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EX-31.1 - EXHIBIT 31.1 - Oaktree Specialty Lending Corpfsc-ex311_1231201610xq.htm
EX-32.2 - EXHIBIT 32.2 - Oaktree Specialty Lending Corpfsc-ex322_1231201610xq.htm
EX-32.1 - EXHIBIT 32.1 - Oaktree Specialty Lending Corpfsc-ex321_1231201610xq.htm
EX-31.2 - EXHIBIT 31.2 - Oaktree Specialty Lending Corpfsc-ex312_1231201610xq.htm
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
 
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended December 31, 2016
OR
 
 
¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
COMMISSION FILE NUMBER: 1-33901
Fifth Street Finance Corp.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 
DELAWARE
(State or jurisdiction of
incorporation or organization)
 
26-1219283
(I.R.S. Employer
Identification No.)
 
 
 
777 West Putnam Avenue, 3rd Floor
Greenwich, CT
(Address of principal executive office)
 
06830
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(203) 681-3600
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 periods as 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   ¨
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   ¨   NO   ¨
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  þ
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
 
 
 
 
(Do not check if a smaller reporting company)
 
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)    YES  ¨     NO  þ
The registrant had 140,960,651 shares of common stock outstanding as of February 8, 2017.




FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2016
TABLE OF CONTENTS
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 3.
Item 4.
Item 5.




 




PART I — FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements.
Fifth Street Finance Corp.
Consolidated Statements of Assets and Liabilities
(in thousands, except per share amounts)
(unaudited)
 
 
December 31, 2016
 
September 30, 2016
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost December 31, 2016: $419,048; cost September 30, 2016: $456,493)
 
$
352,161

 
$
388,267

Affiliate investments (cost December 31, 2016: $34,621; cost September 30, 2016: $34,955)
 
39,461

 
39,769

Non-control/Non-affiliate investments (cost December 31, 2016: $1,690,796; cost September 30, 2016: $1,792,410)
 
1,560,120

 
1,737,455

Total investments at fair value (cost December 31, 2016: $2,144,465; cost September 30, 2016: $2,283,858)
 
1,951,742

 
2,165,491

Cash and cash equivalents
 
179,835

 
117,923

Restricted cash
 
1,124

 
12,439

Interest, dividends and fees receivable
 
12,283

 
15,568

Due from portfolio companies
 
3,119

 
4,077

Receivables from unsettled transactions
 

 
5,346

Deferred financing costs
 
1,733

 
2,234

Insurance recoveries receivable
 
18,970

 
19,729

Other assets
 
106

 
478

Total assets
 
$
2,168,912

 
$
2,343,285

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
4,067

 
$
2,533

Base management fee and Part I incentive fee payable
 
12,401

 
15,958

Due to FSC CT
 
2,059

 
2,204

Interest payable
 
9,060

 
3,912

Amounts payable to syndication partners
 
1,784

 
754

Director fees payable
 
197

 
566

Payables from unsettled transactions
 
19,503

 
6,234

Legal settlements payable
 
18,970

 
19,500

Credit facilities payable
 
441,413

 
516,295

SBA debentures payable (net of $3,096 and $3,289 of unamortized financing costs as of December 31, 2016 and September 30, 2016, respectively)
 
210,204

 
210,011

Unsecured notes payable (net of $5,651 and $5,956 of unamortized financing costs as of December 31, 2016 and September 30, 2016, respectively)
 
405,001

 
404,630

Secured borrowings at fair value (proceeds December 31, 2016: $14,426; proceeds September 30, 2016: $18,929)
 
13,981

 
18,400

Total liabilities
 
1,138,640

 
1,200,997

Commitments and contingencies (Note 16)
 

 
 
Net assets:
 
 
 
 
Common stock, $0.01 par value, 250,000 shares authorized; 143,259 and 140,961 shares issued and outstanding at December 31, 2016, respectively; 143,259 shares issued and outstanding at September 30, 2016
 
1,433

 
1,433

Additional paid-in-capital
 
1,591,467

 
1,591,467

Treasury shares at cost, 2,298 at December 31, 2016
 
(12,500
)
 

Net unrealized depreciation on investments and secured borrowings
 
(192,278
)
 
(117,838
)
Net realized loss on investments and secured borrowings
 
(329,324
)
 
(306,228
)
Accumulated overdistributed net investment income
 
(28,526
)
 
(26,546
)
Total net assets (equivalent to $7.31 and $7.97 per common share at December 31, 2016 and September 30, 2016, respectively) (Note 12)
 
1,030,272

 
1,142,288

Total liabilities and net assets
 
$
2,168,912

 
$
2,343,285

See notes to Consolidated Financial Statements.

3


Fifth Street Finance Corp.
Consolidated Statements of Operations
(in thousands, except per share amounts) (unaudited)
 
 
Three months ended
December 31, 2016
 
Three months ended
December 31, 2015
 
Interest income:
 
 
 
 
 
Control investments
 
$
4,445

 
$
3,655

 
Affiliate investments
 
1,008

 
1,051

 
Non-control/Non-affiliate investments
 
38,301

 
46,397

 
Interest on cash and cash equivalents
 
119

 
63

 
Total interest income
 
43,873

 
51,166

 
PIK interest income:
 
 
 
 
 
Control investments
 
1,560

 
980

 
Affiliate investments
 
201

 
210

 
Non-control/Non-affiliate investments
 
1,076

 
2,104

 
Total PIK interest income
 
2,837

 
3,294

 
Fee income:
 
 
 
 
 
Control investments
 
309

 
842

 
Affiliate investments
 
482

 
8

 
Non-control/Non-affiliate investments
 
2,777

 
7,961

 
Total fee income
 
3,568

 
8,811

 
Dividend and other income:
 
 
 
 
 
Control investments
 
1,462

 
2,427

 
Non-control/Non-affiliate investments
 
20

 
(576
)
 
Total dividend and other income
 
1,482

 
1,851

 
Total investment income
 
51,760

 
65,122

 
Expenses:
 
 
 
 
 
Base management fee
 
8,614

 
11,792

 
Part I incentive fee
 
4,063

 
3,651

 
Professional fees
 
1,064

 
6,969

 
Board of Directors fees
 
197

 
356

 
Interest expense
 
13,189

 
14,047

 
Administrator expense
 
531

 
600

 
General and administrative expenses
 
1,468

 
1,221

 
Loss on legal settlements
 
3

 

 
Total expenses
 
29,129

 
38,636

 
Base management fee waived
 
(61
)
 
(96
)
 
Insurance recoveries
 
(602
)
 

 
Net expenses
 
28,466

 
38,540

 
Net investment income
 
23,294

 
26,582

 
Unrealized appreciation (depreciation) on investments:
 
 
 
 
 
Control investments
 
1,339

 
(14,644
)
 
Affiliate investments
 
26

 
458

 
Non-control/Non-affiliate investments
 
(75,721
)
 
(76,861
)
 
Net unrealized depreciation on investments
 
(74,356
)
 
(91,047
)
 
Net unrealized (appreciation) depreciation on secured borrowings
 
(84
)
 
212

 
Realized gain (loss) on investments and secured borrowings:
 
 
 
 
 
Control investments
 
(23,624
)
 

 
Affiliate investments
 

 

 
Non-control/Non-affiliate investments
 
528

 
1,367

 
Net realized gain (loss) on investments and secured borrowings
 
(23,096
)
 
1,367

 
Net decrease in net assets resulting from operations
 
$
(74,242
)
 
$
(62,886
)
 
Net investment income per common share — basic
 
$
0.16

 
$
0.18

 
Loss per common share — basic
 
$
(0.52
)
 
$
(0.42
)
 
Weighted average common shares outstanding — basic
 
142,853

 
150,263

 
Net investment income per common share — diluted
 
$
0.16

 
$
0.18

 
Loss per common share — diluted (Note 5)
 
$
(0.52
)
 
$
(0.42
)
 
Weighted average common shares outstanding — diluted
 
142,853

 
158,053

 
Distributions per common share
 
$
0.18

 
$
0.18

 
See notes to Consolidated Financial Statements.

4



Fifth Street Finance Corp.
Consolidated Statements of Changes in Net Assets
(in thousands, except per share amounts)
(unaudited)

 
 
Three months ended
December 31, 2016
 
Three months ended
December 31, 2015
 
Operations:
 
 
 
 
 
Net investment income
 
$
23,294

 
$
26,582

 
Net unrealized depreciation on investments
 
(74,356
)
 
(91,047
)
 
Net unrealized (appreciation) depreciation on secured borrowings
 
(84
)
 
212

 
Net realized gain (loss) on investments and secured borrowings
 
(23,096
)
 
1,367

 
Net decrease in net assets resulting from operations
 
(74,242
)
 
(62,886
)
 
Stockholder transactions:
 
 
 
 
 
Distributions to stockholders
 
(25,274
)
 
(27,095
)
 
Net decrease in net assets from stockholder transactions
 
(25,274
)
 
(27,095
)
 
Capital share transactions:
 
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
1,250

 
1,846

 
Repurchases of common stock under dividend reinvestment program
 
(1,250
)
 
(1,846
)
 
Repurchases of treasury shares under stock repurchase program
 
(12,500
)
 

 
Net decrease in net assets from capital share transactions
 
(12,500
)
 

 
Total decrease in net assets
 
(112,016
)
 
(89,981
)
 
Net assets at beginning of period
 
1,142,288

 
1,353,094

 
Net assets at end of period
 
$
1,030,272

 
$
1,263,113

 
Net asset value per common share
 
$
7.31

 
$
8.41

 
Common shares outstanding at end of period
 
140,961

 
150,263

 




See notes to Consolidated Financial Statements.


5

Fifth Street Finance Corp.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 
 
Three months ended
December 31, 2016
 
Three months ended
December 31, 2015
 
Operating activities:
 
 
 
 
 
Net decrease in net assets resulting from operations
 
$
(74,242
)
 
$
(62,886
)
 
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities:
 
 
 
 
 
Net unrealized depreciation on investments
 
74,356

 
91,047

 
Net unrealized appreciation (depreciation) on secured borrowings
 
84

 
(212
)
 
Net realized (gain) loss on investments and secured borrowings
 
23,096

 
(1,367
)
 
PIK interest income
 
(2,837
)
 
(3,294
)
 
Recognition of fee income
 
(3,568
)
 
(8,811
)
 
Accretion of original issue discount on investments
 
(2,201
)
 
(1,139
)
 
Accretion of original issue discount on unsecured notes payable
 
66

 
66

 
Amortization of deferred financing costs
 
999

 
1,290

 
Changes in operating assets and liabilities:
 

 
 
 
Fee income received
 
3,583

 
8,807

 
(Increase) decrease in restricted cash
 
11,315

 
(7,517
)
 
Decrease in interest, dividends and fees receivable
 
3,285

 
176

 
Decrease in due from portfolio companies
 
958

 
291

 
Decrease in receivables from unsettled transactions
 
5,346

 
5,168

 
Decrease in insurance recoveries receivable
 
759

 

 
Decrease in other assets
 
372

 
92

 
Increase in accounts payable, accrued expenses and other liabilities
 
1,534

 
3,392

 
Decrease in base management fee and Part I incentive fee payable
 
(3,557
)
 
(13,006
)
 
Increase (decrease) in due to FSC CT
 
(145
)
 
300

 
Increase in interest payable
 
5,148

 
6,848

 
Increase in payables from unsettled transactions
 
13,269

 
5,443

 
Decrease in director fees payable
 
(369
)
 
296

 
Decrease in legal settlements payable
 
(530
)
 

 
Increase (decrease) in amounts payable to syndication partners
 
1,030

 
(1,316
)
 
Purchases of investments and net revolver activity
 
(104,153
)
 
(351,930
)
 
Principal payments received on investments (scheduled payments)
 
6,371

 
5,693

 
Principal payments received on investments (payoffs)
 
209,241

 
235,472

 
PIK interest income received in cash
 
3,434

 
577

 
Proceeds from the sale of investments
 
6,427

 
101,640

 
Net cash provided by operating activities
 
179,071

 
15,120

 
Financing activities:
 
 
 
 
 
Distributions paid in cash
 
(24,024
)
 
(25,249
)
 
Borrowings under credit facilities
 
84,000

 
230,000

 
Repayments of borrowings under credit facilities
 
(158,882
)
 
(272,000
)
 
Repayments of secured borrowings
 
(4,503
)
 
(1,811
)
 
Repurchases of common stock under stock repurchase program
 
(12,500
)
 

 
Repurchases of common stock under dividend reinvestment plan
 
(1,250
)
 
(1,846
)
 
Net cash used by financing activities
 
(117,159
)
 
(70,906
)
 
Net increase (decrease) in cash and cash equivalents
 
61,912

 
(55,786
)
 
Cash and cash equivalents, beginning of period
 
117,923

 
138,377

 
Cash and cash equivalents, end of period
 
$
179,835

 
$
82,591

 
Supplemental information:
 
 
 
 
 
Cash paid for interest
 
$
6,976

 
$
5,843

 
Non-cash operating activities:
 
 
 
 
 
Purchases of investments from restructurings
 
$
(125,693
)
 
$

 
Proceeds from investment restructurings
 
$
125,693

 
$

 
Non-cash financing activities:
 
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
1,250

 
$
1,846

 

See notes to Consolidated Financial Statements.

6

Fifth Street Finance Corp.
Consolidated Schedule of Investments
December 31, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value
Control Investments (3)
 
 
 
 
 
 
 
 
 Traffic Solutions Holdings, Inc.
 
Construction and engineering
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash 2% PIK due 4/1/2021 (13)
 
 
 
$
36,278

 
$
36,264

 
$
36,278

 First Lien Revolver, LIBOR+7% (1% floor) cash due 4/1/2021 (13)
 
 
 
1,800

 
1,798

 
1,800

 LC Facility, 6% cash due 4/1/2021
 
 
 
3,518

 
3,516

 
3,518

 746,114 Series A Preferred Units
 
 
 
 
 
19,234

 
22,013

 746,114 Shares of Common Stock
 
 
 
 
 
5,316

 
378

 
 
 
 
 
 
66,128

 
63,987

 TransTrade Operators, Inc. (9)
 
Air freight & logistics
 
 
 
 
 
 
 First Lien Term Loan, 11% cash 3% PIK due 12/31/2017
 
 
 
15,973

 
15,571

 
7,682

 First Lien Revolver, 8% cash due 12/31/2017
 
 
 
8,220

 
8,220

 

 596.67 Series A Common Units
 
 
 
 
 

 

 4,000,000 Series A Preferred Units in TransTrade Holdings LLC
 
 
 
 
 
4,000

 

 5,200,000 Series B Preferred Units in TransTrade Holdings LLC
 
 
 
 
 
5,200

 

 
 
 
 
 
 
32,991

 
7,682

 First Star Speir Aviation 1 Limited (11)(16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash due 12/15/2020
 
 
 
41,395

 
35,753

 
41,395

 2,058,411.64 Common Units (6)
 
 
 
 
 

 
2,741

 
 
 
 
 
 
35,753

 
44,136

 First Star Bermuda Aviation Limited (11)(16)
 
Airlines
 
 
 
 
 
 
 First Lien Term Loan, 9% cash 3% PIK due 8/19/2018
 
 
 
11,868

 
11,868

 
11,868

 4,293,736 Common Units (6)
 
 
 
 
 
3,230

 
4,994

 
 
 
 
 
 
15,098

 
16,862

 Eagle Hospital Physicians, LLC
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 8% PIK due 4/30/2017
 
 
 
14,175

 
14,175

 
14,175

 First Lien Term Loan B, 8.1% PIK due 4/30/2017
 
 
 
3,970

 
3,970

 
3,970

 First Lien Revolver, 8% cash due 4/30/2017
 
 
 
1,913

 
1,913

 
1,913

 4,100,000 Class A Common Units
 
 
 
 
 
4,100

 
233

 
 
 
 
 
 
24,158

 
20,291

 Senior Loan Fund JV I, LLC (11)(15)(17)(18)
 
Multi-sector holdings
 
 
 
 
 
 
 Class A Mezzanine Secured Deferrable Floating Rate Notes due 2036 in SLF Repack Issuer 2016 LLC (13)
 
 
 
101,030

 
101,030

 
101,030

 Class B Mezzanine Secured Deferrable Fixed Rate Notes, 15% PIK due 2036 in SLF Repack Issuer 2016 LLC
 
 
 
24,756

 
24,756

 
24,756

 87.5% LLC equity interest (6)
 
 
 
 
 
16,172

 
13,858

 
 
 
 
 
 
141,958

 
139,644

 Express Group Holdings LLC
 
Oil & gas equipment services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6% (1% floor) cash due 9/3/2019 (13)
 
 
 
12,506

 
12,073

 

 First Lien Revolver, LIBOR+4.5% (1% floor) cash due 3/4/2019 (13)
 
 
 
6,090

 
6,090

 
879

 Last-In Revolver, PRIME+3.5% (3.5% floor) cash due 10/7/2016 (13)
 
 
 
3,000

 
3,000

 
3,000

 14,033,391 Series B Preferred Units
 
 
 
 
 
3,982

 

 280,668 Series A Preferred Units
 
 
 
 
 
1,593

 

 1,456,344 Common Stock Units
 
 
 
 
 

 

 
 
 
 
 
 
26,738

 
3,879

 Ameritox Ltd.
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 (13)
 
 
 
31,498

 
31,483

 
31,498

 14,090,126.4 Class A Preferred Units in Ameritox Holdings II, LLC
 
 
 
 
 
14,090

 
16,157

 1,602,260.83 Class B Preferred Units in Ameritox Holdings II, LLC
 
 
 
 
 
1,602

 
1,837

 4,930.03 Class A Units in Ameritox Holdings II, LLC
 
 
 
 
 
29,049

 
6,188

 
 
 
 
 
 
$
76,224

 
$
55,680

 Total Control Investments (34.2% of net assets)
 
 
 
 
 
$
419,048

 
$
352,161

 
 
 
 
 
 
 
 
 
 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 
 
 
9,573

 
$
9,573

 
$
9,572

 1,080,399 Shares of Series A Preferred Stock
 
 
 
 
 
1,080

 
3,962

 
 
 
 
 
 
10,653

 
13,534

See notes to Consolidated Financial Statements.

7

Fifth Street Finance Corp.
Consolidated Schedule of Investments
December 31, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 AmBath/ReBath Holdings, Inc.
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan B, 12.5% cash 2.5% PIK due 8/31/2017
 
 
 
$
24,015

 
$
23,968

 
$
24,136

 4,668,788 Shares of Preferred Stock
 
 
 
 
 

 
1,791

 
 
 
 
 
 
23,968

 
25,927

 Total Affiliate Investments (3.8% of net assets)
 
 
 
 
 
$
34,621

 
$
39,461

 
 
 
 
 
 
 
 
 
 Non-Control/Non-Affiliate Investments (7)
 
 
 
 
 
 
 
 
 Cenegenics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash due 9/30/2019
 
 
 
29,363

 
29,188

 
19,100

 First Lien Revolver, 15% cash due 9/30/2019
 
 
 
1,600

 
1,600

 
1,600

 452,914.87 Common Units in Cenegenics, LLC
 
 
 
 
 
598

 

 345,380.141 Preferred Units in Cenegenics, LLC
 
 
 
 
 
300

 

 
 
 
 
 
 
31,686

 
20,700

 Riverlake Equity Partners II, LP
 
Multi-sector holdings
 
 
 
 
 
 
 1.78% limited partnership interest (11)
 
 
 
 
 
823

 
673

 
 
 
 
 
 
823

 
673

 Riverside Fund IV, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.34% limited partnership interest (11)
 
 
 
 
 
374

 
388

 
 
 
 
 
 
374

 
388

 Bunker Hill Capital II (QP), L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.51% limited partnership interest (11)
 
 
 
 
 
817

 
802

 
 
 
 
 
 
817

 
802


See notes to Consolidated Financial Statements.


8

Fifth Street Finance Corp.
Consolidated Schedule of Investments
December 31, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Maverick Healthcare Group, LLC (9)
 
Healthcare equipment
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5.5% cash (1.75% floor) cash due 4/30/2017 (13)
 
 
 
$
16,228

 
$
16,203

 
$
16,122

 First Lien Term Loan B, LIBOR+9% cash (1.75% floor) cash due 4/30/2017 (13)
 
 
 
40,436

 
39,110

 
17,800

 CapEx Line, LIBOR+5.75% (1.75% floor) cash due 4/30/2017 (13)
 
 
 
1,266

 
1,261

 
1,255

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 4/30/2017 (13)
 
 
 
4,413

 
4,413

 
4,413

 
 
 
 
 
 
60,987

 
39,590

 Refac Optical Group (9)
 
Specialty stores
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
5,704

 
5,670

 
5,698

 First Lien Term Loan B, LIBOR+8.5% cash, 1.75% PIK due 9/30/2018 (13)
 
 
 
34,374

 
34,253

 
34,189

 First Lien Term Loan C, 12% cash due 9/30/2018
 
 
 
3,416

 
3,416

 
3,345

 First Lien Revolver, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
1,600

 
1,600

 
1,600

 1,550.9435 Shares of Common Stock in Refac Holdings, Inc.
 
 
 
 
 
1

 

 550.9435 Shares of Series A-2 Preferred Stock in Refac Holdings, Inc.
 
 
 
 
 
305

 

 1,000 Shares of Series A Preferred Stock Units in Refac Holdings, Inc.
 
 
 
 
 
999

 
142

 
 
 
 
 
 
46,244

 
44,974

 Baird Capital Partners V, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.4% limited partnership interest (11)
 
 
 
 
 
994

 
565

 
 
 
 
 
 
994

 
565

 Milestone Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.85% limited partnership interest (11)
 
 
 
 
 
1,739

 
2,099

 
 
 
 
 
 
1,739

 
2,099

 National Spine and Pain Centers, LLC
 
Healthcare services
 
 
 
 
 
 
 Mezzanine Term Loan, 11% cash 1.6% PIK due 9/27/2020
 
 
 
30,846

 
30,816

 
30,826

 317,282.97 Class A Units
 
 
 
 
 
317

 
721

 
 
 
 
 
 
31,133

 
31,547

 RCPDirect, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.91% limited partnership interest (11)
 
 
 
 
 
635

 
812

 
 
 
 
 
 
635

 
812

 Riverside Fund V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.48% limited partnership interest (11)
 
 
 
 
 
1,147

 
1,046

 
 
 
 
 
 
1,147

 
1,046

See notes to Consolidated Financial Statements.

9

Fifth Street Finance Corp.
Consolidated Schedule of Investments
December 31, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 ACON Equity Partners III, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.13% limited partnership interest (11)
 
 
 
 
 
$
827

 
$
495

 
 
 
 
 
 
827

 
495

 BMC Acquisition, Inc.
 
Other diversified financial services
 
 
 
 
 
 
 500 Series A Preferred Shares
 
 
 
 
 
500

 
720

 50,000 Common Shares
 
 
 
 
 
1

 
22

 
 
 
 
 
 
501

 
742

 Edmentum, Inc.
 
Education services
 
 
 
 
 
 
 Unsecured Senior PIK Note, 8.5% PIK due 6/9/2020
 
 
 
$
2,283

 
2,283

 
1,450

 Unsecured Junior PIK Note, 10% PIK due 6/9/2020
 
 
10,489

 
10,227

 
5,852

 Unsecured Revolver, 5% cash due 6/9/2020
 
 
 
 
 

 

 126,127.80 Class A Common Units
 
 
 
 
 
126

 

 
 
 
 
 
 
12,636

 
7,302

 I Drive Safely, LLC
 
Education services
 
 
 
 
 
 
125,079 Class A Common Units of IDS Investments, LLC
 
 
 
 
 
1,000

 
312

 
 
 
 
 
 
1,000

 
312

 Yeti Acquisition, LLC
 
Leisure products
 
 
 
 
 
 
 3,000,000 Common Stock Units of Yeti Holdings, Inc.
 
 
 
 
 

 
35,209

 
 
 
 
 
 

 
35,209

 Vitalyst Holdings, Inc.
 
IT consulting & other services
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
19,757

 
19,757

 
19,945

 675 Series A Preferred Units of PCH Support Holdings, Inc.
 
 
 
 
 
675

 
383

 7,500 Class A Common Stock Units of PCH Support Holdings, Inc.
 
 
 
 
 
75

 

 
 
 
 
 
 
20,507

 
20,328

 Beecken Petty O'Keefe Fund IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.5% limited partnership interest (11)
 
 
 
 
 
1,187

 
1,339

 
 
 
 
 
 
1,187

 
1,339

 First American Payment Systems, LP
 
Diversified support services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.5% (1.25% floor) cash due 4/12/2019 (13)
 
 
 
18,304

 
18,304

 
17,755

 First Lien Revolver, LIBOR+4.5% (1.25% floor) cash due 10/12/2017 (13)
 
 
 
 
 

 

 
 
 
 
 
 
18,304

 
17,755

 Dexter Axle Company
 
Auto parts & equipment
 
 
 
 
 
 
 1,547 Common Shares in Dexter Axle Holding Company
 
 
 
 
 
1,643

 
3,741

 
 
 
 
 
 
1,643

 
3,741

 Comprehensive Pharmacy Services LLC
 
Pharmaceuticals
 
 
 
 
 
 
 Mezzanine Term Loan, 11.25% cash 1.5% PIK due 11/30/2019
 
 
 
14,854

 
14,854

 
14,413

 20,000 Common Shares in MCP CPS Group Holdings, Inc.
 
 
 
 
 
2,000

 
2,597

 
 
 
 
 
 
16,854

 
17,010

See notes to Consolidated Financial Statements.


10

Fifth Street Finance Corp.
Consolidated Schedule of Investments
December 31, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Garretson Firm Resolution Group, Inc.
 
Diversified support services
 
 
 
 
 
 
 First Lien Revolver, LIBOR+6.5% (1% floor) cash due 5/22/2020 (13)
 
 
 
 
 
$

 
$

 4,950,000 Preferred Units in GRG Holdings, LP
 
 
 
 
 
495

 
477

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
5

 

 
 
 
 
 
 
500

 
477

 Teaching Strategies, LLC
 
Education services
 
 
 
 
 
 
 Senior Term Loan, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (13)
 
 
 
$
7,202

 
7,194

 
7,200

 Senior Revolver, LIBOR+5.5% (0.5% floor) cash due 10/1/2019 (10)(13)
 
 
 
 
 
(1
)
 

 
 
 
 
 
 
7,193

 
7,200

 Omniplex World Services Corporation (9)
 
Security & alarm services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 8/19/2021
 
 
 
11,295

 
11,295

 
10,769

 500 Class A Common Units in Omniplex Holdings Corp.
 
 
 
 
 
500

 
485

 64.041 Class A-1 Common Units in Omniplex Holdings Corp.
 
 
 
 
 
104

 

 
 
 
 
 
 
11,899

 
11,254

 Dominion Diagnostics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 2% PIK due 10/8/2019
 
 
 
16,359

 
16,195

 
7,316

 First Lien Term Loan, LIBOR+4.5% (1% floor) cash due 4/8/2019 (13)
 
 
 
51,648

 
36,563

 
44,327

 First Lien Revolver, LIBOR+4.5% (1% floor) cash due 4/8/2019 (13)
 
 
 
 
 

 

 
 
 
 
 
 
52,758

 
51,643

 AdVenture Interactive, Corp. (9)
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (13)
 
 
 
89,814

 
89,794

 
47,081

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (10)(13)
 
 
 
 
 
(1
)
 

 2,863 Preferred Units of AVI Holdings, L.P.
 
 
 
 
 
1,820

 

 
 
 
 
 
 
91,613

 
47,081

 Sterling Capital Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.2% limited partnership interest (11)
 
 
 
 
 
1,726

 
1,481

 
 
 
 
 
 
1,726

 
1,481

 Advanced Pain Management
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+8.5% (1.25% floor) cash due 2/26/2018 (13)
 
 
 
24,000

 
24,000

 
23,923

 
 
 
 
 
 
24,000

 
23,923

See notes to Consolidated Financial Statements.


11

Fifth Street Finance Corp.
Consolidated Schedule of Investments
December 31, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 TravelClick, Inc.
 
Internet software & services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+7.75% (1% floor) cash due 11/6/2021 (13)
 
 
 
$
4,450

 
$
4,001

 
$
4,378

 
 
 
 
 
 
4,001

 
4,378

 Pingora MSR Opportunity Fund I-A, LP
 
Thrift & mortgage finance
 
 
 
 
 
 
 1.9% limited partnership interest (11)
 
 
 
 
 
7,946

 
5,780

 
 
 
 
 
 
7,946

 
5,780

 Credit Infonet, Inc. (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 10/26/2018
 
 
 
13,863

 
13,863

 
13,305

 
 
 
 
 
 
13,863

 
13,305

 Bracket Holding Corp.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 2/15/2020 (13)
 
 
 
32,000

 
32,000

 
32,028

 50,000 Common Units in AB Group Holdings, LP
 
 
 
 
 
500

 
1,077

 
 
 
 
 
 
32,500

 
33,105

 HealthEdge Software, Inc.
 
Application software
 
 
 
 
 
 
 482,453 Series A-3 Preferred Stock Warrants (exercise price $1.450918) expiration date 9/30/2023
 
 
 
 
 
213

 
700

 
 
 
 
 
 
213

 
700

 InMotion Entertainment Group, LLC
 
Consumer electronics
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
12,777

 
12,751

 
12,826

 First Lien Term Loan B, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
5,569

 
5,425

 
5,577

 First Lien Revolver, LIBOR+6.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
5,604

 
5,599

 
5,604

 CapEx Line, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
829

 
823

 
829

 1,000,000 Class A Units in InMotion Entertainment Holdings, LLC
 
 
 
 
 
1,000

 
1,169

 
 
 
 
 
 
25,598

 
26,005

 Thing5, LLC (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 10/11/2018 (12)(13)
 
 
 
48,293

 
48,260

 
46,758

 First Lien Revolver, LIBOR+7% (1% floor) cash due 10/11/2018 (13)
 
 
 
1,000

 
996

 
1,000

 2,000,000 Units in T5 Investment Vehicle, LLC
 
 
 
 
 
2,000

 
186

 
 
 
 
 
 
51,256

 
47,944

 Epic Health Services, Inc. (9)
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 8/17/2021 (13)
 
 
 
31,867

 
31,539

 
31,867

 
 
 
 
 
 
31,539

 
31,867

See notes to Consolidated Financial Statements.

12

Fifth Street Finance Corp.
Consolidated Schedule of Investments
December 31, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Kason Corporation
 
Industrial machinery
 
 
 
 
 
 
 Mezzanine Term Loan, 11.5% cash 1.75% PIK due 10/28/2019
 
 
 
$
5,927

 
$
5,927

 
$
5,925

 498.6 Class A Preferred Units in Kason Investment, LLC
 
 
 
 
 
499

 
397

 5,540 Class A Common Units in Kason Investment, LLC
 
 
 
 
 
55

 

 
 
 
 
 
 
6,481

 
6,322

 SPC Partners V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.571% limited partnership interest (11)
 
 
 
 
 
1,503

 
1,615

 
 
 
 
 
 
1,503

 
1,615

 P2 Upstream Acquisition Co.
 
 Application software
 
 
 
 
 
 
 First Lien Revolver, LIBOR+4% (1% floor) cash due 10/31/2018 (13)
 
 
 
 
 

 

 
 
 
 
 
 

 

 Vandelay Industries Merger Sub, Inc.
 
Industrial machinery
 
 
 
 
 
 
 Second Lien Term Loan, 10.75% cash 1% PIK due 11/12/2019
 
 
 
39,266

 
39,119

 
39,270

 2,500,000 Class A Common Units in Vandelay Industries, L.P.
 
 
 
 
 
958

 
7,294

 
 
 
 
 
 
40,077

 
46,564

 Vitera Healthcare Solutions, LLC
 
Healthcare technology
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+8.25% (1% floor) cash due 11/4/2021 (13)
 
 
 
8,000

 
7,909

 
7,800

 
 
 
 
 
 
7,909

 
7,800

 OmniSYS Acquisition Corporation
 
Diversified support services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.5% (1% floor) cash due 11/21/2018 (13)
 
 
 
5,500

 
5,462

 
5,489

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 11/21/2018 (10)(13)
 
 
 
 
 
(4
)
 

 100,000 Common Units in OSYS Holdings, LLC
 
 
 
 
 
1,000

 
899

 
 
 
 
 
 
6,458

 
6,388

 Moelis Capital Partners Opportunity Fund I-B, LP
 
Multi-sector holdings
 
 
 
 
 
 
 1.0% limited partnership interest (11)
 
 
 
 
 
1,419

 
1,753

 
 
 
 
 
 
1,419

 
1,753

 Aden & Anais Merger Sub, Inc.
 
Apparel, accessories & luxury goods
 
 
 
 
 
 
 51,645 Common Units in Aden & Anais Holdings, Inc.
 
 
 
 
 
5,165

 
5,198

 
 
 
 
 
 
5,165

 
5,198

 Lift Brands, Inc. (9)
 
Leisure facilities
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.5% (1% floor) cash due 12/23/2019 (13)
 
 
 
22,118

 
22,045

 
22,084

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 12/23/2019 (10)(13)
 
 
 
 
 
(18
)
 

 2,000,000 Class A Common Units in Snap Investments, LLC
 
 
 
 
 
2,000

 
2,277

 
 
 
 
 
 
24,027

 
24,361

 Tailwind Capital Partners II, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.3% limited partnership interest (11)
 
 
 
 
 
1,304

 
1,440

 
 
 
 
 
 
1,304

 
1,440

See notes to Consolidated Financial Statements.

13

Fifth Street Finance Corp.
Consolidated Schedule of Investments
December 31, 2016
(dollar amounts in thousands)
(unaudited)

Portfolio Company/Type of Investment (1)(2)(5)(14)
 
Industry
 
Principal (8)

 
Cost
 
Fair Value

 Long's Drugs Incorporated
 
Pharmaceuticals
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+11% cash due 2/19/2022 (13)
 
 
 
$
26,909

 
$
26,909