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New Mountain Finance Corp - Quarter Report: 2020 March (Form 10-Q)


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
ý      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended March 31, 2020
o         Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Commission
File Number
 
Exact name of registrant as specified in its charter, address of principal executive
offices, telephone numbers and states or other jurisdictions of incorporation or organization
 
I.R.S. Employer
Identification Number
814-00832
 
New Mountain Finance Corporation
 
27-2978010
 
 
787 Seventh Avenue, 48th Floor
New York, New York 10019
Telephone: (212) 720-0300
State of Incorporation: Delaware
 
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
 
 
Common stock, par value $0.01 per share
NMFC
New York Stock Exchange
 
 
5.75% Notes due 2023
NMFX
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 (the "Exchange Act") during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically 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 o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 ý
 
Accelerated filer o
 
 
Non-accelerated filer o
 
Smaller reporting company o
 
 
Emerging growth company o
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý




 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock.
Description
 
Shares as of May 6, 2020
Common stock, par value $0.01 per share
 
96,827,342
 



FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2020
TABLE OF CONTENTS
 
PAGE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3


PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
New Mountain Finance Corporation
 
Consolidated Statements of Assets and Liabilities
(in thousands, except shares and per share data)
(unaudited)
 
March 31, 2020
 
December 31, 2019
Assets
 

 
 

Investments at fair value
 

 
 

Non-controlled/non-affiliated investments (cost of $2,627,761 and $2,619,408, respectively)
$
2,481,871

 
$
2,613,801

Non-controlled/affiliated investments (cost of $79,794 and $82,825, respectively)
59,660

 
73,527

Controlled investments (cost of $478,950 and $449,308, respectively)
449,786

 
472,952

Total investments at fair value (cost of $3,186,505 and $3,151,541, respectively)
2,991,317

 
3,160,280

Securities purchased under collateralized agreements to resell (cost of $30,000 and $30,000, respectively)
21,422

 
21,422

Cash and cash equivalents
22,108

 
48,574

Interest and dividend receivable
32,650

 
31,800

Receivable from unsettled securities sold
30,964

 

Receivable from affiliates
545

 
277

Other assets
4,526

 
3,702

Total assets
$
3,103,532

 
$
3,266,055

Liabilities
 

 
 

Borrowings
 
 
 
     Holdings Credit Facility
$
569,163

 
$
661,563

     Unsecured Notes
453,250

 
453,250

     SBA-guaranteed debentures
300,000

 
225,000

     DB Credit Facility
270,000

 
230,000

     Convertible Notes
201,597

 
201,623

     NMFC Credit Facility
188,500

 
188,500

     Deferred financing costs (net of accumulated amortization of $29,542 and $28,390, respectively)
(18,318
)
 
(17,640
)
Net borrowings
1,964,192

 
1,942,296

Payable for unsettled securities purchased

 
1,780

Management fee payable
20,613

 
10,298

Incentive fee payable
15,472

 
7,646

Interest payable
10,965

 
16,484

Payable to affiliates
1,025

 
673

Deferred tax liability
14

 
912

Other liabilities
1,811

 
2,498

Total liabilities
2,014,092

 
1,982,587

Commitments and contingencies (See Note 9)
 

 
 

Net assets
 

 
 

Preferred stock, par value $0.01 per share, 2,000,000 shares authorized, none issued

 

Common stock, par value $0.01 per share, 200,000,000 and 200,000,000 shares authorized, respectively, and 96,827,342 and 96,827,342 shares issued and outstanding, respectively
968

 
968

Paid in capital in excess of par
1,287,853

 
1,287,853

Accumulated overdistributed earnings
(210,631
)
 
(5,353
)
Total net assets of New Mountain Finance Corporation
1,078,190

 
1,283,468

Non-controlling interest in New Mountain Net Lease Corporation
11,250

 
$

Total net assets
$
1,089,440

 
$
1,283,468

Total liabilities and net assets
$
3,103,532

 
$
3,266,055

Number of shares outstanding
96,827,342

 
96,827,342

Net asset value per share of New Mountain Finance Corporation
$
11.14

 
$
13.26


The accompanying notes are an integral part of these consolidated financial statements.
4


New Mountain Finance Corporation
 
Consolidated Statements of Operations
(in thousands, except shares and per share data)
(unaudited)
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Investment income
 
 
 
From non-controlled/non-affiliated investments:
 
 
 
Interest income
$
57,586

 
$
44,457

Non-cash dividend income
2,324

 
1,974

Other income
1,471

 
2,254

From non-controlled/affiliated investments:
 
 
 
Interest income
1,069

 
1,004

Dividend income
720

 
726

Non-cash dividend income
(3,418
)
 
291

Other income
291

 
291

From controlled investments:
 
 
 
Interest income
2,981

 
2,463

Dividend income
8,229

 
8,457

Non-cash dividend income
2,638

 
2,045

Other income
193

 
229

Total investment income
74,084

 
64,191

Expenses
 
 
 
Incentive fee
7,826

 
6,863

Management fee
13,858

 
10,975

Interest and other financing expenses
22,194

 
19,146

Administrative expenses
1,040

 
1,095

Professional fees
905

 
766

Other general and administrative expenses
499

 
412

Total expenses
46,322

 
39,257

Less: management fees waived (See Note 5)
(3,543
)
 
(2,533
)
Net expenses
42,779

 
36,724

Net investment income before income taxes
31,305

 
27,467

Income tax expense

 
17

Net investment income
31,305

 
27,450

Net realized gains (losses):
 
 
 
Non-controlled/non-affiliated investments
(702
)
 
43

Controlled investments
4

 
3

New Mountain Net Lease Corporation
812

 

Net change in unrealized (depreciation) appreciation:
 
 
 
Non-controlled/non-affiliated investments
(140,283
)
 
9,763

Non-controlled/affiliated investments
(10,836
)
 
(891
)
Controlled investments
(52,808
)
 
7,442

New Mountain Net Lease Corporation
(812
)
 

Benefit for taxes
898

 
110

Net realized and unrealized (losses) gains
(203,727
)
 
16,470

Net (decrease) increase in net assets resulting from operations
(172,422
)
 
43,920

Less: Net decrease in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation
(65
)
 

Net (decrease) increase in net assets resulting from operations related to New Mountain Finance Corporation
$
(172,357
)
 
$
43,920

Basic earnings per share
$
(1.78
)
 
$
0.56

Weighted average shares of common stock outstanding - basic (See Note 11)
96,827,342

 
78,457,641

Diluted earnings per share
$
(1.78
)
 
$
0.49

Weighted average shares of common stock outstanding - diluted (See Note 11)
110,084,927

 
95,857,530

Distributions declared and paid per share
$
0.34

 
$
0.34


The accompanying notes are an integral part of these consolidated financial statements.
5


New Mountain Finance Corporation
 
Consolidated Statements of Changes in Net Assets
(in thousands, except shares and per share data)
(unaudited)
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Increase (decrease) in net assets resulting from operations:
 
 
 
Net investment income
$
31,305

 
$
27,450

Net realized gains on investments and New Mountain Net Lease Corporation
114

 
46

Net change in unrealized (depreciation) appreciation of investments and New Mountain Net Lease Corporation
(204,739
)
 
16,314

Benefit for taxes
898

 
110

Net (decrease) increase in net assets resulting from operations
(172,422
)
 
43,920

Less: Net decrease in net assets resulting from operations related to non-controlling interest in New Mountain Net Lease Corporation
(65
)
 

Net (decrease) increase in net assets resulting from operations related to New Mountain Finance Corporation
(172,357
)
 
43,920

Capital transactions
 
 
 
Net proceeds from shares sold

 
59,297

Deferred offering costs

 
(229
)
Distributions declared to stockholders from net investment income
(32,921
)
 
(27,342
)
Reinvestment of distributions

 
1,364

Total net (decrease) increase in net assets resulting from capital transactions
(32,921
)
 
33,090

Net (decrease) increase in net assets
(205,278
)
 
77,010

New Mountain Finance Corporation net assets at the beginning of the period
1,283,468

 
1,006,269

New Mountain Finance Corporation net assets at the end of the period
1,078,190

 
1,083,279

Non-controlling interest in New Mountain Net Lease Corporation
11,250

 

Net assets at the end of the period
$
1,089,440

 
$
1,083,279

 
 
 
 
Capital share activity
 
 
 
Shares sold

 
4,312,500

Shares issued from the reinvestment of distributions

 
100,558

Net increase in shares outstanding

 
4,413,058




The accompanying notes are an integral part of these consolidated financial statements.
6


New Mountain Finance Corporation
 
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Cash flows from operating activities
 
 
 
Net (decrease) increase in net assets resulting from operations
$
(172,422
)
 
$
43,920

Adjustments to reconcile net decrease (increase) in net assets resulting from operations to net cash (used in) provided by operating activities:
 
 
 
Net realized (gains) losses on investments and New Mountain Net Lease Corporation
(114
)
 
(46
)
Net change in unrealized depreciation (appreciation) of investments and New Mountain Net Lease Corporation
204,739

 
(16,314
)
Amortization of purchase discount
(3,528
)
 
(835
)
Amortization of deferred financing costs
1,152

 
1,651

Amortization of premium on Convertible Notes
(26
)
 
(27
)
Non-cash investment income
(5,131
)
 
(6,842
)
(Increase) decrease in operating assets:
 
 
 
Proceeds from sale of non-controlling interest in New Mountain Net Lease Corporation
11,315

 

Purchase of investments and delayed draw facilities
(172,921
)
 
(158,036
)
Proceeds from sales and paydowns of investments
178,722

 
5,857

Cash received for purchase of undrawn portion of revolving credit or delayed draw facilities
211

 
46

Cash paid for purchase of drawn portion of revolving credit facilities
(8,996
)
 
(338
)
Cash paid on drawn revolvers
(33,639
)
 
(9,026
)
Cash repayments on drawn revolvers
9,620

 
5,182

Interest and dividend receivable
(850
)
 
(4,289
)
Receivable from unsettled securities sold
(30,964
)
 

Receivable from affiliates
(268
)
 
(287
)
Other assets
(802
)
 
(758
)
Increase (decrease) in operating liabilities:
 
 
 
Payable for unsettled securities purchased
(1,780
)
 
295

Management fee payable
10,315

 
50

Incentive fee payable
7,826

 
(1
)
Interest payable
(5,519
)
 
(1,884
)
Payable to affiliates
352

 
(223
)
Deferred tax liability
(898
)
 
(110
)
Other liabilities
74

 
2,758

Net cash flows used in operating activities
(13,532
)
 
(139,257
)
Cash flows from financing activities
 
 
 
Net proceeds from shares sold

 
59,297

Distributions paid
(32,921
)
 
(25,978
)
Offering costs paid

 
(265
)
Proceeds from Holdings Credit Facility
16,000

 
69,500

Repayment of Holdings Credit Facility
(108,400
)
 
(15,000
)
Proceeds from SBA-guaranteed debentures
75,000

 

Proceeds from NMFC Credit Facility

 
110,000

Repayment of NMFC Credit Facility

 
(35,000
)
Proceeds from DB Credit Facility
40,000

 
25,000

Repayment of DB Credit Facility

 
(32,000
)
Deferred financing costs paid
(2,613
)
 
(390
)
Net cash flows (used) provided by financing activities
(12,934
)
 
155,164

Net (decrease) increase in cash and cash equivalents
(26,466
)
 
15,907

Cash and cash equivalents at the beginning of the period
48,574

 
49,664

Cash and cash equivalents at the end of the period
$
22,108

 
$
65,571

Supplemental disclosure of cash flow information
 
 
 
Cash interest paid
$
26,301

 
$
19,085

Income taxes paid

 
3

Non-cash financing activities:
 
 
 
Value of shares issued in connection with the distribution reinvestment plan
$

 
$
1,364

Accrual for offering costs
86

 
92

Accrual for deferred financing costs
4

 
119



The accompanying notes are an integral part of these consolidated financial statements.
7

New Mountain Finance Corporation
 
Consolidated Schedule of Investments
March 31, 2020
(in thousands, except shares)
(unaudited)

Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Non-Controlled/Non-Affiliated Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
Second lien (3)(10)
 
8.50% (L + 7.50%/M)
 
6/1/2018
 
6/8/2026
 
$
28,613

 
$
28,396

 
$
26,301

 
 
 
 
Second lien (8)(10)
 
8.50% (L + 7.50%/M)
 
6/1/2018
 
6/8/2026
 
7,500

 
7,446

 
6,894

 
 
 
 
 
 
 
 
 
 
 
 
36,113

 
35,842

 
33,195

 
3.05
 %
Wolfpack IP Co.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)(10)
 
7.50% (L + 6.50%/M)
 
6/14/2019
 
6/13/2025
 
9,091

 
9,010

 
8,997

 
0.83
 %
Total Funded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
$
45,204

 
$
44,852

 
$
42,192

 
3.88
 %
Funded Debt Investments - United Arab Emirates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GEMS Menasa (Cayman) Limited**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
First lien (8)
 
6.61% (L + 5.00%/Q)

7/30/2019

7/31/2026

$
33,321


$
33,162


$
29,656


2.72
 %
Total Funded Debt Investments - United Arab Emirates
 
 
 






$
33,321


$
33,162


$
29,656


2.72
 %
Funded Debt Investments - United Kingdom
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shine Acquisition Co. S.à.r.l / Boing US Holdco Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Services
 
Second lien (2)(10)
 
8.50% (L + 7.50%/M)
 
9/25/2017
 
10/3/2025
 
$
37,853

 
$
37,677

 
$
36,433

 
 
 
 
Second lien (8)(10)
 
8.50% (L + 7.50%/M)
 
9/25/2017
 
10/3/2025
 
6,000

 
5,972

 
5,775

 
 
 
 
 
 
 
 
 
 
 
 
43,853

 
43,649

 
42,208

 
3.87
 %
Aston FinCo S.a r.l. / Aston US Finco, LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (8)(10)
 
10.13% (L + 8.25%/Q)
 
10/8/2019
 
10/8/2027
 
34,459

 
34,193

 
31,982

 
2.94
 %
Total Funded Debt Investments - United Kingdom
 
 
 
 
 
 
 
 
 
$
78,312

 
$
77,842

 
$
74,190

 
6.81
 %
Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PhyNet Dermatology LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
6.50% (L + 5.50%/M)
 
9/17/2018
 
8/16/2024
 
$
50,240

 
$
49,849

 
$
46,487

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.50% (L + 5.50%/M)
 
9/17/2018
 
8/16/2024
 
28,068

 
27,944

 
25,972

 
 
 
 
 
 
 
 
 
 
 
 
78,308

 
77,793

 
72,459

 
6.65
 %
GS Acquisitionco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)(10)
 
6.83% (L + 5.75%/S)
 
8/7/2019
 
5/24/2024
 
26,842

 
26,694

 
26,369

 
 
 
 
First lien (5)(10)
 
6.83% (L + 5.75%/S)
 
8/7/2019
 
5/24/2024
 
22,363

 
22,239

 
21,969

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.83% (L + 5.75%/S)
 
8/7/2019
 
5/24/2024
 
20,868

 
20,742

 
20,501

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.83% (L + 5.75%/S)
 
8/7/2019
 
5/24/2024
 
3,134

 
3,115

 
3,079

 
 
 
 
 
 
 
 
 
 
 
 
73,207

 
72,790

 
71,918

 
6.60
 %

The accompanying notes are an integral part of these consolidated financial statements.
8

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Benevis Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
8.09% (L + 6.32%/Q)
 
3/15/2018
 
3/15/2024
 
$
62,572

 
$
62,572

 
$
46,528

 
 
 
 
First lien (8)(10)
 
8.09% (L + 6.32%/Q)
 
3/15/2018
 
3/15/2024
 
15,352

 
15,352

 
11,416

 
 
 
 
First lien (3)(10)
 
7.96% (L + 6.32%/Q)
 
3/29/2019
 
3/15/2024
 
7,665

 
7,665

 
5,699

 
 
 
 
 
 
 
 
 
 
 
 
85,589

 
85,589

 
63,643

 
5.84
 %
Associations, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
8.91% (L + 4.00% + 3.00% PIK/Q)*
 
7/30/2018
 
7/30/2024
 
44,899

 
44,684

 
43,866

 
 
 
 
First lien (8)(10)
 
8.91% (L + 4.00% + 3.00% PIK/Q)*
 
7/30/2018
 
7/30/2024
 
5,154

 
5,130

 
5,035

 
 
 
 
First lien (3)(10)(11) - Drawn
 
8.90% (L + 4.00% + 3.00% PIK/Q)*
 
7/30/2018
 
7/30/2024
 
7,433

 
7,395

 
7,262

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.01% (L + 6.00%/M)
 
7/30/2018
 
7/30/2024
 
2,033

 
2,020

 
1,986

 
 
 
 
 
 
 
 
 
 
 
 
59,519

 
59,229

 
58,149

 
5.34
 %
iCIMS, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (8)(10)
 
7.50% (L + 6.50%/M)
 
9/12/2018
 
9/12/2024
 
46,636

 
46,247

 
46,636

 
 
 
 
First lien (8)(10)
 
7.50% (L + 6.50%/M)
 
6/14/2019
 
9/12/2024
 
8,667

 
8,591

 
8,667

 
 
 
 
 
 
 
 
 
 
 
 
55,303

 
54,838

 
55,303

 
5.08
 %
Nomad Buyer, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
5.61% (L + 5.00%/M)
 
8/3/2018
 
8/1/2025
 
56,296

 
54,786

 
54,940

 
5.04
 %
ConnectWise, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)(10)
 
7.07% (L + 6.00%/S)
 
11/26/2019
 
2/28/2025
 
55,473

 
55,145

 
54,031

 
4.96
 %
Salient CRGT Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Services
 
First lien (2)(10)
 
7.57% (L + 6.50%/S)
 
1/6/2015
 
2/28/2022
 
39,031

 
38,798

 
37,177

 
 
 
 
First lien (8)(10)
 
7.57% (L + 6.50%/S)
 
6/6/2019
 
2/28/2022
 
13,338

 
12,942

 
12,704

 
 
 
 
First lien (3)(10)(11) - Drawn
 
8.00% (P + 4.75%/Q)
 
6/26/2018
 
11/29/2021
 
2,100

 
1,932

 
2,000

 
 
 
 
 
 
 
 
 
 
 
 
54,469

 
53,672

 
51,881

 
4.76
 %
CentralSquare Technologies, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (3)(10)
 
8.95% (L + 7.50%/Q)
 
8/15/2018
 
8/31/2026
 
47,838

 
47,312

 
43,762

 
 
 
 
Second lien (8)(10)
 
8.95% (L + 7.50%/Q)
 
8/15/2018
 
8/31/2026
 
7,500

 
7,417

 
6,861

 
 
 
 
 
 
 
 
 
 
 
 
55,338

 
54,729

 
50,623

 
4.65
 %
Frontline Technologies Group Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (4)(10)
 
6.75% (L + 5.75%/M)
 
9/18/2017
 
9/18/2023
 
22,109

 
22,003

 
21,507

 
 
 
 
First lien (2)(10)
 
6.75% (L + 5.75%/M)
 
9/18/2017
 
9/18/2023
 
18,632

 
18,578

 
18,125

 
 
 
 
First lien (2)(10)
 
6.75% (L + 5.75%/M)
 
9/18/2017
 
9/18/2023
 
7,690

 
7,642

 
7,481

 
 
 
 
 
 
 
 
 
 
 
 
48,431

 
48,223

 
47,113

 
4.31
 %

The accompanying notes are an integral part of these consolidated financial statements.
9

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
NM GRC Holdco, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
7.45% (L + 6.00%/Q)
 
2/9/2018
 
2/9/2024
 
$
38,249

 
$
38,116

 
$
36,826

 
 
 
 
First lien (2)(10)
 
7.45% (L + 6.00%/Q)
 
2/9/2018
 
2/9/2024
 
10,631

 
10,591

 
10,235

 
 
 
 
 
 
 
 
 
 
 
 
48,880

 
48,707

 
47,061

 
4.32
 %
Symplr Software Intermediate Holdings, Inc. (24)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Symplr Software, Inc. (fka Caliper Software, Inc.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Information Technology
 
First lien (2)(10)
 
6.57% (L + 5.50%/S)
 
11/30/2018
 
11/28/2025
 
30,484

 
30,279

 
30,200

 
 
 
 
First lien (4)(10)
 
6.57% (L + 5.50%/S)
 
11/30/2018
 
11/28/2025
 
14,813

 
14,718

 
14,675

 
 
 
 
 
 
 
 
 
 
 
 
45,297

 
44,997

 
44,875

 
4.12
 %
Integro Parent Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
6.75% (L + 5.75%/M)
 
10/9/2015
 
10/31/2022
 
34,869

 
34,749

 
34,615

 
 
 
 
Second lien (8)(10)
 
10.25% (L + 9.25%/M)
 
10/9/2015
 
10/30/2023
 
10,000

 
9,945

 
10,000

 
 
 
 
 
 
 
 
 
 
 
 
44,869

 
44,694

 
44,615

 
4.10
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brave Parent Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (5)(10)
 
9.28% (L + 7.50%/Q)
 
4/17/2018
 
4/17/2026
 
22,500

 
22,407

 
20,977

 
 
 
 
Second lien (2)(10)
 
9.28% (L + 7.50%/Q)
 
4/17/2018
 
4/17/2026
 
16,624

 
16,484

 
15,498

 
 
 
 
Second lien (8)(10)
 
9.28% (L + 7.50%/Q)
 
4/17/2018
 
4/17/2026
 
6,000

 
5,949

 
5,594

 
 
 
 
 
 
 
 
 
 
 
 
45,124

 
44,840

 
42,069

 
3.86
 %
Quest Software US Holdings Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (2)(10)
 
10.03% (L + 8.25%/Q)
 
5/17/2018
 
5/18/2026
 
43,697

 
43,331

 
40,927

 
3.76
 %
Tenawa Resource Holdings LLC (14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tenawa Resource Management LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Specialty Chemicals & Materials
 
First lien (3)(10)
 
10.50% (Base + 8.00%/Q)
 
5/12/2014
 
10/30/2024
 
38,900

 
38,852

 
38,900

 
3.57
 %
Trader Interactive, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
7.57% (L + 6.50%/S)
 
6/15/2017
 
6/17/2024
 
31,850

 
31,702

 
30,943

 
 
 
 
First lien (8)(10)
 
7.57% (L + 6.50%/S)
 
6/15/2017
 
6/17/2024
 
4,937

 
4,914

 
4,796

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.72% (L + 6.50%/Q)
 
6/15/2017
 
6/15/2023
 
669

 
664

 
651

 
 
 
 
 
 
 
 
 
 
 
 
37,456

 
37,280

 
36,390

 
3.34
 %
TDG Group Holding Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Services
 
First lien (2)(10)
 
6.57% (L + 5.50%/S)
 
5/22/2018
 
5/31/2024
 
24,797

 
24,705

 
23,693

 
 
 
 
First lien (8)(10)
 
6.57% (L + 5.50%/S)
 
5/22/2018
 
5/31/2024
 
4,937

 
4,919

 
4,717

 
 
 
 
First lien (2)(10)
 
6.57% (L + 5.50%/S)
 
5/22/2018
 
5/31/2024
 
3,312

 
3,300

 
3,165

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.35% (L + 5.50%/Q)
 
5/22/2018
 
5/31/2024
 
4,987

 
4,962

 
4,766

 
 
 
 
 
 
 
 
 
 
 
 
38,033

 
37,886

 
36,341

 
3.34
 %

The accompanying notes are an integral part of these consolidated financial statements.
10

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Kronos Incorporated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (2)
 
10.01% (L + 8.25%/Q)
 
10/26/2012
 
11/1/2024
 
$
26,148

 
$
26,163

 
$
24,658

 
 
 
 
Second lien (8)
 
10.01% (L + 8.25%/Q)
 
10/26/2012
 
11/1/2024
 
11,147

 
11,147

 
10,511

 
 
 
 
 
 
 
 
 
 
 
 
37,295

 
37,310

 
35,169

 
3.23
 %
Definitive Healthcare Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Information Technology
 
First lien (8)(10)
 
8.19% (L + 5.50% + 1.00% PIK/Q)*
 
8/7/2019
 
7/16/2026
 
33,483

 
33,329

 
33,034

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.70% (L + 5.50%/Q)
 
8/7/2019
 
7/16/2024
 
1,848

 
1,839

 
1,823

 
 
 
 
 
 
 
 
 
 
 
 
35,331

 
35,168

 
34,857

 
3.20
 %
Peraton Holding Corp. (fka MHVC Acquisition Corp.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Services
 
First lien (2)
 
6.87% (L + 5.25%/Q)
 
4/25/2017
 
4/29/2024
 
36,812

 
36,693

 
34,419

 
3.16
 %
Apptio, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (8)(10)
 
8.25% (L + 7.25%/M)
 
1/10/2019
 
1/10/2025
 
34,076

 
33,497

 
34,076

 
3.13
 %
KAMC Holdings, Inc
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (2)(10)
 
9.70% (L + 8.00%/Q)
 
8/14/2019
 
8/13/2027
 
18,750

 
18,617

 
16,910

 
 
 
 
Second lien (8)(10)
 
9.70% (L + 8.00%/Q)
 
8/14/2019
 
8/13/2027
 
18,750

 
18,617

 
16,910

 
 
 
 
 
 
 
 
 
 
 
 
37,500

 
37,234

 
33,820

 
3.10
 %
Finalsite Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (4)(10)
 
7.28% (L + 5.50%/Q)
 
9/28/2018
 
9/25/2024
 
22,163

 
22,031

 
21,834

 
 
 
 
First lien (2)(10)
 
7.28% (L + 5.50%/Q)
 
9/28/2018
 
9/25/2024
 
10,947

 
10,882

 
10,785

 
 
 
 
 
 
 
 
 
 
 
 
33,110

 
32,913

 
32,619

 
2.99
 %
Affinity Dental Management, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
7.41% (L + 6.00%/Q)
 
9/15/2017
 
9/15/2023
 
27,028

 
26,974

 
22,158

 
 
 
 
First lien (4)(10)
 
7.41% (L + 6.00%/Q)
 
9/17/2019
 
9/15/2023
 
10,917

 
10,917

 
8,950

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.00% (P + 5.00%/M)
 
9/15/2017
 
3/15/2023
 
1,738

 
1,720

 
1,424

 
 
 
 
 
 
 
 
 
 
 
 
39,683

 
39,611

 
32,532

 
2.99
 %
CoolSys, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial Services
 
First lien (5)(10)
 
7.00% (L + 6.00%/M)
 
11/20/2019
 
11/20/2026
 
22,444

 
22,335

 
21,932

 
 
 
 
First lien (2)(10)
 
7.00% (L + 6.00%/M)
 
11/20/2019
 
11/20/2026
 
10,374

 
10,324

 
10,138

 
 
 
 
 
 
 
 
 
 
 
 
32,818

 
32,659

 
32,070

 
2.94
 %
DCA Investment Holding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
6.32% (L + 5.25%/S)
 
7/2/2015
 
7/2/2021
 
17,051

 
17,010

 
15,511

 
 
 
 
First lien (3)(10)
 
6.32% (L + 5.25%/S)
 
12/20/2017
 
7/2/2021
 
8,868

 
8,821

 
8,067

 
 
 
 
First lien (2)(10)
 
6.32% (L + 5.25%/S)
 
12/20/2017
 
7/2/2021
 
4,174

 
4,156

 
3,797

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.32% (L + 5.25%/S)
 
4/16/2019
 
7/2/2021
 
3,030

 
2,855

 
2,756

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.25% (L + 5.25%/M)
 
7/2/2015
 
7/2/2021
 
2,050

 
2,030

 
1,865

 
 
 
 
 
 
 
 
 
 
 
 
35,173

 
34,872

 
31,996

 
2.94
 %

The accompanying notes are an integral part of these consolidated financial statements.
11

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Kaseya Traverse Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (8)(10)
 
8.91% (L + 4.00% + 3.00% PIK/S)*
 
5/9/2019
 
5/2/2025
 
$
27,595

 
$
27,354

 
$
27,220

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.50% (L + 6.50%/M)
 
5/9/2019
 
5/2/2025
 
2,288

 
2,266

 
2,257

 
 
 
 
First lien (3)(10)(11) - Drawn
 
8.91% (L + 4.00% + 3.00% PIK/S)*
 
5/9/2019
 
5/2/2025
 
431

 
427

 
425

 
 
 
 
 
 
 
 
 
 
 
 
30,314

 
30,047

 
29,902

 
2.73
 %
Integral Ad Science, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (8)(10)
 
8.25% (L + 6.00% + 1.25% PIK/M)*
 
7/19/2018
 
7/19/2024
 
26,927

 
26,711

 
26,443

 
 
 
 
First lien (3)(10)
 
8.25% (L + 6.00% + 1.25% PIK/M)*
 
8/27/2019
 
7/19/2024
 
3,518

 
3,486

 
3,454

 
 
 
 
 
 
 
 
 
 
 
 
30,445

 
30,197

 
29,897

 
2.74
 %
Conservice, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
6.51% (L + 5.25%/Q)
 
1/3/2019
 
11/29/2024
 
25,247

 
25,143

 
24,924

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.51% (L + 5.25%/Q)
 
1/3/2019
 
11/29/2024
 
4,407

 
4,388

 
4,351

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.30% (L + 5.25%/Q)
 
1/3/2019
 
11/29/2024
 
442

 
440

 
437

 
 
 
 
 
 
 
 
 
 
 
 
30,096

 
29,971

 
29,712

 
2.73
 %
GC Waves Holdings, Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (5)(10)
 
7.20% (L + 5.75%/Q)
 
10/31/2019
 
10/31/2025
 
22,500

 
22,340

 
22,331

 
 
 
 
First lien (2)(10)
 
7.20% (L + 5.75%/Q)
 
10/31/2019
 
10/31/2025
 
3,673

 
3,647

 
3,645

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.20% (L + 4.75%/Q)
 
10/31/2019
 
10/31/2025
 
1,481

 
1,467

 
1,470

 
 
 
 
 
 
 
 
 
 
 
 
27,654

 
27,454

 
27,446

 
2.52
 %
Keystone Acquisition Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
6.70% (L + 5.25%/Q)
 
5/10/2017
 
5/1/2024
 
24,419

 
24,312

 
23,040

 
 
 
 
Second lien (2)(10)
 
10.70% (L + 9.25%/Q)
 
5/10/2017
 
5/1/2025
 
4,500

 
4,467

 
4,380

 
 
 
 
 
 
 
 
 
 
 
 
28,919

 
28,779

 
27,420

 
2.52
 %
Sovos Brands Intermediate, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Food & Beverage
 
First lien (2)(10)
 
6.59% (L + 5.00%/Q)
 
11/16/2018
 
11/20/2025
 
27,887

 
27,768

 
26,548

 
2.44
 %
MRI Software LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (5)(10)
 
6.57% (L + 5.50%/S)
 
1/31/2020
 
2/10/2026
 
22,500

 
22,389

 
22,387

 
 
 
 
First lien (2)(10)
 
6.57% (L + 5.50%/S)
 
1/31/2020
 
2/10/2026
 
1,627

 
1,619

 
1,619

 
 
 
 
First lien (3)(10)
 
6.57% (L + 5.50%/S)
 
1/31/2020
 
2/10/2026
 
1,117

 
1,112

 
1,112

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.57% (L + 5.50%/S)
 
1/31/2020
 
2/10/2026
 
1,001

 
996

 
996

 
 
 
 
 
 
 
 
 
 
 
 
26,245

 
26,116

 
26,114

 
2.40
 %
Instructure, Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (8)(10)
 
8.21% (L + 7.00%/Q)
 
3/24/2020
 
3/24/2026
 
26,278

 
26,115

 
26,114

 
2.40
 %

The accompanying notes are an integral part of these consolidated financial statements.
12

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
HS Purchaser, LLC / Help/Systems Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (5)(10)
 
9.00% (L + 8.00%/M)
 
11/14/2019
 
11/19/2027
 
$
22,500

 
$
22,383

 
$
21,551

 
 
 
 
Second lien (2)(10)
 
9.00% (L + 8.00%/M)
 
11/14/2019
 
11/19/2027
 
4,208

 
4,167

 
4,030

 
 
 
 
 
 
 
 
 
 
 
 
26,708

 
26,550

 
25,581

 
2.35
 %
Confluent Health, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
6.01% (L + 5.00%/M)
 
6/21/2019
 
6/24/2026
 
27,294

 
27,168

 
24,600

 
2.26
 %
Ansira Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (8)(10)
 
7.36% (L + 5.75%/Q)
 
12/19/2016
 
12/20/2022
 
28,382

 
28,312

 
20,282

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.98% (L + 5.75%/Q)
 
12/19/2016
 
12/20/2022
 
4,731

 
4,724

 
3,381

 
 
 
 
 
 
 
 
 
 
 
 
33,113

 
33,036

 
23,663

 
2.17
 %
Idera, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (4)(10)
 
10.08% (L + 9.00%/S)
 
6/27/2019
 
6/28/2027
 
22,500

 
22,341

 
22,415

 
2.06
 %
Astra Acquisition Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (5)(10)
 
6.50% (L + 5.50%/M)
 
2/26/2020
 
3/1/2027
 
22,500

 
22,332

 
22,331

 
2.06
 %
Convey Health Solutions, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (4)(10)
 
7.01% (L + 5.25%/Q)
 
9/9/2019
 
9/4/2026
 
22,388

 
22,152

 
21,805

 
2.00
 %
Spring Education Group, Inc (fka SSH Group Holdings, Inc.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Second lien (2)(10)
 
9.70% (L + 8.25%/Q)
 
7/26/2018
 
7/30/2026
 
24,533

 
24,478

 
21,626

 
1.99
 %
YLG Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (5)(10)
 
7.51% (L + 5.75%/Q)
 
11/1/2019
 
10/31/2025
 
18,367

 
18,280

 
17,884

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.75% (L + 5.75%/M)
 
11/1/2019
 
10/31/2025
 
3,571

 
3,554

 
3,477

 
 
 
 
 
 
 
 
 
 
 
 
21,938

 
21,834

 
21,361

 
1.96
 %
TMK Hawk Parent, Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution & Logistics
 
First lien (2)
 
4.58% (L + 3.50%/S)
 
6/24/2019
 
8/28/2024
 
16,865

 
14,554

 
10,710

 
 
 
 
First lien (8)
 
4.58% (L + 3.50%/S)
 
10/23/2019
 
8/28/2024
 
16,266

 
13,474

 
10,329

 
 
 
 
 
 
 
 
 
 
 
 
33,131

 
28,028

 
21,039

 
1.93
 %
Avatar Topco, Inc. (23)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EAB Global, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Second lien (3)(10)
 
9.49% (L + 7.50%/S)
 
11/17/2017
 
11/17/2025
 
13,950

 
13,787

 
13,345

 
 
 
 
Second lien (8)(10)
 
9.49% (L + 7.50%/S)
 
11/17/2017
 
11/17/2025
 
7,500

 
7,412

 
7,174

 
 
 
 
 
 
 
 
 
 
 
 
21,450

 
21,199

 
20,519

 
1.88
 %
AAC Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
First lien (2)(10)
 
9.84% (L + 8.25%/M)
 
9/30/2015
 
9/30/2022
 
25,079

 
24,996

 
19,794

 
1.82
 %
Institutional Shareholder Services, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (3)(10)
 
9.57% (L + 8.50%/S)
 
3/5/2019
 
3/5/2027
 
20,372

 
20,094

 
19,521

 
1.79
 %
MED Parentco, LP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
Second lien (8)(10)
 
9.24% (L + 8.25%/M)
 
8/2/2019
 
8/30/2027
 
20,857

 
20,707

 
19,337

 
1.76
 %

The accompanying notes are an integral part of these consolidated financial statements.
13

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Xactly Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (4)(10)
 
8.25% (L + 7.25%/M)
 
7/31/2017
 
7/29/2022
 
$
19,047

 
$
18,936

 
$
18,944

 
1.74
 %
CRCI Longhorn Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (3)
 
8.05% (L + 7.25%/M)
 
8/2/2018
 
8/10/2026
 
14,349

 
14,302

 
12,161

 
 
 
 
Second lien (8)
 
8.05% (L + 7.25%/M)
 
8/2/2018
 
8/10/2026
 
7,500

 
7,476

 
6,356

 
 
 
 
 
 
 
 
 
 
 
 
21,849

 
21,778

 
18,517

 
1.70
 %
FR Arsenal Holdings II Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
8.25% (L + 7.25%/Q)
 
9/29/2016
 
9/8/2022
 
18,308

 
18,211

 
18,282

 
1.68
 %
Bullhorn, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)(10)
 
6.57% (L + 5.50%/S)
 
9/24/2019
 
10/1/2025
 
17,131

 
17,011

 
16,792

 
 
 
 
First lien (3)(10)
 
6.57% (L + 5.50%/S)
 
9/24/2019
 
10/1/2025
 
283

 
281

 
278

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.50% (L + 5.50%/M)
 
9/24/2019
 
10/1/2025
 
852

 
845

 
835

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.57% (L + 5.50%/S)
 
9/24/2019
 
10/1/2025
 
213

 
211

 
208

 
 
 
 
 
 
 
 
 
 
 
 
18,479

 
18,348

 
18,113

 
1.66
 %
DiversiTech Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution & Logistics
 
Second lien (2)(10)
 
8.95% (L + 7.50%/Q)
 
5/18/2017
 
6/2/2025
 
12,000

 
11,913

 
11,038

 
 
 
 
Second lien (8)(10)
 
8.95% (L + 7.50%/Q)
 
5/18/2017
 
6/2/2025
 
7,500

 
7,445

 
6,898

 
 
 
 
 
 
 
 
 
 
 
 
19,500

 
19,358

 
17,936

 
1.65
 %
Bluefin Holding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (8)(10)
 
8.75% (L + 7.75%/Q)
 
9/6/2019
 
9/6/2027
 
18,000

 
18,000

 
17,143

 
1.57
 %
Kele Holdco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution & Logistics
 
First lien (5)(10)
 
7.12% (L + 6.00%/Q)
 
2/20/2020
 
2/20/2026
 
16,192

 
16,112

 
16,111

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.00% (L + 6.00%/M)
 
2/20/2020
 
2/20/2026
 
900

 
895

 
895

 
 
 
 
 
 
 
 
 
 
 
 
17,092

 
17,007

 
17,006

 
1.56
 %
The Kleinfelder Group, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (4)(10)
 
5.95% (L + 4.75%/Q)
 
12/18/2018
 
11/29/2024
 
17,281

 
17,211

 
16,566

 
1.52
 %
Hill International, Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
6.75% (L + 5.75%/M)
 
6/21/2017
 
6/21/2023
 
15,366

 
15,320

 
15,046

 
1.38
 %
Coyote Buyer, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Specialty Chemicals & Materials
 
First lien (5)(10)
 
7.74% (L + 6.00%/M)
 
3/13/2020
 
2/6/2026
 
14,185

 
14,114

 
14,114

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.74% (L + 6.00%/M)
 
3/13/2020
 
2/6/2025
 
101

 
101

 
101

 
 
 
 
 
 
 
 
 
 
 
 
14,286

 
14,215

 
14,215

 
1.30
 %
Bleriot US Bidco Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Services
 
Second lien (2)(10)
 
9.95% (L + 8.50%/Q)
 
10/24/2019
 
10/29/2027
 
15,000

 
14,855

 
14,175

 
1.30
 %

The accompanying notes are an integral part of these consolidated financial statements.
14

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Diligent Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)(10)
 
6.95% (L + 5.50%/S)
 
10/30/2019
 
4/14/2022
 
$
6,825

 
$
6,767

 
$
6,683

 
 
 
 
First lien (3)(10)
 
6.93% (L + 5.50%/S)
 
12/19/2018
 
4/14/2022
 
5,352

 
5,326

 
5,240

 
 
 
 
First lien (3)(10)
 
7.42% (L + 5.50%/S)
 
12/19/2018
 
4/14/2022
 
2,061

 
2,051

 
2,018

 
 
 
 
First lien (2)(10)
 
6.95% (L + 5.50%/S)
 
10/30/2019
 
4/14/2022
 
140

 
139

 
137

 
 
 
 
 
 
 
 
 
 
 
 
14,378

 
14,283

 
14,078

 
1.29
 %
Netsmart Inc. / Netsmart Technologies, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Information Technology
 
Second lien (2)
 
8.95% (L + 7.50%/Q)
 
4/18/2016
 
10/19/2023
 
15,000

 
14,787

 
13,856

 
1.27
 %
JAMF Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (8)(10)
 
8.70% (L + 7.00%/Q)
 
11/13/2017
 
11/11/2022
 
8,757

 
8,707

 
8,758

 
 
 
 
First lien (2)(10)
 
8.70% (L + 7.00%/Q)
 
11/8/2019
 
11/11/2022
 
4,582

 
4,552

 
4,582

 
 
 
 
 
 
 
 
 
 
 
 
13,339

 
13,259

 
13,340

 
1.22
 %
BackOffice Associates Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
12.28% (L + 7.50% + 3.00% PIK/Q)*
 
8/25/2017
 
8/25/2023
 
13,090

 
13,020

 
12,437

 
 
 
 
First lien (3)(10)(11) - Drawn
 
12.28% (L + 7.50% + 3.00% PIK/Q)*
 
8/25/2017
 
8/25/2023
 
900

 
893

 
855

 
 
 
 
 
 
 
 
 
 
 
 
13,990

 
13,913

 
13,292

 
1.22
 %
Ministry Brands, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)(10)
 
5.62% (L + 4.00%/M)
 
12/7/2016
 
12/2/2022
 
2,925

 
2,918

 
2,796

 
 
 
 
Second lien (8)(10)
 
10.51% (L + 9.25%/Q)
 
12/7/2016
 
6/2/2023
 
7,840

 
7,806

 
7,598

 
 
 
 
Second lien (3)(10)
 
10.51% (L + 9.25%/Q)
 
12/7/2016
 
6/2/2023
 
2,160

 
2,151

 
2,093

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.16% (L + 5.00%/M)
 
12/7/2016
 
12/2/2022
 
575

 
572

 
550

 
 
 
 
 
 
 
 
 
 
 
 
13,500

 
13,447

 
13,037

 
1.20
 %
Alegeus Technologies Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (8)(10)
 
8.13% (L + 6.25%/Q)
 
9/5/2018
 
9/5/2024
 
13,444

 
13,390

 
13,013

 
1.19
 %
Geo Parent Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
6.24% (L + 5.25%/M)
 
12/13/2018
 
12/19/2025
 
13,033

 
12,977

 
12,599

 
1.16
 %
Transcendia Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Packaging
 
Second lien (8)(10)
 
9.07% (L + 8.00%/M)
 
6/28/2017
 
5/30/2025
 
14,500

 
14,353

 
12,163

 
1.12
 %
PaySimple, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)(10)
 
6.46% (L + 5.50%/M)
 
8/19/2019
 
8/23/2025
 
9,833

 
9,742

 
9,597

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.56% (L + 5.50%/M)
 
8/19/2019
 
8/23/2025
 
2,174

 
2,132

 
2,122

 
 
 
 
 
 
 
 
 
 
 
 
12,007

 
11,874

 
11,719

 
1.08
 %
Castle Management Borrower LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
7.95% (L + 6.25%/Q)
 
5/31/2018
 
2/15/2024
 
13,217

 
13,168

 
11,299

 
1.04
 %

The accompanying notes are an integral part of these consolidated financial statements.
15

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Alert Holding Company, Inc. (15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appriss Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (8)(10)
 
6.49% (L + 5.50%/M)
 
5/24/2019
 
5/29/2026
 
$
11,026

 
$
10,940

 
$
10,782

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.49% (L + 5.50%/M)
 
5/24/2019
 
5/30/2025
 
460

 
455

 
449

 
 
 
 
 
 
 
 
 
 
 
 
11,486

 
11,395

 
11,231

 
1.03
 %
OEConnection LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (2)(10)
 
9.32% (L + 8.25%/S)
 
9/25/2019
 
9/25/2027
 
12,044

 
11,929

 
11,173

 
1.03
 %
CHA Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (4)(10)
 
9.82% (L + 8.75%/S)
 
4/3/2018
 
4/10/2026
 
7,012

 
6,954

 
6,758

 
 
 
 
Second lien (3)(10)
 
9.82% (L + 8.75%/S)
 
4/3/2018
 
4/10/2026
 
4,453

 
4,416

 
4,291

 
 
 
 
 
 
 
 
 
 
 
 
11,465

 
11,370

 
11,049

 
1.01
 %
PPVA Black Elk (Equity) LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Subordinated (3)(10)
 
 
5/3/2013
 
 
14,500

 
14,500

 
10,354

 
0.95
 %
CFS Management, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
7.34% (L + 5.75%/S)
 
8/6/2019
 
7/1/2024
 
11,703

 
11,651

 
10,335

 
0.95
 %
NorthStar Financial Services Group, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (5)(10)
 
8.49% (L + 7.50%/M)
 
5/23/2018
 
5/25/2026
 
10,607

 
10,585

 
10,000

 
0.92
 %
Vectra Co.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Products
 
Second lien (8)(10)
 
8.24% (L + 7.25%/M)
 
2/23/2018
 
3/8/2026
 
10,788

 
10,755

 
9,955

 
0.91
 %
Masergy Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (2)(10)
 
8.56% (L + 7.50%/S)
 
12/14/2016
 
12/16/2024
 
10,500

 
10,460

 
9,953

 
0.91
 %
AG Parent Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
6.45% (L + 5.00%/Q)
 
7/30/2019
 
7/31/2026
 
9,975

 
9,929

 
9,695

 
0.89
 %
Teneo Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
6.25% (L + 5.25%/Q)
 
7/15/2019
 
7/11/2025
 
9,950

 
9,770

 
9,553

 
0.88
 %
Quartz Holding Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (3)(10)
 
8.86% (L + 8.00%/M)
 
4/2/2019
 
4/2/2027
 
10,000

 
9,817

 
9,369

 
0.86
 %
Zywave, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Second lien (4)(10)
 
10.80% (L + 9.00%/Q)
 
11/22/2016
 
11/17/2023
 
6,980

 
6,948

 
6,793

 
 
 
 
Second lien (4)(10)
 
10.80% (L + 9.00%/Q)
 
12/3/2019
 
11/17/2023
 
600

 
596

 
584

 
 
 
 
First lien (3)(10)(11) - Drawn
 
6.00% (L + 5.00%/M)
 
11/22/2016
 
11/17/2022
 
2,000

 
1,985

 
1,960

 
 
 
 
 
 
 
 
 
 
 
 
9,580

 
9,529

 
9,337

 
0.86
 %
Stats Intermediate Holdings, LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
6.96% (L + 5.25%/Q)
 
5/22/2019
 
7/10/2026
 
9,975

 
9,860

 
9,329

 
0.86
 %
VT Topco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (4)(10)
 
8.45% (L + 7.00%/Q)
 
8/14/2018
 
7/31/2026
 
10,000

 
9,979

 
9,192

 
0.84
 %

The accompanying notes are an integral part of these consolidated financial statements.
16

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
AgKnowledge Holdings Company, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (4)(10)
 
5.82% (L + 4.75%/S)
 
11/30/2018
 
7/21/2023
 
$
9,332

 
$
9,297

 
$
9,136

 
0.84
 %
Wrike, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (8)(10)
 
7.83% (L + 6.75%/S)
 
12/31/2018
 
12/31/2024
 
9,067

 
8,991

 
9,058

 
0.83
 %
WD Wolverine Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
6.50% (L + 5.50%/M)
 
2/22/2017
 
8/16/2022
 
8,901

 
8,762

 
8,795

 
0.81
 %
Amerijet Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution & Logistics
 
First lien (4)(10)
 
9.00% (L + 8.00%/M)
 
7/15/2016
 
7/15/2021
 
7,513

 
7,496

 
7,449

 
 
 
 
First lien (4)(10)
 
9.00% (L + 8.00%/M)
 
7/15/2016
 
7/15/2021
 
1,252

 
1,249

 
1,242

 
 
 
 
 
 
 
 
 
 
 
 
8,765

 
8,745

 
8,691

 
0.80
 %
Affordable Care Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (2)(10)
 
6.20% (L + 4.75%/Q)
 
3/18/2019
 
10/24/2022
 
9,871

 
9,726

 
8,602

 
0.79
 %
Recorded Future, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (8)(10)
 
7.25% (L + 6.25%/M)
 
8/26/2019
 
7/3/2025
 
6,250

 
6,221

 
6,219

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.25% (L + 6.25%/M)
 
8/26/2019
 
7/3/2025
 
500

 
498

 
497

 
 
 
 
 
 
 
 
 
 
 
 
6,750

 
6,719

 
6,716

 
0.62
 %
DealerSocket, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)(10)
 
6.84% (L + 5.25%/S)
 
4/16/2018
 
4/26/2023
 
6,593

 
6,561

 
6,345

 
0.58
 %
DG Investment Intermediate Holdings 2, Inc. (aka Convergint Technologies Holdings, LLC)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (3)(10)
 
7.74% (L + 6.75%/M)
 
1/29/2018
 
2/2/2026
 
6,732

 
6,706

 
6,024

 
0.55
 %
Restaurant Technologies, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Second lien (4)(10)
 
7.95% (L + 6.50%/Q)
 
9/24/2018
 
10/1/2026
 
6,722

 
6,707

 
6,005

 
0.55
 %
CP VI Bella Midco, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
Second lien (3)(10)
 
7.74% (L + 6.75%/M)
 
1/25/2018
 
12/29/2025
 
6,732

 
6,706

 
5,949

 
0.55
 %
Solera LLC / Solera Finance, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
Subordinated (3)
 
10.50%/S
 
2/29/2016
 
3/1/2024
 
5,000

 
4,852

 
4,931

 
0.45
 %
ADG, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
Second lien (3)(10)
 
11.92% (L + 10.00% PIK/S)*
 
10/3/2016
 
3/28/2024
 
5,422

 
5,375

 
2,753

 
0.25
 %
Sphera Solutions, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (2)(10)
 
8.50% (L + 7.00%/Q)
 
9/10/2019
 
6/14/2022
 
2,483

 
2,462

 
2,458

 
0.23
 %

The accompanying notes are an integral part of these consolidated financial statements.
17

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Education Management Corporation (13)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education Management II LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
First lien (2)
 
8.75% (P + 5.50%/S)(25)
 
1/5/2015
 
7/2/2020
 
$
208

 
$
202

 
$
2

 
 
 
 
First lien (3)
 
8.75% (P + 5.50%/S)(25)
 
1/5/2015
 
7/2/2020
 
117

 
114

 
1

 
 
 
 
First lien (2)
 
14.00% (P + 8.50%/M)(25)
 
1/5/2015
 
7/2/2020
 
300

 
292

 

 
 
 
 
First lien (3)
 
14.00% (P + 8.50%/M)(25)
 
1/5/2015
 
7/2/2020
 
169

 
165

 

 
 
 
 
First lien (2)
 
11.75% (P + 8.50%/Q)(25)
 
1/5/2015
 
7/2/2020
 
142

 
117

 

 
 
 
 
First lien (2)
 
11.75% (P + 8.50%/Q)(25)
 
1/5/2015
 
7/2/2020
 
4

 
3

 

 
 
 
 
First lien (3)
 
11.75% (P + 8.50%/Q)(25)
 
1/5/2015
 
7/2/2020
 
80

 
66

 

 
 
 
 
First lien (3)
 
11.75% (P + 8.50%/Q)(25)
 
1/5/2015
 
7/2/2020
 
2

 
2

 

 
 
 
 
 
 
 
 
 
 
 
 
1,022

 
961

 
3

 
 %
PPVA Fund, L.P.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Collateralized Financing (25)(26)
 
 
11/7/2014
 
 

 

 

 
 %
Total Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
2,412,269

 
$
2,391,489

 
$
2,259,871

 
207.43
 %
Total Funded Debt Investments
 
 
 
 
 
 
 
 
 
$
2,569,106

 
$
2,547,345

 
$
2,405,909

 
220.84
 %
Equity - Hong Kong
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bach Special Limited (Bach Preference Limited)**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Preferred shares (3)(10)(22)
 
 
9/1/2017
 
 
77,537

 
$
7,674

 
$
7,722

 
0.71
 %
Total Shares - Hong Kong
 
 
 
 
 
 
 
 
 
 
 
$
7,674

 
$
7,722

 
0.71
 %
Equity - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Avatar Topco, Inc. (23)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Preferred shares (3)(10)
 
 
11/17/2017
 
 
35,750

 
$
47,619

 
$
48,375

 
4.44
 %
Symplr Software Intermediate Holdings, Inc. (24)



















Healthcare Information Technology

Preferred shares (4)(10)


11/30/2018


7,500


8,770


8,381





Preferred shares (3)(10)


11/30/2018


2,586


3,023


2,890
















11,793


11,271


1.02
 %
Tenawa Resource Holdings LLC (14)




 
 
 
 
 
 
 
 
 
 
 
 
QID NGL LLC

Preferred shares (6)(10)

 
10/30/2017
 
 
1,623,385

 
1,623

 
1,937

 
 
Specialty Chemicals & Materials

Ordinary shares (6)(10)

 
5/12/2014
 
 
5,290,997

 
5,291

 
4,732

 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,914

 
6,669

 
0.61
 %
Alert Holding Company, Inc. (15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alert Intermediate Holdings I, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Preferred shares (3)(10)
 
 
5/31/2019
 
 
6,111

 
6,657

 
6,647

 
0.61
 %

The accompanying notes are an integral part of these consolidated financial statements.
18

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Ancora Acquisition LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Preferred shares (9)(10)
 
 
8/12/2013
 
 
372

 
$
83

 
$
158

 
0.01
 %
Education Management Corporation (13)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Preferred shares (2)
 
 
1/5/2015
 
 
3,331

 
200

 

 
 
 
 
Preferred shares (3)
 
 
1/5/2015
 
 
1,879

 
113

 

 
 
 
 
Ordinary shares (2)
 
 
1/5/2015
 
 
2,994,065

 
100

 

 
 
 
 
Ordinary shares (3)
 
 
1/5/2015
 
 
1,688,976

 
56

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
469

 

 
 %
Total Shares - United States
 
 
 
 
 
 
 
 
 
 
 
$
73,535

 
$
73,120

 
6.70
 %
Total Shares
 
 
 
 
 
 
 
 
 
 
 
$
81,209

 
$
80,842

 
7.41
 %
Warrants - United States
 
 
 
 
 
 
 
 
 
 
 
.

 
 
 
 
ASP LCG Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Warrants (3)(10)
 
 
5/5/2014
 
5/5/2026
 
622

 
$
37

 
$
781

 
0.06
 %
Ancora Acquisition LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Warrants (9)(10)
 
 
8/12/2013
 
8/12/2020
 
20

 

 

 
 %
Total Warrants - United States
 
 
 
 
 
 
 
 
 
 
 
$
37

 
$
781

 
0.06
 %
Total Funded Investments
 
 
 
 
 
 
 
 
 
 
 
$
2,628,591

 
$
2,487,532

 
228.31
 %
Unfunded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wolfpack IP Co.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
6/14/2019
 
6/13/2025
 
$
909

 
$
(9
)
 
$
(9
)
 
(0.00
)%
Total Unfunded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
$
909

 
$
(9
)
 
$
(9
)
 
(0.00
)%
Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
`

 
 
 
 
JAMF Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
11/13/2017
 
11/11/2022
 
$
1,086

 
$
(10
)
 
$

 
 %
iCIMS, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
9/12/2018
 
9/12/2024
 
2,915

 
(29
)
 

 
 %
Apptio, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
1/10/2019
 
1/10/2025
 
2,066

 
(41
)
 

 
 %
Wrike, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
12/31/2018
 
12/31/2024
 
933

 
(9
)
 
(1
)
 
 %
TDG Group Holding Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Services
 
First lien (3)(10)(11) - Undrawn
 
 
5/22/2018
 
5/31/2024
 
57

 

 
(3
)
 
 %

The accompanying notes are an integral part of these consolidated financial statements.
19

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Recorded Future, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
8/26/2019
 
1/3/2021
 
$
500

 
$
(3
)
 
$
(3
)
 
 
 
 
First lien (3)(10)(11) - Undrawn
 
 
8/26/2019
 
7/3/2025
 
250

 
(1
)
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
750

 
(4
)
 
(4
)
 
(0.00
)%
Kele Holdco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution & Logistics
 
First lien (3)(10)(11) - Undrawn
 
 
2/20/2020
 
2/20/2026
 
900

 
(4
)
 
(4
)
 
(0.00
)%
Coyote Buyer, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Specialty Chemicals & Materials
 
First lien (3)(10)(11) - Undrawn
 
 
3/13/2020
 
2/6/2025
 
912

 
(5
)
 
(5
)
 
(0.00
)%
Xactly Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
7/31/2017
 
7/29/2022
 
992

 
(10
)
 
(5
)
 
(0.00
)%
Alert Holding Company, Inc. (15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appriss Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (3)(10)(11) - Undrawn
 
 
5/24/2019
 
5/30/2025
 
470

 
(5
)
 
(10
)
 
(0.00
)%
AgKnowledge Holdings Company, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (3)(10)(11) - Undrawn
 
 
11/30/2018
 
7/21/2023
 
526

 
(3
)
 
(11
)
 
(0.00
)%
Instructure, Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
3/24/2020
 
3/24/2026
 
2,036

 
(13
)
 
(13
)
 
(0.00
)%
Bullhorn, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
9/24/2019
 
10/1/2021
 
923

 
(7
)
 
(18
)
 
(0.00
)%
Ministry Brands, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
12/7/2016
 
12/2/2022
 
425

 
(2
)
 
(19
)
 
(0.00
)%
DealerSocket, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
4/16/2018
 
4/26/2023
 
560

 
(4
)
 
(21
)
 
(0.00
)%
MRI Software LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
1/31/2020
 
2/10/2026
 
1,001

 
(5
)
 
(5
)
 
 
 
 
First lien (3)(10)(11) - Undrawn
 
 
1/31/2020
 
2/10/2022
 
4,389

 

 
(22
)
 
 
 
 
 
 
 
 
 
 
 
 
5,390

 
(5
)
 
(27
)
 
(0.00
)%
PaySimple, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
8/19/2019
 
8/24/2020
 
1,044

 

 
(25
)
 
(0.00
)%
Trader Interactive, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (3)(10)(11) - Undrawn
 
 
6/15/2017
 
6/15/2023
 
1,004

 
(8
)
 
(29
)
 
(0.00
)%

The accompanying notes are an integral part of these consolidated financial statements.
20

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Integral Ad Science, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
7/19/2018
 
7/19/2023
 
$
1,807

 
$
(18
)
 
$
(33
)
 
(0.00
)%
Finalsite Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
9/25/2018
 
9/25/2024
 
2,521

 
(19
)
 
(37
)
 
(0.00
)%
Kaseya Traverse Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
5/9/2019
 
5/3/2021
 
2,873

 

 
(39
)
 
 
 
 
First lien (3)(10)(11) - Undrawn
 
 
5/9/2019
 
5/2/2025
 
23

 

 

 
 
 
 
 
 
 
 
 
 
 
 
2,896

 

 
(39
)
 
(0.00
)%
Conservice, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (3)(10)(11) - Undrawn
 
 
1/3/2019
 
11/29/2024
 
918

 
(5
)
 
(12
)
 
 
 
 
First lien (3)(10)(11) - Undrawn
 
 
1/3/2019
 
6/30/2020
 
2,283

 

 
(29
)
 
 
 
 
 
 
 
 
 
 
 
 
3,201

 
(5
)
 
(41
)
 
(0.00
)%
Integro Parent Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (3)(10)(11) - Undrawn
 
 
6/8/2018
 
4/30/2022
 
6,743

 
(34
)
 
(49
)
 
(0.00
)%
Bluefin Holding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(11) - Undrawn
 
 
9/6/2019
 
9/6/2024
 
1,515

 
(23
)
 
(63
)
 
(0.01
)%
Associations, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (3)(10)(11) - Undrawn
 
 
7/30/2018
 
7/30/2021
 
2,948

 
(18
)
 
(68
)
 
(0.01
)%
YLG Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (5)(10)(11) - Undrawn
 
 
11/1/2019
 
4/30/2021
 
2,381

 

 
(63
)
 
 
 
 
First lien (3)(10)(11) - Undrawn
 
 
11/1/2019
 
10/31/2025
 
397

 
(2
)
 
(10
)
 
 
 
 
 
 
 
 
 
 
 
 
2,778

 
(2
)
 
(73
)
 
(0.01
)%
GC Waves Holdings, Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (3)(10)(11) - Undrawn
 
 
10/31/2019
 
11/1/2021
 
8,395

 

 
(63
)
 
 
 
 
First lien (3)(10)(11) - Undrawn
 
 
10/31/2019
 
10/31/2025
 
3,951

 
(30
)
 
(30
)
 
 
 
 
 
 
 
 
 
 
 
 
12,346

 
(30
)
 
(93
)
 
(0.01
)%
Definitive Healthcare Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Information Technology
 
First lien (3)(10)(11) - Undrawn
 
 
8/7/2019
 
7/16/2021
 
7,391

 

 
(99
)
 
(0.01
)%
ConnectWise, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
11/26/2019
 
2/28/2025
 
4,248

 
(27
)
 
(110
)
 
(0.01
)%

The accompanying notes are an integral part of these consolidated financial statements.
21

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Diligent Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
12/19/2018
 
12/19/2020
 
$
5,977

 
$
(37
)
 
$
(124
)
 
(0.01
)%
CoolSys, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial Services
 
First lien (3)(10)(11) - Undrawn
 
 
11/20/2019
 
11/19/2021
 
5,600

 

 
(128
)
 
(0.02
)%
Salient CRGT Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Services
 
First lien (3)(10)(11) - Undrawn
 
 
6/26/2018
 
11/29/2021
 
4,025

 
(322
)
 
(191
)
 
(0.03
)%
GS Acquisitionco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Software
 
First lien (3)(10)(11) - Undrawn
 
 
8/7/2019
 
8/2/2021
 
17,947

 

 
(316
)
 
 
 
 
First lien (3)(10)(11) - Undrawn
 
 
8/7/2019
 
5/24/2024
 
2,351

 
(15
)
 
(41
)
 
 
 
 
 
 
 
 
 
 
 
 
20,298

 
(15
)
 
(357
)
 
(0.03
)%
CFS Management, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (3)(10)(11) - Undrawn
 
 
8/6/2019
 
7/1/2024
 
3,468

 
(17
)
 
(405
)
 
(0.04
)%
Ansira Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (3)(10)(11) - Undrawn
 
 
12/19/2016
 
4/16/2020
 
2,437

 
(10
)
 
(696
)
 
(0.07
)%
PhyNet Dermatology LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (3)(10)(11) - Undrawn
 
 
9/17/2018
 
8/16/2020
 
17,077

 
(85
)
 
(1,276
)
 
(0.12
)%
DCA Investment Holding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
First lien (3)(10)(11) - Undrawn
 
 
7/2/2015
 
7/2/2021
 
50

 

 
(4
)
 
 
 
 
First lien (3)(10)(11) - Undrawn
 
 
4/16/2019
 
4/16/2021
 
17,396

 

 
(1,571
)
 
 
 
 
 
 
 
 
 
 
 
 
17,446

 

 
(1,575
)
 
(0.14
)%
Total Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
147,711

 
$
(821
)
 
$
(5,652
)
 
(0.52
)%
Total Unfunded Debt Investments
 
 
 
 
 
 
 
 
 
$
148,620

 
$
(830
)
 
$
(5,661
)
 
(0.52
)%
Total Non-Controlled/Non-Affiliated Investments
 
 
 
 
 
 
 
 
 
 
 
$
2,627,761

 
$
2,481,871

 
227.79
 %

The accompanying notes are an integral part of these consolidated financial statements.
22

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Non-Controlled/Affiliated Investments (27)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Permian Holdco 1, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Permian Holdco 2, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Permian Holdco 3, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
First lien (3)(10)
 
14.02% (L + 7.50% + 5.00% PIK/Q)*
 
6/14/2018
 
6/30/2022
 
$
10,633

 
$
10,633

 
$
9,571

 
 
 
 
First lien (3)(10)(11) - Drawn
 
7.50% (L + 6.50%/M)
 
6/14/2018
 
6/30/2022
 
17,700

 
17,700

 
15,930

 
 
 
 
Subordinated (3)(10)
 
18.00% PIK/Q*
 
12/26/2018
 
6/30/2022
 
3,005

 
3,005

 
2,479

 
 
 
 
Subordinated (3)(10)
 
14.00% PIK/Q(25)*
 
10/31/2016
 
10/15/2021
 
2,735

 
2,735

 
1,853

 
 
 
 
Subordinated (3)(10)
 
14.00% PIK/Q(25)*
 
10/31/2016
 
10/15/2021
 
1,409

 
1,409

 
954

 
 
 
 
 
 
 
 
 
 
 
 
35,482

 
35,482

 
30,787

 
2.83
 %
Sierra Hamilton Holdings Corporation



















Energy

Second lien (3)(10)

15.00% PIK/Q*

9/12/2019

9/12/2023

1,496


1,466


1,272


0.12
 %
Total Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
36,978

 
$
36,948

 
$
32,059

 
2.95
 %
Equity - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NMFC Senior Loan Program I LLC**



















Investment Fund

Membership interest (3)(10)


6/13/2014




$
23,000


$
22,073


2.03
 %
Sierra Hamilton Holdings Corporation



















Energy

Ordinary shares (2)(10)


7/31/2017


25,000,000


11,501


5,181





Ordinary shares (3)(10)


7/31/2017


2,786,000


1,281


577
















12,782


5,758


0.53
 %
Permian Holdco 1, Inc.



















Energy

Preferred shares (3)(10)(17)(25)


10/31/2016


1,929,949


5,714







Ordinary shares (3)(10)


10/31/2016


1,366,452


1,350


















$
7,064


$


 %
Total Shares - United States
 
 
 
 
 
 
 
 
 
 
 
$
42,846

 
$
27,831

 
2.56
 %
Total Funded Investments
 
 
 
 
 
 
 
 
 
 
 
$
79,794

 
$
59,890

 
5.51
 %
Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Permian Holdco 3, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
First lien (3)(10)(11) - Undrawn
 
 
6/14/2018
 
6/30/2022
 
$
2,300

 
$

 
$
(230
)
 
(0.02
)%
Total Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
2,250

 
$

 
$
(230
)
 
(0.02
)%
Total Non-Controlled/Affiliated Investments
 
 
 
 
 
 
 
 
 
 
 
$
79,794

 
$
59,660

 
5.49
 %

The accompanying notes are an integral part of these consolidated financial statements.
23

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Controlled Investments (28)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funded Debt Investments - United Kingdom
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Edmentum Ultimate Holdings, LLC (16)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EducationCity Limited**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
First lien (3)(10)(11) - Drawn
 
10.00%/S
 
1/24/2020
 
8/31/2020
 
$
3,000

 
$
3,000

 
$
2,945

 
0.27
 %
Total Funded Debt Investments - United Kingdom
 
 
 
 
 
 
 
 
 
$
3,000

 
$
3,000

 
$
2,945

 
0.27
 %
Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Edmentum Ultimate Holdings, LLC (16)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
First lien (2)(10)
 
10.28% (L + 4.50% + 4.00% PIK/Q)*
 
8/6/2018
 
6/9/2021
 
$
10,170

 
$
9,385

 
$
9,983

 
 
 
 
First lien (3)(10)(11) - Drawn
 
10.00%/S
 
1/24/2020
 
8/31/2020
 
5,000

 
5,000

 
4,908

 
 
 
 
Second lien (3)(10)
 
7.00% PIK/Q*
 
2/23/2018
 
12/9/2021
 
12,213

 
11,844

 
11,410

 
 
 
 
Second lien (3)(10)(11) - Drawn
 
5.00% PIK/Q*
 
6/9/2015
 
12/9/2021
 
7,967

 
7,967

 
7,821

 
 
 
 
Subordinated (3)(10)
 
8.50% PIK/Q*
 
6/9/2015
 
12/9/2021
 
5,441

 
5,440

 
4,902

 
 
 
 
Subordinated (2)(10)
 
10.00% PIK/Q*
 
6/9/2015
 
12/9/2021
 
20,999

 
20,999

 
17,263

 
 
 
 
Subordinated (3)(10)
 
10.00% PIK/Q*
 
6/9/2015
 
12/9/2021
 
5,166

 
5,166

 
4,247

 
 
 
 
 
 
 
 
 
 
 
 
66,956

 
65,801

 
60,534

 
5.57
 %
NHME Holdings Corp. (21)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
National HME, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
Second lien (3)(10)
 
12.00% PIK/Q*
 
11/27/2018
 
5/27/2024
 
17,033

 
13,688

 
12,349

 
 
 
 
Second lien (3)(10)
 
12.00% PIK/Q*
 
11/27/2018
 
5/27/2024
 
9,413

 
8,592

 
8,236

 
 
 
 
 
 
 
 
 
 
 
 
26,446

 
22,280

 
20,585

 
1.89
 %
UniTek Global Services, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
First lien (2)(10)
 
8.11% (L + 5.50% + 1.00% PIK/Q)*
 
6/29/2018
 
8/20/2024
 
12,447

 
12,447

 
10,997

 
 
 
 
First lien (3)(10)
 
8.11% (L + 5.50% + 1.00% PIK/Q)*
 
3/16/2020
 
8/20/2024
 
4,682

 
4,682

 
4,136

 
 
 
 
First lien (2)(10)
 
8.11% (L + 5.50% + 1.00% PIK/Q)*
 
6/29/2018
 
8/20/2024
 
2,490

 
2,490

 
2,199

 
 
 
 
 
 
 
 
 
 
 
 
19,619

 
19,619

 
17,332

 
1.59
 %
Total Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
113,021

 
$
107,700

 
$
98,451

 
9.05
 %
Equity - Canada
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NM APP Canada Corp.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Lease
 
Membership interest (7)(10)
 
 
9/13/2016
 
 

 
$
7,345

 
$
10,481

 
0.96
 %
Total Shares - Canada
 
 
 
 
 
 
 
 
 
 
 
$
7,345

 
$
10,481

 
0.96
 %

The accompanying notes are an integral part of these consolidated financial statements.
24

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Equity - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NMFC Senior Loan Program III LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Fund
 
Membership interest (3)(10)
 
 
5/4/2018
 
 

 
$
110,000

 
$
106,271

 
9.75
 %
NMFC Senior Loan Program II LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Fund
 
Membership interest (3)(10)
 
 
5/3/2016
 
 

 
79,400

 
76,288

 
7.00
 %
UniTek Global Services, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Services
 
Preferred shares (3)(10)(20)
 
 
8/17/2018
 
 
9,024,006

 
9,024

 
7,933

 
 
 
 
Preferred shares (3)(10)(20)
 
 
8/29/2019
 
 
5,363,390

 
5,363

 
4,882

 
 
 
 
Preferred shares (3)(10)(19)
 
 
6/30/2017
 
 
16,495,268

 
16,495

 
13,435

 
 
 
 
Preferred shares (2)(10)(18)(25)
 
 
1/13/2015
 
 
29,326,545

 
26,946

 
15,279

 
 
 
 
Preferred shares (3)(10)(18)(25)


1/13/2015


8,104,462


7,447


4,223

 
 
 
 
Ordinary shares (2)(10)
 
 
1/13/2015
 
 
2,096,477

 
1,925

 
199

 
 
 
 
Ordinary shares (3)(10)
 
 
1/13/2015
 
 
1,993,749

 
532

 
189

 
 
 
 
 
 
 
 
 
 
 
 
 
 
67,732

 
46,140

 
4.24
 %
NM NL Holdings, L.P.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Lease
 
Membership interest (7)(10)
 
 
6/20/2018
 
 

 
44,070

 
45,461

 
4.16
 %
NM GLCR LP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Lease
 
Membership interest (7)(10)
 
 
2/1/2018
 
 

 
14,750

 
22,282

 
2.05
 %
NM CLFX LP

















Net Lease

Membership interest (7)(10)


10/6/2017




12,538


11,709


1.07
 %
NM APP US LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Lease
 
Membership interest (7)(10)
 
 
9/13/2016
 
 

 
5,080

 
6,529

 
0.60
 %
NM YI, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Lease
 
Membership interest (7)(10)
 
 
9/30/2019
 
 

 
6,272

 
5,897

 
0.54
 %
NM DRVT LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Lease
 
Membership interest (7)(10)
 
 
11/18/2016
 
 

 
5,152

 
5,783

 
0.53
 %
NHME Holdings Corp.(21)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
Ordinary shares (3)(10)
 
 
11/27/2018
 
 
640,000

 
4,000

 
4,000

 
0.37
 %
NM JRA LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Lease
 
Membership interest (7)(10)
 
 
8/12/2016
 
 

 
2,043

 
3,522

 
0.32
 %
NM KRLN LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Lease
 
Membership interest (7)(10)
 
 
11/15/2016
 
 

 
7,627

 
1,058

 
0.10
 %
NM GP Holdco, LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Lease
 
Membership interest (7)(10)
 
 
6/20/2018
 
 

 
452

 
456

 
0.04
 %

The accompanying notes are an integral part of these consolidated financial statements.
25

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


Portfolio Company, Location and Industry (1)
 
Type of Investment
 
Interest Rate (12)
 
Acquisition Date
 
Maturity / Expiration Date
 
 Principal
 Amount,
 Par Value
 or Shares
 
 Cost
 
 Fair
 Value
 
Percent of Net
Assets
Edmentum Ultimate Holdings, LLC(16)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Ordinary shares (3)(10)
 
 
6/9/2015
 
 
123,968

 
$
11

 
$
136

 
 
 
 
Ordinary shares (2)(10)
 
 
6/9/2015
 
 
107,143

 
9

 
118

 
 
 
 
 
 
 
 
 
 
 
 
 
 
20

 
254

 
0.02
 %
Total Shares - United States
 
 
 
 
 
 
 
 
 
 
 
$
359,136

 
$
335,650

 
30.79
 %
Total Shares
 
 
 
 
 
 
 
 
 
 
 
$
366,481

 
$
346,131

 
31.75
 %
Warrants - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Edmentum Ultimate Holdings, LLC(16)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Education
 
Warrants (3)(10)
 
 
2/23/2018
 
5/5/2026
 
1,141,846

 
$
769

 
$
1,259

 
0.11
 %
NHME Holdings Corp.(21)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare Services
 
Warrants (3)(10)
 
 
11/27/2018
 
 
160,000

 
1,000

 
1,000

 
0.09
 %
Total Warrants - United States
 
 
 
 
 
 
 
 
 
 
 
$
1,769

 
$
2,259

 
0.20
 %
Total Funded Investments
 
 
 
 
 
 
 
 
 
 
 
$
478,950

 
$
449,786

 
41.28
 %
Total Controlled Investments
 
 
 
 
 
 
 
 
 
 
 
$
478,950

 
$
449,786

 
41.28
 %
Total Investments
 
 
 
 
 
 
 
 
 
 
 
$
3,186,505

 
$
2,991,317

 
274.58
 %
 
(1)
New Mountain Finance Corporation (the “Company”) generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). These investments are generally subject to certain limitations on resale, and may be deemed to be “restricted securities” under the Securities Act.
(2)
Investment is pledged as collateral for the Holdings Credit Facility, a revolving credit facility among the Company as Collateral Manager, New Mountain Finance Holdings, L.L.C. (“NMF Holdings”) as the Borrower, Wells Fargo Bank, National Association as the Administrative Agent, and Collateral Custodian. See Note 7. Borrowings, for details.
(3)
Investment is pledged as collateral for the NMFC Credit Facility, a revolving credit facility among the Company as the Borrower and Goldman Sachs Bank USA as the Administrative Agent and the Collateral Agent and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A. and Stifel Bank & Trust as Lenders. See Note 7. Borrowings, for details.
(4)
Investment is held in New Mountain Finance SBIC, L.P.
(5)
Investment is held in New Mountain Finance SBIC II, L.P.
(6)
Investment is held in NMF QID NGL Holdings, Inc.
(7)
Investment is held in New Mountain Net Lease Corporation.
(8)
Investment is pledged as collateral for the DB Credit Facility, a revolving credit facility among New Mountain Finance DB, L.L.C as the Borrower and Deutsche Bank AG, New York Branch as the Facility Agent. See Note 7. Borrowings, for details.
(9)
Investment is held in NMF Ancora Holdings, Inc.
(10)
The fair value of the Company's investment is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 4. Fair Value, for details.
(11)
Par Value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net of the impact of paydowns and cash paid for drawn revolvers or delayed draws.
(12)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets daily (D), weekly (W), monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of March 31, 2020.
(13)
The Company holds investments in Education Management Corporation and one related entity of Education Management Corporation. The Company holds series A-1 convertible preferred stock and common stock in Education Management Corporation and holds a tranche A first lien term loan and a tranche B first lien term loan in Education Management II LLC, which is an indirect subsidiary of Education Management Corporation.
(14)
The Company holds investments in two related entities of Tenawa Resource Holdings LLC. The Company holds 4.77% of the common units in QID NGL LLC (which at closing represented 98.1% of the ownership in the common units in Tenawa Resource Holdings LLC), class A preferred units in QID NGL LLC and a first lien investment in Tenawa Resource Management LLC, a wholly-owned subsidiary of Tenawa Resource Holdings LLC.
(15)
The Company holds investments in two wholly-owned subsidiaries of Alert Holding Company, Inc. The Company holds a first lien term loan and a first lien revolver in Appriss Holdings, Inc. and preferred equity in Alert Intermediate Holdings I, Inc. The preferred equity is entitled to receive preferential dividends at a rate of L + 10.0% per annum.

The accompanying notes are an integral part of these consolidated financial statements.
26

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


(16)
The Company holds investments in Edmentum Ultimate Holdings, LLC and its related entities. The Company holds subordinated notes, ordinary equity, and warrants in Edmentum Ultimate Holdings, LLC, holds a first lien promissory note in EducationCity Limited and holds a first lien term loan, first lien promissory note, second lien revolver and a second lien term loan in Edmentum, Inc. and Archipelago Learning, Inc., which are wholly-owned subsidiaries of Edmentum Ultimate Holdings, LLC.
(17)
The Company holds preferred equity in Permian Holdco 1, Inc. that is entitled to receive cumulative preferential dividends at a rate of 12.0% per annum payable in additional shares.
(18)
The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 13.5% per annum payable in additional shares.
(19)
The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 19.0% per annum payable in additional shares.
(20)
The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to received cumulative preferential dividends at a rate of 20.0% per annum payable in additional shares.
(21)
The Company holds ordinary shares and warrants in NHME Holdings Corp., as well as second lien term loans in National HME, Inc., a wholly-owned subsidiary of NHME Holdings Corp.
(22)
The Company holds preferred equity in Bach Special Limited (Bach Preference Limited) that is entitled to receive cumulative preferential dividends at a rate of 12.25% per annum payable in additional shares.
(23)
The Company holds preferred equity in Avatar Topco, Inc., and holds a second lien term loan investment in EAB Global, Inc., a wholly-owned subsidiary of Avatar Topco, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of L + 11.00% per annum.
(24)
The Company holds preferred equity in Symplr Intermediate Holdings, Inc. and holds a first lien term loan investment in Symplr Software Inc, Inc. (fka Caliper Software, Inc.), a wholly-owned subsidiary of Symplr Software Intermediate Holdings, Inc. The preferred equity is entitled to receive preferential dividends at a rate of L + 10.50% per annum.
(25)
Investment or a portion of the investment is on non-accrual status. See Note 3. Investments, for details.
(26)
The Company holds one security purchased under a collateralized agreement to resell on its Consolidated Statement of Assets and Liabilities with a cost basis of $30,000 and a fair value of $21,422 as of March 31, 2020. See Note 2. Summary of Significant Accounting Policies, for details.
(27)
Denotes investments in which the Company is an “Affiliated Person”, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), due to owning or holding the power to vote 5.0% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of March 31, 2020 and December 31, 2019, along with transactions during the three months ended March 31, 2020 in which the issuer was a non-controlled/affiliated investment, is as follows:
Portfolio Company
 
Fair Value at
December 31, 2019
 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 
Fair Value at
March 31, 2020
 
Interest
Income
 
Dividend
Income
 
Other
Income
NMFC Senior Loan Program I LLC
 
$
23,000

 
$

 
$

 
$

 
$
(927
)
 
$
22,073

 
$

 
$
720

 
$
267

Permian Holdco 1, Inc. / Permian Holdco 2, Inc. / Permian Holdco 3, Inc.
 
40,621

 
(3,012
)
 
(75
)
 

 
(6,977
)
 
30,557

 
1,013

 
(3,418
)
 
15

Sierra Hamilton Holdings Corporation
 
9,906

 
56

 

 

 
(2,932
)
 
7,030

 
56

 

 
9

Total Non-Controlled/Affiliated Investments
 
$
73,527

 
$
(2,956
)
 
$
(75
)
 
$

 
$
(10,836
)
 
$
59,660

 
$
1,069

 
$
(2,698
)
 
$
291

 
(A)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, payment-in-kind ("PIK") interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)
Gross redemptions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.

The accompanying notes are an integral part of these consolidated financial statements.
27

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(in thousands, except shares)
(unaudited)


(28)
Denotes investments in which the Company is in “Control”, as defined in the 1940 Act, due to owning or holding the power to vote more than 25.0% of the outstanding voting securities of the investment. Fair value as of March 31, 2020 and December 31, 2019, along with transactions during the three months ended March 31, 2020 in which the issuer was a controlled investment, is as follows:
Portfolio Company
 
Fair Value at
December 31, 2019
 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net 
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 
Fair Value at
March 31, 2020
 
Interest
Income
 
Dividend
Income
 
Other
Income
Edmentum Ultimate Holdings, LLC/Edmentum Inc.
 
$
79,112

 
$
9,667

 
$
(42
)
 
$
4

 
$
(23,745
)
 
$
64,992

 
$
1,702

 
$

 
$
80

National HME, Inc./NHME Holdings Corp.
 
24,979

 
948

 

 

 
(342
)
 
25,585

 
948

 

 

NM APP CANADA CORP
 
10,774

 

 

 

 
(293
)
 
10,481

 

 
240

 

NM APP US LLC
 
6,834

 

 

 

 
(305
)
 
6,529

 

 
137

 

NM CLFX LP
 
12,723

 

 

 

 
(1,014
)
 
11,709

 

 
395

 

NM DRVT LLC
 
6,016

 

 

 

 
(233
)
 
5,783

 

 
118

 

NM JRA LLC
 
3,700

 

 

 

 
(178
)
 
3,522

 

 
67

 

NM GLCR LP
 
23,800

 

 

 

 
(1,518
)
 
22,282

 

 
460

 

NM KRLN LLC
 
2,379

 
117

 

 

 
(1,438
)
 
1,058

 

 

 

NM NL Holdings, L.P.
 
48,308

 

 

 

 
(2,847
)
 
45,461

 

 
1,152

 

NM GP Holdco, LLC
 
487

 

 

 

 
(31
)
 
456

 

 
12

 

NM YI LLC
 
6,339

 

 

 

 
(442
)
 
5,897

 

 
193

 

NMFC Senior Loan Program II LLC
 
79,400

 

 

 

 
(3,112
)
 
76,288

 

 
2,581

 

NMFC Senior Loan Program III LLC
 
100,000

 
10,000

 

 

 
(3,729
)
 
106,271

 

 
2,874

 

UniTek Global Services, Inc.
 
68,101

 
9,001

 
(49
)
 

 
(13,581
)
 
63,472

 
331

 
2,638

 
113

Total Controlled Investments
 
$
472,952

 
$
29,733

 
$
(91
)
 
$
4

 
$
(52,808
)
 
$
449,786

 
$
2,981

 
$
10,867

 
$
193

 
(A)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)
Gross redemptions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
*
All or a portion of interest contains PIK interest.
**
Indicates assets that the Company deems to be “non-qualifying assets” under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70.0% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of March 31, 2020, 16.0% of the Company’s total assets are represented by investments at fair value that are considered non-qualifying assets.

The accompanying notes are an integral part of these consolidated financial statements.
28

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
March 31, 2020
(unaudited)


 
 
March 31, 2020
Investment Type
 
Percent of Total
Investments at Fair Value
First lien
 
59.83
%
Second lien
 
23.29
%
Subordinated
 
1.57
%
Equity and other
 
15.31
%
Total investments
 
100.00
%
 
 
 
March 31, 2020
Industry Type
 
Percent of Total
Investments at Fair Value
Software
 
28.44
%
Business Services
 
20.71
%
Healthcare Services
 
15.49
%
Education
 
7.14
%
Investment Fund (includes investments in joint ventures)
 
6.84
%
Net Lease
 
3.78
%
Healthcare Information Technology
 
3.50
%
Federal Services
 
3.35
%
Consumer Services
 
2.63
%
Distribution & Logistics
 
2.16
%
Specialty Chemicals & Materials
 
2.00
%
Energy
 
1.26
%
Industrial Services
 
1.07
%
Food & Beverage
 
0.89
%
Packaging
 
0.41
%
Business Products
 
0.33
%
Total investments
 
100.00
%
 
 
 
March 31, 2020
Interest Rate Type
 
Percent of Total
Investments at Fair Value
Floating rates
 
95.01
%
Fixed rates
 
4.99
%
Total investments
 
100.00
%


The accompanying notes are an integral part of these consolidated financial statements.
29

New Mountain Finance Corporation
 
Consolidated Schedule of Investments
 December 31, 2019
(in thousands, except shares)

Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
Non-Controlled/Non-Affiliated Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
Second lien (3)
 
9.30% (L + 7.50%/M)
 
6/1/2018
 
6/8/2026
 
$
28,613

 
$
28,390

 
$
27,754

 
 
 
 
Second lien (8)
 
9.30% (L + 7.50%/M)
 
6/1/2018
 
6/8/2026
 
7,500

 
7,445

 
7,275

 
 
 
 
 
 
 
 
 
 
 
 
36,113

 
35,835

 
35,029

 
2.73
 %
   Wolfpack IP Co.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (2)(9)
 
8.29% (L + 6.50%/M)
 
6/14/2019
 
6/13/2025
 
9,091

 
9,007

 
9,000

 
0.70
 %
Total Funded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
$
45,204

 
$
44,842

 
$
44,029

 
3.43
 %
Funded Debt Investments - United Arab Emirates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   GEMS Menasa (Cayman) Limited**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
First lien (8)
 
6.91% (L + 5.00%/Q)
 
7/30/2019
 
7/31/2026
 
$
33,405

 
$
33,240

 
$
33,488

 
2.61
 %
Total Funded Debt Investments - United Arab Emirates
 
 
 
 
 
 
 
 
 
$
33,405

 
$
33,240

 
$
33,488

 
2.61
 %
Funded Debt Investments - United Kingdom
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Shine Acquisition Co. S.à.r.l / Boing US Holdco Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Consumer Services
 
Second lien (2)
 
9.24% (L + 7.50%/M)
 
9/25/2017
 
10/3/2025
 
$
37,853

 
$
37,671

 
$
36,717

 
 
 
 
Second lien (8)
 
9.24% (L + 7.50%/M)
 
9/25/2017
 
10/3/2025
 
6,000

 
5,971

 
5,820

 
 
 
 
 
 
 
 
 
 
 
 
43,853

 
43,642

 
42,537

 
3.32
 %
   Aston FinCo S.a r.l. / Aston US Finco, LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (8)(9)
 
10.26% (L + 8.25%/Q)
 
10/8/2019
 
10/8/2027
 
34,459

 
34,187

 
34,201

 
2.66
 %
Total Funded Debt Investments - United Kingdom
 
 
 
 
 
 
 
 
 
$
78,312

 
$
77,829

 
$
76,738

 
5.98
 %
Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Benevis Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)(9)
 
8.25% (L + 6.32%/Q)
 
3/15/2018
 
3/15/2024
 
$
62,731

 
$
62,731

 
$
62,323

 
 
 
 
First lien (8)(9)
 
8.25% (L + 6.32%/Q)
 
3/15/2018
 
3/15/2024
 
15,391

 
15,391

 
15,291

 
 
 
 
First lien (3)(9)
 
8.25% (L + 6.32%/Q)
 
3/29/2019
 
3/15/2024
 
7,743

 
7,743

 
7,693

 
 
 
 
 
 
 
 
 
 
 
 
85,865

 
85,865

 
85,307

 
6.64
 %
   PhyNet Dermatology LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)(9)
 
7.30% (L + 5.50%/M)
 
9/17/2018
 
8/16/2024
 
50,368

 
49,956

 
50,368

 
 
 
 
First lien (3)(9)(10) - Drawn
 
7.30% (L + 5.50%/M)
 
9/17/2018
 
8/16/2024
 
28,139

 
28,009

 
28,139

 
 
 
 
 
 
 
 
 
 
 
 
78,507

 
77,965

 
78,507

 
6.11
 %
   Kronos Incorporated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (2)
 
10.16% (L + 8.25%/Q)
 
10/26/2012
 
11/1/2024
 
49,210

 
48,955

 
50,563

 
 
 
 
Second lien (8)
 
10.16% (L + 8.25%/Q)
 
10/26/2012
 
11/1/2024
 
11,147

 
11,147

 
11,453

 
 
 
 
 
 
 
 
 
 
 
 
60,357

 
60,102

 
62,016

 
4.83
 %
   Associations, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
9.09% (L + 4.00% + 3.00% PIK/Q)*
 
7/30/2018
 
7/30/2024
 
44,557

 
44,332

 
44,557

 
 
 
 
First lien (8)(9)
 
9.09% (L + 4.00% + 3.00% PIK/Q)*
 
7/30/2018
 
7/30/2024
 
5,115

 
5,090

 
5,115

 
 
 
 
First lien (3)(9)(10) - Drawn
 
9.06% (L + 4.00% + 3.00% PIK/Q)*
 
7/30/2018
 
7/30/2024
 
7,171

 
7,133

 
7,171

 
 
 
 
 
 
 
 
 
 
 
 
56,843

 
56,555

 
56,843

 
4.43
 %

The accompanying notes are an integral part of these consolidated financial statements.
30

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   Nomad Buyer, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)
 
6.74% (L + 5.00%/M)
 
8/3/2018
 
8/1/2025
 
$
56,439

 
$
54,867

 
$
56,298

 
4.39
 %
   GS Acquisitionco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (2)(9)
 
7.55% (L + 5.75%/M)
 
8/7/2019
 
5/24/2024
 
26,894

 
26,738

 
26,725

 
 
 
 
First lien (5)(9)
 
7.55% (L + 5.75%/M)
 
8/7/2019
 
5/24/2024
 
22,406

 
22,276

 
22,266

 
 
 
 
First lien (3)(9)(10) - Drawn
 
7.55% (L + 5.75%/M)
 
8/7/2019
 
5/25/2024
 
3,720

 
3,698

 
3,697

 
 
 
 
First lien (3)(9)(10) - Drawn
 
7.55% (L + 5.75%/M)
 
8/7/2019
 
5/25/2024
 
3,510

 
3,488

 
3,488

 
 
 
 
 
 
 
 
 
 
 
 
56,530

 
56,200

 
56,176

 
4.38
 %
   iCIMS, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (8)(9)
 
8.29% (L + 6.50%/M)
 
9/12/2018
 
9/12/2024
 
46,636

 
46,229

 
46,636

 
 
 
 
First lien (8)(9)
 
8.29% (L + 6.50%/M)
 
6/14/2019
 
9/12/2024
 
8,667

 
8,587

 
8,667

 
 
 
 
 
 
 
 
 
 
 
 
55,303

 
54,816

 
55,303

 
4.31
 %
   ConnectWise, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (2)(9)
 
7.94% (L + 6.00%/Q)
 
11/26/2019
 
2/28/2025
 
55,613

 
55,270

 
55,265

 
4.31
 %
   CentralSquare Technologies, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (3)
 
9.30% (L + 7.50%/M)
 
8/15/2018
 
8/31/2026
 
47,838

 
47,297

 
45,087

 
 
 
 
Second lien (8)
 
9.30% (L + 7.50%/M)
 
8/15/2018
 
8/31/2026
 
7,500

 
7,415

 
7,069

 
 
 
 
 
 
 
 
 
 
 
 
55,338

 
54,712

 
52,156

 
4.06
 %
   Dealer Tire, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Distribution & Logistics
 
First lien (2)
 
7.30% (L + 5.50%/M)
 
12/4/2018
 
12/12/2025
 
51,386

 
50,251

 
51,577

 
4.02
 %
   Salient CRGT Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Federal Services
 
First lien (2)
 
8.29% (L + 6.50%/M)
 
1/6/2015
 
2/28/2022
 
39,312

 
39,049

 
37,445

 
 
 
 
First lien (8)
 
8.29% (L + 6.50%/M)
 
6/6/2019
 
2/28/2022
 
13,434

 
12,987

 
12,795

 
 
 
 
 
 
 
 
 
 
 
 
52,746

 
52,036

 
50,240

 
3.91
 %
   NM GRC Holdco, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
7.94% (L + 6.00%/Q)
 
2/9/2018
 
2/9/2024
 
38,346

 
38,206

 
38,346

 
 
 
 
First lien (2)(9)(10) - Drawn
 
7.94% (L + 6.00%/Q)
 
2/9/2018
 
2/9/2024
 
10,658

 
10,616

 
10,658

 
 
 
 
 
 
 
 
 
 
 
 
49,004

 
48,822

 
49,004

 
3.82
 %
   Frontline Technologies Group Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
First lien (4)(9)
 
7.55% (L + 5.75%/M)
 
9/18/2017
 
9/18/2023
 
22,162

 
22,050

 
22,162

 
 
 
 
First lien (2)(9)
 
7.55% (L + 5.75%/M)
 
9/18/2017
 
9/18/2023
 
18,677

 
18,619

 
18,677

 
 
 
 
First lien (2)(9)
 
7.55% (L + 5.75%/M)
 
9/18/2017
 
9/18/2023
 
7,710

 
7,658

 
7,710

 
 
 
 
 
 
 
 
 
 
 
 
48,549

 
48,327

 
48,549

 
3.78
 %
   Integro Parent Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
7.54% (L + 5.75%/M)
 
10/9/2015
 
10/31/2022
 
35,024

 
34,892

 
35,024

 
 
 
 
Second lien (8)(9)
 
11.04% (L + 9.25%/M)
 
10/9/2015
 
10/30/2023
 
10,000

 
9,941

 
10,000

 
 
 
 
 
 
 
 
 
 
 
 
45,024

 
44,833

 
45,024

 
3.51
 %
   Brave Parent Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (5)
 
9.43% (L + 7.50%/Q)
 
4/17/2018
 
4/17/2026
 
22,500

 
22,404

 
21,825

 
 
 
 
Second lien (2)
 
9.43% (L + 7.50%/Q)
 
4/17/2018
 
4/17/2026
 
16,624

 
16,480

 
16,125

 
 
 
 
Second lien (8)
 
9.43% (L + 7.50%/Q)
 
4/17/2018
 
4/17/2026
 
6,000

 
5,948

 
5,820

 
 
 
 
 
 
 
 
 
 
 
 
45,124

 
44,832

 
43,770

 
3.41
 %
   Quest Software US Holdings Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (2)
 
10.18% (L + 8.25%/Q)
 
5/17/2018
 
5/18/2026
 
43,697

 
43,320

 
42,851

 
3.35
 %

The accompanying notes are an integral part of these consolidated financial statements.
31

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   Symplr Software Intermediate Holdings, Inc. (23)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Symplr Software, Inc. (fka Caliper Software, Inc.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Information Technology
 
First lien (2)(9)
 
7.94% (L + 6.00%/Q)
 
11/30/2018
 
11/28/2025
 
$
25,561

 
$
25,387

 
$
25,561

 
 
 
 
First lien (4)(9)
 
7.94% (L + 6.00%/Q)
 
11/30/2018
 
11/28/2025
 
14,850

 
14,752

 
14,850

 
 
 
 
 
 
 
 
 
 
 
 
40,411

 
40,139

 
40,411

 
3.15
 %
   Tenawa Resource Holdings LLC (13)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Tenawa Resource Management LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Energy
 
First lien (3)(9)
 
10.50% (Base + 8.00%/Q)
 
5/12/2014
 
10/30/2024
 
39,000

 
38,950

 
39,000

 
3.04
 %
   KAMC Holdings, Inc
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Second lien (2)(9)
 
9.91% (L + 8.00%/Q)
 
8/14/2019
 
8/13/2027
 
18,750

 
18,614

 
18,609

 
 
 
 
Second lien (8)(9)
 
9.91% (L + 8.00%/Q)
 
8/14/2019
 
8/13/2027
 
18,750

 
18,614

 
18,609

 
 
 
 
 
 
 
 
 
 
 
 
37,500

 
37,228

 
37,218

 
2.90
 %
   Trader Interactive, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
8.30% (L + 6.50%/M)
 
6/15/2017
 
6/17/2024
 
31,932

 
31,776

 
31,932

 
 
 
 
First lien (8)(9)
 
8.30% (L + 6.50%/M)
 
6/15/2017
 
6/17/2024
 
4,949

 
4,925

 
4,949

 
 
 
 
 
 
 
 
 
 
 
 
36,881

 
36,701

 
36,881

 
2.87
 %
   Peraton Holding Corp. (fka MHVC Acquisition Corp.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Federal Services
 
First lien (2)
 
7.05% (L + 5.25%/M)
 
4/25/2017
 
4/29/2024
 
36,907

 
36,781

 
36,745

 
2.86
 %
   Apptio, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (8)(9)
 
8.96% (L + 7.25%/M)
 
1/10/2019
 
1/10/2025
 
34,076

 
33,473

 
33,394

 
2.60
 %
   Definitive Healthcare Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Information Technology
 
First lien (8)(9)
 
8.40% (L + 5.50% + 1.00% PIK/Q)*
 
8/7/2019
 
7/16/2026
 
33,402

 
33,244

 
33,234

 
2.59
 %
   Finalsite Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (4)(9)
 
6.93% (L + 5.00%/Q)
 
9/28/2018
 
9/25/2024
 
22,219

 
22,081

 
22,219

 
 
 
 
First lien (2)(9)
 
6.93% (L + 5.00%/Q)
 
9/28/2018
 
9/25/2024
 
10,974

 
10,906

 
10,974

 
 
 
 
 
 
 
 
 
 
 
 
33,193

 
32,987

 
33,193

 
2.59
 %
   TDG Group Holding Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Consumer Services
 
First lien (2)(9)
 
7.44% (L + 5.50%/Q)
 
5/22/2018
 
5/31/2024
 
24,860

 
24,763

 
24,860

 
 
 
 
First lien (8)(9)
 
7.44% (L + 5.50%/Q)
 
5/22/2018
 
5/31/2024
 
4,950

 
4,931

 
4,950

 
 
 
 
First lien (2)(9)
 
7.44% (L + 5.50%/Q)
 
5/22/2018
 
5/31/2024
 
3,321

 
3,307

 
3,321

 
 
 
 
 
 
 
 
 
 
 
 
33,131

 
33,001

 
33,131

 
2.58
 %
   CoolSys, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Industrial Services
 
First lien (5)
 
7.80% (L + 6.00%/M)
 
11/20/2019
 
11/20/2026
 
22,500

 
22,388

 
22,388

 
 
 
 
First lien (2)
 
7.80% (L + 6.00%/M)
 
11/20/2019
 
11/20/2026
 
10,400

 
10,348

 
10,348

 
 
 
 
 
 
 
 
 
 
 
 
32,900

 
32,736

 
32,736

 
2.55
 %
   Ansira Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (8)
 
7.55% (L + 5.75%/M)
 
12/19/2016
 
12/20/2022
 
28,455

 
28,378

 
27,032

 
 
 
 
First lien (3)(10) - Drawn
 
7.51% (L + 5.75%/M)
 
12/19/2016
 
12/20/2022
 
4,743

 
4,731

 
4,506

 
 
 
 
 
 
 
 
 
 
 
 
33,198

 
33,109

 
31,538

 
2.46
 %
   DCA Investment Holding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)(9)
 
7.19% (L + 5.25%/Q)
 
7/2/2015
 
7/2/2021
 
17,095

 
17,046

 
17,095

 
 
 
 
First lien (3)(9)
 
7.19% (L + 5.25%/Q)
 
12/20/2017
 
7/2/2021
 
8,890

 
8,834

 
8,890

 
 
 
 
First lien (2)(9)
 
7.19% (L + 5.25%/Q)
 
12/20/2017
 
7/2/2021
 
4,184

 
4,163

 
4,184

 
 
 
 
First lien (3)(9)(10) - Drawn
 
9.00% (P + 4.25%/Q)
 
7/2/2015
 
7/2/2021
 
608

 
602

 
608

 
 
 
 
 
 
 
 
 
 
 
 
30,777

 
30,645

 
30,777

 
2.40
 %

The accompanying notes are an integral part of these consolidated financial statements.
32

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   Integral Ad Science, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (8)(9)
 
9.05% (L + 6.00% + 1.25% PIK/M)*
 
7/19/2018
 
7/19/2024
 
$
26,843

 
$
26,616

 
$
26,843

 
 
 
 
First lien (3)(9)
 
9.05% (L + 6.00% + 1.25% PIK/M)*
 
8/27/2019
 
7/19/2024
 
3,507

 
3,474

 
3,507

 
 
 
 
 
 
 
 
 
 
 
 
30,350

 
30,090

 
30,350

 
2.36
 %
   Conservice, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
7.05% (L + 5.25%/M)
 
1/3/2019
 
11/29/2024
 
25,311

 
25,202

 
25,184

 
 
 
 
First lien (3)(9)(10) - Drawn
 
7.05% (L + 5.25%/M)
 
1/3/2019
 
11/29/2024
 
4,418

 
4,398

 
4,396

 
 
 
 
 
 
 
 
 
 
 
 
29,729

 
29,600

 
29,580

 
2.30
 %
   Kaseya Traverse Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (8)(9)
 
8.72% (L + 5.50% + 1.00% PIK/S)*
 
5/9/2019
 
5/2/2025
 
27,525

 
27,274

 
27,250

 
 
 
 
First lien (3)(9)(10) - Drawn
 
8.45% (L + 6.50%/Q)
 
5/9/2019
 
5/2/2025
 
1,321

 
1,308

 
1,308

 
 
 
 
First lien (3)(9)(10) - Drawn
 
8.69% (L + 5.50% + 1.00% PIK/S)*
 
5/9/2019
 
5/2/2025
 
430

 
426

 
426

 
 
 
 
 
 
 
 
 
 
 
 
29,276

 
29,008

 
28,984

 
2.26
 %
   Clarkson Eyecare, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)
 
8.05% (L + 6.25%/M)
 
8/21/2019
 
4/2/2021
 
17,300

 
17,149

 
17,300

 
 
 
 
First lien (2)
 
8.05% (L + 6.25%/M)
 
9/11/2019
 
4/2/2021
 
11,533

 
11,433

 
11,533

 
 
 
 
 
 
 
 
 
 
 
 
28,833

 
28,582

 
28,833

 
2.25
 %
   Keystone Acquisition Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)
 
7.19% (L + 5.25%/Q)
 
5/10/2017
 
5/1/2024
 
24,482

 
24,369

 
23,992

 
 
 
 
Second lien (2)
 
11.19% (L + 9.25%/Q)
 
5/10/2017
 
5/1/2025
 
4,500

 
4,465

 
4,399

 
 
 
 
 
 
 
 
 
 
 
 
28,982

 
28,834

 
28,391

 
2.21
 %
   Sovos Brands Intermediate, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Food & Beverage
 
First lien (2)
 
6.80% (L + 5.00%/M)
 
11/16/2018
 
11/20/2025
 
27,957

 
27,834

 
27,957

 
2.18
 %
   Affinity Dental Management, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (4)(9)
 
8.07% (L + 6.00%/S)
 
9/17/2019
 
9/15/2023
 
10,945

 
10,945

 
10,945

 
 
 
 
First lien (2)(9)
 
8.01% (L + 6.00%/S)
 
9/15/2017
 
9/15/2023
 
11,316

 
11,288

 
11,316

 
 
 
 
First lien (3)(9)
 
8.00% (L + 6.00%/S)
 
9/15/2017
 
9/15/2023
 
5,224

 
5,194

 
5,224

 
 
 
 
 
 
 
 
 
 
 
 
27,485

 
27,427

 
27,485

 
2.14
 %
   Confluent Health, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)
 
6.80% (L + 5.00%/M)
 
6/21/2019
 
6/24/2026
 
27,363

 
27,233

 
27,363

 
2.13
 %
   TMK Hawk Parent, Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Distribution & Logistics
 
First lien (2)
 
5.30% (L + 3.50%/M)
 
6/24/2019
 
8/28/2024
 
16,908

 
14,483

 
13,865

 
 
 
 
First lien (8)
 
5.30% (L + 3.50%/M)
 
10/23/2019
 
8/28/2024
 
16,308

 
13,388

 
13,373

 
 
 
 
 
 
 
 
 
 
 
 
33,216

 
27,871

 
27,238

 
2.12
 %
   HS Purchaser, LLC / Help/Systems Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (5)
 
9.80% (L + 8.00%/M)
 
11/14/2019
 
11/19/2027
 
22,500

 
22,380

 
22,388

 
 
 
 
Second lien (2)
 
9.80% (L + 8.00%/M)
 
11/14/2019
 
11/19/2027
 
4,208

 
4,166

 
4,187

 
 
 
 
 
 
 
 
 
 
 
 
26,708

 
26,546

 
26,575

 
2.07
 %
   GC Waves Holdings, Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (5)(9)
 
7.55% (L + 5.75%/M)
 
10/31/2019
 
10/31/2025
 
22,500

 
22,335

 
22,331

 
 
 
 
First lien (2)(9)
 
7.55% (L + 5.75%/M)
 
10/31/2019
 
10/31/2025
 
3,673

 
3,646

 
3,645

 
 
 
 
 
 
 
 
 
 
 
 
26,173

 
25,981

 
25,976

 
2.02
 %
   Spring Education Group, Inc (fka SSH Group Holdings, Inc.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
Second lien (2)
 
10.19% (L + 8.25%/Q)
 
7/26/2018
 
7/30/2026
 
24,533

 
24,476

 
24,488

 
1.91
 %

The accompanying notes are an integral part of these consolidated financial statements.
33

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   AAC Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
First lien (2)(9)
 
9.95% (L + 8.25%/M)
 
9/30/2015
 
9/30/2022
 
$
24,956

 
$
24,866

 
$
23,110

 
1.80
 %
   Idera, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (4)
 
10.80% (L + 9.00%/M)
 
6/27/2019
 
6/28/2027
 
22,500

 
22,338

 
22,612

 
1.76
 %
   Convey Health Solutions, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (4)(9)
 
6.94% (L + 5.25%/M)
 
9/9/2019
 
9/4/2026
 
22,444

 
22,200

 
22,191

 
1.73
 %
   Avatar Topco, Inc. (22)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   EAB Global, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
Second lien (3)
 
9.49% (L + 7.50%/S)
 
11/17/2017
 
11/17/2025
 
13,950

 
13,782

 
13,950

 
 
 
 
Second lien (8)
 
9.49% (L + 7.50%/S)
 
11/17/2017
 
11/17/2025
 
7,500

 
7,410

 
7,500

 
 
 
 
 
 
 
 
 
 
 
 
21,450

 
21,192

 
21,450

 
1.67
 %
   CRCI Longhorn Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Second lien (3)
 
8.99% (L + 7.25%/M)
 
8/2/2018
 
8/10/2026
 
14,349

 
14,301

 
14,062

 
 
 
 
Second lien (8)
 
8.99% (L + 7.25%/M)
 
8/2/2018
 
8/10/2026
 
7,500

 
7,475

 
7,350

 
 
 
 
 
 
 
 
 
 
 
 
21,849

 
21,776

 
21,412

 
1.67
 %
   National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
Second lien (2)
 
10.30% (L + 8.50%/M)
 
2/5/2019
 
3/8/2027
 
21,051

 
20,609

 
20,999

 
1.64
 %
   MED Parentco, LP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
Second lien (8)
 
10.05% (L + 8.25%/M)
 
8/2/2019
 
8/30/2027
 
20,857

 
20,703

 
20,753

 
1.62
 %
   Institutional Shareholder Services, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Second lien (3)
 
10.44% (L + 8.50%/Q)
 
3/5/2019
 
3/5/2027
 
20,372

 
20,087

 
19,557

 
1.52
 %
   DiversiTech Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Distribution & Logistics
 
Second lien (2)
 
9.44% (L + 7.50%/Q)
 
5/18/2017
 
6/2/2025
 
12,000

 
11,909

 
11,760

 
 
 
 
Second lien (8)
 
9.44% (L + 7.50%/Q)
 
5/18/2017
 
6/2/2025
 
7,500

 
7,443

 
7,350

 
 
 
 
 
 
 
 
 
 
 
 
19,500

 
19,352

 
19,110

 
1.49
 %
   Xactly Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (4)(9)
 
9.05% (L + 7.25%/M)
 
7/31/2017
 
7/29/2022
 
19,047

 
18,925

 
19,047

 
1.48
 %
   FR Arsenal Holdings II Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
9.19% (L + 7.25%/Q)
 
9/29/2016
 
9/8/2022
 
18,355

 
18,249

 
18,355

 
1.43
 %
   YLG Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (5)
 
7.66% (L + 5.75%/Q)
 
11/1/2019
 
10/31/2025
 
18,413

 
18,323

 
18,321

 
1.43
 %
   Geo Parent Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)
 
7.05% (L + 5.25%/M)
 
12/13/2018
 
12/19/2025
 
18,364

 
18,282

 
18,318

 
1.43
 %
   Bluefin Holding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (8)(9)
 
9.64% (L + 7.75%/Q)
 
9/6/2019
 
9/6/2027
 
18,000

 
18,000

 
18,000

 
1.40
 %
   Bullhorn, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (2)(9)
 
7.44% (L + 5.50%/Q)
 
9/24/2019
 
10/1/2025
 
17,174

 
17,049

 
17,045

 
 
 
 
First lien (3)(9)(10) - Drawn
 
7.46% (L + 5.50%/Q)
 
9/24/2019
 
10/1/2025
 
284

 
282

 
282

 
 
 
 
 
 
 
 
 
 
 
 
17,458

 
17,331

 
17,327

 
1.35
 %
   The Kleinfelder Group, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (4)(9)
 
6.37% (L + 4.75%/W)
 
12/18/2018
 
11/29/2024
 
17,325

 
17,251

 
17,325

 
1.35
 %
   TIBCO Software Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Subordinated (3)
 
11.38%/S
 
11/24/2014
 
12/1/2021
 
15,000

 
14,844

 
15,554

 
1.21
 %
   Hill International, Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
7.55% (L + 5.75%/M)
 
6/21/2017
 
6/21/2023
 
15,405

 
15,356

 
15,405

 
1.20
 %
   Bleriot US Bidco Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Federal Services
 
Second lien (2)
 
10.44% (L + 8.50%/Q)
 
10/24/2019
 
10/29/2027
 
15,000

 
14,852

 
14,981

 
1.17
 %

The accompanying notes are an integral part of these consolidated financial statements.
34

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   Netsmart Inc. / Netsmart Technologies, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Information Technology
 
Second lien (2)
 
9.30% (L + 7.50%/M)
 
4/18/2016
 
10/19/2023
 
$
15,000

 
$
14,774

 
$
14,925

 
1.16
 %
   Pathway Vet Alliance LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Consumer Services
 
First lien (4)(9)(10) - Drawn
 
6.30% (L + 4.50%/M)
 
11/14/2019
 
12/20/2024
 
3,670

 
3,652

 
3,652

 
 
 
 
First lien (3)(9)(10) - Drawn
 
6.30% (L + 4.50%/M)
 
11/14/2019
 
12/20/2024
 
1,223

 
1,217

 
1,217

 
 
 
 
Second lien (4)(9)(10) - Drawn
 
10.30% (L + 8.50%/M)
 
11/14/2019
 
12/19/2025
 
7,547

 
7,490

 
7,490

 
 
 
 
Second lien (3)(9)(10) - Drawn
 
10.30% (L + 8.50%/M)
 
11/14/2019
 
12/19/2025
 
2,516

 
2,497

 
2,497

 
 
 
 
 
 
 
 
 
 
 
 
14,956

 
14,856

 
14,856

 
1.16
 %
   Diligent Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (2)(9)
 
7.56% (L + 5.50%/S)
 
10/30/2019
 
4/14/2022
 
6,842

 
6,777

 
6,842

 
 
 
 
First lien (2)(9)
 
7.56% (L + 5.50%/S)
 
10/30/2019
 
4/14/2022
 
140

 
139

 
140

 
 
 
 
First lien (3)(9)(10) - Drawn
 
7.54% (L + 5.50%/S)
 
12/19/2018
 
4/14/2022
 
7,431

 
7,391

 
7,431

 
 
 
 
 
 
 
 
 
 
 
 
14,413

 
14,307

 
14,413

 
1.12
 %
   Alegeus Technologies Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (8)(9)
 
8.28% (L + 6.25%/Q)
 
9/5/2018
 
9/5/2024
 
13,444

 
13,388

 
13,444

 
1.05
 %
   JAMF Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (8)(9)
 
8.91% (L + 7.00%/Q)
 
11/13/2017
 
11/11/2022
 
8,757

 
8,702

 
8,757

 
 
 
 
First lien (2)(9)
 
8.91% (L + 7.00%/Q)
 
11/8/2019
 
11/11/2022
 
4,582

 
4,549

 
4,582

 
 
 
 
 
 
 
 
 
 
 
 
13,339

 
13,251

 
13,339

 
1.04
 %
   BackOffice Associates Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
12.70% (L + 7.50% + 3.00% PIK/S)*
 
8/25/2017
 
8/25/2023
 
13,047

 
12,973

 
12,425

 
 
 
 
First lien (3)(9)(10) - Drawn
 
12.68% (L + 7.50% + 3.00% PIK/Q)*
 
8/25/2017
 
8/25/2023
 
894

 
886

 
851

 
 
 
 
 
 
 
 
 
 
 
 
13,941

 
13,859

 
13,276

 
1.03
 %
   Castle Management Borrower LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
8.16% (L + 6.25%/Q)
 
5/31/2018
 
2/15/2024
 
13,217

 
13,166

 
13,217

 
1.03
 %
   Ministry Brands, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (2)(9)
 
5.85% (L + 4.00%/M)
 
12/7/2016
 
12/2/2022
 
2,932

 
2,924

 
2,932

 
 
 
 
Second lien (8)(9)
 
11.08% (L + 9.25%/M)
 
12/7/2016
 
6/2/2023
 
7,840

 
7,804

 
7,840

 
 
 
 
Second lien (3)(9)
 
11.08% (L + 9.25%/M)
 
12/7/2016
 
6/2/2023
 
2,160

 
2,150

 
2,160

 
 
 
 
First lien (3)(9)(10) - Drawn
 
6.95% (L + 5.00%/Q)
 
12/7/2016
 
12/2/2022
 
200

 
199

 
200

 
 
 
 
 
 
 
 
 
 
 
 
13,132

 
13,077

 
13,132

 
1.02
 %
   Transcendia Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Packaging
 
Second lien (8)(9)
 
9.80% (L + 8.00%/M)
 
6/28/2017
 
5/30/2025
 
14,500

 
14,348

 
12,476

 
0.97
 %
   OEConnection LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Second lien (2)(9)
 
10.04% (L + 8.25%/M)
 
9/25/2019
 
9/25/2027
 
12,044

 
11,926

 
11,924

 
0.93
 %
   CFS Management, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)(9)
 
7.95% (L + 5.75%/S)
 
8/6/2019
 
7/1/2024
 
11,733

 
11,678

 
11,674

 
0.91
 %
   CHA Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Second lien (4)
 
10.69% (L + 8.75%/Q)
 
4/3/2018
 
4/10/2026
 
7,012

 
6,952

 
7,082

 
 
 
 
Second lien (3)
 
10.69% (L + 8.75%/Q)
 
4/3/2018
 
4/10/2026
 
4,453

 
4,415

 
4,497

 
 
 
 
 
 
 
 
 
 
 
 
11,465

 
11,367

 
11,579

 
0.90
 %

The accompanying notes are an integral part of these consolidated financial statements.
35

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   Alert Holding Company, Inc. (14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Appriss Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (8)
 
7.44% (L + 5.50%/Q)
 
5/24/2019
 
5/29/2026
 
$
11,054

 
$
10,965

 
$
10,888

 
0.86
 %
   PaySimple, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (2)
 
7.30% (L + 5.50%/M)
 
8/19/2019
 
8/25/2025
 
9,857

 
9,763

 
9,808

 
 
 
 
First lien (3)(10) - Drawn
 
7.31% (L + 5.50%/M)
 
8/19/2019
 
8/25/2025
 
934

 
916

 
930

 
 
 
 
 
 
 
 
 
 
 
 
10,791

 
10,679

 
10,738

 
0.84
 %
   Vectra Co.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Products
 
Second lien (8)
 
9.05% (L + 7.25%/M)
 
2/23/2018
 
3/8/2026
 
10,788

 
10,754

 
10,518

 
0.82
 %
   NorthStar Financial Services Group, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (5)
 
9.30% (L + 7.50%/M)
 
5/23/2018
 
5/25/2026
 
10,607

 
10,585

 
10,501

 
0.82
 %
   PPVA Black Elk (Equity) LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Subordinated (3)(9)
 
 
5/3/2013
 
 
14,500

 
14,500

 
10,354

 
0.81
 %
   Masergy Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Second lien (2)
 
9.46% (L + 7.50%/Q)
 
12/14/2016
 
12/16/2024
 
10,500

 
10,458

 
10,264

 
0.80
 %
   VT Topco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Second lien (4)
 
8.94% (L + 7.00%/Q)
 
8/14/2018
 
7/31/2026
 
10,000

 
9,978

 
10,025

 
0.78
 %
   Quartz Holding Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (3)
 
9.71% (L + 8.00%/M)
 
4/2/2019
 
4/2/2027
 
10,000

 
9,813

 
9,975

 
0.78
 %
   AG Parent Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)
 
6.91% (L + 5.00%/Q)
 
7/30/2019
 
7/31/2026
 
10,000

 
9,952

 
9,925

 
0.77
 %
   Stats Intermediate Holdings, LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)
 
7.30% (L + 5.25%/S)
 
5/22/2019
 
7/10/2026
 
10,000

 
9,881

 
9,775

 
0.76
 %
   Affordable Care Holding Corp.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)
 
6.59% (L + 4.75%/M)
 
3/18/2019
 
10/24/2022
 
9,897

 
9,738

 
9,649

 
0.75
 %
   Teneo Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)
 
6.99% (L + 5.25%/M)
 
7/15/2019
 
7/11/2025
 
9,975

 
9,788

 
9,476

 
0.74
 %
   AgKnowledge Holdings Company, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (4)
 
6.55% (L + 4.75%/M)
 
11/30/2018
 
7/21/2023
 
9,355

 
9,318

 
9,332

 
0.73
 %
   Wrike, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (8)(9)
 
8.55% (L + 6.75%/M)
 
12/31/2018
 
12/31/2024
 
9,067

 
8,988

 
9,067

 
0.71
 %
   WD Wolverine Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (2)
 
7.30% (L + 5.50%/M)
 
2/22/2017
 
8/16/2022
 
9,014

 
8,859

 
9,014

 
0.70
 %
   Amerijet Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Distribution & Logistics
 
First lien (4)(9)
 
9.80% (L + 8.00%/M)
 
7/15/2016
 
7/15/2021
 
7,674

 
7,653

 
7,674

 
 
 
 
First lien (4)(9)
 
9.80% (L + 8.00%/M)
 
7/15/2016
 
7/15/2021
 
1,279

 
1,276

 
1,279

 
 
 
 
 
 
 
 
 
 
 
 
8,953

 
8,929

 
8,953

 
0.70
 %
   Zywave, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Second lien (4)(9)
 
10.95% (L + 9.00%/Q)
 
11/22/2016
 
11/17/2023
 
6,980

 
6,946

 
6,980

 
 
 
 
Second lien (4)(9)
 
10.84% (L + 9.00%/M)
 
12/3/2019
 
11/17/2023
 
600

 
596

 
600

 
 
 
 
First lien (3)(9)(10) - Drawn
 
6.80% (L + 5.00%/M)
 
11/22/2016
 
11/17/2022
 
670

 
665

 
670

 
 
 
 
 
 
 
 
 
 
 
 
8,250

 
8,207

 
8,250

 
0.64
 %

The accompanying notes are an integral part of these consolidated financial statements.
36

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   DealerSocket, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (2)
 
6.66% (L + 4.75%/Q)
 
4/16/2018
 
4/26/2023
 
$
6,610

 
$
6,576

 
$
6,544

 
 
 
 
First lien (3)(10) - Drawn
 
7.05% (L + 5.25%/M)
 
4/16/2018
 
4/26/2023
 
168

 
167

 
166

 
 
 
 
 
 
 
 
 
 
 
 
6,778

 
6,743

 
6,710

 
0.52
 %
   Restaurant Technologies, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Second lien (4)
 
8.30% (L + 6.50%/M)
 
9/24/2018
 
10/1/2026
 
6,722

 
6,707

 
6,705

 
0.52
 %
   CP VI Bella Midco, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
Second lien (3)
 
8.55% (L + 6.75%/M)
 
1/25/2018
 
12/29/2025
 
6,732

 
6,705

 
6,657

 
0.52
 %
   DG Investment Intermediate Holdings 2, Inc. (aka Convergint Technologies Holdings, LLC)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Second lien (3)
 
8.55% (L + 6.75%/M)
 
1/29/2018
 
2/2/2026
 
6,732

 
6,705

 
6,530

 
0.51
 %
   Recorded Future, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (8)(9)
 
8.55% (L + 6.75%/M)
 
8/26/2019
 
7/3/2025
 
6,250

 
6,220

 
6,219

 
0.48
 %
   Solera LLC / Solera Finance, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
Subordinated (3)
 
10.50%/S
 
2/29/2016
 
3/1/2024
 
5,000

 
4,844

 
5,316

 
0.41
 %
   ADG, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
Second lien (3)(9)
 
11.92% (L + 10.00%/S)
 
10/3/2016
 
3/28/2024
 
5,264

 
5,215

 
4,213

 
0.33
 %
   Sphera Solutions, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (2)(9)
 
9.00% (L + 7.00%/Q)
 
9/10/2019
 
6/14/2022
 
2,489

 
2,466

 
2,464

 
0.19
 %
   First American Payment Systems, L.P.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)
 
6.81% (L + 4.75%/Q)
 
1/3/2017
 
1/5/2024
 
2,034

 
2,021

 
2,020

 
0.16
 %
   Education Management Corporation (12)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Education Management II LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
First lien (2)
 
10.25% (P + 5.50%/Q)(24)
 
1/5/2015
 
7/2/2020
 
208

 
202

 
2

 
 
 
 
First lien (3)
 
10.25% (P + 5.50%/Q)(24)
 
1/5/2015
 
7/2/2020
 
117

 
114

 
1

 
 
 
 
First lien (2)
 
14.00% (P + 8.50%/M)(24)
 
1/5/2015
 
7/2/2020
 
300

 
292

 

 
 
 
 
First lien (3)
 
14.00% (P + 8.50%/M)(24)
 
1/5/2015
 
7/2/2020
 
169

 
165

 

 
 
 
 
First lien (2)
 
13.25% (P + 8.50%/M)(24)
 
1/5/2015
 
7/2/2020
 
142

 
117

 

 
 
 
 
First lien (2)
 
13.25% (P + 8.50%/M)(24)
 
1/5/2015
 
7/2/2020
 
4

 
3

 

 
 
 
 
First lien (3)
 
13.25% (P + 8.50%/M)(24)
 
1/5/2015
 
7/2/2020
 
80

 
66

 

 
 
 
 
First lien (3)
 
13.25% (P + 8.50%/M)(24)
 
1/5/2015
 
7/2/2020
 
2

 
2

 

 
 
 
 
 
 
 
 
 
 
 
 
1,022

 
961

 
3

 
 %
   PPVA Fund, L.P.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Collateralized Financing (24)(25)
 
 
11/7/2014
 
 

 

 

 
 %
Total Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
2,408,610

 
$
2,385,761

 
$
2,375,987

 
185.12
 %
Total Funded Debt Investments
 
 
 
 
 
 
 
 
 
$
2,565,531

 
$
2,541,672

 
$
2,530,242

 
197.14
 %
Equity - Hong Kong
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Bach Special Limited (Bach Preference Limited)**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
Preferred shares (3)(9)(21)
 
 
9/1/2017
 
 
75,184

 
$
7,439

 
$
7,518

 
0.59
 %
Total Shares - Hong Kong
 
 
 
 
 
 
 
 
 
 
 
$
7,439

 
$
7,518

 
0.59
 %

The accompanying notes are an integral part of these consolidated financial statements.
37

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
Equity - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Avatar Topco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
Preferred shares (3)(9)(22)
 
 
11/17/2017
 
 
35,750

 
$
46,093

 
$
47,165

 
3.67
 %
   Symplr Software Intermediate Holdings, Inc.(23)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Information Technology
 
Preferred shares (4)(9)
 
 
11/30/2018
 
 
7,500

 
8,502

 
8,571

 
 
 
 
Preferred shares (3)(9)
 
 
11/30/2018
 
 
2,586

 
2,931

 
2,955

 
 
 
 
 
 
 
 
 
 
 
 
 
 
11,433

 
11,526

 
0.90
 %
   Tenawa Resource Holdings LLC (13)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   QID NGL LLC
 
Ordinary shares (6)(9)
 
 
5/12/2014
 
 
5,290,997

 
5,291

 
8,445

 
 
      Energy
 
Preferred shares (6)(9)
 
 
10/30/2017
 
 
1,623,385

 
1,623

 
2,727

 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,914

 
11,172

 
0.87
 %
   Alert Holding Company, Inc. (14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Alert Intermediate Holdings I, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Preferred shares (3)(9)
 
 
5/31/2019
 
 
6,111

 
6,459

 
6,452

 
0.50
 %
   Education Management Corporation(12)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
Preferred shares (2)
 
 
1/5/2015
 
 
3,331

 
200

 

 
 
 
 
Preferred shares (3)
 
 
1/5/2015
 
 
1,879

 
113

 

 
 
 
 
Ordinary shares (2)
 
 
1/5/2015
 
 
2,994,065

 
100

 

 
 
 
 
Ordinary shares (3)
 
 
1/5/2015
 
 
1,688,976

 
56

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
469

 

 
 %
Total Shares - United States
 
 
 
 
 
 
 
 
 
 
 
$
71,368

 
$
76,315

 
5.94
 %
Total Shares
 
 
 
 
 
 
 
 
 
 
 
$
78,807

 
$
83,833

 
6.53
 %
Warrants - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   ASP LCG Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
Warrants (3)(9)
 
 
5/5/2014
 
5/5/2026
 
622

 
$
37

 
$
898

 
0.07
 %
Total Warrants - United States
 
 
 
 
 
 
 
 
 
 
 
$
37

 
$
898

 
0.07
 %
Total Funded Investments
 
 
 
 
 
 
 
 
 
 
 
$
2,620,516

 
$
2,614,973

 
203.74
 %
Unfunded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Wolfpack IP Co.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
6/14/2019
 
6/13/2025
 
$
909

 
$
(9
)
 
$
(9
)
 
(0.00
)%
Total Unfunded Debt Investments - Canada
 
 
 
 
 
 
 
 
 
$
909

 
$
(9
)
 
$
(9
)
 
(0.00
)%
Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   NM GRC Holdco, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)(10) - Undrawn
 
 
2/9/2018
 
2/9/2020
 
$
771

 
$
(2
)
 
$

 
 %
   Ministry Brands, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
12/7/2016
 
12/2/2022
 
800

 
(4
)
 

 
 %
   Wrike, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
12/31/2018
 
12/31/2024
 
933

 
(9
)
 

 
 %

The accompanying notes are an integral part of these consolidated financial statements.
38

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   Xactly Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
7/31/2017
 
7/29/2022
 
$
992

 
$
(10
)
 
$

 
 %
   Zywave, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
11/22/2016
 
11/17/2022
 
1,330

 
(10
)
 

 
 %
   JAMF Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
11/13/2017
 
11/11/2022
 
1,086

 
(10
)
 

 
 %
   Trader Interactive, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (3)(9)(10) - Undrawn
 
 
6/15/2017
 
6/15/2023
 
1,673

 
(13
)
 

 
 %
   DCA Investment Holding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (3)(9)(10) - Undrawn
 
 
4/16/2019
 
4/16/2021
 
20,426

 

 

 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
7/2/2015
 
7/2/2021
 
1,492

 
(15
)
 

 
 
 
 
 
 
 
 
 
 
 
 
21,918

 
(15
)
 

 
 %
   Affinity Dental Management, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (3)(9)(10) - Undrawn
 
 
9/15/2017
 
3/15/2023
 
1,738

 
(17
)
 

 
 %
   Integral Ad Science, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
7/19/2018
 
7/19/2023
 
1,807

 
(18
)
 

 
 %
   Finalsite Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
9/25/2018
 
9/25/2024
 
2,521

 
(19
)
 

 
 %
   TDG Group Holding Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Consumer Services
 
First lien (3)(9)(10) - Undrawn
 
 
5/22/2018
 
5/31/2024
 
5,044

 
(25
)
 

 
 %
   iCIMS, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
9/12/2018
 
9/12/2024
 
2,915

 
(29
)
 

 
 %
   Associations, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (3)(9)(10) - Undrawn
 
 
7/30/2018
 
7/30/2021
 
3,161

 
(20
)
 

 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
7/30/2018
 
7/30/2024
 
2,033

 
(13
)
 

 
 
 
 
 
 
 
 
 
 
 
 
5,194

 
(33
)
 

 
 %
   Integro Parent Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (3)(9)(10) - Undrawn
 
 
6/8/2018
 
4/30/2022
 
6,743

 
(34
)
 

 
 %
   Diligent Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
12/19/2018
 
12/19/2020
 
5,977

 
(37
)
 

 
 %
   PhyNet Dermatology LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (3)(9)(10) - Undrawn
 
 
9/17/2018
 
8/16/2020
 
17,077

 
(85
)
 

 
 %
   AgKnowledge Holdings Company, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (3)(10) - Undrawn
 
 
11/30/2018
 
7/21/2023
 
526

 
(3
)
 
(1
)
 
(0.00
)%
   DealerSocket, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(10) - Undrawn
 
 
4/16/2018
 
4/26/2023
 
392

 
(3
)
 
(4
)
 
(0.00
)%

The accompanying notes are an integral part of these consolidated financial statements.
39

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   Recorded Future, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
8/26/2019
 
1/3/2021
 
$
500

 
$
(3
)
 
$
(3
)
 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
8/26/2019
 
7/3/2025
 
750

 
(4
)
 
(4
)
 
 
 
 
 
 
 
 
 
 
 
 
1,250

 
(7
)
 
(7
)
 
(0.00
)%
   PaySimple, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(10) - Undrawn
 
 
8/19/2019
 
8/24/2020
 
2,289

 

 
(11
)
 
(0.00
)%
   Alert Holding Company, Inc. (14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Appriss Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (3)(10) - Undrawn
 
 
5/24/2019
 
5/30/2025
 
930

 
(9
)
 
(14
)
 
(0.00
)%
   Bullhorn, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
9/24/2019
 
10/1/2021
 
1,135

 
(9
)
 
(9
)
 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
9/24/2019
 
10/1/2025
 
852

 
(6
)
 
(6
)
 
 
 
 
 
 
 
 
 
 
 
 
1,987

 
(15
)
 
(15
)
 
(0.00
)%
   Bluefin Holding, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(10) - Undrawn
 
 
9/6/2019
 
9/6/2024
 
1,515

 
(23
)
 
(15
)
 
(0.00
)%
   CFS Management, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
First lien (3)(9)(10) - Undrawn
 
 
8/6/2019
 
7/1/2024
 
3,468

 
(17
)
 
(17
)
 
(0.00
)%
   Conservice, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (3)(9)(10) - Undrawn
 
 
1/3/2019
 
11/29/2024
 
1,360

 
(7
)
 
(7
)
 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
1/3/2019
 
6/30/2020
 
2,283

 

 
(11
)
 
 
 
 
 
 
 
 
 
 
 
 
3,643

 
(7
)
 
(18
)
 
(0.00
)%
   ConnectWise, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
11/26/2019
 
2/28/2025
 
4,248

 
(27
)
 
(27
)
 
(0.00
)%
   CoolSys, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Industrial Services
 
First lien (3)(10) - Undrawn
 
 
11/20/2019
 
11/19/2021
 
5,600

 

 
(28
)
 
(0.00
)%
   YLG Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (5)(10) - Undrawn
 
 
11/1/2019
 
4/30/2021
 
2,381

 

 
(12
)
 
 
 
 
First lien (3)(10) - Undrawn
 
 
11/1/2019
 
10/31/2025
 
3,968

 
(20
)
 
(20
)
 
 
 
 
 
 
 
 
 
 
 
 
6,349

 
(20
)
 
(32
)
 
(0.00
)%
   Kaseya Traverse Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
5/9/2019
 
5/3/2021
 
2,873

 

 
(29
)
 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
5/9/2019
 
5/2/2025
 
991

 
(10
)
 
(10
)
 
 
 
 
 
 
 
 
 
 
 
 
3,864

 
(10
)
 
(39
)
 
(0.00
)%
   Apptio, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
1/10/2019
 
1/10/2025
 
2,066

 
(41
)
 
(41
)
 
(0.00
)%

The accompanying notes are an integral part of these consolidated financial statements.
40

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   Definitive Healthcare Holdings, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Information Technology
 
First lien (3)(9)(10) - Undrawn
 
 
8/7/2019
 
7/16/2021
 
$
7,391

 
$

 
$
(37
)
 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
8/7/2019
 
7/16/2024
 
1,848

 
(9
)
 
(9
)
 
 
 
 
 
 
 
 
 
 
 
 
9,239

 
(9
)
 
(46
)
 
(0.01
)%
   Pathway Vet Alliance LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Consumer Services
 
First lien (4)(9)(10) - Undrawn
 
 
11/14/2019
 
10/11/2021
 
3,821

 

 
(19
)
 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
11/14/2019
 
10/11/2021
 
1,274

 

 
(6
)
 
 
 
 
Second lien (4)(9)(10) - Undrawn
 
 
11/14/2019
 
10/11/2021
 
7,453

 

 
(56
)
 
 
 
 
Second lien (3)(9)(10) - Undrawn
 
 
11/14/2019
 
10/11/2021
 
2,484

 

 
(19
)
 
 
 
 
 
 
 
 
 
 
 
 
15,032

 

 
(100
)
 
(0.01
)%
   GC Waves Holdings, Inc.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (3)(9)(10) - Undrawn
 
 
10/31/2019
 
11/1/2021
 
9,877

 

 
(74
)
 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
10/31/2019
 
10/31/2025
 
3,951

 
(30
)
 
(30
)
 
 
 
 
 
 
 
 
 
 
 
 
13,828

 
(30
)
 
(104
)
 
(0.01
)%
   Ansira Holdings, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (3)(10) - Undrawn
 
 
12/19/2016
 
4/16/2020
 
2,437

 
(6
)
 
(122
)
 
(0.01
)%
   GS Acquisitionco, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Software
 
First lien (3)(9)(10) - Undrawn
 
 
8/7/2019
 
8/2/2021
 
35,103

 

 
(219
)
 
 
 
 
First lien (3)(9)(10) - Undrawn
 
 
8/7/2019
 
5/25/2024
 
1,975

 
(12
)
 
(12
)
 
 
 
 
 
 
 
 
 
 
 
 
37,078

 
(12
)
 
(231
)
 
(0.02
)%
   Salient CRGT Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Federal Services
 
First lien (3)(10) - Undrawn
 
 
6/26/2018
 
11/29/2021
 
6,125

 
(490
)
 
(291
)
 
(0.03
)%
Total Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
200,385

 
$
(1,099
)
 
$
(1,163
)
 
(0.09
)%
Total Unfunded Debt Investments
 
 
 
 
 
 
 
 
 
$
201,294

 
$
(1,108
)
 
$
(1,172
)
 
(0.09
)%
Total Non-Controlled/Non-Affiliated Investments
 
 
 
 
 
 
 
 
 
 
 
$
2,619,408

 
$2,613,801
 
203.65
 %
Non-Controlled/Affiliated Investments(26)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Permian Holdco 1, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Permian Holdco 2, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Permian Holdco 3, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Energy
 
First lien (3)(9)
 
14.28% (L + 7.50% + 5.00% PIK/Q)*
 
6/14/2018
 
6/30/2022
 
$
10,523

 
$
10,523

 
$
10,523

 
 
 
 
First lien (3)(9)(10) - Drawn
 
8.24% (L + 6.50%/M)
 
6/14/2018
 
6/30/2022
 
17,750

 
17,750

 
17,750

 
 
 
 
Subordinated (3)(9)
 
18.00% PIK/Q*
 
12/26/2018
 
6/30/2022
 
2,876

 
2,876

 
2,732

 
 
 
 
Subordinated (3)(9)
 
14.00% PIK/Q*
 
10/31/2016
 
10/15/2021
 
2,642

 
2,642

 
2,246

 
 
 
 
Subordinated (3)(9)
 
14.00% PIK/Q*
 
10/31/2016
 
10/15/2021
 
1,361

 
1,361

 
1,157

 
 
 
 
 
 
 
 
 
 
 
 
35,152

 
35,152

 
34,408

 
2.68
 %

The accompanying notes are an integral part of these consolidated financial statements.
41

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   Sierra Hamilton Holdings Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Energy
 
Second lien (3)(9)
 
15.00% PIK/Q*
 
9/12/2019
 
9/12/2023
 
1,442

 
1,410

 
1,406

 
0.11
 %
Total Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
36,594

 
$
36,562

 
$
35,814

 
2.79
 %
Equity - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   NMFC Senior Loan Program I LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Investment Fund
 
Membership interest (3)(9)
 
 
6/13/2014
 
 

 
$
23,000

 
$
23,000

 
1.80
 %
   Sierra Hamilton Holdings Corporation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Energy
 
Ordinary shares (2)(9)
 
 
7/31/2017
 
 
25,000,000

 
11,501

 
7,648

 
 
 
 
Ordinary shares (3)(9)
 
 
7/31/2017
 
 
2,786,000

 
1,281

 
852

 
 
 
 
 
 
 
 
 
 
 
 
 
 
12,782

 
8,500

 
0.66
 %
   Permian Holdco 1, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Energy
 
Preferred shares (3)(9)(16)(24)
 
 
10/31/2016
 
 
1,987,848

 
9,131

 
6,013

 
 
 
 
Ordinary shares (3)(9)
 
 
10/31/2016
 
 
1,366,452

 
1,350

 
200

 
 
 
 
 
 
 
 
 
 
 
 
 
 
10,481

 
6,213

 
0.48
 %
Total Shares - United States
 
 
 
 
 
 
 
 
 
 
 
$
46,263

 
$
37,713

 
2.94
 %
Total Funded Investments
 
 
 
 
 
 
 
 
 
 
 
$
82,825

 
$
73,527

 
5.73
 %
Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Permian Holdco 3, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Energy
 
First lien (3)(9)(10) - Undrawn
 
 
6/14/2018
 
6/30/2022
 
$
2,250

 
$

 
$

 
 %
Total Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
2,250

 
$

 
$

 
 %
Total Non-Controlled/Affiliated Investments
 
 
 
 
 
 
 
 
 
 
 
$
82,825

 
$
73,527

 
5.73
 %
Controlled Investments(27)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Edmentum Ultimate Holdings, LLC (15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
First lien (2)
 
10.43% (L + 4.50% + 4.00% PIK/Q)*
 
8/6/2018
 
6/9/2021
 
$
10,112

 
$
9,173

 
$
10,112

 
 
 
 
Second lien (3)(9)
 
7.00% PIK/Q*
 
2/23/2018
 
12/9/2021
 
11,999

 
11,579

 
11,999

 
 
 
 
Second lien (3)(9)(10) - Drawn
 
5.00% PIK/Q*
 
6/9/2015
 
12/9/2021
 
7,586

 
7,586

 
7,586

 
 
 
 
Subordinated (3)(9)
 
8.50% PIK/Q*
 
6/9/2015
 
12/9/2021
 
5,326

 
5,324

 
5,326

 
 
 
 
Subordinated (2)(9)
 
10.00% PIK/Q*
 
6/9/2015
 
12/9/2021
 
20,476

 
20,476

 
19,333

 
 
 
 
Subordinated (3)(9)
 
10.00% PIK/Q*
 
6/9/2015
 
12/9/2021
 
5,037

 
5,037

 
4,756

 
 
 
 
 
 
 
 
 
 
 
 
60,536

 
59,175

 
59,112

 
4.61
 %
   NHME Holdings Corp. (20)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   National HME, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
Second lien (3)(9)
 
12.00% PIK/Q*
 
11/27/2018
 
5/27/2024
 
16,532

 
13,054

 
11,985

 
 
 
 
Second lien (3)(9)
 
12.00% PIK/Q*
 
11/27/2018
 
5/27/2024
 
9,136

 
8,279

 
7,994

 
 
 
 
 
 
 
 
 
 
 
 
25,668

 
21,333

 
19,979

 
1.56
 %

The accompanying notes are an integral part of these consolidated financial statements.
42

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   UniTek Global Services, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
First lien (2)(9)
 
8.41% (L + 5.50% + 1.00% PIK/Q)*
 
6/29/2018
 
8/20/2024
 
$
12,448

 
$
12,448

 
$
11,068

 
 
 
 
First lien (2)(9)
 
8.41% (L + 5.50% + 1.00% PIK/Q)*
 
6/29/2018
 
8/20/2024
 
2,490

 
2,490

 
2,214

 
 
 
 
 
 
 
 
 
 
 
 
14,938

 
14,938

 
13,282

 
1.03
 %
Total Funded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
101,142

 
$
95,446

 
$
92,373

 
7.20
 %
Equity - Canada
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  NM APP Canada Corp.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
9/13/2016
 
 

 
$
7,345

 
$
10,774

 
0.84
 %
Total Shares - Canada
 
 
 
 
 
 
 
 
 
 
 
$
7,345

 
$
10,774

 
0.84
 %
Equity - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   NMFC Senior Loan Program III LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Investment Fund
 
Membership interest (3)(9)
 
 
5/4/2018
 
 

 
$
100,000

 
$
100,000

 
7.80
 %
   NMFC Senior Loan Program II LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Investment Fund
 
Membership interest (3)(9)
 
 
5/3/2016
 
 

 
79,400

 
79,400

 
6.20
 %
   UniTek Global Services, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Business Services
 
Preferred shares (3)(9)(19)
 
 
8/29/2019
 
 
3,492,227

 
3,492

 
3,347

 
 
 
 
Preferred shares (3)(9)(19)
 
 
8/17/2018
 
 
8,594,292

 
8,594

 
7,979

 
 
 
 
Preferred shares (3)(9)(18)
 
 
6/30/2017
 
 
15,747,272

 
15,747

 
13,909

 
 
 
 
Preferred shares (2)(9)(17)
 
 
1/13/2015
 
 
28,369,088

 
25,989

 
22,766

 
 
 
 
Preferred shares (3)(9)(17)
 
 
1/13/2015
 
 
7,839,866

 
7,182

 
6,292

 
 
 
 
Ordinary shares (2)(9)
 
 
1/13/2015
 
 
2,096,477

 
1,925

 
270

 
 
 
 
Ordinary shares (3)(9)
 
 
1/13/2015
 
 
1,993,749

 
532

 
256

 
 
 
 
 
 
 
 
 
 
 
 
 
 
63,461

 
54,819

 
4.27
 %
   NM NL Holdings, L.P.**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
6/20/2018
 
 

 
44,070

 
48,308

 
3.76
 %
   NM GLCR LP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
2/1/2018
 
 

 
14,750

 
23,800

 
1.85
 %
   NM CLFX LP
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
10/6/2017
 
 

 
12,538

 
12,723

 
0.99
 %
   NM APP US LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
9/13/2016
 
 

 
5,080

 
6,834

 
0.53
 %
   NM YI, LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
9/30/2019
 
 

 
6,272

 
6,339

 
0.49
 %
   NM DRVT LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
11/18/2016
 
 

 
5,152

 
6,016

 
0.46
 %

The accompanying notes are an integral part of these consolidated financial statements.
43

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


Portfolio Company, Location and Industry(1)
 
Type of
Investment
 
Interest Rate (11)
 
Acquisition Date
 
Maturity/Expiration
Date
 
Principal
Amount,
Par Value
or Shares
 
Cost
 
Fair Value
 
Percent of
Net
Assets
   NHME Holdings Corp.(20)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
Ordinary shares (3)(9)
 
 
11/27/2018
 
 
640,000

 
$
4,000

 
$
4,000

 
0.31
 %
   NM JRA LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
8/12/2016
 
 

 
2,043

 
3,700

 
0.29
 %
   Edmentum Ultimate Holdings, LLC (15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
Ordinary shares (3)(9)
 
 
6/9/2015
 
 
123,968

 
11

 
1,806

 
 
 
 
Ordinary shares (2)(9)
 
 
6/9/2015
 
 
107,143

 
9

 
1,561

 
 
 
 
 
 
 
 
 
 
 
 
 
 
20

 
3,367

 
0.26
 %
   NM KRLN LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
11/15/2016
 
 

 
7,510

 
2,379

 
0.19
 %
   NM GP Holdco, LLC**
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Net Lease
 
Membership interest (7)(9)
 
 
6/20/2018
 
 

 
452

 
487

 
0.04
 %
Total Shares - United States
 
 
 
 
 
 
 
 
 
 
 
$
344,748

 
$
352,172

 
27.44
 %
Total Shares
 
 
 
 
 
 
 
 
 
 
 
$
352,093

 
$
362,946

 
28.28
 %
Warrants - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Edmentum Ultimate Holdings, LLC(15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
Warrants (3)(9)
 
 
2/23/2018
 
5/5/2026
 
1,141,846

 
$
769

 
$
16,633

 
1.29
 %
   NHME Holdings Corp.(20)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Healthcare Services
 
Warrants (3)(9)
 
 
11/27/2018
 
 
160,000

 
1,000

 
1,000

 
0.08
 %
Total Warrants - United States
 
 
 
 
 
 
 
 
 
 
 
$
1,769

 
$
17,633

 
1.37
 %
Total Funded Investments
 
 
 
 
 
 
 
 
 
 
 
$
449,308

 
$
472,952

 
36.85
 %
Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Edmentum Ultimate Holdings, LLC (15)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Edmentum, Inc. (fka Plato, Inc.) (Archipelago Learning, Inc.)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Education
 
Second lien (3)(9)(10) - Undrawn
 
 
6/9/2015
 
12/9/2021
 
$
298

 
$

 
$

 
 %
Total Unfunded Debt Investments - United States
 
 
 
 
 
 
 
 
 
$
298

 
$

 
$

 
 %
Total Controlled Investments
 
 
 
 
 
 
 
 
 
 
 
$
449,308

 
$
472,952

 
36.85
 %
Total Investments
 
 
 
 
 
 
 
 
 
 
 
$
3,151,541

 
$3,160,280
 
246.23
 %
 
(1)
New Mountain Finance Corporation (the "Company") generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). These investments are generally subject to certain limitations on resale, and may be deemed to be "restricted securities" under the Securities Act.
(2)
Investment is pledged as collateral for the Holdings Credit Facility, a revolving credit facility among the Company, as the Collateral Manager, New Mountain Finance Holdings, L.L.C. ("NMF Holdings") as the Borrower and Wells Fargo Bank, National Association as the Administrative Agent and Collateral Custodian. See Note 7. Borrowings, for details.
(3)
Investment is pledged as collateral for the NMFC Credit Facility, a revolving credit facility among the Company as the Borrower and Goldman Sachs Bank USA as the Administrative Agent and the Collateral Agent and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A. as Lenders. See Note 7. Borrowings, for details.
(4)
Investment is held in New Mountain Finance SBIC, L.P.
(5)
Investment is held in New Mountain Finance SBIC II, L.P.

The accompanying notes are an integral part of these consolidated financial statements.
44

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


(6)
Investment is held in NMF QID NGL Holdings, Inc.
(7)
Investment is held in New Mountain Net Lease Corporation.
(8)
Investment is pledged as collateral for the DB Credit Facility, a revolving credit facility among New Mountain Finance DB, L.L.C as the Borrower and Deutsche Bank AG, New York Branch as the Facility Agent. See Note 7. Borrowings, for details.
(9)
The fair value of the Company's investment is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 4. Fair Value, for details.
(10)
Par value amounts represent the drawn or undrawn (as indicated in type of investment) portion of revolving credit facilities or delayed draws. Cost amounts represent the cash received at settlement date net of the impact of paydowns and cash paid for drawn revolvers or delayed draws.
(11)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (L), the Prime Rate (P) and the alternative base rate (Base) and which resets daily (D), weekly (W), monthly (M), quarterly (Q), semi-annually (S) or annually (A). For each investment the current interest rate provided reflects the rate in effect as of December 31, 2019.
(12)
The Company holds investments in Education Management Corporation and one related entity of Education Management Corporation. The Company holds series A-1 convertible preferred stock and common stock in Education Management Corporation and holds tranche A first lien term loans and a tranche B first lien term loan in Education Management II LLC, which is an indirect subsidiary of Education Management Corporation.
(13)
The Company holds investments in two related entities of Tenawa Resource Holdings LLC. The Company holds 4.77% of the common units in QID NGL LLC (which at closing represented 98.1% of the ownership in the common units in Tenawa Resource Holdings LLC), class A preferred units in QID NGL LLC and a first lien investment in Tenawa Resource Management LLC, a wholly-owned subsidiary of Tenawa Resource Holdings LLC.
(14)
The Company holds investments in two wholly-owned subsidiaries of Alert Holding Company, Inc. The Company holds a first lien term loan and a first lien revolver in Appriss Holdings, Inc. and preferred equity in Alert Intermediate Holdings I, Inc. The preferred equity is entitled to receive preferential dividends at a rate of L + 10.0% per annum.
(15)
The Company holds investments in Edmentum Ultimate Holdings, LLC and its related entities. The Company holds subordinated notes, ordinary equity and warrants in Edmentum Ultimate Holdings, LLC and holds a first lien term loan, second lien revolver and a second lien term loan in Edmentum, Inc. and Archipelago Learning, Inc., which are wholly-owned subsidiaries of Edmentum Ultimate Holdings, LLC.
(16)
The Company holds preferred equity in Permian Holdco 1, Inc. that is entitled to receive cumulative preferential dividends at a rate of 12.0% per annum payable in additional shares.
(17)
The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 13.5% per annum payable in additional shares.
(18)
The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to receive cumulative preferential dividends at a rate of 19.0% per annum payable in additional shares.
(19)
The Company holds preferred equity in UniTek Global Services, Inc. that is entitled to received cumulative preferential dividends at a rate of 20.0% per annum payable in additional shares.
(20)
The Company holds ordinary shares and warrants in NHME Holdings Corp., as well as second lien term loans in National HME, Inc., a wholly-owned subsidiary of NHME Holdings Corp.
(21)
The Company holds preferred equity in Bach Special Limited (Bach Preference Limited) that is entitled to receive cumulative preferential dividends at a rate of 12.25% per annum payable in additional shares.
(22)
The Company holds preferred equity in Avatar Topco, Inc. and holds a second lien term loan investment in EAB Global, Inc., a wholly-owned subsidiary of Avatar Topco, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of L + 11.00% per annum.
(23)
The Company holds preferred equity in Symplr Software Intermediate Holdings, Inc. and holds a first lien term loan investment in Symplr Software, Inc. (fka Caliper Software, Inc.), a wholly-owned subsidiary of Symplr Software Intermediate Holdings, Inc. The preferred equity is entitled to receive cumulative preferential dividends at a rate of L + 10.50% per annum.
(24)
Investment or a portion of the investment is on non-accrual status. See Note 3. Investments, for details.
(25)
The Company holds one security purchased under a collateralized agreement to resell on its Consolidated Statement of Assets and Liabilities with a cost basis of $30,000 and a fair value of $21,422 as of December 31, 2019. See Note 2. Summary of Significant Accounting Policies, for details.







The accompanying notes are an integral part of these consolidated financial statements.
45

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)


(26)
Denotes investments in which the Company is an “Affiliated Person”, as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), due to owning or holding the power to vote 5.0% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of December 31, 2019 and December 31, 2018 along with transactions during the year ended December 31, 2019 in which the issuer was a non-controlled/affiliated investment is as follows:
Portfolio Company
 
Fair Value at December 31, 2018
 
Gross
Additions (A)
 
Gross
Redemptions
(B)
 
Net
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 
Fair Value at December 31, 2019
 
Interest
Income
 
Dividend
Income
 
Other
Income
NMFC Senior Loan Program I LLC
 
$
23,000

 
$

 
$

 
$

 
$

 
$
23,000

 
$

 
$
3,073

 
$
1,142

Permian Holdco 1, Inc. / Permian Holdco 2, Inc. / Permian Holdco 3, Inc.
 
41,966

 
3,077

 
(100
)
 

 
(4,322
)
 
40,621

 
4,101

 
1,219

 
49

Sierra Hamilton Holdings Corporation
 
12,527

 
1,410

 

 

 
(4,031
)
 
9,906

 
65

 

 
45

Total Non-Controlled/Affiliated Investments
 
$
77,493

 
$
4,487

 
$
(100
)
 
$

 
$
(8,353
)
 
$
73,527

 
$
4,166

 
$
4,292

 
$
1,236

 
(A)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, payment-in-kind (“PIK”) interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement at fair value of an existing portfolio company into this category from a different category.
(B)
Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
(27)
Denotes investments in which the Company is in “Control”, as defined in the 1940 Act, due to owning or holding the power to vote more than 25.0% of the outstanding voting securities of the investment. Fair value as of December 31, 2019 and December 31, 2018 along with transactions during the year ended December 31, 2019 in which the issuer was a controlled investment, is as follows:
Portfolio Company
 
Fair Value at
December 31, 2018
 
Gross
Additions
(A)
 
Gross
Redemptions
(B)
 
Net 
Realized
Gains
(Losses)
 
Net Change In
Unrealized
Appreciation
(Depreciation)
 
Fair Value at
December 31, 2019
 
Interest
Income
 
Dividend
Income
 
Other
Income
Edmentum Ultimate Holdings, LLC/Edmentum Inc.
 
$
45,011

 
$
14,850

 
$
(3,129
)
 
$
18

 
$
22,380

 
$
79,112

 
$
5,781

 
$

 
$
17

National HME, Inc./NHME Holdings Corp.
 
22,722

 
3,501

 

 

 
(1,244
)
 
24,979

 
3,501

 

 

NM APP Canada, Corp.
 
9,727

 

 

 

 
1,047

 
10,774

 

 
920

 

NM APP US LLC
 
5,912

 

 

 

 
922

 
6,834

 

 
527

 

NM CLFX LP
 
12,770

 

 

 

 
(47
)
 
12,723

 

 
1,550

 

NM DRVT LLC
 
5,619

 

 

 

 
397

 
6,016

 

 
565

 

NM JRA LLC
 
2,537

 

 

 

 
1,163

 
3,700

 

 
252

 

NM GLCR LP
 
20,343

 

 

 

 
3,457

 
23,800

 

 
1,761

 

NM KRLN LLC
 
4,205

 

 

 

 
(1,826
)
 
2,379

 

 
832

 

NM NL Holdings, L.P.
 
33,392

 
11,492

 

 

 
3,424

 
48,308

 

 
3,692

 

NM GP Holdco, LLC
 
311

 
145

 

 

 
31

 
487

 

 
36

 

NM YI, LLC
 

 
6,272

 

 

 
67

 
6,339

 

 
240

 

NMFC Senior Loan Program II LLC
 
79,400

 

 

 

 

 
79,400

 

 
11,116

 

NMFC Senior Loan Program III LLC
 
78,400

 
21,600

 

 

 

 
100,000

 

 
10,520

 

UniTek Global Services, Inc.
 
82,788

 
12,225

 
(151
)
 

 
(26,761
)
 
68,101

 
1,246

 
8,918

 
600

Total Controlled Investments
 
$
403,137

 
$
70,085

 
$
(3,280
)
 
$
18

 
$
3,010

 
$
472,952

 
$
10,528

 
$
40,929

 
$
617

 
(A)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, reorganizations or restructurings and the movement of an existing portfolio company into this category from a different category.
(B)
Gross redemptions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, reorganizations or restructurings and the movement of an existing portfolio company out of this category into a different category.
*
All or a portion of interest contains PIK interest.
**
Indicates assets that the Company deems to be “non-qualifying assets” under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70.0% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of December 31, 2019, 14.5% of the Company’s total investments were non-qualifying assets.

The accompanying notes are an integral part of these consolidated financial statements.
46

New Mountain Finance Corporation
 
Consolidated Schedule of Investments (Continued)
 December 31, 2019
(in thousands, except shares)




 
 
December 31, 2019
Investment Type
 
Percent of Total
Investments at Fair Value
First lien
 
57.01
%
Second lien
 
24.96
%
Subordinated
 
2.11
%
Equity and other
 
15.92
%
Total investments
 
100.00
%
 
 
 
December 31, 2019
Industry Type
 
Percent of Total
Investments at Fair Value
Software
 
24.22
%
Business Services
 
20.58
%
Healthcare Services
 
17.45
%
Education
 
9.04
%
Investment Funds (includes investments in joint ventures)
 
6.40
%
Net Lease
 
3.84
%
Distribution & Logistics
 
3.38
%
Federal Services
 
3.22
%
Energy
 
3.19
%
Healthcare Information Technology
 
3.17
%
Consumer Services
 
2.86
%
Industrial Services
 
1.03
%
Food & Beverage
 
0.89
%
Packaging
 
0.40
%
Business Products
 
0.33
%
Total investments
 
100.00
%
 
 
 
December 31, 2019
Interest Rate Type
 
Percent of Total
Investments at Fair Value
Floating rates
 
94.44
%
Fixed rates
 
5.56
%
Total investments
 
100.00
%


The accompanying notes are an integral part of these consolidated financial statements.
47



Notes to the Consolidated Financial Statements of
New Mountain Finance Corporation
 
March 31, 2020
(in thousands, except share data)
(unaudited)
Note 1. Formation and Business Purpose
New Mountain Finance Corporation (“NMFC” or the “Company”) is a Delaware corporation that was originally incorporated on June 29, 2010 and completed its initial public offering ("IPO") on May 19, 2011. NMFC is a closed-end, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). NMFC has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). NMFC is also registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Since NMFC’s IPO, and through March 31, 2020, NMFC raised approximately $893,183 in net proceeds from additional offerings of its common stock.
New Mountain Finance Advisers BDC, L.L.C. (the “Investment Adviser”) is a wholly-owned subsidiary of New Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its affiliates, "New Mountain Capital") whose ultimate owners include Steven B. Klinsky and related and other vehicles. New Mountain Capital is a firm with a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, public equity and credit investment vehicles. The Investment Adviser manages the Company's day-to-day operations and provides it with investment advisory and management services. The Investment Adviser also manages other funds that may have investment mandates that are similar, in whole or in part, to the Company's. New Mountain Finance Administration, L.L.C. (the "Administrator”), a wholly-owned subsidiary of New Mountain Capital, provides the administrative services necessary to conduct the Company's day-to-day operations.
The Company has established the following wholly-owned direct and indirect subsidiaries:
New Mountain Finance Holdings, L.L.C. ("NMF Holdings" or the "Predecessor Operating Company") and New Mountain Finance DB, L.L.C. ("NMFDB"), whose assets are used secure NMF Holdings’ credit facility and NMFDB’s credit facility, respectively;
New Mountain Finance SBIC, L.P. ("SBIC I")  and New Mountain Finance SBIC II, L.P. ("SBIC II"), who have received licenses from the United States ("U.S.") Small Business Administration ("SBA") to operate as small business investment companies ("SBICs") under Section 301(c) of the Small Business Investment Act of 1958, as amended (the "1958 Act") and their general partners, New Mountain Finance SBIC G.P., L.L.C. ("SBIC I GP") and New Mountain Finance SBIC II G.P., L.L.C. ("SBIC II GP"), respectively;
NMF Ancora Holdings Inc. ("NMF Ancora"), NMF QID Holdings, Inc. ("NMF QID") and NMF YP Holdings Inc. ("NMF YP"), which serve as tax blocker corporations by holding equity or equity-like investments in portfolio companies organized as limited liability companies (or other forms of pass-through entities); the Company consolidates its tax blocker corporations for accounting purposes but the tax blocker corporations are not consolidated for income tax purposes and may incur income tax expense as a result of their ownership of the portfolio companies; and
New Mountain Finance Servicing, L.L.C. ("NMF Servicing"), which serves as the administrative agent on certain investment transactions.
New Mountain Net Lease Corporation ("NMNLC") is a majority-owned consolidated subsidiary of the Company, which acquires commercial real estate properties that are subject to ‘‘triple net’’ leases has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a real estate investment trust, or REIT, within the meaning of Section 856(a) of the Code.
The Company’s investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. The first lien debt may include traditional first lien senior secured loans or unitranche loans. Unitranche loans combine characteristics of traditional first lien senior secured loans as well as second lien and subordinated loans. Unitranche loans will expose the Company to the risks associated with second lien and subordinated loans to the extent the Company invests in the “last out” tranche. In some cases, the Company’s investments may also include equity interests. The Company's primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after

48


capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. Similar to the Company, SBIC I's and SBIC II's investment objectives are to generate current income and capital appreciation under the investment criteria used by the Company. However, SBIC I and SBIC II investments must be in SBA eligible small businesses. The Company’s portfolio may be concentrated in a limited number of industries. As of March 31, 2020, the Company’s top five industry concentrations were software, business services, healthcare services, education and investment funds (which includes the Company's investments in its joint ventures).
Note 2. Summary of Significant Accounting Policies
Basis of accounting—The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company is an investment company following accounting and reporting guidance in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, (“ASC 946”). NMFC consolidates its wholly-owned direct and indirect subsidiaries: NMF Holdings, NMFDB, NMF Servicing, SBIC I, SBIC I GP, SBIC II, SBIC II GP, NMF Ancora, NMF QID and NMF YP and its majority-owned consolidated subsidiary: NMNLC.
The Company’s consolidated financial statements reflect all adjustments and reclassifications which, in the opinion of management, are necessary for the fair presentation of the results of operations and financial condition for all periods presented. All intercompany transactions have been eliminated. Revenues are recognized when earned and expenses when incurred. The financial results of the Company’s portfolio investments are not consolidated in the financial statements.
The Company’s interim consolidated financial statements are prepared in accordance with GAAP and pursuant to the requirements for reporting on Form 10-Q and Article 6 or 10 of Regulation S-X. Accordingly, the Company’s interim consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial statements for the interim period, have been included. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending December 31, 2020.
Investments—The Company applies fair value accounting in accordance with GAAP. Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments are reflected on the Company’s Consolidated Statements of Assets and Liabilities at fair value, with changes in unrealized gains and losses resulting from changes in fair value reflected in the Company’s Consolidated Statements of Operations as “Net change in unrealized appreciation (depreciation) of investments” and realizations on portfolio investments reflected in the Company’s Consolidated Statements of Operations as “Net realized gains (losses) on investments”.
The Company values its assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, the Company’s board of directors is ultimately and solely responsible for determining the fair value of the portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where its portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. The Company’s quarterly valuation procedures are set forth in more detail below:
(1)
Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.
(2)
Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.
a.
Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment’s par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and
b.
For investments other than bonds, the Company looks at the number of quotes readily available and performs the following procedures:
i.
Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. The Company will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, the Company will use one or more of the methodologies outlined below to determine fair value.

49


ii.
Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment’s par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).
(3)
Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:
a.
Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
b.
Preliminary valuation conclusions will then be documented and discussed with the Company’s senior management;
c.
If an investment falls into (3) above for four consecutive quarters and if the investment’s par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which the Company does not have a readily available market quotation will be reviewed by an independent valuation firm engaged by the Company’s board of directors; and
d.
When deemed appropriate by the Company’s management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.
The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period and the fluctuations could be material.
See Note 3. Investments, for further discussion relating to investments.
New Mountain Net Lease Corporation
NMNLC was formed to acquire commercial real estate properties that are subject to "triple net" leases. NMNLC's investments are disclosed on the Company's Consolidated Schedule of Investments as of March 31, 2020.
    
On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11,315. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11,315 and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.



50


Below is certain summarized property information for NMNLC as of March 31, 2020:
 
 
 
 
Lease
 
 
 
Total
 
Fair Value as of
Portfolio Company
 
Tenant
 
Expiration Date
 
Location
 
Square Feet
 
March 31, 2020
NM NL Holdings LP / NM GP Holdco LLC
 
Various
 
Various
 
Various
 
Various
 
$
45,917

NM GLCR LP
 
Arctic Glacier U.S.A.
 
2/28/2038
 
CA
 
214
 
22,282

NM CLFX LP
 
Victor Equipment Company
 
8/31/2033
 
TX
 
423
 
11,709

NM APP Canada, Corp.
 
A.P. Plasman, Inc.
 
9/30/2031
 
Canada
 
436
 
10,481

NM APP US LLC
 
Plasman Corp, LLC / A-Brite LP
 
9/30/2033
 
AL / OH
 
261
 
6,529

NM YI, LLC
 
Young Innovations, Inc.
 
10/31/2039
 
IL / MO
 
212
 
5,897

NM DRVT LLC
 
FMH Conveyors, LLC
 
10/31/2031
 
AR
 
195
 
5,783

NM JRA LLC
 
J.R. Automation Technologies, LLC
 
1/31/2031
 
MI
 
88
 
3,522

NM KRLN LLC
 
Kirlin Group, LLC
 
6/30/2029
 
MD
 
95
 
1,058

 
 
 
 
 
 
 
 
 
 
$
113,178

Collateralized agreements or repurchase financings—The Company follows the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral (“ASC 860”), when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of March 31, 2020 and December 31, 2019, the Company held one collateralized agreement to resell with a cost basis of $30,000 and $30,000, respectively, and a fair value of $21,422 and $21,422, respectively. The collateralized agreement to resell is on non-accrual. The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from the Company at the par value of the collateralized agreement. The private hedge fund has breached its agreement to repurchase the collateral under the collateralized agreement. The default by the private hedge fund did not release the collateral to the Company, and therefore, the Company does not have full rights and title to the collateral. A claim has been filed with the Cayman Islands joint official liquidators to resolve this matter. The joint official liquidators have recognized the Company’s contractual rights under the collateralized agreement. The Company continues to exercise its rights under the collateralized agreement and continues to monitor the liquidation process of the private hedge fund. The fair value of the collateralized agreement to resell is reflective of the increased risk of the position.
Cash and cash equivalents—Cash and cash equivalents include cash and short-term, highly liquid investments. The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and so near maturity that there is insignificant risk of changes in value. These securities have original maturities of three months or less. The Company did not hold any cash equivalents as of March 31, 2020 and December 31, 2019.
Revenue recognition
Sales and paydowns of investments:  Realized gains and losses on investments are determined on the specific identification method.
Interest and dividend income:  Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. The Company has loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible.  The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer. For the three months ended March 31, 2020 and March 31, 2019, the Company recognized PIK and non-cash interest from investments of $3,490 and $2,960, respectively, and PIK and non-cash dividends from investments of $1,544 and $4,310, respectively.
Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible.

51


Non-accrual income:  Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment of the ultimate collectibility. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.
Other income:  Other income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees, management fees from a non-controlled/affiliated investment and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. Other income may also include fees from bridge loans. The Company may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received by the Company for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.
Interest and other financing expenses—Interest and other financing fees are recorded on an accrual basis by the Company. See Note 7. Borrowings, for details.
Deferred financing costs—The deferred financing costs of the Company consist of capitalized expenses related to the origination and amending of the Company’s borrowings. The Company amortizes these costs into expense over the stated life of the related borrowing. See Note 7. Borrowings, for details.
Deferred offering costs—The Company's deferred offering costs consist of fees and expenses incurred in connection with equity offerings and the filing of shelf registration statements. Upon the issuance of shares, offering costs are charged as a direct reduction to net assets. Deferred offering costs are included in other assets on the Company's Consolidated Statements of Assets and Liabilities.
Income taxes—The Company has elected to be treated, and intends to comply with the requirements to qualify annually, as a RIC under Subchapter M of the Code. As a RIC, the Company is not subject to U.S. federal income tax on the portion of taxable income and gains timely distributed to its stockholders.
To continue to qualify and be subject to tax as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing at least 90.0% of its investment company taxable income, as defined by the Code. Since U.S. federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes.
Differences between taxable income and the results of operations for financial reporting purposes may be permanent or temporary in nature. Permanent differences are reclassified among capital accounts in the financial statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.
For U.S. federal income tax purposes, distributions paid to stockholders of the Company are reported as ordinary income, return of capital, long term capital gains or a combination thereof.
The Company will be subject to a 4.0% nondeductible federal excise tax on certain undistributed income unless the Company distributes, in a timely manner as required by the Code, an amount at least equal to the sum of (1) 98.0% of its respective net ordinary income earned for the calendar year and (2) 98.2% of its respective capital gain net income for the one-year period ending October 31 in the calendar year.
Certain consolidated subsidiaries of the Company are subject to U.S. federal and state income taxes. These taxable entities are not consolidated for income tax purposes and may generate income tax liabilities or assets from permanent and temporary differences in the recognition of items for financial reporting and income tax purposes.
For the three months ended March 31, 2020 and March 31, 2019, the Company recognized a total income tax benefit of approximately $898 and $93, respectively, for the Company’s consolidated subsidiaries. For the three months ended March 31, 2020 and March 31, 2019, the Company recorded current income tax expense of approximately $0 and $17, respectively, and deferred income tax benefit of approximately $898 and $110, respectively.
As of March 31, 2020 and December 31, 2019, the Company had $14 and $912, respectively, of deferred tax liabilities primarily relating to deferred taxes attributable to certain differences between the computation of income for U.S. federal income tax purposes as compared to GAAP.

52


Based on its analysis, the Company has determined that there were no uncertain income tax positions that do not meet the more likely than not threshold as defined by Accounting Standards Codification Topic 740 ("ASC 740") through December 31, 2019. The 2016 through 2019 tax years remain subject to examination by the U.S. federal, state, and local tax authorities.
Distributions—Distributions to common stockholders of the Company are recorded on the record date as set by the board of directors. The Company intends to make distributions to its stockholders that will be sufficient to enable the Company to maintain its status as a RIC. The Company intends to distribute approximately all of its net investment income (see Note 5. Agreements) on a quarterly basis and substantially all of its taxable income on an annual basis, except that the Company may retain certain net capital gains for reinvestment.
The Company has adopted a dividend reinvestment plan that provides for reinvestment of any distributions declared on behalf of its stockholders, unless a stockholder elects to receive cash.
The Company applies the following in implementing the dividend reinvestment plan. If the price at which newly issued shares are to be credited to stockholders’ accounts is equal to or greater than 110.0% of the last determined net asset value of the shares, the Company will use only newly issued shares to implement its dividend reinvestment plan. Under such circumstances, the number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of the Company’s common stock on the New York Stock Exchange (“NYSE”) on the distribution payment date. Market price per share on that date will be the closing price for such shares on the NYSE or, if no sale is reported for such day, the average of their electronically reported bid and ask prices.
If the price at which newly issued shares are to be credited to stockholders’ accounts is less than 110.0% of the last determined net asset value of the shares, the Company will either issue new shares or instruct the plan administrator to purchase shares in the open market to satisfy the additional shares required. Shares purchased in open market transactions by the plan administrator will be allocated to a stockholder based on the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market. The number of shares of the Company’s common stock to be outstanding after giving effect to payment of the distribution cannot be established until the value per share at which additional shares will be issued has been determined and elections of the Company’s stockholders have been tabulated.
Share repurchase program—On February 4, 2016, the Company's board of directors authorized a program for the purpose of repurchasing up to $50,000 worth of the Company's common stock. Under the repurchase program, the Company was permitted, but was not obligated, to repurchase its outstanding common stock in the open market from time to time provided that it complied with the Company's code of ethics and the guidelines specified in Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including certain price, market volume and timing constraints. In addition, any repurchases were conducted in accordance with the 1940 Act. On December 31, 2019, the Company's board of directors extended the Company's repurchase program and the Company expects the repurchase program to be in place until the earlier of December 31, 2020 or until $50,000 of its outstanding shares of common stock have been repurchased. During the three months ended March 31, 2020 and March 31, 2019, the Company did not repurchase any shares of the Company's common stock. The Company previously repurchased $2,948 of its common stock under the share repurchase program.
Earnings per share—The Company’s earnings per share (“EPS”) amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. Basic EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock outstanding during the period of computation. Diluted EPS is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted average number of shares of common stock assuming all potential shares had been issued, and its related net impact to net assets accounted for, and the additional shares of common stock were dilutive. Diluted EPS reflects the potential dilution, using the as-if-converted method for convertible debt, which could occur if all potentially dilutive securities were exercised.
Foreign securities—The accounting records of the Company are maintained in U.S. dollars. Investment securities denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based on the rate of exchange of such currencies on the respective dates of the transactions. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with “Net change in unrealized appreciation (depreciation)” and “Net realized gains (losses)” in the Company’s Consolidated Statements of Operations.
Investments denominated in foreign currencies may be negatively affected by movements in the rate of exchange between the U.S. dollar and such foreign currencies. This movement is beyond the control of the Company and cannot be predicted.

53


Use of estimates—The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Company’s consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Changes in the economic environment, financial markets, and other metrics used in determining these estimates could cause actual results to differ from the estimates used, and the differences could be material.
Dividend income recorded related to distributions received from flow-through investments is an accounting estimate based on the most recent estimate of the tax treatment of the distribution.

54


Note 3. Investments
At March 31, 2020, the Company’s investments consisted of the following:
Investment Cost and Fair Value by Type
 
Cost
 
Fair Value
First lien
$
1,890,570

 
$
1,789,750

Second lien
745,487

 
696,740

Subordinated
58,106

 
46,983

Equity and other
492,342

 
457,844

Total investments
$
3,186,505

 
$
2,991,317

Investment Cost and Fair Value by Industry
 
Cost
 
Fair Value
Software
$
871,898

 
$
850,864

Business Services
677,977

 
619,387

Healthcare Services
520,016

 
463,398

Education
230,268

 
213,626

Investment Fund (includes investments in joint ventures)
212,400

 
204,632

Net Lease
105,329

 
113,178

Healthcare Information Technology
106,745

 
104,760

Federal Services
104,898

 
100,284

Consumer Services
81,535

 
78,546

Distribution & Logistics
73,134

 
64,668

Specialty Chemicals & Materials
59,976

 
59,779

Energy
56,794

 
37,587

Industrial Services
32,659

 
31,942

Food & Beverage
27,768

 
26,548

Packaging
14,353

 
12,163

Business Products
10,755

 
9,955

Total investments
$
3,186,505

 
$
2,991,317


55


At December 31, 2019, the Company’s investments consisted of the following:
Investment Cost and Fair Value by Type
 
Cost
 
Fair Value
First lien
$
1,803,747

 
$
1,801,615

Second lien
796,921

 
788,868

Subordinated
71,904

 
66,774

Equity and other
478,969

 
503,023

Total investments
$
3,151,541

 
$
3,160,280

Investment Cost and Fair Value by Industry
 
Cost
 
Fair Value
Software
$
764,875

 
$
765,499

Business Services
667,493

 
650,384

Healthcare Services
552,499

 
551,471

Education
267,064

 
285,781

Investment Funds (includes investments in joint ventures)
202,400

 
202,400

Net Lease
105,212

 
121,360

Distribution & Logistics
106,403

 
106,878

Federal Services
103,179

 
101,675

Energy
105,689

 
100,699

Healthcare Information Technology
99,581

 
100,050

Consumer Services
91,474

 
90,424

Industrial Services
32,736

 
32,708

Food & Beverage
27,834

 
27,957

Packaging
14,348

 
12,476

Business Products
10,754

 
10,518

Total investments
$
3,151,541

 
$
3,160,280


As of December 31, 2019, the Company placed its preferred shares in Permian Holdco 1, Inc. on non-accrual status. As of March 31, 2020, the Company placed its subordinated positions in Permian Holdco 2, Inc. on non-accrual status. As of March 31, 2020, the Company's investments in Permian Holdco 1, Inc. and Permian Holdco 2, Inc., which were placed on non-accrual status, had an aggregate cost basis of $9,858 and an aggregate fair value of $2,807. During the three months ended March 31, 2020, the Company reversed $3,418 of previously recorded PIK dividends related to its investment in Permian Holdco 1, Inc. as the Company believes these PIK dividends will ultimately not be collectible.

As of March 31, 2020, the Company placed its junior preferred shares in UniTek Global Services, Inc. on non-accrual status. As of March 31, 2020, the Company's investments in UniTek Global Services, Inc., which were placed on non-accrual status, had an aggregate cost basis of $34,393 and an aggregate fair value of $19,502.

During the first quarter of 2018, the Company placed its first lien positions in Education Management II LLC ("EDMC") on non-accrual status as EDMC announced its intention to wind down and liquidate the business. As of March 31, 2020, the Company's investment in EDMC, which was placed on non-accrual status, represented an aggregate cost basis of $961, an aggregate fair value of $3 and total unearned interest income of $28 for the three months then ended.
As of March 31, 2020, the Company had unfunded commitments on revolving credit facilities and bridge facilities of $47,891 and $0, respectively. As of March 31, 2020, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of $103,029. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments as of March 31, 2020.
As of December 31, 2019, the Company had unfunded commitments on revolving credit facilities and bridge facilities of $66,061 and $0, respectively. As of December 31, 2019, the Company had unfunded commitments in the form of delayed draws or other future funding commitments of $137,781. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments as of December 31, 2019.

56


PPVA Black Elk (Equity) LLC
On May 3, 2013, the Company entered into a collateralized securities purchase and put agreement (the “SPP Agreement”) with a private hedge fund. Under the SPP Agreement, the Company purchased twenty million Class E Preferred Units of Black Elk Energy Offshore Operations, LLC (“Black Elk”) for $20,000 with a corresponding obligation of the private hedge fund, PPVA Black Elk (Equity) LLC, to repurchase the preferred units for $20,000 plus other amounts due under the SPP Agreement. The majority owner of Black Elk was the private hedge fund. In August 2014, the Company received a payment of $20,540, the full amount due under the SPP Agreement.
In August 2017, a trustee (the “Trustee”) for Black Elk informed the Company that the Trustee intended to assert a fraudulent conveyance claim (the “Claim”) against the Company and one of its affiliates seeking the return of the $20,540 repayment. Black Elk filed a Chapter 11 bankruptcy petition pursuant to the United States Bankruptcy Code in August 2015. The Trustee alleged that individuals affiliated with the private hedge fund conspired with Black Elk and others to improperly use proceeds from the sale of certain Black Elk assets to repay, in August 2014, the private hedge fund’s obligation to the Company under the SPP Agreement. The Company was unaware of these claims at the time the repayment was received. The private hedge fund is currently in liquidation under the laws of the Cayman Islands.
On December 22, 2017, the Company settled the Trustee’s $20,540 Claim for $16,000 and filed a claim with the Cayman Islands joint official liquidators of the private hedge fund for $16,000 that is owed to the Company under the SPP Agreement. The SPP Agreement was restored and is in effect since repayment has not been made. The Company continues to exercise its rights under the SPP Agreement and continues to monitor the liquidation process of the private hedge fund. As of March 31, 2020 and December 31, 2019, the SPP Agreement has a cost basis of $14,500 and $14,500, respectively, and a fair value of $10,354 and $10,354, respectively, which is reflective of the higher inherent risk in this transaction.
NMFC Senior Loan Program I LLC
NMFC Senior Loan Program I LLC (“SLP I”) was formed as a Delaware limited liability company on May 27, 2014 and commenced operations on June 10, 2014. SLP I is a portfolio company held by the Company. SLP I is structured as a private investment fund, in which all of the investors are qualified purchasers, as such term is defined under the 1940 Act. Transfer of interests in SLP I are subject to restrictions and, as a result, interests are not readily marketable. SLP I operates under a limited liability company agreement (the “SLP I Agreement”) and will continue in existence until August 31, 2022, subject to earlier termination pursuant to certain terms of the SLP I Agreement. The term may be extended pursuant to certain terms of the SLP I Agreement. SLP I's re-investment period is currently until August 31, 2020. SLP I invests in senior secured loans issued by companies within the Company’s core industry verticals. These investments are typically broadly syndicated first lien loans.
SLP I is capitalized with $93,000 of capital commitments and $265,000 of debt from a revolving credit facility and is managed by the Company. The Company’s capital commitment is $23,000, representing less than 25.0% ownership, with third party investors representing the remaining capital commitments. As of March 31, 2020, SLP I had total investments with an aggregate fair value of approximately $272,911, debt outstanding of $227,967 and capital that had been called and funded of $93,000. As of December 31, 2019, SLP I had total investments with an aggregate fair value of approximately $313,702, debt outstanding of $227,367 and capital that had been called and funded of $93,000. The Company’s investment in SLP I is disclosed on the Company’s Consolidated Schedule of Investments as of March 31, 2020 and December 31, 2019.
The Company, as an investment adviser registered under the Advisers Act, acts as the collateral manager to SLP I and is entitled to receive a management fee for its investment management services provided to SLP I. As a result, SLP I is classified as an affiliate of the Company. No management fee is charged on the Company's investment in SLP I in connection with the administrative services provided to SLP I. For the three months ended March 31, 2020 and March 31, 2019, the Company earned approximately $267 and $283, respectively, in management fees related to SLP I, which is included in other income. As of March 31, 2020 and December 31, 2019, approximately $545 and $277, respectively, of management fees related to SLP I was included in receivable from affiliates. For the three months ended March 31, 2020 and March 31, 2019, the Company earned approximately $720 and $726, respectively, of dividend income related to SLP I, which is included in dividend income. As of March 31, 2020 and December 31, 2019, approximately $812 and $747, respectively, of dividend income related to SLP I was included in interest and dividend receivable.
NMFC Senior Loan Program II LLC
NMFC Senior Loan Program II LLC ("SLP II") was formed as a Delaware limited liability company on March 9, 2016 and commenced operations on April 12, 2016. SLP II is structured as a private joint venture investment fund between the Company and SkyKnight Income, LLC (“SkyKnight”) and operates under a limited liability company agreement (the "SLP II Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within the Company's core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP II, which has equal representation from the

57


Company and SkyKnight. SLP II's investment period was until April 12, 2020 and SLP II will continue in existence until April 12, 2022. The term may be extended for up to one year pursuant to certain terms of the SLP II Agreement.
SLP II is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP II to call down on capital commitments requires approval by the board of managers of SLP II. As of March 31, 2020, the Company and SkyKnight have committed and contributed $79,400 and $20,060, respectively, of equity to SLP II. The Company’s investment in SLP II is disclosed on the Company’s Consolidated Schedule of Investments as of March 31, 2020 and December 31, 2019.
On April 12, 2016, SLP II entered into its $275,000 revolving credit facility with Wells Fargo Bank, National Association, which matures on April 12, 2022 and bears interest at a rate of the London Interbank Offered Rate ("LIBOR") plus 1.60% per annum. As of March 31, 2020 and December 31, 2019, SLP II had total investments with an aggregate fair value of approximately $291,822 and $339,985, respectively, and debt outstanding under its credit facility of $236,770 and $246,870, respectively. As of March 31, 2020 and December 31, 2019, none of SLP II's investments were on non-accrual. Additionally, as of March 31, 2020 and December 31, 2019, SLP II had unfunded commitments in the form of delayed draws of $1,344 and $3,155, respectively. Below is a summary of SLP II's portfolio, along with a listing of the individual investments in SLP II's portfolio as of March 31, 2020 and December 31, 2019:
 
 
March 31, 2020
 
December 31, 2019
First lien investments (1)
 
$
335,833

 
$
351,160

Weighted average interest rate on first lien investments (2)
 
5.74
%
 
6.29
%
Number of portfolio companies in SLP II
 
36

 
37

Largest portfolio company investment (1)
 
$
17,411

 
$
17,456

Total of five largest portfolio company investments (1)
 
$
78,467

 
$
78,932

 
(1)
Reflects principal amount or par value of investment.
(2)
Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.

58


The following table is a listing of the individual investments in SLP II's portfolio as of March 31, 2020:
Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Funded Investments - First lien:
 
 
 
 
 
 
 
 
 
 
 
 
Access CIG, LLC
 
Business Services
 
 5.53% (L + 3.75%)
 
2/27/2025
 
$
4,649

 
$
4,631

 
$
3,835

ADG, LLC
 
Healthcare Services
 
 7.17% (L + 4.75% + 0.50% PIK)
 
9/28/2023
 
16,185

 
16,096

 
13,328

Advisor Group Holdings, Inc.
 
Consumer Services
 
 5.99% (L + 5.00%)
 
7/31/2026
 
4,988

 
4,941

 
3,840

Bearcat Buyer, Inc.
 
Healthcare Services
 
 5.70% (L + 4.25%)
 
7/9/2026
 
90

 
90

 
86

Bearcat Buyer, Inc.
 
Healthcare Services
 
 5.70% (L + 4.25%)
 
7/9/2026
 
1,375

 
1,369

 
1,318

Bleriot US Bidco Inc.
 
Federal Services
 
 7.00% (P + 3.75%)
 
10/31/2026
 
1,351

 
1,338

 
1,179

Bleriot US Bidco Inc.
 
Federal Services
 
 6.20% (L + 4.75%)
 
10/30/2026
 
8,649

 
8,565

 
7,546

Brave Parent Holdings, Inc.
 
Software
 
 5.78% (L + 4.00%)
 
4/18/2025
 
11,680

 
11,647

 
10,201

CentralSquare Technologies, LLC
 
Software
 
 5.20% (L + 3.75%)
 
8/29/2025
 
14,813

 
14,782

 
11,554

CHA Holdings, Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
4/10/2025
 
2,042

 
2,033

 
1,991

CHA Holdings, Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
4/10/2025
 
10,670

 
10,633

 
10,363

CommerceHub, Inc.
 
Software
 
 4.49% (L + 3.50%)
 
5/21/2025
 
2,456

 
2,447

 
2,063

Dealer Tire, LLC
 
Distribution & Logistics
 
 5.24% (L + 4.25%)
 
12/12/2025
 
7,481

 
7,463

 
6,210

Drilling Info Holdings, Inc.
 
Business Services
 
 5.24% (L + 4.25%)
 
7/30/2025
 
14,720

 
14,668

 
13,599

Edgewood Partners Holdings LLC
 
Business Services
 
 5.25% (L + 4.25%)
 
9/6/2024
 
7,413

 
7,351

 
7,144

eResearchTechnology, Inc.
 
Healthcare Services
 
 5.50% (L + 4.50%)
 
2/4/2027
 
3,145

 
3,114

 
2,809

Fastlane Parent Company, Inc.
 
Distribution & Logistics
 
 5.49% (L + 4.50%)
 
2/4/2026
 
3,465

 
3,405

 
2,997

Greenway Health, LLC
 
Software
 
 4.82% (L + 3.75%)
 
2/16/2024
 
14,588

 
14,543

 
9,555

Help/Systems Holdings, Inc.
 
Software
 
 5.75% (L + 4.75%)
 
11/19/2026
 
4,444

 
4,402

 
3,845

Institutional Shareholder Services Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
3/5/2026
 
13,860

 
13,739

 
11,573

Keystone Acquisition Corp.
 
Healthcare Services
 
 6.70% (L + 5.25%)
 
5/1/2024
 
5,265

 
5,231

 
4,968

LSCS Holdings, Inc.
 
Healthcare Services
 
 5.32% (L + 4.25%)
 
3/17/2025
 
1,879

 
1,877

 
1,738

LSCS Holdings, Inc.
 
Healthcare Services
 
 5.32% (L + 4.25%)
 
3/17/2025
 
7,280

 
7,272

 
6,734

Market Track, LLC
 
Business Services
 
 6.03% (L + 4.25%)
 
6/5/2024
 
11,670

 
11,632

 
9,686

MediaOcean, LLC
 
Software
 
 4.99% (L + 4.00%)
 
8/18/2025
 
4,392

 
4,380

 
4,018

Medical Solutions Holdings, Inc.
 
Healthcare Services
 
 5.50% (L + 4.50%)
 
6/14/2024
 
2,788

 
2,779

 
2,481

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
2,089

 
2,084

 
1,997

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
878

 
875

 
839

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
12,128

 
12,096

 
11,592

NorthStar Financial Services Group, LLC
 
Software
 
 4.49% (L + 3.50%)
 
5/25/2025
 
5,885

 
5,862

 
4,796

Peraton Corp. (fka MHVC Acquisition Corp.)
 
Federal Services
 
 6.87% (L + 5.25%)
 
4/29/2024
 
10,211

 
10,178

 
9,548

Premise Health Holding Corp.
 
Healthcare Services
 
 4.95% (L + 3.50%)
 
7/10/2025
 
1,369

 
1,363

 
1,261

Project Accelerate Parent, LLC
 
Business Services
 
 5.25% (L + 4.25%)
 
1/2/2025
 
12,513

 
12,468

 
9,698

PSC Industrial Holdings Corp.
 
Industrial Services
 
 4.75% (L + 3.75%)
 
10/11/2024
 
3,052

 
3,031

 
2,819

Quest Software US Holdings Inc.
 
Software
 
 6.03% (L + 4.25%)
 
5/16/2025
 
14,812

 
14,755

 
13,673

Salient CRGT Inc.
 
Federal Services
 
 7.57% (L + 6.50%)
 
2/28/2022
 
13,040

 
12,985

 
12,421

Wirepath LLC
 
Distribution & Logistics
 
 5.07% (L + 4.00%)
 
8/5/2024
 
14,775

 
14,775

 
12,928

WP CityMD Bidco LLC
 
Healthcare Services
 
 5.95% (L + 4.50%)
 
8/13/2026
 
14,963

 
14,822

 
13,504

Wrench Group LLC
 
Consumer Services
 
 5.00% (L + 4.00%)
 
4/30/2026
 
459

 
454

 
390

Wrench Group LLC
 
Consumer Services
 
 5.45% (L + 4.00%)
 
4/30/2026
 
4,466

 
4,426

 
3,796

YI, LLC
 
Healthcare Services
 
 5.45% (L + 4.00%)
 
11/7/2024
 
14,763

 
14,754

 
11,441

Zelis Cost Management Buyer, Inc.
 
Healthcare I.T.
 
 5.74% (L + 4.75%)
 
9/30/2026
 
10,337

 
10,238

 
9,562

Zywave, Inc.
 
Software
 
 6.78% (L + 5.00%)
 
11/17/2022
 
16,931

 
16,890

 
16,593

Zywave, Inc.
 
Software
 
 6.78% (L + 5.00%)
 
11/17/2022
 
480

 
476

 
471

Total Funded Investments
 
 
 
 
 
 
 
$
334,489

 
$
332,960

 
$
291,990

Unfunded Investments - First lien:
 
 
 
 
 
 
 
 
 
 
 
 
Bearcat Buyer, Inc.
 
Healthcare Services
 
 
7/9/2021
 
$
194

 
$
(1
)
 
$
(8
)
Premise Health Holding Corp.
 
Healthcare Services
 
 
7/10/2020
 
110

 

 
(4
)
Wrench Group LLC
 
Consumer Services
 
 
4/30/2021
 
1,040

 

 
(156
)
Total Unfunded Investments
 
 
 
 
 
 
 
$
1,344

 
$
(1
)
 
$
(168
)
Total Investments
 
 
 
 
 
 
 
$
335,833

 
$
332,959

 
$
291,822

 

59


(1)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of March 31, 2020.
(2)
Represents the fair value in accordance with Accounting Standards Codification Topic 820, Fair Value Measurement and Disclosures (“ASC 820”). The Company's board of directors does not determine the fair value of the investments held by SLP II.

    

60


The following table is a listing of the individual investments in SLP II's portfolio as of December 31, 2019:

61


Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Funded Investments - First lien
 
 
 
 
 
 
 
 
 
 
 
 
Access CIG, LLC
 
Business Services
 
 5.44% (L + 3.75%)
 
2/27/2025
 
$
9,833

 
$
9,794

 
$
9,841

ADG, LLC
 
Healthcare Services
 
 7.17% (L + 4.75% + 0.50% PIK)
 
9/28/2023
 
16,074

 
15,980

 
15,813

Advisor Group Holdings, Inc.
 
Consumer Services
 
 6.80% (L + 5.00%)
 
7/31/2026
 
5,000

 
4,952

 
4,972

Bearcat Buyer, Inc.
 
Healthcare Services
 
 6.19% (L + 4.25%)
 
7/9/2026
 
1,379

 
1,372

 
1,372

Bearcat Buyer, Inc.
 
Healthcare Services
 
 6.19% (L + 4.25%)
 
7/9/2026
 
90

 
90

 
90

Bleriot US Bidco Inc.
 
Federal Services
 
 6.69% (L + 4.75%)
 
10/30/2026
 
8,649

 
8,563

 
8,746

Brave Parent Holdings, Inc.
 
Software
 
 5.93% (L + 4.00%)
 
4/18/2025
 
15,267

 
15,222

 
15,045

CentralSquare Technologies, LLC
 
Software
 
 5.55% (L + 3.75%)
 
8/29/2025
 
14,850

 
14,819

 
14,231

CHA Holdings, Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
4/10/2025
 
10,697

 
10,658

 
10,683

CHA Holdings, Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
4/10/2025
 
2,047

 
2,037

 
2,044

CommerceHub, Inc.
 
Software
 
 5.30% (L + 3.50%)
 
5/21/2025
 
2,463

 
2,453

 
2,432

Drilling Info Holdings, Inc.
 
Business Services
 
 6.05% (L + 4.25%)
 
7/30/2025
 
14,758

 
14,703

 
14,696

Edgewood Partners Holdings LLC
 
Business Services
 
 6.05% (L + 4.25%)
 
9/6/2024
 
7,432

 
7,367

 
7,413

Explorer Holdings, Inc.
 
Healthcare Services
 
 6.26% (L + 4.50%)
 
11/20/2026
 
3,145

 
3,113

 
3,171

Fastlane Parent Company, Inc.
 
Distribution & Logistics
 
 6.44% (L + 4.50%)
 
2/4/2026
 
3,474

 
3,411

 
3,448

Greenway Health, LLC
 
Software
 
 5.69% (L + 3.75%)
 
2/16/2024
 
14,625

 
14,578

 
13,053

Help/Systems Holdings, Inc.
 
Software
 
 6.55% (L + 4.75%)
 
11/19/2026
 
4,444

 
4,400

 
4,428

Idera, Inc.
 
Software
 
 6.30% (L + 4.50%)
 
6/28/2024
 
4,446

 
4,417

 
4,449

Institutional Shareholder Services Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
3/5/2026
 
13,895

 
13,769

 
13,687

Keystone Acquisition Corp.
 
Healthcare Services
 
 7.19% (L + 5.25%)
 
5/1/2024
 
5,278

 
5,243

 
5,173

LSCS Holdings, Inc.
 
Healthcare Services
 
 6.31% (L + 4.25%)
 
3/17/2025
 
7,298

 
7,290

 
7,225

LSCS Holdings, Inc.
 
Healthcare Services
 
 6.31% (L + 4.25%)
 
3/17/2025
 
1,884

 
1,882

 
1,865

Market Track, LLC
 
Business Services
 
 6.18% (L + 4.25%)
 
6/5/2024
 
11,700

 
11,660

 
10,530

MediaOcean, LLC
 
Software
 
 5.80% (L + 4.00%)
 
8/18/2025
 
7,392

 
7,372

 
7,410

Medical Solutions Holdings, Inc.
 
Healthcare Services
 
 6.30% (L + 4.50%)
 
6/14/2024
 
2,795

 
2,786

 
2,791

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
12,160

 
12,124

 
12,160

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
2,095

 
2,089

 
2,095

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
880

 
877

 
880

NorthStar Financial Services Group, LLC
 
Software
 
 5.30% (L + 3.50%)
 
5/25/2025
 
5,885

 
5,861

 
5,789

Peraton Corp. (fka MHVC Acquisition Corp.)
 
Federal Services
 
 7.05% (L + 5.25%)
 
4/29/2024
 
10,237

 
10,203

 
10,193

Premise Health Holding Corp.
 
Healthcare Services
 
 5.44% (L + 3.50%)
 
7/10/2025
 
1,372

 
1,367

 
1,358

Project Accelerate Parent, LLC
 
Business Services
 
 5.99% (L + 4.25%)
 
1/2/2025
 
13,545

 
13,494

 
13,511

PSC Industrial Holdings Corp.
 
Industrial Services
 
 5.49% (L + 3.75%)
 
10/11/2024
 
7,305

 
7,252

 
7,269

Quest Software US Holdings Inc.
 
Software
 
 6.18% (L + 4.25%)
 
5/16/2025
 
14,850

 
14,790

 
14,739

Salient CRGT Inc.
 
Federal Services
 
 8.29% (L + 6.50%)
 
2/28/2022
 
13,134

 
13,071

 
12,510

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)
 
Education
 
 6.19% (L + 4.25%)
 
7/30/2025
 
716

 
715

 
721

Wirepath LLC
 
Distribution & Logistics
 
 5.94% (L + 4.00%)
 
8/5/2024
 
14,813

 
14,813

 
12,886

WP CityMD Bidco LLC
 
Healthcare Services
 
 6.44% (L + 4.50%)
 
8/13/2026
 
15,000

 
14,855

 
15,038

Wrench Group LLC
 
Consumer Services
 
 6.19% (L + 4.25%)
 
4/30/2026
 
4,478

 
4,435

 
4,488

YI, LLC
 
Healthcare Services
 
 5.94% (L + 4.00%)
 
11/7/2024
 
14,801

 
14,791

 
13,839

Zelis Cost Management Buyer, Inc.
 
Healthcare I.T.
 
 6.55% (L + 4.75%)
 
9/30/2026
 
10,363

 
10,261

 
10,427

Zywave, Inc.
 
Software
 
 6.93% (L + 5.00%)
 
11/17/2022
 
16,975

 
16,930

 
16,975

Zywave, Inc.
 
Software
 
 6.84% (L + 5.00%)
 
11/17/2022
 
481

 
477

 
481

Total Funded Investments
 

 

 

 
$
348,005

 
$
346,336

 
$
339,967

Unfunded Investments - First lien
 

 

 

 


 


 


Bearcat Buyer, Inc.
 
Healthcare Services
 
 
7/9/2021
 
$
194

 
$
(1
)
 
$
(1
)
Bleriot US Bidco Inc.
 
Federal Services
 
 
10/31/2020
 
1,351

 
(14
)
 
15

Premise Health Holding Corp.
 
Healthcare Services
 
 
7/10/2020
 
110

 

 

Wrench Group LLC
 
Consumer Services
 
 
4/30/2021
 
1,500

 

 
4

Total Unfunded Investments
 

 

 

 
$
3,155

 
$
(15
)
 
$
18

Total Investments
 

 

 

 
$
351,160

 
$
346,321

 
$
339,985


62


 
(1)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2019.
(2)
Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP II.

Below is certain summarized financial information for SLP II as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and March 31, 2019:
Selected Balance Sheet Information:
March 31, 2020
 
December 31, 2019
Investments at fair value (cost of $332,959 and $346,321, respectively)
$
291,822

 
$
339,985

Cash and other assets
8,364

 
8,159

Total assets
$
300,186

 
$
348,144

 
 
 
 
Credit facility
$
236,770

 
$
246,870

Deferred financing costs
(1,188
)
 
(1,408
)
Distribution payable
3,250

 
3,250

Payable for unsettled securities purchased

 
3,113

Other liabilities
2,175

 
2,367

Total liabilities
241,007

 
254,192

 
 
 
 
Members' capital
$
59,179

 
$
93,952

Total liabilities and members' capital
$
300,186

 
$
348,144

Selected Statement of Operations
Three Months Ended
 Information:
March 31, 2020
 
March 31, 2019
Interest income
$
5,447

 
$
6,223

Other income
53

 
26

Total investment income
5,500

 
6,249

 
 
 
 
Interest and other financing expenses
2,145

 
2,773

Other expenses
132

 
135

Total expenses
2,277

 
2,908

Net investment income
3,223

 
3,341

 
 
 
 
Net realized gains on investments
56

 
8

Net change in unrealized (depreciation) appreciation of investments
(34,801
)
 
1,547

Net (decrease) increase in members' capital
$
(31,522
)
 
$
4,896

For the three months ended March 31, 2020 and March 31, 2019, the Company earned approximately $2,581 and $3,176, respectively, of dividend income related to SLP II, which is included in dividend income. As of March 31, 2020 and December 31, 2019, approximately $2,581 and $2,581, respectively, of dividend income related to SLP II was included in interest and dividend receivable.
The Company has determined that SLP II is an investment company under ASC 946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company other than a wholly-owned investment company subsidiary. Furthermore, Accounting Standards Codification Topic 810, Consolidation ("ASC 810"), concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate SLP II.

63


Unconsolidated Significant Subsidiaries
In accordance with Regulation S-X Rule 10-01(b)(1), the Company evaluates its unconsolidated controlled portfolio companies as significant subsidiaries under this rule. As of March 31, 2020, NMFC Senior Loan Program III LLC ("SLP III") is considered a significant unconsolidated subsidiary under Regulation S-X Rule 10-01(b)(1). Based on the requirements under Regulation S-X 10-01(b)(1), the summarized consolidated financial information of SLP III is shown below.
NMFC Senior Loan Program III LLC
SLP III was formed as a Delaware limited liability company and commenced operations on April 25, 2018. SLP III is structured as a private joint venture investment fund between the Company and SkyKnight Income II, LLC (“SkyKnight II”) and operates under a limited liability company agreement (the "SLP III Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within the Company's core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP III, which has equal representation from the Company and SkyKnight II. SLP III has a five year investment period and will continue in existence until April 25, 2025. The investment period may be extended for up to one year pursuant to certain terms of the SLP III Agreement.
SLP III is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III. As of March 31, 2020, the Company and SkyKnight II have committed $120,000 and $30,000, respectively, of equity to SLP III. As of March 31, 2020, the Company and SkyKnight II have contributed $110,000 and $27,500, respectively, of equity to SLP III. The Company’s investment in SLP III is disclosed on the Company’s Consolidated Schedule of Investments as of March 31, 2020 and December 31, 2019.
On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A., which matures on May 2, 2023 and bears interest at a rate of LIBOR plus 1.70% per annum. Effective February 13, 2020, SLP III's revolving credit facility has a maximum borrowing capacity of $450,000. As of March 31, 2020 and December 31, 2019, SLP III had total investments with an aggregate fair value of approximately $462,537 and $475,198, respectively, and debt outstanding under its credit facility of $401,600 and $355,400, respectively. As of March 31, 2020 and December 31, 2019, none of SLP III's investments were on non-accrual. Additionally, as of March 31, 2020 and December 31, 2019, SLP III had unfunded commitments in the form of delayed draws of $9,878 and $10,608, respectively. Below is a summary of SLP III's portfolio, along with a listing of the individual investments in SLP III's portfolio as of March 31, 2020 and December 31, 2019:
 
 
March 31, 2020
 
December 31, 2019
First lien investments (1)
 
$
543,798

 
$
493,787

Weighted average interest rate on first lien investments (2)
 
5.34
%
 
5.95
%
Number of portfolio companies in SLP III
 
55

 
49

Largest portfolio company investment (1)
 
$
23,894

 
$
23,947

Total of five largest portfolio company investments (1)
 
$
99,663

 
$
99,906

 
(1)
Reflects principal amount or par value of investment.
(2)
Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.

64


The following table is a listing of the individual investments in SLP III's portfolio as of March 31, 2020:
Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Funded Investments - First lien
 
 
 
 
 
 
 
 
 
 
 
 
Access CIG, LLC
 
Business Services
 
 5.53% (L + 3.75%)
 
2/27/2025
 
$
874

 
$
874

 
$
721

Advisor Group Holdings, Inc.
 
Consumer Services
 
 5.99% (L + 5.00%)
 
7/31/2026
 
4,988

 
4,941

 
3,840

Affordable Care Holding Corp.
 
Healthcare Services
 
 6.20% (L + 4.75%)
 
10/24/2022
 
5,948

 
5,875

 
5,183

AG Parent Holdings, LLC
 
Healthcare Services
 
 6.45% (L + 5.00%)
 
7/31/2026
 
12,469

 
12,411

 
12,118

Aston FinCo S.a.r.l. / Aston US Finco, LLC
 
Software
 
 6.13% (L + 4.25%)
 
10/9/2026
 
6,000

 
5,943

 
5,460

Astra Acquisition Corp.
 
Software
 
 6.50% (L + 5.50%)
 
3/1/2027
 
11,577

 
11,491

 
11,490

Ascensus Specialties LLC
 
Business Services
 
 6.33% (L + 4.75%)
 
9/24/2026
 
9,975

 
9,928

 
9,950

BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 4.99% (L + 4.00%)
 
6/11/2026
 
9,144

 
9,060

 
8,230

BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 4.99% (L + 4.00%)
 
6/11/2026
 
1,437

 
1,427

 
1,293

Bearcat Buyer, Inc.
 
Healthcare Services
 
 5.70% (L + 4.25%)
 
7/9/2026
 
19,803

 
19,712

 
18,983

Bearcat Buyer, Inc.
 
Healthcare Services
 
 5.70% (L + 4.25%)
 
7/9/2026
 
1,299

 
1,293

 
1,245

Bleriot US Bidco Inc.
 
Federal Services
 
 6.20% (L + 4.75%)
 
10/31/2026
 
4,324

 
4,282

 
3,773

Bleriot US Bidco Inc.
 
Federal Services
 
 6.20% (L + 4.75%)
 
10/31/2026
 
676

 
669

 
590

Bluefin Holding, LLC
 
Software
 
 5.25% (L + 4.25%)
 
9/4/2026
 
9,975

 
9,835

 
9,564

Bracket Intermediate Holding Corp.
 
Healthcare Services
 
 6.16% (L + 4.25%)
 
9/5/2025
 
14,775

 
14,715

 
11,894

Brave Parent Holdings, Inc.
 
Software
 
 5.78% (L + 4.00%)
 
4/18/2025
 
11,304

 
11,272

 
9,872

CentralSquare Technologies, LLC
 
Software
 
 5.20% (L + 3.75%)
 
8/29/2025
 
14,813

 
14,783

 
11,554

Certara Holdco, Inc.
 
Healthcare I.T.
 
 4.95% (L + 3.50%)
 
8/15/2024
 
1,259

 
1,262

 
1,070

CHA Holdings, Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
4/10/2025
 
985

 
985

 
957

CommerceHub, Inc.
 
Software
 
 4.49% (L + 3.50%)
 
5/21/2025
 
14,738

 
14,681

 
12,379

Covenant Surgical Partners, Inc.
 
Healthcare Services
 
 5.02% (L + 4.00%)
 
7/1/2026
 
9,950

 
9,859

 
8,408

CRCI Longhorn Holdings, Inc.
 
Business Services
 
 4.49% (L + 3.50%)
 
8/8/2025
 
14,775

 
14,716

 
12,559

Dealer Tire, LLC
 
Distribution & Logistics
 
 5.24% (L + 4.25%)
 
12/12/2025
 
9,975

 
9,950

 
8,279

Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)
 
Healthcare Services
 
 4.75% (L + 3.75%)
 
6/6/2025
 
14,748

 
14,719

 
11,725

Drilling Info Holdings, Inc.
 
Business Services
 
 5.24% (L + 4.25%)
 
7/30/2025
 
18,719

 
18,643

 
17,292

Edgewood Partners Holdings LLC
 
Business Services
 
 5.25% (L + 4.25%)
 
9/6/2024
 
7,413

 
7,351

 
7,144

eResearchTechnology, Inc.
 
Healthcare Services
 
 5.50% (L + 4.50%)
 
2/4/2027
 
3,931

 
3,892

 
3,512

EyeCare Partners, LLC
 
Healthcare Services
 
 4.82% (L + 3.75%)
 
2/18/2027
 
12,162

 
12,147

 
10,054

Fastlane Parent Company, Inc.
 
Distribution & Logistics
 
 5.49% (L + 4.50%)
 
2/4/2026
 
3,465

 
3,405

 
2,997

Greenway Health, LLC
 
Software
 
 4.82% (L + 3.75%)
 
2/16/2024
 
14,633

 
14,641

 
9,584

Heartland Dental, LLC
 
Healthcare Services
 
 4.74% (L + 3.75%)
 
4/30/2025
 
18,683

 
18,610

 
14,740

Help/Systems Holdings, Inc.
 
Software
 
 5.75% (L + 4.75%)
 
11/19/2026
 
7,056

 
6,998

 
6,103

Idera, Inc.
 
Software
 
 5.08% (L + 4.00%)
 
6/28/2024
 
5,558

 
5,535

 
4,891

Institutional Shareholder Services Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
3/5/2026
 
990

 
981

 
827

Kestra Advisor Services Holdings A, Inc.
 
Business Services
 
 5.24% (L + 4.25%)
 
6/3/2026
 
9,452

 
9,381

 
8,129

LSCS Holdings, Inc.
 
Healthcare Services
 
 5.32% (L + 4.25%)
 
3/17/2025
 
2,647

 
2,629

 
2,448

LSCS Holdings, Inc.
 
Healthcare Services
 
 5.32% (L + 4.25%)
 
3/17/2025
 
683

 
679

 
632

Market Track, LLC
 
Business Services
 
 6.03% (L + 4.25%)
 
6/5/2024
 
4,765

 
4,761

 
3,955

MED ParentCo, LP
 
Healthcare Services
 
 5.24% (L + 4.25%)
 
8/31/2026
 
10,350

 
10,259

 
8,720

MED ParentCo, LP
 
Healthcare Services
 
 5.21% (L + 4.25%)
 
8/31/2026
 
1,816

 
1,799

 
1,530

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
4,537

 
4,523

 
4,337

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
878

 
875

 
839

National Intergovernmental Purchasing Alliance Company
 
Business Services
 
 5.20% (L + 3.75%)
 
5/23/2025
 
8,768

 
8,764

 
7,453

National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)
 
Healthcare Services
 
 5.12% (L + 4.00%)
 
3/9/2026
 
8,946

 
8,946

 
8,141

National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)
 
Healthcare Services
 
 5.46% (L + 4.00%)
 
3/9/2026
 
406

 
406

 
370

Navex Topco, Inc.
 
Software
 
 4.24% (L + 3.25%)
 
9/5/2025
 
18,348

 
18,197

 
15,940

Netsmart Technologies, Inc.
 
Healthcare I.T.
 
 5.20% (L + 3.75%)
 
4/19/2023
 
10,304

 
10,304

 
9,376

Newport Group Holdings II, Inc.
 
Business Services
 
 5.20% (L + 3.75%)
 
9/12/2025
 
4,925

 
4,905

 
4,297

NorthStar Financial Services Group, LLC
 
Software
 
 4.49% (L + 3.50%)
 
5/25/2025
 
11,770

 
11,726

 
9,593

Outcomes Group Holdings, Inc.
 
Healthcare Services
 
 5.11% (L + 3.50%)
 
10/24/2025
 
3,426

 
3,419

 
2,827

Pelican Products, Inc.
 
Business Products
 
 4.50% (L + 3.50%)
 
5/1/2025
 
4,912

 
4,903

 
4,016

Peraton Corp. (fka MHVC Acquisition Corp.)
 
Federal Services
 
 6.87% (L + 5.25%)
 
4/29/2024
 
15,391

 
15,334

 
14,390


65


Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Premise Health Holding Corp.
 
Healthcare Services
 
 4.95% (L + 3.50%)
 
7/10/2025
 
13,689

 
13,634

 
12,613

Project Accelerate Parent, LLC
 
Business Services
 
 5.25% (L + 4.25%)
 
1/2/2025
 
9,899

 
9,855

 
7,672

Quest Software US Holdings Inc.
 
Software
 
 6.03% (L + 4.25%)
 
5/16/2025
 
14,811

 
14,756

 
13,673

Sierra Enterprises, LLC
 
Food & Beverage
 
 5.00% (L + 4.00%)
 
11/11/2024
 
2,450

 
2,448

 
2,021

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)
 
Education
 
 5.70% (L + 4.25%)
 
7/30/2025
 
14,775

 
14,746

 
11,931

TIBCO Software Inc.
 
Software
 
 4.74% (L + 3.75%)
 
6/30/2026
 
7,692

 
7,673

 
7,308

Wirepath LLC
 
Distribution & Logistics
 
 5.07% (L + 4.00%)
 
8/5/2024
 
17,258

 
17,258

 
15,101

WP CityMD Bidco LLC
 
Healthcare Services
 
 5.76% (L + 4.50%)
 
8/13/2026
 
20,019

 
19,831

 
18,067

VT Topco, Inc.
 
Business Services
 
 4.95% (L + 3.50%)
 
8/1/2025
 
2,816

 
2,816

 
2,422

YI, LLC
 
Healthcare Services
 
 5.07% (L + 4.00%)
 
11/7/2024
 
9,766

 
9,759

 
7,569

Total Funded Investments
 
 
 
 
 
 
 
$
533,920

 
$
531,472

 
$
463,651

Unfunded Investments - First lien
 
 
 
 
 
 
 
 
 
 
 
 
BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 
6/11/2021
 
$
369

 
$
(4
)
 
$
(37
)
Bearcat Buyer, Inc.
 
Healthcare Services
 
 
7/9/2021
 
2,792

 
(14
)
 
(116
)
Covenant Surgical Partners, Inc.
 
Healthcare Services
 
 
7/1/2021
 
2,000

 
(20
)
 
(310
)
EyeCare Partners, LLC
 
Healthcare Services
 
 
2/18/2022
 
2,838

 

 
(492
)
MED ParentCo, LP
 
Healthcare Services
 
 
8/27/2021
 
776

 
(8
)
 
(122
)
Premise Health Holding Corp.
 
Healthcare Services
 
 
7/10/2020
 
1,103

 
(3
)
 
(37
)
Total Unfunded Investments
 
 
 
 
 
 
 
$
9,878

 
$
(49
)
 
$
(1,114
)
Total Investments
 
 
 
 
 
 
 
$
543,798

 
$
531,423

 
$
462,537

 
(1)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of March 31, 2020.
(2)
Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP III.

66


The following table is a listing of the individual investments in SLP III's portfolio as of December 31, 2019:
Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Funded Investments - First lien
 
 
 
 
 
 
 
 
 
 
 
 
Access CIG, LLC
 
Business Services
 
 5.44% (L + 3.75%)
 
2/27/2025
 
$
1,204

 
$
1,204

 
$
1,205

Advisor Group Holdings, Inc.
 
Consumer Services
 
 6.80% (L + 5.00%)
 
7/31/2026
 
5,000

 
4,952

 
4,972

Affordable Care Holding Corp.
 
Healthcare Services
 
 6.59% (L + 4.75%)
 
10/24/2022
 
5,963

 
5,884

 
5,814

AG Parent Holdings, LLC
 
Healthcare Services
 
 6.91% (L + 5.00%)
 
7/31/2026
 
12,500

 
12,440

 
12,406

Aston FinCo S.a r.l. / Aston US Finco, LLC
 
Software
 
 6.26% (L + 4.25%)
 
10/9/2026
 
6,000

 
5,941

 
5,970

Ascensus Specialties LLC
 
Business Services
 
 6.44% (L + 4.75%)
 
9/24/2026
 
10,000

 
9,951

 
9,975

BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 5.80% (L + 4.00%)
 
6/11/2026
 
9,167

 
9,080

 
9,224

BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 5.80% (L + 4.00%)
 
6/11/2026
 
229

 
243

 
231

Bearcat Buyer, Inc.
 
Healthcare Services
 
 6.19% (L + 4.25%)
 
7/9/2026
 
19,853

 
19,759

 
19,753

Bearcat Buyer, Inc.
 
Healthcare Services
 
 6.19% (L + 4.25%)
 
7/9/2026
 
1,302

 
1,296

 
1,296

Bleriot US Bidco Inc.
 
Federal Services
 
 6.69% (L + 4.75%)
 
10/30/2026
 
4,324

 
4,281

 
4,373

Bluefin Holding, LLC
 
Software
 
 6.14% (L + 4.25%)
 
9/4/2026
 
10,000

 
9,855

 
9,900

Bracket Intermediate Holding Corp.
 
Healthcare Services
 
 6.35% (L + 4.25%)
 
9/5/2025
 
14,813

 
14,750

 
14,775

Brave Parent Holdings, Inc.
 
Software
 
 5.93% (L + 4.00%)
 
4/18/2025
 
14,775

 
14,732

 
14,560

CentralSquare Technologies, LLC
 
Software
 
 5.55% (L + 3.75%)
 
8/29/2025
 
14,850

 
14,819

 
14,231

Certara Holdco, Inc.
 
Healthcare I.T.
 
 5.44% (L + 3.50%)
 
8/15/2024
 
1,262

 
1,266

 
1,262

CHA Holdings, Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
4/10/2025
 
987

 
987

 
986

CommerceHub, Inc.
 
Software
 
 5.30% (L + 3.50%)
 
5/21/2025
 
14,775

 
14,716

 
14,590

Covenant Surgical Partners, Inc.
 
Healthcare Services
 
 5.69% (L + 4.00%)
 
7/1/2026
 
9,975

 
9,881

 
9,913

CRCI Longhorn Holdings, Inc.
 
Business Services
 
 5.19% (L + 3.50%)
 
8/8/2025
 
14,813

 
14,751

 
14,414

Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)
 
Healthcare Services
 
 5.55% (L + 3.75%)
 
6/6/2025
 
14,786

 
14,755

 
14,737

Drilling Info Holdings, Inc.
 
Business Services
 
 6.05% (L + 4.25%)
 
7/30/2025
 
18,766

 
18,688

 
18,688

Edgewood Partners Holdings LLC
 
Business Services
 
 6.05% (L + 4.25%)
 
9/6/2024
 
7,432

 
7,367

 
7,413

Explorer Holdings, Inc.
 
Healthcare Services
 
 6.25% (L + 4.50%)
 
11/20/2026
 
3,931

 
3,892

 
3,964

Fastlane Parent Company, Inc.
 
Distribution & Logistics
 
 6.44% (L + 4.50%)
 
2/4/2026
 
3,474

 
3,411

 
3,448

Greenway Health, LLC
 
Software
 
 5.69% (L + 3.75%)
 
2/16/2024
 
14,670

 
14,679

 
13,093

Heartland Dental, LLC
 
Healthcare Services
 
 5.55% (L + 3.75%)
 
4/30/2025
 
18,317

 
18,243

 
18,248

Help/Systems Holdings, Inc.
 
Software
 
 6.55% (L + 4.75%)
 
11/19/2026
 
5,556

 
5,500

 
5,535

Idera, Inc.
 
Software
 
 6.30% (L + 4.50%)
 
6/28/2024
 
5,572

 
5,548

 
5,576

Institutional Shareholder Services Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
3/5/2026
 
993

 
983

 
978

Kestra Advisor Services Holdings A, Inc.
 
Business Services
 
 6.20% (L + 4.25%)
 
6/3/2026
 
9,476

 
9,402

 
9,477

LSCS Holdings, Inc.
 
Healthcare Services
 
 6.31% (L + 4.25%)
 
3/17/2025
 
2,654

 
2,634

 
2,627

LSCS Holdings, Inc.
 
Healthcare Services
 
 6.31% (L + 4.25%)
 
3/17/2025
 
685

 
680

 
678

Market Track, LLC
 
Business Services
 
 6.18% (L + 4.25%)
 
6/5/2024
 
4,778

 
4,773

 
4,300

MED ParentCo, LP
 
Healthcare Services
 
 6.05% (L + 4.25%)
 
8/31/2026
 
10,376

 
10,282

 
10,402

MED ParentCo, LP
 
Healthcare Services
 
 6.05% (L + 4.25%)
 
8/31/2026
 
553

 
549

 
554

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
4,549

 
4,534

 
4,549

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
880

 
877

 
880

National Intergovernmental Purchasing Alliance Company
 
Business Services
 
 5.69% (L + 3.75%)
 
5/23/2025
 
8,790

 
8,786

 
8,790

Navex Topco, Inc.
 
Software
 
 5.05% (L + 3.25%)
 
9/5/2025
 
18,394

 
18,237

 
18,448

Netsmart Technologies, Inc.
 
Healthcare I.T.
 
 5.55% (L + 3.75%)
 
4/19/2023
 
10,330

 
10,330

 
10,308

Newport Group Holdings II, Inc.
 
Business Services
 
 5.65% (L + 3.75%)
 
9/12/2025
 
4,938

 
4,917

 
4,950

NorthStar Financial Services Group, LLC
 
Software
 
 5.30% (L + 3.50%)
 
5/25/2025
 
11,770

 
11,723

 
11,579

Outcomes Group Holdings, Inc.
 
Healthcare Services
 
 5.41% (L + 3.50%)
 
10/24/2025
 
6,435

 
6,421

 
6,344

Pelican Products, Inc.
 
Business Products
 
 5.24% (L + 3.50%)
 
5/1/2025
 
4,925

 
4,915

 
4,531

Peraton Corp. (fka MHVC Acquisition Corp.)
 
Federal Services
 
 7.05% (L + 5.25%)
 
4/29/2024
 
15,430

 
15,371

 
15,363

Premise Health Holding Corp.
 
Healthcare Services
 
 5.44% (L + 3.50%)
 
7/10/2025
 
13,723

 
13,666

 
13,580

Project Accelerate Parent, LLC
 
Business Services
 
 5.99% (L + 4.25%)
 
1/2/2025
 
9,924

 
9,878

 
9,899

Quest Software US Holdings Inc.
 
Software
 
 6.18% (L + 4.25%)
 
5/16/2025
 
14,850

 
14,790

 
14,739

Sierra Enterprises, LLC
 
Food & Beverage
 
 5.80% (L + 4.00%)
 
11/11/2024
 
2,456

 
2,454

 
2,447

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)
 
Education
 
 6.19% (L + 4.25%)
 
7/30/2025
 
14,812

 
14,782

 
14,905

Wirepath LLC
 
Distribution & Logistics
 
 5.94% (L + 4.00%)
 
8/5/2024
 
17,302

 
17,302

 
15,053


67


Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
WP CityMD Bidco LLC
 
Healthcare Services
 
 6.44% (L + 4.50%)
 
8/13/2026
 
20,069

 
19,875

 
20,119

YI, LLC
 
Healthcare Services
 
 5.94% (L + 4.00%)
 
11/7/2024
 
9,791

 
9,784

 
9,155

Total Funded Investments
 
 
 
 
 
 
 
$
483,179

 
$
480,816

 
$
475,207

Unfunded Investments - First lien
 
 
 
 
 
 
 
 
 
 
 
 
BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 
6/11/2021
 
$
1,580

 
$
(16
)
 
$
10

Bearcat Buyer, Inc.
 
Healthcare Services
 
 
7/9/2021
 
2,792

 
(14
)
 
(14
)
Bleriot US Bidco Inc.
 
Federal Services
 
 
10/31/2020
 
676

 
(7
)
 
8

Covenant Surgical Partners, Inc.
 
Healthcare Services
 
 
7/1/2021
 
2,000

 
(20
)
 
(13
)
Heartland Dental, LLC
 
Healthcare Services
 
 
4/30/2020
 
413

 

 
(2
)
MED ParentCo, LP
 
Healthcare Services
 
 
8/27/2021
 
2,044

 
(20
)
 
5

Premise Health Holding Corp.
 
Healthcare Services
 
 
7/10/2020
 
1,103

 
(3
)
 
(3
)
Total Unfunded Investments
 
 
 
 
 
 
 
$
10,608

 
$
(80
)
 
$
(9
)
Total Investments
 
 
 
 
 
 
 
$
493,787

 
$
480,736

 
$
475,198

 
(1)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2019.
(2)
Represents the fair value in accordance with ASC 820. The Company's board of directors does not determine the fair value of the investments held by SLP III.

Below is certain summarized financial information for SLP III as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and March 31, 2019:
Selected Balance Sheet Information:
March 31, 2020
 
December 31, 2019
Investments at fair value (cost of $531,423 and $480,736)
$
462,537

 
$
475,198

Cash and other assets
15,472

 
12,836

Total assets
$
478,009

 
$
488,034



 

Credit facility
$
401,600

 
$
355,400

Deferred financing costs
(2,773
)
 
(2,385
)
Payable for unsettled securities purchased

 
8,166

Distribution payable
3,592

 
3,650

Other liabilities
6,832

 
3,736

Total liabilities
409,251

 
368,567



 

Members' capital
$
68,758

 
$
119,467

Total liabilities and members' capital
$
478,009

 
$
488,034


68


Selected Statement of Operations Information:
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Interest income
$
7,407

 
$
6,293

Other income
181

 
70

Total investment income
7,588

 
6,363



 

Interest and other financing expenses
3,696

 
3,391

Other expenses
157

 
138

Total expenses
3,853

 
3,529

Net investment income
3,735

 
2,834



 

Net realized (losses) gains on investments
(2
)
 
33

Net change in unrealized (depreciation) appreciation of investments
(63,348
)
 
2,967

Net (decrease) increase in members' capital
$
(59,615
)
 
$
5,834

For the three months ended March 31, 2020 and March 31, 2019, the Company earned approximately $2,874 and $2,720, respectively, of dividend income related to SLP III, which is included in dividend income. As of March 31, 2020 and December 31, 2019, approximately $2,874 and $2,920, respectively, of dividend income related to SLP III was included in interest and dividend receivable.
The Company has determined that SLP III is an investment company under ASC 946; however, in accordance with such guidance the Company will generally not consolidate its investment in a company other than a wholly-owned investment company subsidiary. Furthermore, ASC 810 concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, the Company does not consolidate SLP III.
Investment Risk Factors
First and second lien debt that the Company invests in is almost entirely rated below investment grade or may be unrated. Debt investments rated below investment grade are often referred to as “leveraged loans”, “high yield” or “junk” debt investments, and may be considered “high risk” compared to debt investments that are rated investment grade. These debt investments are considered speculative because of the credit risk of the issuers. Such issuers are considered more likely than investment grade issuers to default on their payments of interest and principal, and such risk of default could reduce the net asset value and income distributions of the Company. In addition, some of the Company’s debt investments will not fully amortize during their lifetime, which could result in a loss or a substantial amount of unpaid principal and interest due upon maturity. First and second lien debt may also lose significant market value before a default occurs. Furthermore, an active trading market may not exist for these first and second lien debt investments. This illiquidity may make it more difficult to value the debt.
Subordinated debt is generally subject to similar risks as those associated with first and second lien debt, except that such debt is subordinated in payment and/or lower in lien priority. Subordinated debt is subject to the additional risk that the cash flow of the borrower and the property securing the debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior secured and unsecured obligations of the borrower.
The Company may directly invest in the equity of private companies or, in some cases, equity investments could be made in connection with a debt investment. Equity investments may or may not fluctuate in value, resulting in recognized realized gains or losses upon disposition.
The Company's financial condition and portfolio companies may be negatively impacted by the recent outbreak of the novel strain of coronavirus ("COVID-19"). On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, a national emergency was declared in the U.S. The ongoing spread of COVID-19 has had, and will continue to have, a material adverse impact on the U.S. and global economy as commercial activity and public perception have been negatively impacted by the outbreak. The ultimate extent which the COVID-19 crisis will impact our financial condition and portfolio companies will depend on future developments affecting not only us, but also the entire U.S. and global economy, which are inherently uncertain, including, among others, new information that may emerge concerning the severity and rate of spread of the disease.


69



Note 4. Fair Value
Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes and ranks the inputs to valuation techniques used in measuring investments at fair value. The hierarchy classifies the inputs used in measuring fair value into three levels as follows:
Level I—Quoted prices (unadjusted) are available in active markets for identical investments and the Company has the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by ASC 820, the Company, to the extent that it holds such investments, does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.
Level II—Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following:
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); 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 asset or liability.
Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.
The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.
The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period.
The following table summarizes the levels in the fair value hierarchy that the Company’s portfolio investments fall into as of March 31, 2020:
 
Total
 
Level I
 
Level II
 
Level III
First lien
$
1,789,750

 
$

 
$
50,695

 
$
1,739,055

Second lien
696,740

 

 
67,542

 
629,198

Subordinated
46,983

 

 
4,931

 
42,052

Equity and other
457,844

 

 

 
457,844

Total investments
$
2,991,317

 
$

 
$
123,168

 
$
2,868,149

The following table summarizes the levels in the fair value hierarchy that the Company’s portfolio investments fall into as of December 31, 2019:
 
Total
 
Level I
 
Level II
 
Level III
First lien
$
1,801,615

 
$

 
$
263,192

 
$
1,538,423

Second lien
788,868

 

 
369,477

 
419,391

Subordinated
66,774

 

 
20,870

 
45,904

Equity and other
503,023

 

 

 
503,023

Total investments
$
3,160,280

 
$

 
$
653,539

 
$
2,506,741


70


The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended March 31, 2020, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at March 31, 2020:
 
Total
 
First Lien
 
Second Lien
 
Subordinated
 
Equity and
other
Fair value, December 31, 2019
$
2,506,741

 
$
1,538,423

 
$
419,391

 
$
45,904

 
$
503,023

Total gains or losses included in earnings:
 

 


 


 


 


Net realized (losses) gains on investments
(102
)
 
(185
)
 

 

 
83

Net change in unrealized (depreciation)
appreciation
(181,399
)
 
(86,236
)
 
(31,724
)
 
(4,888
)
 
(58,551
)
Purchases, including capitalized PIK and revolver fundings 
220,476

 
195,654

 
10,497

 
1,036

 
13,289

Proceeds from sales and paydowns of investments
(97,561
)
 
(57,470
)
 
(40,091
)
 

 

Transfers into Level III(1)
434,918

 
148,869

 
286,049

 

 

Transfers out of Level III(1)
(14,924
)
 

 
(14,924
)
 

 

Fair Value, March 31, 2020
$
2,868,149

 
$
1,739,055

 
$
629,198

 
$
42,052

 
$
457,844

Unrealized (depreciation) appreciation for the period relating to those Level III assets that were still held by the Company at the end of the period:
$
(181,745
)
 
$
(86,312
)
 
$
(31,994
)
 
$
(4,888
)
 
$
(58,551
)
 
(1)
As of March 31, 2020, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.

71


The following table summarizes the changes in fair value of Level III portfolio investments for the three months ended March 31, 2019, as well as the portion of appreciation (depreciation) included in income attributable to unrealized appreciation (depreciation) related to those assets and liabilities still held by the Company at March 31, 2019:
 
Total
 
First Lien
 
Second Lien
 
Subordinated
 
Equity and
other
Fair value, December 31, 2018
$
1,775,071

 
$
987,528

 
$
306,815

 
$
40,087

 
$
440,641

Total gains or losses included in earnings:
 

 
 

 
 

 
 

 
 

Net realized gains on investments
38

 
31

 
7

 

 

Net change in unrealized appreciation (depreciation)
9,784

 
1,906

 
1,240

 
(480
)
 
7,118

Purchases, including capitalized PIK and revolver fundings
149,741

 
95,493

 
47,055

 
1,284

 
5,909

Proceeds from sales and paydowns of investments
(10,711
)
 
(7,854
)
 
(2,857
)
 

 

Transfers into Level III (1)
104,983

 
36,971

 
68,012

 

 

Transfers out of Level III (1)
(110,121
)
 
(6,359
)
 
(103,762
)
 

 

Fair Value, March 31, 2019
$
1,918,785

 
$
1,107,716

 
$
316,510

 
$
40,891

 
$
453,668

Unrealized appreciation (depreciation) for the period relating to those Level III assets that were still held by the Company at the end of the period:
$
9,784

 
$
1,906

 
$
1,240

 
$
(480
)
 
$
7,118

 
(1)
As of March 31, 2019, portfolio investments were transferred into Level III from Level II and out of Level III into Level II at fair value as of the beginning of the period in which the reclassification occurred.

Except as noted in the tables above, there were no other transfers in or out of Level I, II, or III during the three months ended March 31, 2020 and March 31, 2019. Transfers into Level III occur as quotations obtained through pricing services are deemed not representative of fair value as of the balance sheet date and such assets are internally valued. As quotations obtained through pricing services are substantiated through additional market sources, investments are transferred out of Level III. In addition, transfers out of Level III and transfers into Level III occur based on the increase or decrease in the availability of certain observable inputs.
The Company invests in revolving credit facilities. These investments are categorized as Level III investments as these assets are not actively traded and their fair values are often implied by the term loans of the respective portfolio companies.
The Company generally uses the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. The Company typically determines the fair value of its performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company’s performance and associated financial risks. The following outlines additional details on the approaches considered:
Company Performance, Financial Review, and Analysis:  Prior to investment, as part of its due diligence process, the Company evaluates the overall performance and financial stability of the portfolio company. Post investment, the Company analyzes each portfolio company’s current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. The Company also attempts to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of its original investment thesis. This analysis is specific to each portfolio company. The Company leverages the knowledge gained from its original due diligence process, augmented by this subsequent monitoring, to continually refine its outlook for each of its portfolio companies and ultimately form the valuation of its investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, the Company will consider the pricing indicated by the external event to corroborate the private valuation.
For debt investments, the Company may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of the Company’s debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, the Company may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value. After enterprise value coverage is demonstrated for the Company’s debt

72


investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.
Market Based Approach:  The Company may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA) multiples of publicly traded comparable companies and comparable transactions. The Company considers numerous factors when selecting the appropriate companies whose trading multiples are used to value its portfolio companies. These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. The Company may apply an average of various relevant comparable company EBITDA multiples to the portfolio company’s latest twelve month (“LTM”) EBITDA or projected EBITDA to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA multiple will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the market based approach as of March 31, 2020 and December 31, 2019, the Company used the relevant EBITDA multiple ranges set forth in the table below to determine the enterprise value of its portfolio companies. The Company believes these were reasonable ranges in light of current comparable company trading levels and the specific portfolio companies involved.
Income Based Approach: The Company also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security’s contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment’s expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach and a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes an average yield-to maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of March 31, 2020 and December 31, 2019, the Company used the discount ranges set forth in the table below to value investments in its portfolio companies.
The unobservable inputs used in the fair value measurement of the Company's Level III investments as of March 31, 2020 were as follows:
 
 
 
 
 
 
 
Range
Type
Fair Value as of March 31, 2020
 
Approach
 
Unobservable Input
 
Low
 
High
 
Weighted
Average
First lien
$
1,664,385

 
Market & income approach
 
EBITDA multiple
 
2.0x

 
31.5x

 
11.4x

 
 
 
 
 
Revenue multiple
 
3.5x

 
11.0x

 
6.9x

 
 

 
 
 
Discount rate
 
5.3
%
 
21.7
%
 
10.1
%
 
34,359

 
Market quote
 
Broker quote
 
N/A

 
N/A

 
N/A

 
40,311

 
Other
 
N/A(1)
 
N/A

 
N/A

 
N/A

Second lien
629,198

 
Market & income approach
 
EBITDA multiple
 
4.3x

 
32.0x

 
9.0x

 
 
 
 
 
Revenue multiple
 
0.3x

 
0.4x

 
0.4x

 
 

 
 
 
Discount rate
 
8.9
%
 
24.7
%
 
12.1
%
Subordinated
42,052

 
Market & income approach
 
EBITDA multiple
 
3.8x

 
15.0x

 
11.0x

 
 

 
 
 
Discount rate
 
15.8
%
 
42.9
%
 
26.0
%
Equity and other
456,905

 
Market & income approach
 
EBITDA multiple
 
4.5x

 
19.5x

 
11.9x

 
 
 
 
 
Revenue multiple
 
0.3x

 
0.4x

 
0.4x

 
 

 
 
 
Discount rate
 
6.4
%
 
44.3
%
 
15.1
%
 
781

 
Black Scholes analysis
 
Expected life in years
 
6.0

 
6.0

 
6.0

 
 

 
 
 
Volatility
 
56.8
%
 
56.8
%
 
56.8
%
 
 

 
 
 
Discount rate
 
2.4
%
 
2.4
%
 
2.4
%
 
158

 
Other
 
N/A(1)
 
N/A

 
N/A

 
N/A

 
$
2,868,149

 
 
 
 
 
 

 
 

 
 

 
 
(1)
Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.

73


The unobservable inputs used in the fair value measurement of the Company's Level III investments as of December 31, 2019 were as follows:
 
 
 
 
 
 
 
Range
Type
Fair Value as of December 31, 2019
 
Approach
 
Unobservable Input
 
Low
 
High
 
Weighted
Average
First lien
$
1,239,847

 
Market & income approach
 
EBITDA multiple
 
2.0x

 
35.0x

 
14.1x

 
 

 
 
 
Revenue multiple
 
3.5x

 
11.0x

 
6.5x

 
 
 
 
 
Discount rate
 
6.3
%
 
14.8
%
 
8.6
%
 
298,576

 
Market quote
 
Broker quote
 
N/A

 
N/A

 
N/A

Second lien
196,494

 
Market & income approach
 
EBITDA multiple
 
6.5x

 
32.0x

 
14.8x

 
 

 
 
 
Revenue multiple
 
0.1x

 
1.3x

 
0.7x

 


 

 
Discount rate
 
8.6
%
 
20.4
%
 
11.6
%
 
222,897

 
Market quote
 
Broker quote
 
N/A

 
N/A

 
N/A

Subordinated
45,904

 
Market & income approach
 
EBITDA multiple
 
5.5x

 
15.0x

 
10.7x

 
 

 
 
 
Discount rate
 
10.2
%
 
35.0
%
 
18.8
%
Equity and other
502,125

 
Market & income approach
 
EBITDA multiple
 
5.5x

 
19.5x

 
11.9x

 
 

 
 
 
Revenue multiple
 
0.1x

 
1.3x

 
0.7x

 
 
 
 
 
Discount rate
 
6.2
%
 
57.4
%
 
13.8
%
 
898

 
Black Scholes analysis
 
Expected life in years
 
6.3

 
6.3

 
6.3

 
 
 
 
 
Volatility
 
23.4
%
 
23.4
%
 
23.4
%
 
 
 
 
 
Discount rate
 
1.8
%
 
1.8
%
 
1.8
%
 
$
2,506,741

 
 
 
 
 
 

 
 

 
 

Based on a comparison to similar BDC credit facilities, the terms and conditions of the Holdings Credit Facility, the NMFC Credit Facility and the DB Credit Facility (as defined in Note 7. Borrowings) are representative of market. The carrying values of the Holdings Credit Facility, NMFC Credit Facility and DB Credit Facility approximate fair value as of March 31, 2020, as the facilities are continually monitored and examined by both the borrower and the lender and are considered Level III. The carrying value of the SBA-guaranteed debentures, the 2016 Unsecured Notes, the 2017A Unsecured Notes, the 2018A Unsecured Notes, the 2018B Unsecured Notes and the 2019A Unsecured Notes (as defined in Note 7. Borrowings) approximate fair value as of March 31, 2020 based on a comparison of market interest rates for the Company’s borrowings and similar entities and are considered Level III. The fair value of the 2018 Convertible Notes and the 5.75% Unsecured Notes (as defined in Note 7. Borrowings) as of March 31, 2020 was $165,046 and $44,484, respectively, which was based on quoted prices and considered Level II. See Note 7. Borrowings, for details. The carrying value of the collateralized agreement approximates fair value as of March 31, 2020 and is considered Level III. The fair value of other financial assets and liabilities approximates their carrying value based on the short-term nature of these items.
Fair value risk factors—The Company seeks investment opportunities that offer the possibility of attaining substantial capital appreciation. Certain events particular to each industry in which the Company’s portfolio companies conduct their operations, as well as general economic, political and public health conditions (including the COVID-19 outbreak), may have a significant negative impact on the operations and profitability of the Company’s investments and/or on the fair value of the Company’s investments. The Company’s investments are subject to the risk of non-payment of scheduled interest or principal, resulting in a reduction in income to the Company and their corresponding fair valuations. Also, there may be risk associated with the concentration of investments in one geographic region or in certain industries. These events are beyond the control of the Company and cannot be predicted. Furthermore, the ability to liquidate investments and realize value is subject to uncertainties.
Note 5. Agreements
The Company entered into an investment advisory and management agreement (the “Investment Management Agreement”) with the Investment Adviser which was most recently re-approved by the Company's board of directors on February 6, 2020. Under the Investment Management Agreement, the Investment Adviser manages the day-to-day operations of, and provides investment advisory services to, the Company. For providing these services, the Investment Adviser receives a fee from the Company, consisting of two components—a base management fee and an incentive fee.
Pursuant to the Investment Management Agreement, the base management fee is calculated at an annual rate of 1.75% of the Company’s gross assets, which equals the Company’s total assets on the Consolidated Statements of Assets and

74


Liabilities, less (i) the borrowings under the New Mountain Finance SPV Funding, L.L.C. Loan and Security Agreement, as amended and restated, dated October 27, 2010 (the "SLF Credit Facility") and (ii) cash and cash equivalents. The base management fee is payable quarterly in arrears, and is calculated based on the average value of the Company’s gross assets, which equals the Company’s total assets, as determined in accordance with GAAP, less the borrowings under the SLF Credit Facility and cash and cash equivalents at the end of each of the two most recently completed calendar quarters, and appropriately adjusted on a pro rata basis for any equity capital raises or repurchases during the current calendar quarter. The Company has not invested, and currently is not invested, in derivatives. To the extent the Company invests in derivatives in the future, the Company will use the actual value of the derivatives, as reported on the Consolidated Statements of Assets and Liabilities, for purposes of calculating its base management fee.
Since the IPO, the base management fee calculation has deducted the borrowings under the SLF Credit Facility. The SLF Credit Facility had historically consisted of primarily lower yielding assets at higher advance rates. As part of an amendment to the Company’s existing credit facilities with Wells Fargo Bank, National Association, the SLF Credit Facility merged with the NMF Holdings Loan and Security Agreement, as amended and restated, dated May 19, 2011, and formed the Holdings Credit Facility on December 18, 2014 (as defined in Note 7. Borrowings). The amendment merged the credit facilities and combined the amount of borrowings previously available. Post credit facility merger and to be consistent with the methodology since the IPO, the Investment Adviser will continue to waive management fees on the leverage associated with those assets held under revolving credit facilities that share the same underlying yield characteristics with investments leveraged under the legacy SLF Credit Facility, which as of March 31, 2020 and March 31, 2019 was approximately $790,562 and $632,173, respectively. The Investment Adviser cannot recoup management fees that the Investment Adviser has previously waived. For the three months ended March 31, 2020 and March 31, 2019, management fees waived were approximately $3,543 and $2,533, respectively.
The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 20.0% of the Company’s “Pre-Incentive Fee Net Investment Income” for the immediately preceding quarter, subject to a “preferred return”, or “hurdle”, and a “catch-up” feature. “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, upfront, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under an administration agreement, as amended and restated (the “Administration Agreement”), with the Administrator, and any interest expense and distributions paid on any issued and outstanding preferred stock (of which there are none as of March 31, 2020), but excluding the incentive fee). Pre-Incentive Fee Net Investment Income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that the Company has not yet received in cash. Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.
Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of the Company’s net assets at the end of the immediately preceding calendar quarter, will be compared to a “hurdle rate” of 2.0% per quarter (8.0% annualized), subject to a “catch-up” provision measured as of the end of each calendar quarter. The hurdle rate is appropriately pro-rated for any partial periods. The calculation of the Company’s incentive fee with respect to the Pre-Incentive Fee Net Investment Income for each quarter is as follows:
No incentive fee is payable to the Investment Adviser in any calendar quarter in which the Company’s Pre-Incentive Fee Net Investment Income does not exceed the hurdle rate of 2.0% (the “preferred return” or “hurdle”).
100.0% of the Company’s Pre-Incentive Fee Net Investment Income with respect to that portion of such Pre-Incentive Fee Net Investment Income, if any, that exceeds the hurdle rate but is less than or equal to 2.5% in any calendar quarter (10.0% annualized) is payable to the Investment Adviser. This portion of the Company’s Pre-Incentive Fee Net Investment Income (which exceeds the hurdle rate but is less than or equal to 2.5%) is referred to as the “catch-up”. The catch-up provision is intended to provide the Investment Adviser with an incentive fee of 20.0% on all of the Company’s Pre-Incentive Fee Net Investment Income as if a hurdle rate did not apply when the Company’s Pre-Incentive Fee Net Investment Income exceeds 2.5% in any calendar quarter.
20.0% of the amount of the Company’s Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.5% in any calendar quarter (10.0% annualized) is payable to the Investment Adviser once the hurdle is reached and the catch-up is achieved.
The second part of the incentive fee will be determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement) and will equal 20.0% of the Company’s realized capital gains, if any, on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and

75


unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fee.
In accordance with GAAP, the Company accrues a hypothetical capital gains incentive fee based upon the cumulative net realized capital gains and realized capital losses and the cumulative net unrealized capital appreciation and unrealized capital depreciation on investments held at the end of each period. Actual amounts paid to the Investment Adviser are consistent with the Investment Management Agreement and are based only on actual realized capital gains computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis from inception through the end of each calendar year as if the entire portfolio was sold at fair value.
The following table summarizes the management fees and incentive fees incurred by the Company for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Management fee
$
13,858

 
$
10,975

Less: management fee waiver
(3,543
)
 
(2,533
)
Total management fee
10,315

 
8,442

Incentive fee, excluding accrued capital gains incentive fees
$
7,826

 
$
6,863

Accrued capital gains incentive fees(1)
$

 
$

 
(1)
As of March 31, 2020 and March 31, 2019, no actual capital gains incentive fee was owed under the Investment Management Agreement by the Company, as cumulative net realized capital gains did not exceed cumulative unrealized capital depreciation.
The Company has entered into the Administration Agreement with the Administrator under which the Administrator provides administrative services. The Administrator maintains, or oversees the maintenance of, the Company’s consolidated financial records, prepares reports filed with the United States Securities and Exchange Commission (the "SEC"), generally monitors the payment of the Company’s expenses and oversees the performance of administrative and professional services rendered by others. The Company will reimburse the Administrator for the Company’s allocable portion of overhead and other expenses incurred by the Administrator in performing its obligations to the Company under the Administration Agreement. Pursuant to the Administration Agreement and further restricted by the Company, the Administrator may, in its own discretion, submit to the Company for reimbursement some or all of the expenses that the Administrator has incurred on behalf of the Company during any quarterly period. As a result, the amount of expenses for which the Company will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to the Company for reimbursement in the future. However, it is expected that the Administrator will continue to support part of the expense burden of the Company in the near future and may decide to not calculate and charge through certain overhead related amounts as well as continue to cover some of the indirect costs. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three months ended March 31, 2020 and March 31, 2019, approximately $655 and $723, respectively, of indirect administrative expenses were included in administrative expenses of which $0 and $0, respectively, were waived by the Administrator. As of March 31, 2020 and December 31, 2019, approximately $1,257 and $602, respectively, of indirect administrative expenses were included in payable to affiliates. For the three months ended March 31, 2020 and March 31, 2019, the reimbursement to the Administrator represented approximately 0.02% and 0.02%, respectively, of the Company's gross assets.
The Company, the Investment Adviser and the Administrator have also entered into a Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant the Company, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the “New Mountain” and the “New Mountain Finance” names. Under the Trademark License Agreement, as amended, subject to certain conditions, the Company, the Investment Adviser and the Administrator will have a right to use the “New Mountain” and “New Mountain Finance” names, for so long as the Investment Adviser or one of its affiliates remains the investment adviser of the Company. Other than with respect to this limited license, the Company, the Investment Adviser and the Administrator will have no legal right to the “New Mountain” or the “New Mountain Finance” names.
Note 6. Related Parties
The Company has entered into a number of business relationships with affiliated or related parties.


76


The Company has entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.
The Company has entered into the Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges office space for the Company and provides office equipment and administrative services necessary to conduct their respective day-to-day operations pursuant to the Administration Agreement. The Company reimburses the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to the Company under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance and compliance functions, and the compensation of the Company’s chief financial officer and chief compliance officer and their respective staffs.
The Company, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant the Company, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the name “New Mountain” and “New Mountain Finance”.
The Company has adopted a formal code of ethics that governs the conduct of its officers and directors. These officers and directors also remain subject to the duties imposed by the 1940 Act and the Delaware General Corporation Law.
The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, to the Company’s investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for the Company or for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that the Company should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff and consistent with the Investment Adviser’s allocation procedures. On October 8, 2019, the SEC issued an exemptive order (the “Exemptive Order”), which superseded a prior order issued on December 18, 2017, which permits the Company to co-invest in portfolio companies with certain funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions of the Exemptive Order. Pursuant to the Exemptive Order, the Company is permitted to co-invest with its affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Company's independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of the Company's stockholders and is consistent with its then-current investment objective and strategies.
On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.63 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11,315. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by the Company in exchange for a promissory note with a principal amount of $11,315 and a 7.0% interest rate, which was repaid by NMNLC to the Company on March 31, 2020.
On March 30, 2020, the Company entered into an unsecured revolving credit facility with NMF Investments III, L.L.C., an affiliate of the Investment Adviser, with a $30,000 maximum amount of revolver borrowings available and a maturity date of December 31, 2022. Refer to Note 7. Borrowings for discussion of the Unsecured Management Company Revolver (defined below).
Note 7. Borrowings
As permitted by the Small Business Credit Availability Act (the “SBCA”) on June 8, 2018 the Company's shareholders approved the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act, as amended by the SBCA, which resulted in the reduction from 200.0% to 150.0% of the minimum asset coverage ratio applicable to the Company as of June 9, 2018 (which means the Company can borrow $2 for every $1 of its equity). As a result of the Company's exemptive relief received on November 5, 2014, the Company is permitted to exclude its SBA-guaranteed debentures from the 150.0% asset coverage ratio that the Company is required to maintain under the 1940 Act. The agreements governing the NMFC Credit Facility, the 2018 Convertible Notes and the Unsecured Notes (as defined below) contain certain covenants and terms, including a requirement that the Company not exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring additional indebtedness and a requirement that the Company not exceed a secured debt ratio of 0.70 to 1.00 at any time. As of March 31, 2020, the Company’s asset coverage ratio was 164.1%.

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Holdings Credit Facility—On December 18, 2014, the Company entered into the Second Amended and Restated Loan and Security Agreement among the Company, as the Collateral Manager, NMF Holdings, as the Borrower, Wells Fargo Securities, LLC, as the Administrative Agent and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian (as amended from time to time, the "Holdings Credit Facility"). As of the most recent amendment on September 6, 2019, the maturity date of the Holdings Credit Facility is October 24, 2022, and the maximum facility amount is the lesser of $800,000 and the actual commitments of the lenders to make advances as of such date.
As of March 31, 2020, the maximum amount of revolving borrowings available under the Holdings Credit Facility is $800,000. Under the Holdings Credit Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0% or 70.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Bank, National Association. The Holdings Credit Facility is non-recourse to the Company and is collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Holdings Credit Facility are capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Holdings Credit Facility. The Holdings Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Holdings Credit Facility requires the Company to maintain a minimum asset coverage ratio of 150.0%. The covenants are generally not tied to mark to market fluctuations in the prices of NMF Holdings investments, but rather to the performance of the underlying portfolio companies.
The Holdings Credit Facility bears interest at a rate of LIBOR plus 1.75% per annum for Broadly Syndicated Loans (as defined in the Loan and Security Agreement) and LIBOR plus 2.25% per annum for all other investments. The Holdings Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Loan and Security Agreement).
The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Holdings Credit Facility for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Interest expense
$
5,421

 
$
6,338

Non-usage fee
$
212

 
$
117

Amortization of financing costs
$
329

 
$
679

Weighted average interest rate
3.5
%
 
4.5
%
Effective interest rate
3.8
%
 
5.1
%
Average debt outstanding
$
629,542

 
$
566,338

As of March 31, 2020 and December 31, 2019, the outstanding balance on the Holdings Credit Facility was $569,163 and $661,563, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.
NMFC Credit Facility—The Senior Secured Revolving Credit Agreement, (as amended from time to time, and together with the related guarantee and security agreement, the "NMFC Credit Facility"), dated June 4, 2014, among the Company, as the Borrower, Goldman Sachs Bank USA, as the Administrative Agent and Collateral Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A., as Lenders, is structured as a senior secured revolving credit facility. The NMFC Credit Facility is guaranteed by certain of the Company's domestic subsidiaries and proceeds from the NMFC Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the NMFC Credit Facility is June 4, 2022.
As of March 31, 2020, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $188,500. The Company is permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Senior Secured Revolving Credit Agreement. All fees associated with the origination of the NMFC Credit Facility are capitalized on the Company’s Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the NMFC Credit Facility. The NMFC Credit Facility contains certain customary affirmative and negative covenants and events of default, including certain financial covenants related to asset coverage and liquidity and other maintenance covenants.
The NMFC Credit Facility generally bears interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charges a commitment fee, based on the unused facility amount multiplied by 0.375% per annum (as defined in the Senior Secured Revolving Credit Agreement).
    

78


The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the NMFC Credit Facility for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Interest expense
$
1,940

 
$
1,019

Non-usage fee
$

 
$
50

Amortization of financing costs
$
34

 
$
122

Weighted average interest rate
4.1
%
 
5.1
%
Effective interest rate
4.2
%
 
5.9
%
Average debt outstanding
$
188,500

 
$
81,500

As of March 31, 2020 and December 31, 2019, the outstanding balance on the NMFC Credit Facility was $188,500 and $188,500, respectively, and NMFC was in compliance with the applicable covenants in the NMFC Credit Facility on such dates.
Unsecured Management Company Revolver—The Uncommitted Revolving Loan Agreement, (the "Unsecured Management Company Revolver"), dated March 30, 2020, among the Company, as the Borrower and NMF Investments III, L.L.C., as Lender, an affiliate of the Investment Adviser, is structured as a discretionary unsecured revolving credit facility. The proceeds from the Unsecured Management Company Revolver may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the Unsecured Management Company Revolver is December 31, 2022. The Unsecured Management Company Revolver generally bears interest at a rate of 7.00% per annum (as defined in the Uncommitted Revolving Loan Agreement). As of March 31, 2020, the maximum amount of revolving borrowings available under the Unsecured Management Company Revolver was $30,000 and no borrowings were outstanding. Subsequent to March 31, 2020, the Unsecured Management Company Revolver's maximum amount of revolving borrowings available was increased to $50,000 (see Note 14—Subsequent Events).
DB Credit Facility—The Loan Financing and Servicing Agreement (the "DB Credit Facility") dated December 14, 2018 and as amended from time to time, among NMFDB as the borrower, Deutsche Bank AG, New York Branch ("Deutsche Bank") as the facility agent, Lender and other agent from time to time party thereto and U.S. Bank National Association, as collateral agent and collateral custodian, is structured as a secured revolving credit facility and the maturity date is December 14, 2023.
As of March 31, 2020, the maximum amount of revolving borrowings available under the DB Credit Facility was $280,000. The Company is permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Loan Financing and Servicing Agreement. The DB Credit Facility is non-recourse to the Company and is collateralized by all of the investments of NMFDB on an investment by investment basis. All fees associated with the origination of the DB Credit Facility are capitalized on the Company's Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the DB Credit Facility. The DB Credit Facility contains certain customary affirmative and negative covenants and events of default. The covenants are generally not tied to mark to market fluctuations in the prices of NMFDB investments, but rather to the performance of the underlying portfolio companies.
The advances under the DB Credit Facility accrue interest at a per annum rate equal to the Applicable Margin plus the lender's Cost of Funds Rate. Prior to June 28, 2019, the "Applicable Margin" was equal to 2.85% during the Revolving Period and then increases by 0.20% during an Event of Default. Effective June 28, 2019, the Applicable Margin is equal to 2.60% during the Revolving Period and then increases by 0.20% during an Event of Default. The "Cost of Funds Rate" for a conduit lender is the lower of its commercial paper rate and the Base Rate plus 0.50%, and for any other lender is the Base Rate. The "Base Rate" is the three-months LIBOR Rate but may become an alternative base rate based on Deutsche Bank's base lending rate if certain LIBOR disruption events occur. The Company is also charged a non-usage fee, based on the unused facility amount multiplied by the Undrawn Fee Rate (as defined in the Loan Financing and Servicing Agreement) and a facility agent fee of 0.25% per annum on the total facility amount.

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The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the DB Credit Facility for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Interest expense(1)
$
2,641

 
$
535

Non-usage fee(1)
$
57

 
$
77

Amortization of financing costs
$
159

 
$
65

Weighted average interest rate
4.5
%
 
5.6
%
Effective interest rate
4.9
%
 
7.1
%
Average debt outstanding
$
235,055

 
$
38,456

 
(1)
Interest expense includes the portion of the facility agent fee applicable to the drawn portion of the DB Credit Facility and non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the DB Credit Facility.
As of March 31, 2020 and December 31, 2019, the outstanding balance on the DB Credit Facility was $270,000 and $230,000, respectively, and NMFDB was in compliance with the applicable covenants in the DB Credit Facility on such dates.
NMNLC Credit Facility—The Revolving Credit Agreement (together with the related guarantee and security agreement, the “NMNLC Credit Facility”), dated September 21, 2018, among NMNLC, as the Borrower, and KeyBank National Association, as the Administrative Agent and Lender, is structured as a senior secured revolving credit facility and matures on September 23, 2020. The NMNLC Credit Facility is guaranteed by the Company and proceeds from the NMNLC Credit Facility may be used for funding of additional acquisition properties.
The NMNLC Credit Facility generally bears interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charges a commitment fee, based on the unused facility amount multiplied by 0.15% per annum (as defined in the Revolving Credit Agreement).
As of March 31, 2020, the maximum amount of revolving borrowings available under the NMNLC Credit Facility was $30,000. For the three months ended March 31, 2020, interest expense, non-usage fees and amortization of financing costs were $0, $11, and $11, respectively. For the three months ended March 31, 2019, interest expense, non-usage fees and amortization of financing costs were $0, $11 and $28, respectively. As of March 31, 2020 and December 31, 2019, the outstanding balance on the NMNLC Credit Facility was $0 and $0, respectively, and NMNLC was in compliance with the applicable covenants in the NMNLC Credit Facility on such date.
Convertible Notes
2014 Convertible Notes—On June 3, 2014, the Company closed a private offering of $115,000 aggregate principal amount of unsecured convertible notes (the “2014 Convertible Notes”), pursuant to an indenture, dated June 3, 2014 (the “2014 Indenture”). The 2014 Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). As of June 3, 2015, the restrictions under Rule 144A under the Securities Act were removed, allowing the 2014 Convertible Notes to be eligible and freely tradable without restrictions for resale pursuant to Rule 144(b)(1) under the Securities Act. On September 30, 2016, the Company closed a public offering of an additional $40,250 aggregate principal amount of the 2014 Convertible Notes. These additional 2014 Convertible Notes constituted a further issuance of, ranked equally in right of payment with, and formed a single series with the $115,000 aggregate principal amount of 2014 Convertible Notes that the Company issued on June 3, 2014.
The 2014 Convertible Notes bore interest at an annual rate of 5.0%, payable semi-annually in arrears on June 15 and December 15 of each year, which commenced on December 15, 2014.
On June 15, 2019, the Company's $155,250 aggregate principal amount of 2014 Convertible Notes matured and the Company repaid the outstanding principal and accrued but unpaid interest in cash.
2018 Convertible Notes—On August 20, 2018, the Company closed a registered public offering of $100,000 aggregate principal amount of unsecured convertible notes (the “2018 Convertible Notes”), pursuant to an indenture, dated August 20, 2018, as supplemented by a first supplemental indenture thereto, dated August 20, 2018 (together the “2018A Indenture”). On August 30, 2018, in connection with the registered public offering, the Company issued an additional $15,000 aggregate principal amount of the 2018 Convertible Notes pursuant to the exercise of an overallotment option by the underwriter of the 2018 Convertible Notes. On June 7, 2019, the Company closed a registered public offering of an additional

80


$86,250 aggregate principal amount of the 2018 Convertible Notes. These additional 2018 Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115,000 aggregate principal amount of 2018 Convertible Notes that the Company issued in August 2018.
The 2018 Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on February 15 and August 15 of each year, which commenced on February 15, 2019. The 2018 Convertible Notes will mature on August 15, 2023 unless earlier converted, repurchased or redeemed pursuant to the terms of the 2018A Indenture. The Company may not redeem the 2018 Convertible Notes prior to May 15, 2023. On or after May 15, 2023, the Company may redeem the 2018 Convertible Notes for cash, in whole or from time to time in part, at its option at a redemption price, subject to an exception for redemption dates occurring after a record date but on or prior to the interest payment date, equal to the sum of (i) 100% of the principal amount of the 2018 Convertible Notes to be redeemed, (ii) accrued and unpaid interest thereon to, but excluding, the redemption date and (iii) a make-whole premium.
No sinking fund is provided for the 2018 Convertible Notes. Holders of 2018 Convertible Notes may, at their option, convert their 2018 Convertible Notes into shares of the Company’s common stock at any time on or prior to the close of business on the business day immediately preceding the maturity date of the 2018 Convertible Notes. In addition, if certain corporate events occur, holders of the 2018 Convertible Notes may require the Company to repurchase for cash all or part of their 2018 Convertible Notes at a repurchase price equal to 100.0% of the principal amount of the 2018 Convertible Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the repurchase date.
The 2018A Indenture contains certain covenants, including covenants requiring the Company to provide certain financial information to the holders of the 2018 Convertible Notes and the trustee if the Company ceases to be subject to the reporting requirements of the Exchange Act. The 2018A Indenture also includes additional financial covenants related to asset coverage. These covenants are subject to limitations and exceptions that are described in the 2018A Indenture.
The following table summarizes certain key terms related to the convertible features of the Company’s 2018 Convertible Notes as of March 31, 2020.
 
2018 Convertible Notes
Initial conversion premium
10.0
%
Initial conversion rate(1)
65.8762

Initial conversion price
$
15.18

Conversion premium at March 31, 2020
10.0
%
Conversion rate at March 31, 2020(1)(2)
65.8762

Conversion price at March 31, 2020(2)(3)
$
15.18

Last conversion price calculation date
August 20, 2019

 
(1)
Conversion rates denominated in shares of common stock per $1 principal amount of the 2018 Convertible Notes converted.
(2)
Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.
(3)
The conversion price in effect at March 31, 2020 was calculated on the last anniversary of the issuance and will be calculated again on the next anniversary, unless the exercise price shall have changed by more than 1.0% before the anniversary.
The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.34 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $13.80 per share. In no event will the total number of shares of common stock issuable upon conversion exceed 72.4637 per $1 principal amount. The Company has determined that the embedded conversion option in the 2018 Convertible Notes is not required to be separately accounted for as a derivative under GAAP.
The 2018 Convertible Notes are unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness, if any, that is expressly subordinated in right of payment to the 2018 Convertible Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries and financing vehicles. As reflected in Note 11. Earnings Per Share, the issuance is considered part of the if-converted method for calculation of diluted earnings per share.

81


The following table summarizes the interest expense, amortization of financing costs and amortization of premium incurred on the Convertible Notes for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Interest expense
$
2,893

 
$
3,594

Amortization of financing costs
$
99

 
$
346

Amortization of premium
$
(26
)
 
$
(27
)
Weighted average interest rate
5.8
%
 
5.4
%
Effective interest rate
5.9
%
 
5.9
%
Average debt outstanding
$
201,250

 
$
270,250

As of March 31, 2020 and December 31, 2019, the outstanding balance on the Convertible Notes was $201,250 and $201,250, respectively, and NMFC was in compliance with the terms of the 2018A Indenture on such date.
Unsecured Notes
On May 6, 2016, the Company issued $50,000 in aggregate principal amount of five-year unsecured notes that mature on May 15, 2021 (the “2016 Unsecured Notes”), pursuant to a note purchase agreement, dated May 4, 2016, to an institutional investor in a private placement. On September 30, 2016, the Company entered into an amended and restated note purchase agreement (the "NPA") and issued an additional $40,000 in aggregate principal amount of 2016 Unsecured Notes to institutional investors in a private placement. On June 30, 2017, the Company issued $55,000 in aggregate principal amount of five-year unsecured notes that mature on July 15, 2022 (the "2017A Unsecured Notes"), pursuant to the NPA and a supplement to the NPA. On January 30, 2018, the Company issued $90,000 in aggregate principal amount of five year unsecured notes that mature on January 30, 2023 (the "2018A Unsecured Notes") pursuant to the NPA and a second supplement to the NPA. On July 5, 2018, the Company issued $50,000 in aggregate principal amount of five year unsecured notes that mature on June 28, 2023 (the "2018B Unsecured Notes") pursuant to the NPA and a third supplement to the NPA (the "Third Supplement"). On April 30, 2019, the Company issued $116,500 in aggregate principal amount of five year unsecured notes that mature on April 30, 2024 (the "2019A Unsecured Notes") pursuant to the NPA and a fourth supplement to the NPA. The NPA provides for future issuances of unsecured notes in separate series or tranches.
The 2016 Unsecured Notes bear interest at an annual rate of 5.313%, payable semi-annually on May 15 and November 15 of each year, which commenced on November 15, 2016. The 2017A Unsecured Notes bear interest at an annual rate of 4.760%, payable semi-annually on January 15 and July 15 of each year, which commenced on January 15, 2018. The 2018A Unsecured Notes bear interest at an annual rate of 4.870%, payable semi-annually on February 15 and August 15 of each year, which commenced on August 15, 2018. The 2018B Unsecured Notes bear interest at an annual rate of 5.360%, payable semi-annually on January 15 and July 15 of each year, which commenced on January 15, 2019. The 2019A Unsecured Notes bear interest at an annual rate of 5.494%, payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2019. These interest rates are subject to increase in the event that: (i) subject to certain exceptions, the underlying unsecured notes or the Company ceases to have an investment grade rating or (ii) the aggregate amount of the Company’s unsecured debt falls below $150,000.  In each such event, the Company has the option to offer to prepay the underlying unsecured notes at par, in which case holders of the underlying unsecured notes who accept the offer would not receive the increased interest rate. In addition, the Company is obligated to offer to prepay the underlying unsecured notes at par if the Investment Adviser, or an affiliate thereof, ceases to be the Company’s investment adviser or if certain change in control events occur with respect to the Investment Adviser. 
The NPA contains customary terms and conditions for unsecured notes issued in a private placement, including, without limitation, an option to offer to prepay all or a portion of the unsecured notes under its governance at par (plus a make-whole amount, if applicable), affirmative and negative covenants such as information reporting, maintenance of the Company’s status as a BDC under the 1940 Act and a RIC under the Code, minimum stockholders’ equity, minimum asset coverage ratio, and prohibitions on certain fundamental changes at the Company or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of the Company or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy. The Third Supplement includes additional financial covenants related to asset coverage as well as other terms.
On September 25, 2018, the Company closed a registered public offering of $50,000 in aggregate principal amount of five-year unsecured notes that mature on October 1, 2023 (the "5.75% Unsecured Notes" and together with the 2016 Unsecured Notes, 2017A Unsecured Notes, 2018A Unsecured Notes, 2018B Unsecured Notes and 2019A Unsecured Notes, the "Unsecured Notes") pursuant to an indenture, dated August 20, 2018, as supplemented by a second supplemental indenture

82


thereto, dated September 25, 2018 (together, the "2018B Indenture"). On October 17, 2018, in connection with the registered public offering, the Company issued an additional $1,750 aggregate principal amount of the 5.75% Unsecured Notes pursuant to the exercise of an overallotment option by the underwriters of the 5.75% Unsecured Notes.
The 5.75% Unsecured Notes bear interest at an annual rate of 5.75%, payable quarterly on January 1, April 1, July 1 and October 1 of each year, which commenced on January 1, 2019. The 5.75% Unsecured Notes will mature on October 1, 2023 unless earlier redeemed. The 5.75% Unsecured Notes are listed on the New York Stock Exchange and trade under the trading symbol “NMFX.”
The Company may redeem the 5.75% Unsecured Notes, in whole or in part, at any time, or from time to time, at its option on or after October 1, 2020, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption.
No sinking fund is provided for the 5.75% Unsecured Notes and holders of the 5.75% Unsecured Notes have no option to have their 5.75% Unsecured Notes repaid prior to the stated maturity date.
The 2018B Indenture contains certain covenants, including covenants requiring the Company to (i) comply with the asset coverage requirements set forth in Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a) of the 1940 Act as may be applicable to the Company from time to time or any successor provisions, whether or not the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to the Company by the SEC and (ii) provide certain financial information to the holders of the 5.75% Unsecured Notes and the trustee if the Company ceases to be subject to the reporting requirements of the Exchange Act. The 2018B Indenture also includes additional financial covenants related to asset coverage. These covenants are subject to limitations and exceptions that are described in the 2018B Indenture.
The 2018B Indenture provides for customary events of default and further provides that the trustee or the holders of 25% in aggregate principal amount of the outstanding 5.75% Unsecured Notes may declare such 5.75% Unsecured Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period.
The Unsecured Notes are unsecured obligations and rank senior in right of payment to the Company’s existing and future indebtedness, if any, that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness (including existing unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries and financing vehicles.
The following table summarizes the interest expense and amortization of financing costs incurred on the Unsecured Notes for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Interest expense
$
5,960

 
$
4,360

Amortization of financing costs
$
317

 
$
275

Weighted average interest rate
5.3
%
 
5.3
%
Effective interest rate
5.6
%
 
5.6
%
Average debt outstanding
$
453,250

 
$
336,750

As of March 31, 2020 and December 31, 2019, the outstanding balance on the Unsecured Notes was $453,250 and $453,250, respectively, and the Company was in compliance with the terms of the NPA and the 2018B Indenture as of such dates, as applicable.
SBA-guaranteed debentures—On August 1, 2014 and August 25, 2017, respectively, SBIC I and SBIC II received licenses from the SBA to operate as SBICs.
The SBIC licenses allow SBICs to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse to the Company, interest only debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes

83


with ten year maturities. The SBA, as a creditor, will have a superior claim to the assets of SBIC I and SBIC II over the Company’s stockholders in the event SBIC I and SBIC II are liquidated or the SBA exercises remedies upon an event of default.
The maximum amount of borrowings available under current SBA regulations for a single licensee is $150,000 as long as the licensee has at least $75,000 in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing. In June 2018, legislation amended the 1958 Act by increasing the individual leverage limit from $150,000 to $175,000, subject to SBA approvals.
As of March 31, 2020 and December 31, 2019, SBIC I had regulatory capital of $75,000 and $75,000, respectively, and SBA-guaranteed debentures outstanding of $150,000 and $150,000, respectively. As of March 31, 2020 and December 31, 2019, SBIC II had regulatory capital of $75,000 and $64,500, respectively, and $150,000 and $75,000, respectively, of SBA-guaranteed debentures outstanding. The SBA-guaranteed debentures incur upfront fees of 3.435%, which consists of a 1.00% commitment fee and a 2.435% issuance discount, which are amortized over the life of the SBA-guaranteed debentures.
The following table summarizes the Company’s SBA-guaranteed debentures as of March 31, 2020.
Issuance Date
 
Maturity Date
 
Debenture Amount
 
Interest Rate
 
SBA Annual Charge
Fixed SBA-guaranteed debentures(1):
 
 
 
 

 
 

 
 

March 25, 2015
 
March 1, 2025
 
$
37,500

 
2.517
%
 
0.355
%
September 23, 2015
 
September 1, 2025
 
37,500

 
2.829
%
 
0.355
%
September 23, 2015
 
September 1, 2025
 
28,795

 
2.829
%
 
0.742
%
March 23, 2016
 
March 1, 2026
 
13,950

 
2.507
%
 
0.742
%
September 21, 2016
 
September 1, 2026
 
4,000

 
2.051
%
 
0.742
%
September 20, 2017
 
September 1, 2027
 
13,000

 
2.518
%
 
0.742
%
March 21, 2018
 
March 1, 2028
 
15,255

 
3.187
%
 
0.742
%
Fixed SBA-guaranteed debentures(2):
 

 


 


 


September 19, 2018
 
September 1, 2028
 
15,000

 
3.548
%
 
0.222
%
September 25, 2019
 
September 1, 2029
 
19,000

 
2.283
%
 
0.222
%
March 25, 2020
 
March 1, 2030
 
24,000

 
2.078
%
 
0.222
%
March 25, 2020
 
March 1, 2030
 
17,000

 
2.078
%
 
0.222
%
March 25, 2020
 
March 1, 2030
 
24,000

 
2.078
%
 
0.275
%
Interim SBA-guaranteed debentures(2):
 
 
 
 
 
 
 
 
 
 
September 1, 2030 (3)
 
30,000

 
1.279
%
 
0.275
%
 
 
September 1, 2030 (3)
 
21,000

 
1.393
%
 
0.275
%
Total SBA-guaranteed debentures
 
 
 
$
300,000

 
 

 
 

 
(1)
SBA-guaranteed debentures are held in SBIC I.
(2)
SBA-guaranteed debentures are held in SBIC II.
(3)
Estimated maturity date as interim SBA-debentures are expected to pool in September 2020.
Prior to pooling, the SBA-guaranteed debentures bear interest at an interim floating rate of LIBOR plus 0.30%. Once pooled, which occurs in March and September each year, the SBA-guaranteed debentures bear interest at a fixed rate that is set to the current 10-year treasury rate plus a spread at each pooling date.

84


The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Interest expense
$
1,823

 
$
1,345

Amortization of financing costs
$
202

 
$
136

Weighted average interest rate
3.0
%
 
3.3
%
Effective interest rate
3.4
%
 
3.6
%
Average debt outstanding
$
243,099

 
$
165,000

The SBIC program is designed to stimulate the flow of private investor capital into eligible smaller businesses, as defined by the SBA. Under SBA regulations, SBICs are subject to regulatory requirements, including making investments in SBA-eligible businesses, investing at least 25.0% of its investment capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, regulating the types of financing, prohibiting investments in smaller businesses with certain characteristics or in certain industries and requiring capitalization thresholds that limit distributions to the Company. SBICs are subject to an annual periodic examination by an SBA examiner to determine the SBIC’s compliance with the relevant SBA regulations and an annual financial audit of its financial statements that are prepared on a basis of accounting other than GAAP (such as ASC 820) by an independent auditor. As of March 31, 2020 and December 31, 2019, SBIC I and SBIC II were in compliance with SBA regulatory requirements.
Leverage risk factors—The Company utilizes and may utilize leverage to the maximum extent permitted by the law for investment and other general business purposes. The Company's lenders will have fixed dollar claims on certain assets that are superior to the claims of the Company's common stockholders, and the Company would expect such lenders to seek recovery against these assets in the event of a default. The use of leverage also magnifies the potential for gain or loss on amounts invested. Leverage may magnify interest rate risk (particularly on the Company's fixed-rate investments), which is the risk that the prices of portfolio investments will fall or rise if market interest rates for those types of securities rise or fall. As a result, leverage may cause greater changes in the Company's net asset value. Similarly, leverage may cause a sharper decline in the Company's income than if the Company had not borrowed. Such a decline could negatively affect the Company's ability to make distributions to its stockholders. Leverage is generally considered a speculative investment technique. The Company's ability to service any debt incurred will depend largely on financial performance and will be subject to prevailing economic conditions and competitive pressures.
Note 8. Regulation
The Company has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a RIC under Subchapter M of the Code. In order to continue to qualify and be subject to tax as a RIC, among other things, the Company is required to timely distribute to its stockholders at least 90.0% of investment company taxable income, as defined by the Code, for each year. The Company, among other things, intends to make and will continue to make the requisite distributions to its stockholders, which will generally relieve the Company from U.S. federal, state, and local income taxes (excluding excise taxes which may be imposed under the Code).
Additionally, as a BDC, the Company must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70.0% of its total assets are qualifying assets (with certain limited exceptions). In addition, the Company must offer to make available to all eligible portfolio companies managerial assistance.
Note 9. Commitments and Contingencies
In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company may also enter into future funding commitments such as revolving credit facilities, bridge financing commitments or delayed draw commitments. As of March 31, 2020, the Company had unfunded commitments on revolving credit facilities of $47,891, no outstanding bridge financing commitments and other future funding commitments of $103,029. As of December 31, 2019, the Company had unfunded commitments on revolving credit facilities of $66,061, no outstanding bridge financing commitments and other future funding commitments of $137,781. The unfunded commitments on revolving credit facilities and delayed draws are disclosed on the Company’s Consolidated Schedule of Investments.
The Company also has revolving borrowings available under the Holdings Credit Facility, the DB Credit Facility and the NMNLC Credit Facility as of March 31, 2020 and December 31, 2019. See Note 7. Borrowings, for details.

85


The Company may from time to time enter into financing commitment letters. As of March 31, 2020 and December 31, 2019, the Company had commitment letters to purchase investments in the aggregate par amount of $0 and $34,248, respectively, which could require funding in the future.
As of March 31, 2020, the Company had unfunded commitments related to an equity investment in SLP III of $10,000, which may be funded at the Company's discretion.
COVID-19 Developments
On March 11, 2020 the World Health Organization declared the novel strain of COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. As of the three months ended March 31, 2020 and subsequent to March 31, 2020, COVID-19 has had a significant impact on the U.S. economy and the Company. The Company has experienced a significant reduction in its net asset value as of March 31, 2020 as compared to its net asset value as of December 31, 2019, due to an increase in unrealized depreciation of its investment portfolio resulting from decreases in fair value of investments. These decreases were attributable to the impact of the COVID-19 pandemic on the markets.
The extent of the impact of the COVID-19 outbreak on the financial performance of our current and future investments will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions and the impact of COVID-19 on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. To the extent the Company’s portfolio companies are adversely impacted by the effects of the COVID-19 pandemic, the Company may experience a material adverse impact on the its future net investment income, the fair value of its portfolio investments, its financial condition and the results of operations and financial condition of its portfolio companies.
Note 10. Net Assets
The table below illustrates the effect of certain transactions on the net asset accounts of the Company during the three months ended March 31, 2020:
 
 
 
 
 
 
 
Accumulated Overdistributed Earnings
 
 
 
 
 
 
 
Common Stock
 
Paid in
Capital in
Excess
 
Accumulated
Net Investment
 
Accumulated 
Net Realized 
(Losses) 
 
Net 
Unrealized
Appreciation
 
 
 
Non-
Controlling
Interest in
 
Total
 
Shares
 
Par Amount
 
of Par
 
Income
 
Gains
 
(Depreciation)
 
Total
 
NMNLC
 
Net Assets
Net assets at December 31, 2019
96,827,342

 
$
968

 
$
1,287,853

 
$
91,333

 
$
(85,448
)
 
$
(11,238
)
 
$
1,283,468

 
$

 
$
1,283,468

Distributions declared

 

 

 
(32,921
)
 

 

 
(32,921
)
 

 
(32,921
)
Purchase of non-controlling interest in NMNLC

 

 

 

 

 

 

 
11,315

 
11,315

Net increase (decrease) in net assets resulting from operations

 

 

 
31,305

 
114

 
(203,776
)
 
(172,357
)
 
(65
)
 
(172,422
)
Net assets at March 31, 2020
96,827,342

 
$
968

 
$
1,287,853

 
$
89,717

 
$
(85,334
)
 
$
(215,014
)
 
$
1,078,190

 
$
11,250

 
$
1,089,440

The table below illustrates the effect of certain transactions on the net asset accounts of the Company during the three months ended March 31, 2019:
 
 
 
 
 
 
 
Accumulated Overdistributed Earnings
 
 
 
Common Stock
 
Paid in
Capital in
 
Accumulated
Net Investment
 
Accumulated Net Realized 
 
Net 
Unrealized
Appreciation
 
Total
 
Shares
 
Par Amount
 
Excess of Par
 
Income
 
(Losses) Gains
 
(Depreciation)
 
Net Assets
Net assets at December 31, 2018
76,106,372

 
$
761

 
$
1,035,629

 
$
61,975

 
$
(86,338
)
 
$
(5,758
)
 
$
1,006,269

Issuances of common stock
4,413,058

 
44

 
60,617

 

 

 

 
60,661

Deferred offering costs

 

 
(229
)
 

 

 

 
(229
)
Distributions declared

 

 

 
(27,342
)
 

 

 
(27,342
)
Net increase (decrease) in net assets resulting from operations

 

 

 
27,450

 
46

 
16,424

 
43,920

Net assets at March 31, 2019
80,519,430

 
$
805

 
$
1,096,017

 
$
62,083

 
$
(86,292
)
 
$
10,666

 
$
1,083,279


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Note 11. Earnings Per Share
The following information sets forth the computation of basic and diluted net increase (decrease) in the Company’s net assets per share resulting from operations for the three months ended March 31, 2020 and March 31, 2019:
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Earnings per share—basic
 

 
 

Numerator for basic earnings per share:
$
(172,357
)
 
$
43,920

Denominator for basic weighted average share:
96,827,342

 
78,457,641

Basic earnings per share:
$
(1.78
)
 
$
0.56

Earnings per share—diluted(1)
 

 
 

Numerator for increase in net assets per share
$
(172,357
)
 
$
43,920

Adjustment for interest on Convertible Notes and incentive fees, net
2,314

 
2,875

Numerator for diluted earnings per share:
$
(170,043
)
 
$
46,795

Denominator for basic weighted average share
96,827,342

 
78,457,641

Adjustment for dilutive effect of Convertible Notes
13,257,585

 
17,399,889

Denominator for diluted weighted average share
110,084,927

 
95,857,530

Diluted earnings per share
$
(1.78
)
 
$
0.49

 
(1)
In applying the if-converted method, conversion is not assumed for purposes of computing diluted earnings per share if the effect would be anti-dilutive. For the three months ended March 31, 2020 there was anti-dilution. For the three months ended March 31, 2019, there was no anti-dilution.

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Note 12. Financial Highlights
The following information sets forth the Company's financial highlights for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
 
March 31, 2020
 
March 31, 2019
Per share data(1):
 

 
 

Net asset value, January 1, 2020 and January 1, 2019, respectively
$
13.26

 
$
13.22

Net investment income
0.32

 
0.35

Net realized and unrealized gains (losses)(2)
(2.10
)
 
0.22

Total net (decrease) increase
(1.78
)
 
0.57

Distributions declared to stockholders from net investment income
(0.34
)
 
(0.34
)
Net asset value, March 31, 2020 and March 31, 2019, respectively
$
11.14

 
$
13.45

Per share market value, March 31, 2020 and March 31, 2019, respectively
$
6.80

 
$
13.57

Total return based on market value(3)
(48.02
)%
 
10.57
%
Total return based on net asset value(4)
(13.46
)%
 
4.34
%
Shares outstanding at end of period
96,827,342

 
80,519,430

Average weighted shares outstanding for the period
96,827,342

 
78,457,641

Average net assets for the period
$
1,281,212

 
$
1,082,424

Ratio to average net assets:
 

 
 

Net investment income
9.83
 %
 
10.28
%
Total expenses, before waivers/reimbursements
14.54
 %
 
14.71
%
Total expenses, net of waivers/reimbursements
13.43
 %
 
13.77
%
Average debt outstanding—Holdings Credit Facility
$
629,542

 
$
566,338

Average debt outstanding—Unsecured Notes
453,250

 
336,750

Average debt outstanding—SBA-guaranteed debentures
243,099

 
165,000

Average debt outstanding—DB Credit Facility
235,055

 
38,456

Average debt outstanding—Convertible Notes
201,250

 
270,250

Average debt outstanding—NMFC Credit Facility
188,500

 
81,500

Asset coverage ratio(5)
164.08
 %
 
179.71
%
Portfolio turnover
5.66
 %
 
0.23
%
 
(1)
Per share data is based on weighted average shares outstanding for the respective period (except for distributions declared to stockholders, which is based on actual rate per share).
(2)
Includes the accretive effect of common stock issuances per share, which for the three months ended March 31, 2020 and March 31, 2019 were $0.00 and $0.01, respectively.
(3)
Total return is calculated assuming a purchase of common stock at the opening of the first day of the year and a sale on the closing of the last business day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at prices obtained under the Company’s dividend reinvestment plan.
(4)
Total return is calculated assuming a purchase at net asset value on the opening of the first day of the year and a sale at net asset value on the last day of the period. Dividends and distributions, if any, are assumed for purposes of this calculation, to be reinvested at the net asset value on the last day of the respective quarter.
(5)
On November 5, 2014, the Company received exemptive relief from the SEC allowing the Company to modify the asset coverage requirement to exclude the SBA-guaranteed debentures from this calculation.

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Note 13. Recent Accounting Standards Updates
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the impact of the optional guidance on the Company's consolidated financial statements and disclosures. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the quarter ended March 31, 2020.
Note 14. Subsequent Events
    
On April 29, 2020, the Company’s board of directors declared a second quarter 2020 distribution of $0.30 per share payable on June 30, 2020 to holders of record as of June 16, 2020.

On May 4, 2020, the Company entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30,000 to $50,000.

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image0a01.jpg
 
Deloitte & Touche LLP
 
30 Rockefeller Plaza
New York, NY 10112
USA
 
Tel:    212 492 4000
Fax:   212 489 1687
www.deloitte.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of New Mountain Finance Corporation
Results of Review of Interim Financial Information
We have reviewed the accompanying consolidated statement of assets and liabilities of New Mountain Finance Corporation and subsidiaries (the “Company”) including the consolidated schedule of investments, as of March 31, 2020, and the related consolidated statements of operations, changes in net assets, and cash flows for the three-month periods ended March 31, 2020 and 2019, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities of the Company, including the consolidated schedule of investments, as of December 31, 2019, and the related consolidated statements of operations, changes in net assets and cash flows for the year then ended (not presented herein); and in our report dated February 26, 2020, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities from which it has been derived.
Basis for Review Results
This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ DELOITTE & TOUCHE LLP
May 6, 2020







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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The information in management's discussion and analysis of financial condition and results of operations relates to New Mountain Finance Corporation, including its wholly-owned direct and indirect subsidiaries (collectively, "we", "us", "our", "NMFC" or the "Company").
Forward-Looking Statements
The information contained in this section should be read in conjunction with the financial data and consolidated financial statements and notes thereto appearing elsewhere in this report. Some of the statements in this report (including in the following discussion) constitute forward-looking statements, which relate to future events or our future performance or our financial condition. The forward-looking statements contained in this section involve a number of risks and uncertainties, including:
statements concerning the impact of a protracted decline in the liquidity of credit markets;
the general economy, including the impact of interest and inflation rates, and the COVID-19 pandemic on the industries in which we invest;
our future operating results, our business prospects, the adequacy of our cash resources and working capital, and the impact of the COVID-19 pandemic thereon;
the ability of our portfolio companies to achieve their objectives and the impact of COVID-19 pandemic thereon;
our ability to make investments consistent with our investment objectives, including with respect to the size, nature and terms of our investments;
the ability of New Mountain Finance Advisers BDC, L.L.C. (the "Investment Adviser") or its affiliates to attract and retain highly talented professionals;
actual and potential conflicts of interest with the Investment Adviser and New Mountain Capital Group, L.P. (together with New Mountain Capital, L.L.C. and its affiliates, "New Mountain Capital") whose ultimate owners include Steven B. Klinsky and related and other vehicles; and
the risk factors set forth in Item 1A.—Risk Factors contained in our annual report on Form 10-K for the year ended December 31, 2019 and in this quarterly report on Form 10-Q.
Forward-looking statements are identified by their use of such terms and phrases such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “project”, “seek”, “should”, “target”, “will”, “would” or similar expressions. Actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth in Item 1A.—Risk Factors contained in our annual report on Form 10-K for the year ended December 31, 2019 and in this quarterly report on Form 10-Q.
We have based the forward-looking statements included in this report on information available to us on the date of this report. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Although we undertake no obligation to revise or update any forward-looking statements, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the United States Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, registration statements on Form N-2, quarterly reports on Form 10-Q and current reports on Form 8-K.
Overview
We are a Delaware corporation that was originally incorporated on June 29, 2010 and completed our initial public offering ("IPO") on May 19, 2011. We are a closed-end, non-diversified management investment company that has elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). We have elected to be treated, and intend to comply with the requirements to continue to qualify annually, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). NMFC is also registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). Since our IPO, and through March 31, 2020, we raised approximately $893.2 million in net proceeds from additional offerings of our common stock.
The Investment Adviser is a wholly-owned subsidiary of New Mountain Capital. New Mountain Capital is a firm with a track record of investing in the middle market. New Mountain Capital focuses on investing in defensive growth companies across its private equity, public equity and credit investment vehicles. The Investment Adviser manages our day-to-day operations and provides us with investment advisory and management services. The Investment Adviser also manages other

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funds that may have investment mandates that are similar, in whole or in part, to ours. New Mountain Finance Administration, L.L.C. (the "Administrator”), a wholly-owned subsidiary of New Mountain Capital, provides the administrative services necessary to conduct our day-to-day operations.
We have established the following wholly-owned direct and indirect subsidiaries:
New Mountain Finance Holdings, L.L.C. ("NMF Holdings" or the "Predecessor Operating Company") and New Mountain Finance DB, L.L.C. ("NMFDB"), whose assets are used secure NMF Holdings’ credit facility and NMFDB’s credit facility, respectively;
New Mountain Finance SBIC, L.P. ("SBIC I")  and New Mountain Finance SBIC II, L.P. ("SBIC II"), who have received licenses from the United States ("U.S.") Small Business Administration ("SBA") to operate as small business investment companies ("SBICs") under Section 301(c) of the Small Business Investment Act of 1958, as amended (the "1958 Act") and their general partners, New Mountain Finance SBIC G.P., L.L.C. ("SBIC I GP") and New Mountain Finance SBIC II G.P., L.L.C. ("SBIC II GP"), respectively;
NMF Ancora Holdings Inc. ("NMF Ancora"), NMF QID Holdings, Inc. ("NMF QID") and NMF YP Holdings Inc. ("NMF YP"), which serve as tax blocker corporations by holding equity or equity-like investments in portfolio companies organized as limited liability companies (or other forms of pass-through entities); we consolidate our tax blocker corporations for accounting purposes but the tax blocker corporations are not consolidated for income tax purposes and may incur income tax expense as a result of their ownership of the portfolio companies; and
New Mountain Finance Servicing, L.L.C. ("NMF Servicing"), which serves as the administrative agent on certain investment transactions.
New Mountain Net Lease Corporation ("NMNLC") is a majority-owned consolidated subsidiary of ours, which acquires commercial real estate properties that are subject to ‘‘triple net’’ leases has elected to be treated, and intends to comply with the requirements to continue to qualify annually, as a real estate investment trust, or REIT, within the meaning of Section 856(a) of the Code;
Our investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. The first lien debt may include traditional first lien senior secured loans or unitranche loans. Unitranche loans combine characteristics of traditional first lien senior secured loans as well as second lien and subordinated loans. Unitranche loans will expose us to the risks associated with second lien and subordinated loans to the extent we invest in the “last out” tranche. In some cases, our investments may also include equity interests.
Our primary focus is in the debt of defensive growth companies, which are defined as generally exhibiting the following characteristics: (i) sustainable secular growth drivers, (ii) high barriers to competitive entry, (iii) high free cash flow after capital expenditure and working capital needs, (iv) high returns on assets and (v) niche market dominance. Similar to us, SBIC I's and SBIC II's investment objectives are to generate current income and capital appreciation under our investment criteria. However, SBIC I's and SBIC II's investments must be in SBA eligible small businesses. Our portfolio may be concentrated in a limited number of industries. As of March 31, 2020, our top five industry concentrations were software, business services, healthcare services, education and investment funds (which includes our investments in our joint ventures).
As of March 31, 2020, our net asset value was approximately $1,078.2 million and our portfolio had a fair value of approximately $2,991.3 million in 114 portfolio companies, with a weighted average yield to maturity at cost for income producing investments ("YTM at Cost") of approximately 8.5% and a weighted average yield to maturity at cost for all investments ("YTM at Cost for Investments") of approximately 8.2%. The YTM at Cost calculation assumes that all investments, including secured collateralized agreements, not on non-accrual are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. The YTM at Cost for Investments calculation assumes that all investments, including secured collateralized agreements, are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity. YTM at Cost and YTM at Cost for Investments calculations exclude the impact of existing leverage. YTM at Cost and YTM at Cost for Investments use the London Interbank Offered Rate ("LIBOR") curves at each quarter's end date. The actual yield to maturity may be higher or lower due to the future selection of the LIBOR contracts by the individual companies in our portfolio or other factors.
Recent Developments
On April 29, 2020, our board of directors declared a second quarter 2020 distribution of $0.30 per share payable on June 30, 2020 to holders of record as of June 16, 2020.

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On May 4, 2020, we entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30.0 million to $50.0 million.

COVID-19 Developments

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. The COVID-19 pandemic has had a significant impact on the U.S. economy. The extent of the impact of the COVID-19 outbreak on the financial performance of our current and future investments will depend on future developments, including the duration and spread of the virus, related advisories and restrictions, and the health of the financial markets and economy as a result of COVID-19, all of which are highly uncertain and cannot be predicted. To the extent our portfolio companies are adversely impacted by the effects of the COVID-19 pandemic, we may have a material adverse impact on our future net investment income, the fair value of our portfolio investments, our financial condition and results of operations and the financial condition of our portfolio companies.

An increase in unrealized depreciation of our investment portfolio due to decreases in fair value of investments attributable to the COVID-19 pandemic has resulted in a significant reduction in our net asset value as of March 31, 2020, as compared to our net asset value as of December 31, 2019. As of March 31, 2020, we are in compliance with our asset coverage requirements under the 1940 Act. In addition, we are not in default of any of the asset coverage requirements under any of our credit facilities as of March 31, 2020. However, any continued increase in unrealized depreciation of our investment portfolio or further significant reductions in our net asset value, as a result of the effects of the COVID-19 pandemic or otherwise, increases the risk of breaching the relevant covenants. For additional discussion on the impact of COVID-19 on our portfolio companies, see “Monitoring of Portfolio Investments”.

We will continue to monitor the rapidly evolving situation surrounding the COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health authorities, and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our plan of operation. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impact of COVID-19 on our financial condition, results of operations or cash flows in the future.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of 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. We have identified the following items as critical accounting policies.
Basis of Accounting
We consolidate our wholly-owned direct and indirect subsidiaries: NMF Holdings, NMF Servicing, NMFDB, SBIC I, SBIC I GP, SBIC II, SBIC II GP, NMF Ancora, NMF QID and NMF YP and our majority-owned consolidated subsidiary, NMNLC. We are an investment company following accounting and reporting guidance as described in Accounting Standards Codification Topic 946, Financial Services—Investment Companies, ("ASC 946").
Valuation and Leveling of Portfolio Investments
At all times consistent with GAAP and the 1940 Act, we conduct a valuation of assets, which impacts our net asset value.
We value our assets on a quarterly basis, or more frequently if required under the 1940 Act. In all cases, our board of directors is ultimately and solely responsible for determining the fair value of our portfolio investments on a quarterly basis in good faith, including investments that are not publicly traded, those whose market prices are not readily available and any other situation where our portfolio investments require a fair value determination. Security transactions are accounted for on a trade date basis. Our quarterly valuation procedures are set forth in more detail below:
(1)
Investments for which market quotations are readily available on an exchange are valued at such market quotations based on the closing price indicated from independent pricing services.
(2)
Investments for which indicative prices are obtained from various pricing services and/or brokers or dealers are valued through a multi-step valuation process, as described below, to determine whether the quote(s) obtained is representative of fair value in accordance with GAAP.

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a.
Bond quotes are obtained through independent pricing services. Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used. If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below); and
b.
For investments other than bonds, we look at the number of quotes readily available and perform the following procedures:
i.
Investments for which two or more quotes are received from a pricing service are valued using the mean of the mean of the bid and ask of the quotes obtained. We will evaluate the reasonableness of the quote, and if the quote is determined to not be representative of fair value, we will use one or more of the methodologies outlined below to determine fair value;
ii.
Investments for which one quote is received from a pricing service are validated internally. The investment professionals of the Investment Adviser analyze the market quotes obtained using an array of valuation methods (further described below) to validate the fair value. If the Investment Adviser is unable to sufficiently validate the quote internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below).
(3)
Investments for which quotations are not readily available through exchanges, pricing services, brokers, or dealers are valued through a multi-step valuation process:
a.
Each portfolio company or investment is initially valued by the investment professionals of the Investment Adviser responsible for the credit monitoring;
b.
Preliminary valuation conclusions will then be documented and discussed with our senior management;
c.
If an investment falls into (3) above for four consecutive quarters and if the investment's par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our board of directors; and
d.
When deemed appropriate by our management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser. The investment professionals of the Investment Adviser will review and validate the value provided.
For investments in revolving credit facilities and delayed draw commitments, the cost basis of the funded investments purchased is offset by any costs/netbacks received for any unfunded portion on the total balance committed. The fair value is also adjusted for the price appreciation or depreciation on the unfunded portion. As a result, the purchase of a commitment not completely funded may result in a negative fair value until it is called and funded.
The values assigned to investments are based upon available information and do not necessarily represent amounts which might ultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until the individual positions are liquidated. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period and the fluctuations could be material.
GAAP fair value measurement guidance classifies the inputs used in measuring fair value into three levels as follows:
Level I—Quoted prices (unadjusted) are available in active markets for identical investments and we have the ability to access such quotes as of the reporting date. The type of investments which would generally be included in Level I include active exchange-traded equity securities and exchange-traded derivatives. As required by Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), we, to the extent that we hold such investments, do not adjust the quoted price for these investments, even in situations where we hold a large position and a sale could reasonably impact the quoted price.
Level II—Pricing inputs are observable for the investments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level I. Level II inputs include the following:
Quoted prices for similar assets or liabilities in active markets;

94


Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds, which trade infrequently);
Pricing models whose inputs are observable for substantially the full term of the asset or liability (examples include most over-the-counter derivatives, including foreign exchange forward contracts); 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 asset or liability.
Level III—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment.
The inputs used to measure fair value may fall into different levels. In all instances when the inputs fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level of input that is significant to the fair value measurement in its entirety. As such, a Level III fair value measurement may include inputs that are both observable and unobservable. Gains and losses for such assets categorized within the Level III table below may include changes in fair value that are attributable to both observable inputs and unobservable inputs.
The inputs into the determination of fair value require significant judgment or estimation by management and consideration of factors specific to each investment. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in the transfer of certain investments within the fair value hierarchy from period to period.
The following table summarizes the levels in the fair value hierarchy that our portfolio investments fall into as of March 31, 2020:
(in thousands)
 
Total
 
Level I
 
Level II
 
Level III
First lien
 
$
1,789,750

 
$

 
$
50,695

 
$
1,739,055

Second lien
 
696,740

 

 
67,542

 
629,198

Subordinated
 
46,983

 

 
4,931

 
42,052

Equity and other
 
457,844

 

 

 
457,844

Total investments
 
$
2,991,317

 
$

 
$
123,168

 
$
2,868,149

We generally use the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs. We typically determine the fair value of our performing debt investments utilizing an income approach. Additional consideration is given using a market based approach, as well as reviewing the overall underlying portfolio company's performance and associated financial risks. The following outlines additional details on the approaches considered:
Company Performance, Financial Review, and Analysis:  Prior to investment, as part of our due diligence process, we evaluate the overall performance and financial stability of the portfolio company. Post investment, we analyze each portfolio company's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") growth, margin trends, liquidity position, covenant compliance and changes to its capital structure. We also attempt to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of our original investment thesis. This analysis is specific to each portfolio company. We leverage the knowledge gained from our original due diligence process, augmented by this subsequent monitoring, to continually refine our outlook for each of our portfolio companies and ultimately form the valuation of our investment in each portfolio company. When an external event such as a purchase transaction, public offering or subsequent sale occurs, we will consider the pricing indicated by the external event to corroborate the private valuation.
For debt investments, we may employ the Market Based Approach (as described below) to assess the total enterprise value of the portfolio company, in order to evaluate the enterprise value coverage of our debt investment. For equity investments or in cases where the Market Based Approach implies a lack of enterprise value coverage for the debt investment, we may additionally employ a discounted cash flow analysis based on the free cash flows of the portfolio company to assess the total enterprise value. After enterprise value coverage is demonstrated for our debt investments through the method(s) above, the Income Based Approach (as described below) may be employed to estimate the fair value of the investment.
Market Based Approach:  We may estimate the total enterprise value of each portfolio company by utilizing market value cash flow (EBITDA) multiples of publicly traded comparable companies and comparable transactions. We consider numerous factors when selecting the appropriate companies whose trading multiples are used to value our portfolio companies.

95


These factors include, but are not limited to, the type of organization, similarity to the business being valued, and relevant risk factors, as well as size, profitability and growth expectations. We may apply an average of various relevant comparable company EBITDA multiples to the portfolio company's latest twelve month ("LTM") EBITDA or projected EBITDA to calculate the enterprise value of the portfolio company. Significant increases or decreases in the EBITDA multiple will result in an increase or decrease in enterprise value, which may result in an increase or decrease in the fair value estimate of the investment. In applying the market based approach as of March 31, 2020, we used the relevant EBITDA multiple ranges set forth in the table below to determine the enterprise value of our portfolio companies. We believe these were reasonable ranges in light of current comparable company trading levels and the specific portfolio companies involved.
Income Based Approach:  We also may use a discounted cash flow analysis to estimate the fair value of the investment. Projected cash flows represent the relevant security's contractual interest, fee and principal payments plus the assumption of full principal recovery at the investment's expected maturity date. These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach and a comparable investment approach. The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date. The comparable investment approach utilizes an average yield-to maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate. Significant increases or decreases in the discount rate would result in a decrease or increase in the fair value measurement. In applying the income based approach as of March 31, 2020, we used the discount ranges set forth in the table below to value investments in our portfolio companies.
The unobservable inputs used in the fair value measurement of our Level III investments as of March 31, 2020 were as follows:
(in thousands)
 
 
 
 
 
 
Range
 
Type
Fair Value as of March 31, 2020
 
Approach
 
Unobservable Input
 
Low
 
High
 
Weighted
Average
 
First lien
$
1,664,385

 
Market & income approach
 
EBITDA multiple
 
2.0x

 
31.5x

 
11.4x

 
 
 
 
 
 
Revenue multiple
 
3.5x

 
11.0x

 
6.9x

 
 
 

 
 
 
Discount rate
 
5.3
%
 
21.7
%
 
10.1
%
 
 
34,359

 
Market quote
 
Broker quote
 
N/A

 
N/A

 
N/A

 
 
40,311

 
Other
 
N/A(1)
 
N/A

 
N/A

 
N/A

 
Second lien
629,198

 
Market & income approach
 
EBITDA multiple
 
4.3x

 
32.0x

 
9.0x

 
 
 
 
 
 
Revenue multiple
 
0.3x

 
0.4x

 
0.4x

 
 
 

 
 
 
Discount rate
 
8.9
%
 
24.7
%
 
12.1
%
 
Subordinated
42,052

 
Market & income approach
 
EBITDA multiple
 
3.8x

 
15.0x

 
11.0x

 
 
 

 
 
 
Discount rate
 
15.8
%
 
42.9
%
 
26.0
%
 
Equity and other
456,905

 
Market & income approach
 
EBITDA multiple
 
4.5x

 
19.5x

 
11.9x

 
 
 
 
 
 
Revenue multiple
 
0.3x

 
0.4x

 
0.4x

 
 
 

 
 
 
Discount rate
 
6.4
%
 
44.3
%
 
15.1
%
 
 
781

 
Black Scholes analysis
 
Expected life in years
 
6.0

 
6.0

 
6.0

 
 
 

 
 
 
Volatility
 
56.8
%
 
56.8
%
 
56.8
%
 
 
 

 
 
 
Discount rate
 
2.4
%
 
2.4
%
 
2.4
%
 
 
158

 
Other
 
N/A(1)
 
N/A

 
N/A

 
N/A

 
 
$
2,868,149

 
 
 
 
 
 

 
 

 
 

 
 
 
(1)
Fair value was determined based on transaction pricing or recent acquisition or sale as the best measure of fair value with no material changes in operations of the related portfolio company since the transaction date.
NMFC Senior Loan Program I LLC
NMFC Senior Loan Program I LLC ("SLP I") was formed as a Delaware limited liability company on May 27, 2014 and commenced operations on June 10, 2014. SLP I is a portfolio company held by us. SLP I is structured as a private investment fund, in which all of the investors are qualified purchasers, as such term is defined under the 1940 Act. Transfer of interests in SLP I is subject to restrictions and, as a result, such interests are not readily marketable. SLP I operates under a limited liability company agreement (the "SLP I Agreement") and will continue in existence until August 31, 2022, subject to

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earlier termination pursuant to certain terms of the SLP I Agreement. The term may be extended pursuant to certain terms of the SLP I Agreement. SLP I's re-investment period is currently until August 31, 2020. SLP I invests in senior secured loans issued by companies within our core industry verticals. These investments are typically broadly syndicated first lien loans.
SLP I is capitalized with $93.0 million of capital commitments and $265.0 million of debt from a revolving credit facility and is managed by us. Our capital commitment is $23.0 million, representing less than 25.0% ownership, with third party investors representing the remaining capital commitments. As of March 31, 2020, SLP I had total investments with an aggregate fair value of approximately $272.9 million, debt outstanding of $228.0 million and capital that had been called and funded of $93.0 million. As of December 31, 2019, SLP I had total investments with an aggregate fair value of approximately $313.7 million, debt outstanding of $227.4 million and capital that had been called and funded of $93.0 million. Our investment in SLP I is disclosed on our Consolidated Schedule of Investments as of March 31, 2020 and December 31, 2019.
We, as an investment adviser registered under the Advisers Act, act as the collateral manager to SLP I and are entitled to receive a management fee for our investment management services provided to SLP I. As a result, SLP I is classified as our affiliate. No management fee is charged on our investment in SLP I in connection with the administrative services provided to SLP I. For the three months ended March 31, 2020 and March 31, 2019, we earned approximately $0.3 million and $0.3 million, respectively, in management fees related to SLP I, which is included in other income. As of March 31, 2020 and December 31, 2019, approximately $0.5 million and $0.3 million, respectively, of management fees related to SLP I was included in receivable from affiliates. For the three months ended March 31, 2020 and March 31, 2019, we earned approximately $0.7 million and $0.7 million, respectively, of dividend income related to SLP I, which is included in dividend income. As of March 31, 2020 and December 31, 2019, approximately $0.8 million and $0.7 million, respectively, of dividend income related to SLP I was included in interest and dividend receivable.
NMFC Senior Loan Program II LLC
NMFC Senior Loan Program II LLC ("SLP II") was formed as a Delaware limited liability company on March 9, 2016 and commenced operations on April 12, 2016. SLP II is structured as a private joint venture investment fund between us and SkyKnight Income, LLC (“SkyKnight”) and operates under a limited liability company agreement (the "SLP II Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP II, which has equal representation from us and SkyKnight. SLP II's investment period is currently until April 12, 2020 and SLP II will continue in existence until April 12, 2022. The term may be extended for up to one year pursuant to certain terms of the SLP II Agreement.
SLP II is capitalized with equity contributions which were called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP II to call down on capital commitments requires approval by the board of managers of SLP II. As of March 31, 2020, we and SkyKnight have committed and contributed $79.4 million and $20.1 million, respectively, of equity to SLP II. Our investment in SLP II is disclosed on our Consolidated Schedule of Investments as of March 31, 2020 and December 31, 2019.
On April 12, 2016, SLP II entered into its $275.0 million revolving credit facility with Wells Fargo Bank, National Association, which matures on April 12, 2022 and bears interest at a rate of the LIBOR plus 1.60% per annum. As of March 31, 2020 and December 31, 2019, SLP II had total investments with an aggregate fair value of approximately $291.8 million and $340.0 million, respectively, and debt outstanding under its credit facility of $236.8 million and $246.9 million, respectively. As of March 31, 2020 and December 31, 2019, none of SLP II's investments were on non-accrual. Additionally, as of March 31, 2020 and December 31, 2019, SLP II had unfunded commitments in the form of delayed draws of $1.3 million and $3.2 million, respectively. Below is a summary of SLP II's portfolio, along with a listing of the individual investments in SLP II's portfolio as of March 31, 2020 and December 31, 2019:
(in thousands)
 
March 31, 2020
 
December 31, 2019
First lien investments (1)
 
$
335,833

 
351,160

Weighted average interest rate on first lien investments (2)
 
5.74
%
 
6.29
%
Number of portfolio companies in SLP II
 
36

 
37

Largest portfolio company investment (1)
 
$
17,411

 
17,456

Total of five largest portfolio company investments (1)
 
$
78,467

 
78,932

 
(1)
Reflects principal amount or par value of investments.
(2)
Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.


97


The following table is a listing of the individual investments in SLP II's portfolio as of March 31, 2020:
Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Funded Investments - First lien:
 
 
 
 
 
 
 
(in thousands)
 
(in thousands)
 
(in thousands)
Access CIG, LLC
 
Business Services
 
 5.53% (L + 3.75%)
 
2/27/2025
 
$
4,649

 
$
4,631

 
$
3,835

ADG, LLC
 
Healthcare Services
 
 7.17% (L + 4.75% + 0.50% PIK)
 
9/28/2023
 
16,185

 
16,096

 
13,328

Advisor Group Holdings, Inc.
 
Consumer Services
 
 5.99% (L + 5.00%)
 
7/31/2026
 
4,988

 
4,941

 
3,840

Bearcat Buyer, Inc.
 
Healthcare Services
 
 5.70% (L + 4.25%)
 
7/9/2026
 
90

 
90

 
86

Bearcat Buyer, Inc.
 
Healthcare Services
 
 5.70% (L + 4.25%)
 
7/9/2026
 
1,375

 
1,369

 
1,318

Bleriot US Bidco Inc.
 
Federal Services
 
 7.00% (P + 3.75%)
 
10/31/2026
 
1,351

 
1,338

 
1,179

Bleriot US Bidco Inc.
 
Federal Services
 
 6.20% (L + 4.75%)
 
10/30/2026
 
8,649

 
8,565

 
7,546

Brave Parent Holdings, Inc.
 
Software
 
 5.78% (L + 4.00%)
 
4/18/2025
 
11,680

 
11,647

 
10,201

CentralSquare Technologies, LLC
 
Software
 
 5.20% (L + 3.75%)
 
8/29/2025
 
14,813

 
14,782

 
11,554

CHA Holdings, Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
4/10/2025
 
2,042

 
2,033

 
1,991

CHA Holdings, Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
4/10/2025
 
10,670

 
10,633

 
10,363

CommerceHub, Inc.
 
Software
 
 4.49% (L + 3.50%)
 
5/21/2025
 
2,456

 
2,447

 
2,063

Dealer Tire, LLC
 
Distribution & Logistics
 
 5.24% (L + 4.25%)
 
12/12/2025
 
7,481

 
7,463

 
6,210

Drilling Info Holdings, Inc.
 
Business Services
 
 5.24% (L + 4.25%)
 
7/30/2025
 
14,720

 
14,668

 
13,599

Edgewood Partners Holdings LLC
 
Business Services
 
 5.25% (L + 4.25%)
 
9/6/2024
 
7,413

 
7,351

 
7,144

eResearchTechnology, Inc.
 
Healthcare Services
 
 5.50% (L + 4.50%)
 
2/4/2027
 
3,145

 
3,114

 
2,809

Fastlane Parent Company, Inc.
 
Distribution & Logistics
 
 5.49% (L + 4.50%)
 
2/4/2026
 
3,465

 
3,405

 
2,997

Greenway Health, LLC
 
Software
 
 4.82% (L + 3.75%)
 
2/16/2024
 
14,588

 
14,543

 
9,555

Help/Systems Holdings, Inc.
 
Software
 
 5.75% (L + 4.75%)
 
11/19/2026
 
4,444

 
4,402

 
3,845

Institutional Shareholder Services Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
3/5/2026
 
13,860

 
13,739

 
11,573

Keystone Acquisition Corp.
 
Healthcare Services
 
 6.70% (L + 5.25%)
 
5/1/2024
 
5,265

 
5,231

 
4,968

LSCS Holdings, Inc.
 
Healthcare Services
 
 5.32% (L + 4.25%)
 
3/17/2025
 
1,879

 
1,877

 
1,738

LSCS Holdings, Inc.
 
Healthcare Services
 
 5.32% (L + 4.25%)
 
3/17/2025
 
7,280

 
7,272

 
6,734

Market Track, LLC
 
Business Services
 
 6.03% (L + 4.25%)
 
6/5/2024
 
11,670

 
11,632

 
9,686

MediaOcean, LLC
 
Software
 
 4.99% (L + 4.00%)
 
8/18/2025
 
4,392

 
4,380

 
4,018

Medical Solutions Holdings, Inc.
 
Healthcare Services
 
 5.50% (L + 4.50%)
 
6/14/2024
 
2,788

 
2,779

 
2,481

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
2,089

 
2,084

 
1,997

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
878

 
875

 
839

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
12,128

 
12,096

 
11,592

NorthStar Financial Services Group, LLC
 
Software
 
 4.49% (L + 3.50%)
 
5/25/2025
 
5,885

 
5,862

 
4,796

Peraton Corp. (fka MHVC Acquisition Corp.)
 
Federal Services
 
 6.87% (L + 5.25%)
 
4/29/2024
 
10,211

 
10,178

 
9,548

Premise Health Holding Corp.
 
Healthcare Services
 
 4.95% (L + 3.50%)
 
7/10/2025
 
1,369

 
1,363

 
1,261

Project Accelerate Parent, LLC
 
Business Services
 
 5.25% (L + 4.25%)
 
1/2/2025
 
12,513

 
12,468

 
9,698

PSC Industrial Holdings Corp.
 
Industrial Services
 
 4.75% (L + 3.75%)
 
10/11/2024
 
3,052

 
3,031

 
2,819

Quest Software US Holdings Inc.
 
Software
 
 6.03% (L + 4.25%)
 
5/16/2025
 
14,812

 
14,755

 
13,673

Salient CRGT Inc.
 
Federal Services
 
 7.57% (L + 6.50%)
 
2/28/2022
 
13,040

 
12,985

 
12,421

Wirepath LLC
 
Distribution & Logistics
 
 5.07% (L + 4.00%)
 
8/5/2024
 
14,775

 
14,775

 
12,928

WP CityMD Bidco LLC
 
Healthcare Services
 
 5.95% (L + 4.50%)
 
8/13/2026
 
14,963

 
14,822

 
13,504

Wrench Group LLC
 
Consumer Services
 
 5.00% (L + 4.00%)
 
4/30/2026
 
459

 
454

 
390

Wrench Group LLC
 
Consumer Services
 
 5.45% (L + 4.00%)
 
4/30/2026
 
4,466

 
4,426

 
3,796

YI, LLC
 
Healthcare Services
 
 5.45% (L + 4.00%)
 
11/7/2024
 
14,763

 
14,754

 
11,441

Zelis Cost Management Buyer, Inc.
 
Healthcare I.T.
 
 5.74% (L + 4.75%)
 
9/30/2026
 
10,337

 
10,238

 
9,562

Zywave, Inc.
 
Software
 
 6.78% (L + 5.00%)
 
11/17/2022
 
16,931

 
16,890

 
16,593

Zywave, Inc.
 
Software
 
 6.78% (L + 5.00%)
 
11/17/2022
 
480

 
476

 
471

Total Funded Investments
 
 
 
 
 
 
 
$
334,489

 
$
332,960

 
$
291,990

Unfunded Investments - First lien:
 
 
 
 
 
 
 
 
 
 
 
 
Bearcat Buyer, Inc.
 
Healthcare Services
 
 
7/9/2021
 
$
194

 
$
(1
)
 
$
(8
)
Premise Health Holding Corp.
 
Healthcare Services
 
 
7/10/2020
 
110

 

 
(4
)
Wrench Group LLC
 
Consumer Services
 
 
4/30/2021
 
1,040

 

 
(156
)
Total Unfunded Investments
 
 
 
 
 
 
 
$
1,344

 
$
(1
)
 
$
(168
)
Total Investments
 
 
 
 
 
 
 
$
335,833

 
$
332,959

 
$
291,822

 

98


(1)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of March 31, 2020.
(2)
Represents the fair value in accordance with Accounting Standards Codification Topic 820, Fair Value Measurement and Disclosures ("ASC 820"). Our board of directors does not determine the fair value of the investments held by SLP II.
        
The following table is a listing of the individual investments in SLP II's portfolio as of December 31, 2019:
Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Funded Investments - First lien
 
 
 
 
 
 
 
(in thousands)
 
(in thousands)
 
(in thousands)
Access CIG, LLC
 
Business Services
 
 5.44% (L + 3.75%)
 
2/27/2025
 
$
9,833

 
$
9,794

 
$
9,841

ADG, LLC
 
Healthcare Services
 
 7.17% (L + 4.75% + 0.50% PIK)
 
9/28/2023
 
16,074

 
15,980

 
15,813

Advisor Group Holdings, Inc.
 
Consumer Services
 
 6.80% (L + 5.00%)
 
7/31/2026
 
5,000

 
4,952

 
4,972

Bearcat Buyer, Inc.
 
Healthcare Services
 
 6.19% (L + 4.25%)
 
7/9/2026
 
1,379

 
1,372

 
1,372

Bearcat Buyer, Inc.
 
Healthcare Services
 
 6.19% (L + 4.25%)
 
7/9/2026
 
90

 
90

 
90

Bleriot US Bidco Inc.
 
Federal Services
 
 6.69% (L + 4.75%)
 
10/30/2026
 
8,649

 
8,563

 
8,746

Brave Parent Holdings, Inc.
 
Software
 
 5.93% (L + 4.00%)
 
4/18/2025
 
15,267

 
15,222

 
15,045

CentralSquare Technologies, LLC
 
Software
 
 5.55% (L + 3.75%)
 
8/29/2025
 
14,850

 
14,819

 
14,231

CHA Holdings, Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
4/10/2025
 
10,697

 
10,658

 
10,683

CHA Holdings, Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
4/10/2025
 
2,047

 
2,037

 
2,044

CommerceHub, Inc.
 
Software
 
 5.30% (L + 3.50%)
 
5/21/2025
 
2,463

 
2,453

 
2,432

Drilling Info Holdings, Inc.
 
Business Services
 
 6.05% (L + 4.25%)
 
7/30/2025
 
14,758

 
14,703

 
14,696

Edgewood Partners Holdings LLC
 
Business Services
 
 6.05% (L + 4.25%)
 
9/6/2024
 
7,432

 
7,367

 
7,413

Explorer Holdings, Inc.
 
Healthcare Services
 
 6.26% (L + 4.50%)
 
11/20/2026
 
3,145

 
3,113

 
3,171

Fastlane Parent Company, Inc.
 
Distribution & Logistics
 
 6.44% (L + 4.50%)
 
2/4/2026
 
3,474

 
3,411

 
3,448

Greenway Health, LLC
 
Software
 
 5.69% (L + 3.75%)
 
2/16/2024
 
14,625

 
14,578

 
13,053

Help/Systems Holdings, Inc.
 
Software
 
 6.55% (L + 4.75%)
 
11/19/2026
 
4,444

 
4,400

 
4,428

Idera, Inc.
 
Software
 
 6.30% (L + 4.50%)
 
6/28/2024
 
4,446

 
4,417

 
4,449

Institutional Shareholder Services Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
3/5/2026
 
13,895

 
13,769

 
13,687

Keystone Acquisition Corp.
 
Healthcare Services
 
 7.19% (L + 5.25%)
 
5/1/2024
 
5,278

 
5,243

 
5,173

LSCS Holdings, Inc.
 
Healthcare Services
 
 6.31% (L + 4.25%)
 
3/17/2025
 
7,298

 
7,290

 
7,225

LSCS Holdings, Inc.
 
Healthcare Services
 
 6.31% (L + 4.25%)
 
3/17/2025
 
1,884

 
1,882

 
1,865

Market Track, LLC
 
Business Services
 
 6.18% (L + 4.25%)
 
6/5/2024
 
11,700

 
11,660

 
10,530

MediaOcean, LLC
 
Software
 
 5.80% (L + 4.00%)
 
8/18/2025
 
7,392

 
7,372

 
7,410

Medical Solutions Holdings, Inc.
 
Healthcare Services
 
 6.30% (L + 4.50%)
 
6/14/2024
 
2,795

 
2,786

 
2,791

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
12,160

 
12,124

 
12,160

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
2,095

 
2,089

 
2,095

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
880

 
877

 
880

NorthStar Financial Services Group, LLC
 
Software
 
 5.30% (L + 3.50%)
 
5/25/2025
 
5,885

 
5,861

 
5,789

Peraton Corp. (fka MHVC Acquisition Corp.)
 
Federal Services
 
 7.05% (L + 5.25%)
 
4/29/2024
 
10,237

 
10,203

 
10,193

Premise Health Holding Corp.
 
Healthcare Services
 
 5.44% (L + 3.50%)
 
7/10/2025
 
1,372

 
1,367

 
1,358

Project Accelerate Parent, LLC
 
Business Services
 
 5.99% (L + 4.25%)
 
1/2/2025
 
13,545

 
13,494

 
13,511

PSC Industrial Holdings Corp.
 
Industrial Services
 
 5.49% (L + 3.75%)
 
10/11/2024
 
7,305

 
7,252

 
7,269

Quest Software US Holdings Inc.
 
Software
 
 6.18% (L + 4.25%)
 
5/16/2025
 
14,850

 
14,790

 
14,739

Salient CRGT Inc.
 
Federal Services
 
 8.29% (L + 6.50%)
 
2/28/2022
 
13,134

 
13,071

 
12,510

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)
 
Education
 
 6.19% (L + 4.25%)
 
7/30/2025
 
716

 
715

 
721

Wirepath LLC
 
Distribution & Logistics
 
 5.94% (L + 4.00%)
 
8/5/2024
 
14,813

 
14,813

 
12,886

WP CityMD Bidco LLC
 
Healthcare Services
 
 6.44% (L + 4.50%)
 
8/13/2026
 
15,000

 
14,855

 
15,038

Wrench Group LLC
 
Consumer Services
 
 6.19% (L + 4.25%)
 
4/30/2026
 
4,478

 
4,435

 
4,488

YI, LLC
 
Healthcare Services
 
 5.94% (L + 4.00%)
 
11/7/2024
 
14,801

 
14,791

 
13,839

Zelis Cost Management Buyer, Inc.
 
Healthcare I.T.
 
 6.55% (L + 4.75%)
 
9/30/2026
 
10,363

 
10,261

 
10,427

Zywave, Inc.
 
Software
 
 6.93% (L + 5.00%)
 
11/17/2022
 
16,975

 
16,930

 
16,975

Zywave, Inc.
 
Software
 
 6.84% (L + 5.00%)
 
11/17/2022
 
481

 
477

 
481

Total Funded Investments
 
 
 
 
 
 
 
$
348,005

 
$
346,336

 
$
339,967


99


Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Unfunded Investments - First lien
 
 
 
 
 
 
 
 
 
 
 
 
Bearcat Buyer, Inc.
 
Healthcare Services
 
 
7/9/2021
 
$
194

 
$
(1
)
 
$
(1
)
Bleriot US Bidco Inc.
 
Federal Services
 
 
10/31/2020
 
1,351

 
(14
)
 
15

Premise Health Holding Corp.
 
Healthcare Services
 
 
7/10/2020
 
110

 

 

Wrench Group LLC
 
Consumer Services
 
 
4/30/2021
 
1,500

 

 
4

Total Unfunded Investments
 
 
 
 
 
 
 
3,155

 
(15
)
 
18

Total Investments
 
 
 
 
 
 
 
$
351,160

 
$
346,321

 
$
339,985

 
(1)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2019.
(2)
Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP II.

Below is certain summarized financial information for SLP II as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and March 31, 2019:
Selected Balance Sheet Information:
March 31, 2020
 
December 31, 2019
 
(in thousands)
 
(in thousands)
Investments at fair value (cost of $332,959 and $346,321, respectively)
$
291,822

 
$
339,985

Cash and other assets
8,364

 
8,159

Total assets
$
300,186

 
$
348,144

 
 
 
 
Credit facility
$
236,770

 
$
246,870

Deferred financing costs
(1,188
)
 
(1,408
)
Distribution payable
3,250

 
3,250

Payable for unsettled securities purchased

 
3,113

Other liabilities
2,175

 
2,367

Total liabilities
241,007

 
254,192

 
 
 
 
Members' capital
$
59,179

 
$
93,952

Total liabilities and members' capital
$
300,186

 
$
348,144

Selected Statement of Operations Information:
Three Months Ended

March 31, 2020
 
March 31, 2019
 
(in thousands)
 
(in thousands)
Interest income
$
5,447

 
$
6,223

Other income
53

 
26

Total investment income
5,500

 
6,249

 
 
 
 
Interest and other financing expenses
2,145

 
2,773

Other expenses
132

 
135

Total expenses
2,277

 
2,908

Net investment income
3,223

 
3,341

 
 
 
 
Net realized gains on investments
56

 
8

Net change in unrealized (depreciation) appreciation of investments
(34,801
)
 
1,547

Net (decrease) increase in members' capital
$
(31,522
)
 
$
4,896

For the three months ended March 31, 2020 and March 31, 2019, we earned approximately $2.6 million and $3.2 million, respectively, of dividend income related to SLP II, which is included in dividend income. As of March 31, 2020 and

100


December 31, 2019, approximately $2.6 million and $2.6 million, respectively, of dividend income related to SLP II was included in interest and dividend receivable.
We have determined that SLP II is an investment company under ASC 946; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly-owned investment company subsidiary. Furthermore, Accounting Standards Codification Topic 810, Consolidation ("ASC 810"), concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, we do not consolidate SLP II.
NMFC Senior Loan Program III LLC
NMFC Senior Loan Program III LLC ("SLP III") was formed as a Delaware limited liability company and commenced operations on April 25, 2018. SLP III is structured as a private joint venture investment fund between us and SkyKnight Income II, LLC (“SkyKnight II”) and operates under a limited liability company agreement (the "SLP III Agreement"). The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals. These investments are typically broadly syndicated first lien loans. All investment decisions must be unanimously approved by the board of managers of SLP III, which has equal representation from us and SkyKnight II. SLP III has a five year investment period and will continue in existence until April 25, 2025. The investment period may be extended for up to one year pursuant to certain terms of the SLP III Agreement.
SLP III is capitalized with equity contributions which are called from its members, on a pro-rata basis based on their equity commitments, as transactions are completed. Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III. As of March 31, 2020, we and SkyKnight II have committed $120.0 million and $30.0 million, respectively, of equity to SLP III. As of March 31, 2020, we and SkyKnight II have contributed $110.0 million and $27.5 million, respectively, of equity to SLP III. Our investment in SLP III is disclosed on our Consolidated Schedule of Investments as of March 31, 2020 and December 31, 2019.
On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A., which matures on May 2, 2023 and bears interest at a rate of LIBOR plus 1.70% per annum. Effective February 13, 2020, SLP III's revolving credit facility has a maximum borrowing capacity of $450.0 million. As of March 31, 2020 and December 31, 2019, SLP III had total investments with an aggregate fair value of approximately $462.5 million and $475.2 million, respectively, and debt outstanding under its credit facility of $401.6 million and $355.4 million, respectively. As of March 31, 2020 and December 31, 2019, none of SLP III's investments were on non-accrual. Additionally, as of March 31, 2020 and December 31, 2019, SLP III had unfunded commitments in the form of delayed draws of $9.9 million and $10.6 million, respectively. Below is a summary of SLP III's portfolio, along with a listing of the individual investments in SLP III's portfolio as of March 31, 2020 and December 31, 2019:    
(in thousands)
 
March 31, 2020
 
December 31, 2019
First lien investments (1)
 
$
543,798

 
493,787

Weighted average interest rate on first lien investments (2)
 
5.34
%
 
5.95
%
Number of portfolio companies in SLP III
 
55

 
49

Largest portfolio company investment (1)
 
$
23,894

 
23,947

Total of five largest portfolio company investments (1)
 
$
99,663

 
99,906

 
(1)
Reflects principal amount or par value of investment.
(2)
Computed as the all in interest rate in effect on accruing investments divided by the total principal amount of investments.

101


The following table is a listing of the individual investments in SLP III's portfolio as of March 31, 2020:
Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Funded Investments - First lien
 
 
 
 
 
 
 
( in thousands)
 
( in thousands)
 
( in thousands)
Access CIG, LLC
 
Business Services
 
 5.53% (L + 3.75%)
 
2/27/2025
 
$
874

 
$
874

 
$
721

Advisor Group Holdings, Inc.
 
Consumer Services
 
 5.99% (L + 5.00%)
 
7/31/2026
 
4,988

 
4,941

 
3,840

Affordable Care Holding Corp.
 
Healthcare Services
 
 6.20% (L + 4.75%)
 
10/24/2022
 
5,948

 
5,875

 
5,183

AG Parent Holdings, LLC
 
Healthcare Services
 
 6.45% (L + 5.00%)
 
7/31/2026
 
12,469

 
12,411

 
12,118

Aston FinCo S.a.r.l. / Aston US Finco, LLC
 
Software
 
 6.13% (L + 4.25%)
 
10/9/2026
 
6,000

 
5,943

 
5,460

Astra Acquisition Corp.
 
Software
 
 6.50% (L + 5.50%)
 
3/1/2027
 
11,577

 
11,491

 
11,490

Ascensus Specialties LLC
 
Business Services
 
 6.33% (L + 4.75%)
 
9/24/2026
 
9,975

 
9,928

 
9,950

BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 4.99% (L + 4.00%)
 
6/11/2026
 
9,144

 
9,060

 
8,230

BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 4.99% (L + 4.00%)
 
6/11/2026
 
1,437

 
1,427

 
1,293

Bearcat Buyer, Inc.
 
Healthcare Services
 
 5.70% (L + 4.25%)
 
7/9/2026
 
19,803

 
19,712

 
18,983

Bearcat Buyer, Inc.
 
Healthcare Services
 
 5.70% (L + 4.25%)
 
7/9/2026
 
1,299

 
1,293

 
1,245

Bleriot US Bidco Inc.
 
Federal Services
 
 6.20% (L + 4.75%)
 
10/31/2026
 
4,324

 
4,282

 
3,773

Bleriot US Bidco Inc.
 
Federal Services
 
 6.20% (L + 4.75%)
 
10/31/2026
 
676

 
669

 
590

Bluefin Holding, LLC
 
Software
 
 5.25% (L + 4.25%)
 
9/4/2026
 
9,975

 
9,835

 
9,564

Bracket Intermediate Holding Corp.
 
Healthcare Services
 
 6.16% (L + 4.25%)
 
9/5/2025
 
14,775

 
14,715

 
11,894

Brave Parent Holdings, Inc.
 
Software
 
 5.78% (L + 4.00%)
 
4/18/2025
 
11,304

 
11,272

 
9,872

CentralSquare Technologies, LLC
 
Software
 
 5.20% (L + 3.75%)
 
8/29/2025
 
14,813

 
14,783

 
11,554

Certara Holdco, Inc.
 
Healthcare I.T.
 
 4.95% (L + 3.50%)
 
8/15/2024
 
1,259

 
1,262

 
1,070

CHA Holdings, Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
4/10/2025
 
985

 
985

 
957

CommerceHub, Inc.
 
Software
 
 4.49% (L + 3.50%)
 
5/21/2025
 
14,738

 
14,681

 
12,379

Covenant Surgical Partners, Inc.
 
Healthcare Services
 
 5.02% (L + 4.00%)
 
7/1/2026
 
9,950

 
9,859

 
8,408

CRCI Longhorn Holdings, Inc.
 
Business Services
 
 4.49% (L + 3.50%)
 
8/8/2025
 
14,775

 
14,716

 
12,559

Dealer Tire, LLC
 
Distribution & Logistics
 
 5.24% (L + 4.25%)
 
12/12/2025
 
9,975

 
9,950

 
8,279

Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)
 
Healthcare Services
 
 4.75% (L + 3.75%)
 
6/6/2025
 
14,748

 
14,719

 
11,725

Drilling Info Holdings, Inc.
 
Business Services
 
 5.24% (L + 4.25%)
 
7/30/2025
 
18,719

 
18,643

 
17,292

Edgewood Partners Holdings LLC
 
Business Services
 
 5.25% (L + 4.25%)
 
9/6/2024
 
7,413

 
7,351

 
7,144

eResearchTechnology, Inc.
 
Healthcare Services
 
 5.50% (L + 4.50%)
 
2/4/2027
 
3,931

 
3,892

 
3,512

EyeCare Partners, LLC
 
Healthcare Services
 
 4.82% (L + 3.75%)
 
2/18/2027
 
12,162

 
12,147

 
10,054

Fastlane Parent Company, Inc.
 
Distribution & Logistics
 
 5.49% (L + 4.50%)
 
2/4/2026
 
3,465

 
3,405

 
2,997

Greenway Health, LLC
 
Software
 
 4.82% (L + 3.75%)
 
2/16/2024
 
14,633

 
14,641

 
9,584

Heartland Dental, LLC
 
Healthcare Services
 
 4.74% (L + 3.75%)
 
4/30/2025
 
18,683

 
18,610

 
14,740

Help/Systems Holdings, Inc.
 
Software
 
 5.75% (L + 4.75%)
 
11/19/2026
 
7,056

 
6,998

 
6,103

Idera, Inc.
 
Software
 
 5.08% (L + 4.00%)
 
6/28/2024
 
5,558

 
5,535

 
4,891

Institutional Shareholder Services Inc.
 
Business Services
 
 5.57% (L + 4.50%)
 
3/5/2026
 
990

 
981

 
827

Kestra Advisor Services Holdings A, Inc.
 
Business Services
 
 5.24% (L + 4.25%)
 
6/3/2026
 
9,452

 
9,381

 
8,129

LSCS Holdings, Inc.
 
Healthcare Services
 
 5.32% (L + 4.25%)
 
3/17/2025
 
2,647

 
2,629

 
2,448

LSCS Holdings, Inc.
 
Healthcare Services
 
 5.32% (L + 4.25%)
 
3/17/2025
 
683

 
679

 
632

Market Track, LLC
 
Business Services
 
 6.03% (L + 4.25%)
 
6/5/2024
 
4,765

 
4,761

 
3,955

MED ParentCo, LP
 
Healthcare Services
 
 5.24% (L + 4.25%)
 
8/31/2026
 
10,350

 
10,259

 
8,720

MED ParentCo, LP
 
Healthcare Services
 
 5.21% (L + 4.25%)
 
8/31/2026
 
1,816

 
1,799

 
1,530

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
4,537

 
4,523

 
4,337

Ministry Brands, LLC
 
Software
 
 5.62% (L + 4.00%)
 
12/2/2022
 
878

 
875

 
839

National Intergovernmental Purchasing Alliance Company
 
Business Services
 
 5.20% (L + 3.75%)
 
5/23/2025
 
8,768

 
8,764

 
7,453

National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)
 
Healthcare Services
 
 5.12% (L + 4.00%)
 
3/9/2026
 
8,946

 
8,946

 
8,141

National Mentor Holdings, Inc. (aka Civitas Solutions, Inc.)
 
Healthcare Services
 
 5.46% (L + 4.00%)
 
3/9/2026
 
406

 
406

 
370

Navex Topco, Inc.
 
Software
 
 4.24% (L + 3.25%)
 
9/5/2025
 
18,348

 
18,197

 
15,940

Netsmart Technologies, Inc.
 
Healthcare I.T.
 
 5.20% (L + 3.75%)
 
4/19/2023
 
10,304

 
10,304

 
9,376

Newport Group Holdings II, Inc.
 
Business Services
 
 5.20% (L + 3.75%)
 
9/12/2025
 
4,925

 
4,905

 
4,297

NorthStar Financial Services Group, LLC
 
Software
 
 4.49% (L + 3.50%)
 
5/25/2025
 
11,770

 
11,726

 
9,593

Outcomes Group Holdings, Inc.
 
Healthcare Services
 
 5.11% (L + 3.50%)
 
10/24/2025
 
3,426

 
3,419

 
2,827

Pelican Products, Inc.
 
Business Products
 
 4.50% (L + 3.50%)
 
5/1/2025
 
4,912

 
4,903

 
4,016


102


Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Peraton Corp. (fka MHVC Acquisition Corp.)
 
Federal Services
 
 6.87% (L + 5.25%)
 
4/29/2024
 
$
15,391

 
$
15,334

 
$
14,390

Premise Health Holding Corp.
 
Healthcare Services
 
 4.95% (L + 3.50%)
 
7/10/2025
 
13,689

 
13,634

 
12,613

Project Accelerate Parent, LLC
 
Business Services
 
 5.25% (L + 4.25%)
 
1/2/2025
 
9,899

 
9,855

 
7,672

Quest Software US Holdings Inc.
 
Software
 
 6.03% (L + 4.25%)
 
5/16/2025
 
14,811

 
14,756

 
13,673

Sierra Enterprises, LLC
 
Food & Beverage
 
 5.00% (L + 4.00%)
 
11/11/2024
 
2,450

 
2,448

 
2,021

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)
 
Education
 
 5.70% (L + 4.25%)
 
7/30/2025
 
14,775

 
14,746

 
11,931

TIBCO Software Inc.
 
Software
 
 4.74% (L + 3.75%)
 
6/30/2026
 
7,692

 
7,673

 
7,308

Wirepath LLC
 
Distribution & Logistics
 
 5.07% (L + 4.00%)
 
8/5/2024
 
17,258

 
17,258

 
15,101

WP CityMD Bidco LLC
 
Healthcare Services
 
 5.76% (L + 4.50%)
 
8/13/2026
 
20,019

 
19,831

 
18,067

VT Topco, Inc.
 
Business Services
 
 4.95% (L + 3.50%)
 
8/1/2025
 
2,816

 
2,816

 
2,422

YI, LLC
 
Healthcare Services
 
 5.07% (L + 4.00%)
 
11/7/2024
 
9,766

 
9,759

 
7,569

Total Funded Investments
 
 
 
 
 
 
 
$
533,920

 
$
531,472

 
$
463,651

Unfunded Investments - First lien
 
 
 
 
 
 
 
 
 
 
 
 
BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 
6/11/2021
 
$
369

 
$
(4
)
 
$
(37
)
Bearcat Buyer, Inc.
 
Healthcare Services
 
 
7/9/2021
 
2,792

 
(14
)
 
(116
)
Covenant Surgical Partners, Inc.
 
Healthcare Services
 
 
7/1/2021
 
2,000

 
(20
)
 
(310
)
EyeCare Partners, LLC
 
Healthcare Services
 
 
2/18/2022
 
2,838

 

 
(492
)
MED ParentCo, LP
 
Healthcare Services
 
 
8/27/2021
 
776

 
(8
)
 
(122
)
Premise Health Holding Corp.
 
Healthcare Services
 
 
7/10/2020
 
1,103

 
(3
)
 
(37
)
Total Unfunded Investments
 
 
 
 
 
 
 
$
9,878

 
$
(49
)
 
$
(1,114
)
Total Investments
 
 
 
 
 
 
 
$
543,798

 
$
531,423

 
$
462,537

 
(1)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of March 31, 2020.
(2)
Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP III.

103


The following table is a listing of the individual investments in SLP III's portfolio as of December 31, 2019:
Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
Funded Investments - First lien
 
 
 
 
 
 
 
(in thousands)
 
(in thousands)
 
(in thousands)
Access CIG, LLC
 
Business Services
 
 5.44% (L + 3.75%)
 
2/27/2025
 
$
1,204

 
$
1,204

 
$
1,205

Advisor Group Holdings, Inc.
 
Consumer Services
 
 6.80% (L + 5.00%)
 
7/31/2026
 
5,000

 
4,952

 
4,972

Affordable Care Holding Corp.
 
Healthcare Services
 
 6.59% (L + 4.75%)
 
10/24/2022
 
5,963

 
5,884

 
5,814

AG Parent Holdings, LLC
 
Healthcare Services
 
 6.91% (L + 5.00%)
 
7/31/2026
 
12,500

 
12,440

 
12,406

Aston FinCo S.a r.l. / Aston US Finco, LLC
 
Software
 
 6.26% (L + 4.25%)
 
10/9/2026
 
6,000

 
5,941

 
5,970

Ascensus Specialties LLC
 
Business Services
 
 6.44% (L + 4.75%)
 
9/24/2026
 
10,000

 
9,951

 
9,975

BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 5.80% (L + 4.00%)
 
6/11/2026
 
9,167

 
9,080

 
9,224

BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 5.80% (L + 4.00%)
 
6/11/2026
 
229

 
243

 
231

Bearcat Buyer, Inc.
 
Healthcare Services
 
 6.19% (L + 4.25%)
 
7/9/2026
 
19,853

 
19,759

 
19,753

Bearcat Buyer, Inc.
 
Healthcare Services
 
 6.19% (L + 4.25%)
 
7/9/2026
 
1,302

 
1,296

 
1,296

Bleriot US Bidco Inc.
 
Federal Services
 
 6.69% (L + 4.75%)
 
10/30/2026
 
4,324

 
4,281

 
4,373

Bluefin Holding, LLC
 
Software
 
 6.14% (L + 4.25%)
 
9/4/2026
 
10,000

 
9,855

 
9,900

Bracket Intermediate Holding Corp.
 
Healthcare Services
 
 6.35% (L + 4.25%)
 
9/5/2025
 
14,813

 
14,750

 
14,775

Brave Parent Holdings, Inc.
 
Software
 
 5.93% (L + 4.00%)
 
4/18/2025
 
14,775

 
14,732

 
14,560

CentralSquare Technologies, LLC
 
Software
 
 5.55% (L + 3.75%)
 
8/29/2025
 
14,850

 
14,819

 
14,231

Certara Holdco, Inc.
 
Healthcare I.T.
 
 5.44% (L + 3.50%)
 
8/15/2024
 
1,262

 
1,266

 
1,262

CHA Holdings, Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
4/10/2025
 
987

 
987

 
986

CommerceHub, Inc.
 
Software
 
 5.30% (L + 3.50%)
 
5/21/2025
 
14,775

 
14,716

 
14,590

Covenant Surgical Partners, Inc.
 
Healthcare Services
 
 5.69% (L + 4.00%)
 
7/1/2026
 
9,975

 
9,881

 
9,913

CRCI Longhorn Holdings, Inc.
 
Business Services
 
 5.19% (L + 3.50%)
 
8/8/2025
 
14,813

 
14,751

 
14,414

Dentalcorp Health Services ULC (fka Dentalcorp Perfect Smile ULC)
 
Healthcare Services
 
 5.55% (L + 3.75%)
 
6/6/2025
 
14,786

 
14,755

 
14,737

Drilling Info Holdings, Inc.
 
Business Services
 
 6.05% (L + 4.25%)
 
7/30/2025
 
18,766

 
18,688

 
18,688

Edgewood Partners Holdings LLC
 
Business Services
 
 6.05% (L + 4.25%)
 
9/6/2024
 
7,432

 
7,367

 
7,413

Explorer Holdings, Inc.
 
Healthcare Services
 
 6.25% (L + 4.50%)
 
11/20/2026
 
3,931

 
3,892

 
3,964

Fastlane Parent Company, Inc.
 
Distribution & Logistics
 
 6.44% (L + 4.50%)
 
2/4/2026
 
3,474

 
3,411

 
3,448

Greenway Health, LLC
 
Software
 
 5.69% (L + 3.75%)
 
2/16/2024
 
14,670

 
14,679

 
13,093

Heartland Dental, LLC
 
Healthcare Services
 
 5.55% (L + 3.75%)
 
4/30/2025
 
18,317

 
18,243

 
18,248

Help/Systems Holdings, Inc.
 
Software
 
 6.55% (L + 4.75%)
 
11/19/2026
 
5,556

 
5,500

 
5,535

Idera, Inc.
 
Software
 
 6.30% (L + 4.50%)
 
6/28/2024
 
5,572

 
5,548

 
5,576

Institutional Shareholder Services Inc.
 
Business Services
 
 6.44% (L + 4.50%)
 
3/5/2026
 
993

 
983

 
978

Kestra Advisor Services Holdings A, Inc.
 
Business Services
 
 6.20% (L + 4.25%)
 
6/3/2026
 
9,476

 
9,402

 
9,477

LSCS Holdings, Inc.
 
Healthcare Services
 
 6.31% (L + 4.25%)
 
3/17/2025
 
2,654

 
2,634

 
2,627

LSCS Holdings, Inc.
 
Healthcare Services
 
 6.31% (L + 4.25%)
 
3/17/2025
 
685

 
680

 
678

Market Track, LLC
 
Business Services
 
 6.18% (L + 4.25%)
 
6/5/2024
 
4,778

 
4,773

 
4,300

MED ParentCo, LP
 
Healthcare Services
 
 6.05% (L + 4.25%)
 
8/31/2026
 
10,376

 
10,282

 
10,402

MED ParentCo, LP
 
Healthcare Services
 
 6.05% (L + 4.25%)
 
8/31/2026
 
553

 
549

 
554

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
4,549

 
4,534

 
4,549

Ministry Brands, LLC
 
Software
 
 5.85% (L + 4.00%)
 
12/2/2022
 
880

 
877

 
880

National Intergovernmental Purchasing Alliance Company
 
Business Services
 
 5.69% (L + 3.75%)
 
5/23/2025
 
8,790

 
8,786

 
8,790

Navex Topco, Inc.
 
Software
 
 5.05% (L + 3.25%)
 
9/5/2025
 
18,394

 
18,237

 
18,448

Netsmart Technologies, Inc.
 
Healthcare I.T.
 
 5.55% (L + 3.75%)
 
4/19/2023
 
10,330

 
10,330

 
10,308

Newport Group Holdings II, Inc.
 
Business Services
 
 5.65% (L + 3.75%)
 
9/12/2025
 
4,938

 
4,917

 
4,950

NorthStar Financial Services Group, LLC
 
Software
 
 5.30% (L + 3.50%)
 
5/25/2025
 
11,770

 
11,723

 
11,579

Outcomes Group Holdings, Inc.
 
Healthcare Services
 
 5.41% (L + 3.50%)
 
10/24/2025
 
6,435

 
6,421

 
6,344

Pelican Products, Inc.
 
Business Products
 
 5.24% (L + 3.50%)
 
5/1/2025
 
4,925

 
4,915

 
4,531

Peraton Corp. (fka MHVC Acquisition Corp.)
 
Federal Services
 
 7.05% (L + 5.25%)
 
4/29/2024
 
15,430

 
15,371

 
15,363

Premise Health Holding Corp.
 
Healthcare Services
 
 5.44% (L + 3.50%)
 
7/10/2025
 
13,723

 
13,666

 
13,580

Project Accelerate Parent, LLC
 
Business Services
 
 5.99% (L + 4.25%)
 
1/2/2025
 
9,924

 
9,878

 
9,899

Quest Software US Holdings Inc.
 
Software
 
 6.18% (L + 4.25%)
 
5/16/2025
 
14,850

 
14,790

 
14,739

Sierra Enterprises, LLC
 
Food & Beverage
 
 5.80% (L + 4.00%)
 
11/11/2024
 
2,456

 
2,454

 
2,447

Spring Education Group, Inc. (fka SSH Group Holdings, Inc.)
 
Education
 
 6.19% (L + 4.25%)
 
7/30/2025
 
14,812

 
14,782

 
14,905

Wirepath LLC
 
Distribution & Logistics
 
 5.94% (L + 4.00%)
 
8/5/2024
 
17,302

 
17,302

 
15,053


104


Portfolio Company and Type of Investment
 
Industry
 
Interest Rate (1)
 
Maturity Date
 
 Principal Amount or Par Value
 
 Cost
 
Fair
Value (2)
WP CityMD Bidco LLC
 
Healthcare Services
 
 6.44% (L + 4.50%)
 
8/13/2026
 
$
20,069

 
$
19,875

 
$
20,119

YI, LLC
 
Healthcare Services
 
 5.94% (L + 4.00%)
 
11/7/2024
 
9,791

 
9,784

 
9,155

Total Funded Investments
 
 
 
 
 
 
 
$
483,179

 
$
480,816

 
$
475,207

Unfunded Investments - First lien
 
 
 
 
 
 
 
 
 
 
 
 
BCPE Empire Holdings, Inc.
 
Distribution & Logistics
 
 
6/11/2021
 
$
1,580

 
$
(16
)
 
$
10

Bearcat Buyer, Inc.
 
Healthcare Services
 
 
7/9/2021
 
2,792

 
(14
)
 
(14
)
Bleriot US Bidco Inc.
 
Federal Services
 
 
10/31/2020
 
676

 
(7
)
 
8

Covenant Surgical Partners, Inc.
 
Healthcare Services
 
 
7/1/2021
 
2,000

 
(20
)
 
(13
)
Heartland Dental, LLC
 
Healthcare Services
 
 
4/30/2020
 
413

 

 
(2
)
MED ParentCo, LP
 
Healthcare Services
 
 
8/27/2021
 
2,044

 
(20
)
 
5

Premise Health Holding Corp.
 
Healthcare Services
 
 
7/10/2020
 
1,103

 
(3
)
 
(3
)
Total Unfunded Investments
 
 
 
 
 
 
 
$
10,608

 
$
(80
)
 
$
(9
)
Total Investments
 
 
 
 
 
 
 
$
493,787

 
$
480,736

 
$
475,198

 
(1)
All interest is payable in cash unless otherwise indicated. A majority of the variable rate debt investments bear interest at a rate that may be determined by reference to the LIBOR (L), the Prime Rate (P) and the alternative base rate (Base). For each investment, the current interest rate provided reflects the rate in effect as of December 31, 2019.
(2)
Represents the fair value in accordance with ASC 820. Our board of directors does not determine the fair value of the investments held by SLP III.

Below is certain summarized financial information for SLP III as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and March 31, 2019:
Selected Balance Sheet Information:
March 31, 2020
 
December 31, 2019
 
(in thousands)
 
(in thousands)
Investments at fair value (cost of $531,423 and $480,736)
$
462,537

 
$
475,198

Cash and other assets
15,472

 
12,836

Total assets
$
478,009

 
$
488,034



 

Credit facility
$
401,600

 
$
355,400

Deferred financing costs
(2,773
)
 
(2,385
)
Payable for unsettled securities purchased

 
8,166

Distribution payable
3,592

 
3,650

Other liabilities
6,832

 
3,736

Total liabilities
409,251

 
368,567



 

Members' capital
$
68,758

 
$
119,467

Total liabilities and members' capital
$
478,009

 
$
488,034


105


Selected Statement of Operations Information:
Three Months Ended
 
March 31, 2020
 
March 31, 2019
 
(in thousands)
 
(in thousands)
Interest income
$
7,407

 
$
6,293

Other income
181

 
70

Total investment income
7,588

 
6,363



 

Interest and other financing expenses
3,696

 
3,391

Other expenses
157

 
138

Total expenses
3,853

 
3,529

Net investment income
3,735

 
2,834



 

Net realized (losses) gains on investments
(2
)
 
33

Net change in unrealized (depreciation) appreciation of investments
(63,348
)
 
2,967

Net (decrease) increase in members' capital
$
(59,615
)
 
$
5,834

For the three months ended March 31, 2020 and March 31, 2019, we earned approximately $2.9 million and $2.7 million of dividend income related to SLP III, which is included in dividend income. As of March 31, 2020 and December 31, 2019, approximately $2.9 million and $2.9 million, respectively, of dividend income related to SLP III was included in interest and dividend receivable.
We have determined that SLP III is an investment company under ASC 946; however, in accordance with such guidance we will generally not consolidate our investment in a company other than a wholly-owned investment company subsidiary. Furthermore, ASC 810 concludes that in a joint venture where both members have equal decision making authority, it is not appropriate for one member to consolidate the joint venture since neither has control. Accordingly, we do not consolidate SLP III.
New Mountain Net Lease Corporation
     NMNLC was formed to acquire commercial real estate properties that are subject to "triple net" leases. NMNLC's investments are disclosed on our Consolidated Schedule of Investments as of March 31, 2020.
On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.

106


Below is certain summarized property information for NMNLC as of March 31, 2020:
 
 
 
 
Lease
 
 
 
Total
 
Fair Value as of
Portfolio Company
 
Tenant
 
Expiration Date
 
Location
 
Square Feet
 
March 31, 2020
 
 
 
 
 
 
 
 
(in thousands)
 
(in thousands)
NM NL Holdings LP / NM GP Holdco LLC
 
Various
 
Various
 
Various
 
Various
 
$
45,917

NM GLCR LP
 
Arctic Glacier U.S.A.
 
2/28/2038
 
CA
 
214
 
22,282

NM CLFX LP
 
Victor Equipment Company
 
8/31/2033
 
TX
 
423
 
11,709

NM APP Canada, Corp.
 
A.P. Plasman, Inc.
 
9/30/2031
 
Canada
 
436
 
10,481

NM APP US LLC
 
Plasman Corp, LLC / A-Brite LP
 
9/30/2033
 
AL / OH
 
261
 
6,529

NM YI, LLC
 
Young Innovations, Inc.
 
10/31/2039
 
IL / MO
 
212
 
5,897

NM DRVT LLC
 
FMH Conveyors, LLC
 
10/31/2031
 
AR
 
195
 
5,783

NM JRA LLC
 
J.R. Automation Technologies, LLC
 
1/31/2031
 
MI
 
88
 
3,522

NM KRLN LLC
 
Kirlin Group, LLC
 
6/30/2029
 
MD
 
95
 
1,058

 
 
 
 
 
 
 
 
 
 
$
113,178

Collateralized agreements or repurchase financings
We follow the guidance in Accounting Standards Codification Topic 860, Transfers and Servicing—Secured Borrowing and Collateral, (“ASC 860”) when accounting for transactions involving the purchases of securities under collateralized agreements to resell (resale agreements). These transactions are treated as collateralized financing transactions and are recorded at their contracted resale or repurchase amounts, as specified in the respective agreements. Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income. As of March 31, 2020 and December 31, 2019, we held one collateralized agreement to resell with a cost basis of $30.0 million and $30.0 million, respectively, and a fair value of $21.4 million and $21.4 million, respectively. The collateralized agreement to resell is on non-accrual. The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P.. The private hedge fund is currently in liquidation under the laws of the Cayman Islands. Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from us at the par value of the collateralized agreement. The private hedge fund has breached its agreement to repurchase the collateral under the collateralized agreement. The default by the private hedge fund did not release the collateral to us, therefore, we do not have full rights and title to the collateral. A claim has been filed with the Cayman Islands joint official liquidators to resolve this matter. The joint official liquidators have recognized our contractual rights under the collateralized agreement. We continue to exercise our rights under the collateralized agreement and continue to monitor the liquidation process of the private hedge fund. The fair value of the collateralized agreement to resell is reflective of the increased risk of the position.
PPVA Black Elk (Equity) LLC
On May 3, 2013, we entered into a collateralized securities purchase and put agreement (the “SPP Agreement”) with a private hedge fund. Under the SPP Agreement, we purchased twenty million Class E Preferred Units of Black Elk Energy Offshore Operations, LLC (“Black Elk”) for $20.0 million with a corresponding obligation of the private hedge fund, PPVA Black Elk (Equity) LLC, to repurchase the preferred units for $20.0 million plus other amounts due under the SPP Agreement. The majority owner of Black Elk was the private hedge fund. In August 2014, we received a payment of $20.5 million, the full amount due under the SPP Agreement.
In August 2017, a trustee (the “Trustee”) for Black Elk informed us that the Trustee intended to assert a fraudulent conveyance claim (the “Claim”) against us and one of its affiliates seeking the return of the $20.5 million repayment. Black Elk filed a Chapter 11 bankruptcy petition pursuant to the United States Bankruptcy Code in August 2015. The Trustee alleged that individuals affiliated with the private hedge fund conspired with Black Elk and others to improperly use proceeds from the sale of certain Black Elk assets to repay, in August 2014, the private hedge fund’s obligation to us under the SPP Agreement. We were unaware of these claims at the time the repayment was received. The private hedge fund is currently in liquidation under the laws of the Cayman Islands.
On December 22, 2017, we settled the Trustee’s $20.5 million Claim for $16.0 million and filed a claim with the Cayman Islands joint official liquidators of the private hedge fund for $16.0 million that is owed to us under the SPP Agreement. The SPP Agreement was restored and is in effect since repayment has not been made. We continue to exercise our rights under the SPP Agreement and continue to monitor the liquidation process of the private hedge fund. During the year

107


ended December 31, 2018, we received a $1.5 million payment from our insurance carrier in respect to the settlement. As of March 31, 2020 and December 31, 2019, the SPP Agreement has a cost basis of $14.5 million and $14.5 million, respectively, and a fair value of $10.4 million and $10.4 million, respectively, which is reflective of the higher inherent risk in this transaction.
Revenue Recognition
Sales and paydowns of investments:  Realized gains and losses on investments are determined on the specific identification method.
Interest and dividend income:  Interest income, including amortization of premium and discount using the effective interest method, is recorded on the accrual basis and periodically assessed for collectability. Interest income also includes interest earned from cash on hand. Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as part of interest income. We have loans and certain preferred equity investments in the portfolio that contain a payment-in-kind (“PIK”) interest or dividend provision. PIK interest and dividends are accrued and recorded as income at the contractual rates, if deemed collectible. The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer. For the three months ended March 31, 2020 and March 31, 2019, we recognized PIK and non-cash interest from investments of approximately $3.5 million million and $3.0 million, respectively, and PIK and non-cash dividends from investments of approximately $1.6 million and $4.3 million, respectively.
Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Dividend income on preferred securities is recorded as dividend income on an accrual basis to the extent that such amounts are deemed collectible.
Non-accrual income:  Investments are placed on non-accrual status when principal or interest payments are past due for 30 days or more and when there is reasonable doubt that principal or interest will be collected. Accrued cash and un-capitalized PIK interest or dividends are reversed when an investment is placed on non-accrual status. Previously capitalized PIK interest or dividends are not reversed when an investment is placed on non-accrual status. Interest or dividend payments received on non-accrual investments may be recognized as income or applied to principal depending upon management’s judgment of the ultimate collectibility. Non-accrual investments are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current.
Other income:  Other income represents delayed compensation, consent or amendment fees, revolver fees, structuring fees, upfront fees, management fees from a non-controlled/affiliated investment and other miscellaneous fees received and are typically non-recurring in nature. Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date. Other income may also include fees from bridge loans. We may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained. These commitments are short-term in nature and may expire unfunded. A fee is received for providing such commitments. Structuring fees and upfront fees are recognized as income when earned, usually when paid at the closing of the investment, and are non-refundable.
Monitoring of Portfolio Investments
We monitor the performance and financial trends of our portfolio companies on at least a quarterly basis. We attempt to identify any developments within the portfolio company, the industry or the macroeconomic environment that may alter any material element of our original investment strategy.
We use an investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in the portfolio. We use a four-level numeric rating scale as follows:
Investment Rating 1—Investment is performing materially above expectations;
Investment Rating 2—Investment is performing materially in-line with expectations. All new loans are rated 2 at initial purchase;
Investment Rating 3—Investment is performing materially below expectations, where the risk of loss has materially increased since the original investment; and
Investment Rating 4—Investment is performing substantially below expectations and risks have increased substantially since the original investment. Payments may be delinquent. There is meaningful possibility that we will not recoup our original cost basis in the investment and may realize a substantial loss upon exit.

108


The following table shows the distribution of our investments and securities purchased under collateralized agreements to resell on the 1 to 4 investment rating scale at fair value as of March 31, 2020:
(in millions)
As of March 31, 2020
Investment Rating
 
Cost
 
Percent
 
Fair Value
 
Percent
Investment Rating 1
 
$
59.3

 
1.9
%
 
$
57.3

 
1.9
%
Investment Rating 2
 
2,772.0

 
86.2
%
 
2,675.6

 
88.8
%
Investment Rating 3
 
287.4

 
8.9
%
 
224.7

 
7.5
%
Investment Rating 4
 
97.8

 
3.0
%
 
55.1

 
1.8
%
 
 
$
3,216.5

 
100.0
%
 
$
3,012.7

 
100.0
%
As of March 31, 2020, all investments in our portfolio had an Investment Rating of 1 or 2 with the exception of eight portfolio companies that had an Investment Rating of 3 and six portfolio companies that had an Investment Rating of 4.
In December 2019, our preferred shares in Permian Holdco 1, Inc. were placed on non-accrual status and had an investment rating of 4. In addition, as of March 31, 2020, we placed our subordinated positions in Permian Holdco 2, Inc. on non-accrual. As of March 31, 2020, our investments in Permian Holdco 1, Inc. and Permian Holdco 2, Inc. had an aggregate cost basis of $9.9 million and an aggregate fair value of $2.8 million and had an Investment Rating of 4. During the three months ended March 31, 2020, we reversed $3.4 million of previously recorded PIK dividends related to our investment in Permian Holdco 1, Inc. as we believe these PIK dividends will ultimately not be collectible.

As of March 31, 2020, we placed our investment in our junior preferred shares of UniTek Global Services, Inc. on non-accrual status and the investment had a rating of 4. As of March 31, 2020, our investment had an aggregate cost basis of $34.4 million and an aggregate fair value of $19.5 million.
During the first quarter of 2018, we placed our first lien positions in Education Management II LLC on non-accrual status as the portfolio company announced its intention to wind down and liquidate the business. Our first lien positions and our preferred and common shares in Education Management Corporation ("EDMC") had an investment rating of 4. As of March 31, 2020, our investment in EDMC, with an Investment Rating of 4, had an aggregate cost basis of $1.4 million, an aggregate fair value of $3.4 million and total unearned interest income of $0.0 million for the three months then ended.
As of March 31, 2020, our investment in NM KRLN LLC had an investment rating of 4 and had an aggregate cost basis of $7.6 million and an aggregate fair value of $1.1 million.
Since December 31, 2019, our subordinated position in PPVA Black Elk (Equity) LLC had an investment rating of 4. As of March 31, 2020, our investment in this security had an aggregate cost basis of $14.5 million and an aggregate fair value of $10.4 million.
During the year ended December 31, 2019, our security purchased under collateralized agreements to resell was placed on non-accrual and the investment had an Investment Rating of 4. As of March 31, 2020, our investment in this security had an aggregate cost basis of $30.0 million and an aggregate fair value of $21.4 million.
In response to the continuing impact of the outbreak of COVID-19 pandemic and its impact on the overall market environment and the health of our portfolio companies, we performed a company-by-company evaluation of the anticipated impact of COVID-19. The evaluation process consisted of dialogue with sponsors and portfolio companies to understand COVID-19’s impact on each portfolio company, the portfolio company’s response to any disruption, the level of sponsor support, and the current and projected financial and liquidity position of the portfolio company. Based on this evaluation, we assigned each portfolio company a “Risk Rating” of red, orange, yellow and green, with red reflecting a portfolio company with the potential for the most severe impact, due to COVID-19, and green reflecting the least. We will continue to monitor our portfolio companies and provide support to their management teams where possible. The following table shows the Risk Rating of our portfolio companies as of March 31, 2020:
(in millions)
March 31, 2020
Risk Rating
 
Cost
 
Percent
 
Fair Value
 
Percent
Red
 
$
212.4

 
6.7
%
 
$
156.3

 
5.2
%
Orange
 
103.8

 
3.2
%
 
83.2

 
2.8
%
Yellow
 
398.1

 
12.5
%
 
343.3

 
11.5
%
Green
 
2,472.2

 
77.6
%
 
2,408.5

 
80.5
%
 
 
$
3,186.5

 
100.0
%
 
$
2,991.3

 
100.0
%

109


Portfolio and Investment Activity
The fair value of our investments was approximately $2,991.3 million in 114 portfolio companies at March 31, 2020 and approximately $3,160.3 million in 114 portfolio companies at December 31, 2019.
The following table shows our portfolio and investment activity for the three months ended March 31, 2020 and March 31, 2019:
 
 
Three Months Ended
(in millions)
 
March 31, 2020
 
March 31, 2019
New investments in 17 and 17 portfolio companies, respectively
 
$
181.7

 
$
158.3

Debt repayments in existing portfolio companies
 
151.5

 
5.9

Sales of securities in 3 and 0 portfolio companies, respectively
 
38.6

 

Change in unrealized appreciation on 6 and 38 portfolio companies, respectively
 
1.0

 
19.6

Change in unrealized depreciation on 112 and 54 portfolio companies, respectively
 
(205.7
)
 
(3.3
)
Recent Accounting Standards Updates
See Item 1.—Financial Statements—Note 13. Recent Accounting Standards for details on recent accounting standards updates.
Results of Operations for the Three Months Ended March 31, 2020 and March 31, 2019
Revenue
 
 
Three Months Ended
(in thousands)
 
March 31, 2020
 
March 31, 2019
Interest income
 
$
61,636

 
$
47,924

Total dividend income
 
10,493

 
13,493

Other income
 
1,955

 
2,774

Total investment income
 
$
74,084

 
$
64,191

Our total investment income increased by approximately $9.9 million, or 15%, for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019. For the three months ended March 31, 2020, total investment income of approximately $74.1 million consisted of approximately $53.6 million in cash interest from investments, approximately $3.5 million in PIK and non-cash interest from investments, approximately $1.0 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $3.5 million, approximately $8.9 million in cash dividends from investments, approximately $1.6 million in PIK and non-cash dividends from investments and approximately $2.0 million in other income. The increase in interest income of approximately $13.7 million during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019 was primarily due to increased interest income which is attributable to larger invested balances. Our larger invested balances were driven by the proceeds from our June 2019 convertible notes issuances, proceeds from our April 2019 unsecured notes issuances, higher drawn balances on our Holdings Credit Facility (as defined below), borrowings from our DB Credit Facility (as defined below) and proceeds from the July 2019 and October 2019 public offerings of our common stock, all of which contributed to the origination of new investments. The decrease in dividend income for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019 was primarily due to the reversal of approximately $3.4 million of previously recorded PIK dividends related to our preferred shares in Permian Holdco 1, Inc., which was deemed to no longer be collectible. Other income during the three months ended March 31, 2020, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront and amendment fees received from 10 different portfolio companies and management fees from a non-controlled affiliated portfolio company.

110


Operating Expenses
 
 
Three Months Ended
(in thousands)
 
March 31, 2020
 
March 31, 2019
Management fee
 
$
13,858

 
$
10,975

Less: management fee waiver
 
(3,543
)
 
(2,533
)
Total management fee
 
10,315

 
8,442

Incentive fee
 
7,826

 
6,863

Interest and other financing expenses
 
22,194

 
19,146

Professional fees
 
905

 
766

Administrative expenses
 
1,040

 
1,095

Other general and administrative expenses
 
499

 
412

Net expenses before income taxes
 
42,779

 
36,724

Income tax expense
 

 
17

Net expenses after income taxes
 
$
42,779

 
$
36,741

Our total net operating expenses increased by approximately $6.0 million for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019. Our management fee increased by approximately $1.9 million, net of a management fee waiver, and our incentive fee increased by approximately $1.0 million for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019. The increase in management and incentive fees was attributable to larger invested balances, driven by the proceeds from our convertible notes issuances, our unsecured notes issuances, our July 2019 and October 2019 public offering of common stock and our use of leverage from our revolving credit facilities and SBA-guaranteed debentures used to originate new investments.
Interest and other financing expenses increased by approximately $3.0 million during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019, primarily due to our issuances of unsecured notes and higher drawn balances on our SBA-guaranteed debentures, Holdings Credit Facility, NMFC Credit Facility and DB Credit Facility. Our total professional fees, administrative expenses and total other general and administrative expenses for the three months ended March 31, 2020 as compared to the three months ended March 31, 2019 remained relatively flat.
Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)
 
 
Three Months Ended
(in thousands)
 
March 31, 2020
 
March 31, 2019
Net realized gains on investments
 
$
114

 
$
46

Net change in unrealized (depreciation) appreciation of investments
 
(204,739
)
 
16,314

Benefit for taxes
 
898

 
110

Net realized and unrealized (losses) gains
 
$
(203,727
)
 
$
16,470

Our net realized gains and unrealized losses resulted in a net loss of approximately $203.7 million for the three months ended March 31, 2020 compared to net realized and unrealized gains resulting in a net gain of approximately $16.5 million for the same period in 2019. As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together. The net loss for the three months ended March 31, 2020 was primarily driven by the overall decrease in market prices of our investments during the period due to the impact of COVID-19. The provision for income taxes was attributable to equity investments that are held as of March 31, 2020 in three of our corporate subsidiaries. The net gain for the three months ended March 31, 2019 was primarily driven by the overall increase in market prices of our investments during the period.


111


Liquidity and Capital Resources
The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate purposes.
Since our IPO, and through March 31, 2020, we raised approximately $893.2 million in net proceeds from additional offerings of common stock.
Our liquidity is generated and generally available through advances from the revolving credit facilities, from cash flows from operations, and, we expect, through periodic follow-on equity offerings. In addition, we may from time to time enter into additional debt facilities, increase the size of existing facilities or issue additional debt securities, including unsecured debt and/or debt securities convertible into common stock. Any such incurrence or issuance would be subject to prevailing market conditions, our liquidity requirements, contractual and regulatory restrictions and other factors. As permitted by the Small Business Credit Availability Act (the “SBCA”) on June 8, 2018 our shareholders approved the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act, as amended by the SBCA, which resulted in the reduction from 200.0% to 150.0% of the minimum asset coverage ratio applicable to us as of June 9, 2018. In accordance with the 1940 Act, with certain limited exceptions, we are only allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 150.0% after such borrowing (which means we can borrow $2 for every $1 of our equity). As a result of our exemptive relief received on November 5, 2014, we are permitted to exclude our SBA-guaranteed debentures from the 150.0% asset coverage ratio that the we are required to maintain under the 1940 Act. The agreements governing the NMFC Credit Facility, the 2018 Convertible Notes and the Unsecured Notes (as defined below) contain certain covenants and terms, including a requirement that we not exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring additional indebtedness and a requirement that we not exceed a secured debt ratio of 0.70 to 1.00 at any time. As of March 31, 2020, our asset coverage ratio was 164.1%.
At March 31, 2020 and December 31, 2019, we had cash and cash equivalents of approximately $22.1 million and $48.6 million, respectively. Our cash used in operating activities during the three months ended March 31, 2020 and March 31, 2019 was approximately $13.5 million and $139.3 million, respectively. We expect that all current liquidity needs will be met with cash flows from operations and other activities.
Borrowings
Holdings Credit Facility—On December 18, 2014, we entered into the Second Amended and Restated Loan and Security Agreement among us, as the Collateral Manager, NMF Holdings, as the Borrower, Wells Fargo Securities, LLC, as the Administrative Agent and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian (as amended from time to time, the "Holdings Credit Facility"). As of the most recent amendment on September 6, 2019, the maturity date of the Holdings Credit Facility is October 24, 2022, and the maximum facility amount is the lesser of $800.0 million and the actual commitments of the lenders to make advances as of such date.
As of March 31, 2020, the maximum amount of revolving borrowings available under the Holdings Credit Facility is $800.0 million. Under the Holdings Credit Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0% or 70.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Bank, National Association. The Holdings Credit Facility is non-recourse to us and is collateralized by all of the investments of NMF Holdings on an investment by investment basis. All fees associated with the origination or upsizing of the Holdings Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the Holdings Credit Facility. The Holdings Credit Facility contains certain customary affirmative and negative covenants and events of default. In addition, the Holdings Credit Facility requires us to maintain a minimum asset coverage ratio of 150.0%. The covenants are generally not tied to mark to market fluctuations in the prices of NMF Holdings investments, but rather to the performance of the underlying portfolio companies.
The Holdings Credit Facility bears interest at a rate of LIBOR plus 1.75% per annum for Broadly Syndicated Loans (as defined in the Loan and Security Agreement) and LIBOR plus 2.25% per annum for all other investments. The Holdings Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Loan and Security Agreement).
    

112


The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the Holdings Credit Facility for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
(in millions)
March 31, 2020
 
March 31, 2019
Interest expense
$
5.4

 
$
6.3

Non-usage fee
$
0.2

 
$
0.1

Amortization of financing costs
$
0.3

 
$
0.7

Weighted average interest rate
3.5
%
 
4.5
%
Effective interest rate
3.8
%
 
5.1
%
Average debt outstanding
$
629.5

 
$
566.3

As of March 31, 2020 and December 31, 2019, the outstanding balance on the Holdings Credit Facility was $569.2 million and $661.6 million, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.
NMFC Credit Facility—The Senior Secured Revolving Credit Agreement, (as amended from time to time, and together with the related guarantee and security agreement, the "NMFC Credit Facility"), dated June 4, 2014, among us, as the Borrower, Goldman Sachs Bank USA, as the Administrative Agent and Collateral Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A., as Lenders, is structured as a senior secured revolving credit facility. The NMFC Credit Facility is guaranteed by certain of our domestic subsidiaries and proceeds from the NMFC Credit Facility may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the NMFC Credit Facility is June 4, 2022.
As of March 31, 2020, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $188.5 million. We are permitted to borrow at various advance rates depending on the type of portfolio investment as outlined in the related Senior Secured Revolving Credit Agreement. All fees associated with the origination of the NMFC Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the NMFC Credit Facility. The NMFC Credit Facility contains certain customary affirmative and negative covenants and events of default, including certain financial covenants related to the asset coverage and liquidity and other maintenance covenants.
The NMFC Credit Facility generally bears interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charges a commitment fee, based on the unused facility amount multiplied by 0.375% per annum (as defined in the Senior Secured Revolving Credit Agreement).
The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the NMFC Credit Facility for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
(in millions)
March 31, 2020
 
March 31, 2019
Interest expense
$
1.9

 
$
1.0

Non-usage fee
$

 
$
0.1

Amortization of financing costs
$

 
$
0.1

Weighted average interest rate
4.1
%
 
5.1
%
Effective interest rate
4.2
%
 
5.9
%
Average debt outstanding
$
188.5

 
$
81.5

 
(1)
For the three months ended March 31, 2020, the total amortization of financing costs were less than $50 thousand.
As of March 31, 2020 and December 31, 2019, the outstanding balance on the NMFC Credit Facility was $188.5 million and $188.5 million, respectively, and NMFC was in compliance with the applicable covenants in the NMFC Credit Facility on such dates.
DB Credit Facility—The Loan Financing and Servicing Agreement (the "DB Credit Facility") dated December 14, 2018 and as amended from time to time, among NMFDB as the borrower, Deutsche Bank AG, New York Branch ("Deutsche

113


Bank") as the facility agent, Lender and other agent from time to time party thereto and U.S. Bank National Association, as collateral agent and collateral custodian, is structured as a secured revolving credit facility and matures on December 14, 2023.
As of March 31, 2020, the maximum amount of revolving borrowings available under the DB Credit Facility was $280.0 million. We are permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the Loan Financing and Servicing Agreement. The DB Credit Facility is non-recourse to us and is collateralized by all of the investments of NMFDB on an investment by investment basis. All fees associated with the origination of the DB Credit Facility are capitalized on our Consolidated Statement of Assets and Liabilities and charged against income as other financing expenses over the life of the DB Credit Facility. The DB Credit Facility contains certain customary affirmative and negative covenants and events of default. The covenants are generally not tied to mark to market fluctuations in the prices of NMFDB investments, but rather to the performance of the underlying portfolio companies.
The advances under the DB Credit Facility accrue interest at a per annum rate equal to the Applicable Margin plus the lender's Cost of Funds Rate. The "Applicable Margin" is equal to 2.85% during the Revolving Period and then increases by 0.20% during an Event of Default. The "Cost of Funds Rate" for a conduit lender is the lower of its commercial paper rate and the Base Rate plus 0.50%, and for any other lender is the Base Rate. The "Base Rate" is the three-months LIBOR Rate but may become an alternative base rate based on Deutsche Bank's base lending rate if certain LIBOR disruption events occur. We are also charged a non-usage fee, based on the unused facility amount multiplied by the Undrawn Fee Rate (as defined in the Loan Financing and Servicing Agreement).
The following table summarizes the interest expense, non-usage fees and amortization of financing costs incurred on the DB Credit Facility for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
(in millions)
March 31, 2020
 
March 31, 2019
Interest expense(1)
$
2.6

 
$
0.5

Non-usage fee(1)
$
0.1

 
$
0.1

Amortization of financing costs
$
0.2

 
$
0.1

Weighted average interest rate
4.5
%
 
5.6
%
Effective interest rate
4.9
%
 
7.1
%
Average debt outstanding
$
235.1

 
$
38.5


(1)
Interest expense includes the portion of the facility agent fee applicable to the drawn portion of the DB Credit Facility and non-usage fee includes the portion of the facility agent fee applicable to the undrawn portion of the DB Credit Facility.
As of March 31, 2020 and December 31, 2019, the outstanding balance on the DB Credit Facility was $270.0 million and $230.0 million, respectively, and NMFDB was in compliance with the applicable covenants in the DB Credit Facility on such date.
Unsecured Management Company Revolver—The Uncommitted Revolving Loan Agreement, (the "Unsecured Management Company Revolver"), dated March 30, 2020, among us as the Borrower and NMF Investments III, L.L.C., as Lender, an affiliate of the Investment Adviser, is structured as a discretionary unsecured revolving credit facility. The proceeds from the Unsecured Management Company Revolver may be used for general corporate purposes, including the funding of portfolio investments. The maturity date of the Unsecured Management Company Revolver is December 31, 2022. The Unsecured Management Company Revolver generally bears interest at a rate of 7.00% per annum (as defined in the Uncommitted Revolving Loan Agreement). As of March 31, 2020, the maximum amount of revolving borrowings available under the Unsecured Management Company Revolver was $30.0 million and no borrowings were outstanding. Subsequent to March 31, 2020, the Unsecured Management Company Revolver's maximum amounts of revolving borrowings available was increased to $50.0 million (see Recent Developments).
NMNLC Credit Facility—The Revolving Credit Agreement (together with the related guarantee and security agreement, the “NMNLC Credit Facility”), dated September 21, 2018, among NMNLC, as the Borrower, and KeyBank National Association, as the Administrative Agent and Lender, is structured as a senior secured revolving credit facility and matures on September 23, 2020. The NMNLC Credit Facility is guaranteed by us and proceeds from the NMNLC Credit Facility may be used for funding of additional acquisition properties.

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The NMNLC Credit Facility generally bears interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charges a commitment fee, based on the unused facility amount multiplied by 0.15% per annum (as defined in the Revolving Credit Agreement).
As of March 31, 2020, the maximum amount of revolving borrowings available under the NMNLC Credit Facility was $30.0 million. For the three months ended March 31, 2020, interest expense, non-usage fees and amortization of financing costs were each less than $50 thousand. For the three months ended March 31, 2019, interest expense, non-usage fees and amortization of financing costs were each less than $50 thousand. As of March 31, 2020 and December 31, 2019, the outstanding balance on the NMNLC Credit Facility was $0 and $0, respectively, and NMNLC was in compliance with the applicable covenants in the NMNLC Credit Facility on such date.
Convertible Notes
2014 Convertible Notes—On June 3, 2014, we closed a private offering of $115.0 million aggregate principal amount of unsecured convertible notes (the “2014 Convertible Notes”), pursuant to an indenture, dated June 3, 2014 (the “2014 Indenture”). The 2014 Convertible Notes were issued in a private placement only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). As of June 3, 2015, the restrictions under Rule 144A under the Securities Act were removed, allowing the 2014 Convertible Notes to be eligible and freely tradable without restrictions for resale pursuant to Rule 144(b)(1) under the Securities Act. On September 30, 2016, we closed a public offering of an additional $40.3 million aggregate principal amount of the 2014 Convertible Notes. These additional 2014 Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115.0 million aggregate principal amount of 2014 Convertible Notes that we issued on June 3, 2014.
The 2014 Convertible Notes bore interest at an annual rate of 5.0%, payable semi-annually in arrears on June 15 and December 15 of each year, which commenced on December 15, 2014.
On June 15, 2019, our $155.3 million aggregate principal amount of 2014 Convertible Notes matured and we repaid the outstanding principal and accrued but unpaid interest in cash.
2018 Convertible Notes—On August 20, 2018, we closed a registered public offering of $100.0 million aggregate principal amount of unsecured convertible notes (the “2018 Convertible Notes” and together with the 2014 Convertible Notes, the "Convertible Notes"), pursuant to an indenture, dated August 20, 2018, as supplemented by a first supplemental indenture thereto, dated August 20, 2018 (together the “2018A Indenture”). On August 30, 2018, in connection with the registered public offering, we issued an additional $15.0 million aggregate principal amount of the 2018 Convertible Notes pursuant to the exercise of an overallotment option by the underwriter of the 2018 Convertible Notes. On June 7, 2019, we closed a registered public offering of an additional $86.3 million aggregate principal amount of the 2018 Convertible Notes. These additional 2018 Convertible Notes constitute a further issuance of, rank equally in right of payment with, and form a single series with the $115.0 million aggregate principal amount of 2018 Convertible Notes that we issued in August 2018.
The 2018 Convertible Notes bear interest at an annual rate of 5.75%, payable semi-annually in arrears on February 15 and August 15 of each year. The 2018 Convertible Notes will mature on August 15, 2023 unless earlier converted, repurchased or redeemed pursuant to the terms of the 2018A Indenture. We may not redeem the 2018 Convertible Notes prior to May 15, 2023. On or after May 15, 2023, we may redeem the 2018 Convertible Notes for cash, in whole or from time to time in part, at our option at a redemption price, subject to an exception for redemption dates occurring after a record date but on or prior to the interest payment date, equal to the sum of (i) 100% of the principal amount of the 2018 Convertible Notes to be redeemed, (ii) accrued and unpaid interest thereon to, but excluding, the redemption date and (iii) a make-whole premium.
No sinking fund is provided for the 2018 Convertible Notes. Holders of 2018 Convertible Notes may, at their option, convert their 2018 Convertible Notes into shares of our common stock at any time on or prior to the close of business on the business day immediately preceding the maturity date of the 2018 Convertible Notes. In addition, if certain corporate events occur, holders of the 2018 Convertible Notes may require us to repurchase for cash all or part of their 2018 Convertible Notes at a repurchase price equal to 100.0% of the principal amount of the 2018 Convertible Notes to be repurchased, plus accrued and unpaid interest through, but excluding, the repurchase date.
The 2018A Indenture contains certain covenants, including covenants requiring us to provide certain financial information to the holders of the 2018 Convertible Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. The 2018A Indenture also includes additional financial covenants related to our asset coverage ratio. These covenants are subject to limitations and exceptions that are described in the 2018A Indenture.

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The following table summarizes certain key terms related to the convertible features of our 2018 Convertible Notes as of March 31, 2020.
 
2018 Convertible Notes
Initial conversion premium
10.0
%
Initial conversion rate(1)
65.8762

Initial conversion price
$
15.18

Conversion premium at March 31, 2020
10.0
%
Conversion rate at March 31, 2020(1)(2)
65.8762

Conversion price at March 31, 2020(2)(3)
$
15.18

Last conversion price calculation date
August 20, 2019

 
(1)
Conversion rates denominated in shares of common stock per $1.0 thousand principal amount of the 2018 Convertible Notes converted.
(2)
Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.
(3)
The conversion price in effect at March 31, 2020 was calculated on the last anniversary of the issuance and will be calculated again on the next anniversary, unless the exercise price shall have changed by more than 1.0% before the anniversary.
The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.34 per share per quarter and certain changes in control. Certain of these adjustments, including adjustments for increases in dividends, are subject to a conversion price floor of $13.80 per share. In no event will the total number of shares of common stock issuable upon conversion exceed 72.4637 per $1 principal amount. We have determined that the embedded conversion option in the 2018 Convertible Notes is not required to be separately accounted for as a derivative under GAAP.
The 2018 Convertible Notes are unsecured obligations and rank senior in right of payment to our existing and future indebtedness, if any, that is expressly subordinated in right of payment to the 2018 Convertible Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries and financing vehicles. As reflected in Note 11. Earnings Per Share, the issuance is considered part of the if-converted method for calculation of diluted earnings per share.
The following table summarizes the interest expense, amortization of financing costs and amortization of premium incurred on the Convertible Notes for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
(in millions)
March 31, 2020
 
March 31, 2019
Interest expense
$
2.9

 
$
3.6

Amortization of financing costs
$
0.1

 
$
0.3

Amortization of premium
$
—(1)

 
$

Weighted average interest rate
5.8
%
 
5.4
%
Effective interest rate
5.9
%
 
5.9
%
Average debt outstanding
$
201.3

 
$
270.3

 
(1)
For the three months ended March 31, 2020 and March 31, 2019, the amortization of premium was less than $50 thousand.
As of March 31, 2020 and December 31, 2019, the outstanding balance on the Convertible Notes was $201.2 million and $201.2 million, respectively, and NMFC was in compliance with the terms of the 2018A Indenture on such date.
Unsecured Notes
On May 6, 2016, we issued $50.0 million in aggregate principal amount of five-year unsecured notes that mature on May 15, 2021 (the “2016 Unsecured Notes”), pursuant to a note purchase agreement, dated May 4, 2016, to an institutional

116


investor in a private placement. On September 30, 2016, we entered into an amended and restated note purchase agreement (the "NPA") and issued an additional $40.0 million in aggregate principal amount of 2016 Unsecured Notes to institutional investors in a private placement. On June 30, 2017, we issued $55.0 million in aggregate principal amount of five-year unsecured notes that mature on July 15, 2022 (the "2017A Unsecured Notes"), pursuant to the NPA and a supplement to the NPA. On January 30, 2018, we issued $90.0 million in aggregate principal amount of five year unsecured notes that mature on January 30, 2023 (the "2018A Unsecured Notes") pursuant to the NPA and a second supplement to the NPA. On July 5, 2018, we issued $50.0 million in aggregate principal amount of five year unsecured notes that mature on June 28, 2023 (the "2018B Unsecured Notes") pursuant to the NPA and a third supplement to the NPA (the "Third Supplement"). On April 30, 2019, we issued $116.5 million in aggregate principal amount of five year unsecured notes that mature on April 30, 2024 (the "2019A Unsecured Notes") pursuant to the NPA and a fourth supplement to the NPA. The NPA provides for future issuances of unsecured notes in separate series or tranches.
The 2016 Unsecured Notes bear interest at an annual rate of 5.313%, payable semi-annually on May 15 and November 15 of each year. The 2017A Unsecured Notes bear interest at an annual rate of 4.760%, payable semi-annually on January 15 and July 15 of each year. The 2018A Unsecured Notes bear interest at an annual rate of 4.870%, payable semi-annually on February 15 and August 15 of each year. The 2018B Unsecured Notes bear interest at an annual rate of 5.360%, payable semi-annually on January 15 and July 15 of each year. These interest rates are subject to increase in the event that: (i) subject to certain exceptions, the underlying unsecured notes or we cease to have an investment grade rating or (ii) the aggregate amount of our unsecured debt falls below $150.0 million.  In each such event, we have the option to offer to prepay the underlying unsecured notes at par, in which case holders of the underlying unsecured notes who accept the offer would not receive the increased interest rate. In addition, we are obligated to offer to prepay the underlying unsecured notes at par if the Investment Adviser, or an affiliate thereof, ceases to be our investment adviser or if certain change in control events occur with respect to the Investment Adviser. 
The NPA contains customary terms and conditions for unsecured notes issued, including, without limitation, an option to offer to prepay all or a portion of the unsecured notes under its governance at par (plus a make-whole amount if applicable), affirmative and negative covenants such as information reporting, maintenance of our status as a BDC under the 1940 Act and a RIC under the Code, minimum stockholders’ equity, minimum asset coverage ratio, and prohibitions on certain fundamental changes at NMFC or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of NMFC or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy. The Third Supplement includes additional financial covenants related to asset coverage as well as other terms.
On September 25, 2018, we closed a registered public offering of $50.0 million in aggregate principal amount of five-year 5.75% Unsecured Notes (together with the 2016 Unsecured Notes, 2017A Unsecured Notes, 2018A Unsecured Notes and 2018B Unsecured Notes, the "Unsecured Notes"), pursuant to an indenture, dated August 20, 2018, as supplemented by a second supplemental indenture thereto, dated September 25, 2018 (together, the "2018B Indenture"). On October 17, 2018, in connection with the registered public offering, we issued an additional $1.8 million aggregate principal amount of the 5.75% Unsecured Notes pursuant to the exercise of an overallotment option by the underwriters of the 5.75% Unsecured Notes.
The 5.75% Unsecured Notes bear interest at an annual rate of 5.75%, payable quarterly on January 1, April 1, July 1 and October 1 of each year. The 5.75% Unsecured Notes will mature on October 1, 2023 unless earlier redeemed. The 5.75% Unsecured Notes are listed on the New York Stock Exchange and trade under the trading symbol “NMFX.”
We may redeem the 5.75% Unsecured Notes, in whole or in part, at any time, or from time to time, at our option on or after October 1, 2020, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price of 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to but not including the date fixed for redemption.
No sinking fund is provided for the 5.75% Unsecured Notes and holders of the 5.75% Unsecured Notes have no option to have their 5.75% Unsecured Notes repaid prior to the stated maturity date.
The 2018B Indenture contains certain covenants, including covenants requiring us to (i) comply with the asset coverage requirements set forth in Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a) of the 1940 Act as may be applicable to us from time to time or any successor provisions, whether or not we continue to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to us by the SEC and (ii) provide certain financial information to the holders of the 5.75% Unsecured Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. The 2018B Indenture also includes additional financial covenants related to asset coverage. These covenants are subject to limitations and exceptions that are described in the 2018B Indenture.

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The 2018B Indenture provides for customary events of default and further provides that the trustee or the holders of 25% in aggregate principal amount of the outstanding 5.75% Unsecured Notes may declare such 5.75% Unsecured Notes immediately due and payable upon the occurrence of any event of default after expiration of any applicable grace period.
The Unsecured Notes are unsecured obligations and rank senior in right of payment to our existing and future indebtedness, if any, that is expressly subordinated in right of payment to the Unsecured Notes; equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries and financing vehicles.
The following table summarizes the interest expense and amortization of financing costs incurred on the Unsecured Notes for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
(in millions)
March 31, 2020
 
March 31, 2019
Interest expense
$
6.0

 
$
4.4

Amortization of financing costs
$
0.3

 
$
0.3

Weighted average interest rate
5.3
%
 
5.3
%
Effective interest rate
5.6
%
 
5.6
%
Average debt outstanding
$
453.3

 
$
336.8

As of March 31, 2020 and December 31, 2019, the outstanding balance on the Unsecured Notes was $453.3 million and $453.3 million, respectively, and we were in compliance with the terms of the NPA and the 2018B Indenture as of such dates, as applicable.
SBA-guaranteed debentures—On August 1, 2014 and August 25, 2017, respectively, SBIC I and SBIC II received SBIC licenses from the SBA to operate as SBICs.
The SBIC license allows SBICs to obtain leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA-guaranteed debentures are non-recourse to us, interest only debentures with interest payable semi-annually and have a ten year maturity. The principal amount of SBA-guaranteed debentures is not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA-guaranteed debentures is fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with ten year maturities. The SBA, as a creditor, will have a superior claim to the assets of SBIC I and SBIC II over our stockholders in the event SBIC I and SBIC II are liquidated or the SBA exercises remedies upon an event of default.
The maximum amount of borrowings available under current SBA regulations for a single licensee is $150.0 million as long as the licensee has at least $75.0 million in regulatory capital, receives a capital commitment from the SBA and has been through an examination by the SBA subsequent to licensing. In June 2018, legislation amended the 1958 Act by increasing the individual leverage limit from $150.0 million to $175.0 million, subject to SBA approvals.

118


As of March 31, 2020 and December 31, 2019, SBIC I had regulatory capital of $75.0 million and $75.0 million, respectively, and SBA-guaranteed debentures outstanding of $150.0 million and $150.0 million, respectively. As of March 31, 2020 and December 31, 2019, SBIC II had regulatory capital of $75.0 million and $64.5 million, respectively, and $150.0 million and $75.0 million, respectively, of SBA-guaranteed debentures outstanding. The SBA-guaranteed debentures incur upfront fees of 3.435%, which consists of a 1.00% commitment fee and a 2.435% issuance discount, which are amortized over the life of the SBA-guaranteed debentures. The following table summarizes our SBA-guaranteed debentures as of March 31, 2020.
(in millions)
 
 
 
 
 
 
 
 
Issuance Date
 
Maturity Date
 
Debenture Amount
 
Interest Rate
 
SBA Annual Charge
Fixed SBA-guaranteed debentures(1):
 
 
 
 

 
 

 
 

March 25, 2015
 
March 1, 2025
 
$
37.5

 
2.517
%
 
0.355
%
September 23, 2015
 
September 1, 2025
 
37.5

 
2.829
%
 
0.355
%
September 23, 2015
 
September 1, 2025
 
28.8

 
2.829
%
 
0.742
%
March 23, 2016
 
March 1, 2026
 
13.9

 
2.507
%
 
0.742
%
September 21, 2016
 
September 1, 2026
 
4.0

 
2.051
%
 
0.742
%
September 20, 2017
 
September 1, 2027
 
13.0

 
2.518
%
 
0.742
%
March 21, 2018
 
March 1, 2028
 
15.3

 
3.187
%
 
0.742
%
Fixed SBA-guaranteed debentures(2):
 

 


 


 


September 19, 2018
 
September 1, 2028
 
15.0

 
3.548
%
 
0.222
%
September 25, 2019
 
September 1, 2029
 
19.0

 
2.283
%
 
0.222
%
March 25, 2020
 
March 1, 2030
 
24.0

 
2.078
%
 
0.222
%
March 25, 2020
 
March 1, 2030
 
17.0

 
2.078
%
 
0.222
%
March 25, 2020
 
March 1, 2030
 
24.0

 
2.078
%
 
0.275
%
Interim SBA-guaranteed debentures(2):
 
 
 
 
 
 
 
 
 
 
September 1, 2030 (3)
 
30.0

 
1.279
%
 
0.275
%
 
 
September 1, 2030 (3)
 
21.0

 
1.393
%
 
0.275
%
Total SBA-guaranteed debentures
 
 
 
$
300.0

 
 

 
 

 
(1)
SBA-guaranteed debentures are held in SBIC I.
(2)
SBA-guaranteed debentures are held in SBIC II.
(3)
Estimated maturity date as interim SBA-debentures are expected to pool in September 2020.
Prior to pooling, the SBA-guaranteed debentures bear interest at an interim floating rate of LIBOR plus 0.30%. Once pooled, which occurs in March and September each year, the SBA-guaranteed debentures bear interest at a fixed rate that is set to the current 10-year treasury rate plus a spread at each pooling date.
The following table summarizes the interest expense and amortization of financing costs incurred on the SBA-guaranteed debentures for the three months ended March 31, 2020 and March 31, 2019.
 
Three Months Ended
(in millions)
March 31, 2020
 
March 31, 2019
Interest expense
$
1.8

 
$
1.3

Amortization of financing costs
$
0.2

 
$
0.1

Weighted average interest rate
3.0
%
 
3.3
%
Effective interest rate
3.4
%
 
3.6
%
Average debt outstanding
$
243.1

 
$
165.0

The SBIC program is designed to stimulate the flow of private investor capital into eligible smaller businesses, as defined by the SBA. Under SBA regulations, SBICs are subject to regulatory requirements, including making investments in SBA-eligible businesses, investing at least 25.0% of its investment capital in eligible smaller businesses, as defined under the 1958 Act, placing certain limitations on the financing terms of investments, regulating the types of financing, prohibiting investments in small businesses with certain characteristics or in certain industries and requiring capitalization thresholds that limit distributions to us. SBICs are subject to an annual periodic examination by an SBA examiner to determine the SBIC's compliance with the relevant SBA regulations and an annual financial audit of its financial statements that are prepared on a

119


basis of accounting other than GAAP (such as ASC 820) by an independent auditor. As of March 31, 2020 and December 31, 2019, SBIC I and SBIC II were in compliance with SBA regulatory requirements.
Off-Balance Sheet Arrangements
We may become 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 may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. As of March 31, 2020 and December 31, 2019, we had outstanding commitments to third parties to fund investments totaling $150.9 million and $203.8 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.
We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future. As of March 31, 2020 and December 31, 2019, we had commitment letters to purchase investments in an aggregate par amount of $0 and $34.2 million, respectively. As of March 31, 2020 and December 31, 2019, we had not entered into any bridge financing commitments which could require funding in the future.
As of March 31, 2020, we had unfunded commitments related to an equity investment in SLP III of $10.0 million, which may be funded at our discretion.
Contractual Obligations
A summary of our significant contractual payment obligations as of March 31, 2020 is as follows:
 
 
Contractual Obligations Payments Due by Period
(in millions)
 
Total
 
Less than
1 Year
 
1 - 3 Years
 
3 - 5 Years
 
More than
5 Years
Holdings Credit Facility(1)
 
$
569.2

 
$

 
$
569.2

 
$

 
$

Unsecured Notes(2)
 
453.3

 

 
235.0

 
218.3

 

SBA-guaranteed debentures(3)
 
300.0

 

 

 
37.5

 
262.5

DB Credit Facility(4)
 
270.0

 

 

 
270.0

 

Convertible Notes(5)
 
201.2

 

 

 
201.2

 

NMFC Credit Facility(6)
 
188.5

 

 
188.5

 

 

Total Contractual Obligations
 
$
1,982.2

 
$

 
$
992.7

 
$
727.0

 
$
262.5

 
(1)
Under the terms of the $800.0 million Holdings Credit Facility, all outstanding borrowings under that facility ($569.2 million as of March 31, 2020) must be repaid on or before October 24, 2022. As of March 31, 2020, there was approximately $230.8 million of possible capacity remaining under the Holdings Credit Facility.
(2)
$90.0 million of the 2016 Unsecured Notes will mature on May 15, 2021 unless earlier repurchased, $55.0 million of the 2017A Unsecured Notes will mature on July 15, 2022 unless earlier repurchased, $90.0 million of the 2018A Unsecured Notes will mature on January 30, 2023 unless earlier repurchased, $50.0 million of the 2018B Unsecured Notes will mature on June 28, 2023 unless earlier repurchased, $51.8 million of the 5.75% Unsecured Notes will mature on October 1, 2023 unless earlier repurchased and $116.5 million of the 2019A Unsecured Notes will mature on April 30, 2024 unless earlier repurchased.
(3)
Our SBA-guaranteed debentures will begin to mature on March 1, 2025.
(4)
Under the terms of the $280.0 million DB Credit Facility, all outstanding borrowings under that facility ($270.0 million as of March 31, 2020) must be repaid on or before December 14, 2023. As of March 31, 2020, there was approximately $10.0 million of possible capacity remaining under the DB Credit Facility.
(5)
The 2018 Convertible Notes will mature on August 15, 2023 unless earlier converted or repurchased at the holder's option or redeemed by us.
(6)
Under the terms of the $188.5 million NMFC Credit Facility, all outstanding borrowings under that facility ($188.5 million as of March 31, 2020) must be repaid on or before June 4, 2022. As of March 31, 2020, there was no capacity remaining under the NMFC Credit Facility.

We have entered into the Investment Management Agreement with the Investment Adviser in accordance with the 1940 Act. Under the Investment Management Agreement, the Investment Adviser has agreed to provide us with investment advisory and management services. We have agreed to pay for these services (1) a management fee and (2) an incentive fee based on our performance.

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We have also entered into the administration agreement, as amended and restated (the "Administration Agreement") with the Administrator. Under the Administration Agreement, the Administrator has agreed to arrange office space for us and provide office equipment and clerical, bookkeeping and record keeping services and other administrative services necessary to conduct our respective day-to-day operations. The Administrator has also agreed to maintain, or oversee the maintenance of, our financial records, our reports to stockholders and reports filed with the SEC.
If any of the contractual obligations discussed above are terminated, our costs under any new agreements that are entered into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under the Investment Management Agreement and the Administration Agreement.
Distributions and Dividends
Distributions declared and paid to stockholders for the three months ended March 31, 2020 totaled approximately $32.9 million.
The following table reflects cash distributions, including dividends and returns of capital, if any, per share that have been declared by our board of directors for the two most recent fiscal years and the current fiscal year to date:
Fiscal Year Ended
 
Date Declared
 
Record Date
 
Payment Date
 
Per Share
Amount (1)
December 31, 2020
 
 
 
 
 
 
 
 
First Quarter
 
February 19, 2020
 
March 13, 2020
 
March 27, 2020
 
$
0.34

 
 
 
 
 
 
 
 
$
0.34

December 31, 2019
 
 
 
 
 
 
 
 
Fourth Quarter
 
November 4, 2019
 
December 13, 2019
 
December 27, 2019
 
$
0.34

Third Quarter
 
August 1, 2019
 
September 13, 2019
 
September 27, 2019
 
0.34

Second Quarter
 
May 1, 2019
 
June 14, 2019
 
June 28, 2019
 
0.34

First Quarter
 
February 22, 2019
 
March 15, 2019
 
March 29, 2019
 
0.34

 
 
 
 
 
 
 
 
$
1.36

December 31, 2018
 
 
 
 
 
 
 
 
Fourth Quarter
 
November 1, 2018
 
December 14, 2018
 
December 28, 2018
 
$
0.34

Third Quarter
 
August 1, 2018
 
September 14, 2018
 
September 28, 2018
 
0.34

Second Quarter
 
May 2, 2018
 
June 15, 2018
 
June 29, 2018
 
0.34

First Quarter
 
February 21, 2018
 
March 15, 2018
 
March 29, 2018
 
0.34

 
 
 
 
 
 
 
 
$
1.36

 
(1)
Tax characteristics of all distributions paid are reported to stockholders on Form 1099 after the end of the calendar year. For the years ended December 31, 2019 and December 31, 2018, total distributions were $117.4 million and $103.4 million, respectively, of which the distributions were comprised of approximately 72.01% and 83.74%, respectively, of ordinary income, 0.00% and 0.00%, respectively, of long-term capital gains and approximately 27.99% and 16.26%, respectively, of a return of capital. Future quarterly distributions, if any, will be determined by our board of directors.
We intend to pay quarterly distributions to our stockholders in amounts sufficient to maintain our status as a RIC. We intend to distribute approximately all of our net investment income on a quarterly basis and substantially all of our taxable income on an annual basis, except that we may retain certain net capital gains for reinvestment.
We maintain an "opt out" dividend reinvestment plan on behalf of our common stockholders, pursuant to which each of our stockholders' cash distributions will be automatically reinvested in additional shares of common stock, unless the stockholder elects to receive cash. See Item 1— Financial Statements—Note 2. Summary of Significant Accounting Policies for additional details regarding our dividend reinvestment plan.
Related Parties
We have entered into a number of business relationships with affiliated or related parties, including the following:
We have entered into the Investment Management Agreement with the Investment Adviser, a wholly-owned subsidiary of New Mountain Capital. Therefore, New Mountain Capital is entitled to any profits earned by the Investment Adviser, which includes any fees payable to the Investment Adviser under the terms of the Investment

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Management Agreement, less expenses incurred by the Investment Adviser in performing its services under the Investment Management Agreement.
We have entered into the Administration Agreement with the Administrator, a wholly-owned subsidiary of New Mountain Capital. The Administrator arranges our office space and provides office equipment and administrative services necessary to conduct our respective day-to-day operations pursuant to the Administration Agreement. We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to us under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance, and compliance functions, and the compensation of our chief financial officer and chief compliance officer and their respective staffs. Pursuant to the Administration Agreement and further restricted by us, the Administrator may, in its own discretion, submit to us for reimbursement some or all of the expenses that the Administrator has incurred on our behalf during any quarterly period. As a result, the amount of expenses for which we will have to reimburse the Administrator may fluctuate in future quarterly periods and there can be no assurance given as to when, or if, the Administrator may determine to limit the expenses that the Administrator submits to us for reimbursement in the future. However, it is expected that the Administrator will continue to support part of our expense burden in the near future and may decide to not calculate and charge through certain overhead related amounts as well as continue to cover some of the indirect costs. The Administrator cannot recoup any expenses that the Administrator has previously waived. For the three months ended March 31, 2020 approximately $0.7 million of indirect administrative expenses were included in administrative expenses, of which approximately $0.0 million were waived by the Administrator. As of March 31, 2020, approximately $1.3 million of indirect administrative expenses were included in payable to affiliates. For the three months ended March 31, 2020, the reimbursement to the Administrator represented approximately 0.02% of our gross assets.
We, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant us, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the name "New Mountain" and "New Mountain Finance".
In addition, we have adopted a formal code of ethics that governs the conduct of our officers and directors, which is available on our website at http://www.newmountainfinance.com. These officers and directors also remain subject to the duties imposed by the 1940 Act and the Delaware General Corporation Law.
The Investment Adviser and its affiliates may also manage other funds in the future that may have investment mandates that are similar, in whole or in part, to our investment mandates. The Investment Adviser and its affiliates may determine that an investment is appropriate for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, the Investment Adviser or its affiliates may determine that we should invest side-by-side with one or more other funds. Any such investments will be made only to the extent permitted by applicable law and interpretive positions of the SEC and its staff, and consistent with the Investment Adviser's allocation procedures. On October 8. 2019, the SEC issued an exemptive order (the “Exemptive Order”), which superseded a prior order issued on December 18, 2017, which permits us to co-invest in portfolio companies with certain funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions of the Exemptive Order. Pursuant to the Exemptive Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment objective and strategies.
On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million. Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.
On March 30, 2020, we entered into an unsecured revolving credit facility with NMF Investments III, L.L.C., an affiliate of the Investment Adviser, with a $30.0 million maximum amount of revolver borrowings available and a maturity date of December 31, 2022. Subsequent to March 31, 2020, the Unsecured Management Company Revolver was upsized from $30.0 million to $50.0 million. Refer to Borrowings and Recent Developments for discussion of the Unsecured Management Company Revolver.

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Item 3.
Quantitative and Qualitative Disclosures About Market Risk
We are subject to certain financial market risks, such as interest rate fluctuations. During the three months ended March 31, 2020, certain of the loans held in our portfolio had floating interest rates. As of March 31, 2020, approximately 95.56% of investments at fair value (excluding investments on non-accrual, unfunded debt investments and non-interest bearing equity investments) represent floating-rate investments with a LIBOR floor (includes investments bearing prime interest rate contracts) and approximately 4.44% of investments at fair value represent fixed-rate investments. Additionally, our senior secured revolving credit facilities are also subject to floating interest rates and are currently paid based on floating LIBOR rates.
The following table estimates the potential changes in net cash flow generated from interest income and expenses, should interest rates increase by 100, 200 or 300 basis points, or decrease by 25 basis points. Interest income is calculated as revenue from interest generated from our portfolio of investments held on March 31, 2020. Interest expense is calculated based on the terms of our outstanding revolving credit facilities, convertible notes and unsecured notes. For our floating rate credit facilities, we use the outstanding balance as of March 31, 2020. Interest expense on our floating rate credit facilities is calculated using the interest rate as of March 31, 2020, adjusted for the hypothetical changes in rates, as shown below. The base interest rate case assumes the rates on our portfolio investments remain unchanged from the actual effective interest rates as of March 31, 2020. These hypothetical calculations are based on a model of the investments in our portfolio, held as of March 31, 2020, and are only adjusted for assumed changes in the underlying base interest rates. In addition, in a prolonged low interest rate environment, including a reduction of LIBOR to zero, the difference between the total interest income earned on interest earning assets and the total interest expense incurred on interest bearing liabilities may be compressed, reducing our net interest income and potentially adversely affecting our operating results.
Actual results could differ significantly from those estimated in the table.
Change in Interest Rates
 
Estimated
Percentage
Change in Interest
Income Net of
Interest Expense (unaudited)
-25 Basis Points
 
(1.22
)%
Base Interest Rate
 
 %
+100 Basis Points
 
11.33
 %
+200 Basis Points
 
22.67
 %
+300 Basis Points
 
34.01
 %



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Item 4.
Controls and Procedures
(a)
Evaluation of Disclosure Controls and Procedures 
As of March 31, 2020 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act. Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic United States Securities and Exchange Commission filings is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
(b)
Changes in Internal Controls Over Financial Reporting
Management has not identified any change in our internal control over financial reporting that occurred during the quarter ended March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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PART II. OTHER INFORMATION
The terms “we”, “us”, “our” and the “Company” refers to New Mountain Finance Corporation and its consolidated subsidiaries.
Item 1.
Legal Proceedings
We, and our consolidated subsidiaries, the Investment Adviser and the Administrator are not currently subject to any material pending legal proceedings threatened against us as of March 31, 2020. From time to time, we may be a party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our business, financial condition or results of operations.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which could materially affect our business, financial condition and/or operating results, including the Risk Factor titled "Recent legislation allows us to incur additional leverage, which could increase the risk of investing in our securities". The risks described in our Annual Report on Form 10-K 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. Other than as set forth below, there have been no material changes during the three months ended March 31, 2020 to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019.

Events outside of our control, including public health crises, could negatively affect our portfolio companies and our results of our operations.
Periods of market volatility have occurred and could continue to occur in response to pandemics or other events outside of our control. These types of events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies. For example, in December 2019, a novel strain of coronavirus (“COVID-19”) surfaced in China and has since spread to other countries, including the United States, which has resulted in restrictions on travel and the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories in the affected jurisdictions, including the United States. In addition to these developments having adverse consequences for us and our portfolio companies have been, and could continue to be, adversely impacted, including through quarantine measures and travel restrictions imposed on its personnel or service providers based or temporarily located in affected countries, or any related health issues of such personnel or service providers. As the potential impact of COVID-19 is difficult to predict, the extent to which COVID-19 could negatively affect our and our portfolio companies’ operating results or the duration of any potential business or supply-chain disruption, is uncertain. Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio companies’ operating results.

We are currently operating in a period of capital markets disruption and economic uncertainty.
The U.S. capital markets have experienced extreme volatility and disruption following the global outbreak of COVID-19 that began in December 2019. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a world-wide economic downturn. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity could be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also could be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments.

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If the current period of capital market disruption and instability continues for an extended period of time, there is a risk that investors in our equity securities may not receive distributions consistent with historical levels or at all or that our distributions may not grow over time and a portion of our distributions may be a return of capital.
We intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions. Our ability to pay distributions might be adversely affected by the impact of one or more of the risk factors described in our Annual Report on Form 10-K including the COVID-19 pandemic described above. For example, if the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories in the jurisdictions, including the United States, affected by the COVID-19 pandemic were to continue for an extended period of time it could result in reduced cash flows to us from our existing portfolio companies, which could reduce cash available for distribution to our stockholders. If we violate certain covenants under our existing or future credit facilities or other leverage, we may be limited in our ability to make distributions. If we declare a distribution and if more stockholders opt to receive cash distributions rather than participate in our dividend reinvestment plan, we may be forced to sell some of our investments in order to make cash distribution payments. To the extent we make distributions to stockholders that include a return of capital, such portion of the distribution essentially constitutes a return of the stockholder’s investment. Although such return of capital may not be taxable, such distributions would generally decrease a stockholder’s basis in our common stock and may therefore increase such stockholder’s tax liability for capital gains upon the future sale of such stock. A return of capital distribution may cause a stockholder to recognize a capital gain from the sale of our common stock even if the stockholder sells its shares for less than the original purchase price.

Due to the COVID-19 pandemic or other disruptions in the economy, we may not be able to increase our dividends and may reduce or defer our dividends and choose to incur US federal excise tax in order preserve cash and maintain flexibility. 

As a BDC, we are not required to make any distributions to shareholders other than in connection with our election to be taxed as a RIC under subchapter M of the Code.  In order to maintain our tax treatment as a RIC, we must distribute to shareholders for each taxable year at least 90.0% of our investment company taxable income (i.e., net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses).  If we qualify for taxation as a RIC, we generally will not be subject to corporate-level U.S. federal income tax on our investment company taxable income and net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) that we timely distribute to shareholders.  We will be subject to a 4.0% US federal excise tax on undistributed earnings of a RIC unless we distribute each calendar year at least the sum of (i) 98.0% of our ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year, and (iii) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which we paid no federal income tax. 

Under the Code, we may satisfy certain of our RIC distributions with dividends paid after the end of the current year.  In particular, if we pay a distribution in January of the following year that was declared in October, November, or December of the current year and is payable to shareholders of record in the current year, the dividend will be treated for all US federal tax purposes as if it were paid on December 31 of the current year.  In addition, under the Code, we may pay dividends, referred to as “spillover dividends,” that are paid during the following taxable year that will allow us to maintain our qualification for taxation as a RIC and eliminate our liability for corporate-level U.S. federal income tax.  Under these spillover dividend procedures, we may defer distribution of income earned during the current year until December of the following year.  For example, we may defer distributions of income earned during 2020 until as late as December 31, 2021.  If we choose to pay a spillover dividend, we will incur the 4% U.S. federal excise tax on some or all of the distribution.

Due to the COVID-19 pandemic or other disruptions in the economy, we anticipate that we may take certain actions with respect to the timing and amounts of our distributions in order to preserve cash and maintain flexibility.  For example, we anticipate that we will not be able to increase our dividends.  In addition, we may reduce our dividends and/or defer our dividends to the following taxable year.  If we defer our dividends, we may choose to utilize the spillover dividend rules discussed above and incur the 4.0% U.S. federal excise tax on such amounts.  To further preserve cash, we may combine these reductions or deferrals of dividends with one or more distributions that are payable partially in our common stock as discussed below under “We may in the future choose to pay dividends in our own common stock, in which case you may be required to pay tax in excess of the cash you receive.”


126


We may in the future choose to pay dividends in our own common stock, in which case you may be required to pay tax in excess of the cash you receive.

We may distribute taxable dividends that are payable in part in our common stock. In accordance with certain applicable Treasury regulations and published guidance issued by the Internal Revenue Service, a publicly offered RIC may treat a distribution of its own stock as fulfilling the RIC distribution requirements if each shareholder may elect to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all shareholders must be at least 20.0% (which has been temporarily reduced to 10% for distributions declared on or after April 1, 2020, and on or before December 31, 2020) of the aggregate declared distribution. If too many shareholders elect to receive cash, the cash available for distribution must be allocated among the shareholders electing to receive cash (with the balance of the distribution paid in stock). In no event will any shareholder, electing to receive cash, receive less than the lesser of (a) the portion of the distribution such shareholder has elected to receive in cash or (b) an amount equal to his or her entire distribution times the percentage limitation on cash available for distribution. If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. Taxable shareholders receiving such dividends will be required to include the amount of the dividends as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. shareholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. shareholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to non-U.S. shareholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock. In addition, if a significant number of our shareholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.

Due to the recent COVID-19 pandemic, shares of BDCs have traded below their respective net asset values ("NAV"). If our shares of common stock trade at a discount from NAV, it could limit our ability to raise equity capital.
As a result of the COVID-19 pandemic, the stocks of BDCs as an industry, including shares of our common stock, have traded below NAV, at or near historic lows as a result of concerns over liquidity, leverage restrictions and distribution requirements. If our common stock trades below its NAV, we will generally not be able to issue additional shares of our common stock at its market price without first obtaining the approval for such issuance from our stockholders and our independent directors. If additional funds are not available to us, we could be forced to curtail or cease our new lending and investment activities, and our NAV could decrease and our level of distributions could be impacted.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
We did not engage in unregistered sales of equity securities during the quarter ended March 31, 2020.
Issuer Purchases of Equity Securities
Dividend Reinvestment Plan
During the quarter ended March 31, 2020, as part of our dividend reinvestment plan for our common stockholders, our dividend reinvestment plan administrator purchased 133,539 shares of our common stock for $0.9 million in the open market in order to satisfy the reinvestment portion of our distribution. The following table outlines purchases by our dividend reinvestment administrator of our common stock for this purpose during the quarter ended March 31, 2020.
(in thousands, except shares and per share data)
 
Total Number of
 
Weighted Average Price
 
Total Number of Shares Purchased as Part of Publicly Announced Plans
 
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the
Period
 
Shares Purchased
 
Paid Per Share
 
or Programs
 
Plans or Programs
January 2020
 

 
$

 

 
$

February 2020
 

 

 

 

March 2020
 
133,539

 
6.75

 

 

Total
 
133,539

 
$
6.75

 

 


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Stock Repurchase Program
On February 4, 2016, our board of directors authorized a program for the purpose of repurchasing up to $50.0 million worth of our common stock. Under the repurchase program, we were permitted, but were not obligated to, repurchase our outstanding common stock in the open market from time to time, provided that we complied with our code of ethics and the guidelines specified in Rule 10b-18 of the Exchange Act, including certain price, market volume and timing constraints. In addition, any repurchases were conducted in accordance with the 1940 Act. On December 31, 2019, our board of directors extended our repurchase program and we expect the repurchase program to be in place until the earlier of December 31, 2020 or until $50.0 million of outstanding shares of common stock have been repurchased. We did not repurchase any shares of our common stock under the repurchase program during the quarter ended March 31, 2020.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
None.

128


Item 6.
Exhibits
(a)
Exhibits
The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the United States Securities and Exchange Commission:
Exhibit
Number
 
Description
3.1(a)

 
 
 
 
3.1(b)

 
 
 
 
3.2

 
 
 
 
3.3

 
 
 
 
4.1

 
 
 
 
10.1

 
 
 
 
 
 
 
31.1

 
 
 
 
31.2

 
 
 
 
32.1

 
 
 
 
32.2

 
 
(1)
Previously filed in connection with New Mountain Finance Holdings, L.L.C.’s registration statement on Form N-2 Pre-Effective Amendment No. 3 (File Nos. 333-168280 and 333-172503) filed on May 9, 2011.
(2)
Previously filed in connection with New Mountain Finance Corporation’s quarterly report on Form 10-Q filed on August 11, 2011.
(3)
Previously filed in connection with New Mountain Finance Corporation and New Mountain Finance AIV Holdings Corporation report on Form 8-K filed on August 25, 2011.
(4)
Previously filed in connection with New Mountain Finance Corporation's report on Form 8-K filed on April 3, 2019.
*    Filed herewith.


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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on May 6, 2020.
 
NEW MOUNTAIN FINANCE CORPORATION
 
 
 
By:
/s/ ROBERT A. HAMWEE
 
 
Robert A. Hamwee
 
 
Chief Executive Officer
 
 
(Principal Executive Officer), and Director
 
 
 
By:
/s/ SHIRAZ Y. KAJEE
 
 
Shiraz Y. Kajee
 
 
Chief Financial Officer
 
 
(Principal Financial and Accounting Officer)

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