UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

 

 

FORM 10-Q

 

 

 

  (Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934   For the quarterly period ended March 31, 2020  

 

OR

 

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

 

COMMISSION FILE NUMBER: 1-35730

 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

  Maryland 46-0937320
(State or other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)

 

4400 Post Oak Parkway, Suite 2200
Houston, Texas 77027

(Address of Principal Executive Offices) (Zip Code)

 

(713) 292-5400

(Registrant’s Telephone Number, Including Area Code)

 

 

 

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 $0.001 per share SCM New York Stock Exchange
5.75% Notes Due 2022 SCA New York Stock Exchange

 

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

 

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

 

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

 

Large accelerated filer ¨   Accelerated filer x
Non-accelerated filer ¨   Smaller reporting company ¨
Emerging growth company ¨      

 

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

 

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

 

The number of shares of the issuer’s Common Stock, $0.001 par value per share, outstanding as of May 8, 2020 was 19,474,247.

 

 

 

 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

 TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION  
Item 1. Financial Statements 1
  Consolidated Statements of Assets and Liabilities as of March 31, 2020 (unaudited) and December 31, 2019 2
  Consolidated Statements of Operations for the three-month periods ended March 31, 2020 and March 31, 2019 (unaudited) 3
  Consolidated Statements of Changes in Net Assets for the three-month periods ended March 31, 2020 and March 31, 2019 (unaudited) 4
  Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2020 and March 31, 2019 (unaudited) 5
  Consolidated Schedules of Investments as of March 31, 2020 (unaudited) and December 31, 2019 6
  Notes to Unaudited Financial Statements 23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 56
Item 3. Quantitative and Qualitative Disclosures About Market Risk 75
Item 4. Controls and Procedures 75
PART II. OTHER INFORMATION  
Item 1. Legal Proceedings 76
Item 1A. Risk Factors 76
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 80
Item 3. Defaults Upon Senior Securities 80
Item 4. Mine Safety Disclosures 80
Item 5. Other Information 80
Item 6. Exhibits 81

 

i 

 

 

PART I — FINANCIAL INFORMATION

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

 CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

 

   March 31,     
   2020   December 31, 
   (Unaudited)   2019 
ASSETS          
Non-controlled, non-affiliated investments, at fair value (amortized cost of $674,809,012 and $642,707,824, respectively)  $609,544,320   $628,948,077 
Cash and cash equivalents   35,025,246    16,133,315 
Receivable for sales and repayments of investments   164,034    123,409 
Interest receivable   3,972,924    2,914,710 
Other receivables   25,495    25,495 
Prepaid expenses   324,298    368,221 
Total Assets  $649,056,317   $648,513,227 
LIABILITIES          
Notes payable  $48,057,076   $47,974,202 
Credit facility payable   209,110,611    160,510,633 
SBA-guaranteed debentures   157,715,128    157,543,853 
Dividends payable   2,206,435    2,167,630 
Management fees payable   2,719,054    2,695,780 
Income incentive fees payable   1,492,113    1,618,509 
Capital gains incentive fees payable       880,913 
Interest payable   917,016    2,322,314 
Unearned revenue   714,159    559,768 
Administrative services payable   432,227    413,278 
Deferred tax liability   105,754    134,713 
Income tax payable   169,400    917,000 
Other accrued expenses and liabilities   498,679    203,461 
Total Liabilities  $424,137,652   $377,942,054 
Commitments and contingencies (Note 7)          
Net Assets  $224,918,665   $270,571,173 
NET ASSETS          
Common stock, par value $0.001 per share (100,000,000 shares authorized; 19,474,247 and 19,131,746 issued and outstanding, respectively)  $19,474   $19,132 
Paid-in capital   277,023,270    272,117,091 
Accumulated undistributed deficit   (52,124,079)   (1,565,050)
Net Assets  $224,918,665   $270,571,173 
Total Liabilities and Net Assets  $649,056,317   $648,513,227 
Net Asset Value Per Share  $11.55   $14.14 

 

 2 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

   For the   For the 
   three   three 
   months ended   months ended 
   March 31,   March 31, 
   2020   2019 
INVESTMENT INCOME          
Interest income  $14,849,588   $13,625,399 
Other income   411,457    209,530 
Total Investment Income  $15,261,045   $13,834,929 
OPERATING EXPENSES          
Management fees  $2,719,054   $2,222,645 
Valuation fees   109,833    107,322 
Administrative services expenses   466,935    405,399 
Income incentive fees   1,339,637    1,373,854 
Capital gains incentive (reversal) fees   (880,913)   1,161,757 
Professional fees   386,714    344,340 
Directors' fees   132,250    104,000 
Insurance expense   93,071    85,697 
Interest expense and other fees   4,292,204    3,674,787 
Income tax expense   196,795    12,744 
Other general and administrative expenses   166,003    8,725 
Total Operating Expenses  $9,021,583   $9,501,270 
Net Investment Income  $6,239,462   $4,333,659 
Net realized gain on non-controlled, non-affiliated investments  $1,296,793   $10,246,098 
Net change in unrealized depreciation on non-controlled, non-affiliated investments  $(51,504,946)  $(4,424,713)
Benefit (provision) for taxes on net unrealized gain on investments  $28,959   $(12,601)
Net (Decrease) Increase in Net Assets Resulting from Operations  $(43,939,732)  $10,142,443 
Net Investment Income Per Share  $0.32   $0.27 
Net (Decrease) Increase in Net Assets Resulting from Operations Per Share  $(2.26)  $0.62 
Weighted Average Shares of Common Stock Outstanding   19,429,480    16,351,032 
Distributions Per Share  $0.34   $0.34 

 

 3 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

 

   For the   For the 
   three   three 
   months ended   months ended 
   March 31,   March 31, 
   2020   2019 
(Decrease) Increase in Net Assets Resulting from Operations          
Net investment income  $6,239,462   $4,333,659 
Net realized gain on non-controlled, non-affiliated investments   1,296,793    10,246,098 
Net change in unrealized depreciation on non-controlled, non-affiliated investments   (51,504,946)   (4,424,713)
Benefit (provision) for taxes on unrealized appreciation on investments   28,959    (12,601)
Net (Decrease) Increase in Net Assets Resulting from Operations  $(43,939,732)  $10,142,443 
Stockholder Distributions From:          
Net investment income  $(6,619,297)  $(5,734,250)
Total Distributions  $(6,619,297)  $(5,734,250)
Capital Share Transactions          
Issuance of common stock  $4,930,467   $39,682,500 
Sales load   (5,681)   (935,000)
Offering costs   (18,169)   (202,891)
Partial share transactions   (96)   1,435 
Net Increase in Net Assets Resulting From Capital Share Transactions  $4,906,521   $38,546,044 
Total (Decrease) Increase in Net Assets  $(45,652,508)  $42,954,237 
Net Assets at Beginning of Period  $270,571,173   $224,845,007 
Net Assets at End of Period  $224,918,665   $267,799,244 

 

 4 

 

 

STELLUS CAPITAL INVESTMENT CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

   For the   For the 
   three   three 
   months ended   months ended 
   March 31,   March 31, 
   2020   2019 
Cash flows from operating activities          
Net (decrease) increase in net assets resulting from operations  $(43,939,732)  $10,142,443 
Adjustments to reconcile net (decrease) increase in net assets from operations to net cash used in operating activities:          
Purchases of investments   (61,533,313)   (28,573,192)
Proceeds from sales and repayments of investments   31,763,595    21,794,726 
Net change in unrealized depreciation on investments   51,504,946    4,424,713 
Increase in investments due to PIK   (537,284)   (41,841)
Amortization of premium and accretion of discount, net   (538,019)   (400,064)
Deferred tax (benefit) provision   (28,959)   12,601 
Amortization of loan structure fees   149,978    123,807 
Amortization of deferred financing costs   82,874    81,963 
Amortization of loan fees on SBA-guaranteed debentures   171,275    149,019 
Net realized gain on investments   (1,296,793)   (10,246,098)
Changes in other assets and liabilities       
(Increase) decrease in interest receivable   (1,058,214)   470,755 
Decrease in other receivable       23,695 
Decrease (increase) in prepaid expenses   43,923    (1,898)
Increase (decrease) in management fees payable   23,274    (1,211,330)
Decrease in incentive fees payable   (126,396)   (301,950)
(Decrease) increase in capital gains incentive fees payable   (880,913)   1,161,757 
Increase in administrative services payable   18,949    49,941 
Decrease in interest payable   (1,405,298)   (997,007)
Increase (decrease) in unearned revenue   154,391    (15,847)
Decrease in income tax payable   (747,600)   (265,058)
Increase in other accrued expenses and liabilities   295,218    360,932 
Net Cash Used in Operating Activities  $(27,884,098)  $(3,257,933)
Cash flows from Financing Activities          
Proceeds from the issuance of common stock  $4,794,995   $39,682,500 
Sales load for common stock issued   (5,681)   (935,000)
Offering costs paid for common stock   (18,169)   (191,827)
Stockholder distributions paid   (6,445,020)   (5,422,675)
Borrowings under Credit Facility   74,450,000    22,250,000 
Repayments of Credit Facility   (26,000,000)   (45,750,000)
Partial share transactions   (96)   1,435 
Net Cash Provided by Financing Activities  $46,776,029   $9,634,433 
Net Increase in Cash and Cash Equivalents  $18,891,931   $6,376,500 
Cash and cash equivalents balance at beginning of period   16,133,315    17,467,146 
Cash and Cash Equivalents Balance at End of Period  $35,025,246   $23,843,646 
Supplemental and Non-Cash Activities          
Cash paid for interest expense  $5,291,684   $4,317,004 
Excise tax paid   940,000    280,000 
Shares issued pursuant to Dividend Reinvestment Plan   135,472     
Increase in distribution payable   38,805    311,575 
Decrease in deferred offering costs       (11,604)

 

 5 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments

 

March 31, 2020

 

(unaudited)

 

Investments  Footnotes  Security  Coupon  LIBOR
floor
   Cash   PIK   Investment
Date
  Maturity 

Headquarters/

Industry

  Principal
Amount/ Shares
   Amortized
Cost
  

Fair

Value (1)

   % of
Net Assets
 
Non-controlled, non-affiliated investments  (2)(9)                                                  
Adams Publishing Group, LLC                                Greenville, TN                    
Term Loan  (12)  First Lien  3M L+7.50%   1.00%   9.29%       8/3/2018  6/30/2023  Media: Advertising, Printing & Publishing  $5,365,080    5,327,106    4,935,873    2.19%
Delayed Draw Term Loan  (12)  First Lien  3M L+7.50%   1.00%   9.25%       8/3/2018  6/30/2023     $171,914    171,914    158,160    0.07%
Total                                        $5,499,020   $5,094,033    2.26%
Advanced Barrier Extrusions, LLC                                Rhinelander, WI                    
Term Loan (SBIC)  (2)(12)  First Lien  3M L+5.75%   1.00%   7.20%       8/8/2018  8/8/2023  Containers, Packaging & Glass  $14,250,000    14,034,599    13,537,500    6.02%
Revolver  (8)(12)  First Lien  3M L+5.75%   1.00%   7.20%       8/8/2018  8/8/2023     $1,000,000    1,000,000    950,000    0.42%
GP ABX Holdings Partnership, L.P. Common Stock  (4)  Equity                    8/8/2018         250,000 units    250,000    310,000    0.14%
Total                                        $15,284,599   $14,797,500    6.58%
APE Holdings, LLC                                Deer Park, TX                    
Class A Common Units  (4)  Equity                    9/5/2014     Chemicals, Plastics, & Rubber   375,000 units    375,000    70,000    0.03%
Atmosphere Aggregator Holdings II, LP                                Atlanta, GA                    
Common Units  (4)  Equity                    1/26/2016     Services: Business   254,250 units    0    1,120,000    0.50%
Stratose Aggregator Holdings, LP Common Units  (4)  Equity                    6/30/2015         750,000 units    0    3,300,000    1.47%
Total                                        $0   $4,420,000    1.97%
ASC Communications, LLC                                Chicago, IL                    
Term Loan (SBIC)  (2)(35)  First Lien  1M L+5.25%   1.00%   6.25%       6/29/2017  6/29/2023  Healthcare & Pharmaceuticals  $4,320,988    4,299,113    4,040,123    1.80%
Term Loan  (35)  First Lien  1M L+5.25%   1.00%   6.25%       2/4/2019  6/29/2023     $7,345,679    7,275,238    6,868,210    3.05%
Revolver  (35)  First Lien  1M L+5.25%   1.00%   6.25%       6/29/2017  6/29/2022     $666,667    666,667    623,333    0.28%
ASC Communications Holdings, LLC Class A Preferred Units (SBIC)  (2)(4)  Equity                    6/29/2017         73,529 shares    88,797    560,000    0.25%
Total                                        $12,329,815   $12,091,666    5.38%
BFC Solmetex, LLC  (23)                             Nashville, TN                    
Revolver  (12)  First Lien  3M L+6.50%   1.00%   7.96%       4/2/2018  9/26/2023  Environmental Industries  $2,139,364    2,139,364    1,957,518    0.87%
Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.50%   1.00%   7.96%       4/2/2018  9/26/2023     $11,563,264    11,447,112    10,580,387    4.70%
Bonded Filter Co. LLC, Term Loan (SBIC)  (2)(12)  First Lien  3M L+6.50%   1.00%   7.96%       4/2/2018  9/26/2023     $1,202,170    1,190,094    1,099,986    0.49%
Total                                        $14,776,570   $13,637,891    6.06%
BW DME Acquisition, LLC                                Tempe, AZ                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+6.00%   1.00%   9.07%       8/24/2017  8/24/2022  Healthcare & Pharmaceuticals  $16,695,804    16,417,425    15,861,014    7.05%
BW DME Holdings, LLC, Term Loan  (6)  Unsecured  17.50%             17.50%  6/1/2018  6/30/2020     $343,842    343,842    326,649    0.15%
BW DME Holdings, LLC Class A-1 Preferred Units  (4)  Equity                    8/24/2017         1,000,000 shares    1,000,000    940,000    0.42%

 

 6 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments

 

March 31, 2020

 

(unaudited)

 

Investments  Footnotes  Security  Coupon  LIBOR
floor
   Cash   PIK   Investment
Date
  Maturity 

Headquarters/

Industry

  Principal
Amount/ Shares
   Amortized
Cost
  

Fair

Value (1)

   % of
Net Assets
 
BW DME Holdings, LLC Class A-2 Preferred Units  (4)  Equity                    1/26/2018         937,261 shares    937,261    880,000    0.39%
Total                                        $18,698,528   $18,007,663    8.01%
Café Valley, Inc.                                Phoenix, AZ                    
Term Loan  (12)  First Lien  3M L+6.00%   1.25%   7.45%       8/28/2019  8/28/2024  Beverage, Food, & Tobacco  $17,530,952    17,214,626    16,566,750    7.37%
CF Topco LLC, Common Units  (4)  Equity                    8/28/2019         8,810 shares    880,952    800,000    0.36%
Total                                        $18,095,578   $17,366,750    7.73%
C.A.R.S. Protection Plus, Inc.                                Murrysville, PA                    
Term Loan  (12)  First Lien  1M L+8.50%   0.50%   9.49%       12/31/2015  12/31/2020  Automotive  $94,003    93,662    91,183    0.04%
Term Loan (SBIC)  (2)(12)  First Lien  1M L+8.50%   0.50%   9.49%       12/31/2015  12/31/2020     $7,332,210    7,305,555    7,112,244    3.16%
CPP Holdings LLC Class A Common Units  (4)  Equity                    12/31/2015         149,828 shares    149,828    130,000    0.06%
Total                                        $7,549,045   $7,333,427    3.26%
Colford Capital Holdings, LLC                                New York, NY                    
Preferred Units  (4)(5)  Equity                    8/20/2015     Finance   38,893 units    195,036    20,000    0.01%
Condor Borrower, LLC                                Clifton, NJ                    
Term Loan  (12)  Second Lien  3M L+8.75%   1.00%   10.53%       10/27/2017  4/27/2025  Software  $13,750,000    13,542,126    12,581,250    5.59%
Condor Top Holdco Limited Convertible Preferred Shares  (4)  Equity                    10/27/2017         500,000 shares    442,197    270,000    0.12%
Condor Holdings Limited Preferred Shares, Class B  (4)  Equity                    10/27/2017         500,000 shares    57,804    40,000    0.02%
Total                                        $14,042,127   $12,891,250    5.73%
Convergence Technologies, Inc.                                Indianpolis, IN                    
Term Loan (SBIC)  (2)(35)  First Lien  3M L+6.75%   1.50%   8.25%       8/31/2018  8/30/2024  Services: Business  $7,035,571    6,925,360    6,683,929    2.97%
Term Loan  (35)  First Lien  3M L+6.75%   1.50%   8.25%       2/28/2019  8/30/2024     $1,414,286    1,390,558    1,343,571    0.60%
Delayed Draw Term Loan  (35)  First Lien  3M L+6.75%   1.50%   8.25%       8/31/2018  8/30/2024     $5,290,179    5,290,179    5,025,670    2.23%
Tailwind Core Investor, LLC Class A Preferred Units  (4)  Equity                    8/31/2018         4,275 units    429,614    220,000    0.10%
Total                                        $14,035,711   $13,273,170    5.90%
Data Centrum Communications, Inc.                                Montvale, NJ                    
Term Loan  (12)  First Lien  3M L+5.50%   1.00%   6.95%       5/15/2019  5/15/2024  Media: Advertising, Printing & Publishing  $16,128,125    15,854,952    14,676,594    6.53%
Health Monitor Holdings, LLC Seires A Preferred Units  (4)  Equity                    5/15/2019         1,000,000 shares    1,000,000    670,000    0.30%
Total                                        $16,854,952   $15,346,594    6.83%
Douglas Products Group, LP                                Liberty, MO                    
Class A Common Units  (4)  Equity                    12/27/2018     Chemicals, Plastics, & Rubber   322 shares    139,656    530,000    0.24%
DRS Holdings III, Inc.                                St. Louis, MO                    
Term Loan  (12)  First Lien  3M  L+5.75%   1.00%   7.20%       11/1/2019  11/1/2025  Consumer Goods: Durable  $9,975,000    9,880,823    9,226,875    4.10%
Revolver  (10)(35)  First Lien  2M  L+5.75%   1.00%   6.75%       11/1/2019  11/1/2025     $727,273    727,273    672,727    0.30%
Total                                        $10,608,096   $9,899,602    4.40%
                                                      
DTE Enterprises, LLC  (18)                             Roselle, IL                    
Term Loan  (35)  First Lien  1M L+7.50%   1.50%   9.00%       4/13/2018  4/13/2023  Energy: Oil & Gas  $10,991,941    10,846,253    10,442,344    4.64%
DTE Holding Company, LLC Common Shares, Class A-2  (4)  Equity                    4/13/2018         776,316 shares    466,204    550,000    0.24%
DTE Holding Company, LLC Preferred Shares, Class AA  (4)  Equity                    4/13/2018         723,684 shares    723,684    510,000    0.23%
Total                                        $12,036,141   $11,502,344    5.11%

 

 7 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments

 

March 31, 2020

 

(unaudited)

 

Investments  Footnotes  Security  Coupon  LIBOR
floor
   Cash   PIK   Investment
Date
  Maturity 

Headquarters/

Industry

  Principal
Amount/ Shares
   Amortized
Cost
  

Fair

Value (1)

   % of
Net Assets
 
Elliott Aviation, LLC                                Moline, IL                    
Term Loan  (35)  First Lien  3M L+6.00%   1.75%   7.75%       1/31/2020  1/31/2025  Aerospace & Defense  $18,781,875    18,416,433    17,373,234    7.72%
Revolver  (3)(35)  First Lien  3M L+6.00%   1.75%   7.75%       1/31/2020  1/31/2025     $1,350,000    1,350,000    1,248,750    0.56%
SP EA Holdings, LLC Preferred Shares, Class A  (4)  Equity                    1/31/2020         900,000 shares    900,000    820,000    0.36%
Total                                        $20,666,433   $19,441,984    8.64%
Empirix Holdings I, Inc.                                Billerica, MA                    
Common Shares, Class A  (4)  Equity                    11/1/2013     Software   1,304 shares    1,304,232    0    0.00%
Common Shares, Class B  (4)  Equity                    11/1/2013         1,317,406 shares    13,174    0    0.00%
Total                                        $1,317,406   $0    0.00%
Energy Labs Holding Corp.                                Houston, TX                    
Common Stock  (4)  Equity                    9/29/2016     Energy: Oil & Gas   598 shares    598,182    790,000    0.35%
Exacta Land Surveyors, LLC  (25)                             Cleveland, OH                    
Term Loan (SBIC)  (2)(35)  First Lien  3M L+5.75%   1.50%   7.25%       2/8/2019  2/8/2024  Services: Business  $16,841,875    16,567,893    15,999,781    7.11%
Revolver  (35)  First Lien  3M L+5.75%   1.50%   7.25%       2/8/2019  2/8/2024     $1,500,000    1,500,000    1,425,000    0.63%
SP ELS Holdings LLC, Class A Common Units  (4)  Equity                    2/8/2019         1,069,143 shares    1,069,143    590,000    0.26%
Total                                        $19,137,036   $18,014,781    8.00%
EOS Fitness Holdings, LLC                                Phoenix, AZ                    
Preferred Units  (4)  Equity                    12/30/2014     Hotel, Gaming, & Leisure   118 shares    0    390,000    0.17%
Class B Common Units  (4)  Equity                    12/30/2014         3,017 shares    0    10,000    0.00%
Total                                        $0   $400,000    0.17%
Fast Growing Trees, LLC  (16)                             Fort Mill, SC                    
Term Loan (SBIC)  (2)(12)  First Lien  3M L+7.75%   1.00%   9.20%       2/5/2018  02/05/23  Retail  $19,192,490    18,953,574    18,136,904    8.06%
SP FGT Holdings, LLC, Class A Common  (4)  Equity                    2/5/2018         1,000,000 shares    1,000,000    750,000    0.33%
Total                                        $19,953,574   $18,886,904    8.39%
FB Topco, Inc.                                Camden, NJ                    
Term Loan  (13)(22)  First Lien  3M L+6.35%   1.00%   10.30%       6/27/2018  4/24/2023  Education  $20,751,213    20,459,599    19,402,384    8.63%
Delayed Draw Term Loan  (13)(22)  First Lien  3M L+6.35%   1.00%   10.33%       6/27/2018  4/24/2023     $1,137,705    1,137,705    1,063,754    0.47%
Total                                        $21,597,304   $20,466,138    9.10%
Furniture Factory Outlet, LLC                                Fort Smith, AR                    
Term Loan     First Lien  7.00%        7.00%       6/10/2016  6/10/2021  Consumer Goods: Durable  $14,801,785    14,698,874    7,104,857    3.16%
Furniture Factory Holdings, LLC Term Loan  (6)  Unsecured  11.00%             11.00%  6/10/2016  2/3/2021     $163,423    163,423    0    0.00%
Furniture Factory Ultimate Holding, LP Common Units  (4)  Equity                    6/10/2016         13,445 shares    94,569    0    0.00%
Total                                        $14,956,866   $7,104,857    3.16%
GK Holdings, Inc.                                Cary, NC                    
Term Loan  (12)(33)  Second Lien  3M L+10.25%   1.00%   0.00%       1/30/2015  1/20/2022  Education  $5,000,000    4,966,092    3,775,000    1.68%
General LED OPCO, LLC                                San Antonio, TX                    
Term Loan  (35)  Second Lien  3M L+9.00%   1.50%   10.50%       5/1/2018  11/1/2023  Services: Business  $4,500,000    4,435,963    4,005,000    1.78%
GS HVAM Intermediate, LLC  (34)                             Carlsbad, CA                    
Term Loan  (35)  First Lien  1M L+5.75%   1.00%   6.75%       10/18/2019  10/2/2024  Beverage, Food, & Tobacco  $13,224,432    13,101,534    12,364,844    5.50%

 

 8 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments

 

March 31, 2020

 

(unaudited)

 

Investments  Footnotes  Security  Coupon  LIBOR
floor
   Cash   PIK   Investment
Date
  Maturity 

Headquarters/

Industry

  Principal
Amount/ Shares
   Amortized
Cost
  

Fair

Value (1)

   % of
Net Assets
 
Revolver  (35)  First Lien  1M L+5.75%   1.00%   6.75%       10/18/2019  10/2/2024     $2,651,515    2,651,515    2,479,167    1.10%
HV GS Acquisition, LP Class A Interests  (4)  Equity                    6/29/2018         1,796 shares    1,618,844    1,230,000    0.55%
Total                                        $17,371,893   $16,074,011    7.15%
Grupo HIMA San Pablo, Inc., et al                                San Juan, PR                    
Term Loan  (12)(27)  First Lien  3M L+7.00%   1.50%   8.76%       2/1/2013  1/31/2018  Healthcare & Pharmaceuticals  $4,503,720    4,503,720    2,724,751    1.21%
Term Loan  (15)(27)  Second Lien  13.75%        0.00%       2/1/2013  7/31/2018     $4,109,524    4,109,524    0    0.00%
Total                                        $8,613,244   $2,724,751    1.21%
ICD Intermediate Holdco 2, LLC                                San Francisco, CA                    
Term Loan (SBIC)  (2)(5)(12)  Second Lien  3M L+9.00%   1.00%   10.45%       1/1/2018  7/1/2024  Finance  $10,000,000    9,854,612    9,600,000    4.27%
ICD Holdings, LLC, Class A Preferred  (4)(5)  Equity                    1/1/2018         9,962 shares    496,405    1,000,000    0.44%
Total                                        $10,351,017   $10,600,000    4.71%
Integrated Oncology Network, LLC  (29)(30)                             Newport Beach, CA                    
Term Loan  (35)  First Lien  3M L+5.50%   1.50%   7.00%       7/17/2019  6/24/2024  Healthcare & Pharmaceuticals  $16,595,505    16,305,845    15,682,752    6.97%
Interstate Waste Services, Inc.                                Amsterdam, OH                    
Common Units  (4)  Equity                    10/30/2015     Environmental Industries   21,925 shares    946,125    520,000    0.23%
Intuitive Health, LLC                                Plano, TX                    
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.00%   1.50%   7.50%       10/18/2019  10/18/2024  Healthcare & Pharmaceuticals  $5,985,000    5,873,558    5,655,825    2.51%
Term Loan  (35)  First Lien  3M L+6.00%   1.50%   7.50%       10/18/2019  10/18/2024     $11,471,250    11,257,652    10,840,331    4.82%
Total                                        $17,131,210   $16,496,156    7.33%
Invincible Boat Company, LLC                                Opa Locka, FL                    
Term Loan (SBIC II)  (9)(35)  First Lien  3M L+6.50%   1.50%   8.00%       8/28/2019  8/28/2025  Consumer Goods: Durable  $5,925,000    5,815,582    5,569,500    2.48%
Term Loan  (35)  First Lien  3M L+6.50%   1.50%   8.00%       8/28/2019  8/28/2025     $6,418,750    6,231,714    6,033,625    2.68%
Revolver  (28)(35)  First Lien  3M L+6.50%   1.50%   8.00%       8/28/2019  8/28/2025     $568,182    568,182    534,091    0.24%
Invincible Parent Holdco, LLC Class A Common Units  (4)  Equity                    8/28/2019         1,000,000 shares    982,099    640,000    0.28%
Total                                        $13,597,577   $12,777,216    5.68%
J.R. Watkins, LLC                                San Francisco, CA                    
Term Loan (SBIC)  (2)  First Lien  7%        7.00%       12/22/2017  12/22/2022  Consumer Goods: non-durable  $12,250,000    12,102,931    9,432,500    4.19%
J.R. Watkins Holdings, Inc. Class A Preferred  (4)  Equity                    12/22/2017         1,133 shares    1,132,576    0    0.00%
Total                                        $13,235,507   $9,432,500    4.19%
Jurassic Acquisiton Corp.                                Sparks, MD                    
Term Loan  (12)  First Lien  3M L+5.50%   0.00%   6.95%       12/28/2018  11/15/2024  Metals & Mining  $17,281,250    17,069,657    15,812,344    7.03%
Kelleyamerit Holdings, Inc.                                Walnut Creek, CA                    
Term Loan (SBIC)  (2)(13)(22)  First Lien  3M L+7.50%   1.00%   9.54%       3/30/2018  3/30/2023  Automotive  $9,750,000    9,620,426    9,311,250    4.14%
KidKraft, Inc.                                Dallas, TX                    
Term Loan  (6)(21)  Second Lien  12.00%        0.00%   0.00%  9/30/2016  3/30/2022  Consumer Goods: Durable  $9,503,655    9,419,763    475,183    0.21%

 

 9 

 

 

Stellus Capital Investment Corporation

 

Consolidated Schedule of Investments

 

March 31, 2020

 

(unaudited)

 

<
Investments  Footnotes  Security  Coupon  LIBOR
floor
   Cash   PIK   Investment
Date
  Maturity 

Headquarters/

Industry

  Principal
Amount/ Shares
   Amortized
Cost
  

Fair

Value (1)

   % of
Net Assets
 
Lynx FBO Operating, LLC  (31)                             Houston, TX                    
Term Loan  (12)  First Lien  3M L+5.75%   1.50%   7.66%       9/30/2019  9/30/2024  Aerospace & Defense  $13,681,250    13,430,490    12,723,563    5.66%
Revolver  (35)  First Lien  3M L+5.75%   1.50%   7.25%       9/30/2019  9/30/2024     $1,000,000    1,000,000    930,000    0.41%
Lynx FBO Investments, LLC Class A-1 Common Units  (4)  Equity                    9/30/2019         3,704 shares    500,040    450,000    0.20%
Total                                        $14,930,530   $14,103,563    6.27%
Madison Logic, Inc.                                New York, NY                    
Term Loan (SBIC)  (2)(12)  First Lien  1M L+7.50%   0.50%   8.49%       11/30/2016  11/30/2021  Media: Broadcasting & Subscription  $4,552,716    4,535,291    4,393,371    1.95%
Madison Logic Holdings, Inc. Common Stock (SBIC)  (2)(4)  Equity                    11/30/2016         5,000 shares    50,000    50,000    0.02%
Madison Logic Holdings, Inc. Series A Preferred Stock (SBIC)  (2)(4)  Equity                    11/30/2016         4,500 shares    450,000    450,000    0.20%
Total                                        $5,035,291   $4,893,371