UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended June 30, 2022
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from _______ to _______
Commission file number 814-00813
(Exact name of registrant as specified in its charter)
| State or Other Jurisdiction of | I.R.S. Employer Identification No. | |||||||
| Incorporation or Organization | ||||||||
| Address of Principal Executive Offices | Zip Code | |||||||
( | ||||||||
| Registrant’s Telephone Number, Including Area Code | ||||||||
| Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
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 ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | ¨ | ||||||||
| ☒ | Smaller reporting company | ||||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No ý
The number of shares of the issuer’s Common Stock, $0.01 par value, outstanding as of August 3, 2022 was 13,429,777 .
OFS CAPITAL CORPORATION
TABLE OF CONTENTS
Item 1. | Consolidated Financial Statements | |||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2 | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
Defined Terms
We have used “we,” “us,” “our,” “our company” and “the Company” to refer to OFS Capital Corporation in this report. We also have used several other terms in this report, which are explained or defined below:
| Term | Explanation or Definition | ||||
| 1940 Act | Investment Company Act of 1940, as amended | ||||
| Adjusted NII | A financial measure calculated and presented on a basis other than in accordance with GAAP and represents net investment income excluding the capital gains incentive fee | ||||
| Administration Agreement | Administration Agreement between the Company and OFS Services dated November 7, 2012 | ||||
| Affiliated Account | An account, other than the Company, managed by OFS Advisor or an affiliate of OFS Advisor | ||||
| Affiliated Fund | Certain other funds, including other BDCs and registered investment companies managed by OFS Advisor or by registered investment advisers controlling, controlled by, or under common control with, OFS Advisor | ||||
| ASC | Accounting Standards Codification, as issued by the FASB | ||||
| BDC | Business Development Company under the 1940 Act | ||||
| BLA | Business Loan Agreement, as amended, with Pacific Western Bank, as lender, which provides the Company with a senior secured revolving credit facility | ||||
| BNP Facility | A secured revolving credit facility, as amended, that provides for borrowings in an aggregate principal amount up to $150,000,000 issued pursuant to a Revolving Credit and Security Agreement, as amended, by and among OFSCC-FS, the lenders from time to time parties thereto, BNP Paribas, as administrative agent, OFSCC-FS Holdings, LLC, a wholly owned subsidiary of the Company, as equityholder, the Company, as servicer, Citibank, N.A., as collateral agent and Virtus Group, LP, as collateral administrator | ||||
| Board | The Company’s board of directors | ||||
| CLO | Collateralized loan obligation | ||||
| Code | Internal Revenue Code of 1986, as amended | ||||
| Company | OFS Capital Corporation and its consolidated subsidiaries | ||||
| DRIP | Distribution reinvestment plan | ||||
| EBITDA | Earnings before interest, taxes, depreciation and amortization | ||||
| Exchange Act | Securities Exchange Act of 1934, as amended | ||||
| FASB | Financial Accounting Standards Board | ||||
| GAAP | Accounting principles generally accepted in the United States | ||||
| HPCI | Hancock Park Corporate Income, Inc., a Maryland corporation and non-traded BDC for whom OFS Advisor serves as investment adviser | ||||
| ICTI | Investment company taxable income, which is generally net ordinary income plus net short-term capital gains in excess of net long-term capital losses | ||||
| Indicative Prices | Market quotations, prices from pricing services or bids from brokers or dealers | ||||
| Investment Advisory Agreement | Investment Advisory and Management Agreement between the Company and OFS Advisor dated November 7, 2012 | ||||
| LIBOR | London Interbank Offered Rate | ||||
| NAV | Net asset value. NAV is calculated as consolidated total assets less consolidated total liabilities and can be expressed in the aggregate or on a per share basis | ||||
| Net Loan Fees | The cumulative amount of fees, such as origination fees, discounts, premiums and amendment fees that are deferred and recognized as income over the life of the loan | ||||
| OCCI | OFS Credit Company, Inc., a Delaware corporation and a non-diversified, closed-end management investment company for whom OFS Advisor serves as investment adviser | ||||
| OFS Advisor | OFS Capital Management, LLC, a wholly owned subsidiary of OFSAM and registered investment advisor under the Investment Advisers Act of 1940, as amended | ||||
| OFS Services | OFS Capital Services, LLC, a wholly owned subsidiary of OFSAM and affiliate of OFS Advisor | ||||
| OFSAM | Orchard First Source Asset Management, LLC, a full-service provider of capital and leveraged finance solutions to U.S. corporations | ||||
| OFSCC-FS | OFSCC-FS, LLC, an indirect wholly owned subsidiary of the Company | ||||
| Term | Explanation or Definition | ||||
| OFSCC-FS Assets | Assets held by the Company through OFSCC-FS | ||||
| OFSCC-MB | OFSCC-MB, Inc., a wholly owned subsidiary taxed under subchapter C of the Code that generally holds the equity investments of the Company that are taxed as pass-through entities | ||||
| OID | Original issue discount | ||||
| Order | An exemptive relief order from the SEC to permit us to co-invest in portfolio companies with Affiliated Funds in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions | ||||
| Parent | OFS Capital Corporation | ||||
| PIK | Payment-in-kind, non-cash interest or dividends payable as an addition to the loan or equity security producing the income | ||||
| Portfolio Company Investment | A debt or equity investment in a portfolio company. Portfolio Company Investments exclude Structured Finance Notes | ||||
| Prime Rate | United States Prime interest rate | ||||
| PWB Credit Facility | A senior secured revolving credit facility, as amended, with Pacific Western Bank, as lender, that provides for borrowings to the Company in an aggregate principal amount up to $35,000,000 | ||||
| RIC | Regulated investment company under the Code | ||||
| SBA | United States Small Business Administration | ||||
| SBIC | A fund licensed under the SBA Small Business Investment Company Program | ||||
| SBIC Acquisition | The Company's acquisition of the remaining ownership interests in SBIC I LP and OFS SBIC I GP, LLC on December 4, 2013 | ||||
| SBIC I LP | OFS SBIC I, LP, a wholly owned SBIC subsidiary of the Company | ||||
| SBIC I GP | OFS SBIC I GP, LLC | ||||
| SEC | United States Securities and Exchange Commission | ||||
| Securities Act | Securities Act of 1933, as amended | ||||
| SOFR | Secured Overnight Financing Rate | ||||
| Stock Repurchase Program | The open market stock repurchase program for shares of the Company’s common stock under Rule 10b-18 of the Exchange Act | ||||
| Structured Finance Notes | CLO mezzanine debt, CLO subordinated debt and CLO loan accumulation facility positions | ||||
| Transaction Price | The price in an arm’s length transaction involving the same security | ||||
| Unsecured Notes | The Unsecured Notes Due September 2023, the Unsecured Notes Due April 2025, the Unsecured Notes Due October 2025, the Unsecured Notes Due October 2026, the Unsecured Notes Due February 2026 and the Unsecured Notes Due October 2028 | ||||
| Unsecured Notes Due April 2025 | The Company’s $50.0 million aggregate principal amount of 6.375% notes due April 30, 2025, which were redeemed on March 12, 2021 | ||||
| Unsecured Notes Due February 2026 | The Company’s $125.0 million aggregate principal amount of 4.75% notes due February 10, 2026 | ||||
| Unsecured Notes Due October 2025 | The Company’s $48.5 million aggregate principal amount of 6.5% notes due October 30, 2025, which were redeemed on March 12, 2021 | ||||
| Unsecured Notes Due October 2026 | The Company's $54.3 million aggregate principal amount of 5.95% notes due October 31, 2026, which were redeemed on November 22, 2021 | ||||
| Unsecured Notes Due October 2028 | The Company’s $55.0 million aggregate principal amount of 4.95% notes due October 31, 2028 | ||||
| Unsecured Notes Due September 2023 | The Company’s $25.0 million aggregate principal amount of 6.25% notes due September 30, 2023, which were redeemed on November 1, 2021 | ||||
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
•our ability and experience operating a BDC or an SBIC, or maintaining our tax treatment as a RIC under Subchapter M of the Code;
•our dependence on key personnel;
•our ability to maintain or develop referral relationships;
•our ability to replicate historical results;
•the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria;
•the belief that the carrying amounts of our financial instruments, such as cash, receivables and payables approximate the fair value of such items due to the short maturity of such instruments and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk;
•actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM;
•restrictions on our ability to enter into transactions with our affiliates;
•the impact of interest and inflation rates on our business prospects and the prospects of our portfolio companies;
•our ability to comply with SBA regulations and requirements;
•the use of borrowed money to finance a portion of our investments;
•our ability to incur additional leverage pursuant to Section 61(a)(2) of the 1940 Act and the impact of such leverage on our net investment income and results of operations;
•competition for investment opportunities;
•our plans to focus on first lien senior secured loans to larger borrowers and the impact on our risk profile, including our belief that the seniority of such loans in a borrower's capital structure may provide greater downside protection against adverse economic changes, including those caused by the ongoing impacts of the coronavirus (“COVID-19”) pandemic, the ongoing conflict between Russia and Ukraine, and rising interest and inflation rates;
•the percentage of investments that will bear interest on a floating rate or fixed rate basis;
•interest rate volatility, including the transition from LIBOR to SOFR and/or other alternative reference rate(s);
•the ability of SBIC I LP to make distributions enabling us to meet RIC requirements;
•plans by SBIC I LP to repay its outstanding SBA debentures;
•our ability to raise debt or equity capital as a BDC;
•the timing, form and amount of any distributions from our portfolio companies;
•the impact of a protracted decline in the liquidity of credit markets on our business;
•the general economy and its impact on the industries in which we invest;
•the impact of current political, economic and industry conditions, including changes in the interest rate environment, significant market volatility, supply chain disruptions, other conditions affecting the financial and capital markets, and the ongoing impacts of the COVID-19 pandemic on our business, financial condition, results of operations and fair value of our portfolio investments;
•the impact of the ongoing conflict between Russia and Ukraine;
•the belief that we have sufficient levels of liquidity to support our existing portfolio companies and deploy capital in new investment opportunities;
1
•the belief that long-dated financing affords us operational flexibility;
•the fluctuation of the fair value of our investments due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value; and
•the effect of new or modified laws or regulations governing our operations.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include, among others, those described or identified in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed on March 4, 2022, and “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed on May 6, 2022, and this Quarterly Report on Form 10-Q. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.
We have based the forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The forward-looking statements and projections contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by Section 21E of the Exchange Act.
2
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Assets and Liabilities
(Dollar amounts in thousands, except per share data)
| June 30, 2022 | December 31, 2021 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Investments, at fair value: | |||||||||||
| Non-control/non-affiliate investments (amortized cost of $489,849 and $428,398, respectively) | $ | 456,076 | $ | 421,567 | |||||||
| Affiliate investments (amortized cost of $17,635 and $17,650, respectively) | 91,601 | 72,584 | |||||||||
| Control investment (amortized cost of $0 and $11,264, respectively) | — | 12,948 | |||||||||
| Total investments, at fair value (amortized cost of $507,484 and $457,312, respectively) | 547,677 | 507,099 | |||||||||
| Cash | 14,844 | 43,048 | |||||||||
| Interest receivable | 1,883 | 1,475 | |||||||||
| Receivable for investments sold | — | 14,893 | |||||||||
| Prepaid expenses and other assets | 2,917 | 2,533 | |||||||||
| Total assets | $ | 567,321 | $ | 569,048 | |||||||
| Liabilities | |||||||||||
| Revolving lines of credit | $ | 134,100 | $ | 100,000 | |||||||
| SBA debentures (net of deferred debt issuance costs of $319 and $555, respectively) | 50,601 | 69,365 | |||||||||
| Unsecured notes (net of deferred debt issuance costs of $4,155 and $4,554, respectively) | 175,845 | 175,446 | |||||||||
| Interest payable | 3,714 | 3,685 | |||||||||
| Payable to adviser and affiliates (Note 3) | 2,672 | 6,217 | |||||||||
| Payable for investments purchased | 3,905 | 8,788 | |||||||||
| Accrued professional fees | 383 | 452 | |||||||||
| Other liabilities | 389 | 1,351 | |||||||||
| Total liabilities | 371,609 | 365,304 | |||||||||
| Commitments and contingencies (Note 6) | |||||||||||
| Net assets | |||||||||||
| Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, -0- shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | $ | — | $ | — | |||||||
| Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,429,777 and 13,422,413 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 134 | 134 | |||||||||
| Paid-in capital in excess of par | 185,195 | 185,113 | |||||||||
| Total distributable earnings | 10,383 | 18,497 | |||||||||
| Total net assets | 195,712 | 203,744 | |||||||||
| Total liabilities and net assets | $ | 567,321 | $ | 569,048 | |||||||
| Number of shares outstanding | 13,429,777 | 13,422,413 | |||||||||
| Net asset value per share | $ | 14.57 | $ | 15.18 | |||||||
See Notes to Consolidated Financial Statements (unaudited).
3
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Operations (unaudited)
(Dollar amounts in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Investment income | |||||||||||||||||||||||
| Interest income: | |||||||||||||||||||||||
Non-control/non-affiliate investments | $ | 10,345 | $ | 9,384 | $ | 20,047 | $ | 18,245 | |||||||||||||||
Affiliate investments | — | 932 | — | 1,860 | |||||||||||||||||||
Control investment | — | 322 | 141 | 689 | |||||||||||||||||||
Total interest income | 10,345 | 10,638 | 20,188 | 20,794 | |||||||||||||||||||
| Dividend income: | |||||||||||||||||||||||
Non-control/non-affiliate investments | — | — | 713 | — | |||||||||||||||||||
Affiliate investments | 5 | 59 | 5 | 106 | |||||||||||||||||||
Control investment | — | 136 | 45 | 136 | |||||||||||||||||||
Total dividend income | 5 | 195 | 763 | 242 | |||||||||||||||||||
| Fee income: | |||||||||||||||||||||||
Non-control/non-affiliate investments | 82 | 583 | 421 | 834 | |||||||||||||||||||
Affiliate investments | — | — | — | 37 | |||||||||||||||||||
Control investment | — | — | 6 | — | |||||||||||||||||||
Total fee income | 82 | 583 | 427 | 871 | |||||||||||||||||||
Total investment income | 10,432 | 11,416 | 21,378 | 21,907 | |||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Interest expense | 3,943 | 4,241 | 7,567 | 9,066 | |||||||||||||||||||
| Management fee | 2,056 | 1,876 | 4,076 | 3,710 | |||||||||||||||||||
| Income Incentive Fee | — | 809 | — | 809 | |||||||||||||||||||
| Capital Gains Fee | (2,988) | — | (1,916) | — | |||||||||||||||||||
| Professional fees | 352 | 489 | 759 | 876 | |||||||||||||||||||
| Administration fee | 423 | 439 | 874 | 1,007 | |||||||||||||||||||
| Other expenses | 398 | 327 | 765 | 654 | |||||||||||||||||||
| Total expenses | 4,184 | 8,181 | 12,125 | 16,122 | |||||||||||||||||||
Net investment income | 6,248 | 3,235 | 9,253 | 5,785 | |||||||||||||||||||
Net realized and unrealized gain (loss) on investments | |||||||||||||||||||||||
| Net realized loss on non-control/non-affiliate investments | (190) | (10,841) | (203) | (10,750) | |||||||||||||||||||
| Net realized gain on control investments | — | — | 278 | — | |||||||||||||||||||
| Income tax expense on net realized investment gains | — | — | (48) | — | |||||||||||||||||||
| Net unrealized appreciation (depreciation) on non-control/non-affiliate investments | (22,158) | 18,071 | (26,942) | 19,655 | |||||||||||||||||||
| Net unrealized appreciation on affiliate investments | 7,241 | 11,465 | 19,033 | 13,391 | |||||||||||||||||||
Net unrealized appreciation (depreciation) on control investment | — | 716 | (1,684) | 1,104 | |||||||||||||||||||
| Deferred tax benefit (expense) on investments net unrealized appreciation/depreciation | 35 | (205) | (6) | (271) | |||||||||||||||||||
| Net gain (loss) on investments | (15,072) | 19,206 | (9,572) | 23,129 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | (144) | (2,299) | |||||||||||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | (8,824) | $ | 22,441 | $ | (463) | $ | 26,615 | |||||||||||||||
Net investment income per common share – basic and diluted | $ | 0.47 | $ | 0.24 | $ | 0.69 | $ | 0.43 | |||||||||||||||
| Net increase (decrease) in net assets resulting from operations per common share – basic and diluted | $ | (0.66) | $ | 1.67 | $ | (0.03) | $ | 1.98 | |||||||||||||||
| Distributions declared per common share | $ | 0.29 | $ | 0.22 | $ | 0.57 | $ | 0.42 | |||||||||||||||
| Basic and diluted weighted average shares outstanding | 13,425,477 | 13,411,998 | 13,423,970 | 13,410,524 | |||||||||||||||||||
See Notes to Consolidated Financial Statements (unaudited).
4
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets (unaudited)
(Dollar amounts in thousands)
| Preferred Stock | Common Stock | Paid-in capital in excess of par | Total distributable earnings (losses) | Total net assets | |||||||||||||||||||||||||||||||||||||
| Number of shares | Par value | Number of shares | Par value | ||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2020 | — | $ | — | 13,409,559 | $ | 134 | $ | 187,124 | $ | (28,302) | $ | 158,956 | |||||||||||||||||||||||||||||
| Net increase in net assets resulting from operations: | |||||||||||||||||||||||||||||||||||||||||
| Net investment income | — | — | — | — | — | 5,785 | 5,785 | ||||||||||||||||||||||||||||||||||
| Net realized loss on investments, net of taxes | — | — | — | — | — | (10,750) | (10,750) | ||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | (2,299) | (2,299) | ||||||||||||||||||||||||||||||||||
| Net unrealized appreciation on investments, net of taxes | — | — | — | — | — | 33,879 | 33,879 | ||||||||||||||||||||||||||||||||||
| Distributions to stockholders: | |||||||||||||||||||||||||||||||||||||||||
Common stock issued from reinvestment of stockholder distributions | — | — | 6,376 | — | 60 | — | 60 | ||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | (5,633) | (5,633) | ||||||||||||||||||||||||||||||||||
| Common stock repurchased under Stock Repurchase Program | — | — | (700) | — | (5) | — | (5) | ||||||||||||||||||||||||||||||||||
| Net increase for the six month period ended June 30, 2021 | — | — | 5,676 | — | 55 | 20,982 | 21,037 | ||||||||||||||||||||||||||||||||||
| Balances at June 30, 2021 | — | $ | — | 13,415,235 | $ | 134 | $ | 187,179 | $ | (7,320) | $ | 179,993 | |||||||||||||||||||||||||||||
| Balances at March 31, 2021 | — | $ | — | 13,411,962 | $ | 134 | $ | 187,146 | $ | (26,810) | $ | 160,470 | |||||||||||||||||||||||||||||
| Net increase in net assets resulting from operations: | |||||||||||||||||||||||||||||||||||||||||
| Net investment income | — | — | — | — | — | 3,235 | 3,235 | ||||||||||||||||||||||||||||||||||
| Net realized loss on investments, net of taxes | — | — | — | — | — | (10,841) | (10,841) | ||||||||||||||||||||||||||||||||||
| Net unrealized appreciation on investments, net of taxes | — | — | — | — | — | 30,047 | 30,047 | ||||||||||||||||||||||||||||||||||
| Distributions to stockholders: | |||||||||||||||||||||||||||||||||||||||||
Common stock issued from reinvestment of stockholder distributions | — | — | 3,273 | — | 33 | — | 33 | ||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | (2,951) | (2,951) | ||||||||||||||||||||||||||||||||||
| Net increase for the three month period ended June 30, 2021 | — | — | 3,273 | — | 33 | 19,490 | 19,523 | ||||||||||||||||||||||||||||||||||
| Balances at June 30, 2021 | — | $ | — | 13,415,235 | $ | 134 | $ | 187,179 | $ | (7,320) | $ | 179,993 | |||||||||||||||||||||||||||||
5
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets (unaudited)
(Dollar amounts in thousands)
| Preferred Stock | Common Stock | Paid-in capital in excess of par | Total distributable earnings (losses) | Total net assets | |||||||||||||||||||||||||||||||||||||
| Number of shares | Par value | Number of shares | Par value | ||||||||||||||||||||||||||||||||||||||
| Balances at December 31, 2021 | — | $ | — | 13,422,413 | $ | 134 | $ | 185,113 | $ | 18,497 | $ | 203,744 | |||||||||||||||||||||||||||||
| Net decrease in net assets resulting from operations: | |||||||||||||||||||||||||||||||||||||||||
| Net investment income | — | — | — | — | — | 9,253 | 9,253 | ||||||||||||||||||||||||||||||||||
| Net realized gain on investments, net of taxes | — | — | — | — | — | 27 | 27 | ||||||||||||||||||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | — | (144) | (144) | ||||||||||||||||||||||||||||||||||
| Net unrealized depreciation on investments, net of taxes | — | — | — | — | — | (9,599) | (9,599) | ||||||||||||||||||||||||||||||||||
| Distributions to stockholders: | |||||||||||||||||||||||||||||||||||||||||
Common stock issued from reinvestment of stockholder distributions | — | — | 7,364 | — | 82 | — | 82 | ||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | (7,651) | (7,651) | ||||||||||||||||||||||||||||||||||
| Net increase (decrease) for the six month period ended June 30, 2022 | — | — | 7,364 | — | 82 | (8,114) | (8,032) | ||||||||||||||||||||||||||||||||||
| Balances at June 30, 2022 | — | $ | — | 13,429,777 | $ | 134 | $ | 185,195 | $ | 10,383 | $ | 195,712 | |||||||||||||||||||||||||||||
| Balances at March 31, 2022 | — | $ | — | 13,425,429 | $ | 134 | $ | 185,152 | $ | 23,100 | $ | 208,386 | |||||||||||||||||||||||||||||
| Net decrease in net assets resulting from operations: | |||||||||||||||||||||||||||||||||||||||||
| Net investment income | — | — | — | — | — | 6,248 | 6,248 | ||||||||||||||||||||||||||||||||||
| Net realized loss on investments, net of taxes | — | — | — | — | — | (190) | (190) | ||||||||||||||||||||||||||||||||||
| Net unrealized depreciation on investments, net of taxes | — | — | — | — | — | (14,882) | (14,882) | ||||||||||||||||||||||||||||||||||
| Distributions to stockholders: | |||||||||||||||||||||||||||||||||||||||||
Common stock issued from reinvestment of stockholder distributions | — | — | 4,348 | — | 43 | — | 43 | ||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | (3,893) | (3,893) | ||||||||||||||||||||||||||||||||||
| Net increase (decrease) for the three month period ended June 30, 2022 | — | — | 4,348 | — | 43 | (12,717) | (12,674) | ||||||||||||||||||||||||||||||||||
| Balances at June 30, 2022 | — | $ | — | 13,429,777 | $ | 134 | $ | 185,195 | $ | 10,383 | $ | 195,712 | |||||||||||||||||||||||||||||
See Notes to Consolidated Financial Statements (unaudited).
6
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(Dollar amounts in thousands)
| Six Months Ended June 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | (463) | $ | 26,615 | |||||||
| Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used in operating activities: | |||||||||||
| Net realized (gain) loss on investments | (75) | 10,750 | |||||||||
| Income tax expense on net realized investment gains | 48 | — | |||||||||
Loss on extinguishment of debt | 144 | 2,299 | |||||||||
| Net unrealized (appreciation) depreciation on investments, net of taxes | 9,599 | (33,879) | |||||||||
Amortization of Net Loan Fees | (794) | (1,521) | |||||||||
Amendment fees collected | 112 | 97 | |||||||||
Payment-in-kind interest and dividend income | (316) | (943) | |||||||||
| Accretion of interest income on Structured Finance Notes | (4,785) | (4,670) | |||||||||
Amortization of debt issuance costs | 751 | 888 | |||||||||
Amortization of intangible asset | 205 | 111 | |||||||||
Purchase and origination of portfolio investments | (122,608) | (128,848) | |||||||||
Proceeds from principal payments on portfolio investments | 54,525 | 100,817 | |||||||||
Proceeds from sale or redemption of portfolio investments | 12,179 | 10,294 | |||||||||
| Proceeds from distributions received from Structured Finance Notes | 11,214 | 6,356 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Interest receivable | (408) | 247 | |||||||||
Interest payable | 29 | 912 | |||||||||
Payable to adviser and affiliates | (3,545) | 100 | |||||||||
Receivable for investment sold | 14,893 | — | |||||||||
Payable for investments purchased | (4,883) | 7,952 | |||||||||
Other assets and liabilities | (535) | 249 | |||||||||
| Net cash used in operating activities | (34,713) | (2,174) | |||||||||
| Cash flows from financing activities | |||||||||||
Distributions paid to stockholders | (7,569) | (5,573) | |||||||||
Borrowings under revolving lines of credit | 49,850 | 42,400 | |||||||||
Repayments under revolving lines of credit | (15,750) | (50,400) | |||||||||
Repayments of SBA debentures | (19,000) | (9,765) | |||||||||
| Redemption of unsecured notes | — | (98,525) | |||||||||
Proceeds from unsecured notes offering, net of discounts | — | 121,791 | |||||||||
Payment of deferred financing costs | (1,022) | (298) | |||||||||
Repurchases of common stock under Stock Repurchase Program | — | (5) | |||||||||
| Net cash provided by (used in) financing activities | 6,509 | (375) | |||||||||
| Net decrease in cash | (28,204) | (2,549) | |||||||||
| Cash at beginning of period | 43,048 | 37,708 | |||||||||
| Cash at end of period | $ | 14,844 | $ | 35,159 | |||||||
| Supplemental Disclosure of Cash Flow Information: | |||||||||||
Cash paid for interest | $ | 6,787 | $ | 7,266 | |||||||
Reinvestment of distributions to stockholders | 82 | 60 | |||||||||
See Notes to Consolidated Financial Statements (unaudited).
7
OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments (unaudited)
June 30, 2022
(Dollar amounts in thousands)
| Portfolio Company (1) Investment Type | Industry | Interest Rate (2) | Spread Above Index (2) | Initial Acquisition Date | Maturity | Principal Amount | Amortized Cost | Fair Value (3) | Percent of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-control/Non-affiliate Investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Equity Investments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 24 Seven Holdco, LLC (15) | Temporary Help Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 7.60% | (L +6.00%) | 1/28/2022 | 11/16/2027 | $ | 8,955 | $ | 8,893 | $ | 8,861 | 4.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Aegion Corporation (15) (22) | Water and Sewer Line and Related Structures Construction | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.27% | (L +4.75%) | 4/1/2021 | 5/17/2028 | 2,426 | 2,395 | 2,250 | 1.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Allen Media, LLC (14) (15) | Cable and Other Subscription Programming | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 7.70% | (SOFR +5.50%) | 3/2/2021 | 2/10/2027 | 3,788 | 3,782 | 3,393 | 1.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
| All Star Auto Lights, Inc. (4) (15) | Motor Vehicle Parts (Used) Merchant Wholesalers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 8.41% | (L +6.50%) | 12/19/2019 | 8/20/2025 | 23,217 | 22,935 | 23,217 | 11.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Astro One Acquisition Corporation | Other Miscellaneous Nondurable Goods Merchant Wholesalers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 10.75% | (L +8.50%) | 1/31/2022 | 9/14/2029 | 3,000 | 2,656 | 2,486 | 1.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Asurion, LLC | Communication Equipment Repair and Maintenance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.92% | (L +5.25%) | 6/28/2022 | 1/31/2028 | 2,000 | 1,745 | 1,718 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Atlantis Holding, LLC (15) | Electronics and Appliance Stores | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 9.30% | (SOFR +7.25%) | 3/29/2022 | 3/31/2029 | 8,421 | 8,116 | 7,716 | 3.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Autokiniton US Holdings, Inc. (14) (15) | Automotive Parts and Accessories Stores | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.62% | (L +4.50%) | 3/26/2021 | 4/6/2028 | 2,683 | 2,675 | 2,488 | 1.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Avison Young (15) (22) | Nonresidential Property Managers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.99% | (L +5.75%) | 11/25/2021 | 1/31/2026 | 3,966 | 3,951 | 3,940 | 2.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Bass Pro Group, LLC (14) (15) | Sporting Goods Stores | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.42% | (L +3.75%) | 2/26/2021 | 3/6/2028 | 979 | 974 | 895 | 0.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
8
OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
June 30, 2022
(Dollar amounts in thousands)
| Portfolio Company (1) Investment Type | Industry | Interest Rate (2) | Spread Above Index (2) | Initial Acquisition Date | Maturity | Principal Amount | Amortized Cost | Fair Value (3) | Percent of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Baymark Health Services, Inc. (15) | Outpatient Mental Health & Sub. Abuse Centers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 10.17% | (L +8.50%) | 6/10/2021 | 6/11/2028 | $ | 4,962 | $ | 4,898 | $ | 4,997 | 2.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (5) | 10.17% | (L +8.50%) | 6/10/2021 | 6/11/2028 | 2,760 | 2,645 | 2,818 | 1.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 7,722 | 7,543 | 7,815 | 4.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Boca Home Care Holdings, Inc. (20) | Services for the Elderly and Persons with Disabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (5) (15) | 8.80% | (SOFR +6.50%) | 2/25/2022 | 2/25/2027 | 9,669 | 9,579 | 9,421 | 4.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Revolver) (5) | n/m (18) | (SOFR +6.50%) | 2/25/2022 | 2/25/2027 | — | (12) | (33) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity (1,290 Class A units) (10) (13) | 2/25/2022 | — | 1,290 | 1,178 | 0.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,669 | 10,857 | 10,566 | 5.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Constellis Holdings, LLC (10) | Other Justice, Public Order, and Safety Activities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity (20,628 common shares) | 3/27/2020 | 703 | 29 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convergint Technologies Holdings, LLC | Security Systems Services (except Locksmiths) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 8.42% | (L +6.75%) | 9/28/2018 | 3/30/2029 | 4,838 | 4,827 | 4,795 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Corel Inc. (14) (15) | Software Publishers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.57% | (L +5.00%) | 3/2/2021 | 7/2/2026 | 636 | 635 | 610 | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Creation Technologies (15) (22) | Bare Printed Circuit Board Manufacturing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.46% | (L +5.50%) | 9/24/2021 | 10/5/2028 | 2,000 | 1,986 | 1,761 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dessert Holdings | Ice Cream and Frozen Dessert Manufacturing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 9.50% | (L +7.25%) | 2/2/2022 | 6/8/2029 | 1,667 | 1,639 | 1,593 | 0.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| DHX Media Ltd. (14) (15) (22) | Motion Picture and Video Production | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.92% | (L +4.25%) | 3/19/2021 | 3/18/2028 | 3,954 | 3,913 | 3,741 | 1.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Diamond Sports Group, LLC (14) (15) | Television Broadcasting | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 9.18% | (SOFR +8.00%) | 3/9/2022 | 5/25/2026 | 254 | 247 | 253 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 4.43% | (SOFR +3.25%) | 11/19/2019 | 8/24/2026 | 1,945 | 1,945 | 473 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2,199 | 2,192 | 726 | 0.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
9
OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
June 30, 2022
(Dollar amounts in thousands)
| Portfolio Company (1) Investment Type | Industry | Interest Rate (2) | Spread Above Index (2) | Initial Acquisition Date | Maturity | Principal Amount | Amortized Cost | Fair Value (3) | Percent of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Directv Financing, LLC (14) (15) | Wired Telecommunications Carriers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.67% | (L +5.00%) | 7/22/2021 | 8/2/2027 | $ | 2,097 | $ | 2,093 | $ | 1,936 | 1.0 | % | ||||||||||||||||||||||||||||||||||||||||||||
| East West Manufacturing (15) | Fluid Power Pump and Motor Manufacturing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 7.28% | (SOFR +5.75%) | 2/11/2022 | 12/22/2028 | 1,959 | 1,941 | 1,891 | 1.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (5) | n/m (18) | (SOFR +2.88%) | 2/11/2022 | 12/22/2028 | — | (3) | (10) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 1,959 | 1,938 | 1,881 | 1.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eblens Holdings, Inc. (20) | Shoe Store | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated Loan (6) (11) | 12.50% cash / 1.50% PIK | N/A | 7/13/2017 | 1/13/2023 | 9,261 | 9,210 | 7,142 | 3.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity (71,250 Class A units) (10) | 7/13/2017 | 713 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,261 | 9,923 | 7,142 | 3.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Electrical Components International, Inc. | Current-Carrying Wiring Device Manufacturing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 10.03% | (L +8.50%) | 4/8/2021 | 6/26/2026 | 3,679 | 3,314 | 3,471 | 1.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| EnergySolutions, LLC (14) (15) | Hazardous Waste Treatment and Disposal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.00% | (L +3.75%) | 7/8/2021 | 5/9/2025 | 1,778 | 1,775 | 1,663 | 0.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Envocore Holding, LLC (F/K/A LRI Holding, LLC) (4) (19) | Electrical Contractors and Other Wiring Installation Contractors | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 7.50% | N/A | 12/31/2021 | 12/31/2025 | 6,391 | 6,391 | 6,391 | 3.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (6) | 10.00% PIK | N/A | 12/31/2021 | 12/31/2026 | 6,751 | 6,584 | 3,221 | 1.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Revolver) (5) | 7.50% | N/A | 11/29/2021 | 12/31/2025 | 771 | 771 | 771 | 0.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Participation Rights (23) | 12/31/2021 | — | 4,722 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 13,913 | 18,468 | 10,383 | 5.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Excelin Home Health, LLC (4) | Home Health Care Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 11.75% | (L +9.50%) | 10/25/2018 | 9/30/2025 | 4,250 | 4,172 | 4,208 | 2.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| GGC Aerospace Topco L.P. | Other Aircraft Parts and Auxiliary Equipment Manufacturing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity (368,852 Class A units) (10) | 12/29/2017 | 450 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity (40,984 Class B units) (10) | 12/29/2017 | 50 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 500 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
10
OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
June 30, 2022
(Dollar amounts in thousands)
| Portfolio Company (1) Investment Type | Industry | Interest Rate (2) | Spread Above Index (2) | Initial Acquisition Date | Maturity | Principal Amount | Amortized Cost | Fair Value (3) | Percent of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Honor HN Buyer Inc | Services for the Elderly and Persons with Disabilities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (15) | 8.25% | (L +6.00%) | 10/15/2021 | 10/15/2027 | $ | 6,565 | $ | 6,449 | $ | 6,352 | 3.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (5) (15) | 8.25% | (L +6.00%) | 10/15/2021 | 10/15/2027 | 1,913 | 1,859 | 1,779 | 0.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Revolver) (5) | n/m (18) | (L +6.00%) | 10/15/2021 | 10/15/2027 | — | (13) | (25) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 8,478 | 8,295 | 8,106 | 4.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Idera | Computer and Computer Peripheral Equipment and Software Merchant Wholesalers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 7.82% | (L +6.75%) | 1/27/2022 | 3/2/2029 | 4,000 | 4,000 | 3,744 | 1.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Inergex Holdings, LLC | Other Computer Related Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (11) | 9.25% cash / 1.0% PIK | (L +8.00%) | 10/1/2018 | 10/1/2024 | 15,260 | 15,001 | 15,260 | 7.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Revolver) (5) | n/m (18) | (L +7.00%) | 10/1/2018 | 10/1/2024 | — | (11) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 15,260 | 14,990 | 15,260 | 7.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intouch Midco Inc. (15) (22) | All Other Professional, Scientific, and Technical Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.42% | (L +4.75%) | 12/20/2019 | 8/24/2025 | 2,894 | 2,862 | 2,846 | 1.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Ivanti Software, Inc. (14) (15) | Software Publishers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.85% | (L +4.25%) | 3/26/2021 | 12/1/2027 | 2,978 | 2,988 | 2,573 | 1.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| JP Intermediate B, LLC (15) | Drugs and Druggists' Sundries Merchant Wholesalers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.74% | (L +5.50%) | 1/14/2021 | 11/15/2025 | 5,553 | 5,379 | 4,859 | 2.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Karman Buyer Corp (14) (15) | Advertising Agencies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.17% | (L +4.50%) | 3/2/2022 | 10/28/2027 | 2,296 | 2,264 | 2,119 | 1.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| KNS Acquisition Corp. (14) (15) | Electronic Shopping and Mail-Order Houses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 8.50% | (L +6.25%) | 4/16/2021 | 4/21/2027 | 6,869 | 6,830 | 6,635 | 3.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Kreg LLC | Other Ambulatory Health Care Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (15) | 8.50% | (L +6.25%) | 12/20/2021 | 12/20/2026 | 20,244 | 20,108 | 19,889 | 10.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Revolver) (5) | n/m (18) | (L +6.25%) | 12/20/2021 | 12/20/2026 | — | (15) | (39) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 20,244 | 20,093 | 19,850 | 10.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
11
OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
June 30, 2022
(Dollar amounts in thousands)
| Portfolio Company (1) Investment Type | Industry | Interest Rate (2) | Spread Above Index (2) | Initial Acquisition Date | Maturity | Principal Amount | Amortized Cost | Fair Value (3) | Percent of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| LogMeIn, Inc. (14) (15) | Data Processing, Hosting, and Related Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.35% | (L +4.75%) | 3/26/2021 | 8/31/2027 | $ | 2,961 | $ | 2,960 | $ | 2,287 | 1.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Magenta Buyer LLC (14) (15) | Software Publishers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.98% | (L +4.75%) | 7/28/2021 | 7/27/2028 | 4,838 | 4,825 | 4,363 | 2.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| McGraw Hill Global Education Holdings, LLC (14) (15) | All Other Publishers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.55% | (L +4.75%) | 4/1/2021 | 7/28/2028 | 2,298 | 2,278 | 2,088 | 1.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Metasource (15) | All Other Business Support Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 7.78% | (SOFR +6.25%) | 5/17/2022 | 5/17/2027 | 2,793 | 2,766 | 2,766 | 1.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (5) | n/m (18) | (SOFR +6.25%) | 5/17/2022 | 5/17/2024 | — | (11) | (11) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2,793 | 2,755 | 2,755 | 1.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Milrose Consultants, LLC (4) | Administrative Management and General Management Consulting Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (15) | 8.75% | (L +6.50%) | 7/16/2019 | 7/16/2025 | 22,250 | 22,250 | 21,803 | 11.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Revolver) (5) | 8.75% | (L +6.50%) | 7/16/2019 | 7/16/2025 | 476 | 469 | 444 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 22,726 | 22,719 | 22,247 | 11.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Molded Devices, Inc. | Other Industrial Machinery Manufacturing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (15) | 7.00% | (L +6.00%) | 11/1/2021 | 11/1/2026 | 8,029 | 7,959 | 7,798 | 4.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (5) (15) | n/m (18) | (L +6.00%) | 11/1/2021 | 11/1/2026 | — | (6) | (42) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Revolver) (5) | 7.00% | (L +6.00%) | 11/1/2021 | 11/1/2026 | 603 | 594 | 575 | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 8,632 | 8,547 | 8,331 | 4.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Odyssey Logistics and Technology Corporation (14) (15) | Freight Transportation Arrangement | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.24% | (L +4.00%) | 4/5/2021 | 10/12/2024 | 987 | 977 | 950 | 0.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| One GI LLC | Offices of Other Holding Companies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (15) | 8.42% | (L +6.75%) | 12/13/2021 | 12/22/2025 | 7,545 | 7,414 | 7,221 | 3.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (5) (15) | n/m (18) | (L +6.75%) | 12/13/2021 | 12/13/2023 | — | (29) | (171) | (0.1) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Revolver) (5) | n/m (18) | (L +6.75%) | 12/13/2021 | 12/22/2025 | — | (25) | (62) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 7,545 | 7,360 | 6,988 | 3.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
12
OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
June 30, 2022
(Dollar amounts in thousands)
| Portfolio Company (1) Investment Type | Industry | Interest Rate (2) | Spread Above Index (2) | Initial Acquisition Date | Maturity | Principal Amount | Amortized Cost | Fair Value (3) | Percent of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Parfums Holding Company, Inc. (14) (15) | Cosmetics, Beauty Supplies, and Perfume Stores | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.67% | (L +4.00%) | 6/25/2019 | 6/30/2024 | $ | 1,462 | $ | 1,462 | $ | 1,384 | 0.7 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Peraton Inc. (14) (15) | Management Consulting Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.42% | (L +3.75%) | 4/2/2021 | 2/1/2028 | 408 | 408 | 384 | 0.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Planet Bingo, LLC (F/K/A 3rd Rock Gaming Holdings, LLC) (6) (10) | Software Publishers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 4.00% | N/A | 3/13/2018 | 3/12/2023 | 16,728 | 14,192 | 7,303 | 3.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
| PM Acquisition LLC (10) (20) | All Other General Merchandise Stores | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity (499 units) | 9/30/2017 | 499 | 1,119 | 0.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Professional Pipe Holdings, LLC | Plumbing, Heating, and Air-Conditioning Contractors | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 9.75% cash / 1.00% PIK | (L +9.75%) | 3/23/2018 | 3/24/2025 | 2,559 | 2,550 | 2,584 | 1.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| RC Buyer, Inc. | Other Automotive Mechanical and Electrical Repair and Maintenance | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 8.75% | (L +6.50%) | 6/24/2022 | 7/30/2029 | 1,125 | 1,080 | 1,080 | 0.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Reception Purchaser LLC (15) | Transportation and Warehousing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 8.20% | (SOFR +6.00%) | 4/28/2022 | 3/24/2028 | 5,109 | 5,034 | 5,034 | 2.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Resource Label Group, LLC (14) (15) | Commercial Printing (except Screen and Books) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.92% | (L +4.25%) | 7/2/2021 | 7/7/2028 | 3,420 | 3,411 | 3,207 | 1.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| RPLF Holdings, LLC (10) (13) | Software Publishers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity (345,339 Class A units) | 1/17/2018 | 492 | 735 | 0.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
13
OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
June 30, 2022
(Dollar amounts in thousands)
| Portfolio Company (1) Investment Type | Industry | Interest Rate (2) | Spread Above Index (2) | Initial Acquisition Date | Maturity | Principal Amount | Amortized Cost | Fair Value (3) | Percent of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| RSA Security (15) | Computer and Computer Peripheral Equipment and Software Merchant Wholesalers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (14) | 5.93% | (L +4.75%) | 4/16/2021 | 4/27/2028 | $ | 2,783 | $ | 2,769 | $ | 2,412 | 1.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 8.97% | (L +7.75%) | 4/16/2021 | 4/27/2029 | 4,450 | 4,396 | 4,049 | 2.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 7,233 | 7,165 | 6,461 | 3.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| RumbleOn, Inc. (15) (22) | Other Industrial Machinery Manufacturing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 9.25% | (L +8.25%) | 8/31/2021 | 8/31/2026 | 4,169 | 3,968 | 3,884 | 2.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (5) | 9.25% | (L +8.25%) | 8/31/2021 | 2/23/2023 | 1,261 | 1,249 | 1,139 | 0.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants (warrants to purchase up to $600,000 in common stock) | 8/31/2021 | 2/28/2023 (12) | 200 | 2 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,430 | 5,417 | 5,025 | 2.6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sentry Centers Holdings, LLC (10) (13) | Convention and Trade Show Organizers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Equity (1,603 Series B units) | 9/4/2020 | 160 | 101 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Signal Parent, Inc. (14) (15) | New Single-Family Housing Construction (except For-Sale Builders) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 5.17% | (L +3.50%) | 3/25/2021 | 4/3/2028 | 1,831 | 1,815 | 1,611 | 0.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Southern Technical Institute, LLC (4) (23) | Colleges, Universities, and Professional Schools | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity appreciation rights | 6/27/2018 | — | 7,192 | 3.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Spring Education Group, Inc. (F/K/A SSH Group Holdings, Inc.,) (15) | Child Day Care Services | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 10.50% | (L +8.25%) | 7/26/2018 | 7/30/2026 | 6,399 | 6,355 | 6,034 | 3.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| SSJA Bariatric Management LLC (15) | Offices of Physicians, Mental Health Specialists | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 7.20% | (SOFR +5.00%) | 8/26/2019 | 8/26/2024 | 9,725 | 9,683 | 9,679 | 4.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 7.20% | (SOFR +5.00%) | 12/31/2020 | 8/26/2024 | 1,051 | 1,044 | 1,046 | 0.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 7.20% | (SOFR +5.00%) | 12/8/2021 | 8/26/2024 | 2,647 | 2,626 | 2,634 | 1.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Revolver) (5) | n/m (18) | (SOFR +5.00%) | 8/26/2019 | 8/26/2024 | — | (3) | (3) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 13,423 | 13,350 | 13,356 | 6.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
14
OFS Capital Corporation and Subsidiaries
Consolidated Schedule of Investments - Continued (unaudited)
June 30, 2022
(Dollar amounts in thousands)
| Portfolio Company (1) Investment Type | Industry | Interest Rate (2) | Spread Above Index (2) | Initial Acquisition Date | Maturity | Principal Amount | Amortized Cost | Fair Value (3) | Percent of Net Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| SS Acquisition, LLC (15) | Sports and Recreation Instruction | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (8) | 7.87% | (L +6.87%) | 12/30/2021 | 12/30/2026 | $ | 3,042 | $ | 3,014 | $ | 3,016 | 1.5 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan (Delayed Draw) (5) | n/m (18) | (L +6.87%) | 12/30/2021 | 12/30/2026 | — | — | (15) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3,042 | 3,014 | 3,001 | 1.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Staples, Inc. (14) (15) (22) | Business to Business Electronic Markets | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 6.29% | (L +5.00%) | 6/24/2019 | 4/16/2026 | 2,915 | 2,866 | 2,548 | 1.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| STS Operating, Inc. | Industrial Machinery and Equipment Merchant Wholesalers | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Senior Secured Loan | 9.67% | (L +8.00%) | 5/15/2018 | 4/30/2026 | 9,073 | 9,071 | 9,035 | |||||||||||||||||||||||||||||||||||||||||||||||||