Special Value Continuation Partners, LP - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - Special Value Continuation Partners, LP	s001685x1_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - Special Value Continuation Partners, LP	s001685x1_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Special Value Continuation Partners, LP	s001685x1_ex31-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

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

For the Quarter Ended March 31, 2017

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

Commission File Number: 814-00897

SPECIAL VALUE CONTINUATION PARTNERS, LP
(Exact Name of Registrant as Specified in Charter)

Delaware (State or Other Jurisdiction of Incorporation)	68-0631675 (IRS Employer Identification No.)

2951 28^th Street, Suite 1000 Santa Monica, California (Address of Principal Executive Offices)	90405 (Zip Code)

Registrant’s telephone number, including area code (310) 566-1000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Limited Partner Interests
(Title of class)

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 and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ 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 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, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller Reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with a 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 ☒

The number of the Registrant’s common limited partner interests outstanding as of March 31, 2017 was $1,032,229,446.

SPECIAL VALUE CONTINUATION PARTNERS, LP

FORM 10-Q

FOR THE THREE MONTHS ENDED MARCH 31, 2017

TABLE OF CONTENTS

Part I.	Financial Information

Item 1.	Financial Statements
	Consolidated Statements of Assets and Liabilities as of March 31, 2017 (unaudited) and December 31, 2016	2
	Consolidated Schedule of Investments as of March 31, 2017 (unaudited) and December 31, 2016	3
	Consolidated Statements of Operations for the three months ended March 31, 2017 (unaudited) and March 31, 2016 (unaudited)	13
	Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2017 (unaudited) and year ended December 31, 2016	14
	Consolidated Statements of Cash Flows for the three months ended March 31, 2017 (unaudited) and March 31, 2016 (unaudited)	15
	Notes to Consolidated Financial Statements (unaudited)	16
	Consolidated Schedule of Changes in Investments in Affiliates for the three months ended March 31, 2017 (unaudited) and year ended December 31, 2016	30
	Consolidated Schedule of Restricted Securities of Unaffiliated Issuers as of March 31, 2017 (unaudited) and December 31, 2016	33

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

Item 4.	Controls and Procedures	45

Part II.	Other Information

Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults upon Senior Securities	46

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	46

Item 6.	Exhibits	46

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Statements of Assets and Liabilities

	March 31, 2017			December 31, 2016
	(unaudited)
Assets
Investments, at fair value:
Companies less than 5% owned (cost of $1,186,962,473 and $1,174,421,611, respectively)	$	1,195,112,846		$	1,175,097,468
Companies 5% to 25% owned (cost of $79,674,112 and $75,508,585, respectively)		70,471,411			69,355,808
Companies more than 25% owned (cost of $98,351,702 and $96,135,623, respectively)		72,925,529			70,516,594
Total investments (cost of $1,364,988,287 and $1,346,065,819, respectively)		1,338,509,786			1,314,969,870

Cash and cash equivalents		55,964,496			53,579,868
Accrued interest income:
Companies less than 5% owned		13,494,055			12,713,025
Companies 5% to 25% owned		1,383,794			953,561
Companies more than 25% owned		18,333			25,608
Deferred debt issuance costs		3,449,834			3,828,784
Prepaid expenses and other assets		977,571			1,156,279
Total assets		1,413,797,869			1,387,226,995

Liabilities
Debt, net of unamortized issuance costs		369,883,104			333,787,426
Incentive allocation payable		4,976,378			4,716,834
Interest payable		2,466,563			2,715,380
Payable for investments purchased		2,056,600			12,348,925
Payable to the Advisor		445,513			325,790
Accrued expenses and other liabilities		1,740,265			1,623,003
Total liabilities		381,568,423			355,517,358

Commitments and contingencies (Note 5)

Net assets applicable to common limited and general partners	$	1,032,229,446		$	1,031,709,637

Composition of net assets applicable to common limited and general partners
Paid-in capital in excess of par	$	1,180,024,317		$	1,180,024,317
Accumulated net investment income		18,754,443			17,764,674
Accumulated net realized losses		(140,050,090	)		(134,962,632	)
Accumulated net unrealized depreciation		(26,499,224	)		(31,116,722	)
Net assets applicable to common limited and general partners	$	1,032,229,446		$	1,031,709,637

See accompanying notes to the consolidated financial statements.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Investments (Unaudited)

March 31, 2017

Issuer	Instrument	Ref	Floor			Spread			Total Coupon			Maturity	Principal		Cost			Fair Value			% of Total Cash and Investments			Notes
Debt Investments ^(A)
Activities Related to Credit Intermediation
Pegasus Business Intelligence, LP (Onyx Centersource)	First Lien Term Loan	LIBOR (Q)		1.00	%		6.75	%		7.90	%	12/20/2021	$	14,732,896	$	14,597,174		$	14,680,595			1.05	%
Pegasus Business Intelligence, LP (Onyx Centersource)	Revolver	LIBOR (Q)		1.00	%		6.75	%		N/A		12/20/2021	$	–		(6,336	)		(2,383	)		-			J
iPayment, Inc.	First Lien Term Loan B2	LIBOR (Q)		1.50	%		5.25	%		6.75	%	5/8/2017	$	11,289,051		11,244,616			11,232,605			0.81	%
																25,835,454			25,910,817			1.86	%
Activities Related to Real Estate
Associations, Inc.	First Lien FILO Term Loan	LIBOR (Q)		1.00	%		8.96	%		10.11	%	12/23/2019	$	12,859,453		12,754,268			12,988,048			0.93	%

Advertising and Public Relations Services
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 1 Term Loan (2.25% Exit Fee)	LIBOR (M)		0.33	%		10.17	%		11.17	%	12/31/2018	$	15,000,000		14,736,380			14,639,250			1.05	%		H/K

Air Transportation
Mesa Air Group, Inc.	Acquisition Loan	LIBOR (M)		-			7.25	%		8.19	%	7/15/2022	$	13,531,264		13,344,705			13,801,889			0.99	%
Mesa Airlines, Inc.	Engine Acquisition Delayed Draw Term Loan A	LIBOR (M)		-			7.25	%		8.25	%	12/14/2021	$	15,857,304		15,598,929			15,735,995			1.13	%
Mesa Airlines, Inc.	Engine Acquisition Delayed Draw Term Loan B	LIBOR (M)		-			7.25	%		8.25	%	2/28/2022	$	9,139,604		8,987,292			9,015,772			0.65	%
Mesa Airlines, Inc.	Engine Acquisition Delayed Draw Term Loan C	LIBOR (M)		-			7.25	%		N/A		12/31/2022	$	–		-			-			-
																37,930,926			38,553,656			2.77	%
Amusement and Recreation
AP Gaming I, LLC	First Lien Revolver	LIBOR (Q)		-			8.25	%		N/A		12/20/2018	$	–		(1,604,966	)		(750,000	)		(0.05	%)		J
VSS-Southern Holdings, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		6.5% Cash + 2% PIK			9.65	%	11/3/2020	$	24,342,738		23,916,272			24,023,848			1.72	%
VSS-Southern Holdings, LLC	Sr Secured Revolver	LIBOR (Q)		1.00	%		6.5% Cash + 2% PIK			N/A		11/3/2020	$	–		(15,384	)		(17,123	)		-			J
																22,295,922			23,256,725			1.67	%
Apparel Manufacturing
Broder Bros., Co.	First Lien Term Loan (First Out)	LIBOR (Q)		1.25	%		5.75	%		7.00	%	6/3/2021	$	9,640,000		9,493,514			9,736,400			0.70	%
Broder Bros., Co.	First Lien Term Loan B (Last Out)	LIBOR (Q)		1.25	%		12.25	%		13.50	%	6/3/2021	$	9,760,000		9,621,892			9,857,600			0.71	%
																19,115,406			19,594,000			1.41	%
Building Equipment Contractors
Hylan Datacom & Electrical, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		7.50	%		8.54	%	7/25/2021	$	14,205,048		14,015,350			14,148,228			1.01	%

Business Support Services
Enerwise Global Technologies, Inc.	Sr Secured Revolving Loan	LIBOR (Q)		0.23	%		8.52	%		N/A		11/30/2018	$	–		(13,002	)		5,800			-			J
Enerwise Global Technologies, Inc.	Sr Secured Term Loan (3.77% Exit Fee)	LIBOR (Q)		0.23	%		9.27	%		10.27	%	11/30/2019	$	23,312,500		23,056,935			23,346,303			1.67	%		K
STG-Fairway Acquisitions, Inc. (First Advantage)	Second Lien Term Loan	LIBOR (Q)		1.00	%		9.25	%		10.30	%	6/30/2023	$	31,000,000		30,606,690			29,313,600			2.10	%
																53,650,623			52,665,703			3.77	%
Chemicals
Anuvia Plant Nutrients Holdings, LLC	Sr Secured Term Loan (8.0% Exit Fee)	LIBOR (M)		-			10.63	%		12.40	%	2/1/2018	$	6,027,601		5,998,676			6,060,150			0.43	%		K
Green Biologics, Inc.	Sr Secured Delayed Draw Term Loan (12.4% Exit Fee)	Prime Rate		-			7.75	%		11.75	%	6/30/2019	$	15,000,000		14,646,627			14,173,500			1.02	%		K
iGM RFE1 B.V. (Netherlands)	First Lien Delayed Draw Term Loan	LIBOR (Q)		-			8.00	%		9.15	%	10/12/2021	$	888,608		882,751			920,154			0.07	%		H
iGM RFE1 B.V. (Netherlands)	First Lien Term Loan	LIBOR (Q)		-			8.00	%		9.15	%	10/12/2021	$	3,840,430		3,814,482			3,976,765			0.29	%		H
Nanosys, Inc.	First Lien Delayed Draw Term Loan (3.5% Exit Fee)	LIBOR (Q)		-			9.81	%		10.94	%	4/1/2019	$	10,000,000		9,497,959			9,691,000			0.69	%		K
																34,840,495			34,821,569			2.50	%
Communications Equipment Manufacturing
Globecomm Systems, Inc.	First Lien Term Loan	LIBOR (Q)		1.25	%		7.63	%		10.38	%	12/11/2018	$	14,442,682		14,298,255			14,166,826			1.02	%		B

Computer Systems Design and Related Services
Aptos Inc. (Canada)	First Lien Term Loan	LIBOR (Q)		1.00	%		6.75	%		7.90	%	9/1/2022	$	9,950,000		9,768,704			9,751,000			0.70	%		H
Bracket Intermediate Holding Corp.	Second Lien Term Loan	LIBOR (M)		1.00	%		9.00	%		10.00	%	3/14/2024	$	10,925,551		10,599,821			10,597,785			0.76	%
Dealersocket, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		10.00	%		11.12	%	2/10/2021	$	17,500,000		16,923,123			17,435,250			1.25	%
Fidelis Acquisitionco, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		6.0% Cash + 2.0% PIK			9.00	%	11/4/2019	$	42,997,043		42,473,722			42,997,043			3.08	%
Fidelis Acquisitionco, LLC	Sr Secured Revolver	LIBOR (Q)		1.00	%		8.00	%		9.00	%	11/4/2019	$	3,182,143		3,182,143			3,182,143			0.23	%
MSC Software Corporation	Second Lien Term Loan	LIBOR (M)		1.00	%		7.50	%		8.50	%	5/29/2021	$	6,993,035		6,957,516			7,001,777			0.50	%
Marketo, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		9.50	%		10.65	%	8/16/2021	$	23,295,455		22,665,828			23,125,398			1.66	%
Marketo, Inc.	Senior Secured Revolver	LIBOR (Q)		1.00	%		9.50	%		N/A		8/16/2021	$	–		(44,816	)		(12,443	)		-			J
OnX Enterprise Solutions, Ltd. (Canada)	First Lien Term Loan B	LIBOR (Q)		-			8.00	%		9.04	%	9/3/2018	$	2,308,067		2,308,067			2,308,067			0.17	%		H
OnX Enterprise Solutions, Ltd. (Canada)	First Lien Term Loan	LIBOR (Q)		-			8.00	%		9.04	%	9/3/2018	$	10,293,333		10,249,578			10,293,333			0.74	%		H
OnX USA, LLC	First Lien Term Loan B	LIBOR (Q)		-			8.00	%		9.04	%	9/3/2018	$	3,726,133		3,726,133			3,726,133			0.27	%
OnX USA, LLC	First Lien Term Loan	LIBOR (Q)		-			8.00	%		9.04	%	9/3/2018	$	3,146,667		3,141,380			3,146,667			0.23	%
Waterfall International, Inc.	First Lien Delayed Draw Term Loan (3.0% Exit Fee)	LIBOR (Q)		-			11.67	%		12.67	%	9/1/2018	$	4,800,000		4,730,576			5,305,680			0.38	%		K
																136,681,775			138,857,833			9.97	%
Data Processing and Hosting Services
IO Data Centers, USA, LLC	First Lien Term Loan	Fixed		-			9.00	%		9.00	%	1/15/2020	$	6,876,756		6,876,756			6,895,324			0.49	%

Educational Support Services
Edmentum, Inc.	Jr Revolving Facility	Fixed		-			5.00	%		5.00	%	6/9/2020	$	2,105,366		2,105,366			2,105,370			0.15	%		B
Edmentum Ultimate Holdings, LLC	Sr PIK Notes	Fixed		-			8.50	%		8.50	%	6/9/2020	$	2,908,070		2,908,070			2,908,070			0.21	%		B
Edmentum Ultimate Holdings, LLC	Jr PIK Notes	Fixed		-			10.00	%		10.00	%	6/9/2020	$	13,373,646		12,905,008			12,410,743			0.89	%		B
																17,918,444			17,424,183			1.25	%
Electronic Component Manufacturing
Soraa, Inc.	Tranche A Term Loan (3.0% Exit Fee)	LIBOR (M)		0.44	%		9.33	%		10.33	%	3/1/2018	$	12,690,841		12,410,761			12,444,639			0.89	%		K
Soraa, Inc.	Tranche B Term Loan	LIBOR (M)		0.44	%		9.33	%		10.33	%	9/1/2017	$	1,603,779		1,574,011			1,578,199			0.11	%
																13,984,772			14,022,838			1.00	%

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Investments (Continued) (Unaudited)

March 31, 2017

Issuer	Instrument	Ref	Floor			Spread			Total Coupon			Maturity	Principal		Cost			Fair Value			% of Total Cash and Investments			Notes
Debt Investments (continued)
Electric Power Generation, Transmission and Distribution
GlassPoint Solar, Inc.	First Lien Term Loan (5.0% Exit Fee)	LIBOR (M)		-			11.44	%		12.56	%	8/1/2020	$	4,000,000	$	3,606,790		$	3,725,202			0.27	%		K
GlassPoint Solar, Inc.	First Lien Delay Draw Term Loan A	LIBOR (M)		-			11.44	%		N/A		8/1/2020	$	–		-			-			-
GlassPoint Solar, Inc.	First Lien Delay Draw Term Loan B	LIBOR (M)		-			11.44	%		N/A		8/1/2020	$	–		-			-			-
Holocene Renewable Energy Fund 3, LLC (Conergy)	First Lien Term Loan	Fixed		-			9% Cash + 1% PIK			10.00	%	9/10/2017	$	7,556,229		7,541,009			7,513,159			0.54	%
																11,147,799			11,238,361			0.81	%
Equipment Leasing
36th Street Capital Partners Holdings, LLC	Senior Note	Fixed		-			12.00	%		12.00	%	11/1/2020	$	30,956,272		30,956,272			30,956,272			2.22	%		E/F
Essex Ocean, LLC (Solexel)	Sr Secured Term Loan	Fixed		-			8.00	%		8.00	%	8/15/2018	$	1,696,898		1,696,898			1,237,887			0.09	%
																32,653,170			32,194,159			2.31	%
Facilities Support Services
NANA Development Corp.	First Lien Term Loan B	LIBOR (M)		1.25	%		6.75	%		8.00	%	3/15/2018	$	703,611		675,274			693,057			0.05	%

Financial Investment Activities
Magnolia Finance V plc (Cayman Islands)	Asset-Backed Credit Linked Notes	Fixed		-			13.13	%		13.13	%	8/2/2021	$	15,000,000		15,000,000			15,030,000			1.08	%		E/H

Grocery Stores
Bashas, Inc.	First Lien FILO Term Loan	LIBOR (M)		1.50	%		8.80	%		10.30	%	10/8/2019	$	9,135,537		9,100,587			9,226,892			0.66	%

Hospitals
KPC Healthcare, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		9.00	%		10.33	%	2/6/2020	$	19,801,933		19,665,937			19,900,943			1.43	%
Pacific Coast Holdings Investment, LLC (KPC Healthcare)	First Lien Term Loan	LIBOR (M)		1.00	%		7.50	%		8.50	%	2/14/2021	$	29,288,064		28,865,762			28,848,743			2.07	%
																48,531,699			48,749,686			3.50	%
Insurance
Alera Group Intermediate Holdings, Inc.	First Lien Delayed Draw Term Loan	LIBOR (Q)		1.00	%		5.50	%		N/A		12/30/2022	$	–		(8,333	)		(7,917	)		-			J
Alera Group Intermediate Holdings, Inc.	First Lien Revolver	LIBOR (Q)		1.00	%		5.50	%		N/A		12/30/2021	$	–		(7,595	)		(7,216	)		-			J
Alera Group Intermediate Holdings, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		5.50	%		6.50	%	12/30/2022	$	3,407,121		3,375,184			3,374,753			0.24	%
Association Member Benefits Advisors, LLC	Second Lien Term Loan	LIBOR (M)		1.00	%		8.75	%		9.75	%	6/8/2023	$	8,277,983		8,123,129			8,230,384			0.59	%
US Apple Holdco, LLC (Ventiv Technology)	First Lien FILO Term Loan	LIBOR (Q)		0.50	%		13.62	%		14.61	%	8/29/2019	$	20,045,455		19,601,825			20,045,455			1.44	%
																31,084,210			31,635,459			2.27	%
Lessors of Nonfinancial Licenses
ABG Intermediate Holdings 2, LLC	Second Lien Term Loan	LIBOR (Q)		1.00	%		8.50	%		9.65	%	5/27/2022	$	16,573,588		16,438,751			16,822,192			1.21	%
ABG Intermediate Holdings 2, LLC	Second Lien Incremental Term Loan	LIBOR (Q)		1.00	%		8.50	%		9.65	%	5/27/2022	$	3,426,412		3,398,716			3,477,808			0.25	%
Kenneth Cole Productions, Inc.	First Lien FILO Term Loan	LIBOR (M)		1.00	%		9.65	%		10.65	%	3/21/2022	$	35,310,220		34,960,857			34,868,842			2.50	%
																54,798,324			55,168,842			3.96	%
Management, Scientific, and Technical Consulting Services
Dodge Data & Analytics, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		8.75	%		9.94	%	10/31/2019	$	23,646,472		23,305,524			23,640,560			1.70	%

Motion Picture and Video Industries
NEG Holdings, LLC (CORE Entertainment)	First Lien Term Loan	LIBOR (Q)		1.00	%		8.0% PIK			9.15	%	10/17/2022	$	1,478,480		1,478,480			1,426,807			0.10	%

Nondepository Credit Intermediation
Auto Trakk SPV, LLC	First Lien Delayed Draw Term Loan	LIBOR (M)		0.50	%		9.50	%		10.41	%	12/21/2021	$	32,392,942		31,920,714			32,213,653			2.31	%
Caliber Home Loans, Inc.	First Lien Delayed Draw Term Loan	LIBOR (M)		1.00	%		6.50	%		7.50	%	6/30/2020	$	14,444,444		14,264,345			14,664,444			1.05	%
Caribbean Financial Group (Cayman Islands)	Sr Secured Notes	Fixed		-			11.50	%		11.50	%	11/15/2019	$	28,678,000		28,576,292			29,394,950			2.11	%		E/G/H
Daymark Financial Acceptance, LLC	First Lien Delayed Draw Term Loan	LIBOR (Q)		-			9.50	%		10.53	%	1/12/2020	$	17,500,000		17,316,726			17,038,000			1.22	%
Greystone Select Holdings, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		8.00	%		9.00	%	3/26/2021	$	16,022,574		15,880,551			16,182,800			1.16	%
Trade Finance Funding I, Ltd. (Cayman Islands)	Secured Class B Notes	Fixed		-			10.75	%		10.75	%	11/13/2018	$	15,084,000		15,084,000			12,972,240			0.93	%		E/H
																123,042,628			122,466,087			8.78	%
Other Information Services
Asset International, Inc.	Delayed Draw Term Loan	LIBOR (Q)		1.00	%		8.50	%		9.65	%	7/31/2020	$	1,251,626		1,229,491			1,249,019			0.09	%
Asset International, Inc.	Revolver Loan	LIBOR (Q)		1.00	%		8.50	%		9.65	%	7/31/2020	$	491,303		480,936			490,075			0.04	%
Asset International, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		8.50	%		9.65	%	7/31/2020	$	15,311,040		15,122,738			15,291,901			1.10	%
Simmons Research, LLC	First Lien Term Loan	LIBOR (Q)		0.50	%		10.50	%		11.69	%	12/11/2020	$	3,098,732		3,050,523			3,135,917			0.22	%
TCH-2 Holdings, LLC (TravelClick)	Second Lien Term Loan	LIBOR (M)		1.00	%		7.75	%		8.75	%	11/6/2021	$	19,988,392		19,778,668			19,813,494			1.42	%		G
																39,662,356			39,980,406			2.87	%
Other Manufacturing
AGY Holding Corp.	Sr Secured Term Loan	Fixed		-			12.00	%		12.00	%	9/15/2018	$	4,869,577		4,869,577			4,869,710			0.35	%		B
AGY Holding Corp.	Second Lien Notes	Fixed		-			11.00	%		11.00	%	11/15/2018	$	9,268,000		7,586,317			9,268,000			0.66	%		B/E
AGY Holding Corp.	Delayed Draw Term Loan	Fixed		-			12.00	%		12.00	%	9/15/2018	$	1,049,146		1,049,146			1,049,147			0.08	%		B
Bioventus, LLC	Second Lien Term Loan	LIBOR (M)		1.00	%		6.25	%		7.25	%	11/15/2021	$	4,968,750		4,875,657			4,981,172			0.36	%
Boomerang Tube, LLC	Subordinated Notes	LIBOR (M)		-			17.50	%		N/A		2/1/2021	$	1,030,741		1,030,741			107,197			0.01	%		C
																19,411,438			20,275,226			1.46	%
Other Publishing
Bisnow, LLC	First Lien Revolver	LIBOR (Q)		-			9.00	%		N/A		4/29/2021	$	–		(24,000	)		15,000			-			J
Bisnow, LLC	First Lien Term Loan	LIBOR (Q)		-			9.00	%		10.19	%	4/29/2021	$	8,394,959		8,252,293			8,361,379			0.60	%
Contextmedia Health, LLC	First Lien Term Loan B	LIBOR (M)		1.00	%		6.50	%		7.50	%	12/23/2021	$	13,465,909		12,163,700			13,465,909			0.96	%
																20,391,993			21,842,288			1.56	%
Other Telecommunications
Securus Technologies, Inc.	Second Lien Term Loan	LIBOR (Q)		1.25	%		7.75	%		9.00	%	4/30/2021	$	4,516,129		4,470,968			4,527,419			0.32	%

Plastics Manufacturing
Iracore International, Inc.	Sr Secured Notes	Fixed		-			9.50	%		9.50	%	6/1/2018	$	13,781,000		14,291,250			4,177,710			0.30	%		C/E/G

Radio and Television Broadcasting
Fuse, LLC	Sr Secured Notes	Fixed		-			10.38	%		10.38	%	7/1/2019	$	7,312,000		7,312,000			4,429,851			0.32	%		E/G
NEP/NCP Holdco, Inc.	Second Lien Term Loan	LIBOR (Q)		1.25	%		8.75	%		10.00	%	7/22/2020	$	15,981,496		15,746,113			16,221,218			1.16	%		G
																23,058,113			20,651,069			1.48	%

Table of Contents

Special Value Continuation Partners, LP

(A Delaware Limited Partnership)

Consolidated Schedule of Investments (Continued) (Unaudited)

March 31, 2017

Issuer	Instrument	Ref	Floor			Spread			Total Coupon			Maturity	Principal		Cost			Fair Value			% of Total Cash and Investments			Notes
Debt Investments (continued)
Real Estate Leasing
Home Partners of America, Inc.	First Lien Term Loan	LIBOR (M)		1.00	%		7.00	%		8.00	%	10/13/2022	$	5,000,000	$	4,907,790		$	5,000,000			0.36	%

Restaurants
RM OpCo, LLC (Real Mex)	Convertible Second Lien Term Loan Tranche B-1	Fixed		-			8.50	%		8.50	%	3/30/2018	$	1,984,960		1,984,960			1,984,960			0.14	%		B
RM OpCo, LLC (Real Mex)	First Lien Term Loan Tranche A	Fixed		-			7.00	%		7.00	%	3/30/2018	$	4,877,999		4,594,613			4,877,999			0.35	%		B
RM OpCo, LLC (Real Mex)	Second Lien Term Loan Tranche B	Fixed		-			8.50	%		8.50	%	3/30/2018	$	9,890,374		9,890,374			1,335,200			0.09	%		B
RM OpCo, LLC (Real Mex)	Second Lien Term Loan Tranche B-1	Fixed		-			8.50	%		8.50	%	3/30/2018	$	3,114,816		3,099,394			3,114,816			0.22	%		B
RM OpCo, LLC (Real Mex)	Sr Convertible Second Lien Term Loan B	Fixed		-			8.50	%		8.50	%	3/30/2018	$	5,600,829		5,600,829			5,600,829			0.40	%		B
																25,170,170			16,913,804			1.20	%
Retail
Bon-Ton, Inc.	First Lien Tranche A-1 Revolver	LIBOR (Q)		1.00	%		9.50	%		10.50	%	3/15/2021	$	4,432,934		4,354,318			4,393,038			0.31	%
Gander Mountain Company	Second Lien Term Loan	LIBOR (M)		-			12.00	%		13.05	%	6/15/2018	$	14,740,910		14,637,679			14,888,319			1.07	%
The Gymboree Corporation	First Lien Term Loan	LIBOR (M)		-			10.25	%		11.30	%	9/24/2020	$	12,692,511		12,469,507			12,946,362			0.93	%
																31,461,504			32,227,719			2.31	%
Satellite Telecommunications
Avanti Communications Group, PLC (United Kingdom)	Delayed Draw PIK Toggle Notes	Fixed		-			10.00	%		10.00	%	11/30/2022	$	–		(21,860	)		(22,538	)		-			E/H/J
Avanti Communications Group, PLC (United Kingdom)	Sr New Money Initial Note	Fixed		-			10.00	%		10.00	%	10/1/2021	$	1,239,631		1,203,193			1,121,866			0.08	%		E/G/H
Avanti Communications Group, PLC (United Kingdom)	Sr Second-Priority PIK Toggle Note	Fixed		-			10.00	%		10.00	%	10/1/2021	$	3,163,188		3,073,088			2,862,685			0.21	%		E/G/H
Avanti Communications Group, PLC (United Kingdom)	Sr Secured Third-Priority Note	Fixed		-			12.00	%		12.00	%	10/1/2023	$	6,327,730		2,934,259			2,594,369			0.19	%		E/G/H
																7,188,680			6,556,382			0.48	%

Scientific Research and Development Services
BPA Laboratories, Inc.	Second Lien Term Loan	LIBOR (Q)		-			2.50	%		3.54	%	7/1/2017	$	3,081,346		1,878,682			2,079,908			0.15	%
Envigo Holdings, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		8.50	%		9.53	%	11/3/2021	$	35,104,936		34,454,676			34,841,649			2.50	%
																36,333,358			36,921,557			2.65	%

Software Publishing
Acronis International GmbH (Switzerland)	First Lien Term Loan	LIBOR (Q)		1.00	%		11.50	%		12.69	%	6/9/2017	$	27,570,661		27,578,796			27,438,322			1.97	%		H
ArcServe (USA), LLC	Second Lien Term Loan	LIBOR (Q)		0.50	%		8.5% Cash + 1.25% PIK			10.90	%	1/31/2020	$	30,323,679		29,978,013			29,272,963			2.10	%
Autoalert, LLC	First Lien Term Loan	LIBOR (Q)		0.25	%		5.75% Cash + 3% PIK			9.94	%	3/31/2019	$	36,231,157		35,913,209			36,439,486			2.61	%
Fishbowl, Inc.	First Lien Term Loan	LIBOR (Q)		-			2.8% Cash + 8.45% PIK			12.44	%	1/26/2022	$	18,432,074		17,826,924			17,786,952			1.27	%
Mapp Digital US, LLC	First Lien Term Loan	LIBOR (Q)		-			9.50	%		10.65	%	12/31/2017	$	5,692,765		5,635,544			5,712,690			0.41	%
Newscycle Solutions, Inc.	Second Lien Term Loan	LIBOR (Q)		-			13.00	%		14.11	%	9/10/2021	$	11,513,361		11,213,956			11,493,214			0.82	%
Newscycle Solutions AB (Sweden)	Second Lien Term Loan B	LIBOR (Q)		-			13.00	%		14.11	%	9/10/2021	$	11,513,362		11,213,956			11,493,214			0.82	%		H
Soasta, Inc.	First Lien Term Loan (8.0% Exit Fee)	LIBOR (M)		-			9.56	%		10.69	%	4/1/2019	$	17,880,435		17,640,758			19,351,995			1.39	%		K
Soasta, Inc.	Convertible Promissory Note	Fixed		-			10.00	%		10.00	%	12/16/2017	$	2,282,609		2,282,609			6,043,435			0.43	%
Tradeshift Holdings, Inc.	First Lien Delayed Draw Term Loan (7.0% Exit Fee)	LIBOR (M)		-			8.88	%		10.00	%	9/1/2020	$	11,470,517		10,660,339			10,820,142			0.78	%		K
Utilidata, Inc.	First Lien Delayed Draw Term Loan (1.0% Exit Fee)	LIBOR (M)		0.62	%		9.88	%		10.88	%	1/1/2019	$	2,852,742		2,778,166			2,799,967			0.20	%		K
																172,722,270			178,652,380			12.80	%
Textile Furnishings Mills
Lexmark Carpet Mills, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		10.00	%		11.00	%	12/19/2019	$	22,570,814		22,570,814			22,700,596			1.63	%
Lexmark Carpet Mills, Inc.	First Lien Term Loan B	LIBOR (Q)		1.00	%		10.00	%		11.00	%	12/19/2019	$	7,742,314		7,615,554			7,786,832			0.56	%
																30,186,368			30,487,428			2.19	%
Utility System Construction
Kawa Solar Holdings Limited (Cayman Islands)	Bank Guarantee Credit Facility	Fixed		-			8.2% Cash + 3.5% PIK			11.70	%	7/2/2017	$	21,464,657		21,464,657			21,464,657			1.54	%		F/H
Kawa Solar Holdings Limited (Cayman Islands)	Revolving Credit Facility	Fixed		-			8.20	%		8.20	%	7/2/2017	$	4,000,000		4,000,000			3,075,000			0.22	%		F/H
																25,464,657			24,539,657			1.76	%
Wholesalers
NILCO, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		9.50	%		10.65	%	9/1/2021	$	20,756,994		20,197,037			21,379,704			1.53	%

Wired Telecommunications Carriers
Alpheus Communications, LLC	First Lien Delayed Draw FILO Term Loan	LIBOR (M)		1.00	%		7.42	%		8.78	%	5/31/2018	$	329,845		326,566			325,227			0.02	%
Alpheus Communications, LLC	First Lien Delayed Draw FILO Term Loan	LIBOR (M)		1.00	%		7.42	%		8.60	%	5/31/2018	$	1,338,648		1,331,125			1,314,901			0.09	%
Alpheus Communications, LLC	First Lien FILO Term Loan	LIBOR (M)		1.00	%		7.42	%		8.42	%	5/31/2018	$	7,207,350		7,135,699			7,107,528			0.51	%
U.S. TelePacific Corp.	First Lien Notes	LIBOR (Q)		1.00	%		8.50	%		9.62	%	2/24/2021	$	10,000,000		9,731,525			10,000,000			0.72	%
																18,524,915			18,747,656			1.34	%
Wireless Telecommunications Carriers
Gogo, LLC	Sr Secured Notes	Fixed		-			12.50	%		12.50	%	7/1/2022	$	10,000,000		10,000,000			11,312,500			0.81	%		E/G

Total Debt Investments																1,279,195,388			1,273,607,815			91.34	%

Table of Contents

Special Value Continuation Partners, LP

(A Delaware Limited Partnership)

Consolidated Schedule of Investments (Continued) (Unaudited)

March 31, 2017

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Shares		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities
Advertising and Public Relations Services
InMobi, Inc. (Singapore)	Warrants to Purchase Stock							1,049,996	$	276,492	$	98,910		0.01	%		C/E/H

Air Transportation
Aircraft Leased to United Airlines, Inc.
United N659UA-767, LLC (N659UA)	Trust Beneficial Interests							683		3,160,496		3,090,678		0.22	%		E/F
United N661UA-767, LLC (N661UA)	Trust Beneficial Interests							688		3,280,344		3,161,098		0.23	%		E/F
Epic Aero, Inc. (One Sky)	Warrants to Purchase Common Stock							1,843		855,313		3,408,386		0.24	%		C/E
										7,296,153		9,660,162		0.69	%
Business Support Services
Findly Talent, LLC	Membership Units							708,229		230,938		143,133		0.01	%		C/E
STG-Fairway Holdings, LLC (First Advantage)	Class A Units							841,479		325,432		779,714		0.06	%		C/E
										556,370		922,847		0.07	%
Chemicals
Green Biologics, Inc.	Warrants to Purchase Stock							909,300		272,807		1,000		-			C/E
Nanosys, Inc.	Warrants to Purchase Common Stock							800,000		605,266		640,640		0.05	%		C/E
										878,073		641,640		0.05	%
Communications Equipment Manufacturing
Wasserstein Cosmos Co-Invest, L.P. (Globecomm)	Limited Partnership Units							5,000,000		5,000,000		233,000		0.02	%		B/C/E

Computer Systems Design and Related Services
Waterfall International, Inc.	Series B Preferred Stock							1,428,571		1,000,000		1,025,143		0.07	%		C/E
Waterfall International, Inc.	Warrants to Purchase Stock							920,000		89,847		55,752		-			C/E
										1,089,847		1,080,895		0.07	%
Data Processing and Hosting Services
Anacomp, Inc.	Class A Common Stock							1,255,527		26,711,047		1,117,419		0.08	%		C/E/F
Rightside Group, Ltd.	Warrants							498,855		2,778,622		738,685		0.05	%		C/E
										29,489,669		1,856,104		0.13	%
Educational Support Services
Edmentum Ultimate Holdings, LLC	Class A Common Units							159,515		680,226		1,123,589		0.08	%		B/C/E

Electric Power Generation, Transmission and Distribution
GlassPoint Solar, Inc.	Warrants to Purchase Series C-1 Preferred Stock							1,100,000		265,618		275,330		0.02	%		C/E

Electrical Equipment Manufacturing
NEXTracker, Inc.	Series B Preferred Stock							558,884		-		1,548,109		0.11	%		E
NEXTracker, Inc.	Series C Preferred Stock							17,640		-		48,863		-			E
										-		1,596,972		0.11	%
Electronic Component Manufacturing
Soraa, Inc.	Warrants to Purchase Common Stock							3,071,860		478,899		9,216		-			C/E

Equipment Leasing
36th Street Capital Partners Holdings, LLC	Membership Units							7,280,139		7,280,139		8,664,822		0.62	%		C/E/F
Essex Ocean II, LLC	Membership Units							199,430		103,398		-		-			C/E/F
										7,383,537		8,664,822		0.62	%
Financial Investment Activities
GACP I, LP	Membership Units							18,520,966		18,611,983		18,891,480		1.35	%		C/E/I
Marsico Holdings, LLC	Common Interest Units							168,698		172,694		1,687		-			C/E/I
										18,784,677		18,893,167		1.35	%
Metal and Mineral Mining
EPMC HoldCo, LLC	Membership Units							1,312,720		-		210,035		0.02	%		B/E

Motion Picture and Video Industries
NEG Parent, LLC	Class A Units							1,182,779		1,235,194		1,278,702		0.09	%		C/E
NEG Parent, LLC	Class P Units							1,537,613		1,537,613		1,548,376		0.11	%		C/E
NEG Parent, LLC	Class A Warrants to Purchase Class A Units							343,387		196,086		193,842		0.01	%		C/E
NEG Parent, LLC	Class B Warrants to Purchase Class A Units							346,794		198,032		195,765		0.02	%		C/E
										3,166,925		3,216,685		0.23	%
Other Information Services
SoundCloud, Ltd. (United Kingdom)	Warrants to Purchase Preferred Stock							946,498		79,082		81,304		0.01	%		C/E/H

Other Manufacturing
AGY Holding Corp.	Common Stock							1,333,527		-		-		-			B/C/E
Boomerang Tube Holdings, Inc.	Common Stock							24,288		243		-		-			C/E
KAGY Holding Company, Inc.	Series A Preferred Stock							9,778		1,091,200		5,213,117		0.37	%		B/C/E
										1,091,443		5,213,117		0.37	%
Radio and Television Broadcasting
Fuse Media, LLC	Warrants to Purchase Common Stock							233,470		300,322		-		-			C/E

Restaurants
RM Holdco, LLC (Real Mex)	Equity Participation							24		-		-		-			B/C/E
RM Holdco, LLC (Real Mex)	Membership Units							13,161,000		2,010,777		-		-			B/C/E
										2,010,777		-		-
Retail
Shop Holding, LLC (Connexity)	Class A Units							507,167		480,049		-		-			C/E

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Investments (Continued) (Unaudited)

March 31, 2017

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Shares		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities (continued)
Satellite Telecommunications
Avanti Communications Group, PLC (United Kingdom)	Common Stock							245,368	$	3,086	$	40,032		-			C/D/H


Software Publishing
Blackline Intermediate, Inc.	Warrants to Purchase Common Stock							246,546		522,678		5,951,872		0.43	%		C/E
Soasta, Inc.	Warrants to Purchase Series F Preferred Stock							1,251,630		533,192		887,281		0.07	%		C/E
Tradeshift, Inc.	Warrants to Purchase Series D Preferred Stock							1,712,930		577,843		564,068		0.04	%
Utilidata, Inc.	Warrants to Purchase Preferred Stock							719,998		216,336		57,240		-			C/E
										1,850,049		7,460,461		0.54	%
Utility System Construction
Kawa Solar Holdings Limited (Cayman Islands)	Ordinary Shares							2,332,594		-		-		-			C/E/F/H
Kawa Solar Holdings Limited (Cayman Islands)	Series B Preferred Shares							93,023		1,395,349		1,395,583		0.10	%		C/E/F/H
										1,395,349		1,395,583		0.10	%
Wired Telecommunications Carriers
V Telecom Investment S.C.A. (Vivacom) (Luxembourg)	Common Shares							1,393		3,236,256		2,228,100		0.16	%		C/D/E/H

Total Equity Securities										85,792,899		64,901,971		4.65	%

Total Investments									$	1,364,988,287	$	1,338,509,786

Cash and Cash Equivalents
Cash Held on Account at Various Institutions												55,964,496		4.01	%
Cash and Cash Equivalents												55,964,496		4.01	%

Total Cash and Investments											$	1,394,474,282		100.00	%		L

Notes to Consolidated Schedule of Investments:

^(A)	Investments in bank debt generally are bought and sold among institutional investors in transactions not subject to registration under the Securities Act of 1933. Such transactions are generally subject to contractual restrictions, such as approval of the agent or borrower.

^(B)	Non-controlled affiliate – as defined under the Investment Company Act of 1940 (ownership of between 5% and 25% of the outstanding voting securities of this issuer). See Consolidated Schedule of Changes in Investments in Affiliates.

^(C)	Non-income producing security.

^(D)	Investment denominated in foreign currency. Amortized cost and fair value converted from foreign currency to US dollars. Foreign currency denominated investments are generally hedged for currency exposure.

^(E)	Restricted security. (See Note 2)

^(F)

Controlled issuer – as defined under the Investment Company Act of 1940 (ownership of 25% or more of the outstanding voting securities of this issuer). Investment is not more than 50% of the outstanding voting securities of the issuer nor deemed to be a significant subsidiary. See Consolidated Schedule of Changes in Investments in Affiliates.

^(G)	Investment has been segregated to collateralize certain unfunded commitments.

^(H)

Non-U.S. company or principal place of business outside the U.S. and as a result the investment is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Partnership may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Partnership’s total assets.

^(I)

Deemed an investment company under Section 3(c) of the Investment Company Act and as a result the investment is not a qualifying asset under Section 55(a) of the Investment Company Act. Under the Investment Company Act, the Partnership may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of the Partnership’s total assets.

^(J)	Negative balances relate to an unfunded commitment that was acquired and/or valued at a discount.

^(K)	In addition to the stated coupon, investment has an exit fee payable upon repayment of the loan in an amount equal to the percentage of the original principal amount shown.

^(L)	All cash and investments, except those referenced in Notes G above, are pledged as collateral under certain debt as described in Note 4 to the Consolidated Financial Statements.

LIBOR or EURIBOR resets monthly (M), quarterly (Q), semiannually (S), or annually (A).

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $139,793,080 and $117,033,249, respectively, for the three months ended March 31, 2017. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments. The total value of restricted securities and bank debt as of March 31, 2017 was $1,337,798,489 or 95.9% of total cash and investments of the Partnership. As of March 31, 2017, approximately 13.8% of the total assets of the Partnership were not qualifying assets under Section 55(a) of the 1940 Act.

See accompanying notes to the consolidated financial statements.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Investments

December 31, 2016

Issuer	Instrument	Ref	Floor			Spread			Total Coupon			Maturity	Principal		Cost			Fair Value			% of Total Cash and Investments			Notes
Debt Investments ^(A)
Activities Related to Credit Intermediation
Pegasus Business Intelligence, LP (Onyx Centersource)	First Lien Term Loan	LIBOR (Q)		1.00	%		6.75	%		7.75	%	12/20/2021	$	14,769,821	$	14,623,499		$	14,622,123			1.07	%
Pegasus Business Intelligence, LP (Onyx Centersource)	Revolver	LIBOR (Q)		1.00	%		6.75	%		N/A		12/20/2021	$	–		(6,669	)		(6,713	)		-			J
iPayment, Inc.	First Lien Term Loan B2	LIBOR (Q)		1.50	%		5.25	%		6.75	%	5/8/2017	$	11,289,051		11,134,310			10,893,934			0.80	%
																25,751,140			25,509,344			1.87	%
Activities Related to Real Estate
Associations, Inc.	First Lien FILO Term Loan	LIBOR (Q)		1.00	%		8.96	%		9.96	%	12/23/2019	$	12,891,845		12,773,127			12,898,291			0.94	%

Advertising and Public Relations Services
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 1 Term Loan (1.25% Exit Fee)	LIBOR (M)		0.33	%		10.17	%		10.98	%	9/1/2018	$	15,000,000		14,772,946			14,704,508			1.07	%		H/K
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 2 Term Loan	LIBOR (M)		0.33	%		10.17	%		N/A		9/1/2018	$	–		-			-			-			H
InMobi, Inc. (Singapore)	First Lien Delayed Draw Tranche 3 Term Loan	LIBOR (M)		0.33	%		10.17	%		N/A		9/1/2018	$	–		-			-			-			H
																14,772,946			14,704,508			1.07	%
Air Transportation
Mesa Air Group, Inc.	Acquisition Loan	LIBOR (M)		-			7.25	%		8.00	%	7/15/2022	$	14,042,971		13,839,296			14,323,830			1.05	%
Mesa Airlines, Inc.	Engine Acquisition Delayed Draw Term Loan A	LIBOR (M)		-			7.25	%		8.00	%	12/14/2021	$	16,546,652		16,259,013			16,257,105			1.19	%
Mesa Airlines, Inc.	Engine Acquisition Delayed Draw Term Loan B	LIBOR (M)		-			7.25	%		N/A		2/28/2022	$	–		-			-			-
Mesa Airlines, Inc.	Engine Acquisition Delayed Draw Term Loan C	LIBOR (M)		-			7.25	%		N/A		12/31/2022	$	–		-			-			-
																30,098,309			30,580,935			2.24	%
Amusement and Recreation
AP Gaming I, LLC	First Lien Revolver	LIBOR (M)		-			8.25	%		N/A		12/20/2018	$	–		(1,655,756	)		(937,500	)		(0.07	%)		J
VSS-Southern Holdings, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		6.5% Cash + 2% PIK			9.50	%	11/3/2020	$	24,220,291		23,755,180			23,735,885			1.73	%
VSS-Southern Holdings, LLC	Sr Secured Revolver	LIBOR (Q)		1.00	%		6.5% Cash + 2% PIK			N/A		11/3/2020	$	–		(16,444	)		(17,123	)		-			J
																22,082,980			22,781,262			1.66	%

Apparel Manufacturing
Broder Bros., Co.	First Lien Term Loan (First Out)	LIBOR (Q)		1.25	%		5.75	%		7.00	%	6/3/2021	$	9,700,000		9,541,402			9,700,000			0.71	%
Broder Bros., Co.	First Lien Term Loan B (Last Out)	LIBOR (Q)		1.25	%		12.25	%		13.50	%	6/3/2021	$	9,800,000		9,646,339			9,800,000			0.72	%
JH Apparel Holdings, LLC	First Lien FILO Term Loan	LIBOR (M)		1.00	%		9.60	%		10.60	%	4/8/2019	$	2,714,632		2,705,143			2,741,779			0.20	%
																21,892,884			22,241,779			1.63	%
Building Equipment Contractors
Hylan Datacom & Electrical, LLC	First Lien Delayed Draw Term Loan	LIBOR (Q)		1.00	%		7.50	%		8.50	%	7/25/2021	$	–		-			-			-
Hylan Datacom & Electrical, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		7.50	%		8.50	%	7/25/2021	$	14,295,589		14,092,734			14,188,374			1.04	%
																14,092,734			14,188,374			1.04	%
Business Support Services
Enerwise Global Technologies, Inc.	Sr Secured Revolving Loan	LIBOR (Q)		0.23	%		8.52	%		N/A		11/30/2018	$	–		(17,798	)		70,000			0.01	%		J
Enerwise Global Technologies, Inc.	Sr Secured Term Loan (1.0% Exit Fee)	LIBOR (Q)		0.23	%		9.27	%		10.12	%	11/30/2019	$	23,937,500		23,867,666			24,356,406			1.78	%		K
STG-Fairway Acquisitions, Inc. (First Advantage)	Second Lien Term Loan	LIBOR (Q)		1.00	%		9.25	%		10.25	%	6/30/2023	$	31,000,000		30,588,757			30,336,600			2.22	%
																54,438,625			54,763,006			4.01	%
Chemicals
Anuvia Plant Nutrients Holdings, LLC	Sr Secured Term Loan (8.0% Exit Fee)	LIBOR (Q)		-			10.63	%		11.63	%	2/1/2018	$	7,563,676		7,995,360			8,250,457			0.60	%		K
Green Biologics, Inc.	Sr Secured Delayed Draw Term Loan (12.4% Exit Fee)	Prime Rate		-			7.75	%		11.50	%	6/30/2019	$	15,000,000		15,468,439			14,905,500			1.09	%		K
iGM RFE1 B.V. (Netherlands)	First Lien Delayed Draw Term Loan	LIBOR (Q)		-			8.00	%		9.00	%	10/12/2021	$	253,581		245,565			251,684			0.02	%		H
iGM RFE1 B.V. (Netherlands)	First Lien Term Loan	LIBOR (Q)		-			8.00	%		9.00	%	10/12/2021	$	3,864,583		3,836,083			3,835,599			0.28	%		H
Nanosys, Inc.	First Lien Delayed Draw Term Loan (3.5% Exit Fee)	LIBOR (Q)		-			9.81	%		10.75	%	4/1/2019	$	10,000,000		9,526,456			9,712,000			0.71	%		K
																37,071,903			36,955,240			2.70	%
Communications Equipment Manufacturing
Globecomm Systems, Inc.	First Lien Term Loan	LIBOR (Q)		1.25	%		7.63	%		8.88	%	12/11/2018	$	14,480,001		14,335,200			14,480,002			1.06	%		B
Triangle Acquisition Co. (Polycom)	First Lien Term Loan	LIBOR (Q)		1.00	%		6.50	%		7.50	%	9/27/2023	$	4,835,417		4,646,389			4,877,727			0.36	%
																18,981,589			19,357,729			1.42	%
Computer Systems Design and Related Services
Aptos Inc. (Canada)	First Lien Term Loan	LIBOR (Q)		1.00	%		6.75	%		7.75	%	9/1/2022	$	9,975,000		9,784,353			9,875,250			0.72	%		H
Dealersocket, Inc.	Senior Secured 1st Lien Term Loan	LIBOR (M)		1.00	%		10.00	%		11.00	%	2/10/2021	$	17,500,000		16,884,459			17,291,750			1.26	%
MSC Software Corporation	Second Lien Term Loan	LIBOR (M)		1.00	%		7.50	%		8.50	%	5/29/2021	$	6,993,035		6,953,617			7,001,777			0.51	%
Marketo, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		9.50	%		10.50	%	8/16/2021	$	23,295,455		22,630,922			22,887,784			1.67	%
Marketo, Inc.	Senior Secured Revolver	LIBOR (Q)		1.00	%		9.50	%		10.50	%	8/16/2021	$	–		(47,341	)		21,307			-			J
OnX Enterprise Solutions, Ltd. (Canada)	First Lien Term Loan B	LIBOR (Q)		-			8.00	%		8.90	%	9/3/2018	$	2,314,000		2,314,000			2,314,000			0.17	%		H
OnX Enterprise Solutions, Ltd. (Canada)	First Lien Term Loan	LIBOR (Q)		-			8.00	%		8.90	%	9/3/2018	$	10,320,000		10,268,787			10,320,000			0.75	%		H
OnX USA, LLC	First Lien Term Loan B	LIBOR (Q)		-			8.00	%		8.90	%	9/3/2018	$	3,738,000		3,738,000			3,738,000			0.27	%
OnX USA, LLC	First Lien Term Loan	LIBOR (Q)		-			8.00	%		8.90	%	9/3/2018	$	3,160,000		3,151,013			3,160,000			0.23	%
Waterfall International, Inc.	First Lien Delayed Draw Term Loan (3.0% Exit Fee)	LIBOR (Q)		-			11.67	%		12.48	%	9/1/2018	$	4,800,000		4,827,231			4,970,640			0.36	%		K
																80,505,041			81,580,508			5.94	%
Data Processing and Hosting Services
IO Data Centers, USA, LLC	First Lien Term Loan	Fixed		-			9.00	%		9.00	%	1/15/2020	$	6,876,756		6,876,756			6,876,756			0.50	%

Electric Power Generation, Transmission and Distribution
Holocene Renewable Energy Fund 3, LLC (Conergy)	First Lien Term Loan	Fixed		-			9% Cash + 1% PIK			10.00	%	9/10/2017	$	7,518,173		7,491,471			7,442,991			0.54	%

Electronic Component Manufacturing
Soraa, Inc.	Tranche A Term Loan (3.0% Exit Fee)	LIBOR (Q)		0.44	%		9.33	%		10.15	%	3/1/2018	$	15,666,296		15,483,478			15,471,251			1.13	%		K
Soraa, Inc.	Tranche B Term Loan	LIBOR (Q)		0.44	%		9.33	%		10.15	%	9/1/2017	$	1,603,779		1,556,152			1,563,204			0.11	%
																17,039,630			17,034,455			1.24	%

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Investments (Continued)

December 31, 2016

Issuer	Instrument	Ref	Floor			Spread			Total Coupon			Maturity	Principal		Cost			Fair Value		% of Total Cash and Investments			Notes
Debt Investments (continued)
Equipment Leasing
36th Street Capital Partners Holdings, LLC	Senior Note	Fixed		-			12.00	%		12.00	%	11/1/2020	$	29,203,304	$	29,203,304		$	29,203,304		2.13	%		E/F
Essex Ocean, LLC (Solexel)	Sr Secured Term Loan	Fixed		-			8.00	%		8.00	%	8/15/2018	$	1,685,289		1,685,289			1,718,994		0.13	%
																30,888,593			30,922,298		2.26	%
Facilities Support Services
NANA Development Corp.	First Lien Term Loan B	LIBOR (M)		1.25	%		6.75	%		8.00	%	3/15/2018	$	879,513		834,963			853,128		0.06	%

Financial Investment Activities
Magnolia Finance V plc (Cayman Islands)	Asset-Backed Credit Linked Notes	Fixed		-			13.13	%		13.13	%	8/2/2021	$	15,000,000		15,000,000			14,994,000		1.10	%		E/H

Grocery Stores
Bashas, Inc.	First Lien FILO Term Loan	LIBOR (M)		1.50	%		8.80	%		10.30	%	10/8/2019	$	9,333,235		9,297,529			9,426,567		0.69	%

Hospitals
KPC Healthcare, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		9.25	%		10.51	%	8/28/2020	$	12,071,083		11,857,665			12,375,878		0.90	%
Pacific Coast Holdings Investment, LLC	Senior Secured 1st Lien Delayed Draw Term Loan	LIBOR (M)		2.00	%		9.70	%		11.70	%	10/23/2019	$	10,828,233		10,806,929			10,828,233		0.79	%
																22,664,594			23,204,111		1.69	%
Insurance
Alera Group Intermediate Holdings, Inc.	First Lien Delayed Draw Term Loan	Prime		-			4.50	%		8.25	%	12/30/2022	$	–		(8,333	)		-		-			J
Alera Group Intermediate Holdings, Inc.	First Lien Revolver	Prime		-			4.50	%		8.25	%	12/30/2021	$	–		(7,595	)		-		-			J
Alera Group Intermediate Holdings, Inc.	First Lien Term Loan	Prime		-			4.50	%		8.25	%	12/30/2022	$	3,407,121		3,373,050			3,373,050		0.25	%
Association Member Benefits Advisors, LLC	Second Lien Term Loan	LIBOR (M)		1.00	%		8.75	%		9.75	%	6/8/2023	$	8,277,983		8,112,882			8,112,423		0.59	%
JSS Holdings, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		6.50	%		7.50	%	8/31/2021	$	3,750,000		3,689,740			3,731,250		0.27	%
US Apple Holdco, LLC (Ventiv Technology)	First Lien Term Loan	LIBOR (Q)		0.50	%		13.62	%		14.49	%	8/29/2019	$	20,015,152		19,533,393			20,015,152		1.46	%
																34,693,137			35,231,875		2.57	%
Lessors of Nonfinancial Licenses
ABG Intermediate Holdings 2, LLC	Second Lien Term Loan	LIBOR (Q)		1.00	%		8.50	%		9.50	%	5/27/2022	$	16,573,588		16,434,441			16,739,324		1.22	%
ABG Intermediate Holdings 2, LLC	Second Lien Incremental Term Loan	LIBOR (Q)		1.00	%		8.50	%		9.50	%	5/27/2022	$	3,426,412		3,396,918			3,460,676		0.25	%
																19,831,359			20,200,000		1.47	%
Management, Scientific, and Technical Consulting Services
Dodge Data & Analytics, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		8.75	%		9.75	%	10/31/2019	$	23,995,511		23,613,049			23,699,166		1.73	%

Motion Picture and Video Industries
NEG Holdings, LLC (CORE Entertainment)	First Lien Term Loan	LIBOR (Q)		1.00	%	8.0% PIK				9.00	%	10/17/2022	$	1,445,592		1,445,592			1,387,712		0.10	%

Nondepository Credit Intermediation
Auto Trakk SPV, LLC	First Lien Delayed Draw Term Loan	LIBOR (M)		0.50	%		9.50	%		10.24	%	12/21/2021	$	32,392,942		31,888,166			31,939,467		2.33	%
Caliber Home Loans, Inc.	First Lien Delayed Draw Term Loan	LIBOR (M)		1.00	%		6.50	%		7.50	%	6/30/2020	$	13,333,333		13,136,017			13,133,333		0.96	%
Caribbean Financial Group (Cayman Islands)	Sr Secured Notes	Fixed		-			11.50	%		11.50	%	11/15/2019	$	28,678,000		28,568,148			29,108,170		2.13	%		E/G/H
Daymark Financial Acceptance, LLC	First Lien Delayed Draw Term Loan	LIBOR (M)		-			9.50	%		10.27	%	1/12/2020	$	17,500,000		17,300,337			16,992,500		1.24	%
Greystone Select Holdings, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		8.00	%		9.00	%	3/26/2021	$	16,062,731		15,912,928			16,207,296		1.18	%
Trade Finance Funding I, Ltd. (Cayman Islands)	Secured Class B Notes	Fixed		-			10.75	%		10.75	%	11/13/2018	$	15,084,000		15,084,000			14,857,740		1.09	%		E/H
																121,889,596			122,238,506		8.93	%
Other Information Services
Asset International, Inc.	Delayed Draw Term Loan	LIBOR (M)		1.00	%		8.50	%		9.50	%	7/31/2020	$	1,251,626		1,227,886			1,231,183		0.09	%
Asset International, Inc.	Revolver Loan	LIBOR (M)		1.00	%		8.50	%		9.50	%	7/31/2020	$	491,303		480,225			481,674		0.04	%
Asset International, Inc.	First Lien Term Loan	LIBOR (M)		1.00	%		8.50	%		9.50	%	7/31/2020	$	15,408,563		15,204,465			15,257,559		1.11	%
Simmons Research, LLC	First Lien Term Loan	LIBOR (Q)		0.50	%		10.50	%		11.38	%	12/11/2020	$	4,936,601		4,853,985			4,973,625		0.36	%
SoundCloud Ltd. (United Kingdom)	Sr Secured Term Loan (2.0% Exit Fee)	LIBOR (M)		0.28	%		10.72	%		11.60	%	10/1/2018	$	31,550,000		31,632,236			32,510,698		2.38	%		H/K
TCH-2 Holdings, LLC (TravelClick)	Second Lien Term Loan	LIBOR (M)		1.00	%		7.75	%		8.75	%	11/6/2021	$	19,988,392		19,769,829			19,663,581		1.44	%		G
																73,168,626			74,118,320		5.42	%
Other Manufacturing
AGY Holding Corp.	Sr Secured Term Loan	Fixed		-			12.00	%		12.00	%	9/15/2018	$	4,869,577		4,869,577			4,869,710		0.36	%		B
AGY Holding Corp.	Second Lien Notes	Fixed		-			11.00	%		11.00	%	11/15/2018	$	9,268,000		7,586,317			9,268,000		0.68	%		B/E
AGY Holding Corp.	Delayed Draw Term Loan	Fixed		-			12.00	%		12.00	%	9/15/2018	$	1,049,146		1,049,146			1,049,147		0.08	%		B
Bioventus, LLC	Second Lien Term Loan	LIBOR (M)		1.00	%		6.25	%		7.25	%	11/15/2021	$	5,000,000		4,900,613			5,000,000		0.37	%
Boomerang Tube, LLC	Subordinated Notes	LIBOR (M)		-			17.50	%		N/A		2/1/2021	$	1,030,741		1,030,740			107,200		0.01	%		C
																19,436,393			20,294,057		1.50	%
Other Publishing
Bisnow, LLC	First Lien Revolver	LIBOR (Q)		-			9.00	%		N/A		4/29/2021	$	–		(24,000	)		15,000		-			J
Bisnow, LLC	First Lien Term Loan	LIBOR (Q)		-			9.00	%		9.88	%	4/29/2021	$	8,614,356		8,459,058			8,549,749		0.62	%
Contextmedia Health, LLC	First Lien Term Loan B	LIBOR (M)		1.00	%		6.50	%		7.50	%	12/23/2021	$	13,636,364		12,272,727			12,477,273		0.91	%
																20,707,785			21,042,022		1.53	%
Other Telecommunications
Securus Technologies, Inc.	Second Lien Term Loan	LIBOR (Q)		1.25	%		7.75	%		9.00	%	4/30/2021	$	4,516,129		4,470,968			4,407,177		0.32	%

Pharmaceuticals
Lantheus Medical Imaging, Inc.	First Lien Term Loan	LIBOR (M)		1.00	%		6.00	%		7.00	%	6/30/2022	$	8,642,604		8,199,514			8,664,210		0.63	%

Table of Contents

Special Value Continuation Partners, LP

(A Delaware Limited Partnership)

Consolidated Schedule of Investments (Continued)

December 31, 2016

Issuer	Instrument	Ref	Floor			Spread			Total Coupon			Maturity	Principal		Cost		Fair Value		% of Total Cash and Investments			Notes
Debt Investments (continued)
Plastics Manufacturing
Iracore International, Inc.	Sr Secured Notes	Fixed		-			9.50	%		9.50	%	6/1/2018	$	13,600,000	$	14,246,000	$	4,503,640		0.33	%		C/E/G

Radio and Television Broadcasting
Fuse, LLC	Sr Secured Notes	Fixed		-			10.38	%		10.38	%	7/1/2019	$	7,312,000		7,312,000		4,435,972		0.32	%		E/G
NEP/NCP Holdco, Inc.	Second Lien Term Loan	LIBOR (M)		1.25	%		8.75	%		10.00	%	7/22/2020	$	15,981,496		15,727,220		16,141,311		1.18	%
																23,039,220		20,577,283		1.50	%
Real Estate Leasing
Home Partners of America, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		7.00	%		8.00	%	10/13/2022	$	5,000,000		4,902,332		5,000,000		0.37	%

Restaurants
RM OpCo, LLC (Real Mex)	Convertible Second Lien Term Loan Tranche B-1	Fixed		-			8.50	%		8.50	%	3/30/2018	$	1,943,371		1,943,371		1,943,371		0.14	%		B
RM OpCo, LLC (Real Mex)	First Lien Term Loan Tranche A	Fixed		-			7.00	%		7.00	%	3/30/2018	$	4,871,284		4,587,898		4,871,284		0.36	%		B
RM OpCo, LLC (Real Mex)	Second Lien Term Loan Tranche B	Fixed		-			8.50	%		8.50	%	3/30/2018	$	9,683,150		9,683,150		3,154,770		0.23	%		B
RM OpCo, LLC (Real Mex)	Second Lien Term Loan Tranche B-1	Fixed		-			8.50	%		8.50	%	3/30/2018	$	3,049,554		3,034,132		3,049,555		0.22	%		B
RM OpCo, LLC (Real Mex)	Sr Convertible Second Lien Term Loan B	Fixed		-			8.50	%		8.50	%	3/30/2018	$	4,251,368		4,251,368		4,251,368		0.31	%		B
																23,499,919		17,270,348		1.26	%
Retail
Bon-Ton, Inc.	First Lien Tranche A-1 Revolver	LIBOR (Q)		1.00	%		9.50	%		10.50	%	3/15/2021	$	4,432,934		4,348,162		4,388,605		0.32	%
Gander Mountain Company	Second Lien Term Loan	LIBOR (M)		-			9.50	%		10.44	%	6/15/2018	$	14,740,910		14,618,096		14,749,754		1.08	%
The Gymboree Corporation	First Lien Term Loan	LIBOR (Q)		-			10.25	%		11.18	%	9/24/2020	$	12,857,349		12,618,039		13,050,209		0.95	%
Kenneth Cole Productions, Inc.	First Lien FILO Term Loan	LIBOR (M)		1.00	%		8.50	%		9.50	%	9/25/2020	$	20,672,789		20,491,699		20,879,517		1.53	%
																52,075,996		53,068,085		3.88	%
Satellite Telecommunications
Avanti Communications Group, PLC (United Kingdom)	Sr Secured Notes	Fixed		-			10.00	%		10.00	%	10/1/2019	$	9,393,000		9,393,000		5,665,153		0.41	%		E/G/H

Scientific Research and Development Services
Envigo Holdings, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		8.50	%		9.50	%	11/3/2021	$	35,192,124		34,499,517		34,796,212		2.54	%

Software Publishing
Acronis International GmbH (Switzerland)	First Lien Term Loan	LIBOR (Q)		1.00	%		11.50	%		12.50	%	6/9/2017	$	28,336,513		28,329,478		28,165,077		2.06	%		H
ArcServe (USA), LLC	Second Lien Term Loan	LIBOR (Q)		0.50	%		8.5% Cash + 1.25% PIK			10.75	%	1/31/2020	$	30,222,833		29,851,330		28,893,029		2.11	%
Autoalert, LLC	First Lien Term Loan	LIBOR (Q)		0.25	%		5.75% Cash + 3% PIK			9.63	%	3/31/2019	$	35,627,947		35,263,561		35,538,877		2.60	%
Mapp Digital US, LLC	First Lien Term Loan	LIBOR (Q)		-			9.50	%		10.35	%	12/31/2017	$	5,837,798		5,754,455		5,823,203		0.43	%
Edmentum, Inc.	Jr Revolving Facility	Fixed		-			5.00	%		5.00	%	6/9/2020	$	-		-		-		-			B
Edmentum Ultimate Holdings, LLC	Sr PIK Notes	Fixed		-			8.50	%		8.50	%	6/9/2020	$	2,846,243		2,846,243		2,846,246		0.21	%		B
Edmentum Ultimate Holdings, LLC	Jr PIK Notes	Fixed		-			10.00	%		10.00	%	6/9/2020	$	13,040,391		12,539,980		12,101,483		0.88	%		B
Fidelis Acquisitionco, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		6.0% Cash + 2.0% PIK			9.00	%	11/4/2019	$	42,565,572		41,986,034		42,991,228		3.14	%
Fidelis Acquisitionco, LLC	Sr Secured Revolver	LIBOR (Q)		1.00	%		8.00	%		9.00	%	11/4/2019	$	3,182,143		3,182,143		3,213,964		0.24	%
Newscycle Solutions, Inc.	Second Lien Term Loan	LIBOR (Q)		-			13.00	%		13.95	%	9/10/2021	$	11,513,361		11,196,782		11,334,905		0.83	%
Newscycle Solutions AB (Sweden)	Second Lien Term Loan B	LIBOR (Q)		-			13.00	%		13.95	%	9/10/2021	$	11,513,362		11,196,782		11,334,905		0.83	%		H
Soasta, Inc.	Senior Secured 1st Lien Term Loan (4.0% Exit Fee)	LIBOR (M)		-			9.56	%		10.50	%	4/1/2019	$	17,880,435		17,783,558		19,037,299		1.39	%		K
Soasta, Inc.	Convertible Promissory Note	Fixed		-			10.00	%		10.00	%	12/16/2017	$	2,282,609		2,282,609		5,504,054		0.40	%
Utilidata, Inc.	First Lien Delayed Draw Term Loan (1.0% Exit Fee)	LIBOR (M)		0.62	%		9.88	%		10.69	%	1/1/2019	$	3,200,000		3,135,670		3,080,000		0.23	%		K
																205,348,625		209,864,270		15.35	%
Textile Furnishings Mills
Lexmark Carpet Mills, Inc.	First Lien Term Loan	LIBOR (Q)		1.00	%		10.00	%		11.00	%	12/19/2019	$	22,804,525		22,804,525		22,827,329		1.67	%
Lexmark Carpet Mills, Inc.	First Lien Term Loan B	LIBOR (Q)		1.00	%		10.00	%		11.00	%	12/19/2019	$	7,822,482		7,681,925		7,830,304		0.57	%
																30,486,450		30,657,633		2.24	%
Utility System Construction
Kawa Solar Holdings Limited (Cayman Islands)	Bank Guarantee Credit Facility	Fixed		-			8.2% Cash + 3.5% PIK			11.70	%	7/2/2017	$	21,276,420		21,276,420		21,276,653		1.56	%		F/H
Kawa Solar Holdings Limited (Cayman Islands)	Revolving Credit Facility	Fixed		-			8.20	%		8.20	%	7/2/2017	$	4,000,000		4,000,000		4,000,000		0.29	%		F/H
																25,276,420		25,276,653		1.85	%
Wholesalers
NILCO, LLC	First Lien Term Loan	LIBOR (Q)		1.00	%		9.50	%		10.50	%	9/1/2021	$	21,023,109		20,424,799		21,601,245		1.58	%

Wired Telecommunications Carriers
Alpheus Communications, LLC	First Lien Delayed Draw FILO Term Loan	LIBOR (M)		1.00	%		7.42	%		8.53	%	5/31/2018	$	332,044		328,743		326,682		0.02	%
Alpheus Communications, LLC	First Lien Delayed Draw FILO Term Loan	LIBOR (M)		1.00	%		7.42	%		8.66	%	5/31/2018	$	1,355,968		1,346,859		1,328,296		0.10	%
Alpheus Communications, LLC	First Lien FILO Term Loan	LIBOR (M)		1.00	%		7.42	%		8.42	%	5/31/2018	$	7,255,721		7,183,589		7,139,992		0.52	%
Integra Telecom Holdings, Inc.	Second Lien Term Loan	LIBOR (Q)		1.25	%		8.50	%		9.75	%	2/22/2020	$	13,231,193		13,084,285		13,313,989		0.97	%		G
U.S. TelePacific Corp.	First Lien Notes	LIBOR (Q)		1.00	%		8.50	%		9.50	%	2/24/2021	$	10,000,000		9,715,362		10,000,000		0.73	%
																31,658,838		32,108,959		2.34	%
Wireless Telecommunications Carriers
Gogo, LLC	Sr Secured Notes	Fixed		-			12.50	%		12.50	%	7/1/2022	$	10,000,000		10,000,000		10,900,000		0.80	%		E/G

Total Debt Investments																1,254,861,949		1,248,887,808		91.25	%

Table of Contents

Special Value Continuation Partners, LP

(A Delaware Limited Partnership)

Consolidated Schedule of Investments (Continued)

December 31, 2016

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Shares		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities
Advertising and Public Relations Services
InMobi, Inc. (Singapore)	Warrants to Purchase Stock							562,496	$	230,569	$	87,356		0.01	%		C/E/H

Air Transportation
Aircraft Leased to United Airlines, Inc.
United N659UA-767, LLC (N659UA)	Trust Beneficial Interests							683		3,250,956		3,191,938		0.23	%		E/F
United N661UA-767, LLC (N661UA)	Trust Beneficial Interests							688		3,376,251		3,266,101		0.24	%		E/F
Epic Aero, Inc. (One Sky)	Warrants to Purchase Common Stock							1,843		855,313		1,909,600		0.14	%		C/E
										7,482,520		8,367,639		0.61	%
Business Support Services
Findly Talent, LLC	Membership Units							708,229		230,938		143,133		0.01	%		C/E
STG-Fairway Holdings, LLC (First Advantage)	Class A Units							841,479		325,432		1,112,351		0.08	%		C/E
										556,370		1,255,484		0.09	%
Chemicals
Green Biologics, Inc.	Warrants to Purchase Stock							909,300		274,213		875		-			C/E
Nanosys, Inc.	Warrants to Purchase Common Stock							800,000		605,266		611,920		0.05	%		C/E
										879,479		612,795		0.05	%
Communications Equipment Manufacturing
Wasserstein Cosmos Co-Invest, L.P. (Globecomm)	Limited Partnership Units							5,000,000		5,000,000		1,530,000		0.11	%		B/C/E

Computer Systems Design and Related Services
Waterfall International, Inc.	Series B Preferred Stock							1,428,571		1,000,000		1,145,286		0.08	%		C/E
Waterfall International, Inc.	Warrants to Purchase Stock							920,000		89,847		175,168		0.01	%		C/E
										1,089,847		1,320,454		0.09	%
Data Processing and Hosting Services
Anacomp, Inc.	Class A Common Stock							1,255,527		26,711,048		1,205,306		0.09	%		C/E/F
Rightside Group, Ltd.	Warrants							498,855		2,778,622		366,489		0.03	%		C/E
										29,489,670		1,571,795		0.12	%
Electrical Equipment Manufacturing
NEXTracker, Inc.	Series B Preferred Stock							558,884		-		1,727,622		0.13	%		E
NEXTracker, Inc.	Series C Preferred Stock							17,640		-		54,525		-			E
										-		1,782,147		0.13	%
Electronic Component Manufacturing
Soraa, Inc.	Warrants to Purchase Common Stock							3,071,860		478,899		5,222		-			C/E

Equipment Leasing
36th Street Capital Partners Holdings, LLC	Membership Units							6,818,897		6,818,897		6,818,897		0.50	%		C/E/F
Essex Ocean II, LLC	Membership Units							199,430		103,398		159,045		0.01	%		C/E/F
										6,922,295		6,977,942		0.51	%
Financial Investment Activities
GACP I, LP	Membership Units							16,615,951		16,735,088		16,866,903		1.23	%		C/E/I
Marsico Holdings, LLC	Common Interest Units							168,698		172,694		1,687		-			C/E/I
										16,907,782		16,868,590		1.23	%
Metal and Mineral Mining
EPMC HoldCo, LLC	Membership Units							1,312,720		-		210,035		0.02	%		B/E

Motion Picture and Video Industries
NEG Parent, LLC	Class A Units							1,182,779		1,235,194		1,292,023		0.09	%		C/E
NEG Parent, LLC	Class P Units							1,537,613		1,537,613		1,551,056		0.11	%		C/E
NEG Parent, LLC	Class A Warrants to Purchase Class A Units							343,387		196,086		196,086		0.01	%		C/E
NEG Parent, LLC	Class B Warrants to Purchase Class A Units							346,794		198,032		198,032		0.02	%		C/E
										3,166,925		3,237,197		0.23	%
Other Information Services
SoundCloud, Ltd. (United Kingdom)	Warrants to Purchase Preferred Stock							946,498		79,082		95,502		0.01	%		C/E/H

Other Manufacturing
AGY Holding Corp.	Common Stock							1,333,527		-		-		-			B/C/E
Boomerang Tube Holdings, Inc.	Common Stock							24,288		243		-		-			C/E
KAGY Holding Company, Inc.	Series A Preferred Stock							9,778		1,091,200		4,607,246		0.34	%		B/C/E
										1,091,443		4,607,246		0.34	%
Radio and Television Broadcasting
Fuse Media, LLC	Warrants to Purchase Common Stock							233,470		300,322		-		-			C/E

Restaurants
RM Holdco, LLC (Real Mex)	Equity Participation							24		-		-		-			B/C/E
RM Holdco, LLC (Real Mex)	Membership Units							13,161,000		2,010,777		-		-			B/C/E
										2,010,777		-		-
Retail
Shop Holding, LLC (Connexity)	Class A Units							507,167		480,049		-		-			C/E

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Investments (Continued)

December 31, 2016

Issuer	Instrument	Ref	Floor	Spread	Total Coupon	Maturity	Shares		Cost		Fair Value		% of Total Cash and Investments			Notes
Equity Securities (continued)
Software Publishing
Blackline Intermediate, Inc.	Warrants to Purchase Common Stock							246,546	$	522,678	$	5,300,373		0.39	%		C/E
Edmentum Ultimate Holdings, LLC	Class A Common Units							159,515		680,226		1,123,591		0.08	%		B/C/E
Soasta, Inc.	Warrants to Purchase Series F Preferred Stock							1,251,630		533,192		794,535		0.06	%		C/E
Utilidata, Inc.	Warrants to Purchase Stock							719,998		216,336		204,983		0.01	%		C/E
										1,952,432		7,423,482		0.54	%
Utility System Construction
Kawa Solar Holdings Limited (Cayman Islands)	Ordinary Shares							2,332,594		-		-		-			C/E/F/H
Kawa Solar Holdings Limited (Cayman Islands)	Series B Preferred Shares							93,023		1,395,349		1,395,350		0.10	%		C/E/F/H
										1,395,349		1,395,350		0.10	%
Wired Telecommunications Carriers
Integra Telecom, Inc.	Common Stock							1,274,522		8,433,884		6,533,964		0.48	%		C/E
Integra Telecom, Inc.	Warrants							346,939		19,920		-		-			C/E
V Telecom Investment S.C.A. (Vivacom) (Luxembourg)	Common Shares							1,393		3,236,256		2,199,862		0.16	%		C/D/E/H
										11,690,060		8,733,826		0.64	%

Total Equity Securities										91,203,870		66,082,062		4.83	%

Total Investments									$	1,346,065,819	$	1,314,969,870

Cash and Cash Equivalents
Cash Held on Account at Various Institutions												53,579,868		3.92	%
Cash and Cash Equivalents												53,579,868		3.92	%

Total Cash and Investments											$	1,368,549,738		100.00	%		L

Notes to Consolidated Schedule of Investments:

^(A)	Investments in bank debt generally are bought and sold among institutional investors in transactions not subject to registration under the Securities Act of 1933. Such transactions are generally subject to contractual restrictions, such as approval of the agent or borrower.

^(B)	Non-controlled affiliate – as defined under the Investment Company Act of 1940 (ownership of between 5% and 25% of the outstanding voting securities of this issuer). See Consolidated Schedule of Changes in Investments in Affiliates.

^(C)	Non-income producing security.

^(D)	Investment denominated in foreign currency. Amortized cost and fair value converted from foreign currency to US dollars. Foreign currency denominated investments are generally hedged for currency exposure.

^(E)	Restricted security. (See Note 2)

^(F)

^(G)	Investment has been segregated to collateralize certain unfunded commitments.

^(H)

^(I)

^(J)	Negative balances relate to an unfunded commitment that was acquired and/or valued at a discount.

^(K)	In addition to the stated coupon, investment has an exit fee payable upon repayment of the loan in an amount equal to the percentage of the original principal amount shown.

^(L)	All cash and investments, except those referenced in Notes G above, are pledged as collateral under certain debt as described in Note 4 to the Consolidated Financial Statements.

LIBOR or EURIBOR resets monthly (M), quarterly (Q), semiannually (S), or annually (A).

Aggregate acquisitions and aggregate dispositions of investments, other than government securities, totaled $587,219,129 and $473,457,512, respectively, for the year ended December 31, 2016. Aggregate acquisitions includes investment assets received as payment in kind. Aggregate dispositions includes principal paydowns on and maturities of debt investments. The total value of restricted securities and bank debt as of December 31, 2016 was $1,311,625,473 or 96.1% of total cash and investments of the Partnership. As of December 31, 2016, approximately 16.4% of the total assets of the Partnership were not qualifying assets under Section 55(a) of the 1940 Act.

See accompanying notes to the consolidated financial statements.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Statements of Operations

	Three Months Ended March 31,
	2017			2016

Investment income
Interest income:
Companies less than 5% owned	$	35,418,453		$	30,810,782
Companies 5% to 25% owned		1,726,423			1,532,728
Companies more than 25% owned		1,635,334			531,013
Lease income:
Companies more than 25% owned		74,457			776,071
Other income:
Companies less than 5% owned		488,347			938,688
Total investment income		39,343,014			34,589,282

Operating expenses
Management and advisory fees		4,934,041			4,504,084
Interest and other debt expenses		4,098,662			3,848,993
Administrative expenses		589,561			421,736
Legal fees, professional fees and due diligence expenses		122,494			354,366
Director fees		106,647			71,949
Custody fees		81,012			79,651
Insurance expense		71,975			68,480
Other operating expenses		364,525			305,110
Total operating expenses		10,368,917			9,654,369

Net investment income		28,974,097			24,934,913

Net realized and unrealized gain (loss) on investments and foreign currency
Net realized gain (loss):
Investments in companies less than 5% owned		(5,087,458	)		(2,943,705	)
Investments in companies 5% to 25% owned		-			315,053
Net realized loss		(5,087,458	)		(2,628,652	)

Change in net unrealized appreciation/depreciation		4,617,498			(4,194,601	)
Net realized and unrealized loss		(469,960	)		(6,823,253	)

Net increase in net assets from operations		28,504,137			18,111,660

Net increase in net assets applicable to common limited and general partners resulting from operations	$	28,504,137		$	18,111,660

See accompanying notes to the consolidated financial statements.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Statements of Changes in Net Assets

	Three Months Ended March 31, 2017 (Unaudited)
	Total			Common Limited Partner			General Partner
Net assets applicable to common limited and general partners, beginning of year	$	1,031,709,637		$	1,031,709,637		$	-

Net investment income		28,974,097			23,997,719			4,976,378
Net realized loss		(5,087,458	)		(5,087,458	)		-
Change in net unrealized appreciation/depreciation		4,617,498			4,617,498			-
Net increase in net assets applicable to common limited and general partners resulting from operations		28,504,137			23,527,759			4,976,378

Distributions to common limited and general partners from:
Net investment income		(27,984,328	)		(23,007,950	)		(4,976,378	)

Net assets applicable to common limited and general partners, end of period (including accumulated net investment income of $31,279,917 in the account of the Common Limited Partner)	$	1,032,229,446		$	1,032,229,446		$	-

	Year Ended December 31, 2016
		Total		Common Limited Partner				General Partner
Net assets applicable to common limited and general partners, beginning of year	$	827,455,601		$	827,455,601		$	-

Contributions from common limited partner		200,870,570			200,870,570			-

Net investment income		106,953,875			87,903,210			19,050,665
Net realized loss		(15,002,148	)		(15,002,148	)		-
Change in net unrealized appreciation/depreciation		15,116,650			15,116,650			-
Net increase in net assets applicable to common limited and general partners resulting from operations		107,068,377			88,017,712			19,050,665

Distributions to common limited and general partners from:
Net investment income		(101,805,363	)		(82,754,698	)		(19,050,665	)
Returns of capital		(1,879,548	)		(1,879,548	)		-
Total distributions to common limited and general partners		(103,684,911	)		(84,634,246	)		(19,050,665	)

Net assets applicable to common limited and general partners, end of period (including accumulated net investment income of $30,290,148 in the account of the Common Limited Partner)	$	1,031,709,637		$	1,031,709,637		$	-

See accompanying notes to consolidated financial statements.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Statements of Cash Flows

	Three Months Ended March 31,
	2017			2016
Operating activities
Net increase in net assets applicable to common limited and general partners resulting from operations	$	28,504,137		$	18,111,660
Adjustments to reconcile net increase in net assets applicable to common common limited and general partners resulting from operations to net cash used in operating activities:
Net realized loss		5,087,458			2,628,652
Change in net unrealized appreciation/depreciation of investments		(4,617,450	)		4,197,738
Net amortization of investment discounts and premiums		(4,313,547	)		(2,490,749	)
Interest and dividend income paid in kind		(3,508,567	)		(1,701,577	)
Amortization of deferred debt issuance costs		474,629			459,816
Changes in assets and liabilities:
Purchases of investment securities		(136,284,513	)		(112,636,204	)
Proceeds from sales, maturities and pay downs of investments		117,033,249			66,139,802
Decrease (increase) in accrued interest income - companies less than 5% owned		2,282,423			(1,190,865	)
Increase in accrued interest income - companies 5% to 25% owned		(430,233	)		(1,011,550	)
Decrease (increase) in accrued interest income - companies more than 25% owned		7,275			(480,715	)
Decrease in prepaid expenses and other assets		178,708			1,015,763
Decrease in payable for investments purchased		(10,292,325	)		(1,139,843	)
Increase (decrease) in interest payable		(248,817	)		(177,369	)
Increase in payable to the Advisor		119,723			212,757
Decrease in accrued expenses and other liabilities		117,262			175,552
Net cash used in operating activities		(5,890,588	)		(27,887,132	)

Financing activities
Borrowings		84,000,000			101,700,000
Repayments of debt		(48,000,000	)		(60,500,000	)
Payments of debt issuance costs		-			(150,350	)
Distributions paid to the common limited partner		(23,007,950	)		(20,893,214	)
Distributions of incentive allocation to the General Partner		(4,716,834	)		(5,207,606	)
Net cash provided by financing activities		8,275,216			14,948,830

Net increase (decrease) in cash and cash equivalents		2,384,628			(12,938,302	)
Cash and cash equivalents at beginning of period		53,579,868			35,629,435
Cash and cash equivalents at end of period	$	55,964,496		$	22,691,133

Supplemental cash flow information
Interest payments	$	3,481,121		$	3,345,865

See accompanying notes to the consolidated financial statements.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

1. Organization and Nature of Operations

Special Value Continuation Partners, LP (the “Partnership”), a Delaware limited partnership, commenced operations on July 31, 2006 as an externally managed, closed-end, non-diversified management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). On April 2, 2012, the Partnership elected to be treated as a business development company (“BDC”) under the 1940 Act. The Partnership’s investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection.

Investment operations are conducted either directly in the Partnership or in one of the Partnership’s wholly owned subsidiaries, TCPC Funding I, LLC, a Delaware limited liability company (“TCPC Funding”), and TCPC SBIC, LP, a Delaware limited partnership (the “SBIC”). The SBIC was organized in June 2013, and, on April 22, 2014, received a license from the United States Small Business Administration (the “SBA”) to operate as a small business investment company under the provisions of Section 301(c) of the Small Business Investment Act of 1958. The Partnership, TCPC Funding, and the SBIC invest primarily in the debt of middle-market companies, including senior secured loans, junior loans, mezzanine debt and bonds. Such investments may include an equity component, and, to a lesser extent, the Partnership, TCPC Funding, and the SBIC may make equity investments directly. The Partnership, TCPC Funding, and the SBIC have elected to be treated as partnerships for U.S. federal income tax purposes. TCP Capital Corp. (“TCPC”) owns the entire common limited partner interest in the Partnership. TCPC has also elected to be treated as a business development company under the 1940 Act.

The general partner of the Partnership is Series H of SVOF/MM, LLC, which also serves as the administrator of both TCPC and the Partnership (the “Administrator” or the “General Partner”). The managing member of the General Partner is Tennenbaum Capital Partners, LLC, which serves as the Advisor to TCPC, the Partnership, TCPC Funding and the SBIC. All of the equity interests in the General Partner are owned directly by the Advisor.

Partnership management consists of the General Partner and the board of directors. The General Partner directs and executes the day-to-day operations of the Partnership subject to oversight from the board of directors, which performs certain functions required by the 1940 Act. The board of directors has delegated investment management of the Partnership’s assets to the Advisor. The board of directors consists of eight persons, six of whom are independent.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements of the Partnership include the accounts of the Partnership, TCPC Funding and the SBIC and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Partnership is an investment company following accounting and reporting guidance in Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies. The Partnership has consolidated the results of its wholly owned subsidiaries in its consolidated financial statements in accordance with ASC Topic 946. All intercompany account balances and transactions have been eliminated in consolidation. The following is a summary of the significant accounting policies of the Partnership.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well the reported amounts of revenues and expenses during the reporting periods presented. Although management believes these estimates and assumptions to be reasonable, actual results could differ from those estimates and such differences could be material.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

2. Summary of Significant Accounting Policies – (continued)

Investment Valuation

Management values investments at fair value in accordance with GAAP, based upon the principles and methods of valuation set forth in policies adopted by the board of directors. Fair value is generally defined as the amount for which an investment would be sold in an orderly transaction between market participants at the measurement date.

All investments are valued at least quarterly based on quotations or other affirmative pricing from independent third-party sources, with the exception of investments priced directly by the Advisor which in the aggregate comprise less than 5% of the capitalization of the Partnership. Investments listed on a recognized exchange or market quotation system, whether U.S. or foreign, are valued using the closing price on the date of valuation.

Investments not listed on a recognized exchange or market quotation system, but for which reliable market quotations are readily available are valued using prices provided by a nationally recognized pricing service or by using quotations from broker-dealers.

Investments for which market quotations are either not readily available or are determined to be unreliable are priced at fair value using affirmative valuations performed by independent valuation services approved by the board of directors or, for investments aggregating less than 5% of the total capitalization of the Partnership, using valuations determined directly by the Advisor. Such valuations are determined under a documented valuation policy that has been reviewed and approved by the board of directors.

Pursuant to this policy, the Advisor provides recent portfolio company financial statements and other reporting materials to independent valuation firms as applicable, which firms evaluate such materials along with relevant observable market data to conduct independent appraisals each quarter, and their preliminary valuation conclusions are documented and discussed with senior management of the Advisor. The audit committee of the board of directors discusses the valuations, and the board of directors approves the fair value of the investments in good faith based on the input of the Advisor, the respective independent valuation firms as applicable, and the audit committee of the board of directors.

Generally, to increase objectivity in valuing the investments, the Advisor will utilize external measures of value, such as public markets or third-party transactions, whenever possible. The Advisor’s valuation is not based on long-term work-out value, immediate liquidation value, nor incremental value for potential changes that may take place in the future. The values assigned to investments are based on available information and do not necessarily represent amounts that might ultimately be realized, as these amounts depend on future circumstances and cannot reasonably be determined until the individual investments are actually liquidated. The foregoing policies apply to all investments, including any in companies and groups of affiliated companies aggregating more than 5% of the Partnership’s assets.

Fair valuations of investments in each asset class are determined using one or more methodologies including the market approach, income approach, or, in the case of recent investments, the cost approach, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. Such information may include observed multiples of earnings and/or revenues at which transactions in securities of comparable companies occur, with appropriate adjustments for differences in company size, operations or other factors affecting comparability.

The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present value amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. The discount rates used for such analyses reflect market yields for comparable investments, considering such factors as relative credit quality, capital structure, and other factors.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

2. Summary of Significant Accounting Policies – (continued)

In following these approaches, the types of factors that may be taken into account also include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, comparable costs of capital, the principal market in which the investment trades and enterprise values, among other factors.

Investments may be categorized based on the types of inputs used in valuing such investments. The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety. Transfers between levels are recognized as of the beginning of the reporting period.

At March 31, 2017, the Partnership’s investments were categorized as follows:

Level	Basis for Determining Fair Value	Bank Debt		Other Corporate Debt		Equity Securities
1	Quoted prices in active markets for identical assets	$	—	$	—	$	40,032
2	Other direct and indirect observable market inputs *		82,368,710		19,726,902		—
3	Independent third-party valuation sources that employ significant unobservable inputs		1,067,034,003		104,393,541		61,792,694
3	Advisor valuations with significant unobservable inputs		84,659		—		3,069,245
Total		$	1,149,487,372	$	124,120,443	$	64,901,971

*	For example, quoted prices in inactive markets or quotes for comparable investments

Unobservable inputs used in the fair value measurement of Level 3 investments as of March 31, 2017 included the following:

Asset Type	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Avg.)
Bank Debt	$	884,784,691	Income approach	Discount rate	5.9% – 21.1% (12.0%)
		127,803,104	Market quotations	Indicative bid/ask quotes	1 – 2 (1)
		25,733,093	Market comparable companies	Revenue multiples	0.4x – 3.0x (1.3x)
		28,797,774	Market comparable companies	EBITDA multiples	7.3x – 10.8x (8.4x)
Other Corporate Debt		2,088,855	Income approach	Discount rate	20.0% (20.0%)
		90,947,831	Market quotations	Indicative bid/ask quotes	1 – 7 (3)
		11,356,855	Market comparable companies	EBITDA multiples	7.5x – 10.5x (8.0x)
Equity		6,251,775	Income approach	Discount rate	5.2% (5.2%)
		40,709,651	Market quotations	Indicative bid/ask quotes	1(1)
		3,847,176	Market comparable companies	Revenue multiples	0.3x – 3.5x (2.0x)
		14,053,337	Market comparable companies	EBITDA multiples	3.4x – 10.8x (8.5x)
	$	1,236,374,142

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

2. Summary of Significant Accounting Policies – (continued)

Generally, a change in an unobservable input may result in a change to the value of an investment as follows:

Input	Impact to Value if Input Increases	Impact to Value if Input Decreases
Discount rate	Decrease	Increase
Revenue multiples	Increase	Decrease
EBITDA multiples	Increase	Decrease

Changes in investments categorized as Level 3 during the three months ended March 31, 2017 were as follows:

	Independent Third-Party Valuation
	Bank Debt			Other Corporate Debt			Equity Securities
Beginning balance	$	1,036,044,457		$	101,934,853		$	64,521,901
Net realized and unrealized gains (losses)		(2,372,273	)		(2,281,934	)		3,011,057
Acquisitions ^*		130,716,787			5,740,622			6,574,305
Dispositions		(86,461,034	)		(1,000,000	)		(10,532,422	)
Transfers out of Level 3 ^†		(10,893,934	)		—			—
Reclassifications within Level 3 ^‡		—			—			(1,782,147	)
Ending balance	$	1,067,034,003		$	104,393,541		$	61,792,694

Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	(162,178	)	$	(2,281,934	)	$	2,546,898

*	Includes payments received in kind and accretion of original issue and market discounts

†	Comprised of one investments that transferred to Level 2 due to increased observable market activity

‡	Comprised of two investments that reclassified to Advisor Valuation

	Advisor Valuation
	Bank Debt			Other Corporate Debt		Equity Securities
Beginning balance	$	107,199		$	—	$	1,560,161
Net realized and unrealized gains (losses)		(678	)		—		(273,063	)
Acquisitions ^*		(21,862	)		—		—
Reclassifications within Level 3 ^†		—			—		1,782,147
Ending balance	$	84,659		$	—	$	3,069,245

Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	(678	)	$	—	$	(273,063	)

*	Includes payments received in kind and accretion of original issue and market discounts

†	Comprised of two investments that reclassified from Independent Third-Party Valuation

There were no transfers between Level 1 and 2 during the three months ended March 31, 2017.

At December 31, 2016, the Partnership’s investments were categorized as follows:

Level	Basis for Determining Fair Value	Bank Debt		Other Corporate Debt		Equity Securities
1	Quoted prices in active markets for identical assets	$	—	$	—	$	—
2	Other direct and indirect observable market inputs *		89,800,173		21,001,126		—
3	Independent third-party valuation sources that employ significant unobservable inputs		1,036,044,457		101,934,853		64,521,901
3	Advisor valuations with significant unobservable inputs		107,199		—		1,560,161
Total		$	1,125,951,829	$	122,935,979	$	66,082,062

*	For example, quoted prices in inactive markets or quotes for comparable investments

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

2. Summary of Significant Accounting Policies – (continued)

Unobservable inputs used in the fair value measurement of Level 3 investments as of December 31, 2016 included the following:

Asset Type	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Avg.)
Bank Debt	$	847,311,244	Income approach	Discount rate	6.9% – 19.4% (12.1%)
		136,116,277	Market quotations	Indicative bid/ask quotes	1 – 2 (1)
		24,851,412	Market comparable companies	Revenue multiples	0.4x – 2.6x (1.0x)
		27,872,723	Market comparable companies	EBITDA multiples	7.3x – 11.0x (8.4x)
Other Corporate Debt		88,163,213	Market quotations	Indicative bid/ask quotes	1 (1)
		13,771,640	Market comparable companies	EBITDA multiples	7.6x – 7.8x (7.7x)
Equity		6,617,084	Income approach	Discount rate	7.3% – 26.2% (7.7%)
		41,442,919	Market quotations	Indicative bid/ask quotes	1(1)
		1,767,102	Market comparable companies	Revenue multiples	0.3x – 2.6x (1.6x)
		16,254,957	Market comparable companies	EBITDA multiples	5.0x – 11.0x (7.7x)
	$	1,204,168,571

Changes in investments categorized as Level 3 during the three months ended March 31, 2016 were as follows:

	Independent Third-Party Valuation
	Bank Debt			Other Corporate Debt			Equity Securities
Beginning balance	$	907,967,337		$	89,314,530		$	49,956,123
Net realized and unrealized gains (losses)		(500,731	)		(1,814,130	)		(1,824,669	)
Acquisitions ^*		96,257,687			9,051,348			6,573,744
Dispositions		(61,198,449	)		—			(2,910,789	)
Transfers into Level 3 †		31,716,003			—			—
Ending balance	$	974,241,847		$	96,551,748		$	51,794,409

Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	(323,387	)	$	(1,814,130	)	$	(1,905,613	)

*	Includes payments received in kind and accretion of original issue and market discounts

†	Comprised of three investments that transferred from Level 2 due to reduced trading volumes

	Advisor Valuation
	Bank Debt			Other Corporate Debt		Equity Securities
Beginning balance	$	1,124,504		$	—	$	2,428,217
Net realized and unrealized gains (losses)		(756,370	)		—		(71,628	)
Acquisitions ^*		1,050,297			—		243
Dispositions		(1,101,994	)		—		(315,053	)
Ending balance	$	316,437		$	—	$	2,041,779

Net change in unrealized appreciation/depreciation during the period on investments still held at period end (included in net realized and unrealized gains/losses, above)	$	(714,303	)	$	—	$	(386,681	)

*	Includes payments received in kind and accretion of original issue and market discounts

There were no transfers between Level 1 and 2 during the three months ended March 31, 2016.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

2. Summary of Significant Accounting Policies – (continued)

Investment Transactions

Investment transactions are recorded on the trade date, except for private transactions that have conditions to closing, which are recorded on the closing date. The cost of investments purchased is based upon the purchase price plus those professional fees which are specifically identifiable to the investment transaction. Realized gains and losses on investments are recorded based on the specific identification method, which typically allocates the highest cost inventory to the basis of investments sold.

Cash and Cash Equivalents

Cash consists of amounts held in accounts with brokerage firms and the custodian bank. Cash equivalents consist of highly liquid investments with an original maturity of generally three months or less. Cash equivalents are carried at amortized cost which approximates fair value. Cash equivalents are classified as Level 1 in the GAAP valuation hierarchy.

Restricted Investments

The Partnership may invest without limitation in instruments that are subject to legal or contractual restrictions on resale. These instruments generally may be resold to institutional investors in transactions exempt from registration or to the public if the securities are registered. Disposal of these investments may involve time-consuming negotiations and additional expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted investments is included at the end of the Consolidated Schedule of Investments. Restricted investments, including any restricted investments in affiliates, are valued in accordance with the investment valuation policies discussed above.

Foreign Investments

The Partnership may invest in instruments traded in foreign countries and denominated in foreign currencies. Foreign currency denominated investments comprised approximately 0.2% and 0.2% of total investments at March 31, 2017 and December 31, 2016, respectively. Such positions were converted at the respective closing foreign exchange rates in effect at March 31, 2017 and December 31, 2016 and reported in U.S. dollars. Purchases and sales of investments and income and expense items denominated in foreign currencies, when they occur, are translated into U.S. dollars based on the foreign exchange rates in effect on the respective dates of such transactions. The portion of gains and losses on foreign investments resulting from fluctuations in foreign currencies is included in net realized and unrealized gain or loss from investments.

Investments in foreign companies and securities of foreign governments may involve special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. government. These risks include, among other things, revaluation of currencies, less reliable information about issuers, different transaction clearance and settlement practices, and potential future adverse political and economic developments. Moreover, investments in foreign companies and securities of foreign governments and their markets may be less liquid and their prices more volatile than those of comparable U.S. companies and the U.S. government.

Derivatives

In order to mitigate certain currency exchange and interest rate risks, the Partnership may enter into certain derivative transactions. All derivatives are reported at their gross amounts as either assets or liabilities in the Consolidated Statements of Assets and Liabilities. Transactions entered into are accounted for using the mark-to-market method with the resulting change in fair value recognized in earnings for the current period. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in interest rates and the value of foreign currencies relative to the U.S. dollar. Certain derivatives may also require the Partnership to pledge assets as collateral to secure its obligations. There were no derivative transactions during the three months ended March 31, 2017, and, as of March 31, 2017, no derivatives were outstanding.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

2. Summary of Significant Accounting Policies – (continued)

During the three months ended March 31, 2016, the Partnership entered into a GBP put option with a notional amount of £2.7 million. At March 31, 2016, the Partnership also held an interest rate cap with a notional amount of $25.0 million and a cross currency basis swap with a notional amount of $16.4 million. The put option and interest rate cap are reported in the Consolidated Statements of Assets and Liabilities as options. The cross currency basis swap is reported in the Consolidated Statements of Assets and Liabilities as unrealized appreciation on swaps. Gains and losses from derivatives during the three months ended March 31, 2016 were included in net realized and unrealized loss on investments in the Consolidated Statements of Operations as follows:

Instrument	Realized Gains (Losses)		Unrealized Gains (Losses)
Put option	$	—	$	(46,965	)
Cross currency basis swap		—		(594,927	)
Interest rate cap		—		—

Valuations of derivatives are determined using observable market inputs other than quoted prices in active markets for identical assets and, accordingly, are classified as Level 2 in the GAAP valuation hierarchy.

Deferred Debt Issuance Costs

Costs of approximately $1.8 million were incurred during 2015 in connection with the extension of the Partnership’s credit facility (see Note 4). Costs of approximately $1.9 million were incurred during 2015 in connection with placing and extending TCPC Funding’s revolving credit facility (see Note 4). Costs of approximately $1.2 million and $0.4 million were incurred during the year ended December 31, 2016 and year ended December 31, 2015, respectively, in connection with placing the SBA Debentures (see Note 4). These costs were deferred and are being amortized on a straight-line basis over the estimated life of the respective instruments. The impact of utilizing the straight-line amortization method versus the effective-interest method is not material to the operations of the Partnership.

Revenue Recognition

Interest and dividend income, including income paid in kind, is recorded on an accrual basis. Origination, structuring, closing, commitment and other upfront fees, including original issue discounts, earned with respect to capital commitments are generally amortized or accreted into interest income over the life of the respective debt investment, as are end-of-term or exit fees receivable upon repayment of a debt investment. Other fees, including certain amendment fees, prepayment fees and commitment fees on broken deals, are recognized as earned. Prepayment fees and similar income due upon the early repayment of a loan or debt security are recognized when earned and are included in interest income.

Certain debt investments are purchased at a discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. Discounts on the acquisition of corporate bonds are generally amortized using the effective-interest or constant-yield method assuming there are no questions as to collectability. When principal payments on a loan are received in an amount in excess of the loan’s amortized cost, the excess principal payments are recorded as interest income.

Income Taxes

The income or loss of the Partnership, TCPC Funding and the SBIC is reported in the respective partners’ income tax returns. Consequently, no income taxes are paid at the partnership level or reflected in the Partnership’s financial statements. In accordance with ASC Topic 740 – Income Taxes, the Partnership recognizes in its consolidated financial statements the effect of a tax position when it is determined that such position is more likely than not, based on the technical merits, to be sustained upon examination. As of March 31, 2017, all tax years of the Partnership, TCPC Funding and the SBIC since January 1, 2013 remain subject to examination by federal tax authorities. No such examinations are currently pending.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

2. Summary of Significant Accounting Policies – (continued)

Cost and unrealized appreciation and depreciation of the Partnership’s investments (including derivatives) for U.S. federal income tax purposes at March 31, 2017 and December 31, 2016 were as follows:

	March 31, 2017			December 31, 2016
Unrealized appreciation	$	41,927,289		$	33,945,996
Unrealized depreciation		(68,405,790	)		(65,041,945	)
Net unrealized depreciation	$	(26,478,501	)	$	(31,095,949	)

Cost	$	1,364,988,287		$	1,346,065,819

Recent Accounting Pronouncements

During the first quarter of 2016, the Partnership adopted Financial Accounting Standards Board (the “FASB”) Accounting Standards Update (“ASU”) 2015-02, Amendments to the Consolidation Analysis. In particular, the new pronouncement changed the manner in which a reporting entity evaluates whether 1) an entity is a variable interest entity (“VIE”), 2) fees paid to decision makers or service providers are variable interests in a VIE, and 3) variable interests in a VIE held by related parties require the reporting entity to consolidate the VIE. The pronouncement also introduced a separate consolidation analysis specific to limited partnerships and similar entities. ASU 2015-02 also eliminated the VIE consolidation model based on majority exposure to variability that applied to certain investment companies and similar entities. The adoption of this pronouncement did not have a material impact on the Partnership’s consolidated financial statements.

The Partnership also adopted ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30) - Simplifying the Presentation of Debt Issuance Costs as well as ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015. Together, these ASUs required, in most cases, that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Debt issuance costs incurred in connection with line-of-credit arrangements, however, may continue to be presented as an asset in the balance sheet. The adoption of these ASUs resulted in the reclassification of certain debt issuance costs related to the Term Loan and SBA Debentures (as defined in Note 4) from deferred debt issuance costs to debt in the Consolidated Statements of Assets and Liabilities. As of March 31, 2017 and December 31, 2016, $2.6 million and $2.7 million in debt issuance costs, respectively, were included in debt in the Consolidated Statements of Assets and Liabilities.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. Under this new pronouncement, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 applies to all entities and, for public entities, is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early application is permitted, but no earlier than annual periods beginning after December 15, 2016 and interim periods within that reporting period. The Partnership does not expect adoption of this pronouncement to have a material impact on its consolidated financial statements.

On January 5, 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The more significant changes to the current GAAP model resulting from ASU 2016-01 include 1) elimination of the requirement to disclose the method(s) and significant assumptions used to estimate the fair value of financial instruments measured at amortized cost, 2) requiring public entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and 3) requiring separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. ASU 2016-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted. The Partnership does not expect adoption of this pronouncement to have a material impact on its consolidated financial statements.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

2. Summary of Significant Accounting Policies – (continued)

On March 30, 2017, the FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities, which amends the amortization period for certain callable debt securities purchased at a premium, shortening the period to the earliest call date. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Partnership does not expect the adoption of this pronouncement to have a material impact on the Partnership’s consolidated financial statements.

3. Management Fees, Incentive Compensation and Other Expenses

The Partnership’s management fee is calculated at an annual rate of 1.5% of total assets (excluding cash and cash equivalents) of TCPC on a consolidated basis as of the beginning of each quarter and is payable to the Advisor quarterly in arrears.

Incentive compensation is only paid to the extent that TCPC’s total performance exceeds a cumulative 8% annual return since January 1, 2013 (the “Total Return Hurdle”). The incentive compensation equals 20% of net investment income (reduced by preferred dividends) and 20% of net realized gains (reduced by any net unrealized losses), subject to the Total Return Hurdle. The incentive compensation is payable quarterly in arrears as an allocation and distribution to the General Partner and is calculated as the difference between cumulative incentive compensation earned since January 1, 2013 and cumulative incentive compensation paid since January 1, 2013. A reserve for incentive compensation is allocated to the account of the General Partner based on the amount of additional incentive compensation that would have been distributable to the General Partner assuming a hypothetical liquidation of TCPC and the Partnership at net asset value on the balance sheet date. The General Partner’s equity interest in the Partnership is comprised entirely of such reserve amount, if any. As of March 31, 2017 and December 31, 2016, no such reserve was allocated.

The Partnership bears all expenses incurred in connection with its business, including fees and expenses of outside contracted services, such as custodian, administrative, legal, audit and tax preparation fees, costs of valuing investments, insurance costs, brokers’ and finders’ fees relating to investments, and any other transaction costs associated with the purchase and sale of investments.

4. Leverage

Leverage is comprised of amounts outstanding under a term loan issued by the Partnership (the “Term Loan”), amounts outstanding under a senior secured revolving credit facility issued by the Partnership (the “SVCP Revolver” and together with the Term Loan, the “SVCP Facility”), amounts outstanding under a senior secured revolving credit facility issued by TCPC Funding (the “TCPC Funding Facility”), and debentures guaranteed by the SBA (the “SBA Debentures”).

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

4. Leverage – (continued)

Total leverage outstanding and available at March 31, 2017 was as follows:

	Maturity	Rate	Carrying Value			Available		Total Capacity
SVCP Facility
SVCP Revolver	2018	L+2.50%*	$	36,000,000		$	80,000,000	$	116,000,000
Term Loan	2018	L+2.50%*		100,500,000			—		100,500,000
TCPC Funding Facility	2020	L+2.50%^†		175,000,000			175,000,000		350,000,000
SBA Debentures	2024-2026	2.58%^‡		61,000,000			89,000,000		150,000,000
Total leverage				372,500,000		$	344,000,000	$	716,500,000
Unamortized issuance costs				(2,616,896	)
Debt, net of unamortized issuance costs			$	369,883,104

*	Based on either LIBOR or the lender’s cost of funds, subject to certain limitations

†	Or L+2.25% subject to certain funding requirements

‡	Weighted-average interest rate, excluding fees of 0.36%

Total leverage outstanding and available at December 31, 2016 was as follows:

	Maturity	Rate	Carrying Value			Available		Total Capacity
SVCP Facility
SVCP Revolver	2018	L+2.50%*	$	—		$	116,000,000	$	116,000,000
Term Loan	2018	L+2.50%*		100,500,000			—		100,500,000
TCPC Funding Facility	2020	L+2.50%^†		175,000,000			175,000,000		350,000,000
SBA Debentures	2024-2026	2.58%^‡		61,000,000			89,000,000		150,000,000
Total leverage				336,500,000		$	380,000,000	$	716,500,000
Unamortized issuance costs				(2,712,574	)
Debt, net of unamortized issuance costs			$	333,787,426

*	Based on either LIBOR or the lender’s cost of funds, subject to certain limitations

†	Or L+2.25% subject to certain funding requirements

‡	Weighted-average interest rate, excluding fees of 0.36%

The combined weighted-average interest rates on total leverage outstanding at March 31, 2017 and December 31, 2016 were 3.40% and 3.23%, respectively.

Total expenses related to debt include:

	Three Months Ended March 31,
	2017		2016
Interest expense	$	3,232,304	$	3,168,496
Amortization of deferred debt issuance costs		474,629		459,816
Commitment fees		391,729		220,681
Total	$	4,098,662	$	3,848,993

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

4. Leverage – (continued)

Amounts outstanding under the SVCP Facility, the TCPC Funding Facility and the SBA Debentures are carried at amortized cost in the Consolidated Statements of Assets and Liabilities. As of March 31, 2017, the estimated fair values of the SVCP Facility, the TCPC Funding Facility and the SBA Debentures approximated their carrying values. The estimated fair values of the SVCP Facility, the TCPC Funding Facility and the SBA Debentures are determined by discounting projected remaining payments using market interest rates for borrowings of the Partnership and entities with similar credit risks at the measurement date. At March 31, 2017, the estimated fair values of the SVCP Facility, the TCPC Funding Facility and the SBA Debentures as prepared for disclosure purposes were deemed to be Level 3 in the GAAP valuation hierarchy.

SVCP Facility

The SVCP Facility consists of a $100.5 million fully-drawn senior secured term loan and a senior secured revolving credit facility which provides for amounts to be drawn up to $116.0 million, subject to certain collateral and other restrictions. The SVCP Facility matures on July 31, 2018. Most of the cash and investments held directly by the Partnership, as well as the net assets of TCPC Funding and the SBIC, are included in the collateral for the facility.

Advances under the SVCP Facility through July 31, 2014 bore interest at an annual rate equal to 0.44% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). Advances under the SVCP Facility for periods from July 31, 2014 through September 3, 2015 bore interest at an annual rate equal to 2.50% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). Advances under the SVCP Facility from September 3, 2015 through July 31, 2016 bore interest at an annual rate equal to 1.75% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). Advances under the SVCP Facility from July 31, 2016 through the maturity date of the facility bear interest at an annual rate of 2.50% plus either LIBOR or the lender’s cost of funds (subject to a cap of LIBOR plus 20 basis points). In addition to amounts due on outstanding debt, the SVCP Revolver accrues commitment fees of 0.20% per annum on the unused portion of the facility, or 0.25% per annum when less than $46.4 million in borrowings are outstanding. The facility may be terminated, and any outstanding amounts thereunder may become due and payable, should the Partnership fail to satisfy certain financial or other covenants. As of March 31, 2017, the Partnership was in full compliance with such covenants.

SBA Debentures

As of March 31, 2017, the SBIC was able to issue up to $150.0 million in SBA Debentures, subject to funded regulatory capital and other customary regulatory requirements. As of March 31, 2017, the Partnership had committed $75.0 million of regulatory capital to the SBIC, all of which had been funded. SBA Debentures are non-recourse and may be prepaid at any time without penalty. Once drawn, the SBIC debentures bear an interim interest rate of LIBOR plus 30 basis points. The rate then becomes fixed at the time of SBA pooling, which occurs twice each year, and is set to the then-current 10-year treasury rate plus a spread and an annual SBA charge.

SBA Debentures outstanding as of March 31, 2017 were as follows:

Issuance Date	Maturity	Debenture Amount		Fixed Interest Rate			SBA Annual Charge
September 24, 2014	September 1, 2024	$	18,500,000		3.02	%		0.36	%
March 25, 2015	March 1, 2025		9,500,000		2.52	%		0.36	%
September 23, 2015	September 1, 2025		10,800,000		2.83	%		0.36	%
March 23, 2016	March 1, 2026		4,000,000		2.51	%		0.36	%
September 21, 2016	September 1, 2026		18,200,000		2.05	%		0.36	%
		$	61,000,000		2.58	%*

*	Weighted-average interest rate

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

4. Leverage – (continued)

SBA Debentures outstanding as of December 31, 2016 were as follows:

Issuance Date	Maturity	Debenture Amount		Fixed Interest Rate			SBA Annual Charge
September 24, 2014	September 1, 2024	$	18,500,000		3.02	%		0.36	%
March 25, 2015	March 1, 2025		9,500,000		2.52	%		0.36	%
September 23, 2015	September 1, 2025		10,800,000		2.83	%		0.36	%
March 23, 2016	March 1, 2026		4,000,000		2.51	%		0.36	%
September 21, 2016	September 1, 2026		18,200,000		2.05	%		0.36	%
		$	61,000,000		2.58	%*

*	Weighted-average interest rate

TCPC Funding Facility

The TCPC Funding Facility is a senior secured revolving credit facility which provides for amounts to be drawn up to $350.0 million, subject to certain collateral and other restrictions. The facility matures on March 6, 2020, subject to extension by the lender at the request of TCPC Funding. The facility contains an accordion feature which allows for expansion of the facility to up to $400.0 million subject to consent from the lender and other customary conditions. The cash and investments of TCPC Funding are included in the collateral for the facility.

Borrowings under the TCPC Funding Facility bear interest at a rate of LIBOR plus either 2.25% or 2.50% per annum, subject to certain funding requirements, plus an administrative fee of 0.25% per annum. In addition to amounts due on outstanding debt, the facility accrues commitment fees of 0.50% per annum on the unused portion of the facility, or 0.75% per annum when the unused portion is greater than 33% of the total facility, plus an administrative fee of 0.25% per annum. The facility may be terminated, and any outstanding amounts thereunder may become due and payable, should TCPC Funding fail to satisfy certain financial or other covenants. As of March 31, 2017, TCPC Funding was in full compliance with such covenants.

5. Commitments, Contingencies, Concentration of Credit Risk and Off-Balance Sheet Risk

The Partnership, TCPC Funding and the SBIC conduct business with brokers and dealers that are primarily headquartered in New York and Los Angeles and are members of the major securities exchanges. Banking activities are conducted with a firm headquartered in the San Francisco area.

In the normal course of business, investment activities involve executions, settlement and financing of various transactions resulting in receivables from, and payables to, brokers, dealers and the custodian. These activities may expose the Partnership to risk in the event that such parties are unable to fulfill contractual obligations. Management does not anticipate any material losses from counterparties with whom it conducts business. Consistent with standard business practice, the Partnership, TCPC Funding and the SBIC enter into contracts that contain a variety of indemnifications, and are engaged from time to time in various legal actions. The maximum exposure under these arrangements and activities is unknown. However, management expects the risk of material loss to be remote.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

5. Commitments, Contingencies, Concentration of Credit Risk and Off-Balance Sheet Risk – (continued)

The Consolidated Schedules of Investments include certain revolving loan facilities and other commitments with unfunded balances at March 31, 2017 and December 31, 2016 as follows:

		Unfunded Balances
Issuer	Maturity	March 31, 2017		December 31, 2016
Alera Group Intermediate Holdings, Inc.	12/30/2021	$	833,333	$	833,333
Alera Group Intermediate Holdings, Inc.	12/30/2022		759,547		759,547
Alpheus Communications, LLC	5/31/2018		357,419		357,419
AP Gaming I, LLC	12/20/2018		12,500,000		12,500,000
Asset International, Inc.	7/31/2020		1,325,721		1,325,721
Auto Trakk SPV, LLC	12/21/2021		3,827,058		3,827,058
Avanti Communications Group, PLC	11/30/2022		751,292		N/A
Bisnow, LLC	4/29/2021		1,200,000		1,200,000
Caliber Home Loans, Inc.	6/30/2020		5,555,556		6,666,667
Edmentum, Inc.	6/9/2020		1,263,220		3,368,586
Enerwise Global Technologies, Inc.	11/30/2017		4,000,000		4,000,000
GlassPoint Solar, Inc.	8/1/2020		16,000,000		N/A
Hylan Datacom & Electrical, LLC	7/25/2016		N/A		1,247,989
iGM RFE1 B.V.	10/12/2021		N/A		855,935
InMobi, Inc.	9/1/2018		N/A		7,500,000
Marketo, Inc.	8/16/2016		1,704,545		1,704,545
Mesa Airlines, Inc.	2/28/2022		N/A		9,268,182
Mesa Airlines, Inc.	12/31/2022		9,731,591		9,731,591
Pegasus Business Intelligence, LP (Onyx Centersource)	12/20/2021		671,356		671,356
Tradeshift Holdings, Inc.	9/1/2020		12,999,918		N/A
VSS-Southern Holdings, LLC	11/3/2020		856,164		856,164
Total Unfunded Balances		$	74,336,720	$	66,674,093

6. Related Party Transactions

TCPC, the Partnership, TCPC Funding, the SBIC, the Advisor, the General Partner and their members and affiliates may be considered related parties. From time to time, the Partnership advances payments to third parties on behalf of TCPC which are reimbursable through deductions from distributions to TCPC. At March 31, 2017 and December 31, 2016, no such amounts were outstanding. From time to time, the Advisor advances payments to third parties on behalf of the Partnership and receives reimbursement from the Partnership. At March 31, 2017 and December 31, 2016, amounts reimbursable to the Advisor totaled $0.4 million and $0.3 million, respectively, as reflected in the Consolidated Statements of Assets and Liabilities.

Pursuant to an administration agreement between the Administrator and the Partnership (the “Administration Agreement”), the Administrator may be reimbursed for costs and expenses incurred by the Administrator for office space rental, office equipment and utilities allocable to the Partnership, as well as costs and expenses incurred by the Administrator or its affiliates relating to any administrative, operating, or other non-investment advisory services provided by the Administrator or its affiliates to the Partnership. For the three months ended March 31, 2017 and 2016, expenses allocated pursuant to the Administration Agreement totaled $0.6 million and $0.4 million, respectively.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2017

7. Distributions

The Partnership’s distributions are recorded on the record date. The timing of distributions is determined by the General Partner, which has provided the Advisor with certain criteria for such distributions.

8. Subsequent Events

On April 26, 2017, the Partnership extended the maturity date of the TCPC Funding facility from March 6, 2020 to April 26, 2021.

On May 9, 2017, TCPC’s board of directors declared a second quarter regular dividend of $0.36 per share payable on June 30, 2017 to stockholders of record as of the close of business on June 16, 2017.

9. Financial Highlights

The financial highlights with respect to the common limited partner are as follows:

	Three Months Ended March 31,
	2017			2016

Return on invested assets ^{(1), (2)}		2.8	%		2.3	%

Gross return to common limited partner ⁽¹⁾		2.8	%		2.2	%
Less: General Partner incentive allocation ⁽¹⁾		(0.6	%)		(0.4	%)
Return to common limited partner ^{(1), (3)}		2.2	%		1.8	%

Ratios to average common equity: ⁽⁴⁾
Net investment income		9.4	%		12.1	%
Expenses		4.1	%		4.7	%
Expenses and General Partner allocation		4.5	%		5.3	%

Ending net assets attributable to common limited partner	$	1,032,229,446		$	820,099,971
Portfolio turnover rate ⁽¹⁾		8.8	%		5.5	%
Weighted-average leverage outstanding	$	352,988,889		$	416,238,462
Weighted-average interest rate on leverage		3.7	%		3.1	%

	⁽¹⁾	Not annualized.

	⁽²⁾	Return on invested assets is a time-weighted, geometrically linked rate of return and excludes cash and cash equivalents.

	⁽³⁾	Returns (net of allocations to General Partner and Partnership expenses, including financing costs and management fees) are calculated on a monthly geometrically linked, time-weighted basis.

	⁽⁴⁾	Net investment income and expenses annualized. General Partner allocation not annualized.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Changes in Investments in Affiliates ⁽¹⁾(Unaudited)

Three Months Ended March 31, 2017

Security	Dividends or Interest ⁽²⁾		Fair Value at December 31, 2016		Acquisitions ⁽³⁾		Dispositions ⁽⁴⁾			Fair Value at March 31, 2017

36th Street Capital Partners Holdings, LLC, Membership Units	$	-	$	6,818,897	$	1,845,925	$	-		$	8,664,822
36th Street Capital Partners Holdings, LLC, Senior Note, 12%, due 11/1/20		908,583		29,203,304		2,752,968		(1,000,000	)		30,956,272
AGY Holding Corp., Common Stock		-		-		-		-			-
AGY Holding Corp., Senior Secured 2nd Lien Notes, 11%, due 11/15/16		254,870		9,268,000		-		-			9,268,000
AGY Holding Corp., Senior Secured Delayed Draw Term Loan, 12%, due 9/15/18		31,474		1,049,147		-		-			1,049,147
AGY Holding Corp., Senior Secured Term Loan, 12%, due 9/15/16		146,088		4,869,710		-		-			4,869,710
Anacomp, Inc., Class A Common Stock		-		1,205,306		-		(87,887	)		1,117,419
Edmentum Ultimate Holdings, LLC, Junior PIK Notes, 10%, due 6/9/20		363,337		12,101,483		365,028		(55,768	)		12,410,743
Edmentum Ultimate Holdings, LLC, Senior PIK Notes, 8.5%, due 6/9/20		61,359		2,846,246		61,824		-			2,908,070
Edmentum, Inc., Junior Revolving Facility, 5%, due 6/9/20		11,275		-		2,105,370		-			2,105,370
Edmentum Ultimate Holdings, LLC, Class A Common Units		-		1,123,591		-		(2	)		1,123,589
EPMC HoldCo, LLC, Membership Units		-		210,035		-		-			210,035
Essex Ocean II, LLC, Membership Units		-		159,045		-		(159,045	)		-
Globecomm Systems Inc., Senior Secured 1st Lien Term Loan, LIBOR + 7.625%, 1.25% LIBOR Floor, due 12/11/18		321,639		14,480,002		373		(313,549	)		14,166,826
KAGY Holding Company, Inc., Series A Preferred Stock		-		4,607,246		605,871		-			5,213,117
Kawa Solar Holdings Limited, Bank Guarantee Credit Facility, 8.2% Cash + 3.5%PIK, due 7/2/17		634,753		21,276,653		188,004		-			21,464,657
Kawa Solar Holdings Limited, Revolving Credit Facility, 8.2%, due 7/2/17		91,998		4,000,000		-		(925,000	)		3,075,000
Kawa Solar Holdings Limited, Ordinary Shares		-		-		-		-			-
Kawa Solar Holdings Limited, Series B Preferred Shares		-		1,395,350		233		-			1,395,583
RM Holdco, LLC, Equity Participation		-		-		-		-			-
RM Holdco, LLC, Membership Units		31,486		-		-		-			-
RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche A, 7%, due 3/21/16		85,327		4,871,284		6,715		-			4,877,999
RM OpCo, LLC, Senior Secured 2nd Lien Term Loan Tranche B, 8.5%, due 3/30/18		208,741		3,154,770		207,224		(2,026,794	)		1,335,200
RM OpCo, LLC, Senior Secured 2nd Lien Term Loan Tranche B-1, 8.5%, due 3/30/18		65,740		3,049,555		65,261		-			3,114,816
RM OpCo, LLC, Convertible 2nd Lien Term Loan Tranche B-1, 8.5%, due 3/30/18		41,893		1,943,371		41,589		-			1,984,960
RM OpCo, LLC, Senior Convertible 2nd Lien Term Loan B, 8.5%, due 3/30/18		103,194		4,251,368		1,349,461		-			5,600,829
United N659UA-767, LLC (N659UA)		39,952		3,191,938		-		(101,260	)		3,090,678
United N661UA-767, LLC (N661UA)		34,505		3,266,101		-		(105,003	)		3,161,098
Wasserstein Cosmos Co-Invest, L.P., Limited Partnership Units		-		1,530,000		-		(1,297,000	)		233,000

Notes to Consolidated Schedule of Changes in Investments in Affiliates:

⁽¹⁾	The issuers of the securities listed on this schedule are considered affiliates under the Investment Company Act of 1940 due to the ownership by the Partnership of 5% or more of the issuers’ voting securities.

⁽²⁾	Also includes fee and lease income as applicable.

⁽³⁾	Acquisitions include new purchases, PIK income, amortization of original issue and market discounts and net unrealized appreciation.

⁽⁴⁾	Dispositions include decreases in the cost basis from sales, paydowns, mortgage amortizations, aircraft depreciation and net unrealized depreciation.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Changes in Investments in Affiliates ⁽¹⁾

Year Ended December 31, 2016

Security	Dividends or Interest⁽²⁾		Fair Value at December 31, 2015		Acquisitions⁽³⁾		Dispositions⁽⁴⁾			Fair Value at December 31, 2016
36th Street Capital Partners Holdings, LLC, Membership Units	$	—	$	225,000	$	6,656,342	$	(62,445	)	$	6,818,897
36th Street Capital Partners Holdings, LLC, Subordinated Promissory Note, 12%, due 11/1/20		1,921,851		900,000		28,303,304		—			29,203,304
AGY Holding Corp., Senior Secured 2nd Lien Notes, 11%, due 11/15/16		1,019,480		9,268,000		—		—			9,268,000
AGY Holding Corp., Senior Secured Delayed Draw Term Loan, 12%, due 9/15/18		20,074		—		1,049,147		—			1,049,147
AGY Holding Corp., Senior Secured Term Loan, 12%, due 9/15/16		594,088		4,869,577		133		—			4,869,710
Anacomp, Inc., Class A Common Stock		—		1,581,964		—		(376,658	)		1,205,306
Edmentum Ultimate Holdings, LLC, Junior PIK Notes, 10%, due 6/9/20		1,381,227		11,343,490		1,362,996		(605,003	)		12,101,483
Edmentum Ultimate Holdings, LLC, Senior PIK Notes, 8.5%, due 6/9/20		236,640		2,612,408		233,838		—			2,846,246
Edmentum, Inc., Junior Revolving Facility, 5%, due 6/9/20		51,210		—		2,762,241		(2,762,241	)		—
Edmentum Ultimate Holdings, LLC, Class A Common Units		—		680,218		443,373		—			1,123,591
EPMC HoldCo, LLC, Membership Units		—		682,614		102,392		(574,971	)		210,035
Essex Ocean II, LLC, Membership Units		—		200,686		65,438		(107,079	)		159,045
Globecomm Systems Inc., Senior Secured 1st Lien Term Loan, LIBOR + 7.625%, 1.25% LIBOR Floor, due 12/11/18		1,316,646		14,256,233		562,182		(338,413	)		14,480,002
KAGY Holding Company, Inc., Series A Preferred Stock		—		6,118,515		45,967		(1,557,236	)		4,607,246
Kawa Solar Holdings Limited, Bank Guarantee Credit Facility, 8.2% Cash + 3.5% PIK, due 7/2/17		2,475,897		25,000,000		661,542		(4,384,889	)		21,276,653
Kawa Solar Holdings Limited, Revolving Credit Facility, 8.2%, due 7/2/17		93,425		—		4,000,000		—			4,000,000
Kawa Solar Holdings Limited, Ordinary Shares		—		—		—		—			—
Kawa Solar Holdings Limited, Series B Preferred Shares		—		—		1,395,350		—			1,395,350
N659UA Aircraft Secured Mortgage, 12%, due 2/28/16		4,554		318,980		—		(318,980	)		—
N661UA Aircraft Secured Mortgage, 12%, due 5/4/16		11,822		570,303		—		(570,303	)		—
N913DL Aircraft Secured Mortgage, 8%, due 3/15/17		2,322		115,617		—		(115,617	)		—
N918DL Aircraft Secured Mortgage, 8%, due 8/15/18		5,109		237,494		—		(237,494	)		—
N954DL Aircraft Secured Mortgage, 8%, due 3/20/19		7,829		342,734		—		(342,734	)		—
N955DL Aircraft Secured Mortgage, 8%, due 6/20/19		8,463		369,162		—		(369,162	)		—
N956DL Aircraft Secured Mortgage, 8%, due 5/20/19		8,365		365,197		—		(365,197	)		—
N957DL Aircraft Secured Mortgage, 8%, due 6/20/19		8,537		372,392		—		(372,392	)		—
N959DL Aircraft Secured Mortgage, 8%, due 7/20/19		8,708		379,522		—		(379,522	)		—
N960DL Aircraft Secured Mortgage, 8%, due 10/20/19		9,289		403,869		—		(403,869	)		—
N961DL Aircraft Secured Mortgage, 8%, due 8/20/19		9,028		393,115		—		(393,115	)		—
N976DL Aircraft Secured Mortgage, 8%, due 2/15/18		4,636		218,321		—		(218,321	)		—
N913DL Equipment Trust Beneficial Interests		491,371		107,501		375		(107,876	)		—
N918DL Equipment Trust Beneficial Interests		8,483		127,662		89,515		(217,177	)		—
N954DL Equipment Trust Beneficial Interests		8,743		77,850		17,496		(95,346	)		—
N955DL Equipment Trust Beneficial Interests		8,278		108,100		2,433		(110,533	)		—
N956DL Equipment Trust Beneficial Interests		8,362		104,478		2,571		(107,049	)		—
N957DL Equipment Trust Beneficial Interests		8,249		105,329		2,637		(107,966	)		—
N959DL Equipment Trust Beneficial Interests		8,139		106,203		2,702		(108,905	)		—
N960DL Equipment Trust Beneficial Interests		7,785		105,937		3,088		(109,025	)		—
N961DL Equipment Trust Beneficial Interests		7,976		101,487		3,159		(104,646	)		—
N976DL Equipment Trust Beneficial Interests		8,635		100,793		755		(101,548	)		—
RM Holdco, LLC, Equity Participation		—		—		—		—			—
RM Holdco, LLC, Membership Units		251,887		—		—		—			—
RM OpCo, LLC, Senior Secured 1st Lien Term Loan Tranche A, 7%, due 3/21/16		328,902		3,719,155		1,152,129		—			4,871,284
RM OpCo, LLC, Senior Secured 2nd Lien Term Loan Tranche B, 8.5%, due 3/30/18		804,739		4,490,993		1,131,050		(2,467,273	)		3,154,770
RM OpCo, LLC, Senior Secured 2nd Lien Term Loan Tranche B-1, 8.5%, due 3/30/18		253,440		2,797,956		251,599		—			3,049,555
RM OpCo, LLC, Convertible 2nd Lien Term Loan Tranche B-1, 8.5%, due 3/30/18		165,193		1,783,036		164,019		(3,684	)		1,943,371
RM OpCo, LLC, Senior Convertible 2nd Lien Term Loan B, 8.5%, due 3/30/18		248,959		2,188,233		2,063,135		—			4,251,368
United N659UA-767, LLC (N659UA)		456,168		3,368,599		448,126		(624,787	)		3,191,938
United N661UA-767, LLC (N661UA)		549,091		3,294,024		673,594		(701,517	)		3,266,101
Wasserstein Cosmos Co-Invest, L.P., Limited Partnership Units		—		4,198,500		—		(2,668,500	)		1,530,000

Notes to Consolidated Schedule of Changes in Investments in Affiliates:

(1)	The issuers of the securities listed on this schedule are considered affiliates under the Investment Company Act of 1940 due to the ownership by the Partnership of 5% or more of the issuers’ voting securities.

(2)	Also includes fee and lease income as applicable.

(3)	Acquisitions include new purchases, PIK income, amortization of original issue and market discounts and net unrealized appreciation.

(4)	Dispositions include decreases in the cost basis from sales, paydowns, mortgage amortizations, aircraft depreciation and net unrealized depreciation.

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Restricted Securities of Unaffiliated Issuers (Unaudited)

March 31, 2017

Investment		Acquisition Date
Avanti Communications Group, PLC, Senior New Money Initial Note, 10%, due 10/1/21		1/26/17
Avanti Communications Group, PLC, Senior Second-Priority PIK Toggle Note, 10%, due 10/1/21		1/26/17
Avanti Communications Group, PLC, Senior Secured Third-Priority Note, 12%, due 10/1/23		1/26/17
BlackLine Intermediate, Inc., Warrants to Purchase Common Stock		9/25/13
Boomerang Tube Holdings, Inc., Common Stock		2/2/16
Caribbean Financial Group, Senior Secured Notes, 11.5%, due 11/15/19		10/19/12
Epic Aero, Inc. (One Sky), Warrants to Purchase Common Stock		12/4/13
Findly Talent, LLC, Membership Units		1/1/14
Fuse Media, LLC, Warrants to Purchase Common Stock		8/3/12
Fuse, LLC, Senior Secured Notes, 10.375%, due 7/1/19		6/18/14
GACP I, LP, Membership Units		10/1/15
Gogo Intermediate Holdings, LLC, Senior Secured Notes, 12.5%, due 7/1/22		6/9/16
Green Biologics, Inc., Warrants to Purchase Stock		12/22/14
InMobi, Inc., Warrants to Purchase Stock		9/18/15
Integra Telecom, Inc., Common Stock		11/19/09
Integra Telecom, Inc., Warrants		11/19/09
Iracore International, Inc., Senior Secured Notes, 9.5%, due 6/1/18		5/8/13
Magnolia Finance V plc, Asset-Backed Credit Linked Notes, 13.125%, due 8/2/21		8/1/13
Marsico Holdings, LLC, Common Interest Units		9/10/12
Nanosys, Inc., Warrants to Purchase Common Stock		3/29/16
NEG Parent, LLC, Class A Units		10/17/16
NEG Parent, LLC, Class A Warrants to Purchase Class A Units		10/17/16
NEG Parent, LLC, Class B Warrants to Purchase Class A Units		10/17/16
NEG Parent, LLC, Class P Units		10/17/16
NEXTracker, Inc., Series B Preferred Stock		12/17/14
NEXTracker, Inc., Series C Preferred Stock		6/12/15
Rightside Group, Ltd., Warrants		8/6/14
Shop Holding, LLC (Connexity), Class A Units		6/2/11
Soasta, Inc., Warrants to Purchase Series F Preferred Stock		3/4/16
Soraa, Inc., Warrants to Purchase Common Stock		8/29/14
SoundCloud, Ltd., Warrants to Purchase Preferred Stock		4/30/15
STG-Fairway Holdings, LLC (First Advantage), Class A Units		12/30/10
Trade Finance Funding I, Ltd., Secured Class B Notes, 10.75%, due 11/13/18		11/13/13
Utilidata, Inc., Warrants to Purchase Stock		12/22/15
V Telecom Investment S.C.A. (Vivacom), Common Shares		11/9/12
Waterfall International, Inc., Series B Preferred Stock		9/16/2015
Waterfall International, Inc., Warrants to Purchase Stock		9/16/2015

Table of Contents

Special Value Continuation Partners, LP
(A Delaware Limited Partnership)

Consolidated Schedule of Restricted Securities of Unaffiliated Issuers

December 31, 2016

Investment		Acquisition Date
Avanti Communications Group, PLC, Senior Secured Notes, 10%, due 10/1/19		9/26/13
BlackLine Intermediate, Inc., Warrants to Purchase Common Stock		9/25/13
Boomerang Tube Holdings, Inc., Common Stock		2/2/16
Caribbean Financial Group, Senior Secured Notes, 11.5%, due 11/15/19		10/19/12
Epic Aero, Inc. (One Sky), Warrants to Purchase Common Stock		12/4/13
Findly Talent, LLC, Membership Units		1/1/14
Fuse Media, LLC, Warrants to Purchase Common Stock		8/3/12
Fuse, LLC, Senior Secured Notes, 10.375%, due 7/1/19		6/18/14
GACP I, LP, Membership Units		10/1/15
Gogo Intermediate Holdings, LLC, Senior Secured Notes, 12.5%, due 7/1/22		6/9/16
Green Biologics, Inc., Warrants to Purchase Stock		12/22/14
InMobi, Inc., Warrants to Purchase Stock		9/18/15
Integra Telecom, Inc., Common Stock		11/19/09
Integra Telecom, Inc., Warrants		11/19/09
Iracore International, Inc., Senior Secured Notes, 9.5%, due 6/1/18		5/8/13
Magnolia Finance V plc, Asset-Backed Credit Linked Notes, 13.125%, due 8/2/21		8/1/13
Marsico Holdings, LLC, Common Interest Units		9/10/12
Nanosys, Inc., Warrants to Purchase Common Stock		3/29/16
NEG Parent, LLC, Class A Units		10/17/16
NEG Parent, LLC, Class A Warrants to Purchase Class A Units		10/17/16
NEG Parent, LLC, Class B Warrants to Purchase Class A Units		10/17/16
NEG Parent, LLC, Class P Units		10/17/16
NEXTracker, Inc., Series B Preferred Stock		12/17/14
NEXTracker, Inc., Series C Preferred Stock		6/12/15
Rightside Group, Ltd., Warrants		8/6/14
Shop Holding, LLC (Connexity), Class A Units		6/2/11
Soasta, Inc., Warrants to Purchase Series F Preferred Stock		3/4/16
Soraa, Inc., Warrants to Purchase Common Stock		8/29/14
SoundCloud, Ltd., Warrants to Purchase Preferred Stock		4/30/15
STG-Fairway Holdings, LLC (First Advantage), Class A Units		12/30/10
Trade Finance Funding I, Ltd., Secured Class B Notes, 10.75%, due 11/13/18		11/13/13
Utilidata, Inc., Warrants to Purchase Stock		12/22/15
V Telecom Investment S.C.A. (Vivacom), Common Shares		11/9/12
Waterfall International, Inc., Series B Preferred Stock		9/16/2015
Waterfall International, Inc., Warrants to Purchase Stock		9/16/2015

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q. Some of the statements in this report (including in the following discussion) constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or the future performance or financial condition of Special Value Continuation Partners, LP. (the “Partnership,” “we,” “us,” or “our”). The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

•

our, or our portfolio companies’, future business, operations, operating results or prospects;

•

the return or impact of current and future investments;

•

the impact of a protracted decline in the liquidity of credit markets on our business;

•

the impact of fluctuations in interest rates on our business;

•

the impact of changes in laws or regulations governing our operations or the operations of our portfolio companies;

•

our contractual arrangements and relationships with third parties;

•

the general economy and its impact on the industries in which we invest;

•

the financial condition of and ability of our current and prospective portfolio companies to achieve their objectives;

•

our expected financings and investments;

•

the adequacy of our financing resources and working capital;

•

the ability of our investment adviser to locate suitable investments for us and to monitor and administer our investments;

•

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

•

the timing, form and amount of any dividend distributions; and

•

our ability to maintain our qualification as a regulated investment company and as a business development company.

We use words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “could,” “may,” “plan” and similar words to identify forward-looking statements. The forward looking statements contained in this annual 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 as “Risk Factors” in this report.

We have based the forward-looking statements included in this report on information available to us on the date of this 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, 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 have filed or in the future may file with the SEC, including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.

Table of Contents

Overview

The Partnership is a Delaware limited partnership formed on July 31, 2006 and is an externally managed, closed-end, non-diversified management investment company. On April 2, 2012, we elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Partnership’s investment objective is to seek to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. The Partnership invests primarily in the debt of middle-market companies and small businesses, including senior secured loans, junior loans, mezzanine debt and bonds, either directly or in one of its wholly-owned subsidiaries, TCPC Funding I, LLC (“TCPC Funding”) and TCPC SBIC, LP (the “SBIC”). Such investments may include an equity component, and, to a lesser extent, the Partnership may make equity investments directly. TCP Capital Corp. (“TCPC”) owns 100% of the common limited partner interests of the Partnership. TCPC has also elected to be treated as a BDC under the 1940 Act. The General Partner of the Partnership is Series H of SVOF/MM, LLC (“SVOF/MM”), which also serves as the administrator (the “Administrator”) of TCPC and the Partnership. The managing member of SVOF/MM is Tennenbaum Capital Partners, LLC (the “Advisor”), which serves as the investment manager to both TCPC and the Partnership. The equity interests in the General Partner are owned directly by the Advisor. The Partnership has elected to be treated as a partnership for U.S. federal income tax purposes.

The SBIC was organized as a Delaware limited partnership in June 2013. On April 22, 2014, the SBIC received a license from the United States Small Business Administration (the “SBA”) to operate as a small business investment company under the provisions of Section 301(c) of the Small Business Investment Act of 1958.

Our leverage program is comprised of $116.0 million in available debt under a senior secured revolving credit facility issued by the Partnership (the “SVCP Revolver”), a $100.5 million term loan issued by the Partnership (the “Term Loan” and together with the SVCP Revolver, the “SVCP Facility”), $350.0 million in available debt under a senior secured revolving credit facility issued by TCPC Funding (the “TCPC Funding Facility”) and $150.0 million in committed leverage from the SBA (the “SBA Program” and, together with the SVCP Facility and the TCPC Funding Facility, the “Leverage Program”). Prior to the repurchase and retirement of the remaining preferred interests on September 3, 2015, the Leverage Program also included amounts outstanding under a preferred equity facility issued by the Partnership (the “Preferred Interests”).

Investments

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity, the general economic environment and the competitive environment for the types of investments we make.

As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities and indebtedness of private U.S. companies, public U.S. operating companies whose securities are not listed on a national securities exchange or registered under the Securities Exchange Act of 1934, as amended, public domestic operating companies having a market capitalization of less than $250.0 million, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. We are also permitted to make certain follow-on investments in companies that were eligible portfolio companies at the time of initial investment but that no longer meet the definition. As of March 31, 2017, 86.2% of our total assets were invested in qualifying assets.

Revenues

We generate revenues primarily in the form of interest on the debt we hold. We also generate revenue from dividends on our equity interests, capital gains on the disposition of investments, and certain lease, fee, and other income. Our investments in fixed income instruments generally have an expected maturity of three to five years, although we have no lower or upper constraint on maturity. Interest on our debt investments is generally payable quarterly or semi-annually. Payments of principal of our debt investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some cases, our debt investments and preferred stock investments may defer payments of cash interest or dividends or PIK. Any outstanding principal amount of our debt investments and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of prepayment fees, commitment, origination, structuring or due diligence fees, end-of-term or exit fees, fees for providing significant managerial assistance, consulting fees and other investment related income.

Table of Contents

Expenses

Our primary operating expenses include the payment of a base management fee and, depending on our operating results, incentive compensation, expenses reimbursable under the management agreement, administration fees and the allocable portion of overhead under the administration agreement. The base management fee and incentive compensation remunerates the Advisor for work in identifying, evaluating, negotiating, closing and monitoring our investments. Our administration agreement with Series H of SVOF/MM, LLC (the “Administrator”) provides that the Administrator may be reimbursed for costs and expenses incurred by the Administrator for office space rental, office equipment and utilities allocable to us under the administration agreement, as well as any costs and expenses incurred by the Administrator or its affiliates relating to any non-investment advisory, administrative or operating services provided by the Administrator or its affiliates to us. We also bear all other costs and expenses of our operations and transactions, which may include those relating to:

•

our organization;

•

calculating our net asset value (including the cost and expenses of any independent valuation firms);

•

interest payable on debt, if any, incurred to finance our investments;

•

the base management fee and any incentive compensation;

•

dividends and distributions on our preferred shares, if any;

•

administration fees payable under the administration agreement;

•

fees payable to third parties relating to, or associated with, making investments;

•

transfer agent and custodial fees;

•

registration fees;

•

director fees and expenses;

•

costs of preparing and filing reports or other documents with the SEC;

•

costs of any reports, proxy statements or other notices to our common limited partner, including printing costs;

•

our fidelity bond;

•

directors and officers/errors and omissions liability insurance, and any other insurance premiums;

•

indemnification payments;

•

direct costs and expenses of administration, including audit and legal costs; and

•

all other expenses reasonably incurred by us and the Administrator in connection with administering our business, such as the allocable portion of overhead under the administration agreement, including rent and other allocable portions of the cost of certain of our officers and their respective staffs.

Table of Contents

The investment management agreement provides that the base management fee be calculated at an annual rate of 1.5% of our total assets (excluding cash and cash equivalents) payable quarterly in arrears. For purposes of calculating the base management fee, “total assets” is determined without deduction for any borrowings or other liabilities. The base management fee is calculated based on the value of our total assets (excluding cash and cash equivalents) at the end of the most recently completed calendar quarter.

Additionally, the investment management agreement and the Amended and Restated Limited Partnership Agreement provide that the Advisor or its affiliates may be entitled to incentive compensation under certain circumstances. According to the terms of such agreements, no incentive compensation was incurred prior to January 1, 2013. Beginning January 1, 2013, the incentive compensation equals the sum of (1) 20% of all of the ordinary income of TCPC since January 1, 2013 and (2) 20% of all net realized capital gains (net of any net unrealized capital depreciation) since January 1, 2013, with each component being subject to a total return requirement of 8% of TCPC’s contributed common equity annually. The incentive compensation is payable to the General Partner by the Partnership pursuant to the Amended and Restated Limited Partnership Agreement. The determination of incentive compensation is subject to limitations under the 1940 Act and the Advisers Act.

Critical accounting policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ. Management considers the following critical accounting policies important to understanding the financial statements. In addition to the discussion below, our critical accounting policies are further described in the notes to our financial statements.

Valuation of portfolio investments

We value our portfolio investments at fair value based upon the principles and methods of valuation set forth in policies adopted by our board of directors. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Market participants are buyers and sellers in the principal (or most advantageous) market for the asset that (i) are independent of us, (ii) are knowledgeable, having a reasonable understanding about the asset based on all available information (including information that might be obtained through due diligence efforts that are usual and customary), (iii) are able to transact for the asset, and (iv) are willing to transact for the asset or liability (that is, they are motivated but not forced or otherwise compelled to do so).

Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker-dealers or market makers. However, short term debt investments with remaining maturities within 90 days are generally valued at amortized cost, which approximates fair value. Debt and equity securities for which market quotations are not readily available, which is the case for many of our investments, or for which market quotations are deemed not to represent fair value, are valued at fair value using a consistently applied valuation process in accordance with our documented valuation policy that has been reviewed and approved by our board of directors, who also approve in good faith the valuation of such securities as of the end of each quarter. Due to the inherent uncertainty and subjectivity 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 may differ materially from the values that we may ultimately realize. In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of our investments than on the fair values of our investments for which market quotations are not readily available. Market quotations may be deemed not to represent fair value in certain circumstances where we believe that facts and circumstances applicable to an issuer, a seller or purchaser, or the market for a particular security cause current market quotations to not reflect the fair value of the security. Examples of these events could include cases where a security trades infrequently causing a quoted purchase or sale price to become stale, where there is a “forced” sale by a distressed seller, where market quotations vary substantially among market makers, or where there is a wide bid-ask spread or significant increase in the bid-ask spread.

Table of Contents

The valuation process approved by our board of directors with respect to investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value is as follows:

•

The investment professionals of the Advisor provide recent portfolio company financial statements and other reporting materials to independent valuation firms approved by our board of directors.

•

Such firms evaluate this information along with relevant observable market data to conduct independent appraisals each quarter, and their preliminary valuation conclusions are documented and discussed with senior management of the Advisor.

•

The fair value of smaller investments comprising in the aggregate less than 5% of our total capitalization may be determined by the Advisor in good faith in accordance with our valuation policy without the employment of an independent valuation firm.

•

The audit committee of the board of directors discusses the valuations, and the board of directors approves the fair value of the investments in our portfolio in good faith based on the input of the Advisor, the respective independent valuation firms (to the extent applicable) and the audit committee of the board of directors.

Those investments for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, our principal market (as the reporting entity) and enterprise values.

When valuing all of our investments, we strive to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances.

Our investments may be categorized based on the types of inputs used in their valuation. The level in the GAAP valuation hierarchy in which an investment falls is based on the lowest level input that is significant to the valuation of the investment in its entirety. Investments are classified by GAAP into the three broad levels as follows:

Level 1 — Investments valued using unadjusted quoted prices in active markets for identical assets.

Level 2 — Investments valued using other unadjusted observable market inputs, e.g. quoted prices in markets that are not active or quotes for comparable instruments.

Level 3 — Investments that are valued using quotes and other observable market data to the extent available, but which also take into consideration one or more unobservable inputs that are significant to the valuation taken as a whole.

Table of Contents

As of March 31, 2017, less than 0.1% of our investments were categorized as Level 1, 7.6% were categorized as Level 2, 92.1% were Level 3 investments valued based on valuations by independent third party sources, and 0.2% were Level 3 investments valued based on valuations by the Advisor.

As of December 31, 2016, none of our investments were categorized as Level 1, 8.4% were categorized as Level 2, 91.5% were Level 3 investments valued based on valuations by independent third party sources, and 0.1% were Level 3 investments valued based on valuations by the Advisor.

Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the financial statements.

Revenue recognition

Certain of our debt investments are purchased at a discount to par as a result of the underlying credit risks and financial results of the issuer, as well as general market factors that influence the financial markets as a whole. Discounts on the acquisition of corporate bonds are generally amortized using the effective-interest or constant-yield method assuming there are no questions as to collectability. When principal payments on a loan are received in an amount in excess of the loan’s amortized cost, the excess principal payments are recorded as interest income.

Net realized gains or losses and net change in unrealized appreciation or depreciation

We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. Realized gains and losses are computed using the specific identification method. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized appreciation or depreciation when gains or losses are realized.

Portfolio and investment activity

During the three months ended March 31, 2017, we invested approximately $139.8 million, comprised of new investments in four new and five existing portfolio companies, as well as draws made on existing commitments and PIK received on prior investments. Of these investments, 95.5% were in senior secured debt comprised of senior loans ($126.9 million, or 90.8% of total acquisitions) and senior secured notes ($6.6 million, or 4.7% of total acquisitions). The remaining $6.3 million (4.5% of total acquisitions) were comprised of $5.7 million in equity interests in two portfolios of debt and lease assets, as well as $0.6 million in two warrant positions received in connection with debt investments. Additionally, we received approximately $117.0 million in proceeds from sales or repayments of investments during the three months ended March 31, 2017.

During the three months ended March 31, 2016, we invested approximately $114.1 million, comprised of new investments in four new and two existing portfolio companies, as well as draws made on existing commitments and PIK received on prior investments. Of these investments, 94.9% were in senior secured debt comprised of senior loans ($91.9 million, or 80.5% of the total) and senior secured notes ($16.4 million, or 14.4% of the total). The remaining $5.8 million (5.1% of total acquisitions) were comprised of $5.0 million in equity interests in two portfolios of debt and lease assets, as well as $0.8 million in two warrant positions received in connection with debt investments. Additionally, we received approximately $66.1 million in proceeds from sales or repayments of investments during the three months ended March 31, 2016.

At March 31, 2017, our investment portfolio of $1,338.5 million (at fair value) consisted of 88 portfolio companies and was invested 95.2% in debt investments, substantially all of which was in senior secured debt. In aggregate, our investment portfolio was invested 86.7% in senior secured loans, 8.5% in senior secured notes and 4.8% in equity investments. Our average portfolio company investment at fair value was approximately $15.4 million. Our largest portfolio company investment by value was approximately $46.2 million and our five largest portfolio company investments by value comprised approximately 15.4% of our portfolio at March 31, 2017.

At December 31, 2016, our investment portfolio of $1,315.0 million (at fair value) consisted of 90 portfolio companies and was invested 95.0% in debt investments, substantially all of which was in senior secured debt. In aggregate, our investment portfolio was invested 83.7% in senior secured loans, 11.3% in senior secured notes and 5.0% in equity investments. Our average portfolio company investment at fair value was approximately $14.6 million. Our largest portfolio company investment by value was approximately $46.2 million and our five largest portfolio company investments by value comprised approximately 14.1% of our portfolio at December 31, 2016.

Table of Contents

The industry composition of our portfolio at fair value at March 31, 2017 was as follows:

Industry	Percent of Total Investments
Software Publishing		13.9	%
Computer Systems Design and Related Services		10.5	%
Nondepository Credit Intermediation		9.1	%
Lessors of Nonfinancial Licenses		4.1	%
Business Support Services		4.0	%
Air Transportation		3.6	%
Hospitals		3.6	%
Equipment Leasing		3.1	%
Other Information Services		3.0	%
Scientific Research and Development Services		2.8	%
Chemicals		2.6	%
Financial Investment Activities		2.5	%
Insurance		2.4	%
Retail		2.4	%
Textile Furnishings Mills		2.3	%
Activities Related to Credit Intermediation		1.9	%
Other Manufacturing		1.9	%
Utility System Construction		1.9	%
Management, Scientific, and Technical Consulting Services		1.8	%
Amusement and Recreation		1.7	%
Other Publishing		1.6	%
Wholesalers		1.6	%
Wired Telecommunications Carriers		1.6	%
Apparel Manufacturing		1.5	%
Radio and Television Broadcasting		1.5	%
Educational Support Services		1.4	%
Restaurants		1.3	%
Advertising and Public Relations Services		1.1	%
Building Equipment Contractors		1.1	%
Communications Equipment Manufacturing		1.1	%
Activities Related to Real Estate		1.0	%
Electronic Component Manufacturing		1.0	%
Other		5.1	%
Total		100.0	%

The weighted average effective yield of the debt securities in our portfolio was 11.07% at March 31, 2017 and 10.92% at December 31, 2016. At March 31, 2017, 83.5% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate, and 16.5% bore interest at fixed rates. The percentage of floating rate debt investments in our portfolio that bore interest based on an interest rate floor was 74.6% at March 31, 2017. At December 31, 2016, 80.5% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate, and 19.5% bore interest at fixed rates. The percentage of floating rate debt investments in our portfolio that bore interest based on an interest rate floor was 77.0% at December 31, 2016.

Table of Contents

Results of operations

Investment income

Investment income totaled $39.3 million and $34.6 million, respectively, for the three months ended March 31, 2017 and 2016, of which $38.8 million and $32.9 million were attributable to interest and fees on our debt investments, $0.1 million and $0.8 million to lease income and $0.4 million and $1.0 million to other income, respectively. Other income is primarily comprised of fee income earned in respect of amendments to various debt investments. Included in interest and fees on our debt investments were $3.3 million and $0.9 million of non-recurring income related to prepayments for the three months ended March 31, 2017 and 2016, respectively. The increase in investment income in the three months ended March 31, 2017 compared to the three months ended March 31, 2016 reflects an increase in interest income due to the increase in prepayment income and the larger portfolio size in the three months ended March 31, 2017 compared to the three months ended March 31, 2016, partially offset by a decrease in other income.

Expenses

Total operating expenses for the three months ended March 31, 2017 and 2016 were $10.4 million and $9.7 million, respectively, comprised of $4.9 million and $4.5 million in base management fees, $4.1 million and $3.8 million in interest expense and related fees, $0.1 million and $0.4 million in legal and professional fees, $0.6 million and $0.4 million in administrative expenses, and $0.7 million and $0.5 million in other expenses, respectively. The increase in expenses in the three months ended March 31, 2017 compared to the three months ended March 31, 2016 primarily reflects the increase in interest expense and other costs related to the increase in outstanding debt, as well as the increase in LIBOR rates during the period.

Net investment income

Net investment income was $29.0 million and $24.9 million, respectively, for the three months ended March 31, 2017 and 2016. The increase in net investment income in the three months ended March 31, 2017 compared to the three months ended March 31, 2016 primarily reflects the increase in investment income, partially offset by the increase in expenses in the three months ended March 31, 2017.

Net realized and unrealized gain or loss

Net realized losses for the three months ended March 31, 2017 and 2016 were $5.1 million and $2.6 million, respectively. Net realized losses during the three months ended March 31, 2017 were comprised primarily of a $3.5 million loss realization on the restructuring of our loan to Avanti Communications Group and a $1.5 million loss on the disposition of our investment in Integra Telecom Holdings. Substantially all of the losses had been recognized on an unrealized basis in prior periods. Net realized loss during the three months ended March 31, 2016 was primarily due to the taxable reorganization of our investment in Boomerang Tube, LLC.

For the three months ended March 31, 2017 and 2016, the change in net unrealized appreciation/depreciation was $4.6 million and $(4.2) million, respectively. The change in net unrealized appreciation/depreciation for the three months ended March 31, 2017 was comprised primarily of the reversal of previously recognized unrealized losses as well as various market gains resulting from generally tighter spreads, partially offset by a $2.0 million markdown of Real Mex along with industry comparables, even as the company benefitted from increasing same store sales and other improvements. The change in net unrealized appreciation/depreciation for the three months ended March 31, 2016 was comprised primarily of a $1.7 million markdown on our loan to STG-Fairway Acquisitions, Inc. (aka First Advantage) to just under par, a $1.4 million markdown on our BPA Laboratories, Inc. debt to just above par as call protection expires, as well as various other mark to market adjustments resulting from generally wider market yield spreads during the quarter. These losses were partially offset by certain unrealized gains from improved credit, including a $3.9 million gain on our loan to Securus Technologies, Inc. due to favorable regulatory developments.

Net increase in net assets allocable to common limited and general partners resulting from operations

The net increase in net assets resulting from operations was $28.5 million and $18.1 million for the three months ended March 31, 2017 and 2016, respectively. The higher net increase in net assets applicable to common shareholders resulting from operations during the three months ended March 31, 2017 is primarily due to the lower net realized and unrealized losses and the higher net investment income during the three months ended March 31, 2017 compared to the net realized and unrealized losses during the three months ended March 31, 2016.

Table of Contents

Liquidity and capital resources

Since our inception, our liquidity and capital resources have been generated primarily through contributions from the common limited partner of the Partnership (which came from the initial private placement of common shares of Special Value Continuation Fund, LLC (TCPC’s predecessor entity) which were subsequently converted to common stock of TCPC), the net proceeds from the initial and secondary public offerings of TCPC, amounts outstanding under our Leverage Program, and cash flows from operations, including investments sales and repayments and income earned from investments and cash equivalents. The primary uses of cash have been investments in portfolio companies, cash distributions to our equity holders, payments to service our Leverage Program and other general corporate purposes.

Total leverage outstanding and available under the combined Leverage Program at March 31, 2017 were as follows:

	Maturity	Rate	Carrying Value			Available		Total Capacity
SVCP Facility
SVCP Revolver	2018	L+2.50%*	$	36,000,000		$	80,000,000	$	116,000,000
Term Loan	2018	L+2.50%*		100,500,000			—		100,500,000
TCPC Funding Facility	2020	L+2.50%†		175,000,000			175,000,000		350,000,000
SBA Debentures	2024-2026	2.58%‡		61,000,000			89,000,000		150,000,000
Total leverage				372,500,000		$	344,000,000	$	716,500,000
Unamortized issuance costs				(2,616,896	)
Debt, net of unamortized issuance costs			$	369,883,104

*	Based on either LIBOR or the lender’s cost of funds, subject to certain limitations

†	Or L+2.25% subject to certain funding requirements

‡	Weighted-average interest rate, excluding fees of 0.36%

On July 13, 2015, we obtained exemptive relief from the SEC to permit us to exclude debt outstanding under the SBA Program from our 200% asset coverage test under the 1940 Act. The exemptive relief provides us with increased flexibility under the 200% asset coverage test by permitting the SBIC to borrow up to $150.0 million more than it would otherwise be able to absent the receipt of this exemptive relief.

Net cash used in operating activities during the three months ended March 31, 2017 was $5.9 million. Our primary use of cash in operating activities during this period consisted of the settlement of acquisitions of investments (net of dispositions) of $19.3 million, partially offset by net investment income less incentive allocation (net of non-cash income and expenses) of approximately $13.4 million.

Net cash provided by financing activities was $8.3 million during the three months ended March 31, 2017, consisting primarily of $36.0 million of net borrowings, reduced by $23.0 million in distributions to TCPC and $4.7 million in distributions of incentive compensation to the General Partner.

At March 31, 2017, we had $56.0 million in cash and cash equivalents.

Table of Contents

The SVCP Facility and the TCPC Funding Facility are secured by substantially all of the assets in our portfolio, including cash and cash equivalents, and are subject to compliance with customary affirmative and negative covenants, including the maintenance of a minimum shareholders’ equity, the maintenance of a ratio of not less than 200% of total assets (less total liabilities other than indebtedness) to total indebtedness, and restrictions on certain payments and issuance of debt. Unfavorable economic conditions may result in a decrease in the value of our investments, which would affect both the asset coverage ratios and the value of the collateral securing the SVCP Facility and the TCPC Funding Facility, and may therefore impact our ability to borrow under the SVCP Facility and the TCPC Funding Facility. In addition to regulatory restrictions that restrict our ability to raise capital, the Leverage Program contains various covenants which, if not complied with, could accelerate repayment of debt, thereby materially and adversely affecting our liquidity, financial condition and results of operations. At March 31, 2017, we were in compliance with all financial and operational covenants required by the Leverage Program.

Unfavorable economic conditions, while potentially creating attractive opportunities for us, may decrease liquidity and raise the cost of capital generally, which could limit our ability to renew, extend or replace the Leverage Program on terms as favorable as are currently included therein. If we are unable to renew, extend or replace the Leverage Program upon the various dates of maturity, we expect to have sufficient funds to repay the outstanding balances in full from our net investment income and sales of, and repayments of principal from, our portfolio company investments, as well as from anticipated debt and equity capital raises, among other sources. Unfavorable economic conditions may limit our ability to raise capital or the ability of the companies in which we invest to repay our loans or engage in a liquidity event, such as a sale, recapitalization or initial public offering. The SVCP Facility and the TCPC Funding Facility mature in July 2018 and March 2020, respectively. Any inability to renew, extend or replace the Leverage Program could adversely impact our liquidity and ability to find new investments or maintain distributions to our common limited partner.

Contractual obligations

In addition to obligations under our Leverage Program, we have entered into several contracts under which we have future commitments. Pursuant to an investment management agreement, the Advisor manages our day-to-day operations and provides investment advisory services to us. Payments under the investment management agreement are equal to a percentage of the value of our gross assets (excluding cash and cash equivalents) and an incentive compensation, plus reimbursement of certain expenses incurred by the Advisor. Under our administration agreement, the Administrator provides us with administrative services, facilities and personnel. Payments under the administration agreement are equal to an allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to us, and may include rent and our allocable portion of the cost of certain of our officers and their respective staffs. We are responsible for reimbursing the Advisor for due diligence and negotiation expenses, fees and expenses of custodians, administrators, transfer and distribution agents, counsel and directors, insurance, filings and registrations, proxy expenses, expenses of communications to investors, compliance expenses, interest, taxes, portfolio transaction expenses, costs of responding to regulatory inquiries and reporting to regulatory authorities, costs and expenses of preparing and maintaining our books and records, indemnification, litigation and other extraordinary expenses and such other expenses as are approved by the directors as being reasonably related to our organization, offering, capitalization, operation or administration and any portfolio investments, as applicable. The Advisor is not responsible for any of the foregoing expenses and such services are not investment advisory services under the 1940 Act. Either party may terminate each of the investment management agreement and administration agreement without penalty upon not less than 60 days’ written notice to the other.

Distributions

Distribution to the common limited partner

Our quarterly distributions to our common limited partner are recorded on the record date. Distributions are declared considering our estimate of annual taxable income available for distribution and the amount of taxable income carried over from the prior year for distribution in the current year. We do not have a policy to pay distributions at a specific level and expect to continue to distribute substantially all of our taxable income. We cannot assure the common limited partner that it will receive any distributions or distributions at a particular level.

Table of Contents

The following table summarizes our distributions to our common limited partner for the three months ended March 31, 2017 and 2016:

Date Declared	Total Amount
February 22, 2017	$	23,007,950
Total for three months ended March 31, 2017	$	23,007,950
February 24, 2016	$	20,893,214
Total for three months ended March 31, 2016	$	20,893,214

Distributions to the General Partner

TCPC’s performance during the three months ended March 31, 2017 and 2016 exceeded the total return threshold; accordingly, incentive compensation of $4.7 million and $5.2 million for the three months ended March 31, 2017 and 2016, respectively, was distributable to the General Partner.

Related Parties

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

•

Each of the Partnership, TCPC, TCPC Funding and the SBIC has entered into an investment management agreement with the Advisor.

•

The Administrator provides us with administrative services necessary to conduct our day-to-day operations. For providing these services, facilities and personnel, the Administrator may be reimbursed by us for expenses incurred by the Administrator in performing its obligations under the administration agreement, including our allocable portion of the cost of certain of our officers and the Administrator’s administrative staff and providing, at our request and on our behalf, significant managerial assistance to our portfolio companies to which we are required to provide such assistance.

•

Pursuant to its limited partnership agreement, the general partner of the Partnership is Series H of SVOF/MM, LLC. SVOF/MM, LLC is an affiliate of the Advisor and certain other series and classes of SVOF/MM, LLC serve as the general partner or managing member of certain other funds managed by the Advisor.

The Advisor and its affiliates, employees and associates currently do and in the future may manage other funds and accounts. The Advisor and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds or accounts. Accordingly, conflicts may arise regarding the allocation of investments or opportunities among us and those accounts. In general, the Advisor will allocate investment opportunities pro rata among us and the other funds and accounts (assuming the investment satisfies the objectives of each) based on the amount of committed capital each then has available. The allocation of certain investment opportunities in private placements is subject to independent director approval pursuant to the terms of the co-investment exemptive order applicable to us. In certain cases, investment opportunities may be made other than on a pro rata basis. For example, we may desire to retain an asset at the same time that one or more other funds or accounts desire to sell it or we may not have additional capital to invest at a time the other funds or accounts do. If the Advisor is unable to manage our investments effectively, we may be unable to achieve our investment objective. In addition, the Advisor may face conflicts in allocating investment opportunities between us and certain other entities that could impact our investment returns. While our ability to enter into transactions with our affiliates is restricted under the 1940 Act, we have received an exemptive order from the SEC permitting certain affiliated investments subject to certain conditions. As a result, we may face conflict of interests and investments made pursuant to the exemptive order conditions which could in certain circumstances affect adversely the price paid or received by us or the availability or size of the position purchased or sold by us.

Recent Developments

From April 1, 2017 through May 5, 2017, we invested approximately $141.1 million primarily in seven senior secured loans with a combined effective yield of approximately 9.3%.

On April 26, 2017, the Partnership extended the maturity date of the TCPC Funding facility from March 6, 2020 to April 26, 2021.

Table of Contents

Item 3:

Quantitative and qualitative disclosure about market risk

We are subject to financial market risks, including changes in interest rates. At March 31, 2017, 83.5% of debt investments in our portfolio bore interest based on floating rates, such as LIBOR, EURIBOR, the Federal Funds Rate or the Prime Rate. The interest rates on such investments generally reset by reference to the current market index after one to six months. At March 31, 2017, the percentage of floating rate debt investments in our portfolio that bore interest based on an interest rate floor was 74.6%. Floating rate investments subject to a floor generally reset by reference to the current market index after one to six months only if the index exceeds the floor.

Interest rate sensitivity refers to the change in earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income. We assess our portfolio companies periodically to determine whether such companies will be able to continue making interest payments in the event that interest rates increase. There can be no assurances that the portfolio companies will be able to meet their contractual obligations at any or all levels of increases in interest rates.

Based on our March 31, 2017 balance sheet, the following table shows the annual impact on net investment income (excluding the related incentive compensation impact) of base rate changes in interest rates (considering interest rate floors for variable rate instruments) assuming no changes in our investment and borrowing structure:

Basis Point Change	Interest income			Interest Expense			Net Investment Income
Up 300 basis points	$	36,089,022		$	(11,175,000	)	$	24,914,022
Up 200 basis points		24,658,655			(7,450,000	)		17,208,655
Up 100 basis points		13,228,288			(3,725,000	)		9,503,288
Down 100 basis points		(4,996,806	)		3,725,000			(1,271,806	)
Down 200 basis points		(5,409,097	)		4,226,758			(1,182,339	)
Down 300 basis points		(5,409,097	)		4,226,758			(1,182,339	)

Item 4.

Controls and Procedures

As of the period covered by this report, we, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on our evaluation, our management, including the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective in timely alerting management, including the chief executive officer and chief financial officer, of material information about us required to be included in our periodic SEC filings. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, are based upon certain assumptions about the likelihood of future events and can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. There has not been any change in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Table of Contents

PART II - Other Information

Item 1.

Legal Proceedings

Although we may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise, as of March 31, 2017, we are currently not a party to any pending material legal proceedings.

Item 1A.

Risk Factors

There have been no material changes from the risk factors previously disclosed in our most recent annual report on Form 10-K, as filed with the Securities and Exchange Commission on February 28, 2017.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4:

Mine Safety Disclosures.

None.

Item 5:

Other Information.

None.

Item 6:

Exhibits

Number		Description
3.1		Articles of Incorporation of the Registrant (1)
3.2		Bylaws of the Registrant (2)
31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934*
31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934*
32.1		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U. S. C. 1350)*

* Filed herewith.

(1)

Incorporated by reference to Exhibit (a)(2) to the Registrant’s Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on May 13, 2011

(2)

Incorporated by reference to Exhibit (b)(2) to the Registrant’s Registration Statement under the Securities Act of 1933 (File No. 333-172669), on Form N-2, filed on May 13, 2011

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

SPECIAL VALUE CONTINUATION PARTNERS, LP

Date: May 9, 2017
	By:	/s/ Howard M. Levkowitz
	Name:	Howard M. Levkowitz
	Title:	Chief Executive Officer

Date: May 9, 2017
	By:	/s/ Paul L. Davis
	Name:	Paul L. Davis
	Title:	Chief Financial Officer

Special Value Continuation Partners, LP - FORM 10-Q - May 9, 2017

Attached files

Special Value Continuation Partners, LP Reports