MVC Capital Earnings 2019-07-31

MVC 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 a19-18276_110q.htm 10-Q

Table of Contents

FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

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

For the quarterly period ended July 31, 2019

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

Commission File Number 814-00201

MVC CAPITAL, INC.

(Exact name of the registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation or organization)		94-3346760 (I.R.S. Employer Identification No.)

287 Bowman Avenue 2nd Floor Purchase, New York (Address of principal executive offices)		10577 (Zip Code)

Registrant’s telephone number, including area code: (914) 701-0310

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	MVC	New York Stock Exchange
Senior Notes	MVCD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No £

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 £ Accelerated filer x Non-accelerated filer £ Smaller reporting company £ Emerging Growth Company £

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

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

There were 17,725,118 shares of the registrant’s common stock, $.01 par value, outstanding as of September 6, 2019.

Table of Contents

MVC Capital, Inc.

(A Delaware Corporation)

Index

				Page
Part I. Consolidated Financial Information

	Item 1.	Consolidated Financial Statements
		Consolidated Balance Sheets
		- July 31, 2019 (Unaudited) and October 31, 2018		3
		Consolidated Statements of Operations
		- For the Nine Month Period November 1, 2018 to July 31, 2019 (Unaudited) and
		- For the Nine Month Period November 1, 2017 to July 31, 2018 (Unaudited)		4
		Consolidated Statements of Operations
		- For the Quarter May 1, 2019 to July 31, 2019 (Unaudited) and
		- For the Quarter May 1, 2018 to July 31, 2018 (Unaudited)		5
		Consolidated Statements of Cash Flows
		- For the Nine Month Period November 1, 2018 to July 31, 2019 (Unaudited) and
		- For the Nine Month Period November 1, 2017 to July 31, 2018 (Unaudited)		6
		Consolidated Statements of Changes in Net Assets
		- For the Nine Month Period November 1, 2018 to July 31, 2019 (Unaudited)
		- For the Nine Month Period November 1, 2017 to July 31, 2018 (Unaudited) and		7
		Consolidated Selected Per Share Data and Ratios
		- For the Nine Month Period November 1, 2018 to July 31, 2019 (Unaudited)
		- For the Nine Month Period November 1, 2017 to July 31, 2018 (Unaudited) and
		- For the Year ended October 31, 2018		8
		Consolidated Schedules of Investments
		- July 31, 2019 (Unaudited)		9
		- October 31, 2018
		Notes to Consolidated Financial Statements		13
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		43
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		72
	Item 4.	Controls and Procedures		87

Part II. Other Information				87

	Item 1.	Legal Proceedings		87
	Item 1A.		Risk Factors	87
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		87
	Item 3.	Defaults Upon Senior Securities		87
	Item 4.	Mine Safety Disclosures		87
	Item 5.	Other Information		88
	Item 6.	Exhibits		88

Exhibits				88

SIGNATURE				89

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CONSOLIDATED FINANCIAL STATEMENTS

MVC Capital, Inc.

Consolidated Balance Sheets

	July 31,			October 31,
	2019			2018
	(Unaudited)
ASSETS
Assets
Cash	$	1,651,952		$	9,803,800
Restricted cash (cost $0 and $5,300,629)	—			5,300,629
Restricted cash equivalents (cost $5,010,243 and $0)	5,010,243			—
Cash equivalents (cost $15,190,805 and $783,271)	15,190,805			783,271
Investments at fair value
Non-control/Non-affiliated investments (cost $245,157,322 and $203,068,014)	229,888,718			188,919,833
Affiliate investments (cost $93,784,009 and $116,062,640)	56,352,756			70,489,501
Control investments (cost $87,399,253 and $90,501,322)	53,163,314			65,097,978
Total investments at fair value (cost $426,340,584 and $409,631,976)	339,404,788			324,507,312
Escrow receivables, net of reserves	1,085,000			969,000
Dividends and interest receivables, net of reserves	3,543,559			2,913,910
Deferred financing fees	700,892			87,850
Fee and other receivables, net of reserves	2,365,725			2,382,463
Prepaid expenses	280,171			330,071

Total assets	$	369,233,135		$	347,078,306

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Senior notes II	$	112,517,280		$	111,958,650
Revolving credit facility IV	22,100,000			—
Incentive compensation payable	2,502,961			2,502,961
Professional fees payable	77,387			166,522
Management fee payable	1,026,831			934,813
Accrued expenses and liabilities	180,423			220,447
Interest payable	668,923			656,847
Management fee payable - Asset Management	326,261			107,079
Consulting fees payable	311,558			154,443
Portfolio fees payable - Asset Management	748,281			664,462
Guarantees/Letters of Credit	848,606			2,866,516
Payable for shares repurchased	—			62,898
Transaction fees payable	7,840			57,166
Taxes payable	1,887			2,056

Total liabilities	141,318,238			120,354,860

Commitments and Contingencies (Note 9)

Shareholders’ equity
Common stock, $0.01 par value; 150,000,000 shares authorized; 28,304,448 shares issued and 17,725,118 and 18,192,804 shares outstanding as of July 31, 2019 and October 31, 2018, respectively	283,044			283,044
Additional paid-in-capital	408,583,787			408,583,787
Accumulated earnings	144,065,692			135,596,655
Dividends paid to stockholders	(176,614,317		)	(168,616,544		)
Accumulated net realized gain	43,361,980			38,778,647
Net unrealized depreciation	(85,252,420		)	(85,459,198		)
Treasury stock, at cost, 10,579,330 and 10,111,644 shares held, respectively	(106,512,869		)	(102,442,945		)

Total shareholders’ equity	227,914,897			226,723,446

Total liabilities and shareholders’ equity	$	369,233,135		$	347,078,306

Net asset value per share	$	12.86		$	12.46

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

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MVC Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

	For the Nine Month Period			For the Nine Month Period
	November 1, 2018 to			November 1, 2017 to
	July 31, 2019			July 31, 2018
Operating Income:
Dividend income
Non-control/Non-affiliated investments	$	395,543		$	—
Affiliate investments (net of foreign taxes withheld of $154,269 and $179,701, respectively) *	698,107			1,420,053
Control investments	542,693			—

Total dividend income	1,636,343			1,420,053

Payment-in-kind dividend income
Non-control/Non-affiliated investments	1,196,260			—

Total payment-in-kind dividend income	1,196,260			—

Interest income
Non-control/Non-affiliated investments	14,347,352			11,329,603
Affiliate investments	—			38,139
Control investments	325,284			267,626

Total interest income	14,672,636			11,635,368

Payment-in-kind/Deferred interest income
Non-control/Non-affiliated investments	3,307,666			2,215,125
Affiliate investments	581,846			285,110
Control investments	379,338			121,281

Total payment-in-kind/Deferred interest income	4,268,850			2,621,516

Fee income
Non-control/Non-affiliated investments	89,299			247,864

Total fee income	89,299			247,864

Fee income - Asset Management 1
Portfolio fees	347,914			542,820
Management fees	292,243			271,178

Total fee income - Asset Management	640,157			813,998

Total operating income	22,503,545			16,738,799

Operating Expenses:
Interest and other borrowing costs 2	7,277,321			8,501,352
Management fee	4,746,192			4,394,066
Audit & tax preparation fees	979,980			594,000
Consulting fees	821,389			708,000
Other expenses *	448,596			540,103
Legal fees	401,400			473,155
Directors’ fees	282,448			248,100
Portfolio fees - Asset Management 1	260,936			407,115
Management fee - Asset Management 1	219,182			203,383
Insurance	206,334			201,656
Administration	123,411			129,945
Public relations fees	105,094			98,365
Printing and postage	53,100			47,785
Loss on extinguishment of debt	—			1,782,705
Net Incentive compensation (Note 11)	—			(2,060,992		)

Total operating expenses	15,925,383			16,268,738

Less: Voluntary expense waiver by Adviser 3	(112,500		)	(112,500		)
Less: Voluntary management fee waiver by Adviser 4	(1,779,822		)	(1,471,399		)

Total waivers	(1,892,322		)	(1,583,899		)

Net operating income before taxes	8,470,484			2,053,960

Tax Expenses:
Current tax expense	1,447			1,442

Total tax expense	1,447			1,442

Net operating income	8,469,037			2,052,518

Net Realized and Unrealized Gain (Loss) on Investments:

Net realized gain (loss) on investments
U.S. Treasury obligations	104,858			(95,355		)
Non-control/Non-affiliated investments	3,226,317			(3,158,367		)
Affiliate investments	(3,727,289		)	3,455,430
Control investments	4,965,552			—
Foreign currency	13,895			(618		)

Total net realized gain on investments	4,583,333			201,090

Net unrealized appreciation (depreciation) on investments	206,778			(10,567,061		)

Net realized and unrealized gain (loss) on investments	4,790,111			(10,365,971		)

Net increase (decrease) in net assets resulting from operations	$	13,259,148		$	(8,313,453	)

Net increase (decrease) in net assets per share resulting from operations	$	0.75		$	(0.45	)

Dividends declared per share 5	$	0.450		$	0.450

Weighted average number of shares outstanding	17,810,123			19,282,604

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

1 These items are related to the management of the MVC Private Equity Fund, L.P. (“PE Fund”). Please see Note 10 “Management” for more information.

2 Interest and other borrowing costs includes $262,705 and $784,969 of interest associated with installment sale treatment on the USG&E note. Please see Note 12 “Tax Matters” for more information.

3 Reflects the nine month period of the TTG Advisers’ voluntary waiver of $150,000 of expenses for the 2019 and 2018 fiscal years, that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”). Please see Note 10 “Management” for more information.

4 Reflects the nine month period of the TTG Advisers’ voluntary waiver of the management fee for the 2019 and 2018. Please see Note 10 “Management” for more information.

5 Please see Note 13 “Dividends and Distributions to Shareholders, Share Repurchase Program and Tender Offer” for more information.

* Amounts from prior year have been reclassified to conform to current year presentation.

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

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MVC Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

	For the Quarter			For the Quarter
	May 1, 2019 to			May 1, 2018 to
	July 31, 2019			July 31, 2018
Operating Income:
Dividend income
Affiliate investments (net of foreign taxes withheld of $0 and $59,405, respectively) *	$	—		$	467,100

Total dividend income	—			467,100

Payment-in-kind dividend income
Non-control/Non-affiliated investments	—			—

Total payment-in-kind dividend income	—			—

Interest income
Non-control/Non-affiliated investments	5,924,050			4,160,019
Affiliate investments	—			14,439
Control investments	109,618			105,135

Total interest income	6,033,668			4,279,593

Payment-in-kind/Deferred interest income
Non-control/Non-affiliated investments	899,710			806,603
Affiliate investments	140,621			175,031
Control investments	132,648			65,766

Total payment-in-kind/Deferred interest income	1,172,979			1,047,400

Fee income
Non-control/Non-affiliated investments	38,101			114,406

Total fee income	38,101			114,406

Fee income - Asset Management 1
Portfolio fees	119,248			149,156
Management fees	104,944			94,210

Total fee income - Asset Management	224,192			243,366

Total operating income	7,468,940			6,151,865

Operating Expenses:
Interest and other borrowing costs 2	2,510,677			2,402,894
Management fee	1,642,930			1,487,189
Audit & tax preparation fees	151,300			84,000
Consulting fees	334,519			257,000
Other expenses *	140,763			129,624
Legal fees	123,000			290,836
Directors’ fees	94,000			85,100
Portfolio fees - Asset Management 1	89,436			111,867
Management fee - Asset Management 1	78,708			70,657
Insurance	69,516			67,320
Administration	41,589			43,135
Public relations fees	26,000			36,120
Printing and postage	16,800			17,300
Net Incentive compensation (Note 11)	—			(1,316,475		)

Total operating expenses	5,319,238			3,766,567

Less: Voluntary expense waiver by Adviser 3	(37,500		)	(37,500		)
Less: Voluntary management fee waiver by Adviser 4	(616,099		)	(557,696		)

Total waivers	(653,599		)	(595,196		)

Net operating income before taxes	2,803,301			2,980,494

Tax Expenses:
Current tax expense	485			482

Total tax expense	485			482

Net operating income	2,802,816			2,980,012

Net Realized and Unrealized Gain (Loss) on Investments:

Net realized gain (loss) on investments
U.S. Treasury obligations	84,375			(95,355		)
Non-control/Non-affiliated investments	2,910			(257,077		)
Affiliate investments	(3,795,709		)	3,455,430
Control investments	(218,992		)	—
Foreign currency	11,733			(985		)

Total net realized gain (loss) on investments	(3,915,683		)	3,102,013

Net unrealized appreciation (depreciation) on investments	1,460,783			(11,951,877		)

Net realized and unrealized loss on investments	(2,454,900		)	(8,849,864		)

Net increase (decrease) in net assets resulting from operations	$	347,916		$	(5,869,852	)

Net increase (decrease) in net assets per share resulting from operations	$	0.02		$	(0.32	)

Dividends declared per share 5	$	0.150		$	0.150

Weighted average number of shares outstanding	17,725,118			18,820,528

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

1 These items are related to the management of the MVC Private Equity Fund, L.P. (“PE Fund”). Please see Note 10 “Management” for more information.

2 Interest and other borrowing costs includes $86,285 and $699,979 of interest associated with installment sale treatment on the USG&E note. Please see Note 12 “Tax Matters” for more information.

3 Reflects the quarterly portion of the TTG Advisers’ voluntary waiver of $150,000 of expenses for the 2019 and 2018 fiscal years, that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the “Voluntary Waiver”). Please see Note 10 “Management” for more information.

4 Reflects the quarterly portion of the TTG Advisers’ voluntary waiver of the management fee for the 2019 and 2018 Please see Note 10 “Management” for more information.

5 Please see Note 13 “Dividends and Distributions to Shareholders, Share Repurchase Program and Tender Offer”

* Amounts from prior year have been reclassified to conform to current year presentation.

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

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MVC Capital, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Month Period			For the Nine Month Period
	November 1, 2018 to			November 1, 2017 to
	July 31, 2019			July 31, 2018
Cash flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	13,259,148		$	(8,313,453	)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realized (gain) loss	(4,583,333		)	(201,090		)
Net change in unrealized depreciation (appreciation)	(206,778		)	10,567,061
Amortization of discounts and fees	(232,955		)	(224,152		)
Increase in accrued payment-in-kind dividends and interest	(5,143,943		)	(2,244,828		)
Amortization of deferred financing fees	968,257			954,998
Loss on extinguishment of debt	—			1,782,705
Changes in operating assets and liabilities:
Dividends, interest and fees receivable	(629,649		)	(533,035		)
Fee and other receivables	16,738			(676,727		)
Escrow receivables, net of reserves	(116,000		)	(935,000		)
Receivable for Investment Sold	—			(5,787,729		)
Prepaid expenses	49,900			35,704
Incentive compensation (Note 5)	—			(3,945,297		)
Other liabilities	322,658			(1,286,021		)
Purchases of equity investments	(4,268,340		)	(468,562		)
Purchases of debt instruments	(36,751,624		)	(50,398,591		)
Purchases of short-term investments	(49,991,103		)	(24,996,182		)
Proceeds from equity investments	30,803,643			6,722,729
Proceeds from debt instruments	3,395,440			12,243,683
Sales/maturities of short-term investments	50,094,859			24,901,266

Net cash used in operating activities	(3,013,082		)	(42,802,521		)

Cash flows from Financing Activities:
Borrowings from senior notes	—			115,000,000
Repayments from senior notes	—			(114,408,750		)
Borrowings from revolving credit facility II	50,000,000			—
Repayments from revolving credit facility II	(50,000,000		)	—
Borrowings from revolving credit facility IV	26,100,000			—
Repayments from revolving credit facility IV	(4,000,000		)	—
Repurchase of common stock	(4,069,924		)	(25,100,502		)
Financing fees paid	(1,053,921		)	(3,707,369		)
Distributions paid to shareholders	(7,728,062		)	(8,215,867		)
Repurchases of common stock under dividend reinvestment plan	(269,711		)	(253,371		)

Net cash provided by (used in) financing activities	8,978,382			(36,685,859		)

Net change in cash, cash equivalents, restricted cash and restricted cash equivalents, for the period	5,965,300			(79,488,380		)

Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of period	$	15,887,700		$	106,674,568

Cash, cash equivalents, restricted cash and restricted cash equivalents, end of period	$	21,853,000		$	27,186,188

During the nine month periods ended July 31, 2019 and 2018 MVC Capital, Inc. paid $6,018,487 and $7,143,752 in interest expense, respectively.

During the nine month periods ended July 31, 2019 and 2018 MVC Capital, Inc. paid $1,616 and $1,920 in income taxes, respectively.

Non-cash activity:

During the nine month periods ended July 31, 2019 and 2018, MVC Capital, Inc. recorded payment in-kind dividend and interest of $5,143,943 and $2,244,828, respectively. This amount was added to the principal balance of the investments and recorded as dividend/interest income.

During the nine month periods ended July 31, 2019 and 2018, the Plan Agent purchased 29,543 and 25,043 shares of common stock in the open market in order to satisfy the reinvestment portion of our dividends.

During the nine month period ended July 31, 2018, all assets and liabilities of SGDA Europe were transferred to a new Austrian holding company, Trientis GmbH, to achieve operating efficiencies.

On November 28, 2017, the Company restructured the Custom Alloy second lien loan and unsecured subordinated loan. The second lien loan was restructured into a $3.5 million second lien loan with an interest rate of 10% and a maturity date of December 31, 2020, 6,500 shares of Series B Preferred Stock with a 10% PIK coupon and a maturity date of December 31, 2020 and 17,935 shares of Series C Preferred Stock. The unsecured subordinated loan was restructured into 3,617 shares of Series A Preferred Stock with a 12% PIK coupon and a maturity date of April 30, 2020.

Effective January 1, 2018, the cost basis of the U.S. Gas second lien loan was decreased by approximately $3.0 million due to a working capital adjustment, resulting in a realized loss of approximately $3.0 million. The second lien loan is still subject to indemnification adjustments.

On April 30, 2019, Custom Alloy redeemed its series A, B and C preferred shares and consolidated its second lien loans in exchange for two second lien loans of approximately $32.5 million and $6.1 million with interest rates of 15% and maturity dates of April 30, 2022. The Company realized a gain of approximately $3.2 million associated with the transaction.

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

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MVC Capital, Inc.

Consolidated Statements of Changes in Net Assets

												Accumulated		Net Unrealized
For the Nine Month Period November 1, 2017 to	Common			Additional			Accumulated		Dividends Paid			Net Realized		Appreciation			Treasury			Total Net
July 31, 2018 (Unaudited)	Stock			Paid-In-Capital			Earnings		to Stockholders			Gain (Loss)		(Depreciation)			Stock			Asset Value

Balances at October 31, 2017	$	283,044		$	418,208,458		$	122,455,573	$	(157,414,605	)	$	38,434,807	$	(70,965,264	)	$	(71,512,945	)	$	279,489,068

Net increase (decrease) resulting from operations	—			—			2,052,518		—			201,090		(10,567,061		)	—			(8,313,453		)
Distributions from Income	—			—			—		—			—		—			—			—
Distributions from return of capital	—			—			—		(8,469,238		)	—		—			—			(8,469,238		)
Issuance of common stock under dividend reinvestment plan	253,371			—			—		—			—		—			—			253,371
Repurchase of common stock under dividend reinvestment plan	(253,371		)	—			—		—			—		—			—			(253,371		)
Repurchase expenses	—			(100,513		)	—		—			—		—			—			(100,513		)
Repurchase of common stock	—			—			—		—			—		—			(24,999,989		)	(24,999,989		)

Balances at July 31, 2018	$	283,044		$	418,107,945		$	124,508,091	$	(165,883,843	)	$	38,635,897	$	(81,532,325	)	$	(96,512,934	)	$	237,605,875

For the Nine Month Period November 1, 2018 to
July 31, 2019(Unaudited)

Balances at October 31, 2018	$	283,044		$	408,583,787	$	135,596,655	$	(168,616,544	)	$	38,778,647	$	(85,459,198	)	$	(102,442,945	)	$	226,723,446

Net increase (decrease) resulting from operations	—			—		8,469,037		—			4,583,333		206,778			—			13,259,148
Distributions from Income	—			—		—		(7,997,773		)	—		—			—			(7,997,773		)
Issuance of common stock under dividend reinvestment plan	269,711			—		—		—			—		—			—			269,711
Repurchase of common stock under dividend reinvestment plan	(269,711		)	—		—		—			—		—			—			(269,711		)
Repurchase of common stock	—			—		—		—			—		—			(4,069,924		)	(4,069,924		)

Balances at July 31, 2019	$	283,044		$	408,583,787	$	144,065,692	$	(176,614,317	)	$	43,361,980	$	(85,252,420	)	$	(106,512,869	)	$	227,914,897

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

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MVC Capital, Inc.

Consolidated Selected Per Share Data and Ratios

	For the Nine Month Period			For the Nine Month Period			For the
	November 1, 2018 to			November 1, 2017 to			Year Ended
	July 31, 2019			July 31, 2018			October 31, 2018
	(Unaudited)			(Unaudited)

Net asset value, beginning of period/year	$	12.46		$	13.24		$	13.24

Income from operations:
Net operating income (loss)	0.48			0.10			0.20
Net realized and unrealized gain (loss) on investments	0.27			(0.55		)	(0.75		)

Total gain (loss) from investment operations	0.75			(0.45		)	(0.55		)

Less distributions from:
Income	(0.45		)	—			(0.02		)
Realized gain	—			—			(0.13		)
Return of capital	—			(0.45		)	(0.45		)

Total distributions	(0.45		)	(0.45		)	(0.60		)

Capital share transactions
Anti-dilutive effect of share repurchase program	0.10			0.28			0.37

Total capital share transactions	0.10			0.28			0.37

Net asset value, end of period/year	$	12.86		$	12.62		$	12.46

Market value, end of period/year	$	9.57		$	9.38		$	9.05

Market discount	(25.58		)%	(25.67		)%	(27.37		)%

Total Return - At NAV (a)	6.91		%	(1.35		)%	(1.46		)%

Total Return - At Market (a)	10.94		%	(8.30		)%	(10.06		)%

Ratios and Supplemental Data:

Portfolio turnover ratio	10.04		%	6.10		%	7.21		%

Net assets, end of period/year (in thousands)	$	227,915		$	237,606		$	226,723

Ratios to average net assets:
Expenses including tax expense	8.32		%(c)	7.73		%(c)	7.70		%
Expenses excluding tax expense	8.32		%(c)	7.73		%(c)	7.70		%

Net operating income (loss) before tax expense	5.02		%(c)	1.08		%(c)	1.51		%
Net operating income (loss) after tax expense	5.02		%(c)	1.08		%(c)	1.51		%

Ratios to average net assets excluding waivers:
Expenses including tax expense	9.44		%(c)	8.56		%(c)	8.58		%
Expenses excluding tax expense	9.44		%(c)	8.56		%(c)	8.57		%

Net operating income (loss) before tax expense	3.90		%(c)	0.25		%(c)	0.63		%
Net operating income (loss) after tax expense	3.90		%(c)	0.25		%(c)	0.63		%

(a) Total annual return is historical and assumes changes in share price, reinvestments of all dividends and distributions, and no sales charge for the period/year.

(b) Supplemental Ratio information

Ratios to average net assets: (b)
Expenses excluding incentive compensation	8.32	%(c)	8.81	%(c)	8.53	%
Expenses excluding incentive compensation, interest and other borrowing costs	4.00	%(c)	4.34	%(c)	4.20	%

Net operating income (loss) before incentive compensation	5.02	%(c)	—	%(c)	0.68	%
Net operating income before incentive compensation, interest and other borrowing costs	9.34	%(c)	4.47	%(c)	5.00	%

Ratios to average net assets excluding waivers: (b)
Expenses excluding incentive compensation	9.44	%(c)	9.65	%(c)	9.40	%
Expenses excluding incentive compensation, interest and other borrowing costs	5.13	%(c)	5.17	%(c)	5.08	%

Net operating income (loss) before incentive compensation	3.90	%(c)	(0.84	)%(c)	(0.20	)%
Net operating income before incentive compensation, interest and other borrowing costs	8.21	%(c)	3.64	%(c)	4.13	%

(c) Annualized.

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

Table of Contents

MVC Capital, Inc.

Consolidated Schedule of Investments

July 31, 2019

(Unaudited)

Company	Industry	Investment	Principal		Cost		Fair Value/Market Value

Non-control/Non-affiliated investments- 100.87% (a), (c), (f), (g)
Apex Industrial Technologies, LLC	Supply Chain Equipment Manufacturer	First Lien Loan 12.0000% Cash, 12/31/2019 (k), (n)	$	15,000,000	$	14,891,774	$	15,000,000
Array Information Technology, Inc.	Information Technology Products and Services	Second Lien Loan 12.0000% Cash, 4.0000% PIK, 10/03/2023 (b), (k), (n), (p)	6,196,094		6,106,983		6,258,040
		Warrants (d), (n)	1		—		—
					6,106,983		6,258,040
Black Diamond Equipment Rentals, LLC	Equipment Rental	Second Lien Loan 12.5000% Cash, 06/27/2022 (k), (n)	7,500,000		7,144,062		7,575,000
		Warrants (d), (n)	1		400,847		952,000
					7,544,909		8,527,000
Custom Alloy Corporation	Manufacturer of Pipe Fittings and Forgings	Second Lien Loan 12.0000% Cash, 3.0000% PIK, 04/30/2022 (b), (k), (n)	32,471,814		32,471,814		32,143,980
		Second Lien Loan 12.0000% Cash, 3.0000% PIK, 04/30/2022 (b), (k), (n)	6,128,187		6,128,187		6,066,316
		Revolver 12.0000% Cash, 3.0000% PIK, 04/30/2020 (b), (k), (n)	800,000		800,000		800,000
					39,400,001		39,010,296
Dukane IAS,LLC	Welding Equipment Manufacturer	Second Lien Note 10.5000% Cash, 2.5000% PIK, 11/17/2020 (b), (k), (n)	4,460,683		4,422,486		4,515,007
Essner Manufacturing, LP	Defense/Aerospace Parts Manufacturing	First Lien Loan 11.5000% Cash, 12/20/2022 (k), (n), (o)	3,588,607		3,540,073		3,588,607
FOLIOfn, Inc.	Technology Investment - Financial Services	Preferred Stock (5,802,259 shares) (d), (i), (n)			15,000,000		5,783,000
GTM Intermediate Holdings, Inc.	Medical Equipment/Manufacturer	Second Lien Loan 11.0000% Cash, 1.0000% PIK, 12/7/2024 (b), (k), (n)	5,051,161		4,956,057		5,051,161
		Common Stock (2 shares) (d), (n), (t)			766,122		766,122
					5,722,179		5,817,283
Highpoint Global LLC	Government Services	Second Lien Note 12.0000% Cash, 2.0000% PIK, 09/30/2022 (b), (k), (n)	5,174,783		5,110,825		5,174,784
HTI Technologies and Industries, Inc.	Electronic Component Manufacturing	Second Lien Note 12.0000% Cash, 3.7500% PIK, 9/15/2024 (b), (k), (n)	11,313,881		11,294,050		11,313,881
Initials, Inc.	Consumer Products	Senior Subordinated Debt 8.0000% Cash, 7.0000% PIK, 06/23/2020 (b), (h), (k), (n)	5,642,913		5,642,913		1,987,512
International Precision Components Corporation	Plastic Injection Molding	Second Lien Loan 12.0000% Cash, 3.5000% PIK, 10/3/2024 (b), (k), (n), (u)	8,000,000		7,846,731		8,000,000
Jedson Engineering, Inc.	Engineering and Construction Management	First Lien Loan 12.0000% Cash, 3.0000% PIK, 06/21/2024 (b), (k), (n)	6,001,500		5,882,852		6,001,500
Legal Solutions Holdings, Inc.	Business Services	Senior Subordinated Debt 12.0000% Cash, 4.0000% PIK, 03/18/2020 (b), (k), (n)	12,090,053		12,090,053		12,090,053
Morey’s Seafood International, LLC	Food Services	Second Lien Loan 10.0000% Cash, 3.0000% PIK, 08/12/2022 (b), (k), (n), (q)	16,361,251		16,361,251		16,361,251
Powers Equipment Acquisition Company, LLC	Equipment Manufacturer	First Lien Note 13.500% Cash, 04/30/2024 (k), (n), (v)	6,500,000		6,376,550		6,500,000
SMA Holdings, Inc.	Consulting	First Lien Loan 11.0000% Cash, 06/26/2024 (k), (n)	7,000,000		6,395,594		6,505,387
		Warrants (d), (n)	2		504,555		504,555
					6,900,149		7,009,942
Tin Roof Software, LLC	Software	Second Lien Loan 11.0000% Cash, 3.5000% PIK, 04/01/2024 (b), (k), (n)	3,750,000		3,687,550		3,750,000
Trientis GmbH	Environmental Services	First Lien Note 5.0000% PIK, 10/26/2024 (b), (e), (h), (m), (n), (r)	1,248,632		1,248,632		263,034
		Warrants (d), (e), (r), (n)	1		67,715		—
					1,316,347		263,034
Tuf-Tug Inc.	Safety Equipment Manufacturer	Second Lien Loan 11.0000% Cash, 2.0000% PIK, 02/24/2024 (b), (k), (n)	4,959,890		4,919,436		4,959,890
		Common Stock (24.6 shares) (d), (n), (s)			750,000		750,000
					5,669,436		5,709,890
Turf Products, LLC	Distributor - Landscaping and Irrigation Equipment	Senior Subordinated Debt 10.0000% Cash, 08/07/2020 (k), (n)	7,717,056		7,717,056		7,502,063
		Third Lien Loan 10.0000% Cash, 08/07/2020 (k), (n)	1,120,000		1,120,000		1,094,447
					8,837,056		8,596,510
U.S. Gas & Electric, Inc.	Energy Services	Second Lien Loan, 9.5000% Cash, 07/05/2025 (l), (n)	37,527,881		37,527,881		37,831,128
U.S. Spray Drying Holding Company	Specialty Chemicals	Class B Common Stock (784 shares) (d), (n)			5,488,000		2,300,000
		Secured Loan 12.0000% Cash, 04/30/2021 (k), (n)	1,500,000		1,500,000		1,500,000
		Senior Secured Loan 12.0000% Cash, 04/30/2021 (k), (n)	1,500,000		1,500,000		1,500,000
					8,488,000		5,300,000
United States Technologies, Inc.	Electronics Manufacturing and Repair	Senior Lien Loan 10.5000% Cash, 07/17/2020 (k), (n)	5,500,000		5,497,273		5,500,000

Sub Total Non-control/Non-affiliated investments					$	245,157,322	$	229,888,718

Affiliate investments - 24.72% (a), (c), (f), (g)
Advantage Insurance, Inc.	Insurance	Preferred Stock (750,000 shares) (d), (e), (n)			7,500,000		7,917,096
JSC Tekers Holdings	Real Estate Management	Common Stock (3,201 shares) (d), (e), (n)			4,500		—
		Preferred Stock (9,159,085 shares) (d), (e), (n)			11,810,188		4,173,000
					11,814,688		4,173,000
MVC Environmental, Inc.	Environmental Services	Senior Secured Loan 9.0000% PIK, 12/22/2020 (b), (h), (k), (n)	6,869,353		6,869,353		—
		Common Stock (980 shares) (d), (n)			6,063,038		—
					12,932,391		—
Security Holdings B.V.	Electrical Engineering	Common Equity Interest (d), (e), (n)			51,204,270		33,930,000
		Bridge Loan 5.0000% PIK, 12/31/2019 (b), (e), (k), (n)	4,937,218		4,937,218		4,937,218
		Senior Subordinated Loan 4.5000% PIK, 05/31/2020 (b), (e), (k), (n)	5,395,442		5,395,442		5,395,442
					61,536,930		44,262,660

Sub Total Affiliate investments

10-Q	2019-07-31	Quarter: 2019-07-31
10-Q	2019-04-30	Quarter: 2019-04-30
10-Q	2019-01-31	Quarter: 2019-01-31
10-K	2018-10-31	Annual: 2018-10-31
10-Q	2018-07-31	Quarter: 2018-07-31
10-Q	2018-04-30	Quarter: 2018-04-30
10-Q	2018-01-31	Quarter: 2018-01-31
10-K	2017-10-31	Annual: 2017-10-31
10-Q	2017-07-31	Quarter: 2017-07-31
10-Q	2017-04-30	Quarter: 2017-04-30
10-Q	2017-01-31	Quarter: 2017-01-31
10-K	2016-10-31	Annual: 2016-10-31
10-Q	2016-07-31	Quarter: 2016-07-31
10-Q	2016-04-30	Quarter: 2016-04-30
10-Q	2016-01-31	Quarter: 2016-01-31
10-K	2015-10-31	Annual: 2015-10-31
10-Q	2015-07-31	Quarter: 2015-07-31
10-Q	2015-01-31	Quarter: 2015-01-31
10-Q	2014-10-31	Quarter: 2014-10-31
10-K	2014-10-31	Annual: 2014-10-31
10-Q	2014-07-31	Quarter: 2014-07-31
10-Q	2014-04-30	Quarter: 2014-04-30
10-Q	2014-01-31	Quarter: 2014-01-31
10-K	2013-10-31	Annual: 2013-10-31

8-K	2019-08-30	Enter Agreement, Off-BS Arrangement
8-K	2019-06-24	Shareholder Vote
8-K	2019-06-19	Enter Agreement, Off-BS Arrangement
8-K	2019-04-30	Amend Bylaw, Exhibits
8-K	2019-04-19	Other Events
8-K	2019-01-29	Enter Agreement, Off-BS Arrangement
8-K	2018-12-07	Enter Agreement, Off-BS Arrangement
8-K	2018-10-30	Amend Bylaw, Shareholder Vote, Exhibits
8-K	2018-10-11	Other Events
8-K	2018-09-17	Shareholder Rights, Other Events, Exhibits
8-K	2018-08-10	Enter Agreement, Off-BS Arrangement
8-K	2018-02-26	Enter Agreement
8-K	2018-01-04	Leave Agreement, Exhibits

MITT	AG Mortgage Investment Trust	504
CIK	Pinnacle Foods	373
PME	Pingtan Marine Enterprise	188
SAR	Saratoga Investment	0
PFLT	Pennantpark Floating Rate Capital	0
DUSA	Dusa Pharmaceuticals	0
STK	Storage Technology	0
TCPC	Blackrock Tcp Capital	0
SAB	Grupo Casa Saba	0
TSLX	TPG Specialty Lending	0

EX-10.1	a19-18276_1ex10d1.htm
EX-10.2	a19-18276_1ex10d2.htm
EX-31.1	a19-18276_1ex31d1.htm
EX-32.1	a19-18276_1ex32d1.htm