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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)    

ý

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

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: 001-33723

Main Street Capital Corporation
(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of
incorporation or organization)
  41-2230745
(I.R.S. Employer
Identification No.)

1300 Post Oak Boulevard, 8th Floor
Houston, TX
(Address of principal executive offices)

 

77056
(Zip Code)

(713) 350-6000
(Registrant's telephone number including area code)

n/a
(Former name, former address and former fiscal year, if changed since last report)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    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 (§232.405 of this chapter) 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, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(do not check if
smaller reporting company)
  Smaller reporting company o

Emerging growth company o

        If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

        The number of shares outstanding of the issuer's common stock as of May 3, 2018 was 59,447,537.

   


Table of Contents


TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Item 1.

 

Consolidated Financial Statements

   

 

Consolidated Balance Sheets—March 31, 2018 (unaudited) and December 31, 2017

  1

 

Consolidated Statements of Operations (unaudited)—Three months ended March 31, 2018 and 2017

  2

 

Consolidated Statements of Changes in Net Assets (unaudited)—Three months ended March 31, 2018 and 2017

  3

 

Consolidated Statements of Cash Flows (unaudited)—Three months ended March 31, 2018 and 2017

  4

 

Consolidated Schedule of Investments (unaudited)—March 31, 2018

  5

 

Consolidated Schedule of Investments—December 31, 2017

  36

 

Notes to Consolidated Financial Statements (unaudited)

  67

 

Consolidated Schedules of Investments in and Advances to Affiliates (unaudited)—Three months ended March 31, 2018 and 2017

  111

Item 2.

 

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

  120

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

  141

Item 4.

 

Controls and Procedures

  141


PART II
OTHER INFORMATION

Item 1.

 

Legal Proceedings

  143

Item 1A.

 

Risk Factors

  143

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

  143

Item 6.

 

Exhibits

  143

 

Signatures

  144

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

(dollars in thousands, except shares and per share amounts)

 
  March 31,
2018
  December 31,
2017
 
 
  (Unaudited)
   
 

ASSETS

             

  

             

Investments at fair value:

             

Control investments (cost: $649,096 and $530,034 as of March 31, 2018 and December 31, 2017, respectively)

  $ 846,797   $ 750,706  

Affiliate investments (cost: $382,351 and $367,317 as of March 31, 2018 and December 31, 2017, respectively)

    359,460     338,854  

Non-Control/Non-Affiliate investments (cost: $1,126,103 and $1,107,447 as of March 31, 2018 and December 31, 2017, respectively)

    1,107,777     1,081,745  

Total investments (cost: $2,157,550 and $2,004,798 as of March 31, 2018 and December 31, 2017, respectively)

    2,314,034     2,171,305  

  

             

Cash and cash equivalents

    29,090     51,528  

Interest receivable and other assets

    40,159     36,343  

Receivable for securities sold

    14,311     2,382  

Deferred financing costs (net of accumulated amortization of $5,856 and $5,600 as of March 31, 2018 and December 31, 2017, respectively)

    3,581     3,837  

Total assets

  $ 2,401,175   $ 2,265,395  

LIABILITIES

             

Credit facility

 
$

188,000
 
$

64,000
 

SBIC debentures (par: $313,800 and $295,800 as of March 31, 2018 and December 31, 2017, respectively)

    306,182     288,483  

4.50% Notes due 2022 (par: $185,000 as of both March 31, 2018 and December 31, 2017)

    182,167     182,015  

4.50% Notes due 2019 (par: $175,000 as of both March 31, 2018 and December 31, 2017)

    173,796     173,616  

6.125% Notes (par: $90,655 as of both March 31, 2018 and December 31, 2017)

    89,133     89,057  

Accounts payable and other liabilities

    15,049     20,168  

Payable for securities purchased

    21,859     40,716  

Interest payable

    8,510     5,273  

Dividend payable

    11,192     11,146  

Deferred tax liability, net

    8,687     10,553  

Total liabilities

    1,004,575     885,027  

  

             

Commitments and contingencies (Note M)

             

NET ASSETS

   
 
   
 
 

Common stock, $0.01 par value per share (150,000,000 shares authorized; 58,987,330 and 58,660,680 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively)

   
590
   
586
 

Additional paid-in capital

    1,325,998     1,310,780  

Accumulated net investment income, net of cumulative dividends of $696,070 and $662,563 as of March 31, 2018 and December 31, 2017, respectively                 

    10,015     7,921  

Accumulated net realized gain from investments (accumulated net realized gain from investments of $72,036 before cumulative dividends of $124,690 as of March 31, 2018 and accumulated net realized gain from investments of $64,576 before cumulative dividends of $124,690 as of December 31, 2017)

    (52,654 )   (60,114 )

Net unrealized appreciation, net of income taxes

    112,651     121,195  

Total net assets

    1,396,600     1,380,368  

Total liabilities and net assets

  $ 2,401,175   $ 2,265,395  

NET ASSET VALUE PER SHARE

  $ 23.67   $ 23.53  

   

The accompanying notes are an integral part of these consolidated financial statements

1


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

(dollars in thousands, except shares and per share amounts)

(Unaudited)

 
  Three Months Ended
March 31,
 
 
  2018   2017  

INVESTMENT INCOME:

             

Interest, fee and dividend income:

             

Control investments

  $ 21,955   $ 12,988  

Affiliate investments

    9,071     9,899  

Non-Control/Non-Affiliate investments

    24,916     25,002  

Total investment income

    55,942     47,889  

EXPENSES:

             

Interest

    (10,265 )   (8,608 )

Compensation

    (5,491 )   (4,430 )

General and administrative

    (2,974 )   (2,940 )

Share-based compensation

    (2,303 )   (2,269 )

Expenses allocated to the External Investment Manager

    2,066     1,524  

Total expenses

    (18,967 )   (16,723 )

NET INVESTMENT INCOME

    36,975     31,166  

NET REALIZED GAIN (LOSS):

   
 
   
 
 

Control investments

    13,094     (682 )

Affiliate investments

        22,930  

Non-Control/Non-Affiliate investments

    (5,634 )   5,317  

SBIC debentures

    (1,374 )   (5,217 )

Total net realized gain

    6,086     22,348  

NET UNREALIZED APPRECIATION (DEPRECIATION):

             

Control investments

    (22,974 )   11,880  

Affiliate investments

    14,238     (26,121 )

Non-Control/Non-Affiliate investments

    (2,146 )   (7,850 )

SBIC debentures

    1,359     5,665  

Total net unrealized depreciation

    (9,523 )   (16,426 )

INCOME TAXES:

             

Federal and state income, excise and other taxes

    (887 )   (1,252 )

Deferred taxes

    1,866     (4,386 )

Income tax benefit (provision)

    979     (5,638 )

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 34,517   $ 31,450  

NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED

  $ 0.63   $ 0.57  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED

  $ 0.59   $ 0.57  

DIVIDENDS PAID PER SHARE:

             

Regular monthly dividends

  $ 0.570   $ 0.555  

Supplemental dividends

         

Total dividends

  $ 0.570   $ 0.555  

WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED

    58,852,252     55,125,170  

   

The accompanying notes are an integral part of these consolidated financial statements

2


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Changes in Net Assets

(dollars in thousands, except shares)

(Unaudited)

 
  Common Stock    
   
  Accumulated
Net Realized
Gain From
Investments,
Net of Dividends
  Net Unrealized
Appreciation from
Investments,
Net of Income
Taxes
   
 
 
   
  Accumulated
Net Investment
Income, Net
of Dividends
   
 
 
  Number of
Shares
  Par
Value
  Additional
Paid-In
Capital
  Total Net
Asset Value
 

Balances at December 31, 2016

    54,354,857   $ 543   $ 1,143,883   $ 19,033   $ (58,887 ) $ 96,909   $ 1,201,481  

Public offering of common stock, net of offering costs

   
1,035,286
   
11
   
37,700
   
   
   
   
37,711
 

Share-based compensation

            2,269                 2,269  

Purchase of vested stock for employee payroll tax withholding

    (8,964 )       (343 )               (343 )

Dividend reinvestment

    48,675         1,806                 1,806  

Amortization of directors' deferred compensation

            163                 163  

Forfeited shares of terminated employees

    (6,479 )                        

Dividends to stockholders

                (11,039 )   (19,564 )       (30,603 )

Net increase (decrease) resulting from operations

                25,949     27,565     (22,064 )   31,450  

Balances at March 31, 2017

    55,423,375   $ 554   $ 1,185,478   $ 33,943   $ (50,886 ) $ 74,845   $ 1,243,934  

Balances at December 31, 2017

    58,660,680   $ 586   $ 1,310,780   $ 7,921   $ (60,114 ) $ 121,195   $ 1,380,368  

Public offering of common stock, net of offering costs

   
309,895
   
4
   
11,332
   
   
   
   
11,336
 

Share-based compensation

            2,303                 2,303  

Purchase of vested stock for employee payroll tax withholding

    (5,392 )       (212 )               (212 )

Dividend reinvestment

    42,423         1,589                 1,589  

Amortization of directors' deferred compensation

            206                 206  

Issuance of restricted stock

    124                          

Dividends to stockholders

                (33,507 )           (33,507 )

Net increase (decrease) resulting from operations

                35,601     7,460     (8,544 )   34,517  

Balances at March 31, 2018

    59,007,730   $ 590   $ 1,325,998   $ 10,015   $ (52,654 ) $ 112,651   $ 1,396,600  

   

The accompanying notes are an integral part of these consolidated financial statements

3


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)

 
  Three Months Ended
March 31,
 
 
  2018   2017  

CASH FLOWS FROM OPERATING ACTIVITIES

             

Net increase in net assets resulting from operations

  $ 34,517   $ 31,450  

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:

             

Investments in portfolio companies

    (340,405 )   (186,922 )

Proceeds from sales and repayments of debt investments in portfolio companies

    133,835     184,487  

Proceeds from sales and return of capital of equity investments in portfolio companies

    32,268     37,041  

Net unrealized depreciation

    9,523     16,426  

Net realized gain

    (6,086 )   (22,348 )

Accretion of unearned income

    (3,238 )   (4,703 )

Payment-in-kind interest

    (576 )   (1,607 )

Cumulative dividends

    (562 )   (877 )

Share-based compensation expense

    2,303     2,269  

Amortization of deferred financing costs

    881     658  

Deferred tax (benefit) provision

    (1,866 )   4,386  

Changes in other assets and liabilities:

             

Interest receivable and other assets

    (3,467 )   (2,175 )

Interest payable

    3,237     (632 )

Accounts payable and other liabilities

    (4,913 )   (2,284 )

Deferred fees and other

    1,392     597  

Net cash provided by (used in) operating activities

    (143,157 )   55,766  

CASH FLOWS FROM FINANCING ACTIVITIES

   
 
   
 
 

Proceeds from public offering of common stock, net of offering costs

    11,336     37,711  

Dividends paid

    (31,872 )   (28,593 )

Proceeds from issuance of SBIC debentures

    22,000     25,400  

Repayments of SBIC debentures

    (4,000 )   (25,200 )

Proceeds from credit facility

    194,000     83,000  

Repayments on credit facility

    (70,000 )   (138,000 )

Payment of deferred issuance costs and SBIC debenture fees

    (533 )   (616 )

Purchases of vested stock for employee payroll tax withholding

    (212 )   (343 )

Net cash provided by (used in) financing activities

    120,719     (46,641 )

Net increase (decrease) in cash and cash equivalents

    (22,438 )   9,125  

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

    51,528     24,480  

CASH AND CASH EQUIVALENTS AT END OF PERIOD

  $ 29,090   $ 33,605  

Supplemental cash flow disclosures:

             

Interest paid

  $ 6,116   $ 8,552  

Taxes paid

  $ 3,320   $ 1,677  

Non-cash financing activities:

             

Shares issued pursuant to the DRIP

  $ 1,589   $ 1,806  

   

The accompanying notes are an integral part of these consolidated financial statements

4


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Control Investments(5)

 

 

 

 

                   

                           

Access Media Holdings, LLC(10)

 

Private Cable Operator

                       

     

10% PIK Secured Debt (Maturity—July 22, 2020)(14)(19)

  $ 23,828   $ 23,828   $ 15,120  

     

Preferred Member Units (8,550,000 units)

          8,444      

     

Member Units (45 units)

          1      

                  32,273     15,120  

                           

ASC Interests, LLC

 

Recreational and Educational Shooting Facility

                       

     

11% Secured Debt (Maturity—July 31, 2018)

    1,650     1,647     1,647  

     

Member Units (1,500 units)

          1,500     1,370  

                  3,147     3,017  

                           

ATS Workholding, LLC(10)

 

Manufacturer of Machine Cutting Tools and Accessories

                       

     

5% Secured Debt (Maturity—November 16, 2021)

    4,186     3,735     3,735  

     

Preferred Member Units (3,725,862 units)

          3,726     3,726  

                  7,461     7,461  

                           

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

                       

     

12% Secured Debt (Maturity—December 28, 2020)

    11,596     11,596     11,596  

     

Common Stock (57,508 shares)

          6,350     9,370  

                  17,946     20,966  

                           

Brewer Crane Holdings, LLC

 

Provider of Crane Rental and Operating Services

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.66%, Secured Debt (Maturity—January 9, 2023)(9)

    9,920     9,825     9,825  

     

Preferred Member Units (2,950 units)(8)

          4,280     4,280  

                  14,105     14,105  

                           

Café Brazil, LLC

 

Casual Restaurant Group

                       

     

Member Units (1,233 units)(8)

          1,742     4,900  

                           

5


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

California Splendor Holdings LLC

 

Processor of Frozen Fruits

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.38%, Secured Debt (Maturity—March 30, 2023)(9)

    3,730     3,610     3,610  

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.38%, Secured Debt (Maturity—March 30, 2023)(9)

    28,000     27,723     27,723  

     

Preferred Member Units (7,143 units)

          12,500     12,500  

                  43,833     43,833  

                           

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

                       

     

Member Units (416 units)(8)

          1,300     67,340  

                           

Chamberlin Holding LLC

 

Roofing and Waterproofing Specialty Subcontractor

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.13%, Secured Debt (Maturity—February 26, 2023)(9)

    21,600     21,389     21,389  

     

Member Units (4,347 units)

          11,440     11,440  

                  32,829     32,829  

                           

Charps, LLC

 

Pipeline Maintenance and Construction

                       

     

12% Secured Debt (Maturity—February 3, 2022)

    16,800     16,646     16,646  

     

Preferred Member Units (1,600 units)

          400     1,190  

                  17,046     17,836  

                           

Clad-Rex Steel, LLC

 

Specialty Manufacturer of Vinyl-Clad Metal

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 11.16%, Secured Debt (Maturity—December 20, 2021)(9)

    13,280     13,174     13,280  

     

Member Units (717 units)(8)

          7,280     9,780  

     

10% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity—December 20, 2036)

    1,178     1,166     1,178  

     

Member Units (Clad-Rex Steel RE Investor, LLC) (800 units)

          210     280  

                  21,830     24,518  

                           

CMS Minerals Investments

 

Oil & Gas Exploration & Production

                       

     

Member Units (CMS Minerals II, LLC) (100 units)(8)

          3,294     2,385  

                           

Copper Trail Energy Fund I, LP(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 30.1%)(8)

          2,500     2,500  

                           

6


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Datacom, LLC

 

Technology and Telecommunications Provider

                       

     

8% Secured Debt (Maturity—May 30, 2018)

    1,755     1,755     1,755  

     

5.25% Current / 5.25% PIK Secured Debt (Maturity—May 30, 2019)(19)

    12,511     12,479     10,780  

     

Class A Preferred Member Units

          1,181     220  

     

Class B Preferred Member Units (6,453 units)

          6,030      

                  21,445     12,755  

                           

Direct Marketing Solutions, Inc.

 

Provider of Omni-Channel Direct Marketing Services

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.75%, Secured Debt (Maturity—February 13, 2023)(9)

    18,722     18,523     18,523  

     

Preferred Stock (8,400 shares)

          8,400     8,400  

                  26,923     26,923  

                           

Gamber-Johnson Holdings, LLC

 

Manufacturer of Ruggedized Computer Mounting Systems

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.66%, Secured Debt (Maturity—June 24, 2021)(9)

    22,910     22,737     22,910  

     

Member Units (8,619 units)(8)

          14,844     26,530  

                  37,581     49,440  

                           

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.69%, Secured Debt (Maturity—March 31, 2020)(9)

    5,362     5,327     5,327  

     

Member Units (1,200 units)

          1,200     1,940  

                  6,527     7,267  

                           

GRT Rubber Technologies LLC

 

Manufacturer of Engineered Rubber Products

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.66%, Secured Debt (Maturity—December 19, 2019)(9)

    11,393     11,347     11,393  

     

Member Units (5,879 units)(8)

          13,065     23,420  

                  24,412     34,813  

                           

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

                       

     

Member Units (438 units)(8)

          2,980     10,830  

                           

7


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Gulf Publishing Holdings, LLC

 

Energy Industry Focused Media and Publishing

                       

     

12.5% Secured Debt (Maturity—April 29, 2021)

    12,698     12,608     12,608  

     

Member Units (3,681 units)

          3,681     4,840  

                  16,289     17,448  

                           

Harborside Holdings, LLC

 

Real Estate Holding Company

                       

     

Member units (100 units)

          6,306     9,500  

                           

Harris Preston Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (2717 MH, L.P.) (Fully diluted 49.3%)

          536     536  

                           

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

                       

     

Common Stock (107,456 shares)

          718     4,980  

                           

HW Temps LLC

 

Temporary Staffing Solutions

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.66%, Secured Debt (Maturity July 2, 2020)(9)

    9,976     9,922     9,922  

     

Preferred Member Units (3,200 units)

          3,942     3,940  

                  13,864     13,862  

                           

IDX Broker, LLC

 

Provider of Marketing and CRM Tools for the Real Estate Industry

                       

     

11.5% Secured Debt (Maturity—November 15, 2020)

    14,950     14,828     14,950  

     

Preferred Member Units (5,607 units)(8)

          5,952     11,550  

                  20,780     26,500  

                           

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

                       

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 11.25%, Secured Debt (Maturity—November 14, 2019)(9)

    3,805     3,771     3,805  

     

Member Units (627 units)(8)

          811     5,100  

                  4,582     8,905  

                           

KBK Industries, LLC

 

Manufacturer of Specialty Oilfield and Industrial Products

                       

     

10% Secured Debt (Maturity—September 28, 2020)

    75     72     75  

     

12.5% Secured Debt (Maturity—September 28, 2020)

    5,900     5,870     5,900  

     

Member Units (325 units)(8)

          783     4,740  

                  6,725     10,715  

8


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Lamb Ventures, LLC

 

Aftermarket Automotive Services Chain

                       

     

11% Secured Debt (Maturity—July 1, 2022)

    8,339     8,298     8,339  

     

Preferred Equity (non-voting)

          400     400  

     

Member Units (742 units)

          5,273     6,730  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity—March 31, 2027)

    432     428     432  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     520  

                  15,024     16,421  

                           

Marine Shelters Holdings, LLC

 

Fabricator of Marine and Industrial Shelters

                       

     

12% PIK Secured Debt (Maturity—December 28, 2017)(14)

    3,131     3,078      

     

Preferred Member Units (3,810 units)

          5,352      

                  8,430      

                           

Market Force Information, LLC

 

Provider of Customer Experience Management Services

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 13.01%, Secured Debt (Maturity—July 28, 2022)(9)

    22,880     22,676     22,676  

     

Member Units (657,113 units)

          14,700     14,700  

                  37,376     37,376  

                           

MH Corbin Holding LLC

 

Manufacturer and Distributor of Traffic Safety Products

                       

     

10% Secured Debt (Maturity—August 31, 2020)

    12,425     12,238     12,238  

     

Preferred Member Units (4,000 shares)

          6,000     6,000  

                  18,238     18,238  

                           

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

                       

     

10% Secured Debt (Maturity—January 15, 2020)

    1,750     1,743     1,743  

     

12% Secured Debt (Maturity—January 15, 2020)

    3,900     3,867     3,867  

     

Member Units (7,874 units)

          3,001     2,171  

     

9.5% Secured Debt (Mid-Columbia Real Estate, LLC) (Maturity—May 13, 2025)

    780     780     780  

     

Member Units (Mid-Columbia Real Estate, LLC) (500 units)(8)

          790     1,290  

                  10,181     9,851  

                           

MSC Adviser I, LLC(16)

 

Third Party Investment Advisory Services

                       

     

Member Units (Fully diluted 100.0%)(8)

              48,722  

                           

9


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Mystic Logistics Holdings, LLC

 

Logistics and Distribution Services Provider for Large Volume Mailers

                       

     

12% Secured Debt (Maturity—August 15, 2019)

    7,562     7,501     7,501  

     

Common Stock (5,873 shares)

          2,720     6,050  

                  10,221     13,551  

                           

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

                       

     

LIBOR Plus 8.50%, Current Coupon 10.51%, Secured Debt (Maturity—May 31, 2019)

    11,475     11,445     11,475  

     

Member Units (2,955 units)(8)

          2,975     12,180  

                  14,420     23,655  

                           

NexRev LLC

 

Provider of Energy Efficiency Products & Services

                       

     

11% Secured Debt (Maturity—February 28, 2023)

    17,440     17,268     17,268  

     

Preferred Member Units (86,400,000 units)

          6,880     6,880  

                  24,148     24,148  

                           

NRI Clinical Research, LLC

 

Clinical Research Service Provider

                       

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.19%, Secured Debt (Maturity—January 15, 2019)(9)

    400     400     400  

     

14% Secured Debt (Maturity—January 15, 2019)

    3,865     3,836     3,865  

     

Warrants (251,723 equivalent units; Expiration—January 15, 2026; Strike price—$0.01 per unit)

          252     500  

     

Member Units (1,454,167 units)

          765     2,500  

                  5,253     7,265  

                           

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

                       

     

12% Secured Debt (Maturity—March 20, 2023)

    6,376     6,376     6,376  

     

Member Units (65,962 units)(8)

          3,717     4,130  

                  10,093     10,506  

                           

NuStep, LLC

 

Designer, Manufacturer and Distributor of Fitness Equipment

                       

     

12% Secured Debt (Maturity—January 31, 2022)

    20,600     20,429     20,429  

     

Preferred Member Units (406 units)

          10,200     10,200  

                  30,629     30,629  

                           

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

                       

     

Common Stock (1,500 shares)(8)

          1,080     14,290  

                           

10


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Pegasus Research Group, LLC

 

Provider of Telemarketing and Data Services

                       

     

Member Units (460 units)(8)

          1,290     10,310  

                           

PPL RVs, Inc.

 

Recreational Vehicle Dealer

                       

     

LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 8.69%, Secured Debt (Maturity—November 15, 2021)(9)

    16,100     15,978     16,100  

     

Common Stock (1,962 shares)(8)

          2,150     11,660  

                  18,128     27,760  

                           

Principle Environmental, LLC (d/b/a TruHorizon Environmental Solutions)

 

Noise Abatement Service Provider

                       

     

13% Secured Debt (Maturity—April 30, 2020)

    7,477     7,359     7,477  

     

Preferred Member Units (19,631 units)(8)

          4,600     13,090  

     

Warrants (1,018 equivalent units; Expiration—January 31, 2021; Strike price—$0.01 per unit)

          1,200     780  

                  13,159     21,347  

                           

Quality Lease Service, LLC

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

Zero Coupon Secured Debt (Maturity—June 8, 2020)

    7,341     7,341     6,950  

     

Member Units (1,000 units)

          3,293     5,363  

                  10,634     12,313  

                           

River Aggregates, LLC

 

Processor of Construction Aggregates

                       

     

Zero Coupon Secured Debt (Maturity—June 30, 2018)

    750     728     728  

     

Member Units (1,150 units)

          1,150     4,610  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     2,670  

                  2,247     8,008  

                           

11


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                       

     

9% Secured Debt (Maturity—October 2, 2018)

    2,924     2,924     1,510  

     

Series A Preferred Units (2,500 units)

          2,500      

     

Warrants (1,424 equivalent units; Expiration—July 1, 2024; Strike price—$0.01 per unit)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100 units)(8)

          2,300     2,480  

                  8,820     3,990  

                           

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

                       

     

9% Secured Debt (Maturity—January 1, 2019)

    184     184     184  

     

Member Units (1,867 units)(8)

          3,579     3,880  

                  3,763     4,064  

                           

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

                       

     

13% Secured Debt (Maturity—December 23, 2018)

    2,814     2,801     2,801  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,000  

     

Common Stock (1,126,242 shares)

          3,706      

                  9,507     5,801  

                           

Ziegler's NYPD, LLC

 

Casual Restaurant Group

                       

     

6.5% Secured Debt (Maturity—October 1, 2019)

    1,000     997     997  

     

12% Secured Debt (Maturity—October 1, 2019)

    300     300     300  

     

14% Secured Debt (Maturity—October 1, 2019)

    2,750     2,750     2,750  

     

Warrants (587 equivalent units; Expiration—September 29, 2018; Strike price—$0.01 per unit)

          600      

     

Preferred Member Units (10,072 units)

          2,834     3,221  

                  7,481     7,268  

Subtotal Control Investments (36.6% of total investments at fair value)

  $ 649,096   $ 846,797  

12


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC

 

Provider of Rent-to-Own Financing Solutions and Services

                       

     

Warrants (42 equivalent units; Expiration—November 7, 2024; Strike price—$0.01 per unit)

        $ 259   $ 900  

     

Preferred Member Units (186 units)(8)

          1,200     3,760  

                  1,459     4,660  

                           

Barfly Ventures, LLC(10)

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—August 31, 2020)

    8,715     8,576     8,715  

     

Options (2 equivalent units)

          397     920  

     

Warrant (1 equivalent unit; Expiration—August 31, 2025; Strike price—$1.00 per unit)

          473     520  

                  9,446     10,155  

                           

BBB Tank Services, LLC

 

Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.66%, Secured Debt (Maturity—April 8, 2021)(9)

    720     700     700  

     

15% Secured Debt (Maturity—April 8, 2021)

    4,000     3,883     3,883  

     

Member Units (800,000 units)

          800     550  

                  5,383     5,133  

                           

Boccella Precast Products LLC

 

Manufacturer of Precast Hollow Core Concrete

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.69%, Secured Debt (Maturity—June 30, 2022)(9)

    16,582     16,426     16,582  

     

Member Units (2,160,000 units)(8)

          2,160     4,860  

                  18,586     21,442  

                           

Boss Industries, LLC

 

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

                       

     

Preferred Member Units (2,242 units)(8)

          2,120     4,740  

                           

13


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions Provider

                       

     

13% Secured Debt (Maturity—July 25, 2021)

    7,500     5,962     5,962  

     

Warrants (82 equivalent shares; Expiration—July 25, 2026; Strike price—$0.01 per share)

          2,132     4,020  

     

13% Secured Debt (Mercury Service Group, LLC) (Maturity—July 25, 2021)

    1,000     993     1,000  

     

Preferred Member Units (Mercury Service Group, LLC) (17,742 units)(8)

          1,000     1,000  

                  10,087     11,982  

                           

Buca C, LLC

 

Casual Restaurant Group

                       

     

LIBOR Plus 9.25% (Floor 1.00%), Current Coupon 10.94%, Secured Debt (Maturity—June 30, 2020)(9)

    20,004     19,904     19,904  

     

Preferred Member Units (6 units; 6% cumulative)(8)(19)

          4,238     4,233  

                  24,142     24,137  

                           

CAI Software LLC

 

Provider of Specialized Enterprise Resource Planning Software

                       

     

12% Secured Debt (Maturity—October 10, 2019)

    4,083     4,063     4,083  

     

Member Units (65,356 units)(8)

          654     3,230  

                  4,717     7,313  

                           

Chandler Signs Holdings, LLC(10)

 

Sign Manufacturer

                       

     

12% Secured Debt (Maturity—July 4, 2021)

    4,500     4,470     4,500  

     

Class A Units (1,500,000 units)

          1,500     2,180  

                  5,970     6,680  

                           

Charlotte Russe, Inc(11)

 

Fast-Fashion Retailer to Young Women

                       

     

8.50% Secured Debt (Maturity—February 2, 2023)

    7,992     7,992     7,912  

     

Common Stock (19,041 shares)

          3,141     3,141  

                  11,133     11,053  

                           

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays Provider

                       

     

Member Units (3,936 units)(8)

          100     1,950  

                           

14


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Congruent Credit Opportunities Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          5,210     480  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          17,869     18,754  

                  23,079     19,234  

                           

Dos Rios Partners(12)(13)

 

Investment Partnership

                       

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

          5,996     7,246  

     

LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.4%)

          1,904     2,182  

                  7,900     9,428  

                           

Dos Rios Stone Products LLC(10)

 

Limestone and Sandstone Dimension Cut Stone Mining Quarries

                       

     

Class A Preferred Units (2,000,000 units)(8)

          2,000     1,350  

                           

East Teak Fine Hardwoods, Inc.

 

Distributor of Hardwood Products

                       

     

Common Stock (6,250 shares)(8)

          480     630  

                           

EIG Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EIG Global Private Debt Fund-A, L.P.) (Fully diluted 11.1%)(8)

          451     403  

                           

Freeport Financial Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.3%)(8)

          5,974     5,554  

     

LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.0%)(8)

          8,558     8,506  

                  14,532     14,060  

                           

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Collection of Healthcare and other Business Receivables

                       

     

8% Secured Debt (Maturity—January 1, 2019)

    12,483     12,483     11,532  

     

Warrants (29,032 equivalent units; Expiration—February 9, 2022; Strike price—$0.01 per unit)

          400      

                  12,883     11,532  

                           

15


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Guerdon Modular Holdings, Inc.

 

Multi-Family and Commercial Modular Construction Company

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.19%, Secured Debt (Maturity—March 1, 2019)(9)

    400     394     394  

     

13% Secured Debt (Maturity—March 1, 2019)

    10,988     10,926     10,926  

     

Preferred Stock (404,998 shares)

          1,140      

     

Common Stock (212,033 shares)

          2,983      

                  15,443     11,320  

                           

Harris Preston Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (HPEP 3, L.P.) (Fully diluted 9.9%)

          1,033     1,033  

                           

Hawk Ridge Systems, LLC(13)

 

Value-Added Reseller of Engineering Design and Manufacturing Solutions

                       

     

10.5% Secured Debt (Maturity—December 2, 2021)

    14,300     14,181     14,300  

     

Preferred Member Units (226 units)(8)

          2,850     6,223  

     

Preferred Member Units (HRS Services, ULC) (226 units)(8)

          150     328  

                  17,181     20,851  

                           

Houston Plating and Coatings, LLC

 

Provider of Plating and Industrial Coating Services

                       

     

8% Unsecured Convertible Debt (Maturity—May 1, 2022)

    3,000     3,000     3,200  

     

Member Units (315,756 units)(8)

          2,179     6,660  

                  5,179     9,860  

                           

I-45 SLF LLC(12)(13)

 

Investment Partnership

                       

     

Member Units (Fully diluted 20.0%; 24.4% profits interest)(8)

          16,200     16,841  

                           

L.F. Manufacturing Holdings, LLC(10)

 

Manufacturer of Fiberglass Products

                       

     

Member Units (2,179,001 units)

          2,019     2,000  

                           

Meisler Operating LLC

 

Provider of Short-term Trailer and Container Rental

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.20%, Secured Debt (Maturity—June 7, 2022)(9)

    18,960     18,779     18,779  

     

Member Units (Milton Meisler Holdings LLC) (48,555 units)

          4,855     5,570  

                  23,634     24,349  

                           

16


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

OnAsset Intelligence, Inc.

 

Provider of Transportation Monitoring / Tracking Products and Services

                       

     

12% PIK Secured Debt (Maturity—June 30, 2021)(19)

    5,247     5,247     5,247  

     

10% PIK Unsecured Debt (Maturity—June 30, 2021)(19)

    49     49     49  

     

Preferred Stock (912 shares)

          1,981      

     

Warrants (5,333 equivalent shares; Expiration—April 18, 2021; Strike price—$0.01 per share)

          1,919      

                  9,196     5,296  

                           

OPI International Ltd.(13)

 

Provider of Man Camp and Industrial Storage Services

                       

     

Common Stock (20,766,317 shares)

          1,371      

                           

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

                       

     

12% Current / 3% PIK Secured Debt (Maturity—March 31, 2019)(19)

    12,617     12,571     12,571  

     

Preferred Stock (1,740,000 shares) (non-voting)

          1,740     3,480  

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)(19)

          3,927     290  

                  18,238     16,341  

                           

Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

12% Secured Debt (Maturity—January 8, 2018)(14)(15)

    30,785     30,281     250  

     

Preferred Member Units (250 units)

          2,500      

                  32,781     250  

                           

Tin Roof Acquisition Company

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—November 13, 2018)

    12,559     12,515     12,515  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)(19)

          3,102     3,102  

                  15,617     15,617  

                           

17


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

UniTek Global Services, Inc.(11)

 

Provider of Outsourced Infrastructure Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.81%, Secured Debt (Maturity—January 13, 2019)(9)

    8,535     8,531     8,535  

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.81% / 1.00% PIK, Current Coupon Plus PIK 10.81%, Secured Debt (Maturity—January 13, 2019)(9)(19)

    138     138     138  

     

15% PIK Unsecured Debt (Maturity—July 13, 2019)(19)

    897     897     897  

     

Preferred Stock (2,596,567 shares; 19% cumulative)(8)(19)

          2,993     2,980  

     

Preferred Stock (4,935,377 shares; 13.5% cumulative)(8)(19)

          7,609     7,560  

     

Common Stock (1,075,992 shares)

              2,680  

                  20,168     22,790  

                           

Universal Wellhead Services Holdings, LLC(10)

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                       

     

Preferred Member Units (UWS Investments, LLC) (716,949 units)

          717     860  

     

Member Units (UWS Investments, LLC) (4,000,000 units)

          4,000     2,030  

                  4,717     2,890  

                           

Valley Healthcare Group, LLC

 

Provider of Durable Medical Equipment

                       

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 14.16%, Secured Debt (Maturity—December 29, 2020)(9)

    11,646     11,571     11,571  

     

Preferred Member Units (Valley Healthcare Holding, LLC) (1,600 units)

          1,600     1,740  

                  13,171     13,311  

                           

Volusion, LLC

 

Provider of Online Software-as-a-Service eCommerce Solutions

                       

     

11.5% Secured Debt (Maturity—January 26, 2020)

    16,734     15,358     15,358  

     

Preferred Member Units (4,876,670 units)

          14,000     14,000  

     

Warrants (1,831,355 equivalent units; Expiration—January 26, 2025; Strike price—$0.01 per unit)

          2,577     1,471  

                  31,935     30,829  

Subtotal Affiliate Investments (15.5% of total investments at fair value)

        $ 382,351   $ 359,460  

18


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)