Saratoga Investment Corp.
SARATOGA INVESTMENT CORP. (Form: 10-Q, Received: 10/12/2011 06:02:26)

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 August 31, 2011

 

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 October 12, 2011 was 3,277,077.

 

 

 



Table of Contents

 

SARATOGA INVESTMENT CORP.

FORM 10-Q FOR THE QUARTER ENDED AUGUST 31, 2011

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

Consolidated Statements of Assets and Liabilities as of August 31, 2011 (unaudited) and February 28, 2011

3

 

 

 

 

Consolidated Statements of Operations for the three and six months ended August 31, 2011 and 2010 (unaudited)

4

 

 

 

 

Consolidated Schedules of Investments as of August 31, 2011 (unaudited) and February 28, 2011

5

 

 

 

 

Consolidated Statements of Changes in Nets Assets for the six months ended August 31, 2011 and 2010 (unaudited)

9

 

 

 

 

Consolidated Statements of Cash Flows for the six months ended August 31, 2011 and 2010 (unaudited)

10

 

 

 

 

Notes to Consolidated Financial Statements as of August 31, 2011 (unaudited)

11

 

 

 

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

50

 

 

 

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

 

2



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Statements of Assets and Liabilities

 

 

 

As of

 

 

 

August 31, 2011

 

February 28, 2011

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-control/non-affiliate investments (amortized cost of $81,536,547 and $73,779,271, respectively)

 

$

60,827,981

 

$

57,292,723

 

Control investments (cost of $25,093,624 and $27,364,350, respectively)

 

25,388,994

 

22,732,038

 

Total investments at fair value (amortized cost of $106,630,171 and $101,143,621, respectively)

 

86,216,975

 

80,024,761

 

Cash and cash equivalents

 

512,592

 

10,735,755

 

Cash and cash equivalents, securitization accounts

 

2,376,331

 

4,369,987

 

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

 

991

 

16,265

 

Interest receivable, (net of reserve of $249,520 and $14,796, respectively)

 

1,633,060

 

1,666,083

 

Deferred credit facility financing costs, net

 

1,297,280

 

1,638,768

 

Management fee receivable

 

229,649

 

231,753

 

Other assets

 

181,384

 

85,166

 

Total assets

 

$

92,448,262

 

$

98,768,538

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Revolving credit facility

 

$

 

$

4,500,000

 

Payable for unsettled trades

 

 

4,900,000

 

Management and incentive fees payable

 

1,329,733

 

2,203,806

 

Accounts payable and accrued expenses

 

498,905

 

785,486

 

Interest and credit facility fees payable

 

46,667

 

67,792

 

Due to manager

 

520,198

 

240,000

 

Total liabilities

 

$

2,395,503

 

$

12,697,084

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

Common stock, par value $.001, 100,000,000 common shares authorized, 3,277,077 and 3,277,077 common shares issued and outstanding, respectively

 

$

3,277

 

$

3,277

 

Capital in excess of par value

 

153,768,680

 

153,768,680

 

Distribution in excess of net investment income

 

(5,620,017

)

(8,918,890

)

Accumulated net realized loss from investments and derivatives

 

(37,555,975

)

(37,548,016

)

Net unrealized depreciation on investments and derivatives

 

(20,543,206

)

(21,233,597

)

Total Net Assets

 

90,052,759

 

86,071,454

 

 

 

 

 

 

 

Total liabilities and Net Assets

 

$

92,448,262

 

$

98,768,538

 

 

 

 

 

 

 

NET ASSET VALUE PER SHARE

 

$

27.48

 

$

26.26

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Statements of Operations

 

 

 

For three months ended
August 31

 

For six months ended
August 31

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

INVESTMENT INCOME

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate investments

 

$

1,836,643

 

$

1,749,678

 

$

3,334,532

 

$

3,366,945

 

Control investments

 

1,050,486

 

816,802

 

1,940,063

 

1,469,522

 

Total interest income

 

2,887,129

 

2,566,480

 

5,274,595

 

4,836,467

 

Interest from cash and cash equivalents

 

1,100

 

863

 

5,248

 

1,182

 

Management fee income

 

503,803

 

508,071

 

1,010,171

 

1,014,856

 

Other income

 

145,908

 

37,633

 

145,908

 

71,192

 

Total investment income

 

3,537,940

 

3,113,047

 

6,435,922

 

5,923,697

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Interest and credit facility financing expenses

 

309,911

 

738,147

 

679,821

 

1,569,268

 

Base management fees

 

411,468

 

423,442

 

809,932

 

834,831

 

Professional fees

 

632,237

 

1,614,588

 

925,865

 

2,757,125

 

Administrator expenses

 

240,000

 

173,425

 

480,000

 

328,562

 

Incentive management fees

 

(1,058,378

)

 

(336,653

)

 

Insurance

 

146,699

 

171,596

 

303,681

 

366,250

 

Directors fees and expenses

 

51,000

 

108,233

 

102,000

 

272,844

 

General & administrative

 

82,859

 

141,461

 

169,213

 

205,597

 

Other expense

 

1,880

 

 

3,190

 

 

Expenses before expense waiver and reimbursement

 

817,676

 

3,370,892

 

3,137,049

 

6,334,477

 

Expense reimbursement

 

 

(103,425

)

 

(258,562

)

Waiver of deferred incentive management fees

 

 

 

(2,636,146

)

 

 

(2,636,146

)

Total expenses net of expense waiver and reimbursement

 

817,676

 

631,321

 

3,137,049

 

3,439,769

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

2,720,264

 

2,481,726

 

3,298,873

 

2,483,928

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

 

 

 

 

 

 

 

 

 

Net realized gain/(loss) from investments

 

(105,967

)

2,147

 

(7,959

)

(2,549,263

)

Net unrealized appreciation/(depreciation) on investments

 

(4,337,470

)

4,214,508

 

705,665

 

9,438,323

 

Net unrealized appreciation/(depreciation) on derivatives

 

(4,732

)

1,438

 

(15,274

)

(18,431

)

Net gain/(loss) on investments

 

(4,448,169

)

4,218,093

 

682,432

 

6,870,629

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

$

(1,727,905

)

$

6,699,819

 

$

3,981,305

 

$

9,354,557

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE

 

$

(0.53

)

$

3.27

 

$

1.22

 

$

5.00

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED

 

3,277,077

 

2,047,985

 

3,277,077

 

1,870,998

 

 

See accompanying notes to consolidated financial statements.

 

4



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

August 31, 2011

(unaudited)

 

Company (a)

 

Industry

 

Investment Interest 
Rate/Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value ( c )

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments - 67.5% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

302,640

 

302,640

 

205,795

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Building Products

 

 

 

662,964

 

205,795

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Group International, Inc. (d)

 

Consumer Products

 

First Lien Term Loan
11.00%, 5/24/2016

 

$

4,000,000

 

3,923,415

 

3,900,000

 

4.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Notes
10.00%, 6/14/2019

 

$

1,692,059

 

$

1,692,059

 

922,171

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d, i)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

1,532,239

 

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Products

 

 

 

6,182,239

 

6,354,410

 

7.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFF Acquisition LLC (d)

 

Consumer Services

 

First Lien Term Loan
7.50%, 7/31/2015

 

$

2,881,639

 

2,628,028

 

2,549,386

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PrePaid Legal Services, Inc. (d)

 

Consumer Services

 

First Lien Term Loan
11.00%, 12/31/2016

 

$

3,000,000

 

2,912,208

 

3,000,000

 

3.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Services

 

 

 

5,540,236

 

5,549,386

 

6.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Education

 

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

 

$

2,933,950

 

1,527,636

 

742,583

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Education

 

Class A Common Stock

 

166,327

 

30,242

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Education

 

 

 

1,557,878

 

742,583

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Lighting Technologies, Inc. (d)

 

Electronics

 

Second Lien Term Loan
6.25%, 6/1/2014

 

$

2,000,000

 

1,880,367

 

1,878,800

 

2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Dekko, Inc. (fka Dekko Technologies, LLC)  (d)

 

Electronics

 

Second Lien Term Loan
10.50%, 5/1/2013

 

$

7,418,194

 

7,418,194

 

6,346,265

 

7.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electronics

 

 

 

9,298,561

 

8,225,065

 

9.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USS Parent Holding Corp. (d, i)

 

Environmental

 

Non Voting Common Stock

 

765

 

133,002

 

103,232

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USS Parent Holding Corp. (d, i)

 

Environmental

 

Voting Common Stock

 

17,396

 

3,025,798

 

2,348,521

 

2.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Environmental

 

 

 

3,158,800

 

2,451,753

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d)

 

Financial Services

 

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

 

$

2,536,532

 

2,536,532

 

139,509

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1,608,278

 

1,600,000

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Financial Services

 

 

 

4,144,810

 

1,739,509

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Big Train, Inc. (d)

 

Food and Beverage

 

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

 

$

1,551,390

 

1,428,346

 

1,528,119

 

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRACS Institute, LTD (d, i)

 

Healthcare Services

 

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

 

$

4,093,750

 

4,075,500

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maverick Healthcare Group (d)

 

Healthcare Services

 

First Lien Term Loan
10.75%, 12/31/2016

 

$

4,975,000

 

4,883,788

 

4,975,000

 

5.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Healthcare Services

 

 

 

8,959,288

 

4,975,000

 

5.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McMillin Companies LLC (d)

 

Homebuilding

 

Senior Secured Notes
9.53%, 12/31/2013

 

$

990,000

 

967,203

 

668,250

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Worldwide Express Operations, LLC (d)

 

Logistics

 

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

 

$

6,716,025

 

6,347,744

 

6,097,479

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jason Incorporated (d)

 

Manufacturing

 

Senior Secured Notes
10.25%, 12/21/2015

 

$

2,518,620

 

2,518,620

 

2,518,620

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialized Technology Resources, Inc. (d)

 

Manufacturing

 

Second Lien Term Loan
7.19%, 12/15/2014

 

$

5,000,000

 

4,851,872

 

5,000,000

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Manufacturing

 

 

 

7,370,492

 

7,518,620

 

8.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d)

 

Metals

 

Senior Secured Notes
17.00%, 3/1/2013

 

$

7,282,800

 

6,990,900

 

6,595,304

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d, i)

 

Metals

 

Warrants to Purchase Limited Liability Company Interests

 

3,000

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Metals

 

 

 

6,990,900

 

6,595,304

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Natural Resources

 

Second Lien Term Loan
0.00%, 9/20/2013

 

$

6,349,512

 

6,348,532

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy Alloys, LLC (d, i)

 

Oil and Gas

 

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

 

$

6,525,331

 

6,525,331

 

2,517,473

 

2.8

%

 

5



Table of Contents

 

Energy Alloys, LLC (d, i)

 

Oil and Gas

 

Warrants to Purchase Limited Liability Company Interests

 

3

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Oil and Gas

 

 

 

6,525,331

 

2,517,473

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d, i)

 

Publishing

 

Unsecured Notes
8.60%, 1/14/2020

 

$

2,393,897

 

1,874,287

 

1,136,144

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d, i)

 

Publishing

 

Common Stock

 

$

211,429

 

 

847,830

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Penton Media, Inc. (d)

 

Publishing

 

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

 

$

4,839,691

 

4,178,936

 

3,675,261

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Publishing

 

 

 

6,053,223

 

5,659,235

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Non-control/Non-affiliated investments

 

 

 

 

 

 

 

81,536,547

 

60,827,981

 

67.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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
14.85%, 1/21/2020

 

$

 30,000,000

 

25,093,624

 

25,388,994

 

28.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Control investments

 

 

 

 

 

 

 

25,093,624

 

25,388,994

 

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 - 95.7% (b)

 

 

 

 

 

 

 

$

106,630,171

 

$

 86,216,975

 

95.7

%

 

Outstanding interest rate cap

 

Interest rate

 

Maturity

 

Notional

 

Cost

 

Fair Value

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate cap

 

8.0

%

2/9/2014

 

$

24,489,796

 

$

87,000

 

$

710

 

0.0

%

Interest rate cap

 

8.0

%

11/30/2013

 

12,635,000

 

44,000

 

281

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Outstanding interest rate cap

 

 

 

 

 

 

 

$

131,000

 

$

991

 

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 Grant U.S. Holdings LLP, GSC Investment Corp. CLO 2007 Ltd. and GSC Partners CDO GP III, LP.

(b)  Percentages are based on net assets of $90,052,759 as of August 31, 2011.

(c)  Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith by our board of directors. (see Note 3 to the consolidated financial statements).

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

(e)  Non-U.S. company. The principal place of business for Grant U.S. Holdings LLP is Canada.

(f)  18.23% represents the modeled effective interest rate that is expected to be earned over the 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.

 

$

 

$

 

$

 

$

1,940,063

 

$

1,010,171

 

$

 

$

4,927,681

 

GSC Partners CDO GP III, LP

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

 

(i) Non-income producing at August 31, 2011.

 

6



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

February 28, 2011

 

Company (a)

 

Industry

 

Investment Interest 
Rate/Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value ( c )

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments - 66.6% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, i)

 

Building Products

 

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

 

$

 293,474

 

293,474

 

154,455

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Building Products

 

 

 

653,798

 

154,455

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hopkins Manufacturing Corporation (d)

 

Consumer Products

 

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

 

$

 3,250,000

 

3,249,024

 

3,233,750

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

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

 

$

 3,169,227

 

3,057,616

 

3,147,834

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Notes
10.00%, 12/14/2015

 

$

 1,538,235

 

1,538,235

 

985,547

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d, i)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

2,881,608

 

3.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Products

 

 

 

8,411,640

 

10,248,739

 

11.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFF Acquisition LLC (d)

 

Consumer Services

 

First Lien Term Loan
7.50%, 7/31/2015

 

$

 285,876

 

285,876

 

244,424

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Acquisition Corp., LLC (d)

 

Education

 

First Lien Term Loan
1.00%, 12/31/2012

 

$

 870,791

 

870,791

 

258,625

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Education

 

Class A Common Stock

 

166,327

 

30,241

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Education

 

 

 

901,032

 

258,625

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Lighting Technologies, Inc. (d)

 

Electronics

 

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

 

$

 2,000,000

 

1,858,442

 

1,867,092

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dekko Technologies, LLC (d)

 

Electronics

 

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

 

$

 7,198,935

 

7,198,935

 

6,766,999

 

7.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electronics

 

 

 

9,057,377

 

8,634,091

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USS Parent Holding Corp. (d, i)

 

Environmental

 

Non Voting Common Stock

 

765

 

133,002

 

124,311

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

USS Parent Holding Corp. (d, i)

 

Environmental

 

Voting Common Stock

 

17,396

 

3,025,798

 

2,828,080

 

3.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Environmental

 

 

 

3,158,800

 

2,952,391

 

3.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bankruptcy Management Solutions, Inc. (d)

 

Financial Services

 

Second Lien Term Loan
1.25%, 8/20/2015

 

$

 2,450,499

 

2,450,499

 

110,272

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

Financial Services

 

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

 

$

 1,600,000

 

1,612,135

 

1,600,000

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Financial Services

 

 

 

4,062,634

 

1,710,272

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Big Train, Inc. (d)

 

Food and Beverage

 

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

 

$

1,687,008

 

1,403,224

 

1,545,637

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRACS Institute, LTD (d)

 

Healthcare Services

 

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

 

$

4,093,750

 

4,069,847

 

3,014,420

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maverick Healthcare Group (d)

 

Healthcare Services

 

First Lien Term Loan
10.75%, 12/31/2016

 

$

5,000,000

 

4,900,000

 

5,000,000

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Healthcare Services

 

 

 

8,969,847

 

8,014,420

 

9.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McMillin Companies LLC (d)

 

Homebuilding

 

Senior Secured Notes
9.53%, 10/31/2013

 

$

 1,100,000

 

1,067,024

 

816,200

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Worldwide Express Operations, LLC (d)

 

Logistics

 

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

 

$

 2,865,629

 

2,862,910

 

2,498,828

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jason Incorporated (d, i)

 

Manufacturing

 

Senior Secured Notes
10.25%, 12/21/2015

 

$

 2,414,272

 

2,414,272

 

2,391,318

 

2.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialized Technology Resources, Inc. (d)

 

Manufacturing

 

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

 

$

 5,000,000

 

4,833,437

 

4,966,500

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Manufacturing

 

 

 

7,247,709

 

7,357,818

 

8.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d)

 

Metals

 

Senior Secured Notes
17.00%, 3/1/2013

 

$

 5,100,000

 

5,017,225

 

4,231,222

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, LLC (d, i)

 

Metals

 

Warrants to Purchase Limited Liability Company Interests

 

3,000

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Metals

 

 

 

5,017,225

 

4,231,222

 

4.9

%

 

7



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
0.00%, 9/20/2013

 

$

 6,349,512

 

6,349,348

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy Alloys, LLC (d, i)

 

Oil and Gas

 

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

 

$

 6,429,092

 

6,429,092

 

316,954

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy Alloys, LLC (d, i)

 

Oil and Gas

 

Warrants to Purchase Limited Liability Company Interests

 

3

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Oil and Gas

 

 

 

6,429,092

 

316,954

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Terphane Holdings Corp. (d, e, i)

 

Packaging

 

Senior Secured Notes
14.00%, 6/15/2015

 

$

 2,500,000

 

2,500,000

 

2,453,252

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d, i)

 

Publishing

 

Unsecured Notes
8.60%, 1/14/2020

 

$

 1,285,714

 

1,285,714

 

929,314

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d, i)

 

Publishing

 

Common Stock

 

$

 211,429

 

 

900,688

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Penton Media, Inc. (d)

 

Publishing

 

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

 

$

 4,839,376

 

4,116,021

 

4,025,393

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Publishing

 

 

 

5,401,735

 

5,855,395

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Non-control/Non-affiliated investments

 

 

 

 

 

 

 

73,779,271

 

57,292,723

 

66.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control investments - 26.4% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Financial Services

 

100% General
Partnership Interest