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EX-32 - Golub Capital BDC, Inc.v192358_ex32.htm
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EX-31.1 - Golub Capital BDC, Inc.v192358_ex31-1.htm
 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
____________________________

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2010

OR

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

For the transition period from _____ to _____

Commission File Number 333-163279

Golub Capital BDC, Inc.
(Exact name of registrant as specified in its charter)

Delaware
27-2326940
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

150 South Wacker Drive, Suite 800
Chicago, IL 60606
(Address of principal executive offices)

(312) 205-5050
(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)
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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer o
Accelerated filer o
 
 
Non-accelerated filer þ (Do not check if a smaller reporting company)
Smaller reporting company o
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

As of August 9, 2010, the Registrant had 17,712,444 shares of common stock, $0.001 par value, outstanding.



 
 
 

Table of Contents
 

Part I.
Financial Information
 
     
Item 1.
Financial Statements
 
     
 
Consolidated Statements of Financial Condition as of June 30, 2010 (unaudited) and September 30, 2009
1
     
 
Consolidated Statements of Operations for the three and nine months ended June 30, 2010 (unaudited) and June 30, 2009 (unaudited)
2
     
 
Consolidated Statements of Changes in Net Assets / Members’ Equity for nine months ended June 30, 2010 (unaudited) and June 30, 2009 (unaudited)
3
     
 
Consolidated Statements of Cash Flows for the nine months ended June 30, 2010 (unaudited) and June 30, 2009 (unaudited)
4
     
 
Consolidated Schedules of Investments as of June 30, 2010 (unaudited) and September 30, 2009
5-10
     
 
Notes to Consolidated Financial Statements (unaudited)
11-23
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
24-36
     
Item 3.
Quanitative and Qualitative Disclosures About Market Risk
36
     
Item 4.
Controls and Procedures
36
     
Part II.
Other Information
 
     
Item 1.
Legal Proceedings
37
     
Item 1A.
Risk Factors
37
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
37
     
Item 3.
Defaults Upon Senior Securities
37
     
Item 4.
Removed and Reserved
37
     
Item 5.
Other Information
37
     
Item 6.
Exhibits
38

 
 

 

Part I. Financial Information
 
Item 1: Financial Statements

Golub Capital BDC, Inc. and Subsidiary
           
Consolidated Statements of Financial Condition
           
(In thousands, except share and per share data)
           
             
   
June 30, 2010
        
September 30, 2009
 
Assets
 
(unaudited)
       
Investments, at fair value (cost of $280,214 and $387,293 respectively)
  $ 277,610     $ 376,294  
Cash and cash equivalents
    71,380       -  
Restricted cash and cash equivalents
    32,728       30,614  
Interest receivable
    1,746       2,198  
Prepaid expenses and other assets
    296       16  
Total Assets
  $ 383,760     $ 409,122  
                 
Liabilities
               
Credit facility advances
  $ 121,764     $ 315,306  
Payable for investments purchased
    885       -  
Accrued professional fees
    540       13  
Management and incentive fee payable
    593       249  
Interest payable
    86       130  
Other payables
    107       672  
Total Liabilities
    123,975       316,370  
                 
Net Assets
               
Members' equity
    -       92,752  
Preferred stock, par value $0.001 per share, 1,000,000 shares authorized,
               
zero shares issued and outstanding as of June 30, 2010
    -       -  
Common stock, par value $0.001 per share, 100,000,000 shares authorized,
               
17,712,444 shares issued and outstanding as of June 30, 2010
    18       -  
Paid in capital in excess of par
    259,690       -  
Undistributed net investment income
    19       -  
Net unrealized appreciation on investments
    58       -  
Total Net Assets
    259,785       92,752  
                 
Total Liabilities and Total Net Assets
  $ 383,760     $ 409,122  
                 
Number of shares outstanding (unaudited)
    17,712,444       N/A  
Net Asset Value Per Share (unaudited)
  $ 14.67       N/A  

See Notes to Unaudited Consolidated Financial Statements.

 
1

 


Golub Capital BDC, Inc. and Subsidiary
                       
Consolidated Statements of Operations (unaudited)
                       
(In thousands, except share and per share data)
                       
                         
   
Three months ended
June 30,
   
Nine months ended
June 30,
 
   
2010
   
2009
   
2010
   
2009
 
Investment income
                       
Interest
  $ 7,230     $ 9,482     $ 25,718     $ 23,814  
                                 
Total investment income
    7,230       9,482       25,718       23,814  
                                 
Expenses
                               
Interest and other credit facility expenses
    591       1,114       2,144       3,680  
Base management fee
    903       811       2,237       2,074  
Incentive fee
    55       -       55       -  
Professional fees relating to registration statement
    188       -       788       -  
Professional fees
    363       154       734       167  
Administrative service fee
    144       -       442       -  
General and administrative expenses
    171       66       303       203  
                                 
Total expenses
    2,415       2,145       6,703       6,124  
                                 
Net investment income
    4,815       7,337       19,015       17,690  
                                 
Net gain (loss) on investments
                               
Net realized loss on investments
    -       -       -       (795 )
Net change in unrealized appreciation (depreciation) on investments
    (100 )     2,016       985       (4,459 )
                                 
Net gain (loss) on investments
    (100 )     2,016       985       (5,254 )
                                 
Net income
  $ 4,715     $ 9,353     $ 20,000     $ 12,436  
                                 
Basic and diluted earnings per share1
  $ 0.29       N/A       N/A       N/A  
                                 
Basic and diluted weighted average shares outstanding
    16,255,783       N/A       N/A       N/A  
                                 
                                 
1
The earnings per share and weighted average shares outstanding calculation for the three months ended June 30, 2010 is based on the assumption that the number of shares issued immediately prior to to the conversion on April 14, 2010 (8,984,863 shares of common stock) had been issued on April 1, 2010, the beginning of the three month period.

See Notes to Unaudited Consolidated Financial Statements.



 
2

 
 
Golub Capital BDC, Inc. and Subsidiary
Consolidated Statements of Changes in Net Assets/Members' Equity
(In thousands, except share and per share data)

                                           
                                           
         
Common Stock
   
Paid in Capital
   
Undistributed
   
Net Unrealized
       
   
Members'
         
Par
   
in Excess
   
Net Investment
   
Appreciation on
   
Total Net
 
   
Equity
   
Shares
   
Amount
   
of Par
   
Income
   
Investments
   
Assets
 
Balance at October 1, 2009
  $ 92,752           $ -     $ -     $ -     $ -     $ 92,752  
Proceeds from members' equity contributions
    47,209                     -       -       -       47,209  
Payments of members' equity distributions
    (13,530 )                   -       -       -       (13,530 )
Net increase in net assets resulting from operations for period October 1, 2009 to April 13, 2010
    15,672                     -       -       -       15,672  
Golub Capital BDC Conversion1
    (142,103 )     8,984,863       9       142,094       -       -       -  
Issuances of common stock, net of offering and underwriting costs2
            8,727,581       9       117,596       -       -       117,605  
Net increase in net assets resulting from operations for period April 14, 2010 to June 30, 2010
    -       -       -       -       4,270       58       4,328  
Dividends
    -       -       -       -       (4,251 )     -       (4,251 )
Balance at June 30, 2010
  $ -       17,712,444     $ 18     $ 259,690     $ 19     $ 58     $ 259,785  
                                                         
                                                         
1
Immediately prior to the initial public offering, Golub Capital BDC LLC converted from a limited liability company leaving Golub Capital BDC, Inc. as the surviving entity. Golub Capital BDC, Inc. issued 8,984,863 shares of common stock to existing Golub Capital BDC LLC owners in connection with the conversion.
2
On April 14, 2010, Golub Capital BDC, Inc. priced its initial public offering, selling 7,100,000 shares of its common stock at a public offering price of $14.50 per share. Concurrent with this offering an additional 1,322,581 shares were sold through a private placement also at $14.50 per share. On May 19, 2010, an additional 305,000 shares were issued at $14.50 per share upon exercise of the underwriters' over-allotment option.

See Notes to Unaudited Consolidated Financial Statements.


 
3

 


           
Consolidated Statements of Cash Flows (unaudited)
           
(In thousands)
           
             
   
Nine months ended June 30,
 
   
2010
   
2009
 
Cash flows from operating activities
           
Net income
  $ 20,000     $ 12,436  
Adjustments to reconcile net income to net cash provided by (used in) operating activities
         
 Amortization of deferred financing fees
    -       369  
 Amortization of discount and premium
    (6,580 )     (3,581 )
 Net realized loss on investments
    -       795  
 Net change in unrealized (appreciation) depreciation on investments
    (985 )     4,459  
 Fundings on revolving loans, net
    4,604       6,203  
 Fundings of portfolio investments
    (16,314 )     (363,129 )
 Proceeds from principal payments and sales of portfolio investments
    117,959       91,248  
 Changes in operating assets and liabilities:
               
 Interest receivable
    452       (1,427 )
 Prepaid expenses and other assets
    (280 )     (12 )
 Payable for investments purchased
    885       -  
 Accrued professional fees
    527       -  
 Management and incentive fee payable
    344       148  
 Interest payable
    (44 )     (53 )
 Other payables
    (565 )     -  
Net cash provided by (used in) operating activities
    120,003       (252,544 )
                 
Cash flows from investing activities
               
Net change in restricted cash and cash equivalents
    (2,114 )     (20,489 )
Net cash used in investing activities
    (2,114 )     (20,489 )
                 
Cash flows from financing activities
               
Borrowings on credit facility
    -       263,754  
Repayments on credit facility
    (193,542 )     (46,570 )
Proceeds from capital contributions
    47,209       59,217  
Payments of capital distributions
    (13,530 )     (3,368 )
Proceeds from shares sold, net of underwriting costs
    119,034       -  
Payment of offering costs
    (1,429 )     -  
Dividend paid
    (4,251 )     -  
Net cash provided by (used in) financing activities
    (46,509 )     273,033  
                 
Net change in cash and cash equivalents
    71,380       -  
                 
Cash and cash equivalents, beginning of period
    -       -  
                 
Cash and cash equivalents, end of period
  $ 71,380     $ -  
                 
                 
Supplemental disclosure of cash flow information
               
 Cash paid during the period for interest
  $ 2,188     $ 3,363  
                 
Supplemental disclosure of noncash activity
               
 Obligations of Company paid by members of Golub Capital BDC LLC
  $ 896     $ 317  

See Notes to Unaudited Consolidated Financial Statements.

 

 
4

 

Golub Capital BDC, Inc. and Subsidiary
Consolidated Schedule of Investments (unaudited)
June 30, 2010
(In thousands)

 
Investment
Type
Spread Above
Index1
 
Interest
Rate2
 
Maturity
Date
   
Principal
Amount
   
Cost
   
Percentage
of
Net Assets
 
Fair
Value
 
Investments, at fair value
                                       
Canada
                                       
Debt investments
                                       
Diversified Conglomerate Service
                                       
Open Text Corporation
Senior loan
L + 2.25%
    2.60 %     10/2013     $ 1,314     $ 1,135       0.5 %   $ 1,293  
                                                     
Leisure, Amusement, Motion Pictures, Entertainment
                                                 
Extreme Fitness, Inc.
Senior loan
L + 7.50%
    11.50 %     03/2012       4,649       4,649       1.8       4,649  
                                                     
Total Canada (cost $5,784)
                                        2.3 %   $ 5,942  
                                                     
United States
                                                   
Debt investments
                                                   
Aerospace and Defense
                                                   
Thermal Solutions LLC
Senior loan
L + 4.75%
    6.00 %     03/2011     $ 95     $ 94       - %   $ 93  
Thermal Solutions LLC
Senior loan
L + 5.25%
    6.50 %     03/2012       1,880       1,868       0.7       1,786  
                                          0.7       1,879  
Automobile
                                                   
CLP Auto Interior Corporation
Senior loan
L + 4.75%
    5.10 %     06/2013       3,240       3,240       1.2       3,143  
Driven Brands, Inc.
Senior loan
L + 5.00%
    7.00 %     10/2014       5,981       5,981       2.3       5,981  
                                          3.5       9,124  
Banking
                                                   
Bonddesk Group LLC
Senior loan
L + 3.00%
    3.36 %     08/2012       2,006       1,936       0.8       1,965  
Prommis Solutions
Senior loan
L + 2.75%
    3.20 %     02/2013       1,523       1,523       0.5       1,447  
                                          1.3       3,412  
Beverage, Food and Tobacco
                                                   
Lone Star Beef Processors, L.P.
Senior loan
L + 4.00%
    4.75 %     05/2013       3,610       3,587       1.4       3,610  
ABP Corporation
Senior loan
L + 4.50%
    8.50 %     02/2013       2,328       2,284       0.9       2,328  
Bertucci's Corporation
Senior loan
L + 9.00%
    12.00 %     07/2012       1,969       1,913       0.8       1,969  
CTI Foods Holding Co., LLC
Senior loan
L + 4.00%
    6.00 %     06/2015       894       886       0.3       862  
                                          3.4       8,769  
Building and Real Estate
                                                   
American Fire Protection Group, Inc.
Senior loan
L + 6.75%
    9.00 %     06/2011       4,548       4,443       1.4       3,638  
Architectural Testing, Inc.
Senior loan
L + 6.50%
    9.50 %     05/2013       6,636       6,636       2.6       6,636  
Infiltrator Systems, Inc.
Senior loan
L + 5.50%
    8.50 %     09/2012       7,840       7,484       2.9       7,526  
ITEL Laboratories, Inc.
Senior loan
L + 6.75%
    9.75 %     03/2014       7,875       7,808       3.0       7,875  
ASP PDM Acquisition Co. LLC
Senior loan
L + 2.75%
    3.06 %     12/2013       610       568       0.2       555  
Best Lighting Products, Inc.
Senior loan
L + 8.00%
    10.00 %     08/2012       2,431       2,362       0.9       2,431  
KHKI Acquisition, Inc.
Senior loan
L + 6.00%
    8.50 %     03/2012       396       395       0.1       376  
KHKI Acquisition, Inc.
Senior loan
L + 6.00%
    8.50 %     03/2013       2,600       2,596       0.8       1,950  
Tecta America Corp.
Senior loan
L + 5.75%
    6.35 %     12/2011       2,668       2,668       0.7       1,708  
                                          12.6       32,695  
Cargo Transport
                                                   
Peco Pallet, Inc.
Senior loan
L + 3.75%
    4.10 %     06/2013       4,107       3,945       1.6       4,066  
                                                     
Chemicals, Plastics and Rubber
                                                   
Celanese Holdings LLC.
Senior loan
L + 1.75%
    2.04 %     04/2014       985       843       0.4       935  
Syrgis Holdings, Inc.
Senior loan
L + 5.50%
    7.75 %     08/2012       352       335       0.1       345  
Syrgis Holdings, Inc.
Senior loan
L + 6.00%
    8.25 %     08/2013       864       818       0.3       829  
Syrgis Holdings, Inc.
Senior loan
L + 8.50%
    10.75 %     02/2014       474       448       0.2       474  
                                          1.0       2,583  
Containers, Packaging and Glass
                                                   
Pelican Products, Inc.
Senior loan
L + 5.00%
    7.75 %     01/2013       77       71       -       77  
Pelican Products, Inc.
Senior loan
L + 5.00%
    7.75 %     01/2014       2,861       2,631       1.1       2,861  
Industrial Container Services, LLC
Senior loan
L + 4.00%
    4.50 %     09/2011       1,130       1,109       0.4       1,130  
                                          1.5       4,068  
Diversified Conglomerate Manufacturing
                                                   
Neptco Inc.
Senior loan
L + 5.25%
    7.25 %     03/2013       4,404       4,235       1.4       3,743  
Pasternack Enterprises, Inc.
Senior loan
L + 4.50%
    6.00 %     02/2014       4,995       4,845       1.9       4,995  
Vintage Parts, Inc.
Senior loan
L + 5.50%
    6.03 %     12/2013       7,224       7,140       2.8       7,152  
Heat Transfer Parent, Inc.
Senior loan
L + 3.00%
    3.35 %     06/2013       1,833       1,761       0.6       1,595  
                                          6.7       17,485  

See Notes to Unaudited Consolidated Financial Statements.
 
5

 


Golub Capital BDC, Inc. and Subsidiary
Consolidated Schedule of Investments (unaudited)
June 30, 2010
(In thousands)

 
Investment
Type
 
Spread Above
Index1
   
Interest
Rate2
 
Maturity
Date
   
Principal
Amount
   
Cost
   
Percentage
of
Net Assets
 
Fair
Value
 
Diversified Conglomerate Service
                                           
Benetech, Inc.
Senior loan
 
L + 5.00%
      5.35 %     12/2013     $ 8,845     $ 8,540       3.3 %   $ 8,668  
Compass Group Diversified Holdings, LLC
Senior loan
 
L + 4.00%