1,084    0.2%
Quest Resource Management Group, LLC (f)  L+6.50%  7.50%  12/7/2021  10/20/2025   3,856     3,784    3,839    0.8%
Quest Resource Management Group, LLC (Delayed Draw) (g) (h)  L+6.50%  7.50%  12/7/2021  10/20/2025   1,778     389    387    0.1%
StormTrap, LLC (f)  SF+5.50%  6.74%  3/25/2022  3/24/2028   8,000     7,860    8,010    1.6%
StormTrap, LLC (Delayed Draw) (g) (h)  SF+5.50%  6.74%  3/25/2022  3/24/2028   2,222     —    —    0.0%
Volt Bidco, Inc. (f)  L+6.50%  7.50%  8/11/2021  8/11/2027   6,000     5,890    5,978    1.2%
Volt Bidco, Inc. (Delayed Draw) (g) (h)  L+6.50%  7.50%  8/11/2021  8/11/2027   688     232    231    0.0%
Volt Bidco, Inc. (Revolver) (g)  L+6.50%  7.50%  8/11/2021  8/11/2027   574     —    —    0.0%
                 25,190     20,161    20,516    4.1%
FIRE: Finance                                  
Exiger LLC (f)  L+7.25%  8.25%  9/30/2021  9/30/2027   14,000     13,740    14,056    2.8%
Exiger LLC (Delayed Draw) (g) (h)  L+7.25%  8.25%  9/30/2021  9/30/2027   4,200     —    —    0.0%
Exiger LLC (Revolver) (g)  L+7.25%  8.25%  9/30/2021  9/30/2027   1,400     —    —    0.0%
J2 BWA Funding LLC (Delayed Draw) (g) (h) (i)  n/a  9.00%  12/24/2020  12/24/2026   2,809     975    960    0.2%
Oceana Australian Fixed Income Trust (f) (i) (j) (k)  n/a  11.50%  2/25/2021  2/25/2026   8,040     8,460    8,040    1.6%
Oceana Australian Fixed Income Trust (f) (i) (j) (k)  n/a  10.75%  6/29/2021  6/29/2026   3,387     3,400    3,387    0.7%
W3 Monroe RE Debt LLC (i)  n/a  10.00% PIK   2/5/2021  2/4/2028   1,806     1,806    1,806    0.4%
                 35,642     28,381    28,249    5.7%
FIRE: Real Estate                                  
300 N. Michigan Mezz, LLC (Delayed Draw) (f) (g) (h) (i)  L+14.50%  16.00% PIK   7/15/2020  7/15/2024   1,000     908    908    0.2%
Avison Young (USA) Inc. (f) (i) (j)  L+5.75%  6.76%  4/26/2019  1/30/2026   1,940     1,928    1,933    0.4%
Florida East Coast Industries, LLC (f) (i)  n/a  10.50%  8/9/2021  6/28/2024   5,063     4,942    5,012    1.0%
InsideRE, LLC (f)  L+5.75%  6.76%  12/22/2021  12/22/2027   7,484     7,341    7,434    1.5%
InsideRE, LLC (Delayed Draw) (g) (h)  L+5.75%  6.76%  12/22/2021  12/22/2027   2,886     —    —    0.0%
InsideRE, LLC (Revolver) (g)  L+5.75%  6.76%  12/22/2021  12/22/2027   965     —    —    0.0%
NCBP Property, LLC (i)  L+9.50%  10.50%  12/18/2020  12/16/2022   2,500     2,491    2,504    0.5%
                 21,838     17,610    17,791    3.6%
Healthcare & Pharmaceuticals                                  
Apotheco, LLC (f)  L+8.50%  6.50% Cash/
3.00% PIK		   4/8/2019  4/8/2024   1,826     1,810    1,751    0.3%
Apotheco, LLC (Revolver)  L+8.50%  6.50% Cash/
3.00% PIK		   4/8/2019  4/8/2024   481     481    462    0.1%
Appriss Health, LLC (f)  L+7.25%  8.25%  5/6/2021  5/6/2027   6,500     6,385    6,503    1.3%
Appriss Health, LLC (Revolver) (g)  L+7.25%  8.25%  5/6/2021  5/6/2027   433     —    —    0.0%
Ascent Midco, LLC (f)  L+5.50%  6.50%  2/5/2020  2/5/2025   2,267     2,240    2,267    0.4%
Ascent Midco, LLC (Revolver) (g)  L+5.50%  6.50%  2/5/2020  2/5/2025   403     —    —    0.0%
Brickell Bay Acquisition Corp. (f)  L+6.50%  7.50%  2/12/2021  2/12/2026   2,841     2,793    2,852    0.6%
Brickell Bay Acquisition Corp. (Delayed Draw) (g) (h)  L+6.50%  7.50%  2/12/2021  2/12/2026   573     —    —    0.0%
Caravel Autism Health, LLC (f)  L+5.75%  6.75%  6/30/2021  6/30/2027   7,980     7,837    7,414    1.5%
Caravel Autism Health, LLC (Delayed Draw) (g) (h)  L+5.75%  6.75%  6/30/2021  6/30/2027   5,999     299    277    0.1%
Caravel Autism Health, LLC (Revolver) (g)  L+5.75%  6.75%  6/30/2021  6/30/2027   2,000     1,000    929    0.2%
Dorado Acquisition, Inc. (f)  L+6.25%  7.25%  6/30/2021  6/30/2026   13,930     13,686    13,923    2.8%
Dorado Acquisition, Inc. (Delayed Draw) (g) (h)  L+6.25%  7.25%  6/30/2021  6/30/2026   606     —    —    0.0%
Dorado Acquisition, Inc. (Revolver) (g)  L+6.25%  7.25%  6/30/2021  6/30/2026   1,670     —    —    0.0%
INH Buyer, Inc. (f)  L+6.00%  7.01%  6/30/2021  6/28/2028   4,886     4,842    4,747    0.9%
NationsBenefits, LLC (f)  L+7.00%  8.00%  8/20/2021  8/20/2026   12,219     12,002    12,464    2.5%
NationsBenefits, LLC (Revolver) (g)  L+7.00%  8.00%  8/20/2021  8/20/2026   1,361     —    —    0.0%
QF Holdings, Inc. (f)  L+6.25%  7.54%  9/19/2019  9/19/2024   4,550     4,502    4,539    0.9%
QF Holdings, Inc. (f)  L+6.25%  7.25%  12/15/2021  12/15/2027   4,368     4,306    4,357    0.9%
QF Holdings, Inc. (f)  L+6.25%  7.54%  9/19/2019  9/19/2024   910     910    908    0.2%
QF Holdings, Inc. (Delayed Draw) (g) (h)  L+6.25%  7.54%  8/21/2020  9/19/2024   910     —    —    0.0%
QF Holdings, Inc. (Revolver) (g)  L+6.25%  7.54%  9/19/2019  9/19/2024   1,092     —    —    0.0%
Seran BioScience, LLC (f)  L+6.25%  7.25%  12/31/2020  12/31/2025   1,980     1,950    1,982    0.4%

 

7

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2022

(in thousands, except for shares and units)

 

Portfolio Company (a)   Spread
Above
 Index (b)		   Interest
Rate		     Acquisition
Date (c)		   Maturity     Principal     Amortized
Cost		     Fair
Value (d)		     % of
Net
Assets (e)		  
Seran BioScience, LLC (Revolver) (g)   L+6.25%   7.25 %   12/31/2020   12/31/2025     356     $ —     $ —       0.0 %
SIP Care Services, LLC (f)   L+5.75%   6.75 %   12/30/2021   12/30/2026     3,800       3,728       3,800       0.8 %
SIP Care Services, LLC (Delayed Draw) (g) (h)   L+5.75%   6.75 %   12/30/2021   12/30/2026     3,040       —       —       0.0 %
SIP Care Services, LLC (Revolver) (g)   L+5.75%   6.75 %   12/30/2021   12/30/2026     760       —       —       0.0 %
TigerConnect, Inc. (f)   SF+6.75%   7.75 %   2/16/2022   2/16/2028     10,000       9,805       10,000       2.0 %
TigerConnect, Inc. (Delayed Draw) (g) (h)   SF+6.75%   7.75 %   2/16/2022   2/16/2028     413       —       —       0.0 %
TigerConnect, Inc. (Revolver) (g)   SF+6.75%   7.75 %   2/16/2022   2/16/2028     1,429       —       —       0.0 %
WebPT, Inc. (f)   L+6.75%   7.75 %   8/28/2019   1/18/2028     5,000       4,946       5,082       1.0 %
WebPT, Inc. (Revolver) (g)   L+6.75%   7.75 %   8/28/2019   1/18/2028     521       —       —       0.0 %
                        105,104       83,522       84,257       16.9 %
High Tech Industries                                                  
Acquia Inc. (f)   L+7.00%   8.00 %   11/1/2019   10/31/2025     15,429       15,182       15,428       3.1 %
Acquia Inc. (Revolver) (g)   L+7.00%   8.00 %   11/1/2019   10/31/2025     588       —       —       0.0 %
Arcstor Midco, LLC (f)   L+7.00%   8.01 %   3/16/2021   3/16/2027     11,880       11,676       11,363       2.3 %
MarkLogic Corporation (f)   L+6.00%   7.00 %   10/20/2020   10/20/2025     5,184       5,088       5,262       1.0 %
MarkLogic Corporation (f)   L+6.00%   7.00 %   11/23/2021   10/20/2025     483       475       492       0.1 %
MarkLogic Corporation (Delayed Draw) (g) (h)   L+6.00%   7.00 %   11/23/2021   10/20/2025     323       —       —       0.0 %
MarkLogic Corporation (Revolver) (g)   L+6.00%   7.00 %   10/20/2020   10/20/2025     404       —       —       0.0 %
Mindbody, Inc. (f)   L+8.50%   8.38% Cash/
1.50% PIK		     2/15/2019   2/14/2025     1,860       1,841       1,854       0.4 %
Mindbody, Inc. (f)   L+8.50%   8.38% Cash/
1.50% PIK		     9/22/2021   2/14/2025     7,358       7,358       7,333       1.5 %
Mindbody, Inc. (Revolver) (g)   L+8.00%   9.38 %   2/15/2019   2/14/2025     190       —       —       0.0 %
Mockingbird Acquisitionco Inc. (f)   L+6.00%   7.00 %   10/1/2020   10/1/2025     3,840       3,783       3,857       0.8 %
Mockingbird Acquisitionco Inc. (Revolver) (g)   L+6.00%   7.00 %   10/1/2020   10/1/2025     600       360       360       0.1 %
Optomi, LLC (f)   L+5.75%   6.75 %   12/16/2021   12/16/2027     13,500       13,243       13,500       2.7 %
Optomi, LLC (Revolver) (g)   L+5.75%   6.75 %   12/16/2021   12/16/2027     3,189       1,913       1,913       0.4 %
Securly, Inc. (f)    L+7.00%   8.01 %   4/22/2021   4/22/2027     8,400       8,253       8,400       1.7 %
Securly, Inc. (Delayed Draw) (g) (h)   L+7.00%   8.00 %   4/22/2021   4/22/2027     1,938       1,764       1,764       0.3 %
Securly, Inc. (Revolver) (g)   L+7.00%   8.01 %   4/22/2021   4/22/2027     969       —       —       0.0 %
Transact Holdings Inc. (f)   L+4.75%   5.21 %   4/18/2019   4/30/2026     731       723       727       0.1 %
                        76,866       71,659       72,253       14.5 %
Hotels, Gaming & Leisure                                                  
Equine Network, LLC (f)   L+6.00%   7.00 %   12/31/2020   12/31/2025     1,485       1,459       1,472       0.3 %
Equine Network, LLC (f)   L+6.00%   7.00 %   1/29/2021   12/31/2025     673       663       668       0.1 %
Equine Network, LLC (Delayed Draw) (g) (h)   L+6.00%   7.00 %   12/31/2020   12/31/2025     366       —       —       0.0 %
Equine Network, LLC (Revolver) (g)   L+6.00%   7.00 %   12/31/2020   12/31/2025     146       73       73       0.0 %
                        2,670       2,195       2,213       0.4 %
Media: Advertising, Printing & Publishing                                                  
95 Percent Buyer, LLC (f)   L+6.00%   7.00 %   11/24/2021   11/24/2026     18,000       17,663       18,002       3.6 %
95 Percent Buyer, LLC (Revolver) (g)   L+6.00%   7.00 %   11/24/2021   11/24/2026     963       —       —       0.0 %
Madison Logic, Inc. (f)   L+5.75%   6.75 %   11/22/2021   11/20/2026     19,950       19,671       20,044       4.0 %
Madison Logic, Inc. (Revolver) (g)   L+5.75%   6.75 %   11/22/2021   11/20/2026     912       —       —       0.0 %
North Haven USHC Acquisition, Inc. (f)   L+6.00%   7.00 %   10/30/2020   10/30/2025     2,469       2,431       2,469       0.5 %
North Haven USHC Acquisition, Inc. (f)   L+6.00%   7.00 %   10/30/2020   10/30/2025     715       715       715       0.2 %
North Haven USHC Acquisition, Inc. (Delayed Draw) (g) (h)   L+6.00%   7.00 %   9/3/2021   10/30/2025     1,440       481       485       0.1 %
North Haven USHC Acquisition, Inc. (Revolver) (g)   L+6.00%   7.00 %   3/12/2021   10/30/2025     240       —       —       0.0 %
NTM Acquisition Corp (f)   L+7.25%   7.26% Cash/
1.00% PIK		     4/18/2019   6/7/2024     4,584       4,583       4,424       0.9 %
Relevate Health Group, LLC (f)   L+6.00%   7.00 %   11/20/2020   11/20/2025     1,980       1,950       1,990       0.4 %
Relevate Health Group, LLC (f)   SF+6.00%   7.00 %   3/28/2022   11/20/2025     5,263       5,158       5,289       1.1 %
Relevate Health Group, LLC (Delayed Draw) (g) (h)   L+6.00%   7.00 %   11/20/2020   11/20/2025     1,044       886       890       0.2 %
Relevate Health Group, LLC (Revolver) (g)   L+6.00%   7.00 %   11/20/2020   11/20/2025     789       —       —       0.0 %
Spherix Global Inc. (f)   SF+6.00%   7.00 %   12/22/2021   12/22/2026     4,500       4,426       4,500       0.9 %
Spherix Global Inc. (Revolver) (g)   SF+6.00%   7.00 %   12/22/2021   12/22/2026     500       —       —       0.0 %
XanEdu Publishing, Inc. (f)   L+6.50%   7.50 %   1/28/2020   1/28/2025     6,078       5,987       6,099       1.2 %
XanEdu Publishing, Inc. (Revolver) (g)   L+6.50%   7.50 %   1/28/2020   1/28/2025     977       —       —       0.0 %
                        70,404       63,951       64,907       13.1 %
Media: Broadcasting & Subscription                                                  
Vice Group Holding Inc.   L+12.00%   5.50% Cash/
8.00% PIK		     5/2/2019   11/2/2022     1,168       1,166       1,168       0.2 %
Vice Group Holding Inc.   L+12.00%   5.50% Cash/
8.00% PIK		     5/2/2019   11/2/2022     366       366       366       0.1 %
Vice Group Holding Inc.   L+12.00%   5.50% Cash/
8.00% PIK		     5/2/2019   11/2/2022     138       138       138       0.0 %
Vice Group Holding Inc.   L+12.00%   5.50% Cash/
8.00% PIK		     11/4/2019   11/2/2022     224       224       224       0.1 %
                        1,896       1,894       1,896       0.4 %
Media: Diversified & Production                                                  
Chess.com, LLC (f)   L+6.50%   7.51 %   12/31/2021   12/31/2027     13,000       12,752       13,000       2.6 %
Chess.com, LLC (Revolver) (g)   L+6.50%   7.51 %   12/31/2021   12/31/2027     1,413       —       —       0.0 %
Crownpeak Technology, Inc. (f)   L+5.75%   6.75 %   2/28/2019   2/28/2024     1,000       992       1,000       0.2 %
Crownpeak Technology, Inc. (f)   L+5.75%   6.75 %   2/28/2019   2/28/2024     15       15       15       0.0 %
Crownpeak Technology, Inc. (Revolver) (g)   L+5.75%   6.75 %   2/28/2019   2/28/2024     42       —       —       0.0 %
CyberGrants Holdings, LLC (f)   L+6.50%   7.25 %   9/8/2021   9/8/2027     18,500       18,251       18,500       3.7 %
CyberGrants Holdings, LLC (Delayed Draw) (g) (h)   L+6.50%   7.25 %   9/8/2021   9/8/2027     1,814       —       —       0.0 %
CyberGrants Holdings, LLC (Revolver) (g)   L+6.50%   7.50 %   9/8/2021   9/8/2027     1,814       1,270       1,270       0.3 %
Spectrum Science Communications, LLC (f)   SF+6.50%   7.50 %   1/25/2022   1/25/2027     3,000       2,942       3,000       0.6 %
Spectrum Science Communications, LLC (Revolver) (g)   SF+6.50%   7.50 %   1/25/2022   1/25/2027     600       —       —       0.0 %
Streamland Media MidCo LLC (f)   SF+6.75%   7.75 %   8/26/2019   8/31/2023     1,989       1,971       1,989       0.4 %
Streamland Media MidCo LLC (f)   SF+6.75%   7.75 %   3/7/2022   8/31/2023     540       531       541       0.1 %
                        43,727       38,724       39,315       7.9 %
Services: Business                                                  
Aperture Companies, LLC (f)   L+6.25%   7.25 %   12/31/2021   12/31/2026     15,000       14,716       14,976       3.0 %
Aperture Companies, LLC (Delayed Draw) (g) (h)   L+6.25%   7.25 %   12/31/2021   12/31/2026     4,320       —       —       0.0 %
Aperture Companies, LLC (Revolver) (g)   L+6.25%   7.25 %   12/31/2021   12/31/2026     1,347       —       —       0.0 %
Aras Corporation (f)   L+7.00%   4.25% Cash/
3.75% PIK		     4/13/2021   4/13/2027     4,539       4,468       4,621       0.9 %
Aras Corporation (Revolver) (g)   L+7.00%   4.25% Cash/
3.75% PIK		     4/13/2021   4/13/2027     325       —       —       0.0 %
Argano, LLC (f)   SF+5.50%   6.50 %   6/10/2021   6/10/2026     9,054       8,899       9,043       1.8 %
Argano, LLC   SF+5.50%   6.50 %   6/10/2021   6/10/2026     4,009       4,009       4,004       0.8 %
Argano, LLC (Delayed Draw) (g) (h)   SF+5.50%   6.50 %   3/16/2022   6/10/2026     4,771       649       649       0.1 %
Argano, LLC (Revolver) (g)   SF+5.50%   6.50 %   6/10/2021   6/10/2026     965       212       212       0.1 %
Certify, Inc. (f)   L+5.50%   6.50 %   2/28/2019   2/28/2024     488       485       486       0.1 %
Certify, Inc. (f)   L+5.50%   6.50 %   2/28/2019   2/28/2024     67       67       66       0.0 %
Certify, Inc. (f)   L+5.50%   6.50 %   1/21/2022   2/28/2024     55       55       55       0.0 %
Certify, Inc. (Delayed Draw) (g) (h)   L+5.50%   6.50 %   1/21/2022   2/28/2024     55       —       —       0.0 %
Certify, Inc. (Revolver) (g)   L+5.50%   6.50 %   2/28/2019   2/28/2024     22       6       6       0.0 %
ecMarket Inc. and Conexiom US Inc. (f) (i) (j)   L+7.00%   8.01 %   9/21/2021   9/21/2027     15,500       15,215       15,442       3.1 %
ecMarket Inc. and Conexiom US Inc. (Delayed
Draw) (g) (h) (i) (j)		   L+7.00%   8.01 %   9/21/2021   9/21/2027     1,291       665       662       0.1 %
ecMarket Inc. and Conexiom US Inc. (Revolver) (g) (i) (j)   L+6.50%   7.50 %   9/21/2021   9/21/2027     2,067       —       —       0.0 %
HS4 Acquisitionco, Inc. (f)   L+6.75%   7.76 %   7/9/2019   7/9/2025     3,970       3,922       3,962       0.8 %
HS4 Acquisitionco, Inc. (f)   L+6.75%   7.76 %   10/6/2021   7/9/2025     4,313       4,313       4,304       0.9 %
HS4 Acquisitionco, Inc. (Revolver) (g)   L+6.75%   7.76 %   7/9/2019   7/9/2025     325       49       49       0.0 %
Kaseya Inc. (f)   L+6.50%   6.50% Cash/
1.00% PIK		     5/3/2019   5/2/2025     2,938       2,906       2,938       0.6 %
Kaseya Inc. (f)   L+6.50%   6.50% Cash/
1.00% PIK		     5/3/2019   5/2/2025     311       311       311       0.1 %
Kaseya Inc. (f)   L+6.50%   6.50% Cash/
1.00% PIK		     3/4/2020   5/2/2025     278       278       278       0.1 %
Kaseya Inc. (f)   L+6.50%   6.50% Cash/
1.00% PIK		     9/8/2021   5/2/2025     8,036       7,915       8,036       1.6 %
Kaseya Inc. (Delayed Draw) (g) (h)   L+6.50%   6.50% Cash/
1.00% PIK		     9/8/2021   5/2/2025     3,774       1,962       1,962       0.4 %
Kaseya Inc. (Revolver) (g)   L+6.50%   7.50 %   5/3/2019   5/2/2025     211       —       —       0.0 %
Relativity ODA LLC (f)   L+6.50%   7.50% PIK     5/12/2021   5/12/2027     4,813       4,711       4,832       1.0 %
Relativity ODA LLC (Revolver) (g)   L+6.50%   7.50% PIK     5/12/2021   5/12/2027     450       —       —       0.0 %
Sundance Group Holdings, Inc. (f)   L+6.50%   7.50 %   7/2/2021   7/2/2027     4,148       4,073       4,140       0.8 %
Sundance Group Holdings, Inc. (Delayed Draw) (g) (h)   L+6.50%   7.50 %   7/2/2021   7/2/2027     1,244       —       —       0.0 %
Sundance Group Holdings, Inc. (Revolver) (g)   L+6.50%   7.50 %   7/2/2021   7/2/2027     498       116       116       0.0 %
                        99,184       80,002       81,150       16.3 %
Services: Consumer                                                  
Express Wash Acquisition Company, LLC (f)   L+6.50%   7.50 %   12/28/2020   12/26/2025     3,578       3,529       3,578       0.7 %
Express Wash Acquisition Company, LLC (f)   L+6.50%   7.50 %   9/3/2021   12/26/2025     8,128       8,005       8,128       1.6 %
Express Wash Acquisition Company, LLC (f)   L+6.50%   7.50 %   9/3/2021   12/26/2025     3,910       3,910       3,910       0.8 %
Express Wash Acquisition Company, LLC (Delayed Draw) (f) (g) (h)   L+6.50%   7.50 %   9/3/2021   12/26/2025     2,800       1,848       1,848       0.4 %
Express Wash Acquisition Company, LLC (Delayed Draw) (g) (h)   L+6.50%   7.50 %   12/22/2021   12/26/2025     5,000       3,879       3,879       0.8 %
Express Wash Acquisition Company, LLC (Revolver) (g)   L+6.50%   7.50 %   12/28/2020   12/26/2025     840       448       448       0.1 %
IDIG Parent, LLC (f)   L+6.00%   7.00 %   12/15/2020   12/15/2026     4,316       4,247       4,332       0.9 %
IDIG Parent, LLC (f)   L+6.00%   7.00 %   12/15/2020   12/15/2026     718       718       721       0.1 %
IDIG Parent, LLC (Revolver) (g)   L+6.00%   7.00 %   12/15/2020   12/15/2026     336       —       —       0.0 %
Light Wave Dental Management, LLC (f)   L+6.50%   7.50 %   8/1/2019   1/2/2024     4,226       4,209       4,215       0.9 %
Light Wave Dental Management, LLC (f)   L+6.50%   7.50 %   5/3/2021   1/2/2024     2,539       2,539       2,533       0.5 %
Light Wave Dental Management, LLC (f)   L+6.50%   7.50 %   8/3/2021   1/2/2024     2,111       2,080       2,106       0.4 %
Light Wave Dental Management, LLC   L+6.50%   7.50 %   8/3/2021   1/2/2024     4,574       4,574       4,562       0.9 %
Light Wave Dental Management, LLC (Revolver) (g)   L+6.50%   7.50 %   5/3/2021   1/2/2024     320       —       —       0.0 %
                        43,396       39,986       40,260       8.1 %
Telecommunications                                                  
Calabrio, Inc. (f)   L+7.00%   8.01 %   4/16/2021   4/16/2027     8,000       7,825       8,000       1.6 %
Calabrio, Inc. (Revolver) (g)   L+7.00%   8.01 %   4/16/2021   4/16/2027     963       —       —       0.0 %
DataOnline Corp. (f)   L+6.25%   7.25 %   11/13/2019   11/13/2025     6,354       6,265       6,332       1.3 %
DataOnline Corp. (Revolver)   L+6.25%   7.26 %   11/13/2019   11/13/2025     844       844       844       0.2 %
Sandvine Corporation (f)   L+4.50%   4.96 %   3/8/2021   10/31/2025     1,159       1,159       1,148       0.2 %
VHT Acquisitions, LLC (f)   L+7.00%   8.00% PIK     12/21/2021   12/21/2026     18,000       17,661       18,036       3.6 % 
VHT Acquisitions, LLC (Delayed Draw) (g) (h)    L+7.00%   8.00% PIK     12/21/2021   12/21/2026     1,440       —       —       0.0 %
VHT Acquisitions, LLC (Revolver) (g)   L+7.00%   8.00% PIK     12/21/2021   12/21/2026     514       —       —       0.0 %
                        37,274       33,754       34,360       6.9 %

 

8

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2022

(in thousands, except for shares and units)

 

Portfolio Company (a)   Spread
Above
 Index (b)		   Interest
Rate		     Acquisition
Date (c)		   Maturity     Principal     Amortized
Cost		     Fair
Value (d)		     % of Net
Assets (e)		  
Transportation: Cargo                                                  
Complete Innovations Inc. (f) (i) (j) (l)   C+6.75%   7.75 %   12/16/2020   12/16/2025     8,797      $ 8,500      $  8,966       1.8 %
Complete Innovations Inc. (Delayed Draw) (g) (h) (i) (j) (l)   C+6.75%   7.75 %   12/16/2020   12/16/2025     1,287       800       820       0.1 %
RS Acquisition, LLC (f)   L+5.75%   6.75 %   12/13/2021   12/14/2026     11,000       10,794       10,986       2.2 %
RS Acquisition, LLC (Delayed Draw) (f) (g) (h)   L+5.75%   6.75 %   12/13/2021   12/14/2026     10,115       8,345       8,334       1.7 %
RS Acquisition, LLC (Revolver) (g)   L+5.75%   6.75 %   12/13/2021   12/14/2026     1,264       —       —       0.0 %
                        32,463       28,439       29,106       5.8 %
Wholesale                                                  
S&S Holdings LLC (f)   L+5.00%   5.80 %   3/10/2021   3/10/2028     2,970       2,891       2,870       0.6 %
                        2,970       2,891       2,870       0.6 %
Total Non-Controlled/Non-Affiliate Senior Secured Loans                       755,565       645,669       653,358       131.3 %
                                                   
Unitranche Secured Loans (m)                                                  
Aerospace & Defense                                                  
Cassavant Holdings, LLC (f)   L+6.50%   7.50 %   9/8/2021   9/8/2026     13,930       13,680       13,944       2.8 %
                        13,930       13,680       13,944       2.8 %
Media: Advertising, Printing & Publishing                                                  
New Engen, Inc. (f)   SF+5.00%   6.00 %   12/3/2021   12/3/2026     9,500       9,344       9,493       1.9 %
New Engen, Inc. (f)   SF+5.00%   6.00 %   12/27/2021   12/3/2026     8,022       8,022       8,017       1.6 %
                        17,522       17,366       17,510       3.5 %
Services: Business                                                  
Onit, Inc. (f)   SF+7.25%   8.25 %   12/20/2021   5/2/2025     16,800       16,508       16,800       3.4 %
                        16,800       16,508       16,800       3.4 %
Telecommunications                                                  
VB E1, LLC (f)   L+7.65%   8.66 %   11/18/2020   11/18/2026     3,000       3,000       3,060       0.6 %
                        3,000       3,000       3,060       0.6 %
Total Non-Controlled/Non-Affiliate Unitranche Secured Loans                       51,252       50,554       51,314       10.3 %
                                                   
Junior Secured Loans                                                  
Banking                                                  
MoneyLion, Inc. (f) (i)   SF+8.50%   9.50 %   3/25/2022   3/24/2026     18,750       18,563       18,727       3.8 %
MoneyLion, Inc. (f) (i)   n/a   12.00 %   8/27/2021   5/1/2023     2,500       2,484       2,497       0.5 %
MoneyLion, Inc. (Delayed Draw) (g) (h) (i)   SF+8.50%   9.50 %   3/25/2022   3/24/2026     5,357       —       —       0.0 %
                        26,607       21,047       21,224       4.3 %
FIRE: Real Estate                                                  
Florida East Coast Industries, LLC (i)   n/a   16.00% PIK     8/9/2021   6/28/2024     3,476       3,401       3,441       0.7 %
Witkoff/Monroe 700 JV LLC (Delayed Draw) (g) (h) (i)   n/a   8.00% Cash/
4.00% PIK		     7/2/2021   7/2/2026     7,856       6,692       6,692       1.3 %
                        11,332       10,093       10,133       2.0 %
Total Non-Controlled/Non-Affiliate Junior Secured Loans                       37,939       31,140       31,357       6.3 %
                                                   
Equity Securities (n) (o)                                                  
Automotive                                                  
Born To Run, LLC (692,841 Class A units)   —   — (p)   4/1/2021   —     —       693       641       0.1 %
Lifted Trucks Holdings, LLC (158,730 Class A shares) (q)   —   — (p)   8/2/2021   —     —       159       158       0.1 %
                                852       799       0.2 %
Banking                                                  
MV Receivables II, LLC (1,822 shares of common
stock) (i) (q)		   —   — (p)   7/29/2021   —     —       750       1,394       0.3 %
MV Receivables II, LLC (warrant to purchase up to 1.0% of the equity) (i) (q)   —   — (p)   7/28/2021   7/28/2031     —       453       1,258       0.2 %
                                1,203       2,652       0.5 %
Beverage, Food & Tobacco                                                  
Huff Hispanic Food Holdings, LLC (171,429 Class A interests)   —   — (p)   10/18/2019   —     —       171       174       0.0 %
                                171       174       0.0 %
Capital Equipment                                                  
MCP Shaw Acquisitionco, LLC (95,125 Class A-2 units) (q)   —   — (p)   2/28/2020   —     —       95       112       0.0 %
                                95       112       0.0 %
Consumer Goods: Durable                                                  
Independence Buyer, Inc. (169 Class A units)   —   — (p)   8/3/2021   —     —       169       228       0.0 %
                                  169       228       0.0 %
Energy: Oil & Gas                                                  
QuarterNorth Energy Inc. (4,376 shares of common stock) (f)   —   — (p)   1/11/2020   —     —       901       602       0.1 %
                                901       602       0.1 %
Environmental Industries                                                  
Quest Resource Management Group, LLC (warrant to purchase up to 0.2% of the equity)   —   — (p)   10/19/2020   3/19/2028     —       67       209       0.1 %
Quest Resource Management Group, LLC (warrant to purchase up to 0.2% of the equity)   —   — (p)   10/19/2021   3/19/2028     —       —       146       0.0 %
StormTrap, LLC (640,000 Class A preferred units) (q)    n/a   8.00% PIK     3/25/2022   —     —       640       640       0.1 %
StormTrap, LLC (640,000 Class A common units) (q)   —   — (p)   3/25/2022   —     —       —       —       0.0 %
Volt Bidco, Inc. (765 shares of common stock)   —   — (p)   8/11/2021   —     —       765       635       0.1 %
                                1,472       1,630       0.3 %
FIRE: Finance                                                  
J2 BWA Funding LLC (0.7% profit sharing) (i) (q)   —   — (p)   12/24/2020   —     —       —       —       0.0 %
                                —       —       0.0 %
FIRE: Real Estate                                                  
InsideRE, LLC (159,884 Class A common units) (q)   —   — (p)   9/9/2019   —     —       160       333       0.1 %
Witkoff/Monroe 700 JV LLC (2,992 preferred units) (i) (q)    n/a    8.00% Cash/
4.00% PIK 		    7/2/2021   —     —       3       359       0.1 %
                                163       692       0.2 %
Healthcare & Pharmaceuticals                                                  
Ascent Midco, LLC (725,806 Class A units) (q)   n/a   8.00% PIK     2/5/2020   —     —       726       880       0.2 %
Dorado Acquisition, Inc. (500,894 Class A-1 units)   —   — (p)   6/30/2021   —     —       501       501       0.1 %
Dorado Acquisition, Inc. (500,894 Class A-2 units)   —   — (p)   6/30/2021   —     —       —       146       0.0 %
NationsBenefits, LLC (356,658 Series B units) (q)   n/a   5.00% PIK     3/24/2022   —     —       2,393       2,875       0.6 %
NationsBenefits, LLC (326,667 common units) (q)   —   — (p)   8/20/2021   —     —       468       524       0.1 %
Seran BioScience, LLC (26,666 common units) (q)   —   — (p)   12/31/2020   —     —       267       468       0.1 %
                                4,355       5,394       1.1 %
High Tech Industries                                                  
MarkLogic Corporation (435,358 Class A units)   —   — (p)   10/20/2020   —     —       435       510       0.1 %
Optomi, LLC (278 Class A units) (q)   —   — (p)   12/16/2021   —     —       278       279       0.1 %
Optomi, LLC (41 Class A-1 units) (q)   n/a   8.00% PIK     12/16/2021   —     —       41       41       0.0 %
Recorded Future, Inc. (40,243 Class A units) (r)   —   — (p)   7/3/2019   —     —       40       113       0.0 %
                                794       943       0.2 %
Hotels, Gaming & Leisure                                                  
Equine Network, LLC (92 Class A units) (q)   —   — (p)   12/31/2020   —     —       95       90       0.0 %
                                95       90       0.0 %
Media: Advertising, Printing & Publishing                                                  
95 Percent Buyer, LLC (385,027 Class A units) (q)   n/a    8.00% PIK     11/24/2021   —     —       385       423       0.1 %
New Engen, Inc. (417 preferred units)   n/a    8.00% PIK     12/27/2021   —     —       417       416       0.1 %
New Engen, Inc. (5,067 Class B common units)   —   — (p)   12/27/2021   —     —       5       5       0.0 %
Relevate Health Group, LLC (53 preferred units)   n/a   12.00% PIK     11/20/2020   —     —       53       53       0.0 %
Relevate Health Group, LLC (53 Class B common units)   —   — (p)   11/20/2020   —     —       —       —       0.0 %
Spherix Global Inc. (333 Class A units)   —   — (p)   12/22/2021   —     —       333       343       0.1 %
XanEdu Publishing, Inc. (65,104 Class A units)   n/a   8.00% PIK     1/28/2020   —     —       65       160       0.0 %
                                1,258       1,400       0.3 %
Media: Diversified & Production                                                  
Chess.com, LLC (5 Class A units) (q)   —   — (p)   12/31/2021   —     —       189       189       0.0 %
                                189       189       0.0 %
Services: Business                                                  
Argano, LLC (52,533 common units) (q)   —   — (p)   6/10/2021   —     —       239       241       0.1 %
ecMarket Inc. and Conexiom US Inc. (96,603 preferred shares) (i) (j)   —   — (p)   9/21/2021   —     —       723       677       0.1 %
Skillsoft Corp. (26,168 Class A shares) (f) (i) (s)   —   — (p)   6/11/2021   —     —       508       158       0.0 %
                                1,470       1,076       0.2 %
Services: Consumer                                                  
Express Wash Acquisition Company, LLC (135,869 Class A units) (q)   n/a   8.00% PIK     12/28/2020   —     —       140       252       0.1 %
IDIG Parent, LLC (192,908 shares of common stock) (q) (t)   —   — (p)   1/4/2021   —     —       195       342       0.1 %
                                335       594       0.2 %
Telecommunications                                                  
American Virtual Cloud Technologies, Inc. (warrant to purchase up to 4.9% of the equity)   —   — (p)   12/2/2021   1/31/2029     —       —       —       0.0 %
                                —       —       0.0 %
Transportation: Cargo                                                  
RS Acquisition, LLC (753,485 common units) (q)   —   — (p)   1/12/2022   —     —       1,264       1,422       0.3 %
                                1,264       1,422       0.3 %
Total Non-Controlled/Non-Affiliate Equity Securities                               14,786       17,997         3.6 %
Total Non-Controlled/Non-Affiliate Company Investments                             $ 742,149     $ 754,026       151.5 %
                                                   
Non-Controlled Affiliate Company Investments (u)                                                  
Senior Secured Loans                                                  
FIRE: Real Estate                                                  
Second Avenue SFR Holdings II LLC (Revolver) (g) (i)   L+7.00%   7.50 %   8/11/2021   8/9/2024     4,875      $  2,591      $  2,591       0.5 %
                        4,875       2,591       2,591       0.5 %
Total Non-Controlled/Affiliate Senior Secured Loans                       4,875       2,591       2,591       0.5 %
                                                   
Junior Secured Loans                                                  
FIRE: Real Estate                                                  
SFR Holdco, LLC (i)    n/a   8.00 %   8/6/2021   7/28/2028     5,850       5,850       5,850       1.2 % 
SFR Holdco, LLC (Delayed Draw) (g) (h) (i)     n/a   8.00 %   3/1/2022   7/28/2028     4,388       196       196       0.1 % 
                        10,238       6,046       6,046       1.3 %
Total Non-Controlled/Affiliate Junior Secured Loans                       10,238       6,046       6,046       1.3 %

 

 

9

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2022

(in thousands, except for shares and units)

 

Portfolio Company (a)   Spread Above
 Index (b)		   Interest Rate     Acquisition Date (c)   Maturity     Principal     Amortized Cost     Fair Value (d)     % of Net Assets (e)  
Equity Securities (o) (u)                                                  
FIRE: Real Estate                                                  
SFR Holdco, LLC (13.9% of equity commitments) (i)   —   — (p)   8/6/2021   —     —      $ 3,900      $  3,900       0.8 %
SFR Holdco, LLC (10.5% of equity commitments) (i) (v)   —   — (p)   3/1/2022   —     —       131       131       0.0 %
                                4,031       4,031       0.8 %
Total Non-Controlled/Affiliate Equity Securities                               4,031       4,031       0.8 %
Total Non-Controlled/Affiliate Company Investments                             $ 12,668     $ 12,668       2.6 %
                                                   
TOTAL INVESTMENTS                             $ 754,817     $ 766,694       154.1 %

 

10

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2022

(in thousands, except for shares and units)

 

Derivative Instruments

 

Foreign currency forward contracts

 

Description  Notional Amount
to be Purchased		   Notional Amount
to be Sold		  Counterparty  Settlement
Date		  Unrealized Gain
(Loss)		 
Foreign currency forward contract  $57    CAD 74  Bannockburn Global Forex, LLC  4/19/2022  $(2)
Foreign currency forward contract  $57    CAD 75  Bannockburn Global Forex, LLC  5/18/2022   (2)
Foreign currency forward contract  $56    CAD 72  Bannockburn Global Forex, LLC  6/17/2022   (2)
Foreign currency forward contract  $56    CAD 72  Bannockburn Global Forex, LLC  7/19/2022   (2)
Foreign currency forward contract  $58    CAD 74  Bannockburn Global Forex, LLC  8/17/2022   (2)
Foreign currency forward contract  $58    CAD 74  Bannockburn Global Forex, LLC  9/19/2022   (2)
Foreign currency forward contract  $59    CAD 77  Bannockburn Global Forex, LLC  10/19/2022   (2)
Foreign currency forward contract  $54    CAD 70  Bannockburn Global Forex, LLC  11/17/2022   (1)
Foreign currency forward contract  $9,352    CAD 12,078  Bannockburn Global Forex, LLC  12/19/2022   (306)
Foreign currency forward contract  $113    AUD 146  Bannockburn Global Forex, LLC  4/19/2022   4 
Foreign currency forward contract  $107    AUD 138  Bannockburn Global Forex, LLC  5/17/2022   3 
Foreign currency forward contract  $119    AUD 153  Bannockburn Global Forex, LLC  6/17/2022   4 
Foreign currency forward contract  $107    AUD 138  Bannockburn Global Forex, LLC  7/18/2022   3 
Foreign currency forward contract  $108    AUD 140  Bannockburn Global Forex, LLC  8/16/2022   3 
Foreign currency forward contract  $118    AUD 153  Bannockburn Global Forex, LLC  9/16/2022   4 
Foreign currency forward contract  $117    AUD 152  Bannockburn Global Forex, LLC  10/19/2022   4 
Foreign currency forward contract  $105    AUD 136  Bannockburn Global Forex, LLC  11/16/2022   3 
Foreign currency forward contract  $109    AUD 142  Bannockburn Global Forex, LLC  12/16/2022   3 
Foreign currency forward contract  $118    AUD 153  Bannockburn Global Forex, LLC  1/18/2023   4 
Foreign currency forward contract  $108    AUD 140  Bannockburn Global Forex, LLC  2/16/2023   3 
Foreign currency forward contract  $102    AUD 132  Bannockburn Global Forex, LLC  3/16/2023   3 
Foreign currency forward contract  $123    AUD 160  Bannockburn Global Forex, LLC  4/20/2023   4 
Foreign currency forward contract  $93    AUD 121  Bannockburn Global Forex, LLC  5/16/2023   2 
Foreign currency forward contract  $121    AUD 156  Bannockburn Global Forex, LLC  6/19/2023   4 
Foreign currency forward contract  $106    AUD 138  Bannockburn Global Forex, LLC  7/18/2023   3 
Foreign currency forward contract  $113    AUD 146  Bannockburn Global Forex, LLC  8/16/2023   3 
Foreign currency forward contract  $113    AUD 146  Bannockburn Global Forex, LLC  9/18/2023   3 
Foreign currency forward contract  $114    AUD 148  Bannockburn Global Forex, LLC  10/18/2023   3 
Foreign currency forward contract  $107    AUD 140  Bannockburn Global Forex, LLC  11/16/2023   3 
Foreign currency forward contract  $109    AUD 142  Bannockburn Global Forex, LLC  12/18/2023   3 
Foreign currency forward contract  $115    AUD 150  Bannockburn Global Forex, LLC  1/17/2024   3 
Foreign currency forward contract  $110    AUD 143  Bannockburn Global Forex, LLC  2/16/2024   3 
Foreign currency forward contract  $11,827    AUD 15,410  Bannockburn Global Forex, LLC  3/18/2024   298 
                 $52 

 

11

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

March 31, 2022

(in thousands, except for shares and units)

 

 

(a) All of the Company's investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of the Company's investments are issued by U.S. portfolio companies unless otherwise noted.
(b) The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), Secured Overnight Financing Rate ("SOFR" or "SF"), Sterling Overnight Index Average (“SONIA” or “SN”), Canadian dollar Offered rate (“CDOR” or “C”) or Prime Rate (“Prime” or “P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR, SOFR, SONIA, CDOR, or Prime and the current contractual interest rate in effect at March 31, 2022. Certain investments are subject to a LIBOR, SOFR, SONIA, CDOR, or Prime interest rate floor, or rate cap. Certain investments contain a Payment-in-Kind (“PIK”) provision.
(c) Except as otherwise noted, all of the Company’s portfolio company investments, which as of March 31, 2022 represented 154.1% of the Company’s net assets or 97.3% of the Company’s total assets, are subject to legal restrictions on sales.
(d) Except as otherwise noted, because there is no readily available market value for these investments, the fair value of each of these investments is determined in good faith using significant unobservable inputs by the Company's board of directors as required by the 1940 Act. (See Note 4 in the accompanying notes to the consolidated financial statements.)
(e) Percentages are based on net assets of $497,611 as of March 31, 2022.
(f) This security was held in MC Income Plus Financing SPV LLC (the “SPV”) as collateral for the Company's secured revolving credit facility (the “Credit Facility”) with KeyBank National Association. (See Note 6 in the accompanying notes to the consolidated financial statements).
(g) All or a portion of this commitment was unfunded at March 31, 2022. As such, interest is earned only on the funded portion of this commitment.
(h) This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings by the Company.
(i) This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of March 31, 2022, non-qualifying assets totaled 12.8% of the Company’s total assets.
(j) This is an international company.
(k) This loan is denominated in Australian dollars and is translated into U.S. dollars as of the valuation date.
(l) This loan is denominated in Canadian dollars and is translated into U.S. dollars as of the valuation date.
(m) The Company structures its unitranche secured loans as senior secured loans. The Company obtains security interests in the assets of these portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of a portfolio company. Generally, the Company syndicates a “first out” portion of the loan to an investor and retains a “last out” portion of the loan, in which case the “first out” portion of the loan will generally receive priority with respect to payments of principal, interest and any other amounts due thereunder. Unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans and the Company’s unitranche secured loans will expose the Company to the risks associated with second lien and subordinated loans and may limit the Company’s recourse or ability to recover collateral upon a portfolio company’s bankruptcy. Unitranche secured loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche secured loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In many cases the Company, together with its affiliates, is the sole or majority lender of these unitranche secured loans, which can afford the Company additional influence with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.
(n) Represents less than 5% ownership of the portfolio company's voting securities.
(o) Ownership of certain equity investments may occur through a holding company or partnership.
(p) Represents a non-income producing security.
(q) Investment is held by a taxable subsidiary of the Company. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company’s wholly-owned taxable subsidiaries.
(r) As of March 31, 2022, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $8.
(s) The fair value of this investment was valued using Level 1 inputs. See Note 4 in the accompanying notes to the consolidated financial statements.
(t) As of March 31, 2022, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $34.
(u) As defined in the 1940 Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns 5% or more of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).

(v) As of March 31, 2022, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $2,794. 

 

n/a - not applicable

 

See Notes to Consolidated Financial Statements.

 

12

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread Above
Index (b)		   Interest
Rate		   Acquisition
Date (c)		   Maturity   Principal   Amortized
Cost		   Fair
Value (d)		   % of
Net
Assets (e)		 
Non-Controlled/Non-Affiliate Company Investments                                        
Senior Secured Loans                                        
Aerospace & Defense                                        
API Holdings III Corp. (f)   L+4.25%    4.35%   5/2/2019    5/8/2026    1,658   $1,652   $1,583    0.4%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)   L+6.00%    7.00%   7/25/2019    7/25/2025    1,955    1,928    1,955    0.5%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)   L+6.00%    7.00%   12/24/2019    7/25/2025    1,020    1,006    1,020    0.3%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)   L+6.00%    7.00%   2/17/2021    7/25/2025    1,765    1,750    1,765    0.5%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)   L+6.00%    7.00%   6/15/2021    7/25/2025    1,034    1,015    1,034    0.3%
SI Holdings, Inc. (Integrated Polymer Solutions) (f)   L+6.00%    7.00%   8/10/2021    7/25/2025    1,010    991    1,010    0.3%
SI Holdings, Inc. (Integrated Polymer Solutions) (Revolver) (g)   L+6.00%    7.00%   7/25/2019    7/25/2024    316    40    40    0.0%
                        8,758    8,382    8,407    2.3%
Automotive                                        
Born To Run, LLC (f)   L+6.00%    7.00%   4/1/2021    4/1/2027    8,955    8,792    9,114    2.5%
Born To Run, LLC (Delayed Draw) (g) (h)   L+6.00%    7.00%   4/1/2021    4/1/2027    1,463    86    88    0.0%
Lifted Trucks Holdings, LLC (f)   L+5.75%    6.75%   8/2/2021    8/2/2027    10,000    9,809    9,970    2.7%
Lifted Trucks Holdings, LLC (Delayed Draw) (g) (h)   L+5.75%    6.75%   8/2/2021    8/2/2027    2,000    —    —    0.0%
Lifted Trucks Holdings, LLC (Revolver) (g)   L+5.75%    6.75%   8/2/2021    8/2/2027    2,381    635    633    0.2%
Truck-Lite Co., LLC (f)   L+6.25%    7.25%   3/11/2020    12/14/2026    3,417    3,391    3,436    0.9%
Truck-Lite Co., LLC (f)   L+6.25%    7.25%   11/23/2021    12/14/2026    634    634    638    0.2%
Truck-Lite Co., LLC (f)   L+6.25%    7.25%   3/11/2020    12/14/2026    506    506    509    0.1%
Truck-Lite Co., LLC (f)   L+6.25%    7.25%   11/23/2021    12/14/2026    563    563    566    0.2%
Truck-Lite Co., LLC (Delayed Draw) (g) (h)   L+6.25%    7.25%   11/23/2021    12/14/2026    718    —    —    0.0%
                        30,637    24,416    24,954    6.8%
Banking                                
MV Receivables II, LLC (Delayed Draw) (g) (h) (i)   L+9.75%    11.25%   7/29/2021    7/29/2026    10,000    1,214    1,611    0.4%
StarCompliance MidCo, LLC (f)   L+6.75%    7.75%   1/12/2021    1/11/2027    3,000    2,948    3,000    0.8%
StarCompliance MidCo, LLC (f)   L+6.75%    7.75%   10/12/2021    1/11/2027    503    494    503    0.1%
StarCompliance MidCo, LLC (Revolver) (g)   L+6.75%    7.75%   1/12/2021    1/11/2027    484    —    —    0.0%
                        13,987    4,656    5,114    1.3%

  

13

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)		   Interest
Rate		   Acquisition
Date (c)		   Maturity   Principal   Amortized
Cost		   Fair
Value (d)		   % of
Net
Assets (e)		 
Beverage, Food & Tobacco                                        
Huff Hispanic Food Holdings, LLC (f)   L+5.50%    6.50%   10/18/2019    10/18/2024    5,422   $5,357   $5,359    1.4%
Huff Hispanic Food Holdings, LLC   L+5.50%    6.50%   10/18/2019    10/18/2024    307    307    303    0.1%
Huff Hispanic Food Holdings, LLC (Revolver) (g)   L+5.50%    6.50%   10/18/2019    10/18/2024    1,286    574    574    0.2%
LVF Holdings, Inc. (f)   L+6.25%    7.25%   6/10/2021    6/10/2027    3,491    3,426    3,491    0.9%
LVF Holdings, Inc. (f)   L+6.25%    7.25%   6/10/2021    6/10/2027    3,341    3,341    3,341    0.9%
LVF Holdings, Inc. (Delayed Draw) (g) (h)   L+6.25%    7.25%   6/10/2021    6/10/2027    802    —    —    0.0%
LVF Holdings, Inc. (Revolver) (g)   L+6.25%    7.25%   6/10/2021    6/10/2027    554    277    277    0.1%
LX/JT Intermediate Holdings, Inc. (f)   L+6.00%    7.50%   3/11/2020    3/11/2025    5,625    5,548    5,543    1.5%
LX/JT Intermediate Holdings, Inc. (Revolver) (g)   L+6.00%    7.50%   3/11/2020    3/11/2025    500    —    —    0.0%
                        21,328    18,830    18,888    5.1%
Capital Equipment                                        
MCP Shaw Acquisitionco, LLC (f)   SF+6.50%    7.50%   2/28/2020    11/28/2025    7,786    7,676    7,759    2.1%
MCP Shaw Acquisitionco, LLC (f)   SF+6.50%    7.50%   12/29/2021    11/28/2025    2,402    2,354    2,393    0.6%
MCP Shaw Acquisitionco, LLC (Delayed Draw) (g) (h)   SF+6.50%    7.50%   12/29/2021    11/28/2025    786    —    —    0.0%
MCP Shaw Acquisitionco, LLC (Revolver) (g)   SF+6.50%    7.50%   2/28/2020    11/28/2025    1,427    —    —    0.0%
                        12,401    10,030    10,152    2.7%

 

14

 

 

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)   Spread Above
Index (b)		     Interest
Rate		     Acquisition
Date (c)		     Maturity     Principal     Amortized
Cost		     Fair
Value (d)		     % of
Net
Assets (e)		  
Construction & Building                                                                
Premier Roofing L.L.C. (f)     L+6.50%       7.50 %     8/31/2020       8/29/2025       3,465     $ 3,412     $ 3,408       0.9 %
Premier Roofing L.L.C. (Revolver) (g)     L+6.50%       7.50 %     8/31/2020       8/29/2025       1,199       959       943       0.3 %
TCFIII Owl Buyer LLC (f)     L+6.00%       7.00 %     4/19/2021       4/17/2026       4,478       4,408       4,478       1.2 %
TCFIII Owl Buyer LLC     L+6.00%       7.00 %     4/19/2021       4/17/2026       5,467       5,467       5,467       1.5 %
TCFIII Owl Buyer LLC (f)     L+6.00%       7.00 %     12/17/2021       4/17/2026       4,906       4,821       4,906       1.3 %
                                      19,515       19,067       19,202       5.2 %
Consumer Goods: Durable                                                                
Independence Buyer, Inc. (f)     L+5.75%       6.75 %     8/3/2021       8/3/2026       12,500       12,265       12,500       3.4 %
Independence Buyer, Inc. (Revolver) (g)     L+5.75%       6.75 %     8/3/2021       8/3/2026       2,964       —       —       0.0 %
Recycled Plastics Industries, LLC (f)     L+6.75%       7.75 %     8/4/2021       8/4/2026       5,486       5,383       5,486       1.5 %
Recycled Plastics Industries, LLC (Revolver) (g)     L+6.75%       7.75 %     8/4/2021       8/4/2026       743       223       223       0.1 %
                                      21,693       17,871       18,209       5.0 %
                                                                 
Consumer Goods: Non-Durable                                                                
Arizona Natural Resources, LLC (f)     L+5.75%       6.75 %     5/18/2021       5/18/2026       13,965       13,712       13,937       3.8 %
Arizona Natural Resources, LLC (f)     L+5.75%       6.75 %     12/15/2021       5/18/2026       2,563       2,513       2,558       0.7 %
Arizona Natural Resources, LLC (Revolver) (g)     L+5.75%       6.75 %     5/18/2021       5/18/2026       1,111       222       222       0.1 %
The Kyjen Company, LLC (f)     L+6.50%       7.50 %     5/14/2021       4/3/2026       2,978       2,950       2,991       0.8 %
The Kyjen Company, LLC (Revolver) (g)     L+6.50%       7.50 %     5/14/2021       4/3/2026       315       129       129       0.0 %
Thrasio, LLC (f)     L+7.00%       8.00 %     12/18/2020       12/18/2026       4,940       4,877       4,940       1.3 %
                                      25,872       24,403       24,777       6.7 %
Containers, Packaging & Glass                                                                
Polychem Acquisition, LLC (f)     L+5.00%       5.50 %     4/8/2019       3/17/2025       1,945       1,940       1,945       0.5 %
Port Townsend Holdings Company, Inc. and Crown Corrugated Company (Delayed Draw) (g) (h)     L+7.75%      

5.75% Cash/
3.00% PIK

       10/16/2020       2/28/2022       165       84       84       0.0 %
                                      2,110       2,024       2,029       0.5 %

 

15

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)		   Interest
Rate		   Acquisition
Date (c)		   Maturity   Principal   Amortized
Cost		   Fair Value (d)   % of
Net
Assets (e)		 
Energy: Oil & Gas                                        
Liquid Tech Solutions Holdings, LLC (f)   L+4.75%    5.50%   3/18/2021    3/17/2028    2,271   $2,261   $2,271    0.6%
Par Petroleum, LLC (f)   L+6.75%    6.88%   1/27/2020    1/12/2026    908    913    906    0.3%
                        3,179    3,174    3,177    0.9%
Environmental Industries                                        
Quest Resource Management Group, LLC (f)   L+6.50%    7.50%   10/19/2020    10/20/2025    990    924    989    0.3%
Quest Resource Management Group, LLC   L+6.50%    7.50%   10/19/2020    10/20/2025    1,087    1,087    1,086    0.3%
Quest Resource Management Group, LLC (f)   L+6.50%    7.50%   12/7/2021    10/20/2025    3,856    3,779    3,853    1.1%
Quest Resource Management Group, LLC (Delayed Draw) (g) (h)   L+6.50%    7.50%   12/7/2021    10/20/2025    1,778    —    —    0.0%
Volt Bidco, Inc. (f)   L+6.50%    7.50%   8/11/2021    8/11/2027    6,000    5,885    6,000    1.6%
Volt Bidco, Inc. (Delayed Draw) (g) (h)   L+6.50%    7.50%   8/11/2021    8/11/2027    688    116    116    0.0%
Volt Bidco, Inc. (Revolver) (g)   L+6.50%    7.50%   8/11/2021    8/11/2027    574    —    —    0.0%
                        14,973    11,791    12,044    3.3%
FIRE: Finance                                                
Exiger LLC (f)     L+7.25%       8.25 %     9/30/2021       9/30/2027       14,000       13,727       13,951       3.8 %
Exiger LLC (Delayed Draw) (g) (h)     L+7.25%       8.25 %     9/30/2021       9/30/2027       4,200       —       —       0.0 %
Exiger LLC (Revolver) (g)     L+7.25%       8.25 %     9/30/2021       9/30/2027       1,400       —       —       0.0 %
J2 BWA Funding LLC (Delayed Draw) (g) (h) (i)     n/a       9.00 %     12/24/2020       12/24/2026       2,809       701       701       0.2 %
Oceana Australian Fixed Income Trust (f) (i) (j) (k)     n/a       11.50 %     2/25/2021       2/25/2026       7,805       8,460       7,805       2.1 %
Oceana Australian Fixed Income Trust (f) (i) (j) (k)     n/a       10.75 %     6/29/2021       6/29/2026       3,288       3,400       3,288       0.9 %
W3 Monroe RE Debt LLC (i)     n/a       10.00% PIK       2/5/2021       2/4/2028       1,760       1,760       1,760       0.5 %
                                      35,262       28,048       27,505       7.5 %
FIRE: Real Estate                                                                
300 N. Michigan Mezz, LLC (Delayed Draw) (f) (g) (h) (i)     L+14.50%       16.00% PIK       7/15/2020       7/15/2024       1,000       888       888       0.3 %
Avison Young (USA) Inc. (f) (i) (j)     L+5.75%       5.97 %     4/26/2019       1/30/2026       1,945       1,932       1,935       0.5 %
Florida East Coast Industries, LLC (f) (i)     n/a       10.50 %     8/9/2021       6/28/2024       7,857       7,649       7,857       2.1 %
InsideRE, LLC (f)     L+5.75%       6.75 %     12/22/2021       12/22/2027       7,503       7,353       7,497       2.0 %
InsideRE, LLC (Delayed Draw) (g) (h)     L+5.75%       6.75 %     12/22/2021       12/22/2027       2,886       —       —       0.0 %
InsideRE, LLC (Revolver) (g)     L+5.75%       6.75 %     12/22/2021       12/22/2027       965       —       —       0.0 %
NCBP Property, LLC (i)     L+9.50%       10.50 %     12/18/2020       12/16/2022       2,500       2,487       2,506       0.7 %
                                      24,656       20,309       20,683       5.6 %
Healthcare & Pharmaceuticals                                        
Apotheco, LLC (f)   L+8.50%    

6.50% Cash/
3.00% PIK

    4/8/2019    4/8/2024    1,816    1,798    1,731    0.5%
Apotheco, LLC (Revolver)   L+8.50%    

6.50% Cash/
3.00% PIK

    4/8/2019    4/8/2024    478    478    455    0.1%
Appriss Health, LLC (f)   L+7.25%    8.25%   5/6/2021    5/6/2027    6,500    6,378    6,516    1.8%
Appriss Health, LLC (Revolver) (g)   L+7.25%    8.25%   5/6/2021    5/6/2027    433    —    —    0.0%
Ascent Midco, LLC (f)   L+5.50%    6.50%   2/5/2020    2/5/2025    2,283    2,253    2,283    0.6%
Ascent Midco, LLC (Revolver) (g)   L+5.50%    6.50%   2/5/2020    2/5/2025    403    —    —    0.0%
Brickell Bay Acquisition Corp. (f)   L+6.50%    7.50%   2/12/2021    2/12/2026    2,848    2,797    2,834    0.8%
Brickell Bay Acquisition Corp. (Delayed Draw) (g) (h)   L+6.50%    7.50%   2/12/2021    2/12/2026    573    —    —    0.0%
Caravel Autism Health, LLC (f)   L+5.75%    6.75%   6/30/2021    6/30/2027    8,000    7,849    7,518    2.0%
Caravel Autism Health, LLC (Delayed Draw) (g) (h)   L+5.75%    6.75%   6/30/2021    6/30/2027    5,999    299    281    0.1%
Caravel Autism Health, LLC (Revolver) (g)   L+5.75%    6.75%   6/30/2021    6/30/2027    2,000    1,000    940    0.3%
Dorado Acquisition, Inc. (f)   L+6.75%    7.75%   6/30/2021    6/30/2026    13,965    13,705    13,951    3.8%
Dorado Acquisition, Inc. (Delayed Draw) (g) (h)   L+6.75%    7.75%   6/30/2021    6/30/2026    606    —    —    0.0%
Dorado Acquisition, Inc. (Revolver) (g)   L+6.75%    7.75%   6/30/2021    6/30/2026    1,670    —    —    0.0%
INH Buyer, Inc. (f)   L+6.00%    7.00%   6/30/2021    6/28/2028    4,898    4,852    4,761    1.3%
NationsBenefits, LLC (f)   L+7.00%    8.00%   8/20/2021    8/20/2026    12,250    12,018    12,229    3.3%
NationsBenefits, LLC (Revolver) (g)   L+7.00%    8.00%   8/20/2021    8/20/2026    1,361    —    —    0.0%
QF Holdings, Inc. (f)   L+6.25%    7.25%   9/19/2019    9/19/2024    4,550    4,497    4,543    1.2%
QF Holdings, Inc. (f)   L+6.25%    7.25%   12/15/2021    12/15/2027    4,368    4,303    4,368    1.2%
QF Holdings, Inc. (f)   L+6.25%    7.25%   9/19/2019    9/19/2024    910    910    909    0.2%
QF Holdings, Inc. (Delayed Draw) (g) (h)   L+6.25%    7.25%   8/21/2020    9/19/2024    910    —    —    0.0%
QF Holdings, Inc. (Revolver) (g)   L+6.25%    7.25%   9/19/2019    9/19/2024    1,092    —    —    0.0%
Seran BioScience, LLC (f)   L+6.25%    7.25%   12/31/2020    12/31/2025    1,985    1,952    1,990    0.5%
Seran BioScience, LLC (Revolver) (g)   L+6.25%    7.25%   12/31/2020    12/31/2025    356    —    —    0.0%
SIP Care Services, LLC (f)   L+5.75%    6.75%   12/30/2021    12/30/2026    3,800    3,724    3,724    1.0%
SIP Care Services, LLC (Delayed Draw) (g) (h)   L+5.75%    6.75%   12/30/2021    12/30/2026    3,040    —    —    0.0%
SIP Care Services, LLC (Revolver) (g)   L+5.75%    6.75%   12/30/2021    12/30/2026    760    —    —    0.0%
WebPT, Inc. (f)   L+6.75%    7.75%   8/28/2019    1/18/2028    5,000    4,941    5,000    1.4%
WebPT, Inc. (Revolver) (g)   L+6.75%    7.75%   8/28/2019    1/18/2028    521    156    156    0.0%
                        93,375    73,910    74,189    20.1%

 

16

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)   Spread
Above
Index (b)		     Interest
Rate		     Acquisition
Date (c)		     Maturity     Principal     Amortized
Cost		     Fair
Value (d)		     % of
Net
Assets (e)		  
High Tech Industries                                                                
Acquia Inc. (f)     L+7.00%       8.00 %     11/1/2019       10/31/2025       15,429     $ 15,166     $ 15,545       4.2 %
Acquia Inc. (Revolver) (g)     L+7.00%       8.00 %     11/1/2019       10/31/2025       588       —       —       0.0 %
Arcstor Midco, LLC (f)     L+7.00%       8.00 %     3/16/2021       3/16/2027       11,910       11,695       11,822       3.2 %
MarkLogic Corporation (f)     L+6.00%       7.00 %     10/20/2020       10/20/2025       5,198       5,095       5,276       1.4 %
MarkLogic Corporation (f)     L+6.00%       7.00 %     11/23/2021       10/20/2025       485       475       494       0.1 %
MarkLogic Corporation (Delayed Draw) (g) (h)     L+6.00%       7.00 %     11/23/2021       10/20/2025       323       —       —       0.0 %
MarkLogic Corporation (Revolver) (g)     L+6.00%       7.00 %     10/20/2020       10/20/2025       404       —       —       0.0 %
Mindbody, Inc. (f)     L+8.50%      

8.00% Cash/
1.50% PIK

       2/15/2019       2/14/2025       1,853       1,832       1,840       0.5 %
Mindbody, Inc.     L+8.50%      

8.00% Cash/
1.50% PIK

       9/22/2021       2/14/2025       7,331       7,331       7,276       2.0 %
Mindbody, Inc. (Revolver) (g)     L+8.00%       9.00 %     2/15/2019       2/14/2025       190       —       —       0.0 %
Mockingbird Acquisitionco Inc. (f)     L+6.00%       7.00 %     10/1/2020       10/1/2025       3,840       3,778       3,878       1.0 %
Mockingbird Acquisitionco Inc. (Revolver) (g)     L+6.00%       7.00 %     10/1/2020       10/1/2025       600       —       —       0.0 %
Optomi, LLC (f)     L+5.75%       6.75 %     12/16/2021       12/16/2027       13,500       13,231       13,230       3.6 %
Optomi, LLC (Revolver) (g)     L+5.75%       6.75 %     12/16/2021       12/16/2027       3,189       2,126       2,083       0.6 %
Recorded Future, Inc. (f)     L+6.00%       7.00 %     7/3/2019       7/3/2025       3,648       3,602       3,679       1.0 %
Recorded Future, Inc. (f)     L+6.00%       7.00 %     3/26/2021       7/3/2025       5,864       5,800       5,913       1.6 %
Recorded Future, Inc. (Revolver) (g)     L+6.00%       7.00 %     7/3/2019       7/3/2025       440       —       —       0.0 %
Securly, Inc. (f)     L+7.00%       8.00 %     4/22/2021       4/22/2027       8,400       8,246       8,400       2.3 %
Securly, Inc. (Delayed Draw) (g) (h)     L+7.00%       8.00 %     4/22/2021       4/22/2027       1,938       —       —       0.0 %
Securly, Inc. (Revolver) (g)     L+7.00%       8.00 %     4/22/2021       4/22/2027       969       —       —       0.0 %
Transact Holdings Inc. (f)     L+4.75%       4.85 %     4/18/2019       4/30/2026       733       725       730       0.2 %
                                      86,832       79,102       80,166       21.7 %
Hotels, Gaming & Leisure                                                                
Equine Network, LLC (f)     L+8.00%       9.00 %     12/31/2020       12/31/2025       1,489       1,461       1,485       0.4 %
Equine Network, LLC (f)     L+8.00%       9.00 %     1/29/2021       12/31/2025       675       664       673       0.2 %
Equine Network, LLC (Delayed Draw) (g) (h)     L+8.00%       9.00 %     12/31/2020       12/31/2025       366       —       —       0.0 %
Equine Network, LLC (Revolver) (g)     L+8.00%       9.00 %     12/31/2020       12/31/2025       146       73       73       0.0 %
                                      2,676       2,198       2,231       0.6 %

 

17

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)		   Interest
Rate		   Acquisition
Date (c)		   Maturity   Principal   Amortized
Cost		   Fair
Value (d)		   % of
Net
Assets (e)		 
Media: Advertising, Printing & Publishing                                        
95 Percent Buyer, LLC (f)   L+6.00%    7.00%   11/24/2021    11/24/2026    18,000   $17,645   $18,000    4.9%
95 Percent Buyer, LLC (Revolver) (g)   L+6.00%    7.00%   11/24/2021    11/24/2026    963    —    —    0.0%
Madison Logic, Inc. (f)   L+5.75%    6.75%   11/22/2021    11/20/2026    20,000    19,703    20,031    5.4%
Madison Logic, Inc. (Revolver) (g)   L+5.75%    6.75%   11/22/2021    11/20/2026    912    —    —    0.0%
New Engen, Inc. (f)   L+5.50%    6.50%   12/3/2021    12/3/2026    9,500    9,335    9,334    2.5%
New Engen, Inc. (f)   L+5.50%    6.50%   12/27/2021    12/3/2026    8,022    8,022    7,882    2.1%
New Engen, Inc. (Revolver) (g)   L+5.50%    6.50%   12/3/2021    12/3/2026    1,056    —    —    0.0%
North Haven USHC Acquisition, Inc. (f)   L+6.00%    7.00%   10/30/2020    10/30/2025    2,475    2,435    2,475    0.7%
North Haven USHC Acquisition, Inc. (f)   L+6.00%    7.00%   10/30/2020    10/30/2025    717    717    717    0.2%
North Haven USHC Acquisition, Inc. (Delayed Draw) (g) (h)   L+6.00%    7.00%   9/3/2021    10/30/2025    1,441    482    487    0.1%
North Haven USHC Acquisition, Inc. (Revolver) (g)   L+6.00%    7.00%   3/12/2021    10/30/2025    240    —    —    0.0%
NTM Acquisition Corp (f)   L+7.25%    

7.25% Cash/
1.00% PIK

    4/18/2019    6/7/2024    4,645    4,641    4,599    1.2%
Relevate Health Group, LLC (f)   L+6.00%    7.00%   11/20/2020    11/20/2025    1,985    1,953    2,005    0.6%
Relevate Health Group, LLC (Delayed Draw) (g) (h)   L+6.00%    7.00%   11/20/2020    11/20/2025    1,046    888    897    0.2%
Relevate Health Group, LLC (Revolver) (g)   L+6.00%    7.00%   11/20/2020    11/20/2025    421    —    —    0.0%
Spherix Global Inc. (f)   SF+6.00%    7.00%   12/22/2021    12/22/2026    4,500    4,422    4,421    1.2%
Spherix Global Inc. (Revolver) (g)   SF+6.00%    7.00%   12/22/2021    12/22/2026    500    —    —    0.0%
XanEdu Publishing, Inc. (f)   L+6.50%    7.50%   1/28/2020    1/28/2025    6,093    5,993    6,114    1.7%
XanEdu Publishing, Inc. (Revolver) (g)   L+6.50%    7.50%   1/28/2020    1/28/2025    977    —    —    0.0%
                        83,493    76,236    76,962    20.8%
Media: Broadcasting & Subscription                                        
Vice Group Holding Inc.   L+12.00%    

5.50% Cash/
8.00% PIK

    5/2/2019    11/2/2022    1,145    1,142    1,145    0.3%
Vice Group Holding Inc.   L+12.00%    

5.50% Cash/
8.00% PIK

    5/2/2019    11/2/2022    359    359    359    0.1%
Vice Group Holding Inc.   L+12.00%    

5.50% Cash/
8.00% PIK

    5/2/2019    11/2/2022    135    135    135    0.0%
Vice Group Holding Inc.   L+12.00%    

5.50% Cash/
8.00% PIK

    11/4/2019    11/2/2022    220    220    220    0.1%
                        1,859    1,856    1,859    0.5%
Media: Diversified & Production                                        
Chess.com, LLC (f)   L+6.50%    7.50%   12/31/2021    12/31/2027    13,000    12,740    12,740    3.5%
Chess.com, LLC (Revolver) (g)   L+6.50%    7.50%   12/31/2021    12/31/2027    1,413    —    —    0.0%
Crownpeak Technology, Inc. (f)   L+5.75%    6.75%   2/28/2019    2/28/2024    1,000    991    1,000    0.3%
Crownpeak Technology, Inc. (f)   L+5.75%    6.75%   2/28/2019    2/28/2024    15    15    15    0.0%
Crownpeak Technology, Inc. (Revolver) (g)   L+5.75%    6.75%   2/28/2019    2/28/2024    42    —    —    0.0%
CyberGrants Holdings, LLC (f)   L+6.50%    7.25%   9/8/2021    9/8/2027    18,500    18,235    18,500    5.0%
CyberGrants Holdings, LLC (Delayed Draw) (g) (h)   L+6.50%    7.25%   9/8/2021    9/8/2027    1,814    —    —    0.0%
CyberGrants Holdings, LLC (Revolver) (g)   L+6.50%    7.25%   9/8/2021    9/8/2027    1,814    —    —    0.0%
Streamland Media MidCo LLC (f)   L+6.75%    7.75%   8/26/2019    8/31/2023    1,994    1,974    1,984    0.5%
                        39,592    33,955    34,239    9.3%

 

18

 

 

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)		   Interest
Rate		   Acquisition
Date (c)		   Maturity   Principal   Amortized
Cost		   Fair
Value (d)		   % of
Net
Assets (e)		 
Services: Business                                        
Aperture Companies, LLC (f)   L+6.25%    7.25%   12/31/2021    12/31/2026    15,000   $14,700   $14,700    4.0%
Aperture Companies, LLC (Delayed Draw) (g) (h)   L+6.25%    7.25%   12/31/2021    12/31/2026    4,320    —    —    0.0%
Aperture Companies, LLC (Revolver) (g)   L+6.25%    7.25%   12/31/2021    12/31/2026    1,347    —    —    0.0%
Aras Corporation (f)   L+7.00%    

4.25% Cash/
3.75% PIK

    4/13/2021    4/13/2027    4,504    4,429    4,556    1.2%
Aras Corporation (Revolver) (g)   L+7.00%    

4.25% Cash/
3.75% PIK

    4/13/2021    4/13/2027    325    —    —    0.0%
Argano, LLC (f)   L+5.50%    6.50%   6/10/2021    6/10/2026    9,077    8,912    9,043    2.4%
Argano, LLC (Delayed Draw) (g) (h)   L+5.50%    6.50%   6/10/2021    6/10/2026    4,009    2,365    2,356    0.6%
Argano, LLC (Revolver) (g)   L+5.50%    6.50%   6/10/2021    6/10/2026    965    —    —    0.0%
Certify, Inc. (f)   L+5.50%    6.50%   2/28/2019    2/28/2024    1,000    992    1,000    0.3%
Certify, Inc. (f)   L+5.50%    6.50%   2/28/2019    2/28/2024    136    136    136    0.0%
Certify, Inc. (Revolver) (g)   L+5.50%    6.50%   2/28/2019    2/28/2024    46    11    11    0.0%
ecMarket Inc. and Conexiom US Inc. (f) (i) (j)   L+7.00%    8.00%   9/21/2021    9/21/2027    15,500    15,202    15,442    4.2%
ecMarket Inc. and Conexiom US Inc. (Delayed Draw) (g) (h) (i) (j)   L+7.00%    8.00%   9/21/2021    9/21/2027    1,291    —    —    0.0%
ecMarket Inc. and Conexiom US Inc. (Revolver) (g) (i) (j)   L+7.00%    8.00%   9/21/2021    9/21/2027    2,067    —    —    0.0%
HS4 Acquisitionco, Inc. (f)   L+6.75%    7.75%   7/9/2019    7/9/2025    3,980    3,928    3,944    1.1%
HS4 Acquisitionco, Inc. (f)   L+6.75%    7.75%   10/6/2021    7/9/2025    4,323    4,323    4,285    1.2%
HS4 Acquisitionco, Inc. (Revolver) (g)   L+6.75%    7.75%   7/9/2019    7/9/2025    325    —    —    0.0%
Kaseya Inc. (f)   L+6.50%    

6.50% Cash/
1.00% PIK

    5/3/2019    5/2/2025    2,930    2,896    2,945    0.8%
Kaseya Inc. (f)   L+6.50%    

6.50% Cash/
1.00% PIK

    5/3/2019    5/2/2025    311    311    312    0.1%
Kaseya Inc. (f)   L+6.50%    

6.50% Cash/
1.00% PIK

    3/4/2020    5/2/2025    277    277    278    0.1%
Kaseya Inc. (f)   L+6.50%    

6.50% Cash/
1.00% PIK

    9/8/2021    5/2/2025    8,015    7,886    8,056    2.2%
Kaseya Inc. (Delayed Draw) (g) (h)   L+6.50%    

6.50% Cash/
1.00% PIK

    9/8/2021    5/2/2025    3,774    1,585    1,593    0.4%
Kaseya Inc. (Revolver) (g)   L+6.50%    7.50%   5/3/2019    5/2/2025    211    —    —    0.0%
Relativity ODA LLC (f)   L+7.50%    8.50% PIK    5/12/2021    5/12/2027    4,741    4,634    4,734    1.3%
Relativity ODA LLC (Revolver) (g)   L+7.50%    8.50% PIK    5/12/2021    5/12/2027    450    —    —    0.0%
Sundance Group Holdings, Inc. (f)   L+6.75%    7.75%   7/2/2021    7/2/2027    4,148    4,069    4,146    1.1%
Sundance Group Holdings, Inc. (Delayed Draw) (g) (h)   L+6.75%    7.75%   7/2/2021    7/2/2027    1,244    —    —    0.0%
Sundance Group Holdings, Inc. (Revolver) (g)   L+6.75%    7.75%   7/2/2021    7/2/2027    498    149    149    0.0%
                        94,814    76,805    77,686    21.0%

 

19

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)		   Interest
Rate		   Acquisition
Date (c)		   Maturity   Principal   Amortized
Cost		   Fair
Value (d)		   % of
Net
Assets (e)		 
Services: Consumer                                        
Express Wash Acquisition Company, LLC (f)   L+6.50%    7.50%   12/28/2020    12/26/2025    3,587   $3,534   $3,587    1.0%
Express Wash Acquisition Company, LLC (f)   L+6.50%    7.50%   9/3/2021    12/26/2025    8,148    8,015    8,148    2.2%
Express Wash Acquisition Company, LLC   L+6.50%    7.50%   9/3/2021    12/26/2025    3,920    3,920    3,920    1.0%
Express Wash Acquisition Company, LLC (Delayed Draw) (g) (h)   L+6.50%    7.50%   9/3/2021    12/26/2025    2,800    1,036    1,036    0.3%
Express Wash Acquisition Company, LLC (Delayed Draw) (g) (h)   L+6.50%    7.50%   12/22/2021    12/26/2025    5,000    2,813    2,813    0.8%
Express Wash Acquisition Company, LLC (Revolver) (g)   L+6.50%    7.50%   12/28/2020    12/26/2025    840    448    448    0.1%
IDIG Parent, LLC (f)   L+6.00%    7.00%   12/15/2020    12/15/2026    4,327    4,253    4,338    1.2%
IDIG Parent, LLC (f)   L+6.00%    7.00%   12/15/2020    12/15/2026    720    720    721    0.2%
IDIG Parent, LLC (Revolver) (g)   L+6.00%    7.00%   12/15/2020    12/15/2026    336    —    —    0.0%
Light Wave Dental Management, LLC (f)   L+6.50%    7.50%   8/1/2019    1/2/2024    4,237    4,217    4,222    1.1%
Light Wave Dental Management, LLC (f)   L+6.50%    7.50%   5/3/2021    1/2/2024    2,546    2,546    2,537    0.7%
Light Wave Dental Management, LLC (f)   L+6.50%    7.50%   8/3/2021    1/2/2024    2,116    2,080    2,109    0.5%
Light Wave Dental Management, LLC (Delayed Draw) (g) (h)   L+6.50%    7.50%   8/3/2021    1/2/2024    4,585    2,881    2,871    0.8%
Light Wave Dental Management, LLC (Revolver) (g)   L+6.50%    7.50%   5/3/2021    1/2/2024    320    —    —    0.0%
                        43,482    36,463    36,750    9.9%
Telecommunications                                        
American Virtual Cloud Technologies, Inc.   L+11.00%    12.00%   12/2/2021    12/2/2022    5,400    5,274    5,265    1.4%
Calabrio, Inc. (f)   L+7.00%    8.00%   4/16/2021    4/16/2027    8,000    7,817    8,000    2.2%
Calabrio, Inc. (Revolver) (g)   L+7.00%    8.00%   4/16/2021    4/16/2027    963    —    —    0.0%
DataOnline Corp. (f)   L+6.25%    7.25%   11/13/2019    11/13/2025    6,370    6,274    6,257    1.7%
DataOnline Corp. (Revolver)   L+6.25%    7.25%   11/13/2019    11/13/2025    844    844    844    0.2%
Sandvine Corporation (f)   L+4.50%    4.60%   3/8/2021    10/31/2025    1,159    1,159    1,159    0.3%
VHT Acquisitions, LLC (f)   L+7.00%    8.00% PIK    12/21/2021    12/21/2026    18,000    17,642    17,640    4.8%
VHT Acquisitions, LLC (Delayed Draw) (g) (h)   L+7.00%    8.00% PIK    12/21/2021    12/21/2026    1,440    —    —    0.0%
VHT Acquisitions, LLC (Revolver) (g)   L+7.00%    8.00% PIK    12/21/2021    12/21/2026    514    —    —    0.0%
                        42,690    39,010    39,165    10.6%
Transportation: Cargo                                        
Complete Innovations Inc. (f) (i) (j) (l)   C+6.75%    7.75%   12/16/2020    12/16/2025    8,704    8,490    8,878    2.4%
Complete Innovations Inc. (Delayed Draw) (g) (h) (i) (j) (l)   C+6.75%    7.75%   12/16/2020    12/16/2025    1,274    801    812    0.2%
RS Acquisition, LLC (Delayed Draw) (f) (g) (h)   L+5.75%    6.75%   12/13/2021    12/14/2026    11,000    4,839    4,956    1.4%
RS Acquisition, LLC (Delayed Draw) (g) (h)   L+5.75%    6.75%   12/13/2021    12/14/2026    10,115    —    —    0.0%
RS Acquisition, LLC (Revolver) (g)   L+5.75%    6.75%   12/13/2021    12/14/2026    1,264    —    —    0.0%
                        32,357    14,130    14,646    4.0%
Wholesale                                        
S&S Holdings LLC (f)   L+5.00%    5.50%   3/10/2021    3/10/2028    2,977    2,895    2,982    0.8%
                        2,977    2,895    2,982    0.8%
Total Non-Controlled/Non-Affiliate Senior Secured Loans                       758,518    629,561    636,016    172.2%

 

20

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)  Spread
Above
Index (b)		   Interest
Rate		   Acquisition
Date (c)		   Maturity   Principal   Amortized
Cost		   Fair
Value (d)		   % of
Net
Assets (e)		 
Unitranche Secured Loans (m)                                        
Aerospace & Defense                                        
Cassavant Holdings, LLC (f)   L+6.50%    7.50%   9/8/2021    9/8/2026    13,965   $13,699   $13,951    3.8%
                        13,965    13,699    13,951    3.8%
Services: Business                                        
Onit, Inc. (f)   L+7.25%    8.25%   12/20/2021    5/2/2025    15,000    14,721    14,719    4.0%
                        15,000    14,721    14,719    4.0%
Telecommunications                                        
VB E1, LLC (Delayed Draw) (f) (g) (h)   L+7.65%    8.15%   11/18/2020    11/18/2026    3,000    1,466    1,491    0.4%
                        3,000    1,466    1,491    0.4%
Total Non-Controlled/Non-Affiliate Unitranche Secured Loans                       31,965    29,886    30,161    8.2%
                                         
Junior Secured Loans                                        
Banking                                                
MoneyLion, Inc. (f) (i)     n/a       12.00 %     8/27/2021       5/1/2023       2,500       2,479       2,537       0.7 %
                                      2,500       2,479       2,537       0.7 %
FIRE: Real Estate                                                                
Florida East Coast Industries, LLC (i)     n/a       16.00% PIK       8/9/2021       6/28/2024       3,344       3,260       3,365       0.9 %
Witkoff/Monroe 700 JV LLC (Delayed Draw) (g) (h) (i)     n/a       8.00% Cash/ 4.00% PIK       7/2/2021       7/2/2026       7,791       6,518       6,828       1.8 %
                                      11,135       9,778       10,193       2.7 %
Total Non-Controlled/Non-Affiliate Junior Secured Loans                       13,635    12,257    12,730    3.4%
                                         
Equity Securities (n) (o)                                         
Automotive                                        
Born To Run, LLC (692,841 Class A units)   —    —(p)   4/1/2021    —    —    693    754    0.2%
Lifted Trucks Holdings, LLC (158,730 Class A units) (q)   —    —(p)   8/2/2021    —    —    159    156    0.0%
                             852    910    0.2%
Banking                                                
MV Receivables II, LLC (911 shares of common units) (i) (q)     —       — (p)     7/29/2021       —       —       375       697       0.2 %
MV Receivables II, LLC (warrant to purchase up to 1.0% of the equity) (i) (q)     —       — (p)     7/28/2021       7/28/2031       —       453       1,258       0.3 %
                                              828       1,955       0.5 %
Beverage, Food & Tobacco                                        
Huff Hispanic Food Holdings, LLC (171,429 Class A interests)   —    —(p)   10/18/2019    —    —    171    144    0.0%
                             171    144    0.0%
Capital Equipment                                        
MCP Shaw Acquisitionco, LLC (95,125 Class A-2 units) (q)   —    —(p)   2/28/2020    —    —    95    118    0.0%
                             95    118    0.0%
Consumer Goods: Durable                                        
Independence Buyer, Inc. (169 Class A units)   —    —(p)   8/3/2021    —    —    169    211    0.1%
                             169    211    0.1%
Energy: Oil & Gas                                        
QuarterNorth Energy Inc. (fka Fieldwood Energy, LLC) (4,376 shares of common stock) (f)   —    —(p)   1/11/2020    —    —    901    414    0.1%
                             901    414    0.1%
Environmental Industries                                        
Quest Resource Management Group, LLC (warrant to purchase up to 0.2% of the equity)   —    —(p)   10/19/2020    3/19/2028    —    67    294    0.1%
Quest Resource Management Group, LLC (warrant to purchase up to 0.2% of the equity)   —    —(p)   10/19/2021    3/19/2028    —    —    169    0.0%
Volt Bidco, Inc. (765 shares of common stock)   —    —(p)   8/11/2021    —    —    765    764    0.2%
                             832    1,227    0.3%
FIRE: Finance                                                
J2 BWA Funding LLC (0.7% profit sharing) (i) (q)     —       — (p)     12/24/2020       —       —       —       —       0.0 %
                                              —       —       0.0 %
FIRE: Real Estate                                                                
InsideRE, LLC (267,963 Class A common units) (q)     —       — (p)     9/9/2019       —       —       160       333       0.1 %
Witkoff/Monroe 700 JV LLC (2,992 preferred units) (i) (q)     n/a       8.00% Cash/ 4.00% PIK       7/2/2021       —       —       3       3       0.0 %
                                              163       336       0.1 %

 

21

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Portfolio Company (a)   Spread
Above
Index (b)		     Interest
Rate		     Acquisition
Date (c)		     Maturity     Principal     Amortized
Cost		     Fair
Value (d)		     % of
Net
Assets (e)		  
Healthcare & Pharmaceuticals                                                                
Ascent Midco, LLC (725,806 Class A units) (q)     n/a       8.00% PIK       2/5/2020       —       —     $ 726     $ 912       0.2 %
Dorado Acquisition, Inc. (500,894 Class A-1 units)     —       — (p)     6/30/2021       —       —       501       501       0.1 %
Dorado Acquisition, Inc. (500,894 Class A-2 units)     —       — (p)     6/30/2021       —       —       —       24       0.0 %
NationsBenefits, LLC (2,722,222 Series A units) (q)     n/a       9.00% PIK       8/20/2021       —       —       2,254       2,186       0.6 %
NationsBenefits, LLC (326,667 common units) (q)     —       — (p)     8/20/2021       —       —       468       206       0.1 %
Seran BioScience, LLC (26,666 common units) (q)     —       — (p)     12/31/2020       —       —       267       571       0.2 %
                                              4,216       4,400       1.2 %
High Tech Industries                                                                
MarkLogic Corporation (435,358 Class A units)     —       — (p)     10/20/2020       —       —       435       634       0.2 %
Optomi, LLC (278 Class A units) (q)     —       — (p)     12/16/2021       —       —       278       278       0.1 %
Optomi, LLC (41 Class A-1 units) (q)     n/a       8.00% PIK       12/16/2021       —       —       41       41       0.0 %
Recorded Future, Inc. (40,243 Class A units) (r)     —       — (p)     7/3/2019       —       —       40       101       0.0 %
                                              794       1,054       0.3 %
Hotels, Gaming & Leisure                                                                
Equine Network, LLC (85 Class A units) (q)     —       — (p)     12/31/2020       —       —       85       87       0.0 %
                                              85       87       0.0 %
Media: Advertising, Printing & Publishing                                                                
95 Percent Buyer, LLC (385,027 Class A units) (q)     n/a        8.00% PIK       11/24/2021       —       —       385       390       0.1 %
New Engen, Inc. (417 preferred units)     n/a        8.00% PIK       12/27/2021       —       —       417       417       0.1 %
New Engen, Inc. (5,067 Class B common units)     —       — (p)     12/27/2021       —       —       5       5       0.0 %
Relevate Health Group, LLC (53 preferred units)     n/a       12.00% PIK       11/20/2020       —       —       53       53       0.0 %
Relevate Health Group, LLC (53 Class B common units)     —       — (p)     11/20/2020       —       —       —       —       0.0 %
Spherix Global Inc. (333 Class A units)     —       — (p)     12/22/2021       —       —       333       333       0.1 %
XanEdu Publishing, Inc. (65,104 Class A units)     n/a       8.00% PIK       1/28/2020       —       —       65       140       0.1 %
                                              1,258       1,338       0.4 %
Media: Diversified & Production                                                                
Chess.com, LLC (5 Class A units) (q)     —       — (p)     12/31/2021       —       —       189       189       0.1 %
                                              189       189       0.1 %
Services: Business                                                                
Argano, LLC (52,533 common units) (q)     —       — (p)     6/10/2021       —       —       239       239       0.1 %
ecMarket Inc. and Conexiom US Inc. (96,603 preferred shares) (i) (j)     —       — (p)     9/21/2021       —       —       723       699       0.1 %
Skillsoft Corp. (fka Software Luxembourg Acquisition S.A.R.L) (26,168 Class A shares) (f) (i) (u)     —       — (p)     6/11/2021       —       —       508       239       0.1 %
                                              1,470       1,177       0.3 %
Services: Consumer                                                                
Express Wash Acquisition Company, LLC (135,869 Class A units) (q)     n/a       8.00% PIK       12/28/2020       —       —       140       233       0.1 %
IDIG Parent, LLC (192,908 shares of common stock) (q) (s)     —       — (p)     1/4/2021       —       —       195       336       0.1 %
                                              335       569       0.2 %
Telecommunications                                                                
American Virtual Cloud Technologies, Inc. (warrant to purchase up to 4.9% of the equity)     —       — (p)     12/2/2021       —       —       —       —       0.0 %
                                              —       —       0.0 %
Total Non-Controlled/Non-Affiliate Equity Securities                                             12,358       14,129       3.8 %
Total Non-Controlled/Non-Affiliate Company Investments                                           $ 684,062     $ 693,036       187.6 %
                                                                 
Non-Controlled Affiliate Company Investments (t)                                                                
Senior Secured Loans                                                                
FIRE: Real Estate                                                                
Second Avenue SFR Holdings II LLC (Revolver) (g) (i)     L+7.00%       7.50 %     8/11/2021       8/9/2024       4,875     $ 2,104     $ 2,104       0.6 %
                                      4,875       2,104       2,104       0.6 %
Total Non-Controlled/Affiliate Senior Secured Loans                                     4,875       2,104       2,104       0.6 %
                                                                 
Junior Secured Loans                                                                
FIRE: Real Estate                                                                
Second Avenue SFR Holdings II LLC (i)     n/a       8.00 %     8/6/2021       7/28/2028       5,850       5,850       5,850       1.6 %
                                      5,850       5,850       5,850       1.6 %
Total Non-Controlled/Affiliate Junior Secured Loans                                     5,850       5,850       5,850       1.6 %
                                                                 
Equity Securities (o) (t)                                                                
FIRE: Real Estate                                                                
Second Avenue SFR Holdings II LLC (24.4% of interests) (i)     —       — (p)     8/6/2021       —       —       3,900       3,900       1.0 %
                                            3,900       3,900       1.0 %
Total Non-Controlled/Affiliate Equity Securities                                           3,900       3,900       1.0 %
Total Non-Controlled/Affiliate Company Investments                                           $ 11,854     $ 11,854       3.2 %
                                                                 
TOTAL INVESTMENTS                                           $ 695,916     $ 704,890       190.8 %

  

22

 

 

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

 

Derivative Instruments

 

Foreign currency forward contracts

 

Description  Notional Amount
to be Purchased		   Notional Amount
to be Sold		  Counterparty  Settlement Date  Unrealized
Gain (Loss)		 
Foreign currency forward contract  $56    CAD                        72   Bannockburn Global Forex, LLC  1/18/2022  $(1)
Foreign currency forward contract  $59    CAD                        77   Bannockburn Global Forex, LLC  2/17/2022   (1)
Foreign currency forward contract  $52    CAD                        67   Bannockburn Global Forex, LLC  3/17/2022   (1)
Foreign currency forward contract  $57    CAD                        74   Bannockburn Global Forex, LLC  4/19/2022   (1)
Foreign currency forward contract  $57    CAD                        75   Bannockburn Global Forex, LLC  5/18/2022   (1)
Foreign currency forward contract  $56    CAD                        72   Bannockburn Global Forex, LLC  6/17/2022   (1)
Foreign currency forward contract  $56    CAD                        72   Bannockburn Global Forex, LLC  7/19/2022   (1)
Foreign currency forward contract  $58    CAD                        74   Bannockburn Global Forex, LLC  8/17/2022   (1)
Foreign currency forward contract  $58    CAD                        74   Bannockburn Global Forex, LLC  9/19/2022   (1)
Foreign currency forward contract  $59    CAD                        77   Bannockburn Global Forex, LLC  10/19/2022   (1)
Foreign currency forward contract  $54    CAD                        70   Bannockburn Global Forex, LLC  11/17/2022   (1)
Foreign currency forward contract  $9,352    CAD                 12,078   Bannockburn Global Forex, LLC  12/19/2022   (206)
Foreign currency forward contract  $121    AUD                     156   Bannockburn Global Forex, LLC  1/19/2022   8 
Foreign currency forward contract  $105    AUD                     136   Bannockburn Global Forex, LLC  2/16/2022   6 
Foreign currency forward contract  $102    AUD                     132   Bannockburn Global Forex, LLC  3/16/2022   6 
Foreign currency forward contract  $113    AUD                     146   Bannockburn Global Forex, LLC  4/19/2022   7 
Foreign currency forward contract  $107    AUD                     138   Bannockburn Global Forex, LLC  5/17/2022   7 
Foreign currency forward contract  $119    AUD                     153   Bannockburn Global Forex, LLC  6/17/2022   7 
Foreign currency forward contract  $107    AUD                     138   Bannockburn Global Forex, LLC  7/18/2022   6 
Foreign currency forward contract  $108    AUD                     140   Bannockburn Global Forex, LLC  8/16/2022   6 
Foreign currency forward contract  $118    AUD                     153   Bannockburn Global Forex, LLC  9/16/2022   7 
Foreign currency forward contract  $117    AUD                     152   Bannockburn Global Forex, LLC  10/19/2022   7 
Foreign currency forward contract  $105    AUD                     136   Bannockburn Global Forex, LLC  11/16/2022   6 
Foreign currency forward contract  $109    AUD                     142   Bannockburn Global Forex, LLC  12/16/2022   7 
Foreign currency forward contract  $118    AUD                     153   Bannockburn Global Forex, LLC  1/18/2023   7 
Foreign currency forward contract  $108    AUD                     140   Bannockburn Global Forex, LLC  2/16/2023   6 
Foreign currency forward contract  $102    AUD                     132   Bannockburn Global Forex, LLC  3/16/2023   6 
Foreign currency forward contract  $123    AUD                     160   Bannockburn Global Forex, LLC  4/20/2023   7 
Foreign currency forward contract  $93    AUD                     121   Bannockburn Global Forex, LLC  5/16/2023   5 
Foreign currency forward contract  $121    AUD                     156   Bannockburn Global Forex, LLC  6/19/2023   7 
Foreign currency forward contract  $106    AUD                     138   Bannockburn Global Forex, LLC  7/18/2023   6 
Foreign currency forward contract  $113    AUD                     146   Bannockburn Global Forex, LLC  8/16/2023   6 
Foreign currency forward contract  $113    AUD                     146   Bannockburn Global Forex, LLC  9/18/2023   6 
Foreign currency forward contract  $114    AUD                     148   Bannockburn Global Forex, LLC  10/18/2023   7 
Foreign currency forward contract  $107    AUD                     140   Bannockburn Global Forex, LLC  11/16/2023   6 
Foreign currency forward contract  $109    AUD                     142   Bannockburn Global Forex, LLC  12/18/2023   6 
Foreign currency forward contract  $115    AUD                     150   Bannockburn Global Forex, LLC  1/17/2024   6 
Foreign currency forward contract  $110    AUD                     143   Bannockburn Global Forex, LLC  2/16/2024   6 
Foreign currency forward contract  $11,827    AUD                15,410   Bannockburn Global Forex, LLC  3/18/2024   635 
                 $585 

  

23

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

December 31, 2021

(in thousands, except for shares and units)

  

 

(a) All of the Company’s investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of the Company’s investments are issued by U.S. portfolio companies unless otherwise noted.
(b) The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), Secured Overnight Financing Rate (“SOFR” or “SF”), Sterling Overnight Index Average (“SONIA” or “SN”), Canadian dollar Offered rate (“CDOR” or “C”), or Prime (“P”) which reset daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR, SOFR, SONIA, CDOR, or Prime and the current contractual interest rate in effect at December 31, 2021. Certain investments are subject to a LIBOR, SOFR, SONIA, CDOR, or Prime interest rate floor, or rate cap. Certain investments contain a Payment-in-Kind (“PIK”) provision.
(c) Except as otherwise noted, all of the Company’s portfolio company investments, which as of December 31, 2021 represented 190.8% of the Company’s net assets or 97.3% of the Company’s total assets, are subject to legal restrictions on sales.
(d) Except as otherwise noted, because there is no readily available market value for these investments, the fair value of each of these investments is determined in good faith using significant unobservable inputs by the Company’s board of directors as required by the 1940 Act. See Note 4 in the accompanying notes to the consolidated financial statements.
(e) Percentages are based on net assets of $369,448 as of December 31, 2021.
(f) This security was held in MC Income Plus Financing SPV LLC (the “SPV”) as collateral for the Company’s secured revolving credit facility (the “Credit Facility”) with KeyBank National Association. (See Note 6 in the accompanying notes to the consolidated financial statements).
(g) All or a portion of this commitment was unfunded at December 31, 2021. As such, interest is earned only on the funded portion of this commitment.
(h) This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings by the Company.
(i) This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2021, non-qualifying assets totaled 11.2% of the Company’s total assets.
(j) This is an international company.
(k) This loan is denominated in Australian dollars and is translated into U.S. dollars as of the valuation date.
(l) This loan is denominated in Canadian dollars and is translated into U.S. dollars as of the valuation date.
(m) The Company structures its unitranche secured loans as senior secured loans. The Company obtains security interests in the assets of these portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of a portfolio company. Generally, the Company syndicates a “first out” portion of the loan to an investor and retains a “last out” portion of the loan, in which case the “first out” portion of the loan will generally receive priority with respect to payments of principal, interest and any other amounts due thereunder. Unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans and the Company’s unitranche secured loans will expose the Company to the risks associated with second lien and subordinated loans and may limit the Company’s recourse or ability to recover collateral upon a portfolio company’s bankruptcy. Unitranche secured loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche secured loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In many cases the Company, together with its affiliates, is the sole or majority lender of these unitranche secured loans, which can afford the Company additional influence with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.
(n) Represents less than 5% ownership of the portfolio company’s voting securities.
(o) Ownership of certain equity investments may occur through a holding company or partnership.
(p) Represents a non-income producing security.
(q) Investment is held by a taxable subsidiary of the Company. See Note 2 in the accompanying notes to the consolidated financial statements for additional information on the Company’s wholly-owned taxable subsidiaries.
(r) As of December 31, 2021, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $8.
(s) As of December 31, 2021, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $34.
(t) As defined in the 1940 Act, the Company is deemed to be an “Affiliated Person” of the portfolio company as it owns 5% or more of the portfolio company’s voting securities. See Note 5 in the accompanying notes to the consolidated financial statements for additional information on transactions in which the issuer was an Affiliated Person (but not a portfolio company that the Company is deemed to control).
(u) The fair value of this investment was valued using Level 1 inputs. See Note 4 in the accompanying notes to the consolidated financial statements.
 

n/a - not applicable

 

See Notes to Consolidated Financial Statements.

 

24

 

 

 

MONROE CAPITAL INCOME PLUS CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(unaudited) 

(in thousands, except share and per share data)

 

Note 1. Organization and Principal Business

 

Monroe Capital Income Plus Corporation (together with its subsidiaries, the “Company”) is a Maryland corporation that was formed to act as an externally managed, closed-end, non-diversified investment company. The Company is a specialty finance company organized to maximize the total return to the Company’s stockholders in the form of current income and capital appreciation through a variety of investments. The Company is managed by Monroe Capital BDC Advisors, LLC (“MC Advisors”). The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for U.S. federal income tax purposes, the Company elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company currently qualifies and intends to qualify annually to be treated as a RIC for U.S. federal income tax purposes.

 

The Company may conduct private offerings, subject to approval by the Company’s board of directors (the “Board”). The Company is conducting its second best efforts, continuous private offering of its common stock to accredited investors in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At each closing, an investor purchases shares of the Company’s common stock pursuant to a subscription agreement entered into with the Company. See Note 10 for additional information on the Company’s share activity.

 

On March 12, 2019, the Company created a wholly-owned subsidiary, MC Income Plus Financing SPV LLC (the “SPV”), for purposes of entering into a senior secured revolving credit facility (the “Credit Facility”) with KeyBank National Association. See Note 7 for additional information on the Credit Facility.

 

Note 2. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. The Company has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies (“ASC Topic 946”). Certain prior period amounts have been reclassified to conform to the current period presentation.

 

As an emerging growth company, the Company intends to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

 

Use of Estimates

 

The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

 

Consolidation

 

As permitted under ASC Topic 946, the Company will generally not consolidate its investment in a portfolio company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of its wholly-owned subsidiaries, including the SPV and the Company’s wholly-owned taxable subsidiaries (the “Taxable Subsidiaries”) in its consolidated financial statements. The purpose of the Taxable Subsidiaries is to permit the Company to hold equity investments in portfolio companies that are taxed as partnerships for U.S. federal income tax purposes while complying with the “source of income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are not consolidated with the Company for U.S. federal corporate income tax purposes, and each Taxable Subsidiary is subject to U.S. federal corporate income tax on its taxable income. All intercompany balances and transactions have been eliminated.

 

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Fair Value of Financial Instruments

 

The Company applies fair value to substantially all of its financial instruments in accordance with ASC Topic 820 — Fair Value Measurements and Disclosures (“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value, and requires disclosures for fair value measurements, including the categorization of financial instruments into a three-level hierarchy based on the transparency of valuation inputs. See Note 4 for further discussion regarding the fair value measurements and hierarchy.

 

ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments.

 

Revenue Recognition

 

The Company’s revenue recognition policies are as follows:

 

Investments and related investment income: Interest and dividend income is recorded on the accrual basis to the extent that the Company expects to collect such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. The Company records fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service is completed.

 

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the applicable distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. For both the three months ended March 31, 2022 and 2021, the Company did not receive any return of capital distributions from its equity investments.

 

The Company has certain investments in its portfolio that contain a payment-in-kind (“PIK”) provision, which represents contractual interest or dividends that are added to the principal balance and recorded as income. The Company stops accruing PIK interest or PIK dividends when it is determined that PIK interest or PIK dividends are no longer collectible. To maintain RIC tax treatment, and to avoid incurring corporate U.S. federal income tax, substantially all of this income must be paid out to stockholders in the form of distributions, even though the Company has not yet collected the cash.

 

Loan origination fees, original issue discount and market discount or premiums are capitalized, and the Company then amortizes such amounts using the effective interest method as interest income over the life of the investment. Unamortized discounts and loan origination fees totaled $10,177 and $10,292 as of March 31, 2022 and December 31, 2021, respectively. Upfront loan origination and closing fees received for the three months ended March 31, 2022 and 2021 totaled $1,031 and $588, respectively. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees are recorded as interest income.

 

The components of the Company’s investment income were as follows:

 

   Three months ended March 31, 
   2022   2021 
Interest income  $13,167   $3,813 
PIK interest income   678    176 
Dividend income (1)   96    21 
Fee income   1,593    278 
Prepayment gain (loss)   210    178 
Accretion of discounts and amortization of premiums   643    189 
Total investment income  $16,387   $4,655 

 

 

(1) Includes PIK dividends of $92 and $21, respectively.

 

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Investment transactions are recorded on a trade-date basis. Realized gains or losses on portfolio investments are calculated based upon the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized. Realized gains and losses are recorded within net realized gain (loss) on investments on the consolidated statements of operations. Changes in the fair value of investments from the prior period, as determined by the Board through the application of the Company’s valuation policy, are included within net change in unrealized gain (loss) on investments on the consolidated statements of operations.

 

Non-accrual: Loans or preferred equity securities are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or dividends will be collected. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal, interest, or dividends are paid, or are expected to be paid, and, in management’s judgment are likely to remain current. As of both March 31, 2022 and December 31, 2021, there were no borrowers with a loan on non-accrual status.

 

Distributions

 

Distributions to common stockholders are recorded on the applicable record date. The amount, if any, to be distributed to common stockholders is determined by the Board at least quarterly and is generally based upon the Company’s earnings as estimated by management. Net realized capital gains, if any, are generally distributed at least annually.

 

The determination of the tax attributes for the Company’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on qualified dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and capital gains, but may also include qualified dividends or return of capital.

 

The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for the reinvestment of dividends and other distributions on behalf of its stockholders that elect to participate in such plan. When the Company declares a dividend or distribution, the Company’s stockholders’ cash distributions will only be reinvested in additional shares of the Company’s common stock if a stockholder specifically “opts in” to the DRIP at least ten (10) days prior to the record date fixed by the Board. Shares issued under the DRIP will be issued at a price per share equal to the net asset value (“NAV”) per share as of the last day of the Company’s fiscal quarter immediately preceding the date that the distribution was declared. See Note 9 for additional information on the Company’s distributions.

 

Segments

 

In accordance with ASC Topic 280 — Segment Reporting, the Company has determined that it has a single reporting segment and operating unit structure.

 

Cash

 

The Company deposits its cash in a financial institution and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits.

 

Restricted Cash

 

Restricted cash includes amounts held within the SPV. Cash held within the SPV is generally restricted to use for the originations of new investments, the repayment of outstanding debt under the Credit Facility and the related payment of interest expense and the quarterly release of earnings to the Company.

 

Unamortized Deferred Financing Costs

 

Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of March 31, 2022 and December 31, 2021, the Company had unamortized deferred financing costs of $3,677 and $3,615, respectively, presented as a direct reduction of the carrying amount of debt on the consolidated statements of assets and liabilities. These amounts are amortized and included in interest and other debt financing expenses on the consolidated statements of operations over the estimated average life of the borrowings. Amortization of deferred financing costs for the three months ended March 31, 2022 and 2021 was $385 and $125, respectively.

 

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Investments Denominated in Foreign Currency

  

At each balance sheet date, portfolio company investments denominated in foreign currencies are translated into U.S. dollars using the spot exchange rate on the last business day of the period. Purchases and sales of foreign portfolio company investments, and any income from such investments, are translated into U.S. dollars using the rates of exchange prevailing on the respective dates of such transactions.

 

Although the fair values of foreign portfolio company investments and the fluctuation in such fair values are translated into U.S. dollars using the applicable foreign exchange rates described above, the Company does not isolate the portion of the change in fair value resulting from foreign currency exchange rates fluctuations from the change in fair value of the underlying investment. All fluctuations in fair value are included in net change in unrealized gain (loss) on investments on the Company’s consolidated statements of operations.

 

Investments denominated in foreign currencies and foreign currency transactions may involve certain consideration and risks not typically associated with those of domestic origin, including unanticipated movements in the value of the foreign currency relative to the U.S. dollar.

 

Derivative Instruments

 

The Company has entered and may continue to enter into foreign currency forward contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations. In a foreign currency forward contract, the Company agrees to receive or deliver a fixed quantity of one currency for another, at a pre-determined price at a future date. Foreign currency forward contracts are marked-to-market based on the difference between the forward rate and the exchange rate at the current period end. Unrealized gain (loss) on foreign currency forward contracts are recorded on the Company’s consolidated statements of assets and liabilities by counterparty on a net basis.

 

The Company does not utilize hedge accounting and as such values its foreign currency forward contracts at fair value with the change in unrealized gain or loss recorded in net change in unrealized gain (loss) on foreign currency forward contracts and the realized gain or loss recorded in net realized gain (loss) on foreign currency forward contracts on the Company’s consolidated statements of operations.

 

Income Taxes

 

The Company has elected to be treated as a RIC under Subchapter M of the Code and operates in a manner as to qualify for the tax treatment available to RICs. As long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders. Rather, any tax liability related to income earned by the Company represents an obligation of the Company’s stockholders and will not be reflected in the consolidated financial statements of the Company.

 

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To qualify as a RIC under Subchapter M of the Code, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its stockholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income. For both the three months ended March 31, 2022 and 2021, the Company did not record a net tax expense on the consolidated statements of operations for U.S. federal excise tax. As of both March 31, 2022 and December 31, 2021, the Company recorded an accrual for U.S. federal excise taxes of $66, which were included in accounts payable and accrued expenses on the consolidated statements of assets and liabilities.

 

The Company’s consolidated Taxable Subsidiaries may be subject to U.S. federal and state corporate-level income taxes. For both the three months ended March 31, 2022 and March 31, 2021, the Company did not record a net tax expense on the consolidated statements of operations for these Taxable Subsidiaries. As of both March 31, 2022 and December 31, 2021, no payables for corporate-level income taxes were accrued.

 

The Company accounts for income taxes in conformity with ASC Topic 740 — Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in the consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. The Company did not take any material uncertain income tax positions through March 31, 2022. The 2018 through 2021 tax years remain subject to examination by U.S. federal and state tax authorities.

 

Subsequent Events

 

The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the consolidated financial statements were issued. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the three months ended March 31, 2022, except as disclosed in Note 13.

 

Recent Accounting Pronouncements

 

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the three months ended March 31, 2022.

 

Note 3. Investments

 

The following tables show the composition of the Company’s investment portfolio, at amortized cost and fair value (with corresponding percentage of total portfolio investments):

 

    March 31, 2022     December 31, 2021  
Amortized Cost:                                
Senior secured loans   $ 648,260       85.9 %   $ 631,665       90.8 %
Unitranche secured loans     50,554       6.7       29,886       4.3  
Junior secured loans     37,186       4.9       18,107       2.6  
Equity securities     18,817       2.5       16,258       2.3  
Total   $ 754,817       100.0 %   $ 695,916       100.0 %

 

    March 31, 2022     December 31, 2021  
Fair Value:                         
Senior secured loans   $ 655,949       85.5 %   $ 638,120       90.5 %
Unitranche secured loans     51,314       6.7       30,161       4.3  
Junior secured loans     37,403       4.9       18,580       2.6  
Equity securities     22,028       2.9       18,029       2.6  
Total   $ 766,694       100.0 %   $ 704,890       100.0 %

   

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The following tables show the composition of the Company’s investment portfolio by geographic region, at amortized cost and fair value (with corresponding percentage of total portfolio investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business:

 

    March 31, 2022     December 31, 2021  
Amortized Cost:                                
International   $ 39,691       5.3 %   $ 39,008       5.6 %
Midwest     169,815       22.5       156,339       22.5  
Northeast     140,207       18.6       127,013       18.3  
Northwest     17,788       2.3       17,779       2.5  
Southeast     157,979       20.9       158,459       22.8  
Southwest     86,940       11.5       83,087       11.9  
West     142,397       18.9       114,231       16.4  
Total   $ 754,817       100.0 %   $ 695,916       100.0 %
                                 

 

    March 31, 2022     December 31, 2021  
Fair Value:                        
International   $ 39,927       5.2 %   $ 38,859       5.5 %
Midwest     171,158       22.3       157,661       22.4  
Northeast     141,442       18.5       128,371       18.2  
Northwest     17,931       2.4       17,638       2.5  
Southeast     162,776       21.2       161,532       22.9  
Southwest     88,347       11.5       83,786       11.9  
West     145,113       18.9       117,043       16.6  
Total   $ 766,694       100.0 %   $ 704,890       100.0 %

 

The following tables show the composition of the Company’s investment portfolio by industry, at amortized cost and fair value (with corresponding percentage of total portfolio investments):

 

    March 31, 2022     December 31, 2021  
Amortized Cost:                                
Aerospace & Defense   $ 22,056       2.9 %   $ 22,081       3.2 %
Automotive     24,593       3.3       25,268       3.6  
Banking     27,813       3.7       7,963       1.1  
Beverage, Food & Tobacco     16,798       2.2       19,001       2.7  
Capital Equipment     10,605       1.4       10,125       1.5  
Construction & Building     19,033       2.5       19,067       2.8  
Consumer Goods: Durable     18,312       2.4       18,040       2.6  
Consumer Goods: Non-Durable     25,212       3.3       24,403       3.5  
Containers, Packaging & Glass     2,139       0.3       2,024       0.3  
Energy: Oil & Gas     4,057       0.5       4,075       0.6  
Environmental Industries     21,633       2.9       12,623       1.8  
FIRE: Finance     28,381       3.8       28,048       4.0  
FIRE: Real Estate     40,534       5.4       42,104       6.1  
Healthcare & Pharmaceuticals     87,877       11.6       78,126       11.2  
High Tech Industries     72,453       9.6       79,896       11.5  
Hotels, Gaming & Leisure     2,290       0.3       2,283       0.3  
Media: Advertising, Printing & Publishing     82,575       10.9       77,494       11.1  
Media: Broadcasting & Subscription     1,894       0.3       1,856       0.3  
Media: Diversified & Production     38,913       5.2       34,144       4.9  
Services: Business     97,980       13.0       92,996       13.4  
Services: Consumer     40,321       5.3       36,798       5.3  
Telecommunications     36,754       4.9       40,476       5.8  
Transportation: Cargo     29,703       3.9       14,130       2.0  
Wholesale     2,891       0.4       2,895       0.4  
Total   $ 754,817       100.0 %   $ 695,916       100.0 %

 

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    March 31, 2022     December 31, 2021  
Fair Value:                        
Aerospace & Defense   $ 22,276       2.9 %   $ 22,358       3.2 %
Automotive     24,934       3.3       25,864       3.7  
Banking     29,875       3.9       9,606       1.4  
Beverage, Food & Tobacco     16,878       2.2       19,032       2.7  
Capital Equipment     10,745       1.4       10,270       1.4  
Construction & Building     19,128       2.5       19,202       2.7  
Consumer Goods: Durable     18,667       2.4       18,420       2.6  
Consumer Goods: Non-Durable     25,549       3.3       24,777       3.5  
Containers, Packaging & Glass     2,142       0.3       2,029       0.3  
Energy: Oil & Gas     3,756       0.5       3,591       0.5  
Environmental Industries     22,146       2.9       13,271       1.9  
FIRE: Finance     28,249       3.7       27,505       3.9  
FIRE: Real Estate     41,284       5.4       43,066       6.1  
Healthcare & Pharmaceuticals     89,651       11.7       78,589       11.1  
High Tech Industries     73,196       9.5       81,220       11.5  
Hotels, Gaming & Leisure     2,303       0.3       2,318       0.3  
Media: Advertising, Printing & Publishing     83,817       10.9       78,300       11.1  
Media: Broadcasting & Subscription     1,896       0.2       1,859       0.3  
Media: Diversified & Production     39,504       5.2       34,428       4.9  
Services: Business     99,026       12.9       93,582       13.3  
Services: Consumer     40,854       5.3       37,319       5.3  
Telecommunications     37,420       4.9       40,656       5.8  
Transportation: Cargo     30,528       4.0       14,646       2.1  
Wholesale     2,870       0.4       2,982       0.4  
Total   $ 766,694       100.0 %   $ 704,890       100.0 %

 

Note 4. Fair Value Measurements

 

Investments

 

The Company values all investments in accordance with ASC Topic 820. ASC Topic 820 requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the assets’ or liabilities’ complexity.

 

ASC Topic 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

 

Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:

 

  • Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
     
  • Level 2 — Valuations based on inputs other than quoted prices in active markets, including quoted prices for similar assets or liabilities, which are either directly or indirectly observable.

 

  • Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement. This includes situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant management judgment or estimation.

 

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or liability’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

 

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With respect to investments for which market quotations are not readily available, the Company’s Board undertakes a multi-step valuation process each quarter, as described below:

 

  • the quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment professionals of MC Advisors responsible for the credit monitoring of the portfolio investment;
     
  • the Board engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of investments for which market quotations are not readily available. The Company will consult with independent valuation firm(s) relative to each portfolio company at least once in every calendar year, but the independent appraisals are generally received quarterly for each investment;

 

  • to the extent an independent valuation firm is not engaged to conduct an investment appraisal on an investment for which market quotations are not readily available, the investment will be valued by the MC Advisors investment professional responsible for the credit monitoring;

 

  • preliminary valuation conclusions are then documented and discussed with the investment committee of MC Advisors;

 

  • the audit committee of the Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and MC Advisors adjusts or further supplements the valuation recommendations to reflect any comments provided by the audit committee; and
     
  • the Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of MC Advisors, the independent valuation firm(s) and the audit committee.

 

The accompanying consolidated schedules of investments held by the Company consist primarily of private debt instruments (“Level 3 debt”). The Company generally uses the income approach to determine fair value for Level 3 debt where market quotations are not readily available, as long as it is appropriate. If there is deterioration in credit quality or a debt investment is in workout status, the Company may consider other factors in determining the fair value, including the value attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. This liquidation analysis may include probability weighting of alternative outcomes. The Company generally considers its Level 3 debt to be performing if the borrower is not in default, the borrower is remitting payments in a timely manner; the loan is in covenant compliance or is otherwise not deemed to be impaired. In determining the fair value of the performing Level 3 debt, the Company considers fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions and other relevant factors, both qualitative and quantitative. In the event that a Level 3 debt instrument is not performing, as defined above, the Company will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the Level 3 debt instrument.

 

Under the income approach, discounted cash flow models are utilized to determine the present value of the future cash flow streams of its debt investments, based on future interest and principal payments as set forth in the associated loan agreements. In determining fair value under the income approach, the Company also considers the following factors: applicable market yields and leverage levels, credit quality, prepayment penalties, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.

 

Under the market approach, the enterprise value methodology is typically utilized to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one portfolio company, enterprise value is generally best expressed as a range of values, from which the Company derives a single estimate of enterprise value. In estimating the enterprise value of a portfolio company, the Company analyzes various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio company’s historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public. Typically, the enterprise values of private companies are based on multiples of earnings before interest, income taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value.

 

In addition, for certain debt investments, the Company may base its valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that the Company and others may be willing to pay. Ask prices represent the lowest price that the Company and others may be willing to accept. The Company generally uses the midpoint of the bid/ask range as its best estimate of fair value of such investment.

  

As of March 31, 2022, the Board determined, in good faith, the fair value of the Company’s portfolio investments in accordance with GAAP and the Company’s valuation procedures based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time. 

 

32

 

 

Foreign Currency Forward Contracts

 

The valuation for the Company’s foreign currency forward contracts is based on the difference between the exchange rate associated with the forward contract and the exchange rate at the current period end. Foreign currency forward contracts are categorized as Level 2 in the fair value hierarchy.

 

Fair Value Disclosures

 

The following tables present fair value measurements of investments and foreign currency forward contracts, by major class according to the fair value hierarchy:

 

    Fair Value Measurements  
March 31, 2022   Level 1     Level 2     Level 3      Total  
Senior secured loans   $ —     $ —     $ 655,949     $ 655,949  
Unitranche secured loans     —       —       51,314       51,314  
Junior secured loans     —       —       37,403       37,403  
Equity securities     158       —       21,870       22,028  
Total investments   $ 158     $ —     $ 766,536     $ 766,694  
Foreign currency forward contracts asset (liability)   $ —     $ 52     $ —     $ 52  

  

    Fair Value Measurements  
December 31, 2021   Level 1     Level 2     Level 3     Total  
Senior secured loans   $ —     $ —     $ 638,120     $ 638,120  
Unitranche secured loans     —       —       30,161       30,161  
Junior secured loans     —       —       18,580       18,580  
Equity securities     239       —       17,790       18,029  
Total investments   $ 239     $ —     $ 704,651     $ 704,890  
Foreign currency forward contracts asset (liability)   $ —     $ 585     $ —     $ 585  

 

Senior secured loans, unitranche secured loans and junior secured loans are collateralized by tangible and intangible assets of the borrowers. These investments include loans to entities that have some level of challenge in obtaining financing from other, more conventional institutions, such as a bank. Interest rates on these loans are either fixed or floating and are based on current market conditions and credit ratings of the borrower. Excluding loans on non-accrual, the contractual interest rates on the loans ranged from 4.71% to 16.00% at March 31, 2022 and 4.35% to 16.00% at December 31, 2021. The maturity dates on the loans outstanding at March 31, 2022 range between June 2022 and July 2028.

 

The following tables provide a reconciliation of the beginning and ending balances for investments at fair value that use Level 3 inputs for the three months ended March 31, 2022 and 2021:

 

    Investments   
    Senior
secured loans		     Unitranche
secured loans		     Junior
secured loans		     Equity
securities		     Total
investments		  
Balance as of December 31, 2021   $ 638,120     $ 30,161     $ 18,580     $ 17,790     $ 704,651  
Net realized gain (loss) on investments     25       —       —       —       25  
Net change in unrealized gain (loss) on investments     1,091       627       (255 )     1,521       2,984  
Purchases of investments and other adjustments to cost (1)      56,166       3,345       19,078       2,559       81,148  
Proceeds from principal payments and sales of investments (2)      (22,238 )     (34 )     —       —        (22,272 )
Reclassifications (3)      (17,215 )      17,215       —       —       —  
Balance as of March 31, 2022   $ 655,949     $ 51,314     $ 37,403     $ 21,870     $ 766,536  

  

33

 

 

    Investments  
    Senior
secured loans		     Unitranche
secured loans		     Junior
secured loans		     Equity
securities		     Total
investments		  
Balance as of December 31, 2020   $ 176,584     $ 5,677     $ 4,334     $ 3,541     $ 190,136  
Net realized gain (loss) on investments     43       —       —       —       43  
Net change in unrealized gain (loss) on investments     2,126       (60 )     102       554       2,722  
Purchases of investments and other adjustments to cost (1)      51,077       99       11       228       51,415  
Proceeds from principal payments and sales of investments (2)      (14,469 )     (4,247 )      (66 )     —        (18,782 )
Reclassifications (3)      —       —       —       —       —  
Balance as of March 31, 2021   $ 215,361     $ 1,469     $ 4,381     $ 4,323     $  225,534  

 

 

(1)  Includes purchases of new investments, effects of refinancing and restructurings, premium and discount accretion and amortization and PIK interest.
(2)  Represents net proceeds from investments sold and principal paydowns received.
(3)  Represents non-cash reclassification of investment type due to a restructuring.

 

The total net change in unrealized gain (loss) on investments included on the consolidated statements of operations for the three months ended March 31, 2022 and 2021, attributable to Level 3 investments still held at March 31, 2022 and 2021, was $3,164 and $2,893, respectively. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of Level 3 as of the beginning of the period in which the reclassifications occur. There were no transfers among Levels 1, 2 and 3 during the three months ended March 31, 2022 and 2021.

 

Significant Unobservable Inputs

 

ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. Disclosure of this information is not required in circumstances where a valuation (unadjusted) is obtained from a third-party pricing service and the information regarding the unobservable inputs is not reasonably available to the Company and as such, the disclosures provided below exclude those investments valued in that manner. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.

 

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of March 31, 2022 were as follows:

 

          Unobservable  Weighted   Range 
   Fair Value   Valuation Technique  Input  Mean   Minimum   Maximum 
Assets:                      
Senior secured loans  $390,211   Discounted cash flow  EBITDA multiples   10.6x   5.8x   18.5x
           Market yields   8.6%   7.0%   11.2%
Senior secured loans   218,251   Discounted cash flow  Revenue multiples   8.7x   0.6x   25.0x
           Market yields   9.5%   8.4%   14.1%
Senior secured loans   31,505   Discounted cash flow  Market yields   9.2%   5.8%   15.3%
Senior secured loans   203   Enterprise value  EBITDA multiples   5.5x   5.5x   5.5x
Unitranche secured loans   31,454   Discounted cash flow  EBITDA multiples   10.0x   9.0x   10.8x
           Market yields   8.8%   8.8%   8.9%
Unitranche secured loans   16,800   Discounted cash flow  Revenue multiples   12.8x   12.8x   12.8x
           Market yields   9.5%   9.5%   9.5%
Unitranche secured loans   3,060   Discounted cash flow  Market yields   10.0%   10.0%   10.0%
Junior secured loans   37,402   Discounted cash flow  Market yields   13.8%   9.3%   25.6%
Equity securities   17,471   Enterprise value  EBITDA multiples   9.9x   5.8x   18.5x
Equity securities   3,442   Enterprise value  Revenue multiples   10.5x   6.7x   25.0x
Equity securities   355   Option pricing model  Volatility   42.5%   42.5%   42.5%
Total Level 3 Assets  $750,154  (1)                     

  

 

(1)  Excludes loans of $16,382 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is not required.

 

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of December 31, 2021 were as follows:

 

                  Weighted
Average		     Range  
    Fair Value     Valuation Technique   Unobservable Input   Mean     Minimum     Maximum  
Assets:                                
Senior secured loans   $ 380,090     Discounted cash flow   EBITDA multiples     10.5 x     6.3 x     20.0 x
                Market yields     7.6 %     6.1 %     10.7 %
Senior secured loans     203,681     Discounted cash flow   Revenue multiples     9.6 x     0.5 x     26.5 x
                Market yields     8.3 %     6.6 %     13.1 %
Senior secured loans     38,102     Discounted cash flow   Market yields     10.2 %     7.5 %     15.3 %
Senior secured loans     84     Enterprise value   EBITDA multiples     5.0 x     5.0 x     5.0 x
Unitranche secured loans     14,719     Discounted cash flow   Revenue multiples     14.0 x     14.0 x     14.0 x
                Market yields     8.3 %     8.3 %     8.3 %
Unitranche secured loans     13,951     Discounted cash flow   EBITDA multiples     8.5 x     8.5 x     8.5 x
                Market yields     8.3 %     8.3 %     8.3 %
Unitranche secured loans     1,491     Discounted cash flow   Market yields     8.9 %     8.9 %     8.9 %
Junior secured loans     16,043     Discounted cash flow   Market yields     16.9 %     8.0 %     25.1 %
Junior secured loans     2,537     Discounted cash flow   Revenue multiples     15.0 x     15.0 x     15.0 x
                Market yields     2.0 %     2.0 %     2.0 %
Equity securities     11,208     Enterprise value   EBITDA multiples     6.8 x     6.3 x     18.5 x
Equity securities     2,186     Discounted cash flow   EBITDA multiples     13.3 x     13.3 x     13.3 x
                Market yields     12.3 %     12.3 %     12.3 %
Equity securities     3,519     Enterprise value   Revenue multiples     14.8 x     9.7 x     26.5 x
Equity securities     463     Option pricing model   Volatility     42.5 %     42.5 %     42.5 %
Total Level 3 Assets   $ 688,074  (1)                                 

 

 

(1)  Excludes loans of $16,577 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is not required.

 

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The significant unobservable input used in the income approach of fair value measurement of the Company’s investments is the discount rate used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Increases (decreases) in the discount rate would result in a decrease (increase) in the fair value estimate of the investment. Included in the consideration and selection of discount rates are the following factors: risk of default, rating of the investment and comparable investments, and call provisions.

 

The significant unobservable inputs used in the market approach of fair value measurement of the Company’s investments are the market multiples of EBITDA or revenue of the comparable guideline public companies. The Company selects a population of public companies for each investment with similar operations and attributes of the portfolio company. Using these guideline public companies’ data, a range of multiples of enterprise value to EBITDA or revenue is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on said multiple and generally the latest twelve months EBITDA or revenue of the portfolio company (or other meaningful measure). Increases (decreases) in the multiple will result in an increase (decrease) in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment.

 

Other Financial Assets and Liabilities

 

ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments. Fair value of the Company’s Credit Facility is estimated by discounting remaining payments using applicable market rates or market quotes for similar instruments at the measurement date, if applicable. As of both March 31, 2022 and December 31, 2021, the Company believes that the carrying value of its Credit Facility approximates fair value.

 

Note 5. Transactions with Affiliated Companies

 

An affiliated company is a company in which the Company has an ownership interest of 5% or more of its voting securities. A controlled affiliate company is a company in which the Company has an ownership interest of more than 25% of its voting securities. Please see the Company’s consolidated schedule of investments for the type of investment, principal amount, interest rate including the spread, and the maturity date. Transactions related to the Company’s investments with affiliates for the three months ended March 31, 2022 were as follows:

 

Portfolio Company   Fair value at
December 31, 2021		     Transfers
in (out)		     Purchases
(cost)		     Sales and
paydowns
(cost)		     PIK
interest
(cost)		     Discount
accretion		     Net
realized
gain (loss)		     Net
unrealized
gain (loss)		     Fair value at
March 31, 2022		  
Non-controlled affiliate company investment:                                                                        
Second Avenue SFR Holdings II LLC (Revolver) (1)    $ 2,104     $ —     $ 487     $ —     $ —     $ —     $ —     $ —     $ 2,591  
      2,104       —       487       —       —       —       —       —       2,591  
                                                                         
SFR Holdco, LLC (Junior secured loan)     5,850       —       —       —       —       —       —       —       5,850  
SFR Holdco, LLC (Junior secured loan)     —       —       196       —       —       —       —       —       196  
SFR Holdco, LLC (13.9% of equity commitments)      3,900       —       —       —       —       —       —       —       3,900  
SFR Holdco, LLC (10.5% of equity commitments)     —       —       131       —       —       —       —       —       131  
      9,750       —       327       —       —       —       —       —       10,077  
Total non-controlled affiliate company investments   $ 11,854     $ —     $ 814     $ —     $ —     $ —     $ —     $ —     $ 12,668  

  

 

(1)    Second Avenue SFR Holdings II LLC is a related entity to SFR Holdco, LLC and is being presented as a non-controlled affiliate for that reason.

 

   For the three months ended March 31,
   2022   2021
Portfolio Company   Interest
Income		    Dividend
Income		    Fee Income    Interest
Income		   Dividend
Income		  Fee Income
Non-controlled affiliate company investments:                          
Second Avenue SFR Holdings II LLC (Revolver)  $46   $—   $—     n/a     n/a   n/a
    46    —    —     n/a     n/a   n/a
                           
SFR Holdco, LLC (Junior secured loan)   117    —    —     n/a     n/a   n/a
SFR Holdco, LLC (Junior secured loan)   1    —    —     n/a     n/a   n/a
SFR Holdco, LLC (LLC interest)   —    —    —     n/a     n/a   n/a
SFR Holdco, LLC (LLC interest)   —    —    —     n/a     n/a   n/a
    118    —    —     n/a     n/a   n/a
Total non-controlled affiliate company investments  $164   $—   $—     n/a     n/a   n/a

 

The Company had no affiliated company or controlled affiliate company investments during the three months ended March 31, 2021.

 

35

 

 

Note 6. Transactions with Related Parties

 

The Company has entered into an investment advisory agreement with MC Advisors (the “Investment Advisory Agreement”), under which MC Advisors, subject to the overall supervision of the Board, provides investment advisory services to the Company. The Company pays MC Advisors a fee for its services under the Investment Advisory Agreement consisting of two components – a base management fee and an incentive fee. The cost of both the base management fee and the incentive fee are borne by the Company’s stockholders, unless such fees are waived by MC Advisors.

 

The base management fee is calculated at an annual rate of 1.50% of average total assets, which includes assets financed using leverage. Following any future quotation or listing of the Company’s securities on a national securities exchange (an “Exchange Listing”) or any future quotation or listing of its securities on any other public trading market, the base management fee will be calculated at an annual rate of 1.75% of average invested assets (calculated as total assets excluding cash). The base management fee is payable in arrears. Base management fees for the three months ended March 31, 2022 and 2021 were $2,796 and $814, respectively. MC Advisors elected to voluntarily waive zero and $814 of such base management fees for the three months ended March 31, 2022 and 2021, respectively. There is no guarantee that MC Advisors will waive base management fees in the future.

 

The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the preceding quarter. Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee), any expenses payable under the administration agreement (the “Administration Agreement”) between the Company and Monroe Capital Management Advisors, LLC (“MC Management”) and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive fee. Pre-incentive fee net investment income will include, in the case of investments with a deferred interest feature such as market discount, debt instruments with PIK interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash. MC Advisors is not under any obligation to reimburse the Company for any part of the incentive fee it receives that was based on accrued interest that the Company never actually receives.

 

Pre-incentive fee net investment income does not include any realized capital gains or losses or unrealized capital gains or losses. If any distributions from portfolio companies are characterized as a return of capital, such returns of capital would affect the capital gains incentive fee to the extent a gain or loss is realized. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter where it incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the hurdle rate (as defined below) for a quarter, the Company will pay the applicable incentive fee even if it has incurred a loss in that quarter due to realized and unrealized capital losses.

 

Pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 1.50% per quarter (6% annually).

 

The Company pays MC Advisors an incentive fee with respect to its pre-incentive fee net investment income in each calendar quarter as follows:

 

  · no incentive fee in any calendar quarter in which the pre-incentive fee net investment income does not exceed the hurdle rate of 1.50% (6% annually);
     
  · 100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.76% in any calendar quarter prior to an Exchange Listing or 1.88% in any calendar quarter following an Exchange Listing. The Company refers to this portion of the Company’s pre-incentive fee net investment income as the “catch-up” provision. Prior to an Exchange Listing, the catch-up is meant to provide MC Advisors with 15% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 1.76% in any calendar quarter, and following an Exchange Listing, the catch-up is meant to provide MC Advisors with 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 1.88% in any calendar quarter; and
     
  · prior to an Exchange Listing, 15% of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds 1.76% in any calendar quarter, and following an Exchange Listing, 20% of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds 1.88% in any calendar quarter.

 

These calculations are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

 

The second part of the incentive fee is a capital gains incentive fee that is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement, as of the termination date), and equals 15% of the Company’s realized capital gains as of the end of the fiscal year. In determining the capital gains incentive fee payable to MC Advisors, the Company calculates the cumulative aggregate realized capital gains and cumulative aggregate realized capital losses since the Company’s inception, and the aggregate unrealized capital depreciation as of the date of the calculation, as applicable, with respect to each of the investments in the Company’s portfolio. For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the amortized cost of such investment. Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the amortized cost of such investment since the Company’s inception. Aggregate unrealized capital depreciation equals the sum of the difference, if negative, between the valuation of each investment as of the applicable calculation date and the amortized cost of such investment. At the end of the applicable year, the amount of capital gains that will serve as the basis for the calculation of the capital gains incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less aggregate unrealized capital depreciation, with respect to the Company’s portfolio of investments. If this number is positive at the end of such year, then the capital gains incentive fee for such year equals 15% of such amount, less the aggregate amount of any capital gains incentive fees paid in respect of the Company’s portfolio in all prior years.

 

36

 

 

While the Investment Advisory Agreement with MC Advisors neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, the Company includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to MC Advisors if the Company’s entire portfolio was liquidated at its fair value as of the balance sheet date even though MC Advisors is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

 

The composition of the Company’s incentive fees was as follows:

 

    Three months ended March 31,  
    2022      2021  
Part one incentive fees (1)    $ 1,461     $ 543  
Part two incentive fees (2)      362       418  
Incentive fees, excluding the impact of incentive fee waivers      1,823       961  
Incentive fee waivers (3)      —       (543 )
Total incentive fees, net of incentive fee waivers    $ 1,823     $ 418  

  

 

(1)    Based on pre-incentive fee net investment income.
(2)    Based upon net realized and unrealized gains and losses, or capital gains. The Company accrues, but does not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. If, on a cumulative basis, the sum of net realized gain (loss) plus net unrealized gain (loss) decreases during a period, the Company will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than 15% of the sum of net realized gain (loss) plus net unrealized gain (loss).
(3)    Represents part one incentive fees voluntarily waived by MC Advisors.

 

37

 

 

On April 18, 2022, MC Advisors agreed to permanently waive a portion of the base management fees and incentive fees to be paid by the Company. See Note 13 for additional information.

 

The Company has entered into the Administration Agreement with MC Management, under which the Company reimburses MC Management, subject to the review and approval of the Board, for its allocable portion of overhead and other expenses, including the costs of furnishing the Company with office facilities and equipment and providing clerical, bookkeeping, record-keeping and other administrative services at such facilities, and the Company’s allocable portion of the cost of the chief financial officer and chief compliance officer and their respective staffs. To the extent that MC Management outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis, without incremental profit, to MC Management. For the three months ended March 31, 2022 and 2021, the Company incurred $558 and $280 respectively, in administrative expenses (included within Professional fees, Administrative service fees and General and administrative expenses on the consolidated statements of operations) under the Administration Agreement, of which $203 and $111, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. As of March 31, 2022 and December 31, 2021, $203 and $178, respectively, of expenses were due to MC Management under the Administration Agreement and are included in accounts payable and accrued expenses on the consolidated statements of assets and liabilities.

 

The Company has entered into a license agreement with Monroe Capital LLC under which Monroe Capital LLC has agreed to grant the Company a non-exclusive, royalty-free license to use the name “Monroe Capital” for specified purposes in its business. Under this agreement, the Company has the right to use the “Monroe Capital” name at no cost, subject to certain conditions, for so long as MC Advisors or one of its affiliates remains its investment adviser. Other than with respect to this limited license, the Company has no legal right to the “Monroe Capital” name or logo.

 

As of March 31, 2022 and December 31, 2021, the Company had accounts payable to members of the Board of $15 and zero, respectively, representing accrued and unpaid fees for their services. 

 

Note 7. Borrowings

 

In accordance with the 1940 Act, the Company is permitted to borrow amounts such that its asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing. As of March 31, 2022 and December 31, 2021, the Company’s asset coverage ratio based on aggregate borrowings outstanding was 277% and 206%, respectively.

 

The Company has a Credit Facility with KeyBank National Association through the Company’s wholly-owned subsidiary, the SPV. The Company’s ability to borrow under the Credit Facility is subject to certain financial and restrictive covenants as well as availability under the borrowing base, which permits the Company to borrow up to 72% of the principal balance of its portfolio company investments depending on the type of investment. Under the terms of the Credit Facility, the SPV is allowed to reinvest available cash and make new borrowings under the Credit Facility through July 16, 2024. The maturity date of the Credit Facility is July 16, 2026. Distributions from the SPV to the Company are limited by the terms of the Credit Facility, which generally allows for the distribution of net interest income pursuant to a waterfall quarterly during the reinvestment period. As of March 31, 2022 and December 31, 2021, the fair value of investments of the Company that were held in the SPV as collateral for the Credit Facility was $685,366 and $615,978, respectively, and these investments are identified on the consolidated schedules of investments. As of March 31, 2022 and December 31, 2021, the Company had outstanding borrowings under the Credit Facility of $281,200 and $348,600, respectively.

 

During the reinvestment period, borrowings under the Credit Facility bear interest at an annual rate of LIBOR (one or three month, at the SPV’s option and subject to a LIBOR minimum of 0.50%) plus a margin ranging from 2.75% to a maximum of 3.00%, depending on the level of utilization of the facility and the number of obligors of eligible loans pledged as collateral in the SPV. After the reinvestment period, borrowings under the Credit Facility bear interest at an annual rate of LIBOR plus 3.25%. In addition to the stated interest rate on borrowings, the SPV is required to pay an unused commitment fee of (i) 0.75% per annum on any unused portion of the Credit Facility when the outstanding borrowings are less than or equal to 30% of the facility amount, (ii) 0.55% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 30% of the facility amount but less than or equal to 50% of the facility amount, and (iii) 0.35% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 50% of the facility amount. As of both March 31, 2022 and December 31, 2021, the outstanding borrowings were accruing at a weighted average interest rate of 3.3%.

 

Components of interest expense: The components of the Company’s interest and other debt financing expenses and average debt outstanding were as follows:

 

    Three months ended March 31,  
    2022     2021  
Interest expense   $ 2,772     $ 521  
Unused commitment fees     123       53  
Amortization of deferred financing costs     385       125  
Total interest and other debt financing expenses   $ 3,280     $ 699  
Average debt outstanding   $ 339,678     $ 59,564  

 

38

 

 

Note 8. Derivative Instruments

 

The Company enters into foreign currency forward contracts from time to time to help mitigate the impact that an adverse change in foreign exchange rates would have on future principal and interest cash flows from the Company’s investments denominated in foreign currencies. As of March 31, 2022 and December 31, 2021, the counterparty to these foreign currency forward contracts was Bannockburn Global Forex, LLC. Net unrealized gain or loss on foreign currency forward contracts are included in net change in unrealized gain (loss) on foreign currency forward contracts and net realized gain or loss on forward currency forward contracts are included in net realized gain (loss) on foreign currency forward contracts on the accompanying consolidated statements of operations.

 

Certain information related to the Company’s foreign currency forward contracts is presented below as of March 31, 2022 and December 31, 2021.

 

   As of March 31, 2022
Description  Notional
Amount to be
Sold		  Settlement
Date		  Gross
Amount
of
Unrealized Gain		   Gross
Amount
of
Unrealized Loss		   Balance Sheet location of Net Amounts
Foreign currency forward contract  CAD 74  4/19/2022  $—   $(2)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD  75  5/18/2022   —    (2)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD 72  6/17/2022   —    (2)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD 72  7/19/2022   —    (2)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD 74  8/17/2022   —    (2)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD 74  9/19/2022   —    (2)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD 77  10/19/2022   —    (2)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD 70  11/17/2022   —    (1)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD 12,078  12/19/2022   —    (306)  Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 146  4/19/2022   4    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 138  5/17/2022   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 153  6/17/2022   4    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 138  7/18/2022   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 140  8/16/2022   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 153  9/16/2022   4    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 152  10/19/2022   4    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 136  11/16/2022   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 142  12/16/2022   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 153  1/18/2023   4    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 140  2/16/2023   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 132  3/16/2023   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 160  4/20/2023   4    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 121  5/16/2023   2    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 156  6/19/2023   4    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 138  7/18/2023   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 146  8/16/2023   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 146  9/18/2023   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 148  10/18/2023   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 140  11/16/2023   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 142  12/18/2023   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 150  1/17/2024   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 143  2/16/2024   3    —   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 15,410  3/18/2024   298    —   Unrealized gain on foreign currency forward contracts
         $373   $(321)  Unrealized gain on foreign currency forward contracts

 

39

 

    As of December 31, 2021
Description   Notional
Amount to be
Sold		   Settlement
Date		   Gross
Amount of
Unrealized
Gain		     Gross
Amount of
Unrealized
Loss		     Balance Sheet location of Net Amounts
Foreign currency forward contract   CAD 72   1/18/2022   $ —     $ (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 77   2/17/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 67   3/17/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 74   4/19/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 75   5/18/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 72   6/17/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 72   7/19/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 74   8/17/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 74   9/19/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 77   10/19/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 70   11/17/2022     —       (1 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   CAD 12,078   12/19/2022     —       (206 )   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 156   1/19/2022     8       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 136   2/16/2022     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 132   3/16/2022     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 146   4/19/2022     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 138   5/17/2022     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 153   6/17/2022     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 138   7/18/2022     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 140   8/16/2022     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 153   9/16/2022     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 152   10/19/2022     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 136   11/16/2022     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 142   12/16/2022     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 153   1/18/2023     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 140   2/16/2023     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 132   3/16/2023     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 160   4/20/2023     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 121   5/16/2023     5       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 156   6/19/2023     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 138   7/18/2023     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 146   8/16/2023     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 146   9/18/2023     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 148   10/18/2023     7       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 140   11/16/2023     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 142   12/18/2023     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 150   1/17/2024     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 143   2/16/2024     6       —     Unrealized gain on foreign currency forward contracts
Foreign currency forward contract   AUD 15,410   3/18/2024     635       —     Unrealized gain on foreign currency forward contracts
Total            $ 802     $ (217 )    

 

For the three months ended March 31, 2022 and 2021, the Company recognized net change in unrealized gain (loss) on foreign currency forward contracts of ($533) and $170, respectively. For the three months ended March 31, 2022 and 2021, the Company recognized net realized gain (loss) on foreign currency forward contracts of $18 and ($3), respectively.

 

Note 9. Distributions

 

The Company’s distributions to common stockholders are recorded on the applicable record date. The following table summarizes the distributions declared during the three months ended March 31, 2022 and 2021, respectively.

 

 Date
Declared		   Record
Date		   Payment
Date (1)		   Amount
Per Share		    

Distribution

Declared

  
Three months ended March 31, 2022:                        
January 4, 2022   January 4, 2022   March 31, 2022   $ 0.07     $ 2,439  
January 4, 2022   February 1, 2022   March 31, 2022     0.07       2,439  
January 4, 2022   March 1, 2022   March 31, 2022     0.06       2,435  
Total distributions declared           $ 0.20     $ 7,313  

40

 

 Date
Declared		   Record
Date		   Payment
Date (1)		   Amount
Per Share		    

Distribution

Declared

  
Three months ended March 31, 2021:                        
March 4, 2021   March 8, 2021   March 12, 2021   $ 0.20     $ 2,766  
Total distributions declared           $ 0.20     $ 2,766  

 

 

(1)   The portion of the Company’s distribution that is to be reinvested pursuant to the DRIP is issued to the Company’s stockholders on the payment date.

 

The following tables summarize the Company’s distributions reinvested during the three months ended March 31, 2022 and 2021, respectively:

 

Payment Date     NAV
Per Share		     DRIP
Shares
Issued		     DRIP
Shares
Value		  
Three months ended March 31, 2022:                          
March 31, 2022     $ 10.10       217,369     $ 2,195  
Total proceeds               217,369     $ 2,195  

 

Payment Date     NAV
Per Share		     DRIP
Shares
Issued		     DRIP
Shares
Value		  
Three months ended March 31, 2021:                          
March 12, 2021     $ 9.94       77,598     $ 771  
Total proceeds               77,598     $ 771  

 

Note 10. Stock Issuances and Share Repurchase Program

 

Stock Issuances 

 

As of March 31, 2022, the total number of shares of all classes of capital stock that the Company has the authority to issue was 100,000,000 shares of common stock, par value $0.001 per share.

 

The following table summarizes the issuance of shares during the three months ended March 31, 2022 and 2021:

 

Date     Price Per
Share		     Shares Issued     Proceeds  
Three months ended March 31, 2022:                          
March 15, 2022     $ 10.10       12,173,590     $ 122,953  
Total               12,173,590     $ 122,953  

 

Date     Price Per
Share		     Shares Issued     Proceeds  
Three months ended March 31, 2021:                          
March 15, 2021     $ 9.74       5,301,797     $ 51,639  
Total               5,301,797     $ 51,639  

 

During the three months ended March 31, 2022 and 2021, the Company also issued 217,369 and 77,598 shares, with an aggregate value of $2,195 and $771, under the DRIP as disclosed in Note 9.

 

Share Repurchase Program

 

During the three months ended March 31, 2022, the Company commenced a quarterly share repurchase program in which the Company intends to repurchase, in each quarter, up to 5% of the shares of common stock outstanding as of the close of the previous calendar quarter (the “Share Repurchase Program”), subject to the discretion of the Board. Any such repurchases are subject to approval by the Board, in its discretion, and the availability of cash to fund such repurchases. The Board may amend, suspend or terminate the share repurchase program if it deems such action to be in the Company’s best interest and the best interest of the Company’s stockholders. As a result, share repurchases may not be available each quarter. The Company intends to conduct such repurchase offers in accordance with the requirements of Rule 13e-4 under the Securities Exchange Act of 1934 and the 1940 Act and subject to compliance with applicable covenants and restrictions under our financing arrangements. All shares repurchased by the Company pursuant to the terms of each tender offer will be redeemed and thereafter will be authorized and unissued shares. The Company’s first tender offer was made on March 16, 2022 and the tender offer period expired on April 13, 2022. See Note 13 for additional information on shares tendered pursuant to this tender offer.  

 

Note 11. Commitments and Contingencies

 

Commitments: As of March 31, 2022 and December 31, 2021, the Company had $116,474 and $125,204, respectively, in outstanding commitments to fund investments. Management believes that the Company’s available cash balances and/or ability to draw on the Credit Facility provide sufficient funds to cover its unfunded commitments as of March 31, 2022.

 

Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnification. The Company’s maximum exposure under these agreements is unknown, as these involve future claims that may be made against the Company but that have not occurred. The Company expects the risk of any future obligations under these indemnification provisions to be remote.

 

Concentration of credit and counterparty risk: Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms of the contract. In the event that the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparties or issuers of the instruments. It is the Company’s policy to review, as necessary, the credit standing of each counterparty.

41

 

 

Market risk: The Company’s investments and borrowings are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments and borrowings are traded.

 

Legal proceedings: In the normal course of business, the Company may be subject to legal and regulatory proceedings that are generally incidental to its ongoing operations. While there can be no assurance of the ultimate disposition of any such proceedings, the Company is not currently aware of any such proceedings or disposition that would have a material adverse effect on the Company’s consolidated financial statements.

 

Note 12. Financial Highlights

 

The following is a schedule of financial highlights for the three months ended March 31, 2022 and 2021:

 

   March 31, 2022   March 31, 2021 
Per share data:          
Net asset value at beginning of period  $10.10   $9.94 
Net investment income (loss) (1)   0.20    0.22 
Net gain (loss) (1)   0.07    0.19 
Net increase (decrease) in net assets resulting from operations (1)   0.27    0.41 
Stockholder distributions declared (2)   (0.20)   (0.20)
Other (3)   (0.01)   (0.09)
Net asset value at end of period  $10.16   $10.06 
Total return based on average net asset value (4)   2.38%   3.71%
Ratio/Supplemental data:          
Net assets at end of period  $497,611   $193,292 
Shares outstanding at end of period   48,956,121    19,206,910 
Portfolio turnover (5)   3.03%   9.04%
Ratio of total investment income to average net assets (6)   15.33%   11.41%
Ratio of expenses to average net assets with waivers (6) (7)   6.64%   2.69%

 

 

(1)   The per share data was derived by using the weighted average shares outstanding during the periods presented.
(2)  The per share data for distributions reflects the actual amount of distributions declared during the period. Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Company’s taxable earnings fall below the total amount of the Company’s distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company’s stockholders. The tax character of distributions will be determined at the end of the fiscal year. However, if the character of such distributions were determined as of March 31, 2022 and 2021, none of the distributions would have been characterized as a tax return of capital to the Company’s stockholders; this tax return of capital may differ from the return of capital calculated with reference to net investment income for financial reporting purposes.
(3)  Includes the effect of share issuances above (below) net asset value and the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of a period end or transaction date.
(4)  Total return based on average net asset value is calculated by dividing the net increase (decrease) in net assets resulting from operations by the average net asset value. Return calculations are not annualized.
(5) Ratio is not annualized.
(6) Ratios are annualized. To the extent incentive fees are included within the ratio, they are not annualized.
(7) The following is a schedule of supplemental ratios for the three months ended March 31, 2022 and 2021. These ratios have been annualized unless otherwise noted.
   
    March 31,
2022		     March 31,
2021		  
Ratio of expenses to average net assets without waivers (6)     6.64 %     5.01 %
Ratio of net investment income (loss) to average net assets without waivers (6)     8.69 %     6.40 %
Ratio of net investment income (loss) to average net assets with waivers (6)     8.69 %     8.72 %
                   

 

42

 

 

Note 13. Subsequent Events

 

The Company has evaluated subsequent events through May 12, 2022, the date on which the consolidated financial statements were issued.

 

Distributions: On April 1, 2022, the Board declared the following distributions:

 

Record Date   Payment Date   Amount Per Share  
April 18, 2022   June 30, 2022   $ 0.0667  
May 16, 2022   June 30, 2022     0.0667  
June 17, 2022   June 30, 2022     0.0666  
Total dividends declared       $ 0.2000  

 

Asset-Backed Securitization: On April 7, 2022 (the “Closing Date”), Monroe Capital Income Plus ABS Funding, LLC (the “2022 ABS SPV”), an indirect, wholly-owned, consolidated subsidiary of the Company, completed a $425,000 asset-backed securitization (the “2022 Asset-Backed Securitization”). The 2022 Asset-Backed Securitization is a secured financing incurred by the 2022 ABS SPV, which is consolidated by the Company and therefore is subject to the Company’s overall asset coverage requirement.

 

The notes offered in the 2022 Asset-Backed Securitization consist of $261,375 of Class A Senior Secured Notes, which bear interest at 4.05% (the “Class A Notes”), $44,625 of Class B Senior Secured Notes, which bear interest at 5.15% (the “Class B Notes”) and $36,125 of Class C Senior Secured Notes, which bear interest at 7.75% (the “Class C Notes” and collectively with the Class A Notes and the Class B Notes, the “Secured 2022 Notes”). The 2022 ABS SPV also issued $82,875 of Subordinated Notes, which do not bear interest (the “Subordinated 2022 Notes” and, together with the Secured 2022 Notes, the “2022 Notes”). The 2022 Notes are due on April 30, 2032. The Secured 2022 Notes were issued through a private placement. The Company retained all of the Class C Notes and the Subordinated 2022 Notes.

 

The Secured 2022 Notes are the secured obligation of the 2022 ABS SPV, and the indenture governing the Secured 2022 Notes includes customary covenants and events of default. The 2022 Notes have not been, and will not be, registered under the Securities Act, or any state “blue sky” laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from registration. MC Advisors serves as collateral manager to the 2022 ABS SPV under a collateral management agreement entered into on the Closing Date and is entitled to receive a fee for providing these services; however MC Advisors has elected to waive such fees.

 

The 2022 Asset Securitization is secured by a diversified portfolio of senior secured loans. The 2022 ABS SPV used the proceeds from the 2022 Asset-Backed Securitization to, among other things, purchase certain investments from the Company and the SPV. In conjunction with the proceeds from the sale of these investments to the 2022 ABS SPV, the SPV repaid certain outstanding indebtedness under the Credit Facility. Through April 22, 2024, all principal collections received on the underlying collateral may be used by the ABS SPV to purchase new collateral under the direction of MC Advisors, in its capacity as collateral manager of the 2022 ABS SPV, in accordance with the Company’s investment strategy and subject to customary conditions set forth in the documents governing the 2022 Asset-Backed Securitization, allowing the Company to maintain the initial leverage in the 2022 Asset-Backed Securitization.

 

Share Repurchase Program: On April 13, 2022, 641,640 shares were validly tendered under the Share Repurchase Program and not withdrawn pursuant to the tender offer as of such date. On April 18, 2022, the Company repurchased all shares validly tendered and not withdrawn at a price equal to $10.10 per share for an aggregate purchase price of approximately $6,481.

 

Advisory Fee Waiver: On April 18, 2022, MC Advisors agreed to permanently waive a portion of the base management fees and incentive fees payable by the Company to MC Advisors under the Investment Advisory Agreement pursuant to a fee waiver letter. These waivers take effect beginning April 1, 2022 (the “Effective Date”).

 

As of and beginning with the Effective Date, the base management fee, payable quarterly in arrears to MC Advisors, will be calculated (i) prior to any Exchange Listing or any future quotation or listing of its securities on any other public trading market, at an annual rate of 1.25% of average total assets (a reduction from 1.50% of average total assets), which includes assets financed using leverage) and (ii) following an Exchange Listing, calculated at an annual rate of 1.75% of average invested assets (calculated as total assets excluding cash).

 

As of and beginning with the Effective Date, prior to an Exchange Listing, the Company shall pay MC Advisors an incentive fee with respect to its pre-incentive fee net investment income in each calendar quarter as follows:

 

·      no incentive fee in any calendar quarter in which the pre-incentive fee net investment income does not exceed the hurdle rate of 1.50% (6% annually);
 
·      100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.6875% (reduced from 1.76%) in any calendar quarter prior to an Exchange Listing or 1.88% in any calendar quarter following an Exchange Listing; and
 
·      prior to an Exchange Listing, 12.5% of the amount of the Company’s pre-incentive fee net investment income (a reduction from 15.0% of the amount of the Company’s pre-incentive fee net income), if any, that exceeds 1.6875% (reduced from 1.76%) in any calendar quarter, and following an Exchange Listing, 20% of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds 1.88% in any calendar quarter.

  

As of and beginning with January 1, 2022, the capital gains incentive fee will be calculated and payable in arrears at the end of each fiscal year (or, upon termination of the Investment Advisory Agreement, as of the termination date) and no equals 12.5% of the Company’s realized capital gains (reduced from 15.0%) as of the end of the fiscal year.  

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Except as otherwise specified, references to “we,” “us” and “our” refer to Monroe Capital Income Plus Corporation and its consolidated subsidiaries; MC Advisors refers to Monroe Capital BDC Advisors, LLC, our investment adviser and a Delaware limited liability company; MC Management refers to Monroe Capital Management Advisors, LLC, our administrator and a Delaware limited liability company; and Monroe Capital refers to Monroe Capital LLC, a Delaware limited liability company, and its subsidiaries and affiliates. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing in our annual report on Form 10-K (the “Annual Report”) for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 14, 2022. The information contained in this section should also be read in conjunction with our unaudited consolidated financial statements and related notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q (the “Quarterly Report”).

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to future events or our future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry, our beliefs and our assumptions. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties, including statements as to:

 

  · our future operating results;

 

  · our business prospects and the prospects of our portfolio companies;

 

  · the dependence of our future success on the general economy and its impact on the industries in which we invest;

 

  · the impact of global health epidemics, such as the current novel coronavirus (“COVID-19”) pandemic, on our or our portfolio companies’ business and the global economy;
     
  · the impact of the Russian invasion of Ukraine on our portfolio companies and the global economy;
     
  · the impact of a protracted decline in the liquidity of credit markets on our business;

 

  · the impact of the decommissioning of London Interbank Offered Rate (“LIBOR”) on our operating results;

 

  · the impact of increased competition;

 

  · the impact of fluctuations in interest rates on our business and our portfolio companies;

 

  · our contractual arrangements and relationships with third parties;

 

  · the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

 

  · actual and potential conflicts of interest with MC Advisors, MC Management and other affiliates of Monroe Capital;

 

  · the ability of our portfolio companies to achieve their objectives;

 

  · the use of borrowed money to finance a portion of our investments;

 

  · the adequacy of our financing sources and working capital;

 

  · the timing of cash flows, if any, from the operations of our portfolio companies;

 

  · the ability of MC Advisors to locate suitable investments for us and to monitor and administer our investments;

 

  · the ability of MC Advisors or its affiliates to attract and retain highly talented professionals;

 

  · our ability to qualify and maintain our qualification as a regulated investment company and as a business development company; and

 

  · the impact of future legislation and regulation on our business and our portfolio companies.

 

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We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates,” “targets” and similar expressions to identify forward-looking statements. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Part I—Item 1A. Risk Factors” in our Annual Report and “Part II—Item 1A. Risk Factors” in this Quarterly Report.

 

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statements in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved.

 

We have based the forward-looking statements included in this Quarterly Report on information available to us on the date of this Quarterly Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 

Overview

 

Monroe Capital Income Plus Corporation is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for U.S. federal income tax purposes we have elected to be treated as a regulated investment company (“RIC”) under the U.S. Internal Revenue Code of 1986, as amended (the “Code”). We currently qualify and intend to qualify annually to be treated as a RIC for U.S. federal income tax purposes. 

  

As an emerging growth company, we intend to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards.

 

We are a specialty finance company that is focused on providing financing solutions primarily to lower middle-market companies in the United States and Canada. We seek to provide investors with attractive risk-adjusted returns and downside protection associated with investing in asset based and secured corporate private credit opportunities in a manner that is decoupled from public markets’ volatility. We seek to provide attractive risk-adjusted returns and downside protection by investing primarily in secured private credit transactions and assets, targeting investments that have significant downside protection through a focus on asset coverage. We expect to invest primarily in: (i) senior secured and junior secured and unsecured loans, notes, bonds, preferred equity (including preferred partnership equity), convertible debt and other securities; (ii) unitranche secured loans (a combination of senior secured and junior secured debt in the same facility in which we syndicate a “first out” portion of the loan to an investor and retain a “last out” portion of the loan) and securities; (iii) asset-based loans and securities; (iv) small business loans and leases; (v) structured debt and structured equity; (vi) syndicated loans; (vii) securitized debt and subordinated notes of collateralized loan obligations facilities, asset-backed securities and other securitized products and warehouse loan facilities; (viii) opportunities to acquire illiquid investments from other third-party funds as a result of liquidity constraints resulting from investor redemptions and market dislocations; and (ix) capital investments in the secondary markets. As of March 31, 2022, our portfolio included approximately 85.5% senior secured loans, 6.7% unitranche secured loans, 4.9% junior secured loans and 2.9% equity securities, compared to December 31, 2021, when our portfolio included approximately 90.5% senior secured loans, 4.3% unitranche secured loans, 2.6% junior secured loans and 2.6% equity securities. We expect that the companies in which we invest may be leveraged, often as a result of leveraged buy-outs or other recapitalization transactions, and, in certain cases, will not be rated by national ratings agencies. If such companies were rated, we believe that they would typically receive a rating below investment grade (between BB and CCC under the Standard & Poor’s system) from the national rating agencies.

 

We use Monroe Capital’s extensive leveraged finance origination infrastructure and broad expertise in sourcing loans to invest in senior secured, unitranche secured and junior secured debt of middle-market companies. Our investment size will vary proportionately with the size of our capital base. We believe that our focus on lending to lower middle-market companies offers several advantages as compared to lending to larger companies, including more attractive economics, lower leverage, more comprehensive and restrictive covenants, more expansive events of default, relatively small debt facilities that provide us with enhanced influence over our borrowers, direct access to borrower management and improved information flow.

 

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Investment income

 

We generate interest income on the debt investments in portfolio company investments that we originate or acquire. Our debt investments, whether in the form of senior secured, unitranche secured or junior secured debt, typically have an initial term of three to seven years and bear interest at a fixed or floating rate. In some instances, we receive payments on our debt investments based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. In some cases, our investments provide for deferred interest of payment-in-kind (“PIK”) interest. In addition, we may generate revenue in the form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and consulting fees. Loan origination fees, original issue discount and market discount or premium are capitalized, and we accrete or amortize such amounts as interest income. We record prepayment premiums and prepayment gains (losses) on loans as interest income. As the frequency or volume of the repayments which trigger these prepayment premiums and prepayment gains (losses) may fluctuate significantly from period to period, the associated interest income recorded may also fluctuate significantly from period to period. Interest and fee income is recorded on the accrual basis to the extent we expect to collect such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. We record fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service is completed.

 

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. The frequency and volume of the distributions on common equity securities and LLC and LP investments may fluctuate significantly from period to period.

 

Expenses

 

Our primary operating expenses include the payment of base management and incentive fees to MC Advisors under the investment advisory agreement entered into on December 5, 2018 (the “Investment Advisory Agreement”), the payment of fees to MC Management for our allocable portion of overhead and other expenses under the administration agreement entered into on December 5, 2018 (the “Administration Agreement”), and other operating costs. See Note 6 to our consolidated financial statements and “Related Party Transactions” below for additional information on our Investment Advisory Agreement and Administration Agreement. Our expenses also include interest expense on indebtedness. We bear all other out-of-pocket costs and expenses of our operations and transactions.

 

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Net gain (loss)

 

We recognize realized gains or losses on investments, foreign currency forward contracts and foreign currency and other transactions based on the difference between the net proceeds from the disposition and the cost basis without regard to unrealized gains or losses previously recognized within net realized gain (loss) on the consolidated statements of operations. We record current period changes in fair value of investments, foreign currency forward contracts, foreign currency and other transactions within net change in unrealized gain (loss) on the consolidated statements of operations.

 

Portfolio and Investment Activity

 

During the three months ended March 31, 2022, we invested $21.2 million in three new portfolio companies, and $58.6 million in 29 existing portfolio companies, and had $22.3 million in aggregate amount of sales and principal repayments, resulting in net investments of $57.5 million for the period.

 

During the three months ended March 31, 2021, we invested $40.9 million in 10 new portfolio companies, and $10.2 million in 15 existing portfolio companies, and had $18.8 million in aggregate amount of sales and principal repayments, resulting in net investments of $32.3 million for the period.

 

The following table shows portfolio yield by security type:

 

   March 31, 2022   December 31, 2021 
   Weighted Average
Annualized
Contractual
Coupon
Yield (1)		   Weighted
Average
Annualized
Effective
Yield (2)		   Weighted Average
Annualized
Contractual
Coupon
Yield (1)		   Weighted
Average
Annualized
Effective
Yield (2)		 
Senior secured loans   7.5%   7.5%   7.6%   7.6%
Unitranche secured loans   7.3    7.6    7.9    8.4 
Junior secured loans   10.5    10.5    11.4    11.4 
Equity securities   6.6    6.6    8.6    8.6 
Total   7.6%   7.6%   7.6%   7.6%

 

 

(1)  The weighted average annualized contractual coupon yield at period end is computed by dividing (a) the interest income on our debt investments and preferred equity investments (with a stated coupon rate) at the period end contractual coupon rate for each investment by (b) the par value of our debt investments and the cost basis of our preferred equity investments.
(2)  The weighted average annualized effective yield on portfolio investments at period end is computed by dividing (a) interest income on our debt investments and preferred equity investments (with a stated coupon rate) at the period end effective rate for each investment by (b) the par value of our debt investments and the cost basis of our preferred equity investments. The weighted average annualized effective yield on portfolio investments is a metric on the investment portfolio alone and does not represent a return to stockholders. This metric is not inclusive of our fees and expenses, the impact of leverage on the investment portfolio or sales load that may be paid by stockholders.

 

The following table shows the composition of our investment portfolio at fair value and as percentage of our total investments at fair value (in thousands):

 

    March 31, 2022     December 31, 2021  
Fair Value:                        
Senior secured loans   $ 655,949       85.5 %   $ 638,120       90.5 %
Unitranche secured loans     51,314       6.7       30,161       4.3  
Junior secured loans     37,403        4.9       18,580       2.6  
Equity securities     22,028       2.9       18,029       2.6  
Total   $ 766,694       100.0 %   $ 704,890       100.0 %

  

Our portfolio composition and contractual and effective yields remained relatively consistent with December 31, 2021.

 

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The following table shows our portfolio composition by industry at fair value and as percentage of our total investments at fair value (in thousands):

 

   March 31, 2022   December 31, 2021 
Fair Value:                
Aerospace & Defense  $22,276    2.9%  $22,358    3.2%
Automotive   24,934    3.3    25,864    3.7 
Banking   29,875    3.9    9,606    1.4 
Beverage, Food & Tobacco   16,878    2.2    19,032    2.7 
Capital Equipment   10,745    1.4    10,270    1.4 
Construction & Building   19,128    2.5    19,202    2.7 
Consumer Goods: Durable   18,667    2.4    18,420    2.6 
Consumer Goods: Non-Durable   25,549    3.3    24,777    3.5 
Containers, Packaging & Glass   2,142    0.3    2,029    0.3 
Energy: Oil & Gas   3,756    0.5    3,591    0.5 
Environmental Industries   22,146    2.9    13,271    1.9 
FIRE: Finance   28,249    3.7    27,505    3.9 
FIRE: Real Estate   41,284    5.4    43,066    6.1 
Healthcare & Pharmaceuticals   89,651    11.7    78,589    11.1 
High Tech Industries   73,196    9.5    81,220    11.5 
Hotels, Gaming & Leisure   2,303    0.3    2,318    0.3 
Media: Advertising, Printing & Publishing   83,817    10.9    78,300    11.1 
Media: Broadcasting & Subscription   1,896    0.2    1,859    0.3 
Media: Diversified & Production   39,504    5.2    34,428    4.9 
Services: Business   99,026    12.9    93,582    13.3 
Services: Consumer   40,854    5.3    37,319    5.3 
Telecommunications   37,420    4.9    40,656    5.8 
Transportation: Cargo   30,528    4.0    14,646    2.1 
Wholesale   2,870    0.4    2,982    0.4 
Total  $766,694    100.0%  $704,890    100.0%

 

Portfolio Asset Quality

 

MC Advisors’ portfolio management staff closely monitors all credits, with senior portfolio managers covering agented and more complex investments. MC Advisors segregates our capital markets investments by industry. The MC Advisors’ monitoring process and projections developed by Monroe Capital both have daily, weekly, monthly and quarterly components and related reports, each to evaluate performance against historical, budget and underwriting expectations. MC Advisors’ analysts will monitor performance using standard industry software tools to provide consistent disclosure of performance. When necessary, MC Advisors will update our internal risk ratings, borrowing base criteria and covenant compliance reports.

 

As part of the monitoring process, MC Advisors regularly assesses the risk profile of each of our investments and rates each of them based on an internal proprietary system that uses the categories listed below, which we refer to as MC Advisors’ investment performance risk rating. For any investment rated in grades 3, 4 or 5, MC Advisors, through its internal Portfolio Management Group (“PMG”), will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions. The PMG is responsible for oversight and management of any investments rated in grades 3, 4, or 5. MC Advisors monitors and, when appropriate, changes the investment ratings assigned to each investment in our portfolio. In connection with our valuation process, MC Advisors reviews these investment performance risk ratings on a quarterly basis. The investment performance risk rating system is described as follows:

 

Investment
Performance
Risk Rating		   Summary Description
Grade 1   Includes investments exhibiting the least amount of risk in our portfolio. The issuer is performing above expectations or the issuer’s operating trends and risk factors are generally positive.
     
Grade 2   Includes investments exhibiting an acceptable level of risk that is similar to the risk at the time of origination. The issuer is generally performing as expected or the risk factors are neutral to positive.
     
Grade 3   Includes investments performing below expectations and indicates that the investment’s risk has increased somewhat since origination. The issuer may be out of compliance with debt covenants; however, scheduled loan payments are generally not past due.
     
Grade 4   Includes an issuer performing materially below expectations and indicates that the issuer’s risk has increased materially since origination. In addition to the issuer being generally out of compliance with debt covenants, scheduled loan payments may be past due (but generally not more than six months past due).

 

Grade 5   Indicates that the issuer is performing substantially below expectations and the investment risk has substantially increased since origination. Most or all of the debt covenants are out of compliance or payments are substantially delinquent. Investments graded 5 are not anticipated to be repaid in full.

 

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Our investment performance risk ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or reflect or represent any third-party assessment of any of our investments.

 

In the event of a delinquency or a decision to rate an investment Grade 4 or Grade 5, the PMG, in consultation with the investment committee, will develop an action plan. Such a plan may require a meeting with the borrower’s management or the lender group to discuss reasons for the default and the steps management is undertaking to address the under-performance, as well as amendments and waivers that may be required. In the event of a dramatic deterioration of a credit, MC Advisors and the PMG will form a team or engage outside advisors to analyze, evaluate and take further steps to preserve our value in the credit. In this regard, we would expect to explore all options, including in a private equity sponsored investment, assuming certain responsibilities for the private equity sponsor or a formal sale of the business with oversight of the sale process by us. The PMG and the investment committee have extensive experience in running debt work-out transactions and bankruptcies.

 

The following table shows the distribution of our investments on the 1 to 5 investment performance risk rating scale as of March 31, 2022 (in thousands):

 

Investment Performance Risk Rating  Investments at
Fair Value		   Percentage of
Total Investments		 
1  $—    —%
2   743,416    97.0 
3   22,676    2.9 
4   602    0.1 
5   —    — 
Total  $766,694    100.0%

 

The following table shows the distribution of our investments on the 1 to 5 investment performance risk rating scale as of December 31, 2021 (in thousands):

 

Investment Performance Risk Rating  Investments at
Fair Value		   Percentage of
Total Investments		 
1  $—    —%
2   693,017    98.3 
3   11,459    1.6 
4   414    0.1 
5   —    — 
Total  $704,890    100.0%

 

As of both March 31, 2022 and December 31, 2021, we had no borrowers with a loan on non-accrual status.

 

Results of Operations

 

Operating results were as follows (in thousands):

 

   Three months ended
March 31,		 
   2022   2021 
Total investment income  $16,387   $4,655 
Total expenses, net of fee waivers   8,472    1,412 
Net investment income before income taxes   7,915    3,243 
Income taxes, including excise taxes   —    — 
Net investment income   7,915    3,243 
Net realized gain (loss) on investments   25    43 
Net realized gain (loss) on foreign currency forward contracts   18    (3)
Net realized gain (loss) on foreign currency and other transactions   —    (40)
Net realized gain (loss)   43    — 
Net change in unrealized gain (loss) on investments   2,903    2,722 
Net change in unrealized gain (loss) on foreign currency forward contracts   (533)   170 
Net change in unrealized gain (loss)   2,370    2,892 
Net increase (decrease) in net assets resulting from operations  $10,328   $6,135 

 

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Investment Income

 

The composition of our investment income was as follows (in thousands):

 

   Three months ended March 31, 
   2022   2021 
Interest income  $13,167   $3,813 
PIK interest income   678    176 
Dividend income (1)    96    21 
Fee income   1,593    278 
Prepayment gain (loss)   210    178 
Accretion of discounts and amortization of premiums   643    189 
Total investment income  $16,387   $4,655 

 

 

(1)  Includes PIK dividends of $92 and $21, respectively.

 

The increase in investment income of $11.7 million during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, is primarily due to the growth of our investment portfolio and an increase in fee income.

 

Operating Expenses

 

The composition of our operating expenses was as follows (in thousands):

 

   Three months ended March 31, 
   2022   2021 
Interest and other debt financing expenses  $3,280   $699 
Base management fees, net of base management fee waivers (1)    2,796    — 
Incentive fees, net of incentive fee waivers (2)    1,823    418 
Professional fees   145    89 
Administrative service fees   203    111 
General and administrative expenses   210    80 
Directors’ fees   15    15 
Total expenses, net of fee waivers  $8,472   $1,412 

 

 

(1)  Base management fees for the three months ended March 31, 2022 and 2021 were $2,796 and $814, respectively. MC Advisors elected to voluntarily waive zero and $814 of such base management fees for the three months ended March 31, 2022 and 2021, respectively. There is no guarantee that MC Advisors will waive any base management fees in the future.
(2)  Incentive fees for the three months ended March 31, 2022 were $1,823, comprised of part one incentive fees of $1,461 and part two capital gains incentive fees of $362. MC Advisors did not elect to voluntarily waive any part one incentive fees during the three months ended March 31, 2022. Incentive fees for the three months ended March 31, 2021 were $961, comprised of part one incentive fees of $543 and part two capital gains incentive fees of $418. MC Advisors elected to voluntarily waive the part one incentive fees of $543 during the three months ended March 31, 2021. There is no guarantee that MC Advisors will waive any incentive fees in the future. See Note 6 to our consolidated financial statements and “Capital Gains Incentive Fee” below for additional information.

 

The composition of our interest and other debt financing expenses and average debt outstanding were as follows (in thousands):

 

   Three months ended March 31, 
   2022   2021 
Interest expense  $2,772   $521 
Unused commitment fees   123    53 
Amortization of deferred financing costs   385    125 
Total interest and other debt financing expenses  $3,280   $699 
Average debt outstanding  $339,678   $59,564 

 

The increase in total expenses of $7.1 million during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, is primarily the result of an increase in interest expense on our revolving facility as average borrowings increased to support the growth of the portfolio and an increase in base management and incentive fees, net of fee waivers. On April 18, 2022, MC Advisors agreed to permanently waive a portion of the base management fees and incentive fees payable by the Company to MC Advisors. See Recent Developments below for additional information.

 

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Income Taxes, Including Excise Taxes

 

We have elected to be treated, currently qualify, and intend to qualify annually as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the U.S. federal income tax treatment available to RICs. To maintain qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and distribute to stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses.

 

Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend distributions from such current year taxable income into the next year and pay a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year annual taxable income may exceed estimated current year dividend distributions, we accrue excise tax, if any, on estimated excess taxable income as such taxable income is earned. For both the three months ended March 31, 2022 and 2021, we did not record a net tax expense on the consolidated statements of operations for U.S. federal excise tax.

 

Certain of our consolidated subsidiaries are subject to U.S. federal and state corporate-level income taxes. For both the three months ended March 31, 2022 and 2021, we did not record a net tax expense on the consolidated statements of operations for these subsidiaries. 

 

Net Realized Gain (Loss)

 

During the three months ended March 31, 2022 and 2021, we had sales of investments of $10.1 million and $3.6 million, respectively, resulting in $25 thousand and $43 thousand of net realized gain (loss) on investments, respectively.

 

We have entered and may continue to enter into foreign currency forward contracts to reduce our exposure to foreign currency exchange rate fluctuations. During the three months ended March 31, 2022 and 2021, we had $18 thousand and ($3) thousand net realized gain (loss) on foreign currency forward contracts, respectively. During the three months ended March 31, 2022 and 2021, we had zero and ($40) thousand of net realized gain (loss) on foreign currency and other transactions, respectively.

 

Net Change in Unrealized Gain (Loss)

 

For the three months ended March 31, 2022 and 2021, our investments had $2.9 million and $2.7 million of net change in unrealized gain (loss), respectively. The net change in unrealized gain (loss) includes both unrealized gain on investments in our portfolio with mark-to-market gains during the periods and unrealized loss on investments in our portfolio with mark-to-market losses during the periods.

 

We estimate that approximately $3.4 million of the net unrealized gain on investments during the three months ended March 31, 2022 was attributable to broad market movements and improvements in fundamental performance at our portfolio companies. These increases in value were offset by ($0.5) million in net unrealized losses attributable to certain underlying portfolio companies that have underlying credit or fundamental performance concerns resulting in an risk rating of Grade 3, 4 or 5 on our investment performance risk rating scale.

 

We estimate approximately $3.2 million of the net unrealized gain on investments during the three months ended March 31, 2021 was attributable to broad market movements and tightening of credit spreads in the loan markets. These increases in value were offset by ($0.5) million in net unrealized losses attributable to specific credit or fundamental performance of the underlying portfolio companies, a significant portion of which is as a result of the impact of the COVID-19 pandemic on individual credit performance.  

 

For the three months ended March 31, 2022 and 2021, our foreign currency forward contracts had ($0.5) million and $0.2 million of net change in unrealized gain (loss), respectively.

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

For the three months ended March 31, 2022 and 2021, the net increase (decrease) in net assets resulting from operations was $10.3 million and $6.1 million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended March 31, 2022 and 2021, our per share net increase (decrease) in net assets resulting from operations was $0.27 and $0.41, respectively. The $4.2 million increase during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, is primarily the result of increased net investment income due to the significant portfolio growth. 

 

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Liquidity and Capital Resources

 

We generate cash primarily from (i) the net proceeds of private offerings, (ii) cash flows from our operations, and (iii) borrowings under our existing revolving credit facility and any financing arrangements we may enter into in the future. These financings may come in the form of borrowings from banks and issuances of senior securities. Our primary uses of cash are for (i) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (ii) the cost of operations (including paying MC Advisors and reimbursements to MC Management), (iii) debt service of any borrowings, (iv) share repurchases under our share repurchase program and (v) cash distributions to our stockholders.

 

As of March 31, 2022, we had $3.3 million in cash, $12.1 million in restricted cash at MC Income Plus Financing SPV LLC (the “SPV”), and $281.2 million debt outstanding on our revolving credit facility. We had $168.8 million available for additional borrowings on our revolving credit facility, subject to borrowing base availability. See “Borrowings” below for additional information.

 

In accordance with the 1940 Act, we are permitted to borrow amounts such that our asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing. As of March 31, 2022 and December 31, 2021, our asset coverage ratio based on aggregate borrowings outstanding was 277% and 206%, respectively.

 

Cash Flows

 

For the three months ended March 31, 2022 and 2021, we experienced a net increase in cash and restricted cash of $1.5 million and $9.8 million, respectively. For the three months ended March 31, 2022 and 2021, operating activities used $48.5 million and $22.9 million of cash, respectively, primarily as a result of purchases of portfolio investments, partially offset by principal repayments on and sales of portfolio investments. During the three months ended March 31, 2022 and 2021, we generated $50.0 million and $32.7 million from financing activities, primarily as a result of the issuance of common stock, partially offset by net repayments on our revolving credit facility and distributions to stockholders.

 

Capital Resources

 

As a BDC, we distribute substantially all of our net income to our stockholders and have an ongoing need to raise additional capital for investment purposes. We intend to generate additional cash primarily from future offerings of securities, including our current Second Private Offering and any subsequent offerings, future borrowings and cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be to invest in portfolio companies, fund share repurchases under our share repurchase program and make cash distributions to our stockholders. We may also use available funds to repay outstanding borrowings.

 

As a BDC, we are generally not permitted to issue and sell our common stock at a price below net asset value (“NAV”) per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current NAV per share of our common stock if our board of directors (the “Board”), including our independent directors, determines that such sale is in the best interests of us and our stockholders, and if our stockholders have approved such sales. As of March 31, 2022 and December 31, 2021, we had 48,956,121 and 36,565,162 shares outstanding, respectively.

 

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Stock Issuances and Share Repurchase Program 

 

Stock Issuances: We are conducting our second best efforts, continuous private offering of our common stock to “accredited investors” in reliance on an exemption from the registration requirements of the Securities Act (the “Second Private Offering”). At each closing an investor purchases shares of our common stock pursuant to a subscription agreement entered into with us. At each closing, investors are required to fund their full subscription to purchase shares of our common stock.

 

The following table summarizes the issuance of shares of our common stock pursuant to the Second Private Offering during the three months ended March 31, 2022 and 2021 (in thousands except shares and per share data):

 

Date   Price Per
Share		     Shares Issued     Proceeds  
Three months ended March 31, 2022:                        
March 15, 2022   $ 10.10       12,173,590     $ 122,953  
Total             12,173,590     $ 122,953  

 

Date     Price Per
Share		     Shares Issued     Proceeds  
Three months ended March 31, 2021:                          
March 15, 2021     $ 9.74       5,301,797     $ 51,639  
Total               5,301,797     $ 51,639  

 

Share Repurchase Program: During the three months ended March 31, 2022, we commenced a quarterly share repurchase program in which we intend to repurchase, in each quarter, up to 5% of the shares of common stock outstanding as of the close of the previous calendar quarter (the “Share Repurchase Program”), subject to the discretion of our Board. Any such repurchases are subject to approval by our Board, in its discretion, and the availability of cash to fund such repurchases. Our Board may amend, suspend or terminate the share repurchase program if it deems such action to be in our best interest and the best interest of our stockholders. Our first tender offer was made on March 16, 2022 and the tender offer period expired on April 13, 2022. See "Recent Developments” for additional information on shares tendered pursuant to this tender offer.

 

Distributions 

 

Distributions to common stockholders are recorded on the applicable record date. The amount, if any, to be distributed to common stockholders is determined by our Board at least quarterly and is generally based upon our earnings estimated by management. Net realized capital gains, if any, are generally distributed at least annually.

 

The determination of the tax attributes for our distributions is made annually, based upon our taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on qualified dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and capital gains, but may also include qualified dividends or return of capital. Distributions to stockholders for the three months ended March 31, 2022 and 2021 totaled $7.3 million ($0.20 per share) and $2.8 million ($0.20 per share), respectively. The tax character of such distributions is determined at the end of the fiscal year. However, if the character of such distributions were determined as of March 31, 2022 and 2021, no portion of these distributions would have been characterized as a tax return of capital to stockholders.

 

We have adopted a DRIP that provides for the reinvestment of dividends and other distributions on behalf of its stockholders that elect to participate in such plan. As a result, if we declare a dividend or distribution, our stockholders’ cash distributions will only be reinvested in additional shares of our common stock if a stockholder specifically “opts in” to the DRIP at least ten (10) days prior to the record date fixed by our Board. Shares issued under the DRIP will be issued at a price per share equal to the NAV per share as of the last day of our fiscal quarter immediately preceding the date that the distribution was declared. See Note 9 for additional information on the Company’s distributions.

  

Borrowings

 

We have a senior secured revolving credit facility (the “Credit Facility”) with KeyBank National Association, as agent, through our wholly-owned subsidiary, the SPV. Our ability to borrow under the Credit Facility is subject to certain financial and restrictive covenants as well as availability under the borrowing base, which permits us to borrow up to 72% of the principal balance of our portfolio company investments depending on the type of investment. Under the terms of the Credit Facility, the SPV is permitted to reinvest available cash and make new borrowings under the Credit Facility through July 16, 2024. The maturity date of the Credit Facility is July 16, 2026. Distributions from the SPV to us are limited by the terms of the Credit Facility, which generally allows for the distribution of net interest income pursuant to a waterfall quarterly during the reinvestment period. As of March 31, 2022 and December 31, 2021, the fair value of our investments held in the SPV as collateral for the Credit Facility was $685.4 million and $616.0 million, respectively, and these investments are identified on the accompanying consolidated schedules of investments. As of March 31, 2022 and December 31, 2021, we had outstanding borrowings under the Credit Facility of $281.2 million and $348.6 million, respectively.

 

During the reinvestment period, borrowings under the Credit Facility bear interest at an annual rate of LIBOR (one or three month, at the SPV’s option and subject to a LIBOR minimum of 0.50%) plus a margin ranging from 2.75% to a maximum of 3.00%, depending on the level of utilization of the facility and the number of obligors of eligible loans pledged as collateral in the SPV. After the reinvestment period, borrowings under the Credit Facility bear interest at an annual rate of LIBOR plus 3.25%. In addition to the stated interest rate on borrowings, the SPV is required to pay an unused commitment fee of (i) 0.75% per annum on any unused portion of the Credit Facility when the outstanding borrowings are less than or equal to 30% of the facility amount, (ii) 0.55% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 30% of the facility amount but less than or equal to 50% of the facility amount, and (iii) 0.35% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 50% of the facility amount. As of both March 31, 2022 and December 31, 2021, the outstanding borrowings were accruing at a weighted average interest rate of 3.3%.

 

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Related Party Transactions

 

We have a number of business relationships with affiliated or related parties, including the following:

 

  • We have an Investment Advisory Agreement with MC Advisors, an investment advisor registered with the SEC, to manage our investing activities. We pay MC Advisors a fee for its services under the Investment Advisory Agreement consisting of two components — a base management fee and an incentive fee. See Note 6 to our consolidated financial statements and “Significant Accounting Estimates and Critical Accounting Policies – Capital Gains Incentive Fee” for additional information.

 

  • We have an Administration Agreement with MC Management to provide us with the office facilities and administrative services necessary to conduct our day-to-day operations. See Note 6 to our consolidated financial statements for additional information.

 

  • Theodore L. Koenig, our Chief Executive Officer and Chairman of our Board is also a manager of MC Advisors and the President and Chief Executive Officer of MC Management. Lewis W. (“Mick”) Solimene, Jr., our Chief Financial Officer and Chief Investment Officer, is also a managing director of MC Management. In addition, Aaron D. Peck, who served as our Chief Financial Officer and Chief Investment Officer until January 28, 2022, is a managing director of MC Management.

 

  • We have a license agreement with Monroe Capital LLC, under which Monroe Capital LLC has agreed to grant us a non-exclusive, royalty-free license to use the name “Monroe Capital” for specified purposes in our business.

 

In addition, we have adopted a formal code of ethics that governs the conduct of MC Advisors’ officers, directors and employees. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Maryland General Corporation Law.

 

Commitments and Contingencies and Off-Balance Sheet Arrangements

 

Commitments and Contingencies

 

As of March 31, 2022 and December 31, 2021, we had outstanding commitments to fund investments under undrawn revolvers, capital expenditure loans, delayed draw commitments and subscription agreements totaling $116.5 million and $125.2 million, respectively. We believe that our available cash balances and/or ability to draw on the Credit Facility provide sufficient funds to cover our unfunded commitments as of March 31, 2022. Additionally, we have entered into certain contracts with other parties that contain a variety of indemnification provisions. Our maximum exposure under these arrangements is unknown. However, we have not experienced claims or losses pursuant to these contracts and believe the risk of loss related to such indemnification provisions to be remote.

 

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Off-Balance Sheet Arrangements

 

Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any off-balance sheet financings or liabilities.

 

Market Trends

 

We have identified the following general trends that may affect our business:

 

Target Market: We believe that small and middle-market companies in the United States with annual revenues between $10.0 million and $2.5 billion represent a significant growth segment of the U.S. economy and often require substantial capital investments to grow. Middle-market companies have generated a significant number of investment opportunities for investment funds managed or advised by Monroe Capital, and we believe that this market segment will continue to produce significant investment opportunities for us.

 

Specialized Lending Requirements: We believe that several factors render many U.S. financial institutions ill-suited to lend to U.S. middle-market companies. For example, based on the experience of our management team, lending to U.S. middle-market companies (1) is generally more labor intensive than lending to larger companies due to the smaller size of each investment and the fragmented nature of information for such companies, (2) requires due diligence and underwriting practices consistent with the demands and economic limitations of the middle-market and (3) may also require more extensive ongoing monitoring by the lender.

 

Demand for Debt Capital: We believe there is a large pool of uninvested private equity capital for middle-market companies. We expect private equity firms will seek to leverage their investments by combining equity capital with senior secured loans and mezzanine debt from other sources, such as us.

 

Competition from Other Lenders: We believe that many traditional bank lenders, in recent years, de-emphasized their service and product offerings to middle-market businesses in favor of lending to large corporate clients and managing capital market transactions. In addition, many commercial banks face significant balance sheet constraints as they seek to build capital and meet future regulatory capital requirements. These factors may result in opportunities for alternative funding sources to middle-market companies and therefore drive increased new investment opportunities for us. Conversely, there has been a significant amount of capital raised over the past several years dedicated to middle market lending, which has increased competitive pressure in the BDC and investment company marketplace for senior and subordinated debt, which in turn could result in lower yields and weaker financial covenants for new assets.

 

Pricing and Deal Structures: We believe that the volatility in global markets over the last several years and current macroeconomic issues including changes in bank regulations for middle-market banks has reduced access to, and availability of, debt capital to middle-market companies, causing a reduction in competition and generally more favorable capital structures and deal terms. Sizable recent capital raises in the private debt marketplace have created significantly increased competition over the last few years, reducing available pricing and creating less favorable capital structures; however, we believe that current market conditions for our target market may continue to create favorable opportunities to invest at attractive risk-adjusted returns.

 

Market Environment: We believe middle market investments are attractive in uncertain market environments such as the current market environment following the COVID-19 outbreak that began in late 2019 and early 2020, and that these investments have historically generated considerable yield premia with more favorable capital structures for lenders when compared to the market for large corporate loans. (1) On the other hand, we believe that the increased competition for direct lending to middle market businesses could result in less favorable pricing terms for our potential investments. If pricing, terms and structures weaken, we would expect to experience decreased net interest income, lower yields and increased risk of credit loss. However, we believe that Monroe Capital’s scale, product suite, entrenched relationships and strong market position will continue to allow us to find investment opportunities with attractive risk-adjusted returns.

 

 

(1)  Standard & Poor’s “LCD Middle Market Review Q4 2021” – New-issue first-lien yield-to-maturity. Middle Market loans have, on average, generated higher yields in comparison to large corporate loans based on data starting in the fourth quarter of 2005.

 

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Recent Developments

 

Distributions: On April 1, 2022, our Board declared the following distributions:

 

Record Date  Payment Date  Amount Per Share 
April 18, 2022  June 30, 2022  $0.0667 
May 16, 2022  June 30, 2022   0.0667 
June 17, 2022  June 30, 2022   0.0666 
Total dividends declared     $0.2000 

 

Asset-Backed Securitization: On April 7, 2022 (the “Closing Date”), Monroe Capital Income Plus ABS Funding, LLC (the “2022 ABS SPV”), an indirect, wholly-owned, consolidated subsidiary, completed a $425.0 million asset-backed securitization (the “2022 Asset-Backed Securitization”). The 2022 Asset-Backed Securitization is a secured financing incurred by the 2022 ABS SPV, which is consolidated and therefore is subject to our overall asset coverage requirement.

 

The notes offered in the 2022 Asset-Backed Securitization consist of $261.4 million of Class A Senior Secured Notes, which bear interest at 4.05% (the “Class A Notes”), $44.6 million of Class B Senior Secured Notes, which bear interest at 5.15% (the “Class B Notes”) and $36.1 million of Class C Senior Secured Notes, which bear interest at 7.75% (the “Class C Notes” and collectively with the Class A Notes and the Class B Notes, the “Secured 2022 Notes”). The 2022 ABS SPV also issued $82.9 million of Subordinated Notes, which do not bear interest (the “Subordinated 2022 Notes” and, together with the Secured 2022 Notes, the “2022 Notes”). The 2022 Notes are due on April 30, 2032. The Secured 2022 Notes were issued through a private placement. We retained all of the Class C Notes and the Subordinated 2022 Notes.

 

The Secured 2022 Notes are the secured obligation of the 2022 ABS SPV, and the indenture governing the Secured 2022 Notes includes customary covenants and events of default. The 2022 Notes have not been, and will not be, registered under the Securities Act, or any state “blue sky” laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from registration. MC Advisors serves as collateral manager to the 2022 ABS SPV under a collateral management agreement entered into on the Closing Date and is entitled to receive a fee for providing these services; however MC Advisors has elected to waive such fees.

 

The 2022 Asset Securitization is secured by a diversified portfolio of senior secured loans. The 2022 ABS SPV used the proceeds from the 2022 Asset-Backed Securitization to, among other things, purchase certain investments from the Company and the SPV. In conjunction with the proceeds from the sale of these investments to the 2022 ABS SPV, the SPV repaid certain outstanding indebtedness under the Credit Facility. Through April 22, 2024, all principal collections received on the underlying collateral may be used by the ABS SPV to purchase new collateral under the direction of MC Advisors, in its capacity as collateral manager of the 2022 ABS SPV, in accordance with the Company’s investment strategy and subject to customary conditions set forth in the documents governing the 2022 Asset-Backed Securitization, allowing the Company to maintain the initial leverage in the 2022 Asset-Backed Securitization.

 

Share Repurchase Program: On April 13, 2022, 641,640 shares were validly tendered under the Share Repurchase Program and not withdrawn pursuant to the tender offer as of such date. On April 18, 2022, we repurchased all shares validly tendered and not withdrawn at a price equal to $10.10 per share for an aggregate purchase price of approximately $6.5 million.

 

Advisory Fee Waiver: On April 18, 2022, MC Advisors agreed to permanently waive a portion of the base management fees and incentive fees payable by us to MC Advisors under the Investment Advisory Agreement pursuant to a fee waiver letter. These reductions take effect beginning April 1, 2022 (the “Effective Date”).

 

As of and beginning with the Effective Date, the base management fee, payable quarterly in arrears to MC Advisors, will be calculated (i) prior to any Exchange Listing or any future quotation or listing of its securities on any other public trading market, at an annual rate of 1.25% of average total assets (a reduction from 1.50% of average total assets), which includes assets financed using leverage) and (ii) following an Exchange Listing, calculated at an annual rate of 1.75% of average invested assets (calculated as total assets excluding cash).

 

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As of and beginning with the Effective Date, prior to an Exchange Listing, we shall pay MC Advisors an incentive fee with respect to its pre-incentive fee net investment income in each calendar quarter as follows:

 

·       no incentive fee in any calendar quarter in which the pre-incentive fee net investment income does not exceed the hurdle rate of 1.50% (6% annually);
 
·      100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.6875% (reduced from 1.76%) in any calendar quarter prior to an Exchange Listing or 1.88% in any calendar quarter following an Exchange Listing; and
 
·      prior to an Exchange Listing, 12.5% of the amount of our pre-incentive fee net investment income (a reduction from 15.0% of the amount of our pre-incentive fee net income), if any, that exceeds 1.6875% (reduced from 1.76%) in any calendar quarter, and following an Exchange Listing, 20% of the amount of our pre-incentive fee net investment income, if any, that exceeds 1.88% in any calendar quarter.

 

As of and beginning with January 1, 2022, the capital gains incentive fee will be calculated and payable in arrears at the end of each fiscal year (or, upon termination of the Investment Advisory Agreement, as of the termination date) and no equals 12.5% of our realized capital gains (reduced from 15.0%) as of the end of the fiscal year.

 

Amendment to Bylaws: On April 28, 2022, our Board approved Amended and Restated Bylaws (the “Amended and Restated Bylaws”), effective as of such date. The Amended and Restated Bylaws reduce the stockholder quorum requirement to one-third (1/3) of votes entitled to be cast in order to constitute a quorum for a meeting of stockholders. All of the other provisions of our bylaws shall remain in full force and effect. A copy of the Amended and Restated Bylaws is attached hereto as Exhibit 3.3 to this Quarterly Report on Form 10-Q.

 

Appointment of New Director: On April 25, 2022, our Board, upon the recommendation of the Nominating and Corporate Governance Committee of the Board, voted to appoint Thomas J. Allison as a Class I director of the Board. In connection with Mr. Allison’s appointment, our Board increased the size of our Board to four directors. Mr. Allison was appointed to serve as a member of our Board until the 2022 annual meeting of stockholders, or until his successor is duly elected and qualified. Our Board and the Nominating and Corporate Governance Committee determined that Mr. Allison is not an “interested person” (as defined in Section 2(a)(19) of the 1940 Act) of the Company.

 

Significant Accounting Estimates and Critical Accounting Policies

 

Revenue Recognition

 

We record interest and fee income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, we do not accrue PIK interest if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue as a receivable interest on loans and debt securities if we have reason to doubt our ability to collect such interest. Loan origination fees, original issue discount and market discount or premium are capitalized, and then we amortize such amounts using the effective interest method as interest income over the life of the investment. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees are recorded as interest income. We record prepayment premiums on loans and debt securities as interest income when we receive such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. We record fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service is completed.

 

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from LLC and LP investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.

 

Valuation of Portfolio Investments

 

As a BDC, we generally invest in illiquid securities including debt and, to a lesser extent, equity securities of middle-market companies. Under procedures established by our Board, we value investments for which market quotations are readily available and within a recent date at such market quotations. When doing so, we determine whether the quote obtained is sufficient in accordance with generally accepted accounting principles in the United States of America to determine the fair value of the security. Debt and equity securities that are not publicly traded or whose market prices are not readily available or whose market prices are not regularly updated are valued at fair value as determined in good faith by our Board. Such determination of fair values may involve subjective judgments and estimates. Investments purchased within 60 days of maturity are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value.

 

Our Board is ultimately and solely responsible for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily available on a quarterly basis in good faith or in any other situation where portfolio investments require a fair value determination. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by our Board using a documented valuation policy and a consistently applied valuation process. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

 

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With respect to investments for which market quotations are not readily available, our Board undertakes a multi-step valuation process each quarter, as described below:

 

  • the quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment professionals of MC Advisors responsible for the credit monitoring of the portfolio investment;
     
  • our Board engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of investments for which market quotations are not readily available. We will consult with independent valuation firm(s) relative to each portfolio company at least once in every calendar year, but the independent appraisals are generally received quarterly for each investment;

 

  • to the extent an independent valuation firm is not engaged to conduct an investment appraisal on an investment for which market quotations are not readily available, the investment will be valued by the MC Advisors investment professional responsible for the credit monitoring;

 

  • preliminary valuation conclusions are then documented and discussed with the investment committee of MC Advisors;

 

  • the audit committee of our Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and MC Advisors adjusts or further supplements the valuation recommendations to reflect any comments provided by the audit committee; and

 

  • our Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of MC Advisors, the independent valuation firm(s) and the audit committee.

 

We generally use the income approach to determine fair value for loans where market quotations are not readily available, as long as it is appropriate. If there is deterioration in credit quality or a debt investment is in workout status, we may consider other factors in determining the fair value, including the value attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. This liquidation analysis may also include probability weighting of alternative outcomes. We generally consider our debt to be performing if the borrower is not in default, the borrower is remitting payments in a timely manner, the loan is in covenant compliance and the loan is otherwise not deemed to be impaired. In determining the fair value of the performing debt, we consider fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions and other relevant factors, both qualitative and quantitative. In the event that a debt instrument is not performing, as defined above, we will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the debt instrument.

 

Under the income approach, discounted cash flow models are utilized to determine the present value of the future cash flow streams of our debt investments, based on future interest and principal payments as set forth in the associated loan agreements. In determining fair value under the income approach, we also consider the following factors: applicable market yields and leverage levels, credit quality, prepayment penalties, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.

 

Under the market approach, the enterprise value methodology is typically utilized to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one portfolio company, enterprise value is generally best expressed as a range of values, from which we derive a single estimate of enterprise value. In estimating the enterprise value of a portfolio company, we analyze various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio company’s historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public. Typically, the enterprise values of private companies are based on multiples of earnings before interest, income taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value.

 

In addition, for certain debt investments, we may base our valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that we and others may be willing to pay. Ask prices represent the lowest price that we and others may be willing to accept. We generally use the midpoint of the bid/ask range as our best estimate of fair value of such investment.

 

As of March 31, 2022, our Board determined, in good faith, the fair value of our portfolio investments in accordance with GAAP and our valuation procedures based on the facts and circumstances known by us at that time, or reasonably expected to be known at that time.

 

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Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss

 

We measure realized gain or loss by the difference between the net proceeds from the sale and the amortized cost basis of the investment, without regard to unrealized gain or loss previously recognized. Net change in unrealized gain or loss reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gain or loss, when gain or loss is realized. Additionally, we do not isolate the change in fair value resulting from foreign currency exchange rate fluctuations from the changes in the fair values of the underlying investment. All fluctuations in fair value are included in net change in unrealized gain (loss) on investments on our consolidated statements of operations.

 

Capital Gains Incentive Fee

 

Pursuant to the terms of the Investment Advisory Agreement with MC Advisors, the incentive fee on capital gains earned on liquidated investments of our portfolio is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). This fee equals 15% (12.5% as of and beginning with January 1, 2022) of our incentive fee capital gains (i.e., our realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On April 18, 2022, this fee was reduced to 12.5% when MC Advisors agreed to permanently waive a portion of the incentive fees (retroactive to January 1, 2022). See “Recent Developments” for additional information. On a quarterly basis, we accrue for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

 

While the Investment Advisory Agreement with MC Advisors neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, we include unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to MC Advisors if our entire portfolio was liquidated at its fair value as of the balance sheet date even though MC Advisors is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

 

During the three months ended March 31, 2022, we accrued capital gains incentive fees of $0.4 million based on the performance of our portfolio, $6 thousand of which was payable to MC Advisors as a result of realized gains. The remaining $0.4 million was based on unrealized appreciation, none of which was payable to MC Advisors under the Investment Advisory Agreement.

  

New Accounting Pronouncements

 

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. We did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the three months ended March 31, 2022.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are subject to financial market risks, including changes in interest rates and the valuations of our investment portfolio. Uncertainty with respect to the economic effects of the COVID-19 outbreak and the Russian invasion of Ukraine have introduced significant volatility in the financial markets, and the effects of this volatility could materially impact our market risks. For additional information concerning the COVID-19 pandemic and the Russian invasion of Ukraine and their potential impact on our business and our operating results, see Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021, “Risks Relating to Our Business and Structure – The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations” and Part II – Other Information, Item 1A. Risk Factors in this Quarterly Report “The Russian invasion of Ukraine may have a material adverse impact on us and our portfolio companies.” 

 

The majority of the loans in our portfolio have floating interest rates and we expect that our loans in the future may also have floating interest rates. These loans are usually based on a floating LIBOR or SOFR and typically have interest rate re-set provisions that adjust applicable interest rates under such loans to current market rates on a monthly or quarterly basis. The majority of the loans in our current portfolio have interest rate floors that will effectively convert the loans to fixed rate loans in the event interest rates decrease. In addition, our Credit Facility has a floating interest rate provision and other credit facilities into which we may enter in the future may also have floating interest rate provisions. 

 

The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to phase out LIBOR. It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist. At this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or any other reforms to LIBOR that may be enacted. The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. In addition, if LIBOR ceases to exist, we may need to renegotiate agreements with our portfolio companies that utilize LIBOR as a factor in determining the interest rate, in order to replace LIBOR with the new standard that is established, which may have an adverse effect on our overall financial condition or results of operations. Following the replacement of LIBOR, some or all of these agreements may bear interest a lower interest rate, which could have an adverse impact on our results of operations. Moreover, if LIBOR ceases to exist, we may need to renegotiate our credit facility and other credit facilities into which we may enter in the future. If we are unable to do so, amounts drawn under our credit facilities may bear interest at a higher rate, which would increase the cost of our borrowings and, in turn, affect our results of operations.

 

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Assuming that the consolidated statement of assets and liabilities as of March 31, 2022 was to remain constant and that we took no actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates (in thousands):

 

   Increase
(decrease) in		   Increase
(decrease) in		   Net increase
(decrease) in
net
investment		 
Change in Interest Rates  interest income   interest expense   income 
Down 25 basis points  $(107)  $—   $(107)
Up 100 basis points   3,224    2,677    547 
Up 200 basis points   10,302    5,489    4,813 
Up 300 basis points   17,385    8,301    9,084 

 

Although we believe that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments, including borrowing under the Credit Facility or other borrowings that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.

 

We may in the future hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts to the extent permitted under the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to the investments in our portfolio with fixed interest rates or interest rate floors.

 

We may also have exposure to foreign currencies (currently Canadian dollars and Australian dollars) related to certain investments. Such investments are translated into U.S. dollars based on the spot rate at each balance sheet date, exposing us to movements in the exchange rate. We may also enter into foreign currency forward contracts to mitigate foreign currency exposure. As of March 31, 2022, we had foreign currency forward contracts in place for CAD 12.7 million and AUD 18.7 million associated with future principal and interest payments on certain investments.

 

ITEM 4. CONTROLS AND PROCEDURES

 

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that, at the end of the period covered by our Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

  

No change occurred in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II

 

OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Neither we, our subsidiaries nor our investment adviser is currently subject to any material legal proceedings.

 

Item 1A. Risk Factors

 

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 14, 2022, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. Other than as set forth below, there have been no material changes during the three months ended March 31, 2022 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021.

 

The Russian invasion of Ukraine may have a material adverse impact on us and our portfolio companies.

 

On February 24, 2022, the President of Russia, Vladimir Putin, announced a military invasion of Ukraine. In response, countries worldwide, including the United States, have imposed sanctions against Russia on certain businesses and individuals, including, but not limited to, those in the banking, import and export sectors. This invasion has led, is currently leading, and for an unknown period of time will continue to lead to disruptions in local, regional, national, and global markets and economies affected thereby. These disruptions caused by the invasion have included, and may continue to include, political, social, and economic disruptions and uncertainties that may affect our business operations or the business operations of our portfolio companies.

 

The 1940 Act allows us to incur additional leverage, which could increase the risk of investing in us.

 

The 1940 Act generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 150% (i.e., the amount of our debt may not exceed 66.7% of the value of our total assets), if certain requirements are met, including approval by our Board and stockholders.

 

Our Board and MC Advisors, our initial stockholder, approved a proposal to adopt an asset coverage ratio of 150% in connection with our organization. Incurring additional indebtedness could increase the risk of investing in us.

 

Leverage is generally considered a speculative investment technique and may increase the risk of investing in our securities. Leverage magnifies the potential for loss on investments in our indebtedness and on invested equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. If the value of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to pay distributions, scheduled debt payments or other payments related to our securities. The effects of leverage would cause any decrease in net asset value for any losses to be greater than any increase in net asset value for any corresponding gains. If we incur additional leverage, stockholders will experience increased risks of investing in our common stock.

 

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We maintain a revolving credit facility and use other borrowed funds to make investments or fund our business operations, which exposes us to risks typically associated with leverage and increases the risk of investing in us.

 

We maintain a revolving credit facility and may borrow money, which is generally considered a speculative investment technique. As a result:

 

  • our common stock is exposed to an increased risk of loss because a decrease in the value of our investments would have a greater negative impact on the value of our common stock than if we did not use leverage;
     
  • if we do not appropriately match the assets and liabilities of our business, adverse changes in interest rates could reduce or eliminate the incremental income we make with the proceeds of any leverage;

 

  • our ability to pay distributions on our common stock may be restricted if our asset coverage ratio, as provided in the 1940 Act, is not at least 150% and any amounts used to service indebtedness would not be available for such distributions;
     
  • any credit facility is subject to periodic renewal by its lenders, whose continued participation cannot be guaranteed;
     
  • our revolving credit facility with KeyBank National Association, as agent, is, and any other credit facility we may enter into would be, subject to various financial and operating covenants; and
     
  • we bear the cost of issuing and paying interest on the revolving credit facility, which costs are entirely borne by our common stockholders.

 

The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

 

   Assumed Return on Our Portfolio
 (Net of Expenses) (1) 		 
   -10%   -5%   0%   5%   10% 
Corresponding return to common stockholder (2)(3)   -22.72%   -12.92%   -3.12%   6.68%   16.48%

 

 

(1)  The assumed return on our portfolio is required by regulation of the SEC to assist investors in understanding the effects of leverage and is not a prediction of, and does not represent, our projected or actual performance.
(2)  Assumes $724.3 million in total assets, $354.8 million in debt outstanding, of which $348.6 million is senior securities outstanding, $369.5 million in net assets and an average cost of funds of 3.25%, which was the weighted average interest rate of borrowings on our revolving credit facility as of December 31, 2021. The interest rate on our revolving credit facility is a variable rate. Actual interest payments may be different.  
(3)  In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2021 total portfolio assets of at least 1.59%.

 

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The interest rates of our revolving credit facility and term loans to our portfolio companies that extend beyond 2021 might be subject to change based on recent regulatory changes, including the decommissioning of LIBOR.

 

LIBOR, the London Interbank Offered Rate, is the basic rate of interest used in lending transactions between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in term loans we extend to portfolio companies such that the interest due to us pursuant to a term loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors that are calculated based on LIBOR. Amounts drawn under our revolving credit facility also currently bear interest at LIBOR plus a margin.

 

On March 5, 2021, the United Kingdom’s Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that the 1-week and 2-month U.S. dollar LIBOR settings will cease publication after December 31, 2021 and the overnight 1, 3, 6 and 12 months U.S. dollar LIBOR settings will cease publication after June 30, 2023. However, the FCA has indicated it will not compel panel banks to continue to contribute to LIBOR after the end of 2021 and the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation have encouraged banks to cease entering into new contracts that use U.S. dollar LIBOR as a reference rate no later than December 31, 2021.

 

To identify a successor rate for U.S. dollar LIBOR, the Alternative Reference Rates Committee (“ARRC”), a U.S.-based group convened by the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, was formed. The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based on directly observable U.S. Treasury-backed repurchase transactions. On July 29, 2021, the ARCC formally recommended SOFR as its preferred alternative replacement rate for LIBOR. Although SOFR appears to be the preferred replacement rate for U.S. dollar LIBOR, at this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or other reforms to LIBOR that may be enacted in the United States, United Kingdom or elsewhere or, whether the COVID-19 outbreak will have further effect on LIBOR transition plans.

 

Although there have been a few issuances utilizing SOFR or the Sterling Over Night Index Average, an alternative reference rate that is based on transactions, it is unknown whether these alternative reference rates will attain market acceptance as replacements for LIBOR.

 

The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market value of and/or transferability of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. In addition, we may need to renegotiate our Credit Facility and the credit agreements extending beyond the date with which the tenor of their associated LIBOR will no longer be available with our portfolio companies that utilize LIBOR as a factor in determining the interest rate, in order to replace LIBOR with the new standard that is established, which may have an adverse effect on our overall financial condition or results of operations. Following the replacement of LIBOR, some or all of these credit agreements may bear interest at a lower interest rate, which could have an adverse impact on the value and liquidity of our investment in these portfolio companies and, as a result on our results of operations.

 

To date, certain of the loan agreements with our portfolio companies have already been amended to include fallback language providing a mechanism for the parties to negotiate a new reference interest rate in the event that LIBOR ceases to exist. Factors such as the pace of the transition to replacement or reformed rates, the specific terms and parameters for and market acceptance of any alternative reference rate, prices of and the liquidity of trading markets for products based on alternative reference rates, and our ability to transition and develop appropriate systems and analytics for one or more alternative reference rates could also have a material adverse effect on our business, financial condition and results of operations. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have a material adverse effect on our business, financial condition, tax position and results of operations.

  

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Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

 

On March 15, 2022, we issued 12,173,590 shares of our common stock, par value $0.01 per share, at a price of $10.10 per share for proceeds of $122,953,260.

 

The sale of shares of our common stock was made pursuant to subscription agreements entered into by us, on the one hand, and each of our investors, on the other hand. The issuance and sale of the shares of our common stock are exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof and Regulation D or Regulation S thereunder, as applicable.

 

Except as previously reported by us in this Item 2 or on our current reports on Form 8-K, we did not sell any securities during the period covered by this Form 10-Q that were not registered under the Securities Act.

 

Item 3.   Defaults Upon Senior Securities

 

None.

 

Item 4.   Mine Safety Disclosures

 

None.

 

Item 5.   Other Information

 

None.

 

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Item 6. Exhibits

 

Exhibit    
Number   Description of Document
3.1   Articles of Incorporation (1)
     
3.2   Articles of Amendment and Restatement (2)
     
3.3   Amended and Restated Bylaws (3)
     
10.4   Indenture, dated as of April 7, 2022, by and between Monroe Capital Income Plus ABS Funding, LLC, as Issuer, and U.S. Bank Trust Company, National Association, as Trustee. (4)
     
10.5   Collateral Management Agreement, dated as of April 7, 2022, by and between Monroe Capital Income Plus ABS Funding, LLC, as Issuer, and Monroe Capital BDC Advisors, LLC, as Collateral Manager. (4)
     
10.6   Loan Sale Agreement, dated as of April 7, 2022, by and between Monroe Capital Income Plus Corporation, as Seller, and Monroe Capital Income Plus ABS Funding, LLC, as Buyer. (4)
     
10.7   Fee Waiver Letter delivered to Monroe Capital Income Plus Corporation by Monroe Capital BDC Advisors, LLC, dated April 18, 2022. (5)
     
31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
     
31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
     
32.1   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
     
(1)   Previously filed as an exhibit to amendment no. 1 to the registration Statement on Form 10 (File No. 000-55941) filed with the SEC on July 30, 2018.
     
(2)   Previously filed as an exhibit to the current report on Form 8-K filed with the SEC on December 7, 2018.
     
(3)   Previously filed as an exhibit to the current report on Form 8-K filed with the SEC on April 29, 2022.
     
(4)   Previously filed as an exhibit to the current report on Form 8-K filed with the SEC on April 13, 2022.
     
(5)   Previously filed as an exhibit to the current report on Form 8-K filed with the SEC on April 22, 2022.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 12, 2022 By /s/ Theodore L. Koenig
    Theodore L. Koenig
    Chairman, Chief Executive Officer and Director
    (Principal Executive Officer)
    Monroe Capital Income Plus Corporation
     
Date: May 12, 2022 By  /s/ Lewis W. Solimene, Jr.
    Lewis W. Solimene, Jr.
    Chief Financial Officer and Chief Investment Officer
    (Principal Financial and Accounting Officer)
    Monroe Capital Income Plus Corporation