Business Development Corp of America - FORM 10-Q - May 11, 2017

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

FORM 10-Q
(Mark One)
x
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
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 814-00821
BUSINESS DEVELOPMENT CORPORATION OF AMERICA
(Exact Name of Registrant as Specified in its Charter)

Maryland
 
27-2614444
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
9 West 57th Street, 49th Floor, Suite 4920
New York, New York
 
10019
(Address of Principal Executive Office)
 
(Zip Code)

(212) 588-6770
(Registrant’s Telephone Number, Including Area Code)
 
Not applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§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 o No o

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 o
 
Accelerated filer o
 
 
 
Non-accelerated filer x
 
Smaller reporting company o
 
 
 
 
 
Emerging growth company o
(Do not check if a smaller reporting 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. o



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

The number of shares of the registrant's common stock, $0.001 par value, outstanding as of May 10, 2017 was 179,904,515.









BUSINESS DEVELOPMENT CORPORATION OF AMERICA
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2017

TABLE OF CONTENTS
 
 
 
Page
PART I - FINANCIAL INFORMATION
  
PART II - OTHER INFORMATION
 



PART I - FINANCIAL INFORMATION

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS DEVELOPMENT CORPORATION OF AMERICA
 
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(dollars in thousands except share and per share data)
 
March 31,
 
December 31,
 
2017
 
2016
ASSETS
(Unaudited)
 
 
Investments, at fair value:
 
 
 
Control Investments, at fair value (amortized cost of $271,734 and $271,711, respectively)
$
248,956

 
$
254,638

Affiliate Investments, at fair value (amortized cost of $353,212 and $383,894, respectively)
324,301

 
354,238

Non-affiliate Investments, at fair value (amortized cost of $1,851,913 and $1,859,933, respectively)
1,785,968

 
1,785,207

Investments, at fair value (amortized cost of $2,476,859 and $2,515,538, respectively)
2,359,225

 
2,394,083

Cash and cash equivalents
127,251

 
189,270

Interest and dividends receivable
23,494

 
28,608

Receivable for unsettled trades
31,951

 
4,293

Prepaid expenses and other assets
1,499

 
52

Total assets
$
2,543,420

 
$
2,616,306

 
 
 
 
LIABILITIES
 

 
 

Debt (net of deferred financing costs of $4,490 and $5,013, respectively)
$
942,958

 
$
910,484

Stockholder distributions payable
13,250

 
13,516

Management fees payable
9,538

 
9,571

Subordinated income incentive fees payable
6,367

 
3,137

Accounts payable and accrued expenses
10,124

 
8,454

Payable for unsettled trades
26,681

 
74,020

Interest and credit facility fees payable
8,372

 
9,606

Payable for common stock repurchases
903

 
57,651

Directors fees payable
91

 
133

Total liabilities
$
1,018,284

 
$
1,086,572

Commitments and contingencies (Note 6)
 
 
 
 
 
 
 
NET ASSETS
 
 
 
Preferred stock, $.001 par value, 50,000,000 shares authorized, none issued and outstanding
$
—

 
$
—

Common stock, $.001 par value, 450,000,000 shares authorized, 178,750,498 and 177,120,791 shares issued and outstanding, respectively
179

 
177

Additional paid in capital
1,743,863

 
1,729,865

Accumulated under distributed net investment income
37,538

 
48,944

Accumulated over distributed net realized gains
(139,932
)
 
(129,161
)
Net unrealized depreciation, net of deferred taxes
(119,544
)
 
(122,912
)
Total net assets attributable to Business Development Corporation of America
1,522,104

 
1,526,913

Net assets attributable to non-controlling interest
3,032

 
2,821

Total net assets
1,525,136

 
1,529,734

 
 
 
 
Total liabilities and net assets
$
2,543,420

 
$
2,616,306

 
 
 
 
Net asset value per share attributable to Business Development Corporation of America
$
8.52

 
$
8.62




The accompanying notes are an integral part of these consolidated financial statements.

1
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands except share and per share data)
(Unaudited)


 
 
For the Three Months Ended March 31,
 
 
2017
 
2016
Investment income:
 
 
 
 
Interest from investments
 
 
 
 
Control investments
 
$
6,154

 
$
6,907

Affiliate investments
 
8,579

 
8,449

Non-affiliate investments
 
38,895

 
39,165

Total interest from investments
 
53,628

 
54,521

Interest from cash and cash equivalents
 
70

 
42

Total interest income
 
53,698

 
54,563

Other income
 
2,974

 
2,355

Total investment income
 
56,672

 
56,918

 
 
 
 
 
Operating expenses:
 
 

 
 

Management fees
 
9,538

 
9,413

Subordinated income incentive fees
 
6,367

 
—

Interest and credit facility fees
 
9,850

 
9,336

Professional fees
 
1,480

 
1,570

Other general and administrative
 
1,625

 
2,630

Administrative services
 
203

 
250

Insurance
 
6

 
55

Directors fees
 
195

 
126

Total expenses
 
29,264

 
23,380

 
 
 
 
 
Income tax expense, including excise tax
 
635

 
—

 
 
 
 
 
Net investment loss attributable to non-controlling interests
 
3

 
7

 
 
 
 
 
Net investment income
 
26,770

 
33,531

 
 
 
 
 
Realized and unrealized gain (loss) on investments:
 
 
 
 
Net realized gain (loss) from investments
 
 
 
 
   Control investments
 
—

 
—

   Affiliate investments
 
970

 
180

   Non-affiliate investments
 
(11,741
)
 
1,017

Total net realized gain (loss) from investments
 
(10,771
)
 
1,197

Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
 
 
 
 
   Control investments
 
(5,950
)
 
6,501

   Affiliate investments
 
745

 
(8,186
)
   Non-affiliate investments
 
8,781

 
(12,759
)
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
 
3,576

 
(14,444
)
Net change in unrealized depreciation attributable to non-controlling interests
 
(208
)
 
—

 
 
 
 
 
Net realized and unrealized loss on investments
 
(7,403
)
 
(13,247
)
 
 
 
 
 
Net increase in net assets resulting from operations
 
$
19,367

 
$
20,284

 
 
 
 
 

The accompanying notes are an integral part of these consolidated financial statements.

2
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands except share and per share data)
(Unaudited)


 
 
For the Three Months Ended March 31,
 
 
2017
 
2016
Per share information - basic and diluted
 
 
 
 
Net investment income
 
$
0.15

 
$
0.19

Net increase in net assets resulting from operations
 
$
0.11

 
$
0.11

Weighted average shares outstanding
 
178,215,971

 
179,076,365




The accompanying notes are an integral part of these consolidated financial statements.

3

BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(dollars in thousands except share and per share data)
(Unaudited)

 
For the Three Months Ended March 31,
 
2017
 
2016
Operations:
 
 
 
Net investment income
$
26,770

 
$
33,531

Net realized gain (loss) from investments
(10,771
)
 
1,197

Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
3,576

 
(14,444
)
Net change in unrealized depreciation attributable to non-controlling interests
(208
)
 
—

Net increase in net assets from operations
19,367

 
20,284

Stockholder distributions:
 

 
 

Distributions from net investment income
(38,176
)
 
(33,531
)
Return of capital
—

 
(5,118
)
Net decrease in net assets from stockholder distributions
(38,176
)
 
(38,649
)
Capital share transactions:
 

 
 

Reinvestment of stockholder distributions
14,898

 
15,621

Repurchases of common stock
(898
)
 
(27,230
)
Net increase (decrease) in net assets from capital share transactions
14,000

 
(11,609
)
Total decrease in net assets, before non-controlling interest
(4,809
)
 
(29,974
)
Increase in non-controlling interest
211

 
5

Total decrease in net assets
(4,598
)
 
(29,969
)
Net assets at beginning of period
1,529,734

 
1,610,485

Net assets at end of period
$
1,525,136

 
$
1,580,516

 
 
 
 
Net asset value per common share attributable to Business Development Corporation of America
$
8.52

 
$
8.86

Common shares outstanding at end of period
178,750,498

 
177,922,785

 
 
 
 
Accumulated under (over) distributed net investment income
$
37,538

 
$
(7,656
)
Accumulated over distributed net realized gains
$
(139,932
)
 
$
(2,208
)


The accompanying notes are an integral part of these consolidated financial statements.

4
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)

 
For the Three Months Ended March 31,
 
2017
 
2016
Operating activities:
 
 
 
Net increase in net assets resulting from operations
$
19,367

 
$
20,284

Adjustments to reconcile net increase in net assets from operations to net cash provided by (used in) operating activities:
 
 
 

Payment-in-kind interest income
(1,597
)
 
(7,093
)
Net accretion of discount on investments
(2,163
)
 
(1,683
)
Amortization of deferred financing costs
527

 
894

Amortization of discount on unsecured notes
78

 
79

Sales and repayments of investments
202,845

 
130,008

Purchases of investments
(171,177
)
 
(144,341
)
Net realized (gain) loss from investments
10,771

 
(1,197
)
Net unrealized (appreciation) depreciation on investments, gross of deferred taxes
(3,821
)
 
13,548

(Increase) decrease in operating assets:
 
 
 

Interest and dividends receivable
5,114

 
1,131

Prepaid expenses and other assets
(1,447
)
 
2,503

Receivable for unsettled trades
(27,658
)
 
1,166

Increase (decrease) in operating liabilities:
 
 
 

Payable for unsettled trades
(47,339
)
 
2,194

Management and incentive fees payable
3,197

 
(252
)
Interest and credit facility fees payable
(1,234
)
 
(1,883
)
Accounts payable and accrued expenses
1,670

 
2,074

Directors fees payable
(42
)
 
38

Net cash provided by (used in) operating activities
(12,909
)
 
17,470

 
 
 
 
Financing activities:
 

 
 

Repurchases of common stock
(898
)
 
(27,230
)
Proceeds from debt
31,873

 
80,000

Payable for common stock repurchases
(56,748
)
 
(924
)
Payments of financing cost
(4
)
 
(25
)
Proceeds from affiliate
—

 
(10
)
Stockholder distributions
(23,544
)
 
(23,160
)
Increase in non-controlling interest
211

 
5

Net cash provided by (used in) financing activities
(49,110
)
 
28,656

 
 
 
 
Net increase (decrease) in cash and cash equivalents
(62,019
)
 
46,126

Cash and cash equivalents, beginning of period
189,270

 
150,412

Cash and cash equivalents, end of period
$
127,251

 
$
196,538

Supplemental information:
 

 
 

Interest paid during the period
$
10,357

 
$
10,180

Taxes, including excise tax, paid during the period
$
18

 
$
85

Distributions reinvested
$
14,898

 
$
15,621


The accompanying notes are an integral part of these consolidated financial statements.

5
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured First Lien
Debt - 105.7% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Abaco Systems Holding Corp. (i)
 
Business Services
 
L+6.00% (7.00%), 12/7/2021
 
$
23,879

 
$
23,426

 
$
23,643

 
1.6
%
Ability Networks Inc. (j)
 
Health Care Providers & Services
 
L+5.00% (6.00%), 5/14/2021
 
13,677

 
13,601

 
13,694

 
0.9
%
Adams Publishing Group, LLC (i)
 
Media
 
L+7.00% (8.15%), 11/3/2020
 
14,447

 
14,200

 
14,447

 
0.9
%
Affinion Group, Inc. (j)
 
Business Services
 
L+5.25% (6.75%), 4/30/2018
 
9,949

 
9,829

 
9,908

 
0.6
%
Aleris International, Inc. (x)
 
Metals & Mining
 
9.50%, 4/1/2021
 
2,882

 
3,079

 
3,076

 
0.2
%
Amports, Inc. (m)
 
Transportation Infrastructure
 
L+8.00% (9.05%), 5/19/2020
 
15,000

 
14,941

 
14,400

 
0.9
%
Amteck, LLC (f) (i)
 
Commercial Services & Supplies
 
L+8.50% (9.65%), 7/2/2020
 
22,625

 
22,282

 
22,173

 
1.5
%
Answers Corporation (t)
 
Internet Software & Services
 
P+6.25% (10.00%), 10/3/2021
 
34,475

 
33,589

 
15,449

 
1.0
%
Answers Corporation (t)
 
Internet Software & Services
 
L+7.00% (8.00%), 4/15/2021
 
1,279

 
1,247

 
1,279

 
0.1
%
AP Gaming I, LLC (i) (j)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.25%), 12/20/2020
 
30,274

 
30,083

 
30,426

 
2.0
%
APCO Holdings (i)
 
Diversified Consumer Services
 
L+6.00% (7.00%), 1/29/2022
 
8,667

 
8,445

 
8,450

 
0.6
%
Applied Merchant Systems West Coast, Inc. (m)
 
Diversified Financial Services
 
L+11.50% (12.50%), 10/26/2020
 
25,865

 
25,487

 
24,831

 
1.6
%
Ascensus, Inc. (j)
 
IT Services
 
L+4.00% (5.02%), 12/3/2022
 
17,786

 
16,910

 
17,886

 
1.2
%
Asurion LLC (j)
 
IT Services
 
L+3.75% (4.75%), 11/3/2023
 
245

 
244

 
247

 
—
%
Avaya, Inc. Term Loan B-3 (j) (t)
 
Communications Equipment
 
L+4.50% (5.54%), 10/26/2017
 
9,685

 
8,784

 
7,672

 
0.5
%
Avaya, Inc. Term Loan B-6 (j) (t)
 
Communications Equipment
 
L+5.50% (6.53%), 3/31/2018
 
8,457

 
8,461

 
6,717

 
0.4
%
Avaya, Inc. Term Loan B-7 (i) (j) (t)
 
Communications Equipment
 
L+5.25% (6.28%), 5/29/2020
 
9,793

 
9,725

 
7,805

 
0.5
%
AxleTech International, LLC (i)
 
Machinery
 
L+6.50% (7.65%), 1/5/2021
 
19,550

 
19,425

 
19,550

 
1.3
%
Basho Technologies, Inc. (d) (l) (t)
 
Software
 
17.00%, 3/9/2018
 
10,720

 
10,466

 
1,394

 
0.1
%
Basho Technologies, Inc. (d) (l) (t)
 
Software
 
17.00%, 6/30/2017
 
2,550

 
2,550

 
332

 
—
%
BDS Solutions Group, LLC (f) (i) (m)
 
Business Services
 
L+8.75% (9.90%), 6/1/2021
 
36,196

 
35,513

 
36,196

 
2.4
%
Berner Food & Beverage LLC (f) (i)
 
Food Products
 
L+7.00% (8.00%), 3/16/2022
 
18,853

 
18,479

 
18,476

 
1.2
%
Blount International, Inc. (j)
 
Machinery
 
L+6.25% (7.25%), 4/12/2023
 
12,438

 
12,111

 
12,500

 
0.8
%
Broder Bros, Co. (m)
 
Distributors
 
L+5.75% (7.00%), 6/3/2021
 
7,230

 
7,120

 
7,230

 
0.5
%
Broder Bros, Co. (m)
 
Distributors
 
L+12.25% (13.50%), 6/3/2021
 
7,320

 
7,209

 
7,320

 
0.5
%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)
 
Food Products
 
L+12.50% (13.50%), 4/28/2019
 
56,470

 
50,053

 
11,294

 
0.7
%
Catapult Learning, LLC (i) (m)
 
Diversified Consumer Services
 
L+6.50% (9.00%), 7/16/2020
 
27,500

 
27,137

 
26,400

 
1.7
%
CCW, LLC (f) (i)
 
Hotels, Restaurants & Leisure
 
L+7.00% (8.00%), 3/21/2021
 
24,500

 
24,163

 
24,255

 
1.6
%

The accompanying notes are an integral part of these consolidated financial statements.

6
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Central Security Group, Inc. (i) (j)
 
Commercial Services & Supplies
 
L+5.63% (6.63%), 10/6/2020
 
$
25,489

 
$
25,159

 
$
25,446

 
1.7
%
Chicken Soup for the Soul Publishing, LLC (i)
 
Media
 
L+6.25% (7.50%), 1/8/2019
 
28,114

 
27,923

 
26,287

 
1.7
%
Clover Technologies Group, LLC (j)
 
Commercial Services & Supplies
 
P+3.50% (5.50%), 5/8/2020
 
13,976

 
13,905

 
13,400

 
0.9
%
Contura Energy Inc.
 
Energy Equipment & Services
 
10.00%, 8/1/2021
 
10,000

 
10,540

 
10,781

 
0.7
%
Contura Energy Inc. (j) (x)
 
Energy Equipment & Services
 
L+5.00% (6.00%), 3/18/2024
 
7,743

 
7,666

 
7,646

 
0.5
%
ConvergeOne Holdings Corp. (j)
 
Diversified Consumer Services
 
L+5.38% (6.52%), 6/17/2020
 
16,558

 
16,434

 
16,496

 
1.1
%
Covenant Surgical Partners, Inc. (x)
 
Health Care
 
8.75%, 8/1/2019
 
10,000

 
9,505

 
9,591

 
0.6
%
Cvent, Inc. (j)
 
Internet Software & Services
 
L+5.00% (6.00%), 11/29/2023
 
10,000

 
9,900

 
10,025

 
0.7
%
Danish CRJ LTD. (a) (p)
 
Aerospace & Defense
 
13.50%
 
20

 
—

 
20

 
—
%
DigiCert, Inc (j)
 
Internet Software & Services
 
L+5.00% (6.00%), 10/21/2021
 
10,863

 
10,613

 
10,863

 
0.7
%
Doskocil Manufacturing Company, Inc. (m)
 
Household Durables
 
L+8.40% (9.40%), 11/10/2020
 
15,000

 
14,810

 
15,000

 
1.0
%
Eagle Rx, LLC (i)
 
Health Care Providers & Services
 
L+6.00% (7.00%), 8/15/2019
 
14,492

 
14,457

 
14,492

 
1.0
%
ECI Acquisition Holdings, Inc. (i)
 
Internet Software & Services
 
L+6.25% (7.40%), 3/11/2019
 
12,742

 
12,708

 
12,552

 
0.8
%
Emergency Communications Network, LLC (m)
 
Internet Software & Services
 
L+10.06% (11.06%), 6/12/2021
 
19,724

 
19,517

 
19,428

 
1.3
%
ERG Holding Company (i) (m)
 
Health Care Providers & Services
 
L+6.75% (8.00%), 4/4/2019
 
34,475

 
34,071

 
33,958

 
2.2
%
Excelitas Technologies Corp. (j)
 
Electronic Equipment, Instruments & Components
 
L+5.00% (6.15%), 11/2/2020
 
13,725

 
13,681

 
13,691

 
0.9
%
Genesys Telecommunications Laboratories, Inc. (j)
 
Diversified Telecommunication Services
 
L+4.00% (5.00%), 12/1/2023
 
24,939

 
24,581

 
25,100

 
1.6
%
Greenwave Holdings, Inc. (l)
 
Internet Software & Services
 
13.00%, 7/8/2019
 
15,811

 
15,661

 
15,811

 
1.0
%
GTCR Valor Companies, Inc. (j)
 
Software
 
L+6.00% (7.15%), 6/16/2023
 
24,813

 
23,930

 
24,914

 
1.6
%
HC Group Holdings III, Inc. (j)
 
Health Care
 
L+5.00% (6.00%), 4/7/2022
 
14,895

 
14,641

 
14,634

 
1.0
%
Hexion Inc. (x)
 
Chemicals
 
10.38%, 2/1/2022
 
920

 
920

 
919

 
0.1
%
Icynene US Acquisition Corp. (f) (i) (m)
 
Building Products
 
L+6.25% (7.28%), 11/4/2020
 
21,226

 
20,970

 
21,013

 
1.4
%
Icynene US Acquisition Corp. (f)
 
Building Products
 
L+6.25% (7.28%), 11/4/2019
 
1,000

 
1,000

 
990

 
0.1
%
ILC Dover LP (i) (l)
 
Aerospace & Defense
 
L+9.00% (10.00%), 3/20/2020
 
14,079

 
14,044

 
12,108

 
0.8
%
Indivior Finance S.A.R.L. (j)
 
Health Care
 
L+6.00% (7.04%), 12/19/2019
 
8,987

 
8,987

 
9,032

 
0.6
%
InMotion Entertainment Group, LLC (f) (i)
 
Specialty Retail
 
L+7.75% (9.00%), 10/1/2018
 
14,255

 
14,148

 
14,255

 
0.9
%
IPC Corp. (j)
 
Diversified Telecommunication Services
 
L+4.50% (5.50%), 8/6/2021
 
9,163

 
9,025

 
8,522

 
0.6
%

The accompanying notes are an integral part of these consolidated financial statements.

7
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Jackson Hewitt, Inc. (j)
 
Diversified Consumer Services
 
L+7.00% (8.04%), 7/30/2020
 
$
6,860

 
$
6,827

 
$
6,483

 
0.4
%
K2 Pure Solutions NoCal, L.P. (i)
 
Chemicals
 
L+6.00% (7.00%), 2/19/2021
 
6,500

 
6,447

 
6,500

 
0.4
%
Kahala Ireland OpCo Designated Activity Company (a) (d) (l) (o)
 
Aerospace & Defense
 
L+8.00% (13.00%), 12/23/2028
 
149,469

 
149,469

 
149,469

 
9.8
%
Kahala US OpCo LLC (d) (l) (o)
 
Aerospace & Defense
 
L+8.00% (13.00%), 12/23/2028
 
2,690

 
2,690

 
2,690

 
0.2
%
Kissner Milling Co. Ltd. (x)
 
Chemicals
 
8.38%, 12/1/2022
 
9,960

 
9,943

 
10,271

 
0.7
%
LenderLive Services, LLC
 
Business Services
 
L+12.00% (12.94%), 8/11/2020
 
10,000

 
9,832

 
9,700

 
0.6
%
Lightsquared LP (l)
 
Diversified Telecommunications Services
 
L+8.75% (9.85%), 6/15/2020
 
10,496

 
9,661

 
10,228

 
0.7
%
Lionbridge Technologies, Inc. (i)
 
Business Services
 
L+5.50% (6.55%), 2/28/2024
 
13,868

 
13,799

 
13,833

 
0.9
%
MCS AMS Sub-Holdings LLC (j)
 
Real Estate Management & Development
 
L+6.50% (7.50%), 10/15/2019
 
11,625

 
11,442

 
11,218

 
0.7
%
Medical Depot Holdings, Inc. (i)
 
Health Care
 
L+5.50% (6.50%), 1/3/2023
 
20,151

 
18,402

 
19,295

 
1.3
%
Metal Services LLC (j)
 
Metals & Mining
 
L+7.50% (8.65%), 6/30/2019
 
10,889

 
10,769

 
10,939

 
0.7
%
Midwest Can Company, LLC (f)
 
Energy Equipment & Services
 
L+5.75% (9.75%), 1/26/2022
 
69

 
69

 
68

 
—
%
Midwest Can Company, LLC (f) (i)
 
Energy Equipment & Services
 
L+6.75% (7.75%), 1/26/2022
 
5,105

 
5,001

 
5,016

 
0.3
%
MMM Holdings, LLC (j) (l)
 
Health Care
 
L+8.75% (10.25%), 6/28/2019
 
7,153

 
7,070

 
7,046

 
0.5
%
Monitronics International, Inc. (j)
 
Diversified Consumer Services
 
L+5.50% (6.65%), 9/30/2022
 
2,985

 
2,971

 
3,011

 
0.2
%
Montreign Operating Company, LLC (m)
 
Hotels, Restaurants, & Leisure
 
L+8.25% (9.31%), 1/24/2023
 
25,000

 
24,514

 
25,468

 
1.7
%
Motion Recruitment Partners, LLC (i)
 
Professional Services
 
L+6.00% (7.00%), 2/13/2020
 
17,750

 
17,508

 
17,750

 
1.2
%
Motion Recruitment Partners, LLC (f) (i)
 
Professional Services
 
L+5.00% (8.75%), 2/13/2020
 
125

 
125

 
125

 
—
%
Motorsports Aftermarket Group, Inc. (i) (j)
 
Auto Components
 
L+4.00% (5.42%), 5/14/2021
 
26,214

 
24,900

 
13,565

 
0.9
%
MSO of Puerto Rico, LLC (j) (l)
 
Health Care
 
L+8.75% (10.25%), 6/28/2019
 
5,200

 
5,140

 
5,122

 
0.3
%
Murray Energy Holdings Co. (j)
 
Energy Equipment & Services
 
L+7.25% (8.40%), 4/16/2020
 
14,809

 
14,069

 
14,350

 
0.9
%
MWI Holdings, Inc. (j)
 
Machinery
 
L+5.50% (6.65%), 6/28/2020
 
9,925

 
9,843

 
9,999

 
0.7
%
National Technical Systems, Inc. (f) (i)
 
Professional Services
 
L+6.25% (7.25%), 6/12/2021
 
19,326

 
19,080

 
18,359

 
1.2
%
New Star Metals Inc. (l) (m)
 
Business Services
 
L+9.50% (11.00%), 12/22/2021
 
32,806

 
32,161

 
32,163

 
2.1
%
NexSteppe Inc. (l)
 
Chemicals
 
15.00%, 3/30/2018
 
10,876

 
10,638

 
5,873

 
0.4
%
Noosa Acquirer, Inc. (i) (m)
 
Food Products
 
L+5.25% (6.40%), 11/21/2020
 
25,000

 
24,772

 
25,000

 
1.6
%
NTM Acquisition Corp. (i)
 
Media
 
L+6.25% (7.25%), 6/7/2022
 
12,272

 
12,110

 
12,149

 
0.8
%

The accompanying notes are an integral part of these consolidated financial statements.

8
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Orchid Underwriters Agency, LLC (f) (i)
 
Insurance Broker
 
L+5.00% (6.00%), 3/17/2022
 
$
20,000

 
$
19,780

 
$
19,800

 
1.3
%
Otter Box Holdings, Inc. (j)
 
Electronic Equipment, Instruments & Components
 
L+4.75% (5.75%), 6/3/2020
 
14,797

 
14,606

 
14,587

 
1.0
%
Peabody Energy Corp. (j)
 
Metals & Mining
 
L+4.50% (5.50%), 3/31/2022
 
4,296

 
4,274

 
4,291

 
0.3
%
PeopLease Holdings, LLC (i)
 
Commercial Services & Supplies
 
L+9.00% (10.16%), 2/26/2021
 
20,000

 
19,842

 
19,900

 
1.3
%
PGX Holdings, Inc. (j)
 
Transportation Infrastructure
 
L+5.25% (6.25%), 9/29/2020
 
13,081

 
12,985

 
13,090

 
0.9
%
Premier Dental Services, Inc. (i) (j)
 
Health Care Providers & Services
 
L+6.50% (7.50%), 11/1/2018
 
22,488

 
22,448

 
22,375

 
1.5
%
Premier Global Services, Inc. (j)
 
Diversified Telecommunication Services
 
L+6.50% (7.50%), 12/8/2021
 
9,743

 
9,318

 
9,690

 
0.6
%
Pre-Paid Legal Services, Inc. (j)
 
Diversified Consumer Services
 
L+5.25% (6.50%), 7/1/2019
 
12,759

 
12,754

 
12,799

 
0.8
%
Pride Plating, Inc. (i)
 
Aerospace & Defense
 
L+5.50% (6.65%), 6/13/2019
 
8,730

 
8,682

 
8,446

 
0.6
%
PSKW, LLC (i)
 
Health Care Providers & Services
 
L+4.25% (5.40%), 11/25/2021
 
1,969

 
1,953

 
1,949

 
0.1
%
PSKW, LLC (m)
 
Health Care Providers & Services
 
L+8.36% (9.51%), 11/25/2021
 
17,750

 
17,474

 
17,218

 
1.1
%
PT Network, LLC (f) (i)
 
Health Care
 
L+6.50% (7.55%), 11/30/2021
 
17,063

 
16,825

 
16,970

 
1.1
%
PT Network, LLC (f)
 
Health Care
 
L+6.50% (7.54%), 11/30/2021
 
1,555

 
1,555

 
1,546

 
0.1
%
Pure Barre, LLC (f) (i) (m)
 
Hotels, Restaurants & Leisure
 
L+7.00% (8.00%), 6/11/2020
 
27,463

 
27,112

 
27,189

 
1.8
%
Resco Products, Inc. (i)
 
Metals & Mining
 
P+4.75% (8.75%), 3/7/2020
 
10,000

 
10,000

 
9,200

 
0.6
%
RVNB Holdings, Inc. (dba All My Sons Moving & Storage) (f) (i)
 
Diversified Consumer Services
 
L+6.50% (7.50%), 2/25/2020
 
21,552

 
21,292

 
21,552

 
1.4
%
Sage Automotive Holdings, Inc. (j)
 
Auto Components
 
L+5.00% (6.00%), 11/8/2022
 
14,963

 
14,820

 
15,000

 
1.0
%
SHO Holding II Corporation (j)
 
Specialty Retail
 
L+5.00% (6.00%), 10/27/2022
 
11,850

 
11,754

 
11,791

 
0.8
%
Squan Holding Corp.
 
Diversified Telecommunication Services
 
L+4.00% (5.15%), 10/10/2019
 
10,385

 
7,119

 
6,854

 
0.4
%
STG-Fairway Acquisitions, Inc. (j)
 
Professional Services
 
L+5.25% (6.40%), 6/30/2022
 
13,359

 
13,206

 
12,858

 
0.8
%
Stratose Intermediate Holdings II, LLC (j)
 
Health Care Providers & Services
 
L+5.00% (6.15%), 1/26/2022
 
9,875

 
9,795

 
9,974

 
0.7
%
SunGard Availability Services Capital, Inc. (j)
 
IT Services
 
L+5.00% (6.00%), 3/31/2019
 
8,741

 
8,704

 
8,446

 
0.6
%
Tax Defense Network, LLC (f) (i) (l) (m)
 
Diversified Consumer Services
 
L+12.50% (13.65%), 8/28/2019
 
26,799

 
26,532

 
18,492

 
1.2
%
Trojan Battery Company, LLC (j)
 
Auto Components
 
P+4.75% (5.87%), 6/12/2021
 
10,559

 
10,494

 
10,546

 
0.7
%
Turning Tech LLC (f) (i)
 
Software
 
L+10.75% (11.90%), 6/30/2020
 
24,601

 
24,320

 
23,125

 
1.5
%
Twenty Eighty, Inc. (l)
 
Media
 
8.00%, 3/31/2020
 
5,969

 
3,812

 
3,844

 
0.3
%
Twenty Eighty, Inc. (l)
 
Media
 
L+8.00% (9.00%), 3/31/2020
 
2,824

 
2,206

 
1,818

 
0.1
%

The accompanying notes are an integral part of these consolidated financial statements.

9
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Twenty Eighty, Inc. (l)
 
Media
 
9.00%, 3/31/2020
 
$
5,387

 
$
3,444

 
$
3,469

 
0.2
%
United Central Industrial Supply Company, LLC (i) (j)
 
Commercial Services & Supplies
 
L+7.25% (8.50%), 10/9/2018
 
8,618

 
8,575

 
7,461

 
0.5
%
VCVH Holding Corp. (j)
 
Health Care
 
L+5.00% (6.15%), 6/1/2023
 
12,903

 
12,788

 
12,854

 
0.8
%
VetCor Professional Practices LLC (f) (i)
 
Diversified Consumer Services
 
L+6.00% (7.15%), 4/20/2021
 
15,031

 
14,874

 
14,731

 
0.9
%
Xplornet Communications, Inc. (a) (j)
 
Diversified Telecommunication Services
 
L+6.00% (7.15%), 7/25/2020
 
9,950

 
9,864

 
10,074

 
0.7
%
Sub Total Senior Secured First Lien Debt
 
 
 
 
 
 
 
$
1,709,814

 
$
1,611,653

 
105.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured Second Lien Debt - 17.5% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Anchor Glass Container Corporation (m)
 
Containers & Packaging
 
L+7.75% (8.75%), 12/7/2024
 
$
20,000

 
$
19,807

 
$
20,350

 
1.3
%
Appriss Holdings, Inc. (m)
 
IT Services
 
L+9.25% (10.40%), 5/21/2021
 
13,985

 
13,847

 
13,845

 
0.9
%
Asurion LLC (j)
 
IT Services
 
L+7.50% (8.50%), 3/3/2021
 
10,000

 
9,360

 
10,112

 
0.7
%
Boston Market Corporation (m)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.40%), 12/16/2018
 
24,288

 
24,154

 
24,045

 
1.6
%
BrandMuscle Holdings Inc. (m)
 
Internet Software & Services
 
L+8.50% (9.50%), 6/1/2022
 
24,500

 
24,110

 
24,500

 
1.6
%
Cayan Holdings (m)
 
IT Services
 
L+8.50% (9.66%), 3/24/2022
 
20,000

 
19,594

 
20,000

 
1.3
%
CDS U.S. Intermediate Holdings, Inc. (m)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.40%), 7/8/2023
 
7,927

 
7,793

 
7,848

 
0.5
%
CIG Financial, LLC (a) (f) (m)
 
Consumer Finance
 
10.50%, 6/30/2019
 
13,000

 
12,941

 
12,415

 
0.8
%
CREDITCORP (x)
 
Consumer Finance
 
12.00%, 7/15/2018
 
13,250

 
13,222

 
11,268

 
0.7
%
Epic Health Services, Inc. (m)
 
Health Care Providers & Services
 
L+8.00% (9.00%), 3/17/2025
 
15,000

 
14,775

 
15,019

 
1.0
%
J. C. Bromac Corporation (dba EagleRider, Inc.) (f)
 
Hotels, Restaurants & Leisure
 
L+8.75% (9.90%), 2/10/2021
 
1,995

 
1,995

 
1,945

 
0.1
%
J. C. Bromac Corporation (dba EagleRider, Inc.) (m)
 
Hotels, Restaurants & Leisure
 
L+8.75% (9.73%), 2/10/2021
 
6,925

 
6,868

 
6,752

 
0.4
%
Linc Energy Finance USA, Inc. (t)
 
Oil, Gas & Consumable Fuels
 
12.50%, 10/31/2017
 
9,000

 
8,914

 
—

 
—
%
NCP Finance Limited Partnership (j)
 
Consumer Finance
 
L+9.75% (11.00%), 10/1/2018
 
12,109

 
12,079

 
11,443

 
0.8
%
Rx30 HoldCo, Inc. (m)
 
Health Care Technology
 
L+9.00% (10.01%), 6/15/2022
 
11,500

 
11,329

 
11,500

 
0.8
%
Schulman Associates Institutional Review Board, Inc. (m)
 
Life Sciences Tools & Services
 
L+8.00% (9.00%), 6/3/2021
 
17,000

 
16,781

 
16,830

 
1.1
%
Stratose Intermediate Holdings II, LLC (m)
 
Health Care Providers & Services
 
L+9.50% (10.65%), 12/30/2021
 
30,000

 
29,597

 
30,000

 
2.0
%
U.S. Auto (m)
 
Diversified Consumer Services
 
L+11.75% (12.75%), 6/8/2020
 
30,000

 
29,587

 
29,700

 
1.9
%
Sub Total Senior Secured Second Lien Debt
 
 
 
 
 
 
 
$
276,753

 
$
267,572

 
17.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Subordinated Debt - 5.3% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Gold, Inc. (m)
 
Textiles, Apparel & Luxury Goods
 
10.00%, 6/30/2019
 
$
7,003

 
$
6,968

 
$
5,953

 
0.4
%

The accompanying notes are an integral part of these consolidated financial statements.

10
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Park Ave RE Holdings, LLC (d) (l) (o)
 
Real Estate Management & Development
 
L+8.00% (13.00%), 12/29/2017
 
$
37,192

 
$
37,192

 
$
37,192

 
2.5
%
Steel City Media (l)
 
Media
 
16.00%, 3/29/2020
 
21,770

 
21,515

 
20,464

 
1.3
%
Xplornet Communications, Inc. (a) (l)
 
Diversified Telecommunication Services
 
13.00%, 10/25/2020
 
14,591

 
14,591

 
15,102

 
1.0
%
Zimbra, Inc. (t)
 
Software
 
12.00%, 7/10/2018
 
1,005

 
1,005

 
1,447

 
0.1
%
Sub Total Subordinated Debt
 
 
 
 
 
 
 
$
81,271

 
$
80,158

 
5.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized Securities - 13.7% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized Securities - Debt Investment
 
 
 
 
 
 
 
 
 
 
 
 
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)
 
Diversified Investment Vehicles
 
L+7.50% (8.53%), 1/19/2027
 
$
10,728

 
$
9,140

 
$
8,905

 
0.6
%
Collateralized Securities - Equity Investment
 
 
 
 
 
 
 
 
 
 
 
 
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
8.01%, 4/16/2026
 
$
40,250

 
$
19,174

 
$
16,173

 
1.0
%
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
0.15%, 1/16/2026
 
31,000

 
9,774

 
8,826

 
0.6
%
CVP Cascade CLO-2, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
9.84%, 7/18/2026
 
35,250

 
13,070

 
12,743

 
0.8
%
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
14.75%, 1/19/2027
 
31,575

 
21,759

 
19,409

 
1.3
%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
2.36%, 1/15/2027
 
35,057

 
19,057

 
15,716

 
1.0
%
MidOcean Credit CLO II, LLC Income Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
7.89%, 1/29/2025
 
37,600

 
22,360

 
20,695

 
1.4
%
MidOcean Credit CLO III, LLC Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
7.41%, 7/21/2026
 
40,250

 
23,040

 
20,948

 
1.4
%
MidOcean Credit CLO IV, LLC Income Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
9.10%, 4/15/2027
 
21,500

 
14,629

 
14,634

 
0.9
%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
23.58%, 7/25/2025
 
31,603

 
23,328

 
24,324

 
1.6
%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
12.01%, 3/20/2025
 
38,000

 
17,867

 
16,446

 
1.1
%
Related Fee Agreements (a) (s)
 
Diversified Investment Vehicles
 
 
 
—

 
9,333

 
8,210

 
0.5
%
Silver Spring CLO, Ltd. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
2.23%, 10/16/2026
 
31,500

 
17,481

 
12,007

 
0.8
%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
8.30%, 5/1/2026
 
36,000

 
14,379

 
10,527

 
0.7
%
Sub Total Collateralized Securities
 
 
 
 
 
 
 
$
234,391

 
$
209,563

 
13.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity/Other - 12.5% (b)
 
 
 
 
 
 
 
 
 
 
 
 

The accompanying notes are an integral part of these consolidated financial statements.

11
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)
 
Software
 
Expire 3/9/2025
 
306,122

 
$
—

 
$
—

 
—
%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)
 
Software
 
 
 
2,000,000

 
2,000

 
—

 
—
%
California Resources Corp. - Preferred Equity
 
Metals & Mining
 
9.00%
 
15,025,000

 
14,725

 
14,725

 
1.0
%
Capstone Nutrition Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o)
 
Food Products
 
 
 
6,023

 
1,630

 
—

 
—
%
Capstone Nutrition Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o) (u)
 
Food Products
 
 
 
24,656

 
—

 
—

 
—
%
Carlyle GMS Finance, Inc. (a) (f)
 
Diversified Investment Vehicles
 
 
 
$
6,587

 
6,587

 
6,250

 
0.4
%
Danish CRJ LTD. (a) (e) (p) (r)
 
Aerospace & Defense
 
 
 
5,002

 
1

 
308

 
—
%
Evolution Research Group - Preferred Equity (e)
 
Health Care Providers & Services
 
8.00%
 
500,000

 
500

 
620

 
—
%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)
 
Internet Software & Services
 
Expire 8/16/2025
 
172,414

 
—

 
7

 
—
%
Kahala Ireland OpCo Designated Activity Company - Common Equity (a) (e) (h) (o)
 
Aerospace & Defense
 
 
 
137

 
—

 
10,270

 
0.7
%
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (e) (h) (o)
 
Aerospace & Defense
 
 
 
3,250,000

 
2,894

 
3,250

 
0.2
%
Kahala US OpCo LLC - Class A Preferred Units (e) (k) (o)
 
Aerospace & Defense
 
13.00%
 
4,413,472

 
4,161

 
4,000

 
0.3
%
New Star Metals Inc.
 
Business Services
 
Expire 12/22/2036
 
133,074

 
201

 
202

 
—
%
NexSteppe Inc. Series C Preferred Stock Warrant (e)
 
Chemicals
 
Expire 3/9/2025
 
176,585

 
500

 
2

 
—
%
NMFC Senior Loan Program I, LLC (a) (p)
 
Diversified Investment Vehicles
 
 
 
$
50,000

 
50,000

 
47,602

 
3.1
%
Orchid Underwriters Agency, LLC - Preferred Shares (e) (u)
 
Insurance Broker
 
 
 
5,000

 
113

 
680

 
—
%
Orchid Underwriters Agency, LLC - Common Shares (e) (u)
 
Insurance Broker
 
 
 
5,000

 
—

 
18

 
—
%
Park Ave RE Holdings, LLC - Common Shares (e) (o) (w)
 
Real Estate Management & Development
 
 
 
1,000

 
—

 
7,146

 
0.5
%
Park Ave RE Holdings, LLC - Preferred Shares (o) (w)
 
Real Estate Management & Development
 
8.00%
 
47,290

 
23,645

 
23,645

 
1.5
%
PennantPark Credit Opportunities Fund II, LP (a) (f) (g) (p)
 
Diversified Investment Vehicles
 
 
 
$
9,943

 
9,943

 
9,979

 
0.7
%
South Grand MM CLO I, LLC (a) (f) (p)
 
Diversified Investment Vehicles
 
 
 
$
29,524

 
29,095

 
28,359

 
1.9
%
Squan Holding Corp. - Class A Common Stock (e) (p)
 
Diversified Telecommunication Services
 
 
 
180,835

 
—

 
—

 
—
%
Squan Holding Corp. - Series A Preferred Stock (e) (p)
 
Diversified Telecommunication Services
 
 
 
8,962

 
—

 
—

 
—
%

The accompanying notes are an integral part of these consolidated financial statements.

12
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)
Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Tax Defense Network, LLC (e)
 
Diversified Consumer Services
 
 
 
425

 
$
425

 
$
—

 
—
%
Tennenbaum Waterman Fund, L.P. (a)
 
Diversified Investment Vehicles
 
 
 
$
10,000

 
10,000

 
10,228

 
0.7
%
The SAVO Group, Ltd. - Warrants (e)
 
Internet Software & Services
 
Expire 3/23/2023
 
138,000

 
—

 
—

 
—
%
THL Credit Greenway Fund II LLC (a) (p)
 
Diversified Investment Vehicles
 
 
 
$
13,960

 
13,960

 
13,143

 
0.9
%
Twentyeighty, Inc. - Class A Common Equity (e)
 
Media
 
 
 
54,586

 
—

 
—

 
—
%
U.S. Auto Series A Common Units (e) (u)
 
Diversified Consumer Services
 
 
 
10,000

 
10

 
—

 
—
%
U.S. Auto Series A Preferred Units (e) (u)
 
Diversified Consumer Services
 
 
 
490

 
490

 
553

 
—
%
World Business Lenders, LLC (e)
 
Consumer Finance
 
 
 
3,750,000

 
3,750

 
4,840

 
0.3
%
Xplornet Communications, Inc. - Warrants (a) (e)
 
Diversified Telecommunication Services
 
Expire 10/25/2023
 
10,284

 
—

 
4,086

 
0.3
%
Zimbra, Inc. - Warrants (Third Lien Bridge Note) (e)
 
Software
 
Expire 7/11/2023
 
1,000,000

 
—

 
366

 
—
%
Sub Total Equity/Other
 
 
 
 
 
 
 
$
174,630

 
$
190,279

 
12.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL INVESTMENTS - 154.7% (b)
 
 
 
 
 
 
 
$
2,476,859

 
$
2,359,225

 
154.7
%
_____________
(a)
All of the Company's investments, except the investments noted by this footnote, are in eligible portfolio companies, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”). Eligible assets represent 78.7% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.
(b)
Percentages are based on net assets of $1,525,136 as of March 31, 2017.
(c)
The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's board of directors as required by the 1940 Act. (See Note 3 to the consolidated financial statements).
(d)
As of the date of election, the portfolio company elected to pay cash interest, noting the company has the option to elect a portion of the interest to be payment-in-kind (“PIK”).
(e)
Non-income producing at March 31, 2017.























The accompanying notes are an integral part of these consolidated financial statements.

13
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)


(f)The Company has various unfunded commitments to portfolio companies. The remaining amount of these unfunded commitments as of March 31, 2017 are comprised of the following:
Portfolio Company Name
 
Investment Type
 
Commitment Type
 
Original Commitment
 
Remaining Commitment
Amteck, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
$
5,000

 
$
5,000

Answers Corporation
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
3,029

 
1,751

BDS Solutions Group, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
3,000

 
3,000

Berner Food & Beverage LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,693

 
2,693

Carlyle GMS Finance, Inc.
 
Equity/Other
 
Equity capital commitment
 
10,000

 
3,413

CCW, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
3,000

 
3,000

CIG Financial, LLC
 
Senior Secured Second Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Icynene US Acquisition Corp.
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Icynene US Acquisition Corp.
 
Senior Secured First Lien Debt
 
Revolver term loan
 
5,000

 
4,000

InMotion Entertainment Group, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,200

 
1,843

J. C. Bromac Corporation (dba EagleRider, Inc.)
 
Senior Secured Second Lien Debt
 
Delayed draw term loan
 
5,000

 
3,005

Midwest Can Company, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
828

 
828

Midwest Can Company, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
1,035

 
966

Motion Recruitment Partners, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,000

 
1,875

National Technical Systems, Inc.
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Orchid Underwriters Agency, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,200

 
2,200

Orchid Underwriters Agency, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,600

 
5,600

PennantPark Credit Opportunities Fund II, LP
 
Equity/Other
 
Equity capital commitment
 
10,800

 
538

PT Network, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
6,579

 
5,024

PT Network, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
1,316

 
1,316

Pure Barre, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,500

 
2,500

RVNB Holdings, Inc. (dba All My Sons Moving & Storage)
 
Senior Secured First Lien Debt
 
Revolver term loan
 
852

 
852

South Grand MM CLO I, LLC
 
Equity/Other
 
Equity capital commitment
 
35,000

 
5,476

Tax Defense Network, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
1,000

Turning Tech LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
6,000

 
3,000

VetCor Professional Practices LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,574

 
2,314

Total
 
 
 
 
 
$
136,206

 
$
76,194


(g)
The investment is subject to a three year lock-up restriction on withdrawals in year 4.
(h)
The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala LuxCo, which own 100% of the equity of the operating company, Kahala Ireland OpCo Designated Activity Company.
(i)
The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(j)
The Company's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(k)
The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc. which own 100% of the equity of the operating company, Kahala US OpCo LLC.








The accompanying notes are an integral part of these consolidated financial statements.

14
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)


(l)For the three months ended March 31, 2017, the following investments paid or have the option to pay all or a portion of interest and dividends via payment-in-kind (“PIK”):
Portfolio Company
 
Investment Type
 
Cash
 
PIK
 
All-in Rate
 
PIK Earned for the three months ended March 31, 2017
Basho Technologies, Inc.
 
Senior Secured First Lien Debt
 
17.00
%
 
—
%
 
17.00
%
 
$
—

Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)
 
Senior Secured First Lien Debt
 
—
%
 
13.50
%
 
13.50
%
 
—

Greenwave Holdings, Inc.
 
Senior Secured First Lien Debt
 
10.00
%
 
3.00
%
 
13.00
%
 
118

ILC Dover LP
 
Senior Secured First Lien Debt
 
8.00
%
 
2.00
%
 
10.00
%
 
71

Kahala Ireland OpCo Designated Activity Company
 
Senior Secured First Lien Debt
 
—
%
 
13.00
%
 
13.00
%
 
60

Kahala US OpCo LLC
 
Senior Secured First Lien Debt
 
13.00
%
 
—
%
 
13.00
%
 
—

Lightsquared LP
 
Senior Secured First Lien Debt
 
—
%
 
9.85
%
 
9.85
%
 
250

MMM Holdings, LLC
 
Senior Secured First Lien Debt
 
10.25
%
 
—
%
 
10.25
%
 
—

MSO of Puerto Rico, LLC
 
Senior Secured First Lien Debt
 
10.25
%
 
—
%
 
10.25
%
 
—

New Star Metals Inc.
 
Senior Secured First Lien Debt
 
9.00
%
 
2.00
%
 
11.00
%
 
180

NexSteppe Inc.
 
Senior Secured First Lien Debt
 
10.00
%
 
5.00
%
 
15.00
%
 
135

Park Ave RE Holdings, LLC
 
Subordinated Debt
 
13.00
%
 
—
%
 
13.00
%
 
—

Steel City Media
 
Subordinated Debt
 
8.00
%
 
8.00
%
 
16.00
%
 
352

Tax Defense Network, LLC
 
Senior Secured First Lien Debt
 
9.65
%
 
4.00
%
 
13.65
%
 
266

Twentyeighty, Inc.
 
Senior Secured First Lien Debt
 
4.50
%
 
4.50
%
 
9.00
%
 
21

Twentyeighty, Inc.
 
Senior Secured First Lien Debt
 
1.00
%
 
7.00
%
 
8.00
%
 
68

Twentyeighty, Inc.
 
Senior Secured First Lien Debt
 
0.25
%
 
8.75
%
 
9.00
%
 
76

Xplornet Communications, Inc.
 
Subordinated Debt
 
—
%
 
13.00
%
 
13.00
%
 
—

Total
 
 
 
 
 
 
 
 
 
$
1,597


(m)
The Company's investment or a portion thereof is pledged as collateral under the UBS Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(n)
For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (v) for a further description of an equity investment in a Collateralized Security.
(o)
The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control Investments” are defined as investments in companies in which the Company owns more than 25% of the voting securities, maintains greater than 50% of the board representation or has the power to exercise control over the management or policies of such portfolio company.
(p)
The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which the Company owns between 5% and 25% of the voting securities.
(q)
The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments. The Company classifies all investments within the consolidated schedule of investments which are not classified as Control Investments or Affiliated Investments as Non-affiliated Investments.
(r)
The Company's investment is held through the Consolidated Holding Company, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.
(s)
Related Fee Agreements consist of one investment with a fair value of $0.7 million that is classified as a Non-affiliated Investment and five investments with a total fair value of $7.5 million that are classified as Affiliated Investments.
(t)
The investment is on non-accrual status as of March 31, 2017.
(u)
Investments are held in the taxable wholly-owned, consolidated subsidiary, 54th Street Equity Holdings, Inc.
(v)
The Collateralized Securities - debt investments and equity investments are considered equity positions in the Collateralized Loan Obligation funds. Equity investments are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
(w)
The Company's investment is held through the consolidated subsidiary, Park Ave RE, Inc., which owns 100% of the equity of the operating company, Park Ave RE Holdings, LLC.
(x)
The Company's investment or a portion thereof is pledged as collateral under the JPMC PB Account. Individual investments can be divided into parts which are pledged to separate credit facilities.





The accompanying notes are an integral part of these consolidated financial statements.

15
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


March 31, 2017
(Unaudited)


The following table shows the portfolio composition by industry grouping based on fair value at March 31, 2017:

 
At March 31, 2017
 
Investments at
Fair Value
 
Percentage of
Total Portfolio
Diversified Investment Vehicles
$
325,124

 
13.8
%
Aerospace & Defense
190,561

 
8.1

Health Care Providers & Services
159,299

 
6.7

Diversified Consumer Services
158,667

 
6.7

Hotels, Restaurants & Leisure
147,928

 
6.3

Business Services
125,645

 
5.3

Internet Software & Services
109,914

 
4.7

Health Care
96,090

 
4.1

Diversified Telecommunication Services
89,656

 
3.8

Commercial Services & Supplies
88,380

 
3.7

Media
82,478

 
3.5

Real Estate Management & Development
79,201

 
3.4

IT Services
70,536

 
3.0

Food Products
54,770

 
2.3

Software
51,578

 
2.2

Professional Services
49,092

 
2.1

Metals & Mining
42,231

 
1.8

Machinery
42,049

 
1.8

Consumer Finance
39,966

 
1.7

Auto Components
39,111

 
1.7

Energy Equipment & Services
37,861

 
1.6

Electronic Equipment, Instruments & Components
28,278

 
1.2

Transportation Infrastructure
27,490

 
1.2

Specialty Retail
26,046

 
1.1

Diversified Financial Services
24,831

 
1.0

Chemicals
23,565

 
1.0

Communications Equipment
22,194

 
0.9

Building Products
22,003

 
0.9

Insurance
20,498

 
0.9

Containers & Packaging
20,350

 
0.9

Life Sciences Tools & Services
16,830

 
0.7

Household Durables
15,000

 
0.6

Distributors
14,550

 
0.6

Health Care Technology
11,500

 
0.5

Textiles, Apparel & Luxury Goods
5,953

 
0.2

Oil, Gas & Consumable Fuels
—

 
—

Total
$
2,359,225

 
100.0
%




The accompanying notes are an integral part of these consolidated financial statements.

16
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured First Lien
Debt - 106.6% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Abaco Systems Holding Corp. (i)
 
Business Services
 
L+6.00% (7.00%), 12/7/2021
 
$
23,940

 
$
23,462

 
$
23,461

 
1.5
%
Ability Networks Inc. (j)
 
Health Care Providers & Services
 
L+5.00% (6.00%), 5/14/2021
 
13,712

 
13,631

 
13,712

 
0.9
%
Adams Publishing Group, LLC (i)
 
Media
 
P+4.25% (8.00%), 11/3/2020
 
15,178

 
14,904

 
15,178

 
1.0
%
Affinion Group, Inc. (j)
 
Business Services
 
L+5.25% (6.75%), 4/30/2018
 
9,974

 
9,827

 
9,910

 
0.6
%
Amports, Inc. (m)
 
Transportation Infrastructure
 
L+8.14% (9.14%), 5/19/2020
 
15,000

 
14,936

 
14,775

 
1.0
%
Amteck, LLC (f) (i)
 
Commercial Services & Supplies
 
L+8.50% (9.50%), 7/2/2020
 
23,438

 
23,063

 
22,852

 
1.5
%
Answers Corporation (i) (j) (t)
 
Internet Software & Services
 
P+6.25% (10.00%), 10/3/2021
 
34,475

 
33,589

 
17,065

 
1.1
%
AP Gaming I, LLC (i) (j)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.25%), 12/20/2020
 
30,353

 
30,148

 
30,150

 
2.0
%
APCO Holdings (i)
 
Diversified Consumer Services
 
L+6.00% (7.00%), 1/29/2022
 
8,868

 
8,632

 
8,646

 
0.6
%
Applied Merchant Systems West Coast, Inc. (m)
 
Diversified Financial Services
 
L+11.50% (12.50%), 10/26/2020
 
26,122

 
25,714

 
25,599

 
1.7
%
Ascensus, Inc. (j)
 
IT Services
 
L+4.50% (5.50%), 12/3/2022
 
17,831

 
16,915

 
17,786

 
1.2
%
Asurion LLC (j)
 
IT Services
 
L+3.75% (4.75%), 11/3/2023
 
249

 
248

 
253

 
—
%
Avaya, Inc. Term Loan B-3 (j)
 
Communications Equipment
 
L+4.50% (5.39%), 10/26/2017
 
9,685

 
8,784

 
8,384

 
0.5
%
Avaya, Inc. Term Loan B-6 (j)
 
Communications Equipment
 
L+5.50% (6.50%), 3/31/2018
 
8,457

 
8,461

 
7,353

 
0.5
%
Avaya, Inc. Term Loan B-7 (i) (j)
 
Communications Equipment
 
L+5.25% (6.25%), 5/29/2020
 
9,793

 
9,725

 
8,489

 
0.5
%
AxleTech International, LLC (i)
 
Machinery
 
L+6.50% (7.50%), 1/5/2021
 
19,600

 
19,467

 
18,914

 
1.2
%
Basho Technologies, Inc. (d) (l) (t)
 
Software
 
17.00%, 3/9/2018
 
10,595

 
10,294

 
3,814

 
0.2
%
Basho Technologies, Inc. (d) (t)
 
Software
 
17.00%, 3/31/2017
 
2,550

 
2,550

 
918

 
0.1
%
BDS Solutions Group, LLC (f) (i) (m)
 
Business Services
 
L+8.75% (9.59%), 6/1/2021
 
36,830

 
36,094

 
36,830

 
2.4
%
Blount International, Inc. (j)
 
Machinery
 
L+6.25% (7.25%), 4/12/2023
 
12,469

 
12,128

 
12,578

 
0.8
%
Broder Bros, Co. (m)
 
Distributors
 
L+5.75% (7.00%), 6/3/2021
 
7,275

 
7,158

 
7,275

 
0.5
%
Broder Bros, Co. (m)
 
Distributors
 
L+12.25% (13.50%), 6/3/2021
 
7,350

 
7,232

 
7,350

 
0.5
%
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (l) (o) (t)
 
Food Products
 
L+12.50% (13.50%), 4/28/2019
 
56,470

 
50,053

 
19,708

 
1.3
%
Catapult Learning, LLC (i) (m)
 
Diversified Consumer Services
 
L+7.99% (8.99%), 7/16/2020
 
27,500

 
27,109

 
26,537

 
1.7
%
CCW, LLC (f) (i)
 
Hotels, Restaurants & Leisure
 
L+7.00% (8.00%), 3/21/2021
 
24,625

 
24,268

 
24,379

 
1.6
%
Central Security Group, Inc. (i) (j)
 
Commercial Services & Supplies
 
L+5.63% (6.63%), 10/6/2020
 
25,554

 
25,200

 
25,458

 
1.7
%
CH Hold Corp. (f) (i)
 
Diversified Consumer Services
 
L+5.25% (6.25%), 11/20/2019
 
16,572

 
16,434

 
16,531

 
1.1
%
Chicken Soup for the Soul Publishing, LLC (i)
 
Media
 
L+6.25% (7.50%), 1/8/2019
 
28,543

 
28,331

 
27,116

 
1.8
%

The accompanying notes are an integral part of these consolidated financial statements.

17
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Clover Technologies Group, LLC (j)
 
Commercial Services & Supplies
 
P+3.50% (7.25%), 5/8/2020
 
$
14,012

 
$
13,935

 
$
13,265

 
0.9
%
Contura Energy Inc.
 
Energy Equipment & Services
 
10.00%, 8/1/2021
 
10,000

 
10,534

 
10,650

 
0.7
%
ConvergeOne Holdings Corp. (j)
 
Diversified Consumer Services
 
L+5.38% (6.38%), 6/17/2020
 
16,601

 
16,470

 
16,518

 
1.1
%
Covenant Surgical Partners
 
Health Care
 
(8.75%), 8/1/2019
 
10,000

 
9,457

 
9,675

 
0.6
%
Cvent, Inc. (j)
 
Internet Software & Services
 
L+5.00% (6.00%), 11/29/2023
 
10,000

 
9,900

 
10,075

 
0.7
%
Danish CRJ LTD. (a) (p)
 
Aerospace & Defense
 
13.50%
 
20

 
7

 
20

 
—
%
DigiCert, Inc (j)
 
Internet Software & Services
 
L+5.00% (6.00%), 10/21/2021
 
10,890

 
10,627

 
10,836

 
0.7
%
Doskocil Manufacturing Company, Inc. (m)
 
Household Durables
 
L+8.40% (9.40%), 11/10/2020
 
15,000

 
14,797

 
15,000

 
1.0
%
Eagle Rx, LLC (i)
 
Health Care Providers & Services
 
L+6.00% (7.00%), 8/15/2019
 
14,533

 
14,495

 
14,533

 
1.0
%
ECI Acquisition Holdings, Inc. (i)
 
Internet Software & Services
 
L+6.25% (7.25%), 3/11/2019
 
12,775

 
12,738

 
12,584

 
0.8
%
Emergency Communications Network, LLC (m)
 
Internet Software & Services
 
L+10.08% (11.33%), 6/12/2021
 
19,750

 
19,530

 
19,552

 
1.3
%
ERG Holding Company (i) (m)
 
Health Care Providers & Services
 
L+6.75% (8.00%), 4/4/2019
 
34,650

 
34,194

 
34,130

 
2.2
%
Excelitas Technologies Corp. (j)
 
Electronic Equipment, Instruments & Components
 
L+5.00% (6.00%), 11/2/2020
 
13,761

 
13,714

 
13,451

 
0.9
%
Genesys Telecommunications Laboratories, Inc. (j)
 
Diversified Telecommunication Services
 
L+5.25% (6.25%), 12/1/2023
 
25,000

 
24,628

 
25,422

 
1.7
%
Greenwave Holdings, Inc. (l)
 
Internet Software & Services
 
13.00%, 7/8/2019
 
15,693

 
15,543

 
15,693

 
1.0
%
GTCR Valor Companies, Inc. (j)
 
Software
 
L+6.00% (7.00%), 6/16/2023
 
24,875

 
23,956

 
24,587

 
1.6
%
HC Group Holdings III, Inc. (j)
 
Health Care
 
L+5.00% (6.00%), 4/7/2022
 
14,932

 
14,665

 
14,298

 
0.9
%
Icynene US Acquisition Corp. (f) (i) (m)
 
Building Products
 
L+6.25% (7.25%), 11/4/2020
 
21,286

 
21,012

 
21,286

 
1.4
%
Icynene US Acquisition Corp. (f)
 
Building Products
 
L+6.25% (7.25%), 11/4/2019
 
1,000

 
1,000

 
1,000

 
0.1
%
ILC Dover LP (i) (l)
 
Aerospace & Defense
 
L+9.00% (10.00%), 3/20/2020
 
14,101

 
14,064

 
11,986

 
0.8
%
Indivior Finance S.A.R.L. (j)
 
Health Care
 
L+6.00% (7.00%), 12/19/2019
 
9,244

 
9,244

 
9,279

 
0.6
%
InMotion Entertainment Group, LLC (f) (i)
 
Specialty Retail
 
L+7.75% (9.00%), 10/1/2018
 
14,450

 
14,328

 
14,450

 
0.9
%
IPC Corp. (j)
 
Diversified Telecommunication Services
 
L+4.50% (5.50%), 8/6/2021
 
9,187

 
9,040

 
8,796

 
0.6
%
Jackson Hewitt, Inc. (j)
 
Diversified Consumer Services
 
L+7.00% (8.00%), 7/30/2020
 
6,860

 
6,810

 
6,577

 
0.4
%
K2 Pure Solutions NoCal, L.P. (i)
 
Chemicals
 
L+6.00% (7.00%), 8/19/2019
 
6,500

 
6,442

 
6,500

 
0.4
%
Kahala Ireland OpCo Designated Activity Company (a) (d) (l) (o)
 
Aerospace & Defense
 
L+8.00% (13.00%), 12/23/2028
 
149,409

 
149,409

 
149,409

 
9.8
%
Kahala US OpCo LLC (d) (l) (o)
 
Aerospace & Defense
 
L+8.00% (13.00%), 12/23/2028
 
2,690

 
2,690

 
2,690

 
0.2
%

The accompanying notes are an integral part of these consolidated financial statements.

18
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Kissner HLD
 
Chemicals
 
8.38%, 12/1/2022
 
$
9,960

 
$
9,942

 
$
10,060

 
0.7
%
Land Holdings I, LLC (m)
 
Hotels, Restaurants & Leisure
 
12.00%, 6/26/2019
 
14,250

 
14,108

 
14,250

 
0.9
%
LenderLive Services, LLC
 
Business Services
 
L+12.00% (12.69%), 8/11/2020
 
10,000

 
9,819

 
9,800

 
0.6
%
Lightsquared LP (l)
 
Diversified Telecommunications Services
 
L+8.75% (9.75%), 6/15/2020
 
10,246

 
9,371

 
9,529

 
0.6
%
MCS AMS Sub-Holdings LLC (j)
 
Real Estate Management & Development
 
L+6.50% (7.50%), 10/15/2019
 
11,906

 
11,701

 
11,073

 
0.7
%
Medical Depot Holdings, Inc. (i)
 
Health Care
 
L+5.50% (6.50%), 1/3/2023
 
20,278

 
18,453

 
18,504

 
1.2
%
Metal Services LLC (j)
 
Metals & Mining
 
L+7.50% (8.50%), 6/30/2019
 
10,917

 
10,783

 
10,944

 
0.7
%
MMM Holdings, LLC (j) (l)
 
Health Care
 
L+8.25% (9.75%), 6/28/2019
 
7,153

 
7,072

 
6,938

 
0.5
%
Monitronics International, Inc. (j)
 
Diversified Consumer Services
 
L+5.50% (6.50%), 9/30/2022
 
2,993

 
2,978

 
3,018

 
0.2
%
Montreign Operating Company, LLC (m)
 
Hotels, Restaurants, & Leisure
 
L+8.25% (9.25%), 1/24/2023
 
25,000

 
24,500

 
25,187

 
1.6
%
Motion Recruitment Partners, LLC (f) (i)
 
Professional Services
 
L+6.00% (7.00%), 2/13/2020
 
18,000

 
17,733

 
18,000

 
1.2
%
Motorsports Aftermarket Group, Inc. (i) (j)
 
Auto Components
 
L+4.00% (5.00%), 5/14/2021
 
26,309

 
24,914

 
12,716

 
0.8
%
MSO of Puerto Rico, LLC (j) (l)
 
Health Care
 
L+8.25% (9.75%), 6/28/2019
 
5,200

 
5,142

 
5,044

 
0.3
%
Murray Energy Holdings Co.
 
Energy Equipment & Services
 
L+7.25% (8.25%), 4/16/2020
 
9,974

 
9,222

 
9,506

 
0.6
%
MWI Holdings, Inc. (j)
 
Machinery
 
L+5.50% (6.50%), 6/28/2020
 
9,950

 
9,862

 
9,950

 
0.6
%
National Technical Systems, Inc. (f) (i)
 
Professional Services
 
L+6.25% (7.25%), 6/12/2021
 
19,326

 
19,072

 
18,359

 
1.2
%
New Star Metals Inc. (l)
 
Business Services
 
L+9.50% (11.00%), 12/22/2021
 
32,707

 
32,020

 
32,023

 
2.1
%
NexSteppe Inc. (l)
 
Chemicals
 
15.00%, 3/30/2018
 
10,741

 
10,444

 
8,056

 
0.5
%
Noosa Acquirer, Inc. (i) (m)
 
Food Products
 
L+5.25% (6.25%), 11/21/2020
 
25,000

 
24,756

 
25,000

 
1.6
%
North Atlantic Trading Company, Inc. (i) (j)
 
Food Products
 
P+5.50% (9.25%), 1/13/2020
 
17,331

 
17,304

 
17,158

 
1.1
%
NTM Acquisition Corp. (i)
 
Media
 
L+6.25% (7.25%), 6/7/2022
 
12,431

 
12,260

 
12,245

 
0.8
%
Orchid Underwriters Agency, LLC (f) (m)
 
Insurance Broker
 
10.00%, 11/6/2019
 
13,955

 
13,806

 
13,955

 
0.9
%
Otter Box Holdings, Inc. (j)
 
Electronic Equipment, Instruments & Components
 
L+4.75% (5.75%), 6/3/2020
 
14,797

 
14,591

 
14,612

 
1.0
%
PeopLease Holdings, LLC (i)
 
Commercial Services & Supplies
 
L+9.00% (10.00%), 2/26/2021
 
20,000

 
19,832

 
20,000

 
1.3
%
PGX Holdings, Inc. (j)
 
Transportation Infrastructure
 
L+5.25% (6.25%), 9/29/2020
 
13,172

 
13,071

 
13,148

 
0.9
%
Plaskolite, LLC (j)
 
Chemicals
 
L+4.75% (5.75%), 11/3/2022
 
8,693

 
8,623

 
8,693

 
0.6
%
Premier Dental Services, Inc. (i) (j)
 
Health Care Providers & Services
 
L+6.50% (7.50%), 11/1/2018
 
22,488

 
22,440

 
22,319

 
1.5
%

The accompanying notes are an integral part of these consolidated financial statements.

19
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Premier Global Services, Inc. (j)
 
Diversified Telecommunication Services
 
L+6.50% (7.50%), 12/8/2021
 
$
9,871

 
$
9,528

 
$
9,606

 
0.6
%
Pre-Paid Legal Services, Inc. (j)
 
Diversified Consumer Services
 
L+5.25% (6.50%), 7/1/2019
 
13,009

 
13,006

 
13,021

 
0.9
%
Pride Plating, Inc. (i)
 
Aerospace & Defense
 
L+5.50% (6.50%), 6/13/2019
 
7,188

 
7,153

 
6,864

 
0.4
%
PSKW, LLC (i)
 
Health Care Providers & Services
 
L+4.25% (5.25%), 11/25/2021
 
2,025

 
2,008

 
2,005

 
0.1
%
PSKW, LLC (m)
 
Health Care Providers & Services
 
L+8.39% (9.39%), 11/25/2021
 
17,750

 
17,460

 
17,217

 
1.1
%
PT Network, LLC (f) (i)
 
Health Care
 
L+6.50% (7.50%), 11/30/2021
 
17,105

 
16,858

 
16,934

 
1.1
%
Pure Barre, LLC (f) (i) (m)
 
Hotels, Restaurants & Leisure
 
L+7.00% (8.00%), 6/11/2020
 
27,823

 
27,444

 
27,545

 
1.8
%
Resco Products, Inc. (i)
 
Metals & Mining
 
P+4.75% (8.50%), 3/31/2017
 
10,000

 
10,000

 
9,200

 
0.6
%
RVNB Holdings, Inc. (dba All My Sons Moving & Storage) (f) (i)
 
Diversified Consumer Services
 
L+6.50% (7.50%), 2/25/2020
 
21,733

 
21,449

 
21,733

 
1.4
%
Sage Automotive Holdings, Inc. (j)
 
Auto Components
 
L+5.00% (6.00%), 10/8/2020
 
15,000

 
14,851

 
14,850

 
1.0
%
SHO Holding II Corporation (j)
 
Specialty Retail
 
L+5.00% (6.00%), 10/27/2022
 
11,880

 
11,779

 
11,821

 
0.8
%
Squan Holding Corp.
 
Diversified Telecommunication Services
 
L+4.00% (5.00%), 10/10/2019
 
10,455

 
6,903

 
6,895

 
0.5
%
STG-Fairway Acquisitions, Inc. (j)
 
Professional Services
 
L+5.25% (6.25%), 6/30/2022
 
13,359

 
13,199

 
13,042

 
0.9
%
Stratose Intermediate Holdings II, LLC (j)
 
Health Care Providers & Services
 
L+5.00% (6.00%), 1/26/2022
 
9,900

 
9,816

 
9,937

 
0.6
%
SunGard Availability Services Capital, Inc. (j)
 
IT Services
 
L+5.00% (6.00%), 3/31/2019
 
8,741

 
8,700

 
8,443

 
0.6
%
Tax Defense Network, LLC (f) (i) (m)
 
Diversified Consumer Services
 
L+10.50% (11.50%), 8/28/2019
 
26,650

 
26,354

 
18,388

 
1.2
%
Total Outdoor Holdings Corp.
 
Media
 
L+11.00% (12.00%), 8/28/2019
 
12,900

 
12,762

 
12,900

 
0.8
%
Trojan Battery Company, LLC (j)
 
Auto Components
 
P+3.75% (7.50%), 6/12/2021
 
10,586

 
10,517

 
10,507

 
0.7
%
Turning Tech LLC (f) (i)
 
Software
 
L+10.75% (11.59%), 6/30/2020
 
24,976

 
24,668

 
24,102

 
1.6
%
Twenty Eighty, Inc. (j) (m)
 
Media
 
P+5.00% (8.75%), 9/30/2019
 
21,926

 
20,989

 
7,975

 
0.5
%
United Central Industrial Supply Company, LLC (i) (j)
 
Commercial Services & Supplies
 
L+7.25% (8.50%), 10/9/2018
 
8,640

 
8,590

 
6,890

 
0.5
%
VCVH Holding Corp. (j)
 
Health Care
 
L+5.00% (6.00%), 6/1/2023
 
12,935

 
12,816

 
12,854

 
0.8
%
VetCor Professional Practices LLC (i)
 
Diversified Consumer Services
 
L+6.25% (7.25%), 4/20/2021
 
14,808

 
14,696

 
14,512

 
0.9
%
Xplornet Communications, Inc. (a) (j)
 
Diversified Telecommunication Services
 
L+6.00% (7.00%), 7/25/2020
 
9,975

 
9,882

 
10,050

 
0.7
%
Sub Total Senior Secured First Lien Debt
 
 
 
 
 
 
 
$
1,726,833

 
$
1,630,661

 
106.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Senior Secured Second Lien Debt - 17.1% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Anchor Glass Container Corporation
 
Containers & Packaging
 
L+7.75% (8.75%), 12/7/2024
 
$
20,000

 
$
19,801

 
$
20,325

 
1.3
%

The accompanying notes are an integral part of these consolidated financial statements.

20
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Appriss Holdings, Inc. (m)
 
IT Services
 
L+9.25% (10.25%), 5/21/2021
 
$
13,985

 
$
13,839

 
$
13,775

 
0.9
%
Asurion LLC (j)
 
IT Services
 
L+7.50% (8.50%), 3/3/2021
 
10,000

 
9,320

 
10,156

 
0.7
%
Boston Market Corporation (m)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.25%), 12/16/2018
 
24,351

 
24,196

 
24,107

 
1.6
%
BrandMuscle Holdings Inc. (m)
 
Internet Software & Services
 
L+8.50% (9.50%), 6/1/2022
 
24,500

 
24,091

 
24,500

 
1.6
%
Cayan Holdings (m)
 
IT Services
 
L+8.50% (9.50%), 3/24/2022
 
20,000

 
19,579

 
19,600

 
1.3
%
CDS U.S. Intermediate Holdings, Inc. (m)
 
Hotels, Restaurants & Leisure
 
L+8.25% (9.25%), 7/8/2023
 
4,800

 
4,680

 
4,668

 
0.3
%
CIG Financial, LLC (a) (f) (m)
 
Consumer Finance
 
10.50%, 6/30/2019
 
13,000

 
12,935

 
12,415

 
0.8
%
CREDITCORP
 
Consumer Finance
 
12.00%, 7/15/2018
 
13,250

 
13,217

 
10,401

 
0.7
%
Epic Health Services, Inc. (m)
 
Health Care Providers & Services
 
L+9.25% (10.25%), 8/17/2021
 
15,933

 
15,703

 
15,933

 
1.0
%
J. C. Bromac Corporation (dba EagleRider, Inc.) (f) (m)
 
Hotels, Restaurants & Leisure
 
L+8.75% (9.59%), 2/10/2021
 
6,950

 
6,887

 
6,776

 
0.4
%
Linc Energy Finance USA, Inc. (t)
 
Oil, Gas & Consumable Fuels
 
12.50%, 10/31/2017
 
9,000

 
8,914

 
—

 
—
%
NCP Finance Limited Partnership (j)
 
Consumer Finance
 
L+9.75% (11.00%), 10/1/2018
 
12,145

 
12,109

 
11,386

 
0.7
%
Rx30 HoldCo, Inc. (m)
 
Health Care Technology
 
L+9.00% (10.00%), 6/15/2022
 
11,500

 
11,320

 
11,500

 
0.8
%
Schulman Associates Institutional Review Board, Inc. (m)
 
Life Sciences Tools & Services
 
L+8.00% (9.00%), 6/3/2021
 
17,000

 
16,768

 
16,745

 
1.1
%
Stratose Intermediate Holdings II, LLC (m)
 
Health Care Providers & Services
 
L+9.50% (10.50%), 7/26/2022
 
30,000

 
29,593

 
30,000

 
2.0
%
U.S. Auto (m)
 
Diversified Consumer Services
 
L+11.75% (12.75%), 6/8/2020
 
30,000

 
29,561

 
29,700

 
1.9
%
Sub Total Senior Secured Second Lien Debt
 
 
 
 
 
 
 
$
272,513

 
$
261,987

 
17.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Subordinated Debt - 5.3% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Gold, Inc. (m)
 
Textiles, Apparel & Luxury Goods
 
10.00%, 6/30/2019
 
$
7,003

 
$
6,924

 
$
5,953

 
0.4
%
Park Ave RE Holdings, LLC (d) (l) (o)
 
Real Estate Management & Development
 
L+8.00% (13.00%), 12/29/2017
 
37,192

 
37,192

 
37,192

 
2.4
%
Steel City Media (l)
 
Media
 
16.00%, 3/29/2020
 
21,418

 
21,146

 
20,561

 
1.4
%
Xplornet Communications, Inc. (a) (l)
 
Diversified Telecommunication Services
 
13.00%, 10/25/2020
 
14,591

 
14,591

 
15,102

 
1.0
%
Zimbra, Inc. (t)
 
Software
 
12.00%, 7/10/2018
 
1,203

 
1,203

 
1,732

 
0.1
%
Sub Total Subordinated Debt
 
 
 
 
 
 
 
$
81,056

 
$
80,540

 
5.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized Securities - 16.3% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Collateralized Securities - Debt Investment
 
 
 
 
 
 
 
 
 
 
 
 
Fifth Street Senior Loan Fund I, LLC - 1A Class F (a) (p)
 
Diversified Investment Vehicles
 
L+7.50% (8.38%), 1/19/2027
 
$
10,728

 
$
9,100

 
$
8,455

 
0.5
%
Collateralized Securities - Equity Investment
 
 
 
 
 
 
 
 
 
 
 
 
B&M CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
7.71%, 4/16/2026
 
$
40,250

 
$
20,331

 
$
16,772

 
1.1
%

The accompanying notes are an integral part of these consolidated financial statements.

21
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
CVP Cascade CLO, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
0.04%, 1/16/2026
 
$
31,000

 
$
10,552

 
$
8,868

 
0.6
%
CVP Cascade CLO-2, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
4.80%, 7/18/2026
 
35,250

 
13,667

 
11,593

 
0.8
%
Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
13.83%, 1/19/2027
 
31,575

 
22,079

 
20,579

 
1.3
%
Figueroa CLO 2014-1, LTD. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
4.65%, 1/15/2027
 
35,057

 
19,941

 
16,101

 
1.1
%
MidOcean Credit CLO II, LLC (a) (p) (v)
 
Diversified Investment Vehicles
 
7.44%, 1/29/2025
 
37,600

 
23,092

 
22,419

 
1.5
%
MidOcean Credit CLO III, LLC (a) (p) (v)
 
Diversified Investment Vehicles
 
11.89%, 7/21/2026
 
40,250

 
23,998

 
23,341

 
1.5
%
MidOcean Credit CLO IV, LLC (a) (p) (v)
 
Diversified Investment Vehicles
 
13.77%, 4/15/2027
 
21,500

 
15,160

 
15,505

 
1.0
%
NewStar Arlington Senior Loan Program LLC Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
23.61%, 7/25/2025
 
31,603

 
23,795

 
24,491

 
1.6
%
Ocean Trails CLO V, LTD. (a) (p) (v)
 
Diversified Investment Vehicles
 
14.78%, 10/13/2026
 
40,518

 
28,222

 
29,144

 
1.9
%
OFSI Fund VI, Ltd. Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
13.59%, 3/20/2025
 
38,000

 
19,012

 
17,354

 
1.1
%
Related Fee Agreements (a) (s)
 
Diversified Investment Vehicles
 
 
 
—

 
11,345

 
10,390

 
0.7
%
Silver Spring CLO, Ltd. (a) (p) (v)
 
Diversified Investment Vehicles
 
0.26%, 10/16/2026
 
31,500

 
18,676

 
12,007

 
0.8
%
WhiteHorse VIII, Ltd. CLO Subordinated Notes (a) (p) (v)
 
Diversified Investment Vehicles
 
6.99%, 5/1/2026
 
36,000

 
15,806

 
12,563

 
0.8
%
Sub Total Collateralized Securities
 
 
 
 
 
 
 
$
274,776

 
$
249,582

 
16.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity/Other - 11.2% (b)
 
 
 
 
 
 
 
 
 
 
 
 
Basho Technologies, Inc. - Series G Senior Participating Preferred Stock Warrant (e)
 
Software
 
Expire 3/9/2025
 
306,122

 
$
—

 
$
—

 
—
%
Basho Technologies, Inc. - Series G Senior Preferred Stock (e)
 
Software
 
 
 
2,040,816

 
2,000

 
—

 
—
%
Capstone Nutrition Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o)
 
Food Products
 
 
 
6,023

 
1,630

 
—

 
—
%
Capstone Nutrition Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (e) (o) (u)
 
Food Products
 
 
 
24,656

 
—

 
—

 
—
%
Carlyle GMS Finance, Inc. (a) (f)
 
Diversified Investment Vehicles
 
 
 
$
6,587

 
6,587

 
6,273

 
0.4
%
Danish CRJ LTD. (a) (e) (p) (r)
 
Aerospace & Defense
 
 
 
10,000

 
1

 
407

 
—
%
Evolution Research Group - Preferred Equity (e)
 
Health Care Providers & Services
 
8.00%
 
200

 
500

 
610

 
—
%
Greenwave Holdings, Inc. - Series C Preferred Stock Warrant (e)
 
Internet Software & Services
 
Expire 8/16/2025
 
172,414

 
—

 
19

 
—
%

The accompanying notes are an integral part of these consolidated financial statements.

22
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Kahala Ireland OpCo Designated Activity Company - Common Equity (a) (e) (h) (o)
 
Aerospace & Defense
 
 
 
137

 
$
—

 
$
8,180

 
0.5
%
Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (a) (e) (h) (o)
 
Aerospace & Defense
 
 
 
3,250,000

 
2,900

 
3,250

 
0.2
%
Kahala US OpCo LLC - Class A Preferred Units (e) (k) (o)
 
Aerospace & Defense
 
13.00%
 
4,413,472

 
4,193

 
4,000

 
0.3
%
New Star Metals Inc. (l)
 
Business Services
 
Expire 12/22/2036
 
133,074

 
201

 
201

 
—
%
NexSteppe Inc. Series C Preferred Stock Warrant (e)
 
Chemicals
 
Expire 3/9/2025
 
185,704

 
500

 
43

 
—
%
NMFC Senior Loan Program I, LLC (a) (p)
 
Diversified Investment Vehicles
 
 
 
$
50,000

 
50,000

 
47,057

 
3.1
%
Orchid Underwriters Agency, LLC - Preferred Shares (e) (u)
 
Insurance Broker
 
 
 
5,000

 
500

 
659

 
—
%
Orchid Underwriters Agency, LLC - Common Shares (e) (u)
 
Insurance Broker
 
 
 
5,000

 
—

 
304

 
—
%
Park Ave RE Holdings, LLC - Common Shares (e) (o) (w)
 
Real Estate Management & Development
 
 
 
1,000

 
—

 
6,564

 
0.4
%
Park Ave RE Holdings, LLC - Preferred Shares (o) (w)
 
Real Estate Management & Development
 
8.00%
 
47,290

 
23,645

 
23,645

 
1.6
%
PennantPark Credit Opportunities Fund II, LP (a) (f) (g) (p)
 
Diversified Investment Vehicles
 
 
 
$
9,943

 
9,943

 
9,788

 
0.7
%
South Grand MM CLO I, LLC (a) (f) (p)
 
Diversified Investment Vehicles
 
 
 
$
29,095

 
29,095

 
28,382

 
1.9
%
Squan Holding Corp. - Class A Common Stock (e) (p)
 
Diversified Telecommunication Services
 
 
 
180,835

 
—

 
—

 
—
%
Squan Holding Corp. - Series A Preferred Stock (e) (p)
 
Diversified Telecommunication Services
 
 
 
8,962

 
—

 
—

 
—
%
Tax Defense Network, LLC (e)
 
Diversified Consumer Services
 
 
 
396

 
425

 
—

 
—
%
Tennenbaum Waterman Fund, L.P. (a)
 
Diversified Investment Vehicles
 
 
 
$
10,000

 
10,000

 
10,169

 
0.7
%
The SAVO Group, Ltd. - Warrants (e)
 
Internet Software & Services
 
Expire 3/23/2023
 
138,000

 
—

 
—

 
—
%
THL Credit Greenway Fund II LLC (a) (p)
 
Diversified Investment Vehicles
 
 
 
$
13,990

 
13,990

 
12,850

 
0.9
%
U.S. Auto Series A Common Units (e) (u)
 
Diversified Consumer Services
 
 
 
10,000

 
10

 
27

 
—
%
U.S. Auto Series A Preferred Units (e) (u)
 
Diversified Consumer Services
 
 
 
490

 
490

 
572

 
—
%
World Business Lenders, LLC (e)
 
Consumer Finance
 
 
 
922,669

 
3,750

 
4,441

 
0.3
%
Xplornet Communications, Inc. - Warrants (a) (e)
 
Diversified Telecommunication Services
 
Expire 10/25/2023
 
10,284

 
—

 
3,647

 
0.2
%
Zimbra, Inc. - Warrants (Third Lien Bridge Note) (e)
 
Software
 
Expire 7/11/2023
 
1,000,000

 
—

 
225

 
—
%

The accompanying notes are an integral part of these consolidated financial statements.

23
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016

Portfolio Company (q)
 
Industry
 
Investment Coupon Rate / Maturity (n)
 
Principal / Number of Shares
 
Amortized Cost
 
Fair Value (c)
 
% of Net Assets (b)
Sub Total Equity/Other
 
 
 
 
 
 
 
$
160,360

 
$
171,313

 
11.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL INVESTMENTS - 156.5% (b)
 
 
 
 
 
 
 
$
2,515,538

 
$
2,394,083

 
156.5
%
_____________

(a)
All of the Company's investments, except the investments noted by this footnote, are in eligible portfolio companies, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”). Eligible assets represent 77.9% of the Company's total assets. The significant majority of all investments held are deemed to be illiquid.
(b)
Percentages are based on net assets of $1,529,734 as of December 31, 2016.
(c)
The fair value of investments with respect to securities for which market quotations are not readily available is determined in good faith by the Company's board of directors as required by the 1940 Act. (See Note 3 to the consolidated financial statements).
(d)
As of the date of election, the portfolio company elected to pay cash interest, noting the company has the option to elect a portion of the interest to be payment-in-kind (“PIK”).
(e)
Non-income producing at December 31, 2016.
(f)The Company has various unfunded commitments to portfolio companies. The remaining amount of these unfunded commitments as of December 31, 2016 are comprised of the following:
Portfolio Company Name
 
Investment Type
 
Commitment Type
 
Original Commitment
 
Remaining Commitment
Amteck, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
$
5,000

 
$
5,000

BDS Solutions Group, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
3,000

 
3,000

Carlyle GMS Finance, Inc.
 
Equity/Other
 
Equity capital commitment
 
10,000

 
3,413

CCW, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
3,000

 
3,000

CH Hold Corp.
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,175

 
706

CIG Financial, LLC
 
Senior Secured Second Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Icynene US Acquisition Corp.
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Icynene US Acquisition Corp.
 
Senior Secured First Lien Debt
 
Revolver term loan
 
5,000

 
4,000

InMotion Entertainment Group, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
2,200

 
1,843

J. C. Bromac Corporation (dba EagleRider, Inc.)
 
Senior Secured Second Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Motion Recruitment Partners, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,000

 
2,000

National Technical Systems, Inc.
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
5,000

Orchid Underwriters Agency, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,600

 
5,600

PennantPark Credit Opportunities Fund II, LP
 
Equity/Other
 
Equity capital commitment
 
10,800

 
538

Pure Barre, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
6,579

 
6,579

PT Network, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
1,316

 
1,316

PT Network, LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
2,500

 
2,500

RVNB Holdings, Inc. (dba All My Sons Moving & Storage)
 
Senior Secured First Lien Debt
 
Revolver term loan
 
852

 
852

South Grand MM CLO I, LLC
 
Equity/Other
 
Equity capital commitment
 
35,000

 
5,476

Tax Defense Network, LLC
 
Senior Secured First Lien Debt
 
Delayed draw term loan
 
5,000

 
1,000

Turning Tech LLC
 
Senior Secured First Lien Debt
 
Revolver term loan
 
6,000

 
3,000

Total
 
 
 
 
 
$
126,022

 
$
69,823


(g)
The investment is subject to a three year lock-up restriction on withdrawals in year 4.
(h)
The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala LuxCo, which own 100% of the equity of the operating company, Kahala Ireland OpCo Designated Activity Company.
(i)
The Company's investment or a portion thereof is pledged as collateral under the Wells Fargo Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(j)
The Company's investment or a portion thereof is pledged as collateral under the Citi Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.

The accompanying notes are an integral part of these consolidated financial statements.

24
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016


(k)
The Company's investment is held through the consolidated subsidiaries, Kahala Aviation Holdings, LLC and Kahala Aviation US, Inc. which own 100% of the equity of the operating company, Kahala US OpCo LLC.
(l)For the year ended December 31, 2016, the following investments paid or have the option to pay all or a portion of interest and dividends via payment-in-kind (“PIK”):
Portfolio Company
 
Investment Type
 
Cash
 
PIK
 
All-in Rate
 
PIK Earned for the year ended December 31, 2016
Basho Technologies, Inc.
 
Senior Secured First Lien Debt
 
17.00
%
 
—
%
 
17.00
%
 
$
283

Capstone Nutrition (fka Integrity Nutraceuticals, Inc.)
 
Senior Secured First Lien Debt
 
—
%
 
13.50
%
 
13.50
%
 
807

CPX Interactive Holdings, LP
 
Senior Secured Second Lien Debt
 
11.00
%
 
2.00
%
 
13.00
%
 
315

Greenwave Holdings, Inc.
 
Senior Secured First Lien Debt
 
10.00
%
 
3.00
%
 
13.00
%
 
510

ILC Dover LP
 
Senior Secured First Lien Debt
 
8.00
%
 
2.00
%
 
10.00
%
 
132

Kahala Ireland OpCo Designated Activity Company
 
Senior Secured First Lien Debt
 
—
%
 
13.00
%
 
13.00
%
 
5,827

Kahala US OpCo LLC
 
Senior Secured First Lien Debt
 
13.00
%
 
—
%
 
13.00
%
 
87

Lightsquared LP
 
Senior Secured First Lien Debt
 
—
%
 
9.75
%
 
9.75
%
 
—

MMM Holdings, LLC
 
Senior Secured First Lien Debt
 
9.75
%
 
—
%
 
9.75
%
 
—

MSO of Puerto Rico, LLC
 
Senior Secured First Lien Debt
 
9.75
%
 
—
%
 
9.75
%
 
—

New Star Metals Inc.
 
Senior Secured First Lien Debt
 
9.00
%
 
2.00
%
 
11.00
%
 
—

NexSteppe Inc.
 
Senior Secured First Lien Debt
 
10.00
%
 
5.00
%
 
15.00
%
 
509

Park Ave RE Holdings, LLC
 
Subordinated Debt
 
13.00
%
 
—
%
 
13.00
%
 
—

Steel City Media
 
Subordinated Debt
 
12.00
%
 
4.00
%
 
16.00
%
 
840

Taqua, LLC
 
Senior Secured First Lien Debt
 
10.50
%
 
3.00
%
 
13.50
%
 
202

The Tennis Channel Holdings, Inc.
 
Senior Secured First Lien Debt
 
6.88
%
 
2.00
%
 
8.88
%
 
85

Visionary Integration Professionals, LLC
 
Subordinated Debt
 
—
%
 
15.00
%
 
15.00
%
 
1,088

Xplornet Communications, Inc.
 
Subordinated Debt
 
—
%
 
13.00
%
 
13.00
%
 
1,727

Total
 
 
 
 
 
 
 
 
 
$
12,412


(m)
The Company's investment or a portion thereof is pledged as collateral under the UBS Credit Facility. Individual investments can be divided into parts which are pledged to separate credit facilities.
(n)
For equity investments in Collateralized Securities, the effective yield is presented in place of the investment coupon rate for each investment. Refer to footnote (v) for a further description of an equity investment in a Collateralized Security.
(o)
The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Control Investments” are defined as investments in companies in which the Company owns more than 25% of the voting securities, maintains greater than 50% of the board representation or has the power to exercise control over the management or policies of such portfolio company.
(p)
The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which the Company owns between 5% and 25% of the voting securities.
(q)
The Company's investments are classified in accordance with the requirements of the 1940 Act. Under the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments. The Company classifies all investments within the consolidated schedule of investments which are not classified as Control Investments or Affiliated Investments as Non-affiliated Investments.
(r)
The Company's investment is held through the Consolidated Holding Company, Kahala Aviation Holdings, LLC, which owns 49% of the operating company, Danish CRJ LTD.
(s)
Related Fee Agreements consist of one investment with a fair value of $0.7 million that is classified as a Non-affiliated Investment and six investments with a total fair value of $9.6 million that are classified as Affiliated Investments.
(t)
The investment is on non-accrual status as of December 31, 2016.
(u)
Investments are held in the taxable wholly-owned, consolidated subsidiary, 54th Street Equity Holdings, Inc.
(v)
The Collateralized Securities - debt investments and equity investments are considered equity positions in the Collateralized Loan Obligation funds. Equity investments are entitled to recurring distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s securities less contractual payments to debt holders and fund expenses. The estimated yield indicated is based upon a current projection of the amount and timing of these recurring distributions and the estimated amount of repayment of principal upon termination. Such projections are periodically reviewed and adjusted, and the estimated yield may not ultimately be realized.
(w)
The Company's investment is held through the consolidated subsidiary, Park Ave RE, Inc., which owns 100% of the equity of the operating company, Park Ave RE Holdings, LLC.






The accompanying notes are an integral part of these consolidated financial statements.

25
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

CONSOLIDATED SCHEDULES OF INVESTMENTS
(dollars in thousands)


December 31, 2016


The following table shows the portfolio composition by industry grouping based on fair value at December 31, 2016:

 
At December 31, 2016
 
Investments at
Fair Value
 
Percentage of
Total Portfolio
Diversified Investment Vehicles
$
364,101

 
15.2
%
Aerospace & Defense
186,806

 
7.8

Diversified Consumer Services
175,780

 
7.3

Health Care Providers & Services
160,396

 
6.7

Hotels, Restaurants & Leisure
157,062

 
6.6

Business Services
112,225

 
4.7

Internet Software & Services
110,324

 
4.6

Media
95,975

 
4.0

Health Care
93,526

 
3.9

Diversified Telecommunication Services
89,047

 
3.7

Commercial Services & Supplies
88,465

 
3.7

Real Estate Management & Development
78,474

 
3.3

IT Services
70,013

 
2.9

Food Products
61,866

 
2.6

Software
55,378

 
2.3

Professional Services
49,401

 
2.1

Machinery
41,442

 
1.7

Consumer Finance
38,643

 
1.6

Auto Components
38,073

 
1.6

Chemicals
33,352

 
1.4

Electronic Equipment, Instruments & Components
28,063

 
1.2

Transportation Infrastructure
27,923

 
1.2

Specialty Retail
26,271

 
1.1

Diversified Financial Services
25,599

 
1.1

Communications Equipment
24,226

 
1.0

Building Products
22,286

 
0.9

Containers & Packaging
20,325

 
0.9

Energy Equipment & Services
20,156

 
0.8

Metals & Mining
20,144

 
0.8

Life Sciences Tools & Services
16,745

 
0.7

Household Durables
15,000

 
0.6

Insurance
14,918

 
0.6

Distributors
14,625

 
0.6

Health Care Technology
11,500

 
0.5

Textiles, Apparel & Luxury Goods
5,953

 
0.3

Oil, Gas & Consumable Fuels
—

 
—

Total
$
2,394,083

 
100.0
%



The accompanying notes are an integral part of these consolidated financial statements.

26
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)


Note 1 — Organization and Basis of Presentation

Business Development Corporation of America (the “Company”) is an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, the Company has elected to be treated for tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s investment activities are managed by BDCA Adviser, LLC (the “Adviser”), a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by the Company’s board of directors, a majority of whom are independent of the Adviser and its affiliates. As a BDC, the Company is required to comply with certain regulatory requirements.

The Company’s investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. The Company invests primarily in first and second lien senior secured loans and mezzanine debt issued by middle market companies. The Company defines middle market companies as those with annual revenues between $10 million and $1 billion. The Company may also purchase interests in loans through secondary market transactions. First and second lien secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in bankruptcy priority and are generally secured by liens on the operating assets of a borrower which may include inventory, receivables, plant, property and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. The Company may invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities” or "CLOs"). Structurally, CLOs are entities that are formed to manage a portfolio of senior secured loans made to companies whose debt is rated below investment grade or, in limited circumstances, unrated. The senior secured loans within these Collateralized Securities meet specified credit and diversity criteria and are subject to concentration limitations in order to create a diverse investment portfolio. In most cases, companies to whom we provide customized financing solutions will be privately held at the time the Company invests in them.

While the structure of the Company’s investments is likely to vary, we may invest in senior secured debt, senior unsecured debt, subordinated secured debt, subordinated unsecured debt, mezzanine debt, convertible debt, convertible preferred equity, preferred equity, common equity, warrants, CLOs and other instruments, many of which generate current yields. If the Adviser deems appropriate, the Company may invest in more liquid senior secured and second lien debt securities, some of which may be traded. The Company will make such investments to the extent allowed by the 1940 Act and consistent with its continued qualification as a RIC for federal income tax purposes.

On January 25, 2011, the Company commenced its initial public offering (the “IPO”) on a “reasonable best efforts basis” of up to 150.0 million shares of common stock, $0.001 par value per share, and subsequently amended the offering to issue up to an additional 101.1 million shares of its common stock (the “Offering”). The Company closed the Offering to new investments on April 30, 2015. In order to allow for associated processing time needed, the transfer agent for the Company accepted subscriptions in good order dated on or before April 30, 2015 and received no later than June 30, 2015. As of March 31, 2017, the Company had issued 191.4 million shares of common stock for gross proceeds of $2.1 billion including the shares purchased by affiliates and shares issued under the Company's distribution reinvestment plan (“DRIP”). As of March 31, 2017, the Company had repurchased a cumulative 12.6 million shares of common stock through its share repurchase program for payments of $114.3 million.

The Company intends to co-invest, subject to the conditions included in the exemptive order the Company received from the SEC, with certain of our affiliates. The Company believes that such co-investments may afford it additional investment opportunities and an ability to achieve greater diversification.

As a BDC, the Company is generally required to invest at least 70% of our total assets primarily in securities of private and certain U.S. public companies (other than certain financial institutions), cash, cash equivalents and U.S. government securities and other high quality debt investments that mature in one year or less.

The Company is permitted to borrow money from time to time within the levels permitted by the 1940 Act (which generally allows it to incur leverage for up to one half of its assets). The Company has used, and expects to continue to use, its credit facilities and other borrowings, along with proceeds from the rotation of its portfolio and proceeds from private securities offerings to finance its investment objectives.

27
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

    
Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

The Company consolidates the following subsidiaries for accounting purposes: BDCA Funding I, LLC (“Funding I”), BDCA 2L Funding I, LLC (“2L Funding I”), BDCA-CB Funding, LLC (“CB Funding”), BDCA Helvetica Funding, Ltd. (“Helvetica Funding”), 54th Street Equity Holdings, Inc. and the Consolidated Holding Companies. All significant intercompany balances and transactions have been eliminated in consolidation. In conjunction with the consolidation of subsidiaries, the Company recognizes non-controlling interests attributable to third party ownership in the following Consolidated Holding Companies: Kahala Aviation Holdings, LLC, Kahala Aviation US, Inc., and Kahala LuxCo.

Interim financial statements are prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X, as appropriate. Accordingly, the consolidated financial statements may not include all of the information and notes required by U.S. GAAP for annual consolidated financial statements. U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported periods. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ materially. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending on December 31, 2017.

Use of Estimates

The preparation of financial statements in conformity with U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation

As provided under Regulation S-X and ASC Topic 946 - Financial Services - Investment Companies, the Company will generally not consolidate its investment in a company other than a substantially wholly-owned investment company or controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the accounts of the Company's substantially wholly-owned subsidiaries in its consolidated financial statements.

Valuation of Portfolio Investments

Portfolio investments are reported on the consolidated statement of assets and liabilities at fair value. On a quarterly basis the Company performs an analysis of each investment to determine fair value as follows:

Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, the Company uses the quote obtained.


28
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Investments without a readily determined market value are primarily valued using 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 the Company may take into account in fair value pricing the Company's investments include, as relevant: 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, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC 946, as of the Company's measurement date.

For investments in Collateralized Securities, both the assets and liabilities of each Collateralized Securities' capital structure are modeled. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets, and distribute the cash flows to the liability structure based on the priority of payments. The waterfall cash flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, broker quotations and/or comparable trade activity is considered as an input to determining fair value when available. 

As part of the Company's quarterly valuation process the Adviser may be assisted by one or more independent valuation firms engaged by the Company. The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).

With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:

•
Each portfolio company or investment will be valued by the Adviser, potentially with assistance from one or more independent valuation firms engaged by our board of directors;
•
The independent valuation firm(s), if involved, will conduct independent appraisals and make an independent assessment of the value of each investment; and
•
The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser, independent valuation firm (to the extent applicable) and the audit committee of the board of directors.

Because there is not a readily available market value for most of the investments in its portfolio, the Company values substantially all of its portfolio investments at fair value as determined in good faith by its board of directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company's investments may fluctuate from period to period. Additionally, the fair value of the Company's investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If the Company was required to liquidate a portfolio investment in a forced or liquidation sale, the Company could realize significantly less than the value at which the Company has recorded it.
    

29
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, “control” is defined as the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. In addition, any person “who owns beneficially, either directly or through one or more controlled companies, more than 25% of the voting securities of a company shall be presumed to control such company. Any person who does not so own more than 25% of the voting securities of any company shall be presumed not to control such company”. Using this definition, the Company has determined to treat “Control Investments” as investments in companies in which the Company owns more than 25% of the voting securities, maintains greater than 50% of the board representation or has the power to exercise control over the management or policies of such portfolio company. Consistent with the 1940 Act, “Affiliated Investments” are defined as those non-control investments in companies in which the Company owns between 5% and 25% of the voting securities. Consistent with the 1940 Act, “Non-affiliated Investments” are defined as investments that are neither Control Investments nor Affiliated Investments.

Where appropriate, prior period consolidated financial statements may have been reclassified to disclose the Company's Control Investments and Affiliate Investments as defined above. In addition, prior period consolidated financial statements have been reclassified to present investment industry classifications in a consistent manner with the current year.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in a money market deposit account. Cash and cash equivalents are carried at cost which approximates fair value.

Offering Costs

The Company incurs certain costs in connection with the registration of shares of its common stock. Offering costs principally relate to professional fees, printing costs, direct marketing expenses, due diligence costs, fees paid to regulators and other expenses, including the salaries and/or expenses of the Adviser and its affiliates engaged in registering and marketing the Company’s common stock. Such allocated expenses of the Adviser and its affiliates may include the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.

Pursuant to the Investment Advisory Agreement, the Company and the Adviser have agreed that the Company will not be liable for organization and offering costs, including transfer agent fees, in excess of 1.5% of the aggregate gross proceeds from the Company’s on-going offering. Should the Company resume continually offering its shares, any offering costs incurred will be capitalized and amortized as an expense on a straight-line basis over a 12 month period. As of March 31, 2017 and December 31, 2016, offering costs have not been incurred in excess of the 1.5% limit.

Deferred Financing Costs

Financing costs incurred in connection with the Company’s Unsecured Notes and revolving credit facilities with Wells Fargo, Citi, and UBS are capitalized and amortized into expense using the straight-line method, which approximates the effective yield method over the life of the respective facility. See Note 5 - Borrowings - for details on the Credit Facilities and Unsecured Notes.

Distributions

The Company’s board of directors has authorized, and the Company has declared cash distributions payable on a monthly basis to stockholders of record on each day since it commenced operations. Since November 2013, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock, except for 2016 where the daily distribution rate was $0.002371585 per day to accurately reflect 2016 being a leap year.

The amount of each such distribution will be subject to the discretion of the board of directors and applicable legal restrictions related to the payment of distributions. The Company will calculate each stockholder’s specific distribution amount

30
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

for the month using record and declaration dates and accrue distributions on the date the Company accepts a subscription for shares of the Company’s common stock. The distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month. From time to time, the Company may also pay interim distributions, including capital gains distributions, at the discretion of the Company’s board of directors. The Company’s distributions may exceed earnings, especially during the period before it has substantially invested the proceeds from the offering. As a result, a portion of the distributions made by the Company may represent a return of capital for U.S. federal income tax purposes. A return of capital is a return of each stockholder’s investment rather than earnings or gains derived from the Company’s investment activities.
    
The Company may fund cash distributions to stockholders from any sources of funds available to the Company, including expense payments from the Adviser that are subject to reimbursement, as well as offering proceeds, borrowings, net investment income from operations, capital gain proceeds from the sale of assets, and non-capital gain proceeds from the sale of assets. The Company has not established limits on the amount of funds it may use from available sources to make distributions. See Note 12 - Income Tax Information and Distributions to Stockholders for additional information.

Revenue Recognition

Interest Income

Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discounts and premiums on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortizations of premiums on investments.

The Company has a number of investments in Collateralized Securities. Interest income from investments in the “equity” class of these Collateralized Securities (in the Company's case, preferred shares or subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets. The Company monitors the expected cash inflows from its equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly.
Fee Income
Fee income, such as structuring fees, origination, closing, amendment fees, commitment and other upfront fees are generally non-recurring and are recognized as revenue when earned, either upfront or amortized into income. Upon the payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment and other upfront fees are recorded as income.
Payment-in-Kind Interest/Dividends

The Company holds debt and equity investments in its portfolio that contain payment-in-kind (“PIK”) interest and dividend provisions. The PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are generally recorded on the accrual basis.

Non-accrual income

Investments are placed on non-accrual status when principal or interest/dividend payments are past due 30 days or more and/or when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.


31
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

Gains or losses on the sale of investments are calculated using the specific identification method. The Company measures 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. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Income Taxes

The Company has elected to be treated for federal income tax purposes as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Generally, a RIC is exempt from federal income taxes if it distributes to stockholders at least 90% of ‘‘investment company taxable income,’’ as defined in the Code, each year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the current tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may be subject to federal excise taxes of 4%. See Note 12 - Income Tax Information and Distributions to Stockholders for additional information.

New Accounting Pronouncements

In December 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-19, Technical Corrections and Improvements. As part of this guidance, ASU 2016-19 amends FASB ASC 820 to clarify the difference between a valuation approach and a valuation technique. The amendment also requires an entity to disclose when there has been a change in either or both a valuation approach and/or a valuation technique. ASU 2016-19 is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. The Company has evaluated the impact of ASU 2016-19 on its consolidated financial statements and disclosures and determined that the adoption of ASU 2016-19 has not had a material impact on its consolidated financial statements.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows, which will amend FASB ASC 230. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is evaluating the impact of ASU 2016-18 on its consolidated financial statements and disclosures.

In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended rules (together, “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. The Company is currently evaluating the impact that the adoption of the amendments to Regulation S-X will have on its consolidated financial statements and disclosures.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230)”, which seeks to reduce diversity in how certain cash payments are presented in the Statement of Cash Flows. Under ASU 2016-15, an entity will need to conform to the presentation as prescribed for eight specific cash flow issues. ASU 2016-15 will be effective for annual and interim reporting periods after December 15, 2017. The application of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606),” which amends the criteria for revenue recognition where an entity enters into contracts with customers to transfer goods or services or where there is a transfer of non-financial assets. Under ASU 2016-10, an entity should recognize revenue in an amount that reflects the

32
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2016-10 will be effective for annual and interim reporting periods after December 15, 2018. The Company does not believe that the adoption of ASU 2016-10 will have any impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 retains many current requirements for the classification and measurement of financial instruments; however, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. ASU 2016-01 also amends certain disclosure requirements associated with the fair value of financial instruments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and early adoption is not permitted for public business entities. The Company is currently evaluating the impact the adoption of this standard has on its consolidated financial statements and disclosures.

Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

Note 3 — Fair Value of Financial Instruments

Accounting guidance establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, if any, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:

•
Level 1—Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
•
Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
•
Level 3—Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the above hierarchy requires significant judgment and factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter.

All of the Company’s investment portfolio at March 31, 2017 was comprised of debt and equity instruments for which Level 1 inputs, such as quoted prices, were not available. Therefore, at March 31, 2017, the investments were valued at fair value as determined in good faith using the valuation policy approved by the board of directors using Level 2 and Level 3 inputs. The Company evaluates the source of inputs, including any markets in which the Company's investments are trading, in determining fair value. Due to the inherent uncertainty in the valuation process, the estimate of fair value of the Company’s investment portfolio at March 31, 2017 may differ materially from values that would have been used had a ready market for the securities existed.

In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the board of directors. Portfolio investments are reported on the consolidated statements of assets and liabilities at

33
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

fair value. On a quarterly basis the Company performs an analysis of each investment to determine fair value as described below.

Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. The Company may also obtain quotes with respect to certain of the Company's investments from pricing services or brokers or dealers in order to value assets. When doing so, the Company determines whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, the Company uses the quote obtained.

Investments without a readily determined market value are primarily valued using 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 the Company may take into account in fair value pricing the Company's investments include, as relevant: 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, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

For an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC Topic 946, as of the Company's measurement date.

For investments in Collateralized Securities, the Adviser models both the assets and liabilities of each Collateralized Securities' capital structure. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets, and distribute the cash flows to the liability structure based on priority of payments. The waterfall cash flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, the Adviser considers broker quotations and/or comparable trade activity is considered as an input to determining fair value when available. 

As part of the Company's quarterly valuation process, the Adviser may be assisted by one or more independent valuation firms engaged by the Company. The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).

Determination of fair values involves subjective judgments and estimates. Accordingly, the notes to the consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations on the consolidated financial statements.
    
For discussion of the fair value measurement of the Company's borrowings, refer to Note 5 - Borrowings - in the consolidated financial statements included in this report.


34
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

The following table presents fair value measurements of investments, by major class, as of March 31, 2017, according to the fair value hierarchy:
 
Fair Value Measurements
 
Level 1
 
Level 2
 
Level 3
 
Measured at Net Asset Value (1)
 
Total
Senior Secured First Lien Debt
$
—

 
$
684,982

 
$
926,671

 
$
—

 
$
1,611,653

Senior Secured Second Lien Debt
—

 
64,597

 
202,975

 
—

 
267,572

Subordinated Debt
—

 
—

 
80,158

 
—

 
80,158

Collateralized Securities
—

 
—

 
209,563

 
—

 
209,563

Equity/Other
—

 
—

 
74,718

 
115,561

 
190,279

Total
$
—

 
$
749,579

 
$
1,494,085

 
$
115,561

 
$
2,359,225

______________

(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.

The following table presents fair value measurements of investments, by major class, as of December 31, 2016, according to the fair value hierarchy:
 
Fair Value Measurements
 
Level 1
 
Level 2
 
Level 3
 
Measured at Net Asset Value (1)
 
Total
Senior Secured First Lien Debt
$
—

 
$
714,562

 
$
916,099

 
$
—

 
$
1,630,661

Senior Secured Second Lien Debt
—

 
56,936

 
205,051

 
—

 
261,987

Subordinated Debt
—

 
—

 
80,540

 
—

 
80,540

Collateralized Securities
—

 
—

 
249,582

 
—

 
249,582

Equity/Other
—

 
—

 
56,794

 
114,519

 
171,313

Total
$
—

 
$
771,498

 
$
1,508,066

 
$
114,519

 
$
2,394,083

______________

(1) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the consolidated statements of assets and liabilities.
















35
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the three months ended March 31, 2017:

 
Senior Secured First Lien Debt
 
Senior Secured Second Lien Debt
 
Subordinated Debt
 
Collateralized Securities
 
Equity/Other
 
Total
Balance as of December 31, 2016
$
916,099

 
$
205,051

 
$
80,540

 
$
249,582

 
$
56,794

 
$
1,508,066

Net change in unrealized appreciation (depreciation) on investments
(16,753
)
 
239

 
(598
)
 
364

 
3,623

 
(13,125
)
Purchases and other adjustments to cost
58,367

 
2,140

 
435

 
40

 
14,726

 
75,708

Sales and redemptions
(46,712
)
 
(16,062
)
 
(198
)
 
(41,372
)
 
(429
)
 
(104,773
)
Net realized gains (losses)
492

 
221

 
(21
)
 
949

 
4

 
1,645

Transfers in
15,178

 
11,386

 
—

 
—

 
—

 
26,564

Transfers out
—

 
—

 
—

 
—

 
—

 
—

Balance as of March 31, 2017
$
926,671

 
$
202,975

 
$
80,158

 
$
209,563

 
$
74,718

 
$
1,494,085

Net change in unrealized appreciation (depreciation) for the
     period relating to those Level 3
     assets that were still held by
     the Company at the end of the
     period:
 
 
 
 
 
 
 
 
 
 

      Net change in unrealized
      appreciation (depreciation):
$
(16,472
)
 
$
239

 
$
(598
)
 
$
1,300

 
$
3,623

 
$
(11,908
)

Purchases represent the acquisition of new investments at cost. Redemptions represent principal payments received during the period.

For the three months ended March 31, 2017, there were no transfers out of Level 1 to Level 2 and Level 3 to Level 2. For the three months ended March 31, 2017, two companies were transferred out of Level 2 to Level 3.
 
Transfers between levels, if any, are recognized at the beginning of the period in which transfers occur.

36
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)


The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended December 31, 2016:
 
Senior Secured First Lien Debt
 
Senior Secured Second Lien Debt
 
Subordinated Debt
 
Collateralized Securities
 
Equity/Other
 
Total
Balance as of December 31, 2015
$
1,095,040

 
$
340,563

 
$
92,272

 
$
261,784

 
$
115,112

 
$
1,904,771

Net change in unrealized appreciation (depreciation) on investments
(39,045
)
 
4,506

 
1,120

 
48,557

 
(19,214
)
 
(4,076
)
Purchases and other adjustments to cost
255,985

 
27,416

 
5,813

 
162

 
201

 
289,577

Sales and redemptions
(241,206
)
 
(118,913
)
 
(7,403
)
 
(60,921
)
 
(4,069
)
 
(432,512
)
Net realized gains (losses)
(9,461
)
 
1,538

 
(11,262
)
 
—

 
(6,081
)
 
(25,266
)
Transfers in
4,252

 
—

 
—

 
—

 
—

 
4,252

Transfers out
(149,466
)
 
(50,059
)
 
—

 
—

 
(29,155
)
 
(228,680
)
Balance as of December 31, 2016
$
916,099

 
$
205,051

 
$
80,540

 
$
249,582

 
$
56,794

 
$
1,508,066

Net change in unrealized appreciation (depreciation) for the
period relating to those Level 3
assets that were still held by
the Company at the end of the
period:
 
 
 
 
 
 
 
 
 
 
 
      Net change in unrealized
appreciation (depreciation):
$
(41,722
)
 
$
1,653

 
$
(603
)
 
$
48,557

 
$
(21,841
)
 
$
(13,956
)

Purchases represent the acquisition of new investments at cost. Redemptions represent principal payments received during the period.

For the year ended December 31, 2016, there were no transfers out of Level 1 to Level 2. For the year ended December 31, 2016, one company was transferred out of Level 2 to Level 3. For the year ended December 31, 2016, seventeen companies were transferred from Level 3 to Level 2 as the number of observable market quotes increased.
 
The composition of the Company’s investments as of March 31, 2017, at amortized cost and fair value, were as follows:

 
Investments at
Amortized Cost
 
Investments at
Fair Value
 
Fair Value
Percentage of
Total Portfolio
Senior Secured First Lien Debt
$
1,709,814

 
$
1,611,653

 
68.3
%
Senior Secured Second Lien Debt
276,753

 
267,572

 
11.3

Subordinated Debt
81,271

 
80,158

 
3.4

Collateralized Securities
234,391

 
209,563

 
8.9

Equity/Other
174,630

 
190,279

 
8.1

Total
$
2,476,859

 
$
2,359,225

 
100.0
%





37
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

The composition of the Company’s investments as of December 31, 2016, at amortized cost and fair value, were as follows:

 
Investments at
Amortized Cost
 
Investments at
Fair Value
 
Fair Value
Percentage of
Total Portfolio
Senior Secured First Lien Debt
$
1,726,833

 
$
1,630,661

 
68.1
%
Senior Secured Second Lien Debt
272,513

 
261,987

 
10.9

Subordinated Debt
81,056

 
80,540

 
3.4

Collateralized Securities
274,776

 
249,582

 
10.4

Equity/Other
160,360

 
171,313

 
7.2

Total
$
2,515,538

 
$
2,394,083

 
100.0
%
    
Significant Unobservable Inputs

The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of March 31, 2017. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.

 
 
 
 
Range
 
 
Asset Category
 
Fair Value
 
Primary Valuation Technique
 
Unobservable Inputs
 
Minimum
 
Maximum
 
Weighted Average (a)
Senior Secured First Lien Debt (b)
 
$
882,684

 
Yield Analysis
 
Market Yield
 
6.00
%
 
27.00
%
 
10.71
%
Senior Secured First Lien Debt (c)
 
$
11,294

 
Joint Venture/Merger Strategy
 
EBITDA Multiple
 
5.00x

 
5.50x

 
N/A

Senior Secured Second Lien Debt
 
$
202,975

 
Yield Analysis
 
Market Yield
 
10.70
%
 
14.50
%
 
12.01
%
Subordinated Debt (d)
 
$
78,710

 
Yield Analysis
 
Market Yield
 
12.25
%
 
17.00
%
 
13.20
%
Collateralized Securities
 
$
209,563

 
Discounted Cash Flow
 
Discount Rate
 
7.54
%
 
30.00
%
 
17.83
%
Equity/Other (e)
 
$
11,006

 
Market Multiple Analysis
 
EBITDA Multiple
 
1.8x

 
22.4x

 
6.7x

______________
    
(a) 
Weighted averages are calculated based on fair value of investments.
(b) 
Refer to note (c) below for one senior secured first lien debt investment valued using an alternative technique. The remaining $32.7 million of senior secured first lien debt were valued at their respective acquisition prices as the investments closed near period end.
(c) 
Weighted average not applicable as this asset category contains one investment.
(d) 
The remaining $1.5 million of subordinated debt were valued based on a Monte-Carlo simulation.
(e) 
The remaining $63.7 million of equity/other investments consisted of $48.6 million which were valued with consideration of their respective appraisal value, $14.7 million which were valued at their respective acquisition prices as the investment closed near period end, and $0.4 million which were based on a Monte-Carlo simulation.

Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets.

38
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

    
The following table summarizes the significant unobservable inputs used to value the majority of the Level 3 investments as of December 31, 2016. The table is not intended to be all-inclusive, but instead identifies the significant unobservable inputs relevant to the determination of fair values.

 
 
 
 
Range
 
 
Asset Category
 
Fair Value
 
Primary Valuation Technique
 
Unobservable Inputs
 
Minimum
 
Maximum
 
Weighted Average (a)
Senior Secured First Lien Debt (b)
 
$
823,974

 
Yield Analysis
 
Market Yield
 
6.00
%
 
27.00
%
 
10.88
%
Senior Secured First Lien Debt (c)
 
$
19,708

 
Joint Venture/Merger Strategy
 
EBITDA Multiple
 
6.75x

 
7.50x

 
N/A

Senior Secured Second Lien Debt
 
$
205,051

 
Yield Analysis
 
Market Yield
 
10.60
%
 
13.60
%
 
11.91
%
Subordinated Debt (d)
 
$
78,808

 
Yield Analysis
 
Market Yield
 
12.25
%
 
17.25
%
 
14.11
%
Collateralized Securities
 
$
249,582

 
Discounted Cash Flow
 
Discount Rate
 
7.54
%
 
45.06
%
 
19.84
%
Equity/Other (e)
 
$
10,279

 
Market Multiple Analysis
 
EBITDA Multiple
 
2.4x

 
11.2x

 
7.0x

______________
    
(a) 
Weighted averages are calculated based on fair value of investments.
(b) 
Refer to note (c) below for one senior secured first lien debt investment valued using an alternative technique. The remaining $72.4 million of senior secured first lien debt were valued at their respective acquisition prices as the investments closed near year end.
(c) 
Weighted average not applicable as this asset category contains one investment.
(d) 
The remaining $1.7 million of subordinated debt were valued based on a Monte-Carlo simulation.
(e) 
The remaining $46.5 million of equity/other investments consisted of $46.0 million which were valued with consideration of their respective appraisal value, $0.3 million which were based on a Monte-Carlo simulation, and $0.2 million which were valued at their respective acquisition prices as the investment closed near year end.

Increases or decreases in any of the above unobservable inputs in isolation would result in a lower or higher fair value measurement for such assets.

As of March 31, 2017, the Company had six portfolio companies, which represented eleven portfolio investments, on non-accrual status with a total principal amount of $143.4 million, amortized cost of $134.8 million, and fair value of $53.4 million which represented 5.3%, 5.4% and 2.3% of the investment portfolio total principal, amortized cost and fair value, respectively. As of December 31, 2016, the Company had six portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $136.2 million, amortized cost of $127.6 million, and fair value of $51.2 million which represented 5.0%, 5.1% and 2.1% of the investment portfolio total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in our consolidated financial statements included in this report for additional details regarding the Company’s non-accrual policy.

Note 4 — Related Party Transactions and Arrangements

The Transaction

On July 19, 2016, American Realty Capital II Advisors, LLC, the former parent of the Adviser, entered into a membership interest purchase agreement with a subsidiary of BSP, pursuant to which such subsidiary acquired all of the outstanding limited liability company interests of the Adviser (the “Transaction”). In connection with the Transaction, the Company amended the Investment Advisory Agreement, effective as of November 1, 2016, to allow the Adviser to serve as

39
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

investment adviser to the Company following the closing of the Transaction.

Investment Advisory Agreement

Pursuant to the Investment Advisory Agreement and for the investment advisory and management services provided thereunder, the Company pays the Adviser a base management fee and an incentive fee.

Base Management Fee

The base management fee is calculated at an annual rate of 1.5% of the Company’s average gross assets. The base management fee is payable quarterly in arrears. Average gross assets is calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters. All or any part of the base management fee not taken as to any quarter shall be deferred without interest and may be taken in such other quarter as the Adviser will determine. The base management fee for any partial month or quarter is appropriately pro-rated.

Incentive Fees

The incentive fee consists of two parts. The first part is referred to as the incentive fee on income and it is calculated and payable quarterly in arrears based on the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter. ). “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees, other than fees for providing managerial assistance, such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount debt instruments with payment-in-kind interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The payment of the incentive fee on income shall be subject to payment of a preferred return to investors each quarter, expressed as a quarterly rate of return on the value of our net assets at the end of the most recently completed calendar quarter, of 1.75% (7.00% annualized), subject to a “catch up” feature (as described below). The calculation of the incentive fee on income for each quarter is as follows:

•
No incentive fee on income shall be payable to the Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the preferred return rate of 1.75% or 7.00% annualized (the “Preferred Return”) on net assets;
•
100% of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds the preferred return but is less than or equal to 2.1875% in any calendar quarter (8.75% annualized) shall be payable to the Adviser. This portion of the Company’s incentive fee on income is referred to as the “catch up” and is intended to provide the Adviser with an incentive fee of 20% on all of the Company’s Pre-Incentive Fee Net Investment Income when the Company’s Pre-Incentive Fee Net Investment Income reaches 2.1875% (8.75% annualized) in any calendar quarter; and
•
For any quarter in which our Pre-Incentive Fee Net Investment Income exceeds 2.1875% (8.75% annualized), the incentive fee on income shall equal 20% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, as the Preferred Return and catch-up will have been achieved.

The second part of the incentive fee, referred to as the “incentive fee on capital gains during operations,” shall be an incentive fee on capital gains earned on liquidated investments from the portfolio during operations prior to the Company’s liquidation and shall be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, if earlier). This fee shall equal 20.0% of the Company’s incentive fee capital gains, which shall equal the Company’s realized capital gains on a cumulative basis from inception, calculated as of the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees.



40
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Administration Agreement

In connection with the closing of the Transaction, the Company terminated the previous administration agreement and entered into a new administration agreement with BSP on November 1, 2016. In connection with the New Administration Agreement, BSP will provide the Company with office facilities and administrative services.

Co-Investment Relief

The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with affiliates absent an order from the SEC permitting the BDC to do so. Unless otherwise provided in the allocation policy, if an investment opportunity is appropriate for both the Company and other investment funds and the investment opportunity requires more than the price to be negotiated, the investment opportunity will be made available to the other investment fund or the Company on an alternating basis based on the date of closing of each such investment opportunity and each fund’s available capital. As a result, the Adviser and/or its affiliates may face conflicts in allocating investment opportunities between the Company and such other entities. Although the Adviser and its affiliates will endeavor to allocate investment opportunities in a fair and equitable manner and consistent with applicable allocation procedures, it is possible that, in the future, the Company may not be given the opportunity to participate in investments made by investment funds managed by the Adviser or its affiliates.

The SEC staff has granted the Company relief sought in an exemptive application that expands its ability to co-invest in portfolio companies with other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with its investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) or its independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to the Company and our stockholders and do not involve overreaching by the Company or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objective and strategies.

Transactions with Affiliates
    
In connection with the closing of the Transaction, an affiliate of BSP purchased $10.0 million of the Company’s common stock based on its net asset value per share in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933. On November 7, 2016, the Company issued approximately 1.2 million shares of its common stock to such BSP affiliate.

Offering Costs

The Company incurs certain costs in connection with the registration of shares of its common stock. Offering costs principally relate to professional fees, printing costs, direct marketing expenses, due diligence costs, fees paid to regulators and other expenses, including the salaries and/or expenses of the Adviser and its affiliates engaged in registering and marketing the Company’s common stock. Such allocated expenses of the Adviser and its affiliates may include the development of marketing materials and presentations, training and educational meetings, and generally coordinating the marketing process for the Company.

Due (to)/from affiliate

As of March 31, 2017 and December 31, 2016, there were no amounts due (to)/from a previous affiliate.

Other Affiliated Parties

BDCA Adviser, LLC (“BDCA Adviser”) is the investment adviser of BDCA. BDCA Adviser is an affiliate of BSP, an SEC registered investment adviser. BDCA Adviser and BSP are under common control. BDCA Adviser is affiliated and under common control with Providence Equity Capital Markets L.L.C. (“PECM”), an SEC registered investment adviser on the BSP platform. BDCA Adviser is affiliated and under common control with Providence Equity Partners L.L.C. (“PEP”), an SEC

41
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

registered investment adviser. PEP is a global private equity investment adviser and maintains an information barrier between itself and BDCA Adviser, BSP and PECM. BSP, BDCA Adviser, PECM, and PEP’s respective Form ADV’s are publicly available for review on the SEC Investment Adviser Public Disclosure website.

Note 5 — Borrowings

Wells Fargo Credit Facility

On July 24, 2012, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, Funding I, entered into a revolving credit facility with Wells Fargo and U.S. Bank as collateral agent, account bank and collateral custodian (the “Wells Fargo Credit Facility”). The Wells Fargo Credit Facility, which was subsequently amended on April 26, 2013, September 9, 2013, June 30, 2014, May 29, 2015, and November 4, 2015, provides for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis.

The Wells Fargo Credit Facility is priced at the one month maturity London Interbank Offered Rate (“LIBOR”), with no LIBOR floor, plus a spread ranging between 1.75% and 2.50% per annum, depending on the composition of the portfolio of loans owned by Funding I for the relevant period. Interest is payable quarterly in arrears. Funding I is subject to a non-usage fee to the extent the aggregate principal amount available under the Wells Fargo Credit Facility has not been borrowed. The non-usage fee per annum for the first six months is 0.50%; thereafter, the non-usage fee per annum is 0.50% for the first 20% of the unused balance and 2.0% for the portion of the unused balance that exceeds 20%.

Borrowings under the Wells Fargo Credit Facility are subject to compliance with a borrowing base, pursuant to which the amount of funds advanced to Funding I varies depending upon the types of loans in Funding I's portfolio. The Wells Fargo Credit Facility may be prepaid in whole or in part, subject to customary breakage costs.

The Wells Fargo Credit Facility contains customary default provisions for facilities of this type pursuant to which Wells Fargo may terminate the rights, obligations, power and authority of the Company, in its capacity as servicer of the portfolio assets under the Wells Fargo Credit Facility, including, but not limited to, non-performance of Wells Fargo Credit Facility obligations, insolvency, defaults of certain financial covenants and other events with respect to the Company that may be adverse to Wells Fargo and the secured parties under the Wells Fargo Credit Facility.

In connection with the Wells Fargo Credit Facility, Funding I has made certain representations and warranties, is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities and is subject to certain customary events of default. Upon the occurrence and during the continuation of an event of default, Wells Fargo may declare the outstanding advances and all other obligations under the Wells Fargo Credit Facility immediately due and payable. During the continuation of an event of default, Funding I must pay interest at a default rate.

Deutsche Bank Credit Facility

On February 21, 2014, the Company, through a wholly-owned, consolidated special purpose financing subsidiary, BDCA 2L Funding I, LLC (“2L Funding I”), entered into the credit facility with Deutsche Bank (the “Deutsche Bank Credit Facility”) as lender and as administrative agent and U.S. Bank as collateral agent and collateral custodian. The Deutsche Bank Credit Facility was amended on February 19, 2016 and it was terminated in accordance with its terms on June 3, 2016.

The Deutsche Bank Credit Facility provided for borrowings in an aggregate principal amount of up to $60.0 million with a term of 36 months. The Deutsche Bank Credit Facility was priced at LIBOR plus 4.25%, with no LIBOR floor. Prior to its termination, the Deutsche Bank Credit Facility was subject to a minimum utilization of 82.5% of the loan amount thereafter, measured quarterly. If the utilized portion of the loan amount was less than the foregoing thresholds, such shortfalls bore interest at LIBOR plus 4.25%. The Deutsche Bank Credit Facility provided for monthly interest payments for each drawn loan. 2L Funding I paid a structuring fee and incurred certain other customary costs and expenses in connection with obtaining the Deutsche Bank Credit Facility.
    

42
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Citi Credit Facility

On June 27, 2014, the Company, through a wholly-owned, special purpose financing subsidiary, CB Funding, entered into a credit facility with Citi (the “Citi Credit Facility”) as administrative agent and U.S. Bank as collateral agent, account bank and collateral custodian. The Citi Credit Facility, which was subsequently amended on October 14, 2015, provides for borrowings in an aggregate principal amount of up to $400.0 million on a committed basis, subject to the administrative agent’s right to approve the assets acquired by CB Funding and pledged as collateral under the Citi Credit Facility. The Citi Credit Facility has a maturity date of June 27, 2018.

The Citi Credit Facility is priced at LIBOR, with no LIBOR floor, plus a spread of 1.70% per annum for the first twenty-four months and 2.00% per annum thereafter. Interest is payable quarterly in arrears. CB Funding is subject to a non-usage fee to the extent the aggregate principal amount available under the Citi Credit Facility has not been borrowed. Any amounts borrowed under the Citi Credit Facility along with any accrued and unpaid interest thereunder will mature, and will be due and payable, in three years.
    
UBS Credit Facility

On April 7, 2015, the Company, through a wholly-owned, special-purpose, bankruptcy-remote subsidiary, Helvetica Funding, entered into a debt financing facility with UBS AG, London Branch (“UBS”), pursuant to which $150.0 million will be made available to the Company to fund investments in new securities and for other general corporate purposes (the “UBS Credit Facility”). The UBS Credit Facility was subsequently amended on July 10, 2015 to increase the amount of debt available to the Company under the facility from $150.0 million to $210.0 million. On June 6, 2016, the UBS credit facility was again amended to increase the amount of debt available from $210.0 million to $232.5 million. In addition, the amended facility increased the applicable spread over a three-month LIBOR from 3.90% to 4.05% per annum for the relevant period and increased the permissible percentage of second lien loans from 60% to 70%. Pricing under the transaction is based on three-month LIBOR plus a spread of 4.05% per annum for the relevant period. The UBS Credit Facility has a maturity date of April 4, 2018.

Unsecured Notes

On August 26, 2015, the Company entered into a Purchase Agreement with the initial purchasers, relating to the Company’s sale of $100.0 million aggregate principal amount of its 6.00% fixed rate senior notes due 2020 to the initial purchasers in a private placement in reliance on Section 4(a)(2) of the Securities Act and for initial resale by the initial purchasers to qualified institutional buyers pursuant to the exemption from registration provided by Rule 144A promulgated under the Securities Act (the “Unsecured Notes”). The Company relied upon these exemptions from registration based in part on representations made by the initial purchasers. The Purchase Agreement includes customary representations, warranties and covenants by the Company. Under the terms of the Purchase Agreement, the Company has agreed to indemnify the initial purchasers against certain liabilities under the Securities Act. The Unsecured Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The net proceeds from the sale of the Unsecured Notes was approximately $97.9 million, after deducting initial purchasers’ discounts and commissions of approximately $1.6 million payable by the Company and estimated offering expenses of approximately $0.5 million payable by the Company. The Company used the net proceeds to make investments in accordance with the Company’s investment objectives and for general corporate purposes. 
    
The Unsecured Notes were issued pursuant to the Indenture, dated as of August 31, 2015, between the Company and the Trustee. The Unsecured Notes will mature on September 1, 2020, and may be redeemed in whole or in part at the Company’s option at any time, or from time to time, at the redemption prices set forth in the Indenture. The Unsecured Notes bear interest at a rate of 6.00% per year payable semi-annually on March 1 and September 1 of each year, commencing on March 1, 2016. The Unsecured Notes will be general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the Unsecured Notes. The Unsecured Notes will rank equally in right of payment with all of the Company’s existing and future senior liabilities that are not so subordinated, effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and structurally junior to all existing and future indebtedness incurred by the Company’s subsidiaries, financing vehicles or similar facilities, including credit facilities held by the Company’s wholly owned, special purpose financing subsidiaries. 

43
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)


The Indenture contains certain covenants, including covenants requiring the Company to: (i) comply with the asset coverage requirements of Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act as in effect immediately prior to the issuance of the Unsecured Notes, whether or not the Company is subject to such provisions; (ii) provide financial information to the holders of the Unsecured Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Securities Exchange Act of 1934, as amended; and (iii) maintain total unencumbered assets, as defined in the Indenture, of at least 175% of the aggregate principal amount of all of the Company and the Company’s consolidated subsidiaries’ outstanding unsecured debt determined on a consolidated basis in accordance with U.S. GAAP. These covenants are subject to important limitations and exceptions that are described in the Indenture.

JP Morgan Securities LLC Prime Brokerage Account
On January 20, 2017, the Company entered into a prime brokerage account agreement with JP Morgan Securities LLC (the “JPMC PB Account”). The JPMC PB Account provides a full suite of services around the custody of bonds and equities and also access to leverage, which is dependent on the price, credit quality and diversity of the pool of assets held within the account. The borrowing availability is recalculated daily based on changes to the assets, with margin calls issued in the morning as appropriate. The cost to borrow is 1 week LIBOR + 90 bps and there is no mandatory usage or period wherein the debt needs to be repaid.

As of March 31, 2017, the Company had borrowings of $1.8 million and additional borrowing capacity of $13.8 million under the JPMC PB Account. For the three months ended March 31, 2017, the Company incurred approximately six thousand dollars of interest expense as calculated using the cost of borrow noted above.

The weighted average annualized interest cost for all borrowings for the three months ended March 31, 2017 and March 31, 2016 was 3.79% and 3.46%, respectively. The average daily debt outstanding for the three months ended March 31, 2017 and March 31, 2016 was $926.7 million and $873.1 million, respectively. The maximum debt outstanding for the three months ended March 31, 2017 and March 31, 2016 was $945.6 million and $922.3 million, respectively.

The following table represents borrowings as of March 31, 2017:
 
Level
 
Maturity Date
 
Total Aggregate Borrowing Capacity
 
Total Principal Outstanding
 
Less Deferred Financing Costs
 
Amount per Balance Sheet
Wells Fargo Credit Facility
3
 
5/29/2020
 
$
400,000

 
$
298,152

 
$
(2,726
)
 
$
295,426

Citi Credit Facility
3
 
6/27/2018
 
400,000

 
316,003

 
(915
)
 
315,088

UBS Credit Facility
3
 
4/7/2018
 
232,500

 
232,500

 
(420
)
 
232,080

Unsecured Notes
3
 
9/1/2020
 
100,000

 
98,920

 
(429
)
 
98,491

JPMC PB Account
n/a
 
n/a
 
15,701

 
1,873

 
—

 
1,873

Totals
 
 
 
 
$
1,148,201

 
$
947,448

 
$
(4,490
)
 
$
942,958















44
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

The following table represents borrowings as of December 31, 2016:
 
Level
 
Maturity Date
 
Total Aggregate Borrowing Capacity
 
Total Principal Outstanding
 
Less Deferred Financing Costs
 
Amount per Balance Sheet
Wells Fargo Credit Facility
3
 
5/29/2020
 
$
400,000

 
$
298,152

 
$
(2,939
)
 
$
295,213

Citi Credit Facility
3
 
6/27/2018
 
400,000

 
286,003

 
(1,097
)
 
284,906

UBS Credit Facility
3
 
4/7/2018
 
232,500

 
232,500

 
(517
)
 
231,983

Unsecured Notes
3
 
9/1/2020
 
100,000

 
98,842

 
(460
)
 
98,382

Totals
 
 
 
 
$
1,132,500

 
$
915,497

 
$
(5,013
)
 
$
910,484


The following table represents interest and credit facility fees for the three months ended March 31, 2017:
 
Three months ended March 31, 2017
 
Interest Rate
 
Non-Usage Rate
 
Interest Expense
 
Non-Usage Fees (3)
Wells Fargo Credit Facility
(1) 
 
(2) 
 
$
2,368

 
$
238

Citi Credit Facility
L+1.70%
 
0.50%
 
2,031

 
140

UBS Credit Facility
L+4.05%
 
n/a
 
2,931

 
23

Unsecured Notes
0.06
 
n/a
 
1,578

 
7

JPMC PB Account
L+0.90%
 
n/a
 
6

 
—

Totals
 
 
 
 
$
8,914

 
$
408

_________________
(1) Interest rate is priced at one month's LIBOR with no LIBOR floor, plus a spread ranging between 1.75% and 2.50% per annum, depending on the composition of the portfolio of loans owned.
(2) The non-usage fee per annum for the first nine months is 0.50%; thereafter, 0.50% for the first 20% of the unused balance and 2.0% for the unused balance that exceeds 20%.
(3) Includes custody fees and trustee fees.
















    




45
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

The following table represents interest and credit facility fees for the three months ended March 31, 2016:
 
Three months ended March 31, 2016
 
Interest Rate
 
Non-Usage Rate
 
Interest Expense
 
Non-Usage Fees (4)
Wells Fargo Credit Facility
(1) 
 
(2) 
 
$
1,871

 
$
269

Deutsche Bank Credit Facility
L+4.25%
 
(3) 
 
328

 
245

Citi Credit Facility
L+1.70%
 
0.50%
 
1,578

 
164

UBS Credit Facility
L+3.90%
 
n/a
 
2,392

 
—

Unsecured Notes
6.00%
 
n/a
 
1,595

 
n/a
Totals
 
 
 
 
$
7,764

 
$
678

_________________
(1) Interest rate is priced at one month's LIBOR with no LIBOR floor, plus a spread ranging between 1.75% and 2.50% per annum, depending on the composition of the portfolio of loans owned.
(2) The non-usage fee per annum for the first nine months is 0.50%; thereafter, 0.50% for the first 20% of the unused balance and 2.0% for the unused balance that exceeds 20%.
(3) The undrawn rate is 0.75%. The Facility is subject to minimum utilization of 82.5% of the loan amount measured quarterly. If the utilized portion of the loan amount is less than the foregoing, such thresholds shall bear interest at LIBOR + 4.25%.
(4) Includes custody fees.
    
The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair value of short-term financial instruments such as cash and cash equivalents, due to affiliates and accounts payable approximate their carrying value on the accompanying statements of assets and liabilities due to their short-term nature. The fair values of the Company’s remaining financial instruments that are not reported at fair value on the accompanying consolidated statements of assets and liabilities are reported below (amounts in thousands):

 
Level
 
Carrying Amount at March 31, 2017
 
Fair Value at March 31, 2017
Wells Fargo Credit Facility
3
 
$
298,152

 
$
298,152

Citi Credit Facility
3
 
316,003

 
316,003

UBS Credit Facility
3
 
232,500

 
232,500

Unsecured Notes
3
 
98,920

 
99,625

JPMC PB Account
n/a
 
1,873

 
1,873

 
 
 
$
947,448

 
$
948,153


 
Level
 
Carrying Amount at December 31, 2016
 
Fair Value at December 31, 2016
Wells Fargo Credit Facility
3
 
$
298,152

 
$
298,152

Citi Credit Facility
3
 
286,003

 
286,003

UBS Credit Facility
3
 
232,500

 
232,500

Unsecured Notes
3
 
98,842

 
98,125

 
 
 
$
915,497

 
$
914,780



46
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Note 6 — Commitments and Contingencies

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of March 31, 2017, the Company had unfunded commitments on delayed draw term loans of $39.1 million, unfunded commitments on revolver term loans of $27.7 million and unfunded equity capital commitments of $9.4 million. As of December 31, 2016, the Company had unfunded commitments on delayed draw term loans of $35.7 million, unfunded commitments on revolver term loans of $24.7 million and unfunded equity capital commitments of $9.4 million. The unfunded commitments are disclosed in the Company's consolidated schedule of investments. The Company maintains sufficient cash on hand and available borrowings to fund such unfunded commitments.

Litigation and Regulatory Matters
 
In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. The Company has no knowledge of material legal or regulatory proceedings pending or known to be contemplated against the Company at this time.
 
Indemnifications

In the ordinary course of its business, the Company may enter into contracts or agreements that contain indemnifications or warranties. Future events could occur that lead to the execution of these provisions against the Company. Based on its history and experience, management feels that the likelihood of such an event is remote.

Guarantees

The Company has provided a guarantee to its controlled portfolio company, Park Ave RE Holdings, LLC, in connection with a secured loan whereby the Company will be responsible for certain liabilities of the portfolio company upon the occurrence of certain events (such as a bankruptcy or the incurrence of additional indebtedness in violation of the terms of the loan).

Note 7 — Economic Dependency
 
Under various agreements, the Company has engaged or will engage the Adviser and its affiliates to provide certain services that are essential to the Company, including asset management services, asset acquisition and disposition decisions, the sale of shares of the Company’s common stock available for issuance, as well as other administrative responsibilities for the Company including accounting services and investor relations.
  
As a result of these relationships, the Company is dependent upon the Adviser and its affiliates. In the event that these companies were unable to provide the Company with the respective services, the Company would be required to find alternative providers of these services.

Note 8 — Common Stock

On August 25, 2011, the Company had raised sufficient funds to break escrow on its IPO. On July 1, 2014, the Company's registration statement on Form N-2 (File No.333-193241) for its Follow-on was declared effective by the SEC. Simultaneously with the effectiveness of the registration statement of the Follow-on, the Company's IPO terminated. Through March 31, 2017, the Company sold 191.4 million shares of common stock for gross proceeds of $2.1 billion, including shares purchased by an affiliate of BSP and shares issued under the DRIP. Following the time the Company's updated registration statement was declared effective on June 30, 2015, the Company issued shares for subscription agreements that had been accepted through that date. The Company is no longer issuing new shares except for DRIP shares. As of March 31, 2017, the Company had repurchased 12.6 million shares of common stock through its share repurchase program for payments of $114.3 million.


47
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

The following table reflects the common stock activity for the three months ended March 31, 2017 (dollars in thousands except share amounts):

 
 
Shares
 
Value
Shares Sold
 
—

 
$
—

Shares Issued through DRIP
 
1,736,346

 
14,898

Share Repurchases
 
(106,639
)
 
(898
)
 
 
1,629,707

 
$
14,000


The following table reflects the common stock activity for the year ended December 31, 2016 (dollars in thousands except share amounts):

 
 
Shares
 
Value
Shares Sold
 
1,165,501

 
$
10,000

Shares Issued through DRIP
 
6,591,972

 
58,424

Share Repurchases
 
(9,778,710
)
 
(85,844
)
 
 
(2,021,237
)
 
$
(17,420
)
    
Note 9 — Share Repurchase Program

The Company intends to conduct semi-annual tender offers pursuant to its share repurchase program (“SRP”). The Company’s board of directors will consider the following factors, among others, in making its determination regarding whether to cause the Company to offer to repurchase shares and under what terms:

•the effect of such repurchases on the Company's qualification as a RIC (including the consequences of
any necessary asset sales);
•the liquidity of the Company's assets (including fees and costs associated with disposing of assets);
•the Company's investment plans and working capital requirements;
•the relative economies of scale with respect to the Company's size;
•the Company's history in repurchasing shares or portions thereof; and
•the condition of the securities markets.
•the effect of such repurchases on the Company's qualification as a RIC (including the consequences of
any necessary asset sales);
    
On March 8, 2016, the Company's board of directors amended the Company's SRP. The Company will conduct tender offers on a semi-annual basis, instead of on a quarterly basis as was done previously. The Company will continue to limit the number of shares to be repurchased in any calendar year to 10% of the weighted average number of shares outstanding in the prior calendar year, or 5.0% at each semi-annual tender offer. In addition, in the event of a stockholder’s death or disability, any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that the Company may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock the Company is able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period. The Company's two most recent tender offers were oversubscribed.
 

48
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Quarterly Offer Date
 
Repurchase Date
 
Shares Tendered
 
Shares Repurchased
 
Repurchase Price Per Share
 
Aggregate Consideration for Repurchased Shares (in thousands)
September 12, 2012
 
October 8, 2012
 
—

 
—

 
$
9.71

 
$
—

December 13, 2012
 
January 15, 2013
 
46,975

 
10,732

 
$
9.90

 
$
106.22

March 27, 2013
 
April 25, 2013
 
29,625

 
29,625

 
$
10.18

 
$
301.58

July 15, 2013
 
August 13, 2013
 
30,365

 
30,365

 
$
10.18

 
$
308.97

October 22, 2013
 
November 21, 2013
 
55,255

 
55,255

 
$
10.36

 
$
572.44

February 4, 2014
 
March 6, 2014
 
68,969

 
68,969

 
$
10.36

 
$
714.52

June 6, 2014
 
July 11, 2014
 
117,425

 
117,425

 
$
10.36

 
$
1,216.38

August 7, 2014
 
September 10, 2014
 
111,854

 
111,854

 
$
10.36

 
$
1,158.80

December 19, 2014
 
January 23, 2015
 
313,101

 
313,101

 
$
10.36

 
$
3,243.73

March 16, 2015
 
April 15, 2015
 
162,688

 
162,688

 
$
10.36

 
$
1,685.45

June 26, 2015
 
July 31, 2015
 
533,527

 
533,527

 
$
9.72

 
$
5,185.88

September 18, 2015
 
October 20, 2015
 
728,874

 
728,874

 
$
9.53

 
$
6,946.17

December 23, 2015
 
January 25, 2016
 
7,375,871

 
3,053,869

 
$
9.22

 
$
28,156.67

July 26, 2016
 
December 31, 2016
 
17,004,354

 
6,715,864

 
$
8.58

 
$
57,622.10

    
Share amounts in the table above represent amounts filed in the tender offer.

Through March 31, 2017, the Company had repurchased an aggregate of 12.6 million shares of common stock for payments of $114.3 million. As of December 31, 2016, the Company had repurchased 12.5 million shares of common stock for payments of $113.4 million. Amounts include additional shares tendered for death and disability as permitted.

Note 10 — Net Increase in Net Assets

Basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company had no potentially dilutive securities as of March 31, 2017 and December 31, 2016.

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets per share from operations for the three months ended March 31, 2017 and March 31, 2016:

 
For the Three Months Ended March 31,
 
For the Three Months Ended March 31,
 
2017
 
2016
Basic and diluted
 
 
 
Net increase in net assets from operations
$
19,367

 
$
20,284

Weighted average common shares outstanding
178,215,971

 
179,079,365

Net increase in net assets resulting from operations per share
$
0.11

 
$
0.11

    
The table below shows changes in the Company's offering price and distribution rates since the commencement of the Company's public offering.

49
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Announcement Date
 
New Public Offering Price
 
Effective Date
 
Daily Distribution Amount per share
 
Annualized Distribution Rate
November 14, 2011
 
$
10.26

 
November 16, 2011
 
0.002221920
 
7.90
%
May 1, 2012
 
$
10.44

 
June 1, 2012
 
0.002215850
 
7.75
%
August 14, 2012
 
$
10.50

 
September 4, 2012
 
0.002246575
 
7.81
%
September 24, 2012
 
$
10.60

 
October 16, 2012
 
0.002246575
 
7.74
%
October 15, 2012
 
$
10.70

 
November 1, 2012
 
0.002273973
 
7.76
%
February 5, 2013
 
$
10.80

 
February 18, 2013
 
0.002293151
 
7.75
%
February 25, 2013
 
$
10.90

 
March 1, 2013
 
0.002314384
 
7.75
%
April 3, 2013
 
$
11.00

 
April 16, 2013
 
0.002335616
 
7.75
%
August 15, 2013
 
$
11.10

 
August 16, 2013
 
0.002356849
 
7.75
%
October 29, 2013
 
$
11.20

 
November 1, 2013
 
0.002378082
 
7.75
%
May 28, 2015
 
$
11.15

 
April 16, 2015
 
0.002378082
 
7.78
%

Note 11 — Distributions

The Company’s board of directors has authorized, and the Company has declared cash distributions payable on a monthly basis to stockholders of record on each day since it commenced operations. Since November 2013, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock, except for 2016 where the daily distribution rate was $0.002371585 per day to accurately reflect 2016 being a leap year.

The amount of each such distribution will be subject to the discretion of the board of directors and applicable legal restrictions related to the payment of distributions. The Company will calculate each stockholder’s specific distribution amount for the month using record and declaration dates and accrue distributions on the date the Company accepts a subscription for shares of the Company’s common stock. The distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month.

From time to time, the Company may also pay interim distributions at the discretion of its board of directors. The Company may fund its cash distributions to stockholders from any sources of funds available to it, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets and non-capital gains proceeds from the sale of assets. The Company’s distributions may exceed its earnings, especially during the period before the Company has substantially invested the proceeds from its IPO and Follow-on. As a result, a portion of the distributions the Company will make may represent a return of capital for tax purposes. As of March 31, 2017, the Company had accrued $13.3 million in stockholder distributions that were unpaid. As of December 31, 2016, the Company had accrued $13.5 million in stockholder distributions that were unpaid.
    

50
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

The table below reflects the cash distributions per share that we have paid on our common stock since January 2015.
Record Date
 
Payment Date
 
Per share
 
Distributions Paid in Cash
 
Distributions Paid Through the DRIP
 
Total Distributions Paid
2015:
 
 
 
 
 
 
 
 
 
 
January 31, 2015
 
February 4, 2015
 
$
0.07

 
$
5,948

 
$
5,797

 
$
11,745

February 28, 2015
 
March 2, 2015
 
0.07

 
5,520

 
5,236

 
10,756

March 31, 2015
 
April 1, 2015
 
0.07

 
6,265

 
5,898

 
12,163

April 30, 2015
 
May 1, 2015
 
0.07

 
6,242

 
5,849

 
12,091

May 29, 2015
 
June 1, 2015
 
0.07

 
6,680

 
5,905

 
12,585

June 30, 2015
 
July 1, 2015
 
0.07

 
6,485

 
5,735

 
12,220

July 31, 2015
 
August 3, 2015
 
0.07

 
6,976

 
6,126

 
13,102

August 31, 2015
 
September 1, 2015
 
0.07

 
7,053

 
6,049

 
13,102

September 30, 2015
 
October 1, 2015
 
0.07

 
6,870

 
5,835

 
12,705

October 31, 2015
 
November 2, 2015
 
0.07

 
7,140

 
6,030

 
13,170

November 30, 2015
 
December 1, 2015
 
0.07

 
6,932

 
5,835

 
12,767

December 31, 2015
 
January 4, 2016
 
0.07

 
7,224

 
5,989

 
13,213

 
 
 
 
 
 
$
79,335

 
$
70,284

 
$
149,619

2016:
 
 
 
 
 
 
 
 
 
 
January 31, 2016
 
February 3, 2016
 
$
0.07

 
$
8,922

 
$
4,298

 
$
13,220

February 28, 2016
 
March 1, 2016
 
0.07

 
7,014

 
5,333

 
12,347

March 31, 2016
 
April 1, 2016
 
0.07

 
7,363

 
5,718

 
13,081

April 30, 2016
 
May 2, 2016
 
0.07

 
12,708

 
(2
)
 
12,706

May 31, 2016
 
June 2, 2016
 
0.07

 
7,582

 
5,539

 
13,121

June 30, 2016
 
July 1, 2016
 
0.07

 
7,438

 
5,304

 
12,742

July 31, 2016
 
August 1, 2016
 
0.07

 
7,789

 
5,421

 
13,210

August 31, 2016
 
September 1, 2016
 
0.07

 
7,908

 
5,351

 
13,259

September 30, 2016
 
October 3, 2016
 
0.07

 
7,745

 
5,127

 
12,872

October 31, 2016
 
November 1, 2016
 
0.07

 
8,067

 
5,273

 
13,340

November 30, 2016
 
December 1, 2016
 
0.07

 
7,947

 
5,073

 
13,020

December 31, 2016
 
January 3, 2017
 
0.07

 
8,311

 
5,205

 
13,516

 
 
 
 
 
 
$
98,794

 
$
57,640

 
$
156,434

2017:
 
 
 
 
 
 
 
 
 
 
January 31, 2017
 
February 3, 2017
 
$
0.07

 
$
7,983

 
$
5,081

 
$
13,064

February 28, 2017
 
March 1, 2017
 
0.07

 
7,250

 
4,612

 
11,862

March 31, 2017
 
April 3, 2017
 
0.07

 
8,165

 
5,085

 
13,250

April 30, 2017
 
May 1, 2017
 
0.07

 
7,919

 
4,873

 
12,792

 
 
 
 
 
 
$
31,317

 
$
19,651

 
$
50,968

 
 
 
 
 
 
$
209,446

 
$
147,575

 
$
357,021


    






51
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)


The Company has not established any limit on the extent to which it may use borrowings, if any, or proceeds from its IPO and Follow-on to fund distributions (which may reduce the amount of capital it ultimately invests in assets). There can be no assurance that the Company will be able to sustain distributions at any particular level.

Note 12 — Income Tax Information and Distributions to Stockholders

The Company has elected to be treated for federal income tax purposes as a RIC under the Code. Generally, a RIC is exempt from federal income taxes if it meets, certain quarterly asset diversification requirements, annual income tests, and distributes to stockholders its ‘‘investment company taxable income,’’ as defined in the Code, each taxable year. Distributions declared prior to the filing of the previous year's tax return and paid up to one year after the previous tax year can be carried back to the prior tax year for determining the distributions paid in such tax year. The Company intends to make sufficient distributions to maintain its RIC status each year. The Company may also be subject to federal excise taxes of 4%.

A RIC is limited in its ability to deduct expenses in excess of its “investment company taxable income” (which is, generally, ordinary income plus net realized short-term capital gains in excess of net realized long-term capital losses). If the Company's expenses in a given taxable year exceed gross taxable income (e.g., as the result of large amounts of equity-based compensation), it would incur a net operating loss for that year. However, a RIC is not permitted to carry forward net operating losses to subsequent taxable years and such net operating losses do not pass through to the RIC’s stockholders. In addition, deductible expenses can be used only to offset investment company taxable income, not net capital gain. A RIC may not use any net capital losses (that is, realized capital losses in excess of realized capital gains) to offset the RIC’s investment company taxable income, but may carry forward such net capital losses, and use them to offset capital gains indefinitely. Due to these limits on the deductibility of expenses and net capital losses, the Company may for tax purposes have aggregate taxable income for several taxable years that it is required to distribute and that is taxable to stockholders even if such taxable income is greater than the aggregate net income the Company actually earned during those taxable years. Such required distributions may be made from the Company cash assets or by liquidation of investments, if necessary. The Company may realize gains or losses from such liquidations. In the event the Company realizes net capital gains from such transactions, the Company may receive a larger capital gain distribution than it would have received in the absence of such transactions.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes (“ASC Topic 740”), nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company's 2015, 2014 and 2013 federal tax returns remain subject to examination by the Internal Revenue Service.

As of March 31, 2017, the Company had a deferred tax asset of $2.5 million and a deferred tax liability of $(2.9) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.5 million. As of December 31, 2016, the Company had a deferred tax asset of $2.3 million and a deferred tax liability of $(2.6) million. Given the losses generated by certain entities, deferred tax assets have been offset by valuation allowances of $2.2 million. 

The deferred tax asset valuation allowance has been determined pursuant to the provisions of ASC Topic 740, including the Company's estimation of future taxable income, if necessary, and is adequate to reduce the total deferred tax asset to an amount that will more likely than not be realized.     











52
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Note 13 — Financial Highlights

The following is a schedule of financial highlights for the three months ended March 31, 2017 and March 31, 2016:

 
For the Three Months Ended March 31,
 
For the Three Months Ended March 31,
 
2017
 
2016
Per share data:
 
 
 
Net asset value, beginning of period
$
8.62

 
$
8.97

 
 
 
 
Results of operations (1)
       Net investment income
0.15

 
0.19

Net realized and unrealized appreciation (depreciation) on investments, net of deferred taxes
(0.04
)
 
(0.08
)
Net increase in net assets resulting from operations
0.11

 
0.11

 
 
 
 
Stockholder distributions (2)
       Distributions from net investment income
(0.21
)
 
(0.19
)
Return of capital
—

 
(0.03
)
Net decrease in net assets resulting from stockholder distributions
(0.21
)
 
(0.22
)
 
 
 
 
Capital share transactions
       Issuance of common stock (3)
—

 
—

Repurchases of common stock
—

 
—

Net increase in net assets resulting from capital share transactions
—

 
—

Net asset value, end of period
$
8.52

 
$
8.86

Shares outstanding at end of period
178,750,498

 
177,922,785

Total return (4)
1.32
%
 
1.25
%
Ratio/Supplemental data:
 
 
 
Net assets, end of period (in thousands)
$
1,525,136

 
$
1,580,516

Ratio of net investment income to average net assets (6)(7)
8.38
%
 
8.45
%
Ratio of total expenses to average net assets (6)(7)
6.50
%
 
5.89
%
Portfolio turnover rate (5)
7.23
%
 
5.61
%
______________
(1) 
The per share data was derived by using the weighted average shares outstanding during the period.
(2) 
The per share data for distributions reflects the actual amount of distributions declared per share during the period.
(3) 
The issuance of common stock on a per share basis reflects the incremental net asset value changes as a result of the issuance of shares of common stock mainly from the Company's dividend reinvestment program.
(4) 
Total return is calculated assuming a purchase of shares of common stock at the current net asset value on the first day and a sale at the current net asset value on the last day of the periods reported. Distributions, if any, are assumed for purposes of this calculation to be reinvested at prices obtained under the DRIP.
(5) 
Portfolio turnover rate is calculated using the lesser of year-to-date purchases or sales over the average of the invested assets at fair value. Not annualized.
(6) 
Ratios are annualized, except for incentive fees.
(7) 
Offering costs are not included as an expense in the calculation of this ratio.





53
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Note 14 – Schedules of Investments and Advances to Affiliates

The following table presents the Schedule of Investments and Advances to Affiliates as of March 31, 2017:

Portfolio Company (1)
 
Type of Asset
 
Amount of dividends and interest included in income
 
Beginning Fair Value at December 31, 2016
 
Gross additions
 
Gross reductions
 
Realized Gain/(Loss)
 
Change in Unrealized Gain (Loss) (6)
 
Fair Value at March 31, 2017
Control Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)
 
Senior Secured First Lien Debt
 
$
—

 
$
19,708

 
$
—

 
$
—

 
$
—

 
$
(8,414
)
 
$
11,294

Kahala Ireland OpCo Designated Activity Company (3)
 
Senior Secured First Lien Debt
 
4,858

 
149,409

 
60

 
 
 
—

 
—

 
149,469

Kahala Ireland OpCo Designated Activity Company - Common Equity (3)
 
Equity/Other
 
—

 
8,180

 
—

 
—

 
—

 
2,090

 
10,270

Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (3)
 
Equity/Other
 
—

 
3,250

 
—

 
(5
)
 
—

 
5

 
3,250

Kahala US OpCo LLC (3)
 
Senior Secured First Lien Debt
 
87

 
2,690

 
 
 
—

 
—

 
—

 
2,690

Kahala US OpCo LLC - Class A Preferred Units (3)
 
Equity/Other
 
—

 
4,000

 
—

 
(32
)
 
—

 
32

 
4,000

Park Ave RE Holdings, LLC (2)
 
Subordinated Debt
 
1,209

 
37,192

 
 
 
—

 
—

 
—

 
37,192

Park Ave RE Holdings, LLC (2) - Common Shares
 
Equity/Other
 
—

 
6,564

 
—

 
 
 
—

 
582

 
7,146

Park Ave RE Holdings, LLC (2) - Preferred Shares
 
Equity/Other
 
473

 
23,645

 
—

 
—

 
—

 
—

 
23,645

  Total Control Investments
 
 
 
$
6,627

 
$
254,638

 
$
60

 
$
(37
)
 
$
—

 
$
(5,705
)
 
$
248,956

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Affiliate Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B&M CLO 2014-1, LTD. Subordinated Notes
 
Collateralized Securities
 
$
398

 
$
16,772

 
$
—

 
$
(1,156
)
 
$
—

 
$
557

 
$
16,173

CVP Cascade CLO, LTD. Subordinated Notes
 
Collateralized Securities
 
6

 
8,868

 
—

 
(777
)
 
—

 
735

 
8,826

CVP Cascade CLO-2, LTD. Subordinated Notes
 
Collateralized Securities
 
470

 
11,593

 
—

 
(595
)
 
—

 
1,745

 
12,743

Danish CRJ LTD.
 
Senior Secured First Lien Debt
 
—

 
20

 
—

 
(7
)
 
—

 
7

 
20

Danish CRJ LTD.
 
Equity/Other
 
—

 
407

 
—

 
—

 
—

 
(99
)
 
308

Fifth Street Senior Loan Fund LLC 2015-1A Class F
 
Collateralized Securities
 
268

 
8,455

 
39

 
—

 
—

 
411

 
8,905

Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes
 
Collateralized Securities
 
829

 
20,579

 
—

 
(320
)
 
—

 
(850
)
 
19,409

Figueroa CLO 2014-1, LTD. Subordinated Notes
 
Collateralized Securities
 
3

 
16,101

 
—

 
(883
)
 
—

 
498

 
15,716

MidOcean Credit CLO II, LLC Income Notes
 
Collateralized Securities
 
461

 
22,419

 
—

 
(732
)
 
—

 
(992
)
 
20,695

MidOcean Credit CLO III, LLC Subordinated Notes
 
Collateralized Securities
 
209

 
23,341

 
—

 
(958
)
 
—

 
(1,435
)
 
20,948

MidOcean Credit CLO IV, LLC Income Notes
 
Collateralized Securities
 
178

 
15,505

 
—

 
(531
)
 
—

 
(340
)
 
14,634

NMFC Senior Loan Program I, LLC
 
Equity/Other
 
1,976

 
47,057

 
—

 
—

 
—

 
545

 
47,602

NewStar Arlington Senior Loan Program LLC Subordinated Notes
 
Collateralized Securities
 
1,382

 
24,491

 
—

 
(467
)
 
—

 
300

 
24,324

Ocean Trails CLO V, LTD.
 
Collateralized Securities
 
48

 
29,144

 
—

 
(29,129
)
 
907

 
(922
)
 
—

OFSI Fund VI, Ltd. Subordinated Notes
 
Collateralized Securities
 
476

 
17,354

 
—

 
(1,145
)
 
—

 
237

 
16,446

PennantPark Credit Opportunities Fund II, LP
 
Equity/Other
 
205

 
9,788

 
—

 
—

 
—

 
191

 
9,979

Related Fee Agreements (5)
 
Collateralized Securities
 
 
 
9,647

 
—

 
(1,993
)
 
42

 
(144
)
 
7,552


54
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Portfolio Company (1)
 
Type of Asset
 
Amount of dividends and interest included in income
 
Beginning Fair Value at December 31, 2016
 
Gross additions
 
Gross reductions
 
Realized Gain/(Loss)
 
Change in Unrealized Gain (Loss) (6)
 
Fair Value at March 31, 2017
South Grand MM CLO I, LLC
 
Equity/Other
 
588

 
28,382

 
—

 
—

 
—

 
(23
)
 
28,359

Silver Spring CLO, Ltd. Subordinated Notes
 
Collateralized Securities
 
180

 
12,007

 
—

 
(1,196
)
 
—

 
1,196

 
12,007

Squan Holding Corp.
 
Senior Secured First Lien Debt
 
394

 
6,895

 
263

 
(69
)
 
21

 
(256
)
 
6,854

Twentyeighty, Inc. - First Lien Debt (TLA 3/20)
 
Senior Secured First Lien Debt
 
63

 
—

 
2,230

 
(25
)
 
—

 
(387
)
 
1,818

Twentyeighty, Inc. - First Lien Debt (TLB 3/20)
 
Senior Secured First Lien Debt
 
156

 
—

 
3,812

 
—

 
—

 
32

 
3,844

Twentyeighty, Inc. - First Lien Debt (TLC 3/20)
 
Senior Secured First Lien Debt
 
147

 
—

 
3,444

 
—

 
—

 
25

 
3,469

THL Credit Greenway Fund II LLC
 
Equity/Other
 
224

 
12,850

 
—

 
(30
)
 
—

 
323

 
13,143

WhiteHorse VIII, Ltd. CLO Subordinated Notes
 
Collateralized Securities
 
347

 
12,563

 
—

 
(1,427
)
 
—

 
(609
)
 
10,527

Total Affiliate Investments
 
 
 
$
9,008

 
$
354,238

 
$
9,788

 
$
(41,440
)
 
$
970

 
$
745

 
$
324,301

Total Control & Affiliate Investments
 
 
 
$
15,635

 
$
608,876

 
$
9,848

 
$
(41,477
)
 
$
970

 
$
(4,960
)
 
$
573,257

______________________________________________________
(1) 
The principal amount and ownership detail are shown in the consolidated schedules of investments.
(2) 
This investment was not deemed significant under SEC Rule 4-08(g) as of March 31, 2017.
(3) 
This investment was not deemed significant under SEC Rule 4-08(g) as of March 31, 2017.
(4) 
This investment was not deemed significant under SEC Rule 4-08(g) as of March 31, 2017.
(5) 
Not all Related Fee Agreements shown on the consolidated schedules of investments are Affiliated Investments.
(6) 
Gross of deferred taxes.
    
The following table presents the Schedule of Investments and Advances to Affiliates as of December 31, 2016:

Portfolio Company (1)
 
Type of Asset
 
Amount of dividends and interest included in income
 
Beginning Fair Value at December 31, 2015
 
Gross additions
 
Gross reductions
 
Realized Gain/(Loss)
 
Change in Unrealized Gain (Loss) (6)
 
Fair Value at December 31, 2016
Control Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capstone Nutrition (fka Integrity Nutraceuticals, Inc.) (4)
 
Senior Secured First Lien Debt
 
$
713

 
$
29,731

 
$
8,933

 
$
—

 
$
—

 
$
(18,956
)
 
$
19,708

Capstone Nutrition Common Stock (fka Integrity Nutraceuticals, Inc.) (4)
 
Equity/Other
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Capstone Nutrition Class B and C Common Stock (fka Integrity Nutraceuticals, Inc.) (4)
 
Equity/Other
 
—

 
—

 
—

 
—

 
—

 
—

 
—

Kahala Ireland OpCo Designated Activity Company (3)
 
Senior Secured First Lien Debt
 
21,354

 
170,281

 
5,828

 
(26,700
)
 
—

 
—

 
149,409

Kahala Ireland OpCo Designated Activity Company - Common Equity (3)
 
Equity/Other
 
—

 
29,428

 
—

 
—

 
—

 
(21,248
)
 
8,180

Kahala Ireland OpCo Designated Activity Company - Profit Participating Note (3)
 
Equity/Other
 
—

 
3,250

 
—

 
(166
)
 
—

 
166

 
3,250

Kahala US OpCo LLC
 
Senior Secured First Lien Debt
 
354

 
2,604

 
86

 
—

 
—

 
—

 
2,690

Kahala US OpCo LLC - Class A Preferred Units
 
Equity/Other
 
1

 
4,136

 
—

 
(250
)
 
—

 
114

 
4,000

Park Ave RE Holdings, LLC (2)
 
Subordinated Debt
 
4,750

 
35,192

 
2,000

 
—

 
—

 
—

 
37,192


55
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

Portfolio Company (1)
 
Type of Asset
 
Amount of dividends and interest included in income
 
Beginning Fair Value at December 31, 2015
 
Gross additions
 
Gross reductions
 
Realized Gain/(Loss)
 
Change in Unrealized Gain (Loss) (6)
 
Fair Value at December 31, 2016
Park Ave RE Holdings, LLC (2) - Common Shares
 
Equity/Other
 
—

 
8,115

 
—

 
(587
)
 
—

 
(964
)
 
6,564

Park Ave RE Holdings, LLC (2) - Preferred Shares
 
Equity/Other
 
2,010

 
23,645

 
—

 
—

 
—

 
—

 
23,645

  Total Control Investments
 
 
 
$
29,182

 
$
306,382

 
$
16,847

 
$
(27,703
)
 
$
—

 
$
(40,888
)
 
$
254,638

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Affiliate Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
B&M CLO 2014-1, LTD. Subordinated Notes
 
Collateralized Securities
 
$
1,938

 
$
19,169

 
$
—

 
$
(5,485
)
 
$
—

 
$
3,088

 
$
16,772

CVP Cascade CLO, LTD. Subordinated Notes
 
Collateralized Securities
 
981

 
11,114

 
—

 
(4,642
)
 
—

 
2,396

 
8,868

CVP Cascade CLO-2, LTD. Subordinated Notes
 
Collateralized Securities
 
860

 
12,216

 
—

 
(5,349
)
 
—

 
4,726

 
11,593

Danish CRJ LTD.
 
Senior Secured First Lien Debt
 
—

 
20

 
—

 
(13
)
 
—

 
13

 
20

Danish CRJ LTD.
 
Equity/Other
 
—

 
1,034

 
—

 
—

 
—

 
(627
)
 
407

Fifth Street Senior Loan Fund LLC 2015-1A Class F
 
Collateralized Securities
 
1,054

 
8,523

 
162

 
—

 
—

 
(230
)
 
8,455

Fifth Street Senior Loan Fund I, LLC - 2015-1A Subordinated Notes
 
Collateralized Securities
 
2,919

 
23,566

 
—

 
(4,660
)
 
—

 
1,673

 
20,579

Figueroa CLO 2014-1, LTD. Subordinated Notes
 
Collateralized Securities
 
1,199

 
16,112

 
—

 
(4,518
)
 
—

 
4,507

 
16,101

MidOcean Credit CLO II, LLC
 
Collateralized Securities
 
2,463

 
23,603

 
—

 
(4,627
)
 
—

 
3,443

 
22,419

MidOcean Credit CLO III, LLC
 
Collateralized Securities
 
3,516

 
23,748

 
—

 
(5,133
)
 
—

 
4,726

 
23,341

MidOcean Credit CLO IV, LLC
 
Collateralized Securities
 
2,456

 
14,212

 
—

 
(2,488
)
 
—

 
3,781

 
15,505

NMFC Senior Loan Program I, LLC
 
Equity/Other
 
7,466

 
45,994

 
—

 
—

 
—

 
1,063

 
47,057

NewStar Arlington Senior Loan Program LLC Subordinated Notes
 
Collateralized Securities
 
5,109

 
24,461

 
—

 
(3,405
)
 
—

 
3,435

 
24,491

Ocean Trails CLO V, LTD.
 
Collateralized Securities
 
4,158

 
25,957

 
—

 
(3,266
)
 
—

 
6,453

 
29,144

OFSI Fund VI, Ltd. Subordinated Notes
 
Collateralized Securities
 
2,577

 
20,205

 
—

 
(5,497
)
 
—

 
2,646

 
17,354

PennantPark Credit Opportunities Fund II, LP
 
Equity/Other
 
650

 
9,082

 
2,691

 
(1,615
)
 
180

 
(550
)
 
9,788

Related Fee Agreements (5)
 
Collateralized Securities
 
1,434

 
11,679

 
—

 
(2,182
)
 
—

 
150

 
9,647

South Grand MM CLO I, LLC
 
Equity/Other
 
2,234

 
29,155

 
—

 
—

 
—

 
(773
)
 
28,382

Silver Spring CLO, Ltd.
 
Collateralized Securities
 
(229
)
 
12,269

 
—

 
(3,609
)
 
—

 
3,347

 
12,007

Squan Holding Corp.
 
Senior Secured First Lien Debt
 
—

 
—

 
20,421

 
(3,022
)
 
(11,017
)
 
513

 
6,895

Squan Holding Corp.
 
Senior Secured First Lien Debt
 
—

 
—

 
1,035

 
(1,045
)
 
—

 
10

 
—

Squan Holding Corp. - Class A Common Stock
 
Equity/Other
 
—

 
—

 
—

 
—

 
(12
)
 
12

 
—

Squan Holding Corp. - Series A Preferred Stock
 
Equity/Other
 
—

 
—

 
—

 
—

 
(1,139
)
 
1,139

 
—

THL Credit Greenway Fund II LLC
 
Equity/Other
 
1,135

 
16,910

 
—

 
(2,912
)
 
—

 
(1,148
)
 
12,850

WhiteHorse VIII, Ltd. CLO Subordinated Notes
 
Collateralized Securities
 
1,659

 
13,955

 
—

 
(5,781
)
 
—

 
4,389

 
12,563

Total Affiliate Investments
 
 
 
$
43,579

 
$
362,984

 
$
24,309

 
$
(69,249
)
 
$
(11,988
)
 
$
48,182

 
$
354,238

Total Control & Affiliate Investments
 
 
 
$
72,761

 
$
669,366

 
$
41,156

 
$
(96,952
)
 
$
(11,988
)
 
$
7,294

 
$
608,876

______________________________________________________
(1) 
The principal amount and ownership detail are shown in the consolidated schedules of investments.

56
BUSINESS DEVELOPMENT CORPORATION OF AMERICA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts, percentages and as otherwise indicated)
For the period ended March 31, 2017
(Unaudited)

(2) 
This investment was not deemed significant under SEC Rule 4-08(g) as of December 31, 2016. However, financial information is provided for comparative purposes. As of December 31, 2016, Park Ave RE Holdings LLC had total assets and liabilities of $136.3 million and $110.2 million, respectively. Total revenue and net income for the year ended December 31, 2016 were approximately $13.4 million and $1.9 million, respectively.
(3) 
This investment was not deemed significant under SEC Rule 4-08(g) as of December 31, 2016. However, financial information is provided for comparative purposes. As of December 31, 2016, Kahala Ireland OpCo Designated Activity Company had total assets and liabilities of $463.1 million and $463.8 million, respectively. Total revenue and net income for the year ended December 31, 2016 were approximately $93.4 million and $2.2 million, respectively.
(4) 
This investment is deemed significant under SEC Rule 4-08(g) as of December 31, 2016. As of December 31, 2016, Capstone Nutrition had total assets and liabilities of $86.0 million and $101.5 million, respectively. Total revenue and net (loss) for the year ended December 31, 2016 were approximately $129.3 million and $(51.6) million, respectively.
(5) 
Not all Related Fee Agreements shown on the consolidated schedules of investments are Affiliated Investments.
(6) 
Gross of deferred taxes.

Note 15 – Subsequent Events

The Company has evaluated subsequent events through the filing of this Form 10-Q and determined that there have been no events that have occurred that would require adjustments to the Company’s disclosures in the consolidated financial statements except for the following:

DRIP Sales

From April 1, 2017 through the filing of this Form 10-Q, the Company has issued 1.2 million shares of common stock including shares issued pursuant to the DRIP. Total gross proceeds from these issuances including proceeds from shares issued pursuant to the DRIP were $10.0 million.

    



    

57


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Business Development Corporation of America and the notes thereto, and other financial information included elsewhere in this Quarterly Report on Form 10-Q. We are externally managed by our adviser, BDCA Adviser, LLC (the “Adviser”).

The forward-looking statements contained in this Quarterly Report on Form 10-Q may include statements as to:
•
our future operating results;
•
our business prospects and the prospects of our portfolio companies;
•
the impact of the investments that we expect to make;
•
the ability of our portfolio companies to achieve their objectives;
•
our contractual arrangements and relationships with third parties;
•
our expected financings and investments;
•
the adequacy of our cash resources and working capital;
•
the timing of cash flows, if any, from the operations of our portfolio companies;
•
our repurchase of shares;
•
actual and potential conflicts of interest with our Adviser and its affiliates;
•
the dependence of our future success on the general economy and its effect on the industries in which we invest;
•
the ability to qualify and maintain our qualification as a regulated investment company (“RIC”) and a business development company (“BDC”);
•
the timing, form and amount of any dividend distributions;
•
the impact of fluctuations in interest rates on our business;
•
the valuation of any investments in portfolio companies, particularly those having no liquid trading market;
•
the impact of changes to generally accepted accounting principles, and the impact to BDCA; and
•
the impact of changes to tax legislation and, generally, our tax position.

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Quarterly Report on Form 10-Q 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 discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K. Other factors that could cause actual results to differ materially include:

•
changes in the economy;
•
risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and
•
future changes in laws or regulations and conditions in our operating areas.

You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

Overview

We are an externally managed, non-diversified closed-end management investment company incorporated in Maryland in May 2010 that has elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (“the 1940 Act”). In addition, we have elected to be treated for tax purposes as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Our investment activities are managed by BDCA Adviser, LLC (the “Adviser”), a subsidiary of Benefit Street Partners L.L.C. (“BSP”) and supervised by our board of directors, a majority of whom are independent of the Adviser and its affiliates. As a BDC, we are required to comply with certain regulatory requirements.

58



Our investment objective is to generate both current income and to a lesser extent long-term capital appreciation through debt and equity investments. We invest primarily in senior secured loans, and to a lesser extent, mezzanine loans, unsecured loans and equity of predominantly private U.S. middle-market companies. We define middle market companies as those with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $10 million to $100 million, although we may invest in larger or smaller companies. We may also purchase interests in loans or corporate bonds through secondary market transactions. We expect that each investment generally will range between approximately 0.5% and 3.0% of our total assets. As of March 31, 2017, 79.6% of our portfolio was invested in senior secured loans.

Senior secured loans generally are senior debt instruments that rank ahead of subordinated debt and equity in bankruptcy priority and are generally secured by liens on the operating assets of a borrower which may include inventory, receivables, plant, property and equipment. Mezzanine debt is subordinated to senior loans and is generally unsecured. We may also invest in the equity and junior debt tranches of collateralized loan obligation investment vehicles (“Collateralized Securities”).

Financial and Operating Highlights
(Dollars in millions, except per share amounts)
 
At March 31, 2017:
 
 
Investment Portfolio:
$
2,359.2

 
Net Assets attributable to Business Development Corporation of America:
1,522.1

 
Indebtedness (borrowings under Credit Facilities and Unsecured Notes):
947.4

 
Net Asset Value per share:
8.52

 
 
 
Portfolio Activity for the Three Months Ended March 31, 2017:
 
 
Cost of investments purchased during period, including PIK:
172.8

 
Sales, repayments and other exits during the period:
202.8

 
Number of portfolio companies at end of period:
138

 
 
 
Operating results for the Three Months Ended March 31, 2017:
 
 
Net investment income per share:
0.15

 
Distributions declared per share:
0.21

 
Net increase in net assets resulting from operations per share:
0.11

 
Net investment income:
26.8

 
Net realized and unrealized loss on investments
(7.4
)
 
Net increase in net assets resulting from operations:
19.4


Portfolio and Investment Activity

During the the three months ended March 31, 2017, we made $171.2 million of investments in new and existing portfolio companies and had $202.8 million in aggregate amount of exits and repayments, resulting in net repayments of $31.6 million for the period. The portfolio composition by loan market consisted of 75.9% Middle Market (1), 7.2% Large Corporate (2), and 16.9% Other (3) investments. In addition, the total portfolio of debt investments at fair value consisted of 93.3% bearing variable interest rates and 6.7% bearing fixed interest rates.
______________

(1) Middle market represents companies whose annual revenues are between $10 million and $1 billion.
(2) Large corporate represents companies whose annual revenues are in excess of $1 billion.
(3) Other represents collateralized securities and equity investments.


59


Our portfolio composition, based on fair value at March 31, 2017 was as follows:
 
March 31, 2017
 
Percentage of
Total Portfolio
 
Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt
68.3
%
 
9.0
%
Senior Secured Second Lien Debt
11.3

 
10.6

Subordinated Debt
3.4

 
13.7

Collateralized Securities (2)
8.9

 
10.7

Equity/Other
8.1

 
N/A

Total
100.0
%
 
9.6
%
______________

(1) Includes the effect of the amortization or accretion of loan premiums or discounts.
(2) Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).

During the year ended December 31, 2016, we made $678.5 million of investments in new and existing portfolio companies and had $587.9 million in aggregate amount of exits and repayments, resulting in net investments of $90.6 million for the period. The portfolio composition by loan market consisted of 75.2% Middle Market (1), 7.2% Large Corporate (2), and 17.6% Other (3) investments. In addition, the total portfolio of debt investments at fair value consisted of 92.2% bearing variable interest rates and 7.8% bearing fixed interest rates.
______________

(1) Middle market represents companies whose annual revenues are between $10 million and $1 billion.
(2) Large corporate represents companies whose annual revenues are in excess of $1 billion.
(3) Other represents collateralized securities and equity investments.

Our portfolio composition, based on fair value at December 31, 2016 was as follows:
 
December 31, 2016
 
Percentage of
Total Portfolio
 
Weighted Average Current Yield for Total Portfolio (1)
Senior Secured First Lien Debt
68.1
%
 
9.1
%
Senior Secured Second Lien Debt
10.9

 
10.7

Subordinated Debt
3.4

 
13.5

Collateralized Securities (2)
10.4

 
11.5

Equity/Other
7.2

 
N/A

Total
100.0
%
 
9.7
%
______________

(1) Includes the effect of the amortization or accretion of loan premiums or discounts.
(2) Weighted average current yield for Collateralized Securities is based on the estimation of effective yield to expected maturity for each security as calculated in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets (see Note 2 - Summary of Significant Accounting Policies).

Portfolio Asset Quality

Our Adviser employs an investment rating system to categorize our investments. In addition to various risk management and monitoring tools, our Adviser grades the credit risk of all debt investments on a scale of 1 to 5 no less frequently than quarterly. This system is intended primarily to reflect the underlying risk of a portfolio debt investment relative to the inherent risk at the time the original debt investment was made (i.e., at the time of acquisition), although it may also take into account under certain circumstances the performance of the portfolio company's business, the collateral coverage of the investment and other relevant factors.

60


 Loan Rating
 
Summary Description
1
  
Debt investment exceeding fundamental performance expectations and/or capital gain expected. Trends and risk factors since the time of investment are favorable.
 
 
2
  
Performing consistent with expectations and a full return of principal and interest expected. Trends and risk factors are neutral to favorable. All investments are initially rated a “2”.
 
 
3
  
Performing debt investment requiring closer monitoring. Trends and risk factors show some deterioration.
 
 
4
  
Underperforming debt investment. Some loss of interest or dividend expected, but still expecting a positive return on investment. Trends and risk factors are negative.
 
 
5
  
Underperforming debt investment with expected loss of interest and some principal.

The weighted average risk ratings of our investments based on fair value was 2.25 and 2.18 as of March 31, 2017 and December 31, 2016, respectively. As of March 31, 2017, the Company had six portfolio companies, which represented eleven portfolio investments, on non-accrual status with a total principal amount of $143.4 million, amortized cost of $134.8 million, and fair value of $53.4 million which represented 5.3%, 5.4% and 2.3% of the investment portfolio total principal, amortized cost and fair value, respectively. As of December 31, 2016, the Company had six portfolio companies, which represented eight portfolio investments, on non-accrual status with a total principal amount of $136.2 million, amortized cost of $127.6 million, and fair value of $51.2 million which represented 5.0%, 5.1% and 2.1% of the investment portfolio total principal, amortized cost and fair value, respectively. Refer to Note 2 - Summary of Significant Accounting Policies - in our consolidated financial statements included in this report for additional details regarding the Company’s non-accrual policy.
 
RESULTS OF OPERATIONS

Operating results for the three months ended March 31, 2017 and March 31, 2016 was as follows (dollars in thousands):
 
For the Three Months Ended March 31,
 
For the Three Months Ended March 31,
 
2017
 
2016
Total investment income
$
56,672

 
$
56,918

Total expenses
29,264

 
23,380

Income tax expense, including excise tax
635

 
—

Net investment loss attributable to non-controlling interests
3

 
7

Net investment income
$
26,770

 
$
33,531


 Investment Income

For the three months ended March 31, 2017, total investment income was $56.7 million and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.4 billion and a weighted average current yield of 9.6%. Included within total investment income was $1.7 million of prepayment and amendment fees for the three months ended March 31, 2017. For the three months ended March 31, 2016, total investment income was $56.9 million and was primarily attributable to interest income from investments in portfolio companies with an average portfolio fair value of $2.3 billion and a weighted average current yield of 10.1%. Included within total investment income was $1.3 million of prepayment and amendment fees for the three months ended March 31, 2016.


61


Operating Expenses

The composition of our operating expenses for the three months ended March 31, 2017 and March 31, 2016 was as follows (dollars in thousands):

 
For the Three Months Ended March 31,
 
For the Three Months Ended March 31,
 
2017
 
2016
Management fees
$
9,538

 
$
9,413

Subordinated income incentive fees
6,367

 
—

Interest and credit facility financing expenses
9,850

 
9,336

Professional fees
1,480

 
1,570

Other general and administrative
1,625

 
2,630

Administrative services
203

 
250

Insurance
6

 
55

Directors fees
195

 
126

Total operating expenses
$
29,264

 
$
23,380


For the three months ended March 31, 2017, we incurred $9.5 million of management fees. For the three months ended March 31, 2017, we incurred $6.4 million of incentive fees. For the three months ended March 31, 2016, we incurred $9.4 million of management fees. For the three months ended March 31, 2016, we did not incur any incentive fees.

For the three months ended March 31, 2017 and March 31, 2016, we incurred interest and credit facility financing expenses of $9.9 million and $9.3 million, respectively. Interest and credit facility financing expenses are comprised of interest expense, non-usage fees, trustee fees, amortization of deferred financing costs and amortization of discount if applicable related to the Wells Fargo Credit Facility, Citi Credit Facility, UBS Credit Facility, Unsecured Notes and the JPMC PB Account. The increase in interest and credit facility financing expenses for the three months ended March 31, 2017 as compared to the same periods in 2016 is a result of an increase in the weighted average interest rate as well as an increase in the average debt outstanding.

Net Realized Gain and Net Change in Unrealized Appreciation (Depreciation) on Investments

Net realized gain and net change in unrealized appreciation (depreciation) on investments for the three months ended March 31, 2017 and March 31, 2016 were as follows (dollars in thousands):
 
For the Three Months Ended March 31,
 
For the Three Months Ended March 31,
 
2017
 
2016
Net realized gain (loss) from investments
 
 
 
   Control investments
$
—

 
$
—

   Affiliate investments
970

 
180

   Non-affiliate investments
(11,741
)
 
1,017

Total net realized gain (loss) from investments
(10,771
)
 
1,197

Net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
 
 
 
   Control investments
(5,950
)
 
6,501

   Affiliate investments
745

 
(8,186
)
   Non-affiliate investments
8,781

 
(12,759
)
Total net change in unrealized appreciation (depreciation) on investments, net of deferred taxes
3,576

 
(14,444
)
Net change in unrealized depreciation attributable to non-controlling interests
(208
)
 
—

Net realized and unrealized loss on investments
$
(7,403
)
 
$
(13,247
)

62



Net realized and unrealized gain (loss) on investments, net of deferred taxes, resulted in a net loss of $(7.4) million for the three months ended March 31, 2017 compared to a net loss of $(13.2) million, respectively, for the same period in 2016. We look at net realized gains (losses) and change in unrealized appreciation (depreciation) together, as movement in unrealized appreciation or depreciation can be the result of realizations.

The net realized and unrealized loss for the three months ended March 31, 2017 was primarily driven by realized losses on one subordinated debt, one senior secured first lien, and one equity investment. The net realized and unrealized loss for the three months ended March 31, 2016 was primarily driven by the unrealized depreciation on our Collateralized Securities and our Fund Investments.
        
Changes in Net Assets from Operations

For the three months ended March 31, 2017, we recorded a net increase in net assets resulting from operations of $19.4 million versus a net increase in net assets resulting from operations of $20.3 million for the three months ended March 31, 2016. The decrease is primarily attributable to an increase in incentive fees, partially offset by a decrease in net unrealized loss on investments. Based on the weighted average shares of common stock outstanding for the periods ended March 31, 2017 and 2016, respectively, our per share net increase in net assets resulting from operations was $0.11 for the three months ended March 31, 2017 and March 31, 2016.

Cash Flows

For the three months ended March 31, 2017, net cash used in operating activities was $12.9 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and sales of portfolio
investments, among other factors. During the three months ended March 31, 2017, we used $12.9 million in operating activities, primarily as a result of purchases of investments of $171.2 million as well as an increase in receivable for unsettled trades of $27.7 million and a decrease in payable for unsettled trades of $47.3 million, partially offset by sales and repayments of investments of $202.8 million.

Net cash used in financing activities of $49.1 million during the three months ended March 31, 2017 primarily related to net repurchases of common stock of $56.7 million and payments of stockholder distributions of $23.5 million, partially offset by proceeds from the Wells Fargo Credit Facility, Citi Credit Facility, UBS Credit Facility and the JPMC PB Account of $31.9 million.

For the three months ended March 31, 2016, net cash provided by operating activities was $17.5 million. The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and sales of portfolio investments, among other factors. The increase in cash flows used in operating activities for the three months ended March 31, 2016 was primarily due to $130.0 million in sales and repayments of investments, offset by cash used in operating activities for purchases of $144.3 million.

Net cash provided by financing activities of $28.7 million during the three months ended March 31, 2016 primarily related to proceeds from the Wells Fargo Credit Facility and the Deutsche Bank Credit Facility of $80.0 million. These inflows were partially offset by payments of stockholder distributions of $23.2 million and repurchases of common stock of $27.2 million.
    
Recent Developments

DRIP Sales

From April 1, 2017 through the filing of this Form 10-Q, the Company has issued 1.2 million shares of common stock including shares issued pursuant to the DRIP. Total gross proceeds from these issuances including proceeds from shares issued pursuant to the DRIP were $10.0 million.

Liquidity and Capital Resources

We generate cash flows from fees, interest and dividends earned from our investments, as well as proceeds from sales of our investments and, previously, from the net proceeds of our Offering. As of March 31, 2017, we had issued 191.4 million shares of our common stock for gross proceeds of $2.1 billion, including shares issued to the BSP affiliate and shares issued under our distribution reinvestment plan (“DRIP”).

63



Our principal demands for funds in both the short-term and long-term are for portfolio investments, for the payment of operating expenses, distributions to our investors, repurchases under our share repurchase program, and for the payment of principal and interest on our outstanding indebtedness. We may also from time to time enter into other agreements with third parties whereby third parties will contribute to specific investment opportunities. Other potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from private offerings, proceeds from the sale of investments and undistributed funds from operations. However, our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. Our ability to raise proceeds in our public offering will be dependent on a number of factors as well, including general market conditions for BDCs.

We intend to conduct semi-annual tender offers pursuant to our share repurchase program. Our board of directors will consider the following factors, among others, in making its determination regarding whether to cause us to offer to repurchase shares and under what terms:

•
the effect of such repurchases on our qualification as a RIC (including the consequences of any necessary asset sales);
•
the liquidity of our assets (including fees and costs associated with disposing of assets);
•
our investment plans and working capital requirements;
•
the relative economies of scale with respect to our size;
•
our history in repurchasing shares or portions thereof; and
•
the condition of the securities markets.

On March 8, 2016, our board of directors amended our share repurchase program. We will begin to make tender offers on a semi-annual basis, instead of on a quarterly basis as was done previously. We will continue to limit the number of shares to be repurchased in any calendar year to 10% of the weighted average number of shares outstanding in the prior calendar year, or 5.0% at each semi-annual tender offer. In addition, in the event of a stockholder’s death or disability, any repurchases of shares made in connection with a stockholder’s death or disability may be included within the overall limitation imposed on tender offers during the relevant redemption period, which provides that we may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period.

Distributions

Our board of directors has authorized, and we have declared, cash distributions payable on a monthly basis to stockholders of record on each day since we commenced operations. Since November 2013, the distribution rate has been $0.002378082 per day, which is equivalent to $0.868 per annum, per share of common stock, except for 2016 where the daily distribution rate was $0.002371585 per day to accurately reflect 2016 being a leap year.

The amount of each such distribution will be subject to the discretion of our board of directors and applicable legal restrictions related to the payment of distributions. We will calculate each stockholder’s specific distribution amount for the month using record and declaration dates and accrue distributions on the date we accept a subscription for shares of our common stock. The distributions are payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month.

From time to time, we may also pay interim distributions at the discretion of our board of directors. Our distributions may exceed our earnings, especially during the period before we have substantially invested the proceeds from our IPO. As a result, a portion of the distributions we make may represent a return of capital for tax purposes.

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The table below shows the components of the distributions we have declared and/or paid during the three months ended March 31, 2017 and 2016 (dollars in thousands).

 
For the Three Months Ended March 31,
 
For the Three Months Ended March 31,
 
2017
 
2016
Distributions declared
$
38,176

 
$
38,649

Distributions paid
$
38,442

 
$
38,781

Portion of distributions paid in cash
$
23,544

 
$
23,160

Portion of distributions paid in DRIP shares
$
14,898

 
$
15,621


As of March 31, 2017, we had $13.3 million of distributions accrued and unpaid.
    
We may fund our cash distributions to stockholders from any sources of funds available to us, including offering proceeds, borrowings, net investment income from operations, capital gains proceeds from the sale of assets and non-capital gains proceeds from the sale of assets. We have not established limits on the amount of funds we may use from available sources to make distributions. We may have distributions which could be characterized as a return of capital for tax purposes. During the three months ended March 31, 2017 and 2016, no portion of our distributions were characterized as return of capital for tax purposes. You should understand that any such distributions were not based on our investment performance and can only be sustained if we achieve positive investment performance in future periods and/or our Adviser continues to make such reimbursements. There can be no assurance that we will achieve the performance necessary to sustain our distributions or that we will be able to pay distributions at all. The Adviser has no obligation to make Expense Support Payments in future periods.

The following table sets forth the distributions made during the three months ended March 31, 2017 and 2016 (dollars in thousands):
 
For the Three Months Ended March 31,
 
For the Three Months Ended March 31,
 
2017
 
2016
Monthly distributions
$
38,176

 
$
38,649

Total distributions
$
38,176

 
$
38,649


Election as a RIC

We have elected to be treated as a RIC under Subchapter M of the Code commencing with our taxable year ended December, 31 2011, and intend to maintain our qualification as a RIC thereafter. As a RIC, we generally will not have to pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders from our tax earnings and profits. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gain over realized net long-term capital loss, or the annual distribution requirement. Even if we qualify as a RIC, we generally will be subject to corporate-level U.S. federal income tax on our undistributed taxable income and could be subject to U.S federal excise, state, local and foreign taxes. We may be subject to a 4% U.S federal excise tax.

Related Party Transactions and Agreements

The Transaction

On July 19, 2016, American Realty Capital II Advisors, LLC, the former parent of the Adviser, entered into a membership interest purchase agreement with a subsidiary of BSP, pursuant to which such subsidiary acquired all of the outstanding limited liability company interests of the Adviser (the “Transaction”). In connection with the Transaction, we amended the Investment Advisory Agreement, effective as of November 1, 2016, to allow the Adviser to serve as investment adviser to us following the closing of the Transaction.

65




Investment Advisory Agreement
    
We entered into an Investment Advisory Agreement on November 1, 2016 under which the Adviser, subject to the overall supervision of our board of directors manages the day-to-day operations of, and provides investment advisory services to us. The Adviser and its affiliates also provide investment advisory services to other funds that have investment mandates that are similar, in whole and in part, with ours. The Adviser and its affiliates serve as investment adviser or subadvisor to private funds and registered open-end funds, and serves as an investment adviser to a public real estate investment trust. The Adviser’s policies are designed to manage and mitigate the conflicts of interest associated with the allocation of investment opportunities pursuant to the SEC exemptive order. In addition, any affiliated fund currently formed or formed in the future and managed by the Adviser or its affiliates may have overlapping investment objectives with our own and, accordingly, may invest in asset classes similar to those targeted by us. However, in certain instances due to regulatory, tax, investment, or other restrictions, certain investment opportunities may not be appropriate for either us or other funds managed by the Adviser or its affiliates.

Administration Agreement

In connection with the closing of the Transaction, we terminated our previous administration agreement and entered into a new administration agreement with BSP on November 1, 2016. In connection with the New Administration Agreement, BSP will provide us with office facilities and administrative services.

Co-Investment Relief

The 1940 Act generally prohibits BDCs from making certain negotiated co-investments with affiliates absent an order from the SEC permitting the BDC to do so. Unless otherwise provided in the allocation policy, if an investment opportunity is appropriate for both us and other investment funds and the investment opportunity requires more than the price to be negotiated, the investment opportunity will be made available to the other investment fund or us on an alternating basis based on the date of closing of each such investment opportunity and each fund’s available capital. As a result, the Adviser and/or its affiliates may face conflicts in allocating investment opportunities between us and such other entities. Although the Adviser and its affiliates will endeavor to allocate investment opportunities in a fair and equitable manner and consistent with applicable allocation procedures, it is possible that, in the future, we may not be given the opportunity to participate in investments made by investment funds managed by the Adviser or its affiliates.

The SEC staff has granted us relief sought in an exemptive application that expands our ability to co-invest in portfolio companies with other funds managed by the Adviser or its affiliates (“Affiliated Funds”) in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions (the “Order”). Pursuant to the Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) or our independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transactions, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching by us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our investment objective and strategies.

Transactions with Affiliates

In connection with the closing of the Transaction, an affiliate of BSP purchased $10.0 million of our common stock based on our net asset value per share as of September 30, 2016 in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933. On November 7, 2016, we issued approximately 1.2 million shares of our common stock to such BSP affiliate.
 










66




Contractual Obligations

The following table shows our payment obligations for repayment of debt and other contractual obligations at March 31, 2017 (dollars in thousands):

 
 
 
Payment Due by Period
 
Total
 
Less than 1 year
 
1 - 3 years
 
3- 5 years
 
More than 5 years
Wells Fargo Credit Facility (1)
$
298,152

 
$
—

 
$
—

 
$
298,152

 
$
—

Citi Credit Facility (2)
316,003

 
—

 
316,003

 
—

 
—

UBS Credit Facility (3)
232,500

 
—

 
232,500

 
—

 
—

Unsecured Notes (4)
98,920

 
—

 
—

 
98,920

 
—

JPMC PB Account (5)
1,873

 
—

 
—

 
—

 
1,873

Total contractual obligations
$
947,448

 
$
—

 
$
548,503

 
$
397,072

 
$
1,873

______________

(1) 
As of March 31, 2017, we had $101.8 million of unused borrowing capacity under the Wells Fargo Credit Facility, subject to borrowing base limits.
(2) 
As of March 31, 2017, we had $84.0 million of unused borrowing capacity under the Citi Credit Facility, subject to borrowing base limits.
(3) 
As of March 31, 2017, we had no unused borrowing capacity under the UBS Credit Facility, subject to borrowing base limits.
(4) 
As of March 31, 2017, we had no unused borrowing capacity under the Unsecured Notes.
(5) 
As of March 31, 2017, we had $13.8 million of unused borrowing capacity under the JPMC PB Account.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Commitments

In the ordinary course of business, the Company may enter into future funding commitments. As of March 31, 2017, we had unfunded commitments on delayed draw term loans of $39.1 million, unfunded commitments on revolver term loans of $27.7 million and unfunded equity capital commitments of $9.4 million. As of December 31, 2016, we had unfunded commitments on delayed draw term loans of $35.7 million, unfunded commitments on revolver term loans of $24.7 million and unfunded equity capital commitments of $9.4 million. The unfunded commitments are disclosed in our consolidated schedule of investments. We maintain sufficient cash on hand and available borrowings to fund such unfunded commitments.

Significant Accounting Estimates and Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

While our significant accounting policies are more fully described in Note 2 of Notes to Consolidated Financial Statements appearing elsewhere in this report, we believe the following accounting policies require the most significant judgment in the preparation of our consolidated financial statements.



67


Valuation of Portfolio Investments

Portfolio investments are reported on the consolidated statement of assets and liabilities at fair value. On a quarterly basis we perform an analysis of each investment to determine fair value as follows:

Securities for which market quotations are readily available on an exchange are valued at the reported closing price on the valuation date. We may also obtain quotes with respect to certain of our investments from pricing services or brokers or dealers in order to value assets. When doing so, we determine whether the quote obtained is readily available according to U.S. GAAP to determine the fair value of the security. If determined readily available, we use the quote obtained.

Investments without a readily determined market value are primarily valued using 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 fair value pricing our investments include, as relevant: 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, M&A comparables, and enterprise values, among other factors. When available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process.

For an investment in an investment fund that does not have a readily determinable fair value, we measure the fair value of the investment predominately based on the net asset value per share of the investment fund if the net asset value of the investment fund is calculated in a manner consistent with the measurement principles of ASC 946, as of our measurement date.

For investments in Collateralized Securities, both the assets and liabilities of each Collateralized Securities' capital structure are modeled. The model uses a waterfall engine to store the collateral data, generate collateral cash flows from the assets, and distribute the cash flows to the liability structure based on the priority of payments. The waterfall cash flows are discounted using rates that incorporate risk factors such as default risk, interest rate risk, downgrade risk, and credit spread risk, among others. In addition, broker quotations and/or comparable trade activity is considered as an input to determining fair value when available. 

As part of our quarterly valuation process the Adviser may be assisted by one or more independent valuation firms engaged by us. The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser and the independent valuation firm(s) (to the extent applicable).

With respect to investments for which market quotations are not readily available, the Adviser undertakes a multi-step valuation process each quarter, as described below:

•
Each portfolio company or investment will be valued by the Adviser, potentially with assistance from one or more independent valuation firms engaged by our board of directors;
•
The independent valuation firm(s), if involved, will conduct independent appraisals and make an independent assessment of the value of each investment; and
•
The board of directors determines the fair value of each investment, in good faith, based on the input of the Adviser, independent valuation firm (to the extent applicable) and the audit committee of the board of directors.

Because there is not a readily available market value for most of the investments in its portfolio, we value substantially all of our portfolio investments at fair value as determined in good faith by our board of directors, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.




68


Revenue Recognition

Interest Income

Investment transactions are accounted for on the trade date. Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Discounts and premiums on investments purchased are accreted/amortized over the expected life of the respective investment using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discounts and amortizations of premiums on investments.

We have a number of investments in Collateralized Securities. Interest income from investments in the “equity” class of these Collateralized Securities (in our case, preferred shares or subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing assumed cash flows in accordance with ASC Topic 325-40-35, Beneficial Interests in Securitized Financial Assets. We monitor the expected cash inflows from its equity investments in Collateralized Securities, including the expected principal repayments. The effective yield is determined and updated quarterly.
Fee Income
Fee income, such as structuring fees, origination, closing, amendment fees, commitment and other upfront fees are generally non-recurring and are recognized as revenue when earned, either upfront or amortized into income. Upon the payment of a loan or debt security, any prepayment penalties and unamortized loan origination, structuring, closing, commitment and other upfront fees are recorded as income.
Payment-in-Kind Interest/Dividends

We hold debt and equity investments in its portfolio that contain payment-in-kind (“PIK”) interest and dividend provisions. The PIK interest and PIK dividend, which represent contractually deferred interest or dividends that add to the investment balance that is generally due at maturity, are generally recorded on the accrual basis.

Non-accrual income

Investments are placed on non-accrual status when principal or interest/dividend payments are past due 30 days or more and/or when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest is generally reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest is not reversed when an investment is placed on non-accrual status. Interest payments received on non-accrual investments may be recognized as income or applied to principal depending upon management's judgment of the ultimate outcome. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management's judgment, are likely to remain current.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

Gains or losses on the sale of investments are calculated using the specific identification method. 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. Net change in unrealized appreciation or depreciation will reflect the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.
 
See Note 2 to the consolidated financial statements for a description of other accounting policies and recently issued accounting pronouncements.


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to interest rate fluctuations. Many factors including governmental monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control contribute to interest rate risk. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars and

69


treasury lock agreements, subject to the requirements of the 1940 Act, in order to mitigate our interest rate risk with respect to various debt instruments. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates. During the periods covered by this report, we did not engage in interest rate hedging activities. We would not hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.
    
As of March 31, 2017, our debt included variable-rate debt, bearing a weighted average interest rate of LIBOR plus 3.57% and fixed rate debt, bearing an interest rate of 6.00% with a total carrying value of $947.4 million. The following table quantifies the potential changes in interest income net of interest expense should interest rates increase by 100 or 200 basis points or decrease by 25 basis points assuming that our current statement of assets and liabilities was to remain constant and no actions were taken to alter our existing interest rate sensitivity.

Change in Interest Rates
 
Estimated Percentage Change in Interest Income net of Interest Expense
(-) 25 Basis Points
 
1.13
%
Base Interest Rate
 
—
%
(+) 100 Basis Points
 
5.19
%
(+) 200 Basis Points
 
10.37
%

Because we may borrow money to make investments, our net investment income may be dependent on the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of increasing interest rates, our cost of funds would increase, which may reduce our net investment income. 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.
    
ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures
 
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were (a) designed to ensure that the information we are required to disclose in our reports under the Exchange Act is recorded, processed and reported in an accurate manner and on a timely basis and the information that we are required to disclose in our Exchange Act reports is accumulated and communicated to management to permit timely decisions with respect to required disclosure and (b) operating in an effective manner.

Change in Internal Control Over Financial Reporting
 
No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of March 31, 2017, we are not defendants in any material pending legal proceeding, and no such material proceedings are known to be contemplated. However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under the contracts with our portfolio companies. Third parties may also seek to impose liability on us in connection with the activities of our portfolio companies.


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ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I., “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. Other than as set forth below, there have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016.

CLOs typically will have no significant assets other than their underlying loans; payments on CLO investments are and will be payable solely from the cash flows from such loans.

CLOs typically will have no significant assets other than their underlying loans. Accordingly, payments on Collateralized Securities are and will be payable solely from the cash flows from such underlying loans, net of all management fees and other expenses. Payments to us as a holder of Collateralized Securities are subject to payments received on the underlying loans. This means that relatively small numbers of defaults of underlying loans may adversely impact our returns.

Collateralized Securities are exposed to leveraged credit risk.

We may be in a subordinated position with respect to realized losses on the loans in CLOs. The leveraged nature of CLOs, in particular, magnifies the adverse impact of loan defaults. Collateralized Securities represent a leveraged investment with respect to the underlying loans. Therefore, changes in the market value of Collateralized Securities could be greater than the change in the market value of the underlying loans, which are subject to credit, liquidity and interest rate risk.

There is the potential for interruption and deferral of cash flow from CLO investments.

If certain minimum collateral value ratios and/or interest coverage ratios are not met by a CLO, primarily due to loan defaults, then cash flow that otherwise would have been available to pay distributions to us on our CLO investments may instead be used to redeem any senior notes or to purchase additional loans, until the ratios again exceed the minimum required levels or any senior notes are repaid in full. This could result in an elimination, reduction or deferral in the distribution and/or principal paid to the holders of such Collateralized Securities, which would adversely impact our returns.

The inability of a CLO collateral manager to reinvest the proceeds of the prepayment of loans may adversely affect us.

There can be no assurance that for any CLO investment, in the event that any of the loans of a CLO underlying such investment are prepaid, the CLO collateral manager will be able to reinvest such proceeds in new loans with equivalent investment returns. If the CLO collateral manager cannot reinvest in new loans with equivalent investment returns, the interest proceeds available to pay interest on the rated liabilities and investments may be adversely affected.

Collateralized Securities are subject to prepayments and calls, increasing re-investment risk.

Collateralized Securities and/or the underlying loans may be prepaid more quickly than expected, which could have an adverse impact on the Company’s value. Prepayment rates are influenced by changes in interest rates and a variety of economic, geographic and other factors beyond the Company’s control, and consequently cannot be predicted with certainty. In addition, for a CLO collateral manager there is often a strong incentive to refinance well performing portfolios once the senior tranches amortize. The yield to maturity of the investments will depend on the amount and timing of payments of principal on the loans and the price paid for the securities. Such yield may be adversely affected by a higher or lower than anticipated rate of prepayments of the debt.

Furthermore, Collateralized Securities generally do not contain optional call provisions, other than a call at the option of the holders of the equity tranches for the senior notes and the junior secured notes to be paid in full after the expiration of an initial period in the deal (referred to as the ‘‘non-call period’’).

The exercise of the call option is by the relevant percentage (usually a majority) of the holders of the equity tranches and, therefore, where the Company does not hold the relevant percentage it will not be able to control the timing of the exercise of the call option. The equity tranches also generally have a call at any time based on certain tax event triggers. In any event, the call can only be exercised by the holders of equity tranches if they can demonstrate (in accordance with the detailed provisions in the transaction) that the senior notes and junior secured notes will be paid in full if the call is exercised.

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Early prepayments and/or the exercise of a call option other than at the Company’s request may also give rise to increased re-investment risk with respect to certain investments, as the Company may realize excess cash earlier than expected. If the Company is unable to reinvest such cash in a new investment with an expected rate of return at least equal to that of the investment repaid, this may reduce the Company’s net income and, consequently, could have an adverse impact on its ability to pay dividends.

Loans of CLOs may be sold and replaced resulting in a loss to us.

The loans underlying Collateralized Securities may be sold and replacement collateral purchased within the parameters set out in the relevant CLO indenture between the CLO and the CLO trustee and those parameters may typically only be amended, modified or waived by the agreement of a majority of the holders of the senior notes and/or the junior secured notes and/or the equity tranche once the CLO has been established. If these transactions result in a net loss, the magnitude of the loss from the perspective of the equity tranche would be increased by the leveraged nature of the investment.

Our investments in CLOs may be subject to special anti-deferral provisions that could result in us incurring tax or recognizing income prior to receiving cash distributions related to such income.

We may in the future purchase residual or subordinated interests in CLOs that are treated for U.S. federal income tax purposes as shares in a ‘‘passive foreign investment company’’ (a ‘‘PFIC’’). If we acquire shares in a PFIC (including equity tranche investments in CLOs that are PFICs), we may be subject to U.S. federal income tax on a portion of any ‘‘excess distribution’’ or gain from the disposition of such shares even if such income is distributed as a taxable distribution by us to our stockholders. Certain elections may be available to mitigate or eliminate such tax on excess distributions, but such elections (if available) will generally require us to recognize our share of the PFICs income for each year regardless of whether we receive any
distributions from such PFICs. We must nonetheless distribute such income to maintain our status as a RIC.

If we hold more than 10% of the shares in a foreign corporation that is treated as a controlled foreign corporation (‘‘CFC’’) (including equity tranche investments in a CLO treated as CFC), we may be treated as receiving a deemed distribution (taxable as ordinary income) each year from such foreign corporation in an amount equal to our pro rata share of the corporation’s income for the tax year (including both ordinary earnings and capital gains). If we are required to include such deemed distributions from a CFC in our income, we will be required to distribute such income to maintain our RIC status regardless of whether or not the CFC makes an actual distribution during such year.

If we are required to include amounts in income prior to receiving distributions representing such income, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.

Proposed regulations may impact our ability to qualify as a RIC if we do not receive timely distributions from our CLO investments.

As discussed above, we may be required to include in our income our proportionate share of the income of certain CLO investments to the extent that such CLOs are PFICs for which we have made a qualifying electing fund (‘‘QEF’’) election or are CFCs. To qualify as a RIC, we must, among other thing, derive in each taxable year at least 90% of our gross income from certain sources specified in the Code (the ‘‘90% Income Test’’). Although the Code generally provides that the income inclusions from a QEF or a CFC will be ‘‘good income’’ for purposes of this 90% Income Test to the extent that the QEF or the CFC distribute such income to us in the same taxable year to which the income is included in our income, the Code does not specifically provide whether these income inclusions would be ‘‘good income’’ for this 90% Income Test if we do not receive distributions from the QEF or CFC during such taxable year. The IRS has issued a series of private rulings in which it has concluded that all income inclusions from a QEF or a CFC included in a RIC’s gross income would constitute ‘‘good income’’ for purposes of the 90% Income Test. Such rulings are not binding on the IRS except with respect to the taxpayers to whom such rulings were issued. Accordingly, under current law, we believe that the income inclusions from a CLO that is a QEF or a CFC would be ‘‘good income’’ for purposes of the 90% Income Test. Recently, the IRS and U.S. Treasury Department issued proposed regulations that provide that the income inclusions from a QEF or a CFC would not be good income for purposes of the 90% Income Test unless we receive a cash distribution from such entity in the same year attributable to the included income. If such income were not considered ‘‘good income’’ for purposes of the 90% Income Test, we may fail to qualify as a RIC. If these regulations are finalized, we will carefully monitor our investments in CLOs to avoid disqualification as a RIC.


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The Collateralized Securities in which we invest may be subject to withholding tax if they fail to comply with certain reporting requirements.

Legislation commonly referred to as the ‘‘Foreign Account Tax Compliance Act,’’ or FATCA, imposes a withholding tax of 30% on payments of U.S. source interest and distributions, and gross proceeds from the disposition of an instrument that produces U.S. source interest or distributions paid after December 31, 2018, to certain non-U.S. entities, including certain non U.S. financial institutions and investment funds, unless such non-U.S. entity complies with certain reporting requirements regarding its U.S. account holders and its U.S. owners. Most CLO vehicles in which we invest will be treated as non-U.S. financial entities for this purpose, and therefore will be required to comply with these reporting requirements to avoid the 30% withholding. If a CLO vehicle in which we invest fails to properly comply with these reporting requirements, it could reduce the amounts available to distribute to equity and junior debt holders in such CLO vehicle, which could materially and adversely affect our operating results and cash flows.

We may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period.

As discussed above, we intend to conduct tender offers pursuant to our share repurchase program on a semi-annual basis. We may limit the number of shares to be repurchased during any redemption period to the number of shares of common stock we are able to repurchase with the proceeds received from the sale of shares of common stock under the DRIP during such redemption period. Our two most recent tender offers were oversubscribed.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6. EXHIBITS

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the three months ended March 31, 2017 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No.
Description
 
 
3.1
Second Articles of Amendment and Restatement of the Registrant (previously filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed on August 13, 2013 and herein incorporated by reference).
 
 
3.2
Bylaws (previously filed as Exhibit (b) to the Company’s Pre-Effective Amendment No. 1 to its Registration Statement on Form N-2/A (File No. 333-166636) (the “Prior Registration Statement”) filed on November 24, 2010 and herein incorporated by reference).
 
 
10.1
Investment Advisory and Management Services Agreement dated November 1, 2016 by and between the Company and the Adviser (previously filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on November 2, 2016 and herein incorporated by reference).
 
 
10.2
Administration Agreement, dated as of February 9, 2016, between the Company and ARC Advisory Services, LLC (previously filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 2015 filed on March 9, 2016 and herein incorporated by reference).
 
 
10.3
Administration Agreement dated November 1, 2016 by and between the Company and Benefit Street Partners L.L.C. (previously filed as Exhibit 99.2 to the Company's Current Report on Form 8-K filed on November 2, 2016 and herein incorporated by reference.
 
 
10.4
Amended and Restated Fund Administration Servicing Agreement by and between the Company and U.S. Bancorp Fund Services, LLC (previously filed as Exhibit 10.1 to the Company’s Current Report filed on April 17, 2015 and herein incorporated by reference).

 
 
10.5
Amended and Restated Fund Accounting Servicing Agreement by and between the Company and U.S. Bancorp Fund Services, LLC (previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on April 17, 2015 and herein incorporated by reference).
 
 
10.6
Distribution Reinvestment Plan (previously filed as Exhibit E to the Company's Pre-Effective Amendment No. 1 to its Prior Registration Statement filed on November 24, 2010 and herein incorporated by reference).
 
 
10.7
Custody Agreement dated August 13, 2012 by and between the Company and U.S. Bank National Association (previously filed as Exhibit 10.11 to the Company's Current Report on Form 8-K filed on August 17, 2012 and herein incorporated by reference).
 
 
10.8
Expense Support Agreement dated November 9, 2011 by and between the Company and Adviser (previously filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed on November 14, 2011 and herein incorporated by reference).
 
 
10.9
Loan and Servicing Agreement, together with Exhibits thereto, among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC, Wells Fargo Bank, National Association, Lenders and Lenders Agents from time to time party hereto and U.S. Bank National Association, each dated as of July 24, 2012 (previously filed as Exhibit 10.15 to the Company's Current Report on Form 8-K filed on August 7, 2012 and herein incorporated by reference).
 
 
10.10
Purchase and Sale Agreement by and between the Company and BDCA Funding I, LLC, dated as of July 24, 2012 (previously filed as Exhibit 10.16 to the Company's Current Report on Form 8-K filed on August 7, 2012 and herein incorporated by reference).
 
 
10.11
Collection Account Agreement by and among U.S. Bank National Association, Wells Fargo Securities, LLC, BDCA Funding I, LLC and the Company, dated as of July 24, 2012 (previously filed as Exhibit 10.17 to the Company's Current Report on Form 8-K filed on August 7, 2012 and herein incorporated by reference).
 
 
10.12
Amendment No. 1 to Loan and Servicing Agreement, among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, dated as of January 14, 2013 (previously filed as Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed on May 15, 2013 and herein incorporated by reference).
 
 
10.13
Amendment No. 2 to Loan and Servicing Agreement, among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, dated as of April 26, 2013 (previously filed as Exhibit 10.17 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed on May 15, 2013 and herein incorporated by reference).
 
 

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Exhibit No.
Description
10.14
Amendment No. 1 to Purchase and Sale Agreement, entered into by and between BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association and U.S. Bank National Association, dated as of April 26, 2013 (previously filed as Exhibit 10.18 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 filed on May 15, 2013 and herein incorporated by reference).
 
 
10.15
Amendment No. 3 to Loan and Servicing Agreement, among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, dated as of September 9, 2013 (previously filed as Exhibit 10.20 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 filed on November 13, 2013 and herein incorporated by reference).
 
 
10.16
Confirmation Letter Agreement by and between 405 TRS I, LLC and Citibank, N.A., amended and restated as of October 15, 2013 (previously filed as Exhibit 10.21 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 filed on November 13, 2013 and herein incorporated by reference).
 
 
10.17
Confirmation Letter Agreement by and between 405 TRS I, LLC and Citibank, N.A., amended and restated as of May 6, 2014 (previously filed as Exhibit 10.25 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 filed on May 15, 2014 and herein incorporated by reference).
 
 
10.18
Credit and Security Agreement, dated as of June 27, 2014, by and between BDCA-CB Funding LLC, the financial institutions and other lenders from time to time party thereto, Citibank, N.A., as administrative agent, U.S. Bank National Association, as collateral agent and custodian, and Business Development Corporation of America, as collateral manager (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).
 
 
10.19
Account Control Agreement, dated as of June 27, 2014, by and between BDCA-CB Funding, LLC, as pledger, U.S. Bank National Association as collateral agent and securities intermediary(previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).
 
 
10.20
Collateral Administration Agreement, dated as of June 27, 2014, between BDCA-CB Funding, LLC, as borrower, Business Development Corporation of America, as collateral manager, Citibank, N.A., as administrative agent, and U.S. Bank National Association, as collateral administrator (previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).
 
 
10.21
Sale and Contribution Agreement, dated as of June 27, 2014, between Business Development Corporation of America, as seller, and BDCA-CB Funding, LLC, as purchaser (previously filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).
 
 
10.22
Agreement and Plan of Merger, dated as of June 27, 2014, by and among BDCA-CB Funding LLC, 405 Loan Funding LLC and Citibank, N.A. (previously filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).
 
 
10.23
Termination Acknowledgment (TRS), dated as of June 27, 2014, by and between BDCA-CB Funding LLC and Citibank, N.A., as counterparty, secured party and bank (previously filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on July 2, 2014 and herein incorporated by reference).
 
 
10.24
Amendment No. 4 to Loan and Servicing Agreement, dated as of June 30, 2014 (as amended), by and among BDCA Funding I, LLC, the Company, Wells Fargo Securities, LLC and Wells Fargo Bank, National Association, and U.S. Bank National Association (previously filed as Exhibit 10.29 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed on August 14, 2014 and herein incorporated by reference).
 
 
10.25
Master Loan Purchase Agreement, dated as of April 7, 2015 between BDCA Helvetica Funding, Ltd. and Business Development Corporation of America (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).
 
 
10.26
Indenture, dated as of April 7, 2015, by and between BDCA Helvetica Funding, Ltd. and U.S. Bank National Association as trustee (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).
 
 
10.27
Subscription Agreement, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd., Business Development Corporation of America (previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).
 
 
10.28
Rule 144A Global Class A Notes and Regulation S Global Class A Notes (included in Exhibit A to Exhibit 10.2 to the Company’s Current Report on Form 8-K previously filed on April 7, 2015 and herein incorporated by reference).
 
 

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Exhibit No.
Description
10.29
TBMA/ISMA 2000 Global Master Repurchase Agreement (2000 version), by and between UBS AG, London Branch and Business Development Corporation of America, together with the related Annex and Confirmation thereto, each dated as of March 31, 2015 (previously filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).
 
 
10.30
Collateral Management Agreement, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd. and Business Development Corporation of America (previously filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).
 
 
10.31
Collateral Administration Agreement, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd., Business Development Corporation of America and U.S. Bank National Association as administrator (previously filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).
 
 
10.32
Account Control Agreement dated as of April 7, 2015 between BDCA Helvetica Funding, Ltd. and U.S. Bank National Association as trustee and custodian (previously filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).
 
 
10.33
Equity Contribution Agreement, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd., Business Development Corporation of America and U.S. Bank National Association as trustee (previously filed as Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).
 
 
10.34
Liquidation Agent Appointment Letter, dated as of April 7, 2015, between BDCA Helvetica Funding, Ltd., Business Development Corporation of America and UBS AG, London Branch (previously filed as Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on April 7, 2015 and herein incorporated by reference).
 
 
10.35
Form of Indemnification Agreement (previously filed as exhibit 10.40 to the Company's Annual Report on Form 10-K for the year ended December 31, 2015 filed on May 4, 2015 and herein incorporated by reference).
 
 
11
Computation of Per Share Earnings (included in the notes to the unaudited consolidated financial statements contained in this report).
 
 
31.1
Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
 
 
31.2
Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
 
 
32
Written statement of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
 
 


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
 
 
 
 
 
Signature
 
Title
 
Date
 
 
 
 
 
/s/ Richard J. Byrne
Richard J. Byrne
 
Chief Executive Officer, President and Chairman of the Board of Directors
(Principal Executive Officer)
 
May 11, 2017
/s/ Corinne D. Pankovcin
Corinne D. Pankovcin
 
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
 
May 11, 2017





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Business Development Corp of America Reports