10-Q 1 tm2223882d1_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 September 30, 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 November 11, 2022, the registrant had 65,309,147 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 September 30, 2022 (unaudited) and December 31, 2021 3
     
  Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited) 4
     
  Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2022 and 2021 (unaudited) 5
     
  Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited) 6
     
  Consolidated Schedules of Investments as of September 30, 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 46
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 62
     
Item 4. Controls and Procedures 62
     
PART II. OTHER INFORMATION 63
     
Item 1. Legal Proceedings 63
     
Item 1A. Risk Factors 63
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 66
     
Item 3. Defaults Upon Senior Securities 66
     
Item 4. Mine Safety Disclosures 66
     
Item 5. Other Information 66
     
Item 6. Exhibits 67
     
Signatures   68

 

2

 

 

Part I. Financial Information 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except per share data)

 

   September 30, 2022   December 31, 2021 
   (unaudited)     
ASSETS          
Investments, at fair value:          
Non-controlled/non-affiliate company investments  $1,040,697   $693,036 
Non-controlled affiliate company investments   37,998    11,854 
Total investments, at fair value (amortized cost of: $1,075,175 and $695,916, respectively)   1,078,695    704,890 
Cash   4,652    4,998 
Restricted cash   57,847    8,973 
Unrealized gain on foreign currency forward contracts   2,928    585 
Interest receivable   8,584    4,803 
Other assets   1,651    12 
Total assets   1,154,357    724,261 
           
LIABILITIES          
Debt:   442,800    348,600 
Less: Unamortized deferred financing costs   (11,471)   (3,615)
Debt, less unamortized deferred financing costs   431,329    344,985 
Interest payable   7,323    2,184 
Payable for unsettled trades   43,915     
Management fees payable   3,285    2,366 
Incentive fees payable   2,358    1,808 
Accounts payable and accrued expenses   6,804    3,470 
Directors' fees payable   22     
Total liabilities   495,036    354,813 
Net assets  $659,321   $369,448 
           
Commitments and contingencies (See Note 11)          
           
ANALYSIS OF NET ASSETS          
Common stock, $0.001 par value, 100,000 shares authorized, 65,309 and 36,565 shares issued and outstanding, respectively  $66   $37 
Capital in excess of par value   651,723    360,955 
Accumulated undistributed (overdistributed) earnings   7,532    8,456 
Total net assets  $659,321   $369,448 
           
Net asset value per share  $10.10   $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 September 30,   Nine months ended September 30, 
   2022   2021   2022   2021 
                 
Investment income:                    
Non-controlled/non-affiliate company investments:                    
Interest, fee and dividend income  $20,586   $8,852   $52,191   $19,157 
Payment-in-kind interest income   1,902    411    3,536    767 
Total investment income from non-controlled/non-affiliate company investments   22,488    9,263    55,727    19,924 
Non-controlled affiliate company investments:                    
Interest income   329    13    680    13 
Total investment income from non-controlled affiliate company investments   329    13    680    13 
Total investment income   22,817    9,276    56,407    19,937 
                     
Operating expenses:                    
Interest and other debt financing expenses   4,979    1,872    12,961    3,485 
Base management fees   3,285    1,699    8,759    3,661 
Incentive fees   1,647    860    3,853    3,194 
Professional fees   334    155    1,019    419 
Administrative service fees   352    143    763    382 
General and administrative expenses   186    179    700    372 
Directors' fees   22    15    59    45 
Expenses before fee waivers   10,805    4,923    28,114    11,558 
Base management fee waivers           (1,701)   (1,425)
Incentive fee waivers   (162)   (569)   (1,468)   (1,722)
Total expenses, net of fee waivers   10,643    4,354    24,945    8,411 
Net investment income before income taxes   12,174    4,922    31,462    11,526 
Income taxes, including excise taxes   1    7    2    14 
Net investment income   12,173    4,915    31,460    11,512 
                     
Net gain (loss):                    
Net realized gain (loss):                    
Non-controlled/non-affiliate company investments       79    (17)   151 
Foreign currency forward contracts   39    17    84    14 
Foreign currency and other transactions   (1)   (5)   (14)   (46)
Net realized gain (loss)   38    91    53    119 
                     
Net change in unrealized gain (loss):                    
Non-controlled/non-affiliate company investments   (2,140)   2,539    (5,537)   7,618 
Non-controlled/affiliate company investments   83        83     
Foreign currency forward contracts   1,541    748    2,343    874 
Foreign currency and other transactions   1        1     
Net change in unrealized gain (loss)   (515)   3,287    (3,110)   8,492 
                     
Net gain (loss)   (477)   3,378    (3,057)   8,611 
                     
Net increase (decrease) in net assets resulting from operations  $11,696   $8,293   $28,403   $20,123 
                     
Per common share data:                    
Net investment income per share - basic and diluted  $0.20   $0.20   $0.62   $0.57 
Net increase (decrease) in net assets resulting from operations per share - basic and diluted  $0.19   $0.33   $0.56   $1.00 
Weighted average common shares outstanding - basic and diluted   60,572    25,057    50,597    20,182 

 

See Notes to Consolidated Financial Statements.

 

4

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(unaudited)

(in thousands)

 

   Common Stock             
   Number of shares   Par
value
   Capital in excess of
par value
   Accumulated undistributed
(overdistributed) earnings
   Total
net assets
 
Balances at June 30, 2021   22,212   $22   $217,714   $3,038   $220,774 
Net investment income               4,915    4,915 
Net realized gain (loss)               91    91 
Net change in unrealized gain (loss)               3,287    3,287 
Issuance of common stock   6,087    6    60,494        60,500 
Repurchase of common stock                    
Distributions declared to stockholders               (4,848)   (4,848)
Stock issued in connection with dividend reinvestment plan   130        1,293        1,293 
Balances at September 30, 2021   28,429   $28   $279,501   $6,483   $286,012 
                          
Balances at June 30, 2022   56,348   $56   $561,229   $7,675   $568,960 
Net investment income               12,173    12,173 
Net realized gain (loss)               38    38 
Net change in unrealized gain (loss)               (515)   (515)
Issuance of common stock   8,682    9    87,677        87,686 
Repurchase of common stock   (139)       (1,406)       (1,406)
Distributions declared to stockholders               (11,839)   (11,839)
Stock issued in connection with dividend reinvestment plan   418    1    4,223        4,224 
Balances at September 30, 2022   65,309   $66   $651,723   $7,532   $659,321 

 

   Common Stock             
   Number of shares   Par
value
   Capital in excess of
par value
   Accumulated undistributed
(overdistributed) earnings
   Total
net assets
 
Balances at December 31, 2020   13,828   $14   $135,636   $1,863   $137,513 
Net investment income               11,512    11,512 
Net realized gain (loss)               119    119 
Net change in unrealized gain (loss)               8,492    8,492 
Issuance of common stock   14,181    14    139,662        139,676 
Repurchase of common stock                    
Distributions declared to stockholders               (15,503)   (15,503)
Stock issued in connection with dividend reinvestment plan   420        4,203        4,203 
Balances at September 30, 2021   28,429   $28   $279,501   $6,483   $286,012 
                          
Balances at December 31, 2021   36,565   $37   $360,955   $8,456   $369,448 
Net investment income               31,460    31,460 
Net realized gain (loss)               53    53 
Net change in unrealized gain (loss)               (3,110)   (3,110)
Issuance of common stock   28,878    29    292,121        292,150 
Repurchase of common stock   (1,114)   (1)   (11,274)       (11,275)
Distributions declared to stockholders               (29,327)   (29,327)
Stock issued in connection with dividend reinvestment plan   980    1    9,921        9,922 
Balances at September 30, 2022   65,309   $66   $651,723   $7,532   $659,321 

 

See Notes to Consolidated Financial Statements.

 

5

 

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

 

   Nine months ended September 30, 
   2022   2021 
Cash flows from operating activities:          
Net increase (decrease) in net assets resulting from operations  $28,403   $20,123 
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   17    (151)
Net realized (gain) loss on foreign currency forward contracts   (84)   (14)
Net realized (gain) loss on foreign currency and other transactions   14    46 
Net change in unrealized (gain) loss on investments   5,454    (7,618)
Net change in unrealized (gain) loss on foreign currency forward contracts   (2,343)   (874)
Net change in unrealized (gain) loss on foreign currency and other transactions   (1)    
Payment-in-kind interest income   (3,536)   (767)
Net accretion of discounts and amortization of premiums   (1,721)   (629)
Purchases of investments   (478,528)   (372,785)
Proceeds from principal payments and sale of investments and settlement of forward contracts   104,593    59,813 
Amortization of deferred financing costs   1,621    580 
Changes in operating assets and liabilities:          
Interest receivable   (3,781)   (2,284)
Other assets   (1,639)   148 
Interest payable   5,139    1,111 
Payable for unsettled trades   43,915     
Management fees payable   919    1,606 
Incentive fees payable   550    1,472 
Accounts payable and accrued expenses   3,334    1,177 
Directors' fees payable   22    15 
Net cash provided by (used in) operating activities   (297,652)   (299,031)
           
Cash flows from financing activities:          
Borrowings of ABS facility   306,000     
Borrowings on revolving credit facility   492,400    372,600 
Repayments of revolving credit facility   (704,200)   (194,200)
Payments of deferred financing costs   (9,477)   (2,957)
Proceeds from issuance of common stock   292,150    139,676 
Repurchase of common stock   (11,275)    
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $9,922 and $4,203, respectively   (19,405)   (11,300)
Net cash provided by (used in) financing activities   346,193    303,819 
           
Net increase (decrease) in Cash and Restricted cash   48,541    4,788 
Effect of foreign currency exchange rates   (13)   (46)
Cash and Restricted cash, beginning of period   13,971    6,120 
Cash and Restricted cash, end of period  $62,499   $10,862 
           
Supplemental disclosure of cash flow information:          
Cash interest paid during the period  $6,201   $1,794 
Cash paid for income taxes, including excise taxes, during the period  $68   $ 

 

 

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:

 

   September 30, 2022   December 31, 2021 
Cash  $4,652   $4,998 
Restricted cash   57,847    8,973 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows  $62,499   $13,971 

 

   September 30, 2021   December 31, 2020 
Cash  $5,230   $2,443 
Restricted cash   5,632    3,677 
Total cash and restricted cash shown on the Consolidated Statements of Cash Flows  $10,862   $6,120 

 

See Notes to Consolidated Financial Statements.

 

6

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

(unaudited)

September 30, 2022

(in thousands, except for shares and units)

 

Portfolio Company (^)  Spread
Above
Index (^^)
  Interest
Rate
  Acquisition
Date (^^^)
  Maturity   Principal   Amortized
Cost
   Fair Value
(^^^^)
   % of Net
Assets
(^^^^^)
 
Non-Controlled/Non-Affiliate Company Investments                                 
Senior Secured Loans                                 
Aerospace & Defense                                 
API Holdings III Corp. (~)   L+4.25%  7.92% 5/2/2019  5/8/2026    1,645   $1,640   $1,447    0.2%
SI Holdings, Inc. (Integrated Polymer Solutions) (~) (~~)   L+6.00%  9.12% 7/25/2019  7/25/2025    1,940    1,918    1,921    0.3%
SI Holdings, Inc. (Integrated Polymer Solutions) (~) (~~)   L+6.00%  9.12% 12/24/2019  7/25/2025    1,013    1,001    1,003    0.1%
SI Holdings, Inc. (Integrated Polymer Solutions) (~) (~~)   L+6.00%  9.12% 2/17/2021  7/25/2025    1,751    1,749    1,734    0.3%
SI Holdings, Inc. (Integrated Polymer Solutions) (~) (~~)   L+6.00%  9.12% 6/15/2021  7/25/2025    1,027    1,009    1,016    0.2%
SI Holdings, Inc. (Integrated Polymer Solutions) (~) (~~)   L+6.00%  9.12% 8/10/2021  7/25/2025    1,002    987    992    0.1%
SI Holdings, Inc. (Integrated Polymer Solutions) (Revolver) (*)   L+6.00%  9.12% 7/25/2019  7/25/2024    316    71    71    0.0%
                 8,694    8,375    8,184    1.2%
Automotive                                 
Born To Run, LLC (~) (~~)   L+6.00%  9.67% 4/1/2021  4/1/2027    8,888    8,746    8,865    1.3%
Born To Run, LLC (Delayed Draw) (*) (**)   L+6.00%  9.67% 4/1/2021  4/1/2027    1,460    1,210    1,207    0.2%
Burgess Point Purchaser Corporation (fka BBB Industries LLC) (~)   SF+5.25%  8.41% 6/30/2022  7/25/2029    5,000    4,507    4,628    0.7%
Lifted Trucks Holdings, LLC (~) (~~)   L+5.75%  8.03% 8/2/2021  8/2/2027    9,925    9,757    9,811    1.5%
Lifted Trucks Holdings, LLC (Delayed Draw) (*) (**)   L+5.75%  8.03% 8/2/2021  8/2/2027    2,000            0.0%
Lifted Trucks Holdings, LLC (Revolver) (*)   L+5.75%  8.03% 8/2/2021  8/2/2027    2,381            0.0%
Truck-Lite Co., LLC (~)   SF+6.25%  8.93% 7/8/2022  12/14/2026    128    125    128    0.0%
Truck-Lite Co., LLC (~)   SF+6.25%  8.93% 3/11/2020  12/14/2026    3,391    3,368    3,395    0.5%
Truck-Lite Co., LLC (~)   SF+6.25%  8.93% 11/23/2021  12/14/2026    630    630    630    0.1%
Truck-Lite Co., LLC (~)   SF+6.25%  8.93% 3/11/2020  12/14/2026    503    503    503    0.1%
Truck-Lite Co., LLC (~)   SF+6.25%  8.93% 11/23/2021  12/14/2026    558    558    559    0.1%
Truck-Lite Co., LLC (~)   SF+6.25%  8.93% 11/23/2021  12/14/2026    716    716    717    0.1%
                 35,580    30,120    30,443    4.6%
Banking                                 
MV Receivables II, LLC (Delayed Draw) (*) (**) (<)   L+9.75%  13.42% 7/29/2021  7/29/2026    10,000    8,576    8,903    1.4%
StarCompliance MidCo, LLC (~~)   L+6.75%  10.42% 1/12/2021  1/12/2027    3,000    2,955    2,963    0.4%
StarCompliance MidCo, LLC (~~)   L+6.75%  10.42% 10/12/2021  1/12/2027    503    495    497    0.1%
StarCompliance MidCo, LLC (Revolver) (*)   L+6.75%  9.87% 1/12/2021  1/12/2027    484    121    119    0.0%
                 13,987    12,147    12,482    1.9%
Beverage, Food & Tobacco                                 
Huff Hispanic Food Holdings, LLC (~) (~~)   L+5.50%  8.62% 10/18/2019  10/18/2024    5,408    5,359    5,354    0.8%
Huff Hispanic Food Holdings, LLC (~)   L+5.50%  8.31% 10/18/2019  10/18/2024    307    307    304    0.0%
Huff Hispanic Food Holdings, LLC (Revolver) (*)   L+5.50%  8.57% 10/18/2019  10/18/2024    1,286    934    925    0.1%
LVF Holdings, Inc. (~)   L+6.25%  9.92% 6/10/2021  6/10/2027    3,465    3,408    3,339    0.5%
LVF Holdings, Inc. (~)   L+6.25%  9.92% 6/10/2021  6/10/2027    3,316    3,316    3,196    0.5%
LVF Holdings, Inc. (Delayed Draw) (*) (**)   L+6.25%  9.92% 6/10/2021  6/10/2027    802            0.0%
LVF Holdings, Inc. (Revolver) (*)   L+6.25%  9.92% 6/10/2021  6/10/2027    554    410    395    0.1%
LX/JT Intermediate Holdings, Inc. (~)   SF+6.00%  9.13% 3/11/2020  3/11/2025    3,296    3,260    3,264    0.5%
LX/JT Intermediate Holdings, Inc. (Revolver) (*)   SF+6.00%  9.13% 3/11/2020  3/11/2025    500            0.0%
                 18,934    16,994    16,777    2.5%
Capital Equipment                                 
Adept AG Holdings, LLC (~)   SF+5.50%  8.38% 8/11/2022  8/11/2027    6,500    6,373    6,482    1.0%
Adept AG Holdings, LLC (Delayed Draw) (*) (**) (<) (c)   SF+5.75%  8.63% 8/11/2022  8/11/2027    10,574            0.0%
Adept AG Holdings, LLC (Delayed Draw) (*) (**)   SF+5.50%  8.38% 8/11/2022  8/11/2027    1,625            0.0%
Adept AG Holdings, LLC (Revolver) (*) (<) (c)   SF+5.75%  8.63% 8/11/2022  8/11/2027    1,057            0.0%
Adept AG Holdings, LLC (Revolver) (*)   SF+5.50%  8.38% 8/11/2022  8/11/2027    1,300            0.0%
CGI Automated Manufacturing, LLC (~)   SF+6.50%  9.83% 9/9/2022  12/17/2026    9,000    8,733    8,730    1.3%
CGI Automated Manufacturing, LLC  SF+6.50%  10.31% 9/30/2022  12/17/2026    5,727    5,584    5,584    0.8%
CGI Automated Manufacturing, LLC (~)   SF+6.50%  10.31% 9/9/2022  12/17/2026    10,958    10,634    10,630    1.6%
MCP Shaw Acquisitionco, LLC (~) (~~)   SF+6.50%  10.31% 2/28/2020  11/28/2025    7,786    7,695    7,790    1.2%
MCP Shaw Acquisitionco, LLC (~) (~~)   SF+6.50%  10.31% 12/29/2021  11/28/2025    2,384    2,344    2,385    0.4%
MCP Shaw Acquisitionco, LLC (~)   SF+6.50%  10.31% 12/29/2021  11/28/2025    784    784    784    0.1%
MCP Shaw Acquisitionco, LLC (Revolver) (*)   SF+6.50%  10.31% 2/28/2020  11/28/2025    1,427            0.0%
                 59,122    42,147    42,385    6.4%
Construction & Building                                 
Premier Roofing L.L.C. (~)   L+8.50%  10.57% Cash/
1.00% PIK
  8/31/2020  8/29/2025    3,450    3,408    3,378    0.5%
Premier Roofing L.L.C. (Revolver) (*)   L+8.50%  10.57% Cash/
1.00% PIK
  8/31/2020  8/29/2025    1,202    962    942    0.2%
TCFIII Owl Buyer LLC (~) (~~)   SF+5.50%  8.65% 4/19/2021  4/17/2026    4,444    4,385    4,444    0.7%
TCFIII Owl Buyer LLC (~)   SF+5.50%  8.65% 4/19/2021  4/17/2026    5,426    5,426    5,426    0.8%
TCFIII Owl Buyer LLC (~) (~~)   SF+5.50%  8.65% 12/17/2021  4/17/2026    4,869    4,797    4,869    0.7%
                 19,391    18,978    19,059    2.9%
Consumer Goods: Durable                                 
Independence Buyer, Inc. (~) (~~)   L+5.50%  8.28% 8/3/2021  8/3/2026    12,406    12,208    12,282    1.9%
Independence Buyer, Inc. (Revolver) (*)   L+5.50%  8.28% 8/3/2021  8/3/2026    2,964            0.0%
Recycled Plastics Industries, LLC (~) (~~)   L+6.75%  9.31% 8/4/2021  8/4/2026    5,445    5,357    5,322    0.8%
Recycled Plastics Industries, LLC (Revolver) (*)   L+6.75%  9.31% 8/4/2021  8/4/2026    743            0.0%
                 21,558    17,565    17,604    2.7%
Consumer Goods: Non-Durable                                 
Arizona Natural Resources, LLC (~)   SF+6.25%  8.88% 5/18/2021  5/18/2026    13,860    13,646    13,749    2.1%
Arizona Natural Resources, LLC (~)   SF+6.25%  8.88% 12/15/2021  5/18/2026    2,544    2,501    2,524    0.4%
Arizona Natural Resources, LLC (~)   SF+6.25%  8.88% 8/12/2022  5/18/2026    6,901    6,767    6,846    1.0%
Arizona Natural Resources, LLC (Delayed Draw) (*) (**)   SF+6.25%  8.88% 8/12/2022  5/18/2026    2,958            0.0%
Arizona Natural Resources, LLC (Revolver) (*)   SF+6.25%  8.96% 5/18/2021  5/18/2026    2,222    1,778    1,764    0.3%
The Kyjen Company, LLC (~) (~~)   SF+7.15%  9.81% Cash/
0.50% PIK
  5/14/2021  4/3/2026    2,962    2,938    2,949    0.5%
The Kyjen Company, LLC  SF+7.10%  9.38% Cash/
0.50% PIK
  9/13/2022  4/3/2026    1    1    1    0.0%
The Kyjen Company, LLC (Revolver) (*)   SF+7.10%  9.38% Cash/
0.50% PIK
  5/14/2021  4/3/2026    315    268    267    0.0%
Thrasio, LLC (~) (~~)   L+7.00%  11.17% 12/18/2020  12/18/2026    4,903    4,847    4,860    0.7%
                 36,666    32,746    32,960    5.0%
Containers, Packaging & Glass                                 
Polychem Acquisition, LLC (~)   L+5.00%  8.12% 4/8/2019  3/17/2025    1,930    1,926    1,930    0.3%
Port Townsend Holdings Company, Inc. and Crown Corrugated Company  SF+7.75%  7.88% Cash/
3.00% PIK
  10/16/2020  10/31/2022    213    213    213    0.0%
                 2,143    2,139    2,143    0.3%
Energy: Oil & Gas                                 
Liquid Tech Solutions Holdings, LLC (~)   L+4.75%  8.92% 3/18/2021  3/17/2028    2,254    2,245    2,175    0.4%
Par Petroleum, LLC (~)   L+6.75%  9.18% 1/27/2020  1/12/2026    868    872    857    0.1%
                 3,122    3,117    3,032    0.5%
Environmental Industries                                 
Quest Resource Management Group, LLC (~) (~~)   L+6.50%  9.06% 10/19/2020  10/20/2025    975    914    978    0.1%
Quest Resource Management Group, LLC (~)   L+6.50%  9.06% 10/19/2020  10/20/2025    1,070    1,070    1,074    0.2%
Quest Resource Management Group, LLC (~) (~~)   L+6.50%  9.06% 12/7/2021  10/20/2025    3,806    3,744    3,805    0.5%
Quest Resource Management Group, LLC (Delayed Draw) (*) (**)  L+6.50%  9.06% 12/7/2021  10/20/2025    1,773    384    384    0.1%
Volt Bidco, Inc. (~~)   SF+6.50%  10.05% 8/11/2021  8/11/2027    9,059    8,898    9,059    1.4%
Volt Bidco, Inc. (Delayed Draw) (*) (**)   SF+6.50%  10.05% PIK  8/11/2021  8/11/2027    1,598    623    623    0.1%
Volt Bidco, Inc. (Revolver) (*)   SF+6.50%  10.05% 8/11/2021  8/11/2027    956            0.0%
                 19,237    15,633    15,923    2.4%
FIRE: Finance                                 
Exiger LLC (~~)   SF+8.00%  8.61% Cash/
2.00% PIK
  9/30/2021  9/30/2027    14,048    13,806    14,055    2.1%
Exiger LLC (~~)   SF+8.00%  8.48% Cash/
2.00% PIK
  8/26/2022  9/30/2027    1,960    1,912    1,961    0.3%
Exiger LLC (~~)   SF+8.00%  8.48% Cash/
2.00% PIK
  9/30/2021  9/30/2027    4,200    4,200    4,202    0.6%
Exiger LLC (Delayed Draw) (*) (**)   SF+8.00%  8.48% Cash/
2.00% PIK
  8/26/2022  9/30/2027    7,000            0.0%
Exiger LLC (Revolver) (*)   SF+8.00%  8.48% Cash/
2.00% PIK
  9/30/2021  9/30/2027    1,400            0.0%
GC Champion Acquisition LLC (~~)   SF+6.75%  9.77% 8/19/2022  8/18/2028    13,000    12,743    13,000    2.0%
GC Champion Acquisition LLC (Delayed Draw) (*) (**)   SF+6.75%  9.77% 8/19/2022  8/18/2028    3,611            0.0%
J2 BWA Funding LLC (Delayed Draw) (*) (**) (<)   n/a  9.00% 12/24/2020  12/24/2026    2,850    1,180    1,159    0.2%
Oceana Australian Fixed Income Trust (~) (<) (a) (b)   n/a  11.50% 2/25/2021  2/25/2026    6,877    8,460    6,877    1.1%
Oceana Australian Fixed Income Trust (~) (<) (a) (b)   n/a  10.75% 6/29/2021  6/29/2026    2,897    3,400    2,897    0.4%
TEAM Public Choices, LLC (~)   SF+5.00%  8.59% 8/23/2022  12/17/2027    4,572    4,346    4,412    0.7%
W3 Monroe RE Debt LLC (<)   n/a  10.00% PIK  2/5/2021  2/4/2028    1,895    1,895    1,895    0.3%
YS WH4 LLC (Revolver) (*) (<)   SF+7.00%  9.95% 7/20/2022  11/20/2025    7,700    2,708    2,708    0.4%
                 72,010    54,650    53,166    8.1%
FIRE: Insurance                                 
Simplicity Financial Marketing Group Holdings Inc. (~)   L+6.00%  9.67% 9/23/2022  12/2/2026    10,016    9,717    9,716    1.5%
Simplicity Financial Marketing Group Holdings Inc. (Delayed Draw) (*) (**)   L+6.00%  9.67% 9/23/2022  12/2/2026    14,223            0.0%
Simplicity Financial Marketing Group Holdings Inc. (Revolver) (*)   L+6.00%  9.67% 9/23/2022  12/2/2026    761            0.0%
                 25,000    9,717    9,716    1.5%
FIRE: Real Estate                                 
300 N. Michigan Mezz, LLC (Delayed Draw) (~) (*) (**) (<)   L+14.50%  17.06% PIK  7/15/2020  7/15/2024    1,000    951    948    0.1%
Avison Young (USA) Inc. (~) (<) (a)   SF+5.75%  8.90% 4/26/2019  1/30/2026    1,930    1,919    1,804    0.3%
Avison Young (USA) Inc. (~) (<) (a)   SF+7.00%  10.15% 9/1/2022  1/30/2026    4,174    3,928    4,007    0.6%
Centaur (Palm Beach) Owner LLC and Panther National Golf Club LLC (<)   SF+8.25%  10.87% 5/3/2022  4/30/2025    16,000    15,714    16,000    2.4%
Centaur (Palm Beach) Owner LLC and Panther National Golf Club LLC (<)   SF+8.25%  11.74% 5/3/2022  4/30/2025    1,635    1,635    1,635    0.3%
Centaur (Palm Beach) Owner LLC and Panther National Golf Club LLC (Revolver) (*) (<)   SF+8.25%  11.74% 5/3/2022  4/30/2025    8,016    461    461    0.1%
Florida East Coast Industries, LLC (~) (<)   n/a  10.50% 8/9/2021  6/28/2024    4,505    4,418    4,533    0.7%
InsideRE, LLC (~) (~~)   L+5.75%  9.42% 12/22/2021  12/22/2027    7,446    7,313    7,317    1.1%
InsideRE, LLC (Delayed Draw) (*) (**)   L+5.75%  9.42% 12/22/2021  12/22/2027    2,886            0.0%
InsideRE, LLC (Revolver) (*)   L+5.75%  8.82% 12/22/2021  12/22/2027    965    64    64    0.0%

 

7

 

 

MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
(unaudited)
September 30, 2022
(in thousands, except for shares and units)

 

Portfolio Company (^)  Spread
Above
Index (^^)
  Interest
Rate
  Acquisition
Date (^^^)
  Maturity   Principal   Amortized
Cost
   Fair Value
(^^^^)
   % of Net
Assets
(^^^^^)
 
NCBP Property, LLC (<)   L+9.50%  12.06% 12/18/2020  6/16/2023    2,500   $2,497   $2,503    0.4%
                 51,057    38,900    39,272    6.0%
Forest Products & Paper                                 
Sylvamo Corporation (~) (<) (i)   SF+4.50%  7.54% 9/22/2022  9/13/2028    5,303    5,224    5,124    0.8%
                 5,303    5,224    5,124    0.8%
Healthcare & Pharmaceuticals                                 
Appriss Health, LLC (~~)   L+7.25%  9.93% 5/6/2021  5/6/2027    6,492    6,385    6,472    1.0%
Appriss Health, LLC (Revolver) (*)   L+7.25%  9.93% 5/6/2021  5/6/2027    433            0.0%
Ascent Midco, LLC (~) (~~)   L+5.75%  8.87% 2/5/2020  2/5/2025    2,236    2,213    2,200    0.3%
Ascent Midco, LLC (Revolver) (*)   L+5.75%  8.87% 2/5/2020  2/5/2025    403            0.0%
Brickell Bay Acquisition Corp. (~) (~~)   L+6.50%  8.78% 2/12/2021  2/12/2026    2,827    2,782    2,774    0.4%
Brickell Bay Acquisition Corp. (Delayed Draw) (*) (**)   L+6.50%  8.78% 2/12/2021  2/12/2026    573            0.0%
Caravel Autism Health, LLC (~)   SF+8.75%  8.09% Cash/
3.00% PIK
  6/30/2021  6/30/2027    7,982    7,850    7,315    1.1%
Caravel Autism Health, LLC (Delayed Draw) (*) (**)   SF+8.75%  8.09% Cash/
3.00% PIK
  6/30/2021  6/30/2027    5,998    299    274    0.0%
Caravel Autism Health, LLC (Revolver) (*)   SF+8.75%  8.09% Cash/
3.00% PIK
  6/30/2021  6/30/2027    2,005    1,405    1,288    0.2%
Dorado Acquisition, Inc. (~) (~~)   L+6.25%  8.53% 6/30/2021  6/30/2026    13,860    13,640    13,839    2.1%
Dorado Acquisition, Inc. (Delayed Draw) (*) (**)   L+6.25%  8.53% 6/30/2021  6/30/2026    606            0.0%
Dorado Acquisition, Inc. (Revolver) (*)   L+6.25%  8.53% 6/30/2021  6/30/2026    1,670            0.0%
Golden State Buyer, Inc. (~)   L+4.75%  8.92% 8/25/2022  6/21/2026    9,974    9,577    9,425    1.4%
INH Buyer, Inc. (~)   L+6.00%  9.67% 6/30/2021  6/28/2028    4,862    4,819    4,512    0.7%
NationsBenefits, LLC (~)   SF+7.00%  9.61% 8/20/2021  8/26/2027    12,158    11,960    12,401    1.9%
NationsBenefits, LLC (~)   SF+7.00%  10.15% 8/26/2022  8/26/2027    14,452    14,452    14,741    2.2%
NationsBenefits, LLC (Delayed Draw) (*) (**)   SF+7.00%  9.61% 8/26/2022  8/26/2027    15,585            0.0%
NationsBenefits, LLC (Revolver) (*)   SF+7.00%  9.61% 8/20/2021  8/26/2027    6,806            0.0%
QF Holdings, Inc. (~~)   L+6.25%  10.43% 9/19/2019  12/15/2027    4,550    4,510    4,570    0.7%
QF Holdings, Inc. (~~)   L+6.25%  9.52% 12/15/2021  12/15/2027    4,368    4,309    4,388    0.7%
QF Holdings, Inc. (~~)   L+6.25%  10.43% 9/19/2019  12/15/2027    910    910    914    0.1%
QF Holdings, Inc. (Delayed Draw) (*) (**)   L+6.25%  10.43% 8/21/2020  12/15/2027    910            0.0%
QF Holdings, Inc. (Revolver) (*)   L+6.25%  10.43% 9/19/2019  12/15/2027    1,092            0.0%
Seran BioScience, LLC (~) (~~)   L+6.25%  8.53% 12/31/2020  7/8/2027    1,970    1,943    1,960    0.3%
Seran BioScience, LLC (Delayed Draw) (*) (**)   SF+6.25%  9.37% 7/8/2022  7/8/2027    2,222    658    654    0.1%
Seran BioScience, LLC (Revolver) (*)   L+6.25%  8.53% 12/31/2020  7/8/2027    356            0.0%
SIP Care Services, LLC (~) (~~)   L+5.75%  8.31% 12/30/2021  12/30/2026    3,781    3,715    3,653    0.6%
SIP Care Services, LLC (Delayed Draw) (*) (**)   L+5.75%  8.31% 12/30/2021  12/30/2026    3,040            0.0%
SIP Care Services, LLC (Revolver) (*)   L+5.75%  8.31% 12/30/2021  12/30/2026    760            0.0%
TigerConnect, Inc. (~~)   SF+7.25%  6.35% Cash/
3.63% PIK
  2/16/2022  2/16/2028    10,000    9,818    9,900    1.5%
TigerConnect, Inc. (Delayed Draw) (*) (**)   SF+6.75%  9.48% 2/16/2022  2/16/2028    413            0.0%
TigerConnect, Inc. (Revolver) (*)   SF+6.75%  9.48% 2/16/2022  2/16/2028    1,429            0.0%
WebPT, Inc. (~~)   L+6.75%  9.82% 8/28/2019  1/18/2028    5,000    4,957    4,955    0.8%
WebPT, Inc. (Revolver) (*)   L+6.75%  10.28% 8/28/2019  1/18/2028    521    141    141    0.0%
Whistler Parent Holdings III, Inc. (~~)   SF+6.75%  9.90% 6/3/2022  6/2/2028    21,000    20,593    20,885    3.2%
Whistler Parent Holdings III, Inc. (Delayed Draw) (*) (**)   SF+6.75%  9.90% 6/3/2022  6/2/2028    6,563            0.0%
Whistler Parent Holdings III, Inc. (Revolver) (*)   SF+6.75%  9.90% 6/3/2022  6/2/2028    2,625            0.0%
                 180,432    126,936    127,261    19.3%
High Tech Industries                                 
Acquia Inc. (~~)   L+7.00%  9.63% 11/1/2019  10/31/2025    15,429    15,212    15,429    2.3%
Acquia Inc. (Revolver) (*)   L+7.00%  10.64% 11/1/2019  10/31/2025    588    240    240    0.0%
Arcstor Midco, LLC (~) (~~)   L+7.00%  10.67% 3/16/2021  3/16/2027    11,850    11,658    10,972    1.7%
Drawbridge Partners, LLC (~~)   SF+7.00%  10.55% PIK  9/1/2022  9/1/2028    15,000    14,706    14,700    2.2%
Drawbridge Partners, LLC (Delayed Draw) (*) (**)   SF+7.00%  10.55% PIK  9/1/2022  9/1/2028    1,649    115    115    0.0%
Drawbridge Partners, LLC (Revolver) (*)   SF+6.50%  9.53% 9/1/2022  9/1/2028    2,609            0.0%
MarkLogic Corporation (~)   SF+6.50%  9.34% 5/10/2022  10/20/2025    4,013    3,940    3,993    0.6%
MarkLogic Corporation (~) (~~)   SF+6.50%  9.34% 10/20/2020  10/20/2025    5,158    5,074    5,133    0.8%
MarkLogic Corporation (~) (~~)   SF+6.50%  9.34% 11/23/2021  10/20/2025    481    473    479    0.1%
MarkLogic Corporation (~)   SF+6.50%  9.34% 11/23/2021  10/20/2025    322    322    321    0.0%
MarkLogic Corporation (Revolver) (*)   SF+6.50%  9.34% 10/20/2020  10/20/2025    404            0.0%
Medallia, Inc. (~~)   L+6.75%  9.62% PIK  8/15/2022  10/27/2028    11,127    10,909    11,155    1.7%
Mindbody, Inc. (~~)   L+8.50%  10.64% Cash/
1.50% PIK
  2/15/2019  2/14/2025    1,875    1,858    1,871    0.3%
Mindbody, Inc. (~~)   L+8.50%  10.64% Cash/
1.50% PIK
  9/22/2021  2/14/2025    7,415    7,415    7,401    1.1%
Mindbody, Inc. (Revolver) (*)   L+8.00%  11.64% 2/15/2019  2/14/2025    190            0.0%
Optomi, LLC (~) (~~)   L+5.50%  7.78% 12/16/2021  12/16/2027    13,433    13,192    13,449    2.0%
Optomi, LLC (Revolver) (*)   L+5.50%  7.78% 12/16/2021  12/16/2027    3,189    1,063    1,063    0.2%
Securly, Inc. (~~)   L+7.00%  9.81% 4/20/2022  4/22/2027    3,702    3,634    3,633    0.6%
Securly, Inc. (~~)   L+7.00%  10.67% 4/22/2021  4/22/2027    8,400    8,264    8,243    1.3%
Securly, Inc. (~~)   L+7.00%  10.07% 4/22/2021  4/22/2027    1,938    1,938    1,902    0.3%
Securly, Inc. (Delayed Draw) (*) (**)   L+7.00%  10.67% 4/20/2022  4/22/2027    2,585            0.0%
Securly, Inc. (Revolver) (*)   L+7.00%  10.67% 4/22/2021  4/22/2027    969            0.0%
Transact Holdings Inc. (~)   L+4.75%  7.87% 4/18/2019  4/30/2026    719    713    690    0.1%
Watchguard Technologies, Inc. (~) (i)   SF+5.25%  8.29% 8/17/2022  6/29/2029    21,154    19,779    19,744    3.0%
                 134,199    120,505    120,533    18.3%
Hotels, Gaming & Leisure                                 
Equine Network, LLC (~) (~~)   SF+8.00%  10.63% 12/31/2020  12/31/2025    1,478    1,455    1,453    0.2%
Equine Network, LLC (~) (~~)   SF+8.00%  10.63% 1/29/2021  12/31/2025    670    661    659    0.1%
Equine Network, LLC (Delayed Draw) (*) (**)   SF+8.00%  10.63% 12/31/2020  12/31/2025    366            0.0%
Equine Network, LLC (Revolver) (*)   SF+8.00%  10.63% 12/31/2020  12/31/2025    146            0.0%
                 2,660    2,116    2,112    0.3%
Media: Advertising, Printing & Publishing                                 
95 Percent Buyer, LLC (~) (~~)   L+5.50%  8.06% 11/24/2021  11/24/2026    17,910    17,605    17,989    2.7%
95 Percent Buyer, LLC (Revolver) (*)   L+5.50%  8.06% 11/24/2021  11/24/2026    963            0.0%
Madison Logic, Inc. (~) (~~)   L+5.50%  8.62% 11/22/2021  11/20/2026    19,850    19,594    19,949    3.0%
Madison Logic, Inc. (Revolver) (*)   L+5.50%  8.62% 11/22/2021  11/20/2026    912            0.0%
North Haven USHC Acquisition, Inc. (~) (~~)   SF+6.50%  10.15% 10/30/2020  10/30/2025    2,456    2,424    2,456    0.4%
North Haven USHC Acquisition, Inc. (~) (~~)   SF+6.50%  10.15% 3/12/2021  10/30/2025    713    713    713    0.1%
North Haven USHC Acquisition, Inc. (~)   SF+6.50%  10.15% 9/3/2021  10/30/2025    1,438    1,438    1,438    0.2%
North Haven USHC Acquisition, Inc. (~)   SF+6.25%  8.89% 7/29/2022  10/30/2025    2,605    2,567    2,588    0.4%
North Haven USHC Acquisition, Inc. (Delayed Draw) (*) (**)   SF+6.50%  10.15% 7/29/2022  10/30/2025    1,056            0.0%
North Haven USHC Acquisition, Inc. (Revolver) (*)   SF+6.50%  10.10% 10/30/2020  10/30/2025    416    83    83    0.0%
NTM Acquisition Corp. (~)   L+7.25%  9.92% Cash/
1.00% PIK
  4/18/2019  6/7/2024    4,463    4,462    4,307    0.7%
Relevate Health Group, LLC (~) (~~)   SF+6.00%  8.61% 11/20/2020  11/20/2025    1,970    1,944    1,962    0.3%
Relevate Health Group, LLC (~)   SF+6.00%  8.61% 3/28/2022  11/20/2025    5,250    5,157    5,229    0.8%
Relevate Health Group, LLC (Delayed Draw) (*) (**)   SF+6.00%  8.61% 11/20/2020  11/20/2025    1,039    881    878    0.1%
Relevate Health Group, LLC (Revolver) (*)   SF+6.00%  8.61% 11/20/2020  11/20/2025    789            0.0%
Spherix Global Inc. (~) (~~)   SF+5.75%  8.14% 12/22/2021  12/22/2026    4,478    4,410    4,422    0.7%
Spherix Global Inc. (Revolver) (*)   SF+5.75%  8.14% 12/22/2021  12/22/2026    500            0.0%
XanEdu Publishing, Inc. (~) (~~)   SF+6.50%  9.65% 1/28/2020  1/28/2025    6,047    5,970    6,068    0.9%
XanEdu Publishing, Inc. (~)   SF+6.50%  9.65% 8/31/2022  1/28/2025    2,403    2,345    2,411    0.4%
XanEdu Publishing, Inc. (Revolver) (*)   SF+6.50%  9.65% 1/28/2020  1/28/2025    977            0.0%
                 76,235    69,593    70,493    10.7%
Media: Broadcasting & Subscription                                 
Vice Group Holding Inc.  L+12.00%  6.81% Cash/
8.00% PIK
  5/2/2019  12/31/2022    1,227    1,227    1,221    0.2%
Vice Group Holding Inc.  L+12.00%  6.81% Cash/
8.00% PIK
  5/2/2019  12/31/2022    385    385    383    0.1%
Vice Group Holding Inc.  L+12.00%  6.71% Cash/
8.00% PIK
  5/2/2019  12/31/2022    145    145    144    0.0%
Vice Group Holding Inc.  L+12.00%  6.81% Cash/
8.00% PIK
  11/4/2019  12/31/2022    236    236    234    0.0%
                 1,993    1,993    1,982    0.3%
Media: Diversified & Production                                 
Bonterra, LLC (fka Cybergrants Holdings) (~~)   L+6.25%  9.92% 9/8/2021  9/8/2027    18,555    18,322    18,207    2.8%
Bonterra, LLC (fka Cybergrants Holdings) (Delayed Draw) (*) (**)   L+6.25%  9.92% 9/8/2021  9/8/2027    1,759            0.0%
Bonterra, LLC (fka Cybergrants Holdings) (Revolver) (*)   L+6.25%  9.92% 9/8/2021  9/8/2027    1,814    1,107    1,086    0.2%
Chess.com, LLC (~) (~~)   L+6.50%  10.17% 12/31/2021  12/31/2027    12,935    12,704    12,741    1.9%
Chess.com, LLC (Revolver) (*)   L+6.50%  10.17% 12/31/2021  12/31/2027    1,413            0.0%
Crownpeak Technology, Inc. (~~)   SF+7.25%  9.86% 2/28/2019  2/28/2024    1,000    994    1,000    0.2%
Crownpeak Technology, Inc. (~~)   SF+7.25%  9.86% 2/28/2019  2/28/2024    15    15    15    0.0%
Crownpeak Technology, Inc. (~~)   SF+7.25%  11.47% 9/27/2022  2/28/2024    318    312    318    0.0%
Crownpeak Technology, Inc. (Delayed Draw) (*) (**)   SF+7.25%  9.86% 9/27/2022  2/28/2024    833            0.0%
Crownpeak Technology, Inc. (Revolver) (*)   SF+7.25%  9.86% 2/28/2019  2/28/2024    125            0.0%
Spectrum Science Communications, LLC (~)   SF+6.25%  9.46% 1/25/2022  1/25/2027    2,993    2,941    2,978    0.4%
Spectrum Science Communications, LLC (Revolver) (*)   SF+6.25%  9.46% 1/25/2022  1/25/2027    600            0.0%
Streamland Media MidCo LLC (~) (~~)   SF+6.75%  9.90% 8/26/2019  8/31/2023    1,979    1,965    1,979    0.3%
Streamland Media MidCo LLC (~)   SF+6.75%  9.90% 3/7/2022  8/31/2023    536    527    536    0.1%
                 44,875    38,887    38,860    5.9%
Services: Business                                 
Aperture Companies, LLC (~) (~~)   L+6.00%  8.56% 12/31/2021  12/31/2026    14,925    14,666    14,447    2.2%
Aperture Companies, LLC (Delayed Draw) (*) (**)   L+6.00%  9.12% 12/31/2021  12/31/2026    4,320    2,022    1,957    0.3%
Aperture Companies, LLC (Revolver) (*)   L+6.00%  8.56% 12/31/2021  12/31/2026    1,347            0.0%
Aras Corporation (~)   L+7.00%  5.71% Cash/
3.75% PIK
  4/13/2021  4/13/2027    4,625    4,560    4,653    0.7%
Aras Corporation (Revolver) (*)   L+6.50%  9.50% 4/13/2021  4/13/2027    325    108    108    0.0%
Argano, LLC (~) (~~)   SF+5.50%  8.11% 6/10/2021  6/10/2026    9,009    8,870    8,930    1.4%
Argano, LLC (~)   SF+5.50%  8.11% 6/10/2021  6/10/2026    3,989    3,989    3,954    0.6%
Argano, LLC (Delayed Draw) (~) (*) (**)   SF+5.50%  8.11% 3/16/2022  6/10/2026    4,769    4,737    4,695    0.7%
Argano, LLC (Revolver) (*)   SF+5.50%  8.11% 6/10/2021  6/10/2026    965    502    497    0.1%
ecMarket Inc. and Conexiom US Inc. (<) (a) (~~)   L+7.00%  10.67% 9/21/2021  9/21/2027    15,591    15,325    15,396    2.3%
ecMarket Inc. and Conexiom US Inc. (<) (a)   L+7.00%  10.67% 9/21/2021  9/21/2027    1,291    1,291    1,275    0.2%
ecMarket Inc. and Conexiom US Inc. (Revolver) (*) (<) (a)   L+7.00%  10.67% 9/21/2021  9/21/2027    2,067            0.0%
HS4 Acquisitionco, Inc. (~~)   L+6.75%  10.42% 7/9/2019  7/9/2025    3,950    3,908    3,940    0.6%
HS4 Acquisitionco, Inc. (~~)   L+6.75%  10.42% 10/6/2021  7/9/2025    4,291    4,291    4,280    0.6%
HS4 Acquisitionco, Inc. (Revolver) (*)   L+6.75%  10.42% 7/9/2019  7/9/2025    325    98    97    0.0%
MPH Acquisition Holdings LLC (~) (<) (i)   SF+4.25%  7.29% 9/20/2022  9/1/2028    3,571    3,357    3,311    0.5%

 

8

 

 

MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
(unaudited)
September 30, 2022
(in thousands, except for shares and units)

 

Portfolio Company (^)  Spread
Above
Index (^^)
  Interest
Rate
  Acquisition
Date (^^^)
  Maturity   Principal   Amortized
Cost
   Fair Value
(^^^^)
   % of Net
Assets
(^^^^^)
 
Moonraker Acquisitionco LLC (~)   SF+6.00%  9.03% 9/30/2022  8/4/2028    7,000   $6,860   $6,860    1.0%
Moonraker Acquisitionco LLC (Delayed Draw) (*) (**)   SF+6.00%  9.03% 9/30/2022  8/4/2028    2,333            0.0%
Moonraker Acquisitionco LLC (Delayed Draw) (*) (**)   SF+6.00%  9.03% 9/30/2022  8/4/2028    2,333            0.0%
Moonraker Acquisitionco LLC (Revolver) (*)   SF+6.00%  9.03% 9/30/2022  8/4/2028    933            0.0%
Relativity ODA LLC (~)   L+7.50%  10.59% PIK  5/12/2021  5/12/2027    5,009    4,913    4,996    0.8%
Relativity ODA LLC (Revolver) (*)   L+7.50%  10.59% PIK  5/12/2021  5/12/2027    450            0.0%
Sundance Group Holdings, Inc. (~~)   L+6.25%  8.54% 7/2/2021  7/2/2027    4,148    4,078    4,142    0.6%
Sundance Group Holdings, Inc. (Delayed Draw) (*) (**)   L+6.25%  8.54% 7/2/2021  7/2/2027    1,244            0.0%
Sundance Group Holdings, Inc. (Revolver) (*)   L+6.25%  9.92% 7/2/2021  7/2/2027    498    340    340    0.1%
Thryv, Inc. (<) (i)   SF+8.50%  11.54% 9/7/2022  3/12/2026    9,634    9,538    9,369    1.4%
                 108,942    93,453    93,247    14.1%
Services: Consumer                                 
Clydesdale Holdings, LLC (~)   SF+5.50%  9.01% 6/24/2022  6/23/2028    15,000    14,707    14,970    2.3%
Clydesdale Holdings, LLC (Delayed Draw) (*) (**)   SF+5.50%  9.00% 6/24/2022  6/23/2028    21,250    2,250    2,246    0.3%
Clydesdale Holdings, LLC (Revolver) (*)   SF+5.50%  9.01% 6/24/2022  6/23/2028    4,523            0.0%
Denali Midco 2, LLC  SF+6.50%  9.45% 9/13/2022  12/22/2027    12,500    12,127    12,125    1.8%
Denali Midco 2, LLC (Delayed Draw) (*) (**)   SF+6.50%  9.45% 9/13/2022  12/22/2027    12,500            0.0%
Express Wash Acquisition Company, LLC (~)   SF+6.50%  9.13% 7/14/2022  7/14/2028    11,558    11,492    11,558    1.8%
Express Wash Acquisition Company, LLC (Delayed Draw) (*) (**)   SF+6.50%  10.31% 7/14/2022  7/14/2028    2,161    1,050    1,050    0.2%
Express Wash Acquisition Company, LLC (Revolver)  SF+6.50%  9.15% 7/14/2022  7/14/2028    536    536    536    0.1%
Light Wave Dental Management, LLC (~) (~~)   SF+6.50%  10.31% 8/1/2019  1/2/2024    2,035    2,025    2,012    0.3%
Light Wave Dental Management, LLC (~) (~~)   SF+6.50%  10.31% 5/3/2021  1/2/2024    1,473    1,473    1,457    0.2%
Light Wave Dental Management, LLC (~) (~~)   SF+6.50%  10.31% 8/3/2021  1/2/2024    1,359    1,344    1,344    0.2%
Light Wave Dental Management, LLC (~)   SF+6.50%  10.31% 8/3/2021  1/2/2024    3,390    3,390    3,353    0.5%
Light Wave Dental Management, LLC (Delayed Draw) (~) (*)   SF+6.50%  10.31% 6/24/2022  1/2/2024    11,472    1,994    1,972    0.3%
Light Wave Dental Management, LLC (Revolver) (*)   SF+6.50%  10.31% 5/3/2021  1/2/2024    187            0.0%
Viad Corp (~) (<) (i)   SF+5.00%  8.04% 9/12/2022  7/30/2028    5,000    4,888    4,767    0.7%
                 104,944    57,276    57,390    8.7%
Telecommunications                                 
American Broadband and Telecommunications Company LLC (Delayed Draw) (~) (*) (**)   P+10.00%  16.25% 6/10/2022  6/10/2025    3,689    3,298    3,325    0.5%
American Broadband and Telecommunications Company LLC (Revolver) (*)   P+10.00%  16.25% 6/10/2022  6/10/2025    1,000    240    232    0.0%
Calabrio, Inc. (~~)   L+7.00%  10.67% 4/16/2021  4/16/2027    8,000    7,839    7,970    1.2%
Calabrio, Inc. (Revolver) (*)   L+7.00%  10.67% 4/16/2021  4/16/2027    963            0.0%
DataOnline Corp. (~) (~~)   L+6.75%  9.82% 11/13/2019  11/13/2025    6,321    6,243    6,125    0.9%
DataOnline Corp. (Revolver)  L+6.75%  10.42% 11/13/2019  11/13/2025    844    844    818    0.1%
EOS Finco S.A.R.L. (~) (<) (a) (i)   SF+6.00%  9.04% 8/3/2022  8/20/2027    1,250    1,150    1,192    0.2%
Patagonia Holdco LLC (~) (<) (a)   SF+5.75%  8.39% 8/5/2022  8/1/2029    15,000    12,326    12,131    1.9%
Sandvine Corporation (~)   L+4.50%  8.17% 3/8/2021  10/31/2025    1,159    1,159    1,130    0.2%
                 38,226    33,099    32,923    5.0%
Transportation: Cargo                                 
Complete Innovations Inc. (~) (<) (a) (c)   C+6.75%  10.43% 12/16/2020  12/16/2025    7,954    8,509    7,944    1.2%
Complete Innovations Inc. (<) (a) (c)   C+6.75%  10.43% 12/16/2020  12/16/2025    1,009    1,101    1,008    0.2%
Fiasco Enterprises, LLC (~)   SF+5.50%  8.13% 5/6/2022  5/6/2027    7,000    6,884    6,983    1.0%
Fiasco Enterprises, LLC (Revolver) (*)   SF+5.50%  8.13% 5/6/2022  5/6/2027    1,750            0.0%
RS Acquisition, LLC (~) (~~)   L+6.00%  8.56% 12/13/2021  12/14/2026    10,945    10,757    10,433    1.6%
RS Acquisition, LLC (Delayed Draw) (~) (*) (**)   L+6.00%  8.56% 12/13/2021  12/14/2026    10,094    8,324    7,934    1.2%
RS Acquisition, LLC (Revolver) (*)   L+6.00%  8.78% 12/13/2021  12/14/2026    1,264    910    868    0.1%
                 40,016    36,485    35,170    5.3%
Wholesale                                 
S&S Holdings LLC (~)   L+5.00%  7.78% 3/10/2021  3/10/2028    2,955    2,881    2,859    0.4%
                 2,955    2,881    2,859    0.4%
Total Non-Controlled/Non-Affiliate Senior Secured Loans                1,127,281    891,676    891,100    135.1%
                                  
Unitranche Secured Loans (<<)                                 
Aerospace & Defense                                 
Cassavant Holdings, LLC (~) (~~)   L+6.50%  9.06% 9/8/2021  9/8/2026    13,860    13,634    13,715    2.1%
                 13,860    13,634    13,715    2.1%
Consumer Goods: Durable                                 
Jumpstart Holdco, Inc. (~)   SF+5.50%  8.20% 4/19/2022  4/19/2028    23,500    23,056    22,741    3.4%
                 23,500    23,056    22,741    3.4%
Environmental Industries                                 
StormTrap, LLC (~)   SF+5.50%  8.11% 3/25/2022  3/24/2028    7,802    7,673    7,826    1.2%
StormTrap, LLC (Delayed Draw) (*) (**)   SF+5.50%  8.11% 3/25/2022  3/24/2028    2,222            0.0%
                 10,024    7,673    7,826    1.2%
Media: Advertising, Printing & Publishing                                 
New Engen, Inc. (~) (~~)   SF+5.00%  7.63% 12/3/2021  12/3/2026    9,453    9,311    9,334    1.4%
New Engen, Inc. (~) (~~)   SF+5.00%  7.63% 12/27/2021  12/3/2026    7,982    7,982    7,882    1.2%
                 17,435    17,293    17,216    2.6%
Services: Business                                 
ASG II, LLC (~~)   SF+6.25%  9.37% 5/25/2022  5/25/2028    15,000    14,710    15,000    2.3%
ASG II, LLC (Delayed Draw) (*) (**)   SF+6.25%  9.37% 5/25/2022  5/25/2028    2,250            0.0%
Onit, Inc. (~~)   SF+7.25%  10.96% 12/20/2021  5/2/2025    16,800    16,547    16,695    2.5%
                 34,050    31,257    31,695    4.8%
Telecommunications                                 
VB E1, LLC (~)   L+7.65%  11.32% 11/18/2020  11/18/2026    3,000    3,000    3,015    0.5%
                 3,000    3,000    3,015    0.5%
Total Non-Controlled/Non-Affiliate Unitranche Secured Loans                101,869    95,913    96,208    14.6%
                                  
Junior Secured Loans                                 
Banking                                 
MoneyLion, Inc. (~) (<)   SF+8.50%  12.31% 3/25/2022  3/24/2026    18,750    18,573    18,258    2.7%
MoneyLion, Inc. (~) (<)   P+5.75%  12.00% 8/27/2021  5/1/2023    2,500    2,484    2,491    0.4%
MoneyLion, Inc. (Delayed Draw) (*) (**) (<)   SF+8.50%  12.31% 3/25/2022  3/24/2026    5,357            0.0%
                 26,607    21,057    20,749    3.1%
FIRE: Real Estate                                 
Florida East Coast Industries, LLC (<)   n/a  16.00% PIK  8/9/2021  6/28/2024    3,761    3,698    3,751    0.6%
Witkoff/Monroe 700 JV LLC (Delayed Draw) (*) (**) (<)   n/a  8.00% Cash/
4.00% PIK
  7/2/2021  7/2/2026    7,998    7,453    7,453    1.1%
                 11,759    11,151    11,204    1.7%
Total Non-Controlled/Non-Affiliate Junior Secured Loans                38,366    32,208    31,953    4.8%
                                  
Equity Securities (#) (##)                                 
Automotive                                 
Born To Run, LLC (692,841 Class A units)     (###)  4/1/2021          693    803    0.1%
Lifted Trucks Holdings, LLC (158,730 Class A shares) (####)      (###)  8/2/2021          159    119    0.0%
                      852    922    0.1%
Banking                                 
MV Receivables II, LLC (1,822 shares of common stock) (<) (####)      (###)  7/29/2021          750    1,525    0.2%
MV Receivables II, LLC (warrant to purchase up to 1.0% of the equity) (<) (####)      (###)  7/28/2021  7/28/2031        453    2,186    0.4%
                      1,203    3,711    0.6%
Beverage, Food & Tobacco                                 
Huff Hispanic Food Holdings, LLC (171,429 Class A interests)     (###)  10/18/2019          171    25    0.0%
                      171    25    0.0%
Capital Equipment                                 
Adept AG Holdings, LLC (314,584 preferred units) (####)      (###)  8/11/2022          650    640    0.1%
MCP Shaw Acquisitionco, LLC (95,125 Class A-2 units) (####)      (###)  2/28/2020          95    138    0.0%
                      745    778    0.1%
Consumer Goods: Durable                                 
Independence Buyer, Inc. (169 Class A units)     (###)  8/3/2021          169    209    0.0%
Jumpstart Holdco, Inc. (1,566,667 Class A units)     (###)  4/19/2022          1,566    1,195    0.2%
                      1,735    1,404    0.2%
Energy: Oil & Gas                                 
QuarterNorth Energy Inc. (4,376 shares of common stock) (~)      (###)  1/11/2020          884    536    0.1%
                      884    536    0.1%
Environmental Industries                                 
Quest Resource Management Group, LLC (warrant to purchase up to 0.2% of the equity)     (###)  10/19/2020  3/19/2028        67    311    0.1%
Quest Resource Management Group, LLC (warrant to purchase up to 0.2% of the equity)     (###)  10/19/2021  3/19/2028            217    0.0%
StormTrap, LLC (640,000 Class A common units) (####)   n/a  8.00% PIK  3/25/2022          640    640    0.1%
StormTrap, LLC (640,000 Class A common units) (####)      (###)  3/25/2022              154    0.0%
Volt Bidco, Inc. (878 shares of common stock)     (###)  8/11/2021          891    980    0.1%
                      1,598    2,302    0.3%
FIRE: Finance                                 
J2 BWA Funding LLC (0.7% profit sharing) (<) (####)      (###)  12/24/2020         $   $    0.0%
                              0.0%
FIRE: Real Estate                                 
InsideRE, LLC (159,884 Class A common units) (####)      (###)  9/9/2019          160    336    0.1%
Witkoff/Monroe 700 JV LLC (2,992 preferred units) (<) (####)   n/a   8.00% Cash/
4.00% PIK
  7/2/2021          3    198    0.0%
                      163    534    0.1%
Healthcare & Pharmaceuticals                                 
Ascent Midco, LLC (725,806 Class A units) (####)   n/a  8.00% PIK  2/5/2020          726    506    0.1%
Dorado Acquisition, Inc. (500,894 Class A-1 units)     (###)  6/30/2021          501    501    0.1%
Dorado Acquisition, Inc. (500,894 Class A-2 units)     (###)  6/30/2021              264    0.0%
NationsBenefits, LLC (356,658 Series B units) (####)   n/a  5.00% PIK  8/20/2021          2,393    2,859    0.4%
NationsBenefits, LLC (326,667 common units) (####)      (###)  8/20/2021          468    438    0.1%
Seran BioScience, LLC (26,666 common units) (####)      (###)  12/31/2020          267    457    0.1%
                      4,355    5,025    0.8%
High Tech Industries                                 
Drawbridge Partners, LLC (652,174 Class A-1 units)     (###)  9/1/2022          652    652    0.1%
MarkLogic Corporation (435,358 Class A units)     (###)  10/20/2020              524    0.1%
Optomi, LLC (278 Class A units) (####)      (###)  12/16/2021          278    489    0.1%
Optomi, LLC (41 Class A-1 units) (####)   n/a  8.00% PIK  12/16/2021          41    41    0.0%
Recorded Future, Inc. (40,243 Class A units) (d)      (###)  7/3/2019          40    115    0.0%
                      1,011    1,821    0.3%

 

9

 

 

MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
(unaudited)
September 30, 2022
(in thousands, except for shares and units)

 
Portfolio Company (^)  Spread
Above
Index (^^)
  Interest
Rate
  Acquisition
Date (^^^)
  Maturity   Principal   Amortized
Cost
   Fair Value
(^^^^)
   % of Net
Assets
(^^^^^)
 
Hotels, Gaming & Leisure                                 
Equine Network, LLC (92 Class A units) (####)      (###)  12/31/2020         $95   $73    0.0%
                      95    73    0.0%
Media: Advertising, Printing & Publishing                                 
95 Percent Buyer, LLC (385,027 Class A units) (####)   n/a  8.00% PIK  11/24/2021          385    587    0.1%
New Engen, Inc. (417 preferred units)  n/a  8.00% PIK  12/27/2021          417    421    0.1%
New Engen, Inc. (5,067 Class B common units)     (###)  12/27/2021          5    5    0.0%
Relevate Health Group, LLC (96 preferred units)  n/a  12.00% PIK  11/20/2020          96    80    0.0%
Relevate Health Group, LLC (96 Class B common units)     (###)  11/20/2020                  0.0%
Spherix Global Inc. (333 Class A units)     (###)  12/22/2021          333    226    0.0%
XanEdu Publishing, Inc. (65,104 Class A units)  n/a  8.00% PIK  1/28/2020          65    235    0.0%
                      1,301    1,554    0.2%
Media: Diversified & Production                                 
Chess.com, LLC (5 Class A units) (####)      (###)  12/31/2021          189    124    0.0%
                      189    124    0.0%
Services: Business                                 
Argano, LLC (53,679 common units) (####)      (###)  6/10/2021          247    374    0.1%
ecMarket Inc. and Conexiom US Inc. (96,603 preferred shares) (<) (a)      (###)  9/21/2021          723    644    0.1%
Skillsoft Corp. (26,168 Class A shares) (~) (<) (e)      (###)  6/11/2021          508    48    0.0%
                      1,478    1,066    0.2%
Services: Consumer                                 
Express Wash Acquisition Company, LLC (135,869 Class A units) (####)   n/a  8.00% PIK  12/28/2020          140    146    0.0%
IDIG Parent, LLC (192,908 shares of common stock) (####) (f)      (###)  1/4/2021          195    245    0.1%
                      335    391    0.1%
Telecommunications                                 
American Broadband and Telecommunications Company LLC (warrant to purchase up to 0.4% of the equity)     (###)  6/10/2022  6/10/2032        84    139    0.0%
American Virtual Cloud Technologies, Inc. (warrant to purchase up to 4.9% of the equity)     (###)  12/2/2021  1/31/2029            101    0.0%
                      84    240    0.0%
Transportation: Cargo                                 
RS Acquisition, LLC (753,485 common units) (####)      (###)  1/12/2022          1,264    930    0.2%
                      1,264    930    0.2%
Total Non-Controlled/Non-Affiliate Equity Securities                     17,463    21,436    3.3%
Total Non-Controlled/Non-Affiliate Company Investments                    $1,037,260   $1,040,697    157.8%
                                  
Non-Controlled Affiliate Company Investments (#####)                                 
Senior Secured Loans                                 
FIRE: Finance                                 
J2 BWA Funding III, LLC (Delayed Draw) (*) (**) (<)   n/a  9.00% 4/29/2022  4/28/2028    7,600   $   $    0.0%
                 7,600            0.0%
FIRE: Real Estate                                 
Second Avenue SFR Holdings II LLC (Revolver) (*) (<)   L+7.00%  9.56% 8/11/2021  8/9/2024    4,875    4,785    4,767    0.7%
                 4,875    4,785    4,767    0.7%
Services: Business                                 
Nastel Technologies, LLC (~~)   SF+6.50%  9.66% 9/21/2022  9/21/2028    3,500    3,430    3,430    0.5%
Nastel Technologies, LLC (Revolver) (*)   SF+6.50%  9.66% 9/21/2022  9/21/2028    368            0.0%
                 3,868    3,430    3,430    0.5%
Transportation: Cargo                                 
SheerTrans Solutions, LLC (~)   SF+7.50%  10.65% 7/29/2022  7/29/2027    5,114    5,013    5,114    0.8%
SheerTrans Solutions, LLC (Revolver) (*)   SF+7.50%  10.65% 7/29/2022  7/29/2027    1,465            0.0%
                 6,579    5,013    5,114    0.8%
Total Non-Controlled/Affiliate Senior Secured Loans                22,922    13,228    13,311    2.0%
                                  
Junior Secured Loans                                 
FIRE: Real Estate                                 
SFR Holdco, LLC (<)   n/a  8.00% 8/6/2021  7/28/2028    5,850    5,850    5,850    0.9%
SFR Holdco, LLC (Delayed Draw) (*) (**) (<)   n/a  8.00% 3/1/2022  7/28/2028    4,388    1,731    1,731    0.3%
                 10,238    7,581    7,581    1.2%
Total Non-Controlled/Affiliate Junior Secured Loans                10,238    7,581    7,581    1.2%
                                  
Equity Securities (##) (#####)                                 
FIRE: Finance                                 
J2 BWA Funding III, LLC (commitment to purchase up to 7.6% of the equity) (<) (####) (g)      (###)  4/29/2022                  0.0%
                              0.0%
FIRE: Real Estate                                 
SFR Holdco, LLC (13.9% of equity commitments) (<)      (###)  8/6/2021          3,900    3,900    0.6%
SFR Holdco, LLC (10.5% of equity commitments) (<) (h)      (###)  3/1/2022          1,155    1,155    0.2%
                      5,055    5,055    0.8%
Services: Business                                 
Nastel Technologies, LLC (3,408 Class A units) (####)      (###)  9/21/2022          3,408    3,408    0.5%
                      3,408    3,408    0.5%
Transportation: Cargo                                 
SheerTrans Solutions, LLC (8,642,579 preferred interests) (####)      (###)  7/29/2022          8,643    8,643    1.3%
                      8,643    8,643    1.3%
Total Non-Controlled/Affiliate Equity Securities                     17,106    17,106    2.6%
Total Non-Controlled/Affiliate Company Investments                    $37,915   $37,998    5.8%
                                  
TOTAL INVESTMENTS                    $1,075,175   $1,078,695    163.6%

 

10

 

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

September 30, 2022

(in thousands, except for shares and units)

 

Derivative Instruments

 

Foreign currency forward contract

 

Description  Notional Amount
to be Purchased
   Notional Amount
to be Sold
  Counterparty  Settlement
Date
  Unrealized Gain
(Loss)
 
Foreign currency forward contract  $62   CAD 80  Bannockburn Global Forex, LLC  10/19/2022  $4 
Foreign currency forward contract  $56   CAD 73  Bannockburn Global Forex, LLC  11/17/2022   4 
Foreign currency forward contract  $9,651   CAD 12,467  Bannockburn Global Forex, LLC  12/19/2022   636 
Foreign currency forward contract  $117   AUD 152  Bannockburn Global Forex, LLC  10/19/2022   20 
Foreign currency forward contract  $105   AUD 136  Bannockburn Global Forex, LLC  11/16/2022   18 
Foreign currency forward contract  $109   AUD 142  Bannockburn Global Forex, LLC  12/16/2022   19 
Foreign currency forward contract  $118   AUD 153  Bannockburn Global Forex, LLC  1/18/2023   20 
Foreign currency forward contract  $108   AUD 140  Bannockburn Global Forex, LLC  2/16/2023   18 
Foreign currency forward contract  $102   AUD 132  Bannockburn Global Forex, LLC  3/16/2023   18 
Foreign currency forward contract  $123   AUD 160  Bannockburn Global Forex, LLC  4/20/2023   21 
Foreign currency forward contract  $93   AUD 121  Bannockburn Global Forex, LLC  5/16/2023   16 
Foreign currency forward contract  $121   AUD 156  Bannockburn Global Forex, LLC  6/19/2023   21 
Foreign currency forward contract  $106   AUD 138  Bannockburn Global Forex, LLC  7/18/2023   18 
Foreign currency forward contract  $113   AUD 146  Bannockburn Global Forex, LLC  8/16/2023   19 
Foreign currency forward contract  $113   AUD 146  Bannockburn Global Forex, LLC  9/18/2023   19 
Foreign currency forward contract  $114   AUD 148  Bannockburn Global Forex, LLC  10/18/2023   19 
Foreign currency forward contract  $107   AUD 140  Bannockburn Global Forex, LLC  11/16/2023   18 
Foreign currency forward contract  $109   AUD 142  Bannockburn Global Forex, LLC  12/18/2023   18 
Foreign currency forward contract  $115   AUD 150  Bannockburn Global Forex, LLC  1/17/2024   19 
Foreign currency forward contract  $110   AUD 143  Bannockburn Global Forex, LLC  2/16/2024   18 
Foreign currency forward contract  $11,827   AUD 15,410  Bannockburn Global Forex, LLC  3/18/2024   1,965 
                 $2,928 

 

11

 

 

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)

(unaudited)

September 30, 2022

(in thousands, except for shares and units)

 

 

(^) All of the Company’s investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940, as amended, (the “1940 Act”), unless otherwise noted. All of the Company’s investments are issued by U.S. portfolio companies unless otherwise noted.
(^^) 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, as applicable, and the current contractual interest rate in effect at September 30, 2022. Certain investments may be subject to an interest rate floor or rate cap. Certain investments contain a payment-in-kind ("PIK") provision.
(^^^) Except as otherwise noted, all of the Company’s portfolio company investments, which as of September 30, 2022 represented 163.6% of the Company’s net assets or 93.4% of the Company’s total assets, are subject to legal restrictions on sales.
(^^^^) 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 Valuation Designee. (See Note 4 in the accompanying notes to the consolidated financial statements.)
(^^^^^) Percentages are based on net assets of $659,321 as of September 30, 2022.
(~) All or a portion of 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 7 in the accompanying notes to the consolidated financial statements).
(~~) All or a portion of this security was held in Monroe Capital Income Plus ABS Funding, LLC (the “2022 Issuer”) as collateral for the Company’s $425,000 asset-backed securitization (the “2022 ABS”). (See Note 7 in the accompanying notes to the consolidated financial statements).
(<) 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 September 30, 2022, non-qualifying assets totaled 14.9% of the Company’s total assets.
(<<) 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.
(#) Represents less than 5% ownership of the portfolio company’s voting securities.
(##) Ownership of certain equity investments may occur through a holding company or partnership.
(###) Represents a non-income producing security.
(####) 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.
(#####) 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).
(*) All or a portion of this commitment was unfunded at September 30, 2022. As such, interest is earned only on the funded portion of this commitment.
(**) This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings by the Company.
(a) This is an international company.
(b) This loan is denominated in Australian dollars and is translated into U.S. dollars as of the valuation date.
(c) This loan is denominated in Canadian dollars and is translated into U.S. dollars as of the valuation date.
(d) As of September 30, 2022, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $8.
(e) The fair value of this investment was valued using Level 1 inputs. See Note 4 in the accompanying notes to the consolidated financial statements.
(f) As of September 30, 2022, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $34.
(g) As of September 30, 2022, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $1,140.
(h) As of September 30, 2022, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $1,771.
(i) Investment position or portion thereof unsettled as of September 30, 2022.

 

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                                                                
SFR Holdco, 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                                                                
SFR Holdco, 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, as amended, (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, as applicable, and the current contractual interest rate in effect at December 31, 2021. Certain investments are subject to an 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 7 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 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.

 

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 MC Income Plus Financing SPV LLC (the “SPV”), Monroe Capital Income Plus ABS Funding, LLC (the “2022 Issuer”) 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.

 

25

 

 

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 the three and nine months ended September 30, 2022, the Company received return of capital distributions from its equity investments of $17 and $452, respectively. For the three and nine months ended September 30, 2021, the Company received return of capital distributions from its equity investments of zero and $551, respectively.

 

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 income accrued from PIK provisions 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 $19,473 and $10,292 as of September 30, 2022 and December 31, 2021, respectively. Upfront loan origination and closing fees received for the three and nine months ended September 30, 2022 totaled $9,547 and $13,794, respectively. Upfront loan origination and closing fees received for the three and nine months ended September 30, 2021 totaled $3,963 and $7,651, 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 September 30, 
   2022   2021 
Interest income  $19,264   $7,718 
PIK interest income   1,902    411 
Dividend income (1)    127    55 
Fee income   385    384 
Prepayment gain (loss)   609    467 
Accretion of discounts and amortization of premiums   530    241 
Total investment income  $22,817   $9,276 

 

26

 

 

   Nine months ended September 30, 
   2022   2021 
Interest income  $47,597   $16,750 
PIK interest income   3,536    767 
Dividend income (2)    342    101 
Fee income   2,170    839 
Prepayment gain (loss)   1,041    851 
Accretion of discounts and amortization of premiums   1,721    629 
Total investment income  $56,407   $19,937 

 

 

(1) Includes PIK dividends of $90 and $45, respectively.

(2) Includes PIK dividends of $270 and $89, respectively.

 

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 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 September 30, 2022 and December 31, 2021, there were no borrowers with a loan or preferred equity securities 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 limit. The Company’s deposits are held in high-quality financial institutions and management believes that risk of loss with any uninsured balance is remote.

 

Restricted Cash

 

Restricted cash includes amounts held within the SPV and 2022 Issuer. Cash held within the SPV and 2022 Issuer is generally restricted to use for the originations of new investments, the repayment of outstanding debt and the related payment of interest expense and the quarterly release of earnings to the Company. As of September 30, 2022, restricted cash included $31,784 held within the SPV and $26,063 held within the 2022 Issuer. As of December 31, 2021, restricted cash represented the cash held within the SPV.

 

27

 

 

Unamortized Deferred Financing Costs

 

Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of September 30, 2022 and December 31, 2021, the Company had unamortized deferred financing costs of $11,471 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 and nine months ended September 30, 2022 was $630 and $1,621, respectively. Amortization of deferred financing costs for the three and nine months ended September 30, 2021 was $296 and $580, respectively.

  

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.

 

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 and nine months ended September 30, 2022, the Company recorded a net tax expense on the consolidated statements of operations of $1 for U.S. federal excise tax. For the three and nine months ended September 30, 2021, the Company recorded a net expense on the consolidated statements of operations of $7 and $14, respectively, for U.S. federal excise tax. As of September 30, 2022 and December 31, 2021, the Company recorded an accrual for U.S. federal excise taxes of zero and $66, respectively, which were included in accounts payable and accrued expenses on the consolidated statements of assets and liabilities.

 

28

 

 

 

The Company’s consolidated Taxable Subsidiaries may be subject to U.S. federal and state corporate-level income taxes. For the three and nine months ended September 30, 2022, the Company recorded a net tax expense of zero and $1, respectively, on the consolidated statements of operations for these subsidiaries. For both the three and nine months ended September 30, 2021, the Company did not record a net tax expense on the consolidated statements of operations for these subsidiaries. As of both September 30, 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 September 30, 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 September 30, 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, 2024. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the nine months ended September 30, 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):

 

   September 30, 2022   December 31, 2021 
Amortized Cost:                    
Senior secured loans  $904,904    84.2%  $631,665    90.8%
Unitranche secured loans   95,913    8.9    29,886    4.3 
Junior secured loans   39,789    3.7    18,107    2.6 
Equity securities   34,569    3.2    16,258    2.3 
Total  $1,075,175    100.0%  $695,916    100.0%

 

   September 30, 2022   December 31, 2021 
Fair Value:                
Senior secured loans  $904,411    83.8%  $638,120    90.5%
Unitranche secured loans   96,208    8.9    30,161    4.3 
Junior secured loans   39,534    3.7    18,580    2.6 
Equity securities   38,542    3.6    18,029    2.6 
Total  $1,078,695    100.0%  $704,890    100.0%

 

29

 

 

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:

 

   September 30, 2022   December 31, 2021 
Amortized Cost:                    
International  $45,806    4.3%  $39,008    5.6%
Midwest   237,471    22.1    156,339    22.5 
Northeast   183,068    17.0    127,013    18.3 
Northwest   37,494    3.5    17,779    2.5 
Southeast   225,943    21.0    158,459    22.8 
Southwest   151,215    14.1    83,087    11.9 
West   194,178    18.0    114,231    16.4 
Total  $1,075,175    100.0%  $695,916    100.0%

 

   September 30, 2022   December 31, 2021 
Fair Value:                
International  $43,044    4.0%  $38,859    5.5%
Midwest   238,096    22.1    157,661    22.4 
Northeast   182,819    16.9    128,371    18.2 
Northwest   37,386    3.5    17,638    2.5 
Southeast   231,763    21.5    161,532    22.9 
Southwest   150,591    13.9    83,786    11.9 
West   194,996    18.1    117,043    16.6 
Total  $1,078,695    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):

 

   September 30, 2022   December 31, 2021 
Amortized Cost:                    
Aerospace & Defense  $22,009    2.0%  $22,081    3.2%
Automotive   30,972    2.9    25,268    3.6 
Banking   34,407    3.2    7,963    1.1 
Beverage, Food & Tobacco   17,165    1.6    19,001    2.7 
Capital Equipment   42,892    4.0    10,125    1.5 
Construction & Building   18,978    1.8    19,067    2.8 
Consumer Goods: Durable   42,356    3.9    18,040    2.6 
Consumer Goods: Non-Durable   32,746    3.0    24,403    3.5 
Containers, Packaging & Glass   2,139    0.2    2,024    0.3 
Energy: Oil & Gas   4,001    0.4    4,075    0.6 
Environmental Industries   24,904    2.3    12,623    1.8 
FIRE: Finance   54,650    5.1    28,048    4.0 
FIRE: Insurance   9,717    0.9         
FIRE: Real Estate   67,635    6.3    42,104    6.1 
Forest Products & Paper   5,224    0.5         
Healthcare & Pharmaceuticals   131,291    12.2    78,126    11.2 
High Tech Industries   121,516    11.3    79,896    11.5 
Hotels, Gaming & Leisure   2,211    0.2    2,283    0.3 
Media: Advertising, Printing & Publishing   88,187    8.2    77,494    11.1 
Media: Broadcasting & Subscription   1,993    0.2    1,856    0.3 
Media: Diversified & Production   39,076    3.6    34,144    4.9 
Services: Business   133,026    12.4    92,996    13.4 
Services: Consumer   57,611    5.3    36,798    5.3 
Telecommunications   36,183    3.4    40,476    5.8 
Transportation: Cargo   51,405    4.8    14,130    2.0 
Wholesale   2,881    0.3    2,895    0.4 
Total  $1,075,175    100.0%  $695,916    100.0%

 

30

 

 

   September 30, 2022   December 31, 2021 
Fair Value:                    
Aerospace & Defense  $21,899    2.0%  $22,358    3.2%
Automotive   31,365    2.9    25,864    3.7 
Banking   36,942    3.4    9,606    1.4 
Beverage, Food & Tobacco   16,802    1.6    19,032    2.7 
Capital Equipment   43,163    4.0    10,270    1.4 
Construction & Building   19,059    1.8    19,202    2.7 
Consumer Goods: Durable   41,749    3.9    18,420    2.6 
Consumer Goods: Non-Durable   32,960    3.1    24,777    3.5 
Containers, Packaging & Glass   2,143    0.2    2,029    0.3 
Energy: Oil & Gas   3,568    0.3    3,591    0.5 
Environmental Industries   26,051    2.4    13,271    1.9 
FIRE: Finance   53,166    4.9    27,505    3.9 
FIRE: Insurance   9,716    0.9         
FIRE: Real Estate   68,413    6.3    43,066    6.1 
Forest Products & Paper   5,124    0.5         
Healthcare & Pharmaceuticals   132,286    12.3    78,589    11.1 
High Tech Industries   122,354    11.3    81,220    11.5 
Hotels, Gaming & Leisure   2,185    0.2    2,318    0.3 
Media: Advertising, Printing & Publishing   89,263    8.3    78,300    11.1 
Media: Broadcasting & Subscription   1,982    0.2    1,859    0.3 
Media: Diversified & Production   38,984    3.6    34,428    4.9 
Services: Business   132,846    12.3    93,582    13.3 
Services: Consumer   57,781    5.4    37,319    5.3 
Telecommunications   36,178    3.3    40,656    5.8 
Transportation: Cargo   49,857    4.6    14,646    2.1 
Wholesale   2,859    0.3    2,982    0.4 
Total  $1,078,695    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.

 

For periods prior to September 30, 2022, the Board determined the fair value of the Company’s investments. Pursuant to the new SEC Rule 2a-5 of the 1940 Act, on September 30, 2022 the Board designated MC Advisors as the Company’s valuation designee (the “Valuation Designee”). The Board is responsible for oversight of the Valuation Designee. The Valuation Designee has established a valuation committee to determine in good faith the fair value of the Company’s investments, based on input of Valuation Designee’s management and personnel and independent valuation firms which are engaged at the direction of the valuation committee to assist in the valuation of certain portfolio investments lacking a readily available market quotation. The valuation committee determines fair values pursuant to a valuation policy approved by the Board and pursuant to a consistently applied valuation process. 

 

31

 

 

 

With respect to investments for which market quotations are not readily available, the Valuation Designee 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 the Valuation Designee responsible for the credit monitoring of the portfolio investment;  
     
  · our Valuation Designee engages an independent valuation firm to conduct independent appraisals of a selection of investments for which market quotations are not readily available. We will consult with an independent valuation firm 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 Valuation Designee;

 

  · preliminary valuation conclusions are then documented and discussed with the valuation committee of the Valuation Designee;

 

  · the valuation conclusions are approved by the valuation committee of the Valuation Designee; and
     
  · a report prepared by the Valuation Designee is presented to the Board quarterly to allow the Board to perform its oversight duties of the valuation process and the Valuation Designee.

 

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 September 30, 2022, the Valuation Designee 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 
September 30, 2022  Level 1   Level 2   Level 3   Total 
Senior secured loans  $   $   $904,411   $904,411 
Unitranche secured loans           96,208    96,208 
Junior secured loans           39,534    39,534 
Equity securities   48        38,494    38,542 
Total investments  $48   $   $1,078,647   $1,078,695 
Foreign currency forward contracts asset (liability)  $   $2,928   $   $2,928 

 

   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 7.29% to 17.06% at September 30, 2022 and 4.35% to 16.00% at December 31, 2021. The maturity dates on the loans outstanding at September 30, 2022 range between October 2022 and August 2029.

 

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 and nine months ended September 30, 2022:

 

    Investments   
    Senior
secured loans
    Unitranche
secured loans
    Junior
secured loans
    Equity
securities
    Total
investments
 
Balance as of June 30, 2022   $ 718,154     $ 88,896     $ 38,547     $ 24,370     $ 869,967  
Net realized gain (loss) on investments                              
Net change in unrealized gain (loss) on investments     (1,679     (552 )     (172 )     390       (2,013
Purchases of investments and other adjustments to cost (1)      251,063       56       1,159       13,751       266,029  
Proceeds from principal payments and sales of investments (2)      (55,047 )     (272 )           (17 )     (55,336 )
Reclassifications (3)     (8,080 )     8,080                    
Balance as of September 30, 2022   $ 904,411     $ 96,208     $ 39,534     $ 38,494     $ 1,078,647  

 

33

 

 

    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     (17 )                       (17 )
Net change in unrealized gain (loss) on investments     (6,874     (54 )     (727 )     2,392       (5,263
Purchases of investments and other adjustments to cost (1)      402,150       41,190       21,681       18,764       483,785  
Proceeds from principal payments and sales of investments (2)      (103,673 )     (384 )           (452 )     (104,509 )
Reclassifications (3)      (25,295     25,295                    
Balance as of September 30, 2022   $ 904,411     $ 96,208     $ 39,534     $ 38,494     $ 1,078,647  

__________________________

(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 following tables provide a reconciliation of the beginning and ending balances for investments at fair value that use Level 3 inputs for the three and nine months ended September 30, 2021:

 

    Investments  
    Senior
secured loans
    Unitranche
secured loans
    Junior
secured loans
    Equity
securities
    Total
investments
 
Balance as of June 30, 2021   $ 338,792     $ 1,474     $ 469     $ 5,491     $ 346,226  
Net realized gain (loss) on investments     79                         79  
Net change in unrealized gain (loss) on investments     2,037       11       98       393       2,539  
Purchases of investments and other adjustments to cost (1)      169,736             12,951       6,134       188,821  
Proceeds from principal payments and sales of investments (2)      (25,031 )           (347 )            (25,378 )
Reclassifications (3)      (540                 540        
Balance as of September 30, 2021   $ 485,073     $ 1,485     $ 13,171     $ 12,558     $  512,287  

 

    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     151                         151  
Net change in unrealized gain (loss) on investments     6,467       (44     (67 )     1,262        7,618  
Purchases of investments and other adjustments to cost (1)      353,327       99       12,967        7,788        374,181  
Proceeds from principal payments and sales of investments (2)      (50,916 )     (4,247     (4,085 )     (551 )      (59,799 )
Reclassifications (3)      (540           22       518        
Balance as of September 30, 2021   $  485,073     $ 1,485     $ 13,171     $  12,558     $  512,287  

_____________________________ 

(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 and nine months ended September 30, 2022, attributable to Level 3 investments still held at September 30, 2022, was ($1,555) and ($4,567), respectively. The total net change in unrealized gain (loss) on investments included on the consolidated statements of operations for the three and nine months ended September 30, 2021, attributable to Level 3 investments still held at September 30, 2021, was $2,965 and $7,856, 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 and nine months ended September 30, 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.

 

34

 

 

The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets as of September 30, 2022 were as follows:

 

   Fair   Valuation  Unobservable  Weighted
Average
   Range 
   Value   Technique  Input  Mean   Minimum   Maximum 
Assets:                      
Senior secured loans  $520,317   Discounted cash flow  EBITDA multiples   10.2x   4.0x   20.5x
           Market yields   10.8%   8.0%   21.5%
Senior secured loans   290,501   Discounted cash flow  Revenue multiples   7.3x   0.9x   20.0x
           Market yields   11.1%   9.5%   19.1%
Senior secured loans   213   Enterprise value  EBITDA multiples   3.5x   3.5x   3.5x
Unitranche secured loans   64,513   Discounted cash flow  EBITDA multiples   10.4x   8.8x   15.5x
           Market yields   10.9%   8.9%   12.3%
Unitranche secured loans   31,695   Discounted cash flow  Revenue multiples   9.3x   5.7x   12.5x
           Market yields   11.9%   11.7%   12.0%
Junior secured loans   39,534   Discounted cash flow  Market yields   16.2%   11.6%   27.5%
Equity securities   24,524   Enterprise value  EBITDA multiples   10.3x   4.0x   17.8x
Equity securities   12,161   Enterprise value  Revenue multiples   5.5x   2.0x   19.3x
Equity securities   1,273   Option pricing model  Volatility   66.4%   48.0%   120.8%
Total Level 3 Assets  $984,731(1)                     

 __________________________

(1)   Excludes loans of $93,916 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 as of December 31, 2021 were as follows:

 

                        Range  
    Fair
Value
    Valuation
Technique
  Unobservable
Input
  Weighted Average
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.

 

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 and 2022 ABS (as defined in Note 7) 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 September 30, 2022 and December 31, 2021, the Company believes that the carrying value of its Credit Facility approximates fair value. As of September 30, 2022, the estimated fair value of the Company’s 2022 ABS Class A and Class B notes was $302,453. 

  

35

 

 

 

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 nine months ended September 30, 2022 and 2021 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
September 30,
2022
 
Non-controlled affiliate company investment:                                                            
J2 BWA Funding III, LLC (Delayed Draw)   $   $   $   $     $   $   $   $     $  
J2 BWA Funding III, LLC (commitment to purchase up to 7.6% of the equity)                                          
                                           
                                                             
Nastel Technologies, LLC             3,430                             3,430  
Nastel Technologies, LLC (Revolver)                                          
Nastel Technologies, LLC (3,408 Class A units)             3,408                             3,408  
              6,838                             6,838  
                                                           
Second Avenue SFR Holdings II LLC (Revolver) (1)     2,104         2,681                       (18 )     4,767  
      2,104         2,681                       (18 )     4,767  
                                                             
SFR Holdco, LLC (Junior secured loan)     5,850                                     5,850  
SFR Holdco, LLC (Junior secured loan)             1,731                             1,731  
SFR Holdco, LLC (13.9% of equity commitments)     3,900                                     3,900  
SFR Holdco, LLC (10.5% of equity commitments)             1,155                             1,155  
      9,750         2,886                             12,636  
                                                             
SheerTrans Solutions, LLC             5,024     (13 )         2         101       5,114  
SheerTrans Solutions, LLC (Revolver)                                          
SheerTrans Solutions, LLC (8,642,579 preferred interests)             8,643                             8,643  
              13,667     (13 )         2         101       13,757  
Total non-controlled affiliate company investments   $ 11,854   $   $ 26,072   $ (13 )   $   $ 2   $   $ 83     $ 37,998  

 

 

(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.

 

Portfolio Company  Fair value
at
December
31, 2020
  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
September
30, 2021
 
Non-controlled affiliate company investments:                                     
Second Avenue SFR Holdings II LLC (Revolver) (1)  $  $  $642  $  $  $  $  $  $642 
          642                   642 
                                      
SFR Holdco, LLC (Junior secured loan)         1,101                  1,101 
SFR Holdco, LLC (24.4% of interests)         734                  734 
          1,835                  1,835 
Total non-controlled affiliate company investments  $  $  $2,477  $  $  $  $  $  $2,477 

 

 

(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 nine months ended September 30,  
    2022     2021  
Portfolio Company   Interest
Income
    Dividend
Income
    Fee Income     Interest
Income
    Dividend
Income
    Fee Income  
Non-controlled affiliate company investments:                                                
J2 BWA Funding III, LLC (Delayed Draw)   $     $     $      $ n/a      $ n/a      $ n/a  
J2 BWA Funding III, LLC (Equity commitment)                       n/a       n/a       n/a  
                        n/a       n/a       n/a  
                                                 
Nastel Technologies, LLC     10                   n/a       n/a       n/a  
Nastel Technologies, LLC (Revolver)                       n/a       n/a       n/a  
Nastel Technologies, LLC (Class A units)                       n/a       n/a       n/a  
      10                   n/a       n/a       n/a  
                                                 
Second Avenue SFR Holdings II LLC (Revolver)     181                   5              
      181                   5              
                                                 
SFR Holdco, LLC (Junior secured loan)     351                   8              
SFR Holdco, LLC (Junior secured loan)     44                   n/a       n/a       n/a  
SFR Holdco, LLC (LLC interest)                                    
SFR Holdco, LLC (LLC interest)                       n/a       n/a       n/a  
      395                   8              
                                                 
SheerTrans Solutions, LLC     93                   n/a       n/a       n/a  
SheerTrans Solutions, LLC (Revolver)     1                   n/a       n/a       n/a  
SheerTrans Parent, LLC (Preferred interests)                       n/a       n/a       n/a  
      94                   n/a       n/a       n/a  
Total non-controlled affiliate company investments   $ 680     $     $      $ 13      $      $  

  

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.

 

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 took effect beginning April 1, 2022 (the “Effective Date”).

 

Beginning with the Effective Date, the base management fee is calculated at an annual rate of 1.25% of average total assets (reduced from 1.50%), 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 and nine months ended September 30, 2022 were $3,285 and $8,759, respectively. MC Advisors elected to voluntarily waive zero and $1,701 of such base management fees for the three and nine months ended September 30, 2022, respectively. Base management fees for the three and nine months ended September 30, 2021 were $1,699 and $3,661, respectively. MC Advisors elected to voluntarily waive zero and $1,425 of such base management fees for the three and nine months ended September 30, 2021, respectively. These base management fee waivers are not subject to recoupment by MC Advisors. There is no guarantee that MC Advisors will waive additional base management fees in the future.

 

36

 

 

 

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).

 

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 1.7143% (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 1.7143% (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.

 

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 12.5% (reduced from 15.0% effective January 1, 2022) 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 12.5% 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.

 

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.

 

37

 

 

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

 

   Three months ended
September 30,
   Nine months ended
September 30,
 
   2022   2021   2022   2021 
Part one incentive fees (1)   $1,707   $771   $4,474   $1,924 
Part two incentive fees (2)    (60)   89    (621)   1,270 
Incentive fees, excluding the impact of the incentive fee waivers   1,647    860    3,853    3,194 
Incentive fee waivers (3)    (162)   (569)   (1,468)   (1,722)
Total incentive fees, net of incentive fee waivers  $1,485   $291   $2,385   $1,472 

 

 

(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 12.5% of the sum of net realized gain (loss) plus net unrealized gain (loss).
(3)    Represents part one incentive fees voluntarily waived by MC Advisors.

 

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 and nine months ended September 30, 2022, the Company incurred $872 and $2,482 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 $352 and $763, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. For the three and nine months ended September 30, 2021, the Company incurred $477 and $1,173 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 $143 and $382, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. As of September 30, 2022 and December 31, 2021, $352 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 September 30, 2022 and December 31, 2021, the Company had accounts payable to members of the Board of $22 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 September 30, 2022 and December 31, 2021, the Company’s asset coverage ratio based on aggregate borrowings outstanding was 249% and 206%, respectively.

 

Revolving Credit Facility: The Company has a $450,000 revolving credit facility (the “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 September 30, 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 $528,122 and $615,978, respectively, and these investments are identified on the consolidated schedules of investments. As of September 30, 2022 and December 31, 2021, the Company had outstanding borrowings under the Credit Facility of $136,800 and $348,600, respectively.

 

38

 

 

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) 0.50% per annum on any unused portion of the Credit Facility when the outstanding borrowings are less than or equal to 60% of the facility amount and (ii) 0.35% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 60% of the facility. As of September 30, 2022 and December 31, 2021, the outstanding borrowings were accruing at a weighted average interest rate of 5.3% and 3.3%, respectively.

 

Asset-Backed Securitization: On April 7, 2022, the Company completed a $425,000 asset-backed securitization (the “2022 ABS”). The notes offered in the 2022 ABS were issued by the 2022 Issuer, a wholly-owned subsidiary of the Company, and are secured by a diversified portfolio of senior secured loans. The transaction was executed through a private placement 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”), and $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 Company retained all of the Class C Notes and the Subordinated 2022 Notes. The Class A Notes and the Class B Notes are included as debt on the Company’s consolidated statements of assets and liabilities. As of September 30, 2022, the Class C and Subordinated Notes were eliminated in consolidation. 

 

The 2022 Issuer used the proceeds from the securitization to, among other things, purchase certain investments from the Company and the SPV. Through April 22, 2024, the 2022 Issuer is permitted to use all principal collections received on the underlying collateral to purchase new collateral under the direction of MC Advisors, in its capacity as collateral manager of the 2022 Issuer, in accordance with the Company’s investment strategy and subject to customary conditions set forth in the documents governing the 2022 ABS, allowing the Company to maintain the initial leverage in the 2022 ABS. The 2022 Notes are due on April 30, 2032.

 

As of September 30, 2022, the fair value of investments of the Company that were held in the 2022 Issuer as collateral was $400,858 and these investments are identified on the consolidated schedule of investments.

 

Distributions from the 2022 Issuer to the Company are limited by the terms of the indenture governing the 2022 ABS, which generally allows for the payment of interest on the Secured 2022 Notes and the distribution of remaining net interest income to the holders of the Subordinated Notes pursuant to a waterfall quarterly during the reinvestment period.

 

 Components of interest expense: The components of the Company’s interest and other debt financing expenses and average debt outstanding and average stated interest rate (i.e. the rate in effect plus spread) were as follows:

 

   Three months ended September 30, 
   2022   2021 
Interest expense – revolving credit facility  $1,128   $1,576 
Interest expense – 2022 ABS   3,221     
Amortization of deferred financing costs   630    296 
Total interest and other debt financing expenses  $4,979   $1,872 
Average debt outstanding  $351,614   $172,808 
Average stated interest rate   4.9%   3.6%

 

   Nine months ended September 30, 
   2022   2021 
Interest expense – revolving credit facility  $5,113   $2,905 
Interest expense – 2022 ABS   6,227     
Amortization of deferred financing costs   1,621    580 
Total interest and other debt financing expenses  $12,961   $3,485 
Average debt outstanding  $349,134   $104,051 
Average stated interest rate   4.3%   3.7%

 

39

 

 

 

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 September 30, 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 September 30, 2022 and December 31, 2021.

 

   As of September 30, 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 80  10/19/2022  $4   $   Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD 73  11/17/2022   4       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  CAD 12,467  12/19/2022   636       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 152  10/19/2022   20       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 136  11/16/2022   18       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 142  12/16/2022   19       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 153  1/18/2023   20       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 140  2/16/2023   18       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 132  3/16/2023   18       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 160  4/20/2023   21       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 121  5/16/2023   16       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 156  6/19/2023   21       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 138  7/18/2023   18       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 146  8/16/2023   19       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 146  9/18/2023   19       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 148  10/18/2023   19       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 140  11/16/2023   18       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 142  12/18/2023   18       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 150  1/17/2024   19       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 143  2/16/2024   18       Unrealized gain on foreign currency forward contracts
Foreign currency forward contract  AUD 15,410  3/18/2024   1,965       Unrealized gain on foreign currency forward contracts
         $2,928   $    

 

40

 

 

    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 and nine months ended September 30, 2022, the Company recognized net change in unrealized gain (loss) on foreign currency forward contracts of $1,541 and $2,343, respectively. For the three and nine months ended September 30, 2022, the Company recognized net realized gain (loss) on foreign currency forward contracts of $39 and $84, respectively.

 

41

 

 

 

For the three and nine months ended September 30, 2021, the Company recognized net change in unrealized gain (loss) on foreign currency forward contracts of $748 and $874, respectively. For the three and nine months ended September 30, 2021, the Company recognized net realized gain (loss) on foreign currency forward contracts of $17 and $14, 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 nine months ended September 30, 2022 and 2021, respectively.

 

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

Distribution

Declared

 
Nine months ended September 30, 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 
April 1, 2022  April 18, 2022  June 30, 2022   0.07    3,222 
April 1, 2022  May 16, 2022  June 30, 2022   0.07    3,223 
April 1, 2022  June 17, 2022  June 30, 2022   0.06    3,730 
July 1, 2022  July 15, 2022  September 30, 2022   0.07    3,759 
July 1, 2022  August 15, 2022  September 30, 2022   0.07    3,759 
July 1, 2022  September 16, 2022  September 30, 2022   0.06    4,321 
Total distributions declared        $0.60   $29,327 

 

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


Distribution

Declared

 
Nine months ended September 30, 2021:                        
March 4, 2021   March 8, 2021   March 12, 2021   $ 0.20     $ 2,766  
May 6, 2021   May 6, 2021   May 13, 2021     0.20       3,841  
May 6, 2021   May 14, 2021   June 30, 2021     0.13       2,576  
May 6, 2021   June 1, 2021   June 30, 2021     0.07       1,472  
July 1, 2021   July 1, 2021   September 30, 2021     0.07       1,482  
July 1, 2021   August 1, 2021   September 30, 2021     0.07       1,482  
July 1, 2021   September 1, 2021   September 30, 2021     0.06       1,884  
Total distributions declared           $ 0.80     $ 15,503  

 

 

(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 nine months ended September 30, 2022 and 2021, respectively:

 

Payment Date  NAV
Per Share
   DRIP
Shares
Issued
   DRIP
Shares
Value
 
Nine months ended September 30, 2022:               
March 31, 2022  $10.10    217,369   $2,195 
June 30, 2022   10.16    344,760    3,503 
September 30, 2022   10.10    418,151    4,224 
Total proceeds        980,280   $9,922 

 

Payment Date  NAV
Per Share
   DRIP
Shares
Issued
   DRIP
Shares
Value
 
Nine months ended September 30, 2021:               
March 12, 2021  $9.94    77,598   $771 
May 13, 2021   10.06    103,582    1,042 
June 30, 2021   10.06    109,029    1,097 
September 30, 2021   9.94    130,031    1,293 
Total proceeds        420,240   $4,203 

 

42

 

 

Note 10. Stock Issuances and Share Repurchase Program

 

Stock Issuances

 

As of September 30, 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 nine months ended September 30, 2022 and 2021:

 

Date  Price Per
Share
   Shares Issued   Proceeds 
Nine months ended September 30, 2022:               
March 15, 2022  $10.10    12,173,590   $122,953 
May 17, 2022   10.16    8,022,706    81,511 
August 16, 2022   10.10    8,681,792    87,686 
Total        28,878,088   $292,150 

 

Date  Price Per
Share
   Shares Issued   Proceeds 
Nine months ended September 30, 2021:               
March 15, 2021  $9.74    5,301,797   $51,639 
May 18, 2021   9.86    2,792,748    27,537 
August 18, 2021   9.94    6,086,569    60,500 
Total        14,181,114   $139,676 

 

During the nine months ended September 30, 2022, the Company also issued 980,280 shares, with an aggregate value of $9,922, under the DRIP as disclosed in Note 9. During the nine months ended September 30, 2021, the Company also issued 420,240 shares, with an aggregate value of $4,203, under the DRIP as disclosed in Note 9.

 

Share Repurchase Program

 

During 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 following table summarizes the total shares repurchased that were validly tendered under the Share Repurchase Program and not withdrawn during the nine months ended September 30, 2022:

 

Date   Price Per
Share
    Shares Repurchased     Total Cost  
Nine months ended September 30, 2022:                        
April 15, 2022   $ 10.10       641,640     $ 6,480  
June 16, 2022     10.16       333,527       3,389  
September 16, 2022     10.10       139,216        1,406  
Total             1,114,383     $ 11,275  

  

There were no shares repurchased during the nine months ended September 30, 2021.

 

43

 

 

Note 11. Commitments and Contingencies

 

Commitments: As of September 30, 2022 and December 31, 2021, the Company had $245,919 and $125,204, respectively, in outstanding commitments to fund investments under undrawn revolvers, delayed draw commitments and subscription agreements. 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 September 30, 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.

 

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 nine months ended September 30, 2022 and 2021:

 

   September 30, 2022   September 30, 2021 
Per share data:          
Net asset value at beginning of period  $10.10   $9.94 
Net investment income (1)    0.62    0.57 
Net gain (loss) (1)    (0.06)   0.43 
Net increase (decrease) in net assets resulting from operations (1)    0.56    1.00 
Stockholder distributions declared (2)    (0.60)   (0.80)
Other (3)    0.04    (0.08)
Net asset value at end of period  $10.10   $10.06 
Total return based on average net asset value (4)    5.42%   9.61%
Ratio/Supplemental data:          
Net assets at end of period  $659,321   $286,012 
Shares outstanding at end of period   65,309,147    28,428,870 
Portfolio turnover (5)    12.22%   18.77%
Ratio of total investment income to average net assets (6)    14.40%   12.73%
Ratio of expenses to average net assets with waivers (6) (7)    6.21%   5.14%

 

 

(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 September 30, 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 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 nine months ended September 30, 2022 and 2021. These ratios have been annualized unless otherwise noted.

 

44

 

 

    September 30,
2022
    September 30, 2021  
Ratio of expenses to average net assets without waivers (6)      6.93 %     6.87 %
Ratio of net investment income (loss) to average net assets without waivers (6)      7.47 %     5.86 %
Ratio of net investment income (loss) to average net assets with waivers (6)      8.18 %     7.59 %

 

Note 13. Subsequent Events

 

The Company has evaluated subsequent events through November 14, 2022, the date on which the consolidated financial statements were issued.

 

Distributions: On October 12, 2022, the Board declared the following distributions:

 

Record Date   Payment Date   Amount Per Share  
October 17, 2022   December 30, 2022   $ 0.0734  
November 14, 2022   December 30, 2022     0.0733  
December 16, 2022   December 30, 2022     0.0733  
Total dividends declared       $ 0.2200  

 

45

 

 

 

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 and general uncertainty surrounding the financial and political stability of the United States, the United Kingdom, the European Union and China;
     
  · 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 rising interest and inflation rates and the risk of recession on our business prospects and the prospects of 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.

 

46

 

 

 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 continue 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 September 30, 2022, our portfolio included approximately 83.8% senior secured loans, 8.9% unitranche secured loans, 3.7% junior secured loans and 3.6% 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.

 

47

 

 

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.

 

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 September 30, 2022, we invested $194.1 million in 20 new portfolio companies, and $69.5 million in 33 existing portfolio companies, and had $55.3 million in aggregate amount of sales and principal repayments, resulting in net investments of $208.3 million for the period.

 

During the nine months ended September 30, 2022, we invested $326.5 million in 31 new portfolio companies, and $152.0 million in 53 existing portfolio companies, and had $104.5 million in aggregate amount of sales and principal repayments, resulting in net investments of $374.0 million for the period.

 

During the three months ended September 30, 2021, we invested $139.0 million in 15 new portfolio companies, and $49.2 million in 19 existing portfolio companies, and had $25.4 million in aggregate amount of sales and principal repayments, resulting in net investments of $162.8 million for the period.

 

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During the nine months ended September 30, 2021, we invested $313.5 million in 42 new portfolio companies, and $59.3 million in 23 existing portfolio companies, and had $59.8 million in aggregate amount of sales and principal repayments, resulting in net investments of $313.0 million for the period.

 

The following table shows portfolio yield by security type:

 

   September 30, 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   9.6%   9.6%   7.6%   7.6%
Unitranche secured loans   9.0    9.9    7.9    8.4 
Junior secured loans   11.8    11.8    11.4    11.4 
Equity securities   6.6    6.6    8.6    8.6 
Total   9.6%   9.7%   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):

 

   September 30, 2022   December 31, 2021 
Fair Value:                    
Senior secured loans  $904,411    83.8%  $638,120    90.5%
Unitranche secured loans   96,208    8.9    30,161    4.3 
Junior secured loans   39,534    3.7    18,580    2.6 
Equity securities   38,542    3.6    18,029    2.6 
Total  $1,078,695    100.0%  $704,890    100.0%

  

Our portfolio composition remained relatively consistent with December 31, 2021. Our effective yields increased from December 31, 2021, driven primarily by increases in LIBOR and SOFR rates. The majority of our loans were above the interest rate floors at the end of the three months ended September 30, 2022.

 

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

 

   September 30, 2022   December 31, 2021 
Fair Value:                    
Aerospace & Defense  $21,899    2.0%  $22,358    3.2%
Automotive   31,365    2.9    25,864    3.7 
Banking   36,942    3.4    9,606    1.4 
Beverage, Food & Tobacco   16,802    1.6    19,032    2.7 
Capital Equipment   43,163    4.0    10,270    1.4 
Construction & Building   19,059    1.8    19,202    2.7 
Consumer Goods: Durable   41,749    3.9    18,420    2.6 
Consumer Goods: Non-Durable   32,960    3.1    24,777    3.5 
Containers, Packaging & Glass   2,143    0.2    2,029    0.3 
Energy: Oil & Gas   3,568    0.3    3,591    0.5 
Environmental Industries   26,051    2.4    13,271    1.9 
FIRE: Finance   53,166    4.9    27,505    3.9 
FIRE: Insurance   9,716    0.9         
FIRE: Real Estate   68,413    6.3    43,066    6.1 
Forest Products & Paper   5,124    0.5         
Healthcare & Pharmaceuticals   132,286    12.3    78,589    11.1 
High Tech Industries   122,354    11.3    81,220    11.5 
Hotels, Gaming & Leisure   2,185    0.2    2,318    0.3 
Media: Advertising, Printing & Publishing   89,263    8.3    78,300    11.1 
Media: Broadcasting & Subscription   1,982    0.2    1,859    0.3 
Media: Diversified & Production   38,984    3.6    34,428    4.9 
Services: Business   132,846    12.3    93,582    13.3 
Services: Consumer   57,781    5.4    37,319    5.3 
Telecommunications   36,178    3.3    40,656    5.8 
Transportation: Cargo   49,857    4.6    14,646    2.1 
Wholesale   2,859    0.3    2,982    0.4 
Total  $1,078,695    100.0%  $704,890    100.0%

 

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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.

 

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.

 

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The following table shows the distribution of our investments on the 1 to 5 investment performance risk rating scale as of September 30, 2022 (in thousands):

 

Investment Performance Risk Rating  Investments at
Fair Value
   Percentage of
Total Investments
 
1  $    %
2   1,045,623    96.9 
3   32,536    3.0 
4   536    0.1 
5        
Total  $1,078,695    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 September 30, 2022 and December 31, 2021, there were no borrowers with a loan or preferred equity securities on non-accrual status.

 

Results of Operations

 

Operating results were as follows (in thousands):

 

   Three months ended
September 30,
 
   2022   2021 
Total investment income  $22,817   $9,276 
Total expenses, net of fee waivers   10,643    4,354 
Net investment income before income taxes   12,174    4,922 
Income taxes, including excise taxes   1    7 
Net investment income   12,173    4,915 
Net realized gain (loss) on investments       79 
Net realized gain (loss) on foreign currency forward contracts   39    17 
Net realized gain (loss) on foreign currency and other transactions   (1)   (5)
Net realized gain (loss)   38    91 
Net change in unrealized gain (loss) on investments   (2,057)   2,539 
Net change in unrealized gain (loss) on foreign currency forward contracts   1,541    748 
Net unrealized gain (loss) on foreign currency and other transactions   1     
Net change in unrealized gain (loss)   (515)   3,287 
Net increase (decrease) in net assets resulting from operations  $11,696   $8,293 

 

   Nine months ended
September 30,
 
   2022   2021 
Total investment income  $56,407   $19,937 
Total expenses, net of fee waivers   24,945    8,411 
Net investment income before income taxes   31,462    11,526 
Income taxes, including excise taxes   2    14 
Net investment income   31,460    11,512 
Net realized gain (loss) on investments   (17)   151 
Net realized gain (loss) on foreign currency forward contracts   84    14 
Net realized gain (loss) on foreign currency and other transactions   (14)   (46)
Net realized gain (loss)   53    119 
Net change in unrealized gain (loss) on investments   (5,454)   7,618 
Net change in unrealized gain (loss) on foreign currency forward contracts   2,343    874 
Net unrealized gain (loss) on foreign currency and other transactions   1     
Net change in unrealized gain (loss)   (3,110)   8,492 
Net increase (decrease) in net assets resulting from operations  $28,403   $20,123 

 

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Investment Income

 

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

 

   Three months ended September 30, 
   2022   2021 
Interest income  $19,264   $7,718 
PIK interest income   1,902    411 
Dividend income (1)    127    55 
Fee income   385    384 
Prepayment gain (loss)   609    467 
Accretion of discounts and amortization of premiums   530    241 
Total investment income  $22,817   $9,276 

 

   Nine months ended September 30, 
   2022   2021 
Interest income  $47,597   $16,750 
PIK interest income   3,536    767 
Dividend income (2)    342    101 
Fee income   2,170    839 
Prepayment gain (loss)   1,041    851 
Accretion of discounts and amortization of premiums   1,721    629 
Total investment income  $56,407   $19,937 

 

 

(1)    Includes PIK dividends of $90 and $45, respectively.
(2)   Includes PIK dividends of $270 and $89, respectively.

 

The increase in investment income of $13.5 million and $36.5 million during the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, is primarily the result of an increase in interest income. The increase in interest income was primarily due to the growth of our investment portfolio and increases in effective rates on the portfolio as a result of the rising interest rate environment. 

 

Operating Expenses

 

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

 

   Three months ended September 30, 
   2022   2021 
Interest and other debt financing expenses  $4,979   $1,872 
Base management fees, net of base management fee waivers (1)    3,285    1,699 
Incentive fees, net of incentive fee waivers (2)    1,485    291 
Professional fees   334    155 
Administrative service fees   352    143 
General and administrative expenses   186    179 
Directors’ fees   22    15 
Total expenses, net of fee waivers  $10,643   $4,354 

 

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   Nine months ended September 30, 
   2022   2021 
Interest and other debt financing expenses  $12,961   $3,485 
Base management fees, net of base management fee waivers (1)    7,058    2,236 
Incentive fees, net of incentive fee waivers (2)    2,385    1,472 
Professional fees   1,019    419 
Administrative service fees   763    382 
General and administrative expenses   700    372 
Directors’ fees   59    45 
Total expenses, net of fee waivers  $24,945   $8,411 

 

 

(1)    Base management fees for the three and nine months ended September 30, 2022 were $3,285 and $8,759, respectively. MC Advisors elected to voluntarily waive zero and $1,701 of such base management fees for the three and nine months ended September 30, 2022, respectively. Base management fees for the three and nine months ended September 30, 2021 were $1,699 and $3,661, respectively. MC Advisors elected to voluntarily waive zero and $1,425 of such base management fees for the three and nine months ended September 30, 2021, respectively. Base management fee waivers are not subject to recoupment by MC Advisors. There is no guarantee that MC Advisors will waive any base management fees in the future.
(2)    Incentive fees for the three and nine months ended September 30, 2022 were $1,647 and $3,853, comprised of part one incentive fees of $1,707 and $4,474 and part two capital gains incentive fees of ($60) and ($621), respectively. MC Advisors elected to voluntarily waive the part one incentive fees of $162 and $1,468 during the three and nine months ended September 30, 2022, respectively. Incentive fees for the three and nine months ended September 30, 2021 were $860 and $3,194, comprised of part one incentive fees of $771 and $1,924 and part two capital gains incentive fees of $89 and $1,270, respectively. MC Advisors elected to voluntarily waive the part one incentive fees of $569 and $1,722 during the three and nine months ended September 30, 2021, respectively. Incentive fee waivers are not subject to recoupment by MC Advisors. 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” for additional information.

 

The composition of our interest and other debt financing expenses, average debt outstanding and average stated interest rates (i.e. the rate in effect plus spread) were as follows (in thousands):

 

   Three months ended September 30, 
   2022   2021 
Interest expense – revolving credit facility  $1,128   $1,576 
Interest expense – 2022 ABS   3,221     
Amortization of deferred financing costs   630    296 
Total interest and other debt financing expenses  $4,979   $1,872 
Average debt outstanding  $351,614   $172,808 
Average stated interest rate   4.9%   3.6%

 

   Nine months ended September 30, 
   2022   2021 
Interest expense – revolving credit facility  $5,113   $2,905 
Interest expense – 2022 ABS   6,227     
Amortization of deferred financing costs   1,621    580 
Total interest and other debt financing expenses  $12,961   $3,485 
Average debt outstanding  $349,134   $104,051 
Average stated interest rate   4.3%   3.7%

 

The increase in total expenses of $6.3 and $16.5 million during the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, respectively, is primarily a result of an increase in interest expense as average borrowings increased to support the growth of the portfolio and an increase in base management and incentive fees, net of fee waivers.

 

Income Taxes, Including Excise Taxes

 

We have elected to be treated, currently qualify, and intend to continue 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.

 

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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 and nine months ended September 30, 2022, we recorded a net tax expense on the consolidated statements of operations of $1 thousand for U.S. federal excise tax. For the three and nine months ended September 30, 2021, we recorded a net expense on the consolidated statements of operations of $7 thousand and $14 thousand, respectively for U.S. federal excise tax, respectively.

 

Certain of our consolidated subsidiaries are subject to U.S. federal and state corporate-level income taxes. For the three and nine months ended September 30, 2022, we recorded a net tax expense of zero and $1 thousand, respectively on the consolidated statements of operations for these subsidiaries. For both the three and nine months ended September 30, 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 September 30, 2022 and 2021, we had sales of investments of zero and $0.9 million, respectively, resulting in zero and $79 thousand of net realized gain (loss) on investments, respectively. During the nine months ended September 30, 2022 and 2021, we had sales of investments of $15.8 million and $7.6 million, respectively, resulting in ($17) thousand and $151 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 September 30, 2022 and 2021, we had $39 thousand and $17 thousand net realized gain (loss) on foreign currency forward contracts, respectively. During the nine months ended September 30, 2022 and 2021, we had $84 thousand and $14 thousand net realized gain (loss) on foreign currency forward contracts, respectively. During the three months ended September 30, 2022 and 2021, we had ($1) thousand and ($5) thousand of net realized gain (loss) on foreign currency and other transactions, respectively. During the nine months ended September 30, 2022 and 2021, we had ($14) thousand and ($46) thousand of net realized gain (loss) on foreign currency and other transactions, respectively.

 

Net Change in Unrealized Gain (Loss)

 

For the three months ended September 30, 2022 and 2021, our investments had ($2.1) million and $2.5 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.

 

During the three months ended September 30, 2022, the net change in unrealized loss on investments was primarily attributable to overall market volatility and spread widening in the loan market. Additionally, $0.7 million in net change in unrealized loss on investments was attributable to portfolio companies that have underlying credit or fundamental performance concerns resulting in a risk rating of Grade 3, 4, or 5 on our investment performance risk rating scale that were still held as of September 30, 2022. We estimate a majority of the net unrealized gain on investments during the three months ended September 30, 2021 was attributable to broad market movements or improvements in fundamental performance at our portfolio companies.

 

For the nine months ended September 30, 2022 and 2021, our investments had ($5.5) million and $7.6 million of net change in unrealized gain (loss), respectively. During the nine months ended September 30, 2022, the net change in unrealized loss on investments was primarily attributable to overall market volatility and spread widening in the loan market. Additionally, $1.6 million in net change in unrealized loss on investments was attributable to portfolio companies that have underlying credit or fundamental performance concerns resulting in a risk rating of Grade 3, 4, or 5 on our investment performance risk rating scale that were still held as of September 30, 2022. We estimate approximately $6.9 million of the net unrealized gains on investments during the nine months ended September 30, 2021 was attributable to broad market movements and tightening of credit spreads in the loan markets. Approximately $0.7 million in net unrealized gains was attributable to portfolio companies that have underlying credit or fundamental performance concerns resulting in a risk rating of Grade 3, 4 or 5 on our investment performance risk rating scale.

 

For the three months ended September 30, 2022 and 2021, our foreign currency forward contracts had $1.5 million and $0.7 million of net change in unrealized gain (loss), respectively. For the nine months ended September 30, 2022 and 2021, our foreign currency forward contracts had $2.3 million and $0.9 million of net change in unrealized gain (loss), respectively.

 

Net Increase (Decrease) in Net Assets Resulting from Operations

 

For the three months ended September 30, 2022 and 2021, the net increase (decrease) in net assets resulting from operations was $11.7 million and $8.3 million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended September 30, 2022 and 2021, our per share net increase (decrease) in net assets resulting from operations was $0.19 and $0.33, respectively. For the nine months ended September 30, 2022 and 2021, the net increase (decrease) in net assets resulting from operations was $28.4 million and $20.1 million, respectively. Based on the weighted average shares of common stock outstanding for the nine months ended September 30, 2022 and 2021, our per share net increase (decrease) in net assets resulting from operations was $0.56 and $1.00, respectively.

 

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The $3.4 million and $8.3 million increases during the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, respectively, is primarily the result of increased net investment income due to the significant portfolio growth and increases in effective rates on the portfolio as a result of the rising interest rate environment. The increases in net investment income were partially offset by net unrealized mark-to-market losses on investments primarily due to market volatility and spread widening during the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, where investments in the portfolio experienced net mark-to-market gains primarily attributable to broad market movements and the tightening of credit spreads in the loan markets.

 

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 September 30, 2022, we had $4.7 million in cash, $31.8 million in restricted cash at MC Income Plus Financing SPV LLC (the “SPV”), $26.0 million in restricted cash at Monroe Capital Income Plus ABS Funding, LLC (the “2022 Issuer”). Additionally, we had $136.8 million debt outstanding on our revolving credit facility and $306.0 million debt outstanding on our 2022 ABS. We had $313.2 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 September 30, 2022 and December 31, 2021, our asset coverage ratio based on aggregate borrowings outstanding was 249% and 206%, respectively.

 

Cash Flows

 

For the nine months ended September 30, 2022 and 2021, we experienced a net increase in cash and restricted cash of $48.5 million and $4.8 million, respectively. For the nine months ended September 30, 2022 and 2021, operating activities used $297.7 million and $299.0 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 nine months ended September 30, 2022 and 2021, we generated $346.2 million and $303.8 million from financing activities, primarily as a result of the issuance of common stock and net borrowings on our debt facilities, partially offset by 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 September 30, 2022 and December 31, 2021, we had 65,309,147 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 nine months ended September 30, 2022 and 2021 (in thousands except shares and per share data):

 

Date  Price Per
Share
   Shares
Issued
   Proceeds 
Nine months ended September 30, 2022:               
March 15, 2022  $10.10    12,173,590   $122,953 
May 17, 2022   10.16    8,022,706    81,511 
August 16, 2022   10.10    8,681,792    87,686 
Total        28,878,088   $292,150 

 

Date  Price Per
Share
   Shares
Issued
   Proceeds 
Nine months ended September 30, 2021:               
March 15, 2021  $9.74    5,301,797   $51,639 
May 18, 2021   9.86    2,792,748    27,537 
August 18, 2021   9.94    6,086,569    60,500 
Total        14,181,114   $139,676 

 

Share Repurchase Program: During 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.

 

The following table summarizes the total shares repurchased that were validly tendered under the Share Repurchase Program and not withdrawn during the nine months ended September 30, 2022 (in thousands except shares and per share data): 

 

Date  Price Per
Share
   Shares
Repurchased
   Total Cost 
Nine months ended September 30, 2022:               
April 15, 2022  $10.10    641,640   $6,480 
June 16, 2022   10.16    333,527    3,389 
September 16, 2022   10.10    139,216    1,406 
Total        1,114,383   $11,275 

 

There were no shares repurchased during the nine months ended September 30, 2021.

 

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 and nine months ended September 30, 2022 totaled $11.8 million ($0.20 per share) and $29.3 million ($0.60 per share), respectively. Distributions to stockholders for the three and nine months ended September 30, 2021 totaled $4.8 million ($0.20 per share) and $15.5 million ($0.80 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 September 30, 2022 and 2021, no portion of these distributions would have been characterized as a tax return of capital to stockholders.

 

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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 to our consolidated financial statements for additional information on our distributions.

  

Borrowings

 

Revolving Credit Facility: We have a $450.0 million 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 September 30, 2022 and December 31, 2021, the fair value of our investments held in the SPV as collateral for the Credit Facility was $528.1 million and $616.0 million, respectively, and these investments are identified on the accompanying consolidated schedules of investments. As of September 30, 2022 and December 31, 2021, we had outstanding borrowings under the Credit Facility of $136.8 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) 0.50% per annum on any unused portion of the Credit Facility when the outstanding borrowings are less than or equal to 60% of the facility amount and (ii) 0.35% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 60% of the facility amount. As of September 30, 2022 and December 31, 2021, the outstanding borrowings were accruing at a weighted average interest rate of 5.3% and 3.3%, respectively.

 

Asset-Backed Securitization: On April 7, 2022, we completed a $425.0 million asset-backed securitization (the “2022 ABS”). The notes offered in the 2022 ABS were issued by the 2022 Issuer, a wholly-owned subsidiary of the Company, and are secured by a diversified portfolio of senior secured loans. The transaction was executed through a private placement 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”), and $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”). We retained all of the Class C Notes and the Subordinated 2022 Notes. The Class A Notes and the Class B Notes are included as debt on the accompanying consolidated statements of assets and liabilities. As of September 30, 2022, the Class C and Subordinated Notes were eliminated in consolidation.

 

The 2022 Issuer used the proceeds from the securitization to, among other things, purchase certain investments from us and the SPV. Through April 22, 2024, the 2022 Issuer is permitted to use all principal collections received on the underlying collateral to purchase new collateral under the direction of MC Advisors, in its capacity as collateral manager of the 2022 Issuer, in accordance with our investment strategy and subject to customary conditions set forth in the documents governing the 2022 ABS, allowing us to maintain the initial leverage in the 2022 ABS. The 2022 Notes are due on April 30, 2032.

  

As of September 30, 2022, the fair value of our investments held in the 2022 Issuer as collateral was $400.9 million and these investments are identified on the accompanying consolidated schedule of investments.

 

 Distributions from the 2022 Issuer to us are limited by the terms of the indenture governing the 2022 ABS, which generally allows for the payment of interest on the Secured 2022 Notes and the distribution of remaining net interest income to the holders of the Subordinated Notes pursuant to a waterfall quarterly during the reinvestment period.

 

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.

 

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  · 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 Chairman and Chief Executive Officer of MC Management. Lewis W. (“Mick”) Solimene, Jr., our Chief Financial Officer and Chief Investment Officer and is also 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 September 30, 2022 and December 31, 2021, we had outstanding commitments to fund investments under undrawn revolvers, delayed draw commitments and subscription agreements totaling $245.9 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 September 30, 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.

 

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.

 

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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.

 

Recent Developments

 

Distributions: On October 12, 2022, our Board declared the following distributions:

 

Record Date  Payment Date  Amount Per Share 
October 17, 2022  December 30, 2022  $0.0734 
November 14, 2022  December 30, 2022   0.0733 
December 16, 2022  December 30, 2022   0.0733 
Total dividends declared     $0.2200 

 

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.

 

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Valuation of Portfolio Investments

 

For periods prior to September 30, 2022, the Board determined the fair value of our investments. Pursuant to the new SEC Rule 2a-5 under the 1940 Act, on September 30, 2022 the Board designated MC Advisors as our valuation designee (the “Valuation Designee”). The Board is responsible for oversight of the Valuation Designee. The Valuation Designee has established a valuation committee to determine in good faith the fair value of our investments, based on input of the Valuation Designee’s management and personnel and independent valuation firms which are engaged at the direction of the valuation committee to assist in the valuation of certain portfolio investments lacking a readily available market quotation. The valuation committee determines fair values pursuant to a valuation policy approved by the Board and pursuant to a consistently applied valuation process.

 

Under the valuation policy, 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 the Valuation Designee. 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 Valuation Designee using a documented valuation policy and a consistently applied valuation process. Such determination of fair values may involve subjective judgments and estimates. 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. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

 

With respect to investments for which market quotations are not readily available, the Valuation Designee 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 the Valuation Designee responsible for the credit monitoring of the portfolio investment;
     
  · our Valuation Designee engages an independent valuation firm to conduct independent appraisals of a selection of investments for which market quotations are not readily available. We will consult with an independent valuation firm 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 Valuation Designee;

 

  · preliminary valuation conclusions are then documented and discussed with the valuation committee of the Valuation Designee;

 

  · the valuation conclusions are approved by the valuation committee of the Valuation Designee; and

 

  · a report prepared by the Valuation Designee is presented to the Board quarterly to allow the Board to perform its oversight duties of the valuation process and the Valuation Designee.

 

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.

 

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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 September 30, 2022, our Valuation Designee determined, in good faith, the fair value of our investment portfolio 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.

 

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 12.5% (reduced from 15.0% as a result of MC Advisors April 18, 2022 agreement to permanently waive a portion of the incentive fees starting on 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 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 and nine months ended September 30, 2022, we reversed $0.1 million and $0.6 million, respectively, of previously accrued capital gains incentive fees based on the performance of our portfolio and the reduction in the incentive fee rate. During the three and nine months ended September 30, 2021, we accrued capital gains incentive fees of $0.1 million and $1.3 million, respectively based on the performance of our portfolio, $14 thousand and $21 thousand, respectively, of which was payable to MC Advisors as a result of realized gains. The remaining $0.1 million and $1.3 million, respectively, 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, 2024. We did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the nine months ended September 30, 2022.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are subject to financial market risks, including valuation risk, interest rate risk, currency risk and inflation and supply chain risk. 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.” 

 

Valuation Risk

 

Our investments may not have readily available market quotations (as such term is defined in Rule 2a-5), and those investments which do not have readily available market quotations are valued at fair value as determined in good faith by our Valuation Designee in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. 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 fluctuate from period to period, including as a result of the impact of the COVID-19 pandemic on the economy and financial and capital markets. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material.

 

In accordance with Rule 2a-5, our Board periodically assesses and manages material risks associated with the determination of the fair value of our investments.

 

Interest Rate Risk 

 

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, whereas our Secured 2022 Notes have fixed interest rates until maturity. We expect that other credit facilities into which we may enter in the future may also have floating interest rate provisions.

 

Assuming that the consolidated statement of assets and liabilities as of September 30, 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  $(2,548)  $(342)  $(2,206)
Up 100 basis points   10,938    2,174    8,764 
Up 200 basis points   21,154    3,542    17,612 
Up 300 basis points   31,370    4,910    26,460 

 

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.

 

Currency Risk  

 

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 September 30, 2022, we had foreign currency forward contracts in place for CAD 12.6 million and AUD 17.9 million associated with future principal and interest payments on certain investments.

 

Inflation and Supply Chain Risk

 

Economic activity has continued to accelerate across sectors and regions. Nevertheless, due to global supply chain issues, geopolitical events, a rise in energy prices and strong consumer demand as economies continue to reopen, inflation is showing signs of acceleration in the U.S. and globally. Inflation is likely to continue in the near to medium-term, particularly in the U.S., with the possibility that monetary policy may tighten in response. Persistent inflationary pressures could affect our portfolio companies’ profit margins. 

 

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 September 30, 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 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.

 

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;

 

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  · 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%.

  

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.

 

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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 August 16, 2022, we issued 8,681,792 shares of our common stock, par value $0.01 per share, at a price of $10.10 per share for proceeds of $87,686,100.

 

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)
     
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.

 

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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: November 14, 2022 By /s/ Theodore L. Koenig
    Theodore L. Koenig
    Chairman, Chief Executive Officer and Director
    (Principal Executive Officer)
    Monroe Capital Income Plus Corporation
     
Date: November 14, 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

 

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