Saratoga Investment Corp.
SARATOGA INVESTMENT CORP. (Form: 10-Q, Received: 01/14/2011 17:06:43)

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x

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

 

For the Quarterly Period Ended November 30, 2010

 

o

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

 

Commission File Number: 1-33376

 

SARATOGA INVESTMENT CORP.

(Exact name of registrant as specified in its charter)

 

Maryland

 

20-8700615

(State or other jurisdiction of
incorporation or organization)

 

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

 

 

 

535 Madison Avenue
New York, New York

 

10022

(Address of principal executive office)

 

(Zip Code)

 

(212) 906-7800

(Registrant’s telephone number, including area code)

 

Not applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o   No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (check one):

 

Large Accelerated Filer o

 

Accelerated Filer o

 

 

 

Non-Accelerated Filer x

 

Smaller Reporting Company o

 

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

 

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of January 6, 2011 was 3,277,077.

 

 

 



Table of Contents

 

SARATOGA INVESTMENT CORP.

 

FORM 10-Q FOR THE QUARTER ENDED NOVEMBER 30, 2010

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

1

 

 

 

 

Consolidated Statements of Assets and Liabilities as of November 30, 2010 (unaudited) and February 28, 2010

1

 

 

 

 

Consolidated Statements of Operations for the three and nine months ended November 30, 2010 and 2009 (unaudited)

2

 

 

 

 

Consolidated Schedules of Investments as of November 30, 2010 (unaudited) and February 28, 2010

3

 

 

 

 

Consolidated Statements of Changes in Nets Assets for the nine months ended November 30, 2010 and 2009 (unaudited)

8

 

 

 

 

Consolidated Statements of Cash Flows for the nine months ended November 30, 2010 and 2009 (unaudited)

9

 

 

 

 

Notes to Consolidated Financial Statements as of November 30, 2010 (unaudited)

10

 

 

 

Item 2.

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

33

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

49

 

 

 

Item 4.

Controls and Procedures

49

 

 

 

PART II

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

50

 

 

 

Item 1A.

Risk Factors

50

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51

 

 

 

Item 3.

Defaults upon Senior Securities

51

 

 

 

Item 4.

Removed and Reserved

51

 

 

 

Item 5.

Other Information

51

 

 

 

Item 6.

Exhibits

51

 

 

 

Signatures

 

52

 


 


Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Statements of Assets and Liabilities

 

 

 

As of

 

 

 

November 30, 2010

 

February 28, 2010

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-control/non-affiliate investments (amortized cost of $95,792,289 and $117,678,275, respectively)

 

$

68,176,984

 

$

72,674,847

 

Control investments (cost of $28,414,863 and $29,233,097, respectively)

 

23,037,967

 

16,698,303

 

Total investments at fair value (amortized cost of $124,207,152 and $146,911,372, respectively)

 

91,214,951

 

89,373,150

 

Cash and cash equivalents

 

4,571,926

 

3,352,434

 

Cash and cash equivalents, securitization accounts

 

3,407,260

 

225,424

 

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

 

22,352

 

42,147

 

Interest receivable, (net of reserve of $579,291 and $2,120,309, respectively)

 

2,017,807

 

3,473,961

 

Deferred credit facility financing costs, net

 

1,805,799

 

 

Management fee receivable

 

231,838

 

327,928

 

Other assets

 

266,245

 

140,272

 

Total assets

 

$

103,538,178

 

$

96,935,316

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Revolving credit facility

 

$

15,750,000

 

$

36,992,222

 

Payable for unsettled trades

 

1,614,000

 

 

Dividend payable

 

1,179,800

 

 

Management and incentive fees payable

 

1,868,744

 

3,071,093

 

Accounts payable and accrued expenses

 

885,297

 

1,111,081

 

Interest and credit facility fees payable

 

152,448

 

267,166

 

Due to manager

 

310,000

 

15,602

 

Total liabilities

 

$

21,760,289

 

$

41,457,164

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

Common stock, par value $.001 and $.001 per share, respectively, 100,000,000 common shares authorized, 3,277,077 and 1,694,011* common shares issued and outstanding, respectively

 

$

3,277

 

$

1,694

 

Capital in excess of par value

 

153,768,680

 

128,339,497

 

Distribution in excess of net investment income

 

(10,223,021

)

(2,846,135

)

Accumulated net realized loss from investments and derivatives

 

(28,670,200

)

(12,389,830

)

Net unrealized depreciation on investments and derivatives

 

(33,100,847

)

(57,627,074

)

Total Net Assets

 

81,777,889

 

55,478,152

 

 

 

 

 

 

 

Total liabilities and Net Assets

 

$

103,538,178

 

$

96,935,316

 

 

 

 

 

 

 

NET ASSET VALUE PER SHARE*

 

$

24.95

 

$

32.75

 

 


*Net Asset Value per share  and end of period shares outstanding for the year ended February 28, 2010 has been adjusted to reflect a one-for-ten reverse stock split effectuated in August 2010.

 

See accompanying notes to consolidated financial statements.

 

1



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Statements of Operations

 

 

 

For the three months ended
November 30

 

For the nine months ended
November 30

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate investments

 

$

3,639,216

 

$

2,593,082

 

$

7,006,161

 

$

8,566,587

 

Control investments

 

941,281

 

368,374

 

2,410,803

 

1,686,088

 

Total interest income

 

4,580,497

 

2,961,456

 

9,416,964

 

10,252,675

 

Interest from cash and cash equivalents

 

2,460

 

2,752

 

3,642

 

22,934

 

Management fee income

 

508,674

 

511,236

 

1,523,530

 

1,549,167

 

Other income

 

 

54,699

 

71,192

 

155,111

 

Total investment income

 

5,091,631

 

3,530,143

 

11,015,328

 

11,979,887

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Interest and credit facility financing expenses

 

618,810

 

1,126,162

 

2,188,078

 

3,174,603

 

Base management fees

 

424,044

 

462,755

 

1,258,875

 

1,515,813

 

Professional fees

 

381,096

 

714,789

 

3,138,221

 

1,396,567

 

Administrator expenses

 

240,000

 

171,861

 

568,562

 

515,583

 

Incentive management fees

 

1,173,144

 

 

1,173,144

 

322,183

 

Insurance

 

170,684

 

220,059

 

536,934

 

649,535

 

Directors fees and expenses

 

48,000

 

71,989

 

320,844

 

217,125

 

General & administrative

 

100,961

 

65,298

 

306,558

 

191,223

 

Expenses before expense waiver and reimbursement

 

3,156,739

 

2,832,913

 

9,491,216

 

7,982,632

 

Expense reimbursement

 

 

(171,861

)

(258,562

)

(515,583

)

Waiver of deferred incentive management fees

 

 

 

(2,636,146

)

 

Total expenses net of expense waiver and reimbursement

 

3,156,739

 

2,661,052

 

6,596,508

 

7,467,049

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

1,934,892

 

869,091

 

4,418,820

 

4,512,838

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

 

 

 

 

 

 

 

 

 

Net realized loss from investments

 

(13,731,107

)

(549,864

)

(16,280,370

)

(1,579,812

)

Net unrealized appreciation/(depreciation) on investments

 

15,107,701

 

8,825,100

 

24,546,024

 

(4,562,979

)

Net unrealized appreciation/(depreciation) on derivatives

 

(1,366

)

(16,754

)

(19,797

)

33,080

 

Net gain/(loss) on investments

 

1,375,228

 

8,258,482

 

8,245,857

 

(6,109,711

)

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

$

3,310,120

 

$

9,127,573

 

$

12,664,677

 

$

(1,596,873

)

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE*

 

$

1.20

 

$

10.08

 

$

5.86

 

$

(1.87

)

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED*

 

2,752,914

 

905,171

 

2,162,832

 

854,298

 

 


*Earnings per share and weighted average shares outstanding for the three and nine months ended November 30, 2009 have been adjusted to reflect a one-for-ten reverse stock split effectuated in August 2010.

 

See accompanying notes to consolidated financial statements.

 

2



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

November 30, 2010

 

Company (a)

 

Industry

 

Investment Interest
Rate/Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value (c)

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments - 83.3% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GFSI Inc (d)

 

Apparel

 

Senior Secured Notes
10.50%, 6/1/2011

 

$

5,227,000

 

$

5,227,000

 

$

5,227,000

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (i)

 

Building Products

 

Common Stock Voting A-1

 

2,535

 

220,900

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (i)

 

Building Products

 

Common Stock Voting B-1

 

1,600

 

139,424

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets, Inc. (d)

 

Building Products

 

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

 

$

288,923

 

288,923

 

141,572

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Building Products

 

 

 

649,247

 

141,572

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hopkins Manufacturing Corporation (d)

 

Consumer Products

 

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

 

$

3,250,000

 

3,248,758

 

3,169,725

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

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

 

$

3,160,481

 

3,032,714

 

2,854,231

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Notes
10.00%, 12/14/2015

 

$

1,538,235

 

1,538,235

 

964,935

 

1.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d), (i)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

2,851,650

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Products

 

 

 

8,386,472

 

9,840,541

 

12.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFF Acquisition LLC (d)

 

Consumer Services

 

First Lien Term Loan
7.50%, 7/31/2013

 

$

300,569

 

300,569

 

257,318

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Acquisition Corp., LLC (d)

 

Education

 

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

 

$

858,351

 

858,351

 

247,119

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Education

 

Class A Common Stock

 

166,327

 

30,241

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Education

 

 

 

888,592

 

247,119

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Lighting Technologies, Inc. (d)

 

Electronics

 

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

 

$

2,000,000

 

1,847,718

 

1,767,000

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dekko Technologies, LLC (d)

 

Electronics

 

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

 

$

7,125,845

 

7,125,845

 

6,043,429

 

7.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electronics

 

 

 

8,973,563

 

7,810,429

 

9.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Environmental

 

Non Voting Common Stock

 

765

 

133,002

 

111,452

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Environmental

 

Voting Common Stock

 

17,396

 

3,025,798

 

2,535,533

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Environmental

 

 

 

3,158,800

 

2,646,985

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d)

 

Financial Services

 

Second Lien Term Loan
8.25%, 8/20/2015

 

$

2,420,754

 

2,420,754

 

716,543

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Financial Services

 

Common Stock

 

 

27,197

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Financial Services

 

Warrants

 

2,510

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DCS Business Services, Inc. (d)

 

Financial Services

 

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

 

$

1,600,000

 

1,614,000

 

1,600,000

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Financial Services

 

 

 

4,034,754

 

2,316,543

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Big Train, Inc. (d)

 

Food and Beverage

 

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

 

$

1,750,296

 

1,415,568

 

1,542,711

 

1.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IDI Acquisition Corp. (d)

 

Healthcare Services

 

Senior Secured Notes
10.75%, 12/15/2011

 

$

3,800,000

 

3,727,266

 

3,800,000

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRACS Institute, LTD (d)

 

Healthcare Services

 

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

 

$

4,093,750

 

4,067,082

 

2,925,394

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Healthcare Services

 

 

 

7,794,348

 

6,725,394

 

8.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McMillin Companies LLC (d)

 

Homebuilding

 

Senior Secured Notes
9.53%, 10/31/2013

 

$

7,700,000

 

7,400,199

 

3,157,000

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Worldwide Express Operations, LLC (d)

 

Logistics

 

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

 

$

2,855,249

 

2,852,235

 

2,433,814

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jason Incorporated (d)

 

Manufacturing

 

Senior Secured Notes
10.25%, 12/21/2015

 

$

2,353,952

 

2,353,952

 

2,147,039

 

2.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialized Technology Resources, Inc. (d)

 

Manufacturing

 

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

 

$

5,000,000

 

4,824,773

 

4,925,000

 

6.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Manufacturing

 

 

 

7,178,725

 

7,072,039

 

8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d)

 

Metals

 

Senior Secured Notes
17.00%, 3/1/2013

 

$

5,100,000

 

5,002,909

 

3,750,030

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Metals

 

Warrants to Purchase Limited Liability Company Interests

 

3,000

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Metals

 

 

 

5,002,909

 

3,750,030

 

4.6

%

 

3



Table of Contents

 

Company (a)

 

Industry

 

Investment Interest
Rate/Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value (c)

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abitibi-Consolidated Company of Canada (d), (e)

 

Natural Resources

 

First Lien Term Loan
11.00%, 6/16/2010

 

$

2,948,640

 

$

2,948,640

 

$

2,978,126

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Natural Resources

 

Second Lien Term Loan
8.25%, 9/20/2013

 

$

6,349,512

 

6,349,348

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Natural Resources

 

 

 

9,297,988

 

2,978,126

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy Alloys, LLC (d), (i)

 

Oil and Gas

 

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

 

$

6,380,722

 

6,380,722

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy Alloys, LLC (d), (i)

 

Oil and Gas

 

Warrants to Purchase Limited Liability Company Interests

 

3

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Oil and Gas

 

 

 

6,380,722

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terphane Holdings Corp. (d), (e)

 

Packaging

 

Senior Secured Notes
14.00%, 6/15/2015

 

$

6,532,000

 

6,532,000

 

6,434,020

 

7.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brown Publishing Company (d), (i)

 

Publishing

 

Second Lien Term Loan
0.00%, 9/19/2014

 

$

1,203,226

 

1,198,390

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d), (i)

 

Publishing

 

Unsecured Notes
10.75%, 12/1/2013

 

$

5,000,000

 

5,057,449

 

1,982,500

 

2.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Penton Media, Inc. (d)

 

Publishing

 

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

 

$

4,840,401

 

4,062,759

 

3,613,843

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Publishing

 

 

 

10,318,598

 

5,596,343

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Non-control/Non-affiliated investments

 

 

 

 

 

 

 

95,792,289

 

68,176,984

 

83.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control investments - 28.2% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Financial Services

 

100% General
Partnership Interest

 

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Structured Finance Securities

 

Other/Structured
Finance Securities
13.21%, 1/21/2020

 

$

30,000,000

 

28,414,863

 

23,037,967

 

28.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Control investments

 

 

 

 

 

 

 

28,414,863

 

23,037,967

 

28.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliate investments - 0.0% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Financial Services

 

6.24% Limited
Partnership Interest

 

 

 

 

0.0

%

Sub Total Affiliate investments

 

 

 

 

 

 

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS - 111.5% (b)

 

 

 

 

 

 

 

$124,207,152

 

$91,214,951

 

111.5

%

 

Outstanding interest rate cap

 

Interest rate

 

Maturity

 

Notional

 

Cost

 

Fair Value

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate cap

 

8.0

%

2/9/2014

 

$

31,836,735

 

$

87,000

 

$

16,101

 

0.0

%

Interest rate cap

 

8.0

%

11/30/2013

 

23,966,000

 

44,000

 

6,251

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total outstanding interest rate cap

 

 

 

 

 

 

 

$

131,000

 

$

22,352

 

0.0

%*

 


* Amounts to less than 0.05%

(a)  All of our equity and debt investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940, except Abitibi-Consolidated Company of Canada, Grant U.S. Holdings LLP, GSC Investment Corp. CLO 2007 Ltd., Terphane Holdings Corp., and GSC Partners CDO GP III, LP.

(b)  Percentages are based on net assets of $81,777,889 as of November 30, 2010.

(c)  Fair valued investment (see Note 3 to the consolidated financial statements).

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

(e)  Non-U.S. company. The principal place of business for Terphane Holdings Corp is Brazil, and for Abitibi-Consolidated Company of Canada and Grant U.S. Holdings LLP is Canada.

(f) 13.21% represents the modeled effective interest rate that is expected to be earned over the remaining life of the investment.

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

 

 

 

 

 

 

 

 

 

Interest

 

Management

 

Net Realized

 

Net Unrealized

 

Company

 

Purchases

 

Redemptions

 

Sales (cost)

 

Income

 

fee income

 

gains/(losses)

 

gains/(losses)

 

GSC Partners CDO GP III, LP

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

 

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

 

 

 

 

 

 

 

 

 

Interest

 

Management

 

Net Realized

 

Net Unrealized

 

Company

 

Purchases

 

Redemptions

 

Sales (cost)

 

Income

 

fee income

 

gains/(losses)

 

gains/(losses)

 

GSC Investment Corp. CLO 2007 LTD.

 

$

 

$

 

$

 

$

2,410,803

 

$

1,523,530

 

$

 

$

7,157,898

 

GSC Partners CDO GP III, LP

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

 

(i) Non-income producing at November 30, 2010.

 

4



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

February 28, 2010

 

Company (a)

 

Industry

 

Investment Interest
Rate/Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value (c)

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments - 131.0% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GFSI Inc (d)

 

Apparel

 

Senior Secured Notes
10.50%, 6/1/2011

 

$

7,082,000

 

$

7,082,000

 

$

6,909,907

 

12.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets, Inc. (d), (i)

 

Building Products

 

First Lien Term Loan
6.58%, 8/18/2012

 

$

1,479,842

 

1,463,159

 

444,841

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets, Inc. (d), (i)

 

Building Products

 

Second Lien Term Loan
12.50%, 8/18/2013

 

$

1,862,420

 

1,828,197

 

85,113

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Building Products

 

 

 

3,291,356

 

529,954

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hopkins Manufacturing Corporation (d)

 

Consumer Products

 

Second Lien Term Loan
7.50%, 1/26/2012

 

$

3,250,000

 

3,247,947

 

3,003,650

 

5.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Group International, Inc. (d)

 

Consumer Products

 

First Lien Term Loan
10.25%, 11/22/2012

 

$

3,109,712

 

2,936,092

 

2,738,101

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Notes
10.00%, 12/14/2015

 

$

1,538,235

 

1,538,235

 

1,529,467

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d), (i)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

237,169

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Products

 

 

 

8,289,039

 

7,508,387

 

13.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFF Acquisition LLC (d)

 

Consumer Services

 

First Lien Term Loan
7.50%, 7/31/2013

 

$

306,855

 

306,855

 

255,242

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Communications, LLC (d)

 

Education

 

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

 

$

831,174

 

831,174

 

616,897

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Communications, LLC (d), (i)

 

Education

 

Class A Common Stock

 

166,327

 

30,241

 

16,633

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Education

 

 

 

861,415

 

633,530

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Lighting Technologies, Inc. (d)

 

Electronics

 

Second Lien Term Loan
6.23%, 6/1/2014

 

$

2,000,000

 

1,814,950

 

1,764,600

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Dekko (d)

 

Electronics

 

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

 

$

6,913,293

 

6,913,293

 

4,852,440

 

8.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electronics

 

 

 

8,728,243

 

6,617,040

 

11.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Environmental

 

Non Voting Common Stock

 

765

 

133,002

 

86,745

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Environmental

 

Voting Common Stock

 

17,396

 

3,025,798

 

1,973,453

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Environmental

 

 

 

3,158,800

 

2,060,198

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d)

 

Financial Services

 

Second Lien Term Loan
6.48%, 7/31/2013

 

$

4,837,500

 

4,814,623

 

983,464

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Big Train, Inc. (d)

 

Food and Beverage

 

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

 

$

1,931,121

 

1,451,316

 

1,696,876

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IDI Acquisition Corp. (d)

 

Healthcare Services

 

Senior Secured Notes
10.75%, 12/15/2011

 

$

3,800,000

 

3,679,489

 

3,620,640

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRACS Institute, LTD (d)

 

Healthcare Services

 

Second Lien Term Loan
8.26%, 4/17/2013

 

$

4,093,750

 

4,058,633

 

3,568,931

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Healthcare Services

 

 

 

7,738,122

 

7,189,571

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McMillin Companies LLC (d)

 

Homebuilding

 

Senior Secured Notes
9.53%, 10/31/2013

 

$

7,700,000

 

7,334,121

 

3,634,400

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Worldwide Express Operations, LLC (d)

 

Logistics

 

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

 

$

2,820,467

 

2,816,547

 

2,230,143

 

4.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jason Incorporated (d), (i)

 

Manufacturing

 

Unsecured Notes
13.00%, 11/1/2010

 

$

12,000,000

 

12,000,000

 

1,478,400

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jason Incorporated (d), (i)

 

Manufacturing

 

Unsecured Notes
13.00%, 11/1/2010

 

$

1,700,000

 

1,700,000

 

209,440

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialized Technology Resources, Inc. (d)

 

Manufacturing

 

Second Lien Term Loan
7.23%, 12/15/2014

 

$

5,000,000

 

4,799,666

 

4,711,000

 

8.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Manufacturing

 

 

 

18,499,666

 

6,398,840

 

11.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d)

 

Metals

 

Senior Secured Notes
13.00%, 3/1/2013

 

$

5,000,000

 

4,883,382

 

3,785,500

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Metals

 

Warrants to Purchase Limited Liability Company Interests

 

3,000

 

 

8,610

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Metals

 

 

 

4,883,382

 

3,794,110

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abitibi-Consolidated Company of Canada (d), (e)

 

Natural Resources

 

First Lien Term Loan
11.00%, 3/30/2009

 

$

2,948,639

 

2,948,639

 

2,830,694

 

5.1

%

 

5



Table of Contents

 

Company (a)

 

Industry

 

Investment Interest
Rate/Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value (c)

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Natural Resources

 

Second Lien Term Loan
10.75%, 9/20/2013

 

$

6,349,512

 

$

6,349,348

 

$

158,738

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Natural Resources

 

 

 

9,297,987

 

2,989,432

 

5.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy Alloys, LLC (d)

 

Oil and Gas

 

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

 

$

6,239,318

 

6,239,318

 

1,128,693

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy Alloys, LLC (d), (i)

 

Oil and Gas

 

Warrants to Purchase Limited Liability Company Interests

 

3

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Oil and Gas

 

 

 

6,239,318

 

1,128,693

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terphane Holdings Corp. (d), (e)

 

Packaging

 

Senior Secured Notes
12.50%, 6/15/2010

 

$

4,850,000

 

4,850,000

 

4,549,785

 

8.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terphane Holdings Corp. (d), (e)

 

Packaging

 

Senior Secured Notes
12.50%, 6/15/2010

 

$

5,087,250

 

5,087,250

 

4,772,349

 

8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terphane Holdings Corp. (d), (e)

 

Packaging

 

Senior Secured Notes
10.92%, 6/15/2010

 

$

500,000

 

500,000

 

469,050

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Packaging