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Main Street Capital CORP - Quarter Report: 2021 September (Form 10-Q)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2021

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: 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)

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

Title of Each Class

  

Trading Symbol

 

Name of Each Exchange on Which
Registered

Common Stock, par value $0.01 per share

MAIN

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  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 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 the 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

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 

The number of shares outstanding of the issuer’s common stock as of November 4, 2021 was 69,583,191.


Table of Contents

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements

Consolidated Balance Sheets—September 30, 2021 (unaudited) and December 31, 2020

1

Consolidated Statements of Operations (unaudited)—Three and nine months ended September 30, 2021 and 2020

2

Consolidated Statements of Changes in Net Assets (unaudited)—Nine months ended September 30, 2021 and 2020

3

Consolidated Statements of Cash Flows (unaudited)—Nine months ended September 30, 2021 and 2020

4

Consolidated Schedule of Investments (unaudited)—September 30, 2021

5

Consolidated Schedule of Investments—December 31, 2020

30

Notes to Consolidated Financial Statements (unaudited)

54

Consolidated Schedules of Investments in and Advances to Affiliates (unaudited)—Nine months ended September 30, 2021 and 2020

90

Item 2.

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

102

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

122

Item 4.

Controls and Procedures

122

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

122

Item 1A.

Risk Factors

122

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

123

Item 6.

Exhibits

124

Signatures

125


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

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

September 30, 

December 31, 

    

2021

    

2020

(Unaudited)

ASSETS

 

  

 

  

Investments at fair value:

 

  

 

  

Control investments (cost: $988,222 and $831,490 as of September 30, 2021 and December 31, 2020, respectively)

$

1,336,218

$

1,113,725

Affiliate investments (cost: $505,935 and $416,479 as of September 30, 2021 and December 31, 2020, respectively)

 

485,139

 

366,301

Non‑Control/Non‑Affiliate investments (cost: $1,338,405 and $1,268,740 as of September 30, 2021 and December 31, 2020, respectively)

 

1,295,747

 

1,204,840

Total investments (cost: $2,832,562 and $2,516,709 as of September 30, 2021 and December 31, 2020, respectively)

 

3,117,104

 

2,684,866

Cash and cash equivalents

 

59,569

 

31,919

Interest receivable and other assets

 

51,172

 

49,761

Receivable for securities sold

 

11,467

 

Deferred financing costs (net of accumulated amortization of $9,219 and $8,477 as of September 30, 2021 and December 31, 2020, respectively)

 

4,460

 

2,818

Total assets

$

3,243,772

$

2,769,364

LIABILITIES

 

 

Credit facility

$

200,000

$

269,000

SBIC debentures (par: $350,000 and $309,800 as of September 30, 2021 and December 31, 2020, respectively)

 

342,435

 

303,972

5.20% Notes due 2024 (par: $450,000 as of both September 30, 2021 and December 31, 2020)

 

451,408

 

451,817

4.50% Notes due 2022 (par: $185,000 as of both September 30, 2021 and December 31, 2020)

 

184,292

 

183,836

3.00% Notes due 2026 (par: $300,000 as of September 30, 2021)

 

295,445

 

Accounts payable and other liabilities

 

27,904

 

20,833

Payable for securities purchased

 

5,084

 

Interest payable

 

15,303

 

8,658

Dividend payable

 

14,553

 

13,889

Deferred tax liability, net

 

23,041

 

2,592

Total liabilities

 

1,559,465

 

1,254,597

Commitments and contingencies (Note K)

 

 

NET ASSETS

 

 

Common stock, $0.01 par value per share (150,000,000 shares authorized; 69,346,340 and 67,674,853 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively)

 

694

 

677

Additional paid‑in capital

 

1,675,917

 

1,615,940

Total undistributed (overdistributed) earnings

 

7,696

 

(101,850)

Total net assets

 

1,684,307

 

1,514,767

Total liabilities and net assets

$

3,243,772

$

2,769,364

NET ASSET VALUE PER SHARE

$

24.27

$

22.35

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

Nine Months Ended

    

September 30, 

September 30, 

    

2021

    

2020

    

2021

    

2020

INVESTMENT INCOME:

 

  

 

  

 

  

 

  

Interest, fee and dividend income:

 

  

 

  

 

  

 

  

Control investments

$

34,852

$

18,558

$

85,904

$

57,357

Affiliate investments

 

12,274

 

8,255

 

34,785

 

23,626

Non‑Control/Non‑Affiliate investments

 

29,653

 

25,141

 

86,192

 

79,126

Total investment income

 

76,779

 

51,954

 

206,881

 

160,109

EXPENSES:

 

 

 

 

Interest

 

(14,711)

 

(12,489)

 

(42,914)

 

(36,827)

Compensation

 

(9,576)

 

(4,980)

 

(22,790)

 

(12,280)

General and administrative

 

(3,047)

 

(3,354)

 

(9,439)

 

(9,827)

Share‑based compensation

 

(2,869)

 

(2,561)

 

(7,961)

 

(8,215)

Expenses allocated to the External Investment Manager

 

2,728

 

1,892

 

7,680

 

5,340

Total expenses

 

(27,475)

 

(21,492)

 

(75,424)

 

(61,809)

NET INVESTMENT INCOME

 

49,304

 

30,462

 

131,457

 

98,300

NET REALIZED GAIN (LOSS):

 

 

 

 

Control investments

 

8,786

 

4,041

 

(4,459)

 

(15,825)

Affiliate investments

 

(5,147)

 

(172)

 

3,962

 

(407)

Non‑Control/Non‑Affiliate investments

 

4,666

 

(17,743)

 

11,072

 

(28,091)

Realized loss on extinguishment of debt

 

 

 

 

(534)

Total net realized gain (loss)

 

8,305

 

(13,874)

 

10,575

 

(44,857)

NET UNREALIZED APPRECIATION (DEPRECIATION):

 

 

 

 

Control investments

 

20,671

 

7,139

 

65,756

 

(35,096)

Affiliate investments

 

14,285

 

2,406

 

30,518

 

(26,883)

Non‑Control/Non‑Affiliate investments

 

3,675

 

53,569

 

20,798

 

(56,051)

SBIC debentures

 

 

 

 

460

Total net unrealized appreciation (depreciation)

 

38,631

 

63,114

 

117,072

 

(117,570)

INCOME TAXES:

 

 

 

 

Federal and state income, excise and other taxes

 

(953)

 

(1,165)

 

(2,242)

 

(1,420)

Deferred taxes

 

(11,331)

 

(342)

 

(20,449)

 

15,673

Income tax benefit (provision)

 

(12,284)

 

(1,507)

 

(22,691)

 

14,253

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

$

83,956

$

78,195

$

236,413

$

(49,874)

NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED

$

0.71

$

0.46

$

1.92

$

1.50

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

$

1.22

$

1.18

$

3.45

$

(0.76)

WEIGHTED AVERAGE SHARES
OUTSTANDING—BASIC AND DILUTED

 

69,021,826

 

66,110,555

 

68,557,362

 

65,319,784

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)

Total

Common Stock

Additional

Undistributed

Number of

Par

PaidIn

(Overdistributed)

Total Net

    

Shares

    

Value

    

Capital

    

Earnings

    

Asset Value

Balances at December 31, 2019

 

64,252,937

$

643

$

1,512,435

$

23,312

$

1,536,390

Public offering of common stock, net of offering costs

 

91,458

 

1

 

3,854

 

 

3,855

Share‑based compensation

 

 

 

2,837

 

 

2,837

Purchase of vested stock for employee payroll tax withholding

(851)

(29)

(29)

Dividend reinvestment

 

108,722

 

1

 

3,929

 

 

3,930

Amortization of directors’ deferred compensation

 

 

 

238

 

 

238

Issuance of restricted stock

 

10,383

 

 

 

 

Dividends to stockholders

 

 

 

93

 

(39,706)

 

(39,613)

Net decrease resulting from operations

 

 

 

 

(171,438)

 

(171,438)

Balances at March 31, 2020

 

64,462,649

$

645

$

1,523,357

$

(187,832)

$

1,336,170

Public offering of common stock, net of offering costs

 

824,968

 

9

 

26,007

 

 

26,016

Share‑based compensation

 

2,817

2,817

Purchase of vested stock for employee payroll tax withholding

 

(84,094)

 

(1)

 

(1,730)

 

 

(1,731)

Dividend reinvestment

 

146,229

 

1

 

4,158

 

 

4,159

Amortization of directors’ deferred compensation

 

 

 

224

 

 

224

Issuance of restricted stock, net of forfeited shares

 

414,053

 

4

 

(4)

 

 

Dividends to stockholders

 

 

 

99

 

(40,179)

 

(40,080)

Net increase resulting from operations

 

 

 

 

43,369

 

43,369

Balances at June 30, 2020

 

65,763,805

$

658

$

1,554,928

$

(184,642)

$

1,370,944

Public offering of common stock, net of offering costs

205,949

2

7,741

7,743

Share‑based compensation

2,561

2,561

Purchase of vested stock for employee payroll tax withholding

 

(1,998)

 

 

(7)

 

 

(7)

Dividend reinvestment

132,583

1

4,129

4,130

Amortization of directors’ deferred compensation

195

195

Issuance of restricted stock, net of forfeited shares

(6,899)

Dividends to stockholders

95

(40,674)

(40,579)

Net increase resulting from operations

78,195

78,195

Balances at September 30, 2020

66,093,440

$

661

$

1,569,642

$

(147,121)

$

1,423,182

Balances at December 31, 2020

 

67,762,032

$

677

$

1,615,940

$

(101,850)

$

1,514,767

Public offering of common stock, net of offering costs

117,388

 

2

 

3,626

 

 

3,628

Share‑based compensation

 

 

2,333

 

 

2,333

Purchase of vested stock for employee payroll tax withholding

(180)

 

 

(7)

 

 

(7)

Dividend reinvestment

106,651

 

1

 

3,698

 

 

3,699

Amortization of directors’ deferred compensation

 

 

195

 

 

195

Issuance of restricted stock

15,007

 

 

 

 

Dividends to stockholders

 

 

96

 

(41,893)

 

(41,797)

Net increase resulting from operations

 

 

-

 

57,346

 

57,346

Balances at March 31, 2021

68,000,898

$

680

$

1,625,881

$

(86,397)

$

1,540,164

Public offering of common stock, net of offering costs

231,795

 

2

 

9,396

 

 

9,398

Share‑based compensation

 

 

2,759

 

 

2,759

Purchase of vested stock for employee payroll tax withholding

(114,357)

 

(1)

 

(4,464)

 

 

(4,465)

Dividend reinvestment

91,632

 

1

 

3,755

 

 

3,756

Amortization of directors’ deferred compensation

 

 

163

 

 

163

Issuance of restricted stock, net of forfeited shares

321,821

 

3

 

(3)

 

 

Dividends to stockholders

 

 

96

 

(42,140)

 

(42,044)

Net increase resulting from operations

 

 

 

95,110

 

95,110

Balances at June 30, 2021

68,531,789

$

685

$

1,637,583

$

(33,427)

$

1,604,841

Public offering of common stock, net of offering costs

772,274

 

8

 

31,812

 

 

31,820

Share‑based compensation

 

 

2,869

 

 

2,869

Purchase of vested stock for employee payroll tax withholding

(13,818)

 

 

(575)

 

 

(575)

Dividend reinvestment

95,364

 

1

 

3,984

 

 

3,985

Amortization of directors’ deferred compensation

 

 

147

 

 

147

Issuance of restricted stock, net of forfeited shares

23,036

 

 

 

 

Dividends to stockholders

 

 

97

 

(42,833)

 

(42,736)

Net increase resulting from operations

 

 

 

83,956

 

83,956

Balances at September 30, 2021

69,408,645

$

694

$

1,675,917

$

7,696

$

1,684,307

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)

Nine Months Ended

    

September 30, 

2021

   

2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net increase (decrease) in net assets resulting from operations

$

236,413

$

(49,874)

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

Investments in portfolio companies

(911,095)

(414,574)

Proceeds from sales and repayments of debt investments in portfolio companies

530,964

255,147

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

83,376

21,210

Net unrealized (appreciation) depreciation

(117,072)

117,570

Net realized (gain) loss

(10,575)

44,857

Accretion of unearned income

(10,972)

(8,239)

Payment-in-kind interest

(6,280)

(3,816)

Cumulative dividends

(1,296)

(1,404)

Share-based compensation expense

7,961

8,215

Amortization of deferred financing costs

2,277

1,986

Deferred tax (benefit) provision

20,449

(15,673)

Changes in other assets and liabilities:

Interest receivable and other assets

(669)

12,661

Interest payable

6,645

6,100

Accounts payable and other liabilities

7,576

(4,739)

Deferred fees and other

3,586

2,296

Net cash used in operating activities

(158,712)

(28,277)

CASH FLOWS FROM FINANCING ACTIVITIES

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

44,846

37,614

Proceeds from public offering of 5.20% Notes due 2024

-

125,000

Proceeds from public offering of 3.00% Notes due 2026

300,000

-

Dividends paid

(114,471)

(107,673)

Proceeds from issuance of SBIC debentures

80,200

35,000

Repayments of SBIC debentures

(40,000)

(42,000)

Proceeds from credit facility

645,000

292,000

Repayments on credit facility

(714,000)

(339,000)

Debt issuance premiums (costs), net

(10,166)

978

Purchases of vested stock for employee payroll tax withholding

(5,047)

(1,767)

Net cash provided by financing activities

186,362

152

Net increase (decrease) in cash and cash equivalents

27,650

(28,125)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

31,919

55,246

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

59,569

$

27,121

Supplemental cash flow disclosures:

Interest paid

$

33,898

$

28,646

Taxes paid

$

2,046

$

2,439

Operating non-cash activities:

Value of shares issued pursuant to the DRIP

$

11,440

$

12,219

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

4


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Control Investments (5)

Analytical Systems Keco Holdings, LLC

August 16, 2019

Manufacturer of Liquid and Gas Analyzers

Secured Debt

(9)

12.00% (L+10.00%, Floor 2.00%)

8/16/2024

$

5,015

$

4,787

$

4,787

Preferred Member Units

3,200

3,200

-

Preferred Member Units

2,427

2,427.00

4,783

Warrants

(27)

420

8/16/2029

316

-

10,730

9,570

ASC Interests, LLC

August 1, 2013

Recreational and Educational Shooting Facility

Secured Debt

13.00%

7/31/2022

1,850

1,831

1,831

Member Units

1,500

1,500

720

3,331

2,551

ATS Workholding, LLC

(10)

March 10, 2014

Manufacturer of Machine Cutting Tools and Accessories

Secured Debt

(14)

5.00%

8/16/2023

4,814

4,655

2,875

Preferred Member Units

3,725,862

3,726

-

8,381

2,875

Barfly Ventures, LLC

(10)

August 31, 2015

Casual Restaurant Group

Secured Debt

7.00%

10/31/2024

711

711

711

Member Units

37

1,584

1,929

2,295

2,640

Bolder Panther Group, LLC

December 31, 2020

Consumer Goods and Fuel Retailer

Secured Debt

(9)

10.50% (L+9.00%, Floor 1.50%)

12/31/2025

39,000

38,671

39,000

Class A Preferred Member Units

(8)

14.00%

10,194

10,194

Class B Preferred Member Units

(8)

140,000

8.00%

14,000

20,310

62,865

69,504

Brewer Crane Holdings, LLC

January 9, 2018

Provider of Crane Rental and Operating Services

Secured Debt

(9)

11.00% (L+10.00%, Floor 1.00%)

1/9/2023

8,184

8,156

8,156

Preferred Member Units

(8)

2,950

4,280

4,280

12,436

12,436

Bridge Capital Solutions Corporation

April 18, 2012

Financial Services and Cash Flow Solutions Provider

Secured Debt

13.00%

12/11/2024

8,813

8,813

8,813

Warrants

(27)

82

7/25/2026

2,132

4,060

Secured Debt

(30)

13.00%

12/11/2024

1,000

1,000

5


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Preferred Member Units

(8) (30)

17,742

1,000

1,000

12,945

14,873

Café Brazil, LLC

April 20, 2004

Casual Restaurant Group

Member Units

(8)

1,233

1,742

2,570

California Splendor Holdings LLC

March 30, 2018

Processor of Frozen Fruits

Secured Debt

(9)

11.00% (L+10.00%, Floor 1.00%)

3/30/2023

28,000

27,899

27,899

Preferred Member Units

(8) (19)

6,725

15.00% PIK

9,194

9,194

Preferred Member Units

(8)

6,157

10,775

10,805

47,868

47,898

CBT Nuggets, LLC

June 1, 2006

Produces and Sells IT Training Certification Videos

Member Units

(8)

416

1,300

52,620

Centre Technologies Holdings, LLC

January 4, 2019

Provider of IT Hardware Services and Software Solutions

Secured Debt

(9)

12.00% (L+10.00%, Floor 2.00%)

1/4/2024

9,569

9,518

9,518

Preferred Member Units

12,696

5,840

5,840

15,358

15,358

Chamberlin Holding LLC

February 26, 2018

Roofing and Waterproofing Specialty Contractor

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%)

2/26/2023

17,817

17,722

17,817

Member Units

(8)

4,347

11,440

24,140

Member Units

(8) (30)

1,047,146

1,322

1,430

30,484

43,387

Charps, LLC

February 3, 2017

Pipeline Maintenance and Construction

Unsecured Debt

10.00%

1/31/2024

5,694

4,582

5,034

Preferred Member Units

(8)

1,600

400

14,240

4,982

19,274

Clad-Rex Steel, LLC

December 20, 2016

Specialty Manufacturer of Vinyl-Clad Metal

Secured Debt

(9)

10.50% (L+9.50%, Floor 1.00%)

1/15/2024

10,480

10,393

10,393

Member Units

(8)

717

7,280

10,250

Secured Debt

10.00%

12/20/2036

1,089

1,078

1,078

Member Units

(30)

800

210

530

18,961

22,251

CMS Minerals Investments

January 30, 2015

Oil & Gas Exploration & Production

Member Units

(8) (30)

100

1,985

1,883

6


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Cody Pools, Inc.

March 6, 2020

Designer of Residential and Commercial Pools

Secured Debt

(9)

12.25% (L+10.50%, Floor 1.75%)

3/6/2025

18,047

17,916

18,047

Preferred Member Units

(8)

587

8,317

30,390

26,233

48,437

Colonial Electric Company LLC

March 31, 2021

Provider of Electrical Contracting Services

Secured Debt

12.00%

3/31/2026

24,885

24,654

24,654

Preferred Member Units

17,280

7,680

8,460

32,334

33,114

CompareNetworks Topco, LLC

January 29, 2019

Internet Publishing and Web Search Portals

Secured Debt

(9)

10.00% (L+9.00%, Floor 1.00%)

1/29/2024

6,477

6,450

6,477

Preferred Member Units

(8)

1,975

1,975

12,000

8,425

18,477

Copper Trail Fund Investments

(12) (13)

July 17, 2017

Investment Partnership

LP Interests (CTMH, LP)

(31)

38.8%

710

710

Datacom, LLC

May 30, 2014

Technology and Telecommunications Provider

Secured Debt

5.00%

12/31/2025

8,919

8,207

8,207

Preferred Member Units

9,000

2,610

2,610

10,817

10,817

Digital Products Holdings LLC

April 1, 2018

Designer and Distributor of Consumer Electronics

Secured Debt

(9)

11.00% (L+10.00%, Floor 1.00%)

4/1/2023

17,183

17,120

17,120

Preferred Member Units

(8)

3,857

9,501

9,835

26,621

26,955

Direct Marketing Solutions, Inc.

February 13, 2018

Provider of Omni-Channel Direct Marketing Services

Secured Debt

(9)

12.00% (L+11.00%, Floor 1.00%)

2/13/2023

14,855

14,799

14,799

Preferred Stock

(8)

8,400

8,400

17,150

23,199

31,949

Gamber-Johnson Holdings, LLC

June 24, 2016

Manufacturer of Ruggedized Computer Mounting Systems

Secured Debt

(9) (17)

9.00% (L+7.00%, Floor 2.00%)

6/24/2021

20,638

20,638

20,638

Member Units

(8)

9,042

17,692

55,370

38,330

76,008

Garreco, LLC

July 15, 2013

Manufacturer and Supplier of Dental Products

7


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%)

7/31/2022

4,519

4,519

4,519

Member Units

1,200

1,200

2,210

5,719

6,729

GRT Rubber Technologies LLC

December 19, 2014

Manufacturer of Engineered Rubber Products

Secured Debt

7.10% (L+7.00%)

12/31/2023

16,775

16,775

16,775

Member Units

(8)

5,879

13,065

44,900

29,840

61,675

Gulf Manufacturing, LLC

August 31, 2007

Manufacturer of Specialty Fabricated Industrial Piping Products

Member Units

(8)

438

2,980

5,640

Gulf Publishing Holdings, LLC

April 29, 2016

Energy Industry Focused Media and Publishing

Secured Debt

(9) (17) (19)

10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%)

9/30/2020

257

257

257

Secured Debt

(17) (19)

12.50% (6.25% Cash, 6.25% PIK)

4/29/2021

13,565

13,565

10,462

Member Units

3,681

3,681

-

17,503

10,719

Harris Preston Fund Investments

(12) (13)

October 1, 2017

Investment Partnership

LP Interests (2717 MH, L.P.)

(31)

49.3%

2,703

3,391

Harrison Hydra-Gen, Ltd.

June 4, 2010

Manufacturer of Hydraulic Generators

Common Stock

107,456

718

3,530

J&J Services, Inc.

October 31, 2019

Provider of Dumpster and Portable Toilet Rental Services

Secured Debt

11.50%

10/31/2024

10,800

10,727

10,800

Preferred Stock

2,814

7,085

15,400

17,812

26,200

Jensen Jewelers of Idaho, LLC

November 14, 2006

Retail Jewelry Store

Secured Debt

(9)

10.00% (Prime+6.75%, Floor 2.00%)

11/14/2023

2,750

2,734

2,750

Member Units

(8)

627

811

11,260

3,545

14,010

KBK Industries, LLC

January 23, 2006

Manufacturer of Specialty Oilfield and Industrial Products

Member Units

(8)

325

783

13,620

Kickhaefer Manufacturing Company, LLC

October 31, 2018

Precision Metal Parts Manufacturing

Secured Debt

11.50%

10/31/2023

20,415

20,313

20,313

Member Units

581

12,240

12,240

8


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

9.00%

10/31/2048

3,924

3,885

3,885

Member Units

(8) (30)

800

992

1,210

37,430

37,648

Market Force Information, LLC

July 28, 2017

Provider of Customer Experience Management Services

Secured Debt

(9)

12.00% (L+11.00%, Floor 1.00%)

7/28/2023

3,400

3,400

3,400

Secured Debt

(14) (19)

12.00% PIK

7/28/2023

26,079

25,952

11,159

Member Units

743,921

16,642

-

45,994

14,559

MH Corbin Holding LLC

August 31, 2015

Manufacturer and Distributor of Traffic Safety Products

Secured Debt

13.00%

3/31/2022

8,330

8,312

6,006

Preferred Member Units

66,000

4,400

-

Preferred Member Units

4,000

6,000

-

18,712

6,006

MS Private Loan Fund I, LP

(12) (13)

January 26, 2021

Investment Partnership

Unsecured Debt

5.00%

6/30/2022

30,291

30,291

30,291

LP Interests

(31)

13.9%

1,000

1,000

31,291

31,291

MSC Adviser I, LLC

(16)

November 22, 2013

Third Party Investment Advisory Services

Member Units

(8)

29,500

128,080

MSC Income Fund Inc.

(12) (13)

January 28, 2021

Business Development Company

Unsecured Debt

5.00%

1/28/2026

60,000

59,648

60,000

Mystic Logistics Holdings, LLC

August 18, 2014

Logistics and Distribution Services Provider for Large Volume Mailers

Secured Debt

12.00%

1/17/2022

6,709

6,706

6,706

Common Stock

(8)

5,873

2,720

7,170

9,426

13,876

NAPCO Precast, LLC

January 31, 2008

Precast Concrete Manufacturing

Member Units

(8)

2,955

2,975

13,560

Nebraska Vet AcquireCo, LLC

December 31, 2020

Mixed-Animal Veterinary and Animal Health Product Provider

Secured Debt

12.00%

12/31/2025

10,500

10,408

10,408

Preferred Member Units

6,500

6,500

6,500

16,908

16,908

NexRev LLC

February 28, 2018

Provider of Energy Efficiency Products & Services

Secured Debt

11.00%

2/28/2023

16,443

16,390

14,750

9


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Preferred Member Units

(8)

86,400,000

6,880

3,280

23,270

18,030

NRP Jones, LLC

December 22, 2011

Manufacturer of Hoses, Fittings and Assemblies

Secured Debt

12.00%

3/20/2023

2,080

2,080

2,080

Member Units

(8)

65,962

114

240

3,603

6,200

5,797

8,520

NuStep, LLC

January 31, 2017

Designer, Manufacturer and Distributor of Fitness Equipment

Secured Debt

(9)

7.50% (L+6.50%, Floor 1.00%)

1/31/2025

1,600

1,600

1,600

Secured Debt

10.50%

1/31/2025

17,240

17,223

17,240

Preferred Member Units

406

10,200

13,500

29,023

32,340

Orttech Holdings, LLC

July 30, 2021

Distributor of Industrial Clutches, Brakes and Other Components

Secured Debt

(9)

12.00% (L+11.00%, Floor 1.00%)

7/31/2026

24,416

24,183

24,183

Preferred Stock

(30)

11,600

11,600

11,600

35,783

35,783

Pearl Meyer Topco LLC

April 27, 2020

Provider of Executive Compensation Consulting Services

Secured Debt

12.00%

4/27/2025

33,674

33,416

33,674

Member Units

(8)

13,800

13,000

21,480

46,416

55,154

Pegasus Research Group, LLC

January 6, 2011

Provider of Telemarketing and Data Services

Member Units

460

1,290

7,280

PPL RVs, Inc.

June 10, 2010

Recreational Vehicle Dealer

Secured Debt

(9)

7.50% (L+7.00%, Floor 0.50%)

11/15/2022

12,405

12,369

12,375

Common Stock

(8)

2,000

2,150

13,690

14,519

26,065

Principle Environmental, LLC

February 1, 2011

Noise Abatement Service Provider

Secured Debt

13.00%

4/30/2023

6,397

6,352

6,352

Preferred Member Units

19,631

4,600

9,580

Common Stock

1,036

1,200

710

12,152

16,642

Quality Lease Service, LLC

June 8, 2015

Provider of Rigsite Accommodation Unit Rentals and Related Services

Member Units

1,000

9,813

3,030

10


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

River Aggregates, LLC

March 30, 2011

Processor of Construction Aggregates

Member Units

(8) (30)

1,500

369

3,400

Tedder Industries, LLC

August 31, 2018

Manufacturer of Firearm Holsters and Accessories

Secured Debt

12.00%

8/31/2022

16,800

16,733

16,733

Preferred Member Units

479

8,136

8,136

24,869

24,869

Trantech Radiator Topco, LLC

May 31, 2019

Transformer Cooling Products and Services

Secured Debt

12.00%

5/31/2024

8,720

8,658

8,658

Common Stock

(8)

615

4,655

6,650

13,313

15,308

UnionRock Energy Fund II, LP

(12) (13)

June 15, 2020

Investment Partnership

LP Interests

(31)

49.6%

4,048

6,455

Vision Interests, Inc.

June 5, 2007

Manufacturer / Installer of Commercial Signage

Secured Debt

13.00%

9/30/2022

2,028

2,028

2,028

Series A Preferred Stock

3,000,000

3,000

3,000

5,028

5,028

Ziegler’s NYPD, LLC

October 1, 2008

Casual Restaurant Group

Secured Debt

12.00%

10/1/2022

625

625

625

Secured Debt

6.50%

10/1/2022

1,000

1,000

1,000

Secured Debt

14.00%

10/1/2022

2,750

2,750

2,750

Preferred Member Units

10,072

2,834

2,130

Warrants

(27)

587

10/1/2025

600

-

7,809

6,505

OMi Topco, LLC

April 1, 2008

Manufacturer of Overhead Cranes

Secured Debt

12.00%

8/31/2026

18,000

17,824

18,000

Preferred Member Units

(8)

900

1,080

20,210

18,904

38,210

Subtotal Control Investments (79.3% of net assets at fair value)

$

988,222

$

1,336,218

11


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Affiliate Investments (6)

AAC Holdings, Inc.

(11)

June 30, 2017

Substance Abuse Treatment Service Provider

Secured Debt

(19)

18.00% (10.00% Cash, 8.00% PIK)

6/25/2025

$

9,995

$

9,799

$

9,708

Common Stock

593,928

3,148

2,110

Warrants

(27)

554,353

12/11/2025

-

1,970

12,947

13,788

AFG Capital Group, LLC

November 7, 2014

Provider of Rent-to-Own Financing Solutions and Services

Secured Debt

10.00%

5/25/2022

231

231

231

Preferred Member Units

(8)

186

1,200

7,380

1,431

7,611

ATX Networks Corp.

(11)

June 30, 2015

Provider of Radio Frequency Management Equipment

Secured Debt

(9)

8.50% (L+7.50%, Floor 1.00%)

9/1/2026

7,667

7,092

7,092

Unsecured Debt

(19)

10.00% PIK

9/1/2028

3,067

1,963

1,963

Common Stock

583

-

-

9,055

9,055

BBB Tank Services, LLC

April 8, 2016

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

Unsecured Debt

(9) (17)

12.00% (L+11.00%, Floor 1.00%)

4/8/2021

4,800

4,800

3,748

Preferred Stock (non-voting)

(8) (14) (19)

15.00% PIK

162

-

Member Units

800,000

800

-

5,762

3,748

Boccella Precast Products LLC

June 30, 2017

Manufacturer of Precast Hollow Core Concrete

Secured Debt

10.00%

2/28/2027

320

320

320

Member Units

(8)

2,160,000

2,256

4,830

2,576

5,150

Brightwood Capital Fund Investments

(12) (13)

July 21, 2014

Investment Partnership

LP Interests (Brightwood Capital Fund V, LP)

(31)

15.8%

1,000

1,000

Buca C, LLC

June 30, 2015

Casual Restaurant Group

Secured Debt

(9) (17)

10.25% (L+9.25%, Floor 1.00%)

6/30/2020

19,491

19,491

14,370

Preferred Member Units

(14) (19)

6

6.00% PIK

4,770

-

24,261

14,370

CAI Software LLC

October 10, 2014

Provider of Specialized

12


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Enterprise Resource Planning Software

Secured Debt

12.50%

12/7/2023

66,601

66,261

66,601

Member Units

(8)

77,960

174

12,590

66,435

79,191

Chandler Signs Holdings, LLC

(10)

January 4, 2016

Sign Manufacturer

Class A Units

1,500,000

1,500

650

Classic H&G Holdings, LLC

March 12, 2020

Provider of Engineered Packaging Solutions

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

3/12/2025

1,400

1,400

1,400

Secured Debt

8.00%

3/12/2025

19,274

19,130

19,274

Preferred Member Units

(8)

154

5,760

13,620

26,290

34,294

Congruent Credit Opportunities Funds

(12) (13)

January 24, 2012

Investment Partnership

LP Interests (Congruent Credit Opportunities Fund
III, LP)

(8) (31)

17.4%

10,700

10,403

Dos Rios Partners

(12) (13)

April 25, 2013

Investment Partnership

LP Interests (Dos Rios Partners, LP)

(31)

20.2%

6,605

9,984

LP Interests (Dos Rios Partners - A, LP)

(31)

6.4%

2,097

3,170

8,702

13,154

Dos Rios Stone Products LLC

(10)

June 27, 2016

Limestone and Sandstone Dimension Cut Stone Mining Quarries

Class A Preferred Units

(30)

2,000,000

2,000

909

EIG Fund Investments

(12) (13)

November 6, 2015

Investment Partnership

LP Interests (EIG Global Private Debt Fund-A, L.P.)

(8) (31)

11.1%

595

474

Freeport Financial Funds

(12) (13)

June 13, 2013

Investment Partnership

LP Interests (Freeport Financial SBIC Fund LP)

(31)

9.3%

5,974

6,133

LP Interests (Freeport First Lien Loan Fund III LP)

(8) (31)

6.0%

7,629

7,231

13,603

13,364

GFG Group, LLC.

March 31, 2021

Grower and Distributor of a Variety of Plants and Products to Other Wholesalers, Retailers and Garden Centers

Secured Debt

12.00%

3/31/2026

12,545

12,431

12,431

13


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Preferred Member Units

(8)

226

4,900

6,990

17,331

19,421

Harris Preston Fund Investments

(12) (13)

August 9, 2017

Investment Partnership

LP Interests (HPEP 3, L.P.)

(31)

8.2%

3,193

4,183

Hawk Ridge Systems, LLC

(13)

December 2, 2016

Value-Added Reseller of Engineering Design and Manufacturing Solutions

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

12/2/2023

2,585

2,585

2,585

Secured Debt

9.00%

12/2/2023

18,400

18,391

18,400

Preferred Member Units

(8)

226

2,850

13,160

Preferred Member Units

(30)

226

150

690

23,976

34,835

Houston Plating and Coatings, LLC

January 8, 2003

Provider of Plating and Industrial Coating Services

Unsecured Convertible Debt

8.00%

5/1/2022

3,000

3,000

2,900

Member Units

(8)

322,297

2,352

3,460

5,352

6,360

I-45 SLF LLC

(12) (13)

October 20, 2015

Investment Partnership

Member Units (Fully diluted 20.0%; 24.40% profits
interest) (8)

(8) (31)

20.0%

19,000

15,002

Iron-Main Investments, LLC

August 3, 2021

Consumer Reporting Agency Providing Employment Background Checks and Drug Testing

Secured Debt

13.00%

8/1/2026

4,600

4,555

4,555

Secured Debt

12.50%

9/1/2026

3,200

3,168

3,168

Common Stock

102,738

1,027

1,027

8,750

8,750

L.F. Manufacturing Holdings, LLC

(10)

December 23, 2013

Manufacturer of Fiberglass Products

Preferred Member Units (non-voting)

(8) (19)

14.00% PIK

103

103

Member Units

2,179,001

2,019

2,100

2,122

2,203

OnAsset Intelligence, Inc.

April 18, 2011

Provider of Transportation Monitoring / Tracking Products and Services

Secured Debt

(19)

12.00% PIK

12/31/2022

7,987

7,987

7,987

Unsecured Debt

(19)

10.00% PIK

12/31/2022

187

187

187

Preferred Stock

(14) (19)

912

7.00% PIK

1,981

-

14


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Common Stock

635

830

-

Warrants

(27)

4,699

5/10/2023

1,089

-

12,074

8,174

Oneliance, LLC

August 6, 2021

Construction Cleaning Company

Secured Debt

(9)

12.00% (L+11.00%, Floor 1.00%)

8/6/2026

5,600

5,545

5,545

Preferred Stock

1,056

1,056

1,056

6,601

6,601

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

January 8, 2013

Provider of Rigsite Accommodation Unit Rentals and Related Services

Secured Debt

(14) (32)

12.00%

1/8/2018

30,369

29,865

-

Preferred Member Units

250

2,500

-

32,365

-

SI East, LLC

August 31, 2018

Rigid Industrial Packaging Manufacturing

Secured Debt

10.25%

8/31/2023

63,600

63,472

63,600

Preferred Member Units

(8)

157

1,218

10,420

64,690

74,020

Slick Innovations, LLC

September 13, 2018

Text Message Marketing Platform

Secured Debt

13.00%

9/13/2023

5,320

5,239

5,320

Common Stock

70,000

700

1,510

Warrants

(27)

18,084

9/13/2028

181

400

6,120

7,230

Sonic Systems International, LLC

(10)

August 20, 2021

Nuclear Power Staffing Services

Secured Debt

(9)

8.50% (L+7.50%, Floor 1.00%)

8/20/2026

11,982

11,747

11,747

Common Stock

7,866

1,070

1,070

12,817

12,817

Superior Rigging & Erecting Co.

August 31, 2020

Provider of Steel Erecting, Crane Rental & Rigging Services

Secured Debt

12.00%

8/31/2025

21,500

21,323

21,323

Preferred Member Units

1,571

4,500

4,500

25,823

25,823

The Affiliati Network, LLC

August 9, 2021

Performance Marketing Solutions

Secured Debt

10.00%

8/9/2026

381

381

Secured Debt

11.83%

8/9/2026

13,623

13,623

Preferred Stock

1,280,000

6,400

6,400

20,404

20,404

UniTek Global Services, Inc.

(11)

April 15, 2011

Provider of Outsourced Infrastructure Services

Secured Debt

(9) (19)

8.50% (6.50% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%)

8/20/2024

2,376

2,362

2,214

Secured Convertible Debt

(19)

15.00% PIK

2/20/2025

1,197

1,197

2,163

Preferred Stock

(8) (19)

1,133,102

20.00% PIK

1,671

2,833

Preferred Stock

(14) (19)

1,521,122

20.00% PIK

2,188

1,112

15


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Preferred Stock

(14) (19)

2,281,682

19.00% PIK

3,667

-

Common Stock

945,507

-

-

Preferred Stock

(14) (19)

4,336,866

13.50% PIK

7,924

-

19,009

8,322

Universal Wellhead Services Holdings, LLC

(10)

October 30, 2014

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

Preferred Member Units

(14) (19) (30)

716,949

14.00% PIK

1,032

-

Member Units

(30)

4,000,000

4,000

-

5,032

-

Volusion, LLC

January 26, 2015

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

Secured Debt

(17)

11.50%

1/26/2020

17,434

17,434

17,434

Unsecured Convertible Debt

8.00%

11/16/2023

409

409

409

Preferred Member Units

4,876,670

14,000

5,990

Warrants

(27)

1,831,355

1/26/2025

2,576

-

34,419

23,833

Subtotal Affiliate Investments (28.8% of net assets at fair value)

$

505,935

$

485,139

16


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Non-Control/Non-Affiliate Investments (7)

Acousti Engineering Company of Florida

(10)

November 2, 2020

Interior Subcontractor Providing Acoustical Walls and Ceilings

Secured Debt

(9)

10.00% (L+8.50%, Floor 1.50%)

11/2/2025

$

12,246

$

12,134

$

12,242

Secured Debt

(9)

14.00% (L+12.50%, Floor 1.50%)

11/2/2025

850

840

840

12,974

13,082

Adams Publishing Group, LLC

(10)

November 19, 2015

Local Newspaper Operator

Secured Debt

(9)

8.75% (L+7.00%, Floor 1.75%)

7/3/2023

4,920

4,842

4,885

ADS Tactical, Inc.

(11)

March 7, 2017

Value-Added Logistics and Supply Chain Provider to the Defense Industry

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

3/19/2026

23,437

22,992

23,583

American Nuts, LLC

(10)

April 10, 2018

Roaster, Mixer and Packager of Bulk Nuts and Seeds

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%)

4/10/2025

12,045

11,863

12,045

American Teleconferencing Services, Ltd.

(11)

May 19, 2016

Provider of Audio Conferencing and Video Collaboration Solutions

Secured Debt

(9) (17)

7.50% (L+6.50%, Floor 1.00%)

9/9/2021

2,980

2,980

1,138

Secured Debt

(9) (14) (17)

7.50% (L+6.50%, Floor 1.00%)

9/9/2021

14,370

13,706

5,487

16,686

6,625

Arcus Hunting LLC

(10)

January 6, 2015

Manufacturer of Bowhunting and Archery Products and Accessories

Secured Debt

(9)

11.00% (L+10.00%, Floor 1.00%)

3/31/2022

13,603

13,537

13,603

Arrow International, Inc

(10)

December 21, 2020

Manufacturer and Distributor of Charitable Gaming Supplies

Secured Debt

(9) (23)

9.18% (L+7.93%, Floor 1.25%)

12/21/2025

22,500

22,291

22,307

ASC Ortho Management Company, LLC

(10)

August 31, 2018

Provider of Orthopedic Services

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%)

8/31/2023

5,117

5,074

5,111

Secured Debt

(19)

13.75% PIK

12/1/2023

2,342

2,323

2,342

7,397

7,453

Berry Aviation, Inc.

(10)

July 6, 2018

Charter Airline Services

Secured Debt

(19)

12.00% (10.50% Cash, 1.50% PIK)

1/6/2024

4,676

4,654

4,676

17


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Preferred Member Units

(8) (19) (30)

122,416

16.00% PIK

162

162

Preferred Member Units

(14) (19) (30)

1,548,387

8.00% PIK

1,671

1,963

6,487

6,801

BigName Commerce, LLC

(10)

May 11, 2017

Provider of Envelopes and Complimentary Stationery Products

Secured Debt

(9)

8.25% (L+7.25%, Floor 1.00%)

5/11/2022

1,899

1,896

1,899

Binswanger Enterprises, LLC

(10)

March 10, 2017

Glass Repair and Installation Service Provider

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%)

3/10/2023

12,387

12,328

12,387

Member Units

1,050,000

1,050

730

13,378

13,117

Bluestem Brands, Inc.

(11)

December 19, 2013

Multi-Channel Retailer of General Merchandise

Secured Debt

(9)

10.00% (L+8.50%, Floor 1.50%)

8/28/2025

5,357

5,357

5,335

Common Stock

(8)

723,184

1

1,350

5,358

6,685

Brainworks Software, LLC

(10)

August 12, 2014

Advertising Sales and Newspaper Circulation Software

Secured Debt

(9) (14) (17)

12.50% (Prime+9.25%, Floor 3.25%)

7/22/2019

7,817

7,817

4,201

Brightwood Capital Fund Investments

(12) (13)

July 21, 2014

Investment Partnership

LP Interests (Brightwood Capital Fund III, LP)

(8) (31)

1.6%

7,200

4,178

LP Interests (Brightwood Capital Fund IV, LP)

(8) (31)

0.6%

4,350

4,499

11,550

8,677

Burning Glass Intermediate Holding Company, Inc.

(10)

June 14, 2021

Provider of Skills-Based Labor Market Analytics

Secured Debt

(9)

6.00% (L+5.00%, Floor 1.00%)

6/10/2028

20,134

19,756

19,756

Cadence Aerospace LLC

(10)

November 14, 2017

Aerostructure Manufacturing

Secured Debt

(9) (19)

9.50% (7.50% Cash, 2.00% PIK) (2.00% PIK + L+6.50%, Floor 1.00%)

11/14/2023

28,554

28,391

26,464

Camin Cargo Control, Inc.

(11)

June 14, 2021

Provider of Mission Critical Inspection, Testing and Fuel Treatment Services

18


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9)

7.50% (L+6.50%, Floor 1.00%)

6/4/2026

16,000

15,848

15,920

Central Security Group, Inc.

(11)

December 4, 2017

Security Alarm Monitoring Service Provider

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

10/16/2025

6,839

6,839

6,600

Common Stock

329,084

1,481

1,399

8,320

7,999

Cenveo Corporation

(11)

September 4, 2015

Provider of Digital Marketing Agency Services

Common Stock

322,907

6,183

2,664

Chisholm Energy Holdings, LLC

(10)

May 15, 2019

Oil & Gas Exploration & Production

Secured Debt

(9)

7.75% (L+6.25%, Floor 1.50%)

5/15/2026

2,857

2,801

2,661

Clarius BIGS, LLC

(10)

September 23, 2014

Prints & Advertising Film Financing

Secured Debt

(14) (17) (19)

15.00% PIK

1/5/2015

2,776

2,776

28

Clickbooth.com, LLC

(10)

December 5, 2017

Provider of Digital Advertising Performance Marketing Solutions

Secured Debt

(9)

9.50% (L+8.50%, Floor 1.00%)

1/31/2025

7,700

7,637

7,700

Computer Data Source, LLC

(10)

August 6, 2021

Third Party Maintenance Provider to the Data Center Ecosystem

Secured Debt

(9)

8.50% (L+7.50%, Floor 1.00%)

8/6/2026

21,100

20,632

20,632

Construction Supply Investments, LLC

(10)

December 29, 2016

Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

Member Units

(8)

861,618

3,335

10,580

Corel Corporation

(11) (13) (21)

July 24, 2019

Publisher of Desktop and Cloud-based Software

Secured Debt

5.12% (L+5.00%)

7/2/2026

22,891

22,143

22,992

Darr Equipment LP

(10)

April 15, 2014

Heavy Equipment Dealer

Secured Debt

(19)

12.50% (11.50% Cash, 1.00% PIK)

6/22/2023

6,004

6,004

5,622

Warrants

(29)

915,734

12/23/2023

474

-

6,478

5,622

DTE Enterprises, LLC

(10)

April 13, 2018

Industrial Powertrain Repair and Services

Secured Debt

(9)

10.00% (L+8.50%, Floor 1.50%)

4/13/2023

9,324

9,247

8,871

Class AA Preferred

(8) (19)

10.00% PIK

1,024

1,024

19


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Member Units (non-voting)

Class A Preferred Member Units

(14) (19)

776,316

8.00% PIK

776

440

11,047

10,335

Dynamic Communities, LLC

(10)

July 17, 2018

Developer of Business Events and Online Community Groups

Secured Debt

(9) (19)

12.50% (4.75% Cash, 7.75% PIK) (L+11.50%, Floor 1.00%)

7/17/2023

5,751

5,702

5,506

Eastern Wholesale Fence LLC

(10)

November 19, 2020

Manufacturer and Distributor of Residential and Commercial Fencing Solutions

Secured Debt

(9)

7.50%, (L+6.50%, Floor 1.00%)

10/30/2025

19,961

19,630

19,850

EnCap Energy Fund Investments

(12) (13)

December 28, 2010

Investment Partnership

LP Interests (EnCap Energy Capital Fund VIII, L.P.)

(8) (31)

0.1%

3,745

1,516

LP Interests (EnCap Energy Capital Fund VIII Co-
Investors, L.P.)

(31)

0.4%

2,097

777

LP Interests (EnCap Energy Capital Fund IX, L.P.)

(8) (31)

0.1%

4,130

2,254

LP Interests (EnCap Energy Capital Fund X, L.P.)

(8) (31)

0.1%

8,862

8,571

LP Interests (EnCap Flatrock Midstream Fund II, L.P.)

(31)

0.8%

6,712

2,837

LP Interests (EnCap Flatrock Midstream Fund III, L.P.)

(8) (31)

0.2%

6,975

6,285

32,521

22,240

EPIC Y-Grade Services, LP

(11)

June 22, 2018

NGL Transportation & Storage

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

6/30/2027

6,910

6,832

5,955

20


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Flip Electronics LLC

(10)

January 4, 2021

Distributor of Hard-to-Find and Obsolete Electronic Components

Secured Debt

(9) (33)

8.99% (L+7.99%, Floor 1.00%)

1/2/2026

5,400

5,298

5,365

Fortna Acquisition Co., Inc.

(10)

July 23, 2019

Process, Physical Distribution and Logistics Consulting Services

Secured Debt

5.08% (L+5.00%)

4/8/2025

7,615

7,534

7,551

Fuse, LLC

(11)

June 30, 2019

Cable Networks Operator

Secured Debt

12.00%

6/28/2024

1,810

1,810

1,672

Common Stock

10,429

256

-

2,066

1,672

GeoStabilization International (GSI)

(11)

December 31, 2018

Geohazard Engineering Services & Maintenance

Secured Debt

5.33% (L+5.25%)

12/19/2025

11,138

11,063

11,083

GoWireless Holdings, Inc.

(11)

December 31, 2017

Provider of Wireless Telecommunications Carrier Services

Secured Debt

(9)

7.50% (L+6.50%, Floor 1.00%)

12/22/2024

18,534

18,432

18,589

Grupo Hima San Pablo, Inc.

(11)

March 7, 2013

Tertiary Care Hospitals

Secured Debt

(9) (14) (17)

9.25% (L+7.00%, Floor 1.50%)

4/30/2019

4,504

4,504

2,363

Secured Debt

(14) (17)

13.75%

10/15/2018

2,055

2,040

49

6,544

2,412

GS HVAM Intermediate, LLC

(10)

October 18, 2019

Specialized Food Distributor

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

10/2/2024

13,015

12,933

13,015

GS Operating, LLC

(10)

February 24, 2020

Distributor of Industrial and Specialty Parts

Secured Debt

(9)

8.00% (L+6.50%, Floor 1.50%)

2/24/2025

25,592

25,243

25,592

HDC/HW Intermediate Holdings

(10)

December 21, 2018

Managed Services and Hosting Provider

Secured Debt

(9)

8.50% (L+7.50%, Floor 1.00%)

12/21/2023

3,457

3,422

3,064

Heartland Dental, LLC

(10)

September 9, 2020

Dental Support Organization

Secured Debt

(9)

7.50% (L+6.50%, Floor 1.00%)

4/30/2025

14,813

14,454

14,887

HOWLCO LLC

(11) (13) (21)

August 19, 2021

Provider of Accounting and Business Development Software to Real Estate End Markets

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

10/23/2026

25,610

25,610

25,610

21


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

HW Temps LLC

July 2, 2015

Temporary Staffing Solutions

Secured Debt

8.00%

3/29/2023

7,844

7,790

7,790

Hybrid Promotions, LLC

(10)

June 30, 2021

Wholesaler of Licensed, Branded and Private Label Apparel

Secured Debt

(9)

9.25% (L+8.25%, Floor 1.00%)

6/30/2026

7,088

6,951

6,951

IG Parent Corporation

(11)

July 30, 2021

Software Engineering

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

7/30/2026

9,615

9,438

9,438

Implus Footcare, LLC

(10)

June 1, 2017

Provider of Footwear and Related Accessories

Secured Debt

(9)

8.75% (L+7.75%, Floor 1.00%)

4/30/2024

18,749

18,495

17,639

Independent Pet Partners Intermediate Holdings, LLC

(10)

November 20, 2018

Omnichannel Retailer of Specialty Pet Products

Secured Debt

(19)

6.15% PIK (L+6.00% PIK)

12/22/2022

6,563

6,563

6,563

Secured Debt

(19)

6.00% PIK

11/20/2023

17,620

16,449

16,449

Preferred Stock (non-voting)

(14) (19)

6.00% PIK

3,235

4,095

Preferred Stock (non-voting)

-

-

Member Units

1,558,333

1,558

-

27,805

27,107

Industrial Services Acquisition, LLC

(10)

June 17, 2016

Industrial Cleaning Services

Secured Debt

(9)

7.75% (L+6.75%, Floor 1.00%)

8/13/2026

19,483

19,048

19,048

Preferred Member Units

(8) (19) (30)

144

10.00% PIK

118

162

Preferred Member Units

(8) (19) (30)

80

20.00% PIK

79

97

Member Units

(30)

900

900

730

20,145

20,037

Inn of the Mountain Gods Resort and Casino

(11)

October 30, 2013

Hotel & Casino Owner & Operator

Secured Debt

9.25%

11/30/2023

6,677

6,677

6,444

Interface Security Systems, L.L.C

(10)

August 7, 2019

Commercial Security & Alarm Services

Secured Debt

(9) (19)

9.75% (8.75% Cash, 1.00% PIK) (1.00% PIK + L+7.00%, Floor 1.75%)

8/7/2023

7,313

7,234

6,306

Intermedia Holdings, Inc.

(11)

August 3, 2018

Unified Communications as a Service

22


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

7/19/2025

20,680

20,608

20,693

Invincible Boat Company, LLC.

(10)

August 28, 2019

Manufacturer of Sport Fishing Boats

Secured Debt

(9)

8.00% (L+6.50%, Floor 1.50%)

8/28/2025

17,770

17,602

17,770

INW Manufacturing, LLC

(11)

May 19, 2021

Manufacturer of Nutrition and Wellness Products

Secured Debt

(9)

6.50% (L+5.75%, Floor 0.75%)

3/25/2027

7,453

7,242

7,304

Isagenix International, LLC

(11)

June 21, 2018

Direct Marketer of Health & Wellness Products

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

6/14/2025

5,261

5,237

4,406

Jackmont Hospitality, Inc.

(10)

May 26, 2015

Franchisee of Casual Dining Restaurants

Secured Debt

(9)

7.75% (L+6.75%, Floor 1.00%)

10/14/2021

3,901

3,901

3,193

Joerns Healthcare, LLC

(11)

April 3, 2013

Manufacturer and Distributor of Health Care Equipment & Supplies

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

8/21/2024

4,016

3,966

3,748

Common Stock

472,579

4,429

855

8,395

4,603

Kemp Technologies Inc.

(10)

June 27, 2019

Provider of Application Delivery Controllers

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

3/29/2024

16,265

16,042

16,265

Common Stock

903,225

1,395

5,230

17,437

21,495

Klein Hersh, LLC

(10)

November 13, 2020

Executive and C-Suite Placement for the Life Sciences and Healthcare Industries

Secured Debt

(9)

8.25% (L+7.50%, Floor 0.75%)

11/13/2025

31,688

30,974

31,641

Kore Wireless Group Inc.

(11) (13)

December 31, 2018

Mission Critical Software Platform

Secured Debt

5.63% (L+5.50%)

12/20/2024

18,993

18,920

18,969

Larchmont Resources, LLC

(11)

August 13, 2013

Oil & Gas Exploration & Production

Secured Debt

(9) (17)

9.00% (L+8.00%, Floor 1.00%)

8/9/2021

2,180

2,180

2,071

Member Units

(30)

2,828

353

4

2,533

2,075

Laredo Energy, LLC

(10)

January 15, 2019

Oil & Gas Exploration & Production

Member Units

1,155,952

11,560

9,771

23


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Lightbox Holdings, L.P.

(11)

May 23, 2019

Provider of Commercial Real Estate Software

Secured Debt

5.13% (L+5.00%)

5/9/2026

14,663

14,491

14,589

LKCM Headwater Investments I, L.P.

(12) (13)

January 25, 2013

Investment Partnership

LP Interests

(31)

2.3%

1,746

3,302

LL Management, Inc.

(10)

May 2, 2019

Medical Transportation Service Provider

Secured Debt

(9)

8.25% (L+7.25%, Floor 1.00%)

9/25/2023

17,481

17,337

17,481

LLFlex, LLC

(10)

August 16, 2021

Provider of Metal-Based Laminates

Secured Debt

(9)

10.00% (L+9.00%, Floor 1.00%)

8/16/2026

4,500

4,401

4,401

Logix Acquisition Company, LLC

(10)

June 24, 2016

Competitive Local Exchange Carrier

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

12/22/2024

25,991

24,657

24,724

Looking Glass Investments, LLC

(12) (13)

July 1, 2015

Specialty Consumer Finance

Member Units

3

125

25

Lulu's Fashion Lounge, LLC

(10)

August 31, 2017

Fast Fashion E-Commerce Retailer

Secured Debt

(9) (19)

10.50% (8.00% Cash, 2.50% PIK) (2.50% PIK + L+7.00%, Floor 1.00%)

8/28/2022

10,687

10,593

9,138

Lynx FBO Operating LLC

(10)

September 30, 2019

Fixed Based Operator in the General Aviation Industry

Secured Debt

(9)

7.25% (L+5.75%, Floor 1.50%)

9/30/2024

13,475

13,276

13,475

Member Units

4,872

687

880

13,963

14,355

Mac Lean-Fogg Company

(10)

April 22, 2019

Manufacturer and Supplier for Auto and Power Markets

Secured Debt

(9)

5.38% (L+4.75%, Floor 0.625%)

12/22/2025

17,080

16,991

17,080

Preferred Stock

(19)

13.75% (4.50% Cash, 9.25% PIK)

1,901

1,901

18,892

18,981

Mako Steel, LP

(10)

March 15, 2021

Self-Storage Design & Construction

Secured Debt

(9)

8.00% (L+7.25%, Floor 0.75%)

3/13/2026

17,812

17,468

17,687

MB2 Dental Solutions, LLC

(11)

January 28, 2021

Dental Partnership Organization

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

1/29/2027

9,955

9,800

9,955

24


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Mills Fleet Farm Group, LLC

(10)

October 24, 2018

Omnichannel Retailer of Work, Farm and Lifestyle Merchandise

Secured Debt

(9)

7.25% (L+6.25%, Floor 1.00%)

10/24/2024

17,781

17,546

17,781

NBG Acquisition Inc

(11)

April 28, 2017

Wholesaler of Home Décor Products

Secured Debt

(9)

6.50% (L+5.50%, Floor 1.00%)

4/26/2024

4,015

3,986

3,449

NinjaTrader, LLC

(10)

December 18, 2019

Operator of Futures Trading Platform

Secured Debt

(9)

8.25% (L+6.75%, Floor 1.50%)

12/18/2024

17,625

17,344

17,600

NNE Partners, LLC

(10)

March 2, 2017

Oil & Gas Exploration & Production

Secured Debt

(19)

9.38% (4.88% Cash, 4.50% PIK) (4.50% PIK + L+4.75%)

12/31/2023

24,499

24,416

22,487

NTM Acquisition Corp.

(11)

July 12, 2016

Provider of B2B Travel Information Content

Secured Debt

(9) (19)

8.25% (7.25% Cash, 1.00% PIK) (1.00%PIK + L+6.25%, Floor 1.00%)

6/7/2024

4,622

4,622

4,576

NWN Corporation

(10)

May 7, 2021

Value Added Reseller and Provider of Managed Services to a Diverse Set of Industries

Secured Debt

(9)

7.50% (L+6.50%, Floor 1.00%)

5/7/2026

41,138

40,209

40,209

Ospemifene Royalty Sub LLC

(10)

July 8, 2013

Estrogen-Deficiency Drug Manufacturer and Distributor

Secured Debt

(14)

11.50%

11/15/2026

4,694

4,694

115

Project Eagle Holdings, LLC

(10)

July 6, 2020

Provider of Secure Business Collaboration Software

Secured Debt

(9)

7.75% (L+6.75%, Floor 1.00%)

7/6/2026

29,813

29,184

29,510

PT Network, LLC

(10)

November 1, 2013

Provider of Outpatient Physical Therapy and Sports Medicine Services

Secured Debt

(9) (19)

8.50% (6.50% Cash, 2.00% PIK) (2.00% PIK + L+5.50%, Floor 1.00%)

11/30/2023

8,668

8,668

8,668

RA Outdoors LLC

(10)

April 8, 2021

Software Solutions Provider for Outdoor Activity Management

25


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9)

7.75% (L+6.75%, Floor 1.00%)

4/8/2026

19,422

19,232

19,232

Research Now Group, Inc. and Survey Sampling International, LLC

(11)

December 31, 2017

Provider of Outsourced Online Surveying

Secured Debt

(9)

6.50% (L+5.50%, Floor 1.00%)

12/20/2024

20,176

19,816

19,989

RM Bidder, LLC

(10)

November 12, 2015

Scripted and Unscripted TV and Digital Programming Provider

Member Units

2,779

46

29

Warrants

(26)

187,161

10/20/2025

425

-

471

29

Roof Opco, LLC

(10)

August 27, 2021

Residential Re-Roofing/Repair

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

8/27/2026

2,800

2,699

2,699

RTIC Subsidiary Holdings, LLC

(10)

September 1, 2020

Direct-To-Consumer eCommerce Provider of Outdoor Products

Secured Debt

(9)

9.00% (L+7.75%, Floor 1.25%)

9/1/2025

18,303

18,098

18,302

Rug Doctor, LLC.

(10)

July 16, 2021

Carpet Cleaning Products and Machinery

Secured Debt

(9) (19)

7.25% (6.25% Cash, 1.00% PIK) (1.00% PIK + L+5.25%, Floor 1.00%)

5/16/2022

9,367

9,220

9,220

Salient Partners L.P.

(11)

June 25, 2015

Provider of Asset Management Services

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

10/30/2022

7,501

7,496

5,312

Savers, Inc.

(11)

May 14, 2021

For-Profit Thrift Retailer

Secured Debt

(9)

6.50% (L+5.75%, Floor 0.75%)

4/26/2028

12,900

12,777

13,061

Staples Canada ULC

(10) (13) (21)

September 14, 2017

Office Supplies Retailer

Secured Debt

(9) (22)

8.00% (L+7.00%, Floor 1.00%)

9/12/2024

16,764

16,674

16,230

Student Resource Center, LLC

(10)

June 25, 2021

Higher Education Services

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%)

6/25/2026

11,250

11,021

11,021

Team Public Choices, LLC

(11)

October 28, 2019

Home-Based Care Employment Service Provider

Secured Debt

(9)

6.00% (L+5.00%, Floor 1.00%)

12/18/2027

18,147

17,735

18,147

Tectonic Financial, LLC

May 15, 2017

Financial Services Organization

26


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Common Stock

(8)

200,000

2,000

4,180

Tex Tech Tennis, LLC

(10)

July 7, 2021

Sporting Goods & Textiles

Common Stock

(30)

1,000,000

1,000

1,000

Time Manufacturing Acquisition LLC

(11)

February 24, 2021

Manufacturer and Distributor of Utility Equipment

Secured Debt

(9)

6.00% (L+5.00%, Floor 1.00%)

2/3/2023

1,476

1,473

1,481

U.S. TelePacific Corp.

(11)

May 17, 2017

Provider of Communications and Managed Services

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

5/2/2023

17,088

16,966

14,247

USA DeBusk LLC

(10)

October 22, 2019

Provider of Industrial Cleaning Services

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

9/8/2026

37,281

36,474

36,974

Veregy Consolidated, Inc.

(11)

November 9, 2020

Energy Service Company

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

11/3/2027

15,893

14,753

15,972

Vida Capital, Inc

(11)

October 10, 2019

Alternative Asset Manager

Secured Debt

6.08% (L+6.00%)

10/1/2026

17,344

17,149

16,000

Vistar Media, Inc.

(10)

February 17, 2017

Operator of Digital Out-of-Home Advertising Platform

Preferred Stock

70,207

767

1,430

Wahoo Fitness Acquisition L.L.C.

(11)

August 17, 2021

Fitness Training Equipment Provider

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

8/12/2028

15,000

14,556

14,700

Wall Street Prep, Inc.

(10)

July 19, 2021

Financial Training Services

Secured Debt

(9)

8.00% (L+7.00%, Floor 1.00%)

7/19/2026

4,373

4,280

4,280

Common Stock

400,000

400

400

4,680

4,680

YS Garments, LLC

(11)

August 22, 2018

Designer and Provider of Branded Activewear

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

8/9/2024

13,034

12,961

12,578

Zilliant Incorporated

June 15, 2012

Price Optimization and Margin Management Solutions

Preferred Stock

186,777

154

260

Warrants

(28)

952,500

6/15/2022

1,071

1,290

1,225

1,550

Short-term portfolio investments

(34) (35)

34,377

34,341

27


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Subtotal Non-Control/Non-Affiliate Investments (76.9% of net assets at fair value)

$

1,338,405

$

1,295,747

Total Portfolio Investments, September 30, 2021 (185.1% of net assets at fair value)

$

2,832,562

$

3,117,104


(1)

All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds.

(2)

Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)

See Note C and Schedule 12-14 for a summary of geographic location of portfolio companies.

(4)

Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)

Control investments are defined by the 1940 Act, as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)

Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments.

(7)

Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)

Income producing through dividends or distributions.

(9)

Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company’s investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower’s option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at September 30, 2021. As noted in this schedule, 70% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.00%, with a weighted-average LIBOR floor of approximately 1.08%.

(10)

Private Loan portfolio investment. See Note C for a description of Private Loan portfolio investments.

(11)

Middle Market portfolio investment. See Note C for a description of Middle Market portfolio investments.

(12)

Other Portfolio investment. See Note C for a description of Other Portfolio investments.

(13)

Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)

Non-accrual and non-income producing investment.

(15)

All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”

(16)

External Investment Manager. Investment is not encumbered as security for the Company's Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds.

(17)

Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)

Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C for further discussion.

(19)

PIK interest income and cumulative dividend income represent income not paid currently in cash.

(20)

All portfolio company headquarters are based in the United States, unless otherwise noted.

(21)

Portfolio company headquarters are located outside of the United States.

28


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

September 30, 2021

(dollars in thousands)

(Unaudited)

(22)

In connection with the Company's debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $20.6 million Canadian Dollars and receive $16.3 million U.S. Dollars with a settlement date of September 14, 2022. The unrealized depreciation on the forward foreign currency contract is $0.1 million as of September 30, 2021.

(23)

The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.25% (Floor 1.25%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(24)

Investment date represents the date of initial investment in the portfolio company.

(25)

Warrants are presented in equivalent shares with a strike price of $10.92 per share.

(26)

Warrants are presented in equivalent units with a strike price of $14.28 per unit.

(27)

Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.

(28)

Warrants are presented in equivalent shares with a strike price of $0.001 per share.

(29)

Warrants are presented in equivalent units with a strike price of $1.50 per unit.

(30)

Shares/Units represent ownership in an underlying Real Estate or HoldCo entity.

(31)

Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.

(32)

Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investment in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investment in this portfolio company is on non-accrual status.

(33)

The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.99% (Floor 1.00%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(34)

Short-term portfolio investments. See Note C for a description of short-term portfolio investments.

(35)

Short-term portfolio investments bear interest at index based floating interest rates which range from LIBOR plus 2.75% to LIBOR plus 4.75%, with LIBOR floors which range from 0% to 0.75% (with a weighted average LIBOR floor of approximately 0.14%), and with resulting interest rates which range from of 2.83% to 4.83% as of September 30, 2021.

29


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Control Investments (5)

ASC Interests, LLC

August 1, 2013

Recreational and Educational Shooting Facility

Secured Debt

13.00%

7/31/2022

$

1,750

$

1,715

$

1,715

Member Units

1,500

1,500

1,120

3,215

2,835

Analytical Systems Keco, LLC

August 16, 2019

Manufacturer of Liquid and Gas Analyzers

Secured Debt

(9)

12.00% (L+10.00%, Floor 2.00%)

8/16/2024

5,155

4,874

4,874

Preferred Member Units

3,200

3,200

3,200

Warrants

(27)

420

8/16/2029

316

10

8,390

8,084

ATS Workholding, LLC

(10)

March 10, 2014

Manufacturer of Machine Cutting Tools and Accessories

Secured Debt

(14)

5.00%

11/16/2021

4,982

4,824

3,347

Preferred Member Units

3,725,862

3,726

-

8,550

3,347

Project BarFly, LLC

(10)

August 31, 2015

Casual Restaurant Group

Secured Debt

7.00%

10/31/2024

343

343

343

Member Units

37

1,584

1,584

1,927

1,927

Bolder Panther Group, LLC

December 31, 2020

Consumer Goods and Fuel Retailer

Secured Debt

(9)

10.50% (L+9.00%, Floor 1.50%)

12/31/2025

27,500

27,225

27,225

Class A Preferred Member Units

(30)

14.00%

10,194

10,194

Class B Preferred Member Units

(30)

140,000

8.00%

14,000

14,000

51,419

51,419

Bond-Coat, Inc.

December 28, 2012

Casing and Tubing Coating Services

Common Stock

57,508

6,350

2,040

Brewer Crane Holdings, LLC

January 9, 2018

Provider of Crane Rental and Operating Services

Secured Debt

(9)

11.00% (L+10.00%, Floor 1.00%)

1/9/2023

8,556

8,513

8,513

Preferred Member Units

(8)

2,950

4,280

5,850

12,793

14,363

Bridge Capital Solutions Corporation

April 18, 2012

Financial Services and Cash Flow Solutions Provider

Secured Debt

13.00%

12/11/2024

8,813

8,403

8,403

Warrants

(27)

82

7/25/2026

2,132

3,220

Secured Debt

(30)

13.00%

12/11/2024

1,000

998

998

30


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Preferred Member Units

(8) (30)

17,742

1,000

1,000

12,533

13,621

Café Brazil, LLC

April 20, 2004

Casual Restaurant Group

Member Units

(8)

1,233

1,742

2,030

California Splendor Holdings LLC

March 30, 2018

Processor of Frozen Fruits

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%)

3/30/2023

8,100

8,014

8,043

Secured Debt

(9)

11.00% (L+10.00%, Floor 1.00%)

3/30/2023

28,000

27,854

27,789

Preferred Member Units

(8)

6,725

8,255

8,255

Preferred Member Units

(8)

6,157

10,775

6,241

54,898

50,328

CBT Nuggets, LLC

June 1, 2006

Produces and Sells IT Training Certification Videos

Member Units

(8)

416

1,300

46,080

Centre Technologies Holdings, LLC

January 4, 2019

Provider of IT Hardware Services and Software Solutions

Secured Debt

(9)

12.00% (L+10.00%, Floor 2.00%)

1/4/2024

11,628

11,549

11,549

Preferred Member Units

12,696

5,840

6,160

17,389

17,709

Chamberlin Holding LLC

February 26, 2018

Roofing and Waterproofing Specialty Contractor

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%)

2/26/2023

15,212

15,136

15,212

Member Units

(8)

4,347

11,440

28,070

Member Units

(8) (30)

1,047,146

1,322

1,270

27,898

44,552

Charps, LLC

February 3, 2017

Pipeline Maintenance and Construction

Unsecured Debt

(19)

10.00% (8.67% Cash, 1.33% PIK)

1/31/2024

9,388

7,641

8,475

Secured Debt

15.00%

6/5/2022

669

669

669

Preferred Member Units

(8)

1,600

400

10,520

8,710

19,664

Clad-Rex Steel, LLC

December 20, 2016

Specialty Manufacturer of Vinyl-Clad Metal

Secured Debt

(9)

10.50% (L+9.50%, Floor 1.00%)

12/20/2021

10,880

10,853

10,853

Member Units

(8)

717

7,280

8,610

Secured Debt

(30)

10.00%

12/20/2036

1,111

1,100

1,100

Member Units

(30)

800

210

530

19,443

21,093

31


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

CMS Minerals Investments

January 30, 2015

Oil & Gas Exploration & Production

Member Units

(30)

100

2,179

1,624

Cody Pools, Inc.

March 6, 2020

Designer of Residential and Commercial Pools

Secured Debt

(9)

12.25% (L+10.50%, Floor 1.75%)

3/6/2025

14,216

14,092

14,216

Preferred Member Units

587

8,317

14,940

22,409

29,156

CompareNetworks Topco, LLC

January 29, 2019

Internet Publishing and Web Search Portals

Secured Debt

(9)

12.00% (L+11.00%, Floor 1.00%)

1/29/2024

7,954

7,910

7,953

Preferred Member Units

(8)

1,975

1,975

6,780

9,885

14,733

Copper Trail Fund Investments

(12) (13)

July 17, 2017

Investment Partnership

LP Interests (CTMH, LP)

(31)

38.8%

747

747

Datacom, LLC

May 30, 2014

Technology and Telecommunications Provider

Secured Debt

(14)

8.00%

5/31/2021

1,800

1,800

1,615

Secured Debt

(14) (19)

10.50% PIK

5/31/2021

12,507

12,475

10,531

Class A Preferred Member Units

-

1,294

-

Class B Preferred Member Units

6,453

6,030

-

21,599

12,146

Digital Products Holdings LLC

April 1, 2018

Designer and Distributor of Consumer Electronics

Secured Debt

(9)

11.00% (L+10.00%, Floor 1.00%)

4/1/2023

18,173

18,077

18,077

Preferred Member Units

(8)

3,857

9,501

9,835

27,578

27,912

Direct Marketing Solutions, Inc.

February 13, 2018

Provider of Omni-Channel Direct Marketing Services

Secured Debt

(9)

12.00% (L+11.00%, Floor 1.00%)

2/13/2023

15,090

15,007

15,007

Preferred Stock

8,400

8,400

19,380

23,407

34,387

Gamber-Johnson Holdings, LLC ("GJH")

June 24, 2016

Manufacturer of Ruggedized Computer Mounting Systems

Secured Debt

(9)

9.00% (L+7.00%, Floor 2.00%)

6/24/2021

19,838

19,807

19,838

Member Units

(8)

8,619

14,844

52,490

34,651

72,328

32


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Garreco, LLC

July 15, 2013

Manufacturer and Supplier of Dental Products

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%)

1/31/2021

4,519

4,519

4,519

Member Units

1,200

1,200

1,410

5,719

5,929

GRT Rubber Technologies LLC ("GRT")

December 19, 2014

Manufacturer of Engineered Rubber Products

Secured Debt

7.15% (L+7.00%)

12/31/2023

16,775

16,775

16,775

Member Units

(8)

5,879

13,065

44,900

29,840

61,675

Gulf Manufacturing, LLC

August 31, 2007

Manufacturer of Specialty Fabricated Industrial Piping Products

Member Units

(8)

438

2,980

4,510

Gulf Publishing Holdings, LLC

April 29, 2016

Energy Industry Focused Media and Publishing

Secured Debt

(9) (17) (19)

10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%)

9/30/2020

250

250

250

Secured Debt

(19)

12.50% (6.25% Cash, 6.25% PIK)

4/29/2021

13,147

13,135

12,044

Member Units

3,681

3,681

-

17,066

12,294

Harris Preston Fund Investments

(12) (13)

October 1, 2017

Investment Partnership

LP Interests (2717 MH, L.P.)

(31)

49.3%

2,599

2,702

LP Interests (2717 HPP-MS, L.P.)

(31)

49.3%

250

250

2,849

2,952

Harrison Hydra-Gen, Ltd.

June 4, 2010

Manufacturer of Hydraulic Generators

Common Stock

(8)

107,456

718

5,450

Jensen Jewelers of Idaho, LLC

November 14, 2006

Retail Jewelry Store

Secured Debt

(9)

10.00% (Prime+6.75%, Floor 2.00%)

11/14/2023

3,400

3,374

3,400

Member Units

(8)

627

811

7,620

4,185

11,020

J&J Services, Inc.

October 31, 2019

Provider of Dumpster and Portable Toilet Rental Services

Secured Debt

11.50%

10/31/2024

12,800

12,697

12,800

Preferred Stock

2,814

7,085

12,680

19,782

25,480

KBK Industries, LLC

January 23, 2006

Manufacturer of Specialty Oilfield and Industrial Products

Member Units

(8)

325

783

13,200

33


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Kickhaefer Manufacturing Company, LLC

October 31, 2018

Precision Metal Parts Manufacturing

Secured Debt

11.50%

10/31/2023

22,415

22,269

22,269

Member Units

581

12,240

12,240

Secured Debt

9.00%

10/31/2048

3,948

3,909

3,909

Member Units

(8) (30)

800

992

1,160

39,410

39,578

Market Force Information, LLC

July 28, 2017

Provider of Customer Experience Management Services

Secured Debt

(9)

12.00% (L+11.00%, Floor 1.00%)

7/28/2023

1,600

1,600

1,600

Secured Debt

(14) (19)

12.00% PIK

7/28/2023

26,079

25,952

13,562

Member Units

743,921

16,642

-

44,194

15,162

MH Corbin Holding LLC

August 31, 2015

Manufacturer and Distributor of Traffic Safety Products

Secured Debt

(19)

13.00% (10.00% Cash, 3.00% PIK)

3/31/2022

8,570

8,527

8,280

Preferred Member Units

66,000

4,400

2,370

Preferred Member Units

4,000

6,000

-

18,927

10,650

MSC Adviser I, LLC

(16)

November 22, 2013

Third Party Investment
Advisory Services

Member Units

(8) (31)

29,500

116,760

Mystic Logistics Holdings, LLC

August 18, 2014

Logistics and Distribution Services Provider for Large Volume Mailers

Secured Debt

12.00%

1/17/2022

6,733

6,723

6,723

Common Stock

(8)

5,873

2,720

8,990

9,443

15,713

NAPCO Precast, LLC

January 31, 2008

Precast Concrete Manufacturing

Member Units

(8)

2,955

2,975

16,100

Nebraska Vet AcquireCo, LLC (NVS)

December 31, 2020

Mixed-Animal Veterinary and Animal Health Product Provider

Secured Debt

12.00%

12/31/2025

10,500

10,395

10,395

Preferred Member Units

6,500

6,500

6,500

16,895

16,895

NexRev LLC

February 28, 2018

Provider of Energy Efficiency Products & Services

Secured Debt

11.00%

2/28/2023

17,097

17,016

16,726

Preferred Member Units

(8)

86,400,000

6,880

1,470

23,896

18,196

NRI Clinical Research, LLC

September 8, 2011

Clinical Research Service Provider

34


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

9.00%

6/8/2022

5,620

5,572

5,620

Warrants

(27)

251,723

6/8/2027

252

1,490

Member Units

(8)

1,454,167

765

5,600

6,589

12,710

NRP Jones, LLC

December 22, 2011

Manufacturer of Hoses, Fittings and Assemblies

Secured Debt

12.00%

3/20/2023

2,080

2,080

2,080

Member Units

(8)

65,962

3,717

2,821

5,797

4,901

NuStep, LLC

January 31, 2017

Designer, Manufacturer and Distributor of Fitness Equipment

Secured Debt

12.00%

1/31/2022

17,240

17,193

17,193

Preferred Member Units

406

10,200

10,780

27,393

27,973

OMi Holdings, Inc.

April 1, 2008

Manufacturer of Overhead Cranes

Common Stock

(8)

1,500

1,080

20,380

Pearl Meyer Topco LLC

April 27, 2020

Provider of Executive Compensation Consulting Services

Secured Debt

12.00%

4/27/2025

37,513

37,202

37,202

Member Units

(8)

13,800

13,000

15,940

50,202

53,142

Pegasus Research Group, LLC

January 6, 2011

Provider of Telemarketing and Data Services

Member Units

(8)

460

1,290

8,830

PPL RVs, Inc.

June 10, 2010

Recreational Vehicle Dealer

Secured Debt

(9)

7.50% (L+7.00%, Floor 0.50%)

11/15/2022

11,855

11,781

11,806

Common Stock

(8)

2,000

2,150

11,500

13,931

23,306

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

February 1, 2011

Noise Abatement Service Provider

Secured Debt

13.00%

4/30/2023

6,397

6,335

6,397

Preferred Member Units

(8)

19,631

4,600

10,500

Warrants

(27)

1,018

1/31/2021

1,200

870

12,135

17,767

Quality Lease Service, LLC

June 8, 2015

Provider of Rigsite Accommodation Unit Rentals and Related Services

Member Units

1,000

11,063

4,460

River Aggregates, LLC

March 30, 2011

Processor of Construction Aggregates

Member Units

(30)

1,500

369

3,240

35


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Tedder Industries, LLC

August 31, 2018

Manufacturer of Firearm Holsters and Accessories

Secured Debt

12.00%

8/31/2023

16,400

16,301

16,301

Preferred Member Units

479

8,136

8,136

24,437

24,437

Trantech Radiator Topco, LLC

May 31, 2019

Transformer Cooling Products and Services

Secured Debt

12.00%

5/31/2024

8,720

8,644

8,644

Common Stock

(8)

615

4,655

6,030

13,299

14,674

UnionRock Energy Fund II, LP

(12) (13)

June 15, 2020

Oil & Gas Exploration & Production

LP Interests

(31)

49.6%

2,894

2,894

Vision Interests, Inc.

June 5, 2007

Manufacturer / Installer of Commercial Signage

Secured Debt

(17)

13.00%

9/30/2019

2,028

2,028

2,028

Series A Preferred Stock

3,000,000

3,000

3,160

5,028

5,188

Ziegler's NYPD, LLC

October 1, 2008

Casual Restaurant Group

Secured Debt

6.50%

10/1/2022

1,000

1,000

979

Secured Debt

12.00%

10/1/2022

625

625

625

Secured Debt

14.00%

10/1/2022

2,750

2,750

2,750

Warrants

(27)

587

10/1/2025

600

-

Preferred Member Units

10,072

2,834

1,780

7,809

6,134

Subtotal Control Investments (73.5% of net assets at fair value)

$

831,490

$

1,113,725

36


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Affiliate Investments (6)

AAC Holdings, Inc.

(11)

June 30, 2017

Substance Abuse Treatment Service Provider

Secured Debt

(19)

18.00% (10.00% Cash, 8.00% PIK)

6/25/2025

9,406

9,187

9,187

Common Stock

593,928

3,148

3,148

Warrants

(27)

554,353

12/11/2025

-

2,938

12,335

15,273

AFG Capital Group, LLC

November 7, 2014

Provider of Rent-to-Own Financing Solutions and Services

Secured Debt

10.00%

5/25/2022

491

491

491

Preferred Member Units

186

1,200

5,810

1,691

6,301

American Trailer Rental Group LLC

June 7, 2017

Provider of Short-term Trailer and Container Rental

Member Units

(30)

73,493

8,596

16,010

BBB Tank Services, LLC

April 8, 2016

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

Unsecured Debt

(9)

12.00% (L+11.00%, Floor 1.00%)

4/8/2021

4,800

4,773

4,722

Preferred Stock (non-voting)

(8) (19)

15.00% PIK

151

151

Member Units

800,000

800

280

5,724

5,153

Boccella Precast Products LLC

June 30, 2017

Manufacturer of Precast Hollow Core Concrete

Member Units

(8)

2,160,000

2,256

6,040

Buca C, LLC

June 30, 2015

Casual Restaurant Group

Secured Debt

(9) (17)

10.25% (L+9.25%, Floor 1.00%)

6/30/2020

19,004

19,004

14,256

Preferred Member Units

(8) (19)

6

6.00% PIK

4,770

-

23,774

14,256

CAI Software LLC

October 10, 2014

Provider of Specialized Enterprise Resource Planning Software

Secured Debt

12.50%

12/7/2023

47,474

47,133

47,474

Member Units

(8)

77,960

2,095

7,190

49,228

54,664

Chandler Signs Holdings, LLC

(10)

January 4, 2016

Sign Manufacturer

Class A Units

1,500,000

1,500

1,460

Charlotte Russe, Inc

(11)

May 28, 2013

Fast-Fashion Retailer to Young Women

Common Stock

19,041

3,141

-

Classic H&G Holdings, LLC

March 12, 2020

Provider of Engineered Packaging Solutions

Secured Debt

12.00%

3/12/2025

24,800

24,583

24,800

Preferred Member Units

(8)

154

5,760

9,510

30,343

34,310

37


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Congruent Credit Opportunities Funds

(12) (13)

January 24, 2012

Investment Partnership

LP Interests (Congruent Credit Opportunities Fund
II, LP)

(31)

19.8%

4,449

94

LP Interests (Congruent Credit Opportunities Fund
III, LP)

(8) (31)

17.4%

11,741

11,540

16,190

11,634

Copper Trail Fund Investments

(12) (13)

July 17, 2017

Investment Partnership

LP Interests (Copper Trail Energy Fund I, LP)

(8) (31)

12.4%

2,161

1,782

Dos Rios Partners

(12) (13)

April 25, 2013

Investment Partnership

LP Interests (Dos Rios Partners, LP)

(31)

20.2%

6,605

5,417

LP Interests (Dos Rios Partners - A, LP)

(31)

6.4%

2,097

1,720

8,702

7,137

East Teak Fine Hardwoods, Inc.

April 13, 2006

Distributor of Hardwood Products

Common Stock

6,250

480

300

EIG Fund Investments

(12) (13)

November 6, 2015

Investment Partnership

LP Interests (EIG Global Private Debt Fund-A, L.P.)

(8) (31)

11.1%

739

526

Freeport Financial Funds

(12) (13)

June 13, 2013

Investment Partnership

LP Interests (Freeport Financial SBIC Fund LP)

(31)

9.3%

5,974

5,264

LP Interests (Freeport First Lien Loan Fund III LP)

(8) (31)

6.0%

10,785

10,321

16,759

15,585

Harris Preston Fund Investments

(12) (13)

August 9, 2017

Investment Partnership

LP Interests (HPEP 3, L.P.)

(31)

8.2%

3,071

3,258

Hawk Ridge Systems, LLC

(13)

December 2, 2016

Value-Added Reseller of Engineering Design and Manufacturing Solutions

Secured Debt

11.00%

12/2/2023

18,400

18,366

18,400

Preferred Member Units

(8)

226

2,850

8,030

Preferred Member Units

(30)

226

150

420

21,366

26,850

38


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Houston Plating and Coatings, LLC

January 8, 2003

Provider of Plating and Industrial Coating Services

Unsecured Convertible Debt

8.00%

5/1/2022

3,000

3,000

2,900

Member Units

(8)

322,297

2,352

5,080

5,352

7,980

I-45 SLF LLC

(12) (13)

October 20, 2015

Investment Partnership

Member Units (Fully diluted 20.0%; 24.40% profits
interest) (8)

(8) (31)

20.00% Fully Diluted, 24.40% Profits Interest

20,200

15,789

L.F. Manufacturing Holdings, LLC

(10)

December 23, 2013

Manufacturer of Fiberglass Products

Preferred Member Units (non-voting)

(8) (19)

14.00% PIK

93

93

Member Units

2,179,001

2,019

2,050

2,112

2,143

OnAsset Intelligence, Inc.

April 18, 2011

Provider of Transportation Monitoring / Tracking Products and Services

Secured Debt

(19)

12.00% PIK

6/30/2021

7,301

7,301

7,301

Unsecured Debt

(19)

10.00% PIK

6/30/2021

64

64

64

Preferred Stock

912

1,981

-

Warrants

(27)

5,333

4/18/2021

1,919

-

11,265

7,365

PCI Holding Company, Inc.

December 18, 2012

Manufacturer of Industrial Gas Generating Systems

Preferred Stock

1,500,000

3,927

4,130

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

January 8, 2013

Provider of Rigsite Accommodation Unit Rentals and Related Services

Secured Debt

(14) (32)

12.00%

1/8/2018

30,369

29,865

-

Preferred Member Units

250

2,500

-

32,365

-

Salado Stone Holdings, LLC

(10)

June 27, 2016

Limestone and Sandstone Dimension Cut Stone Mining Quarries

Class A Preferred Units

(30)

2,000,000

2,000

1,250

Slick Innovations, LLC

September 13, 2018

Text Message Marketing Platform

Secured Debt

13.00%

9/13/2023

5,720

5,605

5,719

Common Stock

70,000

700

1,330

Warrants

(27)

18,084

9/13/2028

181

360

6,486

7,409

SI East, LLC

August 31, 2018

Rigid Industrial Packaging Manufacturing

Secured Debt

9.50%

8/31/2023

32,963

32,760

32,962

Preferred Member Units

(8)

157

6,000

9,780

38,760

42,742

Superior Rigging & Erecting Co.

August 31, 2020

Provider of Steel Erection, Crane Rental & Rigging Services

Secured Debt

12.00%

8/31/2025

21,500

21,298

21,298

39


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Preferred Member Units

1,473

4,500

4,500

25,798

25,798

UniTek Global Services, Inc.

(11)

April 15, 2011

Provider of Outsourced Infrastructure Services

Secured Debt

(9)

7.50% (L+6.50% Floor 1.00%)

8/20/2024

2,708

2,687

2,426

Preferred Stock

(8) (19)

1,133,102

20.00% PIK

1,441

2,832

Preferred Stock

(8) (19)

1,521,122

20.00% PIK

2,188

375

Preferred Stock

(19)

2,281,682

19.00% PIK

3,667

-

Preferred Stock

(19)

4,336,866

13.50% PIK

7,924

-

Common Stock

945,507

-

-

17,907

5,633

Universal Wellhead Services Holdings, LLC

(10)

October 30, 2014

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

Preferred Member Units

(19) (30)

716,949

14.00% PIK

1,032

-

Member Units

(30)

4,000,000

4,000

-

5,032

-

Volusion, LLC

January 26, 2015

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

Secured Debt

(17)

11.50%

1/26/2020

20,234

20,234

19,242

Unsecured Convertible Debt

8.00%

11/16/2023

409

409

291

Preferred Member Units

4,876,670

14,000

5,990

Warrants

(27)

1,831,355

1/26/2025

2,576

-

37,219

25,523

Subtotal Affiliate Investments (24.2% of net assets at fair value)

$

416,479

$

366,301

40


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Non-Control/Non-Affiliate Investments (7)

Acousti Engineering Company of Florida, Inc.

(10)

November 2, 2020

Interior Subcontractor Providing Acoustical Walls and Ceilings

Secured Debt

(9)

10.00% (L+8.50%, Floor 1.50%)

10/31/2025

13,000

12,858

12,858

Adams Publishing Group, LLC

(10)

November 19, 2015

Local Newspaper Operator

Secured Debt

(9)

8.75% (L+7.00%, Floor 1.75%)

7/3/2023

5,863

5,745

5,813

ADS Tactical, Inc.

(10)

March 7, 2017

Value-Added Logistics and Supply Chain Provider to the Defense Industry

Secured Debt

(9)

7.00% (L+6.25%, Floor 0.75%)

7/26/2023

19,633

19,529

19,633

Aethon United BR LP

(10)

September 8, 2017

Oil & Gas Exploration & Production

Secured Debt

(9)

7.75% (L+6.75%, Floor 1.00%)

9/8/2023

9,750

9,659

9,544

Affordable Care Holding Corp.

(10)

May 9, 2019

Dental Support Organization

Secured Debt

(9)

5.75% (L+4.75%, Floor 1.00%)

10/22/2022

14,246

14,066

14,044

ALKU, LLC.

(11)

October 18, 2019

Specialty National Staffing Operator

Secured Debt

5.75% (L+5.50%)

7/29/2026

9,466

9,385

9,478

American Nuts, LLC

(10)

April 10, 2018

Roaster, Mixer and Packager of Bulk Nuts and Seeds

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%)

4/10/2023

12,130

11,954

12,111

American Teleconferencing Services, Ltd.

(11)

May 19, 2016

Provider of Audio Conferencing and Video Collaboration Solutions

Secured Debt

(9)

7.50% (L+6.50%, Floor 1.00%)

6/8/2023

17,358

16,634

8,071

APTIM Corp.

(11)

August 17, 2018

Engineering, Construction & Procurement

Secured Debt

7.75%

6/15/2025

12,452

11,063

9,734

Arcus Hunting LLC

(10)

January 6, 2015

Manufacturer of Bowhunting and Archery Products and Accessories

Secured Debt

(9)

11.00% (L+10.00%, Floor 1.00%)

3/31/2021

11,009

11,009

11,009

Arrow International, Inc

(10)

December 21, 2020

Manufacturer and Distributor of Charitable Gaming Supplies

Secured Debt

(9) (23)

9.23% (L+7.98%, Floor 1.25%)

12/21/2025

10,000

9,901

9,901

41


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

ASC Ortho Management Company, LLC

(10)

August 31, 2018

Provider of Orthopedic Services

Secured Debt

(9)

8.50% (L+7.50%, Floor 1.00%)

8/31/2023

5,206

5,148

5,149

Secured Debt

(19)

13.25% PIK

12/1/2023

2,116

2,091

2,116

7,239

7,265

ATX Networks Corp.

(11) (13) (21)

June 30, 2015

Provider of Radio Frequency Management Equipment

Secured Debt

(9) (19)

8.75% (7.25% Cash, 1.50% PIK) (1.50% PIK + L+6.25%, Floor 1.00%)

12/31/2023

13,402

13,342

12,263

Berry Aviation, Inc.

(10)

July 6, 2018

Charter Airline Services

Secured Debt

(19)

12.00% (10.50% Cash, 1.5% PIK)

1/6/2024

4,624

4,595

4,624

Preferred Member Units

(8) (19) (30)

122,416

16.00% PIK

145

145

Preferred Member Units

(19) (30)

1,548,387

8.00% PIK

1,671

904

6,411

5,673

BigName Commerce, LLC

(10)

May 11, 2017

Provider of Envelopes and Complimentary Stationery Products

Secured Debt

(9)

8.25% (L+7.25%, Floor 1.00%)

5/11/2022

2,044

2,037

2,011

Binswanger Enterprises, LLC

(10)

March 10, 2017

Glass Repair and Installation Service Provider

Secured Debt

(9)

9.50% (L+8.50%, Floor 1.00%)

3/9/2022

12,958

12,798

12,958

Member Units

1,050,000

1,050

670

13,848

13,628

BLST Operating Company, LLC.

(11)

December 19, 2013

Multi-Channel Retailer of General Merchandise

Secured Debt

(9)

10.00% (L+8.50%, Floor 1.50%)

8/28/2025

5,879

5,879

5,879

Common Stock

653

-

-

Warrants

(27)

70

8/28/2030

-

-

5,879

5,879

Brainworks Software, LLC

(10)

August 12, 2014

Advertising Sales and Newspaper Circulation Software

Secured Debt

(9) (14) (17)

12.50% (Prime+9.25%, Floor 3.25%)

7/22/2019

7,817

7,817

5,332

Brightwood Capital Fund Investments

(12) (13)

July 21, 2014

Investment Partnership

LP Interests (Brightwood Capital Fund III, LP)

(8) (31)

1.6%

10,800

8,459

LP Interests (Brightwood Capital Fund IV, LP)

(8) (31)

0.6%

5,000

4,745

15,800

13,204

42


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Cadence Aerospace LLC

(10)

November 14, 2017

Aerostructure Manufacturing

Secured Debt

(9) (19)

9.50% (4.25% Cash, 5.25% PIK) (5.25% PIK + L+3.25%, Floor 1.00%)

11/14/2023

27,703

27,484

26,359

California Pizza Kitchen, Inc.

(11)

August 29, 2016

Casual Restaurant Group

Secured Debt

(9)

11.50% (L+10.00%, Floor 1.50%)

11/23/2024

7,700

7,288

7,315

Secured Debt

(9) (19)

13.50% (1.00% Cash, 12.50% PIK) (1.00% Cash, L+11.00% PIK, Floor 1.50%)

11/23/2024

2,657

2,590

2,524

Secured Debt

(9) (19)

15.00% (1.00% Cash, 14.00% PIK) (1.00% Cash, L+12.50% PIK, Floor 1.50%)

5/23/2025

2,291

2,291

1,833

Common Stock

169,088

949

1,860

13,118

13,532

Central Security Group, Inc.

(11)

December 4, 2017

Security Alarm Monitoring Service Provider

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

10/16/2025

6,891

6,891

5,823

Common Stock

329,084

1,481

1,645

8,372

7,468

Cenveo Corporation

(11)

September 4, 2015

Provider of Digital Marketing Agency Services

Secured Debt

(9)

10.50% (L+9.50%, Floor 1.00%)

6/7/2023

5,250

5,129

4,909

Common Stock

177,130

5,309

2,613

10,438

7,522

Chisholm Energy Holdings, LLC

(10)

May 15, 2019

Oil & Gas Exploration & Production

Secured Debt

(9)

7.75% (L+6.25%, Floor 1.50%)

5/15/2026

3,571

3,498

3,274

Clarius BIGS, LLC

(10)

September 23, 2014

Prints & Advertising Film Financing

Secured Debt

(14) (17) (19)

15.00% PIK

1/5/2015

2,832

2,832

31

Clickbooth.com, LLC

(10)

December 5, 2017

Provider of Digital Advertising Performance Marketing Solutions

Secured Debt

(9)

9.50% (L+8.50%, Floor 1.00%)

1/31/2025

7,850

7,750

7,850

Construction Supply Investments, LLC

(10)

December 29, 2016

Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

Member Units

5,637

8,617

43


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Copper Trail Fund Investments

(12) (13)

July 17, 2017

Investment Partnership

LP Interests (CTEF I, LP)

375

-

67

Corel Corporation

(11) (13) (21)

July 24, 2019

Publisher of Desktop and Cloud-based Software

Secured Debt

5.23% (L+5.00%)

7/2/2026

19,403

18,580

19,124

Darr Equipment LP

(10)

April 15, 2014

Heavy Equipment Dealer

Secured Debt

(19)

12.50% (11.50% Cash, 1.00% PIK)

6/22/2023

5,959

5,959

5,959

Warrants

(29)

915,734

12/23/2023

474

-

6,433

5,959

Digital River, Inc.

(11)

February 24, 2015

Provider of Outsourced e-Commerce Solutions and Services

Secured Debt

(9)

8.00% (L+7.00%, Floor 1.00%)

2/12/2023

13,628

13,422

13,560

DTE Enterprises, LLC

(10)

April 13, 2018

Industrial Powertrain Repair and Services

Secured Debt

(9)

10.00% (L+8.50%, Floor 1.50%)

4/13/2023

9,324

9,213

9,004

Class AA Preferred Member Units (non-voting)

(8) (19)

10.00% PIK

951

951

Class A Preferred Member Units

776,316

776

880

10,940

10,835

Dynamic Communities, LLC

(10)

July 17, 2018

Developer of Business Events and Online Community Groups

Secured Debt

(9) (19)

12.50% (6.25% Cash, 6.25% PIK) (L+11.50%, Floor 1.00%)

7/17/2023

5,320

5,256

4,921

Eastern Wholesale Fence LLC

(10)

November 19, 2020

Manufacturer and Distributor of Residential and Commercial Fencing Solutions

Secured Debt

(9)

7.50%, (L+6.50%, Floor 1.00%)

10/30/2025

11,857

11,523

11,523

Echo US Holdings, LLC.

(10)

November 12, 2019

Developer and Manufacturer of PVC and Polypropylene Materials

Secured Debt

(9)

7.88% (L+6.25%, Floor 1.63%)

10/25/2024

22,190

22,090

22,190

Electronic Transaction Consultants, LLC

(10)

July 24, 2020

Technology Service Provider for Toll Road and Infrastructure Operators

Secured Debt

(9)

8.50% (L+7.50%, Floor 1.00%)

7/24/2025

10,000

9,829

9,829

44


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

EnCap Energy Fund Investments

(12) (13)

December 28, 2010

Investment Partnership

LP Interests (EnCap Energy Capital Fund VIII, L.P.)

(31)

0.1%

3,813

959

LP Interests (EnCap Energy Capital Fund VIII Co-
Investors, L.P.)

(31)

0.4%

2,097

465

LP Interests (EnCap Energy Capital Fund IX, L.P.)

(8) (31)

0.1%

4,366

1,291

LP Interests (EnCap Energy Capital Fund X, L.P.)

(8) (31)

0.1%

8,720

6,426

LP Interests (EnCap Flatrock Midstream Fund II, L.P.)

(8) (31)

0.8%

6,706

2,546

LP Interests (EnCap Flatrock Midstream Fund III, L.P.)

(8) (31)

0.2%

6,982

5,793

32,684

17,480

Encino Acquisition Partners Holdings, Inc.

(11)

November 16, 2018

Oil & Gas Exploration & Production

Secured Debt

(9)

7.75% (L+6.75%, Floor 1.00%)

10/29/2025

9,000

8,932

8,297

EPIC Y-Grade Services, LP

(11)

June 22, 2018

NGL Transportation & Storage

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

6/30/2027

6,944

6,854

5,799

Fortna, Inc.

(10)

July 23, 2019

Process, Physical Distribution and Logistics Consulting Services

Secured Debt

5.15% (L+5.00%)

4/8/2025

7,673

7,553

7,486

Fuse, LLC

(11)

June 30, 2019

Cable Networks Operator

Secured Debt

12.00%

6/28/2024

1,810

1,810

1,472

Common Stock

10,429

256

-

2,066

1,472

GeoStabilization International (GSI)

(11)

December 31, 2018

Geohazard Engineering Services & Maintenance

Secured Debt

5.40% (L+5.25%)

12/19/2025

11,224

11,137

11,196

GoWireless Holdings, Inc.

(11)

December 31, 2017

Provider of Wireless Telecommunications Carrier Services

Secured Debt

(9)

7.50% (L+6.50%, Floor 1.00%)

12/22/2024

17,113

16,988

16,976

45


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Grupo Hima San Pablo, Inc.

(11)

March 7, 2013

Tertiary Care Hospitals

Secured Debt

(9) (17)

9.25% (L+7.00%, Floor 1.50%)

4/30/2019

4,504

4,504

3,375

Secured Debt

(17)

13.75%

10/15/2018

2,055

2,040

49

6,544

3,424

GS HVAM Intermediate, LLC

(10)

October 18, 2019

Specialized Food Distributor

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

10/2/2024

11,053

10,952

11,007

Gexpro Services

(10)

February 24, 2020

Distributor of Industrial and Specialty Parts

Secured Debt

(9)

8.00% (L+6.50%, Floor 1.50%)

2/24/2025

29,180

28,692

28,953

HDC/HW Intermediate Holdings

(10)

December 21, 2018

Managed Services and Hosting Provider

Secured Debt

(9)

8.50% (L+7.50%, Floor 1.00%)

12/21/2023

3,474

3,429

3,351

Heartland Dental, LLC

(10)

September 9, 2020

Dental Support Organization

Secured Debt

(9)

7.50% (L+6.50%, Floor 1.00%)

4/30/2025

14,925

14,501

14,501

Hunter Defense Technologies, Inc.

(10)

March 29, 2018

Provider of Military and Commercial Shelters and Systems

Secured Debt

(9)

8.00% (L+7.00%, Floor 1.00%)

3/29/2023

35,246

34,820

35,246

HW Temps LLC

July 2, 2015

Temporary Staffing Solutions

Secured Debt

12.00%

3/29/2023

9,801

9,698

8,994

Hyperion Materials & Technologies, Inc.

(11) (13)

September 12, 2019

Manufacturer of Cutting and Machine Tools & Specialty Polishing Compounds

Secured Debt

(9)

6.50% (L+5.50%, Floor 1.00%)

8/28/2026

22,275

21,894

20,813

Ian, Evan & Alexander Corporation (EverWatch)

(10)

July 31, 2020

Cybersecurity, Software and Data Analytics provider to the Intelligence Community

Secured Debt

(9)

9.50% (L+8.50%, Floor 1.00%)

7/31/2025

16,529

16,158

16,158

Implus Footcare, LLC

(10)

June 1, 2017

Provider of Footwear and Related Accessories

Secured Debt

(9)

8.75% (L+7.75%, Floor 1.00%)

4/30/2024

18,890

18,566

17,172

Independent Pet Partners Intermediate Holdings, LLC

(10)

November 20, 2018

Omnichannel Retailer of Specialty Pet Products

Secured Debt

(19)

6.31% PIK (L+6.00% PIK)

12/22/2022

6,111

6,111

6,111

Secured Debt

(19)

6.00% PIK

11/20/2023

16,670

15,086

15,086

Preferred Stock (non-voting)

3,235

3,235

46


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Preferred Stock (non-voting)

-

-

Member Units

1,558,333

1,558

-

25,990

24,432

Industrial Services Acquisition, LLC

(10)

June 17, 2016

Industrial Cleaning Services

Unsecured Debt

(19)

13.00% (6.00% Cash, 7.00% PIK)

12/17/2022

5,624

5,579

5,624

Preferred Member Units

(8) (19) (30)

144

10.00% PIK

112

112

Preferred Member Units

(8) (19) (30)

80

20.00% PIK

71

71

Member Units

(30)

900

900

530

6,662

6,337

Inn of the Mountain Gods Resort and Casino

(11)

October 30, 2013

Hotel & Casino Owner & Operator

Secured Debt

9.25%

11/30/2023

6,677

6,677

6,677

Interface Security Systems, L.L.C

(10)

August 7, 2019

Commercial Security & Alarm Services

Secured Debt

(9) (19)

11.75% (8.75% Cash, 3.00% PIK) (3.00% PIK + L+7.00%, Floor 1.75%)

8/7/2023

7,245

7,145

7,245

Intermedia Holdings, Inc.

(11)

August 3, 2018

Unified Communications as a Service

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

7/19/2025

20,839

20,755

20,823

Invincible Boat Company, LLC.

(10)

August 28, 2019

Manufacturer of Sport Fishing Boats

Secured Debt

(9)

8.00% (L+6.50%, Floor 1.50%)

8/28/2025

8,876

8,793

8,876

Isagenix International, LLC

(11)

June 21, 2018

Direct Marketer of Health & Wellness Products

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

6/14/2025

5,572

5,541

3,130

Jackmont Hospitality, Inc.

(10)

May 26, 2015

Franchisee of Casual Dining Restaurants

Secured Debt

(9)

7.75% (L+6.75%, Floor 1.00%)

5/26/2021

3,954

3,953

3,157

Joerns Healthcare, LLC

(11)

April 3, 2013

Manufacturer and Distributor of Health Care Equipment & Supplies

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

8/21/2024

4,016

3,955

4,016

Common Stock

472,579

4,429

2,795

8,384

6,811

Kemp Technologies Inc.

(10)

June 27, 2019

Provider of Application Delivery Controllers

Secured Debt

(9)

7.50% (L+6.50%, Floor 1.00%)

3/29/2024

17,387

17,088

17,387

Common Stock

1,000,000

1,550

1,550

18,638

18,937

47


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Klein Hersh, LLC

(10)

November 13, 2020

Executive and C-Suite Placement for the Life Sciences and Healthcare Industries

Secured Debt

(9)

8.75% (L+8.00%, Floor 0.75%)

11/13/2025

35,000

34,098

34,098

Kore Wireless Group Inc.

(11)

December 31, 2018

Mission Critical Software Platform

Secured Debt

5.75% (L+5.50%)

12/20/2024

19,090

19,003

18,828

Larchmont Resources, LLC

(11)

August 13, 2013

Oil & Gas Exploration & Production

Secured Debt

(9) (19)

11.00% PIK (L+10.00% PIK, Floor 1.00%)

8/9/2021

2,185

2,185

983

Member Units

(30)

2,828

353

113

2,538

1,096

Laredo Energy, LLC

(10)

January 15, 2019

Oil & Gas Exploration & Production

Member Units

1,155,952

11,560

10,238

Lightbox Holdings, L.P.

(11)

May 23, 2019

Provider of Commercial Real Estate Software

Secured Debt

5.15% (L+5.00%)

5/9/2026

14,813

14,623

14,368

LKCM Headwater Investments I, L.P.

(12) (13)

January 25, 2013

Investment Partnership

LP Interests

(31)

2.3%

1,746

3,524

LL Management, Inc.

(10)

May 2, 2019

Medical Transportation Service Provider

Secured Debt

(9)

8.25% (L+7.25%, Floor 1.00%)

9/25/2023

16,504

16,337

16,504

Logix Acquisition Company, LLC

(10)

June 24, 2016

Competitive Local Exchange Carrier

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

12/22/2024

26,131

24,550

24,171

Looking Glass Investments, LLC

(12) (13)

July 1, 2015

Specialty Consumer
Finance

Member Units

3

125

25

LSF9 Atlantis Holdings, LLC

(11)

May 17, 2017

Provider of Wireless Telecommunications Carrier Services

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

5/1/2023

9,206

9,206

9,177

Lulu's Fashion Lounge, LLC

(10)

August 31, 2017

Fast Fashion E-Commerce Retailer

Secured Debt

(9) (19)

10.50% (8.00% Cash, 2.50% PIK) (2.50% PIK + L+7.00%, Floor 1.00%)

8/28/2022

11,152

10,983

9,535

Lynx FBO Operating LLC

(10)

September 30, 2019

Fixed Based Operator in the General Aviation Industry

Secured Debt

(9)

7.25% (L+5.75%, Floor 1.50%)

9/30/2024

13,613

13,369

13,521

48


Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Member Units

4,872

687

780

14,056

14,301

Mac Lean-Fogg Company

(10)

April 22, 2019

Manufacturer and Supplier for Auto and Power Markets

Secured Debt

(9)

5.63% (L+5.00%, Floor 0.625%)

12/22/2025

17,251

17,149

17,251

Preferred Stock

(8) (19)

13.75% (4.50% Cash, 9.25% PIK)

1,870

1,870

1,841

19,019

19,092

MHVC Acquisition Corp.

(11)

May 8, 2017

Provider of Differentiated Information Solutions, Systems Engineering, and Analytics

Secured Debt

(9)

6.25% (L+5.25%, Floor 1.00%)

4/29/2024

19,797

19,716

19,846

Mills Fleet Farm Group, LLC

(10)

October 24, 2018

Omnichannel Retailer of Work, Farm and Lifestyle Merchandise

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

10/24/2024

13,860

13,595

13,609

NBG Acquisition Inc

(11)

April 28, 2017

Wholesaler of Home Décor Products

Secured Debt

(9)

6.50% (L+5.50%, Floor 1.00%)

4/26/2024

4,070

4,034

3,399

NinjaTrader, LLC

(10)

December 18, 2019

Operator of Futures Trading Platform

Secured Debt

(9)

8.25% (L+6.75%, Floor 1.50%)

12/18/2024

16,875

16,543

16,849

NNE Partners, LLC

(10)

March 2, 2017

Oil & Gas Exploration & Production

Secured Debt

(19)

9.48% (4.75% Cash, 4.50% PIK) (4.50% PIK + L+4.75%)

12/31/2023

23,683

23,572

21,025

Project Eagle Holdings, LLC

(10)

July 6, 2020

Provider of Secure Business Collaboration Software

Secured Debt

(9)

9.25% (L+8.25%, Floor 1.00%)

7/6/2026

14,963

14,583

14,583

Novetta Solutions, LLC

(11)

June 21, 2017

Provider of Advanced Analytics Solutions for Defense Agencies

Secured Debt

(9)

6.00% (L+5.00%, Floor 1.00%)

10/17/2022

22,912

22,629

22,864

NTM Acquisition Corp.

(11)

July 12, 2016

Provider of B2B Travel Information Content

Secured Debt

(9) (19)

8.25% (7.25% Cash, 1.00% PIK) (1.00%PIK + L+6.25%, Floor 1.00%)

6/7/2024

4,694

4,694

4,224

Ospemifene Royalty Sub LLC (QuatRx)

(10)

July 8, 2013

Estrogen-Deficiency Drug Manufacturer and Distributor

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(14)

11.50%

11/15/2026

4,765

4,765

121

PaySimple, Inc.

(10)

September 9, 2019

Leading Technology Services Commerce Platform

Secured Debt

5.65% (L+5.50%)

8/23/2025

24,448

24,225

23,959

PricewaterhouseCoopers Public Sector LLP

(11)

May 24, 2018

Provider of Consulting Services to Governments

Secured Debt

8.15% (L+8.00%)

5/1/2026

9,000

8,969

9,000

PT Network, LLC

(10)

November 1, 2013

Provider of Outpatient Physical Therapy and Sports Medicine Services

Secured Debt

(9) (19)

8.73% (6.73% Cash, 2.00% PIK) (2.00% PIK + L+5.50%, Floor 1.00%)

11/30/2023

8,601

8,601

8,601

Research Now Group, Inc. and Survey Sampling International, LLC

(11)

December 31, 2017

Provider of Outsourced Online Surveying

Secured Debt

(9)

6.50% (L+5.50%, Floor 1.00%)

12/20/2024

17,930

17,497

17,715

RM Bidder, LLC

(10)

November 12, 2015

Scripted and Unscripted TV and Digital Programming Provider

Warrants

(26)

187,161

10/20/2025

425

-

Member Units

2,779

46

26

471

26

RTIC Subsidiary Holdings, LLC

(10)

September 1, 2020

Direct-To-Consumer eCommerce Provider of Outdoor Products

Secured Debt

(9)

9.00% (L+7.75%, Floor 1.25%)

9/1/2025

17,260

17,026

17,026

SAFETY Investment Holdings, LLC

April 29, 2016

Provider of Intelligent Driver Record Monitoring Software and Services

Member Units

2,000,000

2,000

2,350

Salient Partners L.P.

(11)

June 25, 2015

Provider of Asset Management Services

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

8/31/2021

6,450

6,443

4,542

Staples Canada ULC

(10) (13) (21)

September 14, 2017

Office Supplies Retailer

Secured Debt

(9) (22)

8.00% (L+7.00%, Floor 1.00%)

9/12/2024

13,032

12,896

12,382

TEAM Public Choices, LLC

(10)

October 28, 2019

Home-Based Care Employment Service Provider

Secured Debt

(9)

6.00% (L+5.00%, Floor 1.00%)

12/18/2027

12,500

12,126

12,406

Tectonic Financial, Inc.

May 15, 2017

Financial Services Organization

Common Stock

200,000

2,000

2,800

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

Portfolio Company (1) (20)

Investment Date (24)

Business Description

Type of Investment (2) (3) (15)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

TGP Holdings III LLC

(11)

September 30, 2017

Outdoor Cooking & Accessories

Secured Debt

(9)

9.50% (L+8.50%, Floor 1.00%)

9/25/2025

5,500

5,448

5,307

The Pasha Group

(11)

February 2, 2018

Diversified Logistics and Transportation Provided

Secured Debt

(9)

9.00% (L+8.00%, Floor 1.00%)

1/26/2023

10,162

9,585

9,323

USA DeBusk LLC

(10)

October 22, 2019

Provider of Industrial Cleaning Services

Secured Debt

(9)

6.75% (L+5.75%, Floor 1.00%)

10/22/2024

24,948

24,561

24,591

U.S. TelePacific Corp.

(11)

September 14, 2016

Provider of Communications and Managed Services

Secured Debt

(9)

6.50% (L+5.50%, Floor 1.00%)

5/2/2023

17,088

16,913

15,486

Veregy Consolidated, Inc.

(11)

November 9, 2020

Energy Service Company

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

11/3/2027

15,000

14,587

14,888

Vida Capital, Inc

(11)

October 10, 2019

Alternative Asset Manager

Secured Debt

6.15% (L+6.00%)

10/1/2026

17,853

17,626

17,272

Vistar Media, Inc.

(10)

February 17, 2017

Operator of Digital Out-of-Home Advertising Platform

Secured Debt

(9) (19)

12.00% (8.50% Cash, 3.50% PIK) (3.50% PIK + L+7.50%, Floor 1.00%)

4/3/2023

4,636

4,513

4,636

Preferred Stock

70,207

767

910

Warrants

(25)

69,675

4/3/2029

-

920

5,280

6,466

YS Garments, LLC

(11)

August 22, 2018

Designer and Provider of Branded Activewear

Secured Debt

(9)

7.00% (L+6.00%, Floor 1.00%)

8/9/2024

13,997

13,902

12,911

Zilliant Incorporated

June 15, 2012

Price Optimization and Margin Management Solutions

Preferred Stock

186,777

154

260

Warrants

(28)

952,500

6/15/2022

1,071

1,190

1,225

1,450

Subtotal Non-Control/Non-Affiliate Investments (79.5% of net assets at fair value)

1,268,740

1,204,840

Total Portfolio Investments, December 31, 2020 (177.2% of net assets at fair value)

$

2,516,709

$

2,684,866


(1)

All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

(2)

Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)

See Note C and Schedule 12-14 for a summary of geographic location of portfolio companies.

(4)

Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)

Control investments are defined by the 1940 Act, as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)

Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments.

(7)

Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)

Income producing through dividends or distributions.

(9)

Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company’s investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower’s option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at December 31, 2020. As noted in this schedule, 61% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.00%, with a weighted-average LIBOR floor of approximately 1.11%.

(10)

Private Loan portfolio investment. See Note C for a description of Private Loan portfolio investments.

(11)

Middle Market portfolio investment. See Note C for a description of Middle Market portfolio investments.

(12)

Other Portfolio investment. See Note C for a description of Other Portfolio investments.

(13)

Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)

Non-accrual and non-income producing investment.

(15)

All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”

(16)

External Investment Manager. Investment is not encumbered as security for the Company's Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds.

(17)

Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)

Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C for further discussion.

(19)

PIK interest income and cumulative dividend income represent income not paid currently in cash.

(20)

All portfolio company headquarters are based in the United States, unless otherwise noted.

(21)

Portfolio company headquarters are located outside of the United States.

(22)

In connection with the Company's debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $15.8 million Canadian Dollars and receive $12.0 million U.S. Dollars with a settlement date of September 14, 2021. The unrealized appreciation on the forward foreign currency contract is $0.4 million as of December 31, 2020.

(23)

The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.25% (Floor 1.25%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(24)

Investment date represents the date of initial investment in the portfolio company.

(25)

Warrants are presented in equivalent shares with a strike price of $10.92 per share.

(26)

Warrants are presented in equivalent units with a strike price of $14.28 per unit.

(27)

Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.

(28)

Warrants are presented in equivalent shares with a strike price of $0.001 per share.

(29)

Warrants are presented in equivalent units with a strike price of $1.50 per unit.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

(30)

Shares/Units represent ownership in an underlying Real Estate or HoldCo entity.

(31)

Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.

(32)

Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investment in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investment in this portfolio company is on non-accrual status.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

NOTE A—ORGANIZATION AND BASIS OF PRESENTATION

1.           Organization

Main Street Capital Corporation (“MSCC”) is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market (“LMM”) companies and debt capital to middle market (“Middle Market”) companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

MSCC was formed in March 2007 to operate as an internally managed business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP (“MSMF”) and Main Street Capital III, LP (“MSC III” and, together with MSMF, the “Funds”), and each of their general partners. The Funds are each licensed as a Small Business Investment Company (“SBIC”) by the United States Small Business Administration (“SBA”). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

MSC Adviser I, LLC (the “External Investment Manager”) was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies (“External Parties”) and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission (“SEC”) to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial statements.

MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the “Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes.

Unless otherwise noted or the context otherwise indicates, the terms “we,” “us,” “our,” the “Company” and “Main Street” refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

2.           Basis of Presentation

Main Street’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company is an investment company following accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies (“ASC 946”). For each of the periods presented

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herein, Main Street’s consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of Main Street’s investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan (as defined in Note C) investments, Other Portfolio (as defined in Note C) investments and the investment in the External Investment Manager (see “Note C—Fair Value Hierarchy for Investments and Debentures—Portfolio Composition—Investment Portfolio Composition” for additional discussion of Main Street’s Investment Portfolio). Main Street’s results of operations for the three and nine months ended September 30, 2021 and 2020, cash flows for the nine months ended September 30, 2021 and 2020, and financial position as of September 30, 2021 and December 31, 2020, are presented on a consolidated basis. The effects of all intercompany transactions between Main Street and its consolidated subsidiaries have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements of Main Street are presented in conformity with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. The unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020. In the opinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. The results of operations for the three and nine months ended September 30, 2021 and 2020 are not necessarily indicative of the operating results to be expected for the full year. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

Principles of Consolidation

Under ASC 946, Main Street is precluded from consolidating other entities in which Main Street has equity investments, including those in which it has a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if Main Street holds a controlling interest in an operating company that provides all or substantially all of its services directly to Main Street or to its portfolio companies. Accordingly, as noted above, MSCC’s consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. Main Street has determined that none of its portfolio investments qualify for this exception, including the investment in the External Investment Manager. Therefore, Main Street’s Investment Portfolio is carried on the consolidated balance sheet at fair value, as discussed further in Note B.1., with any adjustments to fair value recognized as “Net Unrealized Appreciation (Depreciation)” on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a “Net Realized Gain (Loss).”

Portfolio Investment Classification

Main Street classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) “Control Investments” are defined as investments in which Main Street owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) “Affiliate Investments” are defined as investments in which Main Street owns between 5% and 25% (inclusive) of the voting securities and does not have rights to maintain greater than 50% of the board representation, and (c) “Non-Control/Non-Affiliate Investments” are defined as investments that are neither Control Investments nor Affiliate Investments. For purposes of determining the classification of its Investment Portfolio, Main Street has excluded consideration of any voting securities or board appointment rights held by third-party investment funds advised by the External Investment Manager.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.           Valuation of the Investment Portfolio

Main Street accounts for its Investment Portfolio at fair value. As a result, Main Street follows the provisions of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires Main Street to assume that the

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portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

Main Street’s portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by privately held, LMM companies and more liquid debt securities issued by Middle Market companies that are generally larger in size than the LMM companies. Main Street categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities in privately held companies that have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as “club deals.” Private Loan investments are typically similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street’s portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Middle Market portfolio investments or Private Loan portfolio investments, including investments which may be managed by third parties. Main Street’s portfolio may also include short-term portfolio investments that are atypical of Main Street’s LMM, Middle Market and Private Loan portfolio investments in that they are intended to be a short-term deployment of capital and are more liquid than investments within the other portfolios. Main Street’s portfolio investments may be subject to restrictions on resale.

LMM investments and Other Portfolio investments generally have no established trading market while Middle Market and short-term portfolio investments generally have established markets that are not active. Private Loan investments may include investments which have no established trading market or have established markets that are not active. Main Street determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by its Board of Directors and in accordance with the 1940 Act. Main Street’s valuation policies and processes are intended to provide a consistent basis for determining the fair value of Main Street’s Investment Portfolio.

For LMM portfolio investments, Main Street generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology (“Waterfall”) for its LMM equity investments and an income approach using a yield-to-maturity model (“Yield-to-Maturity”) for its LMM debt investments. For Middle Market and short-term portfolio investments, Main Street primarily uses quoted prices in the valuation process. Main Street determines the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Middle Market and Private Loan portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, Main Street generally calculates the fair value of the investment primarily based on the net asset value (“NAV”) of the fund and adjusts the fair value for other factors deemed relevant that would affect the fair value of the investment. All of the valuation approaches for Main Street’s portfolio investments estimate the value of the investment as if Main Street were to sell, or exit, the investment as of the measurement date.

These valuation approaches consider the value associated with Main Street’s ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, “control” portfolio investments are composed of debt and equity securities in companies for which Main Street has a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. For valuation purposes, “non-control” portfolio investments are generally composed of debt and equity securities in companies for which Main Street does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors.

Under the Waterfall valuation method, Main Street estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then performs a waterfall calculation by allocating the enterprise value over the portfolio company’s securities in order of

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their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, privately held companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, Main Street analyzes various factors including the portfolio company’s historical and projected financial results. Due to SEC deadlines for Main Street’s quarterly and annual financial reporting, the operating results of a portfolio company used in the current period valuation are generally the results from the period ended three months prior to such valuation date and may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment in determining. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, Main Street also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, Main Street allocates the enterprise value to investments in order of the legal priority of the various components of the portfolio company’s capital structure. In applying the Waterfall valuation method, Main Street assumes the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which Main Street believes is consistent with its past transaction history and standard industry practices.

Under the Yield-to-Maturity valuation method, Main Street also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of the portfolio company. Main Street’s estimate of the expected repayment date of its debt securities is generally the maturity date of the instrument, as Main Street generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance, changes in market based interest rates and other factors. Main Street will generally use the value determined by the Yield-to-Maturity analysis as the fair value for that security; however, because of Main Street’s general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions that Main Street uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, Main Street may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.

Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, Main Street measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date and adjusts the investment’s fair value for factors known to Main Street that would affect that fund’s NAV, including, but not limited to, fair values for individual investments held by the fund if Main Street holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the investment, Main Street considers whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of Main Street’s investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market participants, or other uncertainties surrounding Main Street’s ability to realize the full NAV of its interests in the investment fund.

Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the Company’s determinations of the fair value of its LMM portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street’s investments in each LMM portfolio company at least once every calendar year, and for Main Street’s investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more

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LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street’s investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at Main Street’s determination of fair value on its investments in a total of 43 LMM portfolio companies for the nine months ended September 30, 2021, representing approximately 70% of the total LMM portfolio at fair value as of September 30, 2021, and on a total of 40 LMM portfolio companies for the nine months ended September 30, 2020, representing approximately 64% of the total LMM portfolio at fair value as of September 30, 2020. Excluding its investments in LMM portfolio companies that, as of September 30, 2021 and 2020, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment or whose primary purpose is to own real estate for which a third-party appraisal is obtained on at least an annual basis, the percentage of the LMM portfolio reviewed and certified by Main Street’s independent financial advisory services firm for the nine months ended September 30, 2021 and 2020 was 74% and 69% of the total LMM portfolio at fair value as of September 30, 2021 and 2020, respectively.

For valuation purposes, all of Main Street’s Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. Because the vast majority of the Middle Market portfolio investments are typically valued using third-party quotes or other independent pricing services (including 91% and 90% of the Middle Market portfolio investments as of September 30, 2021 and December 31, 2020, respectively), Main Street has not consulted with or received an assurance certification from its independent financial advisory services firm in connection with determining the fair value of its Middle Market investments.

For valuation purposes, all of Main Street’s Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.

In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations and an assurance certification regarding the Company’s determinations of the fair value of its Private Loan portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street’s investments in each Private Loan portfolio company at least once every calendar year, and for Main Street’s investments in new Private Loan portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street’s investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at its determination of fair value on its investments in a total of 31 Private Loan portfolio companies for the nine months ended September 30, 2021, representing approximately 57% of the total Private Loan portfolio at fair value as of September 30, 2021, and on a total of 31 Private Loan portfolio companies for the nine months ended September 30, 2020, representing approximately 53% of the total Private Loan portfolio at fair value as of September 30, 2020. Excluding its investments in Private Loan portfolio companies that, as of September 30, 2021 and 2020, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment and its investments in Private Loan portfolio companies that were not reviewed because the investment is valued based upon third-party quotes or other independent pricing, the percentage of the Private Loan portfolio reviewed and certified by Main Street’s independent financial advisory services firm for the nine months ended

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September 30, 2021 and 2020 was 75% and 71% of the total Private Loan portfolio at fair value as of September 30, 2021 and 2020, respectively.

For valuation purposes, all of Main Street’s short-term portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. Because all of the short-term portfolio investments are typically valued using third-party quotes or other independent pricing services, Main Street generally does not consult with any financial advisory services firms in connection with determining the fair value of its short-term portfolio investments.

For valuation purposes, all of Main Street’s Other Portfolio investments are non-control investments. Main Street’s Other Portfolio investments comprised 6.2% and 3.6% of Main Street’s Investment Portfolio at fair value as of September 30, 2021 and December 31, 2020, respectively. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street generally determines the fair value of these investments using the NAV valuation method.

For valuation purposes, Main Street’s investment in the External Investment Manager is a control investment. Market quotations are not readily available for this investment, and as a result, Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach. In estimating the enterprise value, Main Street analyzes various factors, including the entity’s historical and projected financial results, as well as its size, marketability and performance relative to the population of market comparables. This valuation approach estimates the value of the investment as if Main Street were to sell, or exit, the investment. In addition, Main Street considers its ability to control the capital structure of the company, as well as the timing of a potential exit, in connection with determining the fair value of the External Investment Manager.

Due to the inherent uncertainty in the valuation process, Main Street’s determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. Main Street determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.

Main Street uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its LMM portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM portfolio company and the investments held therein.

The SEC recently adopted new Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. Main Street’s Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of its executive officers to serve as the Board’s valuation designee. Main Street adopted the Valuation Procedures effective April 1, 2021. Main Street believes its Investment Portfolio as of September 30, 2021 and December 31, 2020 approximates fair value as of those dates based on the markets in which it operates and other conditions in existence on those reporting dates.

2.           Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1., the consolidated financial statements include investments in the Investment Portfolio whose values have been estimated by Main Street, pursuant to valuation policies and procedures approved and overseen by Main Street’s Board of Directors, in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ materially from the values that would have been determined had a ready market for the securities existed.

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The COVID-19 pandemic, and the related effect on the U.S. and global economies, has impacted, and threatens to continue to impact, the businesses and operating results of certain of Main Street’s portfolio companies, as well as market interest rate spreads. As a result of these and other current effects of the COVID-19 pandemic, as well as the uncertainty regarding the extent and duration of its impact, the valuation of Main Street’s Investment Portfolio has been experiencing increased volatility since the beginning of the COVID-19 pandemic.

3.           Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.

At September 30, 2021, cash balances totaling $56.8 million exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company’s cash deposits are held at large established high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote.

4.            Interest, Dividend and Fee Income

Main Street records interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with Main Street’s valuation policies, Main Street evaluates accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if Main Street otherwise does not expect the debtor to be able to service all of its debt or other obligations, Main Street will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt or other obligations, or if a loan or debt security is sold or written off, Main Street removes it from non-accrual status.

As of September 30, 2021, Main Street’s total Investment Portfolio had eight investments on non-accrual status, which comprised approximately 0.9% of its fair value and 3.5% of its cost. As of December 31, 2020, Main Street’s total Investment Portfolio had seven investments on non-accrual status, which comprised approximately 1.3% of its fair value and 3.6% of its cost.

Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-in-kind (“PIK”) interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the PIK interest and cumulative dividends in cash. For the three months ended September 30, 2021 and 2020, (i) approximately 2.1% and 3.7%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 0.6% and 0.7%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash. For the nine months ended September 30, 2021 and 2020, (i) approximately 3.0% and 3.0%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 0.6% and 0.6%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash. Main Street stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible.

Main Street may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.

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A presentation of total investment income Main Street received from its Investment Portfolio in each of the periods presented is as follows:

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2021

    

2020

    

2021

    

2020

(dollars in thousands)

Interest, fee and dividend income:

Interest income

$

50,468

$

42,138

$

139,882

$

128,587

Dividend income

 

23,012

 

8,106

 

59,328

 

23,942

Fee income

 

3,299

 

1,710

 

7,671

 

7,580

Total interest, fee and dividend income

$

76,779

$

51,954

$

206,881

$

160,109

5.           Deferred Financing Costs

Deferred financing costs include commitment fees and other costs related to Main Street’s multi-year revolving credit facility (the “Credit Facility”) and its unsecured notes, as well as the commitment fees and leverage fees (approximately 3.4% of the total commitment and draw amounts, as applicable) on the SBIC debentures. See further discussion of Main Street’s debt in Note E. Deferred financing costs in connection with the Credit Facility are capitalized as an asset. Deferred financing costs in connection with all other debt arrangements are a direct deduction from the related debt liability.

6.           Equity Offering Costs

The Company’s offering costs are charged against the proceeds from equity offerings when the proceeds are received.

7.           Unearned Income—Debt Origination Fees and Original Issue Discount and Discounts / Premiums to Par Value

Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into income based on the effective interest method over the life of the financing.

In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, “nominal cost equity”) that are valued as part of the negotiation process with the particular portfolio company. When Main Street receives nominal cost equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest income based on the effective interest method over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.

Main Street may also purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, Main Street records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income based on the effective interest method over the life of the debt investment. In the case of a purchase at a premium, Main Street records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income based on the effective interest method over the life of the debt investment.

To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the interest income. For the three months ended September 30, 2021 and 2020, approximately 1.8% and 3.3%, respectively, of Main Street’s total investment income was attributable to interest income from the accretion of discounts associated with debt

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investments, net of any premium reduction. For the nine months ended September 30, 2021 and 2020, approximately 2.1% and 2.1%, respectively, of Main Street’s total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.

8.           Share-Based Compensation

Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

Main Street has also adopted Accounting Standards Update (“ASU”) 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which requires that all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax expense or benefit in the income statement and not delay recognition of a tax benefit until the tax benefit is realized through a reduction to taxes payable. Accordingly, the tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur. Additionally, Main Street has elected to account for forfeitures as they occur.

9.            Income Taxes

MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) the filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street’s consolidated financial statements.

The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager’s separate financial statements.

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The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

10.         Net Realized Gains or Losses and Net Unrealized Appreciation or Depreciation

Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

11.         Fair Value of Financial Instruments

Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.

To estimate the fair value of Main Street’s multiple tranches of unsecured debt instruments as disclosed in Note E – Debt, Main Street uses quoted market prices. For the estimated fair value of Main Street’s SBIC debentures, Main Street uses the Yield-to-Maturity valuation method based on projections of the discounted future free cash flows that the debt security will likely generate, including both the discounted cash flows of the associated interest and principal amounts for the debt security.

12.         Earnings per Share

Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Main Street’s equity compensation plans are participating securities and, therefore, are included in the basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings per share and basic earnings per share amounts.

13.         Recently Issued or Adopted Accounting Standards

In March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting.” The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform and became effective upon issuance for all entities. The Company has agreements that have LIBOR as a reference rate with certain portfolio companies and also with certain lenders. Many of these agreements include language for choosing an alternative successor rate if LIBOR reference is no longer considered to be appropriate. Contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts. The Company adopted this amendment in March 2020 and plans to apply the amendments in this update to account for contract modifications due to changes in reference rates when LIBOR reference is no longer used. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the nine months ended September 30,

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2021. The Company continues to evaluate the impact that the amendments in this update will have on its consolidated financial statements and disclosures when applied.

In May 2020, the SEC published Release No. 33-10786 (the “May 2020 Release”), Amendments to Financial Disclosures about Acquired and Disposed Businesses, announcing its adoption of rules amending Rule 1-02(w)(2) under Regulation S-X used in the determination of a significant subsidiary specific to investment companies, including BDCs. In part, the rules adopted pursuant to the May 2020 Release eliminated the use of the asset test, and amended the income and investment tests for determining whether an unconsolidated subsidiary requires additional disclosure in the footnotes of the financial statements. Main Street adopted the rules pursuant to the May 2020 Release during the quarter ended June 30, 2020. The impact of the adoption of these rules on Main Street’s consolidated financial statements was not material.

In December 2020, the SEC published Release No. IC-34084 (the “December 2020 Release”) Use of Derivatives by Registered Investment Companies and Business Development Companies, announcing its adoption of Rule 18f-4 and amendment of Rule 6c-11 under the 1940 Act to provide an updated, comprehensive approach to the regulation of registered investment companies’, including BDCs’, use of derivatives and address investor protection concerns. In part, the rules adopted pursuant to the December 2020 Release require that funds using derivatives generally will have to adopt a derivatives risk management program that a derivatives risk manager administers and that the fund’s board of directors oversees, and comply with an outer limit on fund leverage. Funds that use derivatives only in a limited manner will not be subject to these requirements, but they will have to adopt and implement policies and procedures reasonably designed to manage the fund’s derivatives risks. Funds also will be subject to reporting and recordkeeping requirements regarding their derivatives use. Main Street adopted the rules pursuant to the December 2020 Release during the quarter ended March 31, 2021. As Main Street is a limited user of derivatives, the impact of the adoption of these rules on the consolidated financial statements was not material.

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by Main Street as of the specified effective date. Main Street believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon adoption.

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION

ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Main Street accounts for its investments at fair value.

Fair Value Hierarchy

In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).

Investments recorded on Main Street’s balance sheet are categorized based on the inputs to the valuation techniques as follows:

Level 1—Investments whose values are based on unadjusted quoted prices for identical assets in an active market that Main Street has the ability to access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities).

Level 2—Investments whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the investment. Level 2 inputs include the following:

Quoted prices for similar assets in active markets (for example, investments in restricted stock);

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Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies);
Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and
Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment.

Level 3—Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid securities issued by privately held companies). These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the investment.

As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

As of September 30, 2021 and December 31, 2020, all of Main Street’s LMM portfolio investments consisted of illiquid securities issued by privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street’s LMM portfolio investments were categorized as Level 3 as of September 30, 2021 and December 31, 2020.

As of September 30, 2021 and December 31, 2020, Main Street’s Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street’s Middle Market portfolio investments were categorized as Level 3 as of September 30, 2021 and December 31, 2020.

As of September 30, 2021 and December 31, 2020, Main Street’s private loan (“Private Loan”) portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street’s Private Loan portfolio investments were categorized as Level 3 as of September 30, 2021 and December 31, 2020.

As of September 30, 2021 and December 31, 2020, Main Street’s Other Portfolio investments consisted of illiquid securities issued by privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street’s Other Portfolio investments were categorized as Level 3 as of September 30, 2021 and December 31, 2020.

As of September 30, 2021, Main Street held several short-term portfolio investments consisting primarily of investments in secured debt investments and independently rated debt investments. The fair value determination for these investments consisted of available observable inputs in non-active markets sufficient to determine the fair value of these investments. As a result, all of Main Street’s short-term portfolio investments were categorized as Level 2 as of September 30, 2021. Main Street did not hold any short-term portfolio investments as of December 31, 2020.

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The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs:

Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers;
Current and projected financial condition of the portfolio company;
Current and projected ability of the portfolio company to service its debt obligations;
Type and amount of collateral, if any, underlying the investment;
Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio) applicable to the investment;
Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio);
Pending debt or capital restructuring of the portfolio company;
Projected operating results of the portfolio company;
Current information regarding any offers to purchase the investment;
Current ability of the portfolio company to raise any additional financing as needed;
Changes in the economic environment which may have a material impact on the operating results of the portfolio company;
Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company;
Qualitative assessment of key management;
Contractual rights, obligations or restrictions associated with the investment; and
Other factors deemed relevant.

The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of Main Street’s LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the weighted-average cost of capital (“WACC”). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement. On the contrary, significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of Main Street’s LMM, Middle Market and Private Loan securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (see “Note B.1.—Valuation of the Investment Portfolio”) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below.

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The following tables provide a summary of the significant unobservable inputs used to fair value Main Street’s Level 3 portfolio investments as of September 30, 2021 and December 31, 2020:

    

Fair Value as of

    

    

    

    

    

 

September 30, 

 

Type of

2021

Significant

Weighted

 

Investment

 

(in thousands)

Valuation Technique

Unobservable Inputs

Range(3)

Average(3)

Median(3)

Equity investments

$

977,015

 

Discounted cash flow

 

WACC

 

9.3% - 20.6%

 

13.9

%

14.9

%

 

Market comparable / Enterprise Value

 

EBITDA multiple (1)

 

4.5x - 8.5x(2)

 

6.8x

 

6.0x

Debt investments

$

1,722,560

 

Discounted cash flow

 

Risk adjusted discount factor

 

6.1% - 16.0%(2)

 

10.1

%

10.0

%

 

Expected principal recovery percentage

 

0.0% - 100.0%

 

100.0

%

100.0

%

Debt investments

$

383,188

 

Market approach

 

Third‑party quote

 

38.2 - 101.3

 

96.1

 

98.0

Total Level 3 investments

$

3,082,763


(1)EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.
(2)Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.2x - 15.0x and the range for risk adjusted discount factor is 4.4% - 36.5%.
(3)Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

    

Fair Value as of

    

    

    

    

    

 

December 31, 

 

Type of

2020

Significant

Weighted

 

Investment

 

(in thousands)

Valuation Technique

Unobservable Inputs

Range(3)

Average(3)

Median(3)

Equity investments

$

877,732

 

Discounted cash flow

 

WACC

 

9.4% - 21.0%

 

14.3

%

15.0

%

 

Market comparable / Enterprise Value

 

EBITDA multiple (1)

 

4.5x - 8.5x(2)

 

7.0x

 

6.1x

Debt investments

$

1,339,079

 

Discounted cash flow

 

Risk adjusted discount factor

 

7.4% - 15.3%(2)

 

10.6

%

10.8

%

 

Expected principal recovery percentage

 

0.0% - 100.0%

 

99.4

%

100.0

%

Debt investments

$

468,055

 

Market approach

 

Third‑party quote

 

45.0 - 100.3

 

94.7

 

96.5

Total Level 3 investments

$

2,684,866


(1)EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.
(2)Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.2x - 15.0x and the range for risk adjusted discount factor is 5.4% - 29.5%.
(3)Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

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The following tables provide a summary of changes in fair value of Main Street’s Level 3 portfolio investments for the nine-month periods ended September 30, 2021 and 2020 (amounts in thousands):

Net

Fair Value

Transfers

Changes

Net

Fair Value

as of

Into

from

Unrealized

as of

Type of

 

December 31, 

 

Level 3

 

Redemptions/

 

New

 

Unrealized

 

Appreciation

 

September 30, 

Investment

    

2020

    

Hierarchy

    

Repayments

    

Investments

    

to Realized

    

(Depreciation)

    

Other(1)

    

2021

Debt

$

1,807,134

$

$

(528,158)

$

814,863

$

13,279

$

2,115

$

(3,485)

$

2,105,748

Equity

866,734

(64,335)

48,181

(2,826)

115,774

5,767

969,295

Equity Warrant

10,998

(1,940)

944

(2,282)

7,720

$

2,684,866

$

$

(592,493)

$

863,044

$

8,513

$

118,833

$

$

3,082,763


(1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.

    

    

    

    

    

Net

    

    

    

Fair Value

Transfers

Changes

Net

Fair Value

as of

Into

from

Unrealized

as of

Type of

December 31, 

Level 3

Redemptions/

New

Unrealized

Appreciation

September 30, 

Investment

2019

Hierarchy

Repayments

Investments

 

to Realized

(Depreciation)

Other(1)

2020

Debt

$

1,782,575

$

$

(299,726)

$

367,944

$

49,393

$

(88,706)

$

(12,268)

$

1,799,212

Equity

 

809,538

 

 

(25,304)

 

50,535

 

(4,047)

 

(65,837)

 

12,268

 

777,153

Equity Warrant

 

10,211

 

 

(1,165)

 

 

1,165

 

(1,931)

 

 

8,280

$

2,602,324

$

$

(326,195)

$

418,479

$

46,511

$

(156,474)

$

$

2,584,645


(1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.

At September 30, 2021 and December 31, 2020, Main Street’s investments at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:

Fair Value Measurements

(in thousands)

    

    

Quoted Prices in

    

    

Significant

 

Active Markets for

 

Significant Other

 

Unobservable

 

Identical Assets

 

Observable Inputs

 

Inputs

At September 30, 2021

Fair Value

 

(Level 1)

(Level 2)

 

(Level 3)

LMM portfolio investments

$

1,494,109

$

$

$

1,494,109

Middle Market portfolio investments

 

420,941

 

 

 

420,941

Private Loan portfolio investments

 

845,961

 

 

 

845,961

Other Portfolio investments

 

193,672

 

 

 

193,672

External Investment Manager

 

128,080

 

 

 

128,080

Short-term portfolio investments

34,341

34,341

Total investments

$

3,117,104

$

$

34,341

$

3,082,763

    

Fair Value Measurements

(in thousands)

Quoted Prices in

Significant

 

Active Markets for

 

Significant Other

Unobservable

 

Identical Assets

 

Observable Inputs

 

Inputs

At December 31, 2020

Fair Value

    

(Level 1)

    

(Level 2)

    

(Level 3)

LMM portfolio investments

$

1,285,524

$

$

$

1,285,524

Middle Market portfolio investments

 

445,609

 

 

 

445,609

Private Loan portfolio investments

 

740,370

 

 

 

740,370

Other Portfolio investments

 

96,603

 

 

 

96,603

External Investment Manager

 

116,760

 

 

 

116,760

Total investments

$

2,684,866

$

$

$

2,684,866

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Table of Contents

Investment Portfolio Composition

Main Street’s LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Main Street’s LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, Main Street receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.

Main Street’s Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in Main Street’s LMM portfolio. Main Street’s Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $20 million. Main Street’s Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

Main Street’s Private Loan portfolio investments are primarily debt securities in privately held companies that have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as “club deals.” Private Loan investments are typically similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street’s Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

Main Street’s Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for its LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, Main Street may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, Main Street generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be liquidated over a five to ten-year period.

Based upon Main Street’s liquidity and capital structure management activities, Main Street’s Investment Portfolio may also include short-term portfolio investments that are atypical of Main Street’s LMM, Middle Market and Private Loan portfolio investments in that they are intended to be a short-term deployment of capital. Those assets are typically expected to be liquidated in one year or less. These short-term investments are not expected to be a significant portion of the overall Investment Portfolio.

Main Street’s external asset management business is conducted through its External Investment Manager. The External Investment Manager earns management fees based on the assets under management for external parties and may earn incentive fees, or a carried interest, based on the performance of the assets managed. Main Street entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with MSC Income Fund, Inc. (“MSC Income”), formerly known as HMS Income Fund, Inc. Through this agreement, Main Street shares employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities. Main Street allocates the related expenses to the External Investment Manager pursuant to the sharing agreement. Main Street’s total expenses are net of expenses allocated to the External Investment Manager for the three months ended September 30, 2021 and 2020 of $2.7 million and $1.9 million, respectively, and for the nine months ended September 30, 2021 and 2020 of $7.7 million and $5.3 million, respectively.

Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the three and nine months ended September 30, 2021 and 2020, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

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The following tables provide a summary of Main Street’s investments in the LMM, Middle Market and Private Loan portfolios as of September 30, 2021 and December 31, 2020 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager, all of which are discussed further below):

    

As of September 30, 2021

LMM (a)

Middle Market

Private Loan

(dollars in millions)

 

Number of portfolio companies

70

 

38

 

69

Fair value

$

1,494.1

 

$

420.9

 

$

846.0

Cost

$

1,245.3

 

$

456.7

 

$

865.5

Debt investments as a % of portfolio (at cost)

69.4

%

93.1

%

94.5

%

Equity investments as a % of portfolio (at cost)

30.6

%

6.9

%

5.5

%

% of debt investments at cost secured by first priority lien

98.8

%

97.2

%

97.9

%

Weighted-average annual effective yield (b)

11.2

%

7.4

%

8.4

%

Average EBITDA (c)

$

5.7

 

$

77.5

 

$

47.3


(a)At September 30, 2021, Main Street had equity ownership in approximately 99% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 40%.
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of September 30, 2021, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average yield on the Company’s debt portfolio as of September 30, 2021 including debt investments on non-accrual status was 10.4% for its LMM portfolio, 7.1% for its Middle Market portfolio and 8.1% for its Private Loan portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s expenses or any sales load paid by an investor.
(c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

    

As of December 31, 2020

LMM (a)

Middle Market

Private Loan

(dollars in millions)

 

Number of portfolio companies

70

 

42

 

63

Fair value

$

1,285.5

 

$

445.6

 

$

740.4

Cost

$

1,104.6

 

$

488.9

 

$

769.0

Debt investments as a % of portfolio (at cost)

65.8

%

93.0

%

93.8

%

Equity investments as a % of portfolio (at cost)

34.2

%

7.0

%

6.2

%

% of debt investments at cost secured by first priority lien

98.1

%

92.4

%

95.4

%

Weighted-average annual effective yield (b)

11.6

%

7.9

%

8.7

%

Average EBITDA (c)

$

5.3

 

$

76.5

 

$

58.1


(a)At December 31, 2020, Main Street had equity ownership in approximately 99% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 38%.
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2020, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average yield on the Company’s debt portfolio as of December 31, 2020 including debt investments on non-accrual status was 10.4% for its LMM portfolio, 7.9% for its Middle

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Market portfolio and 8.4% for its Private Loan portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s expenses or any sales load paid by an investor.
(c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, one Middle Market portfolio company and four Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

For the three months ended September 30, 2021 and 2020, Main Street achieved an annualized total return on investments of 18.0% and 16.5%, respectively. For the nine months ended September 30, 2021 and 2020, Main Street achieved an annualized total return on investments of 16.9% and an annualized total loss on investments of 0.1%, respectively. Total return on investments is calculated using the interest, dividend, and fee income, as well as the realized and unrealized change in fair value of the Investment Portfolio for the specified period. Main Street’s total return on investments is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s expenses or any sales load paid by an investor.

As of September 30, 2021, Main Street had Other Portfolio investments in fourteen companies, collectively totaling approximately $193.7 million in fair value and approximately $201.1 million in cost basis and which comprised approximately 6.2% and 7.1% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2020, Main Street had Other Portfolio investments in twelve companies, collectively totaling approximately $96.6 million in fair value and approximately $124.7 million in cost basis and which comprised approximately 3.6% and 5.0% of Main Street’s Investment Portfolio at fair value and cost, respectively.

As of September 30, 2021, Main Street had short-term portfolio investments in eight companies, collectively totaling approximately $34.3 million in fair value and approximately $34.4 million in cost basis and which comprised approximately 1.1% and 1.2% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2020, Main Street held no short-term investments.

As discussed further in Note A.1., Main Street holds an investment in the External Investment Manager, a wholly owned subsidiary that is treated as a portfolio investment. As of September 30, 2021, this investment had a fair value of approximately $128.1 million and a cost basis of $29.5 million, which comprised approximately 4.1% and 1.0% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2020, this investment had a fair value of approximately $116.8 million and a cost basis of $29.5 million, which comprised approximately 4.3% and 1.2% of Main Street’s Investment Portfolio at fair value and cost, respectively.

The following tables summarize the composition of Main Street’s total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of September 30, 2021 and December 31, 2020 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager, all of which are discussed above).

Cost:

 

September 30, 2021

 

December 31, 2020

First lien debt

 

80.5

%  

77.0

%

Equity

 

17.6

%  

19.0

%

Second lien debt

 

1.1

%  

2.7

%

Equity warrants

 

0.3

%  

0.5

%

Other

 

0.5

%  

0.8

%

 

100.0

%  

100.0

%

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Fair Value:

 

September 30, 2021

 

December 31, 2020

 

First lien debt

 

71.6

%  

70.0

%

 

Equity

 

26.7

%  

26.4

%

 

Second lien debt

 

1.0

%  

2.4

%

 

Equity warrants

 

0.3

%  

0.4

%

 

Other

 

0.4

%  

0.8

%

 

 

100.0

%  

100.0

%

 

The following tables summarize the composition of Main Street’s total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of September 30, 2021 and December 31, 2020 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Cost:

 

September 30, 2021

 

December 31, 2020

 

Southwest

 

24.1

%  

24.3

%

 

Northeast

 

24.0

%  

22.6

%

 

West

 

20.9

%  

21.0

%

 

Midwest

 

14.7

%  

18.2

%

 

Southeast

 

14.4

%  

12.8

%

 

Canada

 

1.9

%  

1.1

%

 

 

100.0

%  

100.0

%

 

Fair Value:

 

September 30, 2021

 

December 31, 2020

 

Southwest

 

24.9

%  

24.7

%

 

Northeast

 

23.3

%  

21.7

%

 

West

 

21.4

%  

21.4

%

 

Midwest

 

15.9

%  

19.7

%

 

Southeast

 

12.8

%  

11.5

%

 

Canada

 

1.7

%  

1.0

%

 

 

100.0

%  

100.0

%

 

Main Street’s LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of Main Street’s total combined LMM portfolio investments, Middle Market portfolio investments and

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Table of Contents

Private Loan portfolio investments by industry at cost and fair value as of September 30, 2021 and December 31, 2020 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager).

Cost:

September 30, 2021

December 31, 2020

Construction & Engineering

 

7.0

%  

6.0

%

Machinery

 

6.9

%  

6.4

%

Internet Software & Services

 

6.9

%  

5.2

%

Leisure Equipment & Products

 

5.5

%  

4.2

%

Commercial Services & Supplies

 

5.1

%  

4.7

%

Software

 

5.0

%  

4.4

%

Professional Services

 

4.9

%  

5.1

%

Health Care Providers & Services

 

4.6

%  

5.1

%

Energy Equipment & Services

 

4.5

%  

4.5

%

Specialty Retail

 

4.3

%  

3.1

%

IT Services

 

3.7

%  

4.0

%

Diversified Telecommunication Services

 

3.1

%  

2.6

%

Communications Equipment

 

3.0

%  

3.3

%

Containers & Packaging

 

2.7

%  

1.6

%

Food Products

 

2.4

%  

2.6

%

Tobacco

 

2.4

%  

2.2

%

Oil, Gas & Consumable Fuels

 

2.2

%  

3.2

%

Building Products

 

2.2

%  

1.4

%

Aerospace & Defense

 

2.0

%  

5.9

%

Diversified Financial Services

 

2.0

%  

2.1

%

Hotels, Restaurants & Leisure

 

1.9

%  

2.6

%

Diversified Consumer Services

 

1.8

%  

1.0

%

Media

 

1.7

%  

2.1

%

Distributors

 

1.7

%  

2.1

%

Electronic Equipment, Instruments & Components

 

1.6

%  

1.9

%

Computers & Peripherals

 

1.5

%  

1.5

%

Life Sciences Tools & Services

 

1.2

%  

1.4

%

Household Durables

 

1.2

%  

1.3

%

Trading Companies & Distributors

 

1.0

%  

1.2

%

Food & Staples Retailing

 

1.0

%  

1.0

%

Transportation Infrastructure

0.5

%  

1.0

%

Other (1)

4.5

%  

5.3

%

 

100.0

%  

100.0

%


(1)Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

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Table of Contents

Fair Value:

September 30, 2021

December 31, 2020

Machinery

 

8.3

%  

8.1

%

Construction & Engineering

 

6.9

%  

6.1

%

Internet Software & Services

 

6.0

%  

4.5

%

Software

 

5.4

%  

4.6

%

Leisure Equipment & Products

 

5.2

%  

4.0

%

Commercial Services & Supplies

 

4.9

%  

4.5

%

Specialty Retail

 

4.8

%  

3.4

%

Diversified Consumer Services

 

4.3

%  

3.0

%

Health Care Providers & Services

 

4.2

%  

5.2

%

Professional Services

 

4.0

%  

4.0

%

IT Services

 

3.6

%  

3.8

%

Energy Equipment & Services

 

3.1

%  

3.0

%

Diversified Telecommunication Services

 

2.8

%  

2.0

%

Computers & Peripherals

 

2.8

%  

2.9

%

Containers & Packaging

 

2.8

%  

1.7

%

Tobacco

 

2.5

%  

2.1

%

Communications Equipment

 

2.3

%  

2.7

%

Diversified Financial Services

 

2.2

%  

2.3

%

Building Products

 

2.2

%  

1.4

%

Food Products

 

2.2

%  

2.2

%

Media

 

2.1

%  

2.5

%

Distributors

 

1.9

%  

2.1

%

Aerospace & Defense

 

1.8

%  

5.7

%

Oil, Gas & Consumable Fuels

 

1.8

%  

2.7

%

Hotels, Restaurants & Leisure

 

1.4

%  

2.0

%

Construction Materials

 

1.2

%  

1.4

%

Life Sciences Tools & Services

 

1.1

%  

1.4

%

Household Durables

 

1.1

%  

1.3

%

Trading Companies & Distributors

 

0.9

%  

1.2

%

Electronic Equipment, Instruments & Components

0.9

%  

1.3

%  

Transportation Infrastructure

0.5

%  

1.0

%  

Other (1)

4.8

%  

5.9

%  

100.0

%  

100.0

%  


(1)Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

At September 30, 2021 and December 31, 2020, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

Unconsolidated Significant Subsidiaries

In evaluating its unconsolidated controlled portfolio companies in accordance with Regulation S-X, there are two tests that Main Street must utilize to determine if any of Main Street’s Control Investments (as defined in Note A, including those unconsolidated portfolio companies defined as Control Investments in which Main Street does not own greater than 50% of the voting securities or maintain greater than 50% of the board representation) are considered significant subsidiaries: the investment test and the income test. The investment test is generally measured by dividing Main Street’s investment in the Control Investment by the value of Main Street’s total investments. The income test is generally measured by dividing the absolute value of the combined sum of total investment income, net realized gain (loss) and net unrealized appreciation (depreciation) from the relevant Control Investment for the period being tested by the absolute value of Main Street’s change in net assets resulting from operations for the same period. Regulation S-X requires Main Street to include (1) separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which Main Street owns greater than 50% of the voting securities) in an annual report and (2) summarized financial information of a Control Investment in a quarterly report, respectively, if certain thresholds of

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the investment or income tests are exceeded and the unconsolidated portfolio company qualifies as a significant subsidiary.

As of September 30, 2021 and December 31, 2020, Main Street had no single investment that qualified as a significant subsidiary under either the investment or income tests.

NOTE D—EXTERNAL INVESTMENT MANAGER

As discussed further in Note A.1 and Note C, the External Investment Manager provides investment management and other services to External Parties. The External Investment Manager is accounted for as a portfolio investment of MSCC since the External Investment Manager conducts all of its investment management activities for External Parties.

During May 2012, Main Street entered into an investment sub-advisory agreement with HMS Adviser, LP (“HMS Adviser”), which was the investment adviser to MSC Income at the time, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow it to own a registered investment adviser, Main Street assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on MSCC’s ability to meet the source-of-income requirement necessary for it to maintain its RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager was entitled to 50% of the annual base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with MSC Income. Effective October 30, 2020, the External Investment Manager and HMS Adviser consummated the transactions contemplated by that certain asset purchase agreement by and among the External Investment Manager, HMS Adviser and the other parties thereto whereby the External Investment Manager became the sole investment adviser and administrator to MSC Income pursuant to an Investment Advisory and Administrative Services Agreement entered into between the External Investment Manager and MSC Income (the “Advisory Agreement”). The Advisory Agreement includes a 1.75% annual management fee, reduced from 2.00%, and the same incentive fee as under MSC Income’s prior advisory agreement with HMS Adviser, with the External Investment Manager receiving 100% of such fee income (increased from 50% previously).

As described more fully in Note L – Related Party Transactions, the External Investment Manager launched a new private fund, MS Private Loan Fund I, LP, a private investment fund with a strategy to co-invest with Main Street in Private Loan portfolio investments (the “Private Loan Fund”), in December 2020. The External Investment Manager entered into an Investment Management Agreement in December 2020 with the Private Loan Fund, pursuant to which the External Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees. The External Investment Manager may also advise other clients, including funds and separately managed accounts, pursuant to advisory and services agreements with such clients in exchange for asset-based and incentive fees.

During the three months ended September 30, 2021 and 2020, the External Investment Manager earned $4.6 million and $2.3 million, respectively, in base management fee income. During the three months ended September 30, 2021, incentive fee income earned was not significant, while no incentive fee income was earned in the three months ended September 30, 2020. During the nine months ended September 30, 2021 and 2020, the External Investment Manager earned $12.7 million and $7.2 million, respectively, in base management fee income. During the nine months ended September 30, 2021, an insignificant amount of incentive fee income was earned, while no incentive fee income was earned in the nine months ended September 30, 2020.

Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach (see further discussion in Note B.1.). Any change in fair value of the investment in the External Investment Manager is recognized on Main Street’s consolidated statements of operations in “Net Unrealized Appreciation (Depreciation)—Control investments.”

The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for financial reporting

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purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. Main Street owns the External Investment Manager through the Taxable Subsidiary to allow MSCC to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The taxable income, or loss, of the External Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. As a result of the above described financial reporting and tax treatment, the External Investment Manager provides for any income tax expense, or benefit, and any tax assets or liabilities in its separate financial statements.

Main Street shares employees with the External Investment Manager and allocates costs related to such shared employees to the External Investment Manager generally based on a combination of the direct time spent, new investment origination activity and assets under management, depending on the nature of the expense. For the three months ended September 30, 2021 and 2020, Main Street allocated $2.7 million and $1.9 million of total expenses, respectively, to the External Investment Manager. For the nine months ended September 30, 2021 and 2020, Main Street allocated $7.7 million and $5.3 million of total expenses, respectively, to the External Investment Manager. The total contribution of the External Investment Manager to Main Street’s net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income earned from the External Investment Manager. For the three months ended September 30, 2021 and 2020, the total contribution to Main Street’s net investment income was $4.2 million and $2.2 million, respectively. For the nine months ended September 30, 2021 and 2020, the total contribution to Main Street’s net investment income was $11.6 million and $6.7 million, respectively.

Summarized financial information from the separate financial statements of the External Investment Manager as of September 30, 2021 and December 31, 2020 and for the three and nine months ended September 30, 2021 and 2020 is as follows:

As of 

As of 

September 30, 

December 31, 

    

2021

    

2020

(dollars in thousands)

Cash

$

53

$

Accounts receivable—advisory clients

 

4,638

 

3,520

Total assets

$

4,691

$

3,520

Accounts payable to MSCC and its subsidiaries

$

3,232

$

2,423

Dividend payable to MSCC and its subsidiaries

 

1,459

 

1,097

Equity

 

 

Total liabilities and equity

$

4,691

$

3,520

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2021

    

2020

    

2021

    

2020

    

(dollars in thousands)

Management fee income

$

4,592

$

2,338

$

12,707

$

7,160

Incentive fees

 

19

 

 

19

 

Total revenues

 

4,611

 

2,338

 

12,726

 

7,160

Expenses allocated from MSCC or its subsidiaries:

 

  

 

  

Salaries, share‑based compensation and other personnel costs

(2,278)

(1,206)

(6,394)

(3,393)

Other G&A expenses

(450)

(686)

(1,286)

(1,947)

Total allocated expenses

 

(2,728)

 

(1,892)

 

(7,680)

 

(5,340)

Pre‑tax income

 

1,883

 

446

 

5,046

 

1,820

Tax expense

 

(424)

 

(108)

 

(1,138)

 

(426)

Net income

$

1,459

$

338

$

3,908

$

1,394

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NOTE E—DEBT

Summary of debt as of September 30, 2021 is as follows:

    

Outstanding Balance

    

Unamortized Debt Issuance (Costs)/Premiums

    

Recorded Value

    

Estimated Fair Value (1)

(in thousands)

SBIC Debentures

$

350,000

$

(7,565)

$

342,435

$

333,954

Credit Facility

200,000

200,000

200,000

4.50% Notes due in 2022

185,000

(708)

184,292

192,639

5.20% Notes due 2024

450,000

1,408

451,408

489,155

3.00% Notes due 2026

300,000

(4,555)

295,445

306,897

Total Debt

$

1,485,000

$

(11,420)

$

1,473,580

$

1,522,645


(1)Estimated fair value for outstanding debt if Main Street had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of Main Street’s debt in Note B.11. – Fair Value of Financial Instruments.

Summary of debt as of December 31, 2020 is as follows:

    

Outstanding Balance

    

Unamortized Debt Issuance (Costs)/Premiums

    

Recorded Value

    

Estimated Fair Value (1)

(in thousands)

SBIC Debentures

$

309,800

$

(5,828)

$

303,972

$

309,907

Credit Facility

269,000

269,000

269,000

4.50% Notes due 2022

185,000

(1,164)

183,836

194,938

5.20% Notes due 2024

450,000

1,817

451,817

488,102

Total Debt

$

1,213,800

$

(5,175)

$

1,208,625

$

1,261,947


(1)Estimated fair value for outstanding debt if Main Street had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of Main Street’s debt in Note B.11. – Fair Value of Financial Instruments.

Summarized interest expense for the three and nine months ended September 30, 2021 and 2020 is as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2021

    

2020

    

2021

    

2020

SBIC Debentures

$

2,704

$

2,977

$

8,002

$

8,981

Credit Facility

1,574

1,942

3,948

7,305

4.50% Notes Due 2022

2,233

2,233

6,699

6,699

5.20% Notes Due 2024

5,713

5,337

17,141

13,842

3.00% Notes due in 2026

2,487

7,124

Total Interest Expense

$

14,711

$

12,489

$

42,914

$

36,827

SBIC Debentures

Under existing SBIC regulations, SBA-approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Main Street’s SBIC

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debentures payable, under existing SBA-approved commitments, were $350.0 million and $309.8 million at September 30, 2021 and December 31, 2020, respectively. SBIC debentures provide for interest to be paid semiannually, with principal due at the applicable 10-year maturity date of each debenture. During the nine months ended September 30, 2021, Main Street issued $80.2 million of SBIC debentures and opportunistically prepaid $40.0 million of existing SBIC debentures that were scheduled to mature over the next year as part of an effort to manage the maturity dates of the oldest SBIC debentures. Main Street expects to maintain SBIC debentures under the SBIC program in the future, subject to periodic repayments and borrowings, in an amount up to the regulatory maximum amount for affiliated SBIC funds. The weighted-average annual interest rate on the SBIC debentures was 2.9% and 3.4% as of September 30, 2021 and December 31, 2020, respectively. The first principal maturity due under the existing SBIC debentures is in 2023, and the weighted-average remaining duration as of September 30, 2021 was approximately 6.4 years. In accordance with SBIC regulations, the Funds are precluded from incurring additional non-SBIC debt without the prior approval of the SBA.

As of September 30, 2021, the SBIC debentures consisted of (i) $175.0 million par value of SBIC debentures outstanding issued by MSMF, with a recorded value of $171.3 million that was net of unamortized debt issuance costs of $3.7 million and (ii) $175.0 million par value of SBIC debentures issued by MSC III with a recorded value of $171.2 million that was net of unamortized debt issuance costs of $3.8 million.

Credit Facility

Main Street maintains the Credit Facility to provide additional liquidity to support its investment and operational activities. As of September 30, 2021, the Credit Facility included total commitments of $855.0 million from a diversified group of 18 lenders, held a maturity date in April 2026 and contained an accordion feature which allowed Main Street to increase the total commitments under the facility to up to $1,200.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

As of September 30, 2021, borrowings under the Credit Facility bore interest, subject to Main Street’s election and resetting on a monthly basis on the first of each month, on a per annum basis at a rate equal to the applicable LIBOR rate (0.1% as of the most recent reset date for the period ended September 30, 2021) plus (i) 1.875% (or the applicable base rate (Prime Rate of 3.25% as of September 30, 2021) plus 0.875%) as long as Main Street meets certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the applicable base rate plus 1.0%) otherwise. Main Street pays unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. As of September 30, 2021, the Credit Facility contained certain affirmative and negative covenants, including but not limited to: (i) maintaining minimum liquidity, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio (tangible net worth to Credit Facility borrowings) of at least 1.5 to 1.0, (iv) maintaining a minimum tangible net worth and (v) maintaining a minimum asset coverage ratio of 200% with respect to the consolidated assets (with certain limitations on the contribution of equity in financing subsidiaries as specified therein) of MSCC and the guarantors under the Credit Facility to the secured debt of MSCC and the guarantors.

As of September 30, 2021, the interest rate on the Credit Facility was 2.0% (based on the LIBOR rate of 0.1% as of the most recent reset date plus 1.875%). The average interest rate for borrowings under the Credit Facility was 2.0% for each of the three months ended September 30, 2021 and 2020, and 2.0% and 2.7% for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, Main Street was in compliance with all financial covenants of the Credit Facility.

4.50% Notes due 2022

In November 2017, Main Street issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due December 1, 2022 (the “4.50% Notes due 2022”) at an issue price of 99.16%. The 4.50% Notes due 2022 are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness,

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including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2022 may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The 4.50% Notes due 2022 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes due 2022, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $182.2 million. Main Street may from time to time repurchase the 4.50% Notes due 2022 in accordance with the 1940 Act and the rules promulgated thereunder.

The indenture governing the 4.50% Notes due 2022 (the “4.50% Notes Indenture”) contains certain covenants, including covenants requiring Main Street’s compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes due 2022 and the trustee if Main Street ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes Indenture. As of September 30, 2021, Main Street was in compliance with these covenants.

5.20% Notes due 2024

In April 2019, Main Street issued $250.0 million in aggregate principal amount of 5.20% unsecured notes due May 1, 2024 (the “5.20% Notes”) at an issue price of 99.125%. Subsequently, in December 2019, Main Street issued an additional $75.0 million aggregate principal amount of the 5.20% Notes at an issue price of 105.0% and, in July 2020, Main Street issued an additional $125.0 million aggregate principal amount at an issue price of 102.674%. The 5.20% Notes issued in December 2019 and July 2020 have identical terms as, and are a part of a single series with, the 5.20% Notes issued in April 2019. The 5.20% Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 5.20% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 5.20% Notes may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The 5.20% Notes bear interest at a rate of 5.20% per year payable semiannually on May 1 and November 1 of each year. The total net proceeds from the 5.20% Notes, resulting from the issue price and after net issue price premiums and estimated offering expenses payable, were approximately $451.4 million. Main Street may from time to time repurchase the 5.20% Notes in accordance with the 1940 Act and the rules promulgated thereunder.

The indenture governing the 5.20% Notes (the “5.20% Notes Indenture”) contains certain covenants, including covenants requiring Main Street’s compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 5.20% Notes and the trustee if Main Street ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 5.20% Notes Indenture. As of September 30, 2021, Main Street was in compliance with these covenants.

3.00% Notes due 2026

In January 2021, Main Street issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due July 14, 2026 (the “3.00% Notes”) at an issue price of 99.004%. The total net proceeds from the 3.00% Notes, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $294.8 million. The 3.00% Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 3.00% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 3.00% Notes may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The 3.00% Notes bear interest at a rate of 3.00% per year

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payable semiannually on January 14 and July 14 of each year. Main Street may from time to time repurchase the 3.00% Notes in accordance with the 1940 Act and the rules promulgated thereunder. See Note M for discussion of the recent issuance of an additional $200.0 million of the 3.00% Notes in October 2021.

The indenture governing the 3.00% Notes (the “3.00% Notes Indenture”) contains certain covenants, including covenants requiring Main Street’s compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 3.00% Notes and the trustee if Main Street ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 3.00% Notes Indenture. As of September 30, 2021, Main Street was in compliance with these covenants.

NOTE F—FINANCIAL HIGHLIGHTS

    

Nine Months Ended September 30, 

    

Per Share Data:

    

2021

    

2020

    

NAV at the beginning of the period

$

22.35

$

23.91

Net investment income(1)

 

1.92

 

1.50

Net realized gain (loss) (1)(2)

 

0.15

 

(0.69)

Net unrealized appreciation (depreciation)(1)(2)

 

1.71

 

(1.80)

Income tax benefit (provision)(1)(2)

 

(0.33)

 

0.23

Net increase (decrease) in net assets resulting from operations(1)

 

3.45

 

(0.76)

Dividends paid

 

(1.85)

 

(1.85)

Impact of the net change in monthly dividends declared prior to the end of the period and paid in the subsequent period

 

(0.01)

 

Accretive effect of stock offerings (issuing shares above NAV per share)

 

0.26

 

0.21

Accretive effect of DRIP issuance (issuing shares above NAV per share)

 

0.06

 

0.07

Other(3)

 

0.01

 

(0.06)

NAV at the end of the period

$

24.27

$

21.52

Market value at the end of the period

$

41.10

$

29.57

Shares outstanding at the end of the period

 

69,408,645

 

66,138,440


(1)Based on weighted-average number of common shares outstanding for the period.
(2)Net realized gains or losses, net unrealized appreciation or depreciation, and income taxes can fluctuate significantly from period to period.
(3)Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

Nine Months Ended September 30, 

2021

   

2020

(dollars in thousands)

NAV at end of period

$

1,684,307

$

1,423,182

Average NAV

$

1,586,020

$

1,416,672

Average outstanding debt

$

1,264,680

$

1,136,300

Ratio of total expenses, including income tax expense, to average NAV (1) (2)

6.19

%

3.36

%

Ratio of operating expenses to average NAV (2) (3)

4.76

%

4.36

%

Ratio of operating expenses, excluding interest expense, to average NAV (2) (3)

2.05

%

1.76

%

Ratio of net investment income to average NAV (2)

8.29

%

6.94

%

Portfolio turnover ratio (2)

20.69

%

10.96

%

Total investment return (2) (4)

33.57

%

(27.31)

%

Total return based on change in NAV (2) (5)

15.61

%

(3.25)

%


(1)Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized

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appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards, which are non-cash in nature and may vary significantly from period to period. Main Street is required to include net deferred tax provision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable.
(2)Not annualized.
(3)Unless otherwise noted, operating expenses include interest, compensation, general and administrative and share-based compensation expenses, net of expenses allocated to the External Investment Manager of $7.7 million.
(4)Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street’s dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.
(5)Total return is based on change in net asset value as calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value. Non-operating changes include any items that affect net asset value other than the net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items.

NOTE G—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

Main Street currently pays monthly dividends to its stockholders. Future monthly dividends, if any, will be determined by its Board of Directors on a quarterly basis. Main Street paid regular monthly dividends of $0.205 per share, totaling $42.3 million, or $0.615 per share, for the three months ended September 30, 2021, and $126.2 million, or $1.845 per share, for the nine months ended September 30, 2021 compared to aggregate regular monthly dividends of approximately $40.6 million, or $0.615 per share, for the three months ended September 30, 2020, and $120.2 million or $1.845 for the nine months ended September 30, 2020.

MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

The determination of the tax attributes for Main Street’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and qualified dividends, but may also include either one or both of capital gains and return of capital.

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Listed below is a reconciliation of “Net increase (decrease) in net assets resulting from operations” to taxable income and to total distributions declared to common stockholders for the nine months ended September 30, 2021 and 2020.

Nine Months Ended September 30, 

   

2021

   

2020

(estimated, dollars in thousands)

Net increase (decrease) in net assets resulting from operations

$

236,413

$

(49,874)

Book-tax difference from share-based compensation expense

(5,436)

2,710

Net unrealized (appreciation) depreciation

(117,072)

117,570

Income tax provision (benefit)

22,691

(14,253)

Pre-tax book (income) loss not consolidated for tax purposes

(35,701)

2,413

Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates

6,027

53,521

Estimated taxable income (1)

106,922

112,087

Taxable income earned in prior year and carried forward for distribution in current year

24,350

29,107

Taxable income earned prior to period end and carried forward for distribution next period

(18,959)

(34,189)

Dividend payable as of period end and paid in the following period

14,553

13,554

Total distributions accrued or paid to common stockholders

$

126,866

$

120,559


(1)Main Street’s taxable income for each period is an estimate and will not be finally determined until the company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.

The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street’s consolidated financial statements.

The income tax expense (benefit) for Main Street is generally composed of (i) deferred tax expense (benefit), which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book tax differences, and (ii) current tax expense, which is primarily the result of current U.S. federal income and state taxes and excise taxes on Main Street’s estimated undistributed taxable income. The income tax expense, or benefit, and the related tax asset and liabilities generated by the Taxable Subsidiaries, if any, are reflected in Main Street’s consolidated statement of operations. Main Street’s provision for income taxes was comprised of the following for the three and nine months ended September 30, 2021 and 2020 (amounts in thousands):

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Three Months Ended September 30, 

Nine Months Ended September 30, 

2021

   

2020

   

2021

   

2020

Current tax expense (benefit):

Federal

$

(239)

$

46

$

(99)

$

123

State

1,056

692

1,712

200

Excise

136

427

629

1,097

Total current tax expense (benefit)

953

1,165

2,242

1,420

Deferred tax expense (benefit):

Federal

7,989

(147)

15,284

(14,998)

State

3,342

489

5,165

(675)

Total deferred tax expense (benefit)

11,331

342

20,449

(15,673)

Total income tax provision (benefit)

$

12,284

$

1,507

$

22,691

$

(14,253)

The net deferred tax liability at September 30, 2021 and December 31, 2020 was $23.0 million and $2.6 million, respectively, primarily related to changes in net unrealized appreciation or depreciation, changes in loss carryforwards, and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. At September 30, 2021, for U.S. federal income tax purposes, the Taxable Subsidiaries had a net operating loss carryforward from prior years which, if unused, will expire in various taxable years from 2028 through 2037. Any net operating losses generated in 2018 and future periods are not subject to expiration and will carryforward indefinitely until utilized. The timing and manner in which Main Street will utilize any loss carryforwards generated before December 31, 2017 may be limited in the future under the provisions of the Code. Additionally, the Taxable Subsidiaries have interest expense limitation carryforwards which have an indefinite carryforward.

NOTE H—COMMON STOCK

Main Street maintains a program with certain selling agents through which it can sell shares of its common stock by means of at-the-market offerings from time to time (the “ATM Program”). During the nine months ended September 30, 2021, Main Street sold 1,111,194 shares of its common stock at a weighted-average price of $40.59 per share and raised $45.1 million of gross proceeds under the ATM Program. Net proceeds were $44.5 million after commissions to the selling agents on shares sold and offering costs. As of September 30, 2021, 4,602,178 shares remained available for sale under the ATM Program.

During the year ended December 31, 2020, Main Street sold 2,645,778 shares of its common stock at a weighted-average price of $32.10 per share and raised $84.9 million of gross proceeds under the ATM Program. Net proceeds were $83.8 million after commissions to the selling agents on shares sold and offering costs.

NOTE I—DIVIDEND REINVESTMENT PLAN

The dividend reinvestment feature of Main Street’s dividend reinvestment and direct stock purchase plan (the “DRIP”) provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Main Street declares a cash dividend, its stockholders who have not “opted out” of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares will be valued based upon the final closing price of MSCC’s common stock on the valuation date determined for each dividend by Main Street’s Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased, before any associated brokerage or other costs. Main Street’s DRIP is administered by its transfer agent on behalf of Main Street’s record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street’s DRIP but may provide a similar dividend reinvestment plan for their clients.

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Summarized DRIP information for the nine months ended September 30, 2021 and 2020 is as follows:

September 30, 

2021

2020

($ in millions)

DRIP participation

$

11.4

$

12.2

Shares issued for DRIP

293,647

387,534

NOTE J—SHARE-BASED COMPENSATION

Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measured the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

Main Street’s Board of Directors approves the issuance of shares of restricted stock to Main Street employees pursuant to the Main Street Capital Corporation 2015 Equity and Incentive Plan (the “Equity and Incentive Plan”). These shares generally vest over a three-year period from the grant date. The fair value is expensed over the service period, starting on the grant date. The following table summarizes the restricted stock issuances approved by Main Street’s Board of Directors under the Equity and Incentive Plan, net of shares forfeited, if any, and the remaining shares of restricted stock available for issuance as of September 30, 2021.

Restricted stock authorized under the plan

    

3,000,000

Less net restricted stock granted during:

 

Year ended December 31, 2015

 

(900)

Year ended December 31, 2016

 

(260,514)

Year ended December 31, 2017

 

(223,812)

Year ended December 31, 2018

 

(243,779)

Year ended December 31, 2019

 

(384,049)

Year ended December 31, 2020

(370,272)

Nine months ended September 30, 2021

(332,718)

Restricted stock available for issuance as of September 30, 2021

 

1,183,956

As of September 30, 2021, the following table summarizes the restricted stock issued to Main Street’s non-employee directors and the remaining shares of restricted stock available for issuance pursuant to the Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan. These shares are granted upon appointment or election to the board and vest on the day immediately preceding the annual meeting of stockholders following the respective grant date and are expensed over such service period.

Restricted stock authorized under the plan

    

300,000

Less net restricted stock granted during:

 

Year ended December 31, 2015

 

(6,806)

Year ended December 31, 2016

 

(6,748)

Year ended December 31, 2017

 

(5,948)

Year ended December 31, 2018

 

(6,376)

Year ended December 31, 2019

 

(6,008)

Year ended December 31, 2020

(11,463)

Nine months ended September 30, 2021

(4,949)

Restricted stock available for issuance as of September 30, 2021

 

251,702

For the three months ended September 30, 2021 and 2020, Main Street recognized total share-based compensation expense of $2.9 million and $2.6 million, respectively, related to the restricted stock issued to Main Street employees and non-employee directors. For the nine months ended September 30, 2021 and 2020, Main Street

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recognized total share-based compensation expense of $8.0 million and $8.2 million, respectively, related to the restricted stock issued to Main Street employees and non-employee directors.

As of September 30, 2021, there was $17.1 million of total unrecognized compensation expense related to Main Street’s non-vested restricted shares. This compensation expense is expected to be recognized over a remaining weighted-average period of approximately 2.1 years as of September 30, 2021.

NOTE K—COMMITMENTS AND CONTINGENCIES

At September 30, 2021, Main Street had the following outstanding commitments (in thousands):

Investments with equity capital commitments that have not yet funded:

    

Amount

 

Congruent Credit Opportunities Fund III, LP

$

8,117

Encap Energy Fund Investments

EnCap Energy Capital Fund IX, L.P.

$

230

EnCap Energy Capital Fund X, L.P.

 

772

EnCap Flatrock Midstream Fund II, L.P.

4,586

EnCap Flatrock Midstream Fund III, L.P.

410

$

5,998

MS Private Loan Fund I, LP

$

9,000

EIG Fund Investments

$

3,701

 

Brightwood Capital Fund Investments

Brightwood Capital Fund III, LP

$

3,000

Brightwood Capital Fund V, LP

4,000

$

7,000

Freeport Fund Investments

Freeport Financial SBIC Fund LP

$

1,375

Freeport First Lien Loan Fund III LP

4,032

$

5,407

LKCM Headwater Investments I, L.P.

$

2,500

UnionRock Energy Fund II, LP

$

819

HPEP 3, L.P.

$

1,555

Dos Rios Partners

Dos Rios Partners, LP

$

835

Dos Rios Partners - A, LP

265

$

1,100

Total Equity Commitments

$

45,197

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Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:

    

Amount

MS Private Loan Fund I, LP

$

19,709

MSC Income Fund Inc.

15,000

NWN Corporation

8,760

SI East, LLC

7,500

Adams Publishing Group, LLC

5,000

Bolder Panther Group, LLC

5,000

Pearl Meyer Topco LLC

5,000

MB2 Dental Solutions, LLC

4,874

Roof Opco, LLC

3,889

Computer Data Source, LLC

2,900

Classic H&G Holdco, LLC

2,600

Superior Rigging & Erecting Co.

2,500

Klein Hersh, LLC

2,500

Nebraska Vet AcquireCo, LLC

2,500

IG Parent Corporation

2,500

Burning Glass Intermediate Holding Company, Inc.

2,323

Evergreen North America Acquisitions, LLC

2,317

RTIC Subsidiary Holdings, LLC

2,055

Fortna, Inc.

2,027

Lynx FBO Operating LLC

1,875

Mako Steel, LP

1,866

The Affiliati Network, LLC

1,600

Colonial Electric Company LLC

1,600

Market Force Information, LLC

1,600

Cody Pools, Inc.

1,600

Chamberlin Holding LLC

1,600

Direct Marketing Solutions, Inc.

1,600

Trantech Radiator Topco, LLC

1,600

GS HVAM Intermediate, LLC

1,591

GRT Rubber Technologies LLC

1,340

RA Outdoors LLC

1,278

PPL RVs, Inc.

1,250

Project Eagle Holdings, LLC

1,250

Invincible Boat Company, LLC.

1,080

CompareNetworks Topco, LLC

1,000

Project BarFly, LLC

760

DTE Enterprises, LLC

750

Student Resource Center, LLC

750

PT Network, LLC

658

Hawk Ridge Systems, LLC

615

Orttech Holdings, LLC

584

ASC Interests, LLC

500

Jensen Jewelers of Idaho, LLC

500

Clickbooth.com, LLC

457

Wall Street Prep, Inc.

400

HW Temps LLC

400

American Nuts, LLC

281

Dynamic Communities, LLC

250

Arcus Hunting LLC

193

Eastern Wholesale Fence LLC

96

Acousti Engineering Company of Florida

53

Total Loan Commitments

$

129,931

Total Commitments

$

175,128

Main Street will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and borrowings under the Credit Facility). Main Street follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary. The Company had total unrealized depreciation of $0.1 million on the outstanding unfunded commitments as of September 30, 2021.

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Effective January 1, 2019, ASC 842 required that a lessee evaluate its leases to determine whether they should be classified as operating or financing leases. Main Street identified one operating lease for its office space. The lease commenced May 15, 2017 and expires January 31, 2028. It contains two five-year extension options for a final expiration date of January 31, 2038.

As Main Street classified this lease as an operating lease prior to implementation, ASC 842-10-65-1 indicates that a right-of-use asset and lease liability should be recorded based on the effective date. Main Street adopted ASC 842 effective January 1, 2019 and recorded a right-of-use asset and a lease liability as of that date. After this date, Main Street has recorded lease expense on a straight-line basis, consistent with the accounting treatment for lease expense prior to the adoption of ASC 842.

Total operating lease cost incurred by Main Street for each of the three months ended September 30, 2021 and 2020 was $0.2 million and for each of the nine months ended September 30, 2021 and 2020 was $0.5 million. As of September 30, 2021, the asset related to the operating lease was $4.0 million and is included in the interest receivable and other assets balance on the consolidated balance sheet. The lease liability was $4.7 million and is included in the accounts payable and other liabilities balance on the consolidated balance sheet. As of September 30, 2021, the remaining lease term was 6.3 years and the discount rate was 4.2%.

The following table shows future minimum payments under Main Street’s operating lease as of September 30, 2021 (in thousands):

For the Years Ended December 31,

Amount

2021

$

194

2022

790

2023

804

2024

818

2025

832

Thereafter

1,779

Total

$

5,217

Main Street may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to impose liability on Main Street in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, Main Street does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on Main Street’s financial condition or results of operations in any future reporting period.

NOTE L—RELATED PARTY TRANSACTIONS

As discussed further in Note D, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of Main Street’s Investment Portfolio. At September 30, 2021, Main Street had a receivable of approximately $4.7 million due from the External Investment Manager, which included (i) approximately $3.2 million related primarily to operating expenses incurred by MSCC or its subsidiaries as required to support the External Investment Manager’s business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion in Note D) and (ii) approximately $1.5 million of dividends declared but not paid by the External Investment Manager. MSCC has entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for the External Investment Manager’s relationship with MSC Income and its other clients (see further discussion in Note A.1 and Note D).

From time to time, Main Street may make investments in clients of the External Investment Manager in the form of debt or equity capital on terms approved by Main Street’s Board of Directors. In January 2021, Main Street entered into a Term Loan Agreement with MSC Income (the “Term Loan Agreement”). The Term Loan Agreement was unanimously approved by Main Street’s Board, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, and the board of directors of MSC Income, including each director who is not an “interested person” of MSC Income or the External Investment Manager. The Term Loan Agreement initially

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provided for a term loan of $40.0 million to MSC Income, bearing interest at a fixed rate of 5.00% per annum, and matures in January 2026. The Term Loan Agreement was amended in July 2021 to provide for borrowings up to an additional $35.0 million, $20.0 million of which was funded upon signing of the amendment and $15.0 million available in two additional advances during the six months following the amendment date. Borrowings under the Term Loan Agreement are expressly subordinated and junior in right of payment to all secured indebtedness of MSC Income. In October 2021, MSC Income fully repaid all borrowings outstanding under the Term Loan Agreement and the Term Loan Agreement was terminated.

In December 2020, the External Investment Manager entered into an Investment Management Agreement with the Private Loan Fund to provide investment advisory and management services in exchange for an asset-based fee and certain incentive fees. The Private Loan Fund is a private investment fund exempt from registration under the 1940 Act that invests in debt investments in middle market companies generally with EBITDA between $7.5 million and $50 million and generally owned by a private equity sponsor, which Main Street generally refers to as Private Loan investments. In connection with the Private Loan Fund’s initial closing in December 2020, Main Street committed to contribute up to $10.0 million as a limited partner and will be entitled to distributions on such interest. In addition, certain of Main Street’s officers and employees (and certain of their immediate family members) have made capital commitments to the Private Loan Fund as limited partners and therefore have direct pecuniary interests in the Private Loan Fund. As of September 30, 2021, Main Street has funded approximately $1.0 million of its limited partner commitment and Main Street’s unfunded commitment was approximately $9.0 million.

Additionally, Main Street provided the Private Loan Fund with a revolving line of credit pursuant to an Unsecured Revolving Promissory Note, dated February 5, 2021 (the “Private Loan Fund Loan”), in an aggregate amount equal to the amount of limited partner capital commitments to the Private Loan Fund up to $50.0 million. Borrowings under the Private Loan Fund Loan bear interest at a fixed rate of 5.00% per annum and will mature on the earlier of June 30, 2022 and the date of the Private Loan Fund’s final closing. The Private Loan Fund Loan was unanimously approved by Main Street’s Board, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, and the board of directors of the Private Loan Fund, including each director who is not an “interested person” of Private Loan Fund or the External Investment Manager. As of September 30, 2021, there were $30.3 million of borrowings outstanding under the Private Loan Fund Loan.

In November 2015, Main Street’s Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the “2015 Deferred Compensation Plan”). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the “2013 Deferred Compensation Plan”). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors’ fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of September 30, 2021, $14.6 million of compensation and dividend reinvestments net of unrealized gains and losses and distributions had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $6.6 million had been deferred into phantom Main Street stock units, representing 159,369 shares of Main Street’s common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the consolidated statements of changes in net assets until such shares are actually distributed to the participant in accordance with the plan, but the related phantom stock units are included in weighted-average shares outstanding with the related dollar amount of the deferral included in total expenses in Main Street’s consolidated statements of operations as earned. The dividend amounts related to additional phantom stock units are included in the statements of changes in net assets as an increase to dividends to stockholders offset by a corresponding increase to additional paid-in capital.

NOTE M—SUBSEQUENT EVENTS

In October 2021, Main Street issued an additional $200.0 million in aggregate principal amount of the 3.00% Notes at an issue price of 101.741%, resulting in an effective interest rate of 2.60%. The total net proceeds from the 3.00% Notes, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $203.5 million. Main Street used the proceeds from this debt issuance to repay outstanding

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borrowings under its Credit Facility, providing significant additional liquidity for its ongoing investment activities and to facilitate future availability for the repayment of its existing 4.50% Notes due 2022.

In November 2021, Main Street declared a supplemental cash dividend of $0.10 per share payable in December 2021. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that Main Street declared for the fourth quarter of 2021 of $0.210 per share for each of October, November and December 2021.

During November 2021, Main Street declared regular monthly dividends of $0.215 per share for each month of January, February and March of 2022. These regular monthly dividends equal a total of $0.645 per share for the first quarter of 2022, representing a 4.9% increase from the regular monthly dividends paid in the first quarter of 2021. Including the regular monthly and supplemental dividends declared for the fourth quarter of 2021 and first quarter of 2022, Main Street will have paid $32.820 per share in cumulative dividends since its October 2007 initial public offering.

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Schedule 12-14

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments In and Advances to Affiliates

September 30, 2021

(dollars in thousands)

(unaudited)

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

September 30, 

Realized

Unrealized

Credited to

2020

Gross

Gross

2021

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

Majorityowned investments

  

  

  

  

  

  

  

  

  

ASK (Analytical Systems Keco Holdings, LLC)

Preferred Member Units

(8)

$

-

$

(3,200)

$

-

$

3,200

$

-

$

3,200

$

-

Preferred Member Units

(8)

-

2,356

-

-

4,783

-

4,783

Warrants

(8)

-

(10)

-

10

-

10

-

12.00% (L+10.00%, Floor 2.00%) Secured Debt

(8)

-

-

520

4,873

134

220

 

4,787

Café Brazil, LLC

Member Units

(8)

-

540

470

2,030

540

-

 

2,570

California Splendor Holdings LLC

Preferred Member Units

(9)

-

4,564

188

6,241

4,564

-

 

10,805

11.00% (L+10.00%, Floor 1.00%) Secured Debt

(9)

-

36

2,579

35,832

196

8,129

 

27,899

15.00% PIK Preferred Member Units

(9)

-

-

939

8,255

939

-

 

9,194

Clad-Rex Steel, LLC

Member Units

(5)

-

-

-

530

-

-

 

530

Member Units

(5)

-

1,640

2,181

8,610

1,640

-

 

10,250

10.00% Secured Debt

(5)

-

-

83

1,100

-

22

 

1,078

10.50% (L+9.50%, Floor 1.00%) Secured Debt

(5)

-

-

878

10,853

-

460

 

10,393

CMS Minerals Investments

Member Units

(9)

-

453

22

1,624

454

195

1,883

Cody Pools, Inc.

Preferred Member Units

(8)

-

15,450

1,602

14,940

15,450

-

30,390

12.25% (L+10.50%, Floor 1.75%) Secured Debt

(8)

-

6

1,400

14,216

8,000

4,169

 

18,047

Datacom, LLC

8.00% Secured Debt

(8)

(1,800)

185

-

1,615

185

1,800

 

-

Preferred Member Units

(8)

(1,294)

1,294

-

-

1,294

1,294

 

-

Preferred Member Units

(8)

(6,030)

6,030

-

-

6,030

6,030

 

-

10.50% PIK Secured Debt

(8)

(1,801)

1,945

1

10,531

1,945

12,476

 

-

Preferred Member Units

(8)

-

-

-

-

2,610

-

 

2,610

5.00% Secured Debt

(8)

-

-

564

-

8,288

81

 

8,207

Direct Marketing Solutions, Inc.

Preferred Stock

(9)

-

(2,230)

672

19,380

-

2,230

 

17,150

12.00% (L+11.00%, Floor 1.00%) Secured Debt

(9)

-

-

1,401

15,006

28

235

 

14,799

Gamber-Johnson Holdings, LLC

Member Units

(5)

-

32

3,744

52,490

2,880

-

 

55,370

9.00% (L+7.00%, Floor 2.00%) Secured Debt

(5)

-

(31)

1,435

19,838

830

30

 

20,638

GRT Rubber Technologies LLC

Member Units

(8)

-

-

3,636

44,900

-

-

 

44,900

7.10% (L+7.00%) Secured Debt

(8)

-

-

904

16,775

-

-

 

16,775

Jensen Jewelers of Idaho, LLC

Member Units

(9)

-

3,640

1,264

7,620

3,640

-

 

11,260

10.00% (Prime+6.75%, Floor 2.00%) Secured Debt

(9)

-

(10)

244

3,400

10

660

 

2,750

Kickhaefer Manufacturing Company, LLC

Member Units

(5)

-

50

75

1,160

50

-

 

1,210

Member Units

(5)

-

-

-

12,240

-

-

 

12,240

11.50% Secured Debt

(5)

-

-

1,915

22,269

44

2,000

 

20,313

9.00% Secured Debt

(5)

-

-

266

3,909

-

24

 

3,885

Market Force Information, LLC

12.00% (L+11.00%, Floor 1.00%) Secured Debt

(9)

-

-

282

1,600

1,800

-

 

3,400

12.00% PIK Secured Debt

(9)

-

(2,403)

-

13,562

-

2,403

 

11,159

MH Corbin Holding LLC

Preferred Member Units

(5)

-

(2,370)

-

2,370

-

2,370

 

-

90


Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

September 30, 

Realized

Unrealized

Credited to

2020

Gross

Gross

2021

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

13.00% Secured Debt

(5)

-

(2,059)

854

8,280

25

2,299

 

6,006

MSC Adviser I, LLC

Member Units

(8)

-

11,320

3,908

116,760

11,320

-

 

128,080

Mystic Logistics Holdings, LLC

Common Stock

(6)

-

(1,820)

548

8,990

-

1,820

 

7,170

12.00% Secured Debt

(6)

-

-

622

6,723

7

24

 

6,706

OMi Holdings, Inc.

Preferred Member Units

(8)

-

(170)

1,330

20,380

-

170

 

20,210

12.00% Secured Debt

(8)

-

176

550

-

18,000

-

 

18,000

PPL RVs, Inc.

Common Stock

(8)

-

2,190

805

11,500

2,190

-

 

13,690

7.50% (L+7.00%, Floor 0.50%) Secured Debt

(8)

-

(21)

708

11,806

790

221

 

12,375

Principle Environmental, LLC

Warrants

(8)

-

330

-

870

330

1,200

 

-

Common Stock

(8)

-

(490)

-

-

1,200

490

 

710

Preferred Member Units

(8)

-

(920)

-

10,500

-

920

 

9,580

13.00% Secured Debt

(8)

-

(62)

649

6,397

18

63

 

6,352

Quality Lease Service, LLC

Member Units

(7)

-

(180)

-

4,460

-

1,430

 

3,030

Trantech Radiator Topco, LLC

Common Stock

(7)

-

620

87

6,030

620

-

6,650

12.00% Secured Debt

(7)

-

-

811

8,644

14

-

8,658

Ziegler’s NYPD, LLC

Preferred Member Units

(8)

-

350

-

1,780

350

-

2,130

12.00% Secured Debt

(8)

-

-

57

625

-

-

625

14.00% Secured Debt

(8)

-

-

292

2,750

-

-

2,750

6.50% Secured Debt

(8)

-

21

49

979

21

-

1,000

Other controlled investments

2717 MH, L.P.

LP Interests (2717 HPP-MS, L.P.)

(8)

-

-

-

250

-

250

-

LP Interests (2717 MH, L.P.)

(8)

-

585

-

2,702

689

-

3,391

ASC Interests, LLC

Member Units

(8)

-

(400)

-

1,120

-

400

720

13.00% Secured Debt

(8)

-

-

193

1,715

116

-

1,831

ATS Workholding, LLC

5.00% Secured Debt

(9)

-

(304)

-

3,347

-

472

2,875

Barfly Ventures, LLC

Member Units

(5)

-

346

-

1,584

346

-

1,930

7.00% Secured Debt

(5)

-

-

58

343

367

-

710

Bolder Panther Group, LLC

10.50% (L+9.00%, Floor 1.50%) Secured Debt

(9)

-

329

2,582

27,225

11,775

-

39,000

14.00% Class A Preferred Member Units

(9)

-

-

1,067

10,194

-

-

10,194

8.00% Class B Preferred Member Units

(9)

-

6,310

2,087

14,000

6,310

-

20,310

9.50% (L+8.00%, Floor 1.50%) Secured Debt

(9)

-

-

36

-

500

500

-

Bond-Coat, Inc.

Common Stock

(8)

(2,320)

4,310

-

2,040

4,310

6,350

-

Brewer Crane Holdings, LLC

Preferred Member Units

(9)

-

(1,570)

397

5,850

-

1,570

4,280

11.00% (L+10.00%, Floor 1.00%) Secured Debt

(9)

-

-

708

8,513

15

372

8,156

Bridge Capital Solutions Corporation

Preferred Member Units

(6)

-

-

75

1,000

-

-

1,000

Warrants

(6)

-

840

-

3,220

840

-

4,060

13.00% Secured Debt

(6)

-

-

100

998

2

-

1,000

13.00% Secured Debt

(6)

-

-

1,279

8,403

410

-

8,813

CBT Nuggets, LLC

Member Units

(9)

-

6,540

1,901

46,080

6,540

-

52,620

Centre Technologies Holdings, LLC

Preferred Member Units

(8)

-

(320)

90

6,160

-

320

5,840

12.00% (L+10.00%, Floor 2.00%) Secured Debt

(8)

-

-

969

11,549

28

2,059

9,518

Chamberlin Holding LLC

Member Units

(8)

-

160

51

1,270

160

-

1,430

Member Units

(8)

-

(3,930)

3,707

28,070

-

3,930

24,140

9.00% (L+8.00%, Floor 1.00%) Secured Debt

(8)

-

18

1,117

15,212

4,000

1,395

17,817

Charps, LLC

Preferred Member Units

(5)

-

3,720

2,120

10,520

3,720

-

14,240

10.00% Unsecured Debt

(5)

-

(382)

846

8,475

282

3,723

5,034

15.00%

(5)

-

-

4

669

-

669

-

91


Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

September 30, 

Realized

Unrealized

Credited to

2020

Gross

Gross

2021

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

Colonial Electric Company LLC

Preferred Member Units

(6)

-

780

200

-

8,460

-

8,460

12.00% Secured Debt

(6)

-

-

1,938

-

24,969

315

24,654

CompareNetworks Topco, LLC

Preferred Member Units

(9)

-

5,220

316

6,780

5,220

-

12,000

10.00% (L+9.00%, Floor 1.00%) Secured Debt

(9)

-

(16)

609

7,954

15

1,492

6,477

Copper Trail Energy Fund I, LP - CTMH

LP Interests (CTMH, LP)

(9)

-

-

-

747

-

37

710

Digital Products Holdings LLC

Preferred Member Units

(5)

-

-

150

9,835

-

-

9,835

11.00% (L+10.00%, Floor 1.00%) Secured Debt

(5)

-

-

1,494

18,077

33

990

17,120

Garreco, LLC

Member Units

(8)

-

800

-

1,410

800

-

2,210

9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%) Secured Debt

(8)

-

-

308

4,519

-

-

4,519

Gulf Manufacturing, LLC

Member Units

(8)

-

1,130

1,210

4,510

1,130

-

5,640

Gulf Publishing Holdings, LLC

10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) Secured Debt

(8)

-

-

17

250

14

7

257

12.50% (6.25% Cash, 6.25% PIK) Secured Debt

(8)

-

(2,012)

1,065

12,044

849

2,431

10,462

Harrison Hydra-Gen, Ltd.

Common Stock

(8)

-

(1,920)

-

5,450

-

1,920

3,530

J&J Services, Inc.

Preferred Stock

(7)

-

2,720

-

12,680

2,720

-

15,400

11.50% Secured Debt

(7)

-

(30)

1,084

12,800

30

2,030

10,800

KBK Industries, LLC

Member Units

(5)

-

420

456

13,200

420

-

13,620

MS Private Loan Fund

LP Interests

(8)

-

-

-

-

1,000

-

1,000

5.00% Unsecured Debt

(8)

-

-

642

-

33,866

3,575

30,291

MSC Income Fund Inc.

5.00% Unsecured Debt

(8)

-

352

1,603

-

60,000

-

60,000

NAPCO Precast, LLC

Member Units

(8)

-

(2,540)

1,823

16,100

-

2,540

13,560

Nebraska Vet AcquireCo, LLC (NVS)

Preferred Member Units

(5)

-

-

-

6,500

-

-

6,500

12.00% Secured Debt

(5)

-

-

979

10,395

13

-

10,408

NexRev LLC

Preferred Member Units

(8)

-

1,810

60

1,470

1,810

-

3,280

11.00% Secured Debt

(8)

-

(1,351)

1,417

16,727

28

2,005

14,750

NRI Clinical Research, LLC

Member Units

(9)

8,786

(4,835)

2,805

5,600

-

5,600

-

Warrants

(9)

-

(1,238)

-

1,490

-

1,490

-

9.00% Secured Debt

(9)

-

(48)

380

5,620

48

5,668

-

NRP Jones, LLC

Member Units

(5)

-

3,619

(45)

2,821

3,619

-

6,440

12.00% Secured Debt

(5)

-

-

189

2,080

-

-

2,080

NuStep, LLC

Preferred Member Units

(5)

-

2,720

-

10,780

2,720

-

13,500

10.50% Secured Debt

(5)

-

17

1,507

17,193

47

-

17,240

7.50% (L+6.50%, Floor 1.00%) Secured Debt

(5)

-

-

25

-

2,000

400

1,600

Orttech Holdings, LLC

Preferred Stock

(5)

-

-

-

-

12,600

1,000

11,600

12.00% (L+11.00%, Floor 1.00%) Secured Debt

(5)

-

-

767

-

24,183

-

24,183

Pearl Meyer Topco LLC

Member Units

(6)

-

5,539

1,949

15,940

5,540

-

21,480

12.00% Secured Debt

(6)

-

258

3,223

37,202

310

3,838

33,674

Pegasus Research Group, LLC

Member Units

(8)

-

(1,550)

-

8,830

-

1,550

7,280

River Aggregates, LLC

Member Units

(8)

-

160

125

3,240

160

-

3,400

Tedder Industries, LLC

Preferred Member Units

(9)

-

-

-

8,136

-

-

8,136

12.00% Secured Debt

(9)

-

-

1,486

16,301

2,032

1,600

16,733

UnionRock Energy Fund II, LP

LP Interests

(9)

-

2,407

-

2,894

3,781

220

6,455

Vision Interests, Inc.

Series A Preferred Stock

(9)

-

(160)

-

3,160

-

160

3,000

13.00% Secured Debt

(9)

-

-

200

2,028

-

-

2,028

Other

92


Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

September 30, 

Realized

Unrealized

Credited to

2020

Gross

Gross

2021

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

Amounts related to investments transferred to or from other 1940 Act classification during the period

-

-

-

-

-

-

-

Total Control investments

$

(4,459)

$

65,756

$

85,904

$

1,113,725

$

340,046

$

117,553

$

1,336,218

Affiliate Investments

AAC Holdings, Inc.

Common Stock

(7)

$

-

$

(1,038)

$

-

$

3,148

$

-

$

1,038

$

2,110

Warrants

(7)

-

(968)

-

2,938

-

968

1,970

18.00% (10.00% Cash, 8.00% PIK) Secured Debt

(7)

-

(89)

1,329

9,187

744

223

9,708

AFG Capital Group, LLC

Preferred Member Units

(8)

-

1,570

200

5,810

1,570

-

7,380

10.00% Secured Debt

(8)

-

-

26

491

-

260

231

ATX Networks Corp.

10.00% PIK Unsecured Debt

(6)

-

-

-

-

1,963

-

1,963

8.50% (L+7.50%, Floor 1.00%) Secured Debt

(6)

-

-

-

-

7,092

-

7,092

8.75% (7.25% Cash, 1.50% PIK) (1.50% PIK + L+6.25%, Floor 1.00%) Secured Debt

(6)

(4,528)

1,133

-

12,263

1,521

13,784

-

BBB Tank Services, LLC

Member Units

(8)

-

(280)

-

280

-

280

-

12.00% (L+11.00%, Floor 1.00%) Unsecured Debt

(8)

-

(1,000)

464

4,722

27

1,001

3,748

15.00% PIK Preferred Stock (non-voting)

(8)

-

(162)

11

151

11

162

-

Boccella Precast Products LLC

Member Units

(6)

-

(1,210)

379

6,040

-

1,210

4,830

10.00% Secured Debt

(6)

-

-

1

-

320

-

320

Brightwood Capital Fund Investments - Fund V

LP Interests (Brightwood Capital Fund V, LP)

(6)

-

-

-

-

1,000

-

1,000

Buca C, LLC

10.25% (L+9.25%, Floor 1.00%) Secured Debt

(7)

-

(373)

1,264

14,256

487

373

14,370

CAI Software LLC

Member Units

(6)

-

7,321

1,900

7,190

7,321

1,921

12,590

12.50% Secured Debt

(6)

-

(1)

5,547

47,474

23,601

4,474

66,601

Chandler Signs Holdings, LLC

Class A Units

(8)

-

(810)

-

1,460

-

810

650

Charlotte Russe, Inc

Common Stock

(9)

(3,141)

3,141

-

-

3,141

3,141

-

Classic H&G Holdings, LLC

Preferred Member Units

(6)

-

4,110

820

9,510

4,110

-

13,620

7.00% (L+6.00%, Floor 1.00%) Secured Debt

(6)

-

-

26

-

1,400

-

1,400

8.00% Secured Debt

(6)

-

(73)

1,807

24,800

73

5,599

19,274

Congruent Credit Opportunities Funds

LP Interests (Congruent Credit Opportunities Fund
II, LP)

(8)

(4,449)

4,355

-

94

4,355

4,449

-

LP Interests (Congruent Credit Opportunities Fund
III, LP)

(8)

-

(96)

583

11,540

-

1,137

10,403

Copper Trail Energy Fund I, LP

LP Interests (Copper Trail Energy Fund I, LP)

(9)

(203)

379

378

1,782

379

2,161

-

Dos Rios Partners

LP Interests (Dos Rios Partners - A, LP)

(8)

-

1,450

-

1,720

1,450

-

3,170

LP Interests (Dos Rios Partners, LP)

(8)

-

4,567

-

5,417

4,567

-

9,984

Dos Rios Stone Products LLC

Class A Preferred Units

(8)

-

(340)

-

1,250

-

340

910

East Teak Fine Hardwoods, Inc.

Common Stock

(7)

(80)

180

100

300

180

480

-

EIG Fund Investments

LP Interests (EIG Global Private Debt Fund-A, L.P.)

(8)

9

92

35

526

125

177

474

Freeport Financial SBIC Fund LP

LP Interests (Freeport Financial SBIC Fund LP)

(5)

-

869

-

5,264

869

-

6,133

LP Interests (Freeport First Lien Loan Fund III LP)

(5)

-

66

613

10,321

66

3,156

7,231

GFG Group, LLC.

Preferred Member Units

(5)

-

2,090

460

-

6,990

-

6,990

12.00% Secured Debt

(5)

-

-

1,211

-

15,631

3,200

12,431

93


Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

September 30, 

Realized

Unrealized

Credited to

2020

Gross

Gross

2021

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

Hawk Ridge Systems, LLC

Preferred Member Units

(9)

-

270

-

420

270

-

690

Preferred Member Units

(9)

-

5,130

691

8,030

5,130

-

13,160

7.00% (L+6.00%, Floor 1.00%) Secured Debt

(9)

-

-

23

-

2,585

-

2,585

9.00% Secured Debt

(9)

-

(25)

1,366

18,400

25

25

18,400

Houston Plating and Coatings, LLC

Member Units

(8)

-

(1,620)

180

5,080

-

1,620

3,460

8.00% Unsecured Convertible Debt

(8)

-

-

182

2,900

-

-

2,900

HPEP 3, L.P.

LP Interests (HPEP 3, L.P.)

(8)

-

803

-

3,258

1,177

252

4,183

I-45 SLF LLC

Member Units (Fully diluted 20.0%; 24.40% profits
interest) (8)

(8)

-

413

1,386

15,787

1,215

2,000

15,002

Iron-Main Investments, LLC

Common Stock

(5)

-

-

-

-

1,027

-

1,027

12.50% Secured Debt

(5)

-

-

98

-

3,168

-

3,168

13.00% Secured Debt

(5)

-

-

191

-

4,555

-

4,555

L.F. Manufacturing Holdings, LLC

Member Units

(8)

-

50

-

2,050

50

-

2,100

14.00% PIK Preferred Member Units (non-voting)

(8)

-

-

10

93

10

-

103

Meisler Operating LLC

Common Stock

(5)

17,048

(7,414)

-

16,010

-

16,010

-

OnAsset Intelligence, Inc.

Common Stock

(8)

-

(830)

-

-

830

830

-

Warrants

(8)

-

830

-

-

830

830

-

10.00% PIK Unsecured Debt

(8)

-

-

6

64

129

6

187

12.00% PIK Secured Debt

(8)

-

-

685

7,301

686

-

7,987

Oneliance, LLC

Preferred Stock

(7)

-

-

-

-

1,056

-

1,056

12.00% (L+11.00%, Floor 1.00%) Secured Debt

(7)

-

-

162

-

5,545

-

5,545

PCI Holding Company, Inc.

Preferred Stock

(9)

-

(203)

2,852

4,130

-

4,130

-

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

12.00% Secured Debt

(8)

(694)

-

-

-

-

-

-

SI East, LLC (Stavig)

Preferred Member Units

(7)

-

5,422

2,102

9,780

5,422

4,782

10,420

10.25% Secured Debt

(7)

-

(74)

2,332

32,962

34,500

3,862

63,600

Slick Innovations, LLC

Common Stock

(6)

-

180

-

1,330

180

-

1,510

Warrants

(6)

-

40

-

360

40

-

400

13.00% Secured Debt

(6)

-

(33)

545

5,720

33

433

5,320

Sonic Systems International, LLC

Common Stock

(8)

-

-

26

-

1,070

-

1,070

8.50% (L+7.50%, Floor 1.00%) Secured Debt

(8)

-

-

111

-

11,747

-

11,747

Superior Rigging & Erecting Co.

Preferred Member Units

(7)

-

-

-

4,500

-

-

4,500

12.00% Secured Debt

(7)

-

-

1,982

21,298

25

-

21,323

The Affiliati Network, LLC

Preferred Stock

(9)

-

-

-

-

6,400

-

6,400

10.00% Secured Debt

(9)

-

-

2

-

381

-

381

11.83% Secured Debt

(9)

-

-

421

-

13,862

239

13,623

UniTek Global Services, Inc.

15.00% PIK Secured Convertible Debt

(6)

-

966

105

-

2,249

87

2,162

20.00% PIK Preferred Stock

(6)

-

737

-

375

737

-

1,112

20.00% PIK Preferred Stock

(6)

-

(230)

230

2,833

230

230

2,833

8.50% (6.50% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) Secured Debt

(6)

-

114

183

2,425

243

454

2,214

Volusion, LLC

Preferred Member Units

(8)

-

-

-

5,990

-

-

5,990

11.50% Secured Debt

(8)

-

991

1,736

19,243

991

2,800

17,434

8.00% Unsecured Convertible Debt

(8)

-

118

24

291

118

-

409

Other

Amounts related to investments transferred to or from other 1940 Act classification during the period

-

-

-

(12,263)

-

-

-

Total Affiliate investments

$

3,962

$

30,518

$

34,785

$

366,301

$

195,509

$

88,934

$

485,139

94


Table of Contents


(1)The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.
(2)Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts from investments transferred from other 1940 Act classifications during the period.”
(3)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.
(4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.
(5)Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of September 30, 2021 for control investments located in this region was $297,953. This represented 22.3% of net assets as of September 30, 2021. The fair value as of September 30, 2021 for affiliate investments located in this region was $41,535. This represented 8.6% of net assets as of September 30, 2021.
(6)Portfolio company located in the Northeast region and Canada as determined by location of the corporate headquarters. The fair value as of September 30, 2021 for control investments located in this region was $117,017. This represented 8.8% of net assets as of September 30, 2021. The fair value as of September 30, 2021 for affiliate investments located in this region was $144,241. This represented 29.7% of net assets as of September 30, 2021.
(7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of September 30, 2021 for control investments located in this region was $44,538. This represented 3.3% of net assets as of September 30, 2021. The fair value as of September 30, 2021 for affiliate investments located in this region was $134,602. This represented 27.7% of net assets as of September 30, 2021.
(8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of September 30, 2021 for control investments located in this region was $573,437. This represented 42.9% of net assets as of September 30, 2021. The fair value as of September 30, 2021 for affiliate investments located in this region was $109,522. This represented 22.6% of net assets as of September 30, 2021.
(9)Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of September 30, 2021 for control investments located in this region was $303,273. This represented 22.7% of net assets as of September 30, 2021. The fair value as of September 30, 2021 for affiliate investments located in this region was $55,239. This represented 11.4% of net assets as of September 30, 2021.
(10)All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.
(11)This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can be located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs.

95


Table of Contents

(12)Investment has an unfunded commitment as of September 30, 2021 (see Note K). The fair value of the investment includes the impact of the fair value of any unfunded commitments.

96


Table of Contents

Schedule 12-14

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments in and Advances to Affiliates

September 30, 2020

(dollars in thousands)

(unaudited)

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

September 30, 

Realized

Unrealized

Credited to

2019

Gross

Gross

2020

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

Majorityowned investments

Café Brazil, LLC

 

Member Units

 

(8)

$

$

(410)

$

38

$

2,440

$

$

410

$

2,030

California Splendor Holdings LLC

 

LIBOR Plus 8.00% (Floor 1.00%)

 

(9)

 

 

(40)

 

826

 

7,104

 

18,200

 

5,840

 

19,464

 

LIBOR Plus 10.00% (Floor 1.00%)

 

(9)

 

 

(65)

 

2,490

 

27,801

 

39

 

65

 

27,775

 

Preferred Member Units

 

(9)

 

 

 

818

 

7,163

 

818

 

1

 

7,980

 

Preferred Member Units

 

(9)

 

 

(1,141)

 

188

 

7,382

 

 

1,141

 

6,241

Clad-Rex Steel, LLC

 

LIBOR Plus 9.50% (Floor 1.00%)

 

(5)

 

 

49

 

897

 

10,781

 

66

 

 

10,847

 

Member Units

 

(5)

 

 

(1,020)

 

317

 

9,630

 

 

1,020

 

8,610

 

10% Secured Debt

 

(5)

 

 

(11)

 

85

 

1,137

 

 

30

 

1,107

 

Member Units

 

(5)

 

 

 

 

460

 

 

 

460

CMS Minerals Investments

 

Member Units

 

(9)

 

 

(69)

 

 

1,900

 

 

203

 

1,697

Cody Pools, Inc.

 

LIBOR Plus 10.50% (Floor 1.75%)

 

(8)

143

1,320

16,000

400

15,600

 

Preferred Member Units

 

(8)

3,523

58

11,840

11,840

CompareNetworks Topco, LLC

 

LIBOR Plus 11.00% (Floor 1.00%)

 

(9)

 

 

 

826

 

8,288

 

2,019

 

910

 

9,397

 

Preferred Member Units

 

(9)

 

 

2,350

 

 

3,010

 

2,350

 

 

5,360

Direct Marketing Solutions, Inc.

 

LIBOR Plus 11.00% (Floor 1.00%)

 

(9)

 

 

(18)

 

1,464

 

15,707

 

36

 

653

 

15,090

 

Preferred Stock

 

(9)

 

 

(140)

 

 

20,200

 

 

140

 

20,060

Gamber-Johnson Holdings, LLC

 

LIBOR Plus 6.50% (Floor 2.00%)

 

(5)

 

 

(26)

 

1,303

 

19,022

 

1,626

 

810

 

19,838

 

Member Units

 

(5)

 

 

(170)

 

3,054

 

53,410

 

 

170

 

53,240

GRT Rubber Technologies LLC

 

LIBOR Plus 7.00%

 

(8)

 

 

 

988

 

15,016

 

1,759

 

 

16,775

 

Member Units

 

(8)

 

 

(2,020)

 

2,593

 

47,450

 

 

2,020

 

45,430

Guerdon Modular Holdings, Inc.

 

16.00% Secured Debt

 

(9)

 

(12,776)

 

12,588

 

 

 

12,776

 

12,776

 

 

LIBOR Plus 8.50% (Floor 1.00%)

 

(9)

 

(993)

 

1,010

 

 

 

993

 

993

 

 

Preferred Stock

 

(9)

 

(1,140)

 

1,140

 

 

 

1,140

 

1,140

 

 

Common Stock

 

(9)

 

(2,849)

 

2,983

 

 

 

2,849

 

2,849

 

 

Warrants

 

(9)

 

 

 

 

 

 

 

Harborside Holdings, LLC

 

Member Units

 

(8)

 

 

(4,640)

 

 

9,560

 

100

 

4,640

 

5,020

IDX Broker, LLC

 

11.00% Secured Debt

 

(9)

 

 

(42)

 

711

 

13,400

 

42

 

13,442

 

 

Preferred Member Units

 

(9)

 

9,337

 

(9,088)

 

1,193

 

15,040

 

 

15,040

 

Jensen Jewelers of Idaho, LLC

 

Prime Plus 6.75% (Floor 2.00%)

 

(9)

 

 

(56)

 

324

 

4,000

 

10

 

356

 

3,654

 

Member Units

 

(9)

 

 

(1,000)

 

236

 

8,270

 

 

1,000

 

7,270

Kickhaefer Manufacturing Company, LLC

 

9.50% Current/2.00% PIK Secured Debt

 

(5)

 

 

 

2,247

 

24,982

 

1,414

 

2,947

 

23,449

 

Member Units

 

(5)

 

 

(90)

 

 

12,240

 

 

90

 

12,150

 

9.00% Secured Debt

 

(5)

 

 

 

268

 

3,939

 

 

22

 

3,917

 

Member Units

 

(5)

 

 

 

68

 

1,160

 

 

 

1,160

Market Force Information, LLC

 

12.00% PIK Secured Debt

 

(9)

 

 

(11,612)

 

242

 

22,621

 

2,795

 

11,704

 

13,712

 

LIBOR Plus 11.00% (Floor 1.00%)

 

(9)

 

 

 

78

 

2,695

 

1,091

 

2,886

 

900

 

Member Units

 

(9)

 

 

(5,280)

 

 

5,280

 

 

5,280

 

MH Corbin Holding LLC

 

13.00% Secured Debt

 

(5)

 

 

(76)

 

888

 

8,890

 

24

 

316

 

8,598

 

Preferred Member Units

 

(5)

 

 

(20)

 

 

20

 

 

20

 

 

Preferred Member Units

 

(5)

 

 

(1,810)

 

 

4,770

 

 

1,810

 

2,960

Mid-Columbia Lumber Products, LLC

 

10.00% Secured Debt

 

(9)

 

 

148

 

44

 

1,602

 

148

 

1,750

 

 

12.00% Secured Debt

 

(9)

 

 

256

 

119

 

3,644

 

256

 

3,900

 

 

Member Units

 

(9)

 

(1)

 

(1,000)

 

1

 

 

101

 

101

 

 

9.50% Secured Debt

 

(9)

 

 

 

30

 

701

 

19

 

720

 

 

Member Units

 

(9)

 

 

(959)

 

20

 

1,640

 

709

 

959

 

1,390

MSC Adviser I, LLC

 

Member Units

 

(8)

 

 

(3,440)

 

1,394

 

74,520

 

 

3,440

 

71,080

Mystic Logistics Holdings, LLC

 

12.00% Secured Debt

 

(6)

 

 

 

605

 

6,253

 

988

 

520

 

6,721

 

Common Stock

 

(6)

 

 

1,760

 

 

8,410

 

1,760

 

 

10,170

OMi Holdings, Inc.

 

Common Stock

 

(8)

 

 

2,480

 

543

 

16,950

 

2,480

 

 

19,430

Pearl Meyer Topco LLC

 

12.00% Secured Debt

 

(6)

 

 

 

2,243

 

 

34,676

 

 

34,676

 

Member Units

 

(6)

 

 

 

269

 

 

13,800

 

800

 

13,000

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Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

September 30, 

Realized

Unrealized

Credited to

2019

Gross

Gross

2020

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

PPL RVs, Inc.

 

LIBOR Plus 8.75% PIK (Floor 0.50%)

 

(8)

 

 

 

964

 

12,118

 

149

 

500

 

11,767

 

Common Stock

 

(8)

 

 

1,210

 

 

9,930

 

1,210

 

 

11,140

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

 

13.00% Secured Debt

 

(8)

 

 

50

 

658

 

6,397

 

 

 

6,397

 

Preferred Member Units

 

(8)

 

 

(2,160)

 

 

13,390

 

 

2,160

 

11,230

 

Warrants

 

(8)

 

 

(160)

 

 

1,090

 

 

160

 

930

Quality Lease Service, LLC

 

Member Units

 

(7)

 

 

(4,880)

 

 

9,289

 

301

 

4,880

 

4,710

Trantech Radiator Topco, LLC

 

12.00% Secured Debt

 

(7)

 

 

69

 

832

 

9,102

 

86

 

480

 

8,708

 

Common Stock

 

(7)

 

 

3,115

 

87

 

4,655

 

3,115

 

1

 

7,769

Vision Interests, Inc.

 

13.00% Secured Debt

 

(9)

 

 

 

201

 

2,028

 

 

 

2,028

 

Series A Preferred Stock

 

(9)

 

 

(630)

 

 

4,089

 

 

630

 

3,459

 

Common Stock

 

(9)

 

(3,586)

 

3,296

 

 

409

 

3,296

 

3,705

 

Ziegler’s NYPD, LLC

 

6.50% Secured Debt

 

(8)

 

 

(21)

 

49

 

1,000

 

 

21

 

979

 

12.00% Secured Debt

 

(8)

 

 

 

57

 

625

 

 

 

625

 

14.00% Secured Debt

 

(8)

 

 

(35)

 

293

 

2,750

 

 

35

 

2,715

 

Warrants

 

(8)

 

 

 

 

 

 

 

 

Preferred Member Units

 

(8)

 

 

(130)

 

 

1,269

 

 

130

 

1,139

Other controlled investments

 

 

 

 

 

 

 

 

 

Access Media Holdings, LLC

 

10.00% PIK Secured Debt

 

(5)

 

 

(2,449)

 

38

 

6,387

 

 

2,449

 

3,938

 

Preferred Member Units

 

(5)

 

 

 

 

(284)

 

 

 

(284)

 

Member Units

 

(5)

 

 

 

 

 

 

 

Analytical Systems Keco, LLC

 

LIBOR Plus 10.00% (Floor 2.00%)

 

(8)

 

 

 

546

 

5,210

 

55

 

340

 

4,925

 

Preferred Member Units

 

(8)

 

 

 

 

3,200

 

 

 

3,200

 

Warrants

 

(8)

 

 

34

 

 

316

 

34

 

 

350

ASC Interests, LLC

 

13.00% Secured Debt

 

(8)

 

 

 

176

 

1,639

 

 

28

 

1,611

 

Member Units

 

(8)

 

 

(240)

 

 

1,290

 

 

240

 

1,050

ATS Workholding, LLC

 

5.00% Secured Debt

 

(9)

 

 

(1,230)

 

282

 

4,521

 

136

 

1,250

 

3,407

 

Preferred Member Units

 

(9)

 

 

(939)

 

 

939

 

 

939

 

Bond-Coat, Inc.

 

15.00% Secured Debt

 

(8)

 

 

 

1,399

 

11,473

 

123

 

11,596

 

 

Common Stock

 

(8)

 

 

(4,990)

 

 

8,300

 

 

4,990

 

3,310

Brewer Crane Holdings, LLC

 

LIBOR Plus 10.00% (Floor 1.00%)

 

(9)

 

 

 

767

 

8,989

 

15

 

372

 

8,632

 

Preferred Member Units

 

(9)

 

 

1,330

 

90

 

4,280

 

1,330

 

 

5,610

Bridge Capital Solutions Corporation

 

13.00% Secured Debt

 

(6)

 

 

 

1,316

 

7,797

 

443

 

 

8,240

 

Warrants

 

(6)

 

 

(500)

 

 

3,500

 

 

500

 

3,000

 

13.00% Secured Debt

 

(6)

 

 

 

101

 

996

 

2

 

 

998

 

Preferred Member Units

 

(6)

 

 

 

75

 

1,000

 

 

 

1,000

CBT Nuggets, LLC

 

Member Units

 

(9)

 

 

(5,120)

 

954

 

50,850

 

 

5,120

 

45,730

Centre Technologies Holdings, LLC

 

LIBOR Plus 10.00% (Floor 2.00%)

 

(8)

 

 

 

1,114

 

12,136

 

19

 

459

 

11,696

 

Preferred Member Units

 

(8)

 

 

220

 

90

 

5,840

 

220

 

 

6,060

Chamberlin Holding LLC

 

LIBOR Plus 10.00% (Floor 1.00%)

 

(8)

 

 

(35)

 

1,551

 

17,773

 

35

 

1,835

 

15,973

 

Member Units

 

(8)

 

 

3,960

 

2,915

 

24,040

 

3,960

 

 

28,000

 

Member Units

 

(8)

 

 

(530)

 

51

 

1,450

 

 

530

 

920

Charps, LLC

 

15.00% Secured Debt

 

(5)

 

 

 

223

 

2,000

 

 

154

 

1,846

 

8.67% Current / 1.33% PIK

 

(5)

 

 

596

 

186

 

 

8,507

 

 

8,507

 

Preferred Member Units

 

(5)

 

 

2,480

 

455

 

6,920

 

2,480

 

 

9,400

Copper Trail Fund Investments

 

LP Interests (CTMH, LP)

 

(9)

 

 

 

 

872

 

 

125

 

747

Datacom, LLC

 

8.00% Secured Debt

 

(8)

 

 

 

 

1,615

 

 

 

1,615

 

10.50% PIK Secured Debt

 

(8)

 

 

 

 

10,142

 

 

 

10,142

 

Class A Preferred Member Units

 

(8)

 

 

 

 

 

 

 

 

Class B Preferred Member Units

 

(8)

 

 

 

 

 

 

 

Digital Products Holdings LLC

 

LIBOR Plus 10.00% (Floor 1.00%)

 

(5)

 

 

643

 

1,655

 

18,452

 

678

 

1,117

 

18,013

 

Preferred Member Units

 

(5)

 

 

1,734

 

150

 

5,174

 

1,734

 

 

6,908

Garreco, LLC

 

LIBOR Plus 8.00% (Floor 1.00%, Ceiling 1.50%)

 

(8)

 

 

 

324

 

4,515

 

4

 

 

4,519

 

Member Units

 

(8)

 

 

(860)

 

 

2,560

 

 

860

 

1,700

Gulf Manufacturing, LLC

 

Member Units

 

(8)

 

 

(3,030)

 

135

 

7,430

 

 

3,030

 

4,400

Gulf Publishing Holdings, LLC

 

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 5.25% / 5.25% PIK

 

(8)

 

 

 

21

 

280

 

10

 

43

 

247

 

6.25% Current / 6.25% PIK

 

(8)

 

 

(1,091)

 

1,226

 

12,493

 

630

 

1,295

 

11,828

 

Member Units

 

(8)

 

 

(2,420)

 

 

2,420

 

 

2,420

 

Harris Preston Fund Investments

 

LP Interests (2717 MH, L.P.)

 

(8)

 

 

120

 

 

3,157

 

172

 

52

 

3,277

Harrison Hydra-Gen, Ltd.

 

Common Stock

 

(8)

 

 

(2,330)

 

104

 

7,970

 

 

2,330

 

5,640

J&J Services, Inc.

 

11.50% Secured Debt

 

(7)

 

 

122

 

1,508

 

17,430

 

170

 

3,200

 

14,400

 

Preferred Stock

 

(7)

 

 

4,835

 

 

7,160

 

4,835

 

75

 

11,920

KBK Industries, LLC

 

Member Units

 

(5)

 

 

(2,330)

 

446

 

15,470

 

 

2,330

 

13,140

NAPCO Precast, LLC

 

Member Units

 

(8)

 

 

(2,280)

 

425

 

14,760

 

 

2,280

 

12,480

NexRev LLC

 

11.00% PIK Secured Debt

 

(8)

 

 

(596)

 

1,483

 

17,469

 

191

 

1,032

 

16,628

 

Preferred Member Units

 

(8)

 

 

(5,360)

 

(55)

 

6,310

 

 

5,360

 

950

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Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

September 30, 

Realized

Unrealized

Credited to

2019

Gross

Gross

2020

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

NRI Clinical Research, LLC

 

10.50% Secured Debt

 

(9)

 

 

(35)

 

598

 

5,981

 

1,554

 

1,415

 

6,120

 

Warrants

 

(9)

 

 

160

 

 

1,230

 

160

 

 

1,390

 

Member Units

 

(9)

 

 

333

 

377

 

4,988

 

710

 

377

 

5,321

NRP Jones, LLC

 

12.00% Secured Debt

 

(5)

 

 

 

582

 

6,376

 

 

 

6,376

 

Member Units

 

(5)

 

 

(1,400)

 

25

 

4,710

 

 

1,400

 

3,310

NuStep, LLC

 

12.00% Secured Debt

 

(5)

 

 

 

1,832

 

19,703

 

32

 

160

 

19,575

 

Preferred Member Units

 

(5)

 

 

 

 

10,200

 

 

 

10,200

Pegasus Research Group, LLC

 

Member Units

 

(8)

 

 

1,530

 

491

 

8,170

 

1,530

 

 

9,700

River Aggregates, LLC

 

Zero Coupon Secured Debt

 

(8)

 

 

28

 

 

722

 

28

 

750

 

 

Member Units

 

(8)

 

4,015

 

(3,840)

 

187

 

4,990

 

 

4,990

 

 

Member Units

 

(8)

 

 

221

 

 

3,169

 

221

 

 

3,390

Tedder Industries, LLC

 

12.00% Secured Debt

 

(9)

 

 

 

1,582

 

16,912

 

22

 

 

16,934

 

Preferred Member Units

 

(9)

 

 

 

 

8,136

 

 

 

8,136

UnionRock Energy Fund II, LP

 

LP Interests

 

(9)

 

 

 

 

 

2,894

 

 

2,894

Other

 

 

 

 

 

 

 

 

 

Amounts related to investments transferred to or from other 1940 Act classification during the period

 

 

 

(7,832)

 

4,252

 

3

 

4,564

 

 

 

Total Control investments

 

 

 

$

(15,825)

 

$

(35,096)

 

$

57,357

 

$

1,032,721

 

$

174,015

 

$

181,459

 

$

1,020,713

Affiliate Investments

 

 

 

 

 

 

 

 

 

AFG Capital Group, LLC

 

10.00% Secured Debt

 

(8)

 

$

 

$

 

$

53

 

$

838

 

$

 

$

260

 

$

578

 

Preferred Member Units

 

(8)

 

 

180

 

 

5,180

 

180

 

 

5,360

American Trailer Rental Group LLC

 

LIBOR Plus 7.25% (Floor 1.00%)

 

(5)

 

 

(182)

 

1,119

 

27,087

 

182

 

27,269

 

 

Member Units

 

(5)

 

 

1,269

 

 

8,540

 

5,010

 

 

13,550

BBB Tank Services, LLC

 

LIBOR Plus 11.00% (Floor 1.00%)

 

(8)

 

 

(51)

 

501

 

4,698

 

55

 

51

 

4,702

 

Preferred Member Units

 

(8)

 

 

 

15

 

131

 

15

 

 

146

 

Member Units

 

(8)

 

 

(80)

 

 

290

 

 

80

 

210

Boccella Precast Products LLC

 

LIBOR Plus 10.00% (Floor 1.00%)

 

(6)

 

 

(138)

 

982

 

13,244

 

138

 

13,382

 

 

Member Units

 

(6)

 

 

(670)

 

424

 

6,270

 

 

670

 

5,600

Buca C, LLC

 

LIBOR Plus 9.25% (Floor 1.00%)

 

(7)

 

 

(1,326)

 

1,534

 

18,794

 

23

 

1,326

 

17,491

 

Preferred Member Units

 

(7)

 

 

(4,005)

 

69

 

4,701

 

69

 

4,005

 

765

CAI Software LLC

 

12.50% Secured Debt

 

(6)

 

 

84

 

1,897

 

9,160

 

19,500

 

2,053

 

26,607

 

Member Units

 

(6)

 

 

369

 

10

 

5,210

 

720

 

 

5,930

Chandler Signs Holdings, LLC

 

Class A Units

 

(8)

 

 

(690)

 

(91)

 

2,740

 

 

690

 

2,050

Charlotte Russe, Inc

 

Common Stock

 

(9)

 

 

 

 

 

 

 

Classic H&G Holdings, LLC

 

12.00% Secured Debt

 

(6)

 

 

227

 

2,338

 

 

26,000

 

1,200

 

24,800

 

Preferred Member Units

 

(6)

 

 

2,790

 

259

 

 

8,550

 

 

8,550

Congruent Credit Opportunities Funds

 

LP Interests (Fund II)

 

(8)

 

 

 

 

855

 

 

 

855

 

LP Interests (Fund III)

 

(8)

 

 

(399)

 

576

 

13,915

 

 

1,819

 

12,096

Copper Trail Fund Investments

 

LP Interests (Copper Trail Energy Fund I, LP)

 

(9)

 

 

(672)

 

597

 

2,362

 

 

508

 

1,854

Dos Rios Partners

 

LP Interests (Dos Rios Partners, LP)

 

(8)

 

 

(759)

 

 

7,033

 

759

 

759

 

7,033

 

LP Interests (Dos Rios Partners - A, LP)

 

(8)

 

 

(241)

 

 

2,233

 

241

 

241

 

2,233

East Teak Fine Hardwoods, Inc.

 

Common Stock

 

(7)

 

 

(100)

 

4

 

400

 

 

100

 

300

EIG Fund Investments

 

LP Interests (EIG Global Private Debt fund-A, L.P.)

 

(8)

 

6

 

(165)

 

104

 

720

 

110

 

304

 

526

Freeport Financial Funds

 

LP Interests (Freeport Financial SBIC Fund LP)

 

(5)

 

 

(697)

 

 

5,778

 

 

697

 

5,081

 

LP Interests (Freeport First Lien Loan Fund III LP)

 

(5)

 

 

(204)

 

631

 

9,696

 

989

 

364

 

10,321

Harris Preston Fund Investments

 

LP Interests (HPEP 3, L.P.)

 

(8)

 

 

 

 

2,474

 

597

 

 

3,071

Hawk Ridge Systems, LLC

 

LIBOR Plus 6.00% (Floor 1.00%)

 

(9)

 

 

 

41

 

600

 

384

 

 

984

 

11.00% Secured Debt

 

(9)

 

 

(23)

 

1,230

 

13,400

 

3,023

 

23

 

16,400

 

Preferred Member Units

 

(9)

 

 

130

 

69

 

7,900

 

130

 

 

8,030

 

Preferred Member Units

 

(9)

 

 

 

 

420

 

 

 

420

Houston Plating and Coatings, LLC

 

8.00% Unsecured Convertible Debt

 

(8)

 

 

(1,260)

 

183

 

4,260

 

 

1,260

 

3,000

 

Member Units

 

(8)

 

 

(4,270)

 

163

 

10,330

 

 

4,270

 

6,060

I-45 SLF LLC

 

Member Units

 

(8)

 

 

(2,215)

 

1,803

 

14,407

 

3,200

 

2,215

 

15,392

L.F. Manufacturing Holdings, LLC

 

Preferred Member Units

 

(8)

 

 

 

9

 

81

 

9

 

 

90

 

Member Units

 

(8)

 

 

 

 

2,050

 

 

 

2,050

OnAsset Intelligence, Inc.

 

12.00% PIK Secured Debt

 

(8)

 

 

 

609

 

6,474

 

710

 

100

 

7,084

 

10.00% PIK Secured Debt

 

(8)

 

 

 

4

 

58

 

6

 

1

 

63

 

Preferred Stock

 

(8)

 

 

 

 

 

 

 

 

Warrants

 

(8)

 

 

 

 

 

 

 

PCI Holding Company, Inc.

 

12.00% Current Secured Debt

 

(9)

 

 

 

1,037

 

11,356

 

 

 

11,356

 

Preferred Stock

 

(9)

 

 

1,750

 

 

2,680

 

1,750

 

 

4,430

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Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

September 30, 

Realized

Unrealized

Credited to

2019

Gross

Gross

2020

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

 

Preferred Stock

 

(9)

 

 

 

 

4,350

 

 

 

4,350

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

 

12.00% Secured Debt

 

(8)

 

(413)

 

 

 

 

413

 

413

 

 

Preferred Member Units

 

(8)

 

 

 

 

 

 

 

Salado Stone Holdings, LLC

 

Class A Preferred Units

 

(8)

 

 

200

 

 

570

 

200

 

 

770

SI East, LLC

 

9.50% Current, Secured Debt

 

(7)

 

 

(55)

 

2,459

 

32,963

 

54

 

55

 

32,962

 

Preferred Member Units

 

(7)

 

 

1,520

 

1,292

 

8,200

 

1,520

 

 

9,720

Slick Innovations, LLC

 

14.00% Current, Secured Debt

 

(6)

 

 

131

 

701

 

6,197

 

163

 

280

 

6,080

 

Warrants

 

(6)

 

 

40

 

 

290

 

40

 

 

330

 

Common Stock

 

(6)

 

 

170

 

 

1,080

 

170

 

 

1,250

Superior Rigging & Erecting Co.

 

12.00% Current, Secured Debt

 

(7)

 

 

 

443

 

 

21,290

 

 

21,290

 

Preferred Member Units

 

(7)

 

 

 

 

 

4,500

 

 

4,500

UniTek Global Services, Inc.

 

LIBOR Plus 6.50% (Floor 1.00%)

 

(6)

 

 

(283)

 

178

 

2,962

 

15

 

306

 

2,671

 

Preferred Stock

 

(6)

 

 

(2,684)

 

 

2,684

 

 

2,684

 

 

Preferred Stock

 

(6)

 

 

(771)

 

212

 

2,282

 

212

 

771

 

1,723

 

Preferred Stock

 

(6)

 

 

382

 

185

 

1,889

 

945

 

1

 

2,833

 

Preferred Stock

 

(6)

 

 

(3,667)

 

 

3,667

 

 

3,667

 

 

Common Stock

 

(6)

 

 

 

 

 

 

 

Universal Wellhead Services Holdings, LLC

 

Preferred Member Units

 

(8)

 

 

(800)

 

 

800

 

 

800

 

 

Member Units

 

(8)

 

 

 

 

 

 

 

Volusion, LLC

 

11.50% Secured Debt

 

(8)

 

 

(181)

 

1,843

 

19,352

 

72

 

181

 

19,243

 

8.00% Unsecured Convertible Debt

 

(8)

 

 

 

25

 

291

 

 

1

 

290

 

Preferred Member Units

 

(8)

 

 

(9,050)

 

 

14,000

 

 

9,050

 

4,950

 

Warrants

 

(8)

 

 

(150)

 

 

150

 

 

150

 

Other

 

 

 

 

 

 

 

 

 

Amounts related to investments transferred to or from other
1940 Act classification during the period

 

 

 

 

(337)

 

118

 

2,195

 

 

 

Total Affiliate investments

 

 

 

$

(407)

 

$

(26,883)

 

$

23,626

 

$

330,287

 

$

101,944

 

$

82,006

 

$

348,030


(1)The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.
(2)Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts from investments transferred from other 1940 Act classifications during the period.”
(3)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.
(4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.
(5)Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of September 30, 2020 for control investments located in this region was $247,265. This represented 17.4% of net assets as of September 30, 2020. The fair value as of September 30, 2020 for affiliate investments located in this region was $28,952. This represented 2.0% of net assets as of September 30, 2020.

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(6)Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of September 30, 2020 for control investments located in this region was $77,805. This represented 5.5% of net assets as of September 30, 2020. The fair value as of September 30, 2020 for affiliate investments located in this region was $86,374. This represented 6.1% of net assets as of September 30, 2020.
(7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of September 30, 2020 for control investments located in this region was $47,507. This represented 3.3% of net assets as of September 30, 2020. The fair value as of September 30, 2020 for affiliate investments located in this region was $87,028. This represented 6.1% of net assets as of September 30, 2020.
(8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of September 30, 2020 for control investments located in this region was $397,738. This represented 27.9% of net assets as of September 30, 2020. The fair value as of September 30, 2020 for affiliate investments located in this region was $97,852. This represented 6.9% of net assets as of September 30, 2020.
(9)Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of September 30, 2020 for control investments located in this region was $250,398. This represented 17.6% of net assets as of September 30, 2020. The fair value as of September 30, 2020 for affiliate investments located in this region was $47,824. This represented 3.4% of net assets as of September 30, 2020.
(10)All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.
(11)This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can be located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs.
(12)Investment has an unfunded commitment as of September 30, 2020 (see Note K). The fair value of the investment includes the impact of the fair value of any unfunded commitments.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements regarding the plans and objectives of management for future operations and which relate to future events or our future performance or financial condition. Any such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including, without limitation: changes in laws and regulations and adverse changes in the economy generally or in the industries in which our portfolio companies operate, including with respect to changes from the impact of the COVID-19 pandemic, and the resulting impacts on our and our portfolio companies’ business and operations, liquidity and access to capital; and such other factors referenced in Item 1A entitled “Risk Factors” below in Part 2 of this Quarterly Report on Form 10-Q, if any, and discussed in Item 1A entitled “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2021 and elsewhere in this Quarterly Report on Form 10-Q and our other SEC filings.

We have based the forward-looking statements included in this Quarterly Report on Form 10-Q on information available to us on the date of this Quarterly Report on Form 10-Q, and we assume no obligation to update any such forward-looking statements, unless we are required to do so by applicable law. However, you are advised to refer to any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including subsequent periodic and current reports.

ORGANIZATION

Main Street Capital Corporation (“MSCC” or “Main Street”) is a principal investment firm. MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP (“MSMF”) and Main Street Capital III, LP (“MSC III” and, collectively with MSMF, the “Funds”) and each of their general partners.

COVID-19 UPDATE

The COVID-19 pandemic, and the related effect on the U.S. and global economies, has had, and threatens to continue to have, adverse consequences for our business and operating results, and the businesses and operating results of our portfolio companies. During the quarter ended September 30, 2021, we continued to work collectively with our employees and portfolio companies to navigate the significant challenges created by the COVID-19 pandemic and the labor and supply constraints, rising costs, and supply chain disruptions. We remain focused on ensuring the safety of our employees and the employees of our portfolio companies, while also managing our ongoing business activities. In this regard, we remain heavily engaged with our portfolio companies. As discussed below under “Discussion and Analysis of Results of Operations,” our investment income, principally our interest and dividend income, was negatively impacted by the economic effects of the COVID-19 pandemic in 2020. We continue to maintain access to multiple sources of liquidity, including cash, unused capacity under our Credit Facility and, as discussed under Liquidity and Capital Resources, access to capital markets for both equity and unsecured note issuances. As of September 30, 2021, we were in compliance with all debt covenants and do not anticipate any issues with our ability to comply with all covenants in the future. Refer to “—Liquidity and Capital Resources” below for further discussion as of September 30, 2021. Neither our management nor our Board of Directors is able to predict the full impact of the COVID-19 pandemic, including its duration and the magnitude of its economic and societal impact. As such, while we will continue to monitor the evolving situation and guidance from U.S. authorities, including federal, state and local public health authorities, we are unable to predict with any certainty the extent to which the outbreak will negatively affect our portfolio companies’ operating

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results and financial condition or the impact that such disruptions may have on our results of operations and financial condition in the future.

OVERVIEW

Our principal investment objective is to maximize our portfolio’s total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We seek to achieve this objective by primarily focusing on providing customized debt and equity financing to lower middle market (“LMM”) companies and debt capital to middle market (“Middle Market”) companies. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million. Our private loan (“Private Loan”) portfolio investments are primarily debt securities in privately held companies that have been originated through strategic relationships with other investment funds on a collaborative basis and are often referred to in the debt markets as “club deals.” Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio.

We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company’s capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a “one stop” financing solution. Providing customized, “one stop” financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date.

Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

Our other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

Subject to changes in our cash and overall liquidity, as well as our capital structure management activities, our Investment Portfolio may also include short-term portfolio investments that are atypical of our LMM, Middle Market and Private Loan portfolio investments in that they are intended to be a short-term deployment of capital. These assets are typically expected to be liquidated in one year or less and are not expected to be a significant portion of the overall Investment Portfolio.

Our external asset management business is conducted through MSC Adviser I, LLC (the “External Investment Manager”). The External Investment Manager earns management fees based on the assets under management for external parties and may earn incentive fees, or a carried interest, based on the performance of the assets managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with MSC Income Fund, Inc. (“MSC Income”), formerly known as HMS Income Fund, Inc., and its other investment advisory clients. Through this agreement, we share

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employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities.

During May 2012, we entered into an investment sub advisory agreement with HMS Adviser, LP (“HMS Adviser”), which was the investment adviser to MSC Income at the time, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source of income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub advisory agreement, the External Investment Manager was entitled to 50% of the annual base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with MSC Income. Effective October 30, 2020, the External Investment Manager and HMS Adviser consummated the transactions contemplated by that certain asset purchase agreement by and among the External Investment Manager, HMS Adviser and the other parties thereto whereby the External Investment Manager became the sole investment adviser and administrator to MSC Income pursuant to an Investment Advisory and Administrative Services Agreement entered into between the External Investment Manager and MSC Income (the “Advisory Agreement”). The Advisory Agreement includes a 1.75% annual management fee, reduced from 2.00% previously, and the same incentive fee as under MSC Income’s prior advisory agreement with HMS Adviser, with the External Investment Manager receiving 100% of such fee income (increased from 50% previously).

In April 2014, we received an exemptive order from the SEC permitting co-investments by us and MSC Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. During December 2020, we received an amended exemptive order from the SEC permitting co-investments by us, MSC Income and other funds advised by the External Investment Manager in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made co-investments with MSC Income and the Private Loan Fund (as defined below), and in the future intend to make co-investments with MSC Income, the Private Loan Fund and other funds advised by the External Investment Manager, in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for us and the External Investment Manager’s advised clients, including MSC Income, as applicable, and if it is appropriate, to propose an allocation of the investment opportunity between such parties. Because the External Investment Manager may receive performance-based fee compensation from funds advised by the External Investment Manager, including MSC Income and the Private Loan Fund, this may provide the Company and the External Investment Manager an incentive to allocate opportunities to other participating funds instead of us. However, both we and the External Investment Manager have policies and procedures in place to manage this conflict, including oversight by the independent members of our Board of Directors.

The External Investment Manager launched its first private fund, MS Private Loan Fund I, LP, a private investment fund with a strategy to co-invest with Main Street in Private Loan portfolio investments (the “Private Loan Fund”), in December 2020. The External Investment Manager entered into an Investment Management Agreement in December 2020 with the Private Loan Fund, pursuant to which the External Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees.

The External Investment Manager earned base management fee income of $4.6 million and $2.3 million during the three months ended September 30, 2021 and 2020, respectively, and $12.7 million and $7.2 million during the nine months ended September 30, 2021 and 2020, respectively. During the three and nine months ended September 30, 2021, an insignificant amount of incentive fee income was earned, while no incentive fee income was earned in the three and nine months ended September 30, 2020.

We allocate certain expenses to the External Investment Manager pursuant to the sharing agreement between it and MSCC. Our total expenses are net of expenses allocated to the External Investment Manager for the three months ended September 30, 2021 and 2020 of $2.7 million and $1.9 million, respectively, and for the nine months ended September 30, 2021 and 2020 of $7.7 million and $5.3 million, respectively. The total contribution of the External Investment Manager to our net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income earned from the External Investment Manager. The total contribution to our net investment income was $4.2 million and $2.2 million for the three months ended September 30, 2021 and 2020, respectively, and $11.6 million and $6.7 million for the nine months ended September 30, 2021 and 2020, respectively.

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See “Note C – Fair Value Hierarchy for Investments and Debentures – Portfolio Composition – Investment Portfolio Composition” in the notes to consolidated financial statements for a summary of Main Street’s investments in the LMM, Middle Market and Private Loan portfolios as of September 30, 2021 and December 31, 2020.

Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes. An investor’s return in MSCC will depend, in part, on the Funds’ investment returns as they are wholly owned subsidiaries of MSCC.

The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio and our External Investment Manager’s asset management business. The ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.5% and 1.3%, respectively, for the trailing twelve months ended September 30, 2021 and 2020, and 1.3% for the year ended December 31, 2020. The ratio of our total operating expenses, including interest expense, as a percentage of our quarterly average total assets was 3.4% and 3.2%, respectively, for the trailing twelve months ended September 30, 2021 and 2020, and 3.2% for the year ended December 31, 2020. Our ratio of expenses as a percentage of our average net asset value is described in greater detail in Note F to the consolidated financial statements included in “Item 1. Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. Critical accounting policies are those that require management to make subjective or complex judgments about the effect of matters that are inherently uncertain and may change in subsequent periods. Changes that may be required in the underlying assumptions or estimates in these areas could have a material impact on our current and future financial condition and results of operations.

Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board of Directors. Our critical accounting policies and estimates include the Investment Portfolio Valuation and Revenue Recognition policies described below. Our significant accounting policies are described in greater detail in Note B to the consolidated financial statements included in “Item 1. Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

Investment Portfolio Valuation

The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We consider

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this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of September 30, 2021 and December 31, 2020 our Investment Portfolio valued at fair value represented approximately 96% and 97% of our total assets, respectively. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See “Note B.1.—Valuation of the Investment Portfolio” in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

The SEC recently adopted new Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. Our board of directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of our executive officers to serve as the Board’s valuation designee. We adopted the Valuation Procedures effective April 1, 2021. We believe our investment portfolio as of September 30, 2021 and December 31, 2020 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates.

Revenue Recognition

Interest and Dividend Income

We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we otherwise do not expect the debtor to be able to service all of its debt or other obligations, we will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt or other obligations, or if a loan or debt security is sold or written off, we remove it from non-accrual status.

Fee Income

We may periodically provide services, including structuring and advisory services, to our portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.

Payment-in-Kind (“PIK”) Interest and Cumulative Dividends

We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of

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these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the three months ended September 30, 2021 and 2020, (i) approximately 2.1% and 3.7%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 0.6% and 0.7%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash. For the nine months ended September 30, 2021 and 2020, (i) approximately 3.0% and 3.0%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 0.6% and 0.6%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash.

INVESTMENT PORTFOLIO COMPOSITION

The following tables summarize the composition of our total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments as of September 30, 2021 and December 31, 2020 (this information excludes the Other Portfolio, short-term investments and the External Investment Manager).

Cost:

 

September 30, 2021

 

December 31, 2020

First lien debt

 

80.5

%  

77.0

%

Equity

 

17.6

%  

19.0

%

Second lien debt

 

1.1

%  

2.7

%

Equity warrants

 

0.3

%  

0.5

%

Other

 

0.5

%  

0.8

%

 

100.0

%  

100.0

%

Fair Value:

 

September 30, 2021

 

December 31, 2020

 

First lien debt

 

71.6

%  

70.0

%

 

Equity

 

26.7

%  

26.4

%

 

Second lien debt

 

1.0

%  

2.4

%

 

Equity warrants

 

0.3

%  

0.4

%

 

Other

 

0.4

%  

0.8

%

 

 

100.0

%  

100.0

%

 

Our LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments carry a number of risks including: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment grade debt and equity investments in our Investment Portfolio. Please see “Risk Factors—Risks Related to Our Investments” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for a more complete discussion of the risks involved with investing in our Investment Portfolio.

PORTFOLIO ASSET QUALITY

We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including each investment’s expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company’s future outlook and other factors that are deemed to be significant to the portfolio company.

As of September 30, 2021, our total Investment Portfolio had eight investments on non-accrual status, which comprised approximately 0.9% of its fair value and 3.5% of its cost. As of December 31, 2020, our total Investment

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Portfolio had seven investments on non-accrual status, which comprised approximately 1.3% of its fair value and 3.6% of its cost.

The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In periods during which the United States economy contracts, as it did due to the impact of COVID-19, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in defaults on our debt investments or in realized losses on our investments and to difficulty in maintaining historical dividend payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by future economic cycles or other conditions, which could also have a negative impact on our future results.

DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2021 and September 30, 2020

Three Months Ended

 

September 30, 

Net Change

    

2021

    

2020

    

Amount

    

%

    

(dollars in thousands)

Total investment income

$

76,779

$

51,954

$

24,825

 

48

%

Total expenses

 

(27,475)

 

(21,492)

 

(5,983)

 

28

%

Net investment income

 

49,304

 

30,462

 

18,842

 

62

%

Net realized gain (loss) from investments

 

8,305

 

(13,874)

 

22,179

NM

Net unrealized appreciation (depreciation) from investments

 

38,631

 

63,114

 

(24,483)

NM

Income tax benefit (provision)

 

(12,284)

 

(1,507)

 

(10,777)

NM

Net increase in net assets resulting from operations

$

83,956

$

78,195

$

5,761

 

7

%

Three Months Ended

 

September 30, 

Net Change

    

2021

    

2020

    

Amount

    

%

    

(dollars in thousands, except per share amounts)

Net investment income

$

49,304

$

30,462

$

18,842

 

62

%

Share‑based compensation expense

 

2,869

 

2,561

 

308

 

12

%

Distributable net investment income(a)

$

52,173

$

33,023

$

19,150

 

58

%

Net investment income per share—Basic and diluted

$

0.71

$

0.46

$

0.25

 

54

%

Distributable net investment income per share—Basic and diluted(a)

$

0.76

$

0.50

$

0.26

 

52

%


NM

Not Meaningful

(a)Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

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Investment Income

Total investment income for the three months ended September 30, 2021 was $76.8 million, a 48% increase from the $52.0 million of total investment income for the corresponding period of 2020. The following table provides a summary of the changes in the comparable period activity.

Three Months Ended

September 30, 

Net Change

2021

2020

Amount

%

(dollars in thousands)

Interest income

$

50,468

$

42,138

$

8,330

20

%

(a)

Dividend income

23,012

8,106

14,906

184

%

(b)

Fee income

3,299

1,710

1,589

93

%

(c)

Total investment income

$

76,779

$

51,954

$

24,825

48

%

(d)

(a)The increase in interest income is primarily related to (i) a $5.8 million increase related to higher average levels of Investment Portfolio debt investments and (ii) a $2.5 million increase related to repayment, repricing and other activities related to certain Investment Portfolio debt investments.
(b)The increase in dividend income from Investment Portfolio equity investments is primarily a result of (i) improved operating results, financial condition and liquidity positions of certain of our portfolio companies following the impacts from the COVID-19 pandemic in 2020 and (ii) a $4.7 million increase related to elevated dividend income considered to be less consistent or non-recurring.
(c)The increase in fee income is primarily related to (i) a $0.9 million increase related to elevated repricing and prepayment activity related to certain Investment Portfolio debt investments and (ii) a $0.7 million increase related to higher originations of Investment Portfolio investments.
(d)The increase in total investment income includes the impact of (i) a $4.7 million increase in dividend income considered less consistent or non-recurring and (ii) a $3.5 million increase in accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments.

Expenses

Total expenses for the three months ended September 30, 2021 was $27.5 million, a 28% increase from the $21.5 million in the corresponding period of 2020. The following table provides a summary of the changes in the comparable period activity.

Three Months Ended

September 30, 

Net Change

2021

2020

Amount

%

(dollars in thousands)

Employee compensation expenses

$

9,598

$

4,407

$

5,191

118

%

(a)

Deferred compensation plan expense

(22)

573

(595)

(104)

%

(b)

Total compensation expense

9,576

4,980

4,596

92

%

G&A expense

3,047

3,354

(307)

(9)

%

Interest expense

14,711

12,489

2,222

18

%

(c)

Share-based compensation expense

2,869

2,561

308

12

%

Gross expenses

30,203

23,384

6,819

29

%

Allocation of expenses to the External Investment Manager

(2,728)

(1,892)

(836)

44

%

(d)

Total expenses

$

27,475

$

21,492

$

5,983

28

%

(a)The increase in employee compensation expenses was primarily due to incentive compensation accruals generally corresponding with our improved operating results.
(b)The change in the non-cash deferred compensation plan expense is due to changes in the fair value of our deferred compensation plan assets, which are correlated with changes in the overall stock market and is not directly attributable to our operating activities or results.

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(c)The increase in interest expense is primarily related to greater amounts of borrowings due to our 3.00% Notes (as defined in “—Liquidity and Capital Resources—Capital Resources” below) issued in January 2021.
(d)The increase in the allocation of expenses to the External Investment Manager primarily relates to the impact of the transaction in October 2020, whereby the External Investment Manager became the sole investment adviser to MSC Income.

Net Investment Income

Net investment income for the three months ended September 30, 2021 increased 62% to $49.3 million, or $0.71 per share, compared to net investment income of $30.5 million, or $0.46 per share, for the corresponding period of 2020. The increase in net investment income and net investment income per share was principally attributable to the 48% increase in total investment income, partially offset by the 28% increase in total expenses, both as discussed above, and the 4% increase in weighted average shares outstanding to 69.0 million for the three months ended September 30, 2021, primarily due to shares issued through the ATM Program (as defined in “—Liquidity and Capital Resources—Capital Resources” below), shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan. The increase in net investment income per share includes (i) an increase of $0.07 per share in investment income from dividend income activity considered to be less consistent or non-recurring and (ii) an increase of $0.05 per share related to higher accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments, as discussed above, and (iii) an increase of $0.01 per share due to the decrease in compensation expense related to our deferred compensation plan, primarily attributable to changes in the fair value of the deferred compensation plan assets.

Distributable Net Investment Income

Distributable net investment income for the three months ended September 30, 2021 increased 58% to $52.2 million, or $0.76 per share, compared with $33.0 million, or $0.50 per share, in the corresponding period of 2020. The increase in distributable net investment income and distributable net investment income per share was primarily due to the increased level of total investment income, partially offset by (i) the increase in total expenses, excluding share-based compensation expense, and (ii) a greater number of average shares outstanding compared to the corresponding period in 2020, all as described above. The increase in distributable net investment income per share includes the impacts of (i) the increase in investment income from dividend activity considered to be less consistent or non-recurring and an increase in accelerated prepayment, repricing and other income activity related to certain Investment Portfolio debt investments and (ii) the decrease in compensation expense attributable to the change in the fair value of the deferred compensation plan assets during the third quarter of 2021, both as discussed above.

Net Realized Gain (Loss) from Investments

The following table provides a summary of the primary components of the total net realized gain on investments of $8.3 million for the three months ended September 30, 2021:

Three Months Ended September 30, 2021

Full Exits

Partial Exits

Restructures

Other (a)

Total (a)

Net Gain/(Loss)

# of Investments

Net Gain/(Loss)

# of Investments

Net Gain/(Loss)

# of Investments

Net Gain/(Loss)

Net Gain/(Loss)

(dollars in thousands)

LMM Portfolio

$

13,275

2

$

-

-

$

-

-

$

(362)

$

12,913

Middle Market Portfolio

-

-

-

-

(4,528)

1

43

(4,485)

Private Loan Portfolio

-

-

-

-

-

-

(31)

(31)

Other Portfolio

-

-

-

-

-

-

(101)

(101)

Short-term Portfolio

9

9

Total net realized gain/(loss)

$

13,275

2

$

-

-

$

(4,528)

1

$

(442)

$

8,305

(a)Other activity includes realized gains and losses from transactions involving 16 portfolio companies which are not considered to be significant individually or in the aggregate.

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Net Unrealized Appreciation (Depreciation)

The following table provides a summary of the total net unrealized appreciation of $38.6 million for the three months ended September 30, 2021:

Three Months Ended September 30, 2021

Middle

Private

    

LMM(a)

    

Market

    

Loan

    

Other

Total

 

(dollars in millions)

Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period

$

(9.6)

$

(0.3)

$

(1.4)

$

0.2

$

(11.1)

Net unrealized appreciation relating to investments

 

27.9

 

2.9

 

3.2

 

15.7

(b)

 

49.7

Total net unrealized appreciation relating to investments

$

18.3

$

2.6

$

1.8

$

15.9

$

38.6


(a)LMM includes unrealized appreciation on 33 LMM portfolio investments and unrealized depreciation on 16 LMM portfolio investments.
(b)Other includes (i) $9.4 million of net unrealized appreciation relating to the Other Portfolio and (ii) $6.4 million of appreciation relating to the External Investment Manager.

Income Tax Benefit (Provision)

The income tax provision for the three months ended September 30, 2021 of $12.3 million principally consisted of (i) a deferred tax provision of $11.3 million, which is primarily the result of the net activity relating to our portfolio investments held in our wholly owned taxable subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences, and (ii) a current tax provision of $1.0 million, related to a $0.9 million provision for current U.S. federal and state income taxes and a $0.1 million provision for excise tax on our estimated undistributed taxable income. The income tax provision for the three months ended September 30, 2020 of $1.5 million principally consisted of (i) a current tax provision of $1.2 million related to a $0.8 million provision for current U.S. federal and state income taxes, and a $0.4 million provision for excise tax on our estimated undistributed taxable income and (ii) a deferred tax provision of $0.3 million.

Net Increase (Decrease) in Net Assets Resulting from Operations

The net increase in net assets resulting from operations for the three months ended September 30, 2021 was $84.0 million, or $1.22 per share, compared with $78.2 million, or $1.18 per share, during the three months ended September 30, 2020. The tables above provide a summary of the net increase in net assets resulting from operations for the three months ended September 30, 2021.

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Comparison of the nine months ended September 30, 2021 and September 30, 2020

Nine Months Ended

 

September 30, 

Net Change

    

2021

    

2020

    

Amount

    

%

(dollars in thousands)

Total investment income

$

206,881

$

160,109

$

46,772

 

29

%

Total expenses

 

(75,424)

 

(61,809)

 

(13,615)

 

22

%

Net investment income

 

131,457

 

98,300

 

33,157

 

34

%

Net realized gain (loss) from investments

 

10,575

 

(44,323)

 

54,898

NM

Net realized loss on extinguishment of debt

 

 

(534)

 

534

NM

Net unrealized appreciation (depreciation) from:

Investments

 

117,072

 

(118,030)

 

235,102

NM

SBIC debentures

 

 

460

 

(460)

NM

Total net unrealized appreciation (depreciation)

 

117,072

 

(117,570)

 

234,642

NM

Income tax benefit (provision)

 

(22,691)

 

14,253

 

(36,944)

NM

Net increase (decrease) in net assets resulting from operations

$

236,413

$

(49,874)

$

286,287

 

NM

Nine Months Ended

 

September 30, 

Net Change

    

2021

    

2020

    

Amount

    

%

(dollars in thousands, except per share amounts)

Net investment income

$

131,457

$

98,300

$

33,157

 

34

%

Share‑based compensation expense

 

7,961

 

8,215

 

(254)

 

(3)

%

Distributable net investment income(a)

$

139,418

$

106,515

$

32,903

 

31

%

Net investment income per share—Basic and diluted

$

1.92

$

1.50

$

0.42

 

28

%

Distributable net investment income per share—Basic and diluted(a)

$

2.03

$

1.63

$

0.40

 

25

%


NM

Not Meaningful

(b)Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

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Investment Income

Total investment income for the nine months ended September 30, 2021 was $206.9 million, a 29% increase from the $160.1 million of total investment income for the corresponding period of 2020. The following table provides a summary of the changes in the comparable period activity.

Nine Months Ended

September 30, 

Net Change

2021

2020

Amount

%

(dollars in thousands)

Interest Income

$

139,882

$

128,587

$

11,295

9

%

(a)

Dividend Income

59,328

23,942

35,386

148

%

(b)

Fee Income

7,671

7,580

91

1

%

Total Investment Income

$

206,881

$

160,109

$

46,772

29

%

(c)

(a)The increase in interest income is primarily related to (i) a $7.8 million increase related to higher average levels of Investment Portfolio debt investments and (ii) a $2.2 million increase related to prepayment, repricing and other activities related to certain Investment Portfolio debt investments.
(b)The increase in dividend income from Investment Portfolio equity investments is primarily a result of (i) improved operating results, financial condition and liquidity positions of certain of our portfolio companies following the impacts from the COVID-19 pandemic in 2020, and (ii) a $10.2 million increase related to elevated dividend income considered to be less consistent or non-recurring.
(c)The increase in total investment income includes the impact of (i) a $10.2 million increase in dividend income considered less consistent or non-recurring and (ii) a $1.6 million increase in accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments.

Expenses

Total expenses for the nine months ended September 30, 2021 was $75.4 million, a 22% increase from the $61.8 million in the corresponding period of 2020. The following table provides a summary of the changes in the comparable period activity.

Nine Months Ended

September 30, 

Net Change

2021

2020

Amount

%

(dollars in thousands)

Employee compensation expenses

$

21,834

$

11,589

$

10,245

88

%

(a)

Deferred compensation plan expense

956

691

265

38

%

Total compensation expense

22,790

12,280

10,510

86

%

G&A expense

9,439

9,827

(388)

(4)

%

Interest expense

42,914

36,827

6,087

17

%

(b)

Share-based compensation expense

7,961

8,215

(254)

(3)

%

Gross expenses

83,104

67,149

15,955

24

%

Allocation of expenses to the external investment manager

(7,680)

(5,340)

(2,340)

44

%

(c)

Total expenses

$

75,424

$

61,809

$

13,615

22

%

(a)The increase in employee compensation expenses was primarily due to incentive compensation accruals generally corresponding with our improved operating results.
(b)The increase in interest expense is primarily related to elevated borrowings under (i) our 3.00% Notes issued in January 2021 and (ii) an additional $125.0 million aggregate principal amount which we issued under our 5.20% Notes in July 2020, partially offset by decreased interest expense relating to our Credit Facility due to the lower average balance outstanding and the lower average interest rate.

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(c)The increase in the allocation of expenses to the External Investment Manager primarily relates to the impact of the transaction in October 2020, whereby the External Investment Manager became the sole investment adviser to MSC Income.

Net Investment Income

Net investment income for the nine months ended September 30, 2021 increased 34% to $131.5 million, or $1.92 per share, compared to net investment income of $98.3 million, or $1.50 per share, for the corresponding period of 2020. The increase in net investment income and net investment income per share was principally attributable to the 29% increase in total investment income, partially offset by the 22% increase in total expenses, both as discussed above, and the 5% increase in weighted average shares outstanding to 68.6 million for the nine months ended September 30, 2021, primarily due to shares issued through the ATM Program, shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan. The increase in net investment income per share includes (i) an increase of $0.15 per share in investment income from dividend income activity considered to be less consistent or non-recurring and (ii) an increase of $0.02 per share related to higher accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments.

Distributable Net Investment Income

Distributable net investment income for the nine months ended September 30, 2021 increased 31% to $139.4 million, or $2.03 per share, compared with $106.5 million, or $1.63 per share, in the corresponding period of 2020. The increase in distributable net investment income and distributable net investment income per share was primarily due to the increased level of total investment income, partially offset by (i) the increase in total expenses, excluding share-based compensation expense, and (ii) a greater number of average shares outstanding compared to the corresponding period in 2020, all as described above. The increase in distributable net investment income per share includes the impacts of the increase in investment income from dividend income activity considered to be less consistent or non-recurring, and the increase in accelerated prepayment, repricing and other income activity related to certain Investment Portfolio debt investments, as discussed above.

Net Realized Gain (Loss) from Investments

The following table provides a summary of the primary components of the total net realized gain on investments of $10.6 million for the nine months ended September 30, 2021:

Nine Months Ended September 30, 2021

Full Exits

Partial Exits

Restructures

Other (a)

Total (a)

Net Gain/(Loss)

# of Investments

Net Gain/(Loss)

# of Investments

Net Gain/(Loss)

# of Investments

Net Gain/(Loss)

Net Gain/(Loss)

(dollars in thousands)

LMM Portfolio

$

28,004

4

$

-

-

$

(10,925)

1

$

(569)

$

16,510

Middle Market Portfolio

(4,243)

2

6,153

1

(4,528)

1

43

(2,575)

Private Loan Portfolio

-

-

-

-

-

-

(48)

(48)

Other Portfolio

(4,449)

1

777

1

-

-

351

(3,321)

Short-term Portfolio

-

-

-

-

-

-

9

9

Total net realized gain/(loss)

$

19,312

7

$

6,930

2

$

(15,453)

2

$

(214)

$

10,575

(a)Other activity includes realized gains and losses from transactions involving 21 portfolio companies which are not considered to be significant individually or in the aggregate.

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Net Unrealized Appreciation (Depreciation)

The following table provides a summary of the total net unrealized appreciation of $117.1 million for the nine months ended September 30, 2021:

Nine Months Ended September 30, 2021

Middle

Private

    

LMM(a)

    

Market

    

Loan

    

Other

Total

 

(dollars in millions)

Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period

$

(5.9)

$

1.4

$

(1.4)

$

4.6

$

(1.3)

Net unrealized appreciation relating to investments

 

73.7

 

6.4

 

10.9

 

27.4

(b)

 

118.4

Total net unrealized appreciation relating to investments

$

67.8

$

7.8

$

9.5

$

32.0

$

117.1


(a)LMM includes unrealized appreciation on 42 LMM portfolio investments and unrealized depreciation on 21 LMM portfolio investments.
(b)Other includes (i) $16.1 million of net unrealized appreciation relating to the Other Portfolio and (ii) $11.4 million of net appreciation relating to the External Investment Manager.

Income Tax Benefit (Provision)

The income tax provision for the nine months ended September 30, 2021 of $22.7 million principally consisted of (i) a deferred tax provision of $20.4 million, which is primarily the result of the net activity relating to our portfolio investments held in our wholly owned taxable subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences and (ii) a current tax provision of $2.2 million, related to a $1.6 million provision for current U.S. federal and state income taxes and a $0.6 million provision for excise tax on our estimated undistributed taxable income. The income tax benefit for the nine months ended September 30, 2020 of $14.3 million principally consisted of a deferred tax benefit of $15.7 million, partially offset by a current tax provision of $1.4 million, primarily related to a $1.1 million provision for excise tax on our estimated undistributed taxable income and $0.3 million provision for current U.S. federal and state income taxes.

Net Increase (Decrease) in Net Assets Resulting from Operations

The net increase in net assets resulting from operations for the nine months ended September 30, 2021 was $236.4 million, or $3.45 per share, compared with a net decrease of $49.9 million, or $0.76 per share, during the nine months ended September 30, 2020. The tables above provide a summary of the net increase in net assets resulting from operations for the nine months ended September 30, 2021.

Liquidity and Capital Resources

This “Liquidity and Capital Resources” section should be read in conjunction with the “COVID-19 Update” section above.

Cash Flows

For the nine months ended September 30, 2021, we realized a net increase in cash and cash equivalents of $27.7 million, which is the net result of $158.7 million of cash used in our operating activities and $186.4 million of cash provided by our financing activities.

The $158.7 million of cash used in our operating activities resulted primarily from cash uses totaling $911.1 million for the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2020, partially offset by (i) cash proceeds totaling $614.4 million from the sales and repayments of debt investments and sales of and return on capital from equity investments, (ii) cash flows that we

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generated from the operating profits earned totaling $123.1 million, which is our distributable net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization expense for deferred financing costs, and (iii) cash proceeds of $14.9 million related to changes in other assets and liabilities.

The $186.4 million of cash provided by our financing activities principally consisted of (i) $300.0 million in cash proceeds from the issuance of the 3.00% Notes, (ii) $80.2 million in cash proceeds from the issuance of SBIC debentures and (iii) $44.8 million in net cash proceeds from our ATM Program (described below) and direct stock purchase plan, partially offset by (i) $114.5 million in cash dividends paid to stockholders, (ii) $69.0 million in net repayments on the Credit Facility, (iii) $40.0 million in repayment of SBIC debentures, (iv) $10.2 million for debt issuance costs, SBIC debenture fees and other costs, and (v) $5.0 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements upon the vesting of such restricted stock.

Capital Resources

As of September 30, 2021, we had $59.6 million in cash and cash equivalents and $655.0 million of unused capacity under the Credit Facility, before considering the accordion feature discussed below, which we maintain to support our investment and operating activities. As of September 30, 2021, our net asset value totaled $1,684.3 million, or $24.27 per share.

The Credit Facility provides additional liquidity to support our investment and operational activities. As of September 30, 2021, the Credit Facility included total commitments of $855.0 million from a diversified group of 18 lenders, held a maturity date in April 2026 and contained an accordion feature which allowed us to increase the total commitments under the facility to up to $1,200.0 million from new and existing lenders on the same terms and conditions as the existing commitments. As of September 30, 2021, borrowings under the Credit Facility bore interest, subject to our election and resetting on a monthly basis on the first of each month, on a per annum basis at a rate equal to the applicable LIBOR rate (0.1% as of September 30, 2021) plus (i) 1.875% (or the applicable base rate (Prime Rate of 3.25% as of September 30, 2021) plus 0.875%) as long as we meet certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the applicable base rate plus 1.0%) otherwise. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. As of September 30, 2021, the Credit Facility contained certain affirmative and negative covenants, including but not limited to: (i) maintaining minimum liquidity, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio (tangible net worth to Credit Facility borrowings) of at least 1.5 to 1.0, (iv) maintaining a minimum tangible net worth and (v) maintaining a minimum asset coverage ratio of 200% with respect to the consolidated assets (with certain limitations on the contribution of equity in financing subsidiaries as specified therein) of MSCC and the guarantors under the Credit Facility to the secured debt of MSCC and the guarantors. As of September 30, 2021, we had $200.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 2.0% (based on the LIBOR rate of 0.1% as of the most recent reset date of September 1, 2021 plus 1.875%) and we were in compliance with all financial covenants of the Credit Facility.

Through the Funds, we have the ability to issue SBIC debentures guaranteed by the SBA at favorable interest rates and favorable terms and conditions. Under existing SBIC regulations, SBA-approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Under existing SBA-approved commitments, we had $350.0 million of outstanding SBIC debentures guaranteed by the SBA as of September 30, 2021 through our wholly owned SBICs, which bear a weighted-average annual fixed interest rate of approximately 2.9%, paid semiannually, and mature ten years from issuance. The first maturity related to our SBIC debentures occurs in 2023, and the weighted-average remaining duration is approximately 6.4 years as of September 30, 2021. During the nine months ended September 30, 2021, Main Street issued $80.2 million of SBIC debentures and opportunistically prepaid $40.0 million of existing SBIC debentures that were scheduled to mature over the next year as part of an effort to manage the maturity dates of the oldest SBIC debentures. Debentures guaranteed by the SBA have fixed interest rates that equal prevailing 10-year Treasury Note rates plus a market spread and have a maturity of ten years with interest payable semiannually. The principal amount of the debentures is not required to be paid before maturity, but may be pre-paid at any time with no prepayment penalty. We expect to maintain SBIC debentures under the SBIC program in the future, subject to periodic repayments and borrowings, in an amount up to the regulatory maximum amount for affiliated SBIC funds.

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In November 2017, we issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due December 1, 2022 (the “4.50% Notes due 2022”) at an issue price of 99.16%. The 4.50% Notes due 2022 are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2022 may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 4.50% Notes due 2022 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. We may from time to time repurchase the 4.50% Notes due 2022 in accordance with the 1940 Act and the rules promulgated thereunder. As of September 30, 2021, the outstanding principal balance of the 4.50% Notes due 2022 was $185.0 million.

The indenture governing the 4.50% Notes due 2022 (the “4.50% Notes Indenture”) contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50% Notes due 2022 and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes Indenture. As of September 30, 2021, we were in compliance with these covenants.

In April 2019, we issued $250.0 million in aggregate principal amount of 5.20% unsecured Notes due May 1, 2024 (the “5.20% Notes”) at an issue price of 99.125%. Subsequently, in December 2019, we issued an additional $75.0 million of the 5.20% Notes at an issue price of 105.0%. Also, in July 2020, we issued an additional $125.0 million aggregate principal amount of the 5.20% Notes at an issue price of 102.674%. The 5.20% Notes issued in December 2019 and July 2020 have identical terms as, and are a part of a single series with, the 5.20% Notes issued in April 2019. The aggregate net proceeds from the 5.20% Notes issuances were used to repay a portion of the borrowings outstanding under the Credit Facility. The 5.20% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 5.20% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 5.20% Notes may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 5.20% Notes bear interest at a rate of 5.20% per year payable semiannually on May 1 and November 1 of each year. We may from time to time repurchase the 5.20% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of September 30, 2021, the outstanding principal balance of the 5.20% Notes was $450.0 million.

The indenture governing the 5.20% Notes (the “5.20% Notes Indenture”) contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 5.20% Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 5.20% Notes Indenture. As of September 30, 2021, we were in compliance with these covenants.

In January 2021, we issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due July 14, 2026 (the “3.00% Notes”) at an issue price of 99.004%. The total net proceeds from the 3.00% Notes, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $294.8 million. The 3.00% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 3.00% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 3.00% Notes may be redeemed in whole or in part at any time at our option subject to certain make whole provisions. The 3.00% Notes bear interest at a rate of 3.00% per year payable semiannually on January 14 and July 14 of each year. We may from time to time repurchase the 3.00% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of September 30, 2021, the outstanding principal balance of the 3.00% Notes was

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$300.0 million. In October 2021, we issued an additional $200.0 million in aggregate principal amount of the 3.00% Notes at an issue price of 101.741%. See Recent Developments for further discussion.

The indenture governing the 3.00% Notes (the “3.00% Notes Indenture”) contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 3.00% Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 3.00% Notes Indenture. As of September 30, 2021, we were in compliance with these covenants.

We maintain a program with certain selling agents through which we can sell shares of our common stock by means of at-the-market offerings from time to time (the “ATM Program”). During the nine months ended September 30, 2021, we sold 1,111,194 shares of our common stock at a weighted-average price of $40.59 per share and raised $45.1 million of gross proceeds under the ATM Program. Net proceeds were $44.5 million after commissions to the selling agents on shares sold and offering costs. As of September 30, 2021, 4,602,178 shares remained available for sale under the ATM Program.

During the year ended December 31, 2020, we sold 2,645,778 shares of our common stock at a weighted-average price of $32.10 per share and raised $84.9 million of gross proceeds under the ATM Program. Net proceeds were $83.8 million after commissions to the selling agents on shares sold and offering costs.

We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, cash flows generated through our ongoing operating activities, utilization of available borrowings under our Credit Facility, and a combination of future issuances of debt and equity capital. Our primary uses of funds will be investments in portfolio companies, operating expenses and cash distributions to holders of our common stock.

We periodically invest excess cash balances into marketable securities and idle funds investments. The primary investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Middle Market and Private Loan portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments. We may also invest in short-term portfolio investments that are atypical of our LMM, Middle Market and Private Loan portfolio investments in that they are intended to be a short-term deployment of capital and are more liquid than investments within the other portfolios. Short-term portfolio investments consist primarily of investments in secured debt investments and independently rated debt investments.

If our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price, unless our stockholders approve such a sale and our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2021 annual meeting of stockholders because our common stock price per share has generally traded significantly above the net asset value per share of our common stock since 2011. We would therefore need future approval from our stockholders to issue shares below the then current net asset value per share.

In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are required to meet a coverage ratio of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if certain requirements are met). This requirement limits the amount that we may borrow. In January 2008, we received an exemptive order from the SEC to exclude SBA-guaranteed debt securities issued by the Funds and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to us, which, in turn, enables us to fund more investments with debt capital.

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Although we have been able to secure access to additional liquidity, including through the Credit Facility, public debt issuances, leverage available through the SBIC program and equity offerings, there is no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all.

Recently Issued or Adopted Accounting Standards

See “Note B.13 – Recently Issued or Adopted Accounting Standards” to the consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recently issued or adopted accounting standards.

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

Inflation

Inflation has not had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, including as a result of the COVID 19 pandemic, and may continue to experience, the impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third-party services and required energy consumption. Prolonged or more severe impacts of inflation to our portfolio companies could impact their ability to service their debt obligations and/or reduce their available cash for distributions which in turn could negatively affect our results of operations.

Off-Balance Sheet Arrangements

We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At September 30, 2021, we had a total of $175.1 million in outstanding commitments comprised of (i) fifty-one investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) ten investments with equity capital commitments that had not been fully called.

Contractual Obligations

As of September 30, 2021, the future fixed commitments for cash payments in connection with our SBIC debentures, the 4.50% Notes due 2022, the 5.20% Notes, the 3.00% Notes and rent obligations under our office lease for each of the next five years and thereafter are as follows (dollars in thousands):

    

2021

    

2022

    

2023

    

2024

    

2025

    

Thereafter

    

Total

SBIC debentures

$

$

$

16,000

$

63,800

$

$

270,200

$

350,000

Interest due on SBIC debentures

-

10,209

9,899

8,455

7,228

22,793

58,584

4.50% Notes due 2022

185,000

185,000

Interest due on 4.50% Notes due 2022

4,163

8,325

12,488

5.20% Notes due 2024

450,000

450,000

Interest due on 5.20% Notes due 2024

11,700

23,400

23,400

11,700

70,200

3.00% Notes due 2026

300,000

300,000

Interest due on 3.00% Notes due 2026

-

9,050

9,000

9,000

9,000

9,000

45,050

Operating Lease Obligation (1)

194

790

804

818

832

1,779

5,217

Total

$

16,057

$

236,774

$

59,103

$

543,773

$

17,060

$

603,772

$

1,476,539


(1)Operating Lease Obligation means a rent payment obligation under a lease classified as an operating lease and disclosed pursuant to ASC 842, as may be modified or supplemented.

As of September 30, 2021, we had $200.0 million in borrowings outstanding under our Credit Facility, and the Credit Facility is scheduled to mature in April 2026.

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Related Party Transactions

As discussed further above, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of our Investment Portfolio. At September 30, 2021, we had a receivable of $4.7 million due from the External Investment Manager, which included $3.2 million related primarily to operating expenses incurred by us as required to support the External Investment Manager’s business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion in Note B.9 and Note D in the notes to consolidated financial statements) and $1.5 million of dividends declared but not paid by the External Investment Manager.

From time to time, we may make investments in clients of the External Investment Manager in the form of debt or equity capital on terms approved by our Board of Directors. In January 2021, we entered into a Term Loan Agreement with MSC Income (the “Term Loan Agreement”). The Term Loan Agreement was unanimously approved by our Board, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act and the board of directors of MSC Income, including each director who is not an “interested person” of MSC Income or the External Investment Manager. The Term Loan Agreement provides for a term loan of $75.0 million to MSC Income, bearing interest at a fixed rate of 5.00% per annum, and matures in January 2026. Borrowings under the Term Loan Agreement are expressly subordinated and junior in right of payment to all secured indebtedness of MSC Income. In October 2021, MSC Income fully repaid all borrowings outstanding under the Term Loan Agreement and the Term Loan Agreement was terminated.

In December 2020, the External Investment Manager entered into an Investment Management Agreement with the Private Loan Fund, pursuant to which the External Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees. The Private Loan Fund is a private investment fund exempt from registration under the 1940 Act that invests in debt investments in middle market companies generally with EBITDA between $7.5 million and $50 million and generally owned by a private equity sponsor, which we generally refer to as Private Loan investments. In connection with the Private Loan Fund’s initial closing in December 2020, we committed to contribute up to $10.0 million as a limited partner and will be entitled to distributions on such interest. In addition, certain of our officers and employees (and certain of their immediate family members) made capital commitments to the Private Loan Fund as limited partners and therefore have direct pecuniary interests in the Private Loan Fund. Additionally, we have provided the Private Loan Fund with a revolving line of credit pursuant to an Unsecured Revolving Promissory Note, dated February 5, 2021 (the “Private Loan Fund Loan”), in an aggregate amount equal to the amount of limited partner capital commitments to the Private Loan Fund up to $50.0 million. Borrowings under the Private Loan Fund Loan bear interest at a fixed rate of 5.00% per annum and will mature on the earlier of June 30, 2022 and the date of the Private Loan Fund’s final closing. The Private Loan Fund Loan was unanimously approved by our Board, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act and the board of directors of the Private Loan Fund, including each director who is not an “interested person” of the Private Loan Fund or the External Investment Manager.

In November 2015, our Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the “2015 Deferred Compensation Plan”). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the “2013 Deferred Compensation Plan”). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors’ fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of September 30, 2021, $14.6 million of compensation and dividend reinvestments net of unrealized gains and losses and distributions had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $6.6 million had been deferred into phantom Main Street stock units, representing 159,369 shares of Main Street’s common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the consolidated statements of changes in net assets until such shares are actually distributed to the participant in accordance with the plan, but the related phantom stock units are included in weighted-average shares outstanding with the related dollar amount of the deferral included in total expenses in Main

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Street’s consolidated statements of operations as earned. The dividend amounts related to additional phantom stock units are included in the statements of changes in net assets as an increase to dividends to stockholders offset by a corresponding increase to additional paid-in capital.

Recent Developments

In October 2021, we issued an additional $200.0 million in aggregate principal amount of the 3.00% Notes at an issue price of 101.741%, resulting in an effective interest rate of 2.60%. The total net proceeds from the offering of the 3.00% Notes, resulting from the public issue price and after underwriting discounts and estimated offering expenses payable, were approximately $203.5 million. We used the proceeds from this debt issuance to repay outstanding borrowings under our Credit Facility, providing significant additional liquidity for our ongoing investment activities and to facilitate future availability for the repayment of our existing 4.50% Notes due 2022.

In November 2021, we declared a supplemental cash dividend of $0.10 per share payable in December 2021. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the fourth quarter of 2021 of $0.210 per share for each of October, November and December 2021.

During November 2021, we declared regular monthly dividends of $0.215 per share for each month of January, February and March of 2022. These regular monthly dividends equal a total of $0.645 per share for the first quarter of 2022, representing a 4.9% increase from the regular monthly dividends paid in the first quarter of 2021. Including the regular monthly and supplemental dividends declared for the fourth quarter of 2021 and first quarter of 2022, we will have paid $32.820 per share in cumulative dividends since our October 2007 initial public offering.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, including changes in interest rates, and changes in interest rates may affect both our interest expense on the debt outstanding under our Credit Facility and our interest income from portfolio investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. Our investment income will be affected by changes in various interest rates, including LIBOR and prime rates, to the extent that any debt investments include floating interest rates. See “Risk Factors—Risks Relating to Our Investments — Changes relating to the LIBOR calculation process, the phase-out of LIBOR and the use of replacement rates for LIBOR may adversely affect the value of our portfolio securities.”, “Risk Factors — Risks Relating to Our Investments — Changes in interest rates may affect our cost of capital, net investment income and value of our investments.” and “Risk Factors — Risks Relating to Our Debt Financing — Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us.” included in our Form 10-K for the fiscal year ended December 31, 2020 for more information regarding risks associated with our debt investments and borrowings that utilize LIBOR as a reference rate.

The majority of our debt investments are made with either fixed interest rates or floating rates that are subject to contractual minimum interest rates for the term of the investment. As of September 30, 2021, approximately 67.4% of our debt investment portfolio (at cost) bore interest at floating rates, 89.2% of which were subject to contractual minimum interest rates. Our interest expense will be affected by changes in the published LIBOR rate in connection with our Credit Facility; however, the interest rates on our outstanding SBIC debentures, 3.00% Notes, 4.50% Notes due 2022 and 5.20% Notes, which collectively comprise the majority of our outstanding debt, are fixed for the life of such debt. As of September 30, 2021, we had not entered into any interest rate hedging arrangements. Due to our limited use of derivatives, we have claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and, therefore, are not subject to registration or regulation as a pool operator under such Act. The following table shows the approximate annualized increase or decrease in the components of net investment income

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due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of September 30, 2021.

    

Increase

    

(Increase)

    

Increase

    

Increase

(Decrease)

Decrease

(Decrease) in Net

(Decrease) in Net

in Interest

in Interest

Investment

Investment

Basis Point Change

    

Income

    

Expense

    

Income

    

Income per Share

(dollars in thousands, except per share amounts)

(150)

$

(222)

$

180

$

(42)

$

(100)

 

(215)

 

180

 

(35)

 

(50)

 

(201)

 

180

 

(21)

 

(25)

 

(194)

 

180

 

(14)

 

25

 

436

 

(500)

 

(64)

 

50

 

888

 

(1,000)

 

(112)

 

75

1,496

(1,500)

(4)

100

 

3,358

 

(2,000)

 

1,358

 

0.02

125

6,583

(2,500)

4,083

0.06

150

10,029

(3,000)

7,029

0.10

The hypothetical results assume that all LIBOR and prime rate changes would be effective on the first day of the period. However, the contractual LIBOR and prime rate reset dates would vary throughout the period, on either a monthly or quarterly basis, for both our investments and our Credit Facility. The hypothetical results would also be impacted by the changes in the amount of debt outstanding under our Credit Facility (with an increase (decrease) in the debt outstanding under the Credit Facility resulting in an (increase) decrease in the hypothetical interest expense).

Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 of the Exchange Act). Based on that evaluation, our Chief Executive Officer, President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to us that is required to be disclosed in the reports we file or submit under the Exchange Act. There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors described in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which could materially affect our business, financial condition and/or operating results. There have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

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The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended September 30, 2021, we issued 95,364 shares of our common stock under our dividend reinvestment plan. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended. The aggregate value of the shares of common stock issued during the three months ended September 30, 2021 under the dividend reinvestment plan was approximately $4.0 million.

Upon vesting of restricted stock awarded pursuant to our employee equity compensation plan, shares may be withheld to meet applicable tax withholding requirements. Any withheld shares are treated as common stock purchases by the Company in our consolidated financial statements as they reduce the number of shares received by employees upon vesting (see “Purchase of vested stock for employee payroll tax withholding” in the consolidated statements of changes in net assets for share amounts withheld).

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Item 6. Exhibits

Listed below are the exhibits which are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):


*

Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Main Street Capital Corporation

/s/ DWAYNE L. HYZAK

Date: November 5, 2021

Dwayne L. Hyzak

Chief Executive Officer

(principal executive officer)

/s/ JESSE E. MORRIS

Date: November 5, 2021

Jesse E. Morris

Chief Financial Officer and Chief Operating Officer

(principal financial officer)

/s/ LANCE A. PARKER

Date: November 5, 2021

Lance A. Parker

Vice President and Chief Accounting Officer

(principal accounting officer)

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