UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
|
|
|
(Mark One)
|
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the quarterly period ended
June 30, 2011
|
OR
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the transition period
from to
|
Commission file number
814-00733
Triangle Capital
Corporation
(Exact name of registrant as
specified in its charter)
|
|
|
Maryland
(State or other jurisdiction
of
incorporation or organization)
|
|
06-1798488
(I.R.S. Employer
Identification No.)
|
|
|
|
3700 Glenwood Avenue, Suite 530
Raleigh, North Carolina
(Address of principal
executive offices)
|
|
27612
(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
|
Smaller
reporting
company o
|
(Do not check if a smaller reporting company)
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 August 1, 2011 was 18,625,238.
TRIANGLE
CAPITAL CORPORATION
TABLE OF
CONTENTS
QUARTERLY
REPORT ON
FORM 10-Q
2
PART I
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial
Statements.
|
TRIANGLE
CAPITAL CORPORATION
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
Investments at fair value:
|
|
|
|
|
|
|
|
|
Non-Control/Non-Affiliate investments (cost of $306,487,844 and
$244,197,828 at June 30, 2011 and December 31, 2010,
respectively)
|
|
$
|
310,837,398
|
|
|
$
|
245,392,144
|
|
Affiliate investments (cost of $90,621,782 and $60,196,084 at
June 30, 2011 and December 31, 2010, respectively)
|
|
|
90,921,038
|
|
|
|
55,661,878
|
|
Control investments (cost of $14,260,745 and $19,647,795 at
June 30, 2011 and December 31, 2010, respectively)
|
|
|
7,641,249
|
|
|
|
24,936,571
|
|
|
|
|
|
|
|
|
|
|
Total investments at fair value
|
|
|
409,399,685
|
|
|
|
325,990,593
|
|
Cash and cash equivalents
|
|
|
68,242,549
|
|
|
|
54,820,222
|
|
Interest and fees receivable
|
|
|
1,579,634
|
|
|
|
867,627
|
|
Prepaid expenses and other current assets
|
|
|
554,905
|
|
|
|
119,151
|
|
Deferred financing fees
|
|
|
6,904,285
|
|
|
|
6,200,254
|
|
Property and equipment, net
|
|
|
51,285
|
|
|
|
47,647
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
486,732,343
|
|
|
$
|
388,045,494
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
Accounts payable and accrued liabilities
|
|
$
|
2,273,598
|
|
|
$
|
2,268,898
|
|
Interest payable
|
|
|
3,112,355
|
|
|
|
2,388,505
|
|
Taxes payable
|
|
|
6,307
|
|
|
|
197,979
|
|
Deferred revenue
|
|
|
37,500
|
|
|
|
37,500
|
|
Deferred income taxes
|
|
|
352,316
|
|
|
|
208,587
|
|
SBA-guaranteed debentures payable
|
|
|
224,149,934
|
|
|
|
202,464,866
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
229,932,010
|
|
|
|
207,566,335
|
|
Net Assets
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value per share
(150,000,000 shares authorized, 18,625,238 and
14,928,987 shares issued and outstanding as of
June 30, 2011 and December 31, 2010, respectively)
|
|
|
18,625
|
|
|
|
14,929
|
|
Additional
paid-in-capital
|
|
|
248,967,897
|
|
|
|
183,602,755
|
|
Investment income in excess of distributions
|
|
|
5,400,419
|
|
|
|
3,365,548
|
|
Accumulated realized gain (loss) on investments
|
|
|
4,736,393
|
|
|
|
(8,244,376
|
)
|
Net unrealized appreciation (depreciation) of investments
|
|
|
(2,323,001
|
)
|
|
|
1,740,303
|
|
|
|
|
|
|
|
|
|
|
Total net assets
|
|
|
256,800,333
|
|
|
|
180,479,159
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and net assets
|
|
$
|
486,732,343
|
|
|
$
|
388,045,494
|
|
|
|
|
|
|
|
|
|
|
Net asset value per share
|
|
$
|
13.79
|
|
|
$
|
12.09
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
3
TRIANGLE
CAPITAL CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
Three Months
|
|
|
Six Months
|
|
|
Six Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
Investment income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan interest, fee and dividend income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Control/Non-Affiliate investments
|
|
$
|
11,224,891
|
|
|
$
|
5,217,203
|
|
|
$
|
19,974,340
|
|
|
$
|
10,018,845
|
|
Affiliate investments
|
|
|
1,724,555
|
|
|
|
1,078,074
|
|
|
|
3,098,798
|
|
|
|
2,108,670
|
|
Control investments
|
|
|
888,593
|
|
|
|
369,325
|
|
|
|
1,146,861
|
|
|
|
722,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loan interest, fee and dividend income
|
|
|
13,838,039
|
|
|
|
6,664,602
|
|
|
|
24,219,999
|
|
|
|
12,849,985
|
|
Paid-in-kind interest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Control/Non-Affiliate investments
|
|
|
1,886,506
|
|
|
|
1,135,906
|
|
|
|
3,368,326
|
|
|
|
1,963,507
|
|
Affiliate investments
|
|
|
549,724
|
|
|
|
303,246
|
|
|
|
944,895
|
|
|
|
565,923
|
|
Control investments
|
|
|
53,504
|
|
|
|
133,909
|
|
|
|
118,801
|
|
|
|
259,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total paid-in-kind interest income
|
|
|
2,489,734
|
|
|
|
1,573,061
|
|
|
|
4,432,022
|
|
|
|
2,789,287
|
|
Interest income from cash and cash equivalent investments
|
|
|
85,973
|
|
|
|
56,484
|
|
|
|
187,122
|
|
|
|
139,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment income
|
|
|
16,413,746
|
|
|
|
8,294,147
|
|
|
|
28,839,143
|
|
|
|
15,779,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
2,541,369
|
|
|
|
1,838,004
|
|
|
|
4,531,353
|
|
|
|
3,577,984
|
|
Amortization of deferred financing fees
|
|
|
212,382
|
|
|
|
99,630
|
|
|
|
522,145
|
|
|
|
196,061
|
|
General and administrative expenses
|
|
|
3,436,474
|
|
|
|
1,797,889
|
|
|
|
5,833,997
|
|
|
|
3,652,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
6,190,225
|
|
|
|
3,735,523
|
|
|
|
10,887,495
|
|
|
|
7,426,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
10,223,521
|
|
|
|
4,558,624
|
|
|
|
17,951,648
|
|
|
|
8,352,308
|
|
Net realized gain (loss) on investments Non
Control/Non-Affiliate
|
|
|
827,599
|
|
|
|
(3,032,785
|
)
|
|
|
827,599
|
|
|
|
(2,833,585
|
)
|
Net realized gain on investments Control
|
|
|
12,153,170
|
|
|
|
|
|
|
|
12,153,170
|
|
|
|
|
|
Net realized gain on investments Affiliate
|
|
|
|
|
|
|
3,541,238
|
|
|
|
|
|
|
|
3,541,238
|
|
Net unrealized appreciation (depreciation) of investments
|
|
|
(8,659,059
|
)
|
|
|
1,840,049
|
|
|
|
(4,063,304
|
)
|
|
|
2,049,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net gain on investments before income taxes
|
|
|
4,321,710
|
|
|
|
2,348,502
|
|
|
|
8,917,465
|
|
|
|
2,757,045
|
|
Income tax benefit (provision)
|
|
|
|
|
|
|
(39,846
|
)
|
|
|
27,359
|
|
|
|
(92,744
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
14,545,231
|
|
|
$
|
6,867,280
|
|
|
$
|
26,896,472
|
|
|
$
|
11,016,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income per share basic and diluted
|
|
$
|
0.55
|
|
|
$
|
0.38
|
|
|
$
|
1.01
|
|
|
$
|
0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations per
share basic and diluted
|
|
$
|
0.78
|
|
|
$
|
0.57
|
|
|
$
|
1.52
|
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
$
|
0.44
|
|
|
$
|
0.41
|
|
|
$
|
0.86
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding basic
and diluted
|
|
|
18,570,929
|
|
|
|
12,003,068
|
|
|
|
17,714,507
|
|
|
|
11,940,724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
4
TRIANGLE
CAPITAL CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
|
Accumulated
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
|
Realized
|
|
|
Unrealized
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
in Excess of
|
|
|
Gains
|
|
|
Appreciation
|
|
|
Total
|
|
|
|
Number
|
|
|
Par
|
|
|
Paid In
|
|
|
(Less Than)
|
|
|
(Losses) on
|
|
|
(Depreciation)
|
|
|
Net
|
|
|
|
of Shares
|
|
|
Value
|
|
|
Capital
|
|
|
Distributions
|
|
|
Investments
|
|
|
of 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,352,308
|
|
|
|
|
|
|
|
|
|
|
|
8,352,308
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
545,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
545,670
|
|
Net realized gain on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
707,653
|
|
|
|
(188,682
|
)
|
|
|
518,971
|
|
Net unrealized gain on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,238,074
|
|
|
|
2,238,074
|
|
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(92,744
|
)
|
|
|
|
|
|
|
|
|
|
|
(92,744
|
)
|
Dividends/distributions declared
|
|
|
237,346
|
|
|
|
237
|
|
|
|
3,220,614
|
|
|
|
(9,817,051
|
)
|
|
|
|
|
|
|
|
|
|
|
(6,596,200
|
)
|
Expenses related to public offering of common stock
|
|
|
|
|
|
|
|
|
|
|
(21,001
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21,001
|
)
|
Issuance of restricted stock
|
|
|
152,944
|
|
|
|
153
|
|
|
|
(153
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock withheld for payroll taxes upon vesting of
restricted stock
|
|
|
(18,617
|
)
|
|
|
(19
|
)
|
|
|
(234,893
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(234,912
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2010
|
|
|
12,074,184
|
|
|
$
|
12,074
|
|
|
$
|
140,279,496
|
|
|
$
|
(487,035
|
)
|
|
$
|
1,155,817
|
|
|
$
|
(7,150,994
|
)
|
|
$
|
133,809,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
|
|
|
Accumulated
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
|
|
|
Realized
|
|
|
Unrealized
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
|
|
|
in Excess of
|
|
|
Gains
|
|
|
Appreciation
|
|
|
Total
|
|
|
|
Number
|
|
|
Par
|
|
|
Paid In
|
|
|
(Less Than)
|
|
|
(Losses) on
|
|
|
(Depreciation)
|
|
|
Net
|
|
|
|
of Shares
|
|
|
Value
|
|
|
Capital
|
|
|
Distributions
|
|
|
Investments
|
|
|
of Investments
|
|
|
Assets
|
|
|
Balance, January 1, 2011
|
|
|
14,928,987
|
|
|
$
|
14,929
|
|
|
$
|
183,602,755
|
|
|
$
|
3,365,548
|
|
|
$
|
(8,244,376
|
)
|
|
$
|
1,740,303
|
|
|
$
|
180,479,159
|
|
Net investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,951,648
|
|
|
|
|
|
|
|
|
|
|
|
17,951,648
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
909,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
909,500
|
|
Net realized gain on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,980,769
|
|
|
|
(11,137,330
|
)
|
|
|
1,843,439
|
|
Net unrealized gain on investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,074,026
|
|
|
|
7,074,026
|
|
Income tax benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,359
|
|
|
|
|
|
|
|
|
|
|
|
27,359
|
|
Dividends/distributions declared
|
|
|
117,142
|
|
|
|
117
|
|
|
|
2,109,433
|
|
|
|
(15,944,136
|
)
|
|
|
|
|
|
|
|
|
|
|
(13,834,586
|
)
|
Public offering of common stock
|
|
|
3,450,000
|
|
|
|
3,450
|
|
|
|
62,989,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,993,096
|
|
Issuance of restricted stock
|
|
|
161,174
|
|
|
|
161
|
|
|
|
(161
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock withheld for payroll taxes upon vesting of
restricted stock
|
|
|
(32,065
|
)
|
|
|
(32
|
)
|
|
|
(643,276
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(643,308
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2011
|
|
|
18,625,238
|
|
|
$
|
18,625
|
|
|
$
|
248,967,897
|
|
|
$
|
5,400,419
|
|
|
$
|
4,736,393
|
|
|
$
|
(2,323,001
|
)
|
|
$
|
256,800,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
5
TRIANGLE
CAPITAL CORPORATION
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
$
|
26,896,472
|
|
|
$
|
11,016,609
|
|
Adjustments to reconcile net increase in net assets resulting
from operations to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Purchases of portfolio investments
|
|
|
(136,291,889
|
)
|
|
|
(58,216,292
|
)
|
Repayments received/sales of portfolio investments
|
|
|
61,522,270
|
|
|
|
21,702,621
|
|
Loan origination and other fees received
|
|
|
2,689,172
|
|
|
|
1,157,860
|
|
Net realized gain on investments
|
|
|
(12,980,769
|
)
|
|
|
(707,653
|
)
|
Net unrealized depreciation (appreciation) of investments
|
|
|
3,919,574
|
|
|
|
(1,718,790
|
)
|
Deferred income taxes
|
|
|
143,729
|
|
|
|
(330,600
|
)
|
Payment-in-kind interest accrued, net of payments received
|
|
|
(1,037,758
|
)
|
|
|
(1,483,865
|
)
|
Amortization of deferred financing fees
|
|
|
522,145
|
|
|
|
196,061
|
|
Accretion of loan origination and other fees
|
|
|
(711,355
|
)
|
|
|
(418,082
|
)
|
Accretion of loan discounts
|
|
|
(518,337
|
)
|
|
|
(312,106
|
)
|
Accretion of discount on SBA-guaranteed debentures payable
|
|
|
85,068
|
|
|
|
|
|
Depreciation expense
|
|
|
14,477
|
|
|
|
9,609
|
|
Stock-based compensation
|
|
|
909,500
|
|
|
|
545,670
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Interest and fees receivable
|
|
|
(712,007
|
)
|
|
|
(374,704
|
)
|
Prepaid expenses
|
|
|
(435,754
|
)
|
|
|
25,041
|
|
Accounts payable and accrued liabilities
|
|
|
4,700
|
|
|
|
(1,080,809
|
)
|
Interest payable
|
|
|
723,850
|
|
|
|
99,921
|
|
Deferred revenue
|
|
|
|
|
|
|
(37,500
|
)
|
Taxes payable
|
|
|
(191,672
|
)
|
|
|
(6,830
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(55,448,584
|
)
|
|
|
(29,933,839
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(18,115
|
)
|
|
|
(20,155
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(18,115
|
)
|
|
|
(20,155
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
Borrowings under SBA-guaranteed debentures payable
|
|
|
31,100,000
|
|
|
|
32,590,000
|
|
Repayments of SBA-guaranteed debentures payable
|
|
|
(9,500,000
|
)
|
|
|
|
|
Financing fees paid
|
|
|
(1,226,176
|
)
|
|
|
(1,324,307
|
)
|
Proceeds from public stock offerings, net of expenses
|
|
|
62,993,096
|
|
|
|
(21,001
|
)
|
Common stock withheld for payroll taxes upon vesting of
restricted stock
|
|
|
(643,308
|
)
|
|
|
(234,912
|
)
|
Cash dividends paid
|
|
|
(13,834,586
|
)
|
|
|
(11,370,734
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
68,889,026
|
|
|
|
19,639,046
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
13,422,327
|
|
|
|
(10,314,948
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
54,820,222
|
|
|
|
55,200,421
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
68,242,549
|
|
|
$
|
44,885,473
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
3,722,435
|
|
|
$
|
3,478,064
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
6
TRIANGLE
CAPITAL CORPORATION
June 30,
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
Non-Control/Non-Affiliate Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ambient Air Corporation (AA) and Peaden-Hobbs
Mechanical,
|
|
Specialty Trade
Contractors
|
|
Subordinated Note-AA (15% Cash, 3% PIK, Due 06/13)
|
|
$
|
4,065,043
|
|
|
$
|
4,033,531
|
|
|
$
|
4,033,531
|
|
LLC (PHM) (2)%*
|
|
|
|
Common Stock-PHM (128,571 shares)
|
|
|
|
|
|
|
128,571
|
|
|
|
128,571
|
|
|
|
|
|
Common Stock Warrants-AA (455 shares)
|
|
|
|
|
|
|
142,361
|
|
|
|
1,622,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,065,043
|
|
|
|
4,304,463
|
|
|
|
5,784,102
|
|
Anns House of Nuts, Inc. (4)%*
|
|
Trail Mixes and Nut Producers
|
|
Subordinated Note (12% Cash, 1% PIK, Due 11/17)
|
|
|
7,045,180
|
|
|
|
6,659,527
|
|
|
|
6,659,527
|
|
|
|
|
|
Preferred A Units (22,368 units)
|
|
|
|
|
|
|
2,124,957
|
|
|
|
2,124,957
|
|
|
|
|
|
Preferred B Units (10,380 units)
|
|
|
|
|
|
|
986,059
|
|
|
|
986,059
|
|
|
|
|
|
Common Units (190,935 units)
|
|
|
|
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
|
|
Common Stock Warrants (14,558 shares)
|
|
|
|
|
|
|
14,558
|
|
|
|
14,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,045,180
|
|
|
|
9,935,101
|
|
|
|
9,935,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assurance Operations Corporation (0)%*
|
|
Metal Fabrication
|
|
Common Stock (517 Shares)
|
|
|
|
|
|
|
516,867
|
|
|
|
511,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
516,867
|
|
|
|
511,000
|
|
BioSan Laboratories, Inc. (2)%*
|
|
Nutritional Supplement Manufacturing and Distribution
|
|
Subordinated Note (12% Cash, 3.8% PIK, Due 10/16)
|
|
|
5,175,000
|
|
|
|
5,071,500
|
|
|
|
5,071,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,175,000
|
|
|
|
5,071,500
|
|
|
|
5,071,500
|
|
Botanical Laboratories, Inc. (4)%*
|
|
Nutritional Supplement Manufacturing and Distribution
|
|
Senior Notes (14% Cash, 1% PIK, Due 02/15)
|
|
|
10,324,703
|
|
|
|
9,727,374
|
|
|
|
9,208,000
|
|
|
|
|
|
Common Unit Warrants (998,680 Units)
|
|
|
|
|
|
|
474,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,324,703
|
|
|
|
10,201,974
|
|
|
|
9,208,000
|
|
Capital Contractors, Inc. (3)%*
|
|
Janitorial and Facilities Maintenance Services
|
|
Subordinated Notes (12% Cash, 2% PIK, Due 12/15)
|
|
|
9,091,889
|
|
|
|
8,470,658
|
|
|
|
8,470,658
|
|
|
|
|
|
Common Stock Warrants (20 shares)
|
|
|
|
|
|
|
492,000
|
|
|
|
409,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,091,889
|
|
|
|
8,962,658
|
|
|
|
8,879,658
|
|
Carolina Beer and Beverage, LLC (5)%*
|
|
Beverage Manufacturing and Packaging
|
|
Subordinated Note (12% Cash, 4% PIK, Due 02/16)
|
|
|
12,993,885
|
|
|
|
12,769,510
|
|
|
|
12,769,510
|
|
|
|
|
|
Class A Units (11,974 Units)
|
|
|
|
|
|
|
1,077,615
|
|
|
|
926,000
|
|
|
|
|
|
Class B Units (11,974 Units)
|
|
|
|
|
|
|
119,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,993,885
|
|
|
|
13,966,860
|
|
|
|
13,695,510
|
|
CRS Reprocessing, LLC (9)%*
|
|
Fluid Reprocessing Services
|
|
Subordinated Note (12% Cash, 2% PIK, Due 11/15)
|
|
|
11,241,853
|
|
|
|
10,861,396
|
|
|
|
10,861,396
|
|
|
|
|
|
Subordinated Note (10% Cash, 4% PIK, Due 11/15)
|
|
|
10,794,017
|
|
|
|
9,701,608
|
|
|
|
9,701,608
|
|
|
|
|
|
Series C Preferred Units (13 Units)
|
|
|
|
|
|
|
122,377
|
|
|
|
155,000
|
|
|
|
|
|
Common Unit Warrant (550 Units)
|
|
|
|
|
|
|
1,253,556
|
|
|
|
2,267,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,035,870
|
|
|
|
21,938,937
|
|
|
|
22,985,004
|
|
CV Holdings, LLC (6)%*
|
|
Specialty Healthcare Products Manufacturer
|
|
Subordinated Note (12% Cash, 4% PIK, Due 09/13)
|
|
|
9,091,591
|
|
|
|
8,550,239
|
|
|
|
8,550,239
|
|
|
|
|
|
Subordinated Note (12% Cash, Due 09/13)
|
|
|
6,000,000
|
|
|
|
5,890,468
|
|
|
|
5,890,468
|
|
|
|
|
|
Royalty rights
|
|
|
|
|
|
|
874,400
|
|
|
|
785,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,091,591
|
|
|
|
15,315,107
|
|
|
|
15,225,707
|
|
DLR Restaurants, LLC (3)%*
|
|
Restaurant
|
|
Subordinated Note (12% Cash, 2% PIK, Due 03/16)
|
|
|
9,056,130
|
|
|
|
8,825,062
|
|
|
|
8,825,062
|
|
|
|
|
|
Royalty rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,056,130
|
|
|
|
8,825,062
|
|
|
|
8,825,062
|
|
7
TRIANGLE
CAPITAL CORPORATION
Unaudited
Consolidated Schedule of
Investments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
Electronic Systems Protection, Inc. (2)%*
|
|
Power Protection Systems Manufacturing
|
|
Subordinated Note (12% Cash, 2% PIK, Due 12/15)
|
|
$
|
3,215,720
|
|
|
$
|
3,196,124
|
|
|
$
|
3,196,124
|
|
|
|
|
|
Senior Note (8.3% Cash, Due 01/14)
|
|
|
801,417
|
|
|
|
801,417
|
|
|
|
801,417
|
|
|
|
|
|
Common Stock (570 shares)
|
|
|
|
|
|
|
285,000
|
|
|
|
187,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,017,137
|
|
|
|
4,282,541
|
|
|
|
4,184,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Hardware Holdings, LLC (0)%*
|
|
Machined Parts Distribution
|
|
Voting Units (4,833 units)
|
|
|
|
|
|
|
4,833
|
|
|
|
1,115,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,833
|
|
|
|
1,115,000
|
|
Frozen Specialties, Inc. (3)%*
|
|
Frozen Foods Manufacturer
|
|
Subordinated Note (13% Cash, 5% PIK, Due 07/14)
|
|
|
8,265,246
|
|
|
|
8,164,068
|
|
|
|
8,164,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,265,246
|
|
|
|
8,164,068
|
|
|
|
8,164,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garden Fresh Restaurant Corp. (0)%*
|
|
Restaurant
|
|
Membership Units (5,000 units)
|
|
|
|
|
|
|
500,000
|
|
|
|
762,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
762,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Expressions Group Holdings,
|
|
Dental Practice Management
|
|
Class A Units (225 Units)
|
|
|
|
|
|
|
450,000
|
|
|
|
680,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LLC (0)%*
|
|
|
|
|
|
|
|
|
|
|
450,000
|
|
|
|
680,000
|
|
Grindmaster-Cecilware Corp. (2)%*
|
|
Food Services Equipment Manufacturer
|
|
Subordinated Note (12% Cash, 4.5% PIK, Due 04/16)
|
|
|
6,131,957
|
|
|
|
6,046,419
|
|
|
|
6,046,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,131,957
|
|
|
|
6,046,419
|
|
|
|
6,046,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hatch Chile Co., LLC (2)%*
|
|
Food Products Distributer
|
|
Senior Note (19% Cash, Due 07/15)
|
|
|
4,500,000
|
|
|
|
4,402,500
|
|
|
|
4,402,500
|
|
|
|
|
|
Subordinated Note (14% Cash, Due 07/15)
|
|
|
1,000,000
|
|
|
|
851,253
|
|
|
|
851,253
|
|
|
|
|
|
Unit Purchase Warrant (5,265 Units)
|
|
|
|
|
|
|
149,800
|
|
|
|
132,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500,000
|
|
|
|
5,403,553
|
|
|
|
5,385,753
|
|
Home Physicians, LLC (HP) and Home Physicians
Holdings, LP
|
|
In-home Primary Care Physician Services
|
|
Subordinated Note-HP (12% Cash, 5% PIK, Due 03/16)
|
|
|
10,385,839
|
|
|
|
10,169,213
|
|
|
|
10,169,213
|
|
(HPH) (4)%*
|
|
|
|
Subordinated Note-HPH (4% Cash, 6% PIK, Due 03/16)
|
|
|
1,245,116
|
|
|
|
1,245,116
|
|
|
|
1,245,116
|
|
|
|
|
|
Royalty rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,630,955
|
|
|
|
11,414,329
|
|
|
|
11,414,329
|
|
Infrastructure Corporation of America, Inc. (4)%*
|
|
Roadway Maintenance, Repair and Engineering Services
|
|
Subordinated Note (12% Cash, 1% PIK, Due 10/15)
|
|
|
10,823,378
|
|
|
|
9,718,271
|
|
|
|
9,718,271
|
|
|
|
|
|
Common Stock Purchase Warrant (199,526 shares)
|
|
|
|
|
|
|
980,000
|
|
|
|
980,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,823,378
|
|
|
|
10,698,271
|
|
|
|
10,698,271
|
|
Inland Pipe Rehabilitation Holding Company LLC (8)%*
|
|
Cleaning and Repair Services
|
|
Subordinated Note (13% Cash, 2.5% PIK, Due 12/16)
|
|
|
20,020,834
|
|
|
|
19,720,834
|
|
|
|
19,720,834
|
|
|
|
|
|
Membership Interest Purchase Warrant (3.0)%
|
|
|
|
|
|
|
853,500
|
|
|
|
2,138,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,020,834
|
|
|
|
20,574,334
|
|
|
|
21,858,834
|
|
Library Systems & Services, LLC (2)%*
|
|
Municipal Business Services
|
|
Subordinated Note (12.5% Cash, 4.5% PIK, Due 06/15)
|
|
|
5,368,782
|
|
|
|
5,235,539
|
|
|
|
5,235,539
|
|
|
|
|
|
Common Stock Warrants (112 shares)
|
|
|
|
|
|
|
58,995
|
|
|
|
516,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,368,782
|
|
|
|
5,294,534
|
|
|
|
5,751,539
|
|
McKenzie Sports Products, LLC (2)%*
|
|
Taxidermy Manufacturer
|
|
Subordinated Note (13% Cash, 1% PIK, Due 10/17)
|
|
|
6,040,926
|
|
|
|
5,929,267
|
|
|
|
5,929,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,040,926
|
|
|
|
5,929,267
|
|
|
|
5,929,267
|
|
Media Temple, Inc. (5)%*
|
|
Web Hosting Services
|
|
Subordinated Note (12% Cash, 5.5% PIK, Due 04/15)
|
|
|
8,800,000
|
|
|
|
8,641,122
|
|
|
|
8,641,122
|
|
|
|
|
|
Convertible Note (8% Cash, 6% PIK, Due 04/15)
|
|
|
3,200,000
|
|
|
|
2,722,222
|
|
|
|
2,722,222
|
|
|
|
|
|
Common Stock Purchase Warrant (28,000 Shares)
|
|
|
|
|
|
|
536,000
|
|
|
|
1,363,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000,000
|
|
|
|
11,899,344
|
|
|
|
12,726,344
|
|
8
TRIANGLE
CAPITAL CORPORATION
Unaudited
Consolidated Schedule of
Investments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
Minco Technology Labs, LLC (2)%*
|
|
Semiconductor Distribution
|
|
Subordinated Note (13% Cash, 3.25% PIK, Due 05/16)
|
|
$
|
5,185,928
|
|
|
$
|
5,075,704
|
|
|
$
|
5,075,704
|
|
|
|
|
|
Class A Units (5,000 Units)
|
|
|
|
|
|
|
500,000
|
|
|
|
114,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,185,928
|
|
|
|
5,575,704
|
|
|
|
5,189,704
|
|
National Investment Managers Inc. (5)%*
|
|
Retirement Plan Administrator
|
|
Subordinated Note (11% Cash, 5% PIK, Due 09/16)
|
|
|
11,409,593
|
|
|
|
11,137,817
|
|
|
|
11,137,817
|
|
|
|
|
|
Preferred A Units (90,000 Units)
|
|
|
|
|
|
|
900,000
|
|
|
|
900,000
|
|
|
|
|
|
Common Units (10,000 Units)
|
|
|
|
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,409,593
|
|
|
|
12,137,817
|
|
|
|
12,137,817
|
|
Novolyte Technologies, Inc. (4)%*
|
|
Specialty Manufacturing
|
|
Subordinated Note (12% Cash, 4% PIK, Due 07/16)
|
|
|
7,117,916
|
|
|
|
6,987,222
|
|
|
|
6,987,222
|
|
|
|
|
|
Subordinated Note (12% Cash, 4% PIK, Due 07/16)
|
|
|
2,287,902
|
|
|
|
2,245,894
|
|
|
|
2,245,894
|
|
|
|
|
|
Preferred Units (641 units)
|
|
|
|
|
|
|
661,227
|
|
|
|
664,600
|
|
|
|
|
|
Common Units (24,522 units)
|
|
|
|
|
|
|
165,306
|
|
|
|
370,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,405,818
|
|
|
|
10,059,649
|
|
|
|
10,267,916
|
|
Pomeroy IT Solutions (4)%*
|
|
Information Technology Outsourcing Services
|
|
Subordinated Notes (13% Cash, 2% PIK, Due 02/16)
|
|
|
10,077,915
|
|
|
|
9,830,910
|
|
|
|
9,830,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,077,915
|
|
|
|
9,830,910
|
|
|
|
9,830,910
|
|
PowerDirect Marketing, LLC (3)%*
|
|
Marketing Services
|
|
Subordinated Note (13% Cash, 2% PIK, Due 05/16)
|
|
|
8,018,675
|
|
|
|
7,456,675
|
|
|
|
7,456,675
|
|
|
|
|
|
Common Unit Purchase Warrants
|
|
|
|
|
|
|
402,000
|
|
|
|
402,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,018,675
|
|
|
|
7,858,675
|
|
|
|
7,858,675
|
|
SRC, Inc. (3)%*
|
|
Specialty Chemical Manufacturer
|
|
Subordinated Notes (12% Cash, 2% PIK, Due 09/14)
|
|
|
8,791,384
|
|
|
|
8,518,660
|
|
|
|
8,518,660
|
|
|
|
|
|
Common Stock Purchase Warrants
|
|
|
|
|
|
|
123,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,791,384
|
|
|
|
8,642,460
|
|
|
|
8,518,660
|
|
Syrgis Holdings, Inc. (2)%*
|
|
Specialty Chemical Manufacturer
|
|
Senior Notes (7.75%-10.75% Cash, Due 08/12-02/14)
|
|
|
2,587,642
|
|
|
|
2,576,533
|
|
|
|
2,576,533
|
|
|
|
|
|
Class C Units (2,114 units)
|
|
|
|
|
|
|
1,000,000
|
|
|
|
1,314,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,587,642
|
|
|
|
3,576,533
|
|
|
|
3,890,533
|
|
TBG Anesthesia Management, LLC (4)%*
|
|
Physician Management Services
|
|
Senior Note (13.5% Cash, Due 11/14)
|
|
|
11,000,000
|
|
|
|
10,652,503
|
|
|
|
10,652,503
|
|
|
|
|
|
Warrant (263 shares)
|
|
|
|
|
|
|
276,100
|
|
|
|
218,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000,000
|
|
|
|
10,928,603
|
|
|
|
10,870,503
|
|
TMR Automotive Service Supply, LLC (2)%
|
|
Automotive Supplies
|
|
Subordinated Note (12% Cash, 1% PIK, Due 03/16)
|
|
|
5,000,000
|
|
|
|
4,715,978
|
|
|
|
4,715,978
|
|
|
|
|
|
Unit Purchase Warrant (329,518 units)
|
|
|
|
|
|
|
195,000
|
|
|
|
195,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000,000
|
|
|
|
4,910,978
|
|
|
|
4,910,978
|
|
Top Knobs USA, Inc. (4)%
|
|
Hardware Designer and Distributor
|
|
Subordinated Note (12% Cash, 4.5% PIK, Due 05/17)
|
|
|
10,133,315
|
|
|
|
9,954,692
|
|
|
|
9,954,692
|
|
|
|
|
|
Common Stock (26,593 shares)
|
|
|
|
|
|
|
750,000
|
|
|
|
534,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,133,315
|
|
|
|
10,704,692
|
|
|
|
10,488,692
|
|
TrustHouse Services Group, Inc. (2)%*
|
|
Food Management Services
|
|
Subordinated Note (12% Cash, 2% PIK, Due 09/15)
|
|
|
4,485,308
|
|
|
|
4,431,866
|
|
|
|
4,431,866
|
|
|
|
|
|
Class A Units (1,495 units)
|
|
|
|
|
|
|
475,000
|
|
|
|
602,000
|
|
|
|
|
|
Class B Units (79 units)
|
|
|
|
|
|
|
25,000
|
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,485,308
|
|
|
|
4,931,866
|
|
|
|
5,042,866
|
|
Tulsa Inspection Resources, Inc. (2)%*
|
|
Pipeline Inspection Services
|
|
Subordinated Note (14%-17.5% Cash, Due 03/14)
|
|
|
5,810,588
|
|
|
|
5,531,094
|
|
|
|
5,531,094
|
|
|
|
|
|
Common Unit (1 unit)
|
|
|
|
|
|
|
200,000
|
|
|
|
3,000
|
|
|
|
|
|
Common Stock Warrants (8 shares)
|
|
|
|
|
|
|
321,000
|
|
|
|
14,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,810,588
|
|
|
|
6,052,094
|
|
|
|
5,548,094
|
|
9
TRIANGLE
CAPITAL CORPORATION
Unaudited
Consolidated Schedule of
Investments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
Twin-Star International, Inc. (2)%*
|
|
Consumer Home Furnishings Manufacturer
|
|
Subordinated Note (12% Cash, 1% PIK, Due 04/14)
|
|
$
|
4,500,000
|
|
|
$
|
4,468,976
|
|
|
$
|
4,468,976
|
|
|
|
|
|
Senior Note (4.3%, Due 04/13)
|
|
|
1,057,740
|
|
|
|
1,057,740
|
|
|
|
1,057,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,557,740
|
|
|
|
5,526,716
|
|
|
|
5,526,716
|
|
Wholesale Floors, Inc. (1)%*
|
|
Commercial Services
|
|
Subordinated Note (12.5% Cash, 3.5% PIK, Due 06/14)
|
|
|
3,845,088
|
|
|
|
3,456,370
|
|
|
|
3,456,370
|
|
|
|
|
|
Membership Interest Purchase Warrant (4.0)%
|
|
|
|
|
|
|
132,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,845,088
|
|
|
|
3,589,170
|
|
|
|
3,456,370
|
|
Yellowstone Landscape Group, Inc. (5)%*
|
|
Landscaping Services
|
|
Subordinated Note (12% Cash, 3% PIK, Due 04/14)
|
|
|
12,626,120
|
|
|
|
12,461,955
|
|
|
|
12,461,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,626,120
|
|
|
|
12,461,955
|
|
|
|
12,461,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Non-Control/Non-Affiliate Investments
|
|
|
|
|
298,613,620
|
|
|
|
306,487,844
|
|
|
|
310,837,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American De-Rosa Lamparts, LLC and Hallmark Lighting (2)%*
|
|
Wholesale and Distribution
|
|
Subordinated Note (10% PIK, Due 10/13)
|
|
|
5,756,249
|
|
|
|
5,182,781
|
|
|
|
4,625,000
|
|
|
|
|
|
Membership Units (6,516 Units)
|
|
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,756,249
|
|
|
|
5,532,781
|
|
|
|
4,625,000
|
|
AP Services, Inc. (3)%*
|
|
Fluid Sealing Supplies and Services
|
|
Subordinated Note (12% Cash, 2% PIK, Due 09/15)
|
|
|
5,893,796
|
|
|
|
5,791,139
|
|
|
|
5,791,139
|
|
|
|
|
|
Class A Units (933 units)
|
|
|
|
|
|
|
933,333
|
|
|
|
1,003,000
|
|
|
|
|
|
Class B Units (496 units)
|
|
|
|
|
|
|
|
|
|
|
85,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,893,796
|
|
|
|
6,724,472
|
|
|
|
6,879,139
|
|
Asset Point, LLC (2)%*
|
|
Asset Management Software Provider
|
|
Senior Note (12% Cash, 5% PIK, Due 03/13)
|
|
|
5,902,491
|
|
|
|
5,860,612
|
|
|
|
5,612,000
|
|
|
|
|
|
Senior Note (12% Cash, 2% PIK, Due 07/15)
|
|
|
611,296
|
|
|
|
611,296
|
|
|
|
506,000
|
|
|
|
|
|
Options to Purchase Membership Units (342,407 units)
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
Membership Unit Warrants (356,506 units)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,513,787
|
|
|
|
6,971,908
|
|
|
|
6,118,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axxiom Manufacturing, Inc. (0)%*
|
|
Industrial Equipment Manufacturer
|
|
Common Stock (136,400 shares)
|
|
|
|
|
|
|
200,000
|
|
|
|
877,000
|
|
|
|
|
|
Common Stock Warrant (4,000 shares)
|
|
|
|
|
|
|
|
|
|
|
26,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
903,000
|
|
Brantley Transportation, LLC (Brantley
Transportation) and Pine Street Holdings, LLC (Pine
|
|
Oil and Gas Services
|
|
Subordinated Note Brantley Transportation (14% Cash,
5% PIK, Due 12/12)
|
|
|
3,848,230
|
|
|
|
3,801,017
|
|
|
|
3,801,017
|
|
Street)(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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,848,230
|
|
|
|
4,034,617
|
|
|
|
3,801,017
|
|
Captek Softgel International, Inc. (3)%*
|
|
Nutraceutical Manufacturer
|
|
Subordinated Note (12% Cash, 4% PIK, Due 08/16)
|
|
|
8,109,895
|
|
|
|
7,955,135
|
|
|
|
7,955,135
|
|
|
|
|
|
Class A Units (80,000 units)
|
|
|
|
|
|
|
800,000
|
|
|
|
800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,109,895
|
|
|
|
8,755,135
|
|
|
|
8,755,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dyson Corporation (1)%*
|
|
Custom Forging and Fastener Supplies
|
|
Class A Units (1,000,000 units)
|
|
|
|
|
|
|
1,000,000
|
|
|
|
3,456,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
3,456,000
|
|
10
TRIANGLE
CAPITAL CORPORATION
Unaudited
Consolidated Schedule of
Investments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
Equisales, LLC (2)%*
|
|
Energy Products and Services
|
|
Subordinated Note (13% Cash, 4% PIK, Due 04/12)
|
|
$
|
3,061,666
|
|
|
$
|
3,036,950
|
|
|
$
|
3,036,950
|
|
|
|
|
|
Class A Units (500,000 units)
|
|
|
|
|
|
|
480,900
|
|
|
|
870,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,061,666
|
|
|
|
3,517,850
|
|
|
|
3,906,950
|
|
Fischbein Partners, LLC (3)%*
|
|
Packaging and Materials Handling Equipment Manufacturer
|
|
Subordinated Note (12% Cash, 2% PIK, Due 10/16)
|
|
|
6,687,867
|
|
|
|
6,558,912
|
|
|
|
6,558,912
|
|
|
|
|
|
Class A Units (1,750,000 units)
|
|
|
|
|
|
|
417,088
|
|
|
|
1,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,687,867
|
|
|
|
6,976,000
|
|
|
|
8,308,912
|
|
Main Street Gourmet, LLC (2)%*
|
|
Baked Goods Provider
|
|
Subordinated Notes (12% Cash, 4.5% PIK, Due 10/16)
|
|
|
4,042,000
|
|
|
|
3,964,620
|
|
|
|
3,964,620
|
|
|
|
|
|
Jr. Subordinated Notes (8% Cash, 2% PIK, Due 04/17)
|
|
|
1,004,667
|
|
|
|
985,324
|
|
|
|
985,324
|
|
|
|
|
|
Preferred Units (233 units)
|
|
|
|
|
|
|
233,478
|
|
|
|
233,478
|
|
|
|
|
|
Common Units (1,652 units)
|
|
|
|
|
|
|
16,522
|
|
|
|
16,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,046,667
|
|
|
|
5,199,944
|
|
|
|
5,199,944
|
|
Plantation Products, LLC (6)%*
|
|
Seed Manufacturing
|
|
Subordinated Notes (13% Cash, 4.5% PIK, Due 06/16)
|
|
|
14,858,871
|
|
|
|
14,519,822
|
|
|
|
14,519,822
|
|
|
|
|
|
Preferred Units (1,127 units)
|
|
|
|
|
|
|
1,127,000
|
|
|
|
1,127,000
|
|
|
|
|
|
Common Units (92,000 units)
|
|
|
|
|
|
|
23,000
|
|
|
|
23,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,858,871
|
|
|
|
15,669,822
|
|
|
|
15,669,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QC Holdings, Inc. (0)%*
|
|
Lab Testing Services
|
|
Common Stock (5,594 shares)
|
|
|
|
|
|
|
563,602
|
|
|
|
477,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
563,602
|
|
|
|
477,000
|
|
Technology Crops International (2)%*
|
|
Supply Chain Management Services
|
|
Subordinated Note (12% Cash, 5% PIK, Due 03/15)
|
|
|
5,469,088
|
|
|
|
5,394,179
|
|
|
|
5,394,179
|
|
|
|
|
|
Common Units (50 Units)
|
|
|
|
|
|
|
500,000
|
|
|
|
588,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,469,088
|
|
|
|
5,894,179
|
|
|
|
5,982,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste Recyclers Holdings, LLC (2)%*
|
|
Environmental and Facilities Services
|
|
Class A Preferred Units (280 Units)
|
|
|
|
|
|
|
2,251,100
|
|
|
|
|
|
|
|
|
|
Class B Preferred Units (985,372 Units)
|
|
|
|
|
|
|
3,304,218
|
|
|
|
3,696,000
|
|
|
|
|
|
Class C Preferred Units (1,444,475 Units)
|
|
|
|
|
|
|
1,499,531
|
|
|
|
1,546,000
|
|
|
|
|
|
Common Unit Purchase Warrant (1,170,083 Units)
|
|
|
|
|
|
|
748,900
|
|
|
|
|
|
|
|
|
|
Common Units (153,219 Units)
|
|
|
|
|
|
|
180,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,984,532
|
|
|
|
5,242,000
|
|
Wythe Will Tzetzo, LLC (5)%*
|
|
Confectionary Goods Distributor
|
|
Subordinated Notes (12% Cash, 2% PIK, Due 10/16)
|
|
|
10,303,000
|
|
|
|
9,795,430
|
|
|
|
9,795,430
|
|
|
|
|
|
Series A Preferred Units (74,764 units)
|
|
|
|
|
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
|
|
|
Common Unit Purchase Warrants (25,065 units)
|
|
|
|
|
|
|
301,510
|
|
|
|
301,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,303,000
|
|
|
|
11,596,940
|
|
|
|
11,596,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Affiliate Investments
|
|
|
|
|
|
|
75,549,116
|
|
|
|
90,621,782
|
|
|
|
90,921,038
|
|
11
TRIANGLE
CAPITAL CORPORATION
Unaudited
Consolidated Schedule of
Investments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Control Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FCL Graphics, Inc. (1)%*
|
|
Commercial Printing Services
|
|
Senior Note (3.8% Cash, 2% PIK, Due 9/11)
|
|
$
|
1,498,266
|
|
|
$
|
1,496,693
|
|
|
$
|
1,496,693
|
|
|
|
|
|
Senior Note (7.8% Cash, 2% PIK, Due 9/11)
|
|
|
2,065,882
|
|
|
|
2,062,625
|
|
|
|
969,307
|
|
|
|
|
|
2nd Lien Note (2.8% Cash, 8% PIK, Due 12/11)
|
|
|
3,612,244
|
|
|
|
2,997,390
|
|
|
|
|
|
|
|
|
|
Preferred Shares (35,000 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares (4,000 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members Interests (3,839 Units)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,176,392
|
|
|
|
6,556,708
|
|
|
|
2,466,000
|
|
Fire Sprinkler Systems, Inc. (0)%*
|
|
Specialty Trade Contractors
|
|
Subordinated Notes (2% PIK, Due 04/12)
|
|
|
3,247,948
|
|
|
|
2,780,028
|
|
|
|
494,000
|
|
|
|
|
|
Common Stock (2,978 shares)
|
|
|
|
|
|
|
294,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,247,948
|
|
|
|
3,074,652
|
|
|
|
494,000
|
|
Fischbein, LLC (1)%*
|
|
Packaging and Materials Handling Equipment Manufacturer
|
|
Class A-1 Common Units (501,984 units)
|
|
|
|
|
|
|
59,315
|
|
|
|
283,816
|
|
|
|
|
|
Class A Common Units (3,839,068 units)
|
|
|
|
|
|
|
453,630
|
|
|
|
1,859,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
512,945
|
|
|
|
2,143,249
|
|
Gerli & Company (1)%*
|
|
Specialty Woven Fabrics Manufacturer
|
|
Subordinated Note (8.5% Cash, Due 03/15)
|
|
|
3,064,458
|
|
|
|
3,000,000
|
|
|
|
2,156,000
|
|
|
|
|
|
Class A Preferred Shares (1,211 shares)
|
|
|
|
|
|
|
855,000
|
|
|
|
382,000
|
|
|
|
|
|
Class E Preferred Shares (400 shares)
|
|
|
|
|
|
|
161,440
|
|
|
|
|
|
|
|
|
|
Common Stock (300 shares)
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,064,458
|
|
|
|
4,116,440
|
|
|
|
2,538,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Control Investments
|
|
|
|
|
|
|
13,488,798
|
|
|
|
14,260,745
|
|
|
|
7,641,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments, June 30, 2011(159)%*
|
|
|
|
$
|
387,651,534
|
|
|
$
|
411,370,371
|
|
|
$
|
409,399,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Value as a percent of net assets
|
|
(1)
|
|
All debt investments are income
producing. Common stock, preferred stock and all warrants are
non-income producing.
|
|
(2)
|
|
Disclosures of interest rates on
notes include cash interest rates and payment-in-kind
(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.
12
TRIANGLE
CAPITAL CORPORATION
December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
Non-Control/Non-Affiliate Investments:
|
Ambient Air Corporation (AA) and Peaden-Hobbs
Mechanical, LLC
|
|
Specialty Trade Contractors
|
|
Subordinated Note-AA (15% Cash, 3% PIK, Due 06/13)
|
|
$
|
4,325,151
|
|
|
$
|
4,287,109
|
|
|
$
|
4,287,109
|
|
(PHM) (3)%*
|
|
|
|
Common Stock-PHM (128,571 shares)
|
|
|
|
|
|
|
128,571
|
|
|
|
68,500
|
|
|
|
|
|
Common Stock Warrants-AA (455 shares)
|
|
|
|
|
|
|
142,361
|
|
|
|
852,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,325,151
|
|
|
|
4,558,041
|
|
|
|
5,207,609
|
|
Anns House of Nuts, Inc. (5)%*
|
|
Trail Mixes and Nut Producers
|
|
Subordinated Note (12% Cash, 1% PIK, Due 11/17)
|
|
|
7,009,722
|
|
|
|
6,603,828
|
|
|
|
6,603,828
|
|
|
|
|
|
Preferred A Units (22,368 units)
|
|
|
|
|
|
|
2,124,957
|
|
|
|
2,124,957
|
|
|
|
|
|
Preferred B Units (10,380 units)
|
|
|
|
|
|
|
986,059
|
|
|
|
986,059
|
|
|
|
|
|
Common Units (190,935 units)
|
|
|
|
|
|
|
150,000
|
|
|
|
150,000
|
|
|
|
|
|
Common Stock Warrants (14,558 shares)
|
|
|
|
|
|
|
14,558
|
|
|
|
14,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,009,722
|
|
|
|
9,879,402
|
|
|
|
9,879,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assurance Operations Corporation (0)%*
|
|
Metal Fabrication
|
|
Common Stock (517 Shares)
|
|
|
|
|
|
|
516,867
|
|
|
|
528,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
516,867
|
|
|
|
528,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Botanical Laboratories, Inc. (5)%*
|
|
Nutritional Supplement Manufacturing
|
|
Senior Notes (14% Cash, Due 02/15)
|
|
|
10,500,000
|
|
|
|
9,843,861
|
|
|
|
9,843,861
|
|
|
|
and Distribution
|
|
Common Unit Warrants (998,680)
|
|
|
|
|
|
|
474,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,500,000
|
|
|
|
10,318,461
|
|
|
|
9,843,861
|
|
Capital Contractors, Inc. (5)%*
|
|
Janitorial and Facilities Maintenance Services
|
|
Subordinated Notes (12% Cash, 2% PIK, Due 12/15)
|
|
|
9,001,001
|
|
|
|
8,329,001
|
|
|
|
8,329,001
|
|
|
|
|
|
Common Stock Warrants (20 shares)
|
|
|
|
|
|
|
492,000
|
|
|
|
492,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,001,001
|
|
|
|
8,821,001
|
|
|
|
8,821,001
|
|
Carolina Beer and Beverage, LLC (8)%*
|
|
Beverage Manufacturing and Packaging
|
|
Subordinated Note (12% Cash , 4% PIK, Due 02/16)
|
|
|
12,865,233
|
|
|
|
12,622,521
|
|
|
|
12,622,521
|
|
|
|
|
|
Class A Units (11,974 Units)
|
|
|
|
|
|
|
1,077,615
|
|
|
|
1,077,615
|
|
|
|
|
|
Class B Units (11,974 Units)
|
|
|
|
|
|
|
119,735
|
|
|
|
119,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,865,233
|
|
|
|
13,819,871
|
|
|
|
13,819,871
|
|
CRS Reprocessing, LLC (8)%*
|
|
Fluid Reprocessing Services
|
|
Subordinated Note (12% Cash, 2% PIK, Due 11/15)
|
|
|
11,129,470
|
|
|
|
10,706,406
|
|
|
|
10,706,406
|
|
|
|
|
|
Subordinated Note (10% Cash, 4% PIK, Due 11/15)
|
|
|
3,403,211
|
|
|
|
3,052,570
|
|
|
|
3,052,570
|
|
|
|
|
|
Common Unit Warrant (340 Units)
|
|
|
|
|
|
|
564,454
|
|
|
|
1,043,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,532,681
|
|
|
|
14,323,430
|
|
|
|
14,801,976
|
|
CV Holdings, LLC (6)%*
|
|
Specialty Healthcare Products Manufacturer
|
|
Subordinated Note (12% Cash, 4% PIK, Due 09/13)
|
|
|
11,685,326
|
|
|
|
11,042,011
|
|
|
|
11,042,011
|
|
|
|
|
|
Royalty rights
|
|
|
|
|
|
|
874,400
|
|
|
|
622,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,685,326
|
|
|
|
11,916,411
|
|
|
|
11,664,511
|
|
Electronic Systems Protection, Inc. (2)%*
|
|
Power Protection Systems Manufacturing
|
|
Subordinated Note (12% Cash, 2% PIK, Due 12/15)
|
|
|
3,183,802
|
|
|
|
3,162,604
|
|
|
|
3,162,604
|
|
|
|
|
|
Senior Note (8.3% Cash, Due 01/14)
|
|
|
835,261
|
|
|
|
835,261
|
|
|
|
835,261
|
|
|
|
|
|
Common Stock (570 shares)
|
|
|
|
|
|
|
285,000
|
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,019,063
|
|
|
|
4,282,865
|
|
|
|
4,107,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy Hardware Holdings, LLC (0)%*
|
|
Machined Parts Distribution
|
|
Voting Units (4,833 units)
|
|
|
|
|
|
|
4,833
|
|
|
|
414,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,833
|
|
|
|
414,100
|
|
Frozen Specialties, Inc. (4)%*
|
|
Frozen Foods Manufacturer
|
|
Subordinated Note (13% Cash, 5% PIK, Due 07/14)
|
|
|
8,060,481
|
|
|
|
7,945,904
|
|
|
|
7,945,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,060,481
|
|
|
|
7,945,904
|
|
|
|
7,945,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garden Fresh Restaurant Corp. (0)%*
|
|
Restaurant
|
|
Membership Units (5,000 units)
|
|
|
|
|
|
|
500,000
|
|
|
|
723,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
723,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerli & Company (1)%*
|
|
Specialty Woven Fabrics Manufacturer
|
|
Subordinated Note (0.69% PIK, Due 08/11)
|
|
|
3,799,359
|
|
|
|
3,161,442
|
|
|
|
2,156,500
|
|
|
|
|
|
Subordinated Note (6.25% Cash, 11.75% PIK, Due 08/11)
|
|
|
137,233
|
|
|
|
120,000
|
|
|
|
120,000
|
|
|
|
|
|
Royalty rights
|
|
|
|
|
|
|
|
|
|
|
112,100
|
|
|
|
|
|
Common Stock Warrants (56,559 shares)
|
|
|
|
|
|
|
83,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,936,592
|
|
|
|
3,364,856
|
|
|
|
2,388,600
|
|
13
TRIANGLE
CAPITAL CORPORATION
Consolidated
Schedule of Investments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
Great Expressions Group Holdings, LLC (3)%*
|
|
Dental Practice Management
|
|
Subordinated Note (12% Cash, 4% PIK, Due 08/15)
|
|
$
|
4,561,311
|
|
|
$
|
4,498,589
|
|
|
$
|
4,498,589
|
|
|
|
|
|
Class A Units (225 Units)
|
|
|
|
|
|
|
450,000
|
|
|
|
678,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,561,311
|
|
|
|
4,948,589
|
|
|
|
5,176,989
|
|
Grindmaster-Cecilware Corp. (3)%*
|
|
Food Services Equipment Manufacturer
|
|
Subordinated Note (12% Cash, 4.5% PIK, Due 04/16)
|
|
|
5,995,035
|
|
|
|
5,900,500
|
|
|
|
5,900,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,995,035
|
|
|
|
5,900,500
|
|
|
|
5,900,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hatch Chile Co., LLC (3)%*
|
|
Food Products Distributer
|
|
Senior Note (19% Cash, Due 07/15)
|
|
|
4,500,000
|
|
|
|
4,394,652
|
|
|
|
4,394,652
|
|
|
|
|
|
Subordinated Note (14% Cash, Due 07/15)
|
|
|
1,000,000
|
|
|
|
837,779
|
|
|
|
837,779
|
|
|
|
|
|
Unit Purchase Warrant (5,265 Units)
|
|
|
|
|
|
|
149,800
|
|
|
|
149,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,500,000
|
|
|
|
5,382,231
|
|
|
|
5,382,231
|
|
Infrastructure Corporation of America, Inc. (6)%*
|
|
Roadway Maintenance, Repair and Engineering Services
|
|
Subordinated Note (12% Cash, 1% PIK, Due 10/15)
|
|
|
10,769,120
|
|
|
|
9,566,843
|
|
|
|
9,566,843
|
|
|
|
|
|
Common Stock Purchase Warrant (199,526 shares)
|
|
|
|
|
|
|
980,000
|
|
|
|
980,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,769,120
|
|
|
|
10,546,843
|
|
|
|
10,546,843
|
|
Inland Pipe Rehabilitation Holding Company LLC (10)%*
|
|
Cleaning and Repair Services
|
|
Subordinated Note (14% Cash, Due 01/14)
|
|
|
8,274,920
|
|
|
|
7,621,285
|
|
|
|
7,621,285
|
|
|
|
|
|
Subordinated Note (18% Cash, Due 01/14)
|
|
|
3,905,108
|
|
|
|
3,861,073
|
|
|
|
3,861,073
|
|
|
|
|
|
Subordinated Note (15% Cash, Due 01/14)
|
|
|
306,302
|
|
|
|
306,302
|
|
|
|
306,302
|
|
|
|
|
|
Subordinated Note (15.3% Cash, Due 01/14)
|
|
|
3,500,000
|
|
|
|
3,465,000
|
|
|
|
3,465,000
|
|
|
|
|
|
Membership Interest Purchase Warrant (3.0)%
|
|
|
|
|
|
|
853,500
|
|
|
|
2,982,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,986,330
|
|
|
|
16,107,160
|
|
|
|
18,236,260
|
|
Library Systems & Services, LLC (3)%*
|
|
Municipal Business Services
|
|
Subordinated Note (12.5% Cash, 4.5% PIK, Due 06/15)
|
|
|
5,250,000
|
|
|
|
5,104,255
|
|
|
|
5,104,255
|
|
|
|
|
|
Common Stock Warrants (112 shares)
|
|
|
|
|
|
|
58,995
|
|
|
|
535,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,250,000
|
|
|
|
5,163,250
|
|
|
|
5,639,255
|
|
McKenzie Sports Products, LLC (3)%*
|
|
Taxidermy Manufacturer
|
|
Subordinated Note (13% Cash, 1% PIK, Due 10/17)
|
|
|
6,010,667
|
|
|
|
5,893,359
|
|
|
|
5,893,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,010,667
|
|
|
|
5,893,359
|
|
|
|
5,893,359
|
|
Media Temple, Inc. (7)%*
|
|
Web Hosting Services
|
|
Subordinated Note (12% Cash, 4% PIK, Due 04/15)
|
|
|
8,800,000
|
|
|
|
8,624,776
|
|
|
|
8,624,776
|
|
|
|
|
|
Convertible Note (8% Cash, 4% PIK, Due 04/15)
|
|
|
3,200,000
|
|
|
|
2,668,581
|
|
|
|
2,668,581
|
|
|
|
|
|
Common Stock Purchase Warrant (28,000 Shares)
|
|
|
|
|
|
|
536,000
|
|
|
|
536,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000,000
|
|
|
|
11,829,357
|
|
|
|
11,829,357
|
|
Minco Technology Labs, LLC (3)%*
|
|
Semiconductor Distribution
|
|
Subordinated Note (13% Cash, 3.25% PIK, Due 05/16)
|
|
|
5,102,216
|
|
|
|
4,984,368
|
|
|
|
4,984,368
|
|
|
|
|
|
Class A Units (5,000 Units)
|
|
|
|
|
|
|
500,000
|
|
|
|
296,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,102,216
|
|
|
|
5,484,368
|
|
|
|
5,281,168
|
|
Novolyte Technologies, Inc. (5)%*
|
|
Specialty Manufacturing
|
|
Subordinated Note (12% Cash, 5.5% PIK, Due 04/15)
|
|
|
7,785,733
|
|
|
|
7,686,662
|
|
|
|
7,686,662
|
|
|
|
|
|
Preferred Units (641 units)
|
|
|
|
|
|
|
640,818
|
|
|
|
664,600
|
|
|
|
|
|
Common Units (24,522 units)
|
|
|
|
|
|
|
160,204
|
|
|
|
370,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,785,733
|
|
|
|
8,487,684
|
|
|
|
8,721,462
|
|
SRC, Inc. (5)%*
|
|
Specialty Chemical Manufacturer
|
|
Subordinated Notes (12% Cash, 2% PIK, Due 09/14)
|
|
|
9,001,000
|
|
|
|
8,697,200
|
|
|
|
8,697,200
|
|
|
|
|
|
Common Stock Purchase Warrants
|
|
|
|
|
|
|
123,800
|
|
|
|
123,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,001,000
|
|
|
|
8,821,000
|
|
|
|
8,821,000
|
|
Syrgis Holdings, Inc. (2)%*
|
|
Specialty Chemical Manufacturer
|
|
Senior Notes (7.75%-10.75% Cash, Due 08/12-02/14)
|
|
|
2,873,393
|
|
|
|
2,858,198
|
|
|
|
2,858,198
|
|
|
|
|
|
Class C Units (2,114 units)
|
|
|
|
|
|
|
1,000,000
|
|
|
|
962,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,873,393
|
|
|
|
3,858,198
|
|
|
|
3,820,398
|
|
14
TRIANGLE
CAPITAL CORPORATION
Consolidated
Schedule of Investments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
TBG Anesthesia Management, LLC (6)%*
|
|
Physician Management Services
|
|
Senior Note (13.5% Cash, Due 11/14)
|
|
$
|
11,000,000
|
|
|
$
|
10,612,766
|
|
|
$
|
10,612,766
|
|
|
|
|
|
Warrant (263 shares)
|
|
|
|
|
|
|
276,100
|
|
|
|
165,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,000,000
|
|
|
|
10,888,866
|
|
|
|
10,777,766
|
|
Top Knobs USA, Inc. (6)%*
|
|
Hardware Designer and Distributor
|
|
Subordinated Note (12% Cash, 4.5% PIK, Due 05/17)
|
|
|
9,910,331
|
|
|
|
9,713,331
|
|
|
|
9,713,331
|
|
|
|
|
|
Common Stock (26,593 shares)
|
|
|
|
|
|
|
750,000
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,910,331
|
|
|
|
10,463,331
|
|
|
|
10,463,331
|
|
TrustHouse Services Group, Inc. (3)%*
|
|
Food Management Services
|
|
Subordinated Note (12% Cash, 2% PIK, Due 09/15)
|
|
|
4,440,543
|
|
|
|
4,381,604
|
|
|
|
4,381,604
|
|
|
|
|
|
Class A Units (1,495 units)
|
|
|
|
|
|
|
475,000
|
|
|
|
492,900
|
|
|
|
|
|
Class B Units (79 units)
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,440,543
|
|
|
|
4,881,604
|
|
|
|
4,874,504
|
|
Tulsa Inspection Resources, Inc. (3)%*
|
|
Pipeline Inspection Services
|
|
Subordinated Note (14%-17.5% Cash, Due 03/14)
|
|
|
5,810,588
|
|
|
|
5,490,797
|
|
|
|
5,490,797
|
|
|
|
|
|
Common Unit (1 unit)
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
Common Stock Warrants (8 shares)
|
|
|
|
|
|
|
321,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,810,588
|
|
|
|
6,011,797
|
|
|
|
5,490,797
|
|
Twin-Star International, Inc. (3)%*
|
|
Consumer Home Furnishings Manufacturer
|
|
Subordinated Note (12% Cash, 1% PIK, Due 04/14)
|
|
|
4,500,000
|
|
|
|
4,462,290
|
|
|
|
4,462,290
|
|
|
|
|
|
Senior Note (4.53%, Due 04/13)
|
|
|
1,088,962
|
|
|
|
1,088,962
|
|
|
|
1,088,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,588,962
|
|
|
|
5,551,252
|
|
|
|
5,551,252
|
|
Wholesale Floors, Inc. (1)%*
|
|
Commercial Services
|
|
Subordinated Note (12.5% Cash, 1.5% PIK, Due 06/14)
|
|
|
3,739,639
|
|
|
|
3,387,525
|
|
|
|
2,632,100
|
|
|
|
|
|
Membership Interest Purchase Warrant (4.0)%
|
|
|
|
|
|
|
132,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,739,639
|
|
|
|
3,520,325
|
|
|
|
2,632,100
|
|
Yellowstone Landscape Group, Inc. (7)%*
|
|
Landscaping Services
|
|
Subordinated Note (12% Cash, 3% PIK, Due 04/14)
|
|
|
12,438,838
|
|
|
|
12,250,147
|
|
|
|
12,250,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,438,838
|
|
|
|
12,250,147
|
|
|
|
12,250,147
|
|
Zoom Systems (4)%*
|
|
Retail Kiosk Operator
|
|
Subordinated Note (12.5% Cash, 1.5% PIK, Due 12/14)
|
|
|
8,125,222
|
|
|
|
7,956,025
|
|
|
|
7,956,025
|
|
|
|
|
|
Royalty rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,125,222
|
|
|
|
7,956,025
|
|
|
|
7,956,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Non-Control/Non-Affiliate Investments
|
|
|
|
|
237,824,178
|
|
|
|
244,197,828
|
|
|
|
245,392,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American De-Rosa Lamparts, LLC and
|
|
Wholesale and Distribution
|
|
Subordinated Note (5% PIK, Due 10/13)
|
|
|
5,475,141
|
|
|
|
5,153,341
|
|
|
|
3,985,700
|
|
Hallmark Lighting (2)%*
|
|
|
|
Membership Units (6,516 Units)
|
|
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,475,141
|
|
|
|
5,503,341
|
|
|
|
3,985,700
|
|
AP Services, Inc. (4)%*
|
|
Fluid Sealing Supplies and Services
|
|
Subordinated Note (12% Cash, 2% PIK, Due 09/15)
|
|
|
5,834,877
|
|
|
|
5,723,194
|
|
|
|
5,723,194
|
|
|
|
|
|
Class A Units (933 units)
|
|
|
|
|
|
|
933,333
|
|
|
|
933,333
|
|
|
|
|
|
Class B Units (496 units)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,834,877
|
|
|
|
6,656,527
|
|
|
|
6,656,527
|
|
Asset Point, LLC (3)%*
|
|
Asset Management Software Provider
|
|
Senior Note (12% Cash, 5% PIK, Due 03/13)
|
|
|
5,756,261
|
|
|
|
5,703,925
|
|
|
|
5,384,500
|
|
|
|
|
|
Senior Note (12% Cash, 2% PIK, Due 07/15)
|
|
|
605,185
|
|
|
|
605,185
|
|
|
|
478,100
|
|
|
|
|
|
Options to Purchase Membership Units (342,407 units)
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
Membership Unit Warrants (356,506 units)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,361,446
|
|
|
|
6,809,110
|
|
|
|
5,862,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axxiom Manufacturing, Inc. (1)%*
|
|
Industrial Equipment Manufacturer
|
|
Common Stock (136,400 shares)
|
|
|
|
|
|
|
200,000
|
|
|
|
978,700
|
|
|
|
|
|
Common Stock Warrant (4,000 shares)
|
|
|
|
|
|
|
|
|
|
|
28,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
1,007,400
|
|
15
TRIANGLE
CAPITAL CORPORATION
Consolidated
Schedule of Investments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
Brantley Transportation, LLC (Brantley
Transportation) and Pine Street
|
|
Oil and Gas Services
|
|
Subordinated Note Brantley Transportation (14% Cash,
Due 12/12)
|
|
$
|
3,800,000
|
|
|
$
|
3,738,821
|
|
|
$
|
3,546,600
|
|
Holdings, LLC (Pine Street)(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
|
|
|
|
3,972,421
|
|
|
|
3,546,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dyson Corporation (1)%*
|
|
Custom Forging and Fastener Supplies
|
|
Class A Units (1,000,000 units)
|
|
|
|
|
|
|
1,000,000
|
|
|
|
2,476,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
2,476,000
|
|
Equisales, LLC (4)%*
|
|
Energy Products and Services
|
|
Subordinated Note (13% Cash, 4% PIK, Due 04/12)
|
|
|
6,000,000
|
|
|
|
5,959,983
|
|
|
|
5,959,983
|
|
|
|
|
|
Class A Units (500,000 units)
|
|
|
|
|
|
|
480,900
|
|
|
|
569,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000,000
|
|
|
|
6,440,883
|
|
|
|
6,529,283
|
|
Plantation Products, LLC (8)%*
|
|
Seed Manufacturing
|
|
Subordinated Notes (13% Cash, 4.5% PIK, Due 06/16)
|
|
|
14,527,188
|
|
|
|
14,164,688
|
|
|
|
14,164,688
|
|
|
|
|
|
Preferred Units (1,127 units)
|
|
|
|
|
|
|
1,127,000
|
|
|
|
1,127,000
|
|
|
|
|
|
Common Units (92,000 units)
|
|
|
|
|
|
|
23,000
|
|
|
|
23,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,527,188
|
|
|
|
15,314,688
|
|
|
|
15,314,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QC Holdings, Inc.(0)%*
|
|
Lab Testing Services
|
|
Common Stock (5,594 shares)
|
|
|
|
|
|
|
563,602
|
|
|
|
505,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
563,602
|
|
|
|
505,500
|
|
Technology Crops International (3)%*
|
|
Supply Chain Management Services
|
|
Subordinated Note (12% Cash, 5% PIK, Due 03/15)
|
|
|
5,333,595
|
|
|
|
5,250,980
|
|
|
|
5,250,980
|
|
|
|
|
|
Common Units (50 Units)
|
|
|
|
|
|
|
500,000
|
|
|
|
612,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,333,595
|
|
|
|
5,750,980
|
|
|
|
5,863,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste Recyclers Holdings, LLC (2)%*
|
|
Environmental and Facilities Services
|
|
Class A Preferred Units (280 Units)
|
|
|
|
|
|
|
2,251,100
|
|
|
|
|
|
|
|
|
|
Class B Preferred Units (985,372 Units)
|
|
|
|
|
|
|
3,304,218
|
|
|
|
2,384,100
|
|
|
|
|
|
Class C Preferred Units (1,444,475 Units)
|
|
|
|
|
|
|
1,499,531
|
|
|
|
1,530,300
|
|
|
|
|
|
Common Unit Purchase Warrant (1,170,083 Units)
|
|
|
|
|
|
|
748,900
|
|
|
|
|
|
|
|
|
|
Common Units (153,219 Units)
|
|
|
|
|
|
|
180,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,984,532
|
|
|
|
3,914,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Affiliate Investments
|
|
|
|
|
47,332,247
|
|
|
|
60,196,084
|
|
|
|
55,661,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Control Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FCL Graphics, Inc. (1)%*
|
|
Commercial Printing Services
|
|
Senior Note (3.76% Cash, 2% PIK, Due 9/11)
|
|
|
1,500,498
|
|
|
|
1,497,934
|
|
|
|
1,465,400
|
|
|
|
|
|
Senior Note (7.79% Cash, 2% PIK, Due 9/11)
|
|
|
2,045,228
|
|
|
|
2,041,167
|
|
|
|
1,081,100
|
|
|
|
|
|
2nd Lien Note (2.79% Cash, 8% PIK, Due 12/11)
|
|
|
3,470,254
|
|
|
|
2,996,287
|
|
|
|
|
|
|
|
|
|
Preferred Shares (35,000 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares (4,000 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Members Interests (3,839 Units)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,015,980
|
|
|
|
6,535,388
|
|
|
|
2,546,500
|
|
Fire Sprinkler Systems, Inc. (0)%*
|
|
Specialty Trade Contractors
|
|
Subordinated Notes (2% PIK, Due 04/11)
|
|
|
3,065,981
|
|
|
|
2,626,072
|
|
|
|
750,000
|
|
|
|
|
|
Common Stock (2,978 shares)
|
|
|
|
|
|
|
294,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,065,981
|
|
|
|
2,920,696
|
|
|
|
750,000
|
|
Fischbein, LLC (11)%*
|
|
Packaging and Materials Handling Equipment Manufacturer
|
|
Subordinated Note (13% Cash, 5.5% PIK, Due 05/13)
|
|
|
4,345,573
|
|
|
|
4,268,333
|
|
|
|
4,268,333
|
|
|
|
|
|
Class A-1 Common Units (558,140 units)
|
|
|
|
|
|
|
558,140
|
|
|
|
2,200,600
|
|
|
|
|
|
Class A Common Units (4,200,000 units)
|
|
|
|
|
|
|
4,200,000
|
|
|
|
13,649,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,345,573
|
|
|
|
9,026,473
|
|
|
|
20,118,533
|
|
16
TRIANGLE
CAPITAL CORPORATION
Consolidated
Schedule of Investments (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
Fair
|
|
Portfolio Company
|
|
Industry
|
|
Type of Investment(1)(2)
|
|
Amount
|
|
|
Cost
|
|
|
Value(3)
|
|
|
Weave Textiles, LLC (1)%*
|
|
Specialty Woven Fabrics Manufacturer
|
|
Senior Note (12% PIK, Due 01/11)
|
|
$
|
310,238
|
|
|
$
|
310,238
|
|
|
$
|
310,238
|
|
|
|
|
|
Membership Units (425 units)
|
|
|
|
|
|
|
855,000
|
|
|
|
1,211,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
310,238
|
|
|
|
1,165,238
|
|
|
|
1,521,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Control Investments
|
|
|
|
|
|
|
14,737,772
|
|
|
|
19,647,795
|
|
|
|
24,936,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments, December 31, 2010 (181)%*
|
|
|
|
$
|
299,894,197
|
|
|
$
|
324,041,707
|
|
|
$
|
325,990,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Value as a percent of net assets
|
|
(1)
|
|
All debt investments are income
producing. Common stock, preferred stock and all warrants are
non-income producing.
|
|
(2)
|
|
Disclosures of interest rates on
subordinated notes include cash interest rates and
payment-in-kind (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.
17
TRIANGLE
CAPITAL CORPORATION
|
|
1.
|
ORGANIZATION,
BASIS OF PRESENTATION AND BUSINESS
|
Organization
Triangle Capital Corporation and its wholly owned subsidiaries,
including Triangle Mezzanine Fund LLLP (the
Fund) and Triangle Mezzanine Fund II LP
(Fund II) (collectively, the
Company), operates as a Business Development Company
(BDC) under the Investment Company Act of 1940 (the
1940 Act). The Fund and Fund II are specialty
finance limited partnerships formed to make investments
primarily in middle market companies located throughout the
United States. 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). On May 26,
2010, Fund II obtained its license to operate as an SBIC.
As SBICs, both the Fund and Fund II are subject to a
variety of regulations concerning, among other things, the size
and nature of the companies in which they may invest and the
structure of those investments.
The Company currently operates as a closed-end, non-diversified
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
Triangle Capital Corporation and its wholly-owned subsidiaries,
including the Fund and Fund II. Neither the Fund nor
Fund II consolidates 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 adjustments
necessary for the fair presentation of financial statements for
the interim period, have been reflected in the unaudited
consolidated financial statements. 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 thereto should be read
in conjunction with the audited financial statements and notes
thereto for the period ended December 31, 2010. 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.
18
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
Summaries of the composition of the Companys investment
portfolio at cost and fair value, and as a percentage of total
investments, are shown in the following tables:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Percentage of
|
|
|
|
Cost
|
|
|
Portfolio
|
|
|
Fair Value
|
|
|
Total Portfolio
|
|
|
June 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt, Unitranche and
2nd lien
notes
|
|
$
|
365,763,772
|
|
|
|
89
|
%
|
|
$
|
358,205,291
|
|
|
|
87
|
%
|
Senior debt
|
|
|
7,995,008
|
|
|
|
2
|
|
|
|
6,901,690
|
|
|
|
2
|
|
Equity shares
|
|
|
29,247,111
|
|
|
|
7
|
|
|
|
32,909,636
|
|
|
|
8
|
|
Equity warrants
|
|
|
7,490,080
|
|
|
|
2
|
|
|
|
10,598,068
|
|
|
|
3
|
|
Royalty rights
|
|
|
874,400
|
|
|
|
|
|
|
|
785,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
411,370,371
|
|
|
|
100
|
%
|
|
$
|
409,399,685
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt, Unitranche and
2nd lien
notes
|
|
$
|
279,433,775
|
|
|
|
86
|
%
|
|
$
|
270,994,677
|
|
|
|
83
|
%
|
Senior debt
|
|
|
8,631,760
|
|
|
|
3
|
|
|
|
7,639,159
|
|
|
|
3
|
|
Equity shares
|
|
|
29,115,890
|
|
|
|
9
|
|
|
|
38,719,699
|
|
|
|
12
|
|
Equity warrants
|
|
|
5,985,882
|
|
|
|
2
|
|
|
|
7,902,458
|
|
|
|
2
|
|
Royalty rights
|
|
|
874,400
|
|
|
|
|
|
|
|
734,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
324,041,707
|
|
|
|
100
|
%
|
|
$
|
325,990,593
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the three months ended June 30, 2011, the Company
made five new investments totaling approximately
$35.2 million and four investments in existing portfolio
companies totaling approximately $32.8 million. During the
six months ended June 30, 2011, the Company made ten new
investments totaling approximately $86.8 million and
investments in seven existing portfolio companies totaling
approximately $49.5 million.
During the three months ended June 30, 2010, the Company
made four new investments totaling approximately
$32.0 million and seven investments in existing portfolio
companies totaling approximately $12.1 million. During the
six months ended June 30, 2010, the Company made six new
investments totaling approximately $43.6 million and ten
investments in existing portfolio companies totaling
approximately $14.6 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.
19
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
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, using 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.
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 payment-in-kind (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,
(iv) publicly available information regarding current
pricing and credit metrics for similar proposed and executed
investment transactions of private companies and, (v) when
management believes a relevant comparison exists, current
pricing and credit metrics for similar proposed and executed
investment transactions of publicly traded debt.
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) publicly available information regarding the valuation
of the securities based on recent sales in comparable
transactions of private companies and, (iii) when
management believes there are comparable companies that are
publicly traded, a review of these publicly traded companies and
the market multiple of their equity securities.
20
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
The following table presents the Companys financial
instruments carried at fair value as of June 30, 2011 and
December 31, 2010, on the consolidated balance sheet by ASC
Topic 820 valuation hierarchy, as previously described:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at June 30, 2011
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Portfolio company investments
|
|
$
|
|
|
|
$
|
|
|
|
$
|
409,399,685
|
|
|
$
|
409,399,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
409,399,685
|
|
|
$
|
409,399,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at December 31, 2010
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Portfolio company investments
|
|
$
|
|
|
|
$
|
|
|
|
$
|
325,990,593
|
|
|
$
|
325,990,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
325,990,593
|
|
|
$
|
325,990,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 six months ended June 30, 2011
and 2010:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
Fair value of portfolio, beginning of period
|
|
$
|
325,990,593
|
|
|
$
|
201,317,970
|
|
New investments
|
|
|
136,291,889
|
|
|
|
58,216,292
|
|
Proceeds from sales of investments
|
|
|
(15,995,056
|
)
|
|
|
(4,089,571
|
)
|
Loan origination fees received
|
|
|
(2,689,172
|
)
|
|
|
(1,157,860
|
)
|
Principal repayments received
|
|
|
(45,527,214
|
)
|
|
|
(17,613,050
|
)
|
Payment in kind interest earned
|
|
|
4,432,022
|
|
|
|
2,789,287
|
|
Payment in kind interest payments received
|
|
|
(3,394,264
|
)
|
|
|
(1,305,422
|
)
|
Accretion of loan discounts
|
|
|
518,337
|
|
|
|
312,106
|
|
Accretion of deferred loan origination revenue
|
|
|
711,355
|
|
|
|
418,082
|
|
Realized gain on investments
|
|
|
12,980,769
|
|
|
|
707,653
|
|
Unrealized gain (loss) on investments
|
|
|
(3,919,574
|
)
|
|
|
1,718,790
|
|
|
|
|
|
|
|
|
|
|
Fair value of portfolio, end of period
|
|
$
|
409,399,685
|
|
|
$
|
241,314,277
|
|
|
|
|
|
|
|
|
|
|
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.
Pre-tax net unrealized gains on investments of $2.4 million
and $7.2 million, respectively, during the three and six
months ended June 30, 2011 are related to portfolio company
investments that were still held by the Company as of
June 30, 2011. Pre-tax net unrealized gains on investments
of $1.5 million and $1.1 million, respectively, during
the three and six months ended June 30, 2010 are related to
portfolio company investments that were still held by the
Company as of June 30, 2010.
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 addition, we
generally request Duff & Phelps to perform the
procedures on a portfolio company when there
21
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
has been a significant change in the fair value of the
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.
The total number of investments and the percentage of our
portfolio on which we asked Duff & Phelps to perform
such procedures are summarized below by period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Total
|
|
|
Total
|
|
Investments at
|
For the Quarter Ended:
|
|
Companies
|
|
Fair Value(1)
|
|
June 30, 2010
|
|
|
8
|
|
|
|
29
|
%
|
September 30, 2010
|
|
|
8
|
|
|
|
26
|
%
|
December 31, 2010
|
|
|
9
|
|
|
|
29
|
%
|
March 31, 2011
|
|
|
11
|
|
|
|
34
|
%
|
June 30, 2011
|
|
|
13
|
|
|
|
26
|
%
|
|
|
|
(1) |
|
Exclusive of the fair value of new investments made during the
quarter |
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
appear reasonable. Our Board of Directors is ultimately and
solely responsible for determining the fair value of our
investments in good faith.
Warrants
When originating a debt security, the Company will sometimes
receive warrants or other equity-related securities from the
borrower. The Company determines the cost basis of the warrants
or other equity-related 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
equity-related 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 are 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. Non-Control/Non-Affiliate
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.
22
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
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 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 ex-dividend 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 investment income
over the term of the loan. Loan prepayment penalties and loan
amendment fees are generally recorded as investment income when
the respective prepayment or loan amendment occurs. Any
previously deferred fees are recognized as a capital gain upon
prepayment of the related loan.
Payment-in-Kind
Interest
The Company currently holds, and expects to hold in the future,
some loans in its 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 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 have been brought current
through payment or 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 Company generally invests in lower middle-market companies
in a variety of industries. At both June 30, 2011 and
December 31, 2010, 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 limited operating histories 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.
23
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
Triangle Capital Corporation has elected for federal income tax
purposes to be treated as a RIC under Subchapter M of the Code.
As a RIC, so long as certain minimum distribution,
source-of-income
and asset diversification requirements are met, income taxes are
generally required to be paid only on the portion of taxable
income and gains that are not distributed (actually or
constructively) and on certain built-in gains.
The Company has certain wholly owned taxable subsidiaries (the
Taxable Subsidiaries) each of which holds one or
more of the Companys 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 pass-through
entities) while satisfying 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 pass-through 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 June 30, 2011 was approximately $413.6 million.
24
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
The Company reported the following borrowings outstanding on its
Consolidated Balance Sheet as of June 30, 2011 and
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prioritized Return
|
|
|
June 30,
|
|
|
December 31,
|
|
Issuance/Pooling Date
|
|
Maturity Date
|
|
(Interest) Rate
|
|
|
2011
|
|
|
2010
|
|
|
SBA Debentures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 28, 2005
|
|
September 1, 2015
|
|
|
5.796
|
%
|
|
$
|
|
|
|
$
|
9,500,000
|
|
March 28, 2007
|
|
March 1, 2017
|
|
|
6.231
|
%
|
|
|
4,000,000
|
|
|
|
4,000,000
|
|
March 26, 2008
|
|
March 1, 2018
|
|
|
6.214
|
%
|
|
|
6,410,000
|
|
|
|
6,410,000
|
|
September 24, 2008
|
|
September 1, 2018
|
|
|
6.455
|
%
|
|
|
50,900,000
|
|
|
|
50,900,000
|
|
March 25, 2009
|
|
March 1, 2019
|
|
|
5.337
|
%
|
|
|
22,000,000
|
|
|
|
22,000,000
|
|
March 24, 2010
|
|
March 1, 2020
|
|
|
4.825
|
%
|
|
|
6,800,000
|
|
|
|
6,800,000
|
|
September 22, 2010
|
|
September 1, 2020
|
|
|
3.687
|
%
|
|
|
32,590,000
|
|
|
|
32,590,000
|
|
March 29, 2011
|
|
March 1, 2021
|
|
|
4.474
|
%
|
|
|
75,400,000
|
|
|
|
63,400,000
|
|
March 11, 2011
|
|
September 1, 2021
|
|
|
1.293
|
%
|
|
|
9,600,000
|
|
|
|
|
|
June 30, 2011
|
|
September 1, 2021
|
|
|
1.053
|
%
|
|
|
9,500,000
|
|
|
|
|
|
SBA LMI Debentures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 14, 2010
|
|
March 1, 2016
|
|
|
2.508
|
%
|
|
|
6,949,934
|
|
|
|
6,864,866
|
|
Credit Facility:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 9, 2011
|
|
May 8, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
224,149,934
|
|
|
$
|
202,464,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SBA
and SBA LMI Debentures
Interest payments on SBA debentures are payable semi-annually.
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. The Companys SBA Low or
Moderate Income (LMI) debentures are five-year
deferred interest debentures that are issued at a discount to
par. The accretion of discount on SBA LMI debentures is included
in interest expense in the Companys consolidated financial
statements.
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 two times (and in certain cases, up to three
times) the amount of its regulatory capital. As of June 30,
2011, the maximum statutory limit on the dollar amount of
outstanding SBA-guaranteed debentures that can be issued by a
single SBIC is $150.0 million and by a group of SBICs under
common control is $225.0 million. As of June 30, 2011,
the Fund has issued the maximum $150.0 million of
SBA-guaranteed debentures and Fund II has issued the
maximum $75.0 million in face amount of SBA-guaranteed
debentures. In addition to a 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 SBA debenture issued and a one-time
2.0% fee on the amount of each SBA LMI 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 June 30, 2011 and
December 31, 2010 were 4.64% and 3.95%, respectively. The
weighted average interest rate as of June 30, 2011 included
$205.0 million of pooled SBA-guaranteed debentures with a
weighted average fixed interest rate of 4.97% and
$19.1 million of unpooled SBA-guaranteed debentures with a
weighted average interim interest rate of 1.17%. The weighted
average interest
25
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
rate as of December 31, 2010 included $139.1 million
of pooled SBA-guaranteed debentures with a weighted average
fixed interest rate of 5.29% and $63.4 million of unpooled
SBA-guaranteed debentures with a weighted average interim
interest rate of 1.00%.
Credit
Facility
In May 2011, the Company entered into a three-year senior
secured credit facility with an initial commitment of
$50.0 million (the Credit Facility). The
purpose of the Credit Facility is to provide additional
liquidity in support of future investment and operational
activities. The Credit Facility was arranged by BB&T
Capital Markets and Fifth Third Bank and has an accordion
feature which allows for an increase in the total loan size up
to $90.0 million and also contains two one-year extension
options, bringing the total potential commitment and funding
period to five years from closing. The Credit Facility, which is
structured to operate like a revolving credit facility, is
secured primarily by Triangle Capital Corporations assets,
excluding the assets of the Fund and Fund II.
Borrowings under the Credit Facility bear interest, subject to
the Companys election, on a per annum basis equal to
(i) the applicable base rate plus 1.95% or ii) the
applicable LIBOR rate plus 2.95%. The applicable base rate is
equal to the greater of i) prime rate, ii) the federal
funds rate plus 0.5% or iii) the adjusted one-month LIBOR
plus 2.0%. The Company pays unused commitment fees of 0.375% per
annum. As of June 30, 2011, the Company did not have any
borrowings outstanding under the Credit Facility.
The Credit Facility contains certain affirmative and negative
covenants, including but not limited to i) maintaining an
interest coverage ratio of at least 2.0 to 1.0,
ii) maintaining a minimum liquidity, and
iii) maintaining a minimum consolidated tangible net worth.
As of June 30, 2011, the Company was in compliance with all
financial covenants of the Credit Facility.
|
|
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.
26
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
The following table presents information with respect to the
Plan for the six months ended June 30, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
Six Months Ended
|
|
|
|
June 30, 2011
|
|
|
June 30, 2010
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
Weighted-Average
|
|
|
|
Number of
|
|
|
Grant-Date Fair
|
|
|
Number of
|
|
|
Grant-Date Fair
|
|
|
|
Shares
|
|
|
Value per Share
|
|
|
Shares
|
|
|
Value per Share
|
|
|
Unvested shares, beginning of period
|
|
|
302,698
|
|
|
$
|
11.40
|
|
|
|
219,813
|
|
|
$
|
10.76
|
|
Shares granted during the period
|
|
|
161,174
|
|
|
$
|
20.37
|
|
|
|
152,944
|
|
|
$
|
12.01
|
|
Shares vested during the period
|
|
|
(104,317
|
)
|
|
$
|
11.53
|
|
|
|
(70,059
|
)
|
|
$
|
10.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested shares, end of period
|
|
|
359,555
|
|
|
$
|
15.39
|
|
|
|
302,698
|
|
|
$
|
11.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the three and six months ended June 30, 2011, the
Company recognized equity-based compensation expense of
approximately $0.5 million and $0.9 million,
respectively. In the three and six months ended June 30,
2010, the Company recognized equity-based compensation expense
of approximately $0.3 million and $0.5 million,
respectively. This expense is included in general and
administrative expenses in the Companys consolidated
statements of operations.
As of June 30, 2011, there was approximately
$4.8 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 2.3 years.
27
TRIANGLE
CAPITAL CORPORATION
Notes to
Unaudited Consolidated Financial Statements
(Continued)
The following is a schedule of financial highlights for the six
months ended June 30, 2011 and 2010:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
Per share data:
|
|
|
|
|
|
|
|
|
Net asset value at beginning of period
|
|
$
|
12.09
|
|
|
$
|
11.03
|
|
Net investment income(1)
|
|
|
1.01
|
|
|
|
0.70
|
|
Net realized gain (loss) on investments(1)
|
|
|
0.73
|
|
|
|
0.06
|
|
Net unrealized appreciation on investments(1)
|
|
|
(0.23
|
)
|
|
|
0.17
|
|
|
|
|
|
|
|
|
|
|
Total increase from investment operations(1)
|
|
|
1.51
|
|
|
|
0.93
|
|
Cash dividends/distributions declared
|
|
|
(0.86
|
)
|
|
|
(0.82
|
)
|
Shares issued pursuant to Dividend Reinvestment Plan
|
|
|
0.02
|
|
|
|
0.05
|
|
Common stock offerings
|
|
|
1.16
|
|
|
|
|
|
Stock-based compensation
|
|
|
(0.09
|
)
|
|
|
(0.09
|
)
|
Income tax provision(1)
|
|
|
|
|
|
|
(0.01
|
)
|
Other(2)
|
|
|
(0.04
|
)
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Net asset value at end of period
|
|
$
|
13.79
|
|
|
$
|
11.08
|
|
|
|
|
|
|
|
|
|
|
Market value at end of period(3)
|
|
$
|
18.46
|
|
|
$
|
14.22
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding at end of period
|
|
|
18,625,238
|
|
|
|
12,074,184
|
|
Net assets at end of period
|
|
$
|
256,800,333
|
|
|
$
|
133,809,358
|
|
Average net assets
|
|
$
|
229,874,789
|
|
|
$
|
132,201,696
|
|
Ratio of total expenses to average net assets (annualized)
|
|
|
9
|
%
|
|
|
11
|
%
|
Ratio of net investment income to average net assets (annualized)
|
|
|
16
|
%
|
|
|
13
|
%
|
Portfolio turnover ratio
|
|
|
13
|
%
|
|
|
11
|
%
|
Total Return(4)
|
|
|
2
|
%
|
|
|
24
|
%
|
|
|
|
(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. |
In July 2011, the Company invested $13.8 million in
subordinated debt of Renew Life Formulas, Inc.
(Renew), a provider of branded nutritional
supplements and wellness products. Under the terms of the
investment, Renew will pay interest on the subordinated debt at
a rate of 14% per annum.
In July 2011, the Company invested $1.9 million in 2nd Lien
debt of Aramsco Holdings, Inc. (Aramsco), a
distributer of environmental safety and emergency preparedness
products. Under the terms of the investment, Aramsco will pay
interest on the subordinated debt at a rate of LIBOR plus 12%
per annum.
28
|
|
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, 2010. 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.
Forward-Looking
Statements
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 herein and in Item 1A
entitled Risk Factors in Part I of our Annual
Report on
Form 10-K
for the year ended December 31, 2010. Other factors that
could cause actual results to differ materially include changes
in the economy, risks associated with possible disruption in our
operations or the economy generally due to terrorism, 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 subsidiaries, Triangle Mezzanine
Fund LLLP, or the Fund, and Triangle Mezzanine Fund II
LP, or Fund II, are licensed as small business investment
companies, or SBICs, by the United States Small Business
Administration, or SBA. In addition, the Fund has also elected
to be treated as a BDC under the 1940 Act. We, the Fund and
Fund II 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 $100.0 million and annual
earnings before interest, taxes, depreciation and amortization,
or EBITDA, between $3.0 and $20.0 million.
29
We invest primarily in subordinated debt securities secured by
second lien security interests in portfolio company assets,
coupled with equity interests. On a more limited basis, we also
invest in senior debt securities secured by first lien security
interests in portfolio companies. Our investments generally
range from $5.0 to $15.0 million per portfolio company. In
certain situations, we partner 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 is instead
accrued and added to the loan balance and paid at the end of the
term. In our negotiations with potential portfolio companies, we
generally 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 June 30, 2011, and December 31, 2010, the
weighted average yield on our outstanding debt investments other
than non-accrual debt investments (including PIK interest) was
approximately 15.1%. The weighted average yield on all of our
outstanding investments (including equity and equity-linked
investments but excluding non-accrual debt investments) was
approximately 14.0% and 13.7% as of June 30, 2011 and
December 31, 2010, respectively. The weighted average yield
on all of our outstanding investments (including equity and
equity-linked investments and non-accrual debt investments) was
approximately 13.5% and 12.9% as of June 30, 2011 and
December 31, 2010, respectively.
The Fund and Fund II are eligible to issue debentures to
the SBA, which pools these with debentures of other SBICs and
sells them in the capital markets at favorable interest rates,
in part as a result of the guarantee of payment from the SBA. We
invest these funds in portfolio companies. We intend to continue
to operate the Fund and Fund II as SBICs, subject to SBA
approval, and to utilize the proceeds of the sale of
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
$409.4 million as of June 30, 2011, as compared to
$326.0 million as of December 31, 2010. As of
June 30, 2011, we had investments in 57 portfolio companies
with an aggregate cost of $411.4 million. As of
December 31, 2010, we had investments in 48 portfolio
companies with an aggregate cost of $324.0 million. As of
both June 30, 2011 and December 31, 2010, none of our
portfolio investments represented greater than 10% of the total
fair value of our investment portfolio.
30
As of June 30, 2011 and December 31, 2010, our
investment portfolio consisted of the following investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
Percentage of
|
|
|
|
Cost
|
|
|
Portfolio
|
|
|
Fair Value
|
|
|
Total Portfolio
|
|
|
June 30, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt, Unitranche and
2nd lien
notes
|
|
$
|
365,763,772
|
|
|
|
89
|
%
|
|
$
|
358,205,291
|
|
|
|
87
|
%
|
Senior debt
|
|
|
7,995,008
|
|
|
|
2
|
|
|
|
6,901,690
|
|
|
|
2
|
|
Equity shares
|
|
|
29,247,111
|
|
|
|
7
|
|
|
|
32,909,636
|
|
|
|
8
|
|
Equity warrants
|
|
|
7,490,080
|
|
|
|
2
|
|
|
|
10,598,068
|
|
|
|
3
|
|
Royalty rights
|
|
|
874,400
|
|
|
|
|
|
|
|
785,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
411,370,371
|
|
|
|
100
|
%
|
|
$
|
409,399,685
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subordinated debt, Unitranche and
2nd lien
notes
|
|
$
|
279,433,775
|
|
|
|
86
|
%
|
|
$
|
270,994,677
|
|
|
|
83
|
%
|
Senior debt
|
|
|
8,631,760
|
|
|
|
3
|
|
|
|
7,639,159
|
|
|
|
3
|
|
Equity shares
|
|
|
29,115,890
|
|
|
|
9
|
|
|
|
38,719,699
|
|
|
|
12
|
|
Equity warrants
|
|
|
5,985,882
|
|
|
|
2
|
|
|
|
7,902,458
|
|
|
|
2
|
|
Royalty rights
|
|
|
874,400
|
|
|
|
|
|
|
|
734,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
324,041,707
|
|
|
|
100
|
%
|
|
$
|
325,990,593
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Activity
During the six months ended June 30, 2011, we made ten new
investments totaling approximately $86.8 million, debt
investments in six existing portfolio companies totaling
approximately $49.3 million and three equity investments in
existing portfolio companies totaling approximately
$0.2 million. We had seven portfolio company loans repaid
at par totaling approximately $39.8 million and received
normal principal repayments and partial loan prepayments
totaling approximately $5.8 million in the six months ended
June 30, 2011. In addition, we sold one equity investment
in a portfolio company for total proceeds of approximately
$16.0 million, resulting in a realized gain totaling
approximately $12.2 million.
During the six months ended June 30, 2010, we made six new
investments totaling approximately $43.6 million, six
additional debt investments in existing portfolio companies
totaling approximately $13.9 million and five additional
equity investments in existing portfolio companies totaling
approximately $0.7 million. In addition, we sold two equity
investments in portfolio companies for total proceeds of
approximately $4.1 million, resulting in realized gains
totaling approximately $3.7 million, and converted a
subordinated debt investment in one portfolio company to equity,
resulting in a realized loss of approximately $3.0 million.
We had five portfolio company loans repaid at par totaling
approximately $13.2 million and received normal principal
repayments and partial loan prepayments totaling approximately
$4.4 million in the six months ended June 30, 2010.
31
Total portfolio investment activity for the six months ended
June 30, 2011 and 2010 was as follows:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
Fair value of portfolio, beginning of period
|
|
$
|
325,990,593
|
|
|
$
|
201,317,970
|
|
New investments
|
|
|
136,291,889
|
|
|
|
58,216,292
|
|
Proceeds from sales of investments
|
|
|
(15,995,056
|
)
|
|
|
(4,089,571
|
)
|
Loan origination fees received
|
|
|
(2,689,172
|
)
|
|
|
(1,157,860
|
)
|
Principal repayments received
|
|
|
(45,527,214
|
)
|
|
|
(17,613,050
|
)
|
Payment in kind interest earned
|
|
|
4,432,022
|
|
|
|
2,789,287
|
|
Payment in kind interest payments received
|
|
|
(3,394,264
|
)
|
|
|
(1,305,422
|
)
|
Accretion of loan discounts
|
|
|
518,337
|
|
|
|
312,106
|
|
Accretion of deferred loan origination revenue
|
|
|
711,355
|
|
|
|
418,082
|
|
Realized gain on investments
|
|
|
12,980,769
|
|
|
|
707,653
|
|
Unrealized gain on investments
|
|
|
(3,919,574
|
)
|
|
|
1,718,790
|
|
|
|
|
|
|
|
|
|
|
Fair value of portfolio, end of period
|
|
$
|
409,399,685
|
|
|
$
|
241,314,277
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield on debt investments at end of period(1)
|
|
|
15.1
|
%
|
|
|
15.4
|
%
|
|
|
|
|
|
|
|
|
|
Weighted average yield on total investments at end of period(1)
|
|
|
14.0
|
%
|
|
|
14.0
|
%
|
|
|
|
|
|
|
|
|
|
Weighted average yield on total investments at end of period
|
|
|
13.5
|
%
|
|
|
12.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Excludes non-accrual debt investments. |
Non-Accrual
Assets
As of June 30, 2011, the fair value of our non-accrual
assets was approximately $7.3 million, which comprised 1.8%
of the total fair value of our portfolio, and the cost of our
non-accrual assets was approximately $14.0 million, which
comprised 3.4% of the total cost of our portfolio. As of
December 31, 2010, the fair value of our non-accrual assets
was approximately $9.6 million, which comprised 3.0% of the
total fair value of our portfolio, and the cost of our
non-accrual assets was approximately $17.4 million, which
comprised 5.4% of the total cost of our portfolio. Our
non-accrual assets as of June 30, 2011 are as follows:
Gerli
and Company
In November 2008, we placed our debt investment in Gerli and
Company, or 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 year ended December 31, 2010, we recognized an
unrealized gain on our debt investment in Gerli of approximately
$0.7 million. During the first quarter of 2011, we
restructured our investment in Gerli. As a result of the
restructuring, we received a new note from Gerli with a face
amount of $3.0 million and a fair value of approximately
$2.3 million and preferred stock with a liquidation
preference of $0.4 million. Under the terms of the new
note, interest on the note is payable only if Gerli meets
certain covenants, which they were not compliant with as of
June 30, 2011. In the six months ended June 30, 2011,
we recognized an unrealized loss on our new debt investment in
Gerli of approximately $0.8 million. As of June 30,
2011, the cost of our new debt investment in Gerli was
$3.0 million and the fair value was $2.2 million.
Fire
Sprinkler Systems, Inc.
In October 2008, we placed our debt investment in Fire Sprinkler
Systems, Inc., or Fire Sprinkler Systems, on non-accrual status.
As a result, under U.S. GAAP, we no longer recognize
interest income on our
32
debt investment in Fire Sprinkler Systems for financial
reporting purposes. During 2008, we recognized an unrealized
loss of $1.3 million on our subordinated note investment in
Fire Sprinkler Systems. In each of the years ended
December 31, 2009 and 2010, we recognized additional
unrealized losses on our debt investment in Fire Sprinkler
Systems of $0.3 million. In the six months ended
June 30, 2011, we recorded an additional $0.4 million
unrealized loss on our debt investment. As of June 30,
2011, the cost of our debt investment in Fire Sprinkler Systems
was $2.8 million and the fair value of such investment was
$0.5 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. In June 2010, we converted
approximately $3.0 million of our subordinated debt in ADL
to equity as part of a restructuring, resulting in realized loss
of approximately $3.0 million. As of June 30, 2011,
the cost of our investment in ADL was approximately
$5.2 million and the fair value of such investment was
approximately $4.6 million.
FCL
Graphics, Inc. 2nd Lien Note
During the first eight months of 2009, we received cash interest
on our 2nd Lien note in FCL Graphics, Inc., or 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, 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
year ended December 31, 2010, we recognized an unrealized
loss on our 2nd Lien note investment in FCL of
approximately $0.8 million. As of June 30, 2011, 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 zero.
Results
of Operations
Comparison
of three months ended June 30, 2011 and June 30,
2010
Investment
Income
For the three months ended June 30, 2011, total investment
income was $16.4 million, a 98% increase from
$8.3 million of total investment income for the three
months ended June 30, 2010. This increase was primarily
attributable to a $8.1 million increase in total loan
interest, fee and dividend income (including PIK interest
income) due to a net increase in our portfolio investments from
June 30, 2010, to June 30, 2011 and an increase in
non-recurring fee income of approximately $1.7 million.
Non-recurring fee income was approximately $2.2 million for
the three months ended June 30, 2011 as compared to
$0.4 million for the three months ended June 30, 2010.
33
Expenses
For the three months ended June 30, 2011, expenses
increased by 66% to $6.2 million from $3.7 million for
the three months ended June 30, 2010. The increase in
expenses was primarily attributable to a $1.6 million
increase in general and administrative expenses resulting from
an increase in employee headcount, increased salary and
incentive compensation costs and increased non-cash compensation
expenses. In addition, the increase in expenses was also
partially attributable to a $0.1 million increase in
amortization of deferred financing fees and a $0.7 million
increase in interest expense related to higher average balances
of SBA-guaranteed debentures outstanding during the three months
ended June 30, 2011 than in the comparable period in 2010.
Net
Investment Income
As a result of the $8.1 million increase in total
investment income and the $2.5 million increase in
expenses, net investment income increased by 124% to
$10.2 million for the three months ended June 30, 2011
as compared to net investment income of $4.6 million for
the three months ended June 30, 2010.
Net
Increase/Decrease in Net Assets Resulting From
Operations
In the three months ended June 30, 2011, we realized a gain
on the sale of one control investment of approximately
$12.2 million, a loss on the disposal of one control
investment of $0.1 million, and gains on the repayments of
two non-control/non-affiliate investments totaling approximately
$0.8 million. In addition, during the three months ended
June 30, 2011, we recorded net unrealized depreciation of
investments totaling approximately $8.7 million, comprised
of unrealized appreciation on 20 investments totaling
approximately $4.7 million, unrealized depreciation on 13
investments totaling approximately $2.2 million and
unrealized depreciation reclassification adjustments related to
the realized gains noted above totaling $11.1 million.
In the three months ended June 30, 2010, we realized a gain
on the sale of one affiliate investment of approximately
$3.5 million and a realized loss on the partial conversion
of one non-control/non-affiliate debt investment to equity of
approximately $3.0 million. In addition, during the three
months ended June 30, 2010, we recorded net unrealized
appreciation of investments totaling approximately
$1.8 million, comprised of 1) unrealized appreciation
on 20 investments totaling approximately $6.6 million and
2) unrealized depreciation on 14 investments totaling
approximately $4.8 million.
As a result of these events, our net increase in net assets from
operations was $14.5 million for the three months ended
June 30, 2011 as compared to a net increase in net assets
from operations of $6.9 million for the three months ended
June 30, 2010.
Comparison
of six months ended June 30, 2011 and June 30,
2010
Investment
Income
For the six months ended June 30, 2011, total investment
income was $28.8 million, an 83% increase from
$15.8 million of total investment income for the six months
ended June 30, 2010. This increase was primarily
attributable to a $13.0 million increase in total loan
interest, fee and dividend income (including PIK interest
income). The increase in total loan interest, fee and dividend
income was due to 1) a net increase in our portfolio
investments from June 30, 2010, to June 30, 2011, and
2) an increase in non-recurring fee income of approximately
$1.7 million. Non-recurring fee income was approximately
$2.7 million for the six months ended June 30, 2011,
as compared to approximately $1.0 million for the six
months ended June 30, 2010.
Expenses
For the six months ended June 30, 2011, expenses increased
by 47% to $10.9 million from $7.4 million for the six
months ended June 30, 2010. The increase in expenses was
primarily attributable to a $1.0 million increase in
interest expense, a $0.3 million increase in amortization
of deferred financing fees and a $2.2 million increase in
general and administrative expenses. The increase in interest
expense is related to
34
higher average balances of SBA-guaranteed debentures outstanding
during the six months ended June 30, 2011 than in the
comparable period in 2010. The increase in amortization of
deferred financing fees is associated with the early repayment
of certain SBA-guaranteed debentures in the first quarter of
2011. The increase in general and administrative costs in the
first six months of 2011 was primarily related to increased
salary and incentive compensation costs and increased non-cash
compensation expenses.
Net
Investment Income
As a result of the $13.1 million increase in total
investment income and the $3.5 million increase in
expenses, net investment income for the six months ended
June 30, 2011 was $18.0 million compared to net
investment income of $8.4 million during the six months
ended June 30, 2010.
Net
Increase/Decrease in Net Assets Resulting From
Operations
In the six months ended June 30, 2011, we realized a gain
on the sale of one control investment of approximately
$12.2 million, a loss on the disposal of one control
investment of $0.1 million, and gains on the repayments of
two non-control/non-affiliate investments totaling approximately
$0.8 million. In addition, during the six months ended
June 30, 2011, we recorded net unrealized depreciation of
investments totaling approximately $4.1 million, comprised
of 1) unrealized appreciation on 21 investments totaling
approximately $11.0 million, 2) unrealized
depreciation on 17 investments totaling approximately
$3.9 million and 3) an $11.1 million unrealized
depreciation reclassification adjustment related to the realized
gains noted above.
In the six months ended June 30, 2010, we realized a gain
on the sale of one affiliate investment of approximately
$3.5 million, a gain on the sale of one
non-control/non-affiliate investment of approximately
$0.2 million and a realized loss on the partial conversion
of one non-control/non-affiliate debt investment to equity of
approximately $3.0 million. In addition, during the six
months ended June 30, 2010, we recorded net unrealized
appreciation of investments totaling approximately
$2.0 million, comprised of 1) unrealized appreciation
on 21 investments totaling approximately $11.3 million,
2) unrealized depreciation on 13 investments totaling
approximately $9.1 million and 3) a $0.2 million
unrealized depreciation reclassification adjustment related to
the $0.2 million realized gain noted above.
As a result of these events, our net increase in net assets from
operations was $26.9 million for the six months ended
June 30, 2011 as compared to a net increase in net assets
from operations of $11.0 million during the six months
ended June 30, 2010.
Liquidity
and Capital Resources
We believe that our current cash and cash equivalents on hand,
available leverage under our new line of credit 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 and Fund IIs assets pursuant to SBA
guidelines, the Fund and Fund II 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 Regulated
Investment Company, or RIC.
Cash
Flows
For the six months ended June 30, 2011, we experienced a
net increase in cash and cash equivalents in the amount of
$13.4 million. During that period, our operating activities
used $55.4 million in cash, consisting primarily of new
portfolio investments of $136.3 million, partially offset
by repayments received from portfolio companies and proceeds
from the sale of investments totaling $61.5 million. In
addition, financing activities provided $68.9 million of
cash, consisting primarily of proceeds from a public stock
offering of $63.0 million, borrowings under SBA-guaranteed
debentures payable of $31.1 million, offset by cash
dividends paid in the amount of $13.8 million, repayments
of SBA-guaranteed debentures of $9.5 million and financing
35
fees paid in the amount of $1.2 million. At June 30,
2011, we had $68.2 million of cash and cash equivalents on
hand.
For the six months ended June 30, 2010, we experienced a
net decrease in cash and cash equivalents in the amount of
$10.3 million. During that period, our operating activities
used $29.9 million in cash, consisting primarily of new
portfolio investments of $58.2 million, partially offset by
repayments received from portfolio companies of
$21.7 million. In addition, financing activities provided
$19.6 million of cash, consisting primarily of borrowings
under SBA-guaranteed debentures payable of $32.6 million,
offset by cash dividends paid in the amount of
$11.4 million and financing fees paid in the amount of
$1.3 million. At June 30, 2010, we had
$44.9 million of cash and cash equivalents on hand.
Financing
Transactions
Due to the Funds and Fund IIs status as
licensed SBICs, the Fund and Fund II have 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 up to two times (and in certain cases, 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 and by a group of SBICs under common control
is $225.0 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.
As of June 30, 2011, the Fund has issued the maximum
$150.0 million of SBA-guaranteed debentures and
Fund II has issued the maximum $75.0 million in face
amount of SBA-guaranteed debentures. In addition to the one-time
fee of 1.0% on the total commitment from the SBA, the Company
also pays a one-time fee of 2.425% on the amount of each
debenture issued (2.0% for SBA LMI debentures). 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 June 30, 2011 was 4.64%.
The weighted average interest rate as of June 30, 2011
included $205.0 million of pooled SBA-guaranteed debentures
with a weighted average fixed interest rate of 4.97% and
$19.1 million of unpooled SBA-guaranteed debentures with a
weighted average interim interest rate of 1.17%.
In May 2011, the Company entered into a three-year senior
secured credit facility with an initial commitment of
$50.0 million (the Credit Facility). The
purpose of the Credit Facility is to provide additional
liquidity in support of future investment and operational
activities. The Credit Facility was arranged by BB&T
Capital Markets and Fifth Third Bank and has an accordion
feature which allows for an increase in the total loan size up
to $90.0 million and also contains two one-year extension
options, bringing the total potential commitment and funding
period to five years from the closing date. The Credit Facility,
which is structured to operate like a revolving credit facility,
is secured primarily by Triangle Capital Corporations
assets, excluding the assets of the Funds.
Borrowings under the Credit Facility bear interest, subject to
the Companys election, on a per annum basis equal to
(i) the applicable base rate plus 1.95% or ii) the
applicable LIBOR rate plus 2.95%. The applicable base rate is
equal to the greater of i) prime rate, ii) the federal
funds rate plus 0.5% or iii) the adjusted one-month LIBOR
plus 2.0%. The Company pays unused commitment fees of 0.375% per
annum. As of both June 30, 2011 and December 31, 2010,
the Company did not have any borrowings outstanding under the
Credit Facility.
Distributions
to Stockholders
We have elected to be treated as a RIC under Subchapter M of the
Internal Revenue Code of 1986, as amended, or 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,
36
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 2010, 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 each year at least 90% of
our investment company taxable income, or ICTI as defined by the
Code. 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
Beginning in 2008, the debt and equity capital markets in the
United States were 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, led to an economic
recession in the U.S. and abroad. Banks, investment
companies and others in the financial services industry reported
significant write-downs in the fair value of their assets, which
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, 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 (the Stimulus Bill) in
February 2009. These events significantly impacted the financial
and credit markets and 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 reoccur in the
future and could then continue for a prolonged period of time.
Although we have been able to secure access to additional
liquidity, including our recent public stock offering, increased
leverage available through the SBIC program as a result of the
Stimulus Bill and our new $50 million credit facility,
there is no assurance that debt or equity capital will be
available to us in the future on favorable terms, or at all.
Recent
Developments
In July 2011, we invested $13.8 million in subordinated
debt of Renew Life Formulas, Inc. (Renew), a
provider of branded nutritional supplements and wellness
products. Under the terms of the investment, Renew will pay
interest on the subordinated debt at a rate of 14% per annum.
37
In July 2011, we invested $1.9 million in
2nd Lien
debt of Aramsco Holdings, Inc. (Aramsco), a
distributer of environmental safety and emergency preparedness
products. Under the terms of the investment, Aramsco will pay
interest on the subordinated debt at a rate of LIBOR plus 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-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
in accordance with FASB ASC Topic 820, Fair Value
Measurements and Disclosures, or ASC Topic 820. ASC Topic
820 defines fair value, establishes a framework for measuring
fair value in accordance with generally accepted accounting
principles and expands disclosures about fair value
measurements. As discussed below, we have engaged an independent
valuation firm to assist us in our valuation process.
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
38
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;
|
|
|
|
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 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,
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,
or 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,
(iv) publicly available information regarding current
pricing and credit metrics for similar proposed and executed
investment transactions of private
39
companies and, (v) when management believes a relevant
comparison exists, current pricing and credit metrics for
similar proposed and executed investment transactions of
publicly traded debt.
In valuing equity securities of private companies, we consider
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) publicly available information regarding the valuation
of the securities based on recent sales in comparable
transactions of private companies and, (iii) when
management believes there are comparable companies that are
publicly traded, a review of these publicly traded companies and
the market multiple of their equity securities.
Duff & Phelps, LLC, or 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 addition, we generally request
Duff & Phelps to perform the procedures on a portfolio
company when there has been a significant change in the fair
value of the 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.
The total number of investments and the percentage of our
portfolio on which we asked Duff & Phelps to perform
such procedures are summarized below by period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Total
|
|
|
Total
|
|
Investments at
|
For the Quarter Ended:
|
|
Companies
|
|
Fair Value(1)
|
|
June 30, 2010
|
|
|
8
|
|
|
|
29
|
%
|
September 30, 2010
|
|
|
8
|
|
|
|
26
|
%
|
December 31, 2010
|
|
|
9
|
|
|
|
29
|
%
|
March 31, 2011
|
|
|
11
|
|
|
|
34
|
%
|
June 30, 2011
|
|
|
13
|
|
|
|
26
|
%
|
|
|
|
(1) |
|
Exclusive of the fair value of new investments made during the
quarter. |
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
appear reasonable. 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 an 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
investment income over the term of
40
the loan. Loan prepayment penalties and loan amendment fees are
recorded as investment income when received. Any previously
deferred fees are recognized as a capital gain upon prepayment
of the 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 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
PIK interest when it is determined that the PIK interest is no
longer collectible.
We may have to include in our taxable income, or ICTI, PIK
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. As a
result, 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.
Off-Balance
Sheet Arrangements
We currently have no off-balance sheet arrangements.
|
|
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
During the first half of 2011, the United States economy
continued to show modest improvement and leading economic
indicators suggest that the modest economic recovery may
continue during the remainder of 2011. Although the economy has
not yet recovered to pre-recession levels, we are cautiously
optimistic of the potential for future economic growth. However,
the recent economic recession may continue to impact the broader
financial and credit markets and may continue to reduce 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. During 2010, we
experienced a $10.9 million increase in the fair value of
our investment portfolio related to unrealized appreciation of
investments and in the first half of 2011, we experienced a
$7.1 million increase in the fair value of our investment
portfolio related to unrealized appreciation of investments,
exclusive of an $11.1 million unrealized depreciation
reclassification adjustment related to certain realized gains
discussed above under Results of Operations.
As of June 30, 2011, the fair value of our non-accrual
assets was approximately $7.3 million, which comprised
approximately 1.8% of the total fair value of our portfolio, and
the cost of our non-accrual assets was approximately
$14.0 million, or 3.4% of the total cost of our portfolio.
In addition to these non-accrual assets, as of June 30,
2011, we had, on a fair value basis, approximately
$16.3 million of debt investments, or 4.0% 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
June 30, 2011 was approximately $18.3 million, or 4.4%
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 economy
deteriorates further, the
41
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 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 June 30, 2011, we were not a party to any hedging
arrangements.
As of June 30, 2011, approximately 97.1%, or
$362.8 million of our debt portfolio investments bore
interest at fixed rates and approximately 2.9%, or
$11.0 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 $0.2 million on an annual basis. All of our
pooled SBA-guaranteed debentures bear interest at fixed rates.
Our credit facility bears interest at LIBOR plus 2.95%.
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 second quarter of 2011 that have materially
affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
42
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.
In addition to the other information set forth in this report,
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, 2010, and the risks
below, which could materially affect our business, financial
condition or operating results. The risks described in our
Annual Report on
Form 10-K
and the risks below 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.
Because
of the limited amount of committed funding under our credit
facility, we will have limited ability to fund new investments
if we are unable to expand the facility.
On May 9, 2011, we entered into a credit agreement
providing for a revolving line of credit, which we refer to as
the Credit Facility. Initial committed funding under the Credit
Facility is $50.0 million. The Credit Facility has an
accordion feature which allows for an increase in the total loan
size up to $90.0 million. However, if we are unable to meet
the terms of the accordion feature, we will be unable to expand
the Credit Facility and thus will continue to have limited
availability to finance new investments under our line of
credit. The Credit Facility matures on May 8, 2014, with
two one-year extension options bringing the total potential
commitment and funding period to five years from closing. If the
facility is not renewed or extended, all principal and interest
will be due and payable.
There can be no guarantee that we will be able to renew, extend
or replace the Credit Facility upon its maturity on terms that
are favorable to us, if at all. Our ability to expand the Credit
Facility, and to obtain replacement financing at the time of
maturity, will be constrained by then-current economic
conditions affecting the credit markets. In the event that we
are not able to expand the Credit Facility, or to renew, extend
or refinance the Credit Facility at the time of its maturity,
this could have a material adverse effect on our liquidity and
ability to fund new investments, our ability to make
distributions to our stockholders and our ability to qualify as
a RIC under the Code.
In
addition to regulatory limitations on our ability to raise
capital, our line of credit contains various covenants, which,
if not complied with, could accelerate our repayment obligations
under the facility, thereby materially and adversely affecting
our liquidity, financial condition, results of operations and
ability to pay distributions.
We will have a continuing need for capital to finance our loans.
We are party to the Credit Facility, which provides us with a
revolving credit line facility of up to $90.0 million, of
which $50.0 million was available for borrowings as of
June 30, 2011. The Credit Facility contains customary terms
and conditions, including, without limitation, affirmative and
negative covenants such as information reporting requirements,
minimum consolidated tangible net worth, minimum interest
coverage ratio, maintenance of RIC and BDC status, and minimum
liquidity. The Credit Facility also contains customary events of
default with customary cure and notice, including, without
limitation, nonpayment, misrepresentation of representations and
warranties in a material respect, breach of covenant,
cross-default to other indebtedness, bankruptcy, change of
control, and materially adverse effect. The Credit Facility
permits us to fund additional loans and investments as long as
we are within the conditions set out in the credit agreement.
Our continued compliance with these covenants depends on many
factors, some of which are beyond our control, and there are no
assurances that we will continue to comply with these covenants.
Our failure to satisfy these covenants could result in
foreclosure by our lenders, which would accelerate our repayment
obligations under the facility and thereby have a material
43
adverse effect on our business, liquidity, financial condition,
results of operations and ability to pay distributions to our
stockholders.
Because
we borrow money, the potential for gain or loss on amounts
invested in us is magnified and may increase the risk of
investing in us.
Borrowings, also known as leverage, magnify the potential for
gain or loss on invested equity capital. As we use leverage to
partially finance our investments, you will experience increased
risks associated with investing in our securities. The Fund and
Fund II issue debt securities guaranteed by the SBA and
sold in the capital markets. As a result of its guarantee of the
debt securities, the SBA has fixed dollar claims on the assets
of the Fund and Fund II that are superior to the claims of
our common stockholders. In addition, our Credit Facility
contains financial and operating covenants that could restrict
our business activities, including our ability to declare
dividends if we default under certain provisions. Breach of any
of those covenants could cause a default under those
instruments. Such a default, if not cured or waived, could have
a material adverse effect on us. We may also borrow from banks
and other lenders in the future. If the value of our assets
increases, then leveraging would cause the net asset value
attributable to our common stock to increase more sharply than
it would have had we not leveraged. Conversely, if the value of
our assets decreases, leveraging would cause net asset value to
decline more sharply than it otherwise would have had we not
leveraged. Similarly, any increase in our income in excess of
interest payable on the borrowed funds would cause our net
investment income to increase more than it would without the
leverage, while any decrease in our income would cause our net
investment income to decline more sharply than it would have had
we not borrowed. Such a decline could negatively affect our
ability to make distributions to our stockholders. Leverage is
generally considered a speculative investment technique.
As a BDC, we are generally required to meet a coverage ratio of
total assets to total borrowings and other senior securities,
which include all of our borrowings (other than SBA leverage)
and any preferred stock we may issue in the future, of at least
200%. If this ratio declines below 200%, we may not be able to
incur additional debt and may need to sell a portion of our
investments to repay some debt when it is disadvantageous to do
so, and we may not be able to make distributions. Currently, we
do not have senior securities outstanding and therefore are not
limited by this ratio.
On June 30, 2011, we had $224.1 million of outstanding
indebtedness guaranteed by the SBA, which had a weighted average
annualized interest cost of 4.64%. The calculation of this
weighted average interest rate includes i) the interim
rates charged on $19.1 million of SBA guaranteed debentures
that have not yet been pooled and ii) the fixed rates
charged on $205.0 million of pooled SBA guaranteed
debentures. The unpooled SBA-guaranteed debentures have a
weighted average interim interest rate of 1.17% and the pooled
SBA guaranteed debentures have a weighted average interest rate
of 4.97%.
Our ability to achieve our investment objective may depend in
part on our ability to achieve additional leverage on favorable
terms by issuing debentures guaranteed by the SBA, by borrowing
from banks or insurance companies or by expanding our line of
credit, and there can be no assurance that such additional
leverage can in fact be achieved.
Stockholders
may experience dilution in their ownership percentage if they do
not participate in our dividend reinvestment plan.
All dividends declared in cash payable to stockholders that are
participants in our dividend reinvestment plan are generally
automatically reinvested in shares of our common stock. As a
result, stockholders that do not participate in the dividend
reinvestment plan may experience dilution over time.
Stockholders who do not elect to receive dividends in shares of
common stock may experience accretion to the net asset value of
their shares if our shares are trading at a premium and dilution
if our shares are trading at a discount. The level of accretion
or discount would depend on various factors, including the
proportion of our stockholders who participate in the plan, the
level of premium or discount at which our shares are trading and
the amount of the dividend payable to a stockholder.
44
|
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds.
|
Sales of
Unregistered Securities
During the six months ended June 30, 2011, we issued a
total of 117,142 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 $2.1 million.
Issuer
Purchases of Equity Securities
During the six months ended June 30, 2011, there were
elections by employees to surrender shares of stock upon vesting
of shares of restricted stock to cover tax withholding
obligations. The following chart summarizes repurchases of our
common stock for the six months ended June 30, 2011.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Number (or
|
|
|
|
|
|
|
|
|
|
Total Number of Shares
|
|
|
Approximate Dollar
|
|
|
|
Total Number
|
|
|
|
|
|
Purchased as Part of
|
|
|
Value) of Shares that May
|
|
|
|
of Shares
|
|
|
Average Price Paid
|
|
|
Publicly Announced
|
|
|
Yet Be Purchased Under
|
|
Period
|
|
Purchased
|
|
|
per Share
|
|
|
Plans or Programs
|
|
|
the Plans or Programs
|
|
|
February 1-28, 2011
|
|
|
23,676
|
(1)
|
|
$
|
20.51
|
|
|
|
|
|
|
|
|
|
May 1-31, 2011
|
|
|
8,389
|
(1)
|
|
$
|
18.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
32,065
|
|
|
$
|
20.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents shares of our common stock delivered to us in
satisfaction of certain tax withholding obligations of holders
of restricted shares that vested during this period. |
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 to
satisfy our Dividend Reinvestment Plan obligations during the
six months ended June 30, 2011.
|
|
Item 3.
|
Defaults
Upon Senior Securities.
|
Not applicable.
|
|
Item 4.
|
[Removed
and Reserved.]
|
|
|
Item 5.
|
Other
Information.
|
Not applicable.
45
|
|
|
|
|
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
|
|
Third Amended and Restated Bylaws of the Registrant (Filed as
Exhibit 3.2 to the Registrants Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on May 4,
2011 and incorporated herein by reference).
|
|
3
|
.3
|
|
Certificate of Domestic 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
|
|
Dividend Reinvestment Plan of the Registrant (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).
|
|
10
|
.1
|
|
Credit Agreement between the Registrant, Branch Banking and
Trust Company, BB&T Capital Markets and Fifth Third
Bank dated May 9, 2011 (Incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on
Form 8-K,
filed on May 11, 2011).
|
|
10
|
.2
|
|
General Security Agreement between the Registrant, ARC
Industries Holdings, Inc., Brantley Holdings, Inc., Energy
Hardware Holdings, Inc., Minco Holdings, Inc., Peaden Holdings,
Inc., Technology Crops Holdings, Inc. and Branch Banking and
Trust Company dated May 9, 2011 (Incorporated by
reference to Exhibit 10.2 to the Registrants Current
Report on
Form 8-K,
filed on May 11, 2011).
|
|
10
|
.3
|
|
Equity Pledge Agreement between the Registrant, ARC Industries
Holdings, Inc., Brantley Holdings, Inc., Energy Hardware
Holdings, Inc., Minco Holdings, Inc., Peaden Holdings, Inc.,
Technology Crops Holdings, Inc. and Branch Banking and
Trust Company dated May 9, 2011 (Incorporated by
reference to Exhibit 10.3 to the Registrants Current
Report on
Form 8-K,
filed on May 11, 2011).
|
|
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.
|
46
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: August 3, 2011
|
|
/s/ Garland S. Tucker, III
Garland
S. Tucker, III
President, Chief Executive Officer and
Chairman of the Board of Directors
|
|
|
|
Date: August 3, 2011
|
|
/s/ Steven C. Lilly
Steven
C. Lilly
Chief Financial Officer and Director
|
|
|
|
Date: August 3, 2011
|
|
/s/ C. Robert Knox, Jr.
C.
Robert Knox, Jr.
Principal Accounting Officer
|
47
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
|
|
Third Amended and Restated Bylaws of the Registrant (Filed as
Exhibit 3.2 to the Registrants Quarterly Report on
Form 10-Q
filed with the Securities and Exchange Commission on May 4,
2011 and incorporated herein by reference).
|
|
3
|
.3
|
|
Certificate of Domestic 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
|
|
Dividend Reinvestment Plan of the Registrant (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).
|
|
10
|
.1
|
|
Credit Agreement between the Registrant, Branch Banking and
Trust Company, BB&T Capital Markets and Fifth Third
Bank dated May 9, 2011 (Incorporated by reference to
Exhibit 10.1 to the Registrants Current Report on
Form 8-K,
filed on May 11, 2011).
|
|
10
|
.2
|
|
General Security Agreement between the Registrant, ARC
Industries Holdings, Inc., Brantley Holdings, Inc., Energy
Hardware Holdings, Inc., Minco Holdings, Inc., Peaden Holdings,
Inc., Technology Crops Holdings, Inc. and Branch Banking and
Trust Company dated May 9, 2011 (Incorporated by
reference to Exhibit 10.2 to the Registrants Current
Report on
Form 8-K,
filed on May 11, 2011).
|
|
10
|
.3
|
|
Equity Pledge Agreement between the Registrant, ARC Industries
Holdings, Inc., Brantley Holdings, Inc., Energy Hardware
Holdings, Inc., Minco Holdings, Inc., Peaden Holdings, Inc.,
Technology Crops Holdings, Inc. and Branch Banking and
Trust Company dated May 9, 2011 (Incorporated by
reference to Exhibit 10.3 to the Registrants Current
Report on
Form 8-K,
filed on May 11, 2011).
|
|
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.
|
48