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Main Street Capital CORP - Quarter Report: 2022 June (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 June 30, 2022

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)

(713350-6000

(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 August 4, 2022 was 73,905,636.

Table of Contents

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements

Consolidated Balance Sheets—June 30, 2022 (unaudited) and December 31, 2021

1

Consolidated Statements of Operations (unaudited)—Three and six months ended June 30, 2022 and 2021

2

Consolidated Statements of Changes in Net Assets (unaudited)—Six months ended June 30, 2022 and 2021

3

Consolidated Statements of Cash Flows (unaudited)—Six months ended June 30, 2022 and 2021

4

Consolidated Schedule of Investments (unaudited)—June 30, 2022

5

Consolidated Schedule of Investments—December 31, 2021

28

Notes to Consolidated Financial Statements (unaudited)

51

Consolidated Schedules of Investments in and Advances to Affiliates (unaudited)—Six months ended June 30, 2022 and 2021

88

Item 2.

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

99

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

122

Item 4.

Controls and Procedures

122

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

123

Item 1A.

Risk Factors

123

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

(in thousands, except shares and per share amounts)

June 30, 

December 31, 

    

2022

    

2021

(Unaudited)

ASSETS

 

  

 

  

Investments at fair value:

 

  

 

  

Control investments (cost: $1,145,692 and $1,107,597 as of June 30, 2022 and December 31, 2021, respectively)

$

1,538,158

$

1,489,257

Affiliate investments (cost: $540,457 and $578,539 as of June 30, 2022 and December 31, 2021, respectively)

 

518,061

 

549,214

Non‑Control/Non‑Affiliate investments (cost: $1,737,243 and $1,573,110 as of June 30, 2022 and December 31, 2021, respectively)

 

1,661,551

 

1,523,360

Total investments (cost: $3,423,392 and $3,259,246 as of June 30, 2022 and December 31, 2021, respectively)

 

3,717,770

 

3,561,831

Cash and cash equivalents

 

43,383

 

32,629

Interest and dividend receivable and other assets

 

59,421

 

56,488

Receivable for securities sold

 

1,441

 

35,125

Deferred financing costs (net of accumulated amortization of $9,948 and $9,462 as of June 30, 2022 and December 31, 2021, respectively)

 

3,730

 

4,217

Total assets

$

3,825,745

$

3,690,290

LIABILITIES

 

 

Credit facility

$

380,000

$

320,000

3.00% Notes due 2026 (par: $500,000 as of both June 30, 2022 and December 31, 2021)

 

497,872

 

497,609

5.20% Notes due 2024 (par: $450,000 as of both June 30, 2022 and December 31, 2021)

 

450,999

 

451,272

SBIC debentures (par: $350,000 as of both June 30, 2022 and December 31, 2021)

 

343,323

 

342,731

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

 

184,747

 

184,444

Accounts payable and other liabilities

 

29,978

 

40,469

Payable for securities purchased

 

 

5,111

Interest payable

 

14,968

 

14,926

Dividend payable

 

15,673

 

15,159

Deferred tax liability, net

 

43,022

 

29,723

Total liabilities

 

1,960,582

 

1,901,444

Commitments and contingencies (Note K)

 

 

NET ASSETS

 

 

Common stock, $0.01 par value per share (150,000,000 shares authorized; 73,455,801 and 70,700,885 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively)

 

735

 

707

Additional paid‑in capital

 

1,837,305

 

1,736,346

Total undistributed earnings

 

27,123

 

51,793

Total net assets

 

1,865,163

 

1,788,846

Total liabilities and net assets

$

3,825,745

$

3,690,290

NET ASSET VALUE PER SHARE

$

25.37

$

25.29

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

1

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

(in thousands, except shares and per share amounts)

(Unaudited)

Three Months Ended

Six Months Ended

    

June 30, 

June 30, 

    

    

2022

    

2021

    

2022

    

2021

INVESTMENT INCOME:

 

  

 

  

 

  

 

  

 

Interest, fee and dividend income:

 

  

 

  

 

  

 

  

 

Control investments

$

36,808

$

27,027

$

69,385

$

51,052

Affiliate investments

 

11,893

 

11,005

 

25,810

 

22,511

Non‑Control/Non‑Affiliate investments

 

36,499

 

29,262

 

69,401

 

56,539

Total investment income

 

85,200

 

67,294

 

164,596

 

130,102

EXPENSES:

 

 

 

 

Interest

 

(17,295)

 

(14,400)

 

(33,982)

 

(28,206)

Compensation

 

(8,807)

 

(6,895)

 

(16,076)

 

(13,216)

General and administrative

 

(4,238)

 

(3,417)

 

(7,464)

 

(6,392)

Share‑based compensation

 

(3,596)

 

(2,759)

 

(6,414)

 

(5,092)

Expenses allocated to the External Investment Manager

 

3,462

 

2,572

 

6,279

 

4,952

Total expenses

 

(30,474)

 

(24,899)

 

(57,657)

 

(47,954)

NET INVESTMENT INCOME

 

54,726

 

42,395

 

106,939

 

82,148

NET REALIZED GAIN (LOSS):

 

 

 

 

Control investments

 

 

(2,320)

 

 

(13,245)

Affiliate investments

 

47

 

13,913

 

739

 

9,110

Non‑Control/Non‑Affiliate investments

 

(5,111)

 

6,407

 

(2,467)

 

6,405

Total net realized gain (loss)

 

(5,064)

 

18,000

 

(1,728)

 

2,270

NET UNREALIZED APPRECIATION (DEPRECIATION):

 

 

 

 

Control investments

 

4,822

 

30,824

 

13,101

 

45,084

Affiliate investments

 

1,731

 

9,816

 

4,772

 

16,232

Non‑Control/Non‑Affiliate investments

 

(31,146)

 

3,801

 

(27,714)

 

17,124

Total net unrealized appreciation (depreciation)

 

(24,593)

 

44,441

 

(9,841)

 

78,440

INCOME TAXES:

 

 

 

 

Federal and state income, excise and other taxes

 

(809)

 

(656)

 

(2,118)

 

(1,289)

Deferred taxes

 

(9,511)

 

(9,070)

 

(13,299)

 

(9,118)

Income tax benefit (provision)

 

(10,320)

 

(9,726)

 

(15,417)

 

(10,407)

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$

14,749

$

95,110

$

79,953

$

152,451

NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED

$

0.75

$

0.62

$

1.47

$

1.20

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

$

0.20

$

1.39

$

1.10

$

2.23

WEIGHTED AVERAGE SHARES
OUTSTANDING—BASIC AND DILUTED

 

73,304,619

 

68,514,683

 

72,512,793

 

68,321,701

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

(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, 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

Balances at December 31, 2021

70,737,021

$

707

$

1,736,346

$

51,793

$

1,788,846

Public offering of common stock, net of offering costs

1,502,430

 

15

 

63,507

 

 

63,522

Share‑based compensation

 

 

2,818

 

 

2,818

Dividend reinvestment

114,043

 

1

 

4,812

 

 

4,813

Amortization of directors’ deferred compensation

 

 

147

 

 

147

Issuance of restricted stock, net of forfeited shares

16,913

 

 

 

 

Dividends to stockholders

 

 

109

 

(51,804)

 

(51,695)

Net increase resulting from operations

 

 

 

65,203

 

65,203

Balances at March 31, 2022

72,370,407

$

723

$

1,807,739

$

65,192

$

1,873,654

Public offering of common stock, net of offering costs

662,828

 

7

 

25,626

 

 

25,633

Share‑based compensation

 

 

3,596

 

 

3,596

Purchase of vested stock for employee payroll tax withholding

(115,071)

 

(1)

 

(4,894)

 

 

(4,895)

Dividend reinvestment

132,156

 

1

 

4,999

 

 

5,000

Amortization of directors’ deferred compensation

 

 

130

 

 

130

Issuance of restricted stock, net of forfeited shares

467,238

 

5

 

(5)

 

 

Dividends to stockholders

 

 

114

 

(52,818)

 

(52,704)

Net increase resulting from operations

 

 

 

14,749

 

14,749

Balances at June 30, 2022

73,517,558

$

735

$

1,837,305

$

27,123

$

1,865,163

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

(in thousands)

(Unaudited)

Six Months Ended

    

June 30, 

2022

   

2021

CASH FLOWS FROM OPERATING ACTIVITIES

Net increase in net assets resulting from operations

$

79,953

$

152,451

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

(540,429)

(520,706)

Proceeds from sales and repayments of debt investments in portfolio companies

381,697

279,303

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

30,293

55,915

Net unrealized (appreciation) depreciation

9,841

(78,440)

Net realized (gain) loss

1,728

(2,270)

Accretion of unearned income

(7,354)

(6,391)

Payment-in-kind interest

(2,364)

(4,672)

Cumulative dividends

(1,062)

(858)

Share-based compensation expense

6,414

5,092

Amortization of deferred financing costs

1,372

1,494

Deferred tax (benefit) provision

13,299

9,118

Changes in other assets and liabilities:

Interest and dividend receivable and other assets

(3,686)

(5,047)

Interest payable

42

3,220

Accounts payable and other liabilities

(10,216)

1,234

Deferred fees and other

1,037

2,363

Net cash used in operating activities

(39,435)

(108,194)

CASH FLOWS FROM FINANCING ACTIVITIES

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

89,155

13,026

Proceeds from public offering of 3.00% Notes due 2026

-

300,000

Dividends paid

(94,071)

(76,221)

Proceeds from issuance of SBIC debentures

-

52,200

Repayments of SBIC debentures

-

(40,000)

Proceeds from credit facility

303,000

446,000

Repayments on credit facility

(243,000)

(546,000)

Debt issuance premiums (costs), net

-

(9,462)

Purchases of vested stock for employee payroll tax withholding

(4,895)

(4,472)

Net cash provided by financing activities

50,189

135,071

Net increase in cash and cash equivalents

10,754

26,877

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

32,629

31,919

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$

43,383

$

58,796

Supplemental cash flow disclosures:

Interest paid

$

32,505

$

23,427

Taxes paid

$

4,920

$

1,609

Non-cash financing activities:

Value of shares issued pursuant to the DRIP

$

9,813

$

7,455

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

4

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Control Investments (5)

Analytical Systems Keco Holdings, LLC

Manufacturer of Liquid and Gas Analyzers

Secured Debt

(9)

8/16/2019

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

8/16/2024

$

4,805

$

4,641

$

4,641

Preferred Member Units

8/16/2019

3,200

3,200

-

Preferred Member Units

5/20/2021

2,427

2,426

4,318

Warrants

(27)

8/16/2019

420

8/16/2029

316

-

10,583

8,959

ASC Interests, LLC

Recreational and Educational Shooting Facility

Secured Debt

12/31/2019

13.00%

7/31/2024

170

170

170

Secured Debt

8/1/2013

13.00%

7/31/2024

1,650

1,648

1,648

Member Units

8/1/2013

1,500

1,500

800

3,318

2,618

ATS Workholding, LLC

(10)

Manufacturer of Machine Cutting Tools and Accessories

Secured Debt

(14)

11/16/2017

5.00%

8/16/2023

4,728

4,570

2,939

Preferred Member Units

11/16/2017

3,725,862

3,726

-

8,296

2,939

Barfly Ventures, LLC

(10)

Casual Restaurant Group

Secured Debt

10/15/2020

7.00%

10/31/2024

711

711

711

Member Units

10/26/2020

37

1,584

2,400

2,295

3,111

Batjer TopCo, LLC

HVAC Mechanical Contractor

Secured Debt

3/7/2022

11.00%

3/31/2027

11,025

10,913

10,913

Preferred Stock

3/7/2022

4,073

4,073

4,073

14,986

14,986

Bolder Panther Group, LLC

Consumer Goods and Fuel Retailer

Secured Debt

(9)

12/31/2020

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

12/31/2025

49,194

48,920

49,194

Class B Preferred Member Units

(8)

12/31/2020

140,000

8.00%

14,000

25,930

62,920

75,124

Brewer Crane Holdings, LLC

Provider of Crane Rental and Operating Services

Secured Debt

(9)

1/9/2018

11.06% (L+10.00%, Floor 1.00%)

1/9/2023

7,812

7,801

7,801

Preferred Member Units

(8)

1/9/2018

2,950

4,279

7,050

12,080

14,851

Bridge Capital Solutions Corporation

Financial Services and Cash Flow Solutions Provider

Secured Debt

7/25/2016

13.00%

12/11/2024

8,813

8,813

8,813

Secured Debt

(30)

7/25/2016

13.00%

12/11/2024

1,000

1,000

1,000

Preferred Member Units

(8) (30)

7/25/2016

17,742

1,000

1,000

Warrants

(27)

7/25/2016

82

7/25/2026

2,132

4,260

12,945

15,073

Café Brazil, LLC

Casual Restaurant Group

Member Units

(8)

6/9/2006

1,233

1,742

2,520

California Splendor Holdings LLC

Processor of Frozen Fruits

Secured Debt

(9)

3/30/2018

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

7/29/2026

28,000

27,944

28,000

5

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Preferred Member Units

(8) (19)

7/31/2019

3,671

15.00% PIK

3,713

3,713

Preferred Member Units

(8)

3/30/2018

6,157

10,775

19,295

42,432

51,008

CBT Nuggets, LLC

Produces and Sells IT Training Certification Videos

Member Units

(8)

6/1/2006

416

1,300

47,900

Centre Technologies Holdings, LLC

Provider of IT Hardware Services and Software Solutions

Secured Debt

(9)

1/4/2019

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

1/4/2026

15,030

14,941

14,941

Preferred Member Units

1/4/2019

13,309

6,122

6,890

21,063

21,831

Chamberlin Holding LLC

Roofing and Waterproofing Specialty Contractor

Secured Debt

(9)

2/26/2018

9.13% (L+8.00%, Floor 1.00%)

2/26/2023

17,466

17,422

17,466

Member Units

(8)

2/26/2018

4,347

11,440

22,510

Member Units

(8) (30)

11/2/2018

1,047,146

1,322

1,540

30,184

41,516

Charps, LLC

Pipeline Maintenance and Construction

Unsecured Debt

8/26/2020

10.00%

1/31/2026

5,694

4,626

5,694

Preferred Member Units

(8)

2/3/2017

1,829

1,963

13,450

6,589

19,144

Clad-Rex Steel, LLC

Specialty Manufacturer of Vinyl-Clad Metal

Secured Debt

(9)

12/20/2016

10.63% (L+9.50%, Floor 1.00%)

1/15/2024

10,480

10,421

10,421

Secured Debt

12/20/2016

10.00%

12/20/2036

1,065

1,055

1,055

Member Units

(8)

12/20/2016

717

7,280

10,250

Member Units

(30)

12/20/2016

800

210

610

18,966

22,336

CMS Minerals Investments

Oil & Gas Exploration & Production

Member Units

(8) (30)

4/1/2016

100

1,691

2,274

Cody Pools, Inc.

Designer of Residential and Commercial Pools

Secured Debt

(9)

3/6/2020

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

12/17/2026

41,649

41,315

41,637

Preferred Member Units

(8) (30)

3/6/2020

587

8,317

51,190

49,632

92,827

Colonial Electric Company LLC

Provider of Electrical Contracting Services

Secured Debt

3/31/2021

12.00%

3/31/2026

25,540

25,351

25,351

Preferred Member Units

(8)

3/31/2021

17,280

7,680

8,940

33,031

34,291

CompareNetworks Topco, LLC

Internet Publishing and Web Search Portals

Secured Debt

(9)

1/29/2019

10.13% (L+9.00%, Floor 1.00%)

1/29/2024

5,741

5,726

5,741

Preferred Member Units

(8)

1/29/2019

1,975

1,975

17,230

7,701

22,971

6

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Copper Trail Fund Investments

(12) (13)

Investment Partnership

LP Interests (CTMH, LP)

(31)

7/17/2017

38.8%

710

710

Datacom, LLC

Technology and Telecommunications Provider

Secured Debt

3/31/2021

7.50%

12/31/2025

8,757

8,245

7,617

Preferred Member Units

(8)

3/31/2021

9,000

2,610

2,670

10,855

10,287

Digital Products Holdings LLC

Designer and Distributor of Consumer Electronics

Secured Debt

(9)

4/1/2018

11.13% (L+10.00%, Floor 1.00%)

4/1/2023

16,193

16,163

16,163

Preferred Member Units

(8)

4/1/2018

3,857

9,501

9,835

25,664

25,998

Direct Marketing Solutions, Inc.

Provider of Omni-Channel Direct Marketing Services

Secured Debt

(9)

2/13/2018

12.13% (L+11.00%, Floor 1.00%)

2/13/2024

24,678

24,561

24,678

Preferred Stock

(8)

2/13/2018

8,400

8,400

21,550

32,961

46,228

Flame King Holdings, LLC

Propane Tank and Accessories Distributor

Secured Debt

(9)

10/29/2021

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

10/31/2026

7,600

7,532

7,600

Secured Debt

(9)

10/29/2021

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

10/31/2026

21,200

21,017

21,200

Preferred Equity

(8)

10/29/2021

9,360

10,400

13,410

38,949

42,210

Gamber-Johnson Holdings, LLC

Manufacturer of Ruggedized Computer Mounting Systems

Secured Debt

(9)

6/24/2016

10.00% (L+8.00%, Floor 2.00%)

1/1/2025

21,598

21,545

21,598

Member Units

(8)

6/24/2016

9,042

17,692

46,300

39,237

67,898

Garreco, LLC

Manufacturer and Supplier of Dental Products

Secured Debt

(9)

7/15/2013

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

7/31/2023

4,196

4,196

4,196

Member Units

(8)

7/15/2013

1,200

1,200

2,490

5,396

6,686

GRT Rubber Technologies LLC

Manufacturer of Engineered Rubber Products

Secured Debt

12/19/2014

9.06% (L+8.00%)

10/29/2026

38,885

38,694

38,885

Member Units

(8)

12/19/2014

5,879

13,065

46,190

51,759

85,075

Gulf Manufacturing, LLC

Manufacturer of Specialty Fabricated Industrial Piping Products

Member Units

(8)

8/31/2007

438

2,980

5,510

Gulf Publishing Holdings, LLC

Energy Industry Focused Media and Publishing

Secured Debt

(9) (17) (19)

9/29/2017

10.60% (5.25% Cash, 5.25% PIK)

9/30/2020

257

257

257

7

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

(L+9.50%, Floor 1.00%)

Secured Debt

(17) (19)

4/29/2016

12.50% (6.25% Cash, 6.25% PIK)

4/29/2021

13,565

13,565

7,529

Member Units

4/29/2016

3,681

3,681

-

17,503

7,786

Harris Preston Fund Investments

(12) (13)

Investment Partnership

LP Interests (2717 MH, L.P.)

(31)

10/1/2017

49.3%

3,877

6,554

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

(31)

3/11/2022

49.3%

244

244

4,121

6,798

Harrison Hydra-Gen, Ltd.

Manufacturer of Hydraulic Generators

Common Stock

6/4/2010

107,456

718

3,330

Jensen Jewelers of Idaho, LLC

Retail Jewelry Store

Secured Debt

(9)

11/14/2006

10.75% (Prime+6.75%, Floor 2.00%)

11/14/2023

2,450

2,441

2,450

Member Units

(8)

11/14/2006

627

811

15,120

3,252

17,570

Johnson Downie Opco, LLC

Executive Search Services

Secured Debt

(9)

12/10/2021

13.00% (L+11.50%, Floor 1.50%)

12/10/2026

10,437

10,328

10,421

Preferred Equity

(8)

12/10/2021

3,150

3,150

5,880

13,478

16,301

JorVet Holdings, LLC

Supplier and Distributor of Veterinary Equipment and Supplies

Secured Debt

3/28/2022

12.00%

3/28/2027

25,650

25,406

25,406

Common Stock

3/28/2022

107,406

10,741

10,741

36,147

36,147

KBK Industries, LLC

Manufacturer of Specialty Oilfield and Industrial Products

Member Units

(8)

1/23/2006

325

783

13,930

Kickhaefer Manufacturing Company, LLC

Precision Metal Parts Manufacturing

Secured Debt

10/31/2018

11.50%

10/31/2023

20,415

20,349

20,349

Secured Debt

10/31/2018

9.00%

10/31/2048

3,897

3,860

3,860

Member Units

10/31/2018

581

12,240

12,240

Member Units

(8) (30)

10/31/2018

800

992

2,460

37,441

38,909

Market Force Information, LLC

Provider of Customer Experience Management Services

Secured Debt

(9)

7/28/2017

12.13% (L+11.00%, Floor 1.00%)

7/28/2023

4,400

4,400

4,400

Secured Debt

(14) (19)

7/28/2017

12.00% PIK

7/28/2023

26,079

25,952

7,531

Member Units

7/28/2017

743,921

16,642

-

46,994

11,931

MH Corbin Holding LLC

Manufacturer and Distributor of Traffic Safety Products

Secured Debt

(17)

8/31/2015

13.00%

3/31/2022

8,090

8,090

4,288

Preferred Member Units

3/15/2019

66,000

4,400

-

Preferred Member Units

9/1/2015

4,000

6,000

-

18,490

4,288

MS Private Loan Fund I, LP

(12) (13)

Investment Partnership

LP Interests

(8) (31)

1/26/2021

14.5%

11,250

10,787

8

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

MSC Adviser I, LLC

(16)

Third Party Investment Advisory Services

Member Units

(8)

11/22/2013

29,500

118,320

MSC Income Fund, Inc.

(12) (13)

Business Development Company

Common Equity

5/2/2022

94,697

750

750

Mystic Logistics Holdings, LLC

Logistics and Distribution Services Provider for Large Volume Mailers

Secured Debt

8/18/2014

10.00%

1/31/2024

6,098

6,098

6,098

Common Stock

(8)

8/18/2014

5,873

2,720

16,210

8,818

22,308

NAPCO Precast, LLC

Precast Concrete Manufacturing

Member Units

(8)

1/31/2008

2,955

2,975

11,830

Nebraska Vet AcquireCo, LLC

Mixed-Animal Veterinary and Animal Health Product Provider

Secured Debt

12/31/2020

12.00%

12/31/2025

10,500

10,423

10,423

Secured Debt

12/31/2020

12.00%

12/31/2025

11,452

11,373

11,373

Preferred Member Units

12/31/2020

6,987

6,987

7,700

28,783

29,496

NexRev LLC

Provider of Energy Efficiency Products & Services

Secured Debt

2/28/2018

11.00%

2/28/2025

12,265

12,094

8,262

Preferred Member Units

(8)

2/28/2018

103,144,186

8,213

940

20,307

9,202

NRP Jones, LLC

Manufacturer of Hoses, Fittings and Assemblies

Secured Debt

12/21/2017

12.00%

3/20/2023

2,080

2,080

2,080

Member Units

(8)

12/22/2011

65,962

3,717

5,470

5,797

7,550

NuStep, LLC

Designer, Manufacturer and Distributor of Fitness Equipment

Secured Debt

(9)

1/31/2017

7.63% (L+6.50%, Floor 1.00%)

1/31/2025

3,200

3,200

3,200

Secured Debt

1/31/2017

12.00%

1/31/2025

18,440

18,408

18,440

Preferred Member Units

1/31/2017

406

10,200

11,560

31,808

33,200

OMi Topco, LLC

Manufacturer of Overhead Cranes

Secured Debt

8/31/2021

12.00%

8/31/2026

16,750

16,610

16,750

Preferred Member Units

(8)

4/1/2008

900

1,080

20,300

17,690

37,050

Orttech Holdings, LLC

Distributor of Industrial Clutches, Brakes and Other Components

Secured Debt

(9)

7/30/2021

12.15% (L+11.00%, Floor 1.00%)

7/31/2026

23,975

23,779

23,779

Preferred Stock

(8) (30)

7/30/2021

10,000

10,000

10,000

33,779

33,779

Pearl Meyer Topco LLC

Provider of Executive Compensation Consulting Services

Secured Debt

4/27/2020

12.00%

4/27/2025

28,681

28,506

28,681

Member Units

(8)

4/27/2020

13,800

13,000

39,750

41,506

68,431

PPL RVs, Inc.

Recreational Vehicle Dealer

9

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9)

11/15/2016

7.97% (L+7.00%, Floor 0.50%)

11/15/2027

19,655

19,394

19,645

Common Stock

(8)

6/10/2010

2,000

2,150

18,490

21,544

38,135

Principle Environmental, LLC

Noise Abatement Service Provider

Secured Debt

2/1/2011

13.00%

11/15/2026

473

471

471

Secured Debt

7/1/2011

13.00%

11/15/2026

5,924

5,820

5,820

Preferred Member Units

(8)

2/1/2011

21,806

5,709

11,530

Common Stock

1/27/2021

1,037

1,200

740

13,200

18,561

Quality Lease Service, LLC

Provider of Rigsite Accommodation Unit Rentals and Related Services

Member Units

6/8/2015

1,000

8,063

1,075

River Aggregates, LLC

Processor of Construction Aggregates

Member Units

(8) (30)

12/20/2013

1,500

369

3,380

Robbins Bros. Jewelry, Inc.

Bridal Jewelry Retailer

Secured Debt

(9)

12/15/2021

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

12/15/2026

36,135

35,774

35,774

Preferred Equity

12/15/2021

11,070

11,070

15,740

46,844

51,514

Tedder Industries, LLC

Manufacturer of Firearm Holsters and Accessories

Secured Debt

8/31/2018

12.00%

8/31/2022

1,840

1,840

1,840

Secured Debt

8/31/2018

12.00%

8/31/2023

15,200

15,185

15,185

Preferred Member Units

8/31/2018

518

8,801

7,314

25,826

24,339

Televerde, LLC

Provider of Telemarketing and Data Services

Member Units

1/6/2011

460

1,290

5,145

Preferred Stock

1/26/2022

248

718

1,794

2,008

6,939

Trantech Radiator Topco, LLC

Transformer Cooling Products and Services

Secured Debt

5/31/2019

12.00%

5/31/2024

8,320

8,277

8,314

Common Stock

(8)

5/31/2019

615

4,655

8,090

12,932

16,404

Vision Interests, Inc.

Manufacturer / Installer of Commercial Signage

Series A Preferred Stock

(8)

12/23/2011

3,000,000

3,000

3,000

VVS Holdco LLC

Omnichannel Retailer of Animal Health Products

Secured Debt

(30)

12/1/2021

11.50%

12/1/2026

30,400

30,102

30,102

Preferred Equity

(8) (30)

12/1/2021

11,840

11,840

12,080

41,942

42,182

Ziegler’s NYPD, LLC

Casual Restaurant Group

Secured Debt

6/1/2015

12.00%

10/1/2022

625

625

625

Secured Debt

10/1/2008

6.50%

10/1/2022

1,000

1,000

1,000

Secured Debt

10/1/2008

14.00%

10/1/2022

2,750

2,750

2,750

Preferred Member Units

6/30/2015

10,072

2,834

1,680

Warrants

(27)

7/1/2015

587

10/1/2025

600

-

7,809

6,055

Subtotal Control Investments (82.5% of net assets at fair value)

$

1,145,692

$

1,538,158

10

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Affiliate Investments (6)

AAC Holdings, Inc.

(11)

Substance Abuse Treatment Service Provider

Secured Debt

(19)

12/11/2020

18.00% PIK

6/25/2025

$

10,621

$

10,457

$

10,090

Common Stock

12/11/2020

593,928

3,148

800

Warrants

(27)

12/11/2020

554,353

12/11/2025

-

740

13,605

11,630

AFG Capital Group, LLC

Provider of Rent-to-Own Financing Solutions and Services

Preferred Member Units

(8)

11/7/2014

186

1,200

8,780

ATX Networks Corp.

(11)

Provider of Radio Frequency Management Equipment

Secured Debt

(9)

9/1/2021

8.92% (L+7.50%, Floor 1.00%)

9/1/2026

7,071

6,496

6,187

Unsecured Debt

(19)

9/1/2021

10.00% PIK

9/1/2028

3,225

2,121

2,242

Common Stock

9/1/2021

583

-

-

8,617

8,429

BBB Tank Services, LLC

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

Unsecured Debt

(9) (17)

4/8/2016

12.06% (L+11.00%, Floor 1.00%)

4/8/2021

4,800

4,800

2,298

Preferred Stock (non-voting)

(19)

12/17/2018

15.00% PIK

162

-

Member Units

4/8/2016

800,000

800

-

5,762

2,298

Boccella Precast Products LLC

Manufacturer of Precast Hollow Core Concrete

Secured Debt

9/23/2021

10.00%

2/28/2027

320

320

320

Member Units

(8)

6/30/2017

2,160,000

2,256

4,510

2,576

4,830

Buca C, LLC

Casual Restaurant Group

Secured Debt

(9)

6/30/2015

10.37% (L+9.25%, Floor 1.00%)

6/30/2023

18,270

18,270

13,149

Preferred Member Units

(19)

6/30/2015

6

6.00% PIK

4,770

-

23,040

13,149

Career Team Holdings, LLC

Provider of Workforce Training and Career Development Services

Secured Debt

12/17/2021

12.50%

12/17/2026

20,250

20,070

20,070

Common Stock

12/17/2021

450,000

4,500

4,500

24,570

24,570

Chandler Signs Holdings, LLC

(10)

Sign Manufacturer

Class A Units

1/4/2016

1,500,000

1,500

620

Classic H&G Holdings, LLC

Provider of Engineered Packaging Solutions

Secured Debt

(9)

3/12/2020

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

3/12/2025

5,560

5,560

5,560

Secured Debt

3/12/2020

8.00%

3/12/2025

19,274

19,160

19,274

Preferred Member Units

(8)

3/12/2020

154

5,760

23,790

30,480

48,624

Congruent Credit Opportunities Funds

(12) (13)

Investment Partnership

11

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

LP Interests (Congruent Credit Opportunities Fund
III, LP)

(8) (31)

2/4/2015

17.4%

8,659

8,299

DMA Industries, LLC

Distributor of aftermarket ride control products

Secured Debt

11/19/2021

12.00%

11/19/2026

21,200

21,014

21,200

Preferred Equity

11/19/2021

5,944

5,944

6,920

26,958

28,120

Dos Rios Partners

(12) (13)

Investment Partnership

LP Interests (Dos Rios Partners, LP)

(31)

4/25/2013

20.2%

6,605

8,610

LP Interests (Dos Rios Partners - A, LP)

(31)

4/25/2013

6.4%

2,097

2,734

8,702

11,344

Dos Rios Stone Products LLC

(10)

Limestone and Sandstone Dimension Cut Stone Mining Quarries

Class A Preferred Units

(30)

6/27/2016

2,000,000

2,000

350

EIG Fund Investments

(12) (13)

Investment Partnership

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

(8) (31)

11/6/2015

11.1%

436

389

Freeport Financial Funds

(12) (13)

Investment Partnership

LP Interests (Freeport Financial SBIC Fund LP)

(8) (31)

3/23/2015

9.3%

4,064

4,116

LP Interests (Freeport First Lien Loan Fund III LP)

(8) (31)

7/31/2015

6.0%

7,250

6,795

11,314

10,911

GFG Group, LLC.

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

Secured Debt

3/31/2021

9.00%

3/31/2026

12,545

12,448

12,545

Preferred Member Units

(8)

3/31/2021

226

4,900

6,990

17,348

19,535

Harris Preston Fund Investments

(12) (13)

Investment Partnership

LP Interests (HPEP 3, L.P.)

(8) (31)

8/9/2017

8.2%

2,833

4,331

LP Interests (423 COR, LP)

(31)

6/2/2022

22.9%

1,400

1,400

4,233

5,731

Hawk Ridge Systems, LLC

Value-Added Reseller of Engineering Design and Manufacturing Solutions

Secured Debt

(9)

12/2/2016

7.13% (L+6.00%, Floor 1.00%)

1/15/2026

2,585

2,585

2,585

Secured Debt

12/2/2016

8.00%

1/15/2026

34,800

34,687

34,800

Preferred Member Units

(8)

12/2/2016

226

2,850

20,030

Preferred Member Units

(30)

12/2/2016

226

150

1,050

12

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

40,272

58,465

Houston Plating and Coatings, LLC

Provider of Plating and Industrial Coating Services

Unsecured Convertible Debt

5/1/2017

8.00%

10/2/2024

3,000

3,000

2,750

Member Units

(8)

1/8/2003

322,297

2,352

2,520

5,352

5,270

I-45 SLF LLC

(12) (13)

Investment Partnership

Member Units (Fully diluted 20.0%; 21.75% profits
interest)

(8)

10/20/2015

19,000

12,949

Iron-Main Investments, LLC

Consumer Reporting Agency Providing Employment Background Checks and Drug Testing

Secured Debt

8/2/2021

12.50%

11/15/2026

4,600

4,561

4,561

Secured Debt

9/1/2021

12.50%

11/15/2026

3,200

3,173

3,173

Secured Debt

11/15/2021

12.50%

11/15/2026

28,944

28,769

28,769

Common Stock

8/3/2021

179,778

1,798

1,798

38,301

38,301

L.F. Manufacturing Holdings, LLC

(10)

Manufacturer of Fiberglass Products

Preferred Member Units (non-voting)

(8) (19)

1/1/2019

14.00% PIK

115

115

Member Units

(8)

12/23/2013

2,179,001

2,019

3,150

2,134

3,265

OnAsset Intelligence, Inc.

Provider of Transportation Monitoring / Tracking Products and Services

Secured Debt

(14) (19)

5/20/2014

12.00% PIK

12/31/2022

964

964

808

Secured Debt

(14) (19)

3/21/2014

12.00% PIK

12/31/2022

983

983

825

Secured Debt

(14) (19)

5/10/2013

12.00% PIK

12/31/2022

2,116

2,116

1,776

Secured Debt

(14) (19)

4/18/2011

12.00% PIK

12/31/2022

4,415

4,415

3,704

Unsecured Debt

(14) (19)

6/5/2017

10.00% PIK

12/31/2022

197

197

197

Preferred Stock

(14) (19)

4/18/2011

912

7.00% PIK

1,981

-

Common Stock

4/15/2021

635

830

-

Warrants

(27)

4/18/2011

4,699

5/10/2023

1,089

-

12,575

7,310

Oneliance, LLC

Construction Cleaning Company

Secured Debt

(9)

8/6/2021

12.06% (L+11.00%, Floor 1.00%)

8/6/2026

5,600

5,553

5,553

Preferred Stock

8/6/2021

1,056

1,056

1,056

6,609

6,609

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

Provider of Rigsite Accommodation Unit Rentals and Related Services

Secured Debt

(14) (17)

6/30/2015

12.00%

1/8/2018

30,369

29,865

-

Preferred Member Units

1/8/2013

250

2,500

-

32,365

-

SI East, LLC

Rigid Industrial Packaging Manufacturing

Secured Debt

8/31/2018

10.25%

8/31/2023

64,361

64,285

64,361

Preferred Member Units

(8)

8/31/2018

157

1,218

12,830

65,503

77,191

Slick Innovations, LLC

Text Message Marketing Platform

Secured Debt

9/13/2018

12.00%

9/13/2023

4,640

4,596

4,640

Common Stock

9/13/2018

70,000

700

1,640

Warrants

(27)

9/13/2018

18,084

9/13/2028

181

440

5,477

6,720

Sonic Systems International, LLC

(10)

Nuclear Power Staffing Services

13

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9)

8/20/2021

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

8/20/2026

15,769

15,495

15,260

Common Stock

8/20/2021

9,968

1,356

1,420

16,851

16,680

Superior Rigging & Erecting Co.

Provider of Steel Erecting, Crane Rental & Rigging Services

Secured Debt

8/31/2020

12.00%

8/31/2025

21,500

21,355

21,355

Preferred Member Units

8/31/2020

1,571

4,500

4,500

25,855

25,855

The Affiliati Network, LLC

Performance Marketing Solutions

Secured Debt

8/9/2021

11.83%

8/9/2026

11,761

11,643

11,643

Preferred Stock

(8)

8/9/2021

1,280,000

6,400

6,400

18,043

18,043

UnionRock Energy Fund II, LP

(12) (13)

Investment Partnership

LP Interests

(8) (31)

6/15/2020

11.1%

2,567

3,865

UniTek Global Services, Inc.

(11)

Provider of Outsourced Infrastructure Services

Secured Debt

(9) (19)

10/15/2018

9.07% (7.07% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%)

8/20/2024

401

400

366

Secured Debt

(9) (19)

8/27/2018

9.07% (7.07% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%)

8/20/2024

2,006

1,996

1,828

Secured Convertible Debt

(19)

1/1/2021

15.00% PIK

2/20/2025

1,339

1,339

2,588

Preferred Stock

(8) (19)

8/29/2019

1,133,102

20.00% PIK

1,938

2,833

Preferred Stock

(19)

8/21/2018

1,521,122

20.00% PIK

2,188

1,891

Preferred Stock

(19)

6/30/2017

2,281,682

19.00% PIK

3,667

-

Preferred Stock

(19)

1/15/2015

4,336,866

13.50% PIK

7,924

-

Common Stock

4/1/2020

945,507

-

-

19,452

9,506

Universal Wellhead Services Holdings, LLC

(10)

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

Preferred Member Units

(19) (30)

12/7/2016

716,949

14.00% PIK

1,032

-

Member Units

(30)

12/7/2016

4,000,000

4,000

-

5,032

-

Volusion, LLC

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

Secured Debt

(17)

1/26/2015

11.50%

1/26/2020

17,084

17,084

17,084

Unsecured Convertible Debt

5/16/2018

8.00%

11/16/2023

409

409

409

Preferred Member Units

1/26/2015

4,876,670

14,000

2,930

Warrants

(27)

1/26/2015

1,831,355

1/26/2025

2,576

-

34,069

20,423

Subtotal Affiliate Investments (27.8% of net assets at fair value)

$

540,457

$

518,061

14

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Non-Control/Non-Affiliate Investments (7)

Acousti Engineering Company of Florida

(10)

Interior Subcontractor Providing Acoustical Walls and Ceilings

Secured Debt

(9)

11/2/2020

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

11/2/2025

$

11,840

$

11,750

$

11,267

Secured Debt

(9)

5/26/2021

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

11/2/2025

828

821

828

12,571

12,095

Acumera, Inc.

(10)

Managed Security Service Provider

Secured Debt

(9)

6/28/2022

10.56% (L+9.50%, Floor 1.00%)

10/26/2027

17,763

17,294

17,294

Adams Publishing Group, LLC

(10)

Local Newspaper Operator

Secured Debt

3/11/2022

10.75%

3/11/2027

788

788

788

Secured Debt

(9)

3/11/2022

8.72% (L+7.00%, Floor 1.00%)

3/11/2027

24,945

24,883

24,883

25,671

25,671

ADS Tactical, Inc.

(11)

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

Secured Debt

(9)

3/29/2021

7.20% (L+5.75%, Floor 1.00%)

3/19/2026

21,861

21,512

20,213

American Health Staffing Group, Inc.

(10)

Healthcare Temporary Staffing

Secured Debt

(9)

11/19/2021

8.01% (L+6.00%, Floor 1.00%)

11/19/2026

6,650

6,579

6,324

American Nuts, LLC

(10)

Roaster, Mixer and Packager of Bulk Nuts and Seeds

Secured Debt

(9) (39)

3/11/2022

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

4/10/2026

15,682

15,428

15,428

Secured Debt

(9) (39)

3/11/2022

9.75% (SOFR+8.75%, Floor 1.00%)

4/10/2026

15,707

15,451

15,451

30,879

30,879

American Teleconferencing Services, Ltd.

(11)

Provider of Audio Conferencing and Video Collaboration Solutions

Secured Debt

(9) (14)

9/17/2021

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

6/30/2022

2,980

2,980

171

Secured Debt

(9) (14)

5/19/2016

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

6/28/2023

14,370

13,706

826

16,686

997

ArborWorks, LLC

(10)

Vegetation Management Services

Secured Debt

(9)

11/9/2021

9.00% (L+7.00%, Floor 1.00%)

11/9/2026

2,807

2,684

2,557

Secured Debt

(9)

11/9/2021

8.37% (L+7.00%, Floor 1.00%)

11/9/2026

30,178

29,649

27,492

Common Equity

11/9/2021

234

234

14

32,567

30,063

Arrow International, Inc

(10)

Manufacturer and Distributor of Charitable Gaming Supplies

Secured Debt

(9) (23) (39)

12/21/2020

8.21% (SOFR+6.63%, Floor 1.00%)

12/21/2025

36,000

35,693

35,656

ATS Operating, LLC

(10)

For-Profit Thrift Retailer

Secured Debt

(9) (39)

1/18/2022

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

1/18/2027

6,660

6,660

6,660

Secured Debt

(9) (39)

1/18/2022

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

1/18/2027

6,660

6,660

6,660

Common Stock

1/18/2022

720,000

720

720

15

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

14,040

14,040

AVEX Aviation Holdings, LLC

(10)

Specialty Aircraft Dealer

Secured Debt

(9)

12/15/2021

8.82% (L+7.00%, Floor 1.00%)

12/15/2026

12,179

11,962

11,195

Secured Debt

(9)

12/15/2021

9.06% (L+7.00%, Floor 1.00%)

12/15/2026

1,440

1,375

1,324

Common Equity

12/15/2021

360

360

258

13,697

12,777

Berry Aviation, Inc.

(10)

Charter Airline Services

Secured Debt

(19)

7/6/2018

12.00% (10.50% Cash, 1.50% PIK)

1/6/2024

194

194

194

Preferred Member Units

(8) (19) (30)

11/12/2019

122,416

16.00% PIK

182

372

Preferred Member Units

(8) (19) (30)

7/6/2018

1,548,387

8.00% PIK

2,105

4,475

2,481

5,041

Bettercloud, Inc.

(10)

SaaS Provider of Workflow Management and Business Application Solutions

Secured Debt

(9) (19) (39)

6/30/2022

8.53% (1.00% Cash, 7.53% PIK) (SOFR+7.25%, Floor 0.75%)

6/30/2028

26,811

26,199

26,199

Binswanger Enterprises, LLC

(10)

Glass Repair and Installation Service Provider

Secured Debt

(9) (39)

3/10/2017

10.12% (SOFR+8.50%, Floor 1.00%)

6/10/2024

11,807

11,700

11,599

Member Units

3/10/2017

1,050,000

1,050

560

12,750

12,159

Bluestem Brands, Inc.

(11)

Multi-Channel Retailer of General Merchandise

Secured Debt

(9)

8/28/2020

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

8/28/2025

5,357

5,357

5,346

Common Stock

(8)

10/1/2020

723,184

1

5,790

5,358

11,136

Brainworks Software, LLC

(10)

Advertising Sales and Newspaper Circulation Software

Secured Debt

(9) (14) (17)

8/12/2014

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

7/22/2019

7,817

7,817

4,201

Brightwood Capital Fund Investments

(12) (13)

Investment Partnership

LP Interests (Brightwood Capital Fund V, LP)

(31)

7/12/2021

1.3%

2,000

2,139

LP Interests (Brightwood Capital Fund III, LP)

(8) (31)

7/21/2014

1.6%

7,062

4,454

LP Interests (Brightwood Capital Fund IV, LP)

(8) (31)

10/26/2016

0.6%

4,350

4,394

13,412

10,987

Burning Glass Intermediate Holding Company, Inc.

(10)

Provider of Skills-Based Labor Market Analytics

Secured Debt

(9)

6/14/2021

6.12% (L+5.00%, Floor 1.00%)

6/10/2026

929

898

913

Secured Debt

(9)

6/14/2021

6.06% (L+5.00%, Floor 1.00%)

6/10/2028

19,983

19,680

19,626

20,578

20,539

Cadence Aerospace LLC

(10)

Aerostructure Manufacturing

16

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9) (19) (34)

11/14/2017

9.49% Cash, 0.24% PIK

11/14/2023

28,502

28,399

27,923

CAI Software LLC

Provider of Specialized Enterprise Resource Planning Software

Preferred Equity

(8)

12/13/2021

1,788,527

1,789

1,789

Preferred Equity

12/13/2021

596,176

-

-

1,789

1,789

Camin Cargo Control, Inc.

(11)

Provider of Mission Critical Inspection, Testing and Fuel Treatment Services

Secured Debt

(9)

6/14/2021

7.86% (L+6.50%, Floor 1.00%)

6/4/2026

15,338

15,214

15,261

CaseWorthy, Inc.

(10)

SaaS Provider of Case Management Solutions

Secured Debt

(9) (39)

5/18/2022

7.46% (SOFR+6.00%, Floor 1.00%)

5/18/2027

6,148

6,077

6,077

Cenveo Corporation

(11)

Provider of Digital Marketing Agency Services

Common Stock

9/7/2018

322,907

6,183

7,221

Channel Partners Intermediateco, LLC

(10)

Outsourced Consumer Services Provider

Secured Debt

(9) (39)

2/7/2022

8.00% (SOFR+6.50%, Floor 1.00%)

2/7/2027

5,183

5,069

5,069

Secured Debt

(9) (37)

2/7/2022

7.74%

2/7/2027

39,253

38,518

38,518

43,587

43,587

Clarius BIGS, LLC

(10)

Prints & Advertising Film Financing

Secured Debt

(14) (17) (19)

9/23/2014

15.00% PIK

1/5/2015

2,734

2,734

17

Computer Data Source, LLC

(10)

Third Party Maintenance Provider to the Data Center Ecosystem

Secured Debt

(9)

8/6/2021

8.87% (L+7.50%, Floor 1.00%)

8/6/2026

23,794

23,398

22,285

Construction Supply Investments, LLC

(10)

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

Member Units

(8)

12/29/2016

861,618

3,335

19,320

Darr Equipment LP

(10)

Heavy Equipment Dealer

Secured Debt

12/26/2017

11.50%

6/22/2023

4,681

4,681

4,337

Warrants

(29)

4/15/2014

915,734

12/23/2023

474

510

5,155

4,847

DTE Enterprises, LLC

(10)

Industrial Powertrain Repair and Services

Secured Debt

(9)

4/13/2018

9.00% (L+7.50%, Floor 1.50%)

4/13/2023

8,574

8,538

8,106

Class AA Preferred Member Units (non-voting)

(8) (19)

4/13/2018

10.00% PIK

1,104

1,104

Class A Preferred Member Units

(19)

4/13/2018

776,316

8.00% PIK

776

180

10,418

9,390

Dynamic Communities, LLC

(10)

Developer of Business Events and

17

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Online Community Groups

Secured Debt

(9)

7/17/2018

10.13% (L+8.50%, Floor 1.00%)

7/17/2023

5,611

5,581

5,048

Eastern Wholesale Fence LLC

(10)

Manufacturer and Distributor of Residential and Commercial Fencing Solutions

Secured Debt

(9)

11/19/2020

8.58%, (L+7.00%, Floor 1.00%)

10/30/2025

33,302

32,810

31,614

Emerald Technologies Acquisition Co, Inc.

(11)

Design & Manufacturing

Secured Debt

(9) (39)

2/10/2022

7.25% (SOFR+6.25%, Floor 0.75%)

2/10/2028

9,375

9,198

9,094

EnCap Energy Fund Investments

(12) (13)

Investment Partnership

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

(8) (31)

1/22/2015

0.1%

3,591

2,188

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

(8) (31)

1/21/2015

0.4%

1,984

1,037

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

(8) (31)

1/22/2015

0.1%

3,807

2,230

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

(8) (31)

3/25/2015

0.1%

8,337

9,978

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

(31)

3/30/2015

0.8%

5,358

1,583

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

(8) (31)

3/27/2015

0.2%

6,042

5,212

29,119

22,228

Engineering Research & Consulting, LLC

(10)

Provider of Engineering & Consulting Services to US Department of Defense

Secured Debt

(9)

5/23/2022

9.50% (Prime+5.50%, Floor 0.75%)

5/23/2027

851

801

801

Secured Debt

(9)

5/23/2022

9.50% (Prime+5.50%, Floor 0.75%)

5/23/2028

16,379

16,061

16,061

16,862

16,862

EPIC Y-Grade Services, LP

(11)

NGL Transportation & Storage

Secured Debt

(9)

6/22/2018

8.08% (L+6.00%, Floor 1.00%)

6/30/2027

6,858

6,792

6,018

Event Holdco, LLC

(10)

Event and Learning Management Software for Healthcare Organizations and Systems

Secured Debt

(9) (30)

12/22/2021

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

12/22/2026

3,692

3,659

3,520

Secured Debt

(9) (30)

12/22/2021

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

12/22/2026

44,308

43,911

42,235

47,570

45,755

18

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Flip Electronics LLC

(10)

Distributor of Hard-to-Find and Obsolete Electronic Components

Secured Debt

(9) (39)

1/4/2021

9.60% (SOFR+7.50%, Floor 1.00%)

1/2/2026

6,185

6,069

6,069

Secured Debt

(9) (39)

3/24/2022

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

1/2/2026

245

245

245

6,314

6,314

Fuse, LLC

(11)

Cable Networks Operator

Secured Debt

6/30/2019

12.00%

6/28/2024

1,810

1,810

1,512

Common Stock

6/30/2019

10,429

256

-

2,066

1,512

GeoStabilization International (GSI)

(11)

Geohazard Engineering Services & Maintenance

Secured Debt

1/2/2019

6.61% (L+5.25%)

12/19/2025

20,604

20,521

20,088

GS HVAM Intermediate, LLC

(10)

Specialized Food Distributor

Secured Debt

(9)

10/18/2019

6.81% (L+5.75%, Floor 1.00%)

10/2/2024

13,159

13,097

12,678

HDC/HW Intermediate Holdings

(10)

Managed Services and Hosting Provider

Secured Debt

(9)

12/21/2018

8.51% (L+7.50%, Floor 1.00%)

12/21/2023

3,437

3,414

3,056

Heartland Dental, LLC

(10)

Dental Support Organization

Secured Debt

(9)

9/9/2020

8.17% (L+6.50%, Floor 1.00%)

4/30/2025

14,700

14,417

14,479

HOWLCO LLC

(11) (13) (21)

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

Secured Debt

(9)

8/19/2021

7.50% (L+6.00%, Floor 1.00%)

10/23/2026

25,418

25,418

24,609

Hybrid Promotions, LLC

(10)

Wholesaler of Licensed, Branded and Private Label Apparel

Secured Debt

(9) (39)

6/30/2021

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

6/30/2026

7,088

6,972

6,550

IG Parent Corporation

(11)

Software Engineering

Secured Debt

(9)

7/30/2021

6.96% (L+5.75%, Floor 1.00%)

7/30/2026

188

156

181

Secured Debt

(9)

7/30/2021

6.99% (L+5.75%, Floor 1.00%)

7/30/2026

9,543

9,421

9,205

9,577

9,386

Implus Footcare, LLC

(10)

Provider of Footwear and Related Accessories

Secured Debt

(9) (19)

6/1/2017

9.01% (8.76% Cash, 0.25% PIK) (0.25% PIK + L+7.75%, Floor 1.00%)

4/30/2024

18,609

18,427

17,169

Independent Pet Partners Intermediate Holdings, LLC

(10)

Omnichannel Retailer of Specialty Pet Products

Secured Debt

(19) (35)

8/20/2020

9.89% PIK

12/22/2022

6,658

6,658

6,658

Secured Debt

(19)

12/10/2020

6.00% PIK

11/20/2023

18,428

17,664

17,121

Preferred Stock (non-voting)

(19)

12/10/2020

6.00% PIK

3,235

2,874

Preferred Stock (non-voting)

12/10/2020

-

-

Member Units

11/20/2018

1,558,333

1,558

-

19

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

29,115

26,653

Industrial Services Acquisition, LLC

(10)

Industrial Cleaning Services

Secured Debt

(9)

8/13/2021

8.38% (L+6.75%, Floor 1.00%)

8/13/2026

463

426

426

Secured Debt

(9)

8/13/2021

7.81% (L+6.75%, Floor 1.00%)

8/13/2026

19,385

19,061

19,033

Preferred Member Units

(8) (19) (30)

1/31/2018

144

10.00% PIK

125

159

Preferred Member Units

(8) (19) (30)

5/17/2019

80

20.00% PIK

86

98

Member Units

(30)

6/17/2016

900

900

690

20,598

20,406

Infolinks Media Buyco, LLC

(10)

Exclusive Placement Provider to the Advertising Ecosystem

Secured Debt

(9)

11/1/2021

6.76% (L+5.75%, Floor 1.00%)

11/1/2026

8,637

8,465

8,331

Interface Security Systems, L.L.C

(10)

Commercial Security & Alarm Services

Secured Debt

(9)

12/9/2021

11.75% (L+10.00%, Floor 1.75%)

8/7/2023

938

938

938

Secured Debt

(9) (14) (19)

8/7/2019

9.75% PIK (L+8.00% PIK, Floor 1.75%)

8/7/2023

7,313

7,237

3,550

Common Stock

12/7/2021

2,143

-

-

8,175

4,488

Intermedia Holdings, Inc.

(11)

Unified Communications as a Service

Secured Debt

(9)

8/3/2018

7.36% (L+6.00%, Floor 1.00%)

7/19/2025

20,573

20,515

19,442

Invincible Boat Company, LLC.

(10)

Manufacturer of Sport Fishing Boats

Secured Debt

(9)

8/28/2019

8.73% (L+6.50%, Floor 1.50%)

8/28/2025

311

306

306

Secured Debt

(9)

8/28/2019

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

8/28/2025

16,889

16,765

16,244

17,071

16,550

INW Manufacturing, LLC

(11)

Manufacturer of Nutrition and Wellness Products

Secured Debt

(9)

5/19/2021

7.38% (L+5.75%, Floor 0.75%)

3/25/2027

7,219

7,041

6,822

Isagenix International, LLC

(11)

Direct Marketer of Health & Wellness Products

Secured Debt

(9)

6/21/2018

7.34% (L+5.75%, Floor 1.00%)

6/14/2025

4,951

4,932

2,966

Jackmont Hospitality, Inc.

(10)

Franchisee of Casual Dining Restaurants

Secured Debt

(9)

5/26/2015

7.51% (L+6.50%, Floor 1.00%)

11/4/2024

2,090

2,090

1,993

Preferred Equity

(8)

11/8/2021

2,826,667

110

610

2,200

2,603

Joerns Healthcare, LLC

(11)

Manufacturer and Distributor of Health Care Equipment & Supplies

Secured Debt

(9)

8/21/2019

7.55% (L+6.00%, Floor 1.00%)

8/21/2024

4,034

3,997

2,626

Secured Debt

(19)

11/15/2021

15.00% PIK

11/8/2022

1,768

1,768

1,768

Common Stock

8/21/2019

472,579

4,429

-

10,194

4,394

JTI Electrical & Mechanical, LLC

(10)

Electrical, Mechanical and Automation Services

Secured Debt

(9)

12/22/2021

7.01% (L+6.00%, Floor 1.00%)

12/22/2026

37,421

36,598

36,366

Common Equity

12/22/2021

1,684,211

1,684

1,760

38,282

38,126

20

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

KMS, LLC

(10)

Wholesaler of Closeout and Value-priced Products

Secured Debt

(9)

10/4/2021

8.31% (L+7.25%, Floor 1.00%)

10/4/2026

7,543

7,413

6,941

Secured Debt

(9)

10/4/2021

9.31% (L+7.25%, Floor 1.00%)

10/4/2026

1,086

1,034

1,034

8,447

7,975

Kore Wireless Group Inc.

(11) (13)

Mission Critical Software Platform

Secured Debt

12/31/2018

7.13% (L+5.50%)

12/20/2024

11,356

11,298

11,271

Laredo Energy, LLC

(10)

Oil & Gas Exploration & Production

Member Units

5/4/2020

1,155,952

11,560

11,383

Lightbox Holdings, L.P.

(11)

Provider of Commercial Real Estate Software

Secured Debt

5/23/2019

6.63% (L+5.00%)

5/9/2026

14,550

14,404

14,186

LKCM Headwater Investments I, L.P.

(12) (13)

Investment Partnership

LP Interests

(8) (31)

1/25/2013

2.3%

1,746

3,074

LL Management, Inc.

(10)

Medical Transportation Service Provider

Secured Debt

(9) (39)

5/2/2019

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

9/25/2023

17,424

17,332

17,279

Secured Debt

(9) (39)

5/12/2022

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

9/25/2023

10,855

10,711

10,711

28,043

27,990

LLFlex, LLC

(10)

Provider of Metal-Based Laminates

Secured Debt

(9)

8/16/2021

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

8/16/2026

4,455

4,371

4,130

Logix Acquisition Company, LLC

(10)

Competitive Local Exchange Carrier

Secured Debt

(9)

1/8/2018

6.81% (L+5.75%, Floor 1.00%)

12/22/2024

19,662

18,876

18,320

Looking Glass Investments, LLC

(12) (13)

Specialty Consumer Finance

Member Units

7/1/2015

3

125

25

Mac Lean-Fogg Company

(10)

Manufacturer and Supplier for Auto and Power Markets

Secured Debt

(9)

4/22/2019

6.06% (L+5.25%, Floor 0.625%)

12/22/2025

16,993

16,919

16,314

Preferred Stock

(19)

10/1/2019

13.75% (4.50% Cash, 9.25% PIK)

1,962

1,785

18,881

18,099

Mako Steel, LP

(10)

Self-Storage Design & Construction

Secured Debt

(9)

3/15/2021

8.81% (L+7.25%, Floor 0.75%)

3/13/2026

2,556

2,509

2,388

Secured Debt

(9)

3/15/2021

8.38 % (L+7.25%, Floor 0.75%)

3/13/2026

15,503

15,267

14,489

17,776

16,877

MB2 Dental Solutions, LLC

(11)

Dental Partnership Organization

Secured Debt

(9)

1/28/2021

7.24% (L+6.00%, Floor 1.00%)

1/29/2027

7,916

7,813

7,712

Secured Debt

(9) (36)

1/28/2021

7.52%

1/29/2027

6,168

6,112

6,008

13,925

13,720

Microbe Formulas, LLC

(10)

Nutritional Supplements Provider

Secured Debt

(9) (39)

4/4/2022

7.48% (SOFR+6.25%, Floor 1.00%)

4/3/2028

30,319

29,683

29,683

21

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Mills Fleet Farm Group, LLC

(10)

Omnichannel Retailer of Work, Farm and Lifestyle Merchandise

Secured Debt

(9)

10/24/2018

7.31% (L+6.25%, Floor 1.00%)

10/24/2024

17,300

17,125

16,759

MonitorUS Holding, LLC

(10) (13) (21)

SaaS Provider of Media Intelligence Services

Secured Debt

(9)

5/24/2022

8.51% (L+7.00%, Floor 1.00%)

5/24/2027

17,038

16,537

16,537

NBG Acquisition Inc

(11)

Wholesaler of Home Décor Products

Secured Debt

(9)

4/28/2017

7.00% (L+5.50%, Floor 1.00%)

4/26/2024

3,904

3,884

2,194

NinjaTrader, LLC

(10)

Operator of Futures Trading Platform

Secured Debt

(9)

12/18/2019

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

12/18/2024

31,425

30,934

30,743

NNE Partners, LLC

(10)

Oil & Gas Exploration & Production

Secured Debt

3/2/2017

10.31% (L+9.25%)

12/31/2023

24,781

24,727

23,486

Northstar Group Services, Inc

(11)

Commercial & Industrial Services

Secured Debt

(9)

11/1/2021

6.86% (L+5.50%, Floor 1.00%)

11/12/2026

9,806

9,764

9,451

NTM Acquisition Corp.

(11)

Provider of B2B Travel Information Content

Secured Debt

(9) (19)

7/12/2016

8.26% (7.26% Cash, 1.00% PIK) (1.00%PIK + L+6.25%, Floor 1.00%)

6/7/2024

4,478

4,478

4,322

NWN Corporation

(10)

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

Secured Debt

(9)

5/7/2021

7.87% (L+6.50%, Floor 1.00%)

5/7/2026

40,719

39,958

37,228

Ospemifene Royalty Sub LLC

(10)

Estrogen-Deficiency Drug Manufacturer and Distributor

Secured Debt

(14)

7/8/2013

11.50%

11/15/2026

4,526

4,526

76

OVG Business Services, LLC

(10)

Venue Management Services

Secured Debt

(9)

11/29/2021

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

11/19/2028

13,965

13,837

13,267

Paragon Healthcare, Inc.

(10)

Infusion Therapy Treatment Provider

Secured Debt

(9) (39)

1/19/2022

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

1/19/2027

18,881

18,165

18,165

Project Eagle Holdings, LLC

(10)

Provider of Secure Business Collaboration Software

Secured Debt

(9)

7/6/2020

7.76% (L+6.75%, Floor 1.00%)

7/6/2026

29,588

29,068

28,143

RA Outdoors LLC

(10)

Software Solutions Provider for Outdoor Activity Management

22

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9) (39)

4/8/2021

8.10% (SOFR+6.75%, Floor 1.00%)

4/8/2026

13,369

13,208

11,882

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

(11)

Provider of Outsourced Online Surveying

Secured Debt

(9)

12/29/2017

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

12/20/2024

20,071

19,793

18,606

RM Bidder, LLC

(10)

Scripted and Unscripted TV and Digital Programming Provider

Member Units

11/12/2015

2,779

46

23

Warrants

(26)

11/12/2015

187,161

10/20/2025

425

-

471

23

Roof Opco, LLC

(10)

Residential Re-Roofing/Repair

Secured Debt

(9)

8/27/2021

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

8/27/2026

2,800

2,740

2,559

Secured Debt

(9)

8/27/2021

7.01% (L+6.00%, Floor 1.00%)

8/27/2026

1,929

1,885

1,772

4,625

4,331

RTIC Subsidiary Holdings, LLC

(10)

Direct-To-Consumer eCommerce Provider of Outdoor Products

Secured Debt

(9)

9/1/2020

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

9/1/2025

20,486

20,321

19,711

Rug Doctor, LLC.

(10)

Carpet Cleaning Products and Machinery

Secured Debt

(9)

7/16/2021

7.31% (L+6.25%, Floor 1.00%)

11/16/2024

14,190

13,994

12,255

Salient Partners L.P.

(11)

Provider of Asset Management Services

Secured Debt

(9)

8/31/2018

7.01% (L+6.00%, Floor 1.00%)

10/30/2022

6,251

6,249

4,920

Secured Debt

(9)

9/30/2021

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

10/30/2022

1,250

1,250

2,435

7,499

7,355

Savers, Inc.

(11)

For-Profit Thrift Retailer

Secured Debt

(9)

5/14/2021

7.13% (L+5.75%, Floor 0.75%)

4/26/2028

11,343

11,247

10,729

SIB Holdings, LLC

(10)

Provider of Cost Reduction Services

Secured Debt

(9)

10/29/2021

7.58% (L+6.00%, Floor 1.00%)

10/29/2026

8,508

8,352

8,352

Common Equity

10/29/2021

95,238

200

200

8,552

8,552

South Coast Terminals Holdings, LLC

(10)

Specialty Toll Chemical Manufacturer

Secured Debt

(9)

12/10/2021

7.51% (L+6.25%, Floor 1.00%)

12/13/2026

41,463

40,644

40,644

Common Equity

12/10/2021

863,636

864

919

41,508

41,563

Staples Canada ULC

(10) (13) (21)

Office Supplies Retailer

Secured Debt

(9) (22)

9/14/2017

9.34% (L+7.00%, Floor 1.00%)

9/12/2024

14,928

14,872

13,911

Stellant Systems, Inc.

(11)

Manufacturer of Traveling Wave Tubes and Vacuum Electronic Devices

Secured Debt

(9)

10/22/2021

7.14% (L+5.50%, Floor 0.75%)

10/1/2028

7,662

7,592

7,125

23

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Student Resource Center, LLC

(10)

Higher Education Services

Secured Debt

(9)

6/25/2021

9.01% (L+8.00%, Floor 1.00%)

6/25/2026

10,588

10,406

9,090

Tacala Investment Corp.

(33)

Quick Service Restaurant Group

Secured Debt

(9)

3/19/2021

4.86% (L+3.75%, Floor 0.75%)

2/5/2027

1,984

1,984

1,861

Team Public Choices, LLC

(11)

Home-Based Care Employment Service Provider

Secured Debt

(9)

12/22/2020

6.33% (L+5.00%, Floor 1.00%)

12/18/2027

15,040

14,738

14,513

Tectonic Financial, LLC

Financial Services Organization

Common Stock

(8)

5/15/2017

200,000

2,000

5,630

Tex Tech Tennis, LLC

(10)

Sporting Goods & Textiles

Common Stock

(30)

7/7/2021

1,000,000

1,000

1,320

U.S. TelePacific Corp.

(11)

Provider of Communications and Managed Services

Secured Debt

(9) (19) (39)

5/17/2017

9.25% (2.00% Cash, 7.25% PIK) (SOFR+1.00%, Floor 1.00%, 7.25% PIK)

5/2/2026

17,690

17,612

7,518

USA DeBusk LLC

(10)

Provider of Industrial Cleaning Services

Secured Debt

(9)

10/22/2019

6.81% (L+5.75%, Floor 1.00%)

9/8/2026

37,002

36,318

35,439

Veregy Consolidated, Inc.

(11)

Energy Service Company

Secured Debt

(9)

11/9/2020

7.24% (L+6.00%, Floor 1.00%)

11/3/2027

17,730

16,675

16,213

Vida Capital, Inc

(11)

Alternative Asset Manager

Secured Debt

10/10/2019

7.36% (L+6.00%)

10/1/2026

16,141

15,986

13,074

Vistar Media, Inc.

(10)

Operator of Digital Out-of-Home Advertising Platform

Preferred Stock

4/3/2019

70,207

767

2,350

VORTEQ Coil Finishers, LLC

(10)

Specialty Coating of Aluminum and Light-Gauge Steel

Secured Debt

(9)

11/30/2021

8.26% (L+7.25%, Floor 1.00%)

11/30/2026

25,637

25,183

24,989

Common Equity

(8)

11/30/2021

1,038,462

1,038

2,240

26,221

27,229

Wahoo Fitness Acquisition L.L.C.

(11)

Fitness Training Equipment Provider

Secured Debt

(9) (39)

8/17/2021

6.90% (SOFR+5.75%, Floor 1.00%)

8/12/2028

14,813

14,419

12,072

Wall Street Prep, Inc.

(10)

Financial Training Services

Secured Debt

(9)

7/19/2021

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

7/19/2026

4,290

4,213

3,960

Common Stock

7/19/2021

400,000

400

400

4,613

4,360

Watterson Brands, LLC

(10)

Facility Management Services

Secured Debt

(9)

12/17/2021

7.01% (L+6.00%, Floor 1.00%)

12/17/2026

29,030

28,547

28,547

24

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate (39)

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

West Star Aviation Acquisition, LLC

(10)

Aircraft, Aircraft Engine and Engine Parts

Secured Debt

(9) (39)

3/1/2022

6.75% (SOFR+6.0%, Floor 0.75%)

3/1/2028

10,848

10,622

10,622

Common Stock

3/1/2022

1,522,200

1,541

1,541

12,163

12,163

Winter Services LLC

(10)

Provider of Snow Removal and Ice Management Services

Secured Debt

(9)

11/19/2021

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

11/19/2026

10,000

9,766

9,442

Xenon Arc, Inc.

(10)

Tech-enabled Distribution Services to Chemicals and Food Ingredients Primary Producers

Secured Debt

(9)

12/17/2021

6.75% (L+6.00%, Floor 0.75%)

12/17/2026

38,407

37,354

36,712

YS Garments, LLC

(11)

Designer and Provider of Branded Activewear

Secured Debt

(9)

8/22/2018

6.54% (L+5.50%, Floor 1.00%)

8/9/2024

12,846

12,793

12,397

Zips Car Wash, LLC

(10)

Express Car Wash Operator

Secured Debt

(9)

2/11/2022

8.26%(L+7.25%, Floor 1.00%)

3/1/2024

17,600

17,266

17,266

Secured Debt

(9) (38)

2/11/2022

8.72%

3/1/2024

4,017

3,979

3,979

21,245

21,245

Subtotal Non-Control/Non-Affiliate Investments (89.1% of net assets at fair value)

$

1,737,243

$

1,661,551

Total Portfolio Investments, June 30, 2022 (199.3% of net assets at fair value)

$

3,423,392

$

3,717,770

(1)

All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition 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 by footnote (8), as described below.

(3)

See Note C—Fair Value Hierarchy for Investments—Portfolio Composition 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, SOFR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets every one, three, or six months at the borrower’s option. As noted in this schedule, 69% of the loans (based on the par amount) contain LIBOR or Term SOFR ("SOFR") floors which range between 0.50% and 2.00%, with a weighted-average floor of 1.04%.

25

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

(10)

Private Loan portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Private Loan portfolio investments.

(11)

Middle Market portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Middle Market portfolio investments.

(12)

Other Portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition 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—Fair Value Hierarchy for Investments—Portfolio Composition 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 $18.4 million Canadian Dollars and receive $14.5 million U.S. Dollars with a settlement date of September 14, 2022. The unrealized appreciation on the forward foreign currency contract was not significant as of June 30, 2022.

(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 security position.

(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 a related 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)

Short-term portfolio investments. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of short-term portfolio investments.

(34)

The security has an effective contractual interest rate of 2.00% PIK + LIBOR+6.50%, Floor 1.00%, but the issuer may, in its discretion, elect to pay the PIK interest in cash. The rate presented represents the effective current yield based on actual payments received during the period.

26

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2022

(dollars in thousands)

(Unaudited)

(35)

As of June 30, 2022, borrowings under the loan facility bear interest at LIBOR+6.50% PIK or Prime+5.50% PIK. Revolving facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility.

(36)

As of June 30, 2022, borrowings under the loan facility bear interest at LIBOR+6.00% (Floor 1.00%) or Prime+5.00%. Delayed draw term loan facility permits the borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility.

(37)

As of June 30, 2022, borrowings under the loan facility bear interest at LIBOR+6.50% (Floor 1.00%). Each new draw on the delayed draw term loan facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility.

(38)

As of June 30, 2022, borrowings under the loan facility bear interest at LIBOR+7.25% (Floor 1.00%). Each new draw on the delayed draw term loan facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility.

(39)

SOFR based contracts may include a credit spread adjustment (the “Adjustment”) that is charged in addition to the stated spread. The Adjustment is applied when the SOFR rate, plus the Adjustment, exceeds the stated floor rate, as applicable. As of June 30, 2022, SOFR based contracts in the portfolio had Adjustments ranging from 0.10% to 0.26%.

27

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Control Investments (5)

Analytical Systems Keco Holdings, LLC

Manufacturer of Liquid and Gas Analyzers

Secured Debt

(9)

8/16/2019

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

8/16/2024

$

4,945

$

4,736

$

4,736

Preferred Member Units

8/16/2019

3,200

3,200

-

Preferred Member Units

5/20/2021

2,427

2,427

4,894

Warrants

(27)

8/16/2019

420

8/16/2029

316

-

10,679

9,630

ASC Interests, LLC

Recreational and Educational Shooting Facility

Secured Debt

12/31/2019

13.00%

7/31/2022

200

200

200

Secured Debt

8/1/2013

13.00%

7/31/2022

1,650

1,636

1,636

Member Units

8/1/2013

1,500

1,500

720

3,336

2,556

ATS Workholding, LLC

(10)

Manufacturer of Machine Cutting Tools and Accessories

Secured Debt

(14)

11/16/2017

5.00%

8/16/2023

4,794

4,635

3,005

Preferred Member Units

11/16/2017

3,725,862

3,726

-

8,361

3,005

Barfly Ventures, LLC

(10)

Casual Restaurant Group

Secured Debt

10/15/2020

7.00%

10/31/2024

711

711

711

Member Units

10/26/2020

37

1,584

1,930

2,295

2,641

Bolder Panther Group, LLC

Consumer Goods and Fuel Retailer

Secured Debt

(9)

12/31/2020

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

12/31/2025

39,000

38,687

39,000

Class A Preferred Member Units

(8)

12/31/2020

14.00%

10,194

10,194

Class B Preferred Member Units

(8)

12/31/2020

140,000

8.00%

14,000

23,170

62,881

72,364

Brewer Crane Holdings, LLC

Provider of Crane Rental and Operating Services

Secured Debt

(9)

1/9/2018

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

1/9/2023

8,060

8,037

8,037

Preferred Member Units

(8)

1/9/2018

2,950

4,280

7,710

12,317

15,747

Bridge Capital Solutions Corporation

Financial Services and Cash Flow Solutions Provider

Secured Debt

7/25/2016

13.00%

12/11/2024

8,813

8,813

8,813

Warrants

(27)

7/25/2016

82

7/25/2026

2,132

4,060

Secured Debt

(30)

7/25/2016

13.00%

12/11/2024

1,000

1,000

1,000

Preferred Member Units

(8) (30)

7/25/2016

17,742

1,000

1,000

12,945

14,873

Café Brazil, LLC

Casual Restaurant Group

Member Units

(8)

6/9/2006

1,233

1,742

2,570

California Splendor Holdings LLC

Processor of Frozen Fruits

Secured Debt

(9)

3/30/2018

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

3/30/2023

28,000

27,915

27,915

Preferred Member Units

(8) (19)

7/31/2019

6,725

15.00% PIK

9,510

9,510

Preferred Member Units

(8)

3/30/2018

6,157

10,775

13,275

48,200

50,700

28

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

CBT Nuggets, LLC

Produces and Sells IT Training Certification Videos

Member Units

(8)

6/1/2006

416

1,300

50,620

Centre Technologies Holdings, LLC

Provider of IT Hardware Services and Software Solutions

Secured Debt

(9)

1/4/2019

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

1/4/2024

9,416

9,370

8,864

Preferred Member Units

1/4/2019

12,696

5,840

5,840

15,210

14,704

Chamberlin Holding LLC

Roofing and Waterproofing Specialty Contractor

Secured Debt

(9)

2/26/2018

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

2/26/2023

17,817

17,738

17,817

Member Units

(8)

2/26/2018

4,347

11,440

24,140

Member Units

(8) (30)

11/2/2018

1,047,146

1,322

1,540

30,500

43,497

Charps, LLC

Pipeline Maintenance and Construction

Unsecured Debt

8/26/2020

10.00%

1/31/2024

5,694

4,599

5,694

Preferred Member Units

(8)

2/3/2017

1,829

1,963

13,990

6,562

19,684

Clad-Rex Steel, LLC

Specialty Manufacturer of Vinyl-Clad Metal

Secured Debt

(9)

12/20/2016

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

1/15/2024

10,480

10,401

10,401

Member Units

(8)

12/20/2016

717

7,280

10,250

Secured Debt

12/20/2016

10.00%

12/20/2036

1,081

1,071

1,071

Member Units

(30)

12/20/2016

800

210

530

18,962

22,252

CMS Minerals Investments

Oil & Gas Exploration & Production

Member Units

(8) (30)

4/1/2016

100

1,838

1,974

Cody Pools, Inc.

Designer of Residential and Commercial Pools

Secured Debt

(9)

3/6/2020

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

12/17/2026

42,497

42,117

42,484

Preferred Member Units

(8) (30)

3/6/2020

587

8,317

47,640

50,434

90,124

Colonial Electric Company LLC

Provider of Electrical Contracting Services

Secured Debt

3/31/2021

12.00%

3/31/2026

24,570

24,351

24,351

Preferred Member Units

(8)

3/31/2021

17,280

7,680

9,130

32,031

33,481

CompareNetworks Topco, LLC

Internet Publishing and Web Search Portals

Secured Debt

(9)

1/29/2019

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

1/29/2024

6,477

6,452

6,477

Preferred Member Units

(8)

1/29/2019

1,975

1,975

12,000

8,427

18,477

Copper Trail Fund Investments

(12) (13)

Investment Partnership

LP Interests (CTMH, LP)

(31)

7/17/2017

38.8%

710

710

29

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Datacom, LLC

Technology and Telecommunications Provider

Secured Debt

3/31/2021

5.00%

12/31/2025

8,892

8,296

7,668

Preferred Member Units

3/31/2021

9,000

2,610

2,610

10,906

10,278

Digital Products Holdings LLC

Designer and Distributor of Consumer Electronics

Secured Debt

(9)

4/1/2018

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

4/1/2023

16,853

16,801

16,801

Preferred Member Units

(8)

4/1/2018

3,857

9,501

9,835

26,302

26,636

Direct Marketing Solutions, Inc.

Provider of Omni-Channel Direct Marketing Services

Secured Debt

(9)

2/13/2018

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

2/13/2024

24,070

23,911

24,048

Preferred Stock

(8)

2/13/2018

8,400

8,400

18,350

32,311

42,398

Gamber-Johnson Holdings, LLC

Manufacturer of Ruggedized Computer Mounting Systems

Secured Debt

(9)

6/24/2016

9.50% (L+7.50%, Floor 2.00%)

1/1/2025

21,598

21,535

21,598

Member Units

(8)

6/24/2016

9,042

17,692

49,700

39,227

71,298

Garreco, LLC

Manufacturer and Supplier of Dental Products

Secured Debt

(9)

7/15/2013

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

7/31/2022

4,196

4,196

4,196

Member Units

(8)

7/15/2013

1,200

1,200

2,270

5,396

6,466

GRT Rubber Technologies LLC

Manufacturer of Engineered Rubber Products

Secured Debt

12/19/2014

8.10% (L+8.00%)

10/29/2026

38,885

38,672

38,885

Member Units

(8)

12/19/2014

5,879

13,065

46,190

51,737

85,075

Gulf Manufacturing, LLC

Manufacturer of Specialty Fabricated Industrial Piping Products

Member Units

(8)

8/31/2007

438

2,980

5,640

Gulf Publishing Holdings, LLC

Energy Industry Focused Media and Publishing

Secured Debt

(9) (17) (19)

9/29/2017

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

9/30/2020

257

257

257

Secured Debt

(17) (19)

4/29/2016

12.50% (6.25% Cash, 6.25% PIK)

4/29/2021

13,565

13,565

9,717

Member Units

4/29/2016

3,681

3,681

-

17,503

9,974

Harris Preston Fund Investments

(12) (13)

Investment Partnership

LP Interests (2717 MH, L.P.)

(31)

10/1/2017

49.3%

2,703

3,971

Harrison Hydra-Gen, Ltd.

Manufacturer of Hydraulic Generators

Common Stock

6/4/2010

107,456

718

3,530

Jensen Jewelers of Idaho, LLC

Retail Jewelry Store

Secured Debt

(9)

11/14/2006

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

11/14/2023

2,550

2,536

2,550

30

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Member Units

(8)

11/14/2006

627

811

12,420

3,347

14,970

Johnson Downie Opco, LLC

Executive Search Services

Secured Debt

(9)

12/10/2021

13.00% (L+11.50%, Floor 1.50%)

12/10/2026

11,475

11,344

11,344

Preferred Equity

12/10/2021

3,150

3,150

3,150

14,494

14,494

KBK Industries, LLC

Manufacturer of Specialty Oilfield and Industrial Products

Member Units

(8)

1/23/2006

325

783

13,620

Kickhaefer Manufacturing Company, LLC

Precision Metal Parts Manufacturing

Secured Debt

10/31/2018

11.50%

10/31/2023

20,415

20,324

20,324

Member Units

10/31/2018

581

12,240

12,310

Secured Debt

10/31/2018

9.00%

10/31/2048

3,915

3,876

3,876

Member Units

(8) (30)

10/31/2018

800

992

2,460

37,432

38,970

Market Force Information, LLC

Provider of Customer Experience Management Services

Secured Debt

(9)

7/28/2017

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

7/28/2023

3,400

3,400

3,400

Secured Debt

(14) (19)

7/28/2017

12.00% PIK

7/28/2023

26,079

25,952

8,936

Member Units

7/28/2017

743,921

16,642

-

45,994

12,336

MH Corbin Holding LLC

Manufacturer and Distributor of Traffic Safety Products

Secured Debt

8/31/2015

13.00%

3/31/2022

8,250

8,241

5,934

Preferred Member Units

3/15/2019

66,000

4,400

-

Preferred Member Units

9/1/2015

4,000

6,000

-

18,641

5,934

MS Private Loan Fund I, LP

(12) (13)

Investment Partnership

Unsecured Debt

2/11/2021

5.00%

2/28/2022

63,151

63,151

63,151

LP Interests

(31)

1/26/2021

12.1%

2,500

2,581

65,651

65,732

MSC Adviser I, LLC

(16)

Third Party Investment Advisory Services

Member Units

(8)

11/22/2013

29,500

140,400

Mystic Logistics Holdings, LLC

Logistics and Distribution Services Provider for Large Volume Mailers

Secured Debt

8/18/2014

12.00%

1/17/2022

6,378

6,377

6,378

Common Stock

(8)

8/18/2014

5,873

2,720

8,840

9,097

15,218

NAPCO Precast, LLC

Precast Concrete Manufacturing

Member Units

(8)

1/31/2008

2,955

2,975

13,560

Nebraska Vet AcquireCo, LLC

Mixed-Animal Veterinary and Animal Health Product Provider

Secured Debt

12/31/2020

12.00%

12/31/2025

10,500

10,412

10,412

Secured Debt

12/31/2020

12.00%

12/31/2025

4,868

4,829

4,829

Preferred Member Units

12/31/2020

6,987

6,987

7,700

22,228

22,941

NexRev LLC

Provider of Energy Efficiency Products & Services

Secured Debt

2/28/2018

11.00%

2/28/2023

16,217

16,173

14,045

Preferred Member Units

(8)

2/28/2018

86,400,000

6,880

2,690

23,053

16,735

NRP Jones, LLC

Manufacturer of Hoses, Fittings and Assemblies

Secured Debt

12/21/2017

12.00%

3/20/2023

2,080

2,080

2,080

Member Units

(8)

12/22/2011

65,962

3,717

6,440

5,797

8,520

31

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

NuStep, LLC

Designer, Manufacturer and Distributor of Fitness Equipment

Secured Debt

(9)

1/31/2017

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

1/31/2025

1,720

1,720

1,720

Secured Debt

1/31/2017

11.00%

1/31/2025

17,240

17,236

17,240

Preferred Member Units

1/31/2017

406

10,200

13,500

29,156

32,460

OMi Topco, LLC

Manufacturer of Overhead Cranes

Secured Debt

8/31/2021

12.00%

8/31/2026

18,000

17,831

18,000

Preferred Member Units

(8)

4/1/2008

900

1,080

20,210

18,911

38,210

Orttech Holdings, LLC

Distributor of Industrial Clutches, Brakes and Other Components

Secured Debt

(9)

7/30/2021

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

7/31/2026

24,375

24,151

24,151

Preferred Stock

(8) (30)

7/30/2021

10,000

10,000

10,000

34,151

34,151

Pearl Meyer Topco LLC

Provider of Executive Compensation Consulting Services

Secured Debt

4/27/2020

12.00%

4/27/2025

32,674

32,438

32,674

Member Units

(8)

4/27/2020

13,800

13,000

26,970

45,438

59,644

PPL RVs, Inc.

Recreational Vehicle Dealer

Secured Debt

(9)

10/31/2019

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

11/15/2022

750

726

726

Secured Debt

(9)

11/15/2016

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

11/15/2022

11,655

11,655

11,655

Common Stock

(8)

6/10/2010

2,000

2,150

14,360

14,531

26,741

Principle Environmental, LLC

Noise Abatement Service Provider

Secured Debt

2/1/2011

13.00%

11/15/2026

1,473

1,465

1,465

Secured Debt

7/1/2011

13.00%

11/15/2026

5,924

5,808

5,808

Preferred Member Units

2/1/2011

21,806

5,709

11,160

Common Stock

1/27/2021

1,037

1,200

710

14,182

19,143

Quality Lease Service, LLC

Provider of Rigsite Accommodation Unit Rentals and Related Services

Member Units

6/8/2015

1,000

9,213

2,149

River Aggregates, LLC

Processor of Construction Aggregates

Member Units

(8) (30)

12/20/2013

1,500

369

3,280

Robbins Bros. Jewelry, Inc.

Bridal Jewelry Retailer

Secured Debt

(9)

12/15/2021

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

12/15/2026

36,360

35,956

35,956

Preferred Equity

12/15/2021

11,070

11,070

11,070

47,026

47,026

Tedder Industries, LLC

Manufacturer of Firearm Holsters and Accessories

Secured Debt

8/31/2018

12.00%

8/31/2022

16,240

16,181

16,181

Preferred Member Units

8/31/2018

505

8,579

8,579

24,760

24,760

Televerde, LLC

Provider of Telemarketing and Data Services

Member Units

1/6/2011

460

1,290

7,280

Trantech Radiator Topco, LLC

Transformer Cooling Products and Services

32

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

5/31/2019

12.00%

5/31/2024

8,720

8,663

8,712

Common Stock

(8)

5/31/2019

615

4,655

8,660

13,318

17,372

UnionRock Energy Fund II, LP

(12) (13)

Investment Partnership

LP Interests

(8) (31)

6/15/2020

49.6%

3,828

6,122

Vision Interests, Inc.

Manufacturer / Installer of Commercial Signage

Series A Preferred Stock

12/23/2011

3,000,000

3,000

3,000

VVS Holdco LLC

Omnichannel Retailer of Animal Health Products

Secured Debt

(9)(30)

12/1/2021

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

12/1/2026

1,200

1,170

1,169

Secured Debt

(30)

12/1/2021

11.50%

12/1/2026

30,400

30,100

30,100

Preferred Equity

(30)

12/1/2021

11,840

11,840

11,840

43,110

43,109

Ziegler’s NYPD, LLC

Casual Restaurant Group

Secured Debt

6/1/2015

12.00%

10/1/2022

625

625

625

Secured Debt

10/1/2008

6.50%

10/1/2022

1,000

1,000

1,000

Secured Debt

10/1/2008

14.00%

10/1/2022

2,750

2,750

2,750

Preferred Member Units

6/30/2015

10,072

2,834

2,130

Warrants

(27)

7/1/2015

587

10/1/2025

600

-

7,809

6,505

Subtotal Control Investments (83.3% of net assets at fair value)

$

1,107,597

$

1,489,257

33

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Affiliate Investments (6)

AAC Holdings, Inc.

(11)

Substance Abuse Treatment Service Provider

Secured Debt

(19)

12/11/2020

18.00% (10.00% Cash, 8.00% PIK)

6/25/2025

$

10,202

$

10,011

$

9,794

Common Stock

12/11/2020

593,928

3,148

2,079

Warrants

(27)

12/11/2020

554,353

12/11/2025

-

1,940

13,159

13,813

AFG Capital Group, LLC

Provider of Rent-to-Own Financing Solutions and Services

Secured Debt

4/25/2019

10.00%

5/25/2022

144

144

144

Preferred Member Units

(8)

11/7/2014

186

1,200

7,740

1,344

7,884

ATX Networks Corp.

(11)

Provider of Radio Frequency Management Equipment

Secured Debt

(9)

9/1/2021

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

9/1/2026

7,667

7,092

7,092

Unsecured Debt

(19)

9/1/2021

10.00% PIK

9/1/2028

3,067

1,963

1,963

Common Stock

9/1/2021

583

-

-

9,055

9,055

BBB Tank Services, LLC

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

Unsecured Debt

(9) (17)

4/8/2016

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

4/8/2021

4,800

4,800

2,508

Preferred Stock (non-voting)

(8) (19)

12/17/2018

15.00% PIK

162

-

Member Units

4/8/2016

800,000

800

-

5,762

2,508

Boccella Precast Products LLC

Manufacturer of Precast Hollow Core Concrete

Secured Debt

9/23/2021

10.00%

2/28/2027

320

320

320

Member Units

(8)

6/30/2017

2,160,000

2,256

4,830

2,576

5,150

Brightwood Capital Fund Investments

(12) (13)

Investment Partnership

LP Interests (Brightwood Capital Fund V, LP)

(31)

7/12/2021

15.8%

1,000

1,000

Buca C, LLC

Casual Restaurant Group

Secured Debt

(9) (17)

6/30/2015

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

6/30/2020

19,491

19,491

14,370

Preferred Member Units

(19)

6/30/2015

6

6.00% PIK

4,770

-

24,261

14,370

Career Team Holdings, LLC

Provider of Workforce Training and Career Development Services

Secured Debt

12/17/2021

12.50%

12/17/2026

20,250

20,050

20,050

Class A Common Units

12/17/2021

450,000

4,500

4,500

24,550

24,550

Chandler Signs Holdings, LLC

(10)

Sign Manufacturer

Class A Units

1/4/2016

1,500,000

1,500

460

Classic H&G Holdings, LLC

Provider of Engineered Packaging Solutions

34

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9)

3/12/2020

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

3/12/2025

4,000

4,000

4,000

Secured Debt

3/12/2020

8.00%

3/12/2025

19,274

19,139

19,274

Preferred Member Units

(8)

3/12/2020

154

5,760

15,260

28,899

38,534

Congruent Credit Opportunities Funds

(12) (13)

Investment Partnership

LP Interests (Congruent Credit Opportunities Fund
III, LP)

(8) (31)

2/4/2015

17.4%

10,256

9,959

DMA Industries, LLC

Distributor of aftermarket ride control products

Secured Debt

11/19/2021

12.00%

11/19/2026

21,200

20,993

20,993

Preferred Equity

11/19/2021

5,944

5,944

5,944

26,937

26,937

Dos Rios Partners

(12) (13)

Investment Partnership

LP Interests (Dos Rios Partners, LP)

(31)

4/25/2013

20.2%

6,605

10,329

LP Interests (Dos Rios Partners - A, LP)

(31)

4/25/2013

6.4%

2,097

3,280

8,702

13,609

Dos Rios Stone Products LLC

(10)

Limestone and Sandstone Dimension Cut Stone Mining Quarries

Class A Preferred Units

(30)

6/27/2016

2,000,000

2,000

640

EIG Fund Investments

(12) (13)

Investment Partnership

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

(8) (31)

11/6/2015

5,000,000

594

547

Flame King Holdings, LLC

Propane Tank and Accessories Distributor

Secured Debt

(9)

10/29/2021

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

10/31/2026

6,400

6,324

6,324

Secured Debt

(9)

10/29/2021

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

10/31/2026

21,200

20,996

20,996

Preferred Equity

10/29/2021

9,360

10,400

10,400

37,720

37,720

Freeport Financial Funds

(12) (13)

Investment Partnership

LP Interests (Freeport Financial SBIC Fund LP)

(31)

3/23/2015

9.3%

5,974

6,078

LP Interests (Freeport First Lien Loan Fund III LP)

(8) (31)

7/31/2015

6.0%

7,629

7,231

13,603

13,309

GFG Group, LLC.

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

Secured Debt

3/31/2021

12.00%

3/31/2026

12,545

12,435

12,545

Preferred Member Units

(8)

3/31/2021

226

4,900

6,990

17,335

19,535

Harris Preston Fund Investments

(12) (13)

Investment Partnership

35

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

LP Interests (HPEP 3, L.P.)

(31)

8/9/2017

8.2%

3,193

4,712

Hawk Ridge Systems, LLC

(13)

Value-Added Reseller of Engineering Design and Manufacturing Solutions

Secured Debt

(9)

12/2/2016

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

1/15/2026

2,585

2,585

2,585

Secured Debt

12/2/2016

8.00%

1/15/2026

34,800

34,672

34,800

Preferred Member Units

(8)

12/2/2016

226

2,850

14,680

Preferred Member Units

(30)

12/2/2016

226

150

770

40,257

52,835

Houston Plating and Coatings, LLC

Provider of Plating and Industrial Coating Services

Unsecured Convertible Debt

5/1/2017

8.00%

5/1/2022

3,000

3,000

2,960

Member Units

(8)

1/8/2003

322,297

2,352

3,210

5,352

6,170

I-45 SLF LLC

(12) (13)

Investment Partnership

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

(8)

10/20/2015

19,000

14,387

Iron-Main Investments, LLC

Consumer Reporting Agency Providing Employment Background Checks and Drug Testing

Secured Debt

8/3/2021

13.00%

8/1/2026

4,600

4,557

4,557

Secured Debt

9/1/2021

12.50%

9/1/2026

3,200

3,170

3,170

Secured Debt

8/3/2021

12.50%

11/30/2026

20,000

19,805

19,805

Secured Debt

(19)

8/3/2021

12.50% PIK

3/31/2022

8,944

8,944

8,944

Common Stock

8/3/2021

179,778

1,798

1,798

38,274

38,274

L.F. Manufacturing Holdings, LLC

(10)

Manufacturer of Fiberglass Products

Preferred Member Units (non-voting)

(8) (19)

1/1/2019

14.00% PIK

107

107

Member Units

12/23/2013

2,179,001

2,019

2,557

2,126

2,664

OnAsset Intelligence, Inc.

Provider of Transportation Monitoring / Tracking Products and Services

Secured Debt

(19)

5/20/2014

12.00% PIK

12/31/2022

935

935

935

Secured Debt

(19)

3/21/2014

12.00% PIK

12/31/2022

954

954

954

Secured Debt

(19)

5/10/2013

12.00% PIK

12/31/2022

2,055

2,055

2,055

Secured Debt

(19)

4/18/2011

12.00% PIK

12/31/2022

4,286

4,286

4,286

Unsecured Debt

(19)

6/5/2017

10.00% PIK

12/31/2022

192

192

192

Preferred Stock

(19)

4/18/2011

912

7.00% PIK

1,981

-

Common Stock

4/15/2021

635

830

-

Warrants

(27)

4/18/2011

4,699

5/10/2023

1,089

-

12,322

8,422

Oneliance, LLC

Construction Cleaning Company

Secured Debt

(9)

8/6/2021

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

8/6/2026

5,600

5,547

5,547

Preferred Stock

8/6/2021

1,056

1,056

1,056

6,603

6,603

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

Provider of Rigsite Accommodation Unit Rentals and Related Services

Secured Debt

(14) (17)

6/30/2015

12.00%

1/8/2018

30,369

29,865

-

Preferred Member Units

1/8/2013

250

2,500

-

32,365

-

36

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

SI East, LLC

Rigid Industrial Packaging Manufacturing

Secured Debt

8/31/2018

10.25%

8/31/2023

65,850

65,738

65,850

Preferred Member Units

(8)

8/31/2018

157

1,218

11,570

66,956

77,420

Slick Innovations, LLC

Text Message Marketing Platform

Secured Debt

9/13/2018

13.00%

9/13/2023

5,320

5,248

5,320

Common Stock

9/13/2018

70,000

700

1,510

Warrants

(27)

9/13/2018

18,084

9/13/2028

181

400

6,129

7,230

Sonic Systems International, LLC

(10)

Nuclear Power Staffing Services

Secured Debt

(9)

8/20/2021

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

8/20/2026

11,982

11,757

11,757

Common Stock

8/20/2021

7,866

1,070

1,070

12,827

12,827

Superior Rigging & Erecting Co.

Provider of Steel Erecting, Crane Rental & Rigging Services

Secured Debt

8/31/2020

12.00%

8/31/2025

21,500

21,332

21,332

Preferred Member Units

8/31/2020

1,571

4,500

4,500

25,832

25,832

The Affiliati Network, LLC

Performance Marketing Solutions

Secured Debt

8/9/2021

7.00%

8/9/2026

280

262

262

Secured Debt

8/9/2021

11.83%

8/9/2026

12,961

12,834

12,834

Preferred Stock

(8)

8/9/2021

1,280,000

6,400

6,400

19,496

19,496

UniTek Global Services, Inc.

(11)

Provider of Outsourced Infrastructure Services

Secured Debt

(9) (19)

10/15/2018

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

8/20/2024

397

396

371

Secured Debt

(9) (19)

8/27/2018

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

8/20/2024

1,986

1,974

1,852

Secured Convertible Debt

(19)

1/1/2021

15.00% PIK

2/20/2025

1,197

1,197

2,375

Preferred Stock

(8) (19)

8/29/2019

1,133,102

20.00% PIK

1,757

2,833

Preferred Stock

(19)

8/21/2018

1,521,122

20.00% PIK

2,188

1,498

Preferred Stock

(19)

1/15/2015

4,336,866

13.50% PIK

7,924

-

Preferred Stock

(19)

6/30/2017

2,281,682

19.00% PIK

3,667

-

Common Stock

4/1/2020

945,507

-

-

19,103

8,929

Universal Wellhead Services Holdings, LLC

(10)

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

Preferred Member Units

(19) (30)

12/7/2016

716,949

14.00% PIK

1,032

-

Member Units

(30)

12/7/2016

4,000,000

4,000

-

5,032

-

Volusion, LLC

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

Secured Debt

(17)

1/26/2015

11.50%

1/26/2020

17,434

17,434

17,434

Unsecured Convertible Debt

5/16/2018

8.00%

11/16/2023

409

409

409

Preferred Member Units

1/26/2015

4,876,670

14,000

5,990

Warrants

(27)

1/26/2015

1,831,355

1/26/2025

2,576

-

34,419

23,833

37

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Subtotal Affiliate Investments (30.7% of net assets at fair value)

$

578,539

$

549,214

38

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Non-Control/Non-Affiliate Investments (7)

Acousti Engineering Company of Florida

(10)

Interior Subcontractor Providing Acoustical Walls and Ceilings

Secured Debt

(9)

11/2/2020

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

11/2/2025

$

12,111

$

12,005

$

12,111

Secured Debt

(9)

5/26/2021

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

11/2/2025

850

841

850

12,846

12,961

ADS Tactical, Inc.

(11)

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

Secured Debt

(9)

3/29/2021

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

3/19/2026

22,136

21,734

22,012

American Health Staffing Group, Inc.

(10)

Healthcare Temporary Staffing

Secured Debt

(9)

11/19/2021

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

11/19/2026

7,067

6,988

6,988

American Nuts, LLC

(10)

Roaster, Mixer and Packager of Bulk Nuts and Seeds

Secured Debt

(9)

12/21/2018

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

4/10/2025

12,017

11,854

12,017

American Teleconferencing Services, Ltd.

(11)

Provider of Audio Conferencing and Video Collaboration Solutions

Secured Debt

(9) (14) (17)

9/17/2021

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

9/9/2021

2,980

2,980

89

Secured Debt

(9) (14)

5/19/2016

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

6/28/2023

14,370

13,706

431

16,686

520

ArborWorks, LLC

(10)

Vegetation Management Services

Secured Debt

(9)

11/9/2021

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

11/9/2026

32,605

31,873

31,873

Common Equity

11/9/2021

234

234

234

32,107

32,107

Arrow International, Inc

(10)

Manufacturer and Distributor of Charitable Gaming Supplies

Secured Debt

(9) (23)

12/21/2020

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

12/21/2025

22,500

22,300

22,500

AVEX Aviation Holdings, LLC

(10)

Specialty Aircraft Dealer

Secured Debt

(9)

12/15/2021

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

12/15/2026

13,320

13,005

13,005

Common Equity

12/15/2021

360

360

360

13,365

13,365

Berry Aviation, Inc.

(10)

Charter Airline Services

Secured Debt

(19)

7/6/2018

12.00% (10.50% Cash, 1.50% PIK)

1/6/2024

4,694

4,674

4,694

Preferred Member Units

(8) (19) (30)

11/12/2019

122,416

16.00% PIK

168

208

Preferred Member Units

(19) (30)

7/6/2018

1,548,387

8.00% PIK

1,671

2,487

6,513

7,389

39

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Binswanger Enterprises, LLC

(10)

Glass Repair and Installation Service Provider

Secured Debt

(9)

3/10/2017

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

3/10/2023

12,194

12,107

12,194

Member Units

3/10/2017

1,050,000

1,050

730

13,157

12,924

Bluestem Brands, Inc.

(11)

Multi-Channel Retailer of General Merchandise

Secured Debt

(9)

8/28/2020

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

8/28/2025

5,357

5,357

5,337

Common Stock

(8)

10/1/2020

723,184

1

1,515

5,358

6,852

Brainworks Software, LLC

(10)

Advertising Sales and Newspaper Circulation Software

Secured Debt

(9) (14) (17)

8/12/2014

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

7/22/2019

7,817

7,817

4,201

Brightwood Capital Fund Investments

(12) (13)

Investment Partnership

LP Interests (Brightwood Capital Fund III, LP)

(8) (31)

7/21/2014

1.6%

7,200

4,269

LP Interests (Brightwood Capital Fund IV, LP)

(8) (31)

10/26/2016

0.6%

4,350

4,394

11,550

8,663

Burning Glass Intermediate Holding Company, Inc.

(10)

Provider of Skills-Based Labor Market Analytics

Secured Debt

(9)

6/14/2021

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

6/10/2026

465

429

429

Secured Debt

(9)

6/14/2021

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

6/10/2028

20,134

19,803

19,985

20,232

20,414

Cadence Aerospace LLC

(10)

Aerostructure Manufacturing

Secured Debt

(19) (35)

11/14/2017

9.28% Cash, 0.22% PIK

11/14/2023

28,540

28,399

26,767

CAI Software LLC

Provider of Specialized Enterprise Resource Planning Software

Preferred Equity

12/13/2021

1,788,527

1,789

1,789

Preferred Equity

12/13/2021

596,176

-

-

1,789

1,789

Camin Cargo Control, Inc.

(11)

Provider of Mission Critical Inspection, Testing and Fuel Treatment Services

Secured Debt

(9)

6/14/2021

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

6/4/2026

15,920

15,775

15,840

Cenveo Corporation

(11)

Provider of Digital Marketing Agency Services

Common Stock

9/7/2018

322,907

6,183

2,852

Chisholm Energy Holdings, LLC

(10)

Oil & Gas Exploration & Production

Secured Debt

(9)

5/15/2019

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

5/15/2026

2,857

2,804

2,663

Clarius BIGS, LLC

(10)

Prints & Advertising Film Financing

Secured Debt

(14) (17) (19)

9/23/2014

15.00% PIK

1/5/2015

2,756

2,756

33

40

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Computer Data Source, LLC

(10)

Third Party Maintenance Provider to the Data Center Ecosystem

Secured Debt

(9)

8/6/2021

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

8/6/2026

21,681

21,234

21,234

Construction Supply Investments, LLC

(10)

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

Member Units

(8)

12/29/2016

861,618

3,335

14,640

Darr Equipment LP

(10)

Heavy Equipment Dealer

Secured Debt

(19)

12/26/2017

12.50% (11.50% Cash, 1.00% PIK)

6/22/2023

4,685

4,685

4,227

Warrants

(29)

4/15/2014

915,734

12/23/2023

474

160

5,159

4,387

DTE Enterprises, LLC

(10)

Industrial Powertrain Repair and Services

Secured Debt

(9)

4/13/2018

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

4/13/2023

9,324

9,259

8,884

Class AA Preferred Member Units (non-voting)

(8) (19)

4/13/2018

10.00% PIK

1,051

1,051

Class A Preferred Member Units

(19)

4/13/2018

776,316

8.00% PIK

776

320

11,086

10,255

Dynamic Communities, LLC

(10)

Developer of Business Events and Online Community Groups

Secured Debt

(9)

7/17/2018

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

7/17/2023

5,681

5,638

5,569

Eastern Wholesale Fence LLC

(10)

Manufacturer and Distributor of Residential and Commercial Fencing Solutions

Secured Debt

(9)

11/19/2020

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

10/30/2025

31,810

31,238

31,810

EnCap Energy Fund Investments

(12) (13)

Investment Partnership

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

(8) (31)

1/22/2015

0.1%

3,745

1,599

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

(31)

1/21/2015

0.4%

2,097

777

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

(8) (31)

1/22/2015

0.1%

4,047

2,284

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

(8) (31)

3/25/2015

0.1%

8,443

8,276

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

(31)

3/30/2015

0.8%

6,582

2,796

LP Interests (EnCap Flatrock

(8) (31)

3/27/2015

0.2%

6,082

5,064

41

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Midstream Fund III, L.P.)

30,996

20,796

EPIC Y-Grade Services, LP

(11)

NGL Transportation & Storage

Secured Debt

(9)

6/22/2018

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

6/30/2027

6,892

6,819

5,862

Event Holdco, LLC

(10)

Event and Learning Management Software for Healthcare Organizations and Systems

Secured Debt

(9)(30)

12/22/2021

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

12/22/2026

51,692

51,135

51,135

Flip Electronics LLC

(10)

Distributor of Hard-to-Find and Obsolete Electronic Components

Secured Debt

(9) (33)

1/4/2021

9.09% (L+8.09%, Floor 1.00%)

1/2/2026

5,400

5,304

5,287

Fortna Acquisition Co., Inc.

(10)

Process, Physical Distribution and Logistics Consulting Services

Secured Debt

7/23/2019

5.09% (L+5.00%)

4/8/2025

7,595

7,525

7,595

Fuse, LLC

(11)

Cable Networks Operator

Secured Debt

6/30/2019

12.00%

6/28/2024

1,810

1,810

1,672

Common Stock

6/30/2019

10,429

256

-

2,066

1,672

GeoStabilization International (GSI)

(11)

Geohazard Engineering Services & Maintenance

Secured Debt

1/2/2019

5.35% (L+5.25%)

12/19/2025

20,710

20,615

20,606

GoWireless Holdings, Inc.

(11)

Provider of Wireless Telecommunications Carrier Services

Secured Debt

(9)

1/10/2018

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

12/22/2024

18,534

18,440

18,576

Grupo Hima San Pablo, Inc.

(11)

Tertiary Care Hospitals

Secured Debt

(9) (14) (17)

3/7/2013

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

4/30/2019

4,504

4,504

1,269

Secured Debt

(14) (17)

3/7/2013

13.75%

10/15/2018

2,055

2,040

49

Secured Debt

(17)

3/7/2013

12.00%

12/24/2021

147

147

147

6,691

1,465

GS HVAM Intermediate, LLC

(10)

Specialized Food Distributor

Secured Debt

(9)

10/18/2019

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

10/2/2024

13,243

13,167

13,243

GS Operating, LLC

(10)

Distributor of Industrial and Specialty Parts

Secured Debt

(9)

2/24/2020

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

2/24/2025

28,451

28,068

28,451

42

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

HDC/HW Intermediate Holdings

(10)

Managed Services and Hosting Provider

Secured Debt

(9)

12/21/2018

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

12/21/2023

3,449

3,419

3,059

Heartland Dental, LLC

(10)

Dental Support Organization

Secured Debt

(9)

9/9/2020

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

4/30/2025

14,813

14,477

14,887

HOWLCO LLC

(11) (13) (21)

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

Secured Debt

(9)

8/19/2021

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

10/23/2026

25,546

25,546

25,546

Hybrid Promotions, LLC

(10)

Wholesaler of Licensed, Branded and Private Label Apparel

Secured Debt

(9)

6/30/2021

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

6/30/2026

7,088

6,957

7,028

IG Parent Corporation

(11)

Software Engineering

Secured Debt

(9)

7/30/2021

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

7/30/2026

9,591

9,419

9,419

Implus Footcare, LLC

(10)

Provider of Footwear and Related Accessories

Secured Debt

(9)

6/1/2017

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

4/30/2024

18,702

18,471

17,743

Independent Pet Partners Intermediate Holdings, LLC

(10)

Omnichannel Retailer of Specialty Pet Products

Secured Debt

(36)

8/20/2020

7.20%

12/22/2022

6,563

6,563

6,563

Secured Debt

(19)

12/10/2020

6.00% PIK

11/20/2023

17,891

16,861

16,861

Preferred Stock (non-voting)

(19)

12/10/2020

6.00% PIK

3,235

4,329

Preferred Stock (non-voting)

12/10/2020

-

-

Member Units

11/20/2018

1,558,333

1,558

-

28,217

27,753

Industrial Services Acquisition, LLC

(10)

Industrial Cleaning Services

Secured Debt

(9)

8/13/2021

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

8/13/2026

19,897

19,490

19,490

Preferred Member Units

(8) (19) (30)

1/31/2018

144

10.00% PIK

120

164

Preferred Member Units

(8) (19) (30)

5/17/2019

80

20.00% PIK

81

99

Member Units

(30)

6/17/2016

900

900

730

20,591

20,483

Infolinks Media Buyco, LLC

(10)

Exclusive Placement Provider to the Advertising Ecosystem

Secured Debt

(9)

11/1/2021

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

11/1/2026

8,680

8,487

8,487

Interface Security Systems, L.L.C

(10)

Commercial Security & Alarm Services

Secured Debt

(9)

12/9/2021

11.75% (L+10.00%, Floor 1.75%)

8/7/2023

525

525

525

Secured Debt

(9) (14) (19)

8/7/2019

9.75% (8.75% Cash, 1.00% PIK) (1.00% PIK +

8/7/2023

7,313

7,237

5,233

43

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

L+7.00%, Floor 1.75%)

7,762

5,758

Intermedia Holdings, Inc.

(11)

Unified Communications as a Service

Secured Debt

(9)

8/3/2018

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

7/19/2025

20,627

20,559

20,527

Invincible Boat Company, LLC.

(10)

Manufacturer of Sport Fishing Boats

Secured Debt

(9)

8/28/2019

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

8/28/2025

17,510

17,354

17,510

INW Manufacturing, LLC

(11)

Manufacturer of Nutrition and Wellness Products

Secured Debt

(9)

5/19/2021

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

3/25/2027

7,406

7,205

7,258

Isagenix International, LLC

(11)

Direct Marketer of Health & Wellness Products

Secured Debt

(9)

6/21/2018

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

6/14/2025

5,158

5,135

3,865

Jackmont Hospitality, Inc.

(10)

Franchisee of Casual Dining Restaurants

Secured Debt

(9)

5/26/2015

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

11/4/2024

2,100

2,100

2,100

Preferred Equity

11/8/2021

2,826,667

314

314

2,414

2,414

Joerns Healthcare, LLC

(11)

Manufacturer and Distributor of Health Care Equipment & Supplies

Secured Debt

(9)

8/21/2019

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

8/21/2024

4,034

3,989

3,658

Secured Debt

(19)

11/15/2021

15.00% PIK

11/8/2022

1,000

1,004

1,004

Common Stock

8/21/2019

472,579

4,429

-

9,422

4,662

JTI Electrical & Mechanical, LLC

(10)

Electrical, Mechanical and Automation Services

Secured Debt

(9)

12/22/2021

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

12/22/2026

37,895

36,972

36,972

Common Equity

12/22/2021

1,684,211

1,684

1,684

38,656

38,656

Klein Hersh, LLC

(10)

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

Secured Debt

(9)

11/13/2020

7.75% (L+7.00%, Floor 0.75%)

11/13/2025

43,321

42,342

43,278

KMS, LLC

(10)

Wholesaler of Closeout and Value-priced Products

Secured Debt

(9)

10/4/2021

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

10/4/2026

7,581

7,415

7,415

Kore Wireless Group Inc.

(11) (13)

Mission Critical Software Platform

Secured Debt

12/31/2018

5.72% (L+5.50%)

12/20/2024

11,415

11,345

11,400

Laredo Energy, LLC

(10)

Oil & Gas Exploration & Production

Member Units

5/4/2020

1,155,952

11,560

9,659

44

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

LaserAway Intermediate Holdings II, LLC

(11)

Aesthetic Dermatology Service Provider

Secured Debt

(9)

10/18/2021

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

10/14/2027

4,130

4,050

4,115

Lightbox Holdings, L.P.

(11)

Provider of Commercial Real Estate Software

Secured Debt

5/23/2019

5.22% (L+5.00%)

5/9/2026

14,625

14,460

14,442

LKCM Headwater Investments I, L.P.

(12) (13)

Investment Partnership

LP Interests

(8) (31)

1/25/2013

2.3%

1,746

2,541

LL Management, Inc.

(10)

Medical Transportation Service Provider

Secured Debt

(9)

5/2/2019

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

9/25/2023

17,438

17,309

17,438

LLFlex, LLC

(10)

Provider of Metal-Based Laminates

Secured Debt

(9)

8/16/2021

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

8/16/2026

4,478

4,382

4,382

Logix Acquisition Company, LLC

(10)

Competitive Local Exchange Carrier

Secured Debt

(9)

1/8/2018

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

12/22/2024

25,850

24,605

24,428

Looking Glass Investments, LLC

(12) (13)

Specialty Consumer Finance

Member Units

7/1/2015

3

125

25

Mac Lean-Fogg Company

(10)

Manufacturer and Supplier for Auto and Power Markets

Secured Debt

(9)

4/22/2019

5.88% (L+5.25%, Floor 0.625%)

12/22/2025

17,080

16,995

17,080

Preferred Stock

(19)

10/1/2019

13.75% (4.50% Cash, 9.25% PIK)

1,920

1,920

18,915

19,000

Mako Steel, LP

(10)

Self-Storage Design & Construction

Secured Debt

(9)

3/15/2021

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

3/13/2026

17,589

17,267

17,589

MB2 Dental Solutions, LLC

(11)

Dental Partnership Organization

Secured Debt

(9)

1/28/2021

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

1/29/2027

11,682

11,531

11,682

Mills Fleet Farm Group, LLC

(10)

Omnichannel Retailer of Work, Farm and Lifestyle Merchandise

Secured Debt

(9)

10/24/2018

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

10/24/2024

17,781

17,563

17,781

NBG Acquisition Inc

(11)

Wholesaler of Home Décor Products

Secured Debt

(9)

4/28/2017

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

4/26/2024

3,987

3,961

2,758

NinjaTrader, LLC

(10)

Operator of Futures Trading Platform

Secured Debt

(9)

12/18/2019

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

12/18/2024

31,425

30,837

31,368

45

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

NNE Partners, LLC

(10)

Oil & Gas Exploration & Production

Secured Debt

(19)

3/2/2017

9.37% (4.87% Cash, 4.50% PIK) (4.50% PIK + L+4.75%)

12/31/2023

24,781

24,709

23,154

Northstar Group Services, Inc

(11)

Commercial & Industrial Services

Secured Debt

(9)

11/1/2021

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

11/12/2026

10,000

9,952

10,034

NTM Acquisition Corp.

(11)

Provider of B2B Travel Information Content

Secured Debt

(9) (19)

7/12/2016

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

6/7/2024

4,598

4,598

4,552

NWN Corporation

(10)

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

Secured Debt

(9)

5/7/2021

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

5/7/2026

42,972

42,108

42,323

Ospemifene Royalty Sub LLC

(10)

Estrogen-Deficiency Drug Manufacturer and Distributor

Secured Debt

(14)

7/8/2013

11.50%

11/15/2026

4,562

4,562

112

OVG Business Services, LLC

(10)

Venue Management Services

Secured Debt

(9)

11/29/2021

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

11/19/2028

14,000

13,861

13,861

Project Eagle Holdings, LLC

(10)

Provider of Secure Business Collaboration Software

Secured Debt

(9)

7/6/2020

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

7/6/2026

29,738

29,151

29,714

PT Network, LLC

(10)

Provider of Outpatient Physical Therapy and Sports Medicine Services

Secured Debt

(9) (19)

10/12/2017

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

11/30/2023

8,889

8,889

8,889

Common Stock

1/1/2020

2

-

80

8,889

8,969

RA Outdoors LLC

(10)

Software Solutions Provider for Outdoor Activity Management

Secured Debt

(9)

4/8/2021

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

4/8/2026

19,374

19,193

18,352

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

(11)

Provider of Outsourced Online Surveying

Secured Debt

(9)

12/29/2017

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

12/20/2024

20,124

19,789

19,899

RM Bidder, LLC

(10)

Scripted and Unscripted TV and

46

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Digital Programming Provider

Member Units

11/12/2015

2,779

46

26

Warrants

(26)

11/12/2015

187,161

10/20/2025

425

-

471

26

Roof Opco, LLC

(10)

Residential Re-Roofing/Repair

Secured Debt

(9)

8/27/2021

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

8/27/2026

2,800

2,704

2,704

RTIC Subsidiary Holdings, LLC

(10)

Direct-To-Consumer eCommerce Provider of Outdoor Products

Secured Debt

(9)

9/1/2020

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

9/1/2025

18,191

17,997

18,191

Rug Doctor, LLC.

(10)

Carpet Cleaning Products and Machinery

Secured Debt

(9)

7/16/2021

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

11/16/2024

11,145

10,902

10,902

Salient Partners L.P.

(11)

Provider of Asset Management Services

Secured Debt

(9)

8/31/2018

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

10/30/2022

6,251

6,247

4,063

Secured Debt

(9)

9/30/2021

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

10/30/2022

1,250

1,250

2,435

7,497

6,498

Savers, Inc.

(11)

For-Profit Thrift Retailer

Secured Debt

(9)

5/14/2021

6.25% (L+5.50%, Floor 0.75%)

4/26/2028

11,400

11,295

11,386

SIB Holdings, LLC

(10)

Provider of Cost Reduction Services

Secured Debt

(9)

10/29/2021

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

10/29/2026

6,282

6,134

6,145

Common Equity

10/29/2021

95,238

200

200

6,334

6,345

South Coast Terminals Holdings, LLC

(10)

Specialty Toll Chemical Manufacturer

Secured Debt

(9)

12/10/2021

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

12/13/2026

50,704

49,589

49,589

Common Equity

12/10/2021

863,636

864

864

50,453

50,453

Staples Canada ULC

(10) (13) (21)

Office Supplies Retailer

Secured Debt

(9) (22)

9/14/2017

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

9/12/2024

16,116

16,039

15,620

Stellant Systems, Inc.

(11)

Manufacturer of Traveling Wave Tubes and Vacuum Electronic Devices

Secured Debt

(9)

10/22/2021

6.25% (L+5.50%, Floor 0.75%)

10/1/2028

7,700

7,625

7,700

Student Resource Center, LLC

(10)

Higher Education Services

Secured Debt

(9)

6/25/2021

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

6/25/2026

10,969

10,753

10,826

Tacala Investment Corp.

(34)

Quick Service Restaurant Group

47

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9)

3/19/2021

4.25% (L+3.50%, Floor 0.75%)

2/5/2027

1,995

1,995

1,994

Team Public Choices, LLC

(11)

Home-Based Care Employment Service Provider

Secured Debt

(9)

12/22/2020

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

12/18/2027

15,109

14,778

15,071

Tectonic Financial, LLC

Financial Services Organization

Common Stock

(8)

5/15/2017

200,000

2,000

4,650

Tex Tech Tennis, LLC

(10)

Sporting Goods & Textiles

Common Stock

(30)

7/7/2021

1,000,000

1,000

1,000

U.S. TelePacific Corp.

(11)

Provider of Communications and Managed Services

Secured Debt

(9)

5/17/2017

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

5/2/2023

17,088

16,985

12,917

USA DeBusk LLC

(10)

Provider of Industrial Cleaning Services

Secured Debt

(9)

10/22/2019

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

9/8/2026

37,281

36,510

37,281

Veregy Consolidated, Inc.

(11)

Energy Service Company

Secured Debt

(9)

11/9/2020

6.25% (L+5.25, Floor 1.00%)

11/3/2025

5,875

5,111

5,111

Secured Debt

(9)

11/9/2020

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

11/3/2027

14,888

14,524

14,925

19,635

20,036

Vida Capital, Inc

(11)

Alternative Asset Manager

Secured Debt

10/10/2019

6.10% (L+6.00%)

10/1/2026

17,089

16,905

15,850

Vistar Media, Inc.

(10)

Operator of Digital Out-of-Home Advertising Platform

Preferred Stock

4/3/2019

70,207

767

1,726

VORTEQ Coil Finishers, LLC

(10)

Specialty Coating of Aluminum and Light-Gauge Steel

Secured Debt

(9)

11/30/2021

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

11/30/2026

25,962

25,450

25,450

Common Equity

11/30/2021

1,038,462

1,038

1,038

26,488

26,488

Wahoo Fitness Acquisition L.L.C.

(11)

Fitness Training Equipment Provider

Secured Debt

(9)

8/17/2021

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

8/12/2028

15,000

14,569

14,916

Wall Street Prep, Inc.

(10)

Financial Training Services

Secured Debt

(9)

7/19/2021

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

7/19/2026

4,373

4,288

4,285

Common Stock

7/19/2021

400,000

400

400

4,688

4,685

Watterson Brands, LLC

(10)

Facility Management Services

Secured Debt

(9)

12/17/2021

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

12/17/2026

25,876

25,267

25,267

Winter Services LLC

(10)

Provider of Snow Removal and Ice Management Services

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

Portfolio Company (1) (20)

Business Description

Type of Investment (2) (3) (15)

Investment Date (24)

Shares/Units

Rate

Maturity Date

Principal (4)

Cost (4)

Fair Value (18)

Secured Debt

(9)

11/19/2021

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

11/19/2026

10,278

10,018

10,061

Xenon Arc, Inc.

(10)

Tech-enabled Distribution Services to Chemicals and Food Ingredients Primary Producers

Secured Debt

(9)

12/17/2021

6.75% (L+6.00%, Floor 0.75%)

12/17/2026

38,600

37,423

37,423

YS Garments, LLC

(11)

Designer and Provider of Branded Activewear

Secured Debt

(9)

8/22/2018

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

8/9/2024

13,034

12,967

12,578

Subtotal Non-Control/Non-Affiliate Investments (85.2% of net assets at fair value)

$

1,573,110

$

1,523,360

Total Portfolio Investments, December 31, 2021 (199.2% of net assets at fair value)

$

3,259,246

$

3,561,831

(1)

All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition 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 by footnote (8), as described below.

(3)

See Note C—Fair Value Hierarchy for Investments—Portfolio Composition 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 every one, three, or six months at the borrower’s option. As noted in this schedule, 67% 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 1.06%.

(10)

Private Loan portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Private Loan portfolio investments.

(11)

Middle Market portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition for a description of Middle Market portfolio investments.

(12)

Other Portfolio investment. See Note C—Fair Value Hierarchy for Investments—Portfolio Composition 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.”

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2021

(dollars in thousands)

(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—Fair Value Hierarchy for Investments—Portfolio Composition 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 $21.4 million Canadian Dollars and receive $16.9 million U.S. Dollars with a settlement date of September 14, 2022. The unrealized depreciation on the forward foreign currency contract was not significant as of December 31, 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 security position.

(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 a related 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 7.96% (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—Fair Value Hierarchy for Investments—Portfolio Composition for a description of short-term portfolio investments.

(35)

The security has an effective contractual interest rate of 2.00% PIK + LIBOR+6.50%, Floor 1.00%, but the issuer may, in its discretion, elect to pay the PIK interest in cash. The rate presented represents the effective current yield based on actual payments received during the period.

(36)

As of December 31, 2021, borrowings under the loan facility bear interest at LIBOR+6.00% or Prime+5.00%. Delayed draw term loan facility permits the borrower to make an interest rate election on each new tranche of borrowings under the facility. The rate presented represents a weighted-average rate for borrowings under the facility.

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MAIN STREET CAPITAL CORPORATION

Notes to the 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 investment strategy. 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”). 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.

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”).

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 does 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

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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 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 Private Loan portfolio companies, investments in Middle Market portfolio companies, Other Portfolio investments and the investment in the External Investment Manager (see Note C—Fair Value Hierarchy for Investments—Portfolio Composition—Investment Portfolio Composition for additional discussion of Main Street’s Investment Portfolio and definitions for the defined terms Private Loan and Other Portfolio). Main Street’s results of operations for the three and six months ended June 30, 2022 and 2021, cash flows for the six months ended June 30, 2022 and 2021, and financial position as of June 30, 2022 and December 31, 2021, 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, 2021. 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 six months ended June 30, 2022 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 Sheets at fair value, as discussed further in Note B.1.—Summary of Significant Accounting Policies—Valuation of the Investment Portfolio, with any adjustments to fair value recognized as “Net Unrealized Appreciation (Depreciation)” until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a “Net Realized Gain (Loss)”, in both cases on the Consolidated Statements of Operations.

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.

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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 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 debt securities issued by Middle Market companies that are generally larger in size than the LMM companies and that can be more liquid than the debt securities issued by 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 directly by Main Street or 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 made in companies that are consistent with the size of companies Main Street invests in through 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, Private Loan portfolio investments or Middle Market 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, Private Loan and Middle Market 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, with such 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”) valuation method 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 Private Loan and Middle Market 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

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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 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.

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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 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 36 LMM portfolio companies for the six months ended June 30, 2022, representing 54% of the total LMM portfolio at fair value as of June 30, 2022, and on a total of 31 LMM portfolio companies for the six months ended June 30, 2021, representing 52% of the total LMM portfolio at fair value as of June 30, 2021. Excluding its investments in LMM portfolio companies that, as of June 30, 2022 and 2021, 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 six months ended June 30, 2022 and 2021 was 61% and 55% of the total LMM portfolio at fair value as of June 30, 2022 and 2021, respectively.

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 29 Private Loan portfolio companies for the six months ended June 30, 2022, representing 44% of the total Private Loan portfolio at fair value as of June 30, 2022, and on a total of 26 Private Loan portfolio companies for the six months ended June 30, 2021, representing 45% of the total Private Loan portfolio at fair value as of June 30, 2021. Excluding its investments in Private Loan portfolio companies that, as of June 30, 2022 and 2021, 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 six months ended June 30, 2022 and 2021 was 67% and 60% of the total Private Loan portfolio at fair value as of June 30, 2022 and 2021, 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

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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. The Company generally consults on a limited basis with a financial advisory services firm in connection with determining the fair value of its Middle Market portfolio investments due to the nature of these investments. The vast majority (92% and 93% as of June 30, 2022 and December 31, 2021, respectively) of the Middle Market portfolio investments (i) are valued using third-party quotes or other independent pricing services, (ii) have received an assurance certification from independent financial services firm within the last twelve months or (iii) are new investments that have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment.

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 2.9% and 4.7% of Main Street’s Investment Portfolio at fair value as of June 30, 2022 and December 31, 2021, 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, Private Loan and Middle Market portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM, Private Loan and Middle Market portfolio company.

In December 2020, the SEC adopted 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 of Directors’ valuation designee. Main Street adopted the Valuation Procedures effective April 1, 2021. Main Street believes its Investment Portfolio as of June 30, 2022 and December 31, 2021 approximates fair value as of those dates based on the markets in which it operates and other conditions in existence on those reporting dates.

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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.—Summary of Significant Accounting Policies—Valuation of the Investment Portfolio, 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.

Macroeconomic factors, including the COVID-19 pandemic, risk of recession, inflation, supply chain constraints or disruptions and rising interest rates, and the related effect on the U.S. and global economies, have impacted, and may 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 macroeconomic factors, as well as the uncertainty regarding the extent and duration of their impact, the valuation of Main Street’s Investment Portfolio has and may continue to experience increased volatility.

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 June 30, 2022, cash balances totaling $40.9 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 its debt obligation, 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 obligation, or if a loan or debt security is sold or written off, Main Street removes it from non-accrual status.

As of June 30, 2022, Main Street’s total Investment Portfolio had nine investments on non-accrual status, which comprised 0.7% of its fair value and 3.2% of its cost. As of December 31, 2021, Main Street’s total Investment Portfolio had nine investments on non-accrual status, which comprised 0.7% of its fair value and 3.3% 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. —Summary of Significant Accounting Policies—Income Taxes 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. Main Street stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected

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interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the three months ended June 30, 2022 and 2021, (i) 1.7% and 3.4%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.2% and 0.6%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash. For the six months ended June 30, 2022 and 2021, (i) 1.4% and 3.6%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.6% and 0.7%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash.

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.

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

Six Months Ended

June 30, 

June 30, 

    

2022

    

2021

    

2022

    

2021

    

(dollars in thousands)

Interest, fee and dividend income:

Interest income

$

63,984

$

45,944

$

123,426

$

89,416

Dividend income

 

17,913

 

18,619

 

34,535

 

36,316

Fee income

 

3,303

 

2,731

 

6,635

 

4,370

Total interest, fee and dividend income

$

85,200

$

67,294

$

164,596

$

130,102

5.           Deferred Financing Costs

Deferred financing costs include commitment fees and other direct 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 (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—Debt. 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 principal amount outstanding.

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 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

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netted against the applicable debt investment, and accreted into interest income 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 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 over the life of the debt investment.

To maintain RIC tax treatment (as discussed in Note B.9.—Summary of Significant Accounting Policies—Income Taxes 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 June 30, 2022 and 2021, 2.0% and 2.4%, 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. For the six months ended June 30, 2022 and 2021, 2.0% and 2.4%, 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 twelve 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

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Taxable Subsidiaries are each taxed at corporate income 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 corporate income 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.

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. Main Street’s net assets as included on the Consolidated Balance Sheets and Consolidated Statements of Changes in Net Assets include an adjustment to classification as a result of permanent book-to-tax differences, which include differences in the book and tax treatment of income and expenses.

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,

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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 utilized the optional expedients and exceptions provided by ASU 2020-04 during the six months ended June 30, 2022, the effect of which was not material to the consolidated financial statements and the notes thereto. The Company continues to evaluate the potential impact that the amendments in this update will have on its consolidated financial statements and disclosures.

In December 2021, the SEC published Staff Accounting Bulletin No. 120 (“SAB 120”) to provide accounting and disclosure guidance for stock compensation awards made to executives and conforming amendments to the Staff Accounting Bulletin Series to align with the current authoritative accounting guidance in ASC 718, Compensation – Stock Compensation. In part, SAB 120 requires that an entity disclose how it determines the current price of underlying shares for grant-date fair value, the policy for when an adjustment to the share price is required, how it determines the amount of an adjustment to the share price and any significant assumptions used in determining an adjustment to the share price. SAB 120 is effective for all stock compensation awards issued after December 1, 2021. Main Street is in compliance with the guidance pursuant to SAB 120 for any share-based compensation disclosures. See Note J – Share-Based Compensation for further discussion of Main Street’s policies and procedures regarding share-based compensation. The impact of SAB 120 was not material to the consolidated financial statements and the notes thereto.

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—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).

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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);
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 June 30, 2022 and December 31, 2021, 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 June 30, 2022 and December 31, 2021.

As of June 30, 2022 and December 31, 2021, Main Street’s 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 June 30, 2022 and December 31, 2021.

As of June 30, 2022 and December 31, 2021, 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 June 30, 2022 and December 31, 2021.

As of June 30, 2022 and December 31, 2021, 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 June 30, 2022 and December 31, 2021.

As of June 30, 2022, Main Street held one short-term portfolio investment, which was a secured debt investment. The fair value determination for this investment consisted of available observable inputs in non-active markets sufficient to determine the fair value of the investment. As a result, Main Street’s short-term portfolio investment was categorized as Level 2 as of June 30, 2022. As of December 31, 2021, Main Street held one short-term portfolio investment, which was a secured debt investment. The fair value determination for this investment consisted of

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available observable inputs in non-active markets sufficient to determine the fair value of the investment. As a result, Main Street’s short-term portfolio investment was categorized as Level 2 as of December 31, 2021.

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, Private Loan and Middle Market 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

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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.

The following tables provide a summary of the significant unobservable inputs used to fair value Main Street’s Level 3 portfolio investments as of June 30, 2022 and December 31, 2021:

    

Fair Value as of

    

    

    

    

    

 

June 30, 

 

Type of

2022

Significant

Weighted

 

Investment

 

(in thousands)

Valuation Technique

Unobservable Inputs

Range(3)

Average(3)

Median(3)

Equity investments

$

1,107,893

 

Discounted cash flow

 

WACC

 

9.5% - 22.1%

 

14.6

%

15.6

%

 

Market comparable / Enterprise value

 

EBITDA multiple (1)

 

4.5x - 8.3x(2)

 

6.6x

 

6.0x

Debt investments

$

2,282,777

 

Discounted cash flow

 

Risk adjusted discount factor

 

6.8% - 15.0%(2)

 

10.4

%

10.6

%

 

Expected principal recovery percentage

 

0.0% - 200.0%

 

99.4

%

100.0

%

Debt investments

$

325,239

 

Market approach

 

Third‑party quote

 

5.75 - 99.8

 

92.0

 

94.5

Total Level 3 investments

$

3,715,909

(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 - 15.7x and the range for risk adjusted discount factor is 5.0% - 38.5%.
(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

2021

Significant

Weighted

 

Investment

 

(in thousands)

Valuation Technique

Unobservable Inputs

Range(3)

Average(3)

Median(3)

Equity investments

$

1,050,269

 

Discounted cash flow

 

WACC

 

9.1% - 20.6%

 

13.8

%

14.8

%

 

Market comparable / Enterprise value

 

EBITDA multiple (1)

 

4.8x - 7.7x(2)

 

6.6x

 

5.9x

Debt investments

$

2,158,424

 

Discounted cash flow

 

Risk adjusted discount factor

 

5.6% - 15.7%(2)

 

9.8

%

9.3

%

 

Expected principal recovery percentage

 

0.0% - 100.0%

 

99.6

%

100.0

%

Debt investments

$

351,144

 

Market approach

 

Third‑party quote

 

3.0 - 100.5

 

94.4

 

99.0

Total Level 3 investments

$

3,559,837

(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 - 11.0x and the range for risk adjusted discount factor is 4.2% - 38.5%.
(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 six-month periods ended June 30, 2022 and 2021 (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

 

June 30, 

Investment

    

2021

    

Hierarchy

    

Repayments

    

Investments

    

to Realized

    

(Depreciation)

    

Other(1)

    

2022

Debt

$

2,509,568

$

$

(351,315)

$

508,045

$

3,656

$

(60,605)

$

(1,333)

$

2,608,016

Equity

1,043,709

(27,338)

34,765

(1,977)

51,451

1,333

1,101,943

Equity Warrant

6,560

(610)

5,950

$

3,559,837

$

$

(378,653)

$

542,810

$

1,679

$

(9,764)

$

$

3,715,909

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

June 30, 

Investment

2020

Hierarchy

Repayments

Investments

 

to Realized

(Depreciation)

Other(1)

2021

Debt

$

1,807,134

$

$

(282,896)

$

457,028

$

9,781

$

11,278

$

(3,485)

$

1,998,840

Equity

 

866,734

(49,565)

20,584

5,177

57,120

5,515

905,565

Equity Warrant

 

10,998

1,128

484

(2,030)

10,580

$

2,684,866

$

$

(332,461)

$

477,612

$

16,086

$

68,882

$

$

2,914,985

(1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information in the Consolidated Statements of Cash Flows.

At June 30, 2022 and December 31, 2021, 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 June 30, 2022

Fair Value

 

(Level 1)

(Level 2)

 

(Level 3)

LMM portfolio investments

$

1,816,255

$

$

$

1,816,255

Private Loan portfolio investments

 

1,309,020

 

 

 

1,309,020

Middle Market portfolio investments

 

363,468

 

 

 

363,468

Other Portfolio investments

 

108,846

 

 

 

108,846

External Investment Manager

 

118,320

 

 

 

118,320

Short-term portfolio investments

1,861

1,861

Total investments

$

3,717,770

$

$

1,861

$

3,715,909

Fair Value Measurements

(in thousands)

    

    

Quoted Prices in

    

    

Significant

 

Active Markets for

 

Significant Other

 

Unobservable

 

Identical Assets

 

Observable Inputs

 

Inputs

At December 31, 2021

Fair Value

 

(Level 1)

(Level 2)

 

(Level 3)

LMM portfolio investments

$

1,716,415

$

$

$

1,716,415

Private Loan portfolio investments

 

1,141,772

 

 

 

1,141,772

Middle Market portfolio investments

 

395,167

 

 

 

395,167

Other Portfolio investments

 

166,083

 

 

 

166,083

External Investment Manager

 

140,400

 

 

 

140,400

Short-term portfolio investments

1,994

1,994

Total investments

$

3,561,831

$

$

1,994

$

3,559,837

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Investment Portfolio Composition

Main Street’s principal investment objective is to maximize its portfolio’s total return by generating current income from its debt investments and current income and capital appreciation from its equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Main Street seeks to achieve its investment objective through its LMM, Private Loan and Middle Market investment strategies.

Main Street’s LMM investment strategy involves investments in 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 $75 million. The LMM debt investments are typically secured by a first 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 private loan (“Private Loan”) investment strategy involves investments in privately held companies that are generally consistent with the size of its LMM portfolio companies or Middle Market portfolio companies, and its Private Loan investments generally range in size from $10 million to $75 million. Main Street’s Private Loan investments generally consist of loans that have been originated directly by Main Street or through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as “club deals.” Main Street’s Private Loan portfolio debt investments are generally secured by a first 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 may have the option to invest alongside the sponsor in the equity securities of its Private Loan portfolio companies.

Main Street’s Middle Market investment strategy involves investments in syndicated loans to or debt securities in Middle Market companies, which Main Street defines as companies with annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $25 million. Main Street’s Middle Market portfolio debt investments are generally secured by a first 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.

Main Street’s other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with the typical profiles for its LMM, Private Loan or Middle Market 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, Private Loan and Middle Market 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”). 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 for the three months ended June 30, 2022 and 2021 are net of expenses allocated to the External Investment Manager of $3.5 million and $2.6 million, respectively, and for the six months ended June 30, 2022 and 2021 of $6.3 million and $5.0 million, respectively.

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Table of Contents

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 six months ended June 30, 2022 and 2021, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

The following tables provide a summary of Main Street’s investments in the LMM, Private Loan and Middle Market portfolios as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager, which are discussed further below):

    

As of June 30, 2022

LMM (a)

Private Loan

Middle Market

(dollars in millions)

 

Number of portfolio companies

75

 

82

 

34

Fair value

$

1,816.3

 

$

1,309.0

 

$

363.5

Cost

$

1,508.9

 

$

1,347.9

 

$

419.0

Debt investments as a % of portfolio (at cost)

71.9

%

96.1

%

92.9

%

Equity investments as a % of portfolio (at cost)

28.1

%

3.9

%

7.1

%

% of debt investments at cost secured by first priority lien

99.0

%

99.4

%

99.2

%

Weighted-average annual effective yield (b)

11.2

%

8.5

%

8.0

%

Average EBITDA (c)

$

7.5

 

$

41.2

 

$

71.4

(a)At June 30, 2022, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 41%.
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of June 30, 2022, 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 annual effective yield on Main Street’s debt portfolio as of June 30, 2022 including debt investments on non-accrual status was 10.5% for its LMM portfolio, 8.3% for its Private Loan portfolio and 7.6% for its Middle Market 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 utilization of debt capital in its capital structure, 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 Private Loan and Middle Market 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, 2021

LMM (a)

Private Loan

Middle Market

(dollars in millions)

 

Number of portfolio companies

73

 

75

 

36

Fair value

$

1,716.4

 

$

1,141.8

 

$

395.2

Cost

$

1,455.7

 

$

1,157.5

 

$

440.9

Debt investments as a % of portfolio (at cost)

70.9

%

95.7

%

93.3

%

Equity investments as a % of portfolio (at cost)

29.1

%

4.3

%

6.7

%

% of debt investments at cost secured by first priority lien

99.0

%

98.7

%

98.7

%

Weighted-average annual effective yield (b)

11.2

%

8.2

%

7.5

%

Average EBITDA (c)

$

6.2

 

$

41.3

 

$

76.0

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(a)At December 31, 2021, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 40%.
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 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 annual effective yield on Main Street’s debt portfolio as of December 31, 2021 including debt investments on non-accrual status was 10.6% for its LMM portfolio, 8.0% for its Private Loan portfolio and 6.9% for its Middle Market 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 utilization of debt capital in its capital structure, 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 Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, three Private Loan portfolio companies and one Middle Market portfolio company, 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 June 30, 2022 and 2021, Main Street achieved an annualized total return on investments of 6.5% and 19.7%, respectively. For the six months ended June 30, 2022 and 2021, Main Street achieved an annualized total return on investments of 9.2% and 16.0%, respectively. For the year ended December 31, 2021, Main Street achieved an annualized total return on investments of 16.6%. 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 utilization of debt capital in its capital structure, Main Street’s expenses or any sales load paid by an investor.

As of June 30, 2022, Main Street had Other Portfolio investments in 14 companies, collectively totaling $108.8 million in fair value and $116.1 million in cost basis and which comprised 2.9% and 3.4% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2021, Main Street had Other Portfolio investments in 13 companies, collectively totaling $166.1 million in fair value and $173.7 million in cost basis and which comprised 4.7% and 5.3% of Main Street’s Investment Portfolio at fair value and cost, respectively.

As of June 30, 2022, Main Street had one short-term portfolio investment, which was a secured debt investment that had $1.9 million in fair value and $2.0 million in cost basis and which comprised 0.1% of Main Street’s Investment Portfolio at both fair value and cost. As of December 31, 2021, Main Street had one short-term portfolio investment, which was a secured debt investment that had $2.0 million in both fair value and cost basis and which comprised 0.1% of Main Street’s Investment Portfolio at both fair value and cost.

As discussed further in Note A.1—Organization and Basis of Presentation—Organization, Main Street holds an investment in the External Investment Manager, a wholly-owned subsidiary that is treated as a portfolio investment. As of June 30, 2022, this investment had a fair value of $118.3 million and a cost basis of $29.5 million, which comprised 3.2% and 0.9% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31, 2021, this investment had a fair value of $140.4 million and a cost basis of $29.5 million, which comprised 3.9% and 0.9% 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, Private Loan portfolio investments and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Private Loan portfolio investments and Middle

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Market portfolio investments, as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio investments, short-term portfolio investments and the External Investment Manager, which are discussed above).

Cost:

 

June 30, 2022

 

December 31, 2021

First lien debt

 

83.9

%  

82.5

%

Equity

 

15.2

%  

16.2

%

Second lien debt

 

0.3

%  

0.6

%

Equity warrants

 

0.2

%  

0.3

%

Other

 

0.4

%  

0.4

%

 

100.0

%  

100.0

%

Fair Value:

 

June 30, 2022

 

December 31, 2021

 

First lien debt

 

74.0

%  

74.3

%

 

Equity

 

25.1

%  

24.6

%

 

Second lien debt

 

0.3

%  

0.5

%

 

Equity warrants

 

0.2

%  

0.2

%

 

Other

 

0.4

%  

0.4

%

 

 

100.0

%  

100.0

%

 

The following tables summarize the composition of Main Street’s total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market 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, Private Loan portfolio investments and Middle Market portfolio investments, as of June 30, 2022 and December 31, 2021 (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:

 

June 30, 2022

 

December 31, 2021

 

West

 

28.0

%  

28.3

%

 

Northeast

 

21.1

%  

22.6

%

 

Southwest

 

20.2

%  

21.6

%

 

Midwest

 

15.5

%  

15.1

%

 

Southeast

 

14.0

%  

11.6

%

 

Canada

 

0.7

%  

0.8

%

 

Other Non-United States

 

0.5

%  

%

 

 

100.0

%  

100.0

%

 

Fair Value:

 

June 30, 2022

 

December 31, 2021

 

West

 

28.4

%  

28.5

%

 

Southwest

 

21.4

%  

23.0

%

 

Northeast

 

20.9

%  

21.9

%

 

Midwest

 

15.9

%  

15.8

%

 

Southeast

 

12.3

%  

10.0

%

 

Canada

 

0.6

%  

0.8

%

 

Other Non-United States

 

0.5

%  

%

 

 

100.0

%  

100.0

%

 

Main Street’s LMM portfolio investments, Private Loan portfolio investments and Middle Market 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, Private Loan portfolio investments and

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Table of Contents

Middle Market portfolio investments by industry at cost and fair value as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager).

Cost:

June 30, 2022

December 31, 2021

Internet Software & Services

 

8.3

%  

7.2

%

Machinery

 

7.6

%  

7.3

%

Construction & Engineering

 

7.2

%  

7.8

%

Commercial Services & Supplies

 

5.6

%  

5.9

%

Diversified Consumer Services

 

5.2

%  

3.4

%

Distributors

 

4.5

%  

4.7

%

Leisure Equipment & Products

 

4.4

%  

4.1

%

Health Care Providers & Services

 

4.2

%  

3.9

%

Professional Services

 

4.1

%  

4.6

%

Energy Equipment & Services

 

3.6

%  

4.0

%

Specialty Retail

 

3.5

%  

3.5

%

IT Services

 

3.5

%  

3.5

%

Aerospace & Defense

 

2.6

%  

1.9

%

Media

 

2.5

%  

1.8

%

Building Products

 

2.2

%  

2.3

%

Containers & Packaging

 

2.1

%  

2.3

%

Textiles, Apparel & Luxury Goods

 

2.1

%  

2.2

%

Communications Equipment

 

2.0

%  

2.3

%

Diversified Financial Services

 

1.9

%  

2.1

%

Tobacco

 

1.9

%  

2.1

%

Diversified Telecommunication Services

 

1.8

%  

2.6

%

Food Products

 

1.7

%  

2.0

%

Software

 

1.7

%  

1.8

%

Oil, Gas & Consumable Fuels

 

1.5

%  

1.8

%

Internet & Catalog Retail

 

1.4

%  

1.6

%

Health Care Equipment & Supplies

 

1.4

%  

0.3

%

Food & Staples Retailing

 

1.3

%  

0.8

%

Chemicals

 

1.3

%  

1.7

%

Electronic Equipment, Instruments & Components

 

1.3

%  

1.4

%

Hotels, Restaurants & Leisure

 

1.2

%  

1.4

%

Computers & Peripherals

1.2

%  

1.3

%

Electrical Equipment

1.0

%  

0.7

%

Pharmaceuticals

1.0

%  

0.1

%

Household Durables

0.9

%  

1.0

%

Life Sciences Tools & Services

%  

1.4

%

Other (1)

2.3

%  

3.2

%

 

100.0

%  

100.0

%

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

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Table of Contents

Fair Value:

June 30, 2022

December 31, 2021

Machinery

 

8.7

%  

8.5

%

Diversified Consumer Services

 

7.4

%  

5.9

%

Internet Software & Services

 

7.2

%  

6.4

%

Construction & Engineering

 

6.8

%  

7.7

%

Commercial Services & Supplies

 

5.1

%  

5.5

%

Distributors

 

4.7

%  

4.7

%

Specialty Retail

 

4.1

%  

4.1

%

Leisure Equipment & Products

 

4.1

%  

4.0

%

Professional Services

 

3.9

%  

3.9

%

Health Care Providers & Services

 

3.9

%  

3.6

%

IT Services

 

3.3

%  

3.3

%

Media

 

3.1

%  

2.2

%

Aerospace & Defense

 

2.4

%  

1.7

%

Energy Equipment & Services

 

2.3

%  

2.8

%

Containers & Packaging

 

2.3

%  

2.5

%

Tobacco

 

2.2

%  

2.2

%

Diversified Financial Services

 

2.1

%  

2.3

%

Textiles, Apparel & Luxury Goods

 

2.1

%  

2.1

%

Building Products

 

2.0

%  

2.2

%

Software

 

2.0

%  

2.0

%

Computers & Peripherals

 

1.9

%  

2.2

%

Food Products

 

1.7

%  

1.9

%

Diversified Telecommunication Services

 

1.6

%  

2.5

%

Internet & Catalog Retail

 

1.5

%  

1.5

%

Oil, Gas & Consumable Fuels

 

1.3

%  

1.4

%

Food & Staples Retailing

 

1.2

%  

0.8

%

Chemicals

 

1.2

%  

1.6

%

Health Care Equipment & Supplies

 

1.2

%  

0.1

%

Communications Equipment

 

1.1

%  

1.5

%

Construction Materials

1.1

%  

1.1

%  

Electrical Equipment

1.0

%  

0.8

%  

Hotels, Restaurants & Leisure

0.9

%  

1.0

%  

Life Sciences Tools & Services

%  

1.3

%  

Other (1)

4.6

%  

4.7

%  

100.0

%  

100.0

%  

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

At June 30, 2022 and December 31, 2021, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

Unconsolidated Significant Subsidiaries

In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, Main Street must determine which of its unconsolidated controlled portfolio companies, if any, are considered “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–Organization and Basis of Presentation, 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. Rules 3-

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09 and 4-08(g) of Regulation S-X require 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 the investment or income tests are exceeded and the unconsolidated portfolio company qualifies as a significant subsidiary.

As of June 30, 2022 and December 31, 2021, 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—Organization and Basis of Presentation—Organization and Note C—Fair Value Hierarchy for Investments—Portfolio Composition—Investment Portfolio Composition, 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.

The External Investment Manager serves as the investment adviser and administrator to MSC Income pursuant to an Investment Advisory and Administrative Services Agreement entered into in October 2020 between the External Investment Manager and MSC Income (the “Advisory Agreement”). Under the Advisory Agreement, the External Investment Manager earns a 1.75% annual base management fee on MSC Income’s average total assets, an incentive fee equal to 20% of pre-investment fee net investment income above a specified investment return hurdle rate and a 20% incentive fee on cumulative net realized capital gains in exchange for providing advisory services to MSC Income.

As described more fully in Note L – Related Party Transactions, the External Investment Manager also serves as the investment adviser and administrator to 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”). 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.

The External Investment Manager provides administrative services for certain External Party clients that, to the extent not waived, are reported as administrative services fees. The administrative services fees generally represent expense reimbursements for a portion of the compensation, overhead and related expenses for certain professionals directly attributable to performing administrative services for a client. These fees are recognized as other revenue in the period in which the related services are rendered.

During the three months ended June 30, 2022 and 2021, the External Investment Manager earned $5.4 million and $4.2 million, respectively, in base management fee income. During the three months ended June 30, 2022, the External Investment Manager earned $0.1 million in incentive fee income. No incentive fee income was earned in the three months ended June 30, 2021. During the three months ended June 30, 2022, the External Investment Manager earned $0.2 million in administrative services fee income. No administrative services fee income was earned in the three months ended June 30, 2021. During the six months ended June 30, 2022 and 2021, the External Investment Manager earned $10.9 million and $8.1 million, respectively, in base management fee income. During the six months ended June 30, 2022, the External Investment Manager earned $0.2 million in incentive fee income. No incentive fee income was earned in the six months ended June 30, 2021. During the six months ended June 30, 2022, the External Investment Manager earned $0.3 million in administrative services fee income. No administrative services fee income was earned in the six months ended June 30, 2021.

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.—Summary of Significant Accounting Policies—Valuation of the Investment Portfolio). Any change in fair value of the investment in the External Investment Manager is

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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 purposes the External Investment Manager is treated as if it is taxed at corporate income 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 June 30, 2022 and 2021, Main Street allocated $3.5 million and $2.6 million of total expenses, respectively, to the External Investment Manager. For the six months ended June 30, 2022 and 2021, Main Street allocated $6.3 million and $5.0 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 June 30, 2022 and 2021, the total contribution to Main Street’s net investment income was $5.2 million and $3.8 million, respectively. For the six months ended June 30, 2022 and 2021, the total contribution to Main Street’s net investment income was $10.3 million and $7.4 million, respectively.

Summarized financial information from the separate financial statements of the External Investment Manager as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and 2021 is as follows:

As of 

As of 

June 30, 

December 31, 

    

2022

    

2021

(dollars in thousands)

Cash

$

381

$

Accounts receivable - advisory clients

5,878

5,595

Intangible Asset

29,500

29,500

Total assets

$

35,759

$

35,095

Accounts payable to MSCC and its subsidiaries

$

4,549

$

3,288

Dividend payable to MSCC and its subsidiaries

1,710

2,307

Equity

29,500

29,500

Total liabilities and equity

$

35,759

$

35,095

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Three Months Ended

Six Months Ended

June 30, 

June 30, 

2022

    

2021

    

2022

2021

(dollars in thousands)

Management fee income

$

5,421

$

4,212

$

10,865

$

8,115

Incentive fees

90

-

227

-

Administrative services fees

153

-

304

-

Total revenues

5,664

4,212

11,396

8,115

Expenses allocated from MSCC or its subsidiaries:

Salaries, share-based compensation and other personnel costs

(2,653)

(2,073)

(4,913)

(4,116)

Other G&A expenses

(809)

(499)

(1,366)

(836)

Total allocated expenses

(3,462)

(2,572)

(6,279)

(4,952)

Pre-tax income

2,202

1,640

5,117

3,163

Tax expense

(492)

(370)

(1,134)

(714)

Net income

$

1,710

$

1,270

$

3,983

$

2,449

NOTE E—DEBT

Summary of debt as of June 30, 2022 is as follows:

Outstanding Balance

Unamortized Debt Issuance (Costs)/Premiums (2)

Recorded Value

Estimated Fair Value (1)

(in thousands)

Credit Facility

$

380,000

$

$

380,000

$

380,000

3.00% Notes due 2026

500,000

(2,128)

497,872

437,595

5.20% Notes due 2024

450,000

999

450,999

448,637

SBIC Debentures

350,000

(6,677)

343,323

304,805

4.50% Notes due 2022

185,000

(253)

184,747

185,250

Total Debt

$

1,865,000

$

(8,059)

$

1,856,941

$

1,756,287

(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.—Summary of Significant Accounting Policies—Fair Value of Financial Instruments.
(2)The unamortized debt issuance costs for the Credit Facility are reflected as Deferred financing costs on the Consolidated Balance Sheets, while the deferred debt issuance costs related to the 3.00% Notes due 2026, 5.20% Notes due 2024, 4.50% Notes due 2022 and SBIC Debentures are reflected as contra-liabilities on the Consolidated Balance Sheets.

Summary of debt as of December 31, 2021 is as follows:

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Outstanding Balance

    

Unamortized Debt Issuance (Costs)/Premiums (2)

    

Recorded Value

    

Estimated Fair Value (1)

(in thousands)

Credit Facility

$

320,000

$

$

320,000

$

320,000

3.00% Notes due 2026

500,000

(2,391)

497,609

502,285

5.20% Notes due 2024

450,000

1,272

451,272

480,767

SBIC Debentures

350,000

(7,269)

342,731

328,206

4.50% Notes due 2022

185,000

(556)

184,444

190,043

Total Debt

$

1,805,000

$

(8,944)

$

1,796,056

$

1,821,301

(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.—Summary of Significant Accounting Policies—Fair Value of Financial Instruments.
(2)The unamortized debt issuance costs for the Credit Facility are reflected as Deferred financing costs on the Consolidated Balance Sheets, while the deferred debt issuance costs related to the 3.00% Notes due 2026, 5.20% Notes due 2024, 4.50% Notes due 2022 and SBIC Debentures are reflected as contra-liabilities on the Consolidated Balance Sheets.

Summarized interest expense for the three and six months ended June 30, 2022 and 2021is as follows (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

2021

2022

2021

Credit Facility

$

2,640

$

1,408

$

4,698

$

2,374

3.00% Notes due 2026

3,882

2,489

7,763

4,638

5.20% Notes due 2024

5,713

5,713

11,428

11,430

SBIC Debentures

2,827

2,557

5,627

5,298

4.50% Notes due 2022

2,233

2,233

4,466

4,466

Total Interest Expense

$

17,295

$

14,400

$

33,982

$

28,206

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 debentures payable, under existing SBA-approved commitments, were $350.0 million at both June 30, 2022 and December 31, 2021. SBIC debentures provide for interest to be paid semiannually, with principal due at the applicable 10-year maturity date of each debenture. 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% as of June 30, 2022 and December 31, 2021. The first principal maturity due under the existing SBIC debentures is in 2023, and the weighted-average remaining duration as of June 30, 2022 was 5.6 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 June 30, 2022, the SBIC debentures consisted of (i) $175.0 million par value of SBIC debentures outstanding issued by MSMF, with a recorded value of $171.7 million that was net of unamortized debt issuance costs of $3.3 million and (ii) $175.0 million par value of SBIC debentures issued by MSC III with a recorded value of $171.6 million that was net of unamortized debt issuance costs of $3.4 million.

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Credit Facility

Main Street maintains the Credit Facility to provide additional liquidity to support its investment and operational activities. As of June 30, 2022, 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 with the right to request an increase in commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total of $1.2 billion.

As of June 30, 2022, 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 plus (i) 1.875% (or the applicable Prime Rate 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 Prime 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 June 30, 2022, 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 a 1940 Act asset coverage ratio 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 June 30, 2022, the interest rate on the Credit Facility was 2.9%. The average interest rate for borrowings under the Credit Facility was 2.7% and 2.0% for the three months ended June 30, 2022 and 2021, respectively, and 2.3% and 2.0% for the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, 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”) at an issue price of 99.16%. The 4.50% 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 4.50% 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 4.50% Notes 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 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, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were $182.2 million. Main Street may from time to time repurchase the 4.50% Notes in accordance with the 1940 Act and the rules promulgated thereunder.

The indenture governing the 4.50% Notes (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 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 June 30, 2022, 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%

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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 $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 June 30, 2022, 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%. Subsequently, in October 2021, Main Street issued an additional $200.0 million aggregate principal amount of the 3.00% Notes at an issue price of 101.741%. The 3.00% Notes issued in October 2021 have identical terms as, and are a part of a single series with, the 3.00% Notes issued in January 2021. 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 payable semiannually on January 14 and July 14 of each year. The total net proceeds from the 3.00% Notes, resulting from the issue price and after net issue price premiums and estimated offering expenses payable, were $498.3 million. Main Street may from time to time repurchase the 3.00% Notes in accordance with the 1940 Act and the rules promulgated thereunder.

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 June 30, 2022, Main Street was in compliance with these covenants.

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NOTE F—FINANCIAL HIGHLIGHTS

    

Six Months Ended June 30, 

    

Per Share Data:

    

2022

    

2021

    

NAV at the beginning of the period

$

25.29

$

22.35

Net investment income(1)

 

1.47

 

1.20

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

 

(0.02)

 

0.03

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

 

(0.14)

 

1.15

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

 

(0.21)

 

(0.15)

Net increase in net assets resulting from operations(1)

 

1.10

 

2.23

Dividends paid from net investment income

 

(1.44)

 

(1.23)

Distributions from capital gains

 

 

Dividends paid

 

(1.44)

 

(1.23)

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

 

0.48

 

0.07

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

 

0.05

 

0.04

Other(3)

 

(0.11)

 

(0.04)

NAV at the end of the period

$

25.37

$

23.42

Market value at the end of the period

$

38.53

$

41.09

Shares outstanding at the end of the period

 

73,517,558

 

68,531,789

(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.

Six Months Ended June 30, 

2022

   

2021

(dollars in thousands)

NAV at end of period

$

1,865,163

$

1,604,841

Average NAV

$

1,842,554

$

1,553,257

Average outstanding debt

$

1,793,857

$

1,311,114

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

3.97

%

3.76

%

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

3.13

%

3.09

%

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

1.28

%

1.27

%

Ratio of net investment income to average NAV (2)

5.80

%

5.29

%

Portfolio turnover ratio (2)

10.48

%

11.86

%

Total investment return (2)(4)

(10.96)

%

31.59

%

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

4.47

%

10.06

%

(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 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 $6.3 million and $5.0 million for the six months ended June 30, 2022 and 2021, respectively.

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(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 based on change in net asset value was 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 regular monthly dividends to its stockholders and periodically pays supplemental dividends to its stockholders. Future dividends, if any, will be determined by its Board of Directors on a quarterly basis. Main Street paid regular monthly dividends of $0.215 per share, totaling $47.1 million, or $0.645 per share, for the three months ended June 30, 2022, and $93.1 million, or $1.29 per share, for the six months ended June 30, 2022 compared to aggregate regular monthly dividends of $42.0 million, or $0.615 per share, for the three months ended June 30, 2021, and $83.9 million, or $1.23 per share, for the six months ended June 30, 2021. Main Street also paid a supplemental dividend of $5.5 million, or $0.075 per share, during the three months ended June 30, 2022, and $10.9 million, or $0.15 per share, during the six months ended June 30, 2022. Main Street did not pay a supplemental dividend during the three or six months ended June 30, 2021.

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 twelve 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 in net assets resulting from operations” to taxable income and to total distributions declared to common stockholders for the six months ended June 30, 2022 and 2021.

Six Months Ended June 30, 

   

2022

   

2021

(estimated, dollars in thousands)

Net increase in net assets resulting from operations

$

79,953

$

152,451

Book-tax difference from share-based compensation expense

(6,906)

(6,967)

Net unrealized (appreciation) depreciation

9,841

(78,440)

Income tax provision (benefit)

15,417

10,407

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

(9,249)

(17,971)

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

13,568

7,780

Estimated taxable income (1)

102,624

67,260

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

50,834

24,350

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

(64,509)

(21,626)

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

15,673

14,049

Total distributions accrued or paid to common stockholders

$

104,622

$

84,033

(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 corporate income 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 assets 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 six months ended June 30, 2022 and 2021 (amounts in thousands):

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Three Months Ended June 30, 

Six Months Ended June 30, 

2022

   

2021

   

2022

   

2021

Current tax expense (benefit):

Federal

$

64

$

97

$

115

$

141

State

71

359

614

655

Excise

674

200

1,389

493

Total current tax expense (benefit)

809

656

2,118

1,289

Deferred tax expense (benefit):

Federal

7,166

7,101

9,973

7,295

State

2,345

1,969

3,326

1,823

Total deferred tax expense (benefit)

9,511

9,070

13,299

9,118

Total income tax provision (benefit)

$

10,320

$

9,726

$

15,417

$

10,407

The net deferred tax liability at June 30, 2022 and December 31, 2021 was $43.0 million and $29.7 million, respectively, with the change 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 June 30, 2022, 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 2034 through 2037. Any net operating losses generated in 2018 and future periods are not subject to expiration and will carryforward indefinitely until utilized. 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 six months ended June 30, 2022, Main Street sold 2,159,117 shares of its common stock at a weighted-average price of $41.71 per share and raised $90.1 million of gross proceeds under the ATM Program. Net proceeds were $88.9 million after commissions to the selling agents on shares sold and offering costs. As of June 30, 2022, sales transactions representing 61,757 shares had not settled and are not included in shares issued and outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statement of Operations and in the shares used to calculate the net asset value per share. In March 2022, Main Street entered into new distribution agreements to sell up to 15,000,000 shares through the ATM Program. As of June 30, 2022, 13,710,949 shares remained available for sale under the ATM Program.

During the year ended December 31, 2021, Main Street sold 2,332,795 shares of its common stock at a weighted-average price of $42.71 per share and raised $99.6 million of gross proceeds under the ATM Program. Net proceeds were $98.4 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2021, sales transactions representing 36,136 shares had not settled and are not included in shares issued and outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statement of Operations and in the shares used to calculate the net asset value per share.

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

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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.

Summarized DRIP information for the six months ended June 30, 2022 and 2021 is as follows:

Six Months Ended June 30, 

2022

2021

($ in millions)

DRIP participation

$

9.8

$

7.5

Shares issued for DRIP

246,199

198,283

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 2022 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 June 30, 2022.

Restricted stock authorized under the plan

    

5,000,000

Less net restricted stock granted during:

 

Six months ended June 30, 2022

Restricted stock available for issuance as of June 30, 2022

 

5,000,000

As of June 30, 2022, 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 2022 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:

 

Six months ended June 30, 2022

(4,590)

Restricted stock available for issuance as of June 30, 2022

 

295,410

For the three months ended June 30, 2022 and 2021, Main Street recognized total share-based compensation expense of $3.6 million and $2.8, respectively, related to the restricted stock issued to Main Street employees and non-employee directors. For the six months ended June 30, 2022 and 2021, Main Street recognized total share-based compensation expense of $6.4 million and $5.1, respectively, related to the restricted stock issued to Main Street employees and non-employee directors.

As of June 30, 2022, there was $28.0 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 2.6 years as of June 30, 2022.

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NOTE K—COMMITMENTS AND CONTINGENCIES

At June 30, 2022, Main Street had the following outstanding commitments (in thousands):

Investments with equity capital commitments that have not yet funded:

    

Amount

 

Brightwood Capital Fund Investments

Brightwood Capital Fund V, LP

$

3,000

Brightwood Capital Fund III, LP

300

$

3,300

Freeport Fund Investments

Freeport First Lien Loan Fund III LP

$

4,871

Freeport Financial SBIC Fund LP

2,868

$

7,739

Harris Preston Fund Investments

HPEP 4, L.P.

$

10,000

HPEP 3, L.P.

1,555

HPEP 423 COR, LP

600

2717 HPP-MS, LP

56

$

12,211

MS Private Loan Fund I, LP

$

3,750

UnionRock Energy Fund II, LP

$

3,624

Total Equity Commitments (1)(2)

$

30,624

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

Xenon Arc, Inc.

$

32,400

MonitorUS Holding, LLC

14,213

CaseWorthy, Inc.

10,452

MS Private Loan Fund I, LP

10,000

NWN Corporation

8,760

JTI Electrical & Mechanical, LLC

8,421

Paragon Healthcare, Inc.

7,571

NinjaTrader, LLC

7,472

Adams Publishing Group, LLC

7,094

Veregy Consolidated, Inc.

5,875

Watterson Brands, LLC

5,789

SI East, LLC

5,250

Bolder Panther Group, LLC

5,000

Pearl Meyer Topco LLC

5,000

Robbins Bros. Jewelry, Inc.

4,500

South Coast Terminals Holdings, LLC

4,465

Winter Services LLC

4,444

ArborWorks, LLC

4,210

Bettercloud, Inc.

4,189

VVS Holdco, LLC

3,200

Cody Pools, Inc.

2,950

Microbe Formulas, LLC

2,881

Batjer TopCo, LLC

2,700

Infolinks Media Buyco, LLC

2,520

Nebraska Vet AcquireCo, LLC

2,500

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Amount

Classic H&G Holdco, LLC

$

2,440

West Star Aviation Acquisition, LLC

2,411

Centre Technologies Holdings, LLC

2,400

IG Parent Corporation

2,313

AVEX Aviation Holdings, LLC

2,160

Direct Marketing Solutions, Inc.

2,125

PPL RVs, Inc.

2,000

The Affiliati Network, LLC

2,000

Roof Opco, LLC

1,960

Evergreen North America Acquisitions, LLC

1,854

ATS Operating, LLC

1,800

Career Team Acquireco LLC

1,800

Johnson Downie Opco, LLC

1,800

Engineering Research & Consulting, LLC

1,769

Chamberlin Holding LLC

1,600

Trantech Radiator Topco, LLC

1,600

Mako Steel, LP

1,501

Hawk Ridge Systems, LLC

1,415

Burning Glass Intermediate Holding Company, Inc.

1,394

GS HVAM Intermediate, LLC

1,364

GRT Rubber Technologies LLC

1,340

American Health Staffing Group, Inc.

1,333

RA Outdoors LLC

1,278

Project Eagle Holdings, LLC

1,250

Acumera, Inc.

1,238

Gamber-Johnson Holdings, LLC

1,200

NuStep, LLC

1,200

KMS, LLC

1,086

BDS Solutions IntermediateCo, LLC

1,032

CompareNetworks Topco, LLC

1,000

Interface Security Systems, L.L.C

898

Mystic Logistics Holdings, LLC

800

Invincible Boat Company, LLC.

768

Project BarFly, LLC

760

DTE Enterprises, LLC

750

Student Resource Center, LLC

750

Flip Electronics LLC

736

MB2 Dental Solutions, LLC

656

Orttech Holdings, LLC

625

Market Force Information, LLC

600

ASC Interests, LLC

530

Jensen Jewelers of Idaho, LLC

500

Datacom, LLC

450

Flame King Holdings, LLC

400

Wall Street Prep, Inc.

400

Zips Car Wash, LLC

383

SIB Holdings, LLC

354

Dynamic Communities, LLC

250

Acousti Engineering Company of Florida

53

Total Loan Commitments

$

232,182

Total Commitments

$

263,602

(1)This table excludes commitments related to six additional Other Portfolio investments for which the investment period has expired and remaining commitments may only be drawn to pay fund expenses. The Company does not expect any material future capital to be called on its commitment to these investments and as a result has excluded those commitments from this table.
(2)This table excludes commitments related to three additional Other Portfolio investments for which the investment period has expired and remaining commitments may only be drawn to pay fund expenses or for follow on investments in existing portfolio companies. The Company does not expect any material future capital to be called on its commitment to these investments to pay fund expenses, and based on representations from the fund manager,

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the Company does not expect any further capital will be called on its commitment for follow on investments. As a result, the Company has excluded those commitments from this table.

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.

Main Street has one operating lease for its office space. The lease commenced May 15, 2017 and expires March 31, 2034. It contains two five-year extension options for a final expiration date of March 31, 2044.

In accordance with ASC 842, Main Street has recorded this lease as a right-of-use asset and a lease liability and records lease expense on a straight-line basis.

Total operating lease cost incurred by Main Street for each of the three months ended June 30, 2022 and 2021 was $0.2 million and for each of the six months ended June 30, 2022 and 2021 was $0.4 million. As of June 30, 2022, the asset related to the operating lease was $3.5 million and is included in the interest receivable and other assets balance on the Consolidated Balance Sheets. The lease liability was $4.1 million and is included in the accounts payable and other liabilities balance on the Consolidated Balance Sheets. As of June 30, 2022, the remaining lease term was 5.6 years and the discount rate was 4.2%.

The following table shows future minimum payments under Main Street’s operating lease as of June 30, 2022 (in thousands):

For the Years Ended December 31,

Amount

2022

$

395

2023

804

2024

818

2025

832

2026

846

Thereafter

933

Total

$

4,628

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—External Investment Manager, 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 June 30, 2022, Main Street had a receivable of $6.3 million due from the External Investment Manager, which included (i) $4.5 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—External Investment Manager) and (ii) $1.7 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—Organization and Basis of Presentation—Organization and Note D—External Investment Manager).

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

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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 of Directors, 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 provided for a term loan of $40.0 million to MSC Income, bearing interest at a fixed rate of 5.00% per annum, and maturing 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 were 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 extinguished.

In May 2022, Main Street purchased 94,697 shares of common stock of MSC Income from MSC Income at the price shares were purchased by MSC Income stockholders pursuant to MSC Income’s dividend reinvestment plan for its May dividend on such date. Main Street’s purchase of MSC Income common stock was unanimously approved by the Board of Directors and MSC Income’s board of directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of each board. As of June 30, 2022, Main Street owned 94,697 shares of MSC Income. In addition, certain of Main Street’s officers and employees own shares of MSC Income and therefore have direct pecuniary interests in MSC Income.

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 co-invests with Main Street in Main Street’s Private Loan investment strategy. 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 February 2022, Main Street increased its total commitment to the Private Loan Fund from $10.0 million to $15.0 million. 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 June 30, 2022, Main Street has funded $11.3 million of its limited partner commitment and Main Street’s unfunded commitment was $3.7 million. Main Street’s limited partner commitment to the Private Loan Fund was unanimously approved by the Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act.

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 and was subsequently amended on November 30, 2021 and on December 29, 2021 (as amended, the “PL Fund 2021 Note”), in an aggregate amount equal to the amount of limited partner capital commitments to the Private Loan Fund up to $85.0 million. Borrowings under the PL Fund 2021 Note bore interest at a fixed rate of 5.00% per annum and matured on February 28, 2022. The PL Fund 2021 Note was unanimously approved by Main Street’s Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. In February 2022, the Private Loan Fund fully repaid all borrowings outstanding under the PL Fund 2021 Note and the PL Fund 2021 Note was extinguished.

In March 2022, Main Street provided the Private Loan Fund with a new revolving line of credit pursuant to a Secured Revolving Promissory Note, dated March 17, 2022 (the “PL Fund 2022 Note”), which provides for borrowings up to $10.0 million. Borrowings under the PL Fund 2022 Note bear interest at a fixed rate of 5.00% per annum and mature on the date upon which the Private Loan Fund’s investment period concludes, which is scheduled to occur in March 2026. Available borrowings under the PL Fund 2022 Note are subject to a 0.25% non-use fee. The PL Fund 2022 Note was unanimously approved by Main Street’s Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. As of June 30, 2022, there were no borrowings outstanding under the PL Fund 2022 Note.

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

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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 June 30, 2022, $14.9 million of compensation, plus net unrealized gains and losses and investment income, and minus distributions had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $6.1 million had been deferred into phantom Main Street stock units, representing 158,865 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 the deferred fees represented by such phantom stock units are earned over the service period. The dividend amounts related to additional phantom stock units are included in the Consolidated 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 August 2022, Main Street declared a supplemental cash dividend of $0.10 per share payable in September 2022. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that Main Street declared for the third quarter of 2022 of $0.215 per share for each of July, August and September 2022.

In August 2022, Main Street declared regular monthly dividends of $0.22 per share for each month of October, November and December of 2022. These regular monthly dividends equal a total of $0.66 per share for the fourth quarter of 2022, representing a 4.8% increase from the regular monthly dividends paid in the fourth quarter of 2021. Including the regular monthly and supplemental dividends declared for the third and fourth quarters of 2022, Main Street will have paid $35.02 per share in cumulative dividends since its October 2007 initial public offering.

During August 2022, Main Street amended its Credit Facility to, among other changes, (i) increase the revolving commitments by lenders to $920.0 million, and with the right to request an increase in commitments under the Credit Facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total of $1.4 billion, subject to certain conditions, (ii) extend the revolving period under the Credit Facility to August 4, 2026 and the final maturity date of the Credit Facility to August 4, 2027, (iii) transition the reference rate used to determine the borrowing interest rate from LIBOR to SOFR plus an applicable credit spread adjustment, while maintaining the interest rate spread of 1.875%.

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Schedule 12-14

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments In and Advances to Affiliates

June 30, 2022

(dollars in thousands)

(unaudited)

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

June 30, 

Realized

Unrealized

Credited to

2021

Gross

Gross

2022

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)

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

(8)

$

-

$

-

$

339

$

4,736

$

45

$

140

$

4,641

Preferred Member Units

(8)

-

(576)

-

4,894

-

576

4,318

Brewer Crane Holdings, LLC

11.06% (L+10.00%, Floor 1.00%) Secured Debt

(9)

-

-

448

8,037

12

248

 

7,801

Preferred Member Units

(9)

-

(660)

530

7,710

-

660

 

7,050

Café Brazil, LLC

Member Units

(8)

-

(50)

99

2,570

-

50

 

2,520

California Splendor Holdings LLC

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

(9)

-

56

1,578

27,915

85

-

 

28,000

15.00% PIK Preferred Member Units

(9)

-

-

652

9,510

652

6,449

3,713

Preferred Member Units

(9)

-

6,020

125

13,275

6,020

-

 

19,295

Clad-Rex Steel, LLC

10.63% (L+9.50%, Floor 1.00%) Secured Debt

(5)

-

-

574

10,401

20

-

 

10,421

10.00% Secured Debt

(5)

-

-

54

1,071

-

16

 

1,055

Member Units

(5)

80

-

530

80

610

Member Units

(5)

-

-

764

10,250

-

-

 

10,250

CMS Minerals Investments

Member Units

(9)

-

447

69

1,974

447

147

 

2,274

Cody Pools, Inc.

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

(8)

-

(45)

2,702

42,484

2,910

3,757

41,637

Preferred Member Units

(8)

-

3,550

1,749

47,640

3,550

-

51,190

CompareNetworks Topco, LLC

10.13% (L+9.00%, Floor 1.00%) Secured Debt

(9)

-

(10)

308

6,477

10

746

 

5,741

Preferred Member Units

(9)

-

5,230

316

12,000

5,230

-

 

17,230

Datacom, LLC

7.50% Secured Debt

(8)

-

-

416

7,668

84

135

 

7,617

Preferred Member Units

(8)

-

60

48

2,610

60

-

 

2,670

Direct Marketing Solutions, Inc.

12.13% (L+11.00%, Floor 1.00%) Secured Debt

(9)

-

(20)

1,551

24,048

1,317

687

 

24,678

Preferred Stock

(9)

-

3,200

686

18,350

3,200

-

 

21,550

Gamber-Johnson Holdings, LLC

10.00% (L+8.00%, Floor 2.00%) Secured Debt

(5)

-

(11)

1,100

21,598

11

11

 

21,598

Member Units

(5)

-

(3,400)

360

49,700

-

3,400

 

46,300

GRT Rubber Technologies LLC

9.06% (L+8.00%) Secured Debt

(8)

-

(22)

1,676

38,885

22

22

 

38,885

Member Units

(8)

-

-

2,441

46,190

-

-

 

46,190

Jensen Jewelers of Idaho, LLC

10.75% (Prime+6.75%, Floor 2.00%) Secured Debt

(9)

-

(4)

130

2,550

4

104

 

2,450

Member Units

(9)

-

2,700

1,376

12,420

2,700

-

 

15,120

Kickhaefer Manufacturing Company, LLC

11.50% Secured Debt

(5)

-

-

1,205

20,324

25

-

 

20,349

9.00% Secured Debt

(5)

-

-

177

3,876

1

17

 

3,860

Member Units

(5)

-

(70)

-

12,310

-

70

12,240

Member Units

(5)

-

-

55

2,460

-

-

 

2,460

Market Force Information, LLC

12.13% (L+11.00%, Floor 1.00%) Secured Debt

(9)

-

-

217

3,400

1,000

-

 

4,400

12.00% PIK Secured Debt

(9)

-

(1,405)

-

8,936

-

1,405

 

7,531

MH Corbin Holding LLC

13.00% Secured Debt

(5)

-

(1,495)

540

5,934

9

1,655

 

4,288

MSC Adviser I, LLC

Member Units

(8)

-

(22,080)

3,983

140,400

-

22,080

 

118,320

Mystic Logistics Holdings, LLC

10.00% Secured Debt

(6)

-

(1)

312

6,378

1

281

 

6,098

Common Stock

(6)

-

7,370

1,596

8,840

7,370

-

 

16,210

OMi Topco, LLC

12.00% Secured Debt

(8)

-

(29)

1,099

18,000

29

1,279

 

16,750

Preferred Member Units

(8)

-

90

1,197

20,210

90

-

 

20,300

PPL RVs, Inc.

7.97% (L+7.00%, Floor 0.50%) Secured Debt

(8)

-

251

683

12,381

9,264

2,000

 

19,645

Common Stock

(8)

-

4,130

462

14,360

4,130

-

 

18,490

Principle Environmental, LLC

13.00% Secured Debt

(8)

-

-

86

1,465

6

1,000

 

471

13.00% Secured Debt

(8)

-

399

5,808

12

5,820

Preferred Member Units

(8)

-

370

437

11,160

370

-

 

11,530

Common Stock

(8)

-

30

-

710

30

-

 

740

Quality Lease Service, LLC

Member Units

(7)

-

76

-

2,149

76

1,150

 

1,075

Robbins Bros. Jewelry, Inc.

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

(9)

-

-

2,241

35,956

43

225

 

35,774

Preferred Equity

(9)

-

4,670

279

11,070

4,670

-

 

15,740

88

Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

June 30, 

Realized

Unrealized

Credited to

2021

Gross

Gross

2022

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

Trantech Radiator Topco, LLC

12.00% Secured Debt

(7)

-

(12)

528

8,712

14

412

8,314

Common Stock

(7)

-

(570)

58

8,660

-

570

8,090

Ziegler’s NYPD, LLC

12.00% Secured Debt

(8)

-

-

38

625

-

-

625

6.50% Secured Debt

(8)

-

-

33

1,000

-

-

1,000

14.00% Secured Debt

(8)

-

-

194

2,750

-

-

2,750

Preferred Member Units

(8)

-

(450)

-

2,130

-

450

1,680

Other controlled investments

2717 MH, L.P.

LP Interests (2717 MH, L.P.)

(8)

-

1,408

-

3,971

2,583

-

6,554

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

(8)

-

-

-

-

244

-

244

ASC Interests, LLC

13.00% Secured Debt

(8)

-

-

13

200

-

30

170

13.00% Secured Debt

(8)

-

-

120

1,636

12

-

1,648

Member Units

(8)

-

80

-

720

80

-

800

ATS Workholding, LLC

5.00% Secured Debt

(9)

-

-

-

3,005

-

66

2,939

Barfly Ventures, LLC

7.00% Secured Debt

(5)

-

-

25

711

-

-

711

Member Units

(5)

-

470

-

1,930

470

-

2,400

Batjer TopCo, LLC

11.00% Secured Debt

(8)

-

-

512

-

11,372

459

10,913

Member Units

(8)

-

-

-

-

4,073

-

4,073

Bolder Panther Group, LLC

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

(9)

-

(39)

2,491

39,000

10,233

39

49,194

Class B Preferred Member Units

(9)

-

2,760

276

23,170

2,760

-

25,930

Bridge Capital Solutions Corporation

13.00% Secured Debt

(6)

-

-

576

8,813

-

-

8,813

13.00% Secured Debt

(6)

-

-

65

1,000

-

-

1,000

Preferred Member Units

(6)

-

-

50

1,000

-

-

1,000

Warrants

(6)

-

200

-

4,060

200

-

4,260

CBT Nuggets, LLC

Member Units

(9)

-

(2,720)

1,647

50,620

-

2,720

47,900

Centre Technologies Holdings, LLC

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

(8)

-

507

838

8,864

7,903

1,826

14,941

Preferred Member Units

(8)

-

768

60

5,840

1,050

-

6,890

Chamberlin Holding LLC

9.13% (L+8.00%, Floor 1.00%) Secured Debt

(8)

-

(35)

845

17,817

35

386

17,466

Member Units

(8)

(1,630)

348

24,140

-

1,630

22,510

Member Units

(8)

-

-

34

1,540

-

-

1,540

Charps, LLC

10.00% Unsecured Debt

(5)

-

(27)

309

5,694

27

27

5,694

Preferred Member Units

(5)

-

(540)

417

13,990

-

540

13,450

Colonial Electric Company LLC

12.00% Secured Debt

(6)

-

-

1,703

24,351

1,630

630

25,351

Preferred Member Units

(6)

-

(190)

805

9,130

-

190

8,940

Copper Trail Energy Fund I, LP - CTMH

LP Interests (CTMH, LP)

(9)

-

-

-

710

-

-

710

Digital Products Holdings LLC

11.13% (L+10.00%, Floor 1.00%) Secured Debt

(5)

-

-

929

16,801

23

661

16,163

Preferred Member Units

(5)

-

-

100

9,835

-

-

9,835

Flame King Holdings, LLC

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

(9)

-

68

288

6,324

1,276

-

7,600

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

(9)

-

183

1,300

20,996

204

-

21,200

Preferred Equity

(9)

-

3,010

559

10,400

3,010

-

13,410

Garreco, LLC

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

(8)

-

-

190

4,196

-

-

4,196

Member Units

(8)

-

220

321

2,270

220

-

2,490

Gulf Manufacturing, LLC

Member Units

(8)

-

(130)

985

5,640

-

130

5,510

Gulf Publishing Holdings, LLC

10.60% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) Secured Debt

(8)

-

-

7

257

-

-

257

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

(8)

-

(2,188)

426

9,717

-

2,188

7,529

Harrison Hydra-Gen, Ltd.

Common Stock

(8)

-

(200)

-

3,530

-

200

3,330

Johnson Downie Opco, LLC

13.00% (L+11.50%, Floor 1.50%) Secured Debt

(8)

-

92

755

11,344

115

1,038

10,421

Preferred Equity

(8)

-

2,730

566

3,150

2,730

-

5,880

JorVet Holdings, LLC

12.00% Secured Debt

(9)

-

-

1,082

-

25,406

-

25,406

Common Stock

(9)

-

-

54

-

10,741

-

10,741

KBK Industries, LLC

Member Units

(5)

-

310

685

13,620

310

-

13,930

MS Private Loan Fund

LP Interests

(8)

-

(544)

191

2,581

8,750

544

10,787

MSC Income Fund, Inc.

Common Equity

(8)

-

-

-

-

750

-

750

NAPCO Precast, LLC

Member Units

(8)

-

(1,730)

4

13,560

-

1,730

11,830

Nebraska Vet AcquireCo, LLC (NVS)

12.00% Secured Debt

(5)

-

-

649

10,412

11

-

10,423

12.00% Secured Debt

(5)

-

548

4,829

6,544

-

11,373

Preferred Member Units

(5)

-

-

-

7,700

-

-

7,700

NexRev LLC

11.00% Secured Debt

(8)

-

(1,703)

1,222

14,045

-

5,783

8,262

Preferred Member Units

(8)

-

(3,080)

40

2,690

-

1,750

940

NRP Jones, LLC

12.00% Secured Debt

(5)

-

-

126

2,080

-

-

2,080

Member Units

(5)

-

(970)

198

6,440

-

970

5,470

NuStep, LLC

7.63% (L+6.50%, Floor 1.00%) Secured Debt

(5)

-

-

110

1,720

1,480

-

3,200

12.00% Secured Debt

(5)

-

28

1,043

17,240

1,200

-

18,440

Preferred Member Units

(5)

-

(1,940)

-

13,500

-

1,940

11,560

89

Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

June 30, 

Realized

Unrealized

Credited to

2021

Gross

Gross

2022

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

Orttech Holdings, LLC

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

(5)

-

-

1,494

24,150

29

400

23,779

Preferred Stock

(5)

-

-

386

10,000

-

-

10,000

Pearl Meyer Topco LLC

12.00% Secured Debt

(6)

-

(61)

1,942

32,674

1,561

5,554

28,681

Member Units

(6)

-

12,780

2,856

26,970

12,780

-

39,750

River Aggregates, LLC

Member Units

(8)

-

100

-

3,280

100

-

3,380

Tedder Industries, LLC

12.00% Secured Debt

(9)

-

-

961

15,141

44

-

15,185

12.00% Secured Debt

(9)

-

102

1,040

800

-

1,840

Preferred Member Units

(9)

-

(1,487)

-

8,579

222

1,487

7,314

Televerde, LLC

Member Units

(8)

-

(2,135)

-

7,280

-

2,135

5,145

Preferred Stock

(8)

-

1,076

-

-

1,794

-

1,794

Vision Interests, Inc.

Series A Preferred Stock

(9)

-

-

144

3,000

-

-

3,000

VVS Holdco LLC

11.50% Secured Debt

(5)

-

-

1,821

31,269

34

1,201

30,102

Preferred Equity

(5)

-

240

200

11,840

240

-

12,080

Other

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

-

-

57

41,748

-

-

-

Total Control investments

$

-

$

13,101

$

69,385

$

1,489,257

$

176,645

$

85,996

$

1,538,158

Affiliate Investments

AAC Holdings, Inc.

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

(7)

$

-

$

(150)

$

970

$

9,794

$

296

$

-

$

10,090

Common Stock

(7)

-

(1,279)

-

2,079

-

1,279

800

Warrants

(7)

-

(1,200)

-

1,940

-

1,200

740

AFG Capital Group, LLC

10.00% Secured Debt

(8)

-

-

2

144

-

144

-

Preferred Member Units

(8)

-

1,040

-

7,740

1,040

-

8,780

ATX Networks Corp.

8.92% (L+7.50%, Floor 1.00%) Secured Debt

(6)

-

(309)

388

7,092

228

1,133

6,187

10.00% PIK Unsecured Debt

(6)

-

120

159

1,963

437

158

2,242

BBB Tank Services, LLC

12.06% (L+11.00%, Floor 1.00%) Unsecured Debt

(8)

-

(209)

290

2,507

-

209

2,298

Preferred Stock (non-voting)

(8)

-

-

-

-

-

-

-

Member Units

(8)

-

-

-

-

-

-

-

Boccella Precast Products LLC

10.00% Secured Debt

(6)

-

-

16

320

-

-

320

Member Units

(6)

-

(320)

70

4,830

-

320

4,510

Buca C, LLC

10.37% (L+9.25%, Floor 1.00%) Secured Debt

(7)

-

-

1,036

14,370

-

1,221

13,149

Career Team Holdings, LLC

12.50% Secured Debt

(6)

-

-

1,296

20,050

20

-

20,070

Class A Common Units

(6)

-

-

-

4,499

1

-

4,500

Chandler Signs Holdings, LLC

Class A Units

(8)

-

160

-

460

160

-

620

Classic H&G Holdings, LLC

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

(6)

-

-

349

4,000

7,920

6,360

5,560

8.00% Secured Debt

(6)

-

(21)

797

19,274

21

21

19,274

Preferred Member Units

(6)

-

8,530

947

15,260

8,530

-

23,790

Congruent Credit Opportunities Funds

LP Interests (Congruent Credit Opportunities Fund
III, LP)

(8)

-

(63)

300

9,959

-

1,660

8,299

DMA Industries, LLC

12.00% Secured Debt

(7)

-

186

1,300

20,993

207

-

21,200

Preferred Equity

(7)

-

976

-

5,944

976

-

6,920

Dos Rios Partners

LP Interests (Dos Rios Partners - A, LP)

(8)

-

(546)

-

3,280

-

546

2,734

LP Interests (Dos Rios Partners, LP)

(8)

-

(1,719)

-

10,329

-

1,719

8,610

Dos Rios Stone Products LLC

Class A Preferred Units

(8)

-

(290)

-

640

-

290

350

EIG Fund Investments

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

(8)

11

-

28

547

-

158

389

Freeport Financial SBIC Fund LP

LP Interests (Freeport Financial SBIC Fund LP)

(5)

-

(52)

2

6,078

-

1,962

4,116

LP Interests (Freeport First Lien Loan Fund III LP)

(5)

-

(57)

242

7,231

-

436

6,795

GFG Group, LLC.

9.00% Secured Debt

(5)

-

(13)

675

12,545

13

13

12,545

Preferred Member Units

(5)

-

-

378

6,990

-

-

6,990

Hawk Ridge Systems, LLC

7.13% (L+6.00%, Floor 1.00%) Secured Debt

(9)

-

-

94

2,585

-

-

2,585

8.00% Secured Debt

(9)

-

(16)

1,416

34,800

16

16

34,800

Preferred Member Units

(9)

-

5,350

704

14,680

5,350

20,030

Preferred Member Units

(9)

-

280

-

771

279

-

1,050

Houston Plating and Coatings, LLC

8.00% Unsecured Convertible Debt

(8)

-

(210)

121

2,960

-

210

2,750

Member Units

(8)

-

(690)

16

3,210

-

690

2,520

HPEP 3, L.P.

LP Interests (HPEP 3, L.P.)

(8)

779

(21)

(80)

4,712

-

381

4,331

LP Interests (423 COR, LP)

(8)

-

-

-

-

1,400

-

1,400

90

Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

June 30, 

Realized

Unrealized

Credited to

2021

Gross

Gross

2022

Company

    

Investment(1)(10)(11)

    

Geography

    

Gain/(Loss)

    

Gain/(Loss)

    

Income(2)

    

Fair Value

    

Additions(3)

    

Reductions(4)

    

Fair Value

I-45 SLF LLC

Member Units (Fully diluted 20.0%; 21.75% profits
interest)

(8)

-

(1,438)

943

14,387

-

1,438

12,949

Iron-Main Investments, LLC

12.50% Secured Debt

(5)

-

-

204

3,170

3

-

3,173

12.50% Secured Debt

(5)

-

-

294

4,557

4

-

4,561

12.50% Secured Debt

(5)

-

-

1,839

28,749

20

-

28,769

Common Stock

(5)

-

-

-

1,798

-

-

1,798

L.F. Manufacturing Holdings, LLC

Preferred Member Units (non-voting)

(8)

-

-

8

107

8

-

115

Member Units

(8)

-

590

224

2,560

590

-

3,150

OnAsset Intelligence, Inc.

12.00% PIK Secured Debt

(8)

-

(155)

28

935

28

155

808

12.00% PIK Secured Debt

(8)

-

(158)

29

954

29

158

825

12.00% PIK Secured Debt

(8)

-

(341)

62

2,055

62

341

1,776

12.00% PIK Secured Debt

(8)

-

(710)

129

4,286

129

711

3,704

10.00% PIK Unsecured Debt

(8)

-

-

5

191

11

5

197

Oneliance, LLC

12.06% (L+11.00%, Floor 1.00%) Secured Debt

(7)

-

-

344

5,547

6

-

5,553

Preferred Stock

(7)

-

-

-

1,056

-

-

1,056

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

12.00% Secured Debt

(8)

(51)

-

-

-

-

-

-

SI East, LLC (Stavig)

10.25% Secured Debt

(7)

-

(36)

3,751

65,850

36

1,525

64,361

Preferred Member Units

(7)

-

1,260

345

11,570

1,260

-

12,830

Slick Innovations, LLC

13.00% Secured Debt

(6)

-

(28)

340

5,320

28

708

4,640

Common Stock

(6)

-

130

-

1,510

130

-

1,640

Warrants

(6)

-

40

-

400

40

-

440

Sonic Systems International, LLC

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

(8)

-

(233)

565

11,757

3,737

234

15,260

Common Stock

(8)

-

64

21

1,070

350

-

1,420

Superior Rigging & Erecting Co.

12.00% Secured Debt

(7)

-

-

1,320

21,332

23

-

21,355

Preferred Member Units

(7)

-

-

-

4,500

-

-

4,500

The Affiliati Network, LLC

11.83% Secured Debt

(9)

-

-

794

13,096

2,187

3,640

11,643

Preferred Stock

(9)

-

-

302

6,400

-

-

6,400

UnionRock Energy Fund II, LP

LP Interests

(9)

-

(997)

55

6,123

1,324

3,582

3,865

UniTek Global Services, Inc.

9.07% (7.07% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) Secured Debt

(6)

-

(9)

18

371

8

13

366

9.07% (7.07% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) Secured Debt

(6)

-

(47)

88

1,852

42

66

1,828

15.00% PIK Secured Convertible Debt

(6)

-

72

95

2,375

309

96

2,588

Preferred Stock

(6)

-

(181)

181

2,833

181

181

2,833

Preferred Stock

(6)

-

393

-

1,498

393

-

1,891

Volusion, LLC

11.50% Secured Debt

(8)

-

-

992

17,434

-

350

17,084

8.00% Unsecured Convertible Debt

(8)

-

-

16

409

-

-

409

Preferred Member Units

(8)

-

(3,060)

-

5,989

-

3,059

2,930

Other

-

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

-

139

1,302

32,597

-

-

-

Total Affiliate investments

$

739

$

4,772

$

25,810

$

549,214

$

37,832

$

36,388

$

518,061

(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 included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
(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 related to investments transferred from other 1940 Act classifications during the period.”

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(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 June 30, 2022 for control investments located in this region was $341,821. This represented 22.2% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $68,747. This represented 13.3% of net assets as of June 30, 2022.
(6)Portfolio company located in the Northeast region and Canada as determined by location of the corporate headquarters. The fair value as of June 30, 2022 for control investments located in this region was $140,103. This represented 9.1% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $102,679. This represented 19.8% of net assets as of June 30, 2022.
(7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of June 30, 2022 for control investments located in this region was $17,479. This represented 1.1% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $162,554. This represented 31.4% of net assets as of June 30, 2022.
(8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of June 30, 2022 for control investments located in this region was $588,039. This represented 38.2% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $103,708. This represented 20.0% of net assets as of June 30, 2022.
(9)Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of June 30, 2022 for control investments located in this region was $450,716. This represented 29.3% of net assets as of June 30, 2022. The fair value as of June 30, 2022 for affiliate investments located in this region was $80,373. This represented 15.5% of net assets as of June 30, 2022.
(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 included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q. Supplemental information can be located within the Consolidated 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 June 30, 2022 (see Note K). The fair value of the investment includes the impact of the fair value of any unfunded commitments.

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Schedule 12-14

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments in and Advances to Affiliates

June 30, 2021

(dollars in thousands)

(unaudited)

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

June 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)

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

(8)

$

-

$

-

$

346

$

4,874

$

114

$

150

$

4,838

Preferred Member Units

(8)

-

(1,830)

-

3,200

-

1,830

1,370

Preferred Member Units

(8)

-

986

-

-

1,640

-

1,640

Warrants

(8)

-

(10)

-

10

-

10

 

-

CMS Minerals Investments

Member Units

(9)

-

453

13

1,624

453

107

 

1,970

Café Brazil, LLC

Member Units

(8)

-

460

31

2,030

460

-

 

2,490

California Splendor Holdings LLC

Preferred Member Units

(9)

-

2,897

125

6,241

2,897

-

 

9,138

Preferred Member Units

(9)

-

-

623

8,255

623

-

 

8,878

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

(9)

-

36

1,708

35,832

113

8,129

 

27,816

Clad-Rex Steel, LLC

Member Units

(5)

-

810

143

8,610

810

-

 

9,420

Member Units

(5)

-

-

-

530

-

-

 

530

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

(5)

-

-

589

10,853

-

469

 

10,384

10.00% Secured Debt

(5)

-

-

55

1,100

-

14

1,086

Cody Pools, Inc.

Preferred Member Units

(8)

-

7,260

106

14,940

7,260

-

22,200

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

(8)

-

(30)

843

14,216

30

2,400

 

11,846

Datacom, LLC

Preferred Member Units

(8)

-

-

-

-

2,610

-

 

2,610

5.00% Secured Debt

(8)

-

-

336

-

8,175

54

 

8,121

Direct Marketing Solutions, Inc.

Preferred Stock

(9)

-

(1,560)

-

19,380

-

1,560

 

17,820

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

(9)

-

-

932

15,007

18

-

 

15,025

GRT Rubber Technologies LLC

Member Units

(8)

-

-

2,192

44,900

-

-

 

44,900

7.09% (L+7.00%) Secured Debt

(8)

-

-

600

16,775

-

-

 

16,775

Gamber-Johnson Holdings, LLC

Member Units

(5)

-

912

3,477

52,490

3,760

-

 

56,250

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

(5)

-

(30)

954

19,838

830

30

 

20,638

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

(5)

-

(1)

4

-

1

1

 

-

Jensen Jewelers of Idaho, LLC

Member Units

(9)

-

1,990

597

7,620

1,990

-

 

9,610

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

(9)

-

(7)

167

3,400

7

407

 

3,000

Kickhaefer Manufacturing Company, LLC

Member Units

(5)

-

-

-

12,240

-

-

 

12,240

11.50% Secured Debt

(5)

-

-

1,296

22,269

29

1,200

 

21,098

Member Units

(5)

-

50

50

1,160

50

-

 

1,210

9.00% Secured Debt

(5)

-

-

177

3,909

-

16

 

3,893

MH Corbin Holding LLC

13.00% (10.00% Cash, 3.00% PIK) Secured Debt

(5)

-

(521)

569

8,280

17

681

 

7,616

Preferred Member Units

(5)

-

(2,370)

-

2,370

-

2,370

 

-

MSC Adviser I, LLC

Member Units

(8)

-

4,970

2,449

116,760

4,970

-

 

121,730

Market Force Information, LLC

12.00% PIK Secured Debt

(9)

-

(294)

-

13,562

-

294

 

13,268

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

(9)

-

-

178

1,600

1,800

-

 

3,400

Mystic Logistics Holdings, LLC

Common Stock

(6)

-

(3,070)

548

8,990

-

3,070

 

5,920

12.00% Secured Debt

(6)

-

-

410

6,723

5

24

 

6,704

12.00% Secured Debt

(6)

-

-

2

-

-

-

 

-

OMi Holdings, Inc.

Common Stock

(8)

-

(1,550)

1,080

20,380

-

1,550

 

18,830

PPL RVs, Inc.

Common Stock

(8)

-

1,630

569

11,500

1,630

-

 

13,130

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Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

June 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

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

(8)

-

(14)

470

11,806

27

214

 

11,619

Principle Environmental, LLC

13.00% Secured Debt

(8)

-

(62)

430

6,397

12

62

 

6,347

Common Stock

(8)

-

(440)

-

-

1,200

440

 

760

Preferred Member Units

(8)

-

(360)

-

10,500

-

360

 

10,140

Quality Lease Service, LLC

Member Units

(7)

-

(311)

-

4,460

-

1,561

 

2,899

Trantech Radiator Topco, LLC

Common Stock

(7)

-

(40)

58

6,030

-

40

 

5,990

12.00% Secured Debt

(7)

-

-

538

8,644

10

-

 

8,654

Ziegler’s NYPD, LLC

Preferred Member Units

(8)

-

290

-

1,780

290

-

 

2,070

14.00% Secured Debt

(8)

-

-

194

2,750

-

-

 

2,750

12.00% Secured Debt

(8)

-

-

38

625

-

-

 

625

6.50% Secured Debt

(8)

-

21

33

979

21

-

 

1,000

Other controlled investments

2717 MH, L.P.

(8)

-

-

-

250

-

250

-

LP Interests (2717 MH, L.P.)

(8)

-

-

-

2,702

46

-

2,748

ASC Interests, LLC

Member Units

(8)

-

(110)

-

1,120

-

110

1,010

13.00% Secured Debt

(8)

-

-

126

1,715

110

-

1,825

ATS Workholding, LLC

5.00% Secured Debt

(9)

-

(305)

-

3,347

-

385

2,962

Barfly Ventures, LLC

Member Units

(5)

-

116

-

1,584

116

-

1,700

7.00% Secured Debt

(5)

-

-

45

343

368

-

711

Bolder Panther Group, LLC

14.00% Class A Preferred Member Units

(9)

-

-

704

10,194

-

-

10,194

8.00% Class B Preferred Member Units

(9)

-

3,420

1,135

14,000

3,420

-

17,420

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

(9)

-

-

1,514

27,225

525

500

27,250

Bond-Coat, Inc.

(8)

(2,320)

4,310

-

2,040

4,310

6,350

-

Brewer Crane Holdings, LLC

Preferred Member Units

(9)

-

(710)

367

5,850

-

710

5,140

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

(9)

-

-

473

8,513

10

248

8,275

Bridge Capital Solutions Corporation

13.00% Secured Debt

(6)

-

-

925

8,403

349

-

8,752

Warrants

(6)

-

510

-

3,220

510

-

3,730

Preferred Member Units

(6)

-

-

50

1,000

-

-

1,000

13.00% Secured Debt

(6)

-

-

67

998

1

-

999

CBT Nuggets, LLC

Member Units

(9)

-

6,540

678

46,080

6,540

-

52,620

Centre Technologies Holdings, LLC

Preferred Member Units

(8)

-

(320)

60

6,160

-

320

5,840

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

(8)

-

-

667

11,549

22

1,906

9,665

Chamberlin Holding LLC

Member Units

(8)

-

(1,420)

3,559

28,070

-

1,420

26,650

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

(8)

-

(22)

691

15,212

22

1,417

13,817

Member Units

(8)

-

110

34

1,270

110

-

1,380

Charps, LLC

Preferred Member Units

(5)

-

1,060

1,543

10,520

1,060

-

11,580

10.00% Unsecured Debt

(5)

-

(382)

683

8,475

262

3,646

5,091

0.15 Secured Debt

(5)

-

-

4

669

-

669

-

Colonial Electric Company LLC

Preferred Member Units

(6)

-

-

100

-

7,680

-

7,680

12.00% Secured Debt

(6)

-

-

1,162

-

24,958

-

24,958

CompareNetworks Topco, LLC

Preferred Member Units

(9)

-

3,250

158

6,780

3,250

-

10,030

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

(9)

-

(9)

430

7,954

9

709

7,254

Copper Trail Energy Fund I, LP - CTMH

LP Interests (CTMH, LP)

(9)

-

-

-

747

-

37

710

Datacom, LLC

Preferred Member Units

(8)

(6,030)

6,030

-

-

6,030

6,030

-

Preferred Member Units

(8)

(1,294)

1,294

-

-

1,294

1,294

-

10.50% PIK Secured Debt

(8)

(1,801)

1,945

1

10,531

1,945

12,476

-

8.00% Secured Debt

(8)

(1,800)

185

-

1,615

185

1,800

-

Digital Products Holdings LLC

Preferred Member Units

(5)

-

-

100

9,835

-

-

9,835

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

(5)

-

-

1,000

18,077

22

660

17,439

Garreco, LLC

Member Units

(8)

-

350

-

1,410

350

-

1,760

94

Table of Contents

Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

June 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

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

(8)

-

-

204

4,519

-

-

4,519

Gulf Manufacturing, LLC

Member Units

(8)

-

790

347

4,510

790

-

5,300

Gulf Publishing Holdings, LLC

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

(8)

-

(1,752)

849

12,044

849

2,171

10,722

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

(8)

-

-

14

250

14

7

257

Harrison Hydra-Gen, Ltd.

Common Stock

(8)

-

(600)

-

5,450

-

600

4,850

J&J Services, Inc.

Preferred Stock

(7)

-

370

-

12,680

370

-

13,050

11.50% Secured Debt

(7)

-

(17)

746

12,800

17

817

12,000

KBK Industries, LLC

Member Units

(5)

-

330

221

13,200

330

-

13,530

MS Private Loan Fund

LP Interests

(8)

-

-

-

-

285

-

285

5.00% Unsecured Debt

(8)

-

-

300

-

16,220

-

16,220

MSC Income Fund Inc.

5.00% Unsecured Debt

(8)

-

210

891

-

39,840

-

39,840

NAPCO Precast, LLC

Member Units

(8)

-

(530)

81

16,100

-

530

15,570

NRI Clinical Research, LLC

9.00% Secured Debt

(9)

-

(20)

262

5,620

20

865

4,775

Member Units

(9)

-

2,434

399

5,600

2,434

-

8,034

NRI Clinical Research, LLC

Warrants

(9)

-

540

-

1,490

540

-

2,030

NRP Jones, LLC

Member Units

(5)

-

419

(45)

2,821

419

-

3,240

12.00% Secured Debt

(5)

-

-

126

2,080

-

-

2,080

Nebraska Vet AcquireCo, LLC (NVS)

12.00% Secured Debt

(5)

-

-

651

10,395

9

-

10,404

Preferred Member Units

(5)

-

-

-

6,500

-

-

6,500

NexRev LLC

Preferred Member Units

(8)

-

1,810

40

1,470

1,810

-

3,280

11.00% Secured Debt

(8)

-

178

946

16,726

197

436

16,487

Preferred Member Units

(5)

-

1,570

-

10,780

1,570

-

12,350

11.00% Secured Debt

(5)

-

26

1,017

17,193

47

-

17,240

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

(5)

-

-

6

-

400

400

-

Pearl Meyer Topco LLC

Member Units

(6)

-

2,550

1,528

15,940

2,550

-

18,490

12.00% Secured Debt

(6)

-

272

2,170

37,202

311

3,840

33,673

Pegasus Research Group, LLC

Member Units

(8)

-

(560)

-

8,830

-

560

8,270

Principle Environmental, LLC

Warrants

(8)

-

330

-

870

330

1,200

-

River Aggregates, LLC

Member Units

(8)

-

50

-

3,240

50

-

3,290

Tedder Industries, LLC

Preferred Member Units

(9)

-

-

-

8,136

-

-

8,136

12.00% Secured Debt

(9)

-

-

960

16,300

582

1,599

15,283

UnionRock Energy Fund II, LP

LP Interests

(9)

-

737

-

2,894

2,113

220

4,787

Vision Interests, Inc.

13.00% Secured Debt

(9)

-

-

133

2,028

-

-

2,028

Series A Preferred Stock

(9)

-

(160)

-

3,160

-

160

3,000

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

-

-

-

-

-

-

-

Total Control Investments

$

(13,245)

$

45,084

$

51,052

$

1,113,725

$

177,453

$

81,385

$

1,209,793

Affiliate Investments

AAC Holdings, Inc.

Common Stock

(7)

$

-

$

(1,069)

$

-

$

3,148

$

-

$

1,069

$

2,079

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

(7)

-

-

(16)

-

-

-

-

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

(7)

-

(89)

883

9,187

401

89

9,499

AAC Holdings, Inc.

Warrants

(7)

-

(998)

-

2,938

-

998

1,940

AFG Capital Group, LLC

Preferred Member Units

(8)

-

1,150

-

5,810

1,150

-

6,960

10.00% Secured Debt

(8)

-

-

20

491

-

173

318

BBB Tank Services, LLC

Member Units

(8)

-

(280)

-

280

-

280

-

15.00% PIK Preferred Stock (non-voting)

(8)

-

(162)

11

151

11

162

-

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

(8)

-

-

317

4,722

27

-

4,749

Boccella Precast Products LLC

Member Units

(6)

-

(1,090)

370

6,040

-

1,090

4,950

Buca C, LLC

6.00% PIK Preferred Member Units

(7)

-

-

-

-

-

-

-

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

(7)

-

(373)

747

14,256

487

373

14,370

CAI Software LLC

Member Units

(6)

-

6,741

1,900

7,190

6,741

1,921

12,010

12.50% Secured Debt

(6)

-

37

3,350

47,474

23,600

3,353

67,721

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Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

June 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

Chandler Signs Holdings, LLC

Class A Units

(8)

-

(810)

-

1,460

-

810

650

Classic H&G Holdings, LLC

Preferred Member Units

(6)

-

2,250

570

9,510

2,250

-

11,760

10.00% Secured Debt

(6)

-

(64)

1,412

24,800

64

5,590

19,274

Congruent Credit Opportunities Funds

LP Interests (Fund II)

(8)

(4,449)

4,355

-

94

4,355

4,449

-

LP Interests (Congruent Credit Opportunities Fund
III, LP)

(8)

-

(178)

389

11,540

-

178

11,362

Copper Trail Energy Fund I, LP

LP Interests (Copper Trail Energy Fund I, LP)

(9)

-

61

319

1,782

61

-

1,843

Dos Rios Partners

LP Interests (Dos Rios Partners, LP)

(8)

-

1,608

-

5,417

1,608

-

7,025

LP Interests (Dos Rios Partners - A, LP)

(8)

-

510

-

1,720

510

-

2,230

Dos Rios Stone Products LLC

Class A Preferred Units

(8)

-

(230)

-

1,250

-

230

1,020

EIG Fund Investments

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

(8)

8

92

33

526

126

166

486

East Teak Fine Hardwoods, Inc.

Common Stock

(7)

-

130

-

300

130

-

430

Freeport Financial SBIC Fund LP

LP Interests (Freeport Financial SBIC Fund LP)

(5)

-

386

-

5,264

386

-

5,650

LP Interests (Freeport First Lien Loan Fund III LP)

(5)

-

-

455

10,321

-

2,317

8,004

GFG Group, LLC.

Preferred Member Units

(5)

-

-

290

-

4,900

-

4,900

12.00% Secured Debt

(5)

-

-

822

-

15,626

3,200

12,426

HPEP 3, L.P.

LP Interests (HPEP 3, L.P.)

(8)

-

531

-

3,258

905

-

4,163

Hawk Ridge Systems, LLC

Preferred Member Units

(9)

-

2,600

691

8,030

2,600

-

10,630

Preferred Member Units

(9)

-

140

-

420

140

-

560

9.50% Secured Debt

(9)

-

(17)

919

18,400

17

17

18,400

9.50% Secured Debt

(9)

-

-

4

-

-

-

-

Houston Plating and Coatings, LLC

8.00% Unsecured Convertible Debt

(8)

-

-

121

2,900

-

-

2,900

Member Units

(8)

-

(1,560)

2

5,080

-

1,560

3,520

I-45 SLF LLC

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

(8)

-

877

935

15,789

1,677

2,000

15,466

L.F. Manufacturing Holdings, LLC

Member Units

(8)

-

(140)

-

2,050

-

140

1,910

14.00% PIK Preferred Member Units (non-voting)

(8)

-

-

7

93

7

-

100

OnAsset Intelligence, Inc.

12.00% PIK Secured Debt

(8)

-

-

447

7,301

447

-

7,748

Common Stock

(8)

-

(830)

-

-

830

830

-

10.00% PIK Unsecured Debt

(8)

-

-

3

64

6

3

67

OnAsset Intelligence, Inc.

Warrants

(8)

-

830

-

-

830

830

-

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

12.00% Secured Debt

(8)

(356)

-

-

-

-

-

-

SI East, LLC (Stavig)

Preferred Member Units

(7)

-

5,250

-

9,780

5,250

-

15,030

8.75% Secured Debt

(7)

-

(60)

1,456

32,961

57

3,847

29,171

Slick Innovations, LLC

12.00% Secured Debt

(6)

-

(23)

362

5,720

23

343

5,400

Common Stock

(6)

-

180

-

1,330

180

-

1,510

Warrants

(6)

-

40

-

360

40

-

400

Superior Rigging & Erecting Co.

Preferred Member Units

(7)

-

-

-

4,499

-

-

4,499

12.00% Secured Debt

(7)

-

-

1,314

21,298

17

-

21,315

UniTek Global Services, Inc.

20.00% PIK Preferred Stock

(6)

-

(239)

149

2,833

149

239

2,743

20.00% PIK Preferred Stock

(6)

-

(375)

-

374

-

374

-

15.00% PIK Secured Debt

(6)

-

355

61

-

1,550

42

1,508

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

(6)

-

62

130

2,426

163

442

2,147

Volusion, LLC

8.00% Unsecured Convertible Debt

(8)

-

118

16

291

118

-

409

11.50% Secured Debt

(8)

-

992

1,170

19,243

991

-

20,234

Preferred Member Units

(8)

-

-

-

5,990

-

-

5,990

Other
Amounts related to

13,907

(4,476)

2,852

20,140

2,591

22,731

-

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Amount of

Interest,

Fees or

Amount of

Amount of

Dividends

December 31, 

June 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

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

Total Affiliate investments

$

9,110

$

16,232

$

22,511

$

366,301

$

81,021

$

59,846

$

387,476

(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 included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
(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 June 30, 2021 for control investments located in this region was $256,063. This represented 16.0% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $30,980. This represented 1.9% of net assets as of June 30, 2021.
(6)Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of June 30, 2021 for control investments located in this region was $111,907. This represented 7.0% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $129,419. This represented 8.1% of net assets as of June 30, 2021.
(7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of June 30, 2021 for control investments located in this region was $42,591. This represented 2.7% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $98,336. This represented 6.1% of net assets as of June 30, 2021.
(8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of June 30, 2021 for control investments located in this region was $499,378. This represented 31.1% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $97,305. This represented 6.1% of net assets as of June 30, 2021.
(9)Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of June 30, 2021 for control investments located in this region was $299,854. This represented 18.7% of net assets as of June 30, 2021. The fair value as of June 30, 2021 for affiliate investments located in this region was $31,433. This represented 2.0% of net assets as of June 30, 2021.

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(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 included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q. Supplemental information can be located within the Consolidated 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 June 30, 2021 (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 the factors referenced in Item 1A entitled “Risk Factors” below in Part II 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, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022 and elsewhere in this Quarterly Report on Form 10-Q and our other SEC filings. Other factors that could cause actual results to differ materially include changes in the economy and future changes in laws or regulations and conditions in our operating areas.

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.

This discussion should be read in conjunction with our consolidated financial statements as of December 31, 2021, and for the year then ended, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, both contained in our Annual Report on Form 10-K for the year ended December 31, 2021, as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report.

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, together with MSMF, the “Funds”), and each of their general partners. 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.

COVID-19 UPDATE

The COVID-19 pandemic and its effect on the U.S. and global economies, including the current related impacts to supply chain delays, labor and material availability and price increases, 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 June 30, 2022, we continued to work collectively with our employees and portfolio companies to navigate these significant challenges. Neither our management team 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, we are unable to predict with any certainty the extent to which these events, or any future impacts related to the pandemic, will negatively affect our portfolio companies’ operating results and financial condition or the impact that such disruptions may have on our results of operations and financial condition in the future.

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OVERVIEW OF OUR BUSINESS

Our principal investment objective is to maximize our portfolio’s total return by generating current income from our debt investments and current income 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 our investment objective through our lower middle market (“LMM”), Private Loan (as defined below) and middle market (“Middle Market”) investment strategies. Our LMM investment strategy involves investments in companies that generally have annual revenues between $10 million and $150 million and our LMM portfolio investments generally range in size from $5 million to $75 million. Our Middle Market investment strategy involves investments in companies that are generally larger in size than our LMM 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 $25 million. Our private loan (“Private Loan”) investment strategy involves investments in companies that are consistent with the size of the companies in our LMM and Middle Market investment strategies, and our Private Loan investments generally range in size from $10 million to $75 million.

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.

Private Loan investments generally consist of loans that have been originated directly by us or through strategic relationships with other investment funds on a collaborative basis and are often referred to in the debt markets as “club deals.” Our Private Loan portfolio debt investments are generally secured by a first 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. We may also invest alongside the sponsor in the equity securities of our Private Loan portfolio companies.

Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing syndicated loans or 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 a first 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.

Our other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with the typical profiles for our LMM, Private Loan or Middle Market 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, our Investment Portfolio may also include short-term portfolio investments that are atypical of our LMM, Private Loan and Middle Market 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”). 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”) and its other clients. Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities.

Our portfolio investments are generally made through MSCC, the Taxable Subsidiaries and the Funds. MSCC, the Taxable Subsidiaries 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 Taxable Subsidiaries’ and the Funds’ investment returns as they are wholly-owned subsidiaries of MSCC.

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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 better alignment of interests between our management team, our employees and our shareholders, and a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed. 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 1.4%, for the trailing twelve months ended June 30, 2022 and 2021, respectively, and 1.5% for the year ended December 31, 2021. The ratio of our total operating expenses, including interest expense, as a percentage of our quarterly average total assets was 3.3% for each of the trailing twelve months ended June 30, 2022 and 2021, and 3.4% for the year ended December 31, 2021. Our ratio of expenses as a percentage of our average net asset value is described in greater detail in Note F – Financial Highlights to the consolidated financial statements included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

The External Investment Manager serves as the investment adviser and administrator to MSC Income pursuant to an Investment Advisory and Administrative Services Agreement entered into in October 2020 between the External Investment Manager and MSC Income (the “Advisory Agreement”). Under the Advisory Agreement, the External Investment Manager earns a 1.75% annual base management fee on MSC Income’s average total assets, an incentive fee equal to 20% of pre-investment fee net investment income above a specified investment return hurdle rate and a 20% incentive fee on cumulative net realized capital gains in exchange for providing advisory services to MSC Income.

Additionally, the External Investment Manager has entered into an Investment Management Agreement with 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”), 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 provides administrative services for certain External Party clients that, to the extent not waived, are reported as administrative services fees. The administrative services fees generally represent expense reimbursements for a portion of the compensation, overhead and related expenses for certain professionals directly attributable to performing administrative services for a client. These fees are recognized as other revenue in the period in which the related services are rendered.

The External Investment Manager earns management fees based on the assets of the funds and accounts under management and may earn incentive fees, or a carried interest, based on the performance of the funds and accounts managed. 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 $5.2 million and $3.8 million for the three months ended June 30, 2022 and 2021, respectively. The External Investment Manager earned base management fee income of $5.4 million and $4.2 million during the three months ended June 30, 2022 and 2021, respectively. During the three months ended June 30, 2022, the External Investment Manager earned $0.1 million in incentive fee income. No incentive fee income was earned in the three months ended June 30, 2021. During the three

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months ended June 30, 2022, the External Investment Manager earned $0.2 million in administrative services fee income. No administrative services fee income was earned in the three months ended June 30, 2021. Our total expenses are net of expenses allocated to the External Investment Manager for the three months ended June 30, 2022 and 2021 of $3.5 million and $2.6 million, respectively. The total contribution to our net investment income was $10.3 million and $7.4 million for the six months ended June 30, 2022 and 2021, respectively. The External Investment Manager earned base management fee income of $10.9 million and $8.1 million during the six months ended June 30, 2022 and 2021, respectively. During the six months ended June 30, 2022, the External Investment Manager earned $0.2 million in incentive fee income. No incentive fee income was earned in the six months ended June 30, 2021. During the six months ended June 30, 2022, the External Investment Manager earned $0.3 million in administrative services fee income. No administrative services fee income was earned in the six months ended June 30, 2021. Our total expenses are net of expenses allocated to the External Investment Manager for the six months ended June 30, 2022 and 2021 of $6.3 million and $5.0 million, respectively.

We have received an exemptive order from the SEC permitting co-investments among us, MSC Income and other funds and clients 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, and in the future intend to continue to make co-investments with MSC Income, the Private Loan Fund and other clients 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, 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 and clients advised by the External Investment Manager, this may provide the Company and the External Investment Manager an incentive to allocate opportunities to other participating funds and clients 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. Additional information regarding the operation of the co-investment program is set forth in the order granting exemptive relief, which may be reviewed on the SEC’s website at www.sec.gov. In addition to the co-investment program described above, we also co-invest in syndicated deals and other transactions where price is the only negotiated point by us and our affiliates.

INVESTMENT PORTFOLIO SUMMARY

The following tables provide a summary of our investments in the LMM, Private Loan and Middle Market portfolios as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio investments, short-term portfolio investments and the External Investment Manager which are discussed further below):

    

As of June 30, 2022

LMM (a)

Private Loan

Middle Market

(dollars in millions)

 

Number of portfolio companies

75

 

82

 

34

Fair value

$

1,816.3

 

$

1,309.0

 

$

363.5

Cost

$

1,508.9

 

$

1,347.9

 

$

419.0

Debt investments as a % of portfolio (at cost)

71.9

%

96.1

%

92.9

%

Equity investments as a % of portfolio (at cost)

28.1

%

3.9

%

7.1

%

% of debt investments at cost secured by first priority lien

99.0

%

99.4

%

99.2

%

Weighted-average annual effective yield (b)

11.2

%

8.5

%

8.0

%

Average EBITDA (c)

$

7.5

 

$

41.2

 

$

71.4

(a)At June 30, 2022, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 41%.
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of June 30, 2022, 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 annual effective yield on our debt portfolio as of June 30, 2022 including debt investments on non-accrual status was 10.5% for our LMM portfolio, 8.3% for our Private Loan portfolio and 7.6% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of

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what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of debt capital in our capital structure, our 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 Private Loan and Middle Market 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 our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

    

As of December 31, 2021

LMM (a)

Private Loan

Middle Market

(dollars in millions)

 

Number of portfolio companies

73

 

75

 

36

Fair value

$

1,716.4

 

$

1,141.8

 

$

395.2

Cost

$

1,455.7

 

$

1,157.5

 

$

440.9

Debt investments as a % of portfolio (at cost)

70.9

%

95.7

%

93.3

%

Equity investments as a % of portfolio (at cost)

29.1

%

4.3

%

6.7

%

% of debt investments at cost secured by first priority lien

99.0

%

98.7

%

98.7

%

Weighted-average annual effective yield (b)

11.2

%

8.2

%

7.5

%

Average EBITDA (c)

$

6.2

 

$

41.3

 

$

76.0

(a)At December 31, 2021, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was 40%.
(b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 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 annual effective yield on our debt portfolio as of December 31, 2021 including debt investments on non-accrual status was 10.6% for our LMM portfolio, 8.0% for our Private Loan portfolio and 6.9% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of debt capital in our capital structure, our 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 Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, three Private Loan portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

For the three months ended June 30, 2022 and 2021, we achieved an annualized total return on investments of 6.5% and 19.7%, respectively. For the six months ended June 30, 2022 and 2021, we achieved an annualized total return on investments of 9.2% and 16.0%, respectively. For the year ended December 31, 2021, we achieved an annualized total return on investments of 16.6%. 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. Our total return on investments is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales load paid by an investor.

As of June 30, 2022, we had Other Portfolio investments in 14 companies, collectively totaling $108.8 million in fair value and $116.1 million in cost basis and which comprised 2.9% and 3.4% of our Investment Portfolio at fair value and cost, respectively. As of December 31, 2021, we had Other Portfolio investments in 13 companies, collectively totaling $166.1 million in fair value and $173.7 million in cost basis and which comprised 4.7% and 5.3% of our Investment Portfolio at fair value and cost, respectively.

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As of June 30, 2022, we had one short-term portfolio investment, which was a secured debt investment that had $1.9 million in fair value and $2.0 million in cost basis and which comprised 0.1% of our Investment Portfolio at both fair value and cost. As of December 31, 2021, we had one short-term portfolio investment, which was a secured debt investment that had $2.0 million in both fair value and cost basis and which comprised 0.1% of our Investment Portfolio at both fair value and cost.

As previously discussed, the External Investment Manager is a wholly-owned subsidiary that is treated as a portfolio investment. As of June 30, 2022, this investment had a fair value of $118.3 million and a cost basis of $29.5 million, which comprised 3.2% and 0.9% of our Investment Portfolio at fair value and cost, respectively. As of December 31, 2021, this investment had a fair value of $140.4 million and a cost basis of $29.5 million, which comprised 3.9% and 0.9% of our Investment Portfolio at fair value and cost, respectively.

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—Summary of Significant Accounting Policies 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 this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of both June 30, 2022 and December 31, 2021, our Investment Portfolio valued at fair value represented 97% of our total assets. 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 included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q 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.

In December 2020, the SEC adopted 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

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serve as the Board of Directors’ valuation designee. We adopted the Valuation Procedures effective April 1, 2021. We believe our Investment Portfolio as of June 30, 2022 and December 31, 2021 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 its debt obligation, 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 obligation, 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 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.—Summary of Significant Accounting Policies—Income Taxes included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q), 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 June 30, 2022 and 2021, (i) 1.7% and 3.4%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.2% and 0.6%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash. For the six months ended June 30, 2022 and 2021, (i) 1.4% and 3.6%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.6% and 0.7%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash.

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INVESTMENT PORTFOLIO COMPOSITION

The following tables summarize the composition of our total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments as of June 30, 2022 and December 31, 2021 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager).

Cost:

 

June 30, 2022

 

December 31, 2021

First lien debt

 

83.9

%  

82.5

%

Equity

 

15.2

%  

16.2

%

Second lien debt

 

0.3

%  

0.6

%

Equity warrants

 

0.2

%  

0.3

%

Other

 

0.4

%  

0.4

%

 

100.0

%  

100.0

%

Fair Value:

 

June 30, 2022

 

December 31, 2021

 

First lien debt

 

74.0

%  

74.3

%

 

Equity

 

25.1

%  

24.6

%

 

Second lien debt

 

0.3

%  

0.5

%

 

Equity warrants

 

0.2

%  

0.2

%

 

Other

 

0.4

%  

0.4

%

 

 

100.0

%  

100.0

%

 

Our LMM portfolio investments, Private Loan portfolio investments and Middle Market 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, 2021for 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, Private Loan and Middle Market portfolio company and to monitor our expected level of returns on each of our LMM, Private Loan and Middle Market 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 June 30, 2022, our total Investment Portfolio had nine investments on non-accrual status, which comprised 0.7% of its fair value and 3.2% of its cost. As of December 31, 2021, our total Investment Portfolio had nine investments on non-accrual status, which comprised 0.7% of its fair value and 3.3% 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, 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.

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DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

Comparison of the three months ended June 30, 2022 and June 30, 2021

Set forth below is a comparison of the results of operations, and a reconciliation of net investment income to distributable net investment income and adjusted distributable net investment income, for the three months ended June 30, 2022 and June 30, 2021, respectively.

Three Months Ended

 

June 30, 

Net Change

    

2022

    

2021

    

Amount

    

%

    

(dollars in thousands)

Total investment income

$

85,200

$

67,294

$

17,906

 

27

%

Total expenses

 

(30,474)

 

(24,899)

 

(5,575)

 

22

%

Net investment income

 

54,726

 

42,395

 

12,331

 

29

%

Net realized gain (loss) from investments

 

(5,064)

 

18,000

 

(23,064)

NM

Net unrealized appreciation (depreciation) from investments

 

(24,593)

 

44,441

 

(69,034)

NM

Income tax benefit (provision)

 

(10,320)

 

(9,726)

 

(594)

NM

Net increase in net assets resulting from operations

$

14,749

$

95,110

$

(80,361)

 

(84)

%

Three Months Ended

 

June 30, 

Net Change

    

2022

    

2021

    

Amount

    

%

    

(dollars in thousands, except per share amounts)

Net investment income

$

54,726

$

42,395

$

12,331

 

29

%

Share‑based compensation expense

 

3,596

 

2,759

 

837

 

30

%

Distributable net investment income(a)

$

58,322

$

45,154

$

13,168

 

29

%

Deferred compensation expense (benefit)

(1,225)

482

(1,707)

NM

Adjusted distributable net investment income (b)

$

57,097

$

45,636

$

11,461

25

%

Net investment income per share—Basic and diluted

$

0.75

$

0.62

$

0.13

 

21

%

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

$

0.80

$

0.66

$

0.14

 

21

%

Adjusted distributable net investment income—Basic and diluted (b)

$

0.78

$

0.67

$

0.11

16

%

NM

Net change % 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.
(b)Adjusted distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impacts of share-based compensation expense and deferred compensation expense or benefit which are non-cash in nature. We believe presenting adjusted 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 and deferred compensation expense or benefit do not require settlement in cash. However, adjusted 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, adjusted 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

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investment income in accordance with U.S. GAAP to adjusted distributable net investment income is presented in the table above. In future quarters, we plan to eliminate the historical disclosure of distributable net investment income and present adjusted distributable net investment income under the heading of distributable net investment income.

Investment Income

Total investment income for the three months ended June 30, 2022 was $85.2 million, a 27% increase from the $67.3 million of total investment income for the corresponding period of 2021. The following table provides a summary of the changes in the comparable period activity.

Three Months Ended

June 30, 

Net Change

2022

2021

Amount

%

(dollars in thousands)

Interest income

$

63,984

$

45,944

$

18,040

39

%

(a)

Dividend income

17,913

18,619

(706)

(4)

%

(b)

Fee income

3,303

2,731

572

21

%

(c)

Total investment income

$

85,200

$

67,294

$

17,906

27

%

(d)

(a)The increase in interest income was primarily due to higher average levels of Investment Portfolio debt investments following (i) net origination activity in our LMM portfolio of $348.6 million and $52.3 million for the year ended December 31, 2021 and six months ended June 30, 2022, respectively, and (ii) net origination activity in our Private Loan portfolio of $370.3 million and $186.5 million for the year ended December 31, 2021 and six months ended June 30, 2022, respectively and a $2.3 million increase in accelerated prepayment repricing and other activity related to certain investment portfolio debt investments.
(b)The decrease in dividend income from Investment Portfolio equity investments was primarily a result of a $3.7 million decrease related to dividend income considered to be less consistent or non-recurring, partially offset by continued strong dividend income from a variety of portfolio companies resulting from the improved operating results, financial condition and liquidity positions of certain of our portfolio companies.
(c)The increase in fee income was primarily related to a $0.5 million increase from refinancing and prepayment of debt investments.
(d)The increase in total investment income includes a net reduction in the impact of certain income considered less consistent or non-recurring, including a $3.7 million decrease in dividend income, partially offset by a $2.3 million increase in accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments.

Expenses

Total expenses for the three months ended June 30, 2022 were $30.5 million, a 22% increase from the $24.9 million in the corresponding period of 2021. The following table provides a summary of the changes in the comparable period activity.

Three Months Ended

June 30, 

Net Change

2022

2021

Amount

%

(dollars in thousands)

Employee compensation expenses

$

10,032

$

6,287

$

3,745

60

%

(a)

Deferred compensation plan expense (benefit)

(1,225)

608

(1,833)

(301)

%

(b)

Total compensation expense

8,807

6,895

1,912

28

%

G&A expense

4,238

3,417

821

24

%

Interest expense

17,295

14,400

2,895

20

%

(c)

Share-based compensation expense

3,596

2,759

837

30

%

Gross expenses

33,936

27,471

6,465

24

%

Allocation of expenses to the External Investment Manager

(3,462)

(2,572)

(890)

35

%

Total expenses

$

30,474

$

24,899

$

5,575

22

%

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(a)The increase in compensation expense is primarily related to increased headcount, base compensation rates and incentive compensation accruals.
(b)The change in the non-cash deferred compensation plan expense (benefit) was due to the comparable period reduction to compensation expense resulting from a decrease in the fair value of deferred compensation plan assets and corresponding liabilities in the second quarter of 2022 compared to an increase in such fair values in the corresponding period of 2021.
(c)The increase in interest expense was primarily related to increased borrowings to support our investment activity, including an aggregate of $200.0 million in principal amount of our 3.00% Notes (as defined in “—Liquidity and Capital Resources—Capital Resources” below) issued in October 2021 and greater amounts of borrowings under our multi-year revolving credit facility (our “Credit Facility”).

Net Investment Income

Net investment income for the three months ended June 30, 2022 increased 29% to $54.7 million, or $0.75 per share, compared to net investment income of $42.4 million, or $0.62 per share, for the corresponding period of 2021. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses, both as discussed above. The increase in net investment income per share reflects these changes and the impact of the increase in weighted average shares outstanding for the three months ended June 30, 2022, 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 on a per share basis includes a $0.02 per share decrease in investment income considered less consistent or non-recurring offset by a decrease in compensation expense of $0.02 per share resulting from the comparable period difference in the fair value of deferred compensation plan assets and corresponding liabilities, both of which are discussed above.

Distributable Net Investment Income

Distributable net investment income for the three months ended June 30, 2022 increased 29% to $58.3 million, or $0.80 per share, compared with $45.2 million, or $0.66 per share, in the corresponding period of 2021. The increase in distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, excluding share-based compensation expense, both as discussed above. The increase in distributable net investment income per share reflects these changes and the net impact of the increase in weighted average shares outstanding for the three months ended June 30, 2022, 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 distributable net investment income on a per share basis includes a $0.02 per share decrease in investment income considered less consistent or non-recurring, offset by a $0.02 per share decrease in compensation expense resulting from the comparable period difference in the fair value of deferred compensation plan assets and corresponding liabilities, both of which are discussed above.

Adjusted Distributable Net Investment Income

Adjusted distributable net investment income for the three months ended June 30, 2022 increased 25% to $57.1 million, or $0.78 per share, compared with $45.6 million, or $0.67 per share, in the corresponding period of 2021. The increase in adjusted distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, excluding share-based compensation expense and deferred compensation expense (benefit), both as discussed above. The increase in adjusted distributable net investment income per share reflects the net impact of the increase in weighted average shares outstanding for the three months ended June 30, 2022, 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 adjusted distributable net investment income on a per share basis includes a $0.02 per share decrease in investment income considered less consistent or non-recurring, as discussed above.

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Net Realized Gain (Loss) from Investments

The following table provides a summary of the primary components of the total net realized loss on investments of $5.1 million for the three months ended June 30, 2022:

Three Months Ended June 30, 2022

Full Exits

Partial Exits

Restructures

Other (a)

Total

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

$

-

-

$

-

-

$

-

-

$

(450)

$

(450)

Private Loan Portfolio

-

-

-

-

-

-

216

216

Middle Market Portfolio

(6,069)

1

-

-

-

-

-

(6,069)

Other Portfolio

-

-

1,038

1

-

-

201

1,239

Short-term Portfolio

-

-

-

-

-

-

-

-

Total net realized gain/(loss)

$

(6,069)

1

$

1,038

1

$

-

-

$

(33)

$

(5,064)

(a)Other activity includes realized gains and losses from transactions involving 10 portfolio companies which are not considered to be significant individually or in the aggregate.

Net Unrealized Appreciation (Depreciation)

The following table provides a summary of the total net unrealized depreciation of $24.6 million for the three months ended June 30, 2022:

Three Months Ended June 30, 2022

Private

Middle

    

LMM(a)

    

Loan

    

Market

    

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

$

0.5

$

(2.0)

$

6.0

$

(1.2)

$

3.3

Net unrealized appreciation (depreciation) relating to portfolio investments

 

25.2

 

(23.4)

 

(15.1)

 

(14.6)

(b)

 

(27.9)

Total net unrealized appreciation (depreciation) relating to portfolio investments

$

25.7

$

(25.4)

$

(9.1)

$

(15.8)

$

(24.6)

(a)LMM includes unrealized appreciation on 25 LMM portfolio investments and unrealized depreciation on 25 LMM portfolio investments.
(b)Other includes (i) $14.6 million of unrealized depreciation relating to the External Investment Manager and (ii) $1.2 million of unrealized depreciation relating to the Main Street Capital Corporation Deferred Compensation Plan (see “Related Party Transactions and Agreements” below), partially offset by $1.4 million of net unrealized appreciation relating to the Other Portfolio.

Income Tax Benefit (Provision)

The income tax provision for the three months ended June 30, 2022 of $10.3 million principally consisted of (i) a deferred tax provision of $9.5 million, which is primarily the result of the net activity relating to our portfolio investments held in our 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 $0.8 million, related to a $0.7 million provision for excise tax on our estimated undistributed taxable income and a $0.1 million provision for current U.S. federal and state income taxes. The income tax provision for the three months ended June 30, 2021 of $9.7 million principally consisted of (i) a deferred tax provision of $9.0 million, and (ii) a current tax provision of $0.7 million related to a $0.5 million provision for current U.S. federal and state income taxes, and a $0.2 million provision for excise tax on our estimated undistributed taxable income.

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Net Increase in Net Assets Resulting from Operations

The net increase in net assets resulting from operations for the three months ended June 30, 2022 was $14.7 million, or $0.20 per share, compared with $95.1 million, or $1.39 per share, during the three months ended June 30, 2021. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

Comparison of the six months ended June 30, 2022 and June 30, 2021

Set forth below is a comparison of the results of operations, and a reconciliation of net investment income to distributable net investment income and adjusted distributable net investment income, for the six months ended June 30, 2022 and June 30, 2021, respectively.

Six Months Ended

 

June 30, 

Net Change

    

2022

    

2021

    

Amount

    

%

(dollars in thousands)

Total investment income

$

164,596

$

130,102

$

34,494

 

27

%

Total expenses

 

(57,657)

 

(47,954)

 

(9,703)

 

20

%

Net investment income

 

106,939

 

82,148

 

24,791

 

30

%

Net realized gain (loss) from investments

 

(1,728)

 

2,270

 

(3,998)

NM

Net unrealized appreciation (depreciation) from investments

(9,841)

 

78,440

 

(88,281)

NM

Income tax benefit (provision)

 

(15,417)

 

(10,407)

 

(5,010)

NM

Net increase in net assets resulting from operations

$

79,953

$

152,451

$

(72,498)

 

(48)

%

Six Months Ended

 

June 30, 

Net Change

    

2022

    

2021

    

Amount

    

%

(dollars in thousands, except per share amounts)

Net investment income

$

106,939

$

82,148

$

24,791

 

30

%

Share‑based compensation expense

 

6,414

 

5,092

 

1,322

 

26

%

Distributable net investment income(a)

$

113,353

$

87,240

$

26,113

 

30

%

Deferred compensation expense (benefit)

(1,601)

728

(2,329)

NM

Adjusted distributable net investment income (b)

$

111,752

$

87,968

$

23,784

27

%

Net investment income per share—Basic and diluted

$

1.47

$

1.20

$

0.27

 

23

%

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

$

1.56

$

1.28

$

0.28

 

22

%

Adjusted distributable net investment income—Basic and diluted (b)

$

1.54

$

1.29

$

0.25

19

%

NM

Net change % 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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(b)Adjusted distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impacts of share-based compensation expense and deferred compensation expense or benefit which are non-cash in nature. We believe presenting adjusted 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 and deferred compensation expense or benefit do not require settlement in cash. However, adjusted 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, adjusted 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 adjusted distributable net investment income is presented in the table above. In future quarters, we plan to eliminate the historical disclosure of distributable net investment income and present adjusted distributable net investment income under the heading of distributable net investment income.

Investment Income

Total investment income for the six months ended June 30, 2022 was $164.6 million, a 27% increase from the $130.1 million of total investment income for the corresponding period of 2021. The following table provides a summary of the changes in the comparable period activity.

Six Months Ended

June 30, 

Net Change

2022

2021

Amount

%

(dollars in thousands)

Interest Income

$

123,426

$

89,416

$

34,010

38

%

(a)

Dividend Income

34,535

36,316

(1,781)

(5)

%

(b)

Fee Income

6,635

4,370

2,265

52

%

(c)

Total Investment Income

$

164,596

$

130,102

$

34,494

27

%

(d)

(a)The increase in interest income was primarily due to higher average levels of Investment Portfolio debt investments following (i) net origination activity in our LMM portfolio of $348.6 million and $52.3 million for the year ended December 31, 2021 and six months ended June 30, 2022, respectively, and (ii) net origination activity in our Private Loan portfolio of $370.3 million and $186.5 million for the year ended December 31, 2021 and six months ended June 30, 2022, respectively.
(b)The decrease in dividend income from Investment Portfolio equity investments was primarily a result of a $6.6 million decrease related to dividend income considered to be less consistent or non-recurring, partially offset by continued strong dividend income from a variety of portfolio companies resulting from the improved operating results, financial condition and liquidity positions of certain of our portfolio companies.
(c)The increase in fee income is primarily related to (i) a $1.2 million increase related to higher originations of Investment Portfolio investments as discussed above and (ii) a $1.0 million increase from refinancing and prepayment of debt investments.
(d)The increase in total investment income includes a net reduction in the impact of certain income considered less consistent or non-recurring, including a $6.6 million decrease in dividend income, partially offset by a $3.0 million increase in accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments.

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Expenses

Total expenses for the six months ended June 30, 2022 were $57.7 million, a 20% increase from the $48.0 million in the corresponding period of 2021. The following table provides a summary of the changes in the comparable period activity.

Six Months Ended

June 30, 

Net Change

2022

2021

Amount

%

(dollars in thousands)

Employee compensation expenses

$

17,576

$

12,238

$

5,338

44

%

(a)

Deferred compensation plan expense (benefit)

(1,500)

978

(2,478)

(253)

%

(b)

Total compensation expense

16,076

13,216

2,860

22

%

G&A expense

7,464

6,392

1,072

17

%

Interest expense

33,982

28,206

5,776

20

%

(c)

Share-based compensation expense

6,414

5,092

1,322

26

%

Gross expenses

63,936

52,906

11,030

21

%

Allocation of expenses to the External Investment Manager

(6,279)

(4,952)

(1,327)

27

%

Total expenses

$

57,657

$

47,954

$

9,703

20

%

(a)The increase in compensation expense is primarily related to increased headcount, base compensation rates and incentive compensation accruals.
(b)The change in the non-cash deferred compensation plan expense was due to the comparable period reduction to compensation expense resulting from a decrease in the fair value of deferred compensation plan assets and corresponding liabilities in the first quarter of 2022 compared to an increase in such fair values in the corresponding period of 2021.
(c)The increase in interest expense was primarily related to increased borrowings to support our investment activity, including an aggregate of $200.0 million in principal amount of our 3.00% Notes issued in October 2021 and greater amounts of borrowings under our Credit Facility.

Net Investment Income

Net investment income for the six months ended June 30, 2022 increased 30% to $106.9 million, or $1.47 per share, compared to net investment income of $82.1 million, or $1.20 per share, for the corresponding period of 2021. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses, both as discussed above. The increase in net investment income per share reflects these changes and the impact of the increase in weighted average shares outstanding for the six months ended June 30, 2022, 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 on a per share basis includes (i) a $0.06 per share decrease in investment income considered less consistent or non-recurring and (ii) a decrease in compensation expense of $0.03 per share resulting from the comparable period difference in the fair value of deferred compensation plan assets and corresponding liabilities, both of which are discussed above.

Distributable Net Investment Income

Distributable net investment income for the six months ended June 30, 2022 increased 30% to $113.4 million, or $1.56 per share, compared with $87.2 million, or $1.28 per share, in the corresponding period of 2021. The increase in distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, excluding share-based compensation expense, both as discussed above. The increase in distributable net investment income per share reflects these changes and the net impact of the increase in weighted average shares outstanding for the six months ended June 30, 2022, 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 distributable net investment income on a per share basis includes (i) a $0.06 per share decrease in investment income considered less consistent or non-recurring and (ii) a decrease in compensation expense of $0.03 per

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share resulting from the comparable period difference in the fair value of deferred compensation plan assets and corresponding liabilities, both of which are discussed above.

Adjusted Distributable Net Investment Income

Adjusted distributable net investment income for the six months ended June 30, 2022 increased 27% to $111.8 million, or $1.54 per share, compared with $88.0 million, or $1.29 per share, in the corresponding period of 2021. The increase in adjusted distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, excluding share-based compensation expense and deferred compensation expense (benefit), both as discussed above. The increase in adjusted distributable net investment income per share reflects the net impact of the increase in weighted average shares outstanding for the six months ended June 30, 2022, 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 distributable net investment income on a per share basis includes a $0.06 per share decrease in investment income considered less consistent or non-recurring, as discussed above.

Net Realized Gain (Loss) from Investments

The following table provides a summary of the primary components of the total net realized loss on investments of $1.7 million for the six months ended June 30, 2022:

Six Months Ended June 30, 2022

Full Exits

Partial Exits

Restructures

Other (a)

Total

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

$

-

-

$

-

-

$

-

-

$

(458)

$

(458)

Private Loan Portfolio

1,560

1

-

-

-

-

185

1,745

Middle Market Portfolio

(6,069)

1

-

-

-

-

-

(6,069)

Other Portfolio

-

-

2,569

2

-

-

441

3,010

Short-term Portfolio

-

-

-

-

-

-

44

44

Total net realized gain/(loss)

$

(4,509)

2

$

2,569

2

$

-

-

$

212

$

(1,728)

(a)Other activity includes realized gains and losses from transactions involving 10 portfolio companies which are not considered to be significant individually or in the aggregate.

Net Unrealized Appreciation (Depreciation)

The following table provides a summary of the total net unrealized depreciation of $9.8 million for the six months ended June 30, 2022:

Six Months Ended June 30, 2022

Private

Middle

    

LMM(a)

    

Loan

    

Market

    

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

$

0.9

$

(2.5)

$

6.0

$

(2.9)

$

1.5

Net unrealized appreciation (depreciation) relating to portfolio investments

 

45.7

 

(20.4)

 

(15.7)

 

(20.9)

(b)

 

(11.3)

Total net unrealized appreciation (depreciation) relating to portfolio investments

$

46.6

$

(22.9)

$

(9.7)

$

(23.8)

$

(9.8)

(a)LMM includes unrealized appreciation on 31 LMM portfolio investments and unrealized depreciation on 30 LMM portfolio investments.

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(b)Other includes (i) $22.1 million of unrealized depreciation relating to the External Investment Manager and (ii) $1.6 million of net unrealized depreciation relating to the Main Street Capital Corporation Deferred Compensation Plan, partially offset by $1.5 million of net unrealized appreciation relating to the Other Portfolio.

Income Tax Benefit (Provision)

The income tax provision for the six months ended June 30, 2022 of $15.4 million principally consisted of (i) a deferred tax provision of $13.3 million, which is primarily the result of the net activity relating to our portfolio investments held in our 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 $2.1 million related to a $1.4 million provision for excise tax on our estimated undistributed taxable income and a $0.7 million provision for current U.S. federal and state income taxes. The income tax benefit for the six months ended June 30, 2021 of $10.4 million principally consisted of (i) a deferred tax provision of $9.1 million and (ii) a current tax provision of $1.3 million primarily related to a $0.8 million provision for current U.S. federal and state income taxes and a $0.5 million provision for excise tax in our estimated undistributed taxable income.

Net Increase in Net Assets Resulting from Operations

The net increase in net assets resulting from operations for the six months ended June 30, 2022 was $80.0 million, or $1.10 per share, compared with $152.5 million, or $2.23 per share, during the six months ended June 30, 2021. The tables above provide a summary of the reasons for the change in net increase in net assets resulting from operations for the six months ended June 30, 2022 as compared to the six months ended June 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 six months ended June 30, 2022, we realized a net increase in cash and cash equivalents of $10.8 million, which is the result of $50.2 million of cash provided by our financing activities, offset by $39.4 million of cash used in our operating activities.

The $39.4 million of cash used in our operating activities resulted primarily from (i) cash uses totaling $540.4 million for the funding of new and follow-on portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2021 and (ii) cash payments of $15.0 million related to changes in other assets and liabilities, partially offset by (i) cash proceeds totaling $412.1 million from the sales and repayments of debt investments and sales of and return on capital from equity investments and (ii) cash flows that we generated from the operating profits earned totaling $103.9 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. 

The $50.2 million of cash provided by our financing activities principally consisted of (i) $89.2 million in net cash proceeds from our ATM Program (described below) and direct stock purchase plan and (ii) $60.0 million in net proceeds from the Credit Facility, partially offset by (i) $94.1 million in cash dividends paid to stockholders and (ii) $4.9 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 June 30, 2022, we had $43.4 million in cash and cash equivalents and $475.0 million of unused capacity under the Credit Facility which we maintain to support our investment and operating activities. As of June 30, 2022, our net asset value totaled $1,865.2 million, or $25.37 per share.

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The Credit Facility provides additional liquidity to support our investment and operational activities. As of June 30, 2022, 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 with the right to request an increase in commitments under the facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total of $1.2 billion. As of June 30, 2022, 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 plus (i) 1.875% (or the applicable Prime Rate plus 0.875%) as long as we meet certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the applicable Prime 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 June 30, 2022, 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 a 1940 Act asset coverage ratio 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 June 30, 2022, we had $380.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 2.9% 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 June 30, 2022 through our wholly-owned SBICs, which bear a weighted-average annual fixed interest rate of 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 5.6 years as of June 30, 2022. 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.

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”) at an issue price of 99.16%. The 4.50% 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 4.50% 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 4.50% Notes may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 4.50% Notes 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 in accordance with the 1940 Act and the rules promulgated thereunder. As of June 30, 2022, the outstanding principal balance of the 4.50% Notes was $185.0 million.

The indenture governing the 4.50% Notes (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 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 June 30, 2022, 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 in aggregate principal amount of the 5.20% Notes at an issue price of 105.0%. Also, in July 2020, we issued an additional $125.0 million in aggregate principal amount of the 5.20% Notes at an issue price of 102.674%. The

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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 June 30, 2022, 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 June 30, 2022, 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%. 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%. The 3.00% Notes issued in October 2021 have identical terms as, and are a part of a single series with, the 3.00% Notes issued in January 2021. The 3.00% 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 3.00% 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 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 June 30, 2022, the outstanding principal balance of the 3.00% Notes was $500.0 million.

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 June 30, 2022, 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 six months ended June 30, 2022, we sold 2,159,117 shares of our common stock at a weighted-average price of $41.71 per share and raised $90.1 million of gross proceeds under the ATM Program. Net proceeds were $88.9 million after commissions to the selling agents on shares sold and offering costs. As of June 30, 2022, sales transactions representing 61,757 shares had not settled and are not included in shares issued and outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statement of Operations and in the shares used to calculate the net asset value per share. In March 2022, we entered into new distribution agreements to sell up to 15,000,000 shares through the ATM Program. As of June 30, 2022, 13,710,949 shares remained available for sale under the ATM Program.

During the year ended December 31, 2021, we sold 2,332,795 shares of our common stock at a weighted-average price of $42.71 per share and raised $99.6 million of gross proceeds under the ATM Program. Net proceeds were $98.4 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2021, sales transactions representing 36,136 shares had not settled and are not included in shares issued and

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outstanding on the face of the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated Statement of Operations and in the shares used to calculate the net asset value per share.

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, Private Loan and Middle Market 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, Private Loan and Middle Market 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 2022 annual meeting of stockholders, and have not sought such authorization since 2012, 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, or BDC asset 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). 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 BDC asset coverage ratio which, in turn, enables us to fund more investments with debt capital. In May 2022, our stockholders also approved the application of the reduced BDC asset coverage ratio. As a result, the BDC asset coverage ratio applicable to us decreased from 200% to 150% effective May 3, 2022. As of June 30, 2022, our BDC asset coverage ratio was 223%.

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

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. For a description of recently issued or adopted accounting standards, see Note B.13 – Recently Issued or Adopted Accounting Standards included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Inflation

Inflation has not historically had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, specifically including over the last few quarters as a result of the COVID-19 pandemic, recent geopolitical events and the related supply chain and labor issues, and may continue to experience, the increasing 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. These issues and

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challenges related to inflation are receiving significant attention from our investment teams and the management teams of our portfolio companies as we work to manage these growing challenges. Prolonged or more severe impacts of inflation to our portfolio companies could continue to impact their operating profits and, thereby, increase their borrowing costs, and as a result negatively impact their ability to service their debt obligations and/or reduce their available cash for distributions. In addition, these factors could have a negative impact on the fair value of our investments in these portfolio companies. The combined impacts of these impacts 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 June 30, 2022, we had a total of $263.6 million in outstanding commitments comprised of (i) 74 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) 10 investments with equity capital commitments that had not been fully called.

Contractual Obligations

As of June 30, 2022, the future fixed commitments for cash payments in connection with our SBIC debentures, the 4.50% Notes, 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):

    

2022

    

2023

    

2024

    

2025

    

2026

    

Thereafter

    

Total

3.00% Notes due 2026

$

$

$

$

$

500,000

$

$

500,000

Interest due on 3.00% Notes due 2026

7,517

15,000

15,000

15,000

15,000

67,517

5.20% Notes due 2024

450,000

450,000

Interest due on 5.20% Notes due 2024

11,700

23,400

11,700

46,800

SBIC debentures

16,000

63,800

270,200

350,000

Interest due on SBIC debentures

5,166

9,899

8,455

7,228

7,228

15,565

53,541

4.50% Notes due 2022

185,000

185,000

Interest due on 4.50% Notes due 2022

4,163

4,163

Operating Lease Obligation (1)

395

804

818

832

846

933

4,628

Total

$

213,941

$

65,103

$

549,773

$

23,060

$

523,074

$

286,698

$

1,661,649

(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 June 30, 2022, we had $380.0 million in borrowings outstanding under our Credit Facility, and the Credit Facility is scheduled to mature in April 2026.

Related Party Transactions and Agreements

As discussed further above, the External Investment Manager is treated as a wholly-owned portfolio company of ours and is included as part of our Investment Portfolio. At June 30, 2022, we had a receivable of $6.3 million due from the External Investment Manager, which included $4.5 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 us under a tax sharing agreement (see further discussion in Note B.9—Summary of Significant Accounting Policies—Income Taxes and Note D – External Investment Manager included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q) and $1.7 million of dividends declared but not paid by the External Investment Manager. We have entered into an agreement with the External Investment Manager to share employees in

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connection with its asset management business generally, and specifically for the External Investment Manager’s relationship with MSC Income and its other clients. See Note A.1—Organization and Basis of Presentation—Organization and Note D – External Investment Manager included in Item 1. Consolidated Financial Statements of this Quarterly Report on Form 10-Q for more information regarding 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 of Directors, 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 provided for a term loan of $40.0 million to MSC Income, bearing interest at a fixed rate of 5.00% per annum, and maturing 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 were 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 extinguished.

In May 2022, we purchased 94,697 shares of common stock of MSC Income totaling $750,000 from MSC Income at the price shares were purchased by MSC Income stockholders pursuant to MSC Income’s dividend reinvestment plan for its May dividend on such date. Our purchase of MSC Income common stock was unanimously approved by the Board of Directors and MSC Income’s board of directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, of each board. As of June 30, 2022, we owned 94,697 shares of MSC Income. In addition, certain of our officers and employees own shares of MSC Income and therefore have direct pecuniary interests in MSC Income.

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 co-invests with Main Street in Main Street’s Private Loan investment strategy. 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 February 2022, Main Street increased its total commitment to the Private Loan Fund from $10.0 million to $15.0 million. In addition, certain of our 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 June 30, 2022, we have funded $11.3 million of our limited partner commitment and our unfunded commitment was $3.7 million. Our limited partner commitment to the Private Loan Fund was unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act.

Additionally, we provided the Private Loan Fund with a revolving line of credit pursuant to an Unsecured Revolving Promissory Note, dated February 5, 2021 and was subsequently amended on November 30, 2021 and on December 29, 2021 (as amended, the “PL Fund 2021 Note”), in an aggregate amount equal to the amount of limited partner capital commitments to the Private Loan Fund up to $85.0 million. Borrowings under the PL Fund 2021 Note bore interest at a fixed rate of 5.00% per annum and matured on February 28, 2022. The PL Fund 2021 Note was unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. In February 2022, the Private Loan Fund fully repaid all borrowings outstanding under the PL Fund 2021 Note and the PL Fund 2021 Note was extinguished.

In March 2022, we provided the Private Loan Fund with a new revolving line of credit pursuant to a Secured Revolving Promissory Note, dated March 17, 2022 (the “PL Fund 2022 Note”), which provides for borrowings up to $10.0 million. Borrowings under the PL Fund 2022 Note bear interest at a fixed rate of 5.00% per annum and mature on the date upon which the Private Loan Fund’s investment period concludes, which is scheduled to occur in March 2026. Available borrowings under the PL Fund 2022 Note are subject to a 0.25% non-use fee. The PL Fund 2022 Note was unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term

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is defined in Section 2(a)(19) of the 1940 Act. As of June 30, 2022, there were no borrowings outstanding under the PL Fund 2022 Note.

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 June 30, 2022, $14.9 million of compensation, plus net unrealized gains and losses and investment income and minus distributions had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $6.1 million had been deferred into phantom Main Street stock units, representing 158,865 shares of our 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 the deferred fees represented by such phantom stock units are earned over the service period. The dividend amounts related to additional phantom stock units are included in the Consolidated 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 August 2022, we declared a supplemental cash dividend of $0.10 per share payable in September 2022. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the third quarter of 2022 of $0.215 per share for each of July, August and September 2022 or total monthly cash dividends of $0.645 per share for the quarter.

In August 2022, we declared regular monthly dividends of $0.22 per share for each  of October, November and December of 2022. These regular monthly dividends equal a total of $0.66 per share for the fourth quarter of 2022, representing a 4.8% increase from the regular monthly dividends paid in the fourth quarter of 2021. Including the regular monthly and supplemental dividends declared for the third and fourth quarters of 2022 we will have paid $35.02 per share in cumulative dividends since our October 2007 initial public offering.

During August 2022, we amended our Credit Facility to, among other changes, (i) increase the revolving commitments by lenders to $920.0 million, and with the right to request an increase in commitments under the Credit Facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total of $1.4 billion, subject to certain conditions, (ii) extend the revolving period under the Credit Facility to August 4, 2026 and the final maturity date of the Credit Facility to August 4, 2027, (iii) transition the reference rate used to determine the borrowing interest rate from LIBOR to Term SOFR (“SOFR”) plus an applicable credit spread adjustment, while maintaining the interest rate spread of 1.875%.

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, SOFR and prime rates, to the extent that any debt investments include floating interest rates. See “Risk Factors—Risks Related 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 Related to our Investments — We are subject to risks associated with the current interest rate environment and changes in interest rates will affect our cost of capital, net investment

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income and the value of our investments.” and “Risk Factors — Risks Related to Leverage — 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for more information regarding risks associated with our debt investments and borrowings that utilize LIBOR, SOFR or Prime 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 June 30, 2022, 75% of our debt investment portfolio (at cost) bore interest at floating rates, 94% of which were subject to contractual minimum interest rates. Our interest expense will be affected by changes in the published LIBOR (or after August 4, 2022, SOFR) rate in connection with our Credit Facility; however, the interest rates on our outstanding SBIC debentures, 4.50% Notes, 5.20% Notes and 3.00% Notes, which collectively comprise the majority of our outstanding debt, are fixed for the life of such debt. As of June 30, 2022, 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 due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of June 30, 2022.

    

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)

$

(23,680)

$

4,066

$

(19,614)

$

(0.27)

(100)

 

(19,055)

 

3,800

 

(15,255)

 

(0.21)

(50)

 

(10,404)

 

1,900

 

(8,504)

 

(0.12)

(25)

 

(5,395)

 

950

 

(4,445)

 

(0.06)

25

 

4,938

 

(950)

 

3,988

 

0.05

50

 

10,206

 

(1,900)

 

8,306

 

0.11

75

15,475

(2,850)

12,625

0.17

100

 

20,745

 

(3,800)

 

16,945

 

0.23

125

26,014

(4,750)

21,264

0.29

150

31,283

(5,700)

25,583

0.35

The hypothetical results assume that all LIBOR, SOFR and prime rate changes would be effective on the first day of the period. However, the contractual LIBOR, SOFR 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 June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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, 2021 that we filed with the SEC on February 25, 2022, 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, 2021.

The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 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 June 30, 2022, we issued 132,156 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 June 30, 2022 under the dividend reinvestment plan was $5.0 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
Number

  

Description of Exhibit

10.1

Third Amendment, dated as of August 4, 2022, to the Third Amended and Restated Credit Agreement by and among Main Street, the guarantors party thereto, Truist Bank, as administrative agent, and the lenders party thereto (previously filed as Exhibit 10.1 to Main Street Capital Corporation’s Current Report on Form 8-K filed on August 4, 2022 (File No. 1-33723)).

31.1

Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2

Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1

Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

32.2

Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

*

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: August 5, 2022

Dwayne L. Hyzak

Chief Executive Officer

(principal executive officer)

/s/ JESSE E. MORRIS

Date: August 5, 2022

Jesse E. Morris

Chief Financial Officer and Chief Operating Officer

(principal financial officer)

/s/ LANCE A. PARKER

Date: August 5, 2022

Lance A. Parker

Vice President and Chief Accounting Officer

(principal accounting officer)

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