424B3 1 tm219555-1_424b3.htm 424B3 tm219555-1_424b3 - none - 12.5313124s
 Filed Pursuant to Rule 424(b)(3)
 Registration Statement No. 333-231247
PROSPECTUS SUPPLEMENT
(To prospectus dated June 11, 2019)
WhiteHorse Finance, Inc.
Up to $35 million
Common Stock
We have entered into an equity distribution agreement, dated March 15, 2021, with Raymond James & Associates, Inc., or the sales agent, relating to the shares of our common stock offered by this prospectus supplement and the accompanying prospectus. The equity distribution agreement provides that we may offer and sell shares of our common stock having an aggregate offering price of up to $35 million from time to time through the sales agent. Sales of our common stock, if any, under this prospectus supplement and the accompanying prospectus may be made in negotiated transactions or transactions that are deemed to be “at the market,” as defined in Rule 415 under the Securities Act of 1933, as amended, or the Securities Act, including sales made directly on The Nasdaq Global Select Market, or Nasdaq, or any similar securities exchange or sales made to or through a market maker other than on a securities exchange, at prices related to the prevailing market prices or at negotiated prices. See “Plan of Distribution.” As of the date of this prospectus supplement, we have not sold any shares of common stock under the equity distribution agreement.
We are an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended, or the 1940 Act. H.I.G. WhiteHorse Advisers, LLC serves as our investment adviser. H.I.G. WhiteHorse Administration, LLC serves as our administrator. These entities are affiliates of H.I.G. Capital, L.L.C., an alternative asset manager founded in 1993 and focused on the lower middle market. H.I.G. Capital, L.L.C. had approximately $40 billion of capital under management as of December 31, 2020 (based on the regulatory assets under management, or AUM, as reported on Form ADV).
Our investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries. Such loans typically carry a floating interest rate based on a risk-free index rate such as the London Interbank Offered Rate, or LIBOR, plus a spread and typically have a term of three to six years. We invest primarily in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were so rated. Below investment grade securities, which are often referred to as “junk” bonds, are viewed as speculative investments because of concerns with respect to the issuer’s capacity to pay interest and repay principal.
Our common stock is traded on Nasdaq under the symbol “WHF”. The last reported closing price for our common stock on March 12, 2021 was $15.76 per share. The net asset value, or NAV, of our common stock as of December 31, 2020 (the last date prior to the date of this prospectus supplement on which we determined NAV) was $15.23 per share.
Under the terms of the equity distribution agreement, the sales agent will receive a commission from us of up to 2.0% of the gross sales price of any shares of common stock sold through the sales agent under the equity distribution agreement. The sales agent is not required to sell any specific number or dollar amount of common stock, but will use its commercially reasonable efforts consistent with its sales and trading practices to sell the shares of our common stock offered by this prospectus supplement and the accompanying prospectus. We may also sell shares of common stock to the sales agent, as principal for its own account, at a price agreed upon at the time of sale. If we sell shares to the sales agent as principal, we will enter into a separate agreement with the sales agent, setting forth the terms of such transaction, and we will describe such agreement in a separate prospectus supplement. See “Plan of Distribution” beginning on page S-13 of this prospectus supplement. The sales price per share of our common stock offered by this prospectus supplement and the accompanying prospectus, less commissions payable under the equity distribution agreement and discounts, if any, will not be less than the NAV per share of our common stock at the time of such sale.
Investing in our common stock involves a high degree of risk. Before investing in our common stock, you should review carefully the risks and uncertainties, including the risk of leverage and dilution, described in the section titled “Risk Factors” in our most recently filed Annual Report on Form 10-K and under similar headings in the other documents that are filed on or after the date hereof and incorporated by reference into this prospectus supplement and the accompanying prospectus.
This prospectus supplement and the accompanying prospectus contain important information about us that a prospective investor should know before investing in our common stock. We may also authorize one or more free writing prospectuses to be provided to you in connection with this offering. You should carefully read this prospectus supplement, the accompanying prospectus and any applicable free writing prospectus, and the documents incorporated by reference, before investing in our common stock and retain such documents for future reference. We maintain a website at www.whitehorsefinance.com and make all of our annual, quarterly and current reports, proxy statements and other publicly filed information available on or through our website. You may also obtain such information, free of charge, and make stockholder inquiries by contacting us at 1450 Brickell Avenue, 31st Floor, Miami, Florida 33131, Attention: Investor Relations, or by calling us collect at (305) 381-6999. The Securities and Exchange Commission, or the SEC, also maintains a website at www.sec.gov that contains such information.
Shares of closed-end investment companies, including business development companies, frequently trade at a discount to their NAV. If our shares trade at a discount to our NAV, it may increase the risk of loss for purchasers in this offering.
Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.
RAYMOND JAMES
The date of this prospectus supplement is March 15, 2021.

 
TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT
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S-17
PROSPECTUS
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ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus supplement, which describes the terms of this offering and also adds to and updates information contained in the accompanying prospectus. The second part is the accompanying prospectus, which gives more general information and disclosure. To the extent the information contained in this prospectus supplement differs from the information contained in the accompanying prospectus, the information in this prospectus supplement will control. Please carefully read this prospectus supplement and the accompanying prospectus, together with any exhibits and documents incorporated by reference, before you make an investment decision. Any exhibits will nonetheless be summarized in this prospectus supplement or the accompanying prospectus.
You should rely only on the information included or incorporated by reference in this prospectus supplement, the accompanying prospectus or in any free writing prospectus prepared by or on behalf of us that relates to this offering of common stock. Neither we nor the sales agent has authorized any other person to provide you with different information or to make representations as to matters not stated in this prospectus supplement, the accompanying prospectus or in any free writing prospectus prepared by or on behalf of us that relates to this offering of common stock. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus supplement, the accompanying prospectus and any free writing prospectus prepared by or on behalf of us that relates to this offering of common stock do not constitute an offer to sell, or a solicitation of an offer to buy, any shares of our common stock by any person in any jurisdiction where it is unlawful for that person to make such an offer or solicitation or to any person in any jurisdiction to whom it is unlawful to make such an offer or solicitation. You should not assume that the information included in this prospectus supplement, the accompanying prospectus or in any such free writing prospectus is accurate as of any date other than their respective dates, or that any information incorporated by reference in such documents is accurate as of any date other than the date of the document incorporated by reference, regardless of the time of delivery of this prospectus supplement or of any of our securities.
Forward-Looking Statements
This prospectus supplement, the accompanying prospectus and any applicable free writing prospectus, including the documents we incorporate by reference in such documents, may contain forward-looking statements, which relate to future events or our future performance or financial condition. All statements other than statements of historical facts, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements.
We use words such as “may,” “might,” “will,” “intends,” “should,” “could,” “can,” “would,” “expects,” “believes,” “estimates,” “anticipates,” “predicts,” “potential,” “plan” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in our most recent Annual Report on Form 10-K and elsewhere in this prospectus supplement, the accompanying prospectus and any applicable free writing prospectus.
The forward-looking statements contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any applicable free writing prospectus involve risks and uncertainties, including the risks, uncertainties and other factors we identify in “Risk Factors” in our most recent Annual Report on Form 10-K and elsewhere contained or incorporated by reference in this prospectus supplement, the accompanying prospectus and any applicable free writing prospectus.
 
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In addition, statements that we “believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the applicable date of this prospectus supplement, accompanying prospectus, free writing prospectus and documents incorporated by reference into this prospectus supplement and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and we caution investors not to unduly rely on these statements. We assume no obligation to update any such forward-looking statements. Although we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file with the SEC in the future, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
 
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PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information included elsewhere or incorporated by reference in this prospectus supplement or the accompanying prospectus. It is not complete and may not contain all of the information that you should consider before making your investment decision. To understand the terms of the common stock offered in this prospectus supplement before making your investment decision, you should carefully read this entire prospectus supplement, the accompanying prospectus, any free writing prospectus relating to this offering and the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, as provided in “Incorporation by Reference” on page S-16 of this prospectus supplement and “Additional Information” beginning on page S-17 of this prospectus supplement and on page 81 of the accompanying prospectus.
Except as otherwise indicated, the terms:

“we,” “us,” “our” and “WhiteHorse Finance” refer (unless the context otherwise requires) to WhiteHorse Finance, Inc., a Delaware corporation, and its consolidated subsidiaries;

“H.I.G. Capital” refers (unless the context otherwise requires), collectively, to H.I.G. Capital, L.L.C., a Delaware limited liability company, and its affiliates. H.I.G. Capital employs all of WhiteHorse Finance’s investment professionals, as well as those of WhiteHorse Advisers (as defined below), WhiteHorse Administration (as defined below) and their respective affiliates;

“WhiteHorse Credit” refers to WhiteHorse Finance Credit I, LLC, a special purpose Delaware limited liability company and a wholly owned subsidiary of WhiteHorse Finance;

“WhiteHorse Advisers” and the “Investment Adviser” refer to H.I.G. WhiteHorse Advisers, LLC, a Delaware limited liability company and an affiliate of H.I.G. Capital;

“WhiteHorse Administration” and the “Administrator” refer to H.I.G. WhiteHorse Administration, LLC, a Delaware limited liability company and an affiliate of H.I.G. Capital;

“2025 Public Notes” refers to the $35 million aggregate principal amount of 6.50% unsecured notes due 2025 issued on November 13, 2018;

“Private Notes” refers (unless the context otherwise requires) collectively to (i) the $30 million aggregate principal amount of 6.00% unsecured notes due 2023 privately issued on August 7, 2018; (ii) the $40 million aggregate principal amount of 5.375% unsecured notes due 2025 privately issued on October 20, 2020; (iii) the $10 million aggregate principal amount of 5.375% unsecured notes due 2026 privately issued on December 4, 2020; and (iv) the $10 million aggregate principal amount of 5.625% unsecured notes due 2027 privately issued on December 4, 2020, in each case, issued to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act; and

“Credit Facility” refers to the $285 million secured revolving credit facility between WhiteHorse Credit, as borrower, and the “Lender,” which refers, collectively, to JPMorgan Chase Bank, N.A., together with any additional lenders that may join the Credit Facility in the future.
WhiteHorse Finance
We are an externally managed, non-diversified, closed-end management investment company that has elected to be treated as a business development company under the 1940 Act. In addition, for tax purposes, we elected to be treated as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, and intend to qualify annually for such treatment.
We are a direct lender targeting debt investments in privately held, lower middle market companies located in the United States. We define the lower middle market as those companies with enterprise values between $50 million and $350 million. Our investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries. Such loans typically carry a floating interest rate based on a risk-free index rate such as LIBOR plus a spread and typically have a term of three to six years. While we focus principally on originating senior secured loans to lower middle market companies, we may also make opportunistic investments at other levels of a company’s capital
 
S-1

 
structure, including mezzanine loans or equity interests, and in companies outside of the lower middle market, to the extent we believe the investment presents an opportunity to achieve an attractive risk-adjusted return. We may also receive warrants to purchase common stock in connection with our debt investments. We generate current income through the receipt of interest payments, as well as origination and other fees, capital appreciation and dividends.
We invest primarily in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were so rated. Below investment grade securities, which are often referred to as “junk” bonds, are viewed as speculative investments because of concerns with respect to the issuer’s capacity to pay interest and repay principal.
As of December 31, 2020, our investment portfolio consisted primarily of senior secured loans across 98 positions in 67 companies with an aggregate fair value of approximately $690.7 million. As of December 31, 2019, our investment portfolio consisted primarily of senior secured loans across 66 positions in 51 companies with an aggregate fair value of approximately $589.7 million. As of both dates, the majority of our portfolio comprised senior secured loans to lower middle market borrowers.
H.I.G. Capital
H.I.G. Capital, founded in 1993, is a leading global alternative asset manager focused on the lower middle market. As of December 31, 2020, H.I.G. Capital managed approximately $40 billion of capital (based on the regulatory AUM, as reported on Form ADV) across multiple investment funds supported by approximately 435 dedicated investment professionals. These investment professionals bring a depth of experience and skills across a broad range of industries and transaction types, including primary loan originations, secondary debt purchases and special situations and distressed debt investing.
Market Opportunity
We pursue an investment strategy focused on originating senior secured loans to lower middle market companies, including first lien and second lien facilities. We may also make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests, and receive warrants to purchase common stock in connection with our debt investments. We believe that market inefficiencies and an imbalance between the supply of, and demand for, capital in the lower middle market credit market creates an attractive investment opportunity through the origination of primary loans for the following reasons:
Specialized Lending Requirements.   In our experience, lending to lower middle market companies requires more rigorous due diligence and underwriting processes than lending to larger companies. Lower middle market companies typically have fewer management resources to dedicate to the borrowing process, and often receive little or no assistance from financial advisors. Because of these and other specialized lending requirements, only a limited segment of the lending community has historically served lower middle market borrowers.
Decrease in Commercial Bank Lending Activity.    In recent years, regulatory changes and ongoing consolidation of smaller commercial banks have curtailed U.S. bank lending capacity. In response, we believe that many remaining commercial banks have deemphasized their service and product offerings to lower middle market companies in favor of lending to larger customers. We believe that the relative decline in the number of commercial banks and a shift in emphasis by remaining banks has driven a higher volume of lower middle market deal flow to us.
Lower Middle Market Environment.   We believe that as the economic recovery continues following the credit crisis, there has been increased competition for lower middle market investments due to new hedge funds and non-bank lenders that have entered the market and due to improving financial performance of lower middle market companies. However, we believe that our strong lower middle market position will continue to allow us to find investment opportunities with attractive risk-adjusted returns.
Significant Demand for Credit.   We believe that demand for debt financing from lower middle market companies will remain strong because these companies will continue to require credit to refinance existing debt, to support growth initiatives and to finance acquisitions. We believe the strong demand by lower middle market companies should increase lending opportunities for us.
 
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Inefficient Market. We believe there are a number of inefficiencies in the lower middle market credit market which allow us to achieve superior risk-adjusted returns relative to other types of loans. Unlike larger companies, lower middle market borrowers may not have a financial advisor and, as a result, may not receive as many financing offers, leading to more favorable financing terms for us, and may be less sophisticated in negotiating the terms of their financing. Moreover, the simpler capital structures frequently found in lower middle market companies often enhance protections and reduce or eliminate inter-creditor issues. In addition, lower middle market lenders face less competition than lenders to larger companies. As a result, lower middle market lenders frequently have greater flexibility in structuring favorable transactions.
We believe these factors, taken together, should increase lending opportunities for us and enable us to generate attractive risk-adjusted returns.
Competitive Strengths
Leading Lower Middle Market Position.   H.I.G. Capital is one of the leading global alternative asset managers focused on the lower middle market. With more than 25 years of investment experience focused primarily on lower middle market companies, H.I.G. Capital believes it has a specialized knowledge of the lower middle market and expertise in evaluating the issues and opportunities facing lower middle market companies throughout economic cycles. We believe that the quality of these resources provides a significant advantage and contributes to the strength of our business.
Large and Experienced Management Team with Substantial Resources.   Through a staffing agreement with an affiliate of H.I.G. Capital, our Investment Adviser has access to the resources and expertise of H.I.G. Capital’s more than 745 employees in 18 offices across the United States, Europe and South America as of December 31, 2020. As of such date, H.I.G. Capital had approximately 435 dedicated investment professionals, including more than 105 professionals dedicated to debt investing. We believe that the quality of these resources provides a significant advantage and contributes to the strength of our business.
Extensive Deal Sourcing Infrastructure.   Given the inefficiencies of the lower middle market, finding smaller companies that represent attractive debt investment opportunities requires a different sourcing network than that for larger companies. For more than 25 years, H.I.G. Capital has built an extensive and proprietary network of deal sources in the lower middle market consisting of accountants, attorneys and other advisors who have access to these companies. Each of H.I.G. Capital’s investment professionals is involved in deal sourcing, and our in-house business development group of approximately 25 dedicated deal sourcing professionals as of December 31, 2020 further enhanced our sourcing network. We believe H.I.G. Capital’s extensive deal sourcing infrastructure provides us with access to investment opportunities that may not be available to many of our competitors.
Deep Credit Expertise.   As recent as December 31, 2020, H.I.G. Capital’s credit platform managed over $18 billion of AUM across multiple investment funds supported by its dedicated credit investment professionals. These investment professionals bring a depth of experience and skills across a broad range of transaction types, including primary loan originations, secondary debt purchases and special situations and distressed debt investments. We believe this experience and expertise in credit documentation, loan structuring and restructuring negotiations helps to protect our investments and maximize our recovery value to the extent a portfolio company does not perform as expected.
Disciplined Investment and Underwriting Process.   Through its more than 25 years of investment experience, H.I.G. Capital has developed a disciplined investment process entailing intensive “bottom-up” fundamental analysis in order to generate attractive risk-adjusted returns while preserving downside protection. Our Investment Adviser utilizes the established investment processes developed by H.I.G. Capital to analyze investment opportunities, including structuring loans with appropriate covenants and pricing loans based on its knowledge of the lower middle market and on its rigorous underwriting standards. Each investment is reviewed by the investment committee, which is comprised of senior investment professionals of H.I.G. Capital with an average of more than 20 years of investment experience as of December 31, 2020.
Investment Strategy
Our investment strategy is to generate current income and capital appreciation primarily by originating secured loans. We seek to create a broad portfolio consisting of investments generally in the range of $5 million to $25 million primarily in debt securities and loans of U.S. based lower middle market companies. We primarily target borrowers in the United States with enterprise values of $50 million to $350 million
 
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across a broad range of industries. The proceeds of our loans are used for a variety of purposes, including refinancings of existing debt, acquisition financing, or working capital to support growth or realignment.
While we focus principally on originating senior secured loans to lower middle market companies that we believe have attractive risk adjusted returns, including first lien and second lien facilities, we may also opportunistically make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests. We also may receive warrants to purchase common stock in connection with our debt investments. We may also invest in assets consistent with our investment strategy indirectly through the acquisitions of interests in other investment companies. We generate current income through the receipt of interest payments, origination and other fees, and dividends. Our typical loans carry a floating interest rate based on a risk-free index rate such as LIBOR plus a spread, have a term of three to six years, are secured by all tangible and intangible assets of the borrower and include covenants, monitoring and information rights in favor of the lender.
Target businesses will typically exhibit some or all of the following characteristics:

enterprise value of between $50 million and $350 million;

organized in the United States;

experienced management team;

stable and predictable free cash flows;

discernible downside protection through recurring revenue or strong tangible asset coverage;

products and services with distinctive competitive advantages or other barriers to entry;

low technology and market risk; and

strong customer relationships.
None of these investment policies is fundamental, and they may be changed without stockholder approval.
We expect that, from time to time, our investments may include certain non-qualifying assets, including assets of non-U.S. companies, certain publicly traded companies and, to a lesser extent and subject to certain limits under the 1940 Act, registered or unregistered investment companies, to the extent permissible under the 1940 Act. See “Risk Factors — Risks Relating to our Business and Structure — The constraints imposed on us as a business development company and RIC may hinder the achievement of our investment objective” and “Regulation — Qualifying Assets” each in our most recent Annual Report on Form 10-K.
Leverage
Historically, the 1940 Act permitted us to issue “senior securities,” including borrowing money from banks or other financial institutions, only in amounts such that our asset coverage, as defined in the 1940 Act, equaled at least 200% after such incurrence or issuance. In March 2018, the Small Business Credit Availability Act, or the SBCAA, was enacted into law. The SBCAA, among other things, amended the 1940 Act to reduce the asset coverage requirements applicable to business development companies from 200% to 150% so long as the business development company meets certain disclosure requirements and obtains certain approvals. At our annual meeting of stockholders held on August 1, 2018, our stockholders approved the reduced asset coverage ratio from 200% to 150%. As a result, our asset coverage requirements applicable to senior securities decreased from 200% to 150%, effective August 2, 2018, such that our maximum debt-to-equity ratio increased on such date from a prior maximum of 1.0x (equivalent of $1 of debt outstanding for each $1 of equity) to a maximum of 2.0x (equivalent to $2 of debt outstanding for each $1 of equity). As of December 31, 2020, our asset coverage for borrowed amounts was 180.2%.
Company Information
Our principal executive offices are located at 1450 Brickell Avenue, 31st Floor, Miami, Florida 33131, telephone number (305) 381-6999. Our corporate website is located at www.whitehorsefinance.com. Information on our website is not incorporated into or a part of this prospectus supplement or the accompanying prospectus.
 
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THE OFFERING
Common stock offered by
the Company
Up to $35 million of shares of our common stock
Common stock outstanding as of
March 12, 2021
20,546,032 shares.
Manner of offering
“At the market offering” that may be made from time to time through Raymond James & Associates, Inc., the sales agent, using commercially reasonable efforts. See “Plan of Distribution.”
Nasdaq symbol
“WHF”
Use of Proceeds
If we sell shares of our common stock with an aggregate offering price of $35 million, we anticipate that our net proceeds, after deducting sales agent’s commissions and estimated expenses payable by us, will be approximately $34,050,000.
We expect to use all or substantially all of the net proceeds from this offering to invest in portfolio companies in accordance with our investment objective and strategies and for general corporate purposes.
See “Use of Proceeds” for more information.
Trading at a Discount
Shares of closed-end investment companies, including business development companies, frequently trade at a discount to their NAV. The risk that our shares may trade at a discount to our NAV is separate and distinct from the risk that our NAV per share may decline. We cannot predict whether our shares will trade above, at or below NAV.
Distributions on Common Stock
The timing and amount of our quarterly distributions, if any, are determined by our board of directors. While we intend to make distributions on a quarterly basis to our stockholders out of assets legally available for distribution, we may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of our distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage requirements applicable to us as a business development company under the 1940 Act. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including the possible loss of our ability to be subject to tax as a RIC. We cannot assure stockholders that they will receive any distributions.
Distribution Reinvestment Plan
We have adopted a distribution reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our stockholders, unless a stockholder elects to receive cash. As a result, if our board of directors declares a cash dividend or other distribution, then our stockholders who have not “opted out” of our distribution reinvestment plan will have their cash distribution automatically reinvested in additional shares of our common stock, rather than receiving the cash distribution. Stockholders who receive dividends and other distributions in the form of stock are
 
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generally subject to the same U.S. federal, state and local tax consequences as are stockholders who elect to receive their distributions in cash; however, since their cash dividends will be reinvested, such stockholders will not receive cash with which to pay any applicable taxes on reinvested dividends. See “Distribution Reinvestment Plan” in the accompanying prospectus.
Risk Factors
Investing in our common stock involves risks. See “Risk Factors” in our most recent Annual Report on Form 10-K incorporated by reference to this prospectus supplement and in any free writing prospectuses we have authorized for use in connection with this offering, and under similar headings in the documents that are filed with the SEC on or after the date hereof and are incorporated by reference into this prospectus supplement and the accompanying prospectus.
 
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FEES AND EXPENSES
The following table is intended to assist you in understanding the various costs and expenses that an investor in shares of our common stock will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary from actual results. The following table should not be considered a representation of our future expenses. Actual expenses may be greater or less than shown. Except where the context suggests otherwise, whenever this prospectus supplement contains a reference to fees or expenses paid by “us” or “WhiteHorse Finance,” or that “we” will pay fees or expenses, common stockholders will indirectly bear such fees or expenses as investors in WhiteHorse Finance.
Stockholder transaction expenses:
Sales load (as a percentage of offering price)
2.0 %(1)
Offering expenses (as a percentage of offering price)
0.71 %(2)
Distribution reinvestment plan fees (per sales transaction fee)
$15 Transaction
Fee(3)
Total stockholder transaction expenses (as a percentage of offering price)
2.71 %
Annual expenses (as a percentage of net assets attributable to common stock):
Base management fees
3.98 %(4)
Incentive fees payable under Investment Advisory Agreement (20% of Pre-Incentive Fee Net Investment Income and 20% of realized capital gains)
2.42 %(5)
Interest payments on borrowed funds
4.19 %(6)
Acquired fund fees and expenses
2.51 %(7)(8)
Other expenses
1.38 %(9)
Total annual expenses
      14.48 %
(1)
Represents the maximum agent commission with respect to the shares of our common stock sold by us in this offering. There is no guarantee that there will be any sales of our common stock pursuant to this prospectus supplement and the accompanying prospectus.
(2)
The percentage reflects estimated offering expenses payable by us of approximately $250,000 for the estimated duration of this offering.
(3)
The expenses of the distribution reinvestment plan, which consist primarily of the expenses of American Stock Transfer & Trust Company, LLC, our plan administrator, are included in “Other expenses.” If a participant elects by written notice to the plan administrator prior to termination of his or her account to have the plan administrator sell part or all of the shares held by the plan administrator in the participant’s account and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15.00 transaction fee plus a $0.10 per share brokerage commission from the proceeds. See “Distribution Reinvestment Plan” in the accompanying prospectus.
(4)
Our base management fee under an investment advisory agreement with WhiteHorse Advisers, or the Investment Advisory Agreement, is calculated at an annual rate equal to 2.0% based on our gross assets, including assets purchased with borrowed funds; provided, however, our base management fee shall be calculated at an annual rate equal to 1.25% of our gross assets, including cash and cash equivalents and assets purchased with borrowed funds, that exceed the product of (i) 200% and (ii) the value of our total net assets. Our base management fee is payable quarterly in arrears. The SEC requires that the “Management fees” percentage be calculated as a percentage of net assets attributable to common stockholders, rather than total assets, including assets that have been funded with borrowed monies, because common stockholders bear all of this cost.
(5)
The incentive fee referenced in the table above is based on actual amounts of the income-based component of the incentive fee incurred during the year ended December 31, 2020 and the actual amount of the capital gains-based incentive fee recorded during this same period. The incentive fee consists of two components that are independent of each other (except as provided in the Incentive Fee Cap and Deferral Mechanism described below), with the result that one component may be payable even if the other is not.
 
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We have structured the calculation of these incentive fees, which we refer to as the “Income and Capital Gain Incentive Fee Calculations,” to include a fee limitation such that no incentive fee will be paid to our Investment Adviser for any fiscal quarter if, after such payment, the cumulative incentive fees paid to our Investment Adviser for the period that includes such fiscal quarter and the 11 full preceding fiscal quarters, which we refer to in this prospectus supplement as the Incentive Fee Look-back Period, would exceed 20.0% of our Cumulative Pre-Incentive Fee Net Return during the applicable Incentive Fee Look-back Period. The deferral component of the Incentive Fee Cap and Deferral Mechanism may cause incentive fees that accrued during one fiscal quarter to be paid to our Investment Adviser at any time during the 11 full fiscal quarters following such initial full fiscal quarter. The “Cumulative Pre-Incentive Fee Net Return” refers to the sum of (a) Pre-Incentive Fee Net Investment Income for each period during the Incentive Fee Look-back Period and (b) the sum of cumulative realized capital gains, cumulative realized capital losses, cumulative unrealized capital depreciation and cumulative unrealized capital appreciation during the applicable Incentive Fee Look-back Period.
We accomplish this limitation by subjecting each incentive fee payable to a cap, which we refer to in this prospectus supplement to as the “Incentive Fee Cap.” The Incentive Fee Cap in any quarter is equal to (a) 20.0% of Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period less (b) cumulative incentive fees of any kind paid to our Investment Adviser by us during the Incentive Fee Look-back Period. To the extent the Incentive Fee Cap is zero or a negative value in any quarter, we will pay no incentive fee to our Investment Adviser in that quarter. We will only pay incentive fees to the extent allowed by the Incentive Fee Cap and Deferral Mechanism. To the extent that the payment of incentive fees is limited by the Incentive Fee Cap and Deferral Mechanism, the payment of such fees may be deferred and paid up to three years after their date of deferment subject to applicable limitations included in the Investment Advisory Agreement.
The first component of the incentive fee, which is income-based and payable quarterly in arrears, equals 20% of the amount, if any, that our “Pre-Incentive Fee Net Investment Income” exceeds a 1.75% quarterly (7.00% annualized) hurdle rate, or the Hurdle Rate, subject to a “catch-up” provision measured at the end of each calendar quarter and the Incentive Fee Cap and Deferral Mechanism described below. For this purpose, “Pre-Incentive
Fee Net Investment Income” means, in each case on a consolidated basis, interest income, distribution income and any other income (including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies) accrued during the calendar quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement (as defined below), any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The operation of the first component of the incentive fee for each quarter is as follows:

no incentive fee is payable to our Investment Adviser in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Rate of 1.75% (7.00% annualized);

100% of our 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 2.1875% in any calendar quarter (8.75% annualized) is payable to our Investment Adviser. We refer to this portion of our Pre-Incentive Fee Net Investment Income (which exceeds the Hurdle Rate but is less than 2.1875%) as the “catch-up.” The effect of the “catch-up” provision is that, if such Pre-Incentive Fee Net Investment Income exceeds 2.1875% in any calendar quarter, our Investment Adviser will receive 20% of such Pre-Incentive Fee Net Investment Income as if the Hurdle Rate did not apply; and

20% of the amount of such Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to our Investment Adviser (once the Hurdle Rate is reached and the catch-up is achieved).
 
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The portion of such incentive fee that is attributable to deferred interest (such as payment-in-kind interest or original issue discount) will be paid to the Investment Adviser, together with any other interest accrued on the loan from the date of deferral to the date of payment, only if and to the extent we actually receive such interest in cash, and any accrual thereof will be reversed if and to the extent such interest is reversed in connection with any write-off or similar treatment of the investment giving rise to any deferred interest accrual. Any reversal of such amounts would reduce net income for the quarter by the net amount of the reversal (after taking into account the reversal of incentive fees payable) and would result in a reduction and possibly elimination of the incentive fees for such quarter. For the avoidance of doubt, no incentive will be paid to the Investment Adviser on amounts accrued and not paid in respect of deferred interest.
There is no accumulation of amounts on the Hurdle Rate from quarter to quarter and, accordingly, there is no clawback of amounts previously paid if subsequent quarters are below the quarterly Hurdle Rate and there is no delay of payment if prior quarters are below the quarterly Hurdle Rate. Since the Hurdle Rate is fixed, as interest rates rise, it will be easier for our Investment Adviser to surpass the Hurdle Rate and receive an incentive fee based on Pre-Incentive Fee Net Investment Income.
The second component of the incentive fee, which is capital gains-based, is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date) and equals 20% of our cumulative aggregate realized capital gains through the end of such year, computed net of our aggregate cumulative realized capital losses and aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid capital gains incentive fees and subject to the Incentive Fee Cap and Deferral Mechanism described above. The capital-gains component of the incentive fee excludes any portion of realized gains (losses) that are associated with the reversal of any portion of unrealized appreciation/depreciation attributable to periods prior to January 1, 2013. The capital gains component of the incentive fee is not subject to any minimum return to stockholders.
As described above, we will not pay any incentive fee at any time when, after such payment, the cumulative incentive fees paid to date would exceed 20% of the Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period.
(6)
Our stockholders bear directly or indirectly the costs of borrowings under the Credit Facility and other debt instruments. Our actual borrowing costs as a percentage of net assets attributable to common stock on our outstanding indebtedness as of December 31, 2020, which consisted of $265.2 million of indebtedness outstanding under the Credit Facility, $35.0 million of indebtedness outstanding in 2025 Public Notes and $90.0 million of indebtedness outstanding in Private Notes, was 4.20%. At December 31, 2020, the weighted average interest rate for total outstanding debt was 3.73%. Assuming we meet certain disclosure requirements required by the SBCAA, we expect to use leverage to finance a portion of our investments in the future, consistent with the newly enacted rules and regulations under the 1940 Act.
(7)
Our stockholders indirectly bear the expenses of underlying funds or other investment vehicles that would be investment companies under Section 3(a) of the 1940 Act but for the exceptions to that definition provided for in Sections 3(c)(1) and 3(c)(7) of the 1940 Act, or Acquired Funds, in which we invest. Specifically, our stockholders indirectly bear the expenses of our investment in NMFC Senior Loan Program I LLC, or NMFC. Included in the expenses indirectly borne by our investment in NMFC is a management fee, charged each quarter equal to 0.44% per annum of the average outstanding loan balances held in the portfolio of NMFC multiplied by our pro-rata ownership percentage in NMFC. Future fees and expenses for Acquired Funds, including NMFC, may be substantially higher or lower because certain fees and expenses are based on the performance of such Acquired Funds, which may fluctuate over time.
(8)
Our stockholders also indirectly bear 60% of the expenses of our investment in our joint venture, WHF STRS Ohio Senior Loan Fund, or STRS JV. No management fee is charged by the WhiteHorse Advisers in connection with STRS JV. For this chart, STRS JV fees and operating expenses are based on our share of the actual fees and operating expenses of STRS JV for the year ended December 31, 2020. Expenses for STRS JV may fluctuate over time and may be substantially higher or lower in the future.
 
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(9)
Includes our overhead expenses, including payments under an administration agreement with WhiteHorse Administration, or the Administration Agreement, based on our allocable portion of overhead and other expenses incurred by WhiteHorse Administration in performing its obligations under the Administration Agreement, and income and excise taxes. “Other expenses” are based on actual amounts incurred during the year ended December 31, 2020.
Example
The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that our annual operating expenses remain at the levels set forth in the table above and that you would pay a sales load of up to 2.0% (the commission to be paid by us with respect to common stock sold by us in this offering). This example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown.
Stockholders would pay the following expenses on a $1,000 common stock investment:
1 year
3 years
5 years
10 years
Assuming a 5% annual return (none of which is subject to the incentive fee)
$ 134 $ 338 $ 515 $ 858
The above table is designed to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. The incentive fee under the Investment Advisory Agreement, which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example. This illustration assumes that we will not realize any capital gains (computed net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses and returns to our investors would be higher.
If the 5% annual return were derived entirely from capital gains, you would pay expenses on a $1,000 investment as follows:
Stockholders would pay the following expenses on a $1,000 common stock investment:
1 year
3 years
5 years
10 years
Assuming a 5% annual return resulting entirely from net realized capital gains (which is subject to the incentive fee based on capital gains)
$ 144 $ 366 $ 558 $ 930
The example assumes reinvestment of all dividends and other distributions at NAV. Under certain circumstances, reinvestment of dividends and distributions under our distribution reinvestment plan may occur at a price per share that differs from NAV. Participants in our distribution reinvestment plan will receive a number of shares of our common stock determined by dividing the total dollar amount of the distribution payable to a participant by the market price per share of our common stock at the close of trading on the valuation date for the distribution. See “Distribution Reinvestment Plan” in the accompanying prospectus for additional information regarding our distribution reinvestment plan.
 
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RISK FACTORS
Before you invest in our common stock, you should be aware of various risks, including those described in our most recent Annual Report on Form 10-K incorporated by reference in this prospectus supplement, in any free writing prospectuses we have authorized for use in connection with this offering and under similar headings in the documents that are filed with the SEC on or after the date of this prospectus supplement and are incorporated by reference into this prospectus supplement and the accompanying prospectus. You should carefully consider these risk factors, together with all of the other information included or incorporated by reference in this prospectus supplement, the accompanying prospectus and in any free writing prospectuses we have authorized for use in connection with this offering, before you decide whether to make an investment in our common stock.
The risks described in these documents are not the only risks we face. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, our NAV and the trading price of our common stock could decline, and you may lose all or part of your investment.
 
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USE OF PROCEEDS
Sales of our common stock, if any, under this prospectus supplement and the accompanying prospectus may be made in negotiated transactions or transactions that are deemed to be “at the market” as defined in Rule 415 under the Securities Act, including sales made directly on Nasdaq or sales made to or through a market maker other than on an exchange. There is no guarantee that there will be any sales of our common stock pursuant to this prospectus supplement and the accompanying prospectus. Actual sales, if any, of our common stock under this prospectus supplement and the accompanying prospectus may be less than the proceeds set forth in this paragraph depending on the market price of our common stock at the time of any such sale. As a result, the actual net proceeds we receive may be more or less than the amount of net proceeds estimated in this prospectus supplement. The sales price per share of our common stock offered by this prospectus supplement and the accompanying prospectus, less commissions payable under the equity distribution agreement and discounts, if any, will not be less than the NAV per share of our common stock at the time of such sale. If we sell shares of our common stock with an aggregate offering price of $35 million, we anticipate that our net proceeds, after deducting sales agent’s commissions and estimated expenses payable by us, will be approximately $34,050,000.
We expect to use all or substantially all of the net proceeds from this offering to invest in portfolio companies in accordance with our investment objective and strategies and for general corporate purposes. We expect that our new investments will consist primarily of senior secured debt investments in lower middle market companies.
We anticipate that we will use substantially all of the net proceeds of the sale of the common stock in this offering for the above purposes within approximately six months after the completion of the offering described in this prospectus supplement, depending on the availability of appropriate investment opportunities consistent with our investment objective and market conditions. We cannot assure you that we will achieve our targeted investment pace.
Until such appropriate investment opportunities can be found, we intend to invest the net proceeds of the offering of our common stock in cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less from the date of investment. These temporary investments may have lower yields than our other investments and, accordingly, may result in lower distributions, if any, during such period. Our ability to achieve our investment objective may be limited to the extent that the net proceeds from an offering, pending full investment, are held in lower yielding interest-bearing deposits or other short-term instruments. See “Item 1. Business — Regulation — Temporary Investments” in our most recent Annual Report on Form 10-K for additional information about temporary investments we may make while waiting to make longer-term investments in pursuit of our investment objective.
 
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PLAN OF DISTRIBUTION
We have entered into an equity distribution agreement, dated March 15, 2021, with Raymond James & Associates, Inc. under which it will act as the sales agent in connection with the offer and sale of up to $35 million of shares of our common stock pursuant to this prospectus supplement and the accompanying prospectus. Upon instructions from us, the sales agent will use its commercially reasonable efforts consistent with its normal sales and trading practices to sell, as the sales agent, our common stock under the terms and subject to the conditions set forth in the equity distribution agreement. We will instruct the sales agent as to the amount of common stock to be sold by us. We may instruct the sales agent not to sell common stock if the sales cannot be effected at or above the price designated by us in any instruction. The sales price per share of our common stock offered by this prospectus supplement and the accompanying prospectus, less commissions payable under the equity distribution agreement and discounts, if any, will not be less than the NAV per share of our common stock at the time of such sale. We or the sales agent may suspend the offering of shares of common stock upon proper notice and subject to other conditions.
Sales of the shares of our common stock, if any, by us under this prospectus supplement and the accompanying prospectus may be made in negotiated transactions or transactions that are deemed to be “at the market,” as defined in Rule 415 under the Securities Act, including sales made directly on Nasdaq or similar securities exchanges or sales made to or through a market maker other than on a securities exchange at prices related to the prevailing market prices or at negotiated prices.
The sales agent will provide written confirmation of a sale to us as soon as practicable following the close of trading on Nasdaq each day in which shares of our common stock are sold under the equity distribution agreement. Each confirmation will include the number of shares of common stock sold on such day, the net proceeds payable to us and the aggregate compensation payable by us to the sales agent in connection with such sales.
We will pay the sales agent a commission of up to 2.0% of the gross sales price of shares of our common stock sold through them pursuant to this prospectus supplement. The estimated offering expenses payable by us, in addition to such commission and reimbursement of expenses, are approximately $250,000, which includes legal, accounting and printing costs and various other fees associated with registering the shares of common stock and the filing fees incident to the review by the Financial Industry Regulatory Authority, Inc., or FINRA, of the terms of the sale of common stock in this offering, as well as an aggregate of $40,000 in reimbursement of reasonable fees and expenses of counsel to the sales agent incurred in connection with the initial launch of this offering (including legal fees and expenses relating to the review by FINRA of the terms of the sale of our common stock in this offering), and up to $7,500 per calendar quarter during the term of the equity distribution agreement for fees and expenses of counsel to the sales agent incurred in connection with quarterly updates for this offering. The remaining sales proceeds, after deducting any other transaction fees, will equal net proceeds from the sale of such shares payable to us.
Settlement for sales of shares of common stock will occur on the second trading day following the date on which such sales are made, or on some other date that is agreed upon by us and the sales agent in connection with a particular transaction, in return for payment of the net proceeds to us. There is no arrangement for funds to be received in an escrow, trust or similar arrangement.
Under the terms of the equity distribution agreement, we may also sell shares of common stock to the sales agent as principal for its own accounts at a price agreed upon at the time of sale. The sales agent may offer common stock sold to them as principals from time to time through public or private transactions at market prices prevailing at the time of sale, at fixed prices, at negotiated prices, at various prices determined at the time of sale or at prices related to prevailing market prices. If we sell shares to the sales agent as principal, we will enter into a separate agreement with the sales agent, setting forth the terms of such transaction, and we will describe such agreement in a separate prospectus supplement.
We will report at least quarterly the number of shares of common stock sold by us through the sales agent under the equity distribution agreement and the net proceeds to us.
In connection with the sale of the common stock on our behalf, the sales agent may be deemed to be an “underwriter” within the meaning of the Securities Act, and the compensation of the sales agent may be
 
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deemed to be underwriting commissions or discounts. We have agreed to provide indemnification and contribution to the sales agent with respect to certain civil liabilities, including liabilities under the Securities Act.
The offering of shares of common stock by us pursuant to the equity distribution agreement will terminate upon the earlier of (i) the sale of all common stock subject to the equity distribution agreement or (ii) the termination of the equity distribution agreement as permitted therein.
The principal business address of Raymond James & Associates, Inc. is 880 Carillon Parkway, St. Petersburg, Florida 33716.
 
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LEGAL MATTERS
Certain legal matters regarding the shares of common stock offered by this prospectus supplement will be passed upon for WhiteHorse Finance by Dechert LLP, Boston, Massachusetts. Dechert LLP also represents the Investment Adviser. Certain legal matters regarding the shares of common stock offered by this prospectus supplement will be passed upon for the sales agent by Proskauer Rose LLP, Washington, DC.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Crowe LLP, located at 485 Lexington Avenue, FL 11, New York, NY 10017, an independent registered public accounting firm, has audited our consolidated financial statements as of December 31, 2020 and 2019 and for each of the three years in the period ended December 31, 2020, as set forth in its report incorporated by reference in this prospectus supplement and the accompanying prospectus. We have incorporated by reference our consolidated financial statements in reliance on Crowe LLP’s report, given on the authority of said firm as experts in accounting and auditing. The senior securities table of WhiteHorse Finance included in the accompanying prospectus and in our most recent Annual Report on Form 10-K has been included in reliance upon the report of Crowe LLP, an independent registered public accounting firm, as stated in its report related thereto.
 
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INCORPORATION BY REFERENCE
We incorporate by reference in this prospectus supplement the documents listed below and any future filings (including those made after the date of this prospectus supplement) we will make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, until the termination of the offering of the securities covered by this prospectus supplement (such reports and other documents deemed to be incorporated by reference into this prospectus supplement and to be part hereof from the date of filing of such reports and other documents); provided, however, that information “furnished” under Item 2.02 or Item 7.01 of Form 8-K or other information “furnished” to the SEC which is not deemed filed is not incorporated by reference into this prospectus supplement:



The description of our Common Stock referenced in our Registration Statement on Form 8-A (No. 001-35752), as filed with the SEC on December 4, 2012, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering of the common stock registered hereby.
To obtain copies of these filings, see “Additional Information.”
 
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ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form N-2, together with all amendments and related exhibits, under the Securities Act, with respect to the securities offered by this prospectus supplement and the accompanying prospectus. The registration statement contains additional information about us and the securities being offered by this prospectus supplement and the accompanying prospectus.
We file with or submit to the SEC annual, quarterly and current periodic reports, proxy statements and other information meeting the informational requirements of the Exchange Act. We maintain a website at www.whitehorsefinance.com and make all of our annual, quarterly and current reports, proxy statements and other publicly filed information available, free of charge, on or through our website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information contained on our website is not incorporated into this prospectus supplement, and you should not consider information on our website to be part of this prospectus supplement. You may also obtain such information by contacting us, in writing at: 1450 Brickell Avenue, 31st Floor, Miami, Florida 33131, Attention: Investor Relations, or by telephone at (305) 381-6999. The SEC maintains a website that contains reports, proxy and information statements and other information we file with the SEC at www.sec.gov.
 
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$389,266,000
WHITEHORSE FINANCE, INC.
Common Stock
Preferred Stock
Warrants
Subscription Rights
Debt Securities
We are an externally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended. H.I.G. WhiteHorse Advisers, LLC serves as our investment adviser. H.I.G. WhiteHorse Administration, LLC serves as our administrator. These entities are affiliates of H.I.G. Capital, L.L.C., an alternative asset manager founded in 1993 and focused on the lower middle market. H.I.G. Capital, L.L.C. had approximately $26 billion of capital under management as of December 31, 2018 (based on the regulatory assets under management as reported on Form ADV).
Our investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries. Such loans typically carry a floating interest rate based on the London Interbank Offered Rate, and have a term of three to six years. We invest primarily in securities that are rated below investment grade by rating agencies or that may be rated below investment grade if they were so rated. Below investment grade securities, which are often referred to as “junk” bonds, are viewed as speculative investments because of concerns with respect to the issuer’s capacity to pay interest and repay principal.
We may offer, from time to time, in one or more offerings or series, together or separately, up to $389,266,000 of our common stock, preferred stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, subscription rights or debt securities, which we refer to, collectively, as the “securities.” We may sell our common stock through underwriters or dealers, “at-the-market” to or through a market maker into an existing trading market or otherwise directly to one or more purchasers or through agents or through a combination of methods of sale. The identities of such underwriters, dealers, market makers or agents, as the case may be, will be described in one or more supplements to this prospectus. The securities may be offered at prices and on terms to be described in one or more supplements to this prospectus. In the event we offer common stock, the offering price per share of our common stock exclusive of any underwriting commissions or discounts will not be less than the net asset value per share of our common stock at the time we make the offering except (1) in connection with a rights offering to our existing stockholders, (2) with the consent of the majority of our common stockholders and approval of our board of directors or (3) under such circumstances as the Securities and Exchange Commission, or the SEC, may permit.
In addition, this prospectus relates to 10,530,000 shares of our common stock that may be sold by the selling stockholders identified under “Selling Stockholders.” Sales of our common stock by the selling stockholders, which may occur at prices below the net asset value per share of our common stock, may adversely affect the market price of our common stock and may make it more difficult for us to raise capital. Each offering by the selling stockholders of their shares of our common stock through agents, underwriters or dealers will be accompanied by a prospectus supplement that will identify the selling stockholder that is participating in such offering. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.
Our common stock trades on the NASDAQ Global Select Market under the symbol “WHF”. The last reported closing price for our common stock on June 10, 2019 was $14.50. Based on this last reported closing price of our common stock, the aggregate market value of the shares of our common stock held by the selling stockholders identified under “Selling Stockholders was approximately $152.7 million. The net asset value of our common stock on March 31, 2019 (the last date prior to the date of this prospectus on which we determined net asset value) was $15.33 per share. Our 6.50% Notes due 2025, or our 2025 Notes, are currently listed on the NASDAQ Global Select Market under the symbol “WHFBZ”. The last reported closing price for our 2025 Notes on June 10, 2019 was $26.04.
This prospectus describes some of the general terms that may apply to an offering of our securities and contains important information you should know before investing in our securities. We will provide the specific terms of these offerings and securities in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be provided to you in connection with these offerings. The prospectus supplement and any related free writing prospectus may also add, update, or change information contained in this prospectus. You should carefully read this prospectus, the applicable prospectus supplement, and any related free writing prospectus, and the documents incorporated by reference, before buying any of the securities being offered. We file annual, quarterly and current reports, proxy statements and other information about us with the SEC before you invest in our securities. We maintain a website at http://www.whitehorsefinance.com and make all of our annual, quarterly and current reports, proxy statements and other publicly filed information available on or through our website. Information contained on our website is not incorporated by reference into this prospectus or any supplement to this prospectus, and you should not consider that information to be part of this prospectus or any such supplement. You may also obtain such information, free of charge, and make stockholder inquiries by contacting us at 1450 Brickell Avenue, 31st Floor, Miami, Florida 33131, Attention: Investor Relations, or by calling us collect at (305) 381-6999. The SEC also maintains a website at http://www.sec.gov that contains such information.
Shares of closed-end investment companies, including business development companies, frequently trade at a discount to their net asset value. If our shares trade at a discount to our net asset value, it may increase the risk of loss for purchasers in an offering made pursuant to this prospectus or any related prospectus supplement.
Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Investing in our common stock involves a high degree of risk. You should review carefully the risks and uncertainties, including the risk of leverage and dilution, described in the section titled “Risk Factors” included in, or incorporated by reference into, the applicable prospectus supplement and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in the other documents that are incorporated by reference into this prospectus before investing in our securities.
This prospectus may not be used to consummate sales of securities unless accompanied by a prospectus supplement.
You should rely only on the information contained in this prospectus. We have not, and the selling stockholders have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the selling stockholders identified under “Selling Stockholders” are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations, cash flows and prospects may have changed since that date. We will update these documents to reflect material changes only as required by law.
The date of this prospectus is June 11, 2019.

 
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with the SEC using the “shelf” registration process. Under the shelf registration process, we may offer from time to time up to $389,266,000 of our common stock, preferred stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, subscription rights or debt securities on the terms to be determined at the time of the offering. We may sell our common stock through underwriters or dealers, “at-the-market” to or through a market maker, into an existing trading market or otherwise directly to one or more purchasers or through agents or through a combination of methods of sale. The identities of such underwriters, dealers, market makers or agents, as the case may be, will be described in one or more supplements to this prospectus. The securities may be offered at prices and on terms described in one or more supplements to this prospectus. In addition, this prospectus relates to 10,530,000 shares of our common stock that may be sold by the selling stockholders identified under “Selling Stockholders.”
This prospectus provides you with a general description of the securities that we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. In a prospectus supplement or free writing prospectus, we may also add, update, or change any of the information contained in this prospectus or in the documents we have incorporated by reference into this prospectus. This prospectus, together with the applicable prospectus supplement, any related free writing prospectus and the documents incorporated by reference into this prospectus and the applicable prospectus supplement, will include all material information relating to the applicable offering. Before buying any of the securities being offered, you should carefully read both this prospectus and the applicable prospectus supplement, and any related free writing prospectus, together with the additional information described in the section titled “Additional Information.”
This prospectus includes summaries of certain provisions contained in some of the documents described in this prospectus, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed, or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described in the section titled “Additional Information.”
You should rely only on the information included or incorporated by reference in this prospectus, any prospectus supplement or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We have not authorized any dealer, salesperson or other person to provide you with different information or to make representations as to matters not stated in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus, any applicable prospectus supplement and any free writing prospectus prepared by or on behalf of us or to which we have referred you do not constitute an offer to sell, or a solicitation of an offer to buy, any securities by any person in any jurisdiction where it is unlawful for that person to make such an offer or solicitation or to any person in any jurisdiction to whom it is unlawful to make such an offer or solicitation. You should not assume that the information included or incorporated by reference in this prospectus or any prospectus supplement or in any such free writing prospectus is accurate as of any date other than their respective dates.
 
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PROSPECTUS SUMMARY
This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read the more detailed information set forth under “Risk Factors” and the other information included in this prospectus carefully.
Except as otherwise indicated, the terms:

“we,” “us,” “our” and “WhiteHorse Finance” refer (unless the context otherwise requires) to WhiteHorse Finance, Inc., a Delaware corporation, and its consolidated subsidiaries;

“H.I.G. Capital” refers (unless the context otherwise requires), collectively, to H.I.G. Capital, L.L.C., a Delaware limited liability company, and its affiliates. H.I.G. Capital employs all of WhiteHorse Finance’s investment professionals, as well as those of WhiteHorse Advisers (as defined below), WhiteHorse Administration (as defined below) and their respective affiliates;

“WhiteHorse Credit” refers to WhiteHorse Finance Credit I, LLC, a special purpose Delaware limited liability company and a wholly owned subsidiary of WhiteHorse Finance;

“WhiteHorse Advisers” and the “Investment Adviser” refer to H.I.G. WhiteHorse Advisers, LLC, a Delaware limited liability company and an affiliate of H.I.G. Capital;

“WhiteHorse Administration” and the “Administrator” refer to H.I.G. WhiteHorse Administration, LLC, a Delaware limited liability company and an affiliate of H.I.G. Capital;

“Private Notes” refer to the $30 million senior unsecured notes privately issued on August 7, 2018 to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act; and “Note Purchase Agreement” refers to the note purchase agreement, dated July 13, 2018, governing the issuance and sale of the Private Notes;

“2020 Notes” refer to the $30 million senior notes issued on July 23, 2013 and redeemed by us on August 9, 2018;

“2025 Notes” refer to the $35 million aggregate principal amount of 6.50% unsecured notes due 2025 issued on November 13, 2018; and

“Credit Facility” refers to the $200 million secured revolving credit facility between WhiteHorse Credit, as borrower, and the “Lender”, which refers, collectively, to JPMorgan Chase Bank, N.A., together with any additional lenders that may join the Credit Facility in the future.
WhiteHorse Finance
We are an externally managed, non-diversified, closed-end management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, for tax purposes, we elected to be treated as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code, and intend to qualify annually for such treatment.
We are a direct lender targeting debt investments in privately held, lower middle market companies located in the United States. We define the lower middle market as those companies with enterprise values between $50 million and $350 million. Our investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing lower middle market companies across a broad range of industries. Such loans typically carry a floating interest rate based on the London Interbank Offered Rate, or LIBOR, and have a term of three to six years. While we focus principally on originating senior secured loans to lower middle market companies, we may also make opportunistic investments at other levels of a company’s capital structure, including mezzanine loans or equity interests. We also may receive warrants to purchase common stock in connection with our debt investments. We generate current income through the receipt of interest payments, as well as origination and other fees, capital appreciation and dividends.
We invest primarily in securities that are rated below investment grade by rating agencies or that may be rated below investment grade if they were so rated. Below investment grade securities, which are often
 
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referred to as “junk” bonds, are viewed as speculative investments because of concerns with respect to the issuer’s capacity to pay interest and repay principal.
As of December 31, 2018, our investment portfolio consisted primarily of senior secured loans across 53 positions in 39 companies with an aggregate fair value of approximately $469.6 million. As of December 31, 2017, our investment portfolio consisted primarily of senior secured loans across 43 positions in 32 companies with an aggregate fair value of approximately $440.7 million. At both dates, the majority of our portfolio comprised senior secured loans to lower middle market borrowers.
Our Investment Adviser
Our investment activities are managed by our investment adviser, WhiteHorse Advisers. WhiteHorse Advisers is an affiliate of H.I.G. Capital and is responsible for sourcing potential investments, conducting research and diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investments and monitoring our investments in portfolio companies on an ongoing basis. WhiteHorse Advisers has also agreed to provide us with access to personnel and its investment committee, or the investment committee. WhiteHorse Advisers is a registered investment adviser under the Investment Advisers Act of 1940, as amended, or the Advisers Act.
WhiteHorse Advisers entered into a staffing agreement, or the Staffing Agreement, with an affiliate of H.I.G. Capital under which the affiliate has agreed to make experienced investment professionals available to WhiteHorse Advisers and to provide access to its senior investment personnel to enable WhiteHorse Advisers to perform all of the Investment Adviser’s obligations under our investment advisory agreement with WhiteHorse Advisers, or the Investment Advisory Agreement. We believe that the Staffing Agreement provides our Investment Adviser with access to investment opportunities, which we refer to in the aggregate as deal flow, generated by H.I.G. Capital in the ordinary course of business and commits certain members of H.I.G. Capital’s investment committee to serve as members of WhiteHorse Advisers’ investment committee. In addition, under the Staffing Agreement, H.I.G. Capital is obligated to allocate investment opportunities among its managed affiliates fairly and equitably over time in accordance with its allocation policy. The Staffing Agreement provides WhiteHorse Advisers with the deal origination, credit underwriting, due diligence, investment structuring, execution, portfolio management and monitoring experience of H.I.G. Capital’s senior investment professionals.
An affiliate of our Investment Adviser, WhiteHorse Administration, under an administration agreement, or the Administration Agreement, provides the administrative services necessary for us to operate.
H.I.G. Capital
H.I.G. Capital, founded in 1993, is a leading global alternative asset manager focused on the lower middle market. As of December 31, 2018, H.I.G. Capital managed approximately $26 billion of capital (based on the regulatory assets under management, or AUM, as reported on Form ADV) across multiple investment funds. As of December 31, 2018, H.I.G. Capital operated through domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles, Miami, New York, San Francisco and Stamford and international offices in Bogota, Hamburg, London, Luxembourg, Madrid, Milan, Paris, Rio de Janeiro and São Paulo and had a team of approximately 375 investment professionals. H.I.G. Capital’s investment professionals share a common investment philosophy built around a highly analytical, private equity-like framework of rigorous business assessment, extensive due diligence and a disciplined risk valuation methodology that guides investment decisions. H.I.G. Capital has built an extensive and proprietary network of informal and unconventional deal sources in the lower middle market business community consisting of accountants, attorneys, and other advisors who have access to lower middle market companies. We believe that H.I.G. Capital, as an experienced lower middle market investor, has a demonstrated ability to identify, source, analyze, invest and monitor investments in the lower middle market. H.I.G. Capital is headquartered in Miami, Florida.
Market Opportunity
We pursue an investment strategy focused on originating senior secured loans to lower middle market companies, including first lien and second lien facilities. We may also make investments at other levels of a
 
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company’s capital structure, including mezzanine loans or equity interests, and receive warrants to purchase common stock in connection with our debt investments. We believe that market inefficiencies and an imbalance between the supply of, and demand for, capital in the lower middle market credit market creates an attractive investment opportunity through the origination of primary loans for the following reasons:
Specialized Lending Requirements.   In our experience, lending to lower middle market companies requires more rigorous due diligence and underwriting processes than lending to larger companies. Lower middle market companies typically have fewer management resources to dedicate to the borrowing process, and often receive little or no assistance from financial advisors. Because of these and other specialized lending requirements, only a limited segment of the lending community has historically served lower middle market borrowers.
Decrease in Commercial Bank Lending Activity.   In recent years, regulatory changes and ongoing consolidation of smaller commercial banks have curtailed U.S. bank lending capacity. In response, we believe that many remaining commercial banks have deemphasized their service and product offerings to lower middle market companies in favor of lending to larger customers. We believe that the relative decline in the number of commercial banks and a shift in emphasis by remaining banks has driven a higher volume of lower middle market deal flow to us.
Lower Middle Market Environment.   We believe that as the economic recovery continues following the credit crisis, there has been increased competition for lower middle market investments due to new hedge funds and non-bank lenders that have entered the market and due to improving financial performance of lower middle market companies. However, we believe that our strong lower middle market position will continue to allow us to find investment opportunities with attractive risk-adjusted returns.
Significant Demand for Credit.   We believe that demand for debt financing from lower middle market companies will remain strong because these companies will continue to require credit to refinance existing debt, to support growth initiatives and to finance acquisitions. We believe the strong demand by lower middle market companies should increase lending opportunities for us.
Inefficient Market.   We believe there are a number of inefficiencies in the lower middle market credit market which allow us to achieve superior risk-adjusted returns relative to other types of loans. Unlike larger companies, lower middle market borrowers may not have a financial advisor and, as a result, may not receive as many financing offers, leading to more favorable financing terms for us, and may be less sophisticated in negotiating the terms of their financing. Moreover, the simpler capital structures frequently found in lower middle market companies often enhance protections and reduce or eliminate inter-creditor issues. In addition, lower middle market lenders face less competition than lenders to larger companies. As a result, lower middle market lenders frequently have greater flexibility in structuring favorable transactions.
We believe these factors, taken together, should increase lending opportunities for us and enable us to generate attractive risk-adjusted returns.
Competitive Strengths
Leading Lower Middle Market Position.   H.I.G. Capital is one of the leading global alternative asset managers focused on the lower middle market. With more than 25 years of investment experience focused primarily on lower middle market companies, H.I.G. Capital believes it has a specialized knowledge of the lower middle market and expertise in evaluating the issues and opportunities facing lower middle market companies throughout economic cycles. We believe that the quality of these resources provides a significant advantage and contributes to the strength of our business.
Large and Experienced Management Team with Substantial Resources.   Our Investment Adviser has access through the Staffing Agreement to the resources and expertise of H.I.G. Capital’s more than 675 employees in 18 offices across the United States, Europe and South America as of March 31, 2019. As of such date, H.I.G. Capital had approximately 380 experienced investment professionals, including approximately 126 professionals dedicated to debt investing. We believe that the quality of these resources provides a significant advantage and contributes to the strength of our business.
 
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Extensive Deal Sourcing Infrastructure.   Given the inefficiencies of the lower middle market, finding smaller companies that represent attractive debt investment opportunities requires a different sourcing network than that for larger companies. For more than 25 years, H.I.G. Capital has built an extensive and proprietary network of deal sources in the lower middle market consisting of accountants, attorneys and other advisors who have access to these companies. Each of H.I.G. Capital’s investment professionals is involved in deal sourcing, and our in-house business development group of more than 20 dedicated deal sourcing professionals as of March 31, 2019 further enhanced our sourcing network. We believe H.I.G. Capital’s extensive deal sourcing infrastructure provides us with access to investment opportunities that may not be available to many of our competitors.
Deep Credit Expertise.   As of March 31, 2019, H.I.G. Capital’s credit platform managed over $11 billion of AUM across multiple investment funds supported by its dedicated credit investment professionals. These investment professionals bring a depth of experience and skills across a broad range of transaction types, including primary loan originations, secondary debt purchases and special situations and distressed debt investments. We believe this experience and expertise in credit documentation, loan structuring and restructuring negotiations helps to protect our investments and maximize our recovery value to the extent a portfolio company does not perform as expected.
Disciplined Investment and Underwriting Process.   Through its more than 25 years of investment experience, H.I.G. Capital has developed a disciplined investment process entailing intensive “bottom-up” fundamental analysis in order to generate attractive risk-adjusted returns while preserving downside protection. Our Investment Adviser utilizes the established investment processes developed by H.I.G. Capital to analyze investment opportunities, including structuring loans with appropriate covenants and pricing loans based on its knowledge of the lower middle market and on its rigorous underwriting standards. Each investment is reviewed by the investment committee, which is comprised of senior investment professionals of H.I.G. Capital with an average of more than 20 years of investment experience as of March 31, 2019.
Investment Strategy
Our investment strategy is to generate current income and capital appreciation primarily by originating secured loans. We seek to create a broad portfolio consisting of investments generally in the range of $5 million to $25 million primarily in debt securities and loans of U.S. based lower middle market companies. We primarily target borrowers in the United States with enterprise values of $50 million to $350 million across a broad range of industries. The proceeds of our loans are used for a variety of purposes, including refinancings of existing debt, acquisition financing, or working capital to support growth or realignment.
While we focus principally on originating senior secured loans to lower middle market companies that we believe have attractive risk adjusted returns, including first lien and second lien facilities, we may also opportunistically make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests. We also may receive warrants to purchase common stock in connection with our debt investments. We may also invest in assets consistent with our investment strategy indirectly through the acquisitions of interests in other investment companies. We generate current income through the receipt of interest payments, origination and other fees, and dividends. Our typical loans carry a floating interest rate based on LIBOR plus a spread, have a term of three to six years, are secured by all tangible and intangible assets of the borrower and include covenants, monitoring and information rights in favor of the lender.
Target businesses will typically exhibit some or all of the following characteristics:

enterprise value of between $50 million and $350 million;

organized in the United States;

experienced management team;

stable and predictable free cash flows;

discernible downside protection through recurring revenue or strong tangible asset coverage;

products and services with distinctive competitive advantages or other barriers to entry;

low technology and market risk; and
 
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strong customer relationships.
None of these investment policies is fundamental, and they may be changed without stockholder approval.
We expect that, from time to time, our investments may include certain non-qualifying assets, including assets of non-U.S. companies, certain publicly traded companies and, to a lesser extent and subject to certain limits under the 1940 Act, registered or unregistered investment companies.
Organizational Structure
The following shows an organizational chart reflecting our relationship with our Investment Adviser and Administrator and our direct and indirect ownership interests in certain of our subsidiaries as of the date of this prospectus:
[MISSING IMAGE: tm219555d1-fc_organizbw.jpg]
Risks Associated with Our Business
Our business is subject to numerous risks, as described in the section titled “Risk Factors” in the applicable prospectus supplement and in any free writing prospectuses we have authorized for use in connection with a specific offering, and under similar headings in the documents that are incorporated by reference into this prospectus, including the section titled “Risk Factors” included in our most recent Annual Report on Form 10-K and our quarterly reports on Form 10-Q, as well as any amendments reflected in subsequent filings with the SEC.
Company Information
Our principal executive offices are located at 1450 Brickell Avenue, 31st Floor, Miami, Florida 33131, telephone number (305) 381-6999. Our corporate website is located at www.whitehorsefinance.com. Information on our website is not incorporated into or a part of this prospectus.
 
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FEES AND EXPENSES
The following table is intended to assist you in understanding the costs and expenses that an investor in shares of our common stock will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. The following table should not be considered a representation of our future expenses. Actual expenses may be greater or less than shown. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “us” or “WhiteHorse Finance,” or that “we” will pay fees or expenses, common stockholders will indirectly bear such fees or expenses as investors in WhiteHorse Finance.
Stockholder transaction expenses:
Sales load (as a percentage of offering price)
%(1)
Offering expenses (as a percentage of offering price)
%(2)
Distribution reinvestment plan fees (per sales transaction fee)
$15 Transaction Fee(3)
Total stockholder transaction expenses (as a percentage of offering price)
%
Annual expenses (as a percentage of net assets attributable to common stock):
Base management fees
4.39%(4)
Incentive fees payable under Investment Advisory Agreement (20% of Pre-Incentive Fee Net Investment Income and 20% of realized capital gains)
4.58%(5)(6)
Interest payments on borrowed funds
7.03%(7)
Acquired fund fees and expenses
0.71%(8)
Other expenses
1.35%(9)
Total annual expenses
18.06%
(1)
In the event that the securities to which this prospectus relates are sold to or through underwriters or agents, a corresponding prospectus supplement will disclose the applicable sales load.
(2)
The related prospectus supplement, including each underwritten offering by any of the selling stockholders identified under “Selling Stockholders,” will disclose the estimated amount of total offering expenses (which may include offering expenses borne by third parties on our behalf), the offering price and the offering expenses borne by us as a percentage of the offering price.
(3)
The expenses of the distribution reinvestment plan, which consist primarily of the expenses of American Stock Transfer & Trust Company, LLC, our plan administrator, are included in “Other expenses.” If a participant elects by written notice to the plan administrator prior to termination of his or her account to have the plan administrator sell part or all of the shares held by the plan administrator in the participant's account and remit the proceeds to the participant, the plan administrator is authorized to deduct a $15.00 transaction fee plus a $0.10 per share brokerage commission from the proceeds. See “Distribution Reinvestment Plan.”
(4)
Our base management fee under the Investment Advisory Agreement is calculated at an annual rate equal to 2.0% based on our consolidated gross assets, including cash and cash equivalents and assets purchased with borrowed funds. Our base management fee shall be calculated at an annual rate equal to 1.25% of our consolidated gross assets, including cash and cash equivalents and assets purchased with borrowed funds, that exceed the product of (1) 200% and (2) the value of our total net assets. Our base management fee is payable quarterly in arrears. The SEC requires that the “Management fees” percentage be calculated as a percentage of net assets attributable to common stockholders, rather than total assets, including assets that have been funded with borrowed monies, because common stockholders bear all of this cost. The estimated base management fee referenced in the table above is based on our current intention (which is subject to change) to employ borrowed funds at a level equivalent to a debt-to-equity ratio of up to 1.25x (equivalent to $1.25 of debt outstanding for each $1 of equity) which is also equivalent to having an asset coverage ratio of 180%. Based on our total outstanding indebtedness of $180.0 million as of December 31, 2018 and applying a 180% asset coverage ratio (1.25x debt-to-equity ratio), we could have incurred up to an additional $214.1 million of borrowings,
 
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bringing our total indebtedness and total assets to $394.1 million and $728.2 million, respectively. Based on actual amounts incurred during the year ended December 31, 2018, before taking into account the impact of any base management fee waivers, which would reduce annual expenses payable to our Investment Adviser, our estimated base management fee as a percentage of net assets attributable to common stock was 3.25%. The estimate of our base management fees assumes net assets of $315.3 million and leverage of $180.0 million, which reflects our net assets and leverage as of December 31, 2018.
(5)
The incentive fee referenced in the table above is based on hypothetical amounts of the income-based component of the incentive fee incurred during the year ended December 31, 2018 (annualized for a full year, as applicable) and the actual amount of the capital gains-based incentive fee recorded during this same period. The incentive fee consists of two components that are independent of each other (except as provided in the Incentive Fee Cap and Deferral Mechanism described below), with the result that one component may be payable even if the other is not.
We have structured the calculation of these incentive fees, which we refer to as the “Income and Capital Gain Incentive Fee Calculations,” to include a fee limitation such that no incentive fee will be paid to our Investment Adviser for any fiscal quarter if, after such payment, the cumulative incentive fees paid to our Investment Adviser for the period that includes such fiscal quarter and the 11 full preceding fiscal quarters, which we refer to in this prospectus as the Incentive Fee Look-back Period, would exceed 20.0% of our Cumulative Pre-Incentive Fee Net Return during the applicable Incentive Fee Look-back Period. The deferral component of the Incentive Fee Cap and Deferral Mechanism may cause incentive fees that accrued during one fiscal quarter to be paid to our Investment Adviser at any time during the 11 full fiscal quarters following such initial full fiscal quarter.
We accomplish this limitation by subjecting each incentive fee payable to a cap, which we refer to in this prospectus to as the “Incentive Fee Cap.” The Incentive Fee Cap in any quarter is equal to (a) 20.0% of Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period less (b) cumulative incentive fees of any kind paid to our Investment Adviser by us during the Incentive Fee Look-back Period. To the extent the Incentive Fee Cap is zero or a negative value in any quarter, we will pay no incentive fee to our Investment Adviser in that quarter. We will only pay incentive fees to the extent allowed by the Incentive Fee Cap and Deferral Mechanism. To the extent that the payment of incentive fees is limited by the Incentive Fee Cap and Deferral Mechanism, the payment of such fees may be deferred and paid up to three years after their date of deferment subject to applicable limitations included in the Investment Advisory Agreement.
The first component of the incentive fee, which is income-based and payable quarterly in arrears, equals 20% of the amount, if any, that our “Pre-Incentive Fee Net Investment Income” exceeds a 1.75% quarterly (7.00% annualized) hurdle rate, or the Hurdle Rate, subject to a “catch-up” provision measured at the end of each calendar quarter and the Incentive Fee Cap and Deferral Mechanism described below. The operation of the first component of the incentive fee for each quarter is as follows:

no incentive fee is payable to our Investment Adviser in any calendar quarter in which our Pre-Incentive Fee Net Investment Income does not exceed the Hurdle Rate of 1.75% (7.00% annualized);

100% of our 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 2.1875% in any calendar quarter (8.75% annualized) is payable to our Investment Adviser. We refer to this portion of our Pre-Incentive Fee Net Investment Income (which exceeds the Hurdle Rate but is less than 2.1875%) as the “catch-up.” The effect of the “catch-up” provision is that, if such Pre-Incentive Fee Net Investment Income exceeds 2.1875% in any calendar quarter, our Investment Adviser will receive 20% of such Pre-Incentive Fee Net Investment Income as if the Hurdle Rate did not apply; and

20% of the amount of such Pre-Incentive Fee Net Investment Income, if any, that exceeds 2.1875% in any calendar quarter (8.75% annualized) is payable to our Investment Adviser (once the Hurdle Rate is reached and the catch-up is achieved).
 
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The portion of such incentive fee that is attributable to deferred interest (such as payment-in-kind, or PIK, interest or original issue discount) will be paid to the Investment Adviser, together with any other interest accrued on the loan from the date of deferral to the date of payment, only if and to the extent we actually receive such interest in cash, and any accrual thereof will be reversed if and to the extent such interest is reversed in connection with any write-off or similar treatment of the investment giving rise to any deferred interest accrual. Any reversal of such amounts would reduce net income for the quarter by the net amount of the reversal (after taking into account the reversal of incentive fees payable) and would result in a reduction and possibly elimination of the incentive fees for such quarter. For the avoidance of doubt, no incentive will be paid to the Investment Adviser on amounts accrued and not paid in respect of deferred interest.
There is no accumulation of amounts on the Hurdle Rate from quarter to quarter and, accordingly, there is no clawback of amounts previously paid if subsequent quarters are below the quarterly Hurdle Rate and there is no delay of payment if prior quarters are below the quarterly Hurdle Rate. Since the Hurdle Rate is fixed, as interest rates rise, it will be easier for our Investment Adviser to surpass the Hurdle Rate and receive an incentive fee based on Pre-Incentive Fee Net Investment Income.
The second component, which is capital gains-based, is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, as of the termination date) and equals 20% of our cumulative aggregate realized capital gains through the end of such year, computed net of our aggregate cumulative realized capital losses and aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid capital gains incentive fees and subject to the Incentive Fee Cap and Deferral Mechanism described above. The capital-gains component of the incentive fee excludes any portion of realized gains (losses) that are associated with the reversal of any portion of unrealized appreciation/depreciation attributable to periods prior to January 1, 2013. The capital gains component of the incentive fee is not subject to any minimum return to stockholders.
As described above, we will not pay any incentive fee at any time when, after such payment, the cumulative incentive fees paid to date would exceed 20% of the Cumulative Pre-Incentive Fee Net Return during the Incentive Fee Look-back Period.
(6)
The estimate of our annualized hypothetical incentive fees under a 180% asset coverage ratio in the table above has assumed (i) $728.2 million in hypothetical total gross assets (including cash and cash equivalents, receivables and prepaid assets, which, for illustrative purposes, are assumed to be equal to actual amounts as of December 31, 2018), (ii) $394.1 million in hypothetical total debt outstanding, (iii) interest income calculated by applying the ratio of “total interest income” for the year ended December 31, 2018 to the “total investments, at fair value” as of December 31, 2018 to the hypothetical total gross assets (excluding cash and cash equivalents, receivables and prepaid assets, which are assumed to produce no interest income) and (iv) interest expense on the incremental hypothetical leverage of 5.5%, which was the interest rate in effect on our outstanding borrowings under the Credit Facility as of December 31, 2018.
(7)
Our stockholders bear directly or indirectly the costs of borrowings under the Credit Facility and other debt instruments. The borrowing costs included in the table above are based on our current intention (which is subject to change) to employ borrowed funds at a level equivalent to a debt-to-equity ratio of up to 1.25x (equivalent to $1.25 of debt outstanding for each $1 of equity) which is also equivalent to having an asset coverage ratio of 180%, and assuming a weighted average interest rate for total outstanding debt of 5.6%, which is equal to the weighted average interest rate for total outstanding debt as of December 31, 2018 of 5.8%, adjusted for additional borrowings of $214.1 million at 5.5%, which was the interest rate in effect on our outstanding borrowings under the Credit Facility as of December 31, 2018. Our actual borrowing costs as a percentage of net assets attributable to common stock on our outstanding indebtedness as of December 31, 2018, which consisted of $115.0 million of indebtedness outstanding under the Credit Facility, $35.0 million of indebtedness outstanding in 2025 Notes and $30.0 million of indebtedness outstanding in Private Notes, was 3.68%. At December 31, 2018, the weighted average interest rate for total outstanding debt was 5.8%. Assuming we meet certain disclosure requirements and obtain certain approvals required by the SBCAA, we expect to use leverage to finance a portion of our investments in the future, consistent with the newly enacted rules and regulations under the 1940 Act.
 
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(8)
Our stockholders indirectly bear the expenses of underlying funds or other investment vehicles that would be investment companies under Section 3(a) of the 1940 Act but for the exceptions to that definition provided for in Sections 3(c)(1) and 3(c)(7) of the 1940 Act, or Acquired Funds, in which we invest. Specifically, our stockholders indirectly bear the expenses of our investment in NMFC Senior Loan Program I LLC, or NMFC. Included in the expenses indirectly borne by our investment in NMFC is a management fee, charged each quarter equal to 0.45% per annum of the average outstanding loan balances held in the portfolio of NMFC multiplied by our pro-rata ownership percentage in NMFC. Future fees and expenses for Acquired Funds, including NMFC, may be substantially higher or lower because certain fees and expenses are based on the performance of such Acquired Funds, which may fluctuate over time.
(9)
Includes our overhead expenses, including payments under the Administration Agreement, based on our allocable portion of overhead and other expenses incurred by WhiteHorse Administration in performing its obligations under the Administration Agreement, and income and excise taxes. “Other expenses” are based on actual amounts incurred during the year ended December 31, 2018 (and have been annualized for estimated recurring expenses, as applicable).
Example
The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed that our annual operating expenses remain at the levels set forth in the table above. This example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown. In the event that shares to which this prospectus relates are sold to or through underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.
Stockholders would pay the following expenses on a $1,000 common stock
investment:(1)
1 year
3 years
5 years
10 years
Under a 180% Asset Coverage Ratio assuming a 5% annual return (none of which is subject to the incentive fee)(2)
$ 129 $ 355 $ 545 $ 895
Under the 150% Asset Coverage Ratio assuming a 5% annual return (none of which is subject to the incentive fee)(3)
$ 173 $ 452 $ 660 $ 979
The above table is designed to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. The incentive fee under the Investment Advisory Agreement, which, assuming a 5% annual return, would either not be payable or would have an insignificant impact on the expense amounts shown above, is not included in the example. This illustration assumes that we will not realize any capital gains (computed net of all realized capital losses and unrealized capital depreciation) in any of the indicated time periods. If we achieve sufficient returns on our investments, including through the realization of capital gains, to trigger an incentive fee of a material amount, our expenses and returns to our investors would be higher.
If the 5% annual return were derived entirely from capital gains, you would pay expenses on a $1,000 investment as follows:
Stockholders would pay the following expenses on a $1,000 common stock
investment:(4)
1 year
3 years
5 years
10 years
Under a 180% Asset Coverage Ratio assuming a 5% annual return
resulting entirely from net realized capital gains (which is subject to the
incentive fee based on capital gains)(2)
$ 139 $ 383 $ 587 $ 964
Under the 150% Asset Coverage Ratio assuming a 5% annual return
resulting entirely from net realized capital gains (which is subject to the
incentive fee based on capital gains)(3)
$ 183 $ 478 $ 698 $ 1,035
The example assumes reinvestment of all dividends and other distributions at NAV. Under certain circumstances, reinvestment of dividends and distributions under our distribution reinvestment plan may
 
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occur at a price per share that differs from NAV. Participants in our distribution reinvestment plan will receive a number of shares of our common stock determined by dividing the total dollar amount of the distribution payable to a participant by the market price per share of our common stock at the close of trading on the valuation date for the distribution. See “Distribution Reinvestment Plan” for additional information regarding our distribution reinvestment plan.
(1)
Under our actual asset coverage ratio of 275% as of December 31, 2018, assuming a 5% annual return (none of which is subject to the incentive fee), stockholders would pay the following expenses on a $1,000 common stock investment over one year, three years, five years and 10 years, respectively: $88, $254, $407 and $739.
(2)
It is our current intention (which is subject to change) to employ borrowed funds at a level equivalent to a debt-to-equity ratio of up to 1.25x (equivalent to $1.25 of debt outstanding for each $1 of equity) which is also equivalent to having an asset coverage ratio of 180%. Based on our total outstanding indebtedness of $180.0 million as of December 31, 2018 and applying a 180% asset coverage ratio (1.25x debt-to-equity ratio), we could have incurred up to an additional $214.1 million of borrowings, bringing our total indebtedness and total assets to $394.1 million and $728.2 million, respectively. At this level, our estimated annual base management fees expense would be approximately $13.8 million.
(3)
A 150% asset coverage ratio is the minimum asset coverage ratio permitted by applicable law.
(4)
Under our actual asset coverage ratio of 275% as of December 31, 2018, assuming a 5% annual return resulting entirely from net realized capital gains (which is subject to the incentive fee based on capital gains), stockholders would pay the following expenses on a $1,000 common stock investment over one year, three years, five years and 10 years, respectively: $98, $283, $453 and $822.
 
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RISK FACTORS
Investing in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should carefully consider the risks and uncertainties described in the section titled “Risk Factors” in the applicable prospectus supplement and any related free writing prospectus, and discussed in the section titled “Risk Factors” in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, as well as any amendments reflected in subsequent filings with the SEC, which are incorporated by reference into this prospectus in their entirety, together with other information in this prospectus, the documents incorporated by reference and any free writing prospectus that we may authorize for use in connection with this offering. The risks described in these documents are not the only risks we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. If any of these risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could be materially and adversely affected. In such a case, the NAV of our common stock and the trading price of our securities could decline, and you may lose all or part of your investment. Please also read carefully the section titled “Special Note Regarding Forward-Looking Statements.”
 
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference in this prospectus contains, and any applicable prospectus supplement or free writing prospectus, including the documents we incorporate by reference in such documents may contain forward-looking statements, which related to future events or our future performance or financial condition. All statements other than statements of historical facts, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. The forward-looking statements contained or incorporated by reference in this prospectus and any applicable prospectus supplement or free writing prospectus may include statements as to:

our future operating results;

changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes to the value of our assets;

our business prospects and the prospects of our prospective portfolio companies;

our ability to consummate new investments and the impact of such investments;

the impact of increased competition;

our contractual arrangements and relationships with third parties;

the dependence of our future success on the general economy and its impact on the industries in which we invest;

the ability of our prospective portfolio companies to achieve their objectives;

the ability of our investment adviser to locate suitable investments for us and to monitor our investments;

our expected financings and investments;

the adequacy of our cash resources and working capital;

our ability to make distributions to our stockholders;

the timing of cash flows, if any, from the operations of our prospective portfolio companies; and

the impact of future acquisitions and divestitures.
We use words such as “anticipate,” “believe,” “expect,” “intend” “may,” “might,” “will,” “should,” “could,” “can,” “would,” “believe,” “estimate,” “anticipate,” “predict,” “potential” and similar words to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” and elsewhere in this prospectus.
The forward-looking statements contained or incorporated by reference in this prospectus and any applicable prospectus supplement or free writing prospectus involve risks and uncertainties, including the risks, uncertainties and other factors we identify in “Risk Factors” in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and elsewhere contained or incorporated by reference in this prospectus and any applicable prospectus or free writing prospectus.
Discussions containing these forward-looking statements may be found in the sections titled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” incorporated by reference from our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, as well as any amendments filed with the SEC. We discuss in greater detail, and incorporate by reference into this prospectus in their entirety, many of these risks and uncertainties in the sections titled “Risk Factors” in the applicable prospectus supplement, in any free writing prospectus we may authorize for use in connection with a specific offering and in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, as well as any amendments reflected in subsequent filings with the SEC.
 
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In addition, statements that we “believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the applicable date of this prospectus, free writing prospectus and documents incorporated by reference into this prospectus and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements.
 
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USE OF PROCEEDS
Unless otherwise specified in a prospectus supplement or free writing prospectus we have authorized for use in connection with a specific offering, we intend to use all or substantially all of the net proceeds from the sale of our securities to invest in portfolio companies in accordance with our investment objective and strategies and for general corporate purposes. We expect that our new investments will consist primarily of senior secured debt investments in lower middle market companies. We will also pay operating expenses, including management and administrative fees, and may pay other expenses such as due diligence expenses relating to potential new investments, from the net proceeds of any offering of our securities. We may also use a portion of the net proceeds from the sale of our securities to repay amounts outstanding under our Credit Facility or any issued and outstanding Private Notes and/or our 2025 Notes, as permitted. As of December 31, 2018, we had $115 million outstanding under our Credit Facility, $30 million issued and outstanding Private Notes and $35 million issued and outstanding 2025 Notes.
We anticipate that we will use substantially all of the net proceeds of an offering for the above purposes within approximately six months after the completion of any offering of our securities, depending on the availability of appropriate investment opportunities consistent with our investment objective and market conditions. We cannot assure you that we will achieve our targeted investment pace.
Until such appropriate investment opportunities can be found, we intend to invest the net proceeds of any offering of our securities primarily in cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less from the date of investment. These temporary investments may have lower yields than our other investments and, accordingly, may result in lower distributions, if any, during such period. Our ability to achieve our investment objective may be limited to the extent that the net proceeds from an offering, pending full investment, are held in lower yielding interest-bearing deposits or other short-term instruments. See “Business — Regulation — Temporary Investments” in our most recently filed Annual Report on Form 10-K for additional information about temporary investments we may make while waiting to make longer-term investments in pursuit of our investment objective.
We have agreed to pay the printing, legal, filing and other similar expenses of any offering of common stock by the selling stockholders, identified under “Selling Stockholders.” However, the selling stockholders will bear all other expenses, including any brokerage fees, underwriting discounts and commissions, of any such offering. We will not receive any proceeds from any sale of common stock by the selling stockholders.
 
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SENIOR SECURITIES
(In Thousands)
Information about our senior securities is shown in the following tables as of December 31, 2018, 2017, 2016, 2015, 2014, 2013 and 2012. The report of our independent registered public accounting firm, Crowe LLP, on the senior securities table as of December 31, 2018, 2017, 2016, 2015, 2014, 2013 and 2012, is attached as an exhibit to the registration statement of which this prospectus is a part. The “ — ” indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.
Class and Year
Total Amount
Outstanding(1)
Asset Coverage
per Unit(2)
Involuntary
Liquidating
Preference
per Unit(3)
Average
Market Value
per Unit(4)
Credit Facility(5)
Fiscal 2018
$ 115,000 $ 2,792 $ N/A
Fiscal 2017
155,000 2,576 N/A
Fiscal 2016
155,000 2,368 N/A
Fiscal 2015
102,000 2,305 N/A
Fiscal 2014
105,500 2,183 N/A
Fiscal 2013
25,000 3,064 N/A
Fiscal 2012
51,250 2,622 N/A
Private Notes
Fiscal 2018
$ 30,000 $ 2,792 $ N/A
2025 Notes
Fiscal 2018
$ 35,000 $ 2,792 $ 982
2020 Notes(6)
Fiscal 2018
$ $ $ N/A
Fiscal 2017
30,000 2,576 1,026
Fiscal 2016
30,000 2,368 1,005
Fiscal 2015
30,000 2,305 1,010
Fiscal 2014
30,000 2,183 1,006
Fiscal 2013
30,000 3,064 982
Unsecured Term Loan(7)
Fiscal 2015
$ 55,000 $ 2,305 $ N/A
Fiscal 2014
55,000 2,183 N/A
Fiscal 2013
55,000 3,064 N/A
Fiscal 2012
90,000 2,622 N/A
(1)
Total amount of each class of senior securities outstanding at the end of the period presented (in thousands), exclusive of debt issuance costs.
(2)
The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by total senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the Asset Coverage Per Unit (including for the 2020 Notes, which were issued in $25 increments).
(3)
The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.
(4)
Not applicable, except for with respect to the 2020 Notes and 2025 Notes, as other senior securities are not registered for public trading on a stock exchange. The average market value per unit for the 2020 Notes and 2025 Notes is based on the average daily prices of such notes and is expressed per $1,000 of indebtedness.
(5)
On September 27, 2012, WhiteHorse Warehouse entered into the Natixis Credit Facility. On December 23, 2015, WhiteHorse Credit entered into the Credit Facility, and we drew $102.0 million on the Credit Facility and used the proceeds to repay the Natixis Credit Facility in full.
(6)
On August 9, 2018, we redeemed 100% of the $30 million aggregate principal amount of the 2020 Notes outstanding and delisted the 2020 Notes from the NASDAQ Global Select Market.
 
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(7)
On June 30, 2016, we repaid in full the outstanding balance of $55.0 million due under the Unsecured Term Loan.
PRICE RANGE OF COMMON STOCK
Our common stock began trading on December 5, 2012 and is currently traded on the NASDAQ Global Select Market under the symbol “WHF”. The following table sets forth, for each fiscal quarter since January 1, 2017, the NAV per share of our common stock, the high and low closing sales price for our common stock, such closing sales price as a premium or discount to our NAV per share and quarterly distributions declared per share.
Period
NAV(1)
Closing Sales Price
Premium
(Discount) of
High Sales
Price to
NAV(2)
(Discount) of
Low Sales
Price to
NAV(2)
Distributions
Declared Per
Share(3)
High
Low
Fiscal year ending December 31, 2019
Second Quarter (as of June 10, 2019)
* $ 14.68 $ 13.96 * * $ 0.355
First Quarter
15.33 14.66 12.90 (4.4)% (15.9)% 0.355
Fiscal year ended December 31, 2018
Fourth Quarter
$ 15.35 $ 14.18 $ 12.24 (7.6)% (20.3)% $ 0.355
Third Quarter
15.46 15.29 13.80 (1.1) (10.7) 0.355
Second Quarter
14.87 15.80 12.52 6.3 (15.8) 0.355
First Quarter
14.30 13.38 10.99 (6.4) (23.1) 0.355
Fiscal year ended December 31, 2017
Fourth Quarter
$ 13.98 $ 15.04 $ 13.42 7.6% (4.0)% $ 0.355
Third Quarter
13.92 14.90 13.15 7.1 (5.5) 0.355
Second Quarter
13.83 14.65 13.30 5.9 (3.8) 0.355
First Quarter
13.80 13.86 12.22 0.5 (11.4) 0.355
(1)
NAV per share is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAV shown is based on outstanding shares at the end of the period.
(2)
Calculated as of the respective high or low closing sales price divided by the quarter end NAV.
(3)
Unless otherwise noted, the distributions were declared from net investment income and long-term capital gains and did not include a return of capital.
*
Not determinable at the time of filing.
Shares of business development companies may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount or premium to NAV is separate and distinct from the risk that our NAV will decrease. It is not possible to predict whether our shares will trade at, above or below NAV in the future.
The last reported closing market price of our common stock on June 10, 2019 was $14.50 per share. As of June 10, 2019, we had 15 stockholders of record.
For the year ended December 31, 2018, distributions to stockholders did not include any return of capital, but included $11.6 million of long-term capital gains, for tax purposes. For the year ended December 31, 2017, distributions to stockholders did not include a return of capital, but did include approximately $0.9 million relating to long-term capital gains, for tax purposes.
Our distributions, if any, are determined by the board of directors. We have elected to be treated as a RIC under Subchapter M of the Code. To maintain our ability to be subject to tax as a RIC each taxable year, we must meet the Annual Distribution Requirement. In addition, we are subject to ordinary income and
 
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capital gain distribution requirements under U.S. federal excise tax rules with respect to each calendar year. If we do not meet the required distributions with respect to any calendar year we will generally be subject to a 4% nondeductible federal excise tax on the undistributed amount. See “Tax Matters — Taxation as a RIC.”
We currently intend to distribute net capital gains (i.e. net long-term capital gains in excess of net short-term capital losses), if any, at least annually out of the assets legally available for such distributions. However, we may decide in the future to retain such capital gains for investment and elect to treat such gains as deemed distributions to you. If this happens, stockholders will be treated for U.S. federal income tax purposes as if they had received an actual distribution of the capital gains that we retain and reinvested the net after tax proceeds in us. In this situation, stockholders would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to your allocable share of the tax we paid on the capital gains deemed distributed to you. See “Tax Matters — Taxation of U.S. Stockholders.” We cannot assure you that we will achieve results that will permit us to pay any cash distributions, and if we issue senior securities, we will be prohibited from making distributions if doing so would cause us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if such distributions are limited by the terms of any of our borrowings.
We have adopted a distribution reinvestment plan that provides for reinvestment of our dividends and other distributions on behalf of our stockholders. As a result, if our board of directors authorizes, and we declare, a cash dividend or other distribution, then our stockholders who have not “opted out” of our distribution reinvestment plan will have their cash distribution automatically reinvested in additional shares of our common stock, rather than receiving the cash distribution.
 
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SALES OF COMMON STOCK BELOW NET ASSET VALUE
Our stockholders may give approval for us to sell shares of our common stock below our then-current NAV per share during a 12-month period in one or more public offerings of our common stock in the future. In making a determination that an offering below NAV per share is in our and our stockholders’ best interests, our board of directors, a majority of our directors who have no financial interest in the sale and a majority of our independent directors considered a variety of factors, including:

The effect that an offering below NAV per share would have on our stockholders, including the potential dilution they would experience as a result of the offering;

The amount per share by which the offering price per share and the net proceeds per share are less than the most recently determined NAV per share;

The relationship of recent market prices of our common stock to NAV per share and the potential impact of the offering on the market price per share of our common stock;

Whether the estimated offering price would closely approximate the market value of our shares, less distributing commissions or discounts, and would not be below current market price;

The potential market impact of being able to raise capital in the current financial market;

The nature of any new investors anticipated to acquire shares in the offering;

The anticipated rate of return on and quality, type and availability of investments;

The leverage available to us, both before and after the offering and other borrowing terms; and

The potential investment opportunities available relative to the potential dilutive effect of additional capital at the time of the offering.
Our board of directors will also consider the fact that a sale of shares of common stock at a discount will benefit our Investment Adviser, as the Investment Adviser will earn additional investment management fees on the proceeds of such offerings, as it would from the offering of any other securities of WhiteHorse Finance or from the offering of common stock at premium to NAV per share.
Sales by us of our common stock at a discount from NAV pose potential risks for our existing stockholders whether or not they participate in the offering, as well as for new investors who participate in the offering.
We will not seek to sell shares under a prospectus supplement to the registration statement, or a post-effective amendment to the registration statement, of which this prospectus forms a part (as used in this section, the “current registration statement”) if the cumulative dilution to our NAV per share arising from offerings from the effective date of the current registration statement through and including any follow-on offering would exceed 15% based on the anticipated pricing of such follow-on offering. This limit would be measured separately for each offering pursuant to the current registration statement by calculating the percentage dilution or accretion to aggregate NAV from that offering and then summing the anticipated percentage dilution from each subsequent offering.
For example, if our most recently determined NAV per share at the time of the first offering is $10.00, and we have 100,000,000 shares outstanding, the sale of an additional 25,000,000 shares at net proceeds to us of $5.00 per share (a 50% discount) would produce dilution of 10.0%.
If we subsequently determined that our NAV per share increased to $11.00 on the then outstanding 125,000,000 shares and contemplated an additional offering, we could, for example, propose to sell approximately 31,250,000 additional shares at a price that would be expected to yield net proceeds to us of $8.25 per share, resulting in incremental dilution of 5.0%, before we would reach the aggregate 15% limit. If we file a new post-effective amendment, the threshold would reset.
 
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The following three headings and accompanying tables explain and provide hypothetical examples assuming proceeds are temporarily invested in cash equivalents on the impact of an offering at a price less than NAV per share on three different sets of investors:

existing stockholders who do not purchase any shares in the offering;

existing stockholders who purchase a relatively small number of shares in the offering or a relatively large number of shares in the offering; and

new investors who become stockholders by purchasing shares in the offering.
Impact on Existing Stockholders who do not Participate in the Offering
Our existing stockholders who do not participate, or who are not given the opportunity to participate, in an offering below NAV per share or who do not buy additional shares of common stock in the secondary market at the same or lower price we obtain in the offering (after any underwriting discounts and commissions) face the greatest potential risks. All stockholders will experience an immediate decrease (often called dilution) in the NAV of the shares of common stock they hold. Stockholders who do not participate in the offering will also experience a disproportionately greater decrease in their participation in our earnings and assets and their voting power than stockholders who do participate in the offering. All stockholders may also experience a decline in the market price of their shares of common stock, which often reflects, to some degree, announced or potential increases and decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discounts increase.
The following examples illustrate the level of NAV dilution that would be experienced by a nonparticipating stockholder in three different hypothetical common stock offerings of different sizes and levels of discount from NAV per share, although it is not possible to predict the level of market price decline that may occur. Actual sales prices and discounts may differ from the presentation below.
The examples assume that Company XYZ has 1,000,000 shares of common stock outstanding, $15.0 million in total assets and $5.0 million in total liabilities. The current NAV and NAV per share are thus $10.0 million and $10.00, respectively. The table below illustrates the dilutive effect on nonparticipating Stockholder A of (1) an offering of 50,000 shares (5% of the outstanding shares) at $9.50 per share after offering expenses and commissions (a 5% discount from NAV); (2) an offering of 100,000 shares (10% of the outstanding shares) at $9.00 per share after offering expenses and commissions (a 10% discount from NAV); (3) an offering of 250,000 shares (25% of the outstanding shares) at $7.50 per share after offering expenses and commissions (a 25% discount from NAV); and (4) an offering of 250,000 shares (25% of the outstanding shares) at $0.001 per share after offering expenses and commissions (effectively a 100% discount from NAV). The 100% column in the following table is presented for illustrative purposes only, as our directors would not be able to approve such an offering under Delaware law.
 
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Example 1
5% Offering at
5% Discount
Example 2
10% Offering at
10% Discount
Example 3
25% Offering at
25% Discount
Example 4
25% Offering at
100% Discount
Prior to
Sale Below
NAV
Following
Sale
%
Change
Following
Sale
%
Change
Following
Sale
%
Change
Following
Sale
%
Change
Offering Price
Price per share to public
$ 10.00 $ 9.47 $ 7.89 $ 0.001
Net proceeds per share to issuer
$ 9.50 $ 9.00 $ 7.50 $ 0.001
Decrease to NAV
Total shares outstanding
1,000,000 1,050,000 5.00% 1,100,000 10.00% 1,250,000 25.00% 1,250,000 25.00%
NAV per share
$ 10.00 $ 9.98 (0.20)% $ 9.91 (0.90)% $ 9.50 (5.00)% $ 8.00 (20.00)%
Dilution to Stockholder
Shares held by Stockholder A
10,000 10,000 10,000 10,000 10,000
Percentage held by
Stockholder A
1.00% 0.95% (5.00)% 0.91% (9.00)% 0.80% (20.00)% 0.80% (20.00)%
Total Asset Values
Total NAV held by
Stockholder A
$ 100,000 $ 99,800 (0.20)% $ 99,100 (0.90)% $ 95,000 (5.00)% $ 80,000 (20.00)%
Total investment by Stockholder A
(assumed to be $10.00 per
Share)
$ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000
Total dilution to Stockholder A
(total NAV less total investment)
$ (200) $ (900) $ (5,000) $ (20,000)
Per Share Amounts
NAV per share held by Stockholder A
$ 9.98 $ 9.91 $ 9.50 $ 8.00
Investment per share held by
Stockholder A (assumed to be
$10.00 per share on shares held
prior to sale)
$ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
Dilution per share held by Stockholder A (NAV per share less investment per share)
$ (0.02) $ (0.09) $ (0.50) $ (2.00)
Percentage dilution to Stockholder
A (dilution per share divided by
investment per share)
(0.20)% (0.90)% (5.00)% (20.00)%
Impact on Existing Stockholders who Participate in the Offering
Our existing stockholders who participate in an offering below NAV per share or who buy additional shares of common stock in the secondary market at the same or lower price as we obtain in the offering (after any underwriting discounts and commissions) will experience the same types of NAV dilution as the nonparticipating stockholders, albeit at a lower level, to the extent they purchase less than the same percentage of the discounted offering as their interest in our shares of common stock immediately prior to the offering. The level of NAV dilution on an aggregate basis will decrease as the number of shares of common stock such stockholders purchase increases. Existing stockholders who buy more than such percentage will experience NAV dilution but will, in contrast to existing stockholders who purchase less than their proportionate share of the offering, experience an increase (often called accretion) in NAV per share over their investment per share and will also experience a disproportionately greater increase in their participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests due to the offering. The level of accretion will increase as the excess number of shares of common stock such stockholder purchases increases. Even a stockholder who over-participates will, however, be subject to the risk that we may make additional discounted offerings in which such stockholder does not participate, in which case such a stockholder will experience NAV dilution as described above in such subsequent offerings. These stockholders may also experience a decline in the market price of their shares,
 
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which often reflects to some degree announced or potential increases and decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discount to NAV increases.
The examples assume that Company XYZ has 1,000,000 shares of common stock outstanding, $15.0 million in total assets and $5.0 million in total liabilities. The current NAV and NAV per share are thus $10.0 million and $10.00, respectively. The table below illustrates the (dilutive) and accretive effect in the hypothetical 25% discount offering from the prior chart for Stockholder A that acquires shares equal to (1) 50% of their proportionate share of the offering (i.e., 1,250 shares, which is 0.50% of the offering of 250,000 shares rather than their 1.00% proportionate share) and (2) 150% of their proportionate share of the offering (i.e., 3,750 shares, which is 1.50% of the offering of 250,000 shares rather than their 1.00% proportionate share). The prospectus supplement pursuant to which any discounted offering is made will include a chart for this example based on the actual number of shares in such offering and the actual discount from the most recently determined NAV per share.
Prior to
Sale Below
NAV
50% Participation
150% Participation
Following
Sale
%
Change
Following
Sale
%
Change
Offering Price
Price per share to public
$ 7.89 $ 7.89
Net proceeds per share to issuer
$ 7.50 $ 7.50
Increases in Shares and Decrease to NAV
Total shares outstanding
1,000,000 1,250,000 25.00% 1,250,000 25.00%
NAV per share
$ 10.00 $ 9.50 (5.00)% $ 9.50 (5.00)%
(Dilution)/Accretion to Participating Stockholder A
Shares held by Stockholder A
10,000 11,250 12.50% 13,750 37.50%
Percentage held by Stockholder A
1.0% 0.90% (10.00)% 1.10% 10.00%
Total Asset Values
Total NAV held by Stockholder A
$ 100,000 $ 106,875 6.88% $ 130,625 30.63%
Total investment by Stockholder A (assumed to be $10.00
per share on shares held prior to sale)
$ 100,000 $ 109,863 9.86% $ 129,588 29.59%
Total (dilution)/accretion to Stockholder A (total NAV less total investment)
$ (2,988) $ 1,037
Per Share Amounts
NAV per share held by Stockholder A
$ 9.50 $ 9.50
Investment per share held by Stockholder A (assumed to be $10.00 per share on shares held prior to sale)
$ 10.00 $ 9.77 (2.30)% 9.42 (5.80)%
(Dilution)/accretion per share held by Stockholder A (NAV per share less investment per share)
(0.27) $ 0.08
Percentage (dilution)/accretion to Stockholder A (dilution/
accretion per share divided by investment per share)
(2.76)% 0.85%
 
21

 
Impact on New Investors
The following examples illustrate the level of NAV dilution or accretion that would be experienced by a new stockholder in three different hypothetical common stock offerings of different sizes and levels of discount from NAV per share, although it is not possible to predict the level of market price decline that may occur. Actual sales prices and discounts may differ from the presentation below.
Investors who are not currently stockholders, but who participate in an offering below NAV and whose investment per share is greater than the resulting NAV per share due to any underwriting discounts and expenses paid by us will experience an immediate decrease, albeit small, in the NAV of their shares of common stock and their NAV per share compared to the price they pay for their shares. Investors who are not currently stockholders and who participate in an offering below NAV per share and whose investment per share is also less than the resulting NAV per share due to any underwriting discounts and expenses paid by us being significantly less than the discount per share, will experience an immediate increase in the NAV of their shares and their NAV per share compared to the price they pay for their shares. All these investors will experience a disproportionately greater participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests. These investors will, however, be subject to the risk that we may make additional discounted offerings in which such new stockholder does not participate, in which case such new stockholder will experience dilution as described above in such subsequent offerings. These investors may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential increases and decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discounts increases.
The following examples illustrate the level of NAV dilution or accretion that would be experienced by a new stockholder who purchases the same percentage (1.00%) of the shares in the three different hypothetical offerings of common stock of different sizes and levels of discount from NAV per share. The examples assume that Company XYZ has 1,000,000 shares of common stock outstanding, $15.0 million in total assets and $5.0 million in total liabilities. The current NAV and NAV per share are thus $10.0 million and $10.00, respectively. The table below illustrates the dilutive and accretive effects on Stockholder A at (1) an offering of 50,000 shares (5% of the outstanding shares) at $9.50 per share after offering expenses and commissions (a 5% discount from NAV); (2) an offering of 100,000 shares (10% of the outstanding shares) at $9.00 per share after offering expenses and commissions (a 10% discount from NAV); (3) an offering of 250,000 shares (25% of the outstanding shares) at $7.50 per share after offering expenses and commissions (a 25% discount from NAV); and (4) an offering of 250,000 shares (25% of the outstanding shares) at $0.001 per share after offering expenses and commissions (effectively a 100% discount from NAV). The 100% column in the following table is presented for illustrative purposes only, as our directors would not be able to approve such an offering under Delaware law.
 
22

 
Prior to
Sale Below
NAV
Example 1
5% Offering at
5% Discount
Example 2
10% Offering at
10% Discount
Example 3
25% Offering at
25% Discount
Example 4
25% Offering at
100% Discount
Following
Sale
%
Change
Following
Sale
%
Change
Following
Sale
%
Change
Following
Sale
%
Change
Offering Price
Price per share to public
$ 10.00 $ 9.47 $ 7.89 $ 0.001
Net offering proceeds per share to issuer
$ 9.50 $ 9.00 $ 7.50 $ 0.001
Decrease to NAV
Total shares outstanding
1,050,000 5.00% 1,100,000 10.00% 1,250,000 25.00% 1,250,000 25.00%
NAV per share
$ 9.98 (0.20)% $ 9.91 (0.90)% $ 9.50 (5.00)% $ 8.00 (20.00)%
Dilution to Stockholder A
Shares held by Stockholder A
500 1,000 2,500 2,500
Percentage held by
Stockholder A
0.05% 0.90% 0.20% 0.20%
Total Asset Values
Total NAV held by
Stockholder A
$ 4,990 $ 9,910 $ 23,750 $ 20,000
Total investment by
Stockholder A
$ 5,000 $ 9,470 $ 19,725 $ 2.50
Total (dilution)/accretion to
Stockholder A (total NAV
less total investment)
$ (10) $ 440 $ 4,025 $ 19,997.50
Per Share Amounts
NAV per share held by Stockholder A
$ 9.98 $ 9.91 $ 9.50 $ 8.00
Investment per share held by
Stockholder A
$ 10.00 $ 9.47 $ 7.89 $ 0.001
(Dilution)/Accretion per
share held by Stockholder
A (NAV per share less
investment per share)
$ (0.02) $ 0.44 $ 1.61 $ 8.00
Percentage (dilution)/
accretion to Stockholder A
((dilution)/accretion per
share divided by
investment per share)
(0.20)% 4.65% 20.41%
 
23

 
PORTFOLIO COMPANIES
The following table sets forth certain information as of December 31, 2018 for each portfolio company in which we had an investment. Other than these investments, our only formal relationships with our portfolio companies are the managerial assistance that we may provide upon request and the board observer or participation rights we may receive in connection with an investment. Except as otherwise noted, we do not “control” and are not an “affiliate” of any of our portfolio companies, each as defined in the 1940 Act. In general, under the 1940 Act, we would “control” a portfolio company if we owned more than 25% of its voting securities and would be an “affiliate” of a portfolio company if we owned five percent or more of its voting securities.
All debt investments were income producing as of December 31, 2018, unless otherwise noted. Preferred and common equity investments are non-income producing unless otherwise noted.
Name and Address of Portfolio
Company
Industry
Type of Investment(1)
Interest
Rate(2)(3)
Maturity
Date
$ Par/Share (in
thousands)
Fair Value of
Investments (in
thousands)
Percentage of
Class Held(4)
Account Control Technology
Holdings, Inc.
21700 Oxnard Street, Suite
1400, Woodland Hills,
CA 91367
Diversified Support
Services
First Lien Secured Term Loan
11.28% (L+8.75%, 1.00% Floor)
04/28/2022 3,933 $ 3,920 20.56%
AG Kings Holdings, Inc.
700 Lanidex Plaza,
Parsippany, NJ 07054
Food Retail
First Lien Secured Term Loan
12.75% (L+9.95%, 1.00% Floor)
08/10/2021 13,031 11,076 11.67
Alpha Media, LLC
1211 SW 5th Avenue, Suite 750,
Portland, OR 97204
Broadcasting
First Lien Secured Term Loan
9.00% (L+9.50%, 1.00% Floor)
02/25/2022 10,877 10,493 5.27
Arcole Acquisition Corp.(6)
7 Huntingdale Road,
Winnipeg, MB R3P 2G7
Other Diversified
Financial Services
First Lien Secured Term Loan A
9.96% (L+7.25%, 1.00% Floor)
11/30/2023 7,588 7,448 15.53
First Lien Secured Term Loan B
17.21% (L+14.50%,
1.00% Floor, 1.50%
PIK)
11/30/2023 1,870 1,836 15.53
AST-Applications Software Technology LLC
485 Lexington Avenue, 23rd Floor,
New York, NY 10017
IT Consulting & Other Services
First Lien Secured Term Loan
10.52% (L+8.00%,
1.00% Floor, 1.00%
PIK)
01/10/2023 4,214 4,088 15.08
Bulk Midco, LLC
338 Pier Avenue,
Hermosa Beach, CA, 90254
Cable & Satellite
First Lien Secured Term Loan
10.10% (L+7.33%, 1.00% Floor)
06/08/2023 15,000 14,700 14.36
Caelus Energy Alaska 03, LLC
8401 N. Central Expressway,
Dallas, TX 75225
Oil & Gas Exploration & Production
Second Lien Secured
Term Loan
10.30% (L+7.50%, 1.25% Floor)
04/15/2020 17,342 17,342 6.19
Clarus Commerce, LLC
500 Enterprise Drive, 2nd Floor
Rocky Hill, Connecticut 06067 ,
Internet Retail
First Lien Secured Term Loan
10.95% (L+8.42%, 1.00% Floor)
03/09/2023 17,100 17,100 17.87
Crews of California, Inc.
8685 W. Sahara Avenue,
Las Vegas, NV 89117
Food Retail
First Lien Secured Term Loan
13.44% (L+11.00%,
1.00% Floor, 1.00%
PIK)
11/20/2019 10,354 10,251 100.00
First Lien Secured Revolving Loan
13.44% (L+11.00%,
1.00% Floor, 1.00%
PIK)
11/20/2019 5,171 5,120 100.00
First Lien Secured Delayed Draw Term Loan
13.44% (L+11.00%,
1.00% Floor, 1.00%
PIK)
11/20/2019 2,974 2,944 100.00
Warrants(5) 12/31/2024 6 24.00
Fluent, Inc.(5)(8)
300 Vesey Street,
9th Floor, New York,
NY 10282
Advertising Common Stock 187 706 0.24
 
24

 
Name and Address of Portfolio
Company
Industry
Type of Investment(1)
Interest
Rate(2)(3)
Maturity
Date
$ Par/Share (in
thousands)
Fair Value of
Investments (in
thousands)
Percentage of
Class Held(4)
Fluent, LLC
33 Whitehall Street, 15th Floor,
New York, NY 10004
Advertising
First Lien Secured Term Loan
9.52% (L+7.00%, 0.50% Floor)
03/27/2023 10,771 10,771 17.86
Fox Rent A Car, Inc.(5)
5500 W. Century Boulevard,
Los Angeles, CA 90045
Trucking Warrants 12/31/2022 100 0.77
FPT Operating Company, LLC/
TLabs Operating Company,
LLC
12700 Park Central Drive,
Suite 1100, Dallas, TX 75241
Data Processing & Outsourced Services
First Lien Secured Term Loan
10.60% (L+8.25%, 1.00% Floor)
12/23/2021 25,394 24,707 50.00
Golden Pear Funding
Assetco, LLC(6)
100 Quentin Roosevelt Blvd.,
Garden City, NY 11530
Specialized Finance
Second Lien Secured
Term Loan
12.85% (L+10.50%, 1.00% Floor)
03/20/2024 17,500 17,150 54.69
Grupo HIMA San Pablo, Inc.
P.O. Box 4980,
Caguas, PR 00726.
Health Care Facilities
First Lien Secured Term Loan
11.52% (L+9.00%, 1.50% Floor)
05/31/2019 14,065 11,955 13.27
Second Lien Secured
Term Loan(9)
15.75% (2.00% PIK) 07/31/2018 1,028 103 1.19
Honors Holdings, LLC
900 Circle 75 Pkwy, Suite 860,
Atlanta, GA 30339
Leisure Facilities
First Lien Secured Term Loan
11.37% (L+8.94%, 0.00% Floor)
07/17/2023 7,500 7,355 17.55
ImageOne Industries, LLC
677 Dunksferry Road,
Bensalem, PA 19020
Diversified Support
Services
First Lien Secured Term Loan
12.52% (L+10.00%,
1.00% Floor, 2.00%
PIK)
01/11/2023 7,264 6,683 26.23
JVMC Holdings Corp.
222 S. Riverside Plaza, Suite
1200,
Chicago, IL 60606
Investment Banking
& Brokerage
First Lien First Out
Secured Term
Loan
10.54% (L+8.02%, 1.00% Floor)
05/05/2022 12,488 12,726 12.27
First Lien Last Out
Secured Term
Loan
14.52% (L+12.00%, 1.00% Floor)
05/05/2022 4,625 4,713 7.69
Lenny & Larry’s, LLC
14300 Arminta Street,
Panorama City, CA 91402
Packaged Foods & Meats
First Lien Secured Term Loan
9.29% (L+6.84%, 1.00% Floor)
05/15/2023 13,449 12,777 14.34
Lift Brands, Inc.
2411 Galpin Court, Suite 110,
Chanhassen, MN 55317
Leisure Facilities
First Lien Secured Term Loan
9.80% (L+7.00%, 1.00% Floor)
04/16/2023 10,858 10,433 9.10
                                                                                                               
First Lien Secured Revolving Loan(10)
9.09% (L+7.00%, 1.00% Floor)
04/16/2023 128 110 7.52
London Trust Media Incorporated
4643 S. Ulster Street, Suite 1120,
Denver, CO 80237
Internet Software &
Services
First Lien Secured Term Loan
10.53% (L+8.00%, 1.00% Floor)
02/01/2023 10,925 10,816 32.86
LS GFG Holdings Inc.
5555 Glenridge Connector, Suite 850,
Atlanta, GA 30342.
Restaurants
First Lien Secured Term Loan
8.47% (L+6.00%, 1.00% Floor)
11/19/2025 10,340 10,020 4.14
Mills Fleet Farm Group, LLC
512 Laurel Street,
Brainerd, MN 56401
Department Stores
First Lien Secured Term Loan
8.77% (L+6.25%, 1.00% Floor)
10/24/2024 15,000 14,707 3.75
Multicultural Radio
Broadcasting, Inc.
27 William Street, 11th Floor,
New York, NY 10005
Broadcasting
First Lien Secured Term Loan
10.52% (L+8.00%, 1.00% Floor)
12/28/2022 17,882 17,739 23.53
Nelson Worldwide, LLC
226 Walnut Street,
Philadelphia, PA, 19106.
Research & Consulting Services
First Lien Secured Term Loan
11.16% (L+8.75%, 1.00% Floor)
01/09/2023 14,303 13,903 25.18
Nicholas & Associates, LLC(5)
7660 Beverly Blvd. 167,
Los Angeles, CA 90036
Food Retail Warrants 12/31/2024 2 131 24.00
 
25

 
Name and Address of Portfolio
Company
Industry
Type of Investment(1)
Interest
Rate(2)(3)
Maturity
Date
$ Par/Share (in
thousands)
Fair Value of
Investments (in
thousands)
Percentage of
Class Held(4)
NMFC Senior Loan Program I
LLC(5)(6)(7)
787 Seventh Avenue,
New York, NY 10019
Specialized Finance
LLC Units 08/31/2021 10,000 9,630 10.75
NNA Services, LLC
9350 De Soto Avenue,
Chatsworth, CA 91313
Diversified Support
Services
First Lien Secured Term Loan
9.80% (L+7.00%, 1.00% Floor)
10/16/2023 10,434 10,202 30.00
Oasis Legal Finance, LLC(6)
9525 West Bryn Mawr Avenue, Suite 900,
Rosemont, IL 60018
Specialized Finance
Second Lien Secured
Term Loan
13.10% (L+10.75%, 1.00% Floor)
03/09/2022 20,000 20,000 40.00
Outcome Health
330 N. Wabash Avenue, Suite 2500,
Chicago, IL 60611
Advertising
First Lien Secured Term Loan
12.31% (L+9.50%,
1.00% Floor, 3.00%
PIK)
12/22/2021 7,943 6,408 3.31
Pinnacle Management Group, LLC(5)
4114 Columns Drive SE,
Marietta, GA 30067.
Food Retail Warrants 12/31/2024 2 131 24.00
Planet Fit Indy 10 LLC
c/o Atlantic Street Capital
Management, LLC,
281 Tresser Blvd., Suite 601,
Stamford, CT 06901
Leisure Facilities
First Lien
Incremental Term
Loan
10.04% (L+7.25%, 1.00% Floor)
03/07/2022 9,892 9,841 17.28
First Lien Initial Delayed Draw Loan
9.82% (L+7.25%, 1.00% Floor)
03/07/2022 6,183 6,153 25.24
First Lien Initial Term Loan
10.02% (L+7.25%, 1.00% Floor)
03/07/2022 130 130 0.48
PMA Holdco, LLC
1580 Santa Barbara Blvd.,
The Villages, FL 32159
Health Care Services
First Lien Secured Term Loan
10.30% (L+7.50%, 1.00% Floor)
06/28/2023 14,875 14,577 31.58
Warrants(5) 06/28/2028 8 393 0.79
Quest Events, LLC
2591 Dallas Parkway, Suite 201,
Frisco, TX 75034
Diversified Support
Services
First Lien Secured Term Loan
8.81% (L+6.00%, 1.00% Floor)
12/28/2024 10,942 10,724 18.70
First Lien Secured Revolving Loan(11)
8.81% (L+6.00%, 1.00% Floor)
12/28/2024 18.71
Preferred Units(5) 317 317