UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2010
OR
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o |
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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 001-33130
Triangle Capital Corporation
(Exact name of registrant as specified in its charter)
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Maryland
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06-1798488 |
(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.) |
|
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|
3700 Glenwood Avenue, Suite 530
Raleigh, North Carolina
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27612 |
(Address of principal executive offices)
|
|
(Zip Code) |
Registrants telephone number, including area code: (919) 719-4770
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report: N/A
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 þ 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 þ |
Non-accelerated filer o (Do not check if a smaller reporting company) |
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 þ
The number of shares outstanding of the registrants
Common Stock on May 3, 2010 was 12,007,146.
TRIANGLE CAPITAL CORPORATION
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
TRIANGLE CAPITAL CORPORATION
Consolidated Balance Sheets
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March 31, |
|
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December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Investments at fair value: |
|
|
|
|
|
|
|
|
NonControl / NonAffiliate investments (cost
of $154,460,897 and $143,239,223 at March 31, 2010
and December 31, 2009, respectively) |
|
$ |
149,994,248 |
|
|
$ |
138,281,894 |
|
Affiliate investments (cost of $44,331,959 and $47,934,280
at March 31, 2010 and December 31, 2009,
respectively) |
|
|
39,467,209 |
|
|
|
45,735,905 |
|
Control investments (cost of $20,060,678 and $18,767,587
at March 31, 2010 and December 31, 2009,
respectively) |
|
|
21,015,301 |
|
|
|
17,300,171 |
|
|
|
|
Total investments at fair value |
|
|
210,476,758 |
|
|
|
201,317,970 |
|
Cash and cash equivalents |
|
|
43,272,690 |
|
|
|
55,200,421 |
|
Interest and fees receivable |
|
|
1,240,315 |
|
|
|
676,961 |
|
Prepaid expenses and other current assets |
|
|
349,163 |
|
|
|
286,790 |
|
Deferred financing fees |
|
|
3,444,061 |
|
|
|
3,540,492 |
|
Property and equipment, net |
|
|
23,188 |
|
|
|
28,666 |
|
|
|
|
Total assets |
|
$ |
258,806,175 |
|
|
$ |
261,051,300 |
|
|
|
|
|
|
|
|
|
|
|
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|
Liabilities |
|
|
|
|
|
|
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|
Accounts payable and accrued liabilities |
|
$ |
1,030,064 |
|
|
$ |
2,222,177 |
|
Interest payable |
|
|
595,868 |
|
|
|
2,333,952 |
|
Dividends payable |
|
|
4,893,183 |
|
|
|
4,774,534 |
|
Taxes payable |
|
|
31,933 |
|
|
|
59,178 |
|
Deferred revenue |
|
|
37,500 |
|
|
|
75,000 |
|
Deferred income taxes |
|
|
614,267 |
|
|
|
577,267 |
|
SBA guaranteed debentures payable |
|
|
121,910,000 |
|
|
|
121,910,000 |
|
|
|
|
Total liabilities |
|
|
129,112,815 |
|
|
|
131,952,108 |
|
|
|
|
|
|
|
|
|
|
Net Assets |
|
|
|
|
|
|
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|
Common stock, $0.001 par value per share (150,000,000
shares authorized, 11,934,594 and 11,702,511 shares
issued and outstanding as of March 31, 2010 and December
31, 2009, respectively) |
|
|
11,935 |
|
|
|
11,703 |
|
Additional paid-in capital |
|
|
138,107,049 |
|
|
|
136,769,259 |
|
Investment income in excess of (less than) distributions |
|
|
(81,945 |
) |
|
|
1,070,452 |
|
Accumulated realized gains on investments |
|
|
647,364 |
|
|
|
448,164 |
|
Net unrealized depreciation of investments |
|
|
(8,991,043 |
) |
|
|
(9,200,386 |
) |
|
|
|
Total net assets |
|
|
129,693,360 |
|
|
|
129,099,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and net assets |
|
$ |
258,806,175 |
|
|
$ |
261,051,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value per share |
|
$ |
10.87 |
|
|
$ |
11.03 |
|
|
|
|
See accompanying notes.
3
TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Operations
|
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|
|
|
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|
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|
Three Months |
|
|
Three Months |
|
|
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Ended |
|
|
Ended |
|
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|
March 31, 2010 |
|
|
March 31, 2009 |
|
|
|
|
Investment income: |
|
|
|
|
|
|
|
|
Loan interest, fee and dividend income: |
|
|
|
|
|
|
|
|
NonControl / NonAffiliate investments |
|
$ |
4,801,642 |
|
|
$ |
4,191,620 |
|
Affiliate investments |
|
|
1,030,596 |
|
|
|
931,836 |
|
Control investments |
|
|
353,145 |
|
|
|
237,957 |
|
|
|
|
Total loan interest, fee and dividend income |
|
|
6,185,383 |
|
|
|
5,361,413 |
|
|
|
|
|
|
|
|
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|
Paymentinkind interest income: |
|
|
|
|
|
|
|
|
NonControl / NonAffiliate investments |
|
|
827,601 |
|
|
|
819,942 |
|
Affiliate investments |
|
|
262,677 |
|
|
|
174,261 |
|
Control investments |
|
|
125,948 |
|
|
|
81,123 |
|
|
|
|
Total paymentinkind interest income |
|
|
1,216,226 |
|
|
|
1,075,326 |
|
|
|
|
|
|
|
|
|
|
Interest income from cash and cash equivalent investments |
|
|
83,298 |
|
|
|
67,761 |
|
|
|
|
Total investment income |
|
|
7,484,907 |
|
|
|
6,504,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,739,980 |
|
|
|
1,656,991 |
|
Amortization of deferred financing fees |
|
|
96,431 |
|
|
|
90,661 |
|
General and administrative expenses |
|
|
1,854,812 |
|
|
|
1,719,266 |
|
|
|
|
Total expenses |
|
|
3,691,223 |
|
|
|
3,466,918 |
|
|
|
|
Net investment income |
|
|
3,793,684 |
|
|
|
3,037,582 |
|
|
|
|
|
|
|
|
|
|
Realized gain on investments Non-Control/Non-Affiliate |
|
|
199,200 |
|
|
|
|
|
Net unrealized appreciation (depreciation) of investments |
|
|
209,343 |
|
|
|
(3,605,144 |
) |
|
|
|
Total net gain (loss) on investments before income taxes |
|
|
408,543 |
|
|
|
(3,605,144 |
) |
Provision for taxes |
|
|
52,898 |
|
|
|
15,795 |
|
|
|
|
Net increase (decrease) in net assets resulting from operations |
|
$ |
4,149,329 |
|
|
$ |
(583,357 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income per share basic and diluted |
|
$ |
0.32 |
|
|
$ |
0.43 |
|
|
|
|
Net increase (decrease) in net assets resulting from
operations per share basic and diluted |
|
$ |
0.35 |
|
|
$ |
(0.08 |
) |
|
|
|
Dividends declared per common share |
|
$ |
0.41 |
|
|
$ |
0.40 |
|
|
|
|
Distributions of capital gains declared per common share |
|
$ |
|
|
|
$ |
0.05 |
|
|
|
|
Weighted average number of shares outstanding basic and
diluted |
|
|
11,877,688 |
|
|
|
6,997,411 |
|
|
|
|
See accompanying notes.
4
TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Changes in Net Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment |
|
|
Accumulated |
|
|
Unrealized |
|
|
|
|
|
|
Common Stock |
|
|
Additional |
|
|
Income |
|
|
Realized |
|
|
Appreciation |
|
|
Total |
|
|
|
Number |
|
|
Par |
|
|
Paid In |
|
|
in Excess of |
|
|
Gains on |
|
|
(Depreciation) of |
|
|
Net |
|
|
|
of Shares |
|
|
Value |
|
|
Capital |
|
|
Distributions |
|
|
Investments |
|
|
Investments |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2009 |
|
|
6,917,363 |
|
|
$ |
6,917 |
|
|
$ |
87,836,786 |
|
|
$ |
2,115,157 |
|
|
$ |
356,495 |
|
|
$ |
1,109,808 |
|
|
$ |
91,425,163 |
|
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,037,582 |
|
|
|
|
|
|
|
|
|
|
|
3,037,582 |
|
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
136,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136,200 |
|
Net unrealized losses on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,605,144 |
) |
|
|
(3,605,144 |
) |
Provision for taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,795 |
) |
|
|
|
|
|
|
|
|
|
|
(15,795 |
) |
Dividends/distributions declared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,816,900 |
) |
|
|
(352,366 |
) |
|
|
|
|
|
|
(3,169,266 |
) |
Issuance of restricted stock |
|
|
133,000 |
|
|
|
133 |
|
|
|
(133 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeiture of restricted stock |
|
|
(2,700 |
) |
|
|
(3 |
) |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2009 |
|
|
7,047,663 |
|
|
$ |
7,047 |
|
|
$ |
87,972,856 |
|
|
$ |
2,320,044 |
|
|
$ |
4,129 |
|
|
$ |
(2,495,336 |
) |
|
$ |
87,808,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment |
|
|
Accumulated |
|
|
Net |
|
|
|
|
|
|
Common Stock |
|
|
Additional |
|
|
Income in |
|
|
Realized |
|
|
Unrealized |
|
|
Total |
|
|
|
Number |
|
|
Par |
|
|
Paid In |
|
|
Excess of (less than) |
|
|
Gains on |
|
|
Depreciation of |
|
|
Net |
|
|
|
of Shares |
|
|
Value |
|
|
Capital |
|
|
Distributions |
|
|
Investments |
|
|
Investments |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2010 |
|
|
11,702,511 |
|
|
$ |
11,703 |
|
|
$ |
136,769,259 |
|
|
$ |
1,070,452 |
|
|
$ |
448,164 |
|
|
$ |
(9,200,386 |
) |
|
$ |
129,099,192 |
|
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,793,684 |
|
|
|
|
|
|
|
|
|
|
|
3,793,684 |
|
Stock-based compensation |
|
|
|
|
|
|
|
|
|
|
248,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
248,556 |
|
Net realized gain on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
199,200 |
|
|
|
(179,200 |
) |
|
|
20,000 |
|
Net unrealized gains on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
388,543 |
|
|
|
388,543 |
|
Provision for taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(52,898 |
) |
|
|
|
|
|
|
|
|
|
|
(52,898 |
) |
Dividends/distributions declared |
|
|
100,046 |
|
|
|
100 |
|
|
|
1,215,461 |
|
|
|
(4,893,183 |
) |
|
|
|
|
|
|
|
|
|
|
(3,677,622 |
) |
Expenses
related to public offerings of common stock |
|
|
|
|
|
|
|
|
|
|
(2,255 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,255 |
) |
Issuance of restricted stock |
|
|
142,499 |
|
|
|
142 |
|
|
|
(142 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock withheld for payroll
taxes upon vesting of restricted
stock |
|
|
(10,462 |
) |
|
|
(10 |
) |
|
|
(123,830 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(123,840 |
) |
|
|
|
|
|
|
|
|
|
Balance, March 31, 2010 |
|
|
11,934,594 |
|
|
$ |
11,935 |
|
|
$ |
138,107,049 |
|
|
$ |
(81,945 |
) |
|
$ |
647,364 |
|
|
$ |
(8,991,043 |
) |
|
$ |
129,693,360 |
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
5
TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
Three Months |
|
|
|
Ended |
|
|
Ended |
|
|
|
March 31, |
|
|
March 31, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets resulting from operations |
|
$ |
4,149,329 |
|
|
$ |
(583,357 |
) |
Adjustments to reconcile net increase (decrease) in net assets
resulting from operations to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Purchases of portfolio investments |
|
|
(14,143,949 |
) |
|
|
(9,193,735 |
) |
Repayments received/sales of portfolio investments |
|
|
6,520,580 |
|
|
|
2,246,284 |
|
Loan origination and other fees received |
|
|
301,875 |
|
|
|
175,000 |
|
Net realized gain on investments |
|
|
(199,200 |
) |
|
|
|
|
Net unrealized depreciation (appreciation) of investments |
|
|
(246,344 |
) |
|
|
3,604,584 |
|
Deferred income taxes |
|
|
37,000 |
|
|
|
560 |
|
Paymentinkind interest accrued, net of payments received |
|
|
(1,059,516 |
) |
|
|
(648,221 |
) |
Amortization of deferred financing fees |
|
|
96,431 |
|
|
|
90,661 |
|
Recognition of loan origination and other fees |
|
|
(215,033 |
) |
|
|
(184,906 |
) |
Accretion of loan discounts |
|
|
(117,201 |
) |
|
|
(104,626 |
) |
Depreciation expense |
|
|
5,478 |
|
|
|
5,571 |
|
Stock-based compensation |
|
|
248,556 |
|
|
|
136,200 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Interest and fees receivable |
|
|
(563,354 |
) |
|
|
211,203 |
|
Prepaid expenses |
|
|
(62,373 |
) |
|
|
(199,720 |
) |
Accounts payable and accrued liabilities |
|
|
(1,192,113 |
) |
|
|
(799,537 |
) |
Interest payable |
|
|
(1,738,084 |
) |
|
|
(1,369,428 |
) |
Deferred revenue |
|
|
(37,500 |
) |
|
|
|
|
Taxes payable |
|
|
(27,245 |
) |
|
|
(30,436 |
) |
|
|
|
Net cash used in operating activities |
|
|
(8,242,663 |
) |
|
|
(6,643,903 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Cash dividends paid |
|
|
(3,558,973 |
) |
|
|
(2,764,780 |
) |
Cash distributions paid |
|
|
|
|
|
|
(352,366 |
) |
Expenses related to public offerings |
|
|
(2,255 |
) |
|
|
|
|
Common stock withheld for payroll taxes upon vesting of restricted stock |
|
|
(123,840 |
) |
|
|
|
|
|
|
|
Net cash used in financing activities |
|
|
(3,685,068 |
) |
|
|
(3,117,146 |
) |
|
|
|
Net decrease in cash and cash equivalents |
|
|
(11,927,731 |
) |
|
|
(9,761,049 |
) |
Cash and cash equivalents, beginning of period |
|
|
55,200,421 |
|
|
|
27,193,287 |
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
43,272,690 |
|
|
$ |
17,432,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
3,478,064 |
|
|
$ |
3,026,419 |
|
|
|
|
See accompanying notes.
6
TRIANGLE CAPITAL CORPORATION
Unaudited Consolidated Schedule of Investments
March 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
Type of Investment (1) (2) |
|
Principal Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
NonControl / NonAffiliate Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ambient Air Corporation (AA) and Peaden-Hobbs Mechanical, LLC (PHM) (5%)* |
|
Specialty Trade Contractors |
|
Subordinated Note-AA (12% Cash, 2% PIK, Due 03/11) |
|
$ |
3,236,386 |
|
|
$ |
3,185,018 |
|
|
$ |
3,185,018 |
|
|
|
|
|
Subordinated Note-AA (14% Cash, 4% PIK, Due 03/11) |
|
|
1,982,791 |
|
|
|
1,968,934 |
|
|
|
1,968,934 |
|
|
|
|
|
Common Stock-PHM (128,571 shares) |
|
|
|
|
|
|
128,571 |
|
|
|
105,100 |
|
|
|
|
|
Common Stock Warrants-AA (455 shares) |
|
|
|
|
|
|
142,361 |
|
|
|
643,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,219,177 |
|
|
|
5,424,884 |
|
|
|
5,902,452 |
|
American De-Rosa Lamparts, LLC and Hallmark Lighting (3%)* |
|
Wholesale and Distribution |
|
Subordinated Note (11.5% Cash, 3.75% PIK, Due 10/13) |
|
|
9,203,983 |
|
|
|
8,251,190 |
|
|
|
3,985,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,203,983 |
|
|
|
8,251,190 |
|
|
|
3,985,700 |
|
American Direct Marketing Resources, LLC (3%)* |
|
Direct Marketing Services |
|
Subordinated Note (12% Cash, 3% PIK, Due 03/15) |
|
|
4,188,639 |
|
|
|
4,122,062 |
|
|
|
4,122,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,188,639 |
|
|
|
4,122,062 |
|
|
|
4,122,062 |
|
Assurance Operations Corporation (2%)* |
|
Auto Components / |
|
Senior Note (6% Cash, 8% PIK, Due 06/11) |
|
|
2,533,680 |
|
|
|
2,083,680 |
|
|
|
2,083,680 |
|
|
|
Metal Fabrication |
|
Common Stock (300 shares) |
|
|
|
|
|
|
300,000 |
|
|
|
166,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,533,680 |
|
|
|
2,383,680 |
|
|
|
2,249,780 |
|
Botanical Laboratories, Inc. (8%)* |
|
Nutritional Supplement |
|
Senior Notes (14% Cash, Due 02/15) |
|
|
10,500,000 |
|
|
|
9,762,900 |
|
|
|
9,762,900 |
|
|
|
Manufacturing and Distribution |
|
Common Unit Warrants (998,680 Units) |
|
|
|
|
|
|
474,600 |
|
|
|
474,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,500,000 |
|
|
|
10,237,500 |
|
|
|
10,237,500 |
|
CRS Reprocessing, LLC (4%)* |
|
Fluid Reprocessing Services |
|
Subordinated Note (12% Cash, 2% PIK, Due 11/14) |
|
|
5,270,385 |
|
|
|
5,148,155 |
|
|
|
5,148,155 |
|
|
|
|
|
Common Unit Warrant (150 Units) |
|
|
|
|
|
|
33,187 |
|
|
|
33,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,270,385 |
|
|
|
5,181,342 |
|
|
|
5,181,342 |
|
CV Holdings, LLC (9%)* |
|
Specialty Healthcare Products |
|
Subordinated Note (12% Cash, 4% PIK, Due 09/13) |
|
|
11,334,261 |
|
|
|
10,548,870 |
|
|
|
10,548,870 |
|
|
|
Manufacturer |
|
Royalty rights |
|
|
|
|
|
|
874,400 |
|
|
|
949,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,334,261 |
|
|
|
11,423,270 |
|
|
|
11,498,170 |
|
Electronic Systems Protection, Inc. (3%)* |
|
Power Protection Systems Manufacturing |
|
Subordinated Note (12% Cash, 2% PIK, Due 12/15) |
|
|
3,136,518 |
|
|
|
3,113,089 |
|
|
|
2,888,901 |
|
|
|
|
|
Senior Note (8.3% Cash, Due 01/14) |
|
|
888,728 |
|
|
|
888,728 |
|
|
|
888,728 |
|
|
|
|
|
Common Stock (500 shares) |
|
|
|
|
|
|
285,000 |
|
|
|
96,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,025,246 |
|
|
|
4,286,817 |
|
|
|
3,874,229 |
|
Energy
Hardware Holdings, LLC
(0%)* |
|
Machined Parts Distribution |
|
Voting Units (4,833 units) |
|
|
|
|
|
|
4,833 |
|
|
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,833 |
|
|
|
600,000 |
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
Type of Investment (1) (2) |
|
Principal Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
Fire Sprinkler Systems, Inc. (1%)* |
|
Specialty Trade Contractors |
|
Subordinated Notes (11%-12.5% PIK, Due 04/11) |
|
$ |
2,765,917 |
|
|
$ |
2,373,242 |
|
|
$ |
750,000 |
|
|
|
|
|
Common Stock (370 shares) |
|
|
|
|
|
|
369,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,765,917 |
|
|
|
2,742,866 |
|
|
|
750,000 |
|
Frozen Specialties, Inc. (6%)* |
|
Frozen Foods Manufacturer |
|
Subordinated Note (13% Cash, 5% PIK, Due 07/14) |
|
|
7,759,048 |
|
|
|
7,625,910 |
|
|
|
7,625,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,759,048 |
|
|
|
7,625,910 |
|
|
|
7,625,910 |
|
Garden Fresh Restaurant Corp. (3%)* |
|
Restaurant |
|
2nd Lien Note (7.8% Cash, Due 12/11) |
|
|
3,000,000 |
|
|
|
3,000,000 |
|
|
|
3,000,000 |
|
|
|
|
|
Membership Units (5,000 units) |
|
|
|
|
|
|
500,000 |
|
|
|
778,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000,000 |
|
|
|
3,500,000 |
|
|
|
3,778,800 |
|
Gerli & Company (1%)* |
|
Specialty Woven Fabrics |
|
Subordinated Note (0.69% PIK, Due 08/11) |
|
|
3,696,132 |
|
|
|
3,133,591 |
|
|
|
1,817,000 |
|
|
|
Manufacturer |
|
Subordinated Note (6.25% Cash, 11.75% PIK, Due 08/11) |
|
|
124,073 |
|
|
|
120,000 |
|
|
|
120,000 |
|
|
|
|
|
Common Stock Warrants (56,559 shares) |
|
|
|
|
|
|
83,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,820,205 |
|
|
|
3,337,005 |
|
|
|
1,937,000 |
|
Grindmaster-Cecilware Corp. (4%)* |
|
Food Services Equipment Manufacturer |
|
Subordinated Note (11% Cash, 3% PIK, Due 03/15) |
|
|
5,844,297 |
|
|
|
5,737,151 |
|
|
|
5,737,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,844,297 |
|
|
|
5,737,151 |
|
|
|
5,737,151 |
|
Inland Pipe Rehabilitation Holding Company LLC (11%)* |
|
Cleaning and Repair Services |
|
Subordinated Note (14% Cash, Due 01/14) |
|
|
8,108,641 |
|
|
|
7,329,114 |
|
|
|
7,329,114 |
|
|
|
|
|
Subordinated Note (18% Cash, Due 01/14) |
|
|
3,750,000 |
|
|
|
3,693,060 |
|
|
|
3,693,060 |
|
|
|
|
|
Membership Interest Purchase Warrant (2.9%) |
|
|
|
|
|
|
853,500 |
|
|
|
3,742,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,858,641 |
|
|
|
11,875,674 |
|
|
|
14,765,074 |
|
Jenkins Service, LLC (7%)* |
|
Restoration Services |
|
Subordinated Note (10.25% Cash, 7.25% PIK, Due 04/14) |
|
|
7,651,434 |
|
|
|
7,534,406 |
|
|
|
7,534,406 |
|
|
|
|
|
Convertible Note (10%, Due 04/14) |
|
|
1,375,000 |
|
|
|
1,344,342 |
|
|
|
1,344,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,026,434 |
|
|
|
8,878,748 |
|
|
|
8,878,748 |
|
Library
Systems & Services, LLC
(1%)* |
|
Municipal Business Services |
|
Subordinated Note (12% Cash, Due 03/11) |
|
|
1,000,000 |
|
|
|
979,277 |
|
|
|
979,277 |
|
|
|
|
|
Common Stock Warrants (112 shares) |
|
|
|
|
|
|
58,995 |
|
|
|
839,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000 |
|
|
|
1,038,272 |
|
|
|
1,818,877 |
|
Novolyte Technologies, Inc. (6%)* |
|
Specialty Manufacturing |
|
Subordinated Note (12% Cash, 5.5% PIK, Due 04/15) |
|
|
7,467,576 |
|
|
|
7,340,921 |
|
|
|
7,340,921 |
|
|
|
|
|
Preferred Units (641 units) |
|
|
|
|
|
|
640,818 |
|
|
|
592,500 |
|
|
|
|
|
Common Units (24,522 units) |
|
|
|
|
|
|
160,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,467,576 |
|
|
|
8,141,943 |
|
|
|
7,933,421 |
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
Type of Investment (1) (2) |
|
Principal Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
Syrgis Holdings, Inc. (3%)* |
|
Specialty Chemical Manufacturer |
|
Senior Notes (7.75%-10.75% Cash, Due 08/12-02/14) |
|
$ |
3,230,583 |
|
|
$ |
3,209,611 |
|
|
$ |
3,209,611 |
|
|
|
|
|
Common Units (2,114 units) |
|
|
|
|
|
|
1,000,000 |
|
|
|
665,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,230,583 |
|
|
|
4,209,611 |
|
|
|
3,874,911 |
|
TBG Anesthesia Management, LLC (6%)* |
|
Physician Management |
|
Senior Note (14% Cash, Due 11/14) |
|
|
8,000,000 |
|
|
|
7,595,281 |
|
|
|
7,595,281 |
|
|
|
Services |
|
Warrant (263 shares) |
|
|
|
|
|
|
276,100 |
|
|
|
281,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000,000 |
|
|
|
7,871,381 |
|
|
|
7,876,681 |
|
TrustHouse Services Group, Inc. (4%)* |
|
Food Management Services |
|
Subordinated Note (12% Cash, 2% PIK, Due 09/15) |
|
|
4,373,386 |
|
|
|
4,306,785 |
|
|
|
4,306,785 |
|
|
|
|
|
Class A Units (1,495 units) |
|
|
|
|
|
|
475,000 |
|
|
|
386,100 |
|
|
|
|
|
Class B Units (79 units) |
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,373,386 |
|
|
|
4,806,785 |
|
|
|
4,692,885 |
|
Tulsa Inspection Resources, Inc. (TIR) and Regent TIR Partners, |
|
Pipeline Inspection |
|
Subordinated Note (14% Cash, Due 03/14) |
|
|
5,000,000 |
|
|
|
4,641,748 |
|
|
|
4,641,748 |
|
LLC (RTIR) (4%)* |
|
Services |
|
Common Units RTIR (11 units) |
|
|
|
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
Common Stock Warrants TIR (7 shares) |
|
|
|
|
|
|
321,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000,000 |
|
|
|
5,162,748 |
|
|
|
4,641,748 |
|
Twin-Star International, Inc. (4%)* |
|
Consumer Home Furnishings Manufacturer |
|
Subordinated Note (12% Cash, 3% PIK, Due 04/14) |
|
|
4,500,000 |
|
|
|
4,452,967 |
|
|
|
4,420,000 |
|
|
|
|
|
Senior Note (4.25%, Due 04/13) |
|
|
1,246,851 |
|
|
|
1,246,851 |
|
|
|
1,192,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,746,851 |
|
|
|
5,699,818 |
|
|
|
5,612,700 |
|
Wholesale Floors, Inc. (3%)* |
|
Commercial Services |
|
Subordinated Note (12.5%Cash, 1.5% PIK, Due 06/14) |
|
|
3,500,000 |
|
|
|
3,369,106 |
|
|
|
3,369,106 |
|
|
|
|
|
Membership Interest Purchase Warrant (4.0%) |
|
|
|
|
|
|
132,800 |
|
|
|
34,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500,000 |
|
|
|
3,501,906 |
|
|
|
3,403,606 |
|
Yellowstone Landscape Group, Inc. (9%)* |
|
Landscaping Services |
|
Subordinated Note (12% Cash, 3% PIK, Due 04/14) |
|
|
11,379,409 |
|
|
|
11,175,441 |
|
|
|
11,175,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,379,409 |
|
|
|
11,175,441 |
|
|
|
11,175,441 |
|
Zoom Systems (6%)* |
|
Retail Kiosk Operator |
|
Subordinated Note (12.5 Cash, 1.5% PIK, Due 12/14) |
|
|
8,032,711 |
|
|
|
7,840,060 |
|
|
|
7,840,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,032,711 |
|
|
|
7,840,060 |
|
|
|
7,840,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal NonControl / NonAffiliate Investments |
|
|
|
|
|
|
154,080,429 |
|
|
|
154,460,897 |
|
|
|
149,994,248 |
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
Type of Investment (1) (2) |
|
Principal Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
Affiliate Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Point, LLC (4%)* |
|
Asset Management |
|
Senior Note (12% Cash, 7% PIK, Due 03/13) |
|
$ |
5,485,835 |
|
|
$ |
5,418,928 |
|
|
$ |
5,418,928 |
|
|
|
Software Provider |
|
Membership Units (10 units) |
|
|
|
|
|
|
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,485,835 |
|
|
|
5,918,928 |
|
|
|
5,418,928 |
|
Axxiom Manufacturing, Inc. (1%)* |
|
Industrial Equipment |
|
Common Stock (34,100 shares) |
|
|
|
|
|
|
200,000 |
|
|
|
635,800 |
|
|
|
Manufacturer |
|
Common Stock Warrant (1,000 shares) |
|
|
|
|
|
|
|
|
|
|
18,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
654,400 |
|
Brantley Transportation, LLC (Brantley Transportation) and Pine Street Holdings, LLC (Pine Street) |
|
Oil and Gas Services |
|
Subordinated Note Brantley Transportation (14% Cash, Due 12/12) |
|
|
3,800,000 |
|
|
|
3,719,360 |
|
|
|
1,958,000 |
|
(4) (2%)* |
|
|
|
Common Unit Warrants Brantley Transportation (4,560 common units) |
|
|
|
|
|
|
33,600 |
|
|
|
|
|
|
|
|
|
Preferred Units Pine Street (200 units) |
|
|
|
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
Common Unit Warrants Pine Street (2,220 units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,800,000 |
|
|
|
3,952,960 |
|
|
|
1,958,000 |
|
Dyson Corporation (6%)* |
|
Custom Forging and Fastener Supplies |
|
Subordinated Note (12% Cash, 3% PIK, Due 12/13) |
|
|
6,000,000 |
|
|
|
5,904,530 |
|
|
|
5,904,530 |
|
|
|
|
|
Class A Units (1,000,000 units) |
|
|
|
|
|
|
1,000,000 |
|
|
|
2,394,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000,000 |
|
|
|
6,904,530 |
|
|
|
8,298,730 |
|
Equisales, LLC (6%)* |
|
Energy Products and Services |
|
Subordinated Note (13% Cash, 4% PIK, Due 04/12) |
|
|
6,613,204 |
|
|
|
6,551,866 |
|
|
|
6,551,866 |
|
|
|
|
|
Class A Units (500,000 units) |
|
|
|
|
|
|
500,000 |
|
|
|
1,440,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,613,204 |
|
|
|
7,051,866 |
|
|
|
7,992,366 |
|
Flint Acquisition Corporation (3%)* |
|
Specialty Chemical Manufacturer |
|
Preferred Stock (9,875 shares) |
|
|
|
|
|
|
308,333 |
|
|
|
3,350,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
308,333 |
|
|
|
3,350,600 |
|
Genapure Corporation (0%)* |
|
Lab Testing Services |
|
Genapure Common Stock (5,594 shares) |
|
|
|
|
|
|
563,602 |
|
|
|
641,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
563,602 |
|
|
|
641,400 |
|
Technology Crops International (4%)* |
|
Supply Chain Management Services |
|
Subordinated Note (12% Cash, 5% PIK, Due 03/15) |
|
|
5,134,137 |
|
|
|
5,040,785 |
|
|
|
5,040,785 |
|
|
|
|
|
Common Units (50 Units) |
|
|
|
|
|
|
500,000 |
|
|
|
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,134,137 |
|
|
|
5,540,785 |
|
|
|
5,540,785 |
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
Type of Investment (1) (2) |
|
Principal Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
Waste Recyclers Holdings, LLC (4%)* |
|
Environmental and Facilities Services |
|
Subordinated Note (8% Cash, 7.5% PIK, Due 08/13) |
|
$ |
4,276,511 |
|
|
$ |
4,053,730 |
|
|
$ |
4,053,730 |
|
|
|
|
|
Subordinated Note (3% Cash, 12.5% PIK, Due 08/13) |
|
|
5,956,523 |
|
|
|
5,671,070 |
|
|
|
1,558,270 |
|
|
|
|
|
Class A Preferred Units (300 Units) |
|
|
|
|
|
|
2,251,100 |
|
|
|
|
|
|
|
|
|
Class B Preferred Units (985,372 Units) |
|
|
|
|
|
|
985,372 |
|
|
|
|
|
|
|
|
|
Common Unit Purchase Warrant (1,170,083 Units) |
|
|
|
|
|
|
748,900 |
|
|
|
|
|
|
|
|
|
Common Units (153,219 Units) |
|
|
|
|
|
|
180,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,233,034 |
|
|
|
13,890,955 |
|
|
|
5,612,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Affiliate Investments |
|
|
|
|
|
|
37,266,210 |
|
|
|
44,331,959 |
|
|
|
39,467,209 |
|
Control Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FCL Graphics, Inc. (3%)* |
|
Commercial Printing Services |
|
Senior Note (3.76% Cash, 2% PIK, Due 9/11) |
|
|
1,561,337 |
|
|
|
1,557,366 |
|
|
|
1,476,300 |
|
|
|
|
|
Senior Note (7.76% Cash, 2% PIK, Due 9/11) |
|
|
2,014,241 |
|
|
|
2,009,067 |
|
|
|
1,905,800 |
|
|
|
|
|
2nd Lien Note (2.76% Cash, 8% PIK, Due 12/11) |
|
|
3,265,134 |
|
|
|
2,994,804 |
|
|
|
1,065,000 |
|
|
|
|
|
Preferred Shares (35,000 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares (4,000 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members Interests (3,839 Units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,840,712 |
|
|
|
6,561,237 |
|
|
|
4,447,100 |
|
Fischbein, LLC (12%)* |
|
Packaging and Materials Handling |
|
Subordinated Note (13% Cash, 5.5% PIK, Due 05/13) |
|
|
7,700,590 |
|
|
|
7,601,845 |
|
|
|
7,601,845 |
|
|
|
Equipment Manufacturer |
|
Class A-1 Common Units (52.5% of Units) |
|
|
|
|
|
|
558,140 |
|
|
|
1,290,000 |
|
|
|
|
|
Class A Common Units (4,200,000 units) |
|
|
|
|
|
|
4,200,000 |
|
|
|
6,536,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,700,590 |
|
|
|
12,359,985 |
|
|
|
15,428,745 |
|
Weave Textiles, LLC (1%)* |
|
Specialty Woven Fabrics |
|
Senior Note (12% PIK, Due 01/11) |
|
|
284,456 |
|
|
|
284,456 |
|
|
|
284,456 |
|
|
|
Manufacturer |
|
Membership Units (425 units) |
|
|
|
|
|
|
855,000 |
|
|
|
855,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
284,456 |
|
|
|
1,139,456 |
|
|
|
1,139,456 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Control Investments |
|
|
|
|
|
|
14,825,758 |
|
|
|
20,060,678 |
|
|
|
21,015,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments, March 31, 2010(162%)* |
|
|
|
|
|
$ |
206,172,397 |
|
|
$ |
218,853,534 |
|
|
$ |
210,476,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Value as a percent of net assets |
|
(1) |
|
All debt investments are income producing. Common stock, preferred stock and all warrants are nonincome producing. |
|
(2) |
|
Disclosures of interest rates on notes include cash interest rates and paymentinkind (PIK) interest rates. |
|
(3) |
|
All investments are restricted as to resale and were valued at fair value as determined in good faith by the Board of Directors. |
|
(4) |
|
Pine Street Holdings, LLC is the majority owner of Brantley Transportation, LLC and its sole business purpose is its ownership of Brantley
Transportation, LLC. |
See accompanying notes.
11
TRIANGLE CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Investment |
|
Principal |
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
(1) (2) |
|
Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
NonControl / NonAffiliate Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ambient Air Corporation (AA) and Peaden-Hobbs Mechanical, LLC (PHM) (5%)* |
|
Specialty Trade Contractors |
|
Subordinated Note-AA (12% Cash, 2% PIK, Due 03/11) |
|
$ |
3,236,386 |
|
|
$ |
3,173,098 |
|
|
$ |
3,173,098 |
|
|
|
|
|
Subordinated Note-AA (14% Cash, 4% PIK, Due 03/11) |
|
|
1,982,791 |
|
|
|
1,965,757 |
|
|
|
1,965,757 |
|
|
|
|
|
Common Stock-PHM (128,571 shares) |
|
|
|
|
|
|
128,571 |
|
|
|
106,900 |
|
|
|
|
|
Common Stock Warrants-AA (455 shares) |
|
|
|
|
|
|
142,361 |
|
|
|
656,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,219,177 |
|
|
|
5,409,787 |
|
|
|
5,902,455 |
|
American De-Rosa Lamparts, LLC and Hallmark Lighting (3%)* |
|
Wholesale and Distribution |
|
Subordinated Note (11.5% Cash, 3.75% PIK, Due 10/13) |
|
|
8,861,819 |
|
|
|
8,244,709 |
|
|
|
3,893,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,861,819 |
|
|
|
8,244,709 |
|
|
|
3,893,299 |
|
American Direct Marketing Resources, LLC (3%)* |
|
Direct Marketing Services |
|
Subordinated Note (12% Cash, 3% PIK, Due 03/15) |
|
|
4,157,458 |
|
|
|
4,088,475 |
|
|
|
4,088,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,157,458 |
|
|
|
4,088,475 |
|
|
|
4,088,475 |
|
Art Headquarters, LLC (2%)* |
|
Retail, Wholesale and Distribution |
|
Subordinated Note (12% Cash, 2% PIK, Due 01/10) |
|
|
2,116,822 |
|
|
|
2,116,822 |
|
|
|
2,116,822 |
|
|
|
|
|
Membership unit warrants (15% of units (150 units)) |
|
|
|
|
|
|
40,800 |
|
|
|
220,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,116,822 |
|
|
|
2,157,622 |
|
|
|
2,336,822 |
|
Assurance
Operations Corporation
(2%)* |
|
Auto Components / |
|
Senior Note (6% Cash, Due 06/11) |
|
|
2,484,000 |
|
|
|
2,034,000 |
|
|
|
2,034,000 |
|
|
|
Metal Fabrication |
|
Common Stock (300 shares) |
|
|
|
|
|
|
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,484,000 |
|
|
|
2,334,000 |
|
|
|
2,034,000 |
|
CRS Reprocessing, LLC (2%)* |
|
Fluid Reprocessing Services |
|
Subordinated Note (12% Cash, 2% PIK, Due 11/14) |
|
|
3,005,333 |
|
|
|
2,929,233 |
|
|
|
2,929,233 |
|
|
|
|
|
Common Unit Warrant (107 Units) |
|
|
|
|
|
|
23,600 |
|
|
|
23,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,005,333 |
|
|
|
2,952,833 |
|
|
|
2,952,833 |
|
CV Holdings, LLC (9%)* |
|
Specialty Healthcare Products |
|
Subordinated Note (12% Cash, 4% PIK, Due 09/13) |
|
|
11,221,670 |
|
|
|
10,391,652 |
|
|
|
10,391,652 |
|
|
|
Manufacturer |
|
Royalty rights |
|
|
|
|
|
|
874,400 |
|
|
|
949,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,221,670 |
|
|
|
11,266,052 |
|
|
|
11,340,952 |
|
Electronic
Systems Protection, Inc.
(3%)* |
|
Power Protection Systems Manufacturing |
|
Subordinated Note (12% Cash, 2% PIK, Due 12/15) |
|
|
3,120,913 |
|
|
|
3,096,783 |
|
|
|
2,869,000 |
|
|
|
|
|
Senior Note (8.3% Cash, Due 01/14) |
|
|
895,953 |
|
|
|
895,953 |
|
|
|
895,953 |
|
|
|
|
|
Common Stock (500 shares) |
|
|
|
|
|
|
285,000 |
|
|
|
31,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,016,866 |
|
|
|
4,277,736 |
|
|
|
3,796,253 |
|
Energy Hardware Holdings, LLC (0%)* |
|
Machined Parts Distribution |
|
Voting Units (4,833 units) |
|
|
|
|
|
|
4,833 |
|
|
|
572,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,833 |
|
|
|
572,300 |
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Investment |
|
Principal |
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
(1) (2) |
|
Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
Fire Sprinkler Systems, Inc. (1%)* |
|
Specialty Trade Contractors |
|
Subordinated Notes (11%-12.5% PIK, Due 04/11) |
|
$ |
2,765,917 |
|
|
$ |
2,369,744 |
|
|
$ |
750,000 |
|
|
|
|
|
Common Stock (295 shares) |
|
|
|
|
|
|
294,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,765,917 |
|
|
|
2,664,368 |
|
|
|
750,000 |
|
Frozen Specialties, Inc. (6%)* |
|
Frozen Foods Manufacturer |
|
Subordinated Note (13% Cash, 5% PIK, Due 07/14) |
|
|
7,662,863 |
|
|
|
7,523,924 |
|
|
|
7,523,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,662,863 |
|
|
|
7,523,924 |
|
|
|
7,523,924 |
|
Garden Fresh Restaurant Corp. (3%)* |
|
Restaurant |
|
2nd Lien Note (7.8% Cash, Due 12/11) |
|
|
3,000,000 |
|
|
|
3,000,000 |
|
|
|
3,000,000 |
|
|
|
|
|
Membership Units (5,000 units) |
|
|
|
|
|
|
500,000 |
|
|
|
811,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000,000 |
|
|
|
3,500,000 |
|
|
|
3,811,300 |
|
Gerli & Company (1%)* |
|
Specialty Woven Fabrics |
|
Subordinated Note (0.69% PIK, Due 08/11) |
|
|
3,630,774 |
|
|
|
3,124,893 |
|
|
|
1,442,000 |
|
|
|
Manufacturer |
|
Subordinated Note (6.25% Cash, 11.75% PIK, Due 08/11) |
|
|
122,389 |
|
|
|
120,000 |
|
|
|
120,000 |
|
|
|
|
|
Common Stock Warrants (56,559 shares) |
|
|
|
|
|
|
83,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,753,163 |
|
|
|
3,328,307 |
|
|
|
1,562,000 |
|
Grindmaster-Cecilware Corp. (4%)* |
|
Food Services Equipment Manufacturer |
|
Subordinated Note (11% Cash, 3% PIK, Due 03/15) |
|
|
5,800,791 |
|
|
|
5,689,665 |
|
|
|
5,689,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,800,791 |
|
|
|
5,689,665 |
|
|
|
5,689,665 |
|
Inland Pipe Rehabilitation Holding Company LLC (11%)* |
|
Cleaning and Repair Services |
|
Subordinated Note (14% Cash, Due 01/14) |
|
|
8,108,641 |
|
|
|
7,279,341 |
|
|
|
7,279,341 |
|
|
|
|
|
Subordinated Note (18% Cash, Due 01/14) |
|
|
3,750,000 |
|
|
|
3,699,679 |
|
|
|
3,699,679 |
|
|
|
|
|
Membership Interest Purchase Warrant (2.9%) |
|
|
|
|
|
|
853,500 |
|
|
|
3,742,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,858,641 |
|
|
|
11,832,520 |
|
|
|
14,721,920 |
|
Jenkins Service, LLC (7%)* |
|
Restoration Services |
|
Subordinated Note (10.25% Cash, 7.25% PIK, Due 04/14) |
|
|
7,515,221 |
|
|
|
7,392,334 |
|
|
|
7,392,334 |
|
|
|
|
|
Convertible Note (10%, Due 04/14) |
|
|
1,375,000 |
|
|
|
1,342,799 |
|
|
|
1,342,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,890,221 |
|
|
|
8,735,133 |
|
|
|
8,735,133 |
|
Library Systems & Services, LLC (2%)* |
|
Municipal Business Services |
|
Subordinated Note (12% Cash, Due 03/11) |
|
|
1,000,000 |
|
|
|
972,768 |
|
|
|
972,768 |
|
|
|
|
|
Common Stock Warrants (112 shares) |
|
|
|
|
|
|
58,995 |
|
|
|
1,242,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000 |
|
|
|
1,031,763 |
|
|
|
2,215,568 |
|
Novolyte Technologies, Inc. (6%)* |
|
Specialty Manufacturing |
|
Subordinated Note (12% Cash, 5.5% PIK, Due 04/15) |
|
|
7,366,289 |
|
|
|
7,230,970 |
|
|
|
7,230,970 |
|
|
|
|
|
Preferred Units (600 units) |
|
|
|
|
|
|
600,000 |
|
|
|
545,900 |
|
|
|
|
|
Common Units (22,960 units) |
|
|
|
|
|
|
150,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,366,289 |
|
|
|
7,980,970 |
|
|
|
7,776,870 |
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Investment |
|
Principal |
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
(1) (2) |
|
Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
Syrgis Holdings, Inc. (3%)* |
|
Specialty Chemical Manufacturer |
|
Senior Notes (7.75%-10.75% Cash, Due 08/12-02/14) |
|
$ |
3,337,740 |
|
|
$ |
3,314,933 |
|
|
$ |
3,314,933 |
|
|
|
|
|
Common Units (2,114 units) |
|
|
|
|
|
|
1,000,000 |
|
|
|
447,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,337,740 |
|
|
|
4,314,933 |
|
|
|
3,762,733 |
|
TBG Anesthesia Management, LLC (6%)* |
|
Physician Management |
|
Senior Note (14% Cash, Due11/14) |
|
|
8,000,000 |
|
|
|
7,579,320 |
|
|
|
7,579,320 |
|
|
|
Services |
|
Warrant (263 shares) |
|
|
|
|
|
|
276,100 |
|
|
|
276,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000,000 |
|
|
|
7,855,420 |
|
|
|
7,855,420 |
|
TrustHouse Services Group, Inc. (4%)* |
|
Food Management Services |
|
Subordinated Note (12% Cash, 2% PIK, Due 09/15) |
|
|
4,351,628 |
|
|
|
4,282,621 |
|
|
|
4,282,621 |
|
|
|
|
|
Class A Units (1,495 units) |
|
|
|
|
|
|
475,000 |
|
|
|
409,700 |
|
|
|
|
|
Class B Units (79 units) |
|
|
|
|
|
|
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,351,628 |
|
|
|
4,782,621 |
|
|
|
4,692,321 |
|
Tulsa Inspection Resources, Inc. (TIR) and Regent TIR Partners, |
|
Pipeline Inspection |
|
Subordinated Note (14% Cash, Due 03/14) |
|
|
5,000,000 |
|
|
|
4,625,242 |
|
|
|
4,625,242 |
|
LLC (RTIR) (4%)* |
|
Services |
|
Common Units RTIR (11 units) |
|
|
|
|
|
|
200,000 |
|
|
|
8,000 |
|
|
|
|
|
Common Stock Warrants TIR (7 shares) |
|
|
|
|
|
|
321,000 |
|
|
|
34,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000,000 |
|
|
|
5,146,242 |
|
|
|
4,667,942 |
|
Twin-Star International, Inc. (4%)* |
|
Consumer Home Furnishings Manufacturer |
|
Subordinated Note (12% Cash, 3% PIK, Due 04/14) |
|
|
4,500,000 |
|
|
|
4,450,037 |
|
|
|
4,168,000 |
|
|
|
|
|
Senior Note (4.29%, Due 04/13) |
|
|
1,287,564 |
|
|
|
1,287,564 |
|
|
|
1,145,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,787,564 |
|
|
|
5,737,601 |
|
|
|
5,313,000 |
|
Wholesale Floors, Inc. (3%)* |
|
Commercial Services |
|
Subordinated Note (12.5%Cash, 1.5% PIK, Due 06/14) |
|
|
3,500,000 |
|
|
|
3,363,335 |
|
|
|
3,363,335 |
|
|
|
|
|
Membership Interest Purchase Warrant (4.0%) |
|
|
|
|
|
|
132,800 |
|
|
|
39,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500,000 |
|
|
|
3,496,135 |
|
|
|
3,403,135 |
|
Yellowstone Landscape Group, Inc. (9%)* |
|
Landscaping Services |
|
Subordinated Note (12% Cash, 3% PIK, Due 04/14) |
|
|
11,294,699 |
|
|
|
11,080,907 |
|
|
|
11,080,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,294,699 |
|
|
|
11,080,907 |
|
|
|
11,080,907 |
|
Zoom Systems (6%)* |
|
Retail Kiosk Operator |
|
Subordinated Note (12.5 Cash, 1.5% PIK, Due 12/14) |
|
|
8,002,667 |
|
|
|
7,802,667 |
|
|
|
7,802,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,002,667 |
|
|
|
7,802,667 |
|
|
|
7,802,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal NonControl / NonAffiliate Investments |
|
|
|
|
|
|
142,455,328 |
|
|
|
143,239,223 |
|
|
|
138,281,894 |
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Investment |
|
Principal |
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
(1) (2) |
|
Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
Affiliate Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Point, LLC (4%)* |
|
Asset Management Software Provider |
|
Subordinated Note (12% Cash, 7% PIK, Due 03/13) |
|
$ |
5,417,830 |
|
|
$ |
5,346,346 |
|
|
$ |
5,346,346 |
|
|
|
|
|
Membership Units (10 units) |
|
|
|
|
|
|
500,000 |
|
|
|
173,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,417,830 |
|
|
|
5,846,346 |
|
|
|
5,519,946 |
|
Axxiom Manufacturing, Inc. (0%)* |
|
Industrial Equipment |
|
Common Stock (34,100 shares) |
|
|
|
|
|
|
200,000 |
|
|
|
542,400 |
|
|
|
Manufacturer |
|
Common Stock Warrant (1,000 shares) |
|
|
|
|
|
|
|
|
|
|
14,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000 |
|
|
|
556,400 |
|
Brantley Transportation, LLC (Brantley Transportation) and Pine Street Holdings, LLC (Pine Street) |
|
Oil and Gas Services |
|
Subordinated Note Brantley Transportation (14% Cash, Due 12/12) |
|
|
3,800,000 |
|
|
|
3,713,247 |
|
|
|
1,400,000 |
|
(4) (1%)* |
|
|
|
Common Unit Warrants Brantley Transportation (4,560 common units) |
|
|
|
|
|
|
33,600 |
|
|
|
|
|
|
|
|
|
Preferred Units Pine Street (200 units) |
|
|
|
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
Common Unit Warrants Pine Street (2,220 units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,800,000 |
|
|
|
3,946,847 |
|
|
|
1,400,000 |
|
Dyson Corporation (10%)* |
|
Custom Forging and Fastener Supplies |
|
Subordinated Note (12% Cash, 3% PIK, Due 12/13) |
|
|
10,000,000 |
|
|
|
9,833,080 |
|
|
|
9,833,080 |
|
|
|
|
|
Class A Units (1,000,000 units) |
|
|
|
|
|
|
1,000,000 |
|
|
|
2,634,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000,000 |
|
|
|
10,833,080 |
|
|
|
12,467,780 |
|
Equisales, LLC (6%)* |
|
Energy Products and Services |
|
Subordinated Note (13% Cash, 4% PIK, Due 04/12) |
|
|
6,547,511 |
|
|
|
6,479,476 |
|
|
|
6,479,476 |
|
|
|
|
|
Class A Units (500,000 units) |
|
|
|
|
|
|
500,000 |
|
|
|
1,375,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,547,511 |
|
|
|
6,979,476 |
|
|
|
7,855,176 |
|
Flint Acquisition Corporation (2%)* |
|
Specialty Chemical Manufacturer |
|
Preferred Stock (9,875 shares) |
|
|
|
|
|
|
308,333 |
|
|
|
2,571,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
308,333 |
|
|
|
2,571,600 |
|
Genapure Corporation (0%)* |
|
Lab Testing Services |
|
Genapure Common Stock (5,594 shares) |
|
|
|
|
|
|
563,602 |
|
|
|
641,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
563,602 |
|
|
|
641,300 |
|
Technology Crops International (4%)* |
|
Supply Chain Management Services |
|
Subordinated Note (12% Cash, 5% PIK, Due 03/15) |
|
|
5,070,492 |
|
|
|
4,973,767 |
|
|
|
4,973,767 |
|
|
|
|
|
Common Units (50 Units) |
|
|
|
|
|
|
500,000 |
|
|
|
500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,070,492 |
|
|
|
5,473,767 |
|
|
|
5,473,767 |
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Investment |
|
Principal |
|
|
|
|
|
|
Fair |
|
Portfolio Company |
|
Industry |
|
(1) (2) |
|
Amount |
|
|
Cost |
|
|
Value (3) |
|
|
|
Waste Recyclers Holdings, LLC (7%)* |
|
Environmental and Facilities Services |
|
Subordinated Note (8% Cash, 7.5% PIK, Due 08/13) |
|
$ |
4,116,978 |
|
|
$ |
4,048,936 |
|
|
$ |
4,048,936 |
|
|
|
|
|
Subordinated Note (3% Cash, 12.5% PIK, Due 08/13) |
|
|
5,734,318 |
|
|
|
5,666,275 |
|
|
|
4,920,000 |
|
|
|
|
|
Class A Preferred Units (300 Units) |
|
|
|
|
|
|
2,251,100 |
|
|
|
|
|
|
|
|
|
Class B Preferred Units (886,835 Units) |
|
|
|
|
|
|
886,835 |
|
|
|
281,000 |
|
|
|
|
|
Common Unit Purchase Warrant (1,170,083 Units) |
|
|
|
|
|
|
748,900 |
|
|
|
|
|
|
|
|
|
Common Units (153,219 Units) |
|
|
|
|
|
|
180,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,851,296 |
|
|
|
13,782,829 |
|
|
|
9,249,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Affiliate Investments |
|
|
|
|
|
|
40,687,129 |
|
|
|
47,934,280 |
|
|
|
45,735,905 |
|
Control Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FCL Graphics, Inc. (3%)* |
|
Commercial Printing Services |
|
Senior Note (3.76% Cash, 2% PIK, Due 9/11) |
|
|
1,562,891 |
|
|
|
1,558,472 |
|
|
|
1,514,200 |
|
|
|
|
|
Senior Note (7.76% Cash, 2% PIK, Due 9/11) |
|
|
2,005,114 |
|
|
|
1,999,592 |
|
|
|
1,943,800 |
|
|
|
|
|
2nd Lien Note (2.76% Cash, 8% PIK, Due 12/11) |
|
|
3,200,672 |
|
|
|
2,994,352 |
|
|
|
823,000 |
|
|
|
|
|
Preferred Shares (35,000 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares (4,000 shares) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members Interests (3,839 Units) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,768,677 |
|
|
|
6,552,416 |
|
|
|
4,281,000 |
|
Fischbein, LLC (10%)* |
|
Packaging and Materials Handling |
|
Subordinated Note (12% Cash, 6.5% PIK, Due 05/13) |
|
|
7,595,671 |
|
|
|
7,490,171 |
|
|
|
7,490,171 |
|
|
|
Equipment Manufacturer |
|
Class A-1 Common Units (52.5% of Units) |
|
|
|
|
|
|
525,000 |
|
|
|
1,122,300 |
|
|
|
|
|
Class A Common Units (4,200,000 units) |
|
|
|
|
|
|
4,200,000 |
|
|
|
4,406,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,595,671 |
|
|
|
12,215,171 |
|
|
|
13,019,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Control Investments |
|
|
|
|
|
|
14,364,348 |
|
|
|
18,767,587 |
|
|
|
17,300,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments, December 31, 2009(156%)* |
|
|
|
|
|
$ |
197,506,805 |
|
|
$ |
209,941,090 |
|
|
$ |
201,317,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Value as a percent of net assets |
|
(1) |
|
All debt investments are income producing. Common stock, preferred stock and all warrants are
nonincome producing. |
|
(2) |
|
Disclosures of interest rates on subordinated notes include cash interest rates and
paymentinkind (PIK) interest rates. |
|
(3) |
|
All investments are restricted as to resale and were valued at fair value as determined in
good faith by the Board of Directors. |
|
(4) |
|
Pine Street Holdings, LLC is the majority owner of Brantley Transportation, LLC and its sole
business purpose is its ownership of Brantley Transportation, LLC. |
See accompanying notes.
16
TRIANGLE CAPITAL CORPORATION
Notes to Unaudited Consolidated Financial Statements
1. ORGANIZATION, BASIS OF PRESENTATION AND BUSINESS
Organization
Triangle Capital Corporation and its wholly owned subsidiary, Triangle Mezzanine Fund LLLP
(the Fund) (collectively, the Company) operate as a Business Development Company (BDC) under
the Investment Company Act of 1940 (the 1940 Act). The Fund is a specialty finance limited
liability limited partnership formed to make investments primarily in middle market companies
located throughout the United States. The Funds term is ten years from the date of formation
(August 14, 2002) unless terminated earlier or extended in accordance with provisions of the
limited partnership agreement. On September 11, 2003, the Fund was licensed to operate as a Small
Business Investment Company (SBIC) under the authority of the United States Small Business
Administration (SBA). As an SBIC, the Fund is subject to a variety of regulations concerning,
among other things, the size and nature of the companies in which it may invest and the structure
of those investments.
The Company currently operates as a closedend, nondiversified investment company and has
elected to be treated as a BDC under the 1940 Act. The Company is internally managed by its
executive officers under the supervision of its board of directors. The Company does not pay
management or advisory fees, but instead incurs the operating costs associated with employing
executive management and investment and portfolio management professionals.
Basis of Presentation
The financial statements of the Company include the accounts of the Company and its
wholly-owned subsidiaries, including the Fund. The Fund does not consolidate portfolio company
investments. The effects of all intercompany transactions between the Company and its subsidiaries
have been eliminated in consolidation.
The accompanying unaudited financial statements are presented in conformity with United States
generally accepted accounting principles (U.S. GAAP) for interim financial information and
pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X.
Accordingly, certain disclosures accompanying annual consolidated financial statements prepared in
accordance with U.S. GAAP are omitted. In the opinion of management, all adjustments, consisting
solely of normal recurring accruals considered necessary for the fair presentation of financial
statements for the interim period, have been included. The current periods results of operations
are not necessarily indicative of results that ultimately may be achieved for the year. Therefore,
the unaudited financial statements and notes should be read in conjunction with the audited
financial statements and notes thereto for the period ended December 31, 2009. Financial
statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that
affect the amounts and disclosures reported in the consolidated financial statements and
accompanying notes. Such estimates and assumptions could change in the future as more information
becomes known, which could impact the amounts reported and disclosed herein.
Recently Issued Accounting Standards
In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820). This update improves
disclosure requirements related to Fair Value Measurements and Disclosures-Overall Subtopic
(Subtopic 820-10) of the FASB Standards Codification, originally issued as FASB Statement No. 157,
Fair Value Measurements. These improved disclosure requirements will provide a greater level of
disaggregated information and more robust disclosures about valuation techniques and inputs to fair
value measurements. The Company adopted these changes beginning with its financial statements for
the quarter ended March 31, 2010. The adoption of these changes did not have a material impact on
the Companys financial position or results of operations.
17
2. INVESTMENTS
Summaries of the composition of the Companys investment portfolio at cost and fair value as a
percentage of total investments are shown in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total |
|
|
|
|
|
Percentage of Total |
|
|
Cost |
|
Portfolio |
|
Fair Value |
|
Portfolio |
|
|
|
March 31, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt,
Unitranche and
2nd lien
notes |
|
$ |
186,649,538 |
|
|
|
85 |
% |
|
$ |
171,383,096 |
|
|
|
82 |
% |
Senior debt |
|
|
11,279,759 |
|
|
|
5 |
|
|
|
11,041,275 |
|
|
|
5 |
|
Equity shares |
|
|
16,891,380 |
|
|
|
8 |
|
|
|
21,034,900 |
|
|
|
10 |
|
Equity warrants |
|
|
3,158,457 |
|
|
|
2 |
|
|
|
6,068,187 |
|
|
|
3 |
|
Royalty rights |
|
|
874,400 |
|
|
|
|
|
|
|
949,300 |
|
|
|
|
|
|
|
|
|
|
$ |
218,853,534 |
|
|
|
100 |
% |
|
$ |
210,476,758 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt,
Unitranche and
2nd lien
notes |
|
$ |
179,482,425 |
|
|
|
86 |
% |
|
$ |
166,087,684 |
|
|
|
83 |
% |
Senior debt |
|
|
11,090,514 |
|
|
|
5 |
|
|
|
10,847,886 |
|
|
|
5 |
|
Equity shares |
|
|
15,778,681 |
|
|
|
8 |
|
|
|
17,182,500 |
|
|
|
9 |
|
Equity warrants |
|
|
2,715,070 |
|
|
|
1 |
|
|
|
6,250,600 |
|
|
|
3 |
|
Royalty rights |
|
|
874,400 |
|
|
|
|
|
|
|
949,300 |
|
|
|
|
|
|
|
|
|
|
$ |
209,941,090 |
|
|
|
100 |
% |
|
$ |
201,317,970 |
|
|
|
100 |
% |
|
|
|
During the three months ended March 31, 2010, the Company made two new investments totaling
approximately $11.6 million and five investments in existing portfolio companies totaling
approximately $2.5 million. During the three months ended March 31, 2009, the Company made one new
investment totaling $5.2 million and five investments in existing portfolio companies totaling
approximately $4.0 million.
Valuation of Investments
The Company has established and documented processes and methodologies for determining the
fair values of portfolio company investments on a recurring basis in accordance with FASB ASC Topic
820, Fair Value Measurements and Disclosures (ASC Topic 820). Under ASC Topic 820, a financial
instruments categorization within the valuation hierarchy is based upon the lowest level of input
that is significant to the fair value measurement. The three levels of valuation hierarchy
established by ASC TOPIC 820 are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical
assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
The Companys investment portfolio is comprised of debt and equity instruments of privately
held companies for which quoted prices falling within the categories of Level 1 and Level 2 inputs
are not available. Therefore, the Company values all of its investments at fair value, as
determined in good faith by the Board of Directors (Level 3 inputs, as further described below).
Due to the inherent uncertainty in the valuation process, the Board of Directors estimate of fair
value may differ significantly from the values that would have been used had a ready market for the
securities existed, and the differences could be material. In addition, changes in the market
environment and other events that may occur over the life of the investments may cause the gains or
losses ultimately realized on these investments to be different than the valuations currently
assigned.
Debt and equity securities that are not publicly traded and for which a limited market does
not exist are valued at fair value as determined in good faith by the Board of Directors. There is
no single standard for determining fair value in good faith, as fair value depends upon
circumstances of each individual case. In general, fair value is the amount that the Company might
reasonably expect to receive upon the current sale of the security.
Management evaluates the investments in portfolio companies using the most recent portfolio
company financial statements and forecasts. Management also consults with the portfolio companys
senior management to obtain further updates on the portfolio companys performance, including
information such as industry trends, new product development and other operational issues.
18
In making the good faith determination of the value of debt securities, the Company starts
with the cost basis of the security, which includes the amortized original issue discount, and
paymentinkind (PIK) interest, if any. The Company also uses a risk rating system to estimate
the probability of default on the debt securities and the probability of loss if there is a
default. The risk rating system covers both qualitative and quantitative aspects of the business
and the securities held. In valuing debt securities, management utilizes an income approach
model that considers factors including, but not limited to, (i) the portfolio investments current
risk rating, (ii) the portfolio companys current trailing twelve months (TTM) results of
operations as compared to the portfolio companys TTM results of operations as of the date the
investment was made and the portfolio companys anticipated results for the next twelve months of
operations, (iii) the portfolio companys current leverage as compared to its leverage as of the
date the investment was made, and (iv) current pricing and credit metrics for similar proposed and
executed investment transactions. In valuing equity securities of private companies, the Company
considers valuation methodologies consistent with industry practice, including but not limited to
(i) valuation using a valuation model based on original transaction multiples and the portfolio
companys recent financial performance, (ii) valuation of the securities based on recent sales in
comparable transactions, and (iii) a review of similar companies that are publicly traded and the
market multiple of their equity securities.
The following table presents the Companys financial instruments carried at fair value as of
March 31, 2010 and December 31, 2009, on the consolidated balance sheet by ASC Topic 820 valuation
hierarchy, as previously described:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at March 31, 2010 |
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio company investments |
|
$ |
|
|
|
$ |
|
|
|
$ |
210,476,758 |
|
|
$ |
210,476,758 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
210,476,758 |
|
|
$ |
210,476,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at December 31, 2009 |
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio company investments |
|
$ |
|
|
|
$ |
|
|
|
$ |
201,317,970 |
|
|
$ |
201,317,970 |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
201,317,970 |
|
|
$ |
201,317,970 |
|
|
|
|
The following table reconciles the beginning and ending balances of our portfolio company
investments measured at fair value on a recurring basis using significant unobservable inputs
(Level 3) for the three months ended March 31, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Three Months
Ended |
|
|
March 31, 2010 |
|
March 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of portfolio, Beginning of Period |
|
$ |
201,317,970 |
|
|
$ |
182,105,291 |
|
New investments |
|
|
14,143,949 |
|
|
|
9,193,735 |
|
Loan origination fees received |
|
|
(301,875 |
) |
|
|
(175,000 |
) |
Proceeds from sale of investment |
|
|
(240,000 |
) |
|
|
|
|
Gain on sale of investment |
|
|
199,200 |
|
|
|
|
|
Principal repayments received |
|
|
(6,280,580 |
) |
|
|
(2,246,284 |
) |
Paymentinkind interest earned |
|
|
1,216,226 |
|
|
|
1,075,326 |
|
Paymentinkind interest received |
|
|
(156,710 |
) |
|
|
(427,105 |
) |
Accretion of loan discounts |
|
|
117,201 |
|
|
|
104,626 |
|
Accretion of deferred loan origination revenue |
|
|
215,033 |
|
|
|
184,906 |
|
Unrealized gains (losses) on investments |
|
|
246,344 |
|
|
|
(3,604,584 |
) |
|
|
|
Fair value of portfolio, End of Period |
|
$ |
210,476,758 |
|
|
$ |
186,210,911 |
|
|
|
|
All realized and unrealized gains and losses are included in earnings (changes in net assets)
and are reported on separate line items within the Companys statements of operations. Unrealized
gains on investments of $425,544 during the three months ended March 31, 2010 are related to
portfolio company investments that were still held by the Company as of March 31, 2010. Unrealized
losses on investments of $3,604,584 during the three months ended March 31, 2009 are related to
portfolio company investments that are still held by the Company as of March 31, 2009.
19
Duff & Phelps, LLC (Duff & Phelps), an independent valuation firm, provides third party
valuation consulting services to the Company which consist of certain limited procedures that the
Company identified and requested Duff & Phelps to perform (hereinafter referred to as the
procedures). We generally request Duff & Phelps to perform the procedures on each portfolio
company at least once in every calendar year and for new portfolio companies, at least once in
the twelve-month period subsequent to the initial investment. In certain instances, we may
determine that it is not cost-effective, and as a result is not in our stockholders best interest,
to request Duff & Phelps to perform the procedures on one or more portfolio companies. Such
instances include, but are not limited to, situations where the fair value of our investment in the
portfolio company is determined to be insignificant relative to our total investment portfolio.
For the quarter ended March 31, 2010, the Company asked Duff & Phelps to perform the
procedures on investments in seven portfolio companies comprising approximately 25% of the total
investments at fair value (exclusive of the fair value of new investments made during the quarter)
as of March 31, 2010. For the quarter ended March 31, 2009, the Company asked Duff & Phelps to
perform the procedures on investments in seven portfolio companies comprising approximately 26% of
the total investments at fair value (exclusive of the fair value of new investments made during the
quarter) as of March 31, 2009. Upon completion of the procedures, Duff & Phelps concluded that the
fair value, as determined by the Board of Directors, of those investments subjected to the
procedures did not appear to be unreasonable. The Board of Directors of Triangle Capital
Corporation is ultimately and solely responsible for determining the fair value of the Companys
investments in good faith.
Warrants
When originating a debt security, the Company will sometimes receive warrants or other
equityrelated securities from the borrower. The Company determines the cost basis of the warrants
or other equityrelated securities received based upon their respective fair values on the date of
receipt in proportion to the total fair value of the debt and warrants or other equityrelated
securities received. Any resulting difference between the face amount of the debt and its recorded
fair value resulting from the assignment of value to the warrant or other equity instruments is
treated as original issue discount and accreted into interest income over the life of the loan.
Realized Gain or Loss and Unrealized Appreciation or Depreciation of Portfolio Investments
Realized gains or losses are recorded upon the sale or liquidation of investments and
calculated as the difference between the net proceeds from the sale or liquidation, if any, and the
cost basis of the investment using the specific identification method. Unrealized appreciation or
depreciation reflects the difference between the fair value of the investments and the cost basis
of the investments.
Investment Classification
In accordance with the provisions of the 1940 Act, the Company classifies investments by level
of control. As defined in the 1940 Act, Control Investments are investments in those companies
that the Company is deemed to Control. Affiliate Investments are investments in those companies
that are Affiliated Companies of the Company, as defined in the 1940 Act, other than Control
Investments. NonControl/NonAffiliate Investments are those that are neither Control
Investments nor Affiliate Investments. Generally, under the 1940 Act, the Company is deemed to
control a company in which it has invested if the Company owns more than 25.0% of the voting
securities of such company or has greater than 50.0% representation on its board. The Company is
deemed to be an affiliate of a company in which the Company has invested if it owns between 5.0%
and 25.0% of the voting securities of such company.
Investment Income
Interest income, adjusted for amortization of premium and accretion of original issue
discount, is recorded on the accrual basis to the extent that such amounts are expected to be
collected. Generally, when interest and/or principal payments on a loan become past due, or if the
Company otherwise does not expect the borrower to be able to service its debt and other
obligations, the Company will place the loan on non-accrual status and will generally cease
recognizing interest income on that loan until all principal and interest has been brought current
through payment or due to a restructuring such that the interest income is deemed to be
collectible. The Company writes off any previously accrued and uncollected interest when it is
determined that interest is no longer considered collectible. Dividend income is recorded on the
exdividend date.
Fee Income
Loan origination, facility, commitment, consent and other advance fees received in connection
with loan agreements are recorded as deferred income and recognized as income over the term of the
loan. Loan prepayment penalties and loan amendment fees are recorded into income when the
respective prepayment or loan amendment occurs. Any previously deferred fees are immediately
recorded into income upon prepayment of the related loan.
20
Payment-in-Kind Interest
The Company holds loans in its portfolio that contain a paymentinkind (PIK) interest
provision. The PIK interest, computed at the contractual rate specified in each loan agreement, is
added to the principal balance of the loan and is recorded as interest income. Thus, the actual
collection of PIK interest may be deferred until the time of debt principal repayment.
To maintain the Companys status as a Regulated Investment Company (RIC) under Subchapter M
of the Internal Revenue Code of 1986, as Amended (the Code), this non-cash source of income must
be paid out to stockholders in the form of dividends, even though the Company has not yet collected
the cash. Generally, when current cash interest and/or principal payments on a loan become past
due, or if the Company otherwise does not expect the borrower to be able to service its debt and
other obligations, the Company will place the loan on non-accrual status and will generally cease
recognizing PIK interest income on that loan for financial reporting purposes until all principal
and interest has been brought current through payment or due to a restructuring such that the
interest income is deemed to be collectible. The Company writes off any accrued and uncollected
PIK interest when it is determined that the PIK interest is no longer collectible.
Concentration of Credit Risk
The Companys investees are generally lower middlemarket companies in a variety of
industries. At both March 31, 2010, and December 31, 2009, there were no individual investments
greater than 10% of the fair value of the Companys portfolio. Income, consisting of interest,
dividends, fees, other investment income, and realization of gains or losses on equity interests,
can fluctuate dramatically upon repayment of an investment or sale of an equity interest and in any
given year can be highly concentrated among several investees.
The Companys investments carry a number of risks including, but not limited to: 1) investing
in lower middle market companies which have a limited operating history and financial resources; 2)
investing in senior subordinated debt which ranks equal to or lower than debt held by other
investors; 3) holding investments that are not publicly traded and are subject to legal and other
restrictions on resale and other risks common to investing in below investment grade debt and
equity instruments.
3. INCOME TAXES
The Company has elected to be treated as a RIC under Subchapter M of the Code. As a RIC, so
long as the Company meets certain minimum distribution, source-of-income and asset diversification
requirements, it generally is required to pay income taxes only on the portion of its taxable
income and gains it does not distribute (actually or constructively) and certain built-in gains.
In addition, the Company has certain wholly owned taxable subsidiaries (the Taxable
Subsidiaries), each of which holds one or more of its portfolio investments that are listed on the
Consolidated Schedule of Investments. The Taxable Subsidiaries are consolidated for financial
reporting purposes, such that the Companys consolidated financial statements reflect the Companys
investments in the portfolio companies owned by the Taxable Subsidiaries. The purpose of the
Taxable Subsidiaries is to permit the Company to hold certain portfolio companies that are
organized as limited liability companies (LLCs) (or other forms of passthrough entities) and
still satisfy the RIC tax requirement that at least 90% of the RICs gross revenue for income tax
purposes must consist of qualifying investment income. Absent the Taxable Subsidiaries, a
proportionate amount of any gross income of an LLC (or other passthrough entity) portfolio
investment would flow through directly to the RIC. To the extent that such income did not consist
of qualifying investment income, it could jeopardize the Companys ability to qualify as a RIC and
therefore cause the Company to incur significant amounts of federal income taxes. When LLCs (or
other pass-through entities) are owned by the Taxable Subsidiaries, their income is taxed to the
Taxable Subsidiaries and does not flow through to the RIC, thereby helping the Company preserve its
RIC status and resultant tax advantages. The Taxable Subsidiaries are not consolidated for income
tax purposes and may generate income tax expense as a result of their ownership of the portfolio
companies. This income tax expense is reflected in the Companys Statements of Operations.
For federal income tax purposes, the cost of investments owned at March 31, 2010 was
approximately $220.6 million.
21
4. LONGTERM DEBT
At both March 31, 2010 and December 31, 2009, the Company has the following debentures
outstanding guaranteed by the SBA:
|
|
|
|
|
|
|
|
|
|
|
Issuance/Pooling |
|
|
|
Prioritized Return |
|
|
|
|
|
Date |
|
Maturity Date |
|
(Interest) Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 22, 2004
|
|
September 1, 2014
|
|
|
5.539 |
% |
|
$ |
8,700,000 |
|
March 23, 2005
|
|
March 1, 2015
|
|
|
5.893 |
% |
|
|
13,600,000 |
|
September 28, 2005
|
|
September 1, 2015
|
|
|
5.796 |
% |
|
|
9,500,000 |
|
March 28, 2007
|
|
March 1, 2017
|
|
|
6.231 |
% |
|
|
4,000,000 |
|
March 26, 2008
|
|
March 1, 2018
|
|
|
6.191 |
% |
|
|
6,410,000 |
|
September 24, 2008
|
|
September 1, 2018
|
|
|
6.580 |
% |
|
|
4,840,000 |
|
September 24, 2008
|
|
September 1, 2018
|
|
|
6.442 |
% |
|
|
46,060,000 |
|
March 25, 2009
|
|
March 1, 2019
|
|
|
5.337 |
% |
|
|
22,000,000 |
|
March 24, 2010
|
|
March 1, 2020
|
|
|
4.825 |
% |
|
|
6,800,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
121,910,000 |
|
|
|
|
|
|
|
|
|
|
|
Interest payments are payable semiannually. There are no principal payments required on
these issues prior to maturity. Debentures issued prior to September 2006 were subject to
prepayment penalties during their first five years. Those pre-payment penalties no longer apply to
debentures issued after September 1, 2006.
Under the Small Business Investment Act and current SBA policy applicable to SBICs, an SBIC
(or group of SBICs under common control) can have outstanding at any time SBA guaranteed debentures
up to three times the amount of its regulatory capital. As of March 31, 2010, the maximum statutory
limit on the dollar amount of outstanding SBA guaranteed debentures issued by a single SBIC is
$150.0 million. With $65.3 million of regulatory capital as of March 31, 2010, the Fund has the
current capacity to issue up to the statutory maximum of $150.0 million of SBA guaranteed
debentures. In addition, the Company has applied for a second SBIC license which application is
currently being reviewed by the SBA. If approved, this license would provide the Company with the
capability to issue an additional $75.0 million of SBA guaranteed debentures. In addition to a
onetime 1.0% fee on the total commitment from the SBA, the Company also pays a onetime 2.425%
fee on the amount of each debenture issued. These fees are capitalized as deferred financing costs
and are amortized over the term of the debt agreements using the effective interest method. The
weighted average interest rates for all SBA guaranteed debentures as of March 31, 2010, and
December 31, 2009 were 5.963% and 5.772%, respectively. The weighted average interest rate as of
December 31, 2009, included $115.1 million of pooled SBA-guaranteed debentures with a weighted
average fixed interest rate of 6.03% and $6.8 million of unpooled SBA-guaranteed debentures with a
weighted average interim interest rate of 1.41%. As of March 31, 2010, all SBA-guaranteed
debentures have been pooled and assigned fixed rates.
22
5. EQUITY-BASED COMPENSATION
The Companys Board of Directors and stockholders have approved the Triangle Capital
Corporation Amended and Restated 2007 Equity Incentive Plan (the Plan), under which there are
900,000 shares of the Companys Common Stock authorized for issuance. Under the Plan, the Board of
Directors (or compensation committee, if delegated administrative authority by the Board of
Directors) may award stock options, restricted stock or other stock based incentive awards to
executive officers, employees and directors. Equity-based awards granted under the Plan to
independent directors generally will vest over a one-year period and equity-based awards granted
under the Plan to executive officers and employees generally will vest ratably over a four-year
period.
The Company accounts for its equity-based compensation plan using the fair value method, as
prescribed by ASC Topic 718, Stock Compensation. Accordingly, for restricted stock awards, we
measure the grant date fair value based upon the market price of our common stock on the date of
the grant and amortize this fair value to compensation expense over the requisite service period or
vesting term.
The following table presents information with respect to the Plan for the three months ended
March 31, 2010 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
March 31, 2010 |
|
March 31, 2009 |
|
|
|
|
|
|
Weighted-Average |
|
|
|
|
|
|
|
|
|
|
|
|
Grant-Date Fair |
|
|
|
|
|
Weighted-Average Grant-Date |
|
|
Number of Shares |
|
Value per Share |
|
Number of Shares |
|
Fair Value per Share |
|
|
|
Unvested shares, beginning of period |
|
|
219,813 |
|
|
$ |
10.76 |
|
|
|
110,800 |
|
|
$ |
11.11 |
|
Shares granted during the period |
|
|
142,499 |
|
|
$ |
11.84 |
|
|
|
133,000 |
|
|
$ |
10.62 |
|
Shares vested during the period |
|
|
(33,247 |
) |
|
$ |
10.62 |
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested shares, end of period |
|
|
329,065 |
|
|
$ |
11.24 |
|
|
|
243,800 |
|
|
$ |
10.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the three months ended March 31, 2010 and 2009, the Company recognized equity-based
compensation expense of approximately $0.2 million and $0.1 million, respectively. This expense is
included in general and administrative expenses in the Companys consolidated statements of
operations.
As of March 31, 2010, there was approximately $3.2 million of total unrecognized compensation
cost, related to the Companys non-vested restricted shares. This cost is expected to be
recognized over a weighted-average period of approximately 2.9 years.
23
6. FINANCIAL HIGHLIGHTS
The following is a schedule of financial highlights for the three months ended March 31, 2010
and 2009:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2010 |
|
2009 |
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
Net asset value at beginning of period |
|
$ |
11.03 |
|
|
$ |
13.22 |
|
Net investment income(1) |
|
|
0.32 |
|
|
|
0.43 |
|
Net realized gain on investments(1) |
|
|
0.02 |
|
|
|
|
|
Net unrealized appreciation (depreciation) on investments(1) |
|
|
0.02 |
|
|
|
(0.51 |
) |
|
|
|
Total increase (decrease) from investment operations(1) |
|
|
0.36 |
|
|
|
(0.08 |
) |
|
|
|
|
|
|
|
|
|
Cash dividends/distributions declared |
|
|
(0.41 |
) |
|
|
(0.45 |
) |
Shares issued pursuant to Dividend Reinvestment Plan |
|
|
0.10 |
|
|
|
|
|
Stock-based compensation |
|
|
0.02 |
|
|
|
0.02 |
|
Income tax provision(1) |
|
|
(0.01 |
) |
|
|
|
|
Grant of restricted shares |
|
|
(0.13 |
) |
|
|
(0.24 |
) |
Other(2) |
|
|
(0.09 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value at end of period |
|
$ |
10.87 |
|
|
$ |
12.46 |
|
|
|
|
Market value at end of period(3) |
|
$ |
14.04 |
|
|
$ |
7.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding at end of period |
|
|
11,934,594 |
|
|
|
7,047,663 |
|
Net assets at end of period |
|
$ |
129,693,360 |
|
|
$ |
87,808,740 |
|
Average net assets |
|
$ |
131,333,496 |
|
|
$ |
91,158,655 |
|
Ratio of operating expenses to average net assets (annualized) |
|
|
11 |
% |
|
|
15 |
% |
Ratio of net investment income to average net assets
(annualized) |
|
|
12 |
% |
|
|
13 |
% |
Portfolio turnover ratio |
|
|
3 |
% |
|
|
1 |
% |
Total Return(4) |
|
|
20 |
% |
|
|
(20 |
%) |
|
|
|
(1) |
|
Weighted average basic per share data. |
|
(2) |
|
Represents the impact of the different share amounts used in calculating per share
data as a result of calculating certain per share data based upon the weighted average
basic shares outstanding during the period and certain per share data based on the shares
outstanding as of a period end or transaction date. |
|
(3) |
|
Represents the closing price of the Companys common stock on the last day of the
period. |
|
(4) |
|
Total return equals the change in the ending market value of the Companys common
stock during the period, plus dividends declared per share during the period, divided by
the market value of the Companys common stock on the first day of the period. Total
return is not annualized. |
7. SUBSEQUENT EVENT
In April 2010, the Company invested $12.0 million in subordinated debt, convertible debt and
warrants of Media Temple, Inc., a privately held, web hosting and virtualization service provider.
Under the terms of the investments, Media Temple, Inc. will pay interest on the subordinated debt
at a rate of 16% per annum and will pay interest on the convertible debt at a rate of 12% per
annum.
24
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion is designed to provide a better understanding of our unaudited
consolidated financial statements, including a brief discussion of our business, key factors that
impacted our performance and a summary of our operating results. The following discussion should be
read in conjunction with the Unaudited Financial Statements and the notes thereto included in Item
1 of this Quarterly Report on Form 10-Q, and the Consolidated Financial Statements and notes
thereto and Managements Discussion and Analysis of Financial Condition and Results of Operations
contained in our Annual Report on Form 10-K for the year ended December 31, 2009. Historical
results and percentage relationships among any amounts in the financial statements are not
necessarily indicative of trends in operating results for any future periods.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This Quarterly Report contains forward-looking statements which are subject to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not
historical are forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. Some of the statements in this
Quarterly Report constitute forward-looking statements because they relate to future events or our
future performance or financial condition. Forward-looking statements may include, among other
things, statements as to our future operating results, our business prospects and the prospects of
our portfolio companies, the impact of the investments that we expect to make, the ability of our
portfolio companies to achieve their objectives, our expected financings and investments, the
adequacy of our cash resources and working capital, and the timing of cash flows, if any, from the
operations of our portfolio companies. Words such as expect, anticipate, target, goals,
project, intend, plan, believe, seek, estimate, continue, forecast, may,
should, potential, variations of such words, and similar expressions indicate a forward-looking
statement, although not all forward-looking statements include these words. Readers are cautioned
that the forward-looking statements contained in this Quarterly Report are only predictions, are
not guarantees of future performance, and are subject to risks, events, uncertainties and
assumptions that are difficult to predict. Our actual results could differ materially from those
implied or expressed in the forward-looking statements for any reason, including the factors
discussed in Item 1A entitled Risk Factors in Part I of our 2009 Annual Report on Form 10-K.
Other factors that could cause actual results to differ materially include changes in the economy,
risks associated with possible disruption due to terrorism in our operations or the economy
generally, and future changes in laws or regulations and conditions in our operating areas. These
statements are based on our current expectations, estimates, forecasts, information and projections
about the industry in which we operate and the beliefs and assumptions of our management as of the
date of this Quarterly Report. We assume no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, unless we are
required to do so by law. Although 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.
Overview of Our Business
We are a Maryland corporation which has elected to be treated and operates as an internally
managed business development company, or BDC, under the Investment Company Act of 1940, or 1940
Act. Our wholly owned subsidiary, Triangle Mezzanine Fund LLLP, or the Fund, is licensed as a small
business investment company, or SBIC, by the United States Small Business Administration, or SBA,
and has also elected to be treated as a BDC under the 1940 Act. We and the Fund invest primarily in
debt instruments, equity investments, warrants and other securities of lower middle market
privately held companies located in the United States.
Our business is to provide capital to lower middle market companies in the United States. We
define lower middle market companies as those with annual revenues between $10.0 and $100.0
million. We focus on investments in companies with a history of generating revenues and positive
cash flows, an established market position and a proven management team with a strong operating
discipline. Our target portfolio company has annual revenues between $20.0 and $75.0 million and
annual earnings before interest, taxes, depreciation and amortization, or EBITDA, between $3.0 and
$20.0 million.
We invest primarily in senior and subordinated debt securities secured by first and second
lien security interests in portfolio company assets, coupled with equity interests. Our investments
generally range from $5.0 to $15.0 million per portfolio company. In certain situations, we have
partnered with other funds to provide larger financing commitments.
We generate revenues in the form of interest income, primarily from our investments in debt
securities, loan origination and other fees and dividend income. Fees generated in connection with
our debt investments are recognized over the life of the loan using the effective interest method
or, in some cases, recognized as earned. In addition, we generate revenue in the form of capital
gains, if any, on warrants or other equity-related securities that we acquire from our portfolio
companies. Our debt investments generally have a term of between three and seven years and
typically bear interest at fixed rates between 12.0% and 17.0% per annum. Certain of our debt
investments have a form of interest, referred to as payment-in-kind, or PIK, interest, that is not
paid currently but that is accrued and added to the loan balance and paid at the end of the term.
In our negotiations with potential portfolio companies, we generally
25
seek to minimize PIK interest. Cash interest on our debt investments is generally payable
monthly; however, some of our debt investments pay cash interest on a quarterly basis. As of both
March 31, 2010, and December 31, 2009, the weighted average yield on our outstanding debt
investments other than non-accrual debt investments (including PIK interest) was approximately
14.7%. The weighted average yield on all of our outstanding investments (including equity and
equity-linked investments but excluding non-accrual debt investments) was approximately 13.4% and
13.5% as of March 31, 2010 and December 31, 2009, respectively. The weighted average yield on all
of our outstanding investments (including equity and equity-linked investments and non-accrual debt
investments) was approximately 11.8% and 12.5% as of March 31, 2010 and December 31, 2009,
respectively.
The Fund is eligible to sell debentures guaranteed by the SBA in the capital markets at
favorable interest rates and invest these funds in portfolio companies. We intend to continue to
operate the Fund as an SBIC, subject to SBA approval, and to utilize the proceeds of the sale of
the Funds SBA-guaranteed debentures, referred to herein as SBA leverage, to enhance returns to our
stockholders.
Portfolio Composition
The total value of our investment portfolio was $210.5 million as of March 31, 2010, as
compared to $201.3 million as of December 31, 2009. As of March 31, 2010, we had investments in 38
portfolio companies with an aggregate cost of $218.9 million. As of December 31, 2009, we had
investments in 37 portfolio companies with an aggregate cost of $209.9 million. As of both March
31, 2010, and December 31, 2009, none of our portfolio investments represented greater than 10% of
the total fair value of our investment portfolio.
As of March 31, 2010 and December 31, 2009, our investment portfolio consisted of the
following investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Total |
|
|
|
|
|
Percentage of Total |
|
|
Cost |
|
Portfolio |
|
Fair Value |
|
Portfolio |
|
|
|
March 31, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt, Unitranche and 2nd lien notes |
|
$ |
186,649,538 |
|
|
|
85 |
% |
|
$ |
171,383,096 |
|
|
|
82 |
% |
Senior debt |
|
|
11,279,759 |
|
|
|
5 |
|
|
|
11,041,275 |
|
|
|
5 |
|
Equity shares |
|
|
16,891,380 |
|
|
|
8 |
|
|
|
21,034,900 |
|
|
|
10 |
|
Equity warrants |
|
|
3,158,457 |
|
|
|
2 |
|
|
|
6,068,187 |
|
|
|
3 |
|
Royalty rights |
|
|
874,400 |
|
|
|
|
|
|
|
949,300 |
|
|
|
|
|
|
|
|
|
|
$ |
218,853,534 |
|
|
|
100 |
% |
|
$ |
210,476,758 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt, Unitranche and 2nd lien notes |
|
$ |
179,482,425 |
|
|
|
86 |
% |
|
$ |
166,087,684 |
|
|
|
83 |
% |
Senior debt |
|
|
11,090,514 |
|
|
|
5 |
|
|
|
10,847,886 |
|
|
|
5 |
|
Equity shares |
|
|
15,778,681 |
|
|
|
8 |
|
|
|
17,182,500 |
|
|
|
9 |
|
Equity warrants |
|
|
2,715,070 |
|
|
|
1 |
|
|
|
6,250,600 |
|
|
|
3 |
|
Royalty rights |
|
|
874,400 |
|
|
|
|
|
|
|
949,300 |
|
|
|
|
|
|
|
|
|
|
$ |
209,941,090 |
|
|
|
100 |
% |
|
$ |
201,317,970 |
|
|
|
100 |
% |
|
|
|
Investment Activity
During the three months ended March 31, 2010, we made two new investments totaling
approximately $11.6 million, one additional debt investment in an existing portfolio company of
$2.2 million and four additional equity investments in existing portfolio companies totaling
approximately $0.3 million. We sold one equity investment in a portfolio company for approximately
$0.2 million, resulting in a realized gain of $0.2 million. We had one portfolio company loan
repaid at par in the amount of approximately $2.1 million and received normal principal repayments
and partial loan prepayments totaling approximately $4.2 million in the three months ended March
31, 2010.
During the three months ended March 31, 2009, we made one new investment totaling $5.2 million
and five additional investments in existing portfolio companies totaling approximately $4.0
million. We also received a full repayment from one portfolio company totaling approximately $2.0
million. In addition, we received normal principal repayments totaling approximately $0.3 million
in the three months ended March 31, 2009.
26
Total portfolio investment activity for the three months ended March 31, 2010 and 2009 was as
follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
March 31, 2010 |
|
March 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of portfolio, beginning of period |
|
$ |
201,317,970 |
|
|
$ |
182,105,291 |
|
New investments |
|
|
14,143,949 |
|
|
|
9,193,735 |
|
Loan origination fees received |
|
|
(301,875 |
) |
|
|
(175,000 |
) |
Proceeds from sale of investment |
|
|
(240,000 |
) |
|
|
|
|
Gain on sale of investment |
|
|
199,200 |
|
|
|
|
|
Principal repayments received |
|
|
(6,280,580 |
) |
|
|
(2,246,284 |
) |
Payment-in-kind interest earned |
|
|
1,216,226 |
|
|
|
1,075,326 |
|
Payment-in-kind interest received |
|
|
(156,710 |
) |
|
|
(427,105 |
) |
Accretion of loan discounts |
|
|
117,201 |
|
|
|
104,626 |
|
Accretion of deferred loan origination revenue |
|
|
215,033 |
|
|
|
184,906 |
|
Unrealized gains (losses) on investments |
|
|
246,344 |
|
|
|
(3,604,584 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of portfolio, end of period |
|
$ |
210,476,758 |
|
|
$ |
186,210,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield on debt investments at end of period(1) |
|
|
14.7 |
% |
|
|
14.3 |
% |
|
|
|
Weighted average yield on total investments at end of period(1) |
|
|
13.4 |
% |
|
|
13.1 |
% |
|
|
|
Weighted average yield on total investments at end of period |
|
|
11.8 |
% |
|
|
12.8 |
% |
|
|
|
|
|
|
(1) |
|
Excludes non-accrual debt investments. |
Non-Accrual Assets
As of March 31, 2010, the fair value of our non-accrual assets was approximately $13.3
million, which comprised 6.3% of the total fair value of our portfolio, and the cost of our
non-accrual assets was approximately $26.6 million, which comprised 12.2% of the total cost of our
portfolio. Our non-accrual assets as of March 31, 2010 are as follows:
Gerli and Company
In November 2008, we placed our debt investment in Gerli and Company (Gerli) on non-accrual
status. As a result, under generally accepted accounting principles in the United States, or U.S.
GAAP, we no longer recognize interest income on our debt investment in Gerli for financial
reporting purposes. During 2008, we recognized an unrealized loss on our debt investment in Gerli
of $1.2 million and in the year ended December 31, 2009, we recognized an additional unrealized
loss on our debt investment in Gerli of $0.5 million. In the quarter ended March 31, 2010, we
recognized an unrealized gain on our debt investment in Gerli of approximately $0.4 million. As of
March 31, 2010, the cost of our debt investment in Gerli is $3.3 million and the fair value of such
investment is $1.9 million.
Fire Sprinkler Systems, Inc.
In October 2008, we placed our debt investment in Fire Sprinkler Systems, Inc. (Fire
Sprinkler Systems) on non-accrual status. As a result, under U.S. GAAP, we no longer recognize
interest income on our debt investment in Fire Sprinkler Systems for financial reporting purposes.
During 2008, we recognized an unrealized loss of $1.4 million on our subordinated note investment
in Fire Sprinkler Systems. In the year ended December 31, 2009, we recognized an additional
unrealized loss on our debt investment in Fire Sprinkler Systems of $0.3 million. As of March 31,
2010, the cost of our debt investment in Fire Sprinkler Systems is $2.4 million and the fair value
of such investment is $0.8 million.
American De-Rosa Lamparts, LLC and Hallmark Lighting
In 2008, we recognized an unrealized loss of $1.2 million on our subordinated note investment
in American De-Rosa Lamparts, LLC and Hallmark Lighting, or collectively, ADL. This unrealized loss
reduced the fair value of our investment in ADL to $6.9 million as of December 31, 2008. Through
August 31, 2009, we continued to receive interest payments from ADL in accordance with the loan
agreement. In September 2009, we received notification from ADLs senior lender that ADL was
blocked from making interest payments to us. As a result, we placed our investment in ADL on
non-accrual status and under U.S. GAAP, we no longer recognize interest income on our investment in
ADL for financial reporting purposes. In the year ended December 31, 2009, we recognized an
additional unrealized loss on our investment in ADL of $3.2 million and in the first quarter of
2010, we recognized an unrealized gain on our investment in ADL of approximately $0.1 million. As
of March 31, 2010, the cost of our investment in ADL was approximately $8.3 million and the fair
value of such investment was approximately $4.0 million.
27
FCL Graphics, Inc. 2nd Lien Note
During the first eight months of 2009, we received cash interest on our 2nd lien note in FCL
at the stated contractual rate (20% per annum as of September 30, 2009). In September 2009, FCL did
not make the scheduled interest payments on its 2nd Lien notes. As a result, we placed our 2nd Lien
note in FCL on non-accrual status and therefore, under U.S. GAAP, we no longer recognized interest
income on our 2nd Lien note investment in FCL for financial reporting purposes. In November 2009,
we amended the terms of our note with FCL. The terms of the amendment provide for cash interest at
a rate of LIBOR plus 250 basis points per annum and PIK interest at a rate of 8% per annum. In
addition, we exchanged approximately $0.4 million of unpaid PIK interest on our FCL 2nd lien note
for common equity in FCL Graphics, resulting in a $0.4 million realized loss. While we are
currently recognizing cash interest on our 2nd Lien investment in FCL, we have placed the PIK
component of this note on non-accrual status. In the year ended December 31, 2009, we recognized an
unrealized loss on our 2nd Lien note investment in FCL of approximately $2.2 million and in the
first quarter of 2010, we recognized an unrealized gain on our 2nd Lien note investment
in FCL of approximately $0.2 million. As of March 31, 2010, the cost of our 2nd Lien
note investment in FCL was approximately $3.0 million and the fair value of our 2nd Lien note
investment in FCL was approximately $1.1 million.
Waste Recyclers Holdings, LLC
In 2009, in an effort to address liquidity and working capital constraints at Waste Recyclers
Holdings, LLC, or Waste Recyclers, we restructured our debt investments in Waste Recyclers to
provide for a lower rate of current cash interest and a higher rate of PIK interest. In addition,
in 2009, we recognized an unrealized loss on our debt investments in Waste Recyclers of
approximately $0.7 million. We continued to receive scheduled cash interest payments from Waste
Recyclers during 2009. In March 2010, Waste Recyclers did not make its scheduled cash interest
payments for the first quarter of 2010 and in April 2010, we received notification from Waste
Recyclers senior lender that Waste Recyclers was blocked from making interest payments to us for a
period of 180 days. As a result, we placed our debt investments in Waste Recyclers on non-accrual
status and under U.S. GAAP, we no longer recognize interest income on our debt investments in Waste
Recyclers for financial reporting purposes. In the first quarter of 2010, we recognized an
unrealized loss on our debt investments in Waste Recyclers of approximately $3.4 million. As of
March 31, 2010, the cost of our debt investments in Waste Recyclers was approximately $9.7 million
and the fair value of our debt investments in Waste Recyclers was approximately $5.6 million.
We are currently in negotiations with the Waste Recyclers investor group regarding various
restructuring alternatives, including converting some or all of our existing debt investments to an
equity security. While there can be no assurance that these negotiations will result in an outcome
that is acceptable to us, the investor group is working diligently toward an acceptable
restructuring.
Results of Operations
Comparison of three months ended March 31, 2010 and March 31, 2009
Investment Income
For the three months ended March 31, 2010, total investment income was $7.5 million, a 15%
increase from $6.5 million of total investment income for the three months ended March 31, 2009.
This increase was primarily attributable to a $1.0 million increase in total loan interest, fee and
dividend income (including PIK interest income) due to 1) a net increase in our portfolio
investments from March 31, 2009, to March 31, 2010, and 2) an increase in non-recurring fee income
of approximately $0.3 million. Non-recurring fee income was approximately $0.6 million for the
three months ended March 31, 2010, as compared to approximately $0.3 million for the three months
ended March 31, 2009.
Expenses
For the three months ended March 31, 2010, expenses increased by 6% to $3.7 million from $3.5
million for the three months ended March 31, 2009. The increase in expenses was primarily
attributable to a $0.1 million increase in interest expense and a $0.1 million increase in general
and administrative expenses. The increase in interest expense is related to higher average
balances of SBA-guaranteed debentures outstanding during the three months ended March 31, 2010 than
in the comparable period in 2009. In addition, we experienced a slight increase in general and
administrative costs in the first quarter of 2010, primarily related to increased compensation
costs (including equity-based compensation).
Net Investment Income
As a result of the $1.0 million increase in total investment income and the $0.2 million
increase in expenses, net investment income for the three months ended March 31, 2010 was $3.8
million compared to net investment income of $3.0 million during the three months ended March 31,
2009.
28
Net Increase/Decrease in Net Assets Resulting From Operations
In the three months ended March 31, 2010, we realized a gain on the sale of one
non-control/non-affiliate investment of approximately $0.2 million. In addition, during the three
months ended March 31, 2010, we recorded net unrealized appreciation of investments totaling
approximately $0.2 million, comprised of 1) unrealized appreciation on 15 investments totaling
approximately $5.2 million, 2) unrealized depreciation on 11 investments totaling approximately
$4.8 million and 3) a $0.2 million unrealized depreciation reclassification adjustment related to
the realized gain noted above.
During the three months ended March 31, 2009, we recorded net unrealized depreciation of
investments in the amount of $3.6 million, comprised of unrealized depreciation on 11 investments
totaling $6.2 million and unrealized gains on 11 other investments totaling $2.6 million.
As a result of these events, our net increase in net assets from operations was $4.1 million
for the three months ended March 31, 2010 as compared to a net decrease in net assets from
operations of $0.6 million during the three months ended March 31, 2009.
Liquidity and Capital Resources
We believe that our current cash and cash equivalents on hand, our available SBA leverage and
our anticipated cash flows from operations will be adequate to meet our cash needs for our daily
operations for at least the next twelve months.
In the future, depending on the valuation of the Funds assets pursuant to SBA guidelines, the
Fund may be limited by provisions of the Small Business Investment Act of 1958, and SBA regulations
governing SBICs, from making certain distributions to Triangle Capital Corporation that may be
necessary to enable Triangle Capital Corporation to make the minimum required distributions to its
stockholders and qualify as a RIC.
Cash Flows
For the three months ended March 31, 2010, we experienced a net decrease in cash and cash
equivalents in the amount of $11.9 million. During that period, our operating activities used $8.2
million in cash, consisting primarily of new portfolio investments of $14.1 million, partially
offset by repayments received from portfolio companies of $6.5 million. In addition, we used $3.7
million of cash in financing activities, consisting primarily of cash dividends paid in the amount
of $3.6 million. At March 31, 2010, we had $43.3 million of cash and cash equivalents on hand.
For the three months ended March 31, 2009, we experienced a net decrease in cash and cash
equivalents in the amount of $9.8 million. During that period, our operating activities used $6.6
million in cash, consisting primarily of purchases of investments totaling $9.2 million, net of
repayments received totaling $2.2 million. In the three months ended March 31, 2009, we used $3.1
million of cash for financing activities, consisting of cash dividends and distributions to
stockholders. At March 31, 2009, we had $17.4 million of cash and cash equivalents on hand.
Financing Transactions
Due to the Funds status as a licensed SBIC, the Fund has the ability to issue debentures
guaranteed by the SBA at favorable interest rates. Under the Small Business Investment Act and the
SBA rules applicable to SBICs, an SBIC (or group of SBICs under common control) can have
outstanding at any time debentures guaranteed by the SBA in an amount up to three times the amount
of its regulatory capital, which generally is the amount raised from private investors. The maximum
statutory limit on the dollar amount of outstanding debentures guaranteed by the SBA issued by a
single SBIC is currently $150.0 million. Debentures guaranteed by the SBA have a maturity of ten
years, with interest payable semi-annually. The principal amount of the debentures is not required
to be paid before maturity but may be pre-paid at any time. Debentures issued prior to September
2006, were subject to pre-payment penalties during their first five years. Those pre-payment
penalties no longer apply to debentures issued after September 1, 2006.
In June 2009, Triangle SBIC received a new leverage commitment from the SBA which increased
Triangle SBICs ability to issue SBA guaranteed debentures up to the maximum statutory limit of
$150.0 million. In addition, we have applied for a second SBIC license which application is
currently being reviewed by the SBA. If approved, this license would provide us with the
capability to issue an additional $75.0 million of SBA-guaranteed debentures. As of March 31,
2010, Triangle SBIC had $121.9 million of SBA guaranteed debentures outstanding. In addition to the
one-time 1.0% fee on the total commitment from the SBA, the Company also pays a one-time 2.425% fee
on the amount of each debenture issued. These fees are capitalized as deferred financing costs and
are amortized over the term of the debt agreements using the effective interest method. The
weighted average interest rate for all SBA guaranteed debentures as of March 31, 2010 was 5.963%.
As of March 31, 2010, all SBA-guaranteed debentures have been pooled and assigned fixed rates.
29
Distributions to Stockholders
We have elected to be treated as a RIC under Subchapter M of the Internal Revenue Code of
1986, as amended (the Code) and intend to make the required distributions to our stockholders as
specified therein. In order to qualify as a RIC and to obtain RIC tax benefits, we must meet
certain minimum distribution, source-of-income and asset diversification requirements. If such
requirements are met, then we are generally required to pay income taxes only on the portion of our
taxable income and gains we do not distribute (actually or constructively) and certain built-in
gains. We met our minimum distribution requirements for 2009, 2008 and 2007 and continually monitor
our distribution requirements with the goal of ensuring compliance with the Code.
The minimum distribution requirements applicable to RICs require us to distribute to our
stockholders at least 90% of our investment company taxable income (ICTI), as defined by the
Code, each year. Depending on the level of ICTI earned in a tax year, we may choose to carry
forward ICTI in excess of current year distributions into the next tax year and pay a 4% excise tax
on such excess. Any such carryover ICTI must be distributed before the end of the next tax year
through a dividend declared prior to filing the final tax return related to the year which
generated such ICTI.
ICTI generally differs from net investment income for financial reporting purposes due to
temporary and permanent differences in the recognition of income and expenses. We may be required
to recognize ICTI in certain circumstances in which we do not receive cash. For example, if we hold
debt obligations that are treated under applicable tax rules as having original issue discount
(such as debt instruments issued with warrants), we must include in ICTI each year a portion of the
original issue discount that accrues over the life of the obligation, regardless of whether cash
representing such income is received by us in the same taxable year. We may also have to include in
ICTI other amounts that we have not yet received in cash, such as 1) PIK interest income and 2)
interest income from investments that have been classified as non-accrual for financial reporting
purposes. Interest income on non-accrual investments is not recognized for financial reporting
purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts
accrued will be included in our ICTI for the year of accrual, we may be required to make a
distribution to our stockholders in order to satisfy the minimum distribution requirements, even
though we will not have received and may not ever receive any corresponding cash amount. ICTI also
excludes net unrealized appreciation or depreciation, as investment gains or losses are not
included in taxable income until they are realized.
Current Market Conditions
Since the beginning of 2008, the debt and equity capital markets in the United States have
been severely impacted by significant write-offs in the financial services sector relating to
subprime mortgages and the re-pricing of credit risk in the broadly syndicated bank loan market,
among other factors. These events, along with the deterioration of the housing market, have led to
an economic recession in the U.S and abroad, which could be long-term. Banks, investment companies
and others in the financial services industry have continued to report significant write-downs in
the fair value of their assets, which has led to the failure of a number of banks and investment
companies, a number of distressed mergers and acquisitions, the government take-over of the
nations two largest government-sponsored mortgage companies, and the passage of the $700 billion
Emergency Economic Stabilization Act of 2008 in October 2008 and the passage of the American
Recovery and Reinvestment Act of 2009 in February 2009. These events have significantly impacted
the financial and credit markets and have reduced the availability of debt and equity capital for
the market as a whole, and for financial firms in particular. Notwithstanding recent gains across
both the equity and debt markets, these conditions may continue for a prolonged period of time or
worsen in the future. While we have capacity to issue additional SBA guaranteed debentures as
discussed above, we may not be able to access additional equity capital, which could result in the
slowing of our origination activity during 2010 and beyond.
In the event that the United States economy remains in a recession, it is possible that the
results of some of the middle market companies in which we invest could experience further
deterioration, which could ultimately lead to difficulty in meeting debt service requirements and
an increase in defaults. There can be no assurance that the performance of certain of our portfolio
companies will not be negatively impacted by challenging economic conditions which could have a
negative impact on our future results.
Recent Developments
In April 2010, we invested $12.0 million in subordinated debt, convertible debt and warrants
of Media Temple, Inc., a privately held, web hosting and virtualization service provider. Under
the terms of the investments, Media Temple, Inc. will pay interest on the subordinated debt at a
rate of 16% per annum and will pay interest on the convertible debt at a rate of 12% per annum.
Critical Accounting Policies and Use of Estimates
The preparation of our unaudited financial statements in accordance with accounting principles
generally accepted in the United States requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses for the periods covered by such
financial statements. We have identified investment valuation and revenue recognition as our most
critical accounting estimates. On an on-
30
going basis, we evaluate our estimates, including those related to the matters described
below. These estimates are based on the information that is currently available to us and on
various other assumptions that we believe to be reasonable under the circumstances. Actual results
could differ materially from those estimates under different assumptions or conditions. A
discussion of our critical accounting policies follows.
Investment Valuation
The most significant estimate inherent in the preparation of our financial statements is the
valuation of investments and the related amounts of unrealized appreciation and depreciation of
investments recorded. We have established and documented processes and methodologies for
determining the fair values of portfolio company investments on a recurring (quarterly) basis. As
discussed below, we have engaged an independent valuation firm to assist us in our valuation
process.
On January 1, 2008, we adopted FASB ASC Topic 820, Fair Value Measurements and Disclosures,
which defines fair value, establishes a framework for measuring fair value in accordance with
generally accepted accounting principles and expands disclosures about fair value measurements.
ASC Topic 820 clarifies that the exchange price is the price in an orderly transaction between
market participants to sell an asset or transfer a liability in the market in which the reporting
entity would transact for the asset or liability, that is, the principal or most advantageous
market for the asset or liability. The transaction to sell the asset or transfer the liability is a
hypothetical transaction at the measurement date, considered from the perspective of a market
participant that holds the asset or owes the liability. ASC Topic 820 provides a consistent
definition of fair value which focuses on exit price and prioritizes, within a measurement of fair
value, the use of market-based inputs over entity-specific inputs. In addition, ASC Topic 820
provides a framework for measuring fair value and establishes a three-level hierarchy for fair
value measurements based upon the transparency of inputs to the valuation of an asset or liability
as of the measurement date. The three levels of valuation hierarchy established by ASC Topic 820
are defined as follows:
|
|
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical
assets or liabilities in active markets. |
|
|
|
Level 2 inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the financial instrument. |
|
|
|
Level 3 inputs to the valuation methodology are unobservable and significant to the fair
value measurement. |
A financial instruments categorization within the valuation hierarchy is based upon the
lowest level of input that is significant to the fair value measurement. Our investment portfolio
is comprised of debt and equity instruments of privately held companies for which quoted prices
falling within the categories of Level 1 and Level 2 inputs are not available. Therefore, we value
all of our investments at fair value, as determined in good faith by our Board of Directors, using
Level 3 inputs, as further described below. Due to the inherent uncertainty in the valuation
process, our Board of Directors estimate of fair value may differ significantly from the values
that would have been used had a ready market for the securities existed, and the differences could
be material. In addition, changes in the market environment and other events that may occur over
the life of the investments may cause the gains or losses ultimately realized on these investments
to be different than the valuations currently assigned.
Debt and equity securities that are not publicly traded and for which a limited market does
not exist are valued at fair value as determined in good faith by our Board of Directors. There is
no single standard for determining fair value in good faith, as fair value depends upon
circumstances of each individual case. In general, fair value is the amount that we might
reasonably expect to receive upon the current sale of the security.
We evaluate the investments in portfolio companies using the most recently available portfolio
company financial statements and forecasts. We also consult with the portfolio companys senior
management to obtain further updates on the portfolio companys performance, including information
such as industry trends, new product development and other operational issues. Additionally, we
consider some or all of the following factors:
|
|
|
financial standing of the issuer of the security; |
|
|
|
|
comparison of the business and financial plan of the issuer with actual results; |
|
|
|
|
the size of the security held as it relates to the liquidity of the market for such
security; |
|
|
|
|
pending public offering of common stock by the issuer of the security; |
|
|
|
|
pending reorganization activity affecting the issuer, such as merger or debt
restructuring; |
|
|
|
|
ability of the issuer to obtain needed financing; |
|
|
|
|
changes in the economy affecting the issuer; |
31
|
|
|
financial statements and reports from portfolio company senior management and
ownership; |
|
|
|
|
the type of security, the securitys cost at the date of purchase and any
contractual restrictions on the disposition of the security; |
|
|
|
|
discount from market value of unrestricted securities of the same class at the time
of purchase; |
|
|
|
|
special reports prepared by analysts; |
|
|
|
|
information as to any transactions or offers with respect to the security and/or
sales to third parties of similar securities; |
|
|
|
|
the issuers ability to make payments and the type of collateral; |
|
|
|
|
the current and forecasted earnings of the issuer; |
|
|
|
|
statistical ratios compared to lending standards and to other similar securities;
and |
|
|
|
|
other pertinent factors. |
In making the good faith determination of the value of debt securities, we start with the cost
basis of the security, which includes the amortized original issue discount, and paid-in-kind (PIK)
interest, if any. We also use a risk rating system to estimate the probability of default on the
debt securities and the probability of loss if there is a default. The risk rating system covers
both qualitative and quantitative aspects of the business and the securities held. In valuing debt
securities, we utilize an income approach model that considers factors including, but not limited
to, (i) the portfolio investments current risk rating (discussed below), (ii) the portfolio
companys current trailing twelve months (TTM) results of operations as compared to the
portfolio companys TTM results of operations as of the date the investment was made and the
portfolio companys outlook for the next twelve months of operations, (iii) the portfolio companys
current leverage as compared to its leverage as of the date the investment was made, and (iv)
current pricing and credit metrics for similar proposed and executed investment transactions. In
valuing equity securities of private companies, we consider valuation methodologies consistent with
industry practice, including (i) valuation using a valuation model based on original transaction
multiples and the portfolio companys recent financial performance, (ii) valuation of the
securities based on recent sales in comparable transactions, and (iii) a review of similar
companies that are publicly traded and the market multiple of their equity securities.
Unrealized appreciation or depreciation on portfolio investments are recorded as increases or
decreases in investments on the balance sheets and are separately reflected on the statements of
operations in determining net increase or decrease in net assets resulting from operations.
Duff & Phelps, LLC (Duff & Phelps), an independent valuation firm, provides third party
valuation consulting services to us, which consist of certain limited procedures that we identified
and requested Duff & Phelps to perform (hereinafter referred to as the procedures). We generally
request Duff & Phelps to perform the procedures on each portfolio company at least once in every
calendar year and for new portfolio companies, at least once in the twelve-month period subsequent
to the initial investment. In certain instances, we may determine that it is not cost-effective,
and as a result is not in our stockholders best interest, to request Duff & Phelps to perform the
procedures on one or more portfolio companies. Such instances include, but are not limited to,
situations where the fair value of our investment in the portfolio company is determined to be
insignificant relative to our total investment portfolio.
For the quarter ended March 31, 2010, we asked Duff & Phelps to perform the procedures on
investments in seven portfolio companies comprising approximately 25% of the total investments at
fair value (exclusive of the fair value of new investments made during the quarter) as of March 31,
2010. Upon completion of the procedures, Duff & Phelps concluded that the fair value, as
determined by the Board of Directors, of those investments subjected to the procedures did not
appear to be unreasonable. Our Board of Directors is ultimately and solely responsible for
determining the fair value of our investments in good faith.
Revenue Recognition
Interest and Dividend Income
Interest income, adjusted for amortization of premium and accretion of original issue
discount, is recorded on the accrual basis to the extent that such amounts are expected to be
collected. Generally, when interest and/or principal payments on a loan become past due, or if we
otherwise do not expect the borrower to be able to service its debt and other obligations, we will
place the loan on non-accrual status and will generally cease recognizing interest income on that
loan for financial reporting purposes until all principal and interest have been brought current
through payment or due to a restructuring such that the interest income is deemed to be
collectible. We write off any previously accrued and uncollected interest when it is determined
that interest is no longer considered collectible. Dividend income is recorded on the ex-dividend
date.
Fee Income
Loan origination, facility, commitment, consent and other advance fees received in connection
with the origination of a loan are recorded as deferred income and recognized as income over the
term of the loan. Loan prepayment penalties and loan amendment fees are recorded into income when
received. Any previously deferred fees are immediately recorded into income upon prepayment of the
32
related loan.
Payment-in-Kind Interest (PIK)
We currently hold, and we expect to hold in the future, some loans in our portfolio that
contain a PIK interest provision. The PIK interest, computed at the contractual rate specified in
each loan agreement, is added to the principal balance of the loan, rather than being paid to us in
cash, and is recorded as interest income. Thus, the actual collection of PIK interest may be
deferred until the time of debt principal repayment.
To maintain our status as a RIC, this non-cash source of income must be paid out to
stockholders in the form of dividends, even though we have not yet collected the cash. Generally,
when current cash interest and/or principal payments on a loan become past due, or if we otherwise
do not expect the borrower to be able to service its debt and other obligations, we will place the
loan on non-accrual status and will generally cease recognizing PIK interest income on that loan
for financial reporting purposes until all principal and interest has been brought current through
payment or due to a restructuring such that the interest income is deemed to be collectible. We
write off any previously accrued and uncollected PIK interest when it is determined that the PIK
interest is no longer collectible.
Recently Issued Accounting Standards
In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update No. 2010-06, Fair Value Measurements and Disclosures (Topic 820). This update improves
disclosure requirements related to Fair Value Measurements and Disclosures-Overall Subtopic
(Subtopic 820-10) of the FASB Standards Codification, originally issued as FASB Statement No. 157,
Fair Value Measurements. These improved disclosure requirements will provide a greater level of
disaggregated information and more robust disclosures about valuation techniques and inputs to fair
value measurements. We adopted these changes beginning with its financial statements for the
quarter ended March 31, 2010. The adoption of these changes did not have a material impact on our
financial position or results of operations.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Beginning in late 2007, the United States entered a recession, which many believe could be
prolonged. As the economy continued to deteriorate in 2008, spending by both consumers and
businesses declined significantly, which has impacted the broader financial and credit markets and
has reduced the availability of debt and equity capital for the market as a whole and financial
firms in particular. This reduction in spending has had an adverse effect on a number of the
industries in which some of our portfolio companies operate, and on certain of our portfolio
companies as well.
During 2009, we experienced write-downs in our portfolio, several of which were due to
declines in the operating performance of certain portfolio companies. In the first quarter of 2010,
the fair value of our portfolio as a whole remained relatively flat with the fair value as of
December 31, 2009.
As of March 31, 2010, the fair value of our non-accrual assets was approximately $13.3
million, which comprised approximately 6.3% of the total fair value of our portfolio, and the cost
of our non-accrual assets was approximately $26.6 million, or 12.2% of the total cost of our
portfolio. In addition to these non-accrual assets, as of March 31, 2010, we had, on a fair value
basis, approximately $13.8 million of debt investments, or 6.6% of the total fair value of our
portfolio, which were current with respect to scheduled principal and interest payments, but which
were carried at less than cost. The cost of these assets as of March 31, 2010 was approximately
$16.1 million, or 7.4% of the total cost of our portfolio.
While the equity and debt markets have recently improved, these stressed conditions may
continue for a prolonged period of time or worsen in the future. In the event that the current
recession continues for a significant time or the economy deteriorates further, the financial
position and results of operations of certain of the middle-market companies in our portfolio could
be further affected adversely, which ultimately could lead to difficulty in our portfolio companies
meeting debt service requirements and lead to an increase in defaults. There can be no assurance
that the performance of our portfolio companies will not be further impacted by economic
conditions, which could have a negative impact on our future results.
In addition, we are subject to interest rate risk. Interest rate risk is defined as the
sensitivity of our current and future earnings to interest rate volatility, variability of spread
relationships, the difference in re-pricing intervals between our assets and liabilities and the
effect that interest rates may have on our cash flows. Changes in the general level of interest
rates can affect our net interest income, which is the difference between the interest income
earned on interest earning assets and our interest expense incurred in connection with our interest
bearing debt and liabilities. Changes in interest rates can also affect, among other things, our
ability to acquire and
33
originate loans and securities and the value of our investment portfolio. Our investment
income is affected by fluctuations in various interest rates, including LIBOR and prime rates. We
regularly measure exposure to interest rate risk and determine whether or not any hedging
transactions are necessary to mitigate exposure to changes in interest rates. As of March 31, 2010,
we were not a party to any hedging arrangements.
As of March 31, 2010, approximately 92.5%, or $183.0 million of our debt portfolio
investments bore interest at fixed rates and approximately 7.5%, or $14.9 million of our debt
portfolio investments bore interest at variable rates, which are either Prime-based or LIBOR-based.
A 200 basis point increase or decrease in the interest rates on our variable-rate debt investments
would increase or decrease, as applicable, our investment income by approximately $0.3 million on
an annual basis. All of our pooled SBA-guaranteed debentures bear interest at fixed rates.
Because we currently borrow, and plan to borrow in the future, money to make investments, our
net investment income is dependent upon the difference between the rate at which we borrow funds
and the rate at which we invest the funds borrowed. Accordingly, there can be no assurance that a
significant change in market interest rates will not have a material adverse effect on our net
investment income. In periods of rising interest rates, our cost of funds would increase, which
could reduce our net investment income if there is not a corresponding increase in interest income
generated by our investment portfolio.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the reports that we file or submit under the Securities Exchange Act of
1934 is recorded, processed, summarized, and reported within the time periods specified in the
SECs rules and forms and that such information is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer
carried out an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this report. Based on the evaluation
of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were effective. It should be noted
that any system of controls, however well designed and operated, can provide only reasonable, and
not absolute, assurance that the objectives of the system are met. In addition, the design of any
control system is based in part upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control systems, there can be no assurance that
any design will succeed in achieving its stated goals under all potential future conditions,
regardless of how remote.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the first
quarter of 2010 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
Neither Triangle Capital Corporation nor any of its subsidiaries is currently a party to any
material pending legal proceedings.
Item 1A. Risk Factors.
In addition to the other information set forth in this report and the risk factor below, you
should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2009, which could materially affect our
business, financial condition or operating results. The risks described herein or in our Annual
Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties
not currently known to us or that we currently deem to be immaterial also may materially adversely
affect our business, financial condition and/or operating results.
Recent healthcare reform legislation may affect our revenue and financial condition.
On March 23, 2010, the President of the United States signed into law the Patient Protection
and Affordable Care Act of 2010 and on March 30, 2010, the President signed into law the Health
Care and Education Reconciliation Act, which in part modified the Patient Protection and Affordable
Care Act. Together, the two Acts serve as the primary vehicle for comprehensive health care reform
in the United States. The Acts are intended to reduce the number of individuals in the United
States without health insurance and effect significant other changes to the ways in which health
care is organized, delivered and reimbursed. The complexities and ramifications of the new
legislation are significant, and will be implemented in a phased approach beginning in 2010 and
concluding in 2018. At this time, the effects of health care reform and its impact on our
operations and on the business, revenues and financial
34
condition of our portfolio companies are not yet known. Accordingly, the reform could
adversely affect the cost of providing healthcare coverage generally and could adversely affect the
financial success of both the portfolio companies in which we invest and us.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Sales of Unregistered Securities
During the quarter ended March 31, 2010, we issued a total of 100,046 shares of our common
stock under our dividend reinvestment plan pursuant to an exemption from the registration
requirements of the Securities Act of 1933. The aggregate offering price for the shares of common
stock sold under the dividend reinvestment plan was approximately $1,215,561.
Issuer Purchases of Equity Securities
Pursuant to Section 23(c)(1) of the Investment Company Act of 1940, we intend to purchase our
common stock in the open market in order to satisfy our Dividend Reinvestment Plan obligations if,
at the time of the distribution of any dividend, our common stock is trading at a price per share
below net asset value. We did not purchase any shares of our common stock during the three months
ended March 31, 2010.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Reserved.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits.
|
|
|
Number |
|
Exhibit |
3.1
|
|
Articles of Amendment and Restatement of the Registrant (Filed as
Exhibit (a)(3) to the Registrants Registration Statement on Form
N-2/N-5 (File No. 333-138418) filed with the Securities and
Exchange Commission on December 29, 2006 and incorporated herein by
reference). |
|
|
|
3.2
|
|
Second Amended and Restated Bylaws of the Registrant (Filed as
Exhibit 3.4 to the Registrants Annual Report on Form 10-K for the
year ended December 31, 2008 filed with the Securities and Exchange
Commission on February 25, 2009 and incorporated herein by
reference). |
|
|
|
3.3
|
|
Certificate of Limited Partnership of Triangle Mezzanine Fund LLLP
(Filed as Exhibit (a)(4) to the Registrants Registration Statement
on Form N-2/N-5 (File No. 333-138418) filed with the Securities and
Exchange Commission on February 13, 2007 and incorporated herein by
reference). |
|
|
|
3.4
|
|
Second Amended and Restated Agreement of Limited Partnership of
Triangle Mezzanine Fund LLLP (Filed as Exhibit 3.4 to the
Registrants Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on November 11, 2007 and
incorporated herein by reference). |
|
|
|
4.1
|
|
Form of Common Stock Certificate (Filed as Exhibit (d) to the
Registrants Registration Statement on Form N-2/N-5 (File No.
333-138418) filed with the Securities and Exchange Commission on
February 15, 2007 and incorporated herein by reference). |
|
|
|
4.2
|
|
Triangle Capital Corporation Dividend Reinvestment Plan (Filed as
Exhibit 4.2 to the Registrants Annual Report on Form 10-K for the
year ended December 31, 2007 filed with the Securities and Exchange
Commission on March 12, 2008 and incorporated herein by reference). |
|
|
|
4.3
|
|
Agreement to Furnish Certain Instruments (Filed as Exhibit 4.19 to
the Registrants Annual Report on Form 10-K for the year ended
December 31, 2008 filed with the Securities and Exchange Commission
on February 25, 2009 and incorporated herein by reference). |
|
|
|
31.1
|
|
Chief Executive Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2
|
|
Chief Financial Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1
|
|
Chief Executive Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2
|
|
Chief Financial Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
TRIANGLE CAPITAL CORPORATION
|
|
Date: May 5, 2010 |
/s/ Garland S. Tucker, III
|
|
|
Garland S. Tucker, III |
|
|
President, Chief Executive Officer and
Chairman of the Board of Directors |
|
|
|
|
|
Date: May 5, 2010 |
/s/ Steven C. Lilly
|
|
|
Steven C. Lilly |
|
|
Chief Financial Officer and Director |
|
|
|
|
|
Date: May 5, 2010 |
/s/ C. Robert Knox, Jr.
|
|
|
C. Robert Knox, Jr. |
|
|
Principal Accounting Officer |
|
36
EXHIBIT INDEX
|
|
|
Number |
|
Exhibit |
3.1
|
|
Articles of Amendment and Restatement of the Registrant (Filed as
Exhibit (a)(3) to the Registrants Registration Statement on Form
N-2/N-5 (File No. 333-138418) filed with the Securities and
Exchange Commission on December 29, 2006 and incorporated herein by
reference). |
|
|
|
3.2
|
|
Second Amended and Restated Bylaws of the Registrant (Filed as
Exhibit 3.4 to the Registrants Annual Report on Form 10-K for the
year ended December 31, 2008 filed with the Securities and Exchange
Commission on February 25, 2009 and incorporated herein by
reference). |
|
|
|
3.3
|
|
Certificate of Limited Partnership of Triangle Mezzanine Fund LLLP
(Filed as Exhibit (a)(4) to the Registrants Registration Statement
on Form N-2/N-5 (File No. 333-138418) filed with the Securities and
Exchange Commission on February 13, 2007 and incorporated herein by
reference). |
|
|
|
3.4
|
|
Second Amended and Restated Agreement of Limited Partnership of
Triangle Mezzanine Fund LLLP (Filed as Exhibit 3.4 to the
Registrants Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on November 11, 2007 and
incorporated herein by reference). |
|
|
|
4.1
|
|
Form of Common Stock Certificate (Filed as Exhibit (d) to the
Registrants Registration Statement on Form N-2/N-5 (File No.
333-138418) filed with the Securities and Exchange Commission on
February 15, 2007 and incorporated herein by reference). |
|
|
|
4.2
|
|
Triangle Capital Corporation Dividend Reinvestment Plan (Filed as
Exhibit 4.2 to the Registrants Annual Report on Form 10-K for the
year ended December 31, 2007 filed with the Securities and Exchange
Commission on March 12, 2008 and incorporated herein by reference). |
|
|
|
4.3
|
|
Agreement to Furnish Certain Instruments (Filed as Exhibit 4.19 to
the Registrants Annual Report on Form 10-K for the year ended
December 31, 2008 filed with the Securities and Exchange Commission
on February 25, 2009 and incorporated herein by reference). |
|
|
|
31.1
|
|
Chief Executive Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
31.2
|
|
Chief Financial Officer Certification Pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.1
|
|
Chief Executive Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
32.2
|
|
Chief Financial Officer Certification pursuant to Section 1350,
Chapter 63 of Title 18, United States Code, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |