Saratoga Investment Corp.
SARATOGA INVESTMENT CORP. (Form: 10-Q, Received: 10/15/2013 17:04:44)

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, 2013

 

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 15, 2013 was 4,730,116.

 

 

 



Table of Contents

 

TABLE OF CONTENTS

 


 

 

 

 

Page

 

 

 

 

PART I

FINANCIAL INFORMATION

 

3

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

Consolidated Statements of Assets and Liabilities as of August 31, 2013 (unaudited) and February 28, 2013

 

3

 

 

 

 

 

Consolidated Statements of Operations for the three and six months ended August 31, 2013 and 2012 (unaudited)

 

4

 

 

 

 

 

Consolidated Schedules of Investments as of August 31, 2013 (unaudited) and February 28, 2013

 

5

 

 

 

 

 

Consolidated Statements of Changes in Net Assets for the six months ended August 31, 2013 and 2012 (unaudited)

 

11

 

 

 

 

 

Consolidated Statements of Cash Flows for the six months ended August 31, 2013 and 2012 (unaudited)

 

12

 

 

 

 

 

Notes to Consolidated Financial Statements as of August 31, 2013 (unaudited)

 

13

 

 

 

 

Item 2.

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

 

34

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

50

 

 

 

 

Item 4.

Controls and Procedures

 

51

 

 

 

 

PART II

OTHER INFORMATION

 

51

 

 

 

 

Item 1.

Legal Proceedings

 

51

 

 

 

 

Item 1A.

Risk Factors

 

51

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

51

 

 

 

 

Item 3.

Defaults upon Senior Securities

 

51

 

 

 

 

Item 4.

Mine Safety Disclosures

 

52

 

 

 

 

Item 5.

Other Information

 

52

 

 

 

 

Item 6.

Exhibits

 

52

 

 

 

 

Signatures

 

 

53

 

2



Table of Contents

 

PART I FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Saratoga Investment Corp.

 

Consolidated Statements of Assets and Liabilities

 

 

 

As of

 

 

 

August 31, 2013

 

February 28, 2013

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-control/non-affiliate investments (amortized cost of $167,382,770 and $130,465,086, respectively)

 

$

168,058,055

 

$

129,563,428

 

Control investments (cost of $16,804,518 and $18,944,966 respectively)

 

19,741,624

 

25,516,959

 

Total investments at fair value (amortized cost of $184,187,288 and $149,410,052 respectively)

 

187,799,679

 

155,080,387

 

Cash and cash equivalents

 

11,558,783

 

149,025

 

Cash and cash equivalents, reserve accounts

 

16,592,698

 

12,086,142

 

Interest receivable, (net of reserve of $240,693 and $53,543, respectively)

 

2,060,413

 

2,889,358

 

Due from manager

 

4,929

 

 

Deferred debt financing costs, net

 

4,250,199

 

2,090,184

 

Management fee receivable

 

198,522

 

215,853

 

Other assets

 

91,345

 

83,407

 

Receivable from unsettled trades

 

1,500,585

 

1,817,074

 

Total assets

 

$

224,057,153

 

$

174,411,430

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Revolving credit facility

 

$

 

$

24,300,000

 

SBA debentures payable

 

40,000,000

 

36,000,000

 

Notes payable

 

48,300,000

 

 

Payable for unsettled trades

 

16,270,000

 

 

Management and incentive fees payable

 

5,486,746

 

4,509,322

 

Accounts payable and accrued expenses

 

501,640

 

435,038

 

Interest and debt fees payable

 

745,051

 

257,796

 

Due to manager

 

308,401

 

222,513

 

Total liabilities

 

$

111,611,838

 

$

65,724,669

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

Common stock, par value $.001, 100,000,000 common shares authorized, 4,730,116 and 4,730,116 common shares issued and outstanding, respectively

 

$

4,730

 

$

4,730

 

Capital in excess of par value

 

174,824,076

 

174,824,076

 

Distribution in excess of net investment income

 

(19,781,396

)

(24,522,951

)

Accumulated net realized loss from investments and derivatives

 

(46,214,485

)

(47,289,427

)

Net unrealized appreciation on investments and derivatives

 

3,612,390

 

5,670,333

 

Total Net Assets

 

112,445,315

 

108,686,761

 

 

 

 

 

 

 

Total liabilities and Net Assets

 

$

224,057,153

 

$

174,411,430

 

 

 

 

 

 

 

NET ASSET VALUE PER SHARE

 

$

23.77

 

$

22.98

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Statements of Operations

 

 

 

For the three months ended August 31

 

For the six months ended August 31

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

INVESTMENT INCOME

 

 

 

 

 

 

 

 

 

Interest from investments

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliate investments

 

$

3,385,362

 

$

2,206,947

 

$

7,254,826

 

$

3,945,469

 

Payment-in-kind interest income from Non-control/Non-affiliate investments

 

296,802

 

212,811

 

472,923

 

539,274

 

Control investments

 

1,109,535

 

1,094,681

 

2,235,539

 

2,140,466

 

Total interest income

 

4,791,699

 

3,514,439

 

9,963,288

 

6,625,209

 

Interest from cash and cash equivalents

 

3,959

 

1,791

 

5,865

 

4,637

 

Management fee income

 

480,750

 

500,225

 

978,841

 

1,000,065

 

Other income

 

111,300

 

146,834

 

457,476

 

152,560

 

Total investment income

 

5,387,708

 

4,163,289

 

11,405,470

 

7,782,471

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Interest and debt financing expenses

 

1,603,581

 

653,025

 

2,731,436

 

1,278,728

 

Base management fees

 

811,106

 

504,802

 

1,547,822

 

963,610

 

Professional fees

 

235,191

 

293,483

 

566,255

 

639,322

 

Administrator expenses

 

250,000

 

250,000

 

500,000

 

500,000

 

Incentive management fees

 

(39,770

)

869,403

 

781,352

 

1,299,674

 

Insurance

 

119,234

 

130,308

 

239,229

 

260,615

 

Directors fees and expenses

 

45,000

 

51,000

 

96,000

 

102,000

 

General & administrative

 

91,425

 

97,022

 

189,786

 

148,363

 

Other expense

 

75

 

 

12,035

 

3,123

 

Total expenses

 

3,115,842

 

2,849,043

 

6,663,915

 

5,195,435

 

 

 

 

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

2,271,866

 

1,314,246

 

4,741,555

 

2,587,036

 

 

 

 

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

 

 

 

 

 

 

 

 

 

Net realized gain from investments

 

545,642

 

268,718

 

1,074,942

 

447,348

 

Net realized loss from derivatives

 

 

 

 

(131,000

)

Net unrealized appreciation (depreciation) on investments

 

(2,858,805

)

3,288,078

 

(2,057,943

)

5,027,500

 

Net unrealized appreciation on derivatives

 

 

 

 

130,925

 

Net gain (loss) on investments

 

(2,313,163

)

3,556,796

 

(983,001

)

5,474,773

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

 

$

(41,297

)

$

4,871,042

 

$

3,758,554

 

$

8,061,809

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS (LOSS) PER COMMON SHARE

 

$

(0.01

)

$

1.26

 

$

0.79

 

$

2.08

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED

 

4,730,116

 

3,876,661

 

4,730,116

 

3,876,661

 

 

See accompanying notes to consolidated financial statements.

 

4



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

August 31, 2013

(unaudited)

 

Company (a)

 

Industry

 

Investment Interest Rate / Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value (c)

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments - 149.4% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coast Plating, Inc. (d)

 

Aerospace

 

First Lien Term Loan
11.70% Cash, 9/13/2014

 

$

2,401,310

 

$

2,401,310

 

$

2,401,310

 

2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coast Plating, Inc. (d)

 

Aerospace

 

First Lien Term Loan
12.45% Cash, 9/13/2014

 

$

894,606

 

894,606

 

894,606

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Aerospace

 

 

 

3,295,916

 

3,295,916

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

National Truck Protection Co., Inc. (d), (g)

 

Automotive

 

Common Stock

 

589

 

500,000

 

826,041

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

National Truck Protection Co., Inc. (d)

 

Automotive

 

First Lien Term Loan
15.50% (13.50% Cash/2.00% PIK),
8/10/2017

 

$

5,471,119

 

5,471,119

 

5,471,119

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Take 5 Oil Change, L.L.C. (d), (g)

 

Automotive

 

Common Stock

 

6,415

 

712,800

 

923,076

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Automotive

 

 

 

6,683,919

 

7,220,236

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (g)

 

Building Products

 

Common Stock Voting A-1

 

2,535

 

220,900

 

136,890

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (g)

 

Building Products

 

Common Stock Voting B-1

 

1,600

 

139,424

 

86,400

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets, Inc. (d)

 

Building Products

 

First Lien Term Loan
7.25% (1.00% Cash/6.25% PIK),
5/3/2014

 

$

274,603

 

274,603

 

246,264

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Building Products

 

 

 

634,927

 

469,554

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMC Software, Inc. (d)

 

Business Services

 

First Lien Term Loan
5.00% Cash, 9/10/2020

 

$

6,000,000

 

5,940,000

 

5,988,000

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispensing Dynamics International (d)

 

Business Services

 

Senior Secured Note
12.50% Cash, 1/1/2018

 

$

7,000,000

 

6,871,015

 

7,070,000

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Easy Ice, LLC (d)

 

Business Services

 

First Lien Term Loan
14.00% (11.00% Cash 3.00% PIK),
3/29/2018

 

$

7,394,783

 

7,261,256

 

7,394,783

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emily Street Enterprises, L.L.C. (d)

 

Business Services

 

Senior Secured Note
14.00% (13.00% Cash/1.00% PIK),
12/28/2017

 

$

5,739,067

 

5,640,488

 

5,739,067

 

5.1

%

 

 

`

 

`

 

 

 

 

 

 

 

 

 

Emily Street Enterprises, L.L.C. (d), (g)

 

Business Services

 

Warrant Membership Interests

 

49,318

 

400,000

 

458,657

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Help/Systems Holdings, Inc.(Help/Systems, LLC) (d)

 

Business Services

 

First Lien Term Loan
5.50% Cash, 6/28/2019

 

$

4,000,000

 

3,960,973

 

3,970,000

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Help/Systems Holdings, Inc.(Help/Systems, LLC) (d)

 

Business Services

 

Second Lien Term Loan
9.50% Cash, 6/28/2020

 

$

2,000,000

 

1,970,625

 

2,000,000

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Knowland Technology Holdings, L.L.C. (d)

 

Business Services

 

First Lien Term Loan
11.00% Cash, 11/29/2017

 

$

6,200,000

 

6,094,743

 

6,200,000

 

5.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trinet HR Corporation (SOI Holdings, Inc.) (d)

 

Business Services

 

First Lien Term Loan
5.00% Cash, 8/20/2020

 

$

5,000,000

 

4,950,176

 

4,950,000

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trinet HR Corporation (SOI Holdings, Inc.) (d)

 

Business Services

 

Second Lien Term Loan
8.75% Cash, 2/20/2021

 

$

2,500,000

 

2,450,000

 

2,450,000

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vector Controls Holding Co., LLC (d)

 

Business Services

 

First Lien Term Loan,
14.00% (12.00% Cash, 2.00% PIK),
3/6/2018

 

$

9,619,580

 

9,447,755

 

9,619,580

 

8.6

%

.

 

 

 

 

 

 

 

 

 

 

 

 

 

Vector Controls Holding Co., LLC (d), (g)

 

Business Services

 

Warrants to Purchase Limited Liability
Company Interests

 

79

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Business Services

 

 

 

54,987,031

 

55,840,087

 

49.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Group International, Inc. (d)

 

Consumer Products

 

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

 

$

3,815,100

 

3,772,976

 

3,834,175

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Note
10.00% PIK, 6/14/2019

 

$

1,914,341

 

1,914,341

 

1,386,303

 

1.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Note
16.00% Cash, 10/26/2018

 

$

358,682

 

353,039

 

346,129

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d), (g)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

2,390,418

 

2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Products

 

 

 

6,607,121

 

7,957,025

 

7.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFF Acquisition L.L.C. (d)

 

Consumer Services

 

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

 

$

1,702,391

 

1,621,776

 

1,698,816

 

1.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expedited Travel L.L.C. (d)

 

Consumer Services

 

First Lien Term Loan
12.00% Cash, 12/28/2017

 

$

4,705,000

 

4,613,457

 

4,705,000

 

4.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PrePaid Legal Services, Inc. (d)

 

Consumer Services

 

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

 

$

4,838,710

 

4,791,498

 

4,838,710

 

4.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PrePaid Legal Services, Inc. (d)

 

Consumer Services

 

Second Lien Term Loan
9.75% Cash, 7/1/2020

 

$

5,000,000

 

4,926,560

 

5,000,000

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Services

 

 

 

15,953,291

 

16,242,526

 

14.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Acquisition Corp., L.L.C. (d)

 

Education

 

First Lien Term Loan
1.00% Cash, 6/28/2013

 

$

2,740,780

 

1,416,994

 

390,960

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M/C Acquisition Corp., L.L.C. (d), (g)

 

Education

 

Class A Common Stock

 

544,761

 

30,242

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Education

 

 

 

1,447,236

 

390,960

 

0.3

%

 

5



Table of Contents

 

Group Dekko, Inc. (d)

 

Electronics

 

Second Lien Term Loan
11.00% (10.00% Cash/1.00% PIK),
5/1/2016

 

$

6,865,996

 

6,865,996

 

6,831,666

 

6.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electronics

 

 

 

6,865,996

 

6,831,666

 

6.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Environmental

 

Non Voting Common Stock

 

765

 

133,002

 

176,914

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Environmental

 

Voting Common Stock

 

17,396

 

3,025,798

 

4,022,999

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Environmental

 

 

 

3,158,800

 

4,199,913

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DS Waters of America, Inc. (d)

 

Food and Beverage

 

First Lien Term Loan
5.25% Cash, 8/30/2020

 

$

2,500,000

 

2,475,000

 

2,497,000

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOA Restaurant Group, L.L.C. (d)

 

Food and Beverage

 

Senior Secured Note
11.25% Cash, 4/1/2017

 

$

4,000,000

 

3,907,889

 

4,060,000

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

0.2

%

TB Corp. (d)

 

Food and Beverage

 

First Lien Term Loan
5.81% Cash, 6/19/2018

 

$

5,127,738

 

5,105,368

 

5,090,306

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.5

%

TB Corp. (d)

 

Food and Beverage

 

Unsecured Note
13.50% (12.00% Cash/1.50% PIK),
12/20/2018

 

$

2,523,533

 

2,490,413

 

2,523,533

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TM Restaurant Group L.L.C. (d)

 

Food and Beverage

 

First Lien Term Loan
7.75% Cash, 7/16/2017

 

$

2,883,190

 

2,866,436

 

2,877,712

 

3.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Food and Beverage

 

 

 

16,845,106

 

17,048,551

 

15.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oceans Acquisition, Inc. (d)

 

Healthcare Services

 

First Lien Term Loan
9.03% Cash, 12/27/2017

 

$

6,500,000

 

6,384,688

 

6,500,000

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Smile Brands Group Inc. (d)

 

Healthcare Services

 

First Lien Term Loan
7.50% Cash, 8/16/2019

 

$

4,500,000

 

4,410,124

 

4,430,250

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Surgical Specialties Corporation (US), Inc. (d)

 

Healthcare Services

 

First Lien Term Loan
7.25% Cash, 8/22/2018

 

$

2,500,000

 

2,475,041

 

2,493,750

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zest Holdings, LLC (d)

 

Healthcare Services

 

First Lien Term Loan
6.50% Cash, 8/16/2020

 

$

4,500,000

 

4,410,000

 

4,432,500

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Healthcare Services

 

 

 

17,679,853

 

17,856,500

 

15.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

McMillin Companies L.L.C. (d), (g)

 

Homebuilding

 

Senior Secured Note
0% Cash, 12/31/2013

 

$

550,000

 

549,733

 

376,090

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Homebuilding

 

 

 

549,733

 

376,090

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Keystone Automotive Operations, Inc. (d)

 

Logistics

 

First Lien Term Loan
7.00% Cash, 8/15/2019

 

$

5,000,000

 

4,925,343

 

5,000,000

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Logistics

 

 

 

4,925,343

 

5,000,000

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution International, Inc. (d)

 

Manufacturing

 

First Lien Term Loan
8.75% Cash, 7/16/2019

 

$

6,000,000

 

5,940,828

 

5,970,000

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Logistics

 

 

 

5,940,828

 

5,970,000

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, L.L.C. (d)

 

Metals

 

Senior Secured Note
17.00% (13.00% Cash/4.00% PIK),
9/14/2014

 

$

8,859,614

 

8,859,614

 

7,147,051

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, L.L.C. (d), (g)

 

Metals

 

Warrants to Purchase Limited Liability
Company Interests (2008)

 

5,000

 

20

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elyria Foundry Company, L.L.C. (d), (g)

 

Metals

 

Warrants to Purchase Limited Liability
Company Interests (2013)

 

18,227

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Metals

 

 

 

8,859,634

 

7,147,051

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d)

 

Publishing

 

Unsecured Notes
8.60% PIK, 1/14/2020

 

$

2,553,340

 

2,127,768

 

1,177,040

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d), (g)

 

Publishing

 

Common Stock

 

211,429

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Penton Media, Inc. (d)

 

Publishing

 

First Lien Term Loan
6.00% Cash,
8/1/2014

 

$

4,861,303

 

4,635,522

 

4,771,854

 

4.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Publishing

 

 

 

6,763,290

 

5,948,894

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Investors, Inc. (d)

 

Software

 

First Lien Term Loan
9.75% Cash,
5/9/2018

 

$

6,150,000

 

6,034,746

 

6,075,585

 

5.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Investors, Inc. (d)

 

Software

 

Revolver

 

$

166,667

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Investors, Inc. (d), (g)

 

Software

 

Common Stock

 

1,282

 

1,282

 

1,603

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Investors, Inc. (d), (g)

 

Software

 

Preferred Stock

 

148,718

 

148,718

 

185,898

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Software

 

 

 

6,184,746

 

6,263,086

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Non-control/Non-affiliated investments

 

 

 

 

 

 

 

167,382,770

 

168,058,055

 

149.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control investments - 17.6% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Structured Finance Securities

 

Other/Structured
Finance Securities
17.90%, 1/21/2020

 

$

30,000,000

 

16,804,518

 

19,741,624

 

17.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Control investments

 

 

 

 

 

 

 

16,804,518

 

19,741,624

 

17.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS - 167.0% (b)

 

 

 

 

 

 

 

$

184,187,288

 

$

187,799,679

 

167.0

%

 


(a)  All of our equity and debt investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940, except GSC Investment Corp. CLO 2007 Ltd.

(b)  Percentages are based on net assets of $112,445,315 as of August 31, 2013.

(c)  Because there is no readily available market value for these investments, the fair value of these investments is approved 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) 17.90% represents the modeled effective interest rate that is expected to be earned over the life of the investment.

(f)  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.

 

$

 

$

 

$

 

$

2,235,539

 

$

978,841

 

$

 

$

2,937,106

 

 

(g) Non-income producing at August 31, 2013.

 

6



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

February 28, 2013

 

Company (a)

 

Industry

 

Investment Interest Rate / Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value (c)

 

% of
Net Assets

 

Non-control/Non-affiliated investments - 119.2% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

Coast Plating, Inc. (d)

 

Aerospace

 

First Lien Term Loan 11.70% Cash, 9/13/2014

 

$

2,550,000

 

$

2,550,000

 

$

2,550,000

 

2.3

%

Coast Plating, Inc. (d)

 

Aerospace

 

First Lien Term Loan 13.20% Cash, 9/13/2014

 

$

950,000

 

950,000

 

950,000

 

0.9

%

 

 

 

 

Total Aerospace

 

 

 

3,500,000

 

3,500,000

 

3.2

%

National Truck Protection Co., Inc. (d), (h)

 

Automotive

 

Common Stock

 

589

 

500,000

 

591,827

 

0.5

%

National Truck Protection Co., Inc. (d)

 

Automotive

 

First Lien Term Loan 15.50% Cash 8/10/2017

 

$

5,500,000

 

5,500,000

 

5,500,000

 

5.1

%

Take 5 Oil Change, L.L.C. (d)

 

Automotive

 

First Lien Term Loan 9.00% Cash, 11/28/2016

 

$

6,000,000

 

6,000,000

 

6,000,000

 

5.5

%

Take 5 Oil Change, L.L.C. (d)

 

Automotive

 

First Lien Term Loan 13.00% Cash, 11/28/2016

 

$

2,000,000

 

1,961,761

 

2,000,000

 

1.8

%

Take 5 Oil Change, L.L.C. (d), (h)

 

Automotive

 

Common Stock

 

7,128

 

712,800

 

712,800

 

0.7

%

 

 

 

 

Total Automotive

 

 

 

14,674,561

 

14,804,627

 

13.6

%

Legacy Cabinets Holdings (d), (h)

 

Building Products

 

Common Stock Voting A-1

 

2,535

 

220,900

 

 

0.0

%

Legacy Cabinets Holdings (d), (h)

 

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% (1.00% Cash/6.25% PIK), 5/3/2014

 

$

332,229

 

332,229

 

267,378

 

0.2

%

 

 

 

 

Total Building Products

 

 

 

692,553

 

267,378

 

0.2

%

Emily Street Enterprises, L.L.C. (d)

 

Business Services

 

Senior Secured Note 14.00% (13.00% Cash/1.00% PIK), 12/28/2017

 

$

5,705,384

 

5,595,317

 

5,705,384

 

5.2

%

Emily Street Enterprises, L.L.C. (d), (h)

 

Business Services

 

Warrant Membership Interests

 

49,318

 

400,000

 

399,969

 

0.4

%

Dispensing Dynamics International (d)

 

Business Services

 

Senior Secured Note 12.50% Cash, 1/1/2018

 

$

7,000,000

 

6,860,186

 

7,000,000

 

6.4

%

Knowland Technology Holdings, L.L.C. (d)

 

Business Services

 

First Lien Term Loan 11.00% Cash, 11/29/2017

 

$

6,200,000

 

6,082,248

 

6,200,000

 

5.7

%

Sourcehov LLC (d)

 

Business Services

 

Second Lien Term Loan 10.50% Cash, 4/29/2018

 

$

3,000,000

 

2,648,298

 

2,850,000

 

2.6

%

 

 

 

 

Total Business Services

 

 

 

21,586,049

 

22,155,353

 

20.3

%

C.H.I. Overhead Doors, Inc. (d)

 

Consumer Products

 

First Lien Term Loan 7.25% Cash, 8/17/2017

 

$

4,974,747

 

4,930,481

 

5,024,495

 

4.7

%

Targus Group International, Inc. (d)

 

Consumer Products

 

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

 

$

3,940,003

 

3,888,460

 

3,956,551

 

3.6

%

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Note 10.00% PIK, 6/14/2019

 

$

1,914,341

 

1,914,341

 

1,116,252

 

1.0

%

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Note 16.00% Cash, 10/26/2018

 

$

332,500

 

326,320

 

305,334

 

0.3

%

Targus Holdings, Inc. (d), (h)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

3,324,741

 

3.1

%

 

 

 

 

Total Consumer Products

 

 

 

11,626,367

 

13,727,373

 

12.7

%

CFF Acquisition L.L.C. (d)

 

Consumer Services

 

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

 

$

2,161,391

 

2,032,060

 

2,154,475

 

2.0

%

Expedited Travel L.L.C. (d)

 

Consumer Services

 

First Lien Term Loan 12.00% Cash, 12/28/2017

 

$

5,500,000

 

5,380,520

 

5,500,000

 

5.0

%

PrePaid Legal Services, Inc. (d)

 

Consumer Services

 

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

 

$

3,000,000

 

2,936,860

 

3,000,000

 

2.8

%

 

 

 

 

Total Consumer Services

 

 

 

10,349,440

 

10,654,475

 

9.8

%

 

7



Table of Contents

 

Company (a)

 

Industry

 

Investment Interest Rate / Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value (c)

 

% of
Net Assets

 

M/C Acquisition Corp., L.L.C. (d)

 

Education

 

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

 

$

2,740,780

 

1,586,846

 

291,893

 

0.3

%

M/C Acquisition Corp., L.L.C. (d), (h)

 

Education

 

Class A Common Stock

 

544,761

 

30,242

 

 

0.0

%

 

 

 

 

Total Education

 

 

 

1,617,088

 

291,893

 

0.3

%

Group Dekko, Inc. (d)

 

Electronics

 

Second Lien Term Loan 11.00% (10.00% Cash/1.00% PIK), 5/1/2016

 

$

6,824,717

 

6,824,717

 

6,720,981

 

6.2

%

 

 

 

 

Total Electronics

 

 

 

6,824,717

 

6,720,981

 

6.2

%

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

 

Environmental

 

Non Voting Common Stock

 

765

 

133,002

 

125,981

 

0.1

%

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

 

Environmental

 

Voting Common Stock

 

17,396

 

3,025,798

 

2,866,065

 

2.7

%

 

 

 

 

Total Environmental

 

 

 

3,158,800

 

2,992,046

 

2.8

%

DS Waters of America, Inc. (d)

 

Food and Beverage

 

First Lien Term Loan 10.50% Cash, 8/29/2017

 

$

3,970,000

 

3,994,704

 

4,049,400

 

3.7

%

HOA Restaurant Group, L.L.C. (d)

 

Food and Beverage

 

Senior Secured Note 11.25% Cash, 4/1/2017

 

$

4,000,000

 

3,897,940

 

3,560,000

 

3.3

%

TB Corp. (d)

 

Food and Beverage

 

First Lien Term Loan 5.81% Cash, 6/19/2018

 

$

5,153,506

 

5,128,662

 

5,140,622

 

4.7

%

TB Corp. (d)

 

Food and Beverage

 

Unsecured Note 13.50% (12.00% Cash/1.50% PIK), 2/19/2017

 

$

2,504,585

 

2,468,317

 

2,492,062

 

2.3

%

TM Restaurant Group L.L.C. (d)

 

Food and Beverage

 

First Lien Term Loan 7.75% Cash, 7/17/2017

 

$

2,962,500

 

2,943,045

 

2,956,871

 

2.7

%

 

 

 

 

Total Food and Beverage

 

 

 

18,432,668

 

18,198,955

 

16.7

%

Oceans Acquisition, Inc. (d)

 

Healthcare Services

 

First Lien Term Loan 10.75% Cash, 12/27/2017

 

$

7,500,000

 

7,351,433

 

7,500,000

 

6.9

%

Maverick Healthcare Group (d)

 

Healthcare Services

 

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

 

$

4,900,000

 

4,835,389

 

4,900,000

 

4.5

%

 

 

 

 

Total Healthcare Services

 

 

 

12,186,822

 

12,400,000

 

11.4

%

McMillin Companies L.L.C. (d), (h)

 

Homebuilding

 

Senior Secured Note 0% Cash, 12/31/2013

 

$

550,000

 

536,764

 

315,370

 

0.3

%

 

 

 

 

Total Homebuilding

 

 

 

536,764

 

315,370

 

0.3

%

Capstone Logistics, L.L.C. (d)

 

Logistics

 

First Lien Term Loan 7.50% Cash, 9/16/2016

 

$

899,769

 

889,798

 

908,766

 

0.8

%

Capstone Logistics, L.L.C. (d)

 

Logistics

 

First Lien Term Loan 13.50% Cash, 9/16/2016

 

$

3,693,369

 

3,652,443

 

3,767,236

 

3.5

%

Worldwide Express Operations, L.L.C. (d)

 

Logistics

 

First Lien Term Loan 7.50% Cash, 6/30/2013

 

$

6,527,979

 

6,461,295

 

6,504,478

 

6.0

%

 

 

 

 

Total Logistics

 

 

 

11,003,536

 

11,180,480

 

10.3

%

Elyria Foundry Company, L.L.C. (d)

 

Metals

 

Senior Secured Note 17.00% (13.00% Cash/4.00% PIK), 3/1/2013

 

$

7,728,566

 

7,728,566

 

6,723,852

 

6.2

%

Elyria Foundry Company, L.L.C. (d), (h)

 

Metals

 

Warrants to Purchase Limited Liability Company Interests

 

3,000

 

 

 

0.0

%

 

 

 

 

Total Metals

 

 

 

7,728,566

 

6,723,852

 

6.2

%

Network Communications, Inc. (d)

 

Publishing

 

Unsecured Note 8.60% PIK, 1/14/2020

 

$

2,500,198

 

2,049,660

 

960,827

 

0.9

%

Network Communications, Inc. (d), (h)

 

Publishing

 

Common Stock

 

211,429

 

 

 

0.0

%

Penton Media, Inc. (d)

 

Publishing