Company Quick10K Filing
OFS Capital
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 0 $0
10-Q 2019-11-08 Quarter: 2019-09-30
10-Q 2019-08-02 Quarter: 2019-06-30
10-Q 2019-05-03 Quarter: 2019-03-31
10-K 2019-03-15 Annual: 2018-12-31
10-Q 2018-11-02 Quarter: 2018-09-30
10-Q 2018-08-03 Quarter: 2018-06-30
10-Q 2018-05-04 Quarter: 2018-03-31
10-K 2018-03-12 Annual: 2017-12-31
10-Q 2017-11-03 Quarter: 2017-09-30
10-Q 2017-08-04 Quarter: 2017-06-30
10-Q 2017-05-05 Quarter: 2017-03-31
10-K 2017-03-15 Annual: 2016-12-31
10-Q 2016-11-04 Quarter: 2016-09-30
10-Q 2016-08-08 Quarter: 2016-06-30
10-Q 2016-05-06 Quarter: 2016-03-31
10-K 2016-03-15 Annual: 2015-12-31
10-Q 2015-11-06 Quarter: 2015-09-30
10-Q 2015-08-07 Quarter: 2015-06-30
10-Q 2015-05-08 Quarter: 2015-03-31
10-K 2015-03-06 Annual: 2014-12-31
10-Q 2014-11-07 Quarter: 2014-09-30
10-Q 2014-08-08 Quarter: 2014-06-30
10-Q 2014-05-09 Quarter: 2014-03-31
10-K 2014-03-17 Annual: 2013-12-31
10-Q 2013-11-08 Quarter: 2013-09-30
10-Q 2013-08-07 Quarter: 2013-06-30
10-Q 2013-05-08 Quarter: 2013-03-31
10-K 2013-03-26 Annual: 2012-12-31
10-Q 2012-12-13 Quarter: 2012-09-30
8-K 2019-11-08 Earnings, Exhibits
8-K 2019-08-02 Earnings, Exhibits
8-K 2019-06-20 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2019-06-11 Other Events
8-K 2019-06-04 Shareholder Vote
8-K 2019-05-03 Earnings, Exhibits
8-K 2019-04-15 Enter Agreement, Exhibits
8-K 2019-03-15 Accountant, Exhibits
8-K 2019-03-08 Earnings, Exhibits
8-K 2018-11-02 Earnings, Exhibits
8-K 2018-08-03 Earnings, Exhibits
8-K 2018-06-05 Shareholder Vote
8-K 2018-05-23 Other Events
8-K 2018-05-04 Earnings, Exhibits
8-K 2018-05-03
8-K 2018-03-02 Earnings, Exhibits
8-K 2018-02-12 Regulation FD, Exhibits
OFS 2019-09-30
Part I. Financial Information
Item 1. Consolidated Financial Statements
Note 1. Organization
Note 2. Summary of Significant Accounting Policies
Note 3. Related Party Transactions
Note 4. Investments
Note 5. Fair Value of Financial Instruments
Note 6. Commitments and Contingencies
Note 7. Borrowings
Note 8. Federal Income Tax
Note 9. Financial Highlights
Note 10. Capital Transactions
Note 11. Consolidated Schedule of Investments in and Advances To Affiliates
Note 12. Subsequent Events Not Disclosed Elsewhere
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part Ii-Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ofs2019q3ex311.htm
EX-31.2 ofs2019q3ex312.htm
EX-32.1 ofs2019q3ex321.htm
EX-32.2 ofs2019q3ex322.htm

OFS Capital Earnings 2019-09-30

OFS 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
MKD
PLL
SRL
MMD
PBB
HCXY
MCI
HQL
SLRC
CMFNL

10-Q 1 ofs2019q310-q.htm 10-Q Document
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 September 30, 2019
or
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______

Commission file number 814-00813

OFS CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
46-1339639
State or Other Jurisdiction of
 
I.R.S. Employer Identification No.
Incorporation or Organization
 
 
 
 
 
10 S. Wacker Drive, Suite 2500, Chicago, Illinois
 
60606
Address of Principal Executive Offices
 
Zip Code
 
 
 
 
(847) 734-2000
 
                                      Registrant’s Telephone Number, Including Area Code
 
 
 
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
OFS
The Nasdaq Global Select Market
6.375% Notes due 2025
OFSSL
The Nasdaq Global Select Market
6.50% Notes due 2025
OFSSZ
The Nasdaq Global Select Market
5.95% Notes due 2026
OFSSI
The Nasdaq Global Select Market

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
ý
 
 
 
 
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. ¨




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

The number of shares of the issuer’s Common Stock, $0.01 par value, outstanding as of November 7, 2019 was 13,371,451.



OFS CAPITAL CORPORATION

TABLE OF CONTENTS
 
 
Item 1.
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
Item 1.
Item 1A.
Item 2
Item 3.
Item 4.
Item 5.
Item 6.

2


Defined Terms
We have used "we," "us," "our," "our company" and "the Company" to refer to OFS Capital Corporation in this report. We also have used several other terms in this report, which are explained or defined below:
Term
Explanation or Definition
1940 Act
Investment Company Act of 1940, as amended
Administration Agreement
Administration Agreement between the Company and OFS Services dated November 7, 2012
Annual Distribution Requirement
Distributions to our stockholders, for each taxable year, of at least 90% of our ICTI
April 2017 Offering
The April 2017 follow-on public offering of 3,625,000 shares of our common stock at an offering price of $14.57 per share
ASC
Accounting Standards Codification, as issued by the FASB
ASU
Accounting Standards Updates, as issued by the FASB
BDC
Business Development Company under the 1940 Act
BLA
Business Loan Agreement, as amended, with Pacific Western Bank, as lender, which provides the Company with a senior secured revolving credit facility
BNP Facility
Revolving credit and security agreement by and among OFSCC-FS, the lenders from time to time parties thereto, BNP Paribas, as administrative agent, OFSCC-FS Holdings, LLC, a wholly owned subsidiary of the Company, as equityholder, the Company, as servicer, Citibank, N.A., as collateral agent and Virtus Group, LP, as collateral administrator, which provides for borrowings in an aggregate principal amount up to $150,000,000
Board
The Company's board of directors
CLO
Collateralized loan obligation
Code
Internal Revenue Code of 1986, as amended
Company
OFS Capital Corporation and its consolidated subsidiaries
Direct Investment
A debt or equity investment in a portfolio company, excluding Structured Finance Notes
DRIP
Distribution reinvestment plan
EBITDA
Earnings before interest, taxes, depreciation, and amortization
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
GAAP
Accounting principles generally accepted in the United States
HPCI
Hancock Park Corporate Income, Inc., a Maryland corporation and non-traded BDC for whom OFS Advisor serves as investment adviser
ICTI
Investment company taxable income, which is generally net ordinary income plus net short-term capital gains in excess of net long-term capital losses
Indicative Prices
Market quotations, prices from pricing services or bids from brokers or dealers
Investment Advisory Agreement
Investment Advisory and Management Agreement between the Company and OFS Advisor dated November 7, 2012
IPO
Initial Public Offering
LIBOR
London Interbank Offered Rate
NBIB
Non-binding indicative bid
Net Loan Fees
The cumulative amount of fees, such as discounts, premiums and amendment fees that are deferred and recognized as income over the life of the loan.
OCCI
OFS Credit Company, Inc., a Delaware corporation and a non-diversified, closed-end management investment company for whom OFS Advisor serves as investment adviser
OFS Advisor
OFS Capital Management, LLC, a wholly owned subsidiary of OFSAM and registered investment advisor under the Investment Advisers Act of 1940, as amended
OFS Capital WM
OFS Capital WM, LLC, a wholly owned investment company subsidiary of the Company
OFS Services
OFS Capital Services, LLC, a wholly owned subsidiary of OFSAM and affiliate of OFS Advisor
OFSAM
Orchard First Source Asset Management, LLC, a full-service provider of capital and leveraged finance solutions to U.S. corporations



Term
Explanation or Definition
OFSCC-FS
OFSCC-FS, LLC, an indirect wholly owned subsidiary of the Company
Parent
OFS Capital Corporation
PIK
Payment-in-kind, non-cash interest or dividends payable as an addition to the loan or equity security producing the income.
Prime Rate
United States Prime interest rate
PWB Credit Facility
Senior secured revolving credit facility between the Company and Pacific Western Bank, as lender
RIC
Regulated investment company under the Code
SBA
U.S. Small Business Administration
SBCAA
Small Business Credit Availability Act
SBIC
A fund licensed under the SBA small business investment company program
SBIC Acquisition
The Company's acquisition of the remaining ownership interests in SBIC I LP and OFS SBIC I GP, LLC on December 4, 2013
SBIC Act
Small Business Investment Act of 1958, as amended
SBIC I LP
OFS SBIC I, LP, a wholly owned SBIC subsidiary of the Company
SEC
U.S. Securities and Exchange Commission
Securities Act
Securities Act of 1933, as amended
Secured Revolver Amendment
The amended Business Loan Agreement with Pacific Western Bank, as lender, dated April 10, 2019
Stock Repurchase Program
The open market stock repurchase program for shares of the Company’s common stock under Rule 10b-18 of the Exchange Act
Structured Finance Notes
CLO subordinated debt positions. CLO subordinated debt positions are entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying securities less contractual payments to debt holders and fund expenses
The Order
An exemptive relief order from the SEC to permit us to co-invest in portfolio companies with certain funds managed by OFS Advisor in a manner consistent with our investment objective, positions, policies, strategies and restrictions as well as regulatory requirements and other pertinent factors, subject to compliance with certain conditions
Transaction Price
The cost of an arm's length transaction occurring in the same security
Unsecured Notes
The combination of the Unsecured Notes Due April 2025 and the Unsecured Notes Due October 2025
Unsecured Notes Due April 2025
The Company’s $50.0 million aggregate principal amount of 6.375% notes due April 30, 2025
Unsecured Notes Due October 2025
The Company’s $46.0 million aggregate principal amount of 6.5% notes due October 30, 2025



Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:
our ability and experience operating a BDC or an SBIC, or maintaining our tax treatment as a RIC under Subchapter M of the Code;
our dependence on key personnel;
our ability to maintain or develop referral relationships;
our ability to replicate historical results;
the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria;
actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM;
constraint on investment due to access to material nonpublic information;
restrictions on our ability to enter into transactions with our affiliates;
limitations on the amount of SBA-guaranteed debentures that may be issued by an SBIC;
our ability to comply with SBA regulations and requirements;
the use of borrowed money to finance a portion of our investments;
our ability to incur additional leverage pursuant to the SBCAA and the impact of such leverage on our net investment income and results of operations;
competition for investment opportunities;
the percentage of investments that will bear interest on a floating rate or fixed rate basis;
the ability of SBIC I LP to make distributions enabling us to meet RIC requirements;
our ability to raise debt or equity capital as a BDC;
the timing, form and amount of any distributions from our portfolio companies;
the impact of a protracted decline in the liquidity of credit markets on our business;
the general economy and its impact on the industries in which we invest;
uncertain valuations of our portfolio investments; and
the effect of new or modified laws or regulations governing our operations.
Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include, among others, those described or identified in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q.
We have based the forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The forward-looking statements and projections contained in this Quarterly Report on Form 10-Q are excluded from the safe harbor protection provided by Section 21E of the Exchange Act.

1


PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
OFS Capital Corporation and Subsidiaries
Consolidated Statements of Assets and Liabilities
(Dollar amounts in thousands, except per share data)

September 30,
2019

December 31,
2018

(unaudited)


Assets





Investments, at fair value:





Non-control/non-affiliate investments (amortized cost of $392,289 and $312,223, respectively)
$
368,634


$
297,749

Affiliate investments (amortized cost of $120,570 and $90,751, respectively)
124,227


89,103

Control investment (amortized cost of $10,342 and $10,337, respectively)
9,300


9,945

Total investments at fair value (amortized cost of $523,201 and $413,311, respectively)
502,161


396,797

Cash
7,974


38,172

Interest receivable
3,298


2,787

Prepaid expenses and other assets
4,854


3,665

Total assets
$
518,287


$
441,421







Liabilities





Revolving lines of credit
$
92,475


$
12,000

SBA debentures (net of deferred debt issuance costs of $1,999 and $2,280, respectively)
147,881


147,600

Unsecured notes (net of deferred debt issuance costs of $2,925 and $3,299 respectively)
95,600


95,226

Interest payable
2,045


2,791

Payable to adviser and affiliates (Note 3)
4,049


3,700

Payable for investments purchased
5,075


4,151

Accrued professional fees
339


637

Other liabilities
417


293

Total liabilities
347,881


266,398







Commitments and contingencies (Note 6)











Net assets





Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, -0- shares issued and outstanding as of September 30, 2019, and December 31, 2018, respectively
$


$

Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,371,451 and 13,357,337 shares issued and outstanding as of September 30, 2019, and December 31, 2018, respectively
134


134

Paid-in capital in excess of par
187,890


187,540

Total distributable earnings (losses)
(17,618
)

(12,651
)
Total net assets
170,406


175,023







Total liabilities and net assets
$
518,287


$
441,421







Number of shares outstanding
13,371,451


13,357,337

Net asset value per share
$
12.74


$
13.10


See Notes to Consolidated Financial Statements.

2


OFS Capital Corporation and Subsidiaries
Consolidated Statements of Operations (unaudited)
(Dollar amounts in thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018
Investment income











Interest income:











Non-control/non-affiliate investments
$
10,181


$
7,424


$
28,110


$
19,508

Affiliate investments
2,647


2,455


7,640


7,308

Control investment
262


255


784


744

Total interest income
13,090


10,134


36,534


27,560

Payment-in-kind interest and dividend income:











Non-control/non-affiliate investments
96


178


289


524

Affiliate investments
347


308


899


1,054

Control investment
28


28


83


82

Total payment-in-kind interest and dividend income
471


514


1,271


1,660

Dividend income:











Affiliate investments




173


130

Control investment


58


89


185

Total dividend income


58


262


315

Fee income:











Non-control/non-affiliate investments
285


251


781


664

Affiliate investments
6


7


216


12

Control investment
6


18


39


52

Total fee income
297


276


1,036


728

Total investment income
13,858


10,982


39,103


30,263

Expenses











Interest expense
4,464


2,393


11,564


6,196

Management fee
2,164


1,678


6,062


4,586

Incentive fee
1,214


1,170


3,622


3,041

Professional fees
510


458


1,413


859

Administration fee
396


311


1,250


1,252

Other expenses
257


282


651


1,287

Total expenses before incentive fee waiver
9,005


6,292


24,562


17,221

Incentive fee waiver (see Note 3)






(22
)
Total expenses, net of incentive fee waiver
9,005


6,292


24,562


17,199

Net investment income
4,853


4,690


14,541


13,064













Net realized and unrealized gain (loss) on investments











Net realized gain (loss) on non-control/non-affiliate investments
51




(843
)

(5,003
)
Net realized loss on affiliate investments






(4,018
)
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes
(6,534
)

(923
)

(9,506
)

2,925

Net unrealized appreciation on affiliate investments
4,765


1,223


5,305


6,396

Net unrealized appreciation (depreciation) on control investment
(1,373
)

189


(650
)

303













Net gain (loss) on investments
(3,091
)

489


(5,694
)

603













Net increase in net assets resulting from operations
$
1,762


$
5,179


$
8,847


$
13,667













Net investment income per common share – basic and diluted
$
0.36


$
0.35


$
1.09


$
0.98

Net increase in net assets resulting from operations per common share – basic and diluted
$
0.13


$
0.39


$
0.66


$
1.02

Distributions declared per common share
$
0.34


$
0.34


$
1.02


$
1.39

Basic and diluted weighted average shares outstanding
13,366,515


13,350,484


13,361,757


13,346,630

See Notes to Consolidated Financial Statements.

3

OFS Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets (unaudited)
(Dollar amounts in thousands)



 
Preferred Stock
 
Common Stock
 
 
 
 
 
 
 
Number of shares
 
Par value
 
Number of shares
 
Par value
 
Paid-in capital in excess of par
 
Total distributable earnings (losses)
 
Total net assets
Balances at January 1, 2018

 
$

 
13,340,217


$
133


$
187,398


$
805


$
188,336

Net increase in net assets resulting from operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net investment income

 

 






13,064

 
13,064

  Net realized loss on investments

 

 






(9,021
)
 
(9,021
)
  Net unrealized appreciation on investments, net of taxes

 

 






9,624


9,624

  Tax reclassifications of permanent differences

 

 

 

 
305


(305
)


Distributions to stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Common stock issued from reinvestment of stockholder distributions

 

 
12,607

 
1

 
143

 

 
144

  Dividends declared

 

 






(18,549
)

(18,549
)
Net increase (decrease) for the period ended September 30, 2018

 

 
12,607

 
1

 
448

 
(5,187
)
 
(4,738
)
Balances at September 30, 2018

 
$

 
13,352,824

 
$
134

 
$
187,846

 
$
(4,382
)
 
$
183,598

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at June 30, 2018

 
$

 
13,350,458


$
134


$
187,549


$
(4,753
)
 
$
182,930

Net increase in net assets resulting from operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net investment income

 

 






4,690


4,690

  Net unrealized appreciation on investments, net of taxes

 

 






489

 
489

  Tax reclassifications of permanent differences

 

 

 

 
270


(270
)


Distributions to stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Common stock issued from reinvestment of stockholder distributions

 

 
2,366




27




27

  Dividends declared

 

 






(4,538
)

(4,538
)
Net increase for the period ended September 30, 2018

 

 
2,366

 

 
297

 
371

 
668

Balances at September 30, 2018

 
$

 
13,352,824

 
$
134

 
$
187,846

 
$
(4,382
)
 
$
183,598

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4

OFS Capital Corporation and Subsidiaries
Consolidated Statements of Changes in Net Assets (unaudited)
(Dollar amounts in thousands)


 
Preferred Stock
 
Common Stock
 
 
 
 
 
 
 
Number of shares
 
Par value
 
Number of shares
 
Par value
 
Paid-in capital in excess of par
 
Total distributable earnings (losses)
 
Total net assets
Balances at January 1, 2019

 
$

 
13,357,337


$
134


$
187,540


$
(12,651
)

$
175,023

Net increase in net assets resulting from operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net investment income

 

 

 

 

 
14,541

 
14,541

  Net realized loss on investments

 

 

 

 

 
(843
)
 
(843
)
  Net unrealized depreciation on investments, net of taxes

 

 

 

 

 
(4,851
)
 
(4,851
)
  Tax reclassifications of permanent differences

 

 

 

 
183


(183
)


Distributions to stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Common stock issued from reinvestment of stockholder distributions

 

 
14,114

 

 
167

 

 
167

  Dividends declared

 

 

 

 

 
(13,631
)
 
(13,631
)
Net increase (decrease) for the period ended September 30, 2019

 

 
14,114

 

 
350

 
(4,967
)
 
(4,617
)
Balances at September 30, 2019

 
$

 
13,371,451

 
$
134

 
$
187,890

 
$
(17,618
)
 
$
170,406

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at June 30, 2019

 
$

 
13,366,461


$
134


$
187,814


$
(14,816
)

$
173,132

Net increase in net assets resulting from operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net investment income

 

 






4,853


4,853

  Net realized gain on investments

 

 






51


51

  Net unrealized depreciation on investments, net of taxes

 

 






(3,142
)

(3,142
)
  Tax reclassifications of permanent differences

 

 




18


(18
)


Distributions to stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Common stock issued from reinvestment of stockholder distributions

 

 
4,990




58




58

  Dividends declared

 

 






(4,546
)

(4,546
)
Net increase (decrease) for the period ended September 30, 2019

 

 
4,990

 

 
76

 
(2,802
)
 
(2,726
)
Balances at September 30, 2019

 
$

 
13,371,451

 
$
134

 
$
187,890

 
$
(17,618
)
 
$
170,406


See Notes to Consolidated Financial Statements.

5


OFS Capital Corporation and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(Dollar amounts in thousands)
 
Nine Months Ended September 30,
 
2019
 
2018
Cash flows from operating activities
 
 
 
Net increase in net assets resulting from operations
$
8,847


$
13,667

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:





Net realized loss on investments
843


9,021

Net unrealized depreciation (appreciation) on investments
4,851


(9,624
)
Amortization of Net Loan Fees
(788
)

(992
)
Amendment fees collected
103


79

Payment-in-kind interest and dividend income
(1,271
)

(1,659
)
Accretion of interest income on structured finance notes
(2,001
)
 

Amortization of debt issuance costs
942


532

Amortization of intangible asset
146


146

Purchase and origination of portfolio investments
(169,638
)

(185,806
)
Proceeds from principal payments on portfolio investments
30,750


34,891

Proceeds from sale or redemption of portfolio investments
30,368


42,659

Proceeds from distributions received from portfolio investments
1,976



Changes in operating assets and liabilities:





Interest receivable
(511
)

97

Interest payable
(746
)

(620
)
Payable to adviser and affiliates
349


885

Payable for investments purchased
924

 

Other assets and liabilities
(493
)

797

Net cash used in operating activities
(95,349
)

(95,927
)
 
 
 
 
Cash flows from financing activities
 
 
 
Distributions paid to stockholders
(13,464
)

(18,405
)
Borrowings under revolving lines of credit
128,675


70,500

Repayments under revolving lines of credit
(48,200
)

(71,100
)
Proceeds from unsecured notes offering, net of discounts


48,023

Payment of deferred financing costs
(1,857
)


Repurchases of common stock under Stock Repurchase Program
(3
)
 

Net cash provided by financing activities
65,151


29,018

Net decrease in cash
(30,198
)

(66,909
)
   Cash at beginning of period
38,172


72,952

   Cash at end of period
$
7,974


$
6,043

 
 
 
 
Supplemental Disclosure of Cash Flow Information:
 
 
 
Cash paid for interest
$
11,368


$
6,284

Reinvestment of distributions to stockholders
167


144


See Notes to Consolidated Financial Statements.

6

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments (unaudited)
September 30, 2019
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type
 
Industry
 
Interest Rate (2)
 
Spread Above Index (2)
 
Initial Acquisition Date
 
Maturity
 
Principal Amount
 
Amortized Cost
 
Fair Value (3)
 
Percent of Net Assets
Non-control/Non-affiliate Investments
 
 




















Debt and Equity Investments
 
 




















AHP Health Partners (14) (15) (19)

General Medical and Surgical Hospitals




















Senior Secured Loan



6.54%

(L +4.50%)

6/27/2019

6/30/2025

$
2,614


$
2,619


$
2,624


1.5
%























Albertson's Holdings LLC (14) (15) (19)

Supermarkets and Other Grocery (except Convenience) Stores




















Senior Secured Loan



4.79%

(L +2.75%)

6/24/2019

11/17/2025

2,154


2,150


2,169


1.3
























American Bath Group, LLC (14) (15) (19)

Plastics Plumbing Fixture Manufacturing




















Senior Secured Loan



6.29%

(L +4.25%)

6/24/2019

9/30/2023

1,492


1,487


1,483


0.9
























AppLovin Corporation (14) (15) (19)

Advertising Agencies




















Senior Secured Loan



5.79%

(L +3.75%)

6/24/2019

8/15/2025

1,990


1,992


1,992


1.2
























Asurion, LLC (14) (15) (19)

Communication Equipment Repair and Maintenance




















Senior Secured Loan



5.04%

(L +3.00%)

6/24/2019

11/3/2024

1,990


1,990


1,999


1.2

Senior Secured Loan



5.04%

(L +3.00%)

7/24/2019

11/3/2023

997


1,000


1,002


0.6













2,987


2,989


3,001


1.8

Athenahealth, Inc. (14) (15) (19)

Software Publishers




















Senior Secured Loan



6.68%

(L +4.50%)

6/24/2019

2/11/2026

1,990


1,995


1,988


1.2
























Bass Pro Group, LLC (14) (15) (19)

Sporting Goods Stores




















Senior Secured Loan



7.04%

(L +5.00%)

6/24/2019

9/25/2024

1,990


1,923


1,920


1.1
























Baymark Health Services, Inc.

Outpatient Mental Health & Sub. Abuse Centers




















Senior Secured Loan



10.21%

(L +8.25%)

3/22/2018

3/1/2025

4,000


3,969


4,026


2.4
























BrightSpring Health Services (14) (15) (19)

Residential Intellectual and Developmental Disability Facilities




















Senior Secured Loan



6.57%

(L +4.50%)

6/24/2019

3/5/2026

2,993


2,999


3,002


1.8

























7

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
September 30, 2019
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type
 
Industry
 
Interest Rate (2)
 
Spread Above Index (2)
 
Initial Acquisition Date
 
Maturity
 
Principal Amount
 
Amortized Cost
 
Fair Value (3)
 
Percent of Net Assets
Brookfield WEC Holdings Inc. (14) (15) (19)

Business to Business Electronic Markets




















Senior Secured Loan



5.54%

(L +3.50%)

7/25/2019

8/1/2025

$
1,995


$
2,005


$
2,005


1.2
%























Carolina Lubes, Inc.

Automotive Oil Change and Lubrication Shops




















Senior Secured Loan (4) (8)



10.08%

(L +7.76%)

8/23/2017

8/23/2022

20,410


20,305


20,532


12.0

Senior Secured Loan (Revolver)



0.25% (18)

(L +7.25%)

8/23/2017

8/23/2022



(8
)
















20,410

 
20,297

 
20,532

 
12.0

Cenexel Clinical Research, Inc. (f/k/a JBR Clinical Research, Inc.) (4) (8)

Research and Development in the Social Sciences and Humanities




















Senior Secured Loan



9.45%

(L +7.95%)

8/2/2018

8/2/2023

24,290


24,154


24,046


14.0
























CHG Healthcare Services, Inc. (15) (19)

All Other Outpatient Care Centers




















Senior Secured Loan



5.04%

(L +3.00%)

7/24/2019

6/7/2023

2,000


2,002


2,002


1.2
























Cirrus Medical Staffing, Inc. (4)

Temporary Help Services




















Senior Secured Loan



10.35%

(L +8.25%)

3/5/2018

10/19/2022

12,655


12,539


12,190


7.2

Senior Secured Loan (Revolver)



10.35%

(L +8.25%)

3/5/2018

10/19/2022

410


410


395


0.2













13,065


12,949


12,585


7.4

Community Intervention Services, Inc. (4) (6) (10) (11)

Outpatient Mental Health and Substance Abuse Centers




















Subordinated  Loan



7.0% cash / 6.0% PIK

N/A

7/16/2015

1/16/2021

9,479


7,639




























Confie Seguros Holdings II Co. (14)

Insurance Agencies and Brokerages




















Senior Secured Loan



10.63%

(L +8.50%)

7/7/2015

11/1/2025

9,678


9,509


9,115


5.3
























Constellis Holdings, LLC

Other Justice, Public Order, and Safety Activities




















Senior Secured Loan



11.26%

(L +9.00%)

4/28/2017

4/21/2025

9,950


9,846


2,856


1.7
























Convergint Technologies Holdings, LLC

Security Systems Services (except Locksmiths)




















Senior Secured Loan



8.79%

(L +6.75%)

9/28/2018

2/2/2026

3,481


3,428


3,412


2.0

























8

OFS Capital Corporation and Subsidiaries

Consolidated Schedule of Investments - Continued (unaudited)
September 30, 2019
(Dollar amounts in thousands)


Portfolio Company (1)
Investment Type
 
Industry
 
Interest Rate (2)
 
Spread Above Index (2)
 
Initial Acquisition Date
 
Maturity
 
Principal Amount
 
Amortized Cost
 
Fair Value (3)
 
Percent of Net Assets
DuPage Medical Group (15) (19)

Offices of Physicians, Mental Health Specialists




















Senior Secured Loan



9.04%

(L +7.00%)

8/22/2017

8/15/2025

$
10,099


$
10,177


$
10,068


5.9
%























Eblens Holdings, Inc.

Shoe Store




















Subordinated Loan (11)



12.0% cash / 1.0% PIK

N/A

7/13/2017

1/13/2023

8,987


8,935


9,023


5.3

Common Equity (71,250 Class A units) (10)







7/13/2017






713


839


0.5













8,987


9,648


9,862


5.8

Elgin Fasteners Group

Bolt, Nut, Screw, Rivet, and Washer Manufacturing




















Senior Secured Loan



10.75%

(P +5.75%)

10/31/2011

8/27/2018 (5)

3,483


3,483


3,361


2.0
























Endo International PLC (14) (15) (19)

Pharmaceutical Preparation Manufacturing