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EX-32.2 - EXHIBIT 32.2 - Oaktree Specialty Lending Corpfsc-ex322_0331201710xq.htm
EX-32.1 - EXHIBIT 32.1 - Oaktree Specialty Lending Corpfsc-ex321_0331201710xq.htm
EX-31.2 - EXHIBIT 31.2 - Oaktree Specialty Lending Corpfsc-ex312_0331201710xq.htm
EX-31.1 - EXHIBIT 31.1 - Oaktree Specialty Lending Corpfsc-ex311_0331201710xq.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
 
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2017
OR
 
 
¨

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

 
DELAWARE
(State or jurisdiction of
incorporation or organization)
 
26-1219283
(I.R.S. Employer
Identification No.)
 
 
 
777 West Putnam Avenue, 3rd Floor
Greenwich, CT
(Address of principal executive office)
 
06830
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(203) 681-3600
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES   þ     NO   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   ¨   NO   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  þ
 
Accelerated filer  ¨
 
Non-accelerated filer  ¨
 
Smaller reporting company  ¨
 
 
 
 
(Do not check if a 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 any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)    YES  ¨     NO  þ
The registrant had 140,960,651 shares of common stock outstanding as of May 9, 2017.




FIFTH STREET FINANCE CORP.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2017
TABLE OF CONTENTS
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 3.
Item 4.
Item 5.




 




PART I — FINANCIAL INFORMATION
Item 1.
Consolidated Financial Statements.
Fifth Street Finance Corp.
Consolidated Statements of Assets and Liabilities
(in thousands, except per share amounts)
(unaudited)
 
 
March 31, 2017
 
September 30, 2016
ASSETS
Investments at fair value:
 
 
 
 
Control investments (cost March 31, 2017: $454,875; cost September 30, 2016: $456,493)
 
$
401,158

 
$
388,267

Affiliate investments (cost March 31, 2017: $34,328; cost September 30, 2016: $34,955)
 
38,480

 
39,769

Non-control/Non-affiliate investments (cost March 31, 2017: $1,385,682; cost September 30, 2016: $1,792,410)
 
1,349,048

 
1,737,455

Total investments at fair value (cost March 31, 2017: $1,874,885; cost September 30, 2016: $2,283,858)
 
1,788,686

 
2,165,491

Cash and cash equivalents
 
84,572

 
117,923

Restricted cash
 
8,250

 
12,439

Interest, dividends and fees receivable
 
12,293

 
15,568

Due from portfolio companies
 
6,881

 
4,077

Receivables from unsettled transactions
 
25,559

 
5,346

Deferred financing costs
 
1,435

 
2,234

Insurance recoveries receivable
 

 
19,729

Other assets
 
1,707

 
478

Total assets
 
$
1,929,383

 
$
2,343,285

LIABILITIES AND NET ASSETS
Liabilities:
 

 
 
Accounts payable, accrued expenses and other liabilities
 
$
2,878

 
$
2,533

Base management fee and Part I incentive fee payable
 
10,900

 
15,958

Due to FSC CT
 
1,403

 
2,204

Interest payable
 
3,760

 
3,912

Amounts payable to syndication partners
 
1,516

 
754

Director fees payable
 
318

 
566

Payables from unsettled transactions
 
1,404

 
6,234

Legal settlements payable
 

 
19,500

Credit facilities payable
 
322,413

 
516,295

SBA debentures payable (net of $2,215 and $3,289 of unamortized financing costs as of March 31, 2017 and September 30, 2016, respectively)
 
145,785

 
210,011

Unsecured notes payable (net of $5,346 and $5,956 of unamortized financing costs as of March 31, 2017 and September 30, 2016, respectively)
 
405,372

 
404,630

Secured borrowings at fair value (proceeds March 31, 2017: $14,119; proceeds September 30, 2016: $18,929)
 
14,008

 
18,400

Total liabilities
 
909,757

 
1,200,997

Commitments and contingencies (Note 16)
 

 
 
Net assets:
 
 
 
 
Common stock, $0.01 par value, 250,000 shares authorized; 140,961 shares issued and outstanding at March 31, 2017; 143,259 shares issued and outstanding at September 30, 2016
 
1,409

 
1,433

Additional paid-in-capital
 
1,579,278

 
1,591,467

Net unrealized depreciation on investments and secured borrowings
 
(86,088
)
 
(117,838
)
Net realized loss on investments and secured borrowings
 
(445,217
)
 
(306,228
)
Accumulated overdistributed net investment income
 
(29,756
)
 
(26,546
)
Total net assets (equivalent to $7.23 and $7.97 per common share at March 31, 2017 and September 30, 2016, respectively) (Note 12)
 
1,019,626

 
1,142,288

Total liabilities and net assets
 
$
1,929,383

 
$
2,343,285

See notes to Consolidated Financial Statements.

3


Fifth Street Finance Corp.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
 
Three months ended
March 31, 2017
 
Three months ended
March 31, 2016
 
Six months ended
March 31, 2017
 
Six months ended
March 31, 2016
Interest income:
 
 
 
 
 
 
 
 
Control investments
 
$
2,949

 
$
4,000

 
$
7,394

 
$
7,655

Affiliate investments
 
976

 
1,026

 
1,984

 
2,076

Non-control/Non-affiliate investments
 
34,216

 
44,217

 
72,517

 
90,615

Interest on cash and cash equivalents
 
164

 
88

 
283

 
151

Total interest income
 
38,305

 
49,331

 
82,178

 
100,497

PIK interest income:
 
 
 
 
 
 
 
 
Control investments
 
2,362

 
1,080

 
3,922

 
2,060

Affiliate investments
 
196

 
205

 
397

 
415

Non-control/Non-affiliate investments
 
997

 
1,847

 
2,073

 
3,952

Total PIK interest income
 
3,555

 
3,132

 
6,392

 
6,427

Fee income:
 
 
 
 
 
 
 
 
Control investments
 
313

 
376

 
622

 
1,219

Affiliate investments
 
247

 
263

 
729

 
271

Non-control/Non-affiliate investments
 
2,293

 
4,548

 
5,070

 
12,509

Total fee income
 
2,853

 
5,187

 
6,421

 
13,999

Dividend and other income:
 
 
 
 
 
 
 
 
Control investments
 
842

 
1,692

 
2,304

 
4,118

Non-control/Non-affiliate investments
 

 
221

 
20

 
(356
)
Total dividend and other income
 
842

 
1,913

 
2,324

 
3,762

Total investment income
 
45,555

 
59,563

 
97,315

 
124,685

Expenses:
 
 
 
 
 
 
 
 
Base management fee
 
8,035

 
10,006

 
16,649

 
21,799

Part I incentive fee
 
3,168

 
4,173

 
7,231

 
7,824

Professional fees
 
1,723

 
4,455

 
2,787

 
11,424

Board of Directors fees
 
193

 
243

 
390

 
599

Interest expense
 
12,712

 
13,838

 
25,901

 
27,885

Administrator expense
 
619

 
514

 
1,150

 
1,114

General and administrative expenses
 
1,319

 
1,072

 
2,787

 
2,292

Loss on legal settlements
 

 

 
3

 

Total expenses
 
27,769

 
34,301

 
56,898

 
72,937

Base management fee waived
 
(61
)
 
(81
)
 
(122
)
 
(177
)
Insurance recoveries
 
(657
)
 

 
(1,259
)
 

Net expenses
 
27,051

 
34,220

 
55,517

 
72,760

Net investment income
 
18,504

 
25,343

 
41,798

 
51,925

Unrealized appreciation (depreciation) on investments:
 
 
 
 
 
 
 
 
Control investments
 
13,172

 
(4,203
)
 
14,509

 
(18,847
)
Affiliate investments
 
(687
)
 
(793
)
 
(662
)
 
(335
)
Non-control/Non-affiliate investments
 
94,039

 
11,005

 
18,321

 
(65,855
)
Net unrealized appreciation (depreciation) on investments
 
106,524

 
6,009

 
32,168

 
(85,037
)
Net unrealized (appreciation) depreciation on secured borrowings
 
(334
)
 
294

 
(418
)
 
506

Realized gain (loss) on investments and secured borrowings:
 
 
 
 
 
 
 
 
Control investments
 
(22,312
)
 
(8,148
)
 
(45,936
)
 
(8,148
)
Non-control/Non-affiliate investments
 
(93,581
)
 
(18,518
)
 
(93,053
)
 
(17,151
)
Net realized loss on investments and secured borrowings
 
(115,893
)
 
(26,666
)
 
(138,989
)
 
(25,299
)
Net increase (decrease) in net assets resulting from operations
 
$
8,801

 
$
4,980

 
$
(65,441
)
 
$
(57,905
)
Net investment income per common share — basic
 
$
0.13

 
$
0.17

 
$
0.29

 
$
0.35

Earnings (loss) per common share — basic
 
$
0.06

 
$
0.03

 
$
(0.46
)
 
$
(0.39
)
Weighted average common shares outstanding — basic
 
140,961

 
149,207

 
141,917

 
149,738

Net investment income per common share — diluted
 
$
0.13

 
$
0.16

 
$
0.29

 
$
0.33

Earnings (loss) per common share — diluted (Note 5)
 
$
0.06

 
$
0.03

 
$
(0.46
)
 
$
(0.39
)
Weighted average common shares outstanding — diluted
 
140,961

 
156,997

 
141,917

 
157,528

Distributions per common share
 
$
0.14

 
$
0.18

 
$
0.32

 
$
0.36

See notes to Consolidated Financial Statements.

4



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

 
 
Six months
ended
March 31, 2017
 
Six months
ended
March 31, 2016
 
Operations:
 
 
 
 
 
Net investment income
 
$
41,798

 
$
51,925

 
Net unrealized appreciation (depreciation) on investments
 
32,168

 
(85,037
)
 
Net unrealized (appreciation) depreciation on secured borrowings
 
(418
)
 
506

 
Net realized loss on investments and secured borrowings
 
(138,989
)
 
(25,299
)
 
Net decrease in net assets resulting from operations
 
(65,441
)
 
(57,905
)
 
Stockholder transactions:
 
 
 
 
 
Contributions from stockholders (Note 11)
 
287

 

 
Distributions to stockholders
 
(45,008
)
 
(54,123
)
 
Net decrease in net assets from stockholder transactions
 
(44,721
)
 
(54,123
)
 
Capital share transactions:
 
 
 
 
 
Issuance of common stock under dividend reinvestment plan
 
2,166

 
3,554

 
Repurchases of common stock under dividend reinvestment program
 
(2,166
)
 
(3,554
)
 
Repurchases of treasury shares under stock repurchase program
 
(12,500
)
 
(15,092
)
 
Net decrease in net assets from capital share transactions
 
(12,500
)
 
(15,092
)
 
Total decrease in net assets
 
(122,662
)
 
(127,120
)
 
Net assets at beginning of period
 
1,142,288

 
1,353,094

 
Net assets at end of period
 
$
1,019,626

 
$
1,225,974

 
Net asset value per common share
 
$
7.23

 
$
8.33

 
Common shares outstanding at end of period
 
140,961

 
147,184

 




See notes to Consolidated Financial Statements.


5

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

 
 
Six months
ended
March 31, 2017
 
Six months
ended
March 31, 2016
 
Operating activities:
 
 
 
 
 
Net decrease in net assets resulting from operations
 
$
(65,441
)
 
$
(57,905
)
 
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities:
 
 
 
 
 
Net unrealized (appreciation) depreciation on investments
 
(32,168
)
 
85,037

 
Net unrealized appreciation (depreciation) on secured borrowings
 
418

 
(506
)
 
Net realized loss on investments and secured borrowings
 
138,989

 
25,299

 
PIK interest income
 
(6,392
)
 
(6,427
)
 
Recognition of fee income
 
(6,421
)
 
(13,999
)
 
Accretion of original issue discount on investments
 
(5,270
)
 
(1,951
)
 
Accretion of original issue discount on unsecured notes payable
 
132

 
133

 
Amortization of deferred financing costs
 
2,483

 
2,579

 
Changes in operating assets and liabilities:
 

 
 
 
Fee income received
 
6,286

 
13,594

 
(Increase) decrease in restricted cash
 
4,189

 
(7,117
)
 
Decrease in interest, dividends and fees receivable
 
3,275

 
1,792

 
Increase in due from portfolio companies
 
(2,804
)
 
(602
)
 
(Increase) decrease in receivables from unsettled transactions
 
(20,213
)
 
5,168

 
Decrease in insurance recoveries receivable
 
19,729

 

 
Increase in other assets
 
(1,229
)
 
(1,175
)
 
Increase in accounts payable, accrued expenses and other liabilities
 
345

 
204

 
Decrease in base management fee and Part I incentive fee payable
 
(5,058
)
 
(2,433
)
 
Decrease in due to FSC CT
 
(801
)
 
(836
)
 
Increase (decrease) in interest payable
 
(152
)
 
3,594

 
Decrease in payables from unsettled transactions
 
(4,830
)
 
(3,648
)
 
Decrease in director fees payable
 
(248
)
 

 
Decrease in legal settlements payable
 
(19,500
)
 

 
Increase (decrease) in amounts payable to syndication partners
 
762

 
(1,262
)
 
Purchases of investments and net revolver activity
 
(208,020
)
 
(425,877
)
 
Principal payments received on investments (scheduled payments)
 
11,093

 
12,508

 
Principal payments received on investments (payoffs)
 
416,912

 
294,554

 
PIK interest income received in cash
 
3,715

 
1,037

 
Proceeds from the sale of investments
 
58,081

 
163,502

 
Net cash provided by operating activities
 
287,862

 
85,263

 
Financing activities:
 
 
 
 
 
Contributions received in cash
 
287

 

 
Distributions paid in cash
 
(42,842
)
 
(50,569
)
 
Repayments of borrowings under SBA debentures payable
 
(65,300
)
 

 
Borrowings under credit facilities
 
148,000

 
320,000

 
Repayments of borrowings under credit facilities
 
(341,882
)
 
(350,000
)
 
Repayments of secured borrowings
 
(4,810
)
 
(2,155
)
 
Repurchases of common stock under stock repurchase program
 
(12,500
)
 
(15,092
)
 
Repurchases of common stock under dividend reinvestment plan
 
(2,166
)
 
(3,554
)
 
Net cash used by financing activities
 
(321,213
)
 
(101,370
)
 
Net decrease in cash and cash equivalents
 
(33,351
)
 
(16,107
)
 
Cash and cash equivalents, beginning of period
 
117,923

 
138,377

 
Cash and cash equivalents, end of period
 
$
84,572

 
$
122,270

 
Supplemental information:
 
 
 
 
 
Cash paid for interest
 
$
23,438

 
$
21,579

 
Non-cash operating activities:
 
 
 
 
 
Purchases of investments from restructurings
 
$
(157,903
)
 
$
(17,370
)
 
Proceeds from investment restructurings
 
$
157,903

 
$
16,783

 
Non-cash financing activities:
 
 
 
 
 
Issuance of shares of common stock under dividend reinvestment plan
 
$
2,166

 
$
3,554

 

See notes to Consolidated Financial Statements.

6

Fifth Street Finance Corp.
Consolidated Schedule of Investments
March 31, 2017
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value
Control Investments (3)
 
 
 
 
 
 
 
 
 Traffic Solutions Holdings, Inc.
 
Construction and engineering
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash 2% PIK due 4/1/2021 (13)
 
 
 
$
36,372

 
$
36,372

 
$
36,372

 First Lien Revolver, LIBOR+7% (1% floor) cash due 4/1/2021 (13)
 
 
 
1,300

 
1,300

 
1,300

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

 
3,518

 
3,518

 746,114 Series A Preferred Units
 
 
 
 
 
19,945

 
22,563

 746,114 Shares of Common Stock
 
 
 
 
 
5,316

 
1,257

 
 
 
 
 
 
66,451

 
65,010

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

 
15,574

 
6,992

 First Lien Revolver, 8% cash due 12/31/2017
 
 
 
7,436

 
7,436

 

 596.67 Series A Common Units
 
 
 
 
 

 

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

 

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

 

 
 
 
 
 
 
32,210

 
6,992

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

 
35,412

 
40,659

 2,058,411.64 Common Units (6)
 
 
 
 
 

 

 
 
 
 
 
 
35,412

 
40,659

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

 
11,868

 
11,868

 4,293,736 Common Units (6)
 
 
 
 
 
3,114

 
4,086

 
 
 
 
 
 
14,982

 
15,954

 Eagle Hospital Physicians, LLC
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan A, 8% PIK due 4/30/2017
 
 
 
14,460

 
14,460

 
14,185

 First Lien Term Loan B, 8.1% PIK due 4/30/2017
 
 
 
4,051

 
3,970

 

 First Lien Revolver, 8% cash due 4/30/2017
 
 
 
4,013

 
4,013

 
4,013

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

 

 
 
 
 
 
 
26,543

 
18,198

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

 
101,030

 
101,030

 Class B Mezzanine Secured Deferrable Fixed Rate Notes, 15% PIK due 2036 in SLF Repack Issuer 2016 LLC
 
 
 
25,689

 
25,689

 
25,689

 87.5% LLC equity interest (6)
 
 
 
 
 
16,172

 
14,142

 
 
 
 
 
 
142,891

 
140,861

 Ameritox Ltd.
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash 3% PIK due 4/11/2021 (13)
 
 
 
39,806

 
39,806

 
39,806

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

 
16,861

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

 
1,917

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

 
3,061

 
 
 
 
 
 
84,547

 
61,645

 New IPT, Inc.
 
 Oil & gas equipment services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+5% (1% floor) cash due 3/17/2021 (13)
 
 
 
4,107

 
4,107

 
4,107

 Second Lien Term Loan, LIBOR+5.1% (1% floor) cash due 9/17/2021 (13)
 
 
 
2,504

 
2,504

 
2,504

 First Lien Revolver, LIBOR+5% (1% floor) cash due 3/17/2021 (13)
 
 
 
1,009

 
1,009

 
1,009

 50.087 Class A Common Units in New IPT Holdings, LLC
 
 
 
 
 

 

 
 
 
 
 
 
7,620

 
7,620

 AdVenture Interactive, Corp. (9)
 
Advertising
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+6.75% (1.25% floor) cash due 3/22/2018 (13)
 
 
 
19,960

 
19,960

 
19,960

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

 

 9,073 shares of common stock
 
 
 
 
 
24,259

 
24,259

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

 

 
 
 
 
 
 
44,219

 
44,219

 Total Control Investments (39.3% of net assets)
 
 
 
 
 
$
454,875

 
$
401,158

 Affiliate Investments (4)
 
 
 
 
 
 
 
 
 Caregiver Services, Inc.
 
Healthcare services
 
 
 
 
 
 
 Second Lien Term Loan, 10% cash 2% PIK due 6/30/2019
 
 
 
9,620

 
$
9,620

 
$
9,530

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

 
3,811

 
 
 
 
 
 
10,700

 
13,341

See notes to Consolidated Financial Statements.

7

Fifth Street Finance Corp.
Consolidated Schedule of Investments
March 31, 2017
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 AmBath/ReBath Holdings, Inc.
 
Home improvement retail
 
 
 
 
 
 
 First Lien Term Loan B, 12.5% cash 2.5% PIK due 8/31/2018
 
 
 
$
23,663

 
$
23,628

 
$
23,537

 4,668,788 Shares of Preferred Stock
 
 
 
 
 

 
1,602

 
 
 
 
 
 
23,628

 
25,139

 Total Affiliate Investments (3.8% of net assets)
 
 
 
 
 
$
34,328

 
$
38,480

 
 
 
 
 
 
 
 
 
 Non-Control/Non-Affiliate Investments (7)
 
 
 
 
 
 
 
 
 Cenegenics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 First Lien Term Loan, 9.75% cash due 9/30/2019
 
 
 
29,058

 
$
28,748

 
$
19,417

 First Lien Revolver, 15% cash due 9/30/2019
 
 
 
2,189

 
2,189

 
1,359

 452,914.87 Common Units in Cenegenics, LLC
 
 
 
 
 
598

 

 345,380.141 Preferred Units in Cenegenics, LLC
 
 
 
 
 
300

 

 
 
 
 
 
 
31,835

 
20,776

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

 
673

 
 
 
 
 
 
823

 
673

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

 
388

 
 
 
 
 
 
374

 
388

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

 
802

 
 
 
 
 
 
817

 
802

 Maverick Healthcare Group, LLC (9)
 
Healthcare equipment
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+5.5% cash (1.75% floor) cash due 4/30/2017 (13)
 
 
 
16,309

 
16,203

 
14,776

 First Lien Term Loan B, LIBOR+9% cash (1.75% floor) cash due 4/30/2017 (13)
 
 
 
41,739

 
39,110

 
20,579

 CapEx Line, LIBOR+5.75% (1.75% floor) cash due 4/30/2017 (13)
 
 
 
1,272

 
1,261

 
1,152

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 4/30/2017 (13)
 
 
 
56

 
40

 
56

 
 
 
 
 
 
56,614

 
36,563

 Refac Optical Group (9)
 
Specialty stores
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
5,209

 
5,150

 
5,199

 First Lien Term Loan B, LIBOR+8.5% cash, 1.75% PIK due 9/30/2018 (13)
 
 
 
34,454

 
34,315

 
34,181

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

 
3,416

 
3,342

 First Lien Revolver, LIBOR+7.5% cash due 9/30/2018 (13)
 
 
 
3,520

 
3,509

 
3,520

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

 

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

 

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

 
242

 
 
 
 
 
 
47,695

 
46,484

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

 
603

 
 
 
 
 
 
994

 
603

 Milestone Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.85% limited partnership interest (11)
 
 
 
 
 
1,770

 
2,156

 
 
 
 
 
 
1,770

 
2,156

 National Spine and Pain Centers, LLC
 
Healthcare services
 
 
 
 
 
 
 Mezzanine Term Loan, 11% cash 1.6% PIK due 9/27/2020
 
 
 
30,969

 
30,950

 
30,886

 317,282.97 Class A Units
 
 
 
 
 
317

 
787

 
 
 
 
 
 
31,267

 
31,673

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

 
812

 
 
 
 
 
 
635

 
812

 Riverside Fund V, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.48% limited partnership interest (11)
 
 
 
 
 
1,241

 
1,140

 
 
 
 
 
 
1,241

 
1,140


See notes to Consolidated Financial Statements.

8

Fifth Street Finance Corp.
Consolidated Schedule of Investments
March 31, 2017
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 ACON Equity Partners III, LP
 
Multi-sector holdings
 
 
 
 
 
 
 0.13% limited partnership interest (11)
 
 
 
 
 
$
806

 
$
958

 
 
 
 
 
 
806

 
958

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

 
734

 50,000 Common Shares
 
 
 
 
 
1

 
74

 
 
 
 
 
 
501

 
808

 Edmentum, Inc.
 
Education services
 
 
 
 
 
 
 Unsecured Senior PIK Note, 8.5% PIK due 6/9/2020
 
 
 
$
2,332

 
2,332

 
1,730

 Unsecured Junior PIK Note, 10% PIK due 6/9/2020
 
 
10,751

 
10,227

 
5,856

 Unsecured Revolver, 5% cash due 6/9/2020
 
 
 
1,665

 
1,665

 
1,665

 126,127.80 Class A Common Units
 
 
 
 
 
126

 

 
 
 
 
 
 
14,350

 
9,251

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

 

 
 
 
 
 
 
1,000

 

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

 
25,642

 
 
 
 
 
 

 
25,642

 Vitalyst Holdings, Inc.
 
IT consulting & other services
 
 
 
 
 
 
 Subordinated Term Loan, 12% cash 1.5% PIK due 9/5/2018
 
 
 
19,831

 
19,831

 
19,808

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

 
469

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

 

 
 
 
 
 
 
20,581

 
20,277

 Beecken Petty O'Keefe Fund IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.5% limited partnership interest (11)
 
 
 
 
 
1,207

 
1,359

 
 
 
 
 
 
1,207

 
1,359

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

 
5,411

 
 
 
 
 
 
1,643

 
5,411

 Comprehensive Pharmacy Services LLC
 
Pharmaceuticals
 
 
 
 
 
 
 Mezzanine Term Loan, 11.25% cash 1.5% PIK due 11/30/2019
 
 
 
14,910

 
14,910

 
14,855

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

 
2,182

 
 
 
 
 
 
16,910

 
17,037

 Garretson Firm Resolution Group, Inc.
 
Diversified support services
 
 
 
 
 
 
 First Lien Revolver, LIBOR+6.5% (1% floor) cash due 5/22/2020 (13)
 
 
 
60

 
60

 
44

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

 
418

 50,000 Common Units in GRG Holdings, LP
 
 
 
 
 
5

 

 
 
 
 
 
 
560

 
462

 Teaching Strategies, LLC
 
Education services
 
 
 
 
 
 
 Second Lien Term Loan, LIBOR+9.5% (1% floor) cash due 8/27/2023 (13)
 
 
 
33,500

 
33,500

 
33,500

 
 
 
 
 
 
33,500

 
33,500

 Omniplex World Services Corporation (9)
 
Security & alarm services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 8/19/2021
 
 
 
11,359

 
11,359

 
10,115

 500 Class A Common Units in Omniplex Holdings Corp.
 
 
 
 
 
500

 
34

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

 

 
 
 
 
 
 
11,963

 
10,149

See notes to Consolidated Financial Statements.


9

Fifth Street Finance Corp.
Consolidated Schedule of Investments
March 31, 2017
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 Dominion Diagnostics, LLC (9)
 
Healthcare services
 
 
 
 
 
 
 Subordinated Term Loan, 11% cash 2% PIK due 10/8/2019
 
 
 
$
16,400

 
$
16,195

 
$
7,663

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

 
37,558

 
46,783

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

 

 
 
 
 
 
 
53,753

 
54,446

 Sterling Capital Partners IV, L.P.
 
Multi-sector holdings
 
 
 
 
 
 
 0.2% limited partnership interest (11)
 
 
 
 
 
1,621

 
1,292

 
 
 
 
 
 
1,621

 
1,292

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

 
24,000

 
23,240

 
 
 
 
 
 
24,000

 
23,240

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

 
4,024

 
4,411

 
 
 
 
 
 
4,024

 
4,411

 Pingora MSR Opportunity Fund I-A, LP
 
Thrift & mortgage finance
 
 
 
 
 
 
 1.9% limited partnership interest (11)
 
 
 
 
 
7,574

 
6,879

 
 
 
 
 
 
7,574

 
6,879

 Credit Infonet, Inc. (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 Subordinated Term Loan, 12.25% cash 1.25% PIK due 10/26/2020
 
 
 
13,888

 
13,888

 
13,607

 
 
 
 
 
 
13,888

 
13,607

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

 
707

 
 
 
 
 
 
213

 
707

 InMotion Entertainment Group, LLC
 
Consumer electronics
 
 
 
 
 
 
 First Lien Term Loan A, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
12,604

 
12,587

 
12,488

 First Lien Term Loan B, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
5,494

 
5,372

 
5,444

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

 
5,601

 
5,604

 CapEx Line, LIBOR+7.75% (1.25% floor) cash due 10/1/2018 (13)
 
 
 
818

 
814

 
818

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

 
1,579

 
 
 
 
 
 
25,374

 
25,933

 Thing5, LLC (9)
 
Data processing & outsourced services
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7% (1% floor) cash due 10/11/2020 (12)(13)
 
 
 
48,100

 
48,078

 
47,484

 First Lien Revolver, LIBOR+7% (1% floor) cash due 10/11/2020 (13)
 
 
 
1,000

 
997

 
1,000

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

 
38

 
 
 
 
 
 
51,075

 
48,522

 Kason Corporation
 
Industrial machinery
 
 
 
 
 
 
 Mezzanine Term Loan, 11.5% cash 1.75% PIK due 10/28/2019
 
 
 
5,953

 
5,953

 
5,696

 498.6 Class A Preferred Units in Kason Investment, LLC
 
 
 
 
 
499

 
390

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

 

 
 
 
 
 
 
6,507

 
6,086

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

 
1,673

 
 
 
 
 
 
1,503

 
1,673

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

 
(119
)
 
 
 
 
 
 

 
(119
)
See notes to Consolidated Financial Statements.

10

Fifth Street Finance Corp.
Consolidated Schedule of Investments
March 31, 2017
(dollar amounts in thousands)
(unaudited)

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

 
Cost
 
Fair Value

 Vandelay Industries Merger Sub, Inc.
 
Industrial machinery
 
 
 
 
 
 
 Second Lien Term Loan, 10.75% cash 1% PIK due 11/12/2019
 
 
 
$
39,265

 
$
39,131

 
$
39,227

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

 
6,342

 
 
 
 
 
 
40,089

 
45,569

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

 
5,474

 
5,430

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 11/21/2018 (10)(13)
 
 
 
 
 
(3
)
 
(32
)
 100,000 Common Units in OSYS Holdings, LLC
 
 
 
 
 
1,000

 
1,026

 
 
 
 
 
 
6,471

 
6,424

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

 
1,794

 
 
 
 
 
 
1,419

 
1,794

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

 
4,633

 
 
 
 
 
 
5,165

 
4,633

 Lift Brands, Inc.
 
Leisure facilities
 
 
 
 
 
 
 First Lien Term Loan, LIBOR+7.5% (1% floor) cash due 12/23/2019 (13)
 
 
 
21,969

 
21,916

 
21,815

 First Lien Revolver, LIBOR+7.5% (1% floor) cash due 12/23/2019 (10)(13)
 
 
 
 
 
(13
)
 
(105
)
 2,000,000 Class A Common Units in Snap Investments, LLC
 
 
 
 
 
2,000

 
2,713

 
 
 
 
 
 
23,903

 
24,423

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