Saratoga Investment Corp.
SARATOGA INVESTMENT CORP. (Form: 10-Q, Received: 07/14/2014 16:04:19)

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 May 31, 2014

 

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 July 14, 2014 was 5,379,616.

 

 

 



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 May 31, 2014 (unaudited) and February 28, 2014

3

 

 

 

 

Consolidated Statements of Operations for the three months ended May 31, 2014 and May 31, 2013 (unaudited)

4

 

 

 

 

Consolidated Schedules of Investments as of May 31, 2014 (unaudited) and February 28, 2014

5

 

 

 

 

Consolidated Statements of Changes in Net Assets for the three months ended May 31, 2014 and May 31, 2013 (unaudited)

10

 

 

 

 

Consolidated Statements of Cash Flows for the three months ended May 31, 2014 and May 31, 2013 (unaudited)

11

 

 

 

 

Notes to Consolidated Financial Statements as of May 31, 2014 (unaudited)

12

 

 

 

Item 2.

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

36

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

54

 

 

 

Item 4.

Controls and Procedures

54

 

 

 

PART II

OTHER INFORMATION

56

 

 

 

Item 1.

Legal Proceedings

56

 

 

 

Item 1A.

Risk Factors

56

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

56

 

 

 

Item 3.

Defaults upon Senior Securities

56

 

 

 

Item 4.

Mine Safety Disclosures

56

 

 

 

Item 5.

Other Information

56

 

 

 

Item 6.

Exhibits

57

 

 

 

Signatures

 

58

 

2



Table of Contents

 

PART I FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Saratoga Investment Corp.

 

Consolidated Statements of Assets and Liabilities

 

 

 

As of

 

 

 

May 31, 2014

 

February 28, 2014

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Investments at fair value

 

 

 

 

 

Non-control/non-affiliate investments (amortized cost of $198,520,606 and $185,266,607, respectively)

 

$

198,595,113

 

$

186,275,106

 

Control investments (cost of $16,555,808 and $16,555,808, respectively)

 

20,118,891

 

19,569,596

 

Total investments at fair value (amortized cost of $215,076,414 and $201,822,415, respectively)

 

218,714,004

 

205,844,702

 

Cash and cash equivalents

 

2,974,111

 

3,293,898

 

Cash and cash equivalents, reserve accounts

 

9,725,613

 

3,293,113

 

Interest receivable, (net of reserve of $296,091 and $150,058, respectively)

 

3,506,476

 

2,571,853

 

Deferred debt financing costs, net

 

4,125,345

 

4,008,704

 

Management fee receivable

 

166,876

 

150,106

 

Other assets

 

21,336

 

14,461

 

Total assets

 

$

239,233,761

 

$

219,176,837

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Revolving credit facility

 

$

4,700,000

 

$

 

SBA debentures payable

 

64,000,000

 

50,000,000

 

Notes payable

 

48,300,000

 

48,300,000

 

Management and incentive fees payable

 

3,649,739

 

3,856,962

 

Accounts payable and accrued expenses

 

896,106

 

824,568

 

Interest and debt fees payable

 

658,269

 

873,135

 

Due to manager

 

348,154

 

398,154

 

Total liabilities

 

$

122,552,268

 

$

104,252,819

 

 

 

 

 

 

 

Commitments and contingencies (See Note 7)

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

Common stock, par value $.001, 100,000,000 common shares authorized, 5,379,616 and 5,379,616 common shares issued and outstanding, respectively

 

$

5,380

 

$

5,380

 

Capital in excess of par value

 

184,851,154

 

184,851,154

 

Distribution in excess of net investment income

 

(27,567,086

)

(29,627,578

)

Accumulated net realized loss from investments and derivatives

 

(44,245,545

)

(44,327,225

)

Net unrealized appreciation on investments and derivatives

 

3,637,590

 

4,022,287

 

Total Net Assets

 

116,681,493

 

114,924,018

 

 

 

 

 

 

 

Total liabilities and Net Assets

 

$

239,233,761

 

$

219,176,837

 

 

 

 

 

 

 

NET ASSET VALUE PER SHARE

 

$

21.69

 

$

21.36

 

 

See accompanying notes to consolidated financial statements.

 

3



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Statements of Operations

 

(unaudited)

 

 

 

For the three months
ended May 31, 2014

 

For the three months
ended May 31, 2013

 

INVESTMENT INCOME

 

 

 

 

 

Interest from investments

 

 

 

 

 

Non-control/Non-affiliate investments

 

$

4,707,894

 

$

3,756,830

 

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

 

252,928

 

288,755

 

Control investments

 

641,338

 

1,126,004

 

Total interest income

 

5,602,160

 

5,171,589

 

Interest from cash and cash equivalents

 

594

 

1,906

 

Management fee income

 

392,034

 

498,091

 

Other income

 

149,335

 

346,176

 

Total investment income

 

6,144,123

 

6,017,762

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

Interest and debt financing expenses

 

1,787,587

 

1,127,855

 

Base management fees

 

968,479

 

736,716

 

Professional fees

 

435,374

 

331,064

 

Administrator expenses

 

250,000

 

250,000

 

Incentive management fees

 

380,903

 

821,122

 

Insurance

 

84,487

 

119,995

 

Directors fees and expenses

 

53,175

 

51,000

 

General and administrative

 

123,626

 

98,361

 

Other expense

 

 

11,960

 

Total expenses

 

4,083,631

 

3,548,073

 

 

 

 

 

 

 

NET INVESTMENT INCOME

 

2,060,492

 

2,469,689

 

 

 

 

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

 

 

 

 

 

Net realized gain from investments

 

81,680

 

529,300

 

Net unrealized appreciation (depreciation) on investments

 

(384,697

)

800,862

 

Net gain/(loss) on investments

 

(303,017

)

1,330,162

 

 

 

 

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

 

$

1,757,475

 

$

3,799,851

 

 

 

 

 

 

 

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE

 

$

0.33

 

$

0.80

 

 

See accompanying notes to consolidated financial statements.

 

4



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

May 31, 2014

 

(unaudited)

 

Company (a)

 

Industry

 

Investment Interest Rate / Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value ( c )

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments - 170.2% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PATS Aircraft, LLC (d), (g)

 

Aerospace

 

Common Stock

 

51,813

 

$

89,636

 

$

89,636

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PATS Aircraft, LLC (d)

 

Aerospace

 

First Lien Term Loan 8.50% Cash, 10/6/2016

 

$

254,598

 

254,598

 

254,598

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Aerospace

 

 

 

344,234

 

344,234

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Automotive

 

Common Stock

 

1,116

 

1,000,000

 

1,338,052

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

National Truck Protection Co., Inc. (d)

 

Automotive

 

First Lien Term Loan 15.50% Cash, 9/13/2018

 

$

7,737,848

 

7,737,848

 

7,737,848

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Automotive

 

Common Stock

 

7,128

 

712,800

 

1,316,185

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tectum Holdings, Inc. (d)

 

Automotive

 

Second Lien Term Loan 8.00% Cash, 3/20/2020

 

$

3,500,000

 

3,500,000

 

3,500,000

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Automotive

 

 

 

12,950,648

 

13,892,085

 

11.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (g)

 

Building Products

 

Common Stock Voting A-1

 

2,535

 

220,900

 

763,694

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (g)

 

Building Products

 

Common Stock Voting B-1

 

1,600

 

139,424

 

482,016

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Building Products

 

 

 

360,324

 

1,245,710

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARSloane Acquistion, LLC (d)

 

Business Services

 

First Lien Term Loan 7.50% Cash, 10/1/2019

 

$

995,000

 

986,141

 

1,001,268

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMC Software, Inc. (d)

 

Business Services

 

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

 

$

5,985,000

 

5,931,055

 

5,997,569

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispensing Dynamics International (d)

 

Business Services

 

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

 

$

7,000,000

 

6,899,617

 

7,665,000

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Easy Ice, LLC (d)

 

Business Services

 

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

 

$

7,545,233

 

7,410,230

 

7,545,233

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emily Street Enterprises, L.L.C.

 

Business Services

 

Senior Secured Note 12.00% (11.00% Cash/1.00% PIK), 12/28/2017

 

$

5,777,760

 

5,696,225

 

5,777,760

 

5.0

%

 

 

`

 

`

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

Warrant Membership Interests

 

49,318

 

400,000

 

464,082

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

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

 

$

3,980,000

 

3,946,154

 

3,950,150

 

3.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

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

 

$

2,000,000

 

1,973,841

 

2,000,000

 

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Knowland Technology Holdings, L.L.C.

 

Business Services

 

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

 

$

5,259,171

 

5,185,612

 

5,259,171

 

4.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

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

 

$

4,975,000

 

4,930,743

 

5,002,860

 

4.3

%

.

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

Common Stock

 

3,005

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vector Controls Holding Co., LLC (d)

 

Business Services

 

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

 

$

9,292,485

 

9,155,906

 

9,292,485

 

8.0

%

.

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

Warrants to Purchase Limited Liability Company Interests

 

101

 

 

102,679

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Business Services

 

 

 

52,515,524

 

54,058,257

 

46.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Group International, Inc. (d)

 

Consumer Products

 

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

 

$

3,699,857

 

3,670,403

 

3,539,954

 

3.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d), (g)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

912,478

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Note 10.00% PIK, 6/14/2019

 

$

2,054,158

 

2,054,158

 

1,471,852

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Note 16.00% Cash, 10/26/2018

 

$

399,152

 

394,315

 

374,198

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Products

 

 

 

6,685,641

 

6,298,482

 

5.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avionte Holdings, LLC (g)

 

Consumer Services

 

Common Stock

 

100,000

 

100,000

 

137,000

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avionte Holdings, LLC

 

Consumer Services

 

First Lien Term Loan 8.25% Cash, 1/8/2019

 

$

3,000,000

 

2,944,732

 

3,000,000

 

2.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CFF Acquisition L.L.C. (d)

 

Consumer Services

 

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

 

$

1,105,054

 

1,073,253

 

1,105,054

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expedited Travel L.L.C.

 

Consumer Services

 

First Lien Term Loan 9.00% Cash, 12/28/2017

 

$

3,955,000

 

3,890,456

 

3,955,000

 

3.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PrePaid Legal Services, Inc. (d)

 

Consumer Services

 

First Lien Term Loan 6.25% Cash, 7/1/2019

 

$

4,193,548

 

4,157,895

 

4,202,355

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PrePaid Legal Services, Inc. (d)

 

Consumer Services

 

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

 

$

5,000,000

 

4,934,596

 

5,047,000

 

4.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Consumer Services

 

 

 

17,100,932

 

17,446,409

 

14.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Education

 

Class A Common Stock

 

544,761

 

30,241

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Education

 

First Lien Term Loan 1.00% Cash, 3/13/14

 

$

2,512,184

 

1,358,250

 

130,619

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Education

 

 

 

1,388,491

 

130,619

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Group Dekko, Inc. (d)

 

Electronics

 

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

 

$

6,901,547

 

6,901,547

 

6,527,359

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Electronics

 

 

 

6,901,547

 

6,527,359

 

5.6

%

 

5



Table of Contents

 

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

 

Environmental

 

Non Voting Common Stock

 

765

 

133,002

 

198,236

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Environmental

 

Voting Common Stock

 

17,396

 

3,025,798

 

4,509,856

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Environmental

 

 

 

3,158,800

 

4,708,092

 

4.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DS Waters of America, Inc. (d)

 

Food and Beverage

 

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

 

$

2,487,500

 

2,465,215

 

2,512,375

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Food and Beverage

 

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

 

$

4,000,000

 

3,932,974

 

4,230,000

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TB Corp. (d)

 

Food and Beverage

 

First Lien Term Loan 5.75% Cash, 6/19/2018

 

$

5,089,087

 

5,070,345

 

5,089,087

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TB Corp. (d)

 

Food and Beverage

 

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

 

$

2,546,121

 

2,518,106

 

2,546,121

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TM Restaurant Group L.L.C.

 

Food and Beverage

 

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

 

$

2,845,690

 

2,832,346

 

2,821,569

 

2.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Food and Beverage

 

 

 

16,818,986

 

17,199,152

 

14.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bristol Hospice, LLC

 

Healthcare Services

 

Senior Secured Note 11.00%(10.00% Cash/1.00% PIK), 11/29/2018

 

$

5,500,283

 

5,401,424

 

5,514,068

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oceans Acquisition, Inc.

 

Healthcare Services

 

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

 

$

6,246,226

 

6,154,587

 

6,121,301

 

5.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oceans Acquisition, Inc.

 

Healthcare Services

 

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

 

$

1,000,000

 

983,769

 

980,000

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Roscoe Medical, Inc. (d) (g)

 

Healthcare Services

 

Common Stock

 

5,000

 

500,000

 

500,000

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Roscoe Medical, Inc.

 

Healthcare Services

 

Second Lien Term Loan 11.25% Cash, 9/26/2019

 

$

4,200,000

 

4,118,800

 

4,200,000

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Smile Brands Group Inc. (d)

 

Healthcare Services

 

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

 

$

4,477,500

 

4,399,298

 

4,343,175

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Healthcare Services

 

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

 

$

2,406,250

 

2,385,838

 

2,394,219

 

2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Zest Holdings, LLC (d)

 

Healthcare Services

 

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

 

$

4,477,500

 

4,397,283

 

4,477,500

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Healthcare Services

 

 

 

28,340,999

 

28,530,263

 

24.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Homebuilding

 

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

 

$

550,000

 

558,433

 

376,090

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Homebuilding

 

 

 

558,433

 

376,090

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution International, Inc. (d)

 

Manufacturing

 

First Lien Term Loan 7.50% Cash, 7/16/2019

 

$

5,955,000

 

5,903,750

 

5,955,000

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Manufacturing

 

 

 

5,903,750

 

5,955,000

 

5.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HMN Holdco, LLC

 

Media

 

First Lien Term Loan 14.00% Cash, 5/16/2019

 

$

9,500,000

 

8,932,568

 

9,470,584

 

8.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HMN Holdco, LLC (g)

 

Media

 

Warrants to Purchase Limited Liability Company Interests (Common)

 

57,872

 

300,356

 

579

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HMN Holdco, LLC (g)

 

Media

 

Warrants to Purchase Limited Liability Company Interests

 

8,139

 

81,390

 

28,837

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Media

 

 

 

9,314,314

 

9,500,000

 

8.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Metals

 

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

 

$

8,859,615

 

8,859,615

 

5,721,258

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Metals

 

Warrants to Purchase Limited Liability Company Interests (2008)

 

7,000

 

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

 

 

 

8,859,635

 

5,721,258

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d), (g)

 

Publishing

 

Common Stock

 

380,572

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Communications, Inc. (d)

 

Publishing

 

Unsecured Notes 8.60% PIK, 1/14/2020

 

$

2,601,736

 

2,258,294

 

1,162,818

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Publishing

 

 

 

2,258,294

 

1,162,818

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Investors, Inc. (g)

 

Software

 

Common Stock

 

1,282

 

1,282

 

1,987

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Investors, Inc.

 

Software

 

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

 

$

6,983,333

 

6,871,096

 

6,983,333

 

6.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Investors, Inc.

 

Software

 

Revolver

 

$

166,667

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Investors, Inc. (g)

 

Software

 

Preferred Stock

 

63,463

 

149,138

 

98,369

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Investors, Inc. (g)

 

Software

 

Preferred Stock - A Shares

 

135,584

 

135,584

 

210,155

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pen-Link, Ltd. (d), (g)

 

Software

 

Second Lien Term Loan 12.50% Cash, 5/26/2019

 

$

11,500,000

 

11,291,430

 

11,500,000

 

9.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Software

 

 

 

18,448,530

 

18,793,844

 

16.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advanced Air & Heat of Florida, LLC

 

Utilities

 

First Lien Term Loan 10.00% Cash, 1/31/2019

 

$

6,705,441

 

6,611,524

 

6,705,441

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Utilities

 

 

 

6,611,524

 

6,705,441

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Non-control/Non-affiliated investments

 

 

 

 

 

 

 

198,520,606

 

198,595,113

 

170.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Control investments - 17.2% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Saratoga Investment Corp. CLO 2013-1, Ltd. (d), (e), (f)

 

Structured Finance Securities

 

Other/Structured Finance Securities 15.89%, 10/17/2023

 

$

30,000,000

 

16,555,808

 

20,118,891

 

17.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub Total Control investments

 

 

 

 

 

 

 

16,555,808

 

20,118,891

 

17.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL INVESTMENTS - 187.4% (b)

 

 

 

 

 

 

 

$

215,076,414

 

$

218,714,004

 

187.4

%

 


(a) All of our equity and debt investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940, except Saratoga Investment Corp. CLO 2013-1, Ltd.

(b) Percentages are based on net assets of $116,681,493 as of May 31, 2014.

(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) 15.89% 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)

 

Saratoga Investment Corp. CLO 2013-1, Ltd.

 

$

 

$

 

$

 

$

641,338

 

$

392,034

 

$

 

$

3,563,083

 

 

(g) Non-income producing at May 31, 2014.

 

6



Table of Contents

 

Saratoga Investment Corp.

 

Consolidated Schedule of Investments

 

February 28, 2014

 

Company (a)

 

Industry

 

Investment Interest Rate / Maturity

 

Principal/
Number of Shares

 

Cost

 

Fair Value (c)

 

% of
Net Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-control/Non-affiliated investments - 162.1% (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PATS Aircraft, LLC (d), (g)

 

Aerospace

 

Common Stock

 

51,813

 

89,636

 

89,636

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PATS Aircraft, LLC (d)

 

Aerospace

 

First Lien Term Loan 8.50% Cash, 10/6/2016

 

$

254,598

 

254,598

 

254,598

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Aerospace

 

 

 

344,234

 

344,234

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Automotive

 

Common Stock

 

1,116

 

1,000,000

 

1,152,531

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

National Truck Protection Co., Inc. (d)

 

Automotive

 

First Lien Term Loan 15.50% Cash, 9/13/2018

 

$

8,250,000

 

8,250,000

 

8,250,000

 

7.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Automotive

 

Common Stock

 

7,128

 

712,800

 

1,217,747

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Automotive

 

 

 

9,962,800

 

10,620,278

 

9.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (g)

 

Building Products

 

Common Stock Voting A-1

 

2,535

 

220,900

 

552,351

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Cabinets Holdings (d), (g)

 

Building Products

 

Common Stock Voting B-1

 

1,600

 

139,424

 

348,624

 

0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Building Products

 

 

 

360,324

 

900,975

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARSloane Acquistion, LLC (d)

 

Business Services

 

First Lien Term Loan 7.50% Cash, 10/1/2019

 

$

997,500

 

988,200

 

1,004,981

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BMC Software, Inc. (d)

 

Business Services

 

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

 

$

6,000,000

 

5,943,801

 

6,013,800

 

5.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dispensing Dynamics International (d)

 

Business Services

 

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

 

$

7,000,000

 

6,882,278

 

7,525,000

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Easy Ice, LLC (d)

 

Business Services

 

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

 

$

7,507,024

 

7,387,970

 

7,507,024

 

6.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Emily Street Enterprises, L.L.C.

 

Business Services

 

Senior Secured Note 12.00% (11.00% Cash/1.00% PIK), 12/28/2017

 

$

5,767,983

 

5,680,703

 

5,767,983

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

Warrant Membership Interests

 

49,318

 

400,000

 

601,679

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

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

 

$

3,990,000

 

3,954,385

 

3,960,075

 

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

 

1,972,758

 

2,000,000

 

1.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Knowland Technology Holdings, L.L.C.

 

Business Services

 

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

 

$

6,200,000

 

6,107,034

 

6,200,000

 

5.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

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

 

$

4,987,500

 

4,941,335

 

5,018,921

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

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

 

$

2,500,000

 

2,453,145

 

2,518,750

 

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

 

$

9,261,074

 

9,115,415

 

9,075,853

 

7.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Business Services

 

Warrants to Purchase Limited Liability Company Interests

 

101

 

 

136,217

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Business Services

 

 

 

55,827,024

 

57,330,283

 

49.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Group International, Inc. (d)

 

Consumer Products

 

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

 

$

3,738,369

 

3,704,766

 

3,663,602

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d), (g)

 

Consumer Products

 

Common Stock

 

62,413

 

566,765

 

730,232

 

0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Targus Holdings, Inc. (d)

 

Consumer Products

 

Unsecured Note 10.00% PIK, 6/14/2019

 

$

2,054,158

 

2,054,158

 

1,387,848

 

1.2

%