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EX-31.1 - EX-31.1 - SARATOGA INVESTMENT CORP.a12-1973_1ex31d1.htm
EX-32.2 - EX-32.2 - SARATOGA INVESTMENT CORP.a12-1973_1ex32d2.htm

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Quarterly Period Ended November 30, 2011

 

o

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Commission File Number: 1-33376

 

SARATOGA INVESTMENT CORP.

(Exact name of registrant as specified in its charter)

 

Maryland

 

20-8700615

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

535 Madison Avenue
New York, New York

 

10022

(Address of principal executive office)

 

(Zip Code)

 

(212) 906-7800

(Registrant’s telephone number, including area code)

 

Not applicable

(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 x 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (check one):

 

Large Accelerated Filer o

 

Accelerated Filer o

 

 

 

Non-Accelerated Filer x

 

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 x

 

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of January 12, 2012 was 3,876,661.

 

 

 



Table of Contents

 

SARATOGA INVESTMENT CORP.

FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 30, 2011

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Statements of Assets and Liabilities as of November 30, 2011 (unaudited) and February 28, 2011

3

 

 

 

 

Consolidated Statements of Operations for the three and nine months ended November 30, 2011 and 2010 (unaudited)

4

 

 

 

 

Consolidated Schedules of Investments as of November 30, 2011 (unaudited) and February 28, 2011

5

 

 

 

 

Consolidated Statements of Changes in Net Assets for the nine months ended November 30, 2011 and 2010 (unaudited)

11

 

 

 

 

Consolidated Statements of Cash Flows for the nine months ended November 30, 2011 and 2010 (unaudited)

12

 

 

 

 

Notes to Consolidated Financial Statements as of November 30, 2011 (unaudited)

13

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

35

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

51

 

 

 

Item 4.

Controls and Procedures

52

 

 

 

PART II

OTHER INFORMATION

53

 

 

 

Item 1.

Legal Proceedings

53

 

 

 

Item 1A.

Risk Factors

53

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

53

 

 

 

Item 3.

Defaults upon Senior Securities

53

 

 

 

Item 4.

Removed and Reserved

53

 

 

 

Item 5.

Other Information

53

 

 

 

Item 6.

Exhibits

53

 

 

 

Signatures

 

54

 

2


 


Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Statements of Assets and Liabilities

 

 

 

As of

 

 

 

November 30, 2011

 

February 28, 2011

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-control/non-affiliate investments (amortized cost of $70,208,225 and $73,779,271, respectively)

 

$

60,003,928

 

$

57,292,723

 

Control investments (amortized cost of $24,362,779 and $27,364,350, respectively)

 

25,375,268

 

22,732,038

 

Total investments at fair value (amortized cost of $94,571,004 and $101,143,621, respectively)

 

85,379,196

 

80,024,761

 

Cash and cash equivalents

 

7,941,870

 

10,735,755

 

Cash and cash equivalents, securitization accounts

 

833,546

 

4,369,987

 

Outstanding interest rate cap at fair value (cost of $131,000 and $131,000, respectively)

 

1,157

 

16,265

 

Interest receivable, (net of reserve of $552,352 and $14,796, respectively)

 

1,295,797

 

1,666,083

 

Deferred credit facility financing costs, net

 

1,128,392

 

1,638,768

 

Management fee receivable

 

227,462

 

231,753

 

Other assets

 

2,966,063

 

85,166

 

Total assets

 

$

99,773,483

 

$

98,768,538

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Revolving credit facility

 

$

 

$

4,500,000

 

Payable for unsettled trades

 

 

4,900,000

 

Dividend payable

 

1,966,447

 

 

Management and incentive fees payable

 

2,490,901

 

2,203,806

 

Accounts payable and accrued expenses

 

685,990

 

785,486

 

Interest and credit facility fees payable

 

45,833

 

67,792

 

Due to manager

 

284,580

 

240,000

 

Total liabilities

 

$

5,473,751

 

$

12,697,084

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

Common stock, par value $.001, 100,000,000 common shares authorized, 3,876,661 and 3,277,077 common shares issued and outstanding, respectively

 

$

3,877

 

$

3,277

 

Capital in excess of par value

 

161,632,864

 

153,768,680

 

Distribution in excess of net investment income

 

(14,627,476

)

(8,918,890

)

Accumulated net realized loss from investments and derivatives

 

(43,387,880

)

(37,548,016

)

Net unrealized depreciation on investments and derivatives

 

(9,321,653

)

(21,233,597

)

Total Net Assets

 

94,299,732

 

86,071,454

 

 

 

 

 

 

 

Total liabilities and Net Assets

 

$

99,773,483

 

$

98,768,538

 

 

 

 

 

 

 

NET ASSET VALUE PER SHARE

 

$

24.32

 

$

26.26

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Statements of Operations

 

 

 

For three months ended
November 30

 

For nine months ended
November 30

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT INCOME

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate investments

 

$

1,877,650

 

$

3,639,216

 

$

5,212,182

 

$

7,006,161

 

Control investments

 

1,155,241

 

941,281

 

3,095,304

 

2,410,803

 

Total interest income

 

3,032,891

 

4,580,497

 

8,307,486

 

9,416,964

 

Interest from cash and cash equivalents

 

1,567

 

2,460

 

6,815

 

3,642

 

Management fee income

 

501,920

 

508,674

 

1,512,091

 

1,523,530

 

Other income

 

92,671

 

 

238,579

 

71,192

 

Total investment income

 

3,629,049

 

5,091,631

 

10,064,971

 

11,015,328

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Interest and credit facility financing expenses

 

307,221

 

618,810

 

987,042

 

2,188,078

 

Base management fees

 

393,888

 

424,044

 

1,203,820

 

1,258,875

 

Professional fees

 

356,144

 

381,096

 

1,282,009

 

3,138,221

 

Administrator expenses

 

250,000

 

240,000

 

730,000

 

568,562

 

Incentive management fees

 

1,178,750

 

1,173,144

 

842,097

 

1,173,144

 

Insurance

 

145,105

 

170,684

 

448,786

 

536,934

 

Directors fees and expenses

 

51,000

 

48,000

 

153,000

 

320,844

 

General & administrative

 

121,019

 

100,961

 

290,232

 

306,558

 

Other expense

 

2,150

 

 

5,340

 

 

Expenses before expense waiver and reimbursement

 

2,805,277

 

3,156,739

 

5,942,326

 

9,491,216

 

Expense reimbursement

 

 

 

 

(258,562

)

Waiver of deferred incentive management fees

 

 

 

 

(2,636,146

)

Total expenses net of expense waiver and reimbursement

 

2,805,277

 

3,156,739

 

5,942,326

 

6,596,508

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

823,772

 

1,934,892

 

4,122,645

 

4,418,820

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

 

 

 

 

 

 

 

 

 

Net realized loss from investments

 

(5,831,905

)

(13,731,107

)

(5,839,864

)

(16,280,370

)

Net unrealized appreciation on investments

 

11,221,387

 

15,107,701

 

11,927,052

 

24,546,024

 

Net unrealized appreciation/(depreciation) on derivatives

 

166

 

(1,366

)

(15,108

)

(19,797

)

Net gain on investments

 

5,389,648

 

1,375,228

 

6,072,080

 

8,245,857

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

 

$

6,213,420

 

$

3,310,120

 

$

10,194,725

 

$

12,664,677

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE

 

$

1.88

 

$

1.20

 

$

3.10

 

$

5.86

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED

 

3,310,021

 

2,752,914

 

3,287,979

 

2,162,832

 

 

See accompanying notes to consolidated financial statements.

 

4



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

November 30, 2011

(unaudited)

 

Company (a)

 

Industry

 

Investment Interest
Rate/Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value ( c )

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments - 63.6% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coast Plating, Inc. (d)

 

Aerospace

 

First Lien Term Loan
11.74%, 9/13/2014

 

$

2,550,000

 

$

2,550,000

 

$

2,550,000

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coast Plating, Inc. (d)

 

Aerospace

 

First Lien Term Loan
13.24%, 9/13/2014

 

$

950,000

 

950,000

 

950,000

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Aerospace

 

 

 

3,500,000

 

3,500,000

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (h)

 

Building Products

 

Common Stock Voting A-1

 

2,535

 

220,900

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (h)

 

Building Products

 

Common Stock Voting B-1

 

1,600

 

139,424

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets, Inc. (d)

 

Building Products

 

First Lien Term Loan
7.25%, 5/3/2014

 

$

307,408

 

307,408

 

213,095

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Building Products

 

 

 

667,732

 

213,095

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Group International, Inc. (d)

 

Consumer Products

 

First Lien Term Loan
11.00%, 5/24/2016

 

$

3,990,000

 

3,917,632

 

3,928,155

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Notes
10.00%, 6/14/2019

 

$

1,692,059

 

1,692,059

 

888,500

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d), (h)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

2,932,787

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Products

 

 

 

6,176,456

 

7,749,442

 

8.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFF Acquisition LLC (d)

 

Consumer Services

 

First Lien Term Loan
7.50%, 7/31/2015

 

$

2,817,889

 

2,580,428

 

2,489,887

 

2.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PrePaid Legal Services, Inc. (d)

 

Consumer Services

 

First Lien Term Loan
11.00%, 12/31/2016

 

$

3,000,000

 

2,916,310

 

3,000,000

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Services

 

 

 

5,496,738

 

5,489,887

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Acquisition Corp., LLC (d)

 

Education

 

First Lien Term Loan
6.75%, 12/31/2012

 

$

2,938,192

 

1,787,165

 

716,625

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Acquisition Corp., LLC (d), (h)

 

Education

 

Class A Common Stock

 

544,761

 

30,242

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Education

 

 

 

1,817,407

 

716,625

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Lighting Technologies, Inc. (d)

 

Electronics

 

Second Lien Term Loan
6.26%, 6/1/2014

 

$

2,000,000

 

1,891,210

 

1,870,000

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Dekko, Inc. (fka Dekko Technologies, LLC) (d)

 

Electronics

 

Second Lien Term Loan
10.50%, 5/1/2013

 

$

7,494,283

 

7,494,283

 

6,894,740

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electronics

 

 

 

9,385,493

 

8,764,740

 

9.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USS Parent Holding Corp. (d), (h)

 

Environmental

 

Non Voting Common Stock

 

765

 

133,002

 

99,080

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USS Parent Holding Corp. (d), (h)

 

Environmental

 

Voting Common Stock

 

17,396

 

3,025,798

 

2,254,058

 

2.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Environmental

 

 

 

3,158,800

 

2,353,138

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d)

 

Financial Services

 

Second Lien Term Loan
8.37%, 8/20/2015

 

$

2,479,858

 

2,479,858

 

51,829

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d), (h)

 

Financial Services

 

Common Stock

 

27,197

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d), (h)

 

Financial Services

 

Warrants

 

2,510

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DCS Business Services, Inc. (d)

 

Financial Services

 

First Lien Term Loan
13.75%, 9/30/2012

 

$

1,600,000

 

1,606,371

 

1,600,000

 

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Financial Services

 

 

 

4,086,229

 

1,651,829

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Big Train, Inc. (d)

 

Food and Beverage

 

First Lien Term Loan
7.75%, 3/31/2012

 

$

1,479,060

 

1,410,059

 

1,436,019

 

1.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRACS Institute, LTD (d), (h)

 

Healthcare Services

 

Second Lien Term Loan
10.00%, 4/17/2013

 

$

4,093,750

 

4,078,296

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maverick Healthcare Group (d)

 

Healthcare Services

 

First Lien Term Loan
10.75%, 12/31/2016

 

$

4,962,500

 

4,875,767

 

4,813,625

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Healthcare Services

 

 

 

8,954,063

 

4,813,625

 

5.1

%

 

5



Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McMillin Companies LLC (d)

 

Homebuilding

 

Senior Secured Notes
9.53%, 12/31/2013

 

$

990,000

 

970,393

 

735,374

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Worldwide Express Operations, LLC (d)

 

Logistics

 

First Lien Term Loan
10.00%, 6/30/2013

 

$

6,698,151

 

6,380,051

 

6,185,072

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capstone Logistics, LLC (d)

 

Logistics

 

First Lien Term Loan
7.50%, 9/16/2016

 

$

1,000,000

 

985,017

 

1,000,000

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capstone Logistics, LLC (d)

 

Logistics

 

First Lien Term Loan
13.50%, 9/16/2016

 

$

4,000,000

 

3,940,069

 

4,000,000

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Logistics

 

 

 

11,305,137

 

11,185,072

 

11.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d)

 

Metals

 

Senior Secured Notes
17.00%, 3/1/2013

 

$

7,428,456

 

7,170,143

 

6,670,753

 

7.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d), (h)

 

Metals

 

Warrants to Purchase Limited Liability Company Interests

 

3,000

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Metals

 

 

 

7,170,143

 

6,670,753

 

7.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d)

 

Publishing

 

Unsecured Notes
8.60%, 1/14/2020

 

$

2,378,181

 

1,880,328

 

1,067,090

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d), (h)

 

Publishing

 

Common Stock

 

211,429

 

 

710,401

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Penton Media, Inc. (d)

 

Publishing

 

First Lien Term Loan
5.00%, 8/1/2014

 

$

4,839,609

 

4,229,248

 

2,946,838

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Publishing

 

 

 

6,109,576

 

4,724,329

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Non-control/Non-affiliated investments

 

 

 

 

 

 

 

70,208,225

 

60,003,928

 

63.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control investments - 26.9% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GSC Partners CDO GP III, LP (g), (h)

 

Financial Services

 

100% General
Partnership Interest

 

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GSC Investment Corp. CLO 2007 LTD. (d), (e), (g)

 

Structured Finance Securities

 

Other/Structured
Finance Securities
19.20%, 1/21/2020

 

$

30,000,000

 

24,362,779

 

25,375,268

 

26.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Control investments

 

 

 

 

 

 

 

24,362,779

 

25,375,268

 

26.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate investments - 0.0% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GSC Partners CDO GP III, LP (f), (h)

 

Financial Services

 

6.24% Limited
Partnership Interest

 

 

 

 

0.0

%

Sub Total Affiliate investments

 

 

 

 

 

 

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS - 90.5% (b)

 

 

 

 

 

 

 

$

94,571,004

 

$

85,379,196

 

90.5

%

 

Outstanding interest rate cap

 

Interest rate

 

Maturity

 

Notional

 

Cost

 

Fair Value

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate cap

 

8.0

%

2/9/2014

 

$

22,040,816

 

$

87,000

 

$

843

 

0.0

%

Interest rate cap

 

8.0

%

11/30/2013

 

10,332,000

 

44,000

 

314

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Outstanding interest rate cap

 

 

 

 

 

 

 

$

131,000

 

$

1,157

 

0.0

%*

 

6



Table of Contents

 


* Amounts to less than 0.05%

(a)  All of our equity and debt investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940, except GSC Investment Corp. CLO 2007 Ltd. and GSC Partners CDO GP III, LP.

(b)  Percentages are based on net assets of $94,299,732 as of November 30, 2011.

(c)  Because there is no readily available market value for these investments, the fair value of all of our investments is determined in good faith by our board of directors. (see Note 3 to the consolidated financial statements).

(d)  These securities are pledged as collateral under a senior secured revolving credit facility (see Note 6 to the consolidated financial statements).

(e)  19.20% represents the modeled effective interest rate that is expected to be earned over the life of the investment.

(f)  As defined in the Investment Company Act, we are an “Affiliate” of this portfolio company because we own 5% or more of the portfolio company’s outstanding voting securities. Transactions during the period in which the issuer was an Affiliate are as follows:

 

 

 

 

 

 

 

 

 

Interest

 

Management

 

Net Realized

 

Net Unrealized

 

Company

 

Purchases

 

Redemptions

 

Sales (cost)

 

Income

 

fee income

 

gains/(losses)

 

gains/(losses)

 

GSC Partners CDO GP III, LP

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

 

(g)  As defined in the Investment Company Act, we “Control” this portfolio company because we own more than 25% of the portfolio company’s outstanding voting securities. Transactions during the period in which the issuer was both an Affiliate and a portfolio company that we Control are as follows:

 

 

 

 

 

 

 

 

 

Interest

 

Management

 

Net Realized

 

Net Unrealized

 

Company

 

Purchases

 

Redemptions

 

Sales (cost)

 

Income

 

fee income

 

gains/(losses)

 

gains/(losses)

 

GSC Investment Corp. CLO 2007 LTD.

 

$

 

$

 

$

 

$

3,095,304

 

$

1,512,091

 

$

 

$

5,644,800

 

GSC Partners CDO GP III, LP

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

 

(h)  Non-income producing at November 30, 2011.

 

7



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

February 28, 2011

 

Company (a)

 

Industry

 

Investment Interest
Rate/Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value ( c )

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments — 66.6% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (i)

 

Building Products

 

Common Stock Voting A-1

 

$

2,535

 

$

220,900

 

$

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (i)

 

Building Products

 

Common Stock Voting B-1

 

1,600

 

139,424

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets, Inc. (d), (i)

 

Building Products

 

First Lien Term Loan
7.25%, 5/3/2014

 

$

293,474

 

293,474

 

154,455

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Building Products

 

 

 

653,798

 

154,455

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hopkins Manufacturing Corporation (d)

 

Consumer Products

 

Second Lien Term Loan
7.54%, 1/26/2012

 

$

3,250,000

 

3,249,024

 

3,233,750

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

First Lien Term Loan
8.75%, 11/22/2012

 

$

3,169,227

 

3,057,616

 

3,147,834

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Notes
10.00%, 12/14/2015

 

$

1,538,235

 

1,538,235

 

985,547

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d), (i)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

2,881,608

 

3.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Products

 

 

 

8,411,640

 

10,248,739

 

11.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFF Acquisition LLC (d)

 

Consumer Services

 

First Lien Term Loan
7.50%, 7/31/2015

 

$

285,876

 

285,876

 

244,424

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Acquisition Corp., LLC (d)

 

Education

 

First Lien Term Loan
1.00%, 12/31/2012

 

$

870,791

 

870,791

 

258,625

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Acquisition Corp., LLC (d), (i)

 

Education

 

Class A Common Stock

 

166,327

 

30,241

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Education

 

 

 

901,032

 

258,625

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Lighting Technologies, Inc. (d)

 

Electronics

 

Second Lien Term Loan
6.29%, 6/1/2014

 

$

2,000,000

 

1,858,442

 

1,867,092

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dekko Technologies, LLC (d)

 

Electronics

 

Second Lien Term Loan
10.50%, 1/20/2012

 

$

7,198,935

 

7,198,935

 

6,766,999

 

7.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electronics

 

 

 

9,057,377

 

8,634,091

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USS Parent Holding Corp. (d), (i)

 

Environmental

 

Non Voting Common Stock

 

765

 

133,002

 

124,311

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USS Parent Holding Corp. (d), (i)

 

Environmental

 

Voting Common Stock

 

17,396

 

3,025,798

 

2,828,080

 

3.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Environmental

 

 

 

3,158,800

 

2,952,391

 

3.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d)

 

Financial Services

 

Second Lien Term Loan
1.25%, 8/20/2015

 

$

2,450,499

 

2,450,499

 

110,272

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d), (i)

 

Financial Services

 

Common Stock

 

$

27,197

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d), (i)

 

Financial Services

 

Warrants

 

$

2,510

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DCS Business Services, Inc.

 

Financial Services

 

First Lien Term Loan
13.75%, 9/30/2012

 

$

1,600,000

 

1,612,135

 

1,600,000

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Financial Services

 

 

 

4,062,634

 

1,710,272

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Big Train, Inc. (d)

 

Food and Beverage

 

First Lien Term Loan
7.75%, 3/31/2012

 

$

1,687,008

 

1,403,224

 

1,545,637

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRACS Institute, LTD (d)

 

Healthcare Services

 

Second Lien Term Loan
10.00%, 4/17/2013

 

$

4,093,750

 

4,069,847

 

3,014,420

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maverick Healthcare Group (d)

 

Healthcare Services

 

First Lien Term Loan
10.75%, 12/31/2016

 

$

5,000,000

 

4,900,000

 

5,000,000

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Healthcare Services

 

 

 

8,969,847

 

8,014,420

 

9.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McMillin Companies LLC (d)

 

Homebuilding

 

Senior Secured Notes
9.53%, 10/31/2013

 

$

1,100,000

 

1,067,024

 

816,200

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Worldwide Express Operations, LLC (d)

 

Logistics

 

First Lien Term Loan
10.00%, 6/30/2013

 

$

2,865,629

 

2,862,910

 

2,498,828

 

2.9

%

 

8



Table of Contents

 

Jason Incorporated (d), (i)

 

Manufacturing

 

Senior Secured Notes
10.25%, 12/21/2015

 

$

2,414,272

 

2,414,272

 

2,391,318

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialized Technology Resources, Inc. (d)

 

Manufacturing

 

Second Lien Term Loan
7.26%, 12/15/2014

 

$

5,000,000

 

4,833,437

 

4,966,500

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Manufacturing

 

 

 

7,247,709

 

7,357,818

 

8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d)

 

Metals

 

Senior Secured Notes
17.00%, 3/1/2013

 

$

5,100,000

 

5,017,225

 

4,231,222

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d), (i)

 

Metals

 

Warrants to Purchase Limited Liability Company Interests

 

3,000

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Metals

 

 

 

5,017,225

 

4,231,222

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant U.S. Holdings LLP (d), (e), (i)

 

Natural Resources

 

Second Lien Term Loan
0.00%, 9/20/2013

 

$

6,349,512

 

6,349,348

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy Alloys, LLC (d), (i)

 

Oil and Gas

 

Second Lien Term Loan
3.00%, 6/30/2015

 

$

6,429,092

 

6,429,092

 

316,954

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy Alloys, LLC (d), (i)

 

Oil and Gas

 

Warrants to Purchase Limited Liability Company Interests

 

3

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Oil and Gas

 

 

 

6,429,092

 

316,954

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terphane Holdings Corp. (d), (e), (i)

 

Packaging

 

Senior Secured Notes
14.00%, 6/15/2015

 

$

2,500,000

 

2,500,000

 

2,453,252

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d), (i)

 

Publishing

 

Unsecured Notes
8.60%, 1/14/2020

 

$

1,285,714

 

1,285,714

 

929,314

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d), (i)

 

Publishing

 

Common Stock

 

$

211,429

 

 

900,688

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Penton Media, Inc. (d)

 

Publishing

 

First Lien Term Loan
5.00%, 8/1/2014

 

$

4,839,376

 

4,116,021

 

4,025,393

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Publishing

 

 

 

5,401,735

 

5,855,395

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Non-control/Non-affiliated investments

 

 

 

 

 

 

 

73,779,271

 

57,292,723

 

66.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control investments — 26.4% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GSC Partners CDO GP III, LP (h), (i)

 

Financial Services

 

100% General Partnership Interest

 

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GSC Investment Corp. CLO 2007 LTD. (d), (f), (h)

 

Structured Finance Securities

 

Other/Structured Finance Securities
11.99%, 1/21/2020

 

$

30,000,000

 

27,364,350

 

22,732,038

 

26.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Control investments

 

 

 

 

 

 

 

27,364,350

 

22,732,038

 

26.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate investments — 0.0% (b)