Table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2022
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from:
to
Commission File Number: 001-33723
Main Street Capital Corporation
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation or organization)
1300 Post Oak Boulevard, 8th Floor
Houston, TX
(Address of principal executive offices)
41-2230745
(I.R.S. Employer
Identification No.)
77056
(Zip Code)
(713) 350-6000
(Registrant’s telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $0.01 per share
Trading Symbol
MAIN
Name of Each Exchange on Which
Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o
No o
No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer
o Non-accelerated filer
o Smaller reporting company
Emerging growth company
o
o
Table of contents
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No
x
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, 2022, was
$2,711.4 million based upon the last sale price for the registrant’s common stock on that date.
The number of shares outstanding of the issuer’s common stock as of February 23, 2023 was 79,549,888.
Portions of the registrants’ definitive Proxy Statement for its 2023 Annual Meeting of Stockholders, to be filed with the
Securities and Exchange Commission, are incorporated by reference in this Annual Report on Form 10-K in response to Part III.
DOCUMENTS INCORPORATED BY REFERENCE
Table of contents
TABLE OF CONTENTS
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
PART I
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
[Reserved.]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Consolidated Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors, Executive Officers and Corporate Governance
Executive Compensation
PART III
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Item 15.
Exhibits and Consolidated Financial Statement Schedules
Signatures
Page
2
22
44
44
44
44
45
48
49
63
65
195
195
195
197
197
198
198
198
198
199
202
Table of contents
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements regarding the plans and objectives of
management for future operations and which relate to future events or our future performance or financial condition. Any
such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause
our actual results, performance or achievements to be materially different from future results, performance or
achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve
assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words
“may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these
words or other variations on these words or comparable terminology. These forward-looking statements are based on
assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking
statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-
looking statements as a result of various factors, including, without limitation, the factors discussed in Item 1A entitled
“Risk Factors” in Part I of this Annual Report on Form 10-K and elsewhere in this Annual Report on Form 10-K and in
other filings we may make with the Securities and Exchange Commission (“SEC”) from time to time. Other factors that
could cause actual results to differ materially include changes in the economy and future changes in laws or regulations
and conditions in our operating areas.
We have based the forward-looking statements included in this Annual Report on Form 10-K on information
available to us on the date of this Annual Report on Form 10-K, and we assume no obligation to update any such forward-
looking statements, unless we are required to do so by applicable law. However, you are advised to refer to any additional
disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including
subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
1
Table of contents
Item 1. Business
ORGANIZATION
PART I
Main Street Capital Corporation (“MSCC”) is a principal investment firm primarily focused on providing
customized debt and equity financing to lower middle market (“LMM”) companies and debt capital to middle market
(“Middle Market”) companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to
support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate
in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and
generally provides “one-stop” financing alternatives within its LMM investment strategy. MSCC and its consolidated
subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM
companies based in the United States and in secured debt investments of Middle Market companies generally
headquartered in the United States.
MSCC was formed in March 2007 to operate as an internally managed business development company (“BDC”)
under the Investment Company Act of 1940, as amended (the “1940 Act”). Because MSCC is internally managed, all of
the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external
investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio
management professionals.
MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP (“MSMF”) and Main
Street Capital III, LP (“MSC III” and, together with MSMF, the “Funds”), and each of their general partners. The Funds
are each licensed as a Small Business Investment Company (“SBIC”) by the United States Small Business Administration
(“SBA”).
MSC Adviser I, LLC (the “External Investment Manager”) was formed in November 2013 as a wholly-owned
subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries
(“External Parties”) and receives fee income for such services. MSCC has been granted no-action relief by the Securities
and Exchange Commission (“SEC”) to allow the External Investment Manager to register as a registered investment
adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its
investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not
included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial statements.
MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”)
under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, MSCC generally does
not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to
its stockholders.
MSCC has certain direct and indirect wholly-owned subsidiaries that have elected to be taxable entities (the
“Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in
portfolio companies which are “pass-through” entities for tax purposes. MSCC also has certain direct and indirect wholly-
owned subsidiaries formed for financing purposes (the “Structured Subsidiaries”).
Unless otherwise noted or the context otherwise indicates, the terms “we,” “us,” “our,” the “Company” and “Main
Street” refer to MSCC and its consolidated subsidiaries, which include the Funds, the Taxable Subsidiaries and the
Structured Subsidiaries.
2
Table of contents
The following diagram depicts our organizational structure:
Main Street Capital Corporation (“MSCC”)
100%
100%
100%
Main Street
Mezzanine
Management,
LLC
Main Street
Capital III GP,
LLC
Other Holding
Companies*
99.6%
0.4%
Main Street
Mezzanine Fund,
LP (“MSMF”)
______________________
1%
99%
100%
Main Street
Capital III, LP
(“MSC III”)
MSC Adviser I,
LLC (“External
Investment
Manager”)**
*
**
Other Holding Companies includes the Taxable Subsidiaries, the Structured Subsidiaries and other entities formed
for operational purposes. Each of these companies is directly or indirectly wholly-owned by MSCC.
The External Investment Manager is accounted for as a portfolio investment at fair value, as opposed to a
consolidated subsidiary, and is indirectly wholly-owned by MSCC.
CORPORATE INFORMATION
Our principal executive offices are located at 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056. We
maintain a website on the Internet at www.mainstcapital.com. We make available free of charge on our website our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports
as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Information
contained on our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not
consider that information to be part of this Annual Report on Form 10-K. Our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports and other public filings are also
available free of charge on the EDGAR Database on the SEC’s website at www.sec.gov.
OVERVIEW OF OUR BUSINESS
Our principal investment objective is to maximize our portfolio’s total return by generating current income from
our debt investments and current income and capital appreciation from our equity and equity-related investments, including
warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We seek to achieve our
investment objective through our LMM, Private Loan (as defined below) and Middle Market investment strategies. Our
LMM investment strategy involves investments in companies that generally have annual revenues between $10 million and
$150 million, and our LMM portfolio investments generally range in size from $5 million to $75 million. Our private loan
(“Private Loan”) investment strategy involves investments in companies that are consistent with the size of the companies
in our LMM and Middle Market investment strategies, and our Private Loan investments generally range in size from $10
million to $75 million. Our Middle Market investment strategy involves investments in companies that are generally larger
in size than our LMM companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle
Market investments generally range in size from $3 million to $25 million.
We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing
from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to
meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participation.
Our ability to invest across a company’s capital structure, from secured loans to equity securities, allows us to offer
portfolio companies a comprehensive suite of financing options, or a “one-stop” financing solution. Providing customized,
“one-stop” financing solutions is important to LMM portfolio companies. We generally seek to partner directly with
3
Table of contents
entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments
are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and
seven years from the original investment date.
Private Loan investments consist generally of loans that either (i) primarily have originated directly by us or (ii) to
a lesser extent, through strategic relationships with other investment funds on a collaborative basis that are often referred to
in the debt markets as “club deals” because of the small lender group size. In both cases, our Private Loan Investments are
typically made to a company to support the acquisition of the company by a private equity sponsor. Private Loan
investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and
Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by a first priority lien on the
assets of the portfolio company and typically have a term of between three and seven years from the original investment
date. We may also invest alongside the sponsor in the equity securities of our Private Loan portfolio companies.
Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of
interest-bearing syndicated loans or debt securities in privately held companies based in the United States that are generally
larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are
generally secured by a first priority lien on the assets of the portfolio company and typically have an expected duration of
between three and seven years from the original investment date.
Our other portfolio (“Other Portfolio”) investments primarily consist of investments that are not consistent with
the typical profiles for our LMM, Private Loan or Middle Market portfolio investments, including investments which may
be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with
investments managed by third parties, such as investments in other investment companies or private funds.
Subject to changes in our cash and overall liquidity, our Investment Portfolio (as defined below) may also include
short-term portfolio investments that are atypical of our LMM, Private Loan and Middle Market portfolio investments in
that they are intended to be a short-term deployment of capital. These assets are typically expected to be liquidated in one
year or less and are not expected to be a significant portion of the overall Investment Portfolio.
Our external asset management business is conducted through the External Investment Manager. The External
Investment Manager earns management fees based on the assets of the funds under management and may earn incentive
fees, or a carried interest, based on the performance of the funds managed.
Our portfolio investments are generally made through MSCC, the Taxable Subsidiaries, the Funds and the
Structured Subsidiaries. MSCC, the Taxable Subsidiaries, the Funds and the Structured Subsidiaries share the same
investment strategies and criteria, although they are subject to different regulatory regimes (see Regulation). An investor’s
return in MSCC will depend, in part, on the Taxable Subsidiaries’, the Funds’ and the Structured Subsidiaries’ investment
returns as they are wholly-owned subsidiaries of MSCC.
The level of new portfolio investment activity will fluctuate from period to period based upon our view of the
current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and
our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee
income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and
the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we
intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be
more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and
liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or
losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity,
economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses
and unrealized appreciation or depreciation could have a material impact on our operating results.
Because we are internally managed, we do not pay any external investment advisory fees, but instead directly
incur the operating costs associated with employing investment and portfolio management professionals. We believe that
our internally managed structure provides us with a better alignment of interests between our management team and our
employees and our shareholders and a beneficial operating expense structure when compared to other publicly traded and
privately held investment firms which are externally managed, and our internally managed structure allows us the
opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio (as defined below) and
our External Investment Manager’s asset management business (as defined below). For the years ended December 31,
4
Table of contents
2022 and 2021, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly
average total assets was 1.4% and 1.5%, respectively. The ratio of our total operating expenses, including interest expense,
as a percentage of our quarterly average total assets was 3.3% and 3.4%, respectively, for the years ended December 31,
2022 and 2021. For further information on our expense ratio refer to Note F to the consolidated financial statements
included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Through the External Investment Manager, we serve as the sole investment adviser and administrator to MSC
Income Fund, Inc. (“MSC Income”) pursuant to an Investment Advisory and Administrative Services Agreement entered
into between the External Investment Manager and MSC Income (the “Advisory Agreement”). Under the Advisory
Agreement, the External Investment Manager earns a 1.75% annual base management fee and a 20% incentive fee on MSC
Income’s pre-investment fee net investment income above a specified hurdle rate in exchange for providing advisory
services to MSC Income.
Additionally, the External Investment Manager has entered into an Investment Management Agreement with MS
Private Loan Fund I, LP, a private investment fund with a strategy to co-invest with Main Street in Private Loan portfolio
investments (the “Private Loan Fund”), pursuant to which the External Investment Manager provides investment advisory
and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees. The
External Investment Manager may also advise other clients, including funds and separately managed accounts, pursuant to
advisory and services agreements with such clients in exchange for asset-based and incentive fees.
The External Investment Manager earns management fees based on the assets of the funds and accounts under
management and may earn incentive fees, or a carried interest, based on the performance of the funds and accounts
managed. The total contribution of the External Investment Manager to our net investment income consists of the
combination of the expenses allocated to the External Investment Manager and the dividend income earned from the
External Investment Manager. For the years ended December 31, 2022, 2021 and 2020, the total contribution of the
External Investment Manager to our net investment income was $22.3 million, $16.5 million and $9.9 million,
respectively. During the year ended December 31, 2022, the External Investment Manager earned $21.8 million in base
management fees, and $2.5 million in incentive fees and $0.6 million in administrative service fees compared to $17.7
million of base management fees and $0.6 million in incentive fees in 2021 and $10.7 million of base management fees and
no incentive fees in 2020 for the investment advisory services provided to MSC Income, the Private Loan Fund and other
clients.
We have entered into an agreement with the External Investment Manager to share employees in connection with
its asset management business generally, and specifically for its relationship with MSC Income and its other clients.
Through this agreement, we share employees with the External Investment Manager, including their related infrastructure,
business relationships, management expertise and capital raising capabilities, and we allocate the related expenses to the
External Investment Manager pursuant to the sharing agreement. Our total expenses for the years ended December 31,
2022, 2021 and 2020 are net of expenses allocated to the External Investment Manager of $13.0 million, $10.3 million and
$7.4 million, respectively.
We have received an exemptive order from the SEC permitting co-investments among us, MSC Income and other
funds and clients advised by the External Investment Manager in certain negotiated transactions where co-investing would
otherwise be prohibited under the 1940 Act. We have made co-investments with, and in the future intend to continue to
make co-investments with MSC Income, the Private Loan Fund and other clients advised by the External Investment
Manager, in accordance with the conditions of the order. The order requires, among other things, that we and the External
Investment Manager consider whether each such investment opportunity is appropriate for us and the External Investment
Manager’s advised clients, as applicable, and if it is appropriate, to propose an allocation of the investment opportunity
between such parties. Because the External Investment Manager may receive performance-based fee compensation from
funds and clients advised by the External Investment Manager, this may provide the Company and the External Investment
Manager an incentive to allocate opportunities to other participating funds and clients instead of us. However, both we and
the External Investment Manager have policies and procedures in place to manage this conflict, including oversight by the
independent members of our Board of Directors. In addition to the co-investment program described above, we also co-
invest in syndicated deals and other transactions where price is the only negotiated point by us and our affiliates.
BUSINESS STRATEGIES
Our principal investment objective is to maximize our portfolio’s total return by generating current income from
our debt investments and current income and capital appreciation from our equity and equity-related investments, including
5
Table of contents
warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We have adopted the
following business strategies to achieve our investment objective:
•
•
•
•
•
•
•
Deliver Customized Financing Solutions in the Lower Middle Market. We offer LMM portfolio companies
customized debt and equity financing solutions that are tailored to the facts and circumstances of each
situation. We believe our ability to provide a broad range of customized financing solutions to LMM
companies sets us apart from other capital providers that focus on providing a limited number of financing
solutions. Our ability to invest across a company’s capital structure, from senior secured loans to subordinated
debt to equity securities, allows us to offer LMM portfolio companies a comprehensive suite of financing
options, or a “one-stop” financing solution.
Focus on Established Companies. We generally invest in companies with established market positions,
experienced management teams and proven revenue streams. We believe that those companies generally
possess better risk-adjusted return profiles than newer companies that are building their management teams or
are in the early stages of building a revenue base. We also believe that established companies in our targeted
size range also generally provide opportunities for capital appreciation.
Leverage the Skills and Experience of our Investment Team. Our investment team has significant experience
in lending to and investing in LMM and Middle Market companies. The members of our investment team
have broad investment backgrounds, with prior experience at private investment funds, investment banks and
other financial services companies and currently include seven certified public accountants and two Chartered
Financial Analyst® charter holders. The expertise of our investment team in analyzing, valuing, structuring,
negotiating and closing transactions should provide us with competitive advantages by allowing us to
consider customized financing solutions and non-traditional or complex structures for our portfolio
companies. Also, the reputation of our investment team has and should continue to enable us to generate
additional revenue in the form of management and incentive fees in connection with us providing advisory
services to other investment funds.
Invest Across Multiple Companies, Industries, Regions and End Markets. We seek to maintain a portfolio of
investments that is appropriately balanced among various companies, industries, geographic regions and end
markets. This portfolio balance is intended to mitigate the potential effects of negative economic events for
particular companies, regions, industries and end markets.
Capitalize on Strong Transaction Sourcing Network. Our investment team seeks to leverage its extensive
network of referral sources for portfolio company investments. We have developed a reputation in our
marketplace as a responsive, efficient and reliable source of financing, which has created a growing stream of
proprietary deal flow for us.
Grow our Asset Management Business. Our asset management business provides us with a recurring source
of income, additional income diversification from sources of income directly tied to invested capital and the
opportunity for greater stockholder returns through the utilization of our existing investment expertise, strong
historical track record and favorable reputation. We seek to grow our asset management business within our
internally managed BDC structure in order to increase the value of this unique benefit to our stakeholders. We
expect such growth to come organically through the expansion of the investment capital that we manage for
third parties and the potential extension of our asset management business to new investment strategies, and
potentially through mergers and acquisition activities.
Benefit from Lower, Fixed, Long-Term Cost of Capital. The SBIC licenses held by the Funds have allowed
them to issue SBA-guaranteed debentures. SBA-guaranteed debentures carry long-term fixed interest rates
that are generally lower than interest rates on comparable bank loans and other debt. Because lower-cost SBA
leverage is, and will continue to be, a significant part of our capital base through the Funds, our relative cost
of debt capital should be lower than many of our competitors. In addition, the SBIC leverage that we receive
through the Funds represents a stable, long-term component of our capital structure with proper matching of
duration and cost compared to our LMM portfolio investments. We also maintain investment grade ratings
from both Standard & Poor’s Ratings Services and Fitch Ratings, which provide us the opportunity and
flexibility to obtain additional, attractive long-term financing options to supplement our capital structure,
including the unsecured notes with fixed interest rates we issued in 2019, 2020, 2021, 2022 and 2023.
6
Table of contents
INVESTMENT CRITERIA
Our investment team has identified the following investment criteria that it believes are important in evaluating
prospective portfolio companies. Our investment team uses these criteria in evaluating investment opportunities. However,
not all of these criteria have been, or will be, met in connection with each of our investments:
•
•
•
•
Proven Management Team with Meaningful Equity Stake. We look for operationally-oriented management
with direct industry experience and a successful track record. In addition, we expect the management team of
each LMM portfolio company to have meaningful equity ownership in the portfolio company to better align
our respective economic interests. We believe management teams with these attributes are more likely to
manage the companies in a manner that both protects our debt investment and enhances the value of our
equity investment.
Established Companies with Positive Cash Flow. We seek to invest in established companies with sound
historical financial performance. We typically focus on LMM companies that have historically generated
earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $3 million to $20 million and
commensurate levels of free cash flow. We also pursue investments in debt securities of Middle Market
companies that are generally established companies with sound historical financial performance that are
generally larger in size than LMM companies. We generally do not invest in start-up companies or companies
with speculative business plans.
Defensible Competitive Advantages/Favorable Industry Position. We primarily focus on companies having
competitive advantages in their respective markets and/or operating in industries with barriers to entry, which
may help to protect their market position and profitability.
Exit Alternatives. We exit our debt investments primarily through the repayment of our investment from
internally generated cash flow of the portfolio company and/or a refinancing. In addition, we seek to invest in
companies whose business models and expected future cash flows may provide alternate methods of repaying
our investment, such as through a strategic acquisition by other industry participants or a recapitalization.
INVESTMENT PORTFOLIO
The “Investment Portfolio”, as used herein, refers to all of our investments in LMM companies (including both
our LMM and Private Loan portfolio investments) and investments in Middle Market companies (including both our
Private Loan and Middle Market portfolio investments), Other Portfolio investments and our investment in the External
Investment Manager. Our LMM portfolio investments primarily consist of secured debt, direct equity investments and
equity warrants in privately held, LMM companies based in the United States. Our Private Loan portfolio investments
primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of the
companies in our LMM portfolio and Middle Market portfolio and are originated either (i) directly by us or (ii) to a lesser
extent, through strategic relationships with other investment funds on a collaborative basis that are often referred to in the
debt markets as “club deals” because of the small lender group size. In both cases, our Private Loan investments are
typically made to a company to support the acquisition of the company by a private equity sponsor. Our Middle Market
portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in
privately held companies based in the United States that are generally larger in size than the companies included in our
LMM portfolio. Our Other Portfolio investments primarily consist of investments that are not consistent with the typical
profiles for our LMM, Private Loan and Middle Market portfolio investments, including investments which may be
managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments
managed by third parties, such as investments in other investment companies or private funds.
Debt Investments
Historically, we have made LMM debt investments principally in the form of single tranche debt. Single tranche
debt financing involves issuing one debt security that blends the risk and return profiles of both first lien secured and
subordinated debt. We believe that single tranche debt is more appropriate for many LMM companies given their size in
order to reduce structural complexity and potential conflicts among creditors.
Our LMM debt investments generally have a term of five to seven years from the original investment date, with
limited required amortization prior to maturity, and provide for monthly or quarterly payment of interest at interest rates
7
Table of contents
generally between 10% and 14% per annum, payable currently in cash. Interest rate terms can include either fixed or
floating rate terms. The LMM debt investments with floating interest rates will generally bear interest at the London
Interbank Offered Rate (“LIBOR”), the Secured Overnight Financing Rate (“SOFR”) or the Prime rate typically subject to
a contractual minimum interest rate (an “interest rate floor”), plus a margin. In addition, certain LMM debt investments
may have a form of interest that is not paid currently but is accrued and added to the loan balance and paid at maturity. We
refer to this form of interest as payment-in-kind, or PIK, interest. We typically structure our LMM debt investments with
the maximum seniority and collateral that we can reasonably obtain while seeking to achieve our total return target. In most
cases, our LMM debt investment will be collateralized by a first priority lien on substantially all the assets of the portfolio
company. In addition to seeking a senior lien position in the capital structure of our LMM portfolio companies, we seek to
limit the downside potential of our LMM debt investments by negotiating covenants that are designed to protect our LMM
debt investments while affording our portfolio companies as much flexibility in managing their businesses as is reasonable.
Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control or
change of management provisions, key-man life insurance, guarantees, equity pledges, personal guaranties, where
appropriate, and put rights. In addition, we typically seek board representation or observation rights in all of our LMM
portfolio companies.
While we will continue to focus our LMM debt investments primarily on single tranche debt investments, we may
structure some of our debt investments as mezzanine loans. These mezzanine loans would be primarily junior secured or
unsecured, subordinated loans that would provide for relatively high interest rates, payable currently in cash, and would
provide us with significant interest income. These mezzanine loans would afford us the additional opportunity for income
and gains through PIK interest and equity warrants and other similar equity instruments issued in conjunction with these
mezzanine loans. These loans typically would have interest-only payments in the early years, with amortization of principal
deferred to the later years of the mezzanine loan term. Typically, these mezzanine loans would have maturities of three to
five years. We would generally target interest rates of 12% to 14%, payable currently in cash, for our mezzanine loan
investments with higher targeted total returns from equity warrants or PIK interest.
Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in
companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are
investments which have been originated directly by Main Street or through strategic relationships with other investment
funds on a collaborative basis and are typically made to a company to support the acquisition of the company by a private
equity sponsor. The debt investments in our Private Loan portfolio have rights and protections that are similar to those in
our LMM debt investments, which may include affirmative and negative covenants, default penalties, lien protection,
change of control provisions, guarantees and equity pledges. Our Private Loan portfolio debt investments are generally
secured by a first priority lien and typically have a term of between three and seven years from the original investment date.
Our Private Loan debt investments generally have floating interest rates at LIBOR, SOFR or Prime rate typically subject to
an interest rate floor, plus a margin.
We also pursue debt investments in Middle Market companies. Our Middle Market portfolio investments
primarily consist of direct investments or secondary purchases of interest-bearing debt securities in privately held
companies based in the United States that are generally larger in size than the companies included in our LMM portfolio.
Our Middle Market portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio
company and typically have a term of between three and seven years from the original investment date. The debt
investments in our Middle Market portfolio usually have rights and protections that are similar to those in our LMM and
Private Loan debt investments. The Middle Market debt investments generally have floating interest rates at LIBOR, SOFR
or Prime rate typically subject to an interest rate floor, plus a margin.
Warrants
In connection with our LMM debt investments, we occasionally receive equity warrants to establish or increase
our equity interest in the portfolio company. Warrants that we receive in connection with a debt investment typically
require only a nominal cost to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional
investment return from this equity interest. We typically structure the warrants to provide provisions protecting our rights
as a minority-interest holder, as well as secured or unsecured put rights, or rights to sell such securities back to the portfolio
company, upon the occurrence of specified events. In certain cases, we also may obtain registration rights in connection
with these equity interests, which may include demand and “piggyback” registration rights.
8
Table of contents
Direct Equity Investments
We also seek to make direct equity investments to align our interests with key management and stockholders of
our LMM portfolio companies, and to allow for participation in the appreciation in the equity values of our LMM portfolio
companies. We usually make our direct equity investments in connection with debt investments in our LMM portfolio
companies. In addition, we may have both equity warrants and direct equity positions in some of our LMM portfolio
companies. We seek to maintain fully diluted equity positions in our LMM portfolio companies of 5% to 50%, and may
have controlling equity interests in some instances. We have a value orientation toward our direct equity investments and
have traditionally been able to purchase our equity investments at reasonable valuations. We will also have, from time to
time, the opportunity to make an equity co-investment in the equity securities of our Private Loan portfolio companies
alongside the private equity sponsor. The equity co-investment aligns our interests with those of the private equity sponsor
and provides us with the opportunity to benefit from appreciation on our investment.
INVESTMENT PROCESS
Our management team’s investment committee is responsible for all aspects of our investment processes. The
current members of our investment committee are Dwayne L. Hyzak, our Chief Executive Officer, David Magdol, our
President and Chief Investment Officer, and Vincent D. Foster, our Senior Advisor and Chairman of the Board.
The investment processes for LMM, Private Loan and Middle Market portfolio investments are outlined below.
Our investment strategy involves a “team” approach, whereby potential transactions are screened by several members of
our investment team before being presented to the investment committee. Our investment committee meets on an as-
needed basis depending on transaction volume. We generally categorize our investment process into seven distinct stages:
Deal Generation/Origination
Deal generation and origination is maximized through long-standing and extensive relationships with industry
contacts, brokers, commercial and investment bankers, entrepreneurs, service providers such as lawyers, financial advisors
and accountants, and current and former portfolio companies and investors. Our investment team has focused its deal
generation and origination efforts on LMM, Private Loan and Middle Market investments, and we have developed a
reputation as a knowledgeable, reliable and active source of capital and assistance in these markets.
Screening
During the screening process, if a transaction initially meets our investment criteria, we will perform preliminary
due diligence, taking into consideration some or all of the following information:
•
•
•
•
•
•
a comprehensive financial model based on quantitative analysis of historical financial performance,
projections and pro forma adjustments to determine the estimated internal rate of return;
a brief industry and market analysis;
direct industry expertise imported from other portfolio companies or investors;
preliminary qualitative analysis of the management team’s competencies and backgrounds;
potential investment structures and pricing terms; and
regulatory compliance.
Upon successful screening of a proposed LMM transaction, the investment team makes a recommendation to our
investment committee. If our investment committee concurs with moving forward on the proposed LMM transaction, we
typically issue a non-binding term sheet or letter of intent to the company. Upon successful screening of a proposed Private
Loan transaction, the investment team makes a recommendation to our investment committee. If our investment committee
concurs with moving forward on the proposed Private Loan transaction, we typically issue a non-binding term sheet to the
company. For Middle Market portfolio investments, the initial term sheet is typically issued by the borrower, through the
syndicating bank, and is screened by the investment team which makes a recommendation to our investment committee.
9
Table of contents
Term Sheet
For proposed LMM transactions, the non-binding term sheet or letter of intent will include the key economic
terms based upon our analysis performed during the screening process, as well as a proposed timeline and our qualitative
expectation for the transaction. While the term sheet or letter of intent for LMM investments is non-binding, we typically
receive an expense deposit in order to move the transaction to the due diligence phase. Upon execution of a term sheet, we
begin our formal due diligence process.
For proposed Private Loan transactions, the non-binding term sheet will include the key economic terms based
upon our analysis performed during the screening process, as well as a proposed timeline and our qualitative expectation
for the transaction. Upon execution of a term sheet, we begin our formal due diligence process.
For proposed Middle Market transactions, the initial term sheet will include key economic terms and other
conditions proposed by the borrower and its representatives and the proposed timeline for the investment, which are
reviewed by our investment team to determine if such terms and conditions are in agreement with our investment
objectives.
Due Diligence
Due diligence on a proposed LMM investment is performed by a minimum of three of our investment
professionals, whom we refer to collectively as the investment team, and certain external resources, who together conduct
due diligence to understand the relationships among the prospective portfolio company’s business plan, operations and
financial performance. Our LMM due diligence review includes some or all of the following:
•
•
•
•
•
•
•
•
•
site visits with management and key personnel;
detailed review of historical and projected financial statements;
operational reviews and analysis;
interviews with customers and suppliers;
detailed evaluation of company management, including background checks;
review of material contracts;
in-depth industry, market and strategy analysis;
regulatory compliance analysis; and
review by legal, environmental or other consultants, if applicable.
Due diligence on a proposed Private Loan or Middle Market investment is generally performed on materials and
information obtained from certain external resources and assessed internally by a minimum of three of our investment
professionals, who work to understand the relationships among the prospective portfolio company’s business plan,
operations and financial performance using the accumulated due diligence information. Our typical Private Loan and
Middle Market due diligence review includes some or all of the following:
•
•
•
•
•
detailed review of historical and projected financial statements
site visits or other discussions with management and key personnel;
in-depth industry, market, operational and strategy analysis;
regulatory compliance analysis; and
detailed review of the company’s management team and their capabilities.
10
Table of contents
During the due diligence process, significant attention is given to sensitivity analyses and how the company might
be expected to perform given downside, base-case and upside scenarios. In certain cases, we may decide not to make an
investment based on the results of the diligence process.
Document and Close
Upon completion of a satisfactory due diligence review of a proposed LMM portfolio investment, the investment
team presents the findings and a recommendation to our investment committee. The presentation contains information
which can include, but is not limited to, the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
company history and overview;
transaction overview, history and rationale, including an analysis of transaction strengths and risks;
analysis of key customers and suppliers and key contracts;
a working capital analysis;
an analysis of the company’s business strategy;
a management and key equity investor background check and assessment;
third-party accounting, legal, environmental or other due diligence findings;
investment structure and expected returns;
anticipated sources of repayment and potential exit strategies;
pro forma capitalization and ownership;
an analysis of historical financial results and key financial ratios;
sensitivities to management’s financial projections;
regulatory compliance analysis findings; and
detailed reconciliations of historical to pro forma results.
Upon completion of a satisfactory due diligence review of a proposed Private Loan or Middle Market portfolio
investment, the investment team presents the findings and a recommendation to our investment committee. The
presentation contains information which can include, but is not limited to, the following:
•
•
•
•
•
•
•
•
company history and overview;
transaction overview, history and rationale, including an analysis of transaction strengths and risks;
analysis of key customers and suppliers;
an analysis of the company’s business strategy;
investment structure and expected returns;
anticipated sources of repayment and potential exit strategies;
pro forma capitalization and ownership;
regulatory compliance analysis findings; and
11
Table of contents
•
an analysis of historical financial results and key financial ratios.
If any adjustments to the transaction terms or structures are proposed by the investment committee, such changes
are made and applicable analyses are updated prior to approval of the transaction. Approval for the transaction must be
made by the affirmative vote from a majority of the members of the investment committee, with the committee member
managing the transaction, if any, abstaining from the vote. Upon receipt of transaction approval, the investment team will
re-confirm regulatory compliance, process and finalize all required legal documents, and fund the investment.
Post-Investment
We continuously monitor the status and progress of the portfolio companies. We generally offer managerial
assistance to our portfolio companies, giving them access to our investment experience, direct industry expertise and
contacts. The same investment team that was involved in the investment process will continue its involvement in the
portfolio company post-investment. This provides for continuity of knowledge and allows the investment team to maintain
a strong business relationship with key management of our portfolio companies for post-investment assistance and
monitoring purposes.
As part of the monitoring process of LMM portfolio investments, the investment team will analyze monthly and
quarterly financial statements versus the previous periods and year, review financial projections, meet and discuss issues or
opportunities with management, attend board meetings and review all compliance certificates and covenants. While we
maintain limited involvement in the ordinary course operations of our LMM portfolio companies, we maintain a higher
level of involvement in non-ordinary course financing or strategic activities and any non-performing scenarios.
As part of the monitoring process of our Private Loan and Middle Market portfolio investments, the investment
team will analyze monthly and quarterly financial statements versus the previous periods and year, review financial
projections and review all compliance certificates and covenants. Depending upon the nature of our Private Loan portfolio
investments, our investment team may also attend board meetings, and meet and discuss issues or opportunities with the
portfolio company’s management team or private equity owners, however, due to the larger size and nature of our “lender
only” relationship with these Private Loan and Middle Market companies in comparison to our LMM portfolio companies,
it is not necessary or practical to have as much direct management interface.
We utilize an internally developed investment rating system to rate the performance of each LMM, Private Loan
and Middle Market portfolio company and to monitor our expected level of returns on each of our LMM, Private Loan and
Middle Market investments in relation to our expectations for the portfolio company. The investment rating system takes
into consideration various factors, including, but not limited to, each investment’s expected level of returns, the
collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments,
comparisons to competitors and other industry participants, the portfolio company’s future outlook and other factors that
are deemed to be significant to the portfolio company.
Exit Strategies/Refinancing
While we generally exit most investments through the refinancing or repayment of our debt and redemption or
sale of our equity positions, we typically assist our LMM portfolio companies in developing and planning exit
opportunities, including any sale or merger of our portfolio companies. We may also assist in the structure, timing,
execution and transition of the exit strategy. The refinancing or repayment of Private Loan investments and Middle Market
debt investments typically do not require our assistance due to the additional resources available to these larger Private
Loan and Middle Market companies.
DETERMINATION OF NET ASSET VALUE AND INVESTMENT PORTFOLIO VALUATION PROCESS
We determine the net asset value (“NAV”) per share of our common stock on a quarterly basis. The NAV per
share is equal to our total assets minus total liabilities divided by the total number of shares of common stock outstanding.
We are required to report our investments at fair value. As a result, the most significant determination inherent in
the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts
of unrealized appreciation and depreciation. We follow the provisions of the Financial Accounting Standards Board
Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820
defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality
12
Table of contents
of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires
us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which
may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are
independent, knowledgeable and willing and able to transact.
We determine in good faith the fair value of our Investment Portfolio pursuant to a valuation policy in accordance
with ASC 820 and a valuation process approved by our Board of Directors and in accordance with the 1940 Act. Our
valuation policies and processes are intended to provide a consistent basis for determining the fair value of our Investment
Portfolio. See Note B.1. — Valuation of the Investment Portfolio included in Item 8. Consolidated Financial Statements
and Supplementary Data of this Annual Report on Form 10-K for a detailed discussion of our Investment Portfolio
valuation process and procedures.
Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment
Portfolio may differ materially from the values that would have been determined had a ready market for the securities
existed. In addition, changes in the market environment, portfolio company performance and other events that may occur
over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially
different than the valuations currently assigned. We determine the fair value of each individual investment and record
changes in fair value as unrealized appreciation or depreciation.
The 1940 Act requires valuation of a portfolio security at “market value” if market quotations for the security are
“readily available.” Portfolio securities for which market quotations are not readily available must be valued at fair value as
determined in good faith by the board of directors. In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act,
which permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee
to determine the fair value for its investment portfolio, subject to the active oversight of the board.
Our Board of Directors adopted policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and
designated a group of our executive officers to serve as the Board’s valuation designee thereunder (the “Valuation
Committee”) effective April 1, 2021. Pursuant to the Valuation Procedures, we undertake a multi-step process each quarter
in connection with determining the fair value of our investments.
The following outlines our valuation process as established under the Valuation Procedures:
•
•
•
•
•
•
Our quarterly process begins with an initial valuation of each portfolio investment performed by the valuation
team consisting of several professionals who apply the appropriate valuation methodology depending on the
type of investment.
Each valuation model is then reviewed by the investment team responsible for monitoring the portfolio
investment for accuracy, with any recommended changes reviewed by the valuation team.
Updated valuation conclusions are then reviewed by and discussed with the Valuation Committee at quarterly
valuation meetings. Valuation meetings are generally attended by the Valuation Committee, the valuation
team, members of the investment team responsible for each investment and members of the compliance team.
Valuation models and valuation conclusions are adjusted as necessary following such meetings.
A nationally recognized independent financial advisory services firm analyzes and provides observations,
recommendations and an assurance certification regarding the determinations of the fair value for the majority
of our portfolio companies on a rotational basis.
After incorporating commentary by the Valuation Committee and review of recommendations provided by
the independent financial advisory services firm, valuation results are finalized and approved by the Valuation
Committee.
The Board of Directors oversees the process through its Audit Committee in accordance with Rule 2a-5
pursuant to the Valuation Procedures.
Determination of fair value involves subjective judgments and estimates. The notes to our consolidated financial
statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations,
on our financial results and financial condition.
13
Table of contents
COMPETITION
We compete for investments with a number of investment funds (including private equity funds, mezzanine funds,
BDCs, and SBICs), as well as traditional financial services companies such as commercial banks and other sources of
financing. Many of the entities that compete with us are larger and have more resources available to them. We believe we
are able to be competitive with these entities primarily on the basis of our focus toward the underserved LMM, the
experience and contacts of our management team, our responsive and efficient investment analysis and decision-making
processes, our comprehensive suite of customized financing solutions and the investment terms we offer.
We believe that some of our competitors make senior secured loans, junior secured loans and subordinated debt
investments with interest rates and returns that are comparable to or lower than the rates and returns that we target.
Therefore, we do not seek to compete primarily on the interest rates and returns that we offer to potential portfolio
companies. For additional information concerning the competitive risks we face, see Item 1A. Risk Factors — Risks Related
to Our Business and Structure — We face increasing competition for investment opportunities.
HUMAN CAPITAL
Our employees are vital to our success as a principal investment firm. As a human-capital intensive business, the
long-term success of our company depends on our people. We strive to attract, develop and retain our employees by
offering unique employment opportunities, superior advancement and promotion opportunities, attractive compensation
and benefit structures and a close-knit culture. The departure of our key investment and other personnel could cause our
operating results to suffer.
Our LMM business segment depends heavily on the business owners and management teams of our portfolio
companies and their respective employees, contractors and service providers. In our investment process for LMM portfolio
investments, the analysis of these individuals is a critical part of our overall investment underwriting process and as a result
we carefully review the qualifications and experience of the portfolio company’s business owners and management team
and their employment practices. We strive to partner with business owners and management teams whose business
practices reflect our core values.
We strive to recruit talented and driven individuals who share our values. We have competitive programs
dedicated to attracting and retaining new talent and enhancing the skills of our employees. Our recruiting efforts utilize
strong relationships with a variety of sources from which we recruit. Among other opportunities, we offer selected students
investment analyst internships, which are expected to lead to permanent roles for high performing and high potential
interns. Through our internship program, individuals who want to become investment analysts have the opportunity to see
the full investment process from origination to closing, as well as post-closing portfolio management activities. We
routinely recruit from within, promoting current employees who have shown the technical ability, attitude, interest and the
initiative to take on greater responsibility.
We have designed a compensation structure, including an array of benefit plans and programs, that we believe is
attractive to our current and prospective employees. We also offer formal and informal training and mentorship programs
that provide employees with access to senior level executives. Through our annual goal setting and performance review
processes, our employees are annually evaluated by supervisors and our senior management team to ensure employees
continue to develop and advance as expected. We are committed to having a diverse workforce, and an inclusive work
environment is a natural extension of our culture. We also maintain a Women’s Initiative that provides employees with
opportunities to network internally at Main Street and externally with other women in the financial services industry. Our
employees have access to several programs designed to enable our employees to balance work, family and family-related
situations including flexible working arrangements and parental leave for birth and adoption placement. We are committed
to creating and maintaining an atmosphere where all employees feel welcomed, valued, respected and heard so that they
feel motivated and encouraged to contribute fully to their careers, our company and our communities.
We seek to maintain a close-knit culture, which we believe is an important factor in employee retention, which is
reinforced by our Community Building Committee. Our Community Building Committee, which is composed of a
substantial cross section of employees across our organization, develops programs and initiatives that promote an open and
inclusive atmosphere and encourage employee outreach with our community, in each case based upon feedback received
from our employees. Initiatives generated by our Community Building Committee include employee well-being and
engagement activities along with volunteer and donation opportunities with local charitable organizations. We encourage
14
Table of contents
you to visit our website for more information about charitable organizations receiving our ongoing support. Nothing on our
website, however, shall be deemed incorporated by reference into this Annual Report on Form 10-K.
We monitor and evaluate various turnover and attrition metrics throughout our management team. Our annualized
voluntary turnover is relatively low, a record which we attribute to our strong corporate culture, commitment to career
development and attractive compensation and benefit programs. For additional information concerning the competitive
risks we face, see Item 1A. Risk Factors — Risks Related to Our Business and Structure — Our success depends on
attracting and retaining qualified personnel in a competitive environment.
As of December 31, 2022, we had 91 employees, 53 of whom we characterize as investment and portfolio
management professionals, and the others include operations professionals and administrative staff. None of our employees
are represented by a collective bargaining agreement. As necessary, we will hire additional investment professionals and
administrative personnel. All but two of our employees are located in our Houston, Texas office.
REGULATION
Regulation as a Business Development Company
We have elected to be regulated as a BDC under the 1940 Act. The 1940 Act contains prohibitions and restrictions
relating to transactions between BDCs and their affiliates, principal underwriters and affiliates of those affiliates or
underwriters. The 1940 Act requires that a majority of the members of the board of directors of a BDC be persons other
than “interested persons,” as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not
change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved by a majority
of our outstanding voting securities.
The 1940 Act defines “a majority of the outstanding voting securities” as the lesser of (i) 67% or more of the
voting securities present at a meeting if the holders of more than 50% of our outstanding voting securities are present or
represented by proxy or (ii) more than 50% of our outstanding voting securities.
Qualifying Assets
Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the
1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent
at least 70% of the company’s total assets. The principal categories of qualifying assets relevant to our business are any of
the following:
(1)
(2)
(3)
(4)
(5)
(6)
Securities purchased in transactions not involving any public offering from the issuer of such securities,
which issuer (subject to certain limited exceptions) is an eligible portfolio company (as defined below),
or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible
portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC.
Securities of any eligible portfolio company that we control.
Securities purchased in a private transaction from a U.S. issuer that is not an investment company or
from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy
and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was
unable to meet its obligations as they came due without material assistance other than conventional
lending or financing arrangements.
Securities of an eligible portfolio company purchased from any person in a private transaction if there is
no ready market for such securities and we already own 60% of the outstanding equity of the eligible
portfolio company.
Securities received in exchange for or distributed on or with respect to securities described in (1) through
(4) above, or pursuant to the exercise of warrants or rights relating to such securities.
Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or
less from the time of investment.
15
Table of contents
In addition, a BDC must have been organized and have its principal place of business in the United States and
must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) above.
An eligible portfolio company is defined in the 1940 Act as any issuer which:
(a)
(b)
is organized under the laws of, and has its principal place of business in, the United States;
is not an investment company (other than a small business investment company wholly-owned by the
BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act;
and
(c)
satisfies any of the following:
(i)
(ii)
(iii)
does not have any class of securities that is traded on a national securities exchange or has a
class of securities listed on a national securities exchange but has an aggregate market value of
outstanding voting and non-voting common equity of less than $250 million;
is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated
person who is a director of the eligible portfolio company; or
is a small and solvent company having total assets of not more than $4 million and capital and
surplus of not less than $2 million.
Managerial Assistance to Portfolio Companies
As noted above, a BDC must be operated for the purpose of making investments in the type of securities described
in (1), (2) or (3) above under the heading entitled “— Qualifying Assets.” In addition, BDCs must generally offer to make
available to such issuer of the securities (other than small and solvent companies described above) significant managerial
assistance; except that, where we purchase such securities in conjunction with one or more other persons acting together,
one of the other persons in the group may make available such managerial assistance. Making available managerial
assistance means, among other things, any arrangement whereby the BDC, through its directors, officers or employees,
offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management,
operations or business objectives and policies of a portfolio company. However, if a BDC purchases securities in
conjunction with one or more other persons acting together, one of the other persons in the group may make available such
significant managerial assistance on behalf of all investors in the group.
Temporary Investments
Pending investment in “qualifying assets,” as described above, our investments may consist of cash, cash
equivalents, U.S. government securities and high-quality debt securities maturing in one year or less from time of
investment therein, so that 70% of our assets are qualifying assets.
Senior Securities
Prior to 2018 legislation that modified the asset coverage requirements of the 1940 Act, we were permitted, as a
BDC, to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least
200% of all debt and/or senior stock immediately after each such issuance. However, 2018 legislation modified the 1940
Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio, or BDC
asset coverage ratio, of 200% to an asset coverage ratio of 150%, if certain requirements are met. In May 2022, our
stockholders approved the application of the reduced BDC asset coverage ratio. As a result, the BDC asset coverage ratio
applicable to us decreased from 200% to 150% effective May 3, 2022.
We have received exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures of the
Funds from our 150% asset coverage test under the 1940 Act. As such, our ratio of total consolidated assets to outstanding
indebtedness may be less than 150%. This provides us with increased investment flexibility but also increases our risks
related to leverage.
16
Table of contents
In addition, while any senior securities remain outstanding (other than senior securities representing indebtedness
issued in consideration of a privately arranged loan which is not intended to be publicly distributed), we must generally
include provisions in the documents governing new senior securities to prohibit any cash distribution to our stockholders or
the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution
or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes
without regard to asset coverage with such borrowings not constituting senior securities for purposes of the asset coverage
ratio requirements of the 1940 Act. A loan is presumed to be for temporary purposes if it is repaid within sixty days and not
extended or renewed. For a discussion of the risks associated with leverage, see Item 1A. Risk Factors — Risks Related to
Leverage, including, without limitation, — Because we borrow money, the potential for gain or loss on amounts invested in
us is magnified and may increase the risk of investing in us.
Common Stock
We are not generally able to issue and sell our common stock at a price below NAV per share. We may, however,
sell our common stock, warrants, options or rights to acquire our common stock, at a price below the current NAV of the
common stock if our Board of Directors determines that such sale is in our best interests and that of our stockholders, and
our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be
less than a price which, in the determination of our Board of Directors, closely approximates the market value of such
securities (less any distributing commission or discount). We did not seek stockholder authorization to sell shares of our
common stock below the then current NAV per share of our common stock at our 2022 Annual Meeting of Stockholders,
and have not sought such stockholder authorization since 2012, because our common stock price had been trading
significantly above the NAV per share of our common stock since 2011. Our stockholders have previously approved a
proposal that authorizes us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or
more offerings. We may also make rights offerings to our stockholders at prices per share less than the NAV per share,
subject to applicable requirements of the 1940 Act. See Item 1A. Risk Factors — Risks Related to our Securities —
Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then
current NAV per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our
common stock.
Code of Ethics
We have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for
personal investments and restricts certain personal securities transactions. Personnel subject to the code may invest in
securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such
investments are made in accordance with the code’s requirements. The code of ethics is available on the EDGAR Database
on the SEC’s website at http://www.sec.gov.
Proxy Voting Policies and Procedures
We vote proxies relating to our portfolio securities in a manner in which we believe is consistent with the best
interest of our stockholders. We review on a case-by-case basis each proposal submitted to a stockholder vote to determine
its impact on the portfolio securities held by us. Although we generally vote against proposals that we expect would have a
negative impact on our portfolio securities, we may vote for such a proposal if there exists compelling long-term reasons to
do so.
Our proxy voting decisions are made by the investment team which is responsible for monitoring each of our
investments. To ensure that our vote is not the product of a conflict of interest, we require that anyone involved in the
decision-making process discloses to our chief compliance officer any potential conflict regarding a proxy vote of which he
or she is aware.
Stockholders may obtain information, without charge, regarding how we voted proxies with respect to our
portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, 1300 Post Oak
Boulevard, 8th Floor, Houston, Texas 77056.
17
Table of contents
Other 1940 Act Regulations
We are also prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates
without the prior approval of our Board of Directors who are not interested persons and, in some cases, prior approval by
the SEC.
We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us
against larceny and embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer
against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such person’s office.
We are required to adopt and implement written policies and procedures reasonably designed to prevent violation
of the federal securities laws, review these policies and procedures no less frequently than annually for their adequacy and
the effectiveness of their implementation, and to designate a chief compliance officer to be responsible for administering
the policies and procedures.
We may be periodically examined by the SEC for compliance with the 1940 Act.
Small Business Investment Company Regulations
Each of the Funds is licensed by the SBA to operate as a SBIC under Section 301(c) of the Small Business
Investment Act of 1958. MSMF obtained its SBIC license in 2002 and MSC III obtained its license in 2016.
SBICs are designed to stimulate the flow of private capital to eligible small businesses. Under SBIC regulations,
SBICs may make loans to eligible small businesses, invest in the equity securities of such businesses and provide them
with consulting and advisory services. Each of the Funds has typically invested in secured debt, acquired warrants and/or
made equity investments in qualifying small businesses.
The Funds are subject to regulation and oversight by the SBA, including requirements with respect to reporting
financial information, such as the extent of capital impairment if applicable, on a regular basis and annual examinations
conducted by the SBA. The SBA, as a creditor, will have a superior claim to the Funds’ assets over our securities holders in
the event the Funds are liquidated or the SBA exercises its remedies under the SBA-guaranteed debentures issued by the
Funds upon an event of default.
Under present SBIC regulations, eligible small businesses generally include businesses that (together with their
affiliates) have a tangible net worth not exceeding $19.5 million or have average annual net income after U.S. federal
income taxes not exceeding $6.5 million (average net income to be computed without benefit of any carryover loss) for the
two most recent fiscal years. In addition, an SBIC must devote 25% of its investment activity to “smaller” enterprises as
defined by the SBA. A smaller enterprise generally includes businesses that have a tangible net worth not exceeding $6
million and have average annual net income after U.S. federal income taxes not exceeding $2 million (average net income
to be computed without benefit of any net carryover loss) for the two most recent fiscal years. SBIC regulations also
provide alternative size standard criteria to determine eligibility for designation as an eligible small business or smaller
enterprise, which criteria depend on the primary industry in which the business is engaged and are based on such factors as
the number of employees and gross revenue. However, once an SBIC has invested in a company, it generally may continue
to make follow-on investments in the company, regardless of the size of the portfolio company at the time of the follow-on
investment, up to the time of the portfolio company’s initial public offering.
The SBA prohibits an SBIC from providing funds to small businesses for certain purposes, such as relending and
investment outside the United States, to businesses engaged in certain prohibited industries, and to certain “passive” (non-
operating) companies. In addition, without prior SBA approval, an SBIC may not invest an amount equal to more than 30%
of the SBIC’s regulatory capital, as defined by the SBA, in any one portfolio company and its affiliates.
The SBA places certain limitations on the financing terms of investments by SBICs in portfolio companies (such
as limiting the permissible interest rate on debt securities held by an SBIC in a portfolio company). Included in such
limitations are SBIC regulations which allow an SBIC to exercise control over a small business for a period of seven years
from the date on which the SBIC initially acquires its control position. This control period may be extended for an
additional period of time with the SBA’s prior written approval.
18
Table of contents
The SBA restricts the ability of an SBIC to lend money to any of its officers, directors and employees or to invest
in affiliates thereof. The SBA also prohibits, without prior SBA approval, a “change of control” of an SBIC or transfers
that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of equity of a
licensed SBIC. A “change of control” is any event which would result in the transfer of the power, direct or indirect, to
direct the management and policies of an SBIC, whether through ownership, contractual arrangements or otherwise.
The SBIC licenses allow the Funds to incur leverage by issuing SBA-guaranteed debentures, subject to the
issuance of a capital commitment and certain approvals by the SBA and customary procedures. SBA-guaranteed
debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt. Under
applicable regulations, an SBIC may generally have outstanding debentures guaranteed by the SBA in amounts up to twice
the amount of the privately raised funds of the SBIC. Debentures guaranteed by the SBA have a maturity of ten years,
require semiannual payments of interest, do not require any principal payments prior to maturity, and are not subject to
prepayment penalties. As of December 31, 2022, we, through the Funds, had $350.0 million of outstanding SBA-
guaranteed debentures, which had an annual weighted-average interest rate of 2.9%.
SBICs must invest idle funds that are not being used to make loans in investments permitted under SBIC
regulations in the following limited types of securities: (i) direct obligations of, or obligations guaranteed as to principal
and interest by, the United States government, which mature within 15 months from the date of the investment; (ii)
repurchase agreements with federally insured institutions with a maturity of seven days or less (and the securities
underlying the repurchase obligations must be direct obligations of or guaranteed by the federal government); (iii)
certificates of deposit with a maturity of one year or less, issued by a federally insured institution; (iv) a deposit account in
a federally insured institution that is subject to a withdrawal restriction of one year or less; (v) a checking account in a
federally insured institution; or (vi) a reasonable petty cash fund.
SBICs are periodically examined and audited by the SBA’s staff to determine their compliance with SBIC
regulations and are periodically required to file certain financial information and other documents with the SBA.
Neither the SBA nor the U.S. government or any of its agencies or officers has approved any ownership interest to
be issued by us or any obligation that we or any of our subsidiaries may incur.
Securities Exchange Act of 1934 and Sarbanes-Oxley Act Compliance
We are subject to the reporting and disclosure requirements of the Securities Exchange Act of 1934 (the
“Exchange Act”), including the filing of quarterly, annual and current reports, proxy statements and other required items.
In addition, we are subject to the Sarbanes-Oxley Act of 2002, which imposes a wide variety of regulatory requirements on
publicly-held companies and their insiders. For example:
•
•
•
•
pursuant to Rule 13a-14 of the Exchange Act, our Chief Executive Officer and Chief Financial Officer are
required to certify the accuracy of the consolidated financial statements contained in our periodic reports;
pursuant to Item 307 of Regulation S-K, our periodic reports are required to disclose our conclusions about
the effectiveness of our disclosure controls and procedures;
pursuant to Rule 13a-15 of the Exchange Act, our management is required to prepare a report regarding its
assessment of our internal control over financial reporting, and our independent registered public accounting
firm separately audits our internal control over financial reporting; and
pursuant to Item 308 of Regulation S-K and Rule 13a-15 of the Exchange Act, our periodic reports must
disclose whether there were significant changes in our internal control over financial reporting or in other
factors that could significantly affect these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material weaknesses.
The New York Stock Exchange Corporate Governance Regulations
The New York Stock Exchange (“NYSE”) has adopted corporate governance regulations that listed companies
must comply with. We believe we are in compliance with such corporate governance listing standards. We intend to
monitor our compliance with all future listing standards and to take all necessary actions to ensure that we stay in
compliance.
19
Table of contents
Investment Adviser Regulations
The External Investment Manager, which is wholly-owned by us, is subject to regulation under the Investment
Advisers Act of 1940, as amended (the “Advisers Act”). The Advisers Act establishes, among other things, recordkeeping
and reporting requirements, disclosure requirements, limitations on transactions between the adviser’s account and an
advisory client’s account, limitations on transactions between the accounts of advisory clients, and general anti-fraud
prohibitions. The External Investment Manager may be examined by the SEC from time to time for compliance with the
Advisers Act.
Taxation as a Regulated Investment Company
MSCC has elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code.
MSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the
Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level
U.S. federal income taxes on any income that we distribute to our stockholders as dividends. To qualify as a RIC, we must,
among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition,
in order to obtain RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our
“investment company taxable income,” which is generally our net ordinary taxable income plus the excess of realized net
short-term capital gains over realized net long-term capital losses, and 90% of our tax-exempt income (the “Annual
Distribution Requirement”). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-
deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the
end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income
tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which
such taxable income was generated.
For any taxable year in which we qualify as a RIC and satisfy the Annual Distribution Requirement, we will not
be subject to U.S. federal income tax on the portion of our income or capital gains we distribute (or are deemed to
distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or
capital gains not distributed (or deemed distributed) to our stockholders.
We are subject to a 4% non-deductible U.S. federal excise tax on certain undistributed income unless we distribute
in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary taxable income for each calendar
year, (2) 98.2% of our capital gain net income for the one-year period ending December 31 in that calendar year and (3)
any taxable income recognized, but not distributed, in preceding years on which we paid no U.S. federal income tax (the
“Excise Tax Avoidance Requirement”). Dividends declared and paid by us in a year will generally differ from taxable
income for that year as such dividends may include the distribution of current year taxable income, exclude amounts
carried over into the following year, and include the distribution of prior year taxable income carried over into and
distributed in the current year. For amounts we carry over into the following year, we will be required to pay the 4% U.S.
federal excise tax on the excess of 98% of our annual investment company taxable income and 98.2% of our capital gain
net income over our distributions for the year.
In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:
•
•
continue to qualify as a BDC under the 1940 Act at all times during each taxable year;
derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect
to certain securities, loans, gains from the sale of stock or other securities, net income from certain “qualified
publicly traded partnerships,” or other income derived with respect to our business of investing in such stock
or securities (the “90% Income Test”); and
•
diversify our holdings so that at the end of each quarter of the taxable year:
•
at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities,
securities of other RICs, and other securities if such other securities of any one issuer do not represent
more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the
issuer; and
20
Table of contents
•
no more than 25% of the value of our assets is invested in the securities, other than U.S. government
securities or securities of other RICs, (i) of one issuer, (ii) of two or more issuers that are controlled, as
determined under applicable Code rules, by us and that are engaged in the same or similar or related
trades or businesses or (iii) of certain “qualified publicly traded partnerships” (collectively, the
“Diversification Tests”).
In order to comply with the 90% Income Test, we formed the Taxable Subsidiaries as wholly-owned taxable
subsidiaries for the primary purpose of permitting us to own equity interests in portfolio companies which are “pass-
through” entities for tax purposes. Absent the taxable status of the Taxable Subsidiaries, a portion of the gross income from
such portfolio companies would flow directly to us for purposes of the 90% Income Test. To the extent such income did
not consist of income derived from securities, such as dividends and interest, it could jeopardize our ability to qualify as a
RIC and, therefore, cause us to incur significant U.S. federal income taxes. The Taxable Subsidiaries are consolidated with
Main Street for generally accepted accounting principles in the United States of America (“U.S. GAAP”) purposes and are
included in our consolidated financial statements, and the portfolio investments held by the Taxable Subsidiaries are
included in our consolidated financial statements. The Taxable Subsidiaries are not consolidated with MSCC for income
tax purposes and may generate income tax expense, or benefit, as a result of their ownership of the portfolio investments.
The income tax expense, or benefit, if any, and any related tax assets and liabilities, are reflected in our consolidated
financial statements.
The External Investment Manager is accounted for as a portfolio investment for U.S. GAAP purposes and is an
indirect wholly-owned subsidiary of MSCC, owned through a Taxable Subsidiary. The External Investment Manager is
owned by a Taxable Subsidiary in order to comply with the 90% Income Test, since the External Investment Manager’s
income would likely not consist of income derived from securities, such as dividends and interest, and as result, it could
jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. As a result
of its ownership by a Taxable Subsidiary, the External Investment Manager is a disregarded entity for tax purposes. The
External Investment Manager has also entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the
External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated
subsidiary of MSCC in MSCC’s consolidated financial statements, and as a result of the tax sharing agreement with its
Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if
it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income
tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External
Investment Manager are reflected in the External Investment Manager’s separate financial statements.
We may be required to recognize taxable income in circumstances in which we do not receive cash. For example,
if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt
instruments issued with warrants and debt securities invested in at a discount to par), we must include in income each year
a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing
such income is received by us in the same taxable year. We may also have to include in income other amounts that we have
not yet received in cash such as PIK interest, cumulative dividends or amounts that are received in non-cash compensation
such as warrants or stock. Because any original issue discount or other amounts accrued will be included in our investment
company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to
satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.
Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to
satisfy distribution requirements. However, under the 1940 Act, we are not permitted to make distributions to our
stockholders in certain circumstances while our debt obligations and other senior securities are outstanding unless certain
“asset coverage” tests are met. See Regulation — Regulation as a Business Development Company — Senior Securities.
Moreover, our ability to dispose of assets to meet our distribution requirements may be limited by (1) the illiquid nature of
our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification Tests. If we dispose
of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make
such dispositions at times that, from an investment standpoint, are not advantageous.
We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of
the Code and the U.S. Department of the Treasury (“Treasury”) regulations, distributions payable by us in cash or in shares
of stock (at the stockholders’ election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service
has issued guidance indicating that this rule will apply even where the total amount of cash that may be distributed is
limited to no more than 20% of the total distribution. According to this guidance, if too many stockholders elect to receive
their distributions in cash, each such stockholder would receive a pro rata share of the total cash to be distributed and would
21
Table of contents
receive the remainder of their distribution in shares of stock. Taxable stockholders receiving such dividends will be
required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as (i)
ordinary income (including any qualified dividend income that, in the case of a noncorporate stockholder, may be eligible
for the same reduced maximum tax rate applicable to long-term capital gains to the extent such distribution is properly
reported by us as qualified dividend income and such stockholder satisfies certain minimum holding period requirements
with respect to our stock) or (ii) long-term capital gain (to the extent such distribution is properly reported as a capital gain
dividend), to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a
result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a
U.S. stockholder sells the stock it receives in order to pay this tax, the sales proceeds may be less than the amount included
in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore,
with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in
respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders
determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading
price of our stock.
Failure to Qualify as a RIC
If we fail to satisfy the 90% Income Test or the Diversification Tests for any taxable year, we may nevertheless
continue to qualify as a RIC for such year if certain relief provisions are applicable (which may, among other things,
require us to pay certain corporate-level U.S. federal taxes or to dispose of certain assets).
If we were unable to qualify for treatment as a RIC and the foregoing relief provisions are not applicable, we
would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions
to stockholders, nor would they be required to be made. If we were subject to tax on all of our taxable income at regular
corporate rates, then distributions we make after being subject to such tax would be taxable to our stockholders and,
provided certain holding period and other requirements were met, could qualify for treatment as “qualified dividend
income” eligible for the maximum 20% rate (plus a 3.8% Medicare surtax, if applicable) applicable to qualified dividends
to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate
taxpayers would be eligible for a dividends-received deduction on distributions they receive. Distributions in excess of our
current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder’s
tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable
year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and
profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that
qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC
no later than the second year following the nonqualifying year, we could be subject to tax on any unrealized net built-in
gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the
subsequent five years, unless we made a special election to pay corporate-level U.S. federal income tax on such built-in
gain at the time of our requalification as a RIC.
Item 1A. Risk Factors
Investing in our securities involves a number of significant risks. In addition to the other information contained in
this Annual Report on Form 10-K, you should consider carefully the following information before making an investment in
our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known
to us or not presently deemed material by us might also impair our operations and performance. If any of the following
events occur, our business, financial condition and results of operations could be materially and adversely affected. In
such case, our NAV, the trading price of our common stock and the value of our other securities could decline, and you
may lose all or part of your investment.
SUMMARY OF RISK FACTORS
The following is a summary of the principal risk factors associated with an investment in our securities. Further
details regarding each risk included in the below summary list can be found further below.
Risks Related to our Business and Structure
• Because our Investment Portfolio is recorded at fair value, there is and will continue to be uncertainty as to the value
of our portfolio investments.
• Our financial condition and results of operations depends on our ability to effectively manage and deploy capital.
22
Table of contents
• We are subject to risks associated with the interest rate environment and changes in interest rates will affect our cost of
capital, net investment income and the value of our investments.
• We face increasing competition for investment opportunities.
• We are dependent upon our key investment personnel for our future success.
• Our success depends on attracting and retaining qualified personnel in a competitive environment.
• Our business model depends to a significant extent upon strong referral relationships.
• Our Board of Directors may change our operating policies and strategies without prior notice or stockholder approval,
the effects of which may be adverse.
Risks Related to our Investments
• The types of portfolio companies in which we invest involve significant risks and we could lose all or part of our
investment.
• Economic recessions or downturns could impair our portfolio companies’ performance and defaults by our portfolio
companies will harm our operating results.
• Rising credit spreads could affect the value of our investments, and rising interest rates make it more difficult for
portfolio companies to make periodic payments on their loans.
• Inflation could adversely affect the business, results of operations and financial condition of our portfolio companies.
• We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest.
• The lack of liquidity in our investments may adversely affect our business.
• We may not have the funds or ability to make additional investments in our portfolio companies.
• There may be circumstances where our debt investments could be subordinated to claims of other creditors or we
could be subject to lender liability claims.
• We generally will not control our portfolio companies.
• Defaults by our portfolio companies will harm our operating results.
• Any unrealized depreciation that we experience in our portfolio may be an indication of future realized losses, which
could reduce our income and gains available for distribution.
• Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and
reduce our return on equity.
• The interest rates of some of our investments are priced using a spread over LIBOR, which will be phased out in the
future.
• We may be subject to risks associated with “covenant-lite” loans.
• We may not realize gains from our equity investments.
Risks Related to Leverage
• Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the
risk of investing in us.
• All of our assets are subject to security interests under our senior securities and if we default on our obligations under
our senior securities, we may suffer adverse consequences, including foreclosure on our assets.
• We are subject to risks associated with any revolving credit facility that utilizes a Structured Subsidiary as our interests
in any Structured Subsidiary are subordinated and we could be prevented from receiving cash on our equity interests
from a Structured Subsidiary.
Risks Related to our Investment Management Activities
• Our executive officers and employees, through the External Investment Manager, may manage other investment funds
that operate in the same or a related line of business as we do, and may invest in such funds, which may result in
significant conflicts of interest.
• We, through the External Investment Manager, derive revenues from managing third-party funds pursuant to
management agreements that may be terminated.
Risks Related to BDCs
• Failure to comply with applicable laws or regulations and changes in laws or regulations governing our operations may
adversely affect our business or cause us to alter our business strategy.
• Operating under the constraints imposed on us as a BDC and RIC may hinder the achievement of our investment
objectives.
Risks Related to our Securities
• Investing in our securities may involve a high degree of risk.
• Shares of closed-end investment companies, including BDCs, may trade at a discount to their NAV.
23
Table of contents
• We may not be able to pay distributions to our stockholders, our distributions may not grow over time, and a portion of
distributions paid to our stockholders may be a return of capital.
Risks Related to our SBIC Funds
• We, through the Funds, issue debt securities guaranteed by the SBA and sold in the capital markets. As a result of its
guarantee of the debt securities, the SBA has fixed dollar claims on the assets of the Funds that are superior to the
claims of our securities holders.
Federal Income Tax Risks
• We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M
of the Code.
• We may have difficulty paying the distributions required to maintain RIC tax treatment under the Code if we recognize
income before or without receiving cash representing such income.
General Risk Factors
• Events outside of our control, including public health crises, supply chain disruptions and inflation, could negatively
affect our portfolio companies and the results of our operations.
• We are currently operating in a period of capital markets disruption and economic uncertainty, and capital markets
may experience periods of disruption and instability in the future.
• Government intervention in the credit markets could adversely affect our business.
• We are highly dependent on information systems and systems failures could significantly disrupt our business.
RISKS RELATED TO OUR BUSINESS AND STRUCTURE
Because our Investment Portfolio is recorded at fair value, there is and will continue to be uncertainty as to the value of
our portfolio investments.
Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there is no readily
available market value, at fair value as determined by us pursuant to procedures established and overseen by our Board of
Directors. Typically, there is not a public market for the securities of the privately held companies in which we invest
through our LMM and Private Loan investment strategies. As a result, we value these securities quarterly at fair value
based on inputs from management and a nationally recognized independent financial advisory services firm (on a rotational
basis) pursuant to Valuation Procedures approved by our Board of Directors. In addition, the market for investments in
companies that we invest through our Middle Market investment strategy is generally not a liquid market, and therefore, we
primarily use a combination of observable inputs in non-active markets for which sufficient observable inputs were not
available to determine the fair value of these investments and unobservable inputs, pursuant to our Valuation Procedures.
See Note B.1. — Valuation of the Investment Portfolio included in Item 8. Consolidated Financial Statements and
Supplementary Data of this Annual Report on Form 10-K for a detailed discussion of our Investment Portfolio valuation
process and procedures.
The determination of fair value and consequently, the amount of unrealized gains and losses in our portfolio, are
to a certain degree, subjective and dependent on a valuation process approved by our Board of Directors. Certain factors
that may be considered in determining the fair value of our investments include external events, such as private mergers,
sales and acquisitions involving comparable companies. Because such valuations, and particularly valuations of securities
in privately held companies, are inherently uncertain, may fluctuate over short periods of time and may be based on
estimates, our determinations of fair value may differ materially from the values that would have been used if a ready
market for these securities existed. Due to this uncertainty, our fair value determinations may cause our NAV on a given
date to materially understate or overstate the value that we may ultimately realize on one or more of our investments. As a
result, investors purchasing our securities based on an overstated NAV would pay a higher price than the value of our
investments might warrant. Conversely, investors selling our securities during a period in which the NAV understates the
value of our investments may receive a lower price for their securities than the value of our investments might warrant.
Our financial condition and results of operations depends on our ability to effectively manage and deploy capital.
Our ability to achieve our investment objective of maximizing our portfolio’s total return by generating current
income from our debt investments and current income and capital appreciation from our equity and equity-related
investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company,
24
Table of contents
depends on our ability to effectively manage and deploy capital, which depends, in turn, on our investment team’s ability to
identify, evaluate and monitor, and our ability to finance and invest in, companies that meet our investment criteria.
Accomplishing our investment objective on a cost-effective basis is largely a function of our investment team’s
handling of the investment process, its ability to provide competent, attentive and efficient services and our access to
investments offering acceptable terms. In addition to monitoring the performance of our existing investments, members of
our investment team are also called upon, from time to time, to provide managerial assistance to some of our portfolio
companies. These demands on their time may distract them or slow the rate of investment.
Even if we are able to grow and build upon our investment operations, any failure to manage our growth
effectively could have a material adverse effect on our business, financial condition, results of operations and prospects.
The results of our operations will depend on many factors, including the availability of opportunities for investment,
readily accessible short and long-term funding alternatives in the financial markets and economic conditions. Furthermore,
if we cannot successfully operate our business or implement our investment policies and strategies as described herein, it
could negatively impact our ability to pay dividends.
We are subject to risks associated with the interest rate environment and changes in interest rates will affect our cost of
capital, net investment income and the value of our investments.
To the extent we borrow money or issue debt securities or preferred stock to make investments, our net investment
income will depend, in part, upon the difference between the rate at which we borrow funds or pay interest or dividends on
such debt securities or preferred stock and the rate at which we invest these funds. In addition, many of our debt
investments and borrowings have floating interest rates that reset on a periodic basis, and many of our investments are
subject to interest rate floors. As a result, a change in market interest rates could have a material adverse effect on our net
investment income. In periods of rising interest rates, our cost of funds will increase because the interest rates on the
amounts borrowed under our credit facilities are floating, and any new fixed rate debt may be issued a higher coupon rates,
which could reduce our net investment income to the extent any debt investments have either fixed interest rates, or in
periods when debt investments with floating interest rates are subject to an interest rate floor above then current levels. In
periods of declining interest rates, our interest income and our net investment income could be reduced as the interest
income earned on our floating rate debt investments declines and any new fixed rate debt may be issued at lower coupon
rates. See further discussion and analysis at Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
We can use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations.
Such techniques could include various interest rate hedging activities to the extent permitted by the 1940 Act and
applicable commodities laws. These activities could limit our ability to participate in the benefits of lower interest rates
with respect to the hedged borrowings. Adverse developments resulting from changes in interest rates or hedging
transactions could have a material adverse effect on our business, financial condition and results of operations.
An increase in the market pricing of the spreads charged over index rates on floating rate investments could lead
to a decline in the fair value of the debt securities we own, which would adversely affect our NAV. Also, an increase in
interest rates available to investors could make an investment in our common stock less attractive if we are not able to
increase our dividends, which could reduce the value of our common stock.
We face increasing competition for investment opportunities.
We compete for investments with other investment funds (including private equity funds, debt funds, mezzanine
funds, collateralized loan obligation funds, or CLOs, BDCs and SBICs), as well as traditional financial services companies
such as commercial banks and other sources of funding. Many of our competitors are substantially larger and have
considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a
lower cost of capital and access to funding sources that are not available to us. In addition, some of our competitors may
have higher risk tolerances or different risk assessments than we have. These characteristics could allow our competitors to
consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring
than we are able to do. We may lose investment opportunities if we do not match our competitors’ pricing, terms and
structure. If we are forced to match our competitors’ pricing, terms and structure, we may not be able to achieve acceptable
returns on our investments or may bear substantial risk of capital loss. A significant part of our competitive advantage
stems from the fact that the market for investments in LMM companies is underserved by traditional commercial banks and
other financing sources. A significant increase in the number and/or the size of our competitors in this target market could
25
Table of contents
force us to accept less attractive investment terms. Furthermore, many of our competitors are not subject to the regulatory
restrictions that the 1940 Act imposes on us as a BDC.
We are dependent upon our key investment personnel for our future success.
We depend on the members of our investment team, particularly Dwayne L. Hyzak, David L. Magdol, Jesse E.
Morris, Jaime Arreola, K. Colton Braud, III, Damian T. Burke, Samuel A. Cashiola, Diego Fernandez and Nicholas T.
Meserve for the identification, review, final selection, structuring, closing and monitoring of our investments. These
employees have significant investment expertise and relationships that we rely on to implement our business plan.
Although we have entered into non-compete arrangements with all of our executive officers and other key employees, we
cannot guarantee that any employees will remain employed with us. If we lose the services of the individuals mentioned
above, we may not be able to operate our business as we expect, and our ability to compete could be harmed, which could
cause our operating results to suffer.
Our success depends on attracting and retaining qualified personnel in a competitive environment.
Our growth will require that we retain new investment and administrative personnel in a competitive market. Our
ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors
including, but not limited to, our ability to offer competitive wages, benefits and professional growth opportunities. Many
of the entities, including investment funds (such as private equity funds, debt funds and mezzanine funds) and traditional
financial services companies, with which we compete for experienced personnel have greater resources than we have.
The competitive environment for qualified personnel may require us to take certain measures to ensure that we are
able to attract and retain experienced personnel. Such measures may include increasing the attractiveness of our overall
compensation packages, altering the structure of our compensation packages through the use of additional forms of
compensation, or other steps. The inability to attract and retain experienced personnel would have a material adverse effect
on our business.
Our business model depends to a significant extent upon strong referral relationships.
We expect that members of our management team will maintain their relationships with intermediaries, financial
institutions, investment bankers, commercial bankers, financial advisors, attorneys, accountants, consultants and other
individuals within our network, and we will rely to a significant extent upon these relationships to provide us with potential
investment opportunities. If our management team fails to maintain its existing relationships or develop new relationships
with sources of investment opportunities, we will not be able to grow our Investment Portfolio. In addition, individuals
with whom members of our management team have relationships are not obligated to provide us with investment
opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.
Our Board of Directors may change our operating policies and strategies without prior notice or stockholder approval,
the effects of which may be adverse.
Our Board of Directors has the authority to modify or waive our current operating policies, investment criteria and
strategies without prior notice and without stockholder approval. We cannot predict the effect any changes to our current
operating policies, investment criteria and strategies would have on our business, NAV, operating results and value of our
stock. However, the effects might be adverse, which could negatively impact our ability to pay interest and principal
payments to holders of our debt instruments and dividends to our stockholders and cause our investors to lose all or part of
their investment in us.
We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with
respect to the proportion of our assets that may be invested in securities of a single issuer.
We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that
we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single
issuer. Under the 1940 Act, a “diversified” investment company is required to invest at least 75% of the value of its total
assets in cash and cash items, government securities, securities of other investment companies and other securities limited
in respect of any one issuer to an amount not greater than 5% of the value of the total assets of such company and no more
than 10% of the outstanding voting securities of such issuer. As a non-diversified investment company, we are not subject
to this requirement. To the extent that we assume large positions in the securities of a small number of issuers, our NAV
26
Table of contents
may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial
condition or the market’s assessment of the issuer. We may also be more susceptible to any single economic or regulatory
occurrence than a diversified investment company. Beyond our RIC asset diversification requirements, we do not have
fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies. See
Risk Factors — Federal Income Tax Risks — We will be subject to corporate-level U.S. federal income tax if we are unable
to qualify as a RIC under Subchapter M of the Code.
We are subject to risks related to corporate social responsibility.
Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities.
We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as diversity and
inclusion, environmental stewardship, support for local communities, corporate governance and transparency and
considering ESG factors in our investment processes. Adverse incidents with respect to ESG activities could impact the
value of our brand, the cost of our operations and relationships with investors, all of which could adversely affect our
business and results of operations. Additionally, new regulatory initiatives related to ESG could adversely affect our
business.
RISKS RELATED TO OUR INVESTMENTS
The types of portfolio companies in which we invest involve significant risks and we could lose all or part of our
investment.
Investing in the types of companies that comprise our portfolio companies exposes us to a number of significant
risks. Among other things, these companies:
• may have limited financial resources and may be unable to meet their obligations under their debt instruments
that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in
the likelihood of us realizing any guarantees from subsidiaries or affiliates of our portfolio companies that we
may have obtained in connection with our investment, as well as a corresponding decrease in the value of the
equity components of our investments;
• may have shorter operating histories, narrower product lines, smaller market shares and/or significant
customer concentrations than larger businesses, which tend to render them more vulnerable to competitors’
actions and market conditions, as well as general economic downturns;
•
•
•
are more likely to depend on the management talents and efforts of a small group of persons; therefore, the
death, disability, resignation, termination or significant under-performance of one or more of these persons
could have a material adverse impact on our portfolio company and, in turn, on us;
generally have less predictable operating results, may from time to time be parties to litigation, may be
engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may
require substantial additional capital to support their operations, finance expansion or maintain their
competitive position; and
generally have less publicly available information about their businesses, operations and financial condition.
We are required to rely on the ability of our management team and investment professionals to obtain
adequate information to evaluate the potential returns from investing in these companies. If we are unable to
uncover all material information about these companies, we may not make a fully informed investment
decision, and may lose all or part of our investment.
In addition certain of our officers and directors may serve as directors on the boards of our portfolio companies.
To the extent that litigation arises out of our investments in these companies, our officers and directors may be named as
defendants in such litigation, which could result in an expenditure of funds (through our indemnification of such officers
and directors) and the diversion of management time and resources.
27
Table of contents
Economic recessions or downturns could impair our portfolio companies’ performance and defaults by our portfolio
companies will harm our operating results.
Many of our portfolio companies are susceptible to economic slowdowns or recessions and could be unable to
repay our loans during these periods. Therefore, the number of non-performing assets are likely to increase and the value of
our portfolio is likely to decrease during these periods. Adverse economic conditions could decrease the value of collateral
securing any of our loans and the value of any equity investments. A severe recession could further decrease the value of
such collateral and result in losses of value in our portfolio and a decrease in our revenues, net income, assets and net
worth. Economic slowdowns or recessions could lead to financial losses in our portfolio and a decrease in revenues, net
income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital
markets or result in a decision by lenders not to extend credit to us. These events could prevent us from increasing our
investments and harm our operating results.
Any deterioration of general economic conditions could lead to significant declines in corporate earnings or loan
performance, and the ability of corporate borrowers to service their debt, any of which could trigger a period of global
economic slowdown, and have an adverse impact on our performance and financial results, and the value and the liquidity
of our investments. In an economic downturn, we could have non-performing assets or an increase in non-performing
assets, and we would anticipate that the value of our portfolio would decrease during these periods. Failure to satisfy
financial or operating covenants imposed by lenders, including us, to a portfolio company could lead to defaults and,
potentially, acceleration of payments on such loans and foreclosure on the assets representing collateral for the portfolio
company’s obligations. Cross default provisions under other agreements could be triggered and thus limit the portfolio
company’s ability to satisfy its obligations under any debt that we hold and affect the value of any equity securities we
own. We would expect to incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms
with a portfolio company following or in anticipation of a default.
Rising credit spreads could affect the value of our investments, and rising interest rates make it more difficult for
portfolio companies to make periodic payments on their loans.
Some of our portfolio investments are debt securities that bear interest at variable rates and may be negatively
affected by changes in market interest rates. Rising interest rates make it more difficult for borrowers to repay debt, which
could increase the risk of payment defaults and cause the portfolio companies to defer or cancel needed investment. Any
failure of one or more portfolio companies to repay or refinance its debt at or prior to maturity or the inability of one or
more portfolio companies to make ongoing payments following an increase in contractual interest rates could have a
material adverse effect on our business, financial condition, results of operations and cash flows. The value of our
securities could also be reduced from an increase in market credit spreads as rates available to investors could make an
investment in our securities less attractive than alternative investments.
Conversely, decreases in market interest rates could negatively impact the interest income from our variable rate
debt investments while the interest we pay on our fixed rate debt securities does not change. A decrease in market interest
rates may also have an adverse impact on our returns by requiring us to accept lower yields on our debt investments and by
increasing the risk that our portfolio companies will prepay our debt investments, resulting in the need to redeploy capital
at potentially lower rates.
Inflation could adversely affect the business, results of operations and financial condition of our portfolio companies.
Certain of our portfolio companies are in industries that could be impacted by inflation. If such portfolio
companies are unable to pass any increases in their costs of operations along to their customers, it could adversely affect
their operating results and impact their ability to pay dividends on our equity investments and/or interest and principal on
our loans, particularly if interest rates rise in response to inflation. In addition, any projected future decreases in our
portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any
decreases in the fair value of our investments could result in future realized or unrealized losses and therefore reduce our
net increase (decrease) in net assets resulting from operations.
We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest.
Our investments may include original issue discount and contractual PIK interest, which represents contractual
interest added to a loan balance and due at the end of such loan’s term. To the extent original issue discount or PIK interest
28
Table of contents
constitute a portion of our income, we are exposed to typical risks associated with such income being required to be
included in taxable and accounting income prior to receipt of cash, including the following:
•
•
•
•
original issue discount and PIK instruments may have higher yields, which reflect the payment deferral and
credit risk associated with these instruments;
for accounting purposes, cash distributions to investors representing original issue discount income are not
derived from paid in capital, although they may be effectively paid from any offering proceeds during any
given period; thus, although the source for the cash used to pay a distribution of original issue discount
income may come from the cash invested by investors, the 1940 Act does not require that investors be given
notice of this fact;
original issue discount and PIK instruments may have unreliable valuations because their continuing accruals
require continuing judgments about the collectability of the deferred payments and the value of the collateral;
and
original issue discount and PIK instruments may represent a higher credit risk than coupon loans; even if the
conditions for income accrual under generally accepted accounting principles in the United States of America
are satisfied, a borrower could still default when actual payment is due upon the maturity of such loan.
The lack of liquidity in our investments may adversely affect our business.
We generally invest in companies whose securities are not publicly traded and whose securities will be subject to
legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of these
investments may make it difficult for us to sell these investments when desired. In addition, if we are required to liquidate
all or a portion of our portfolio quickly, we may realize significantly less than the value at which we had previously
recorded these investments. As a result, we do not expect to achieve liquidity in our investments in the near-term. Our
investments are usually subject to contractual or legal restrictions on resale or are otherwise illiquid because there is usually
no established trading market for such investments. The illiquidity of most of our investments may make it difficult for us
to dispose of them at a favorable price and, as a result, we may suffer losses.
We may not have the funds or ability to make additional investments in our portfolio companies.
We may not have the funds or ability to make additional investments in our portfolio companies. After our initial
investment in a portfolio company, we may be called upon from time to time to provide additional funds to such company
or have the opportunity to increase our investment through the extension of additional loans, the exercise of a warrant to
purchase equity securities, or the funding of additional equity investments. There is no assurance that we will make, or will
have sufficient funds to make, follow-on investments. Any decisions not to make a follow-on investment or any inability
on our part to make such an investment may have a negative impact on a portfolio company in need of such an investment,
may result in a missed opportunity for us to increase our participation in a successful operation, may reduce our ability to
protect an existing investment or may reduce the expected yield on the investment.
There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could
be subject to lender liability claims.
Our portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or senior to,
the debt in which we invest. By their terms, such debt instruments may entitle the holders to receive payment of interest or
principal on or before the dates on which we are entitled to receive payments with respect to the debt instruments in which
we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company,
holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to
receive payment in full before we receive any distribution. After repaying such senior creditors, such portfolio company
may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt
instruments in which we invest, we would have to share on an equal basis any distributions with other creditors holding
such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio
company.
Even if our investment is structured as a senior-secured loan, principles of equitable subordination, as defined by
existing case law, could lead a bankruptcy court to subordinate all or a portion of our claim to that of other creditors and
29
Table of contents
transfer any lien securing such subordinated claim to the bankruptcy estate. The principles of equitable subordination
defined by case law have generally indicated that a claim may be subordinated only if its holder is guilty of misconduct or
where the senior loan is re-characterized as an equity investment and the senior lender has actually provided significant
managerial assistance to the bankrupt debtor. We may also be subject to lender liability claims for actions taken by us with
respect to a borrower’s business or instances where we exercise control over the borrower. It is possible that we could
become subject to a lender liability claim, including as a result of actions taken in rendering significant managerial
assistance or actions to compel and collect payments from the borrower outside the ordinary course of business.
We generally will not control our portfolio companies.
We do not, and do not expect to, control the decision making in many of our portfolio companies, even though we
may have board representation or board observation rights, and our debt agreements may contain certain restrictive
covenants. As a result, we are subject to the risk that a portfolio company in which we invest will make business decisions
with which we disagree and the management of such company will take risks or otherwise act in ways that do not serve our
interests as debt investors or minority equity holders. Due to the lack of liquidity for our investments in non-traded
companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like or at an
appropriate valuation. As a result, a portfolio company may make decisions that would decrease the value of our portfolio
holdings.
Defaults by our portfolio companies will harm our operating results.
A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead
to non-payment of interest and other defaults and, potentially, termination of its loans and foreclosure on its secured assets,
which could trigger cross-defaults under other agreements and jeopardize a portfolio company’s ability to meet its
obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek
recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a
defaulting portfolio company.
Any unrealized depreciation that we experience in our portfolio may be an indication of future realized losses, which
could reduce our income and gains available for distribution.
As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at the
fair value as determined in accordance with our Valuation Procedures adopted pursuant to Rule 2a-5 under the 1940 Act.
Decreases in the market values or fair values of our investments will be recorded as unrealized depreciation. Any
unrealized depreciation in our portfolio could be an indication of a portfolio company’s inability to meet its repayment
obligations to us with respect to affected loans or a potential impairment of the value of affected equity investments.
This could result in realized losses in the future and ultimately in reductions of our income and gains available for
distribution in future periods.
Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and
reduce our return on equity.
We are subject to the risk that the investments we make in our portfolio companies may be repaid prior to
maturity. When this occurs, we will generally reinvest these proceeds in temporary investments, pending their future
investment in new portfolio companies. These temporary investments will typically have substantially lower yields than the
debt being prepaid and we could experience significant delays in reinvesting these amounts. Any future investment in a
new portfolio company may also be at lower yields than the debt that was repaid. As a result, our results of operations
could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us.
Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market price
of our securities.
30
Table of contents
The interest rates of some of our investments are priced using a spread over LIBOR, which will be phased out in the
future.
LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely
used as a reference for setting the interest rate on loans globally. On July 27, 2017, the U.K Financial Conduct Authority
(“FCA”) announced that it would phase out LIBOR as a benchmark by the end of 2021. As of December 31, 2021, all non-
U.S. dollar LIBOR publications have been phased out. The phase out of a majority of the U.S. dollar publications is
delayed until June 30, 2023. The Alternative Reference Rates Committee (“ARRC”) of the Federal Reserve Bank of New
York previously confirmed that this constitutes a “benchmark transition event” and established “benchmark replacement
dates” in ARRC standard LIBOR transition provisions that exist in many U.S. law contracts using LIBOR. There is
currently no definitive information regarding the future utilization of LIBOR.
The ARRC has identified SOFR as its preferred alternative rate for LIBOR. SOFR is a measure of the cost of
borrowing cash overnight, collateralized by the U.S. Treasury securities, and is based on directly observable U.S. Treasury-
backed repurchase transactions. Although SOFR appears to be the preferred replacement rate for U.S. dollar LIBOR, it is
not possible to predict whether SOFR will attain market traction as a LIBOR replacement tool, and the future of LIBOR is
still uncertain. The effect of any such changes, any establishment of alternative reference rates or any other reforms to
LIBOR or other reference rates that may be enacted in the United States, United Kingdom or elsewhere cannot be predicted
at this time, and it is not possible to predict whether LIBOR will continue to be viewed as an acceptable market benchmark,
what rate or rates may become accepted alternatives to LIBOR, or what the effect of any such changes in views or
alternatives may have on the financial markets for financial instruments based on LIBOR.
To date, nearly all of the agreements with our portfolio companies governing floating rate loans are already
utilizing SOFR or include fallback language providing a mechanism for a new reference interest rate in the event that
LIBOR ceases to exist, and our credit facilities have been amended to utilize SOFR. Factors such as the pace of the
transition to replacement or reformed rates, the specific terms and parameters for and market acceptance of any alternative
reference rate, prices of and the liquidity of trading markets for products based on alternative reference rates, and our
ability to transition and develop appropriate systems and analytics for one or more alternative reference rates could also
have a material adverse effect on our business, financial condition and results of operations. In addition, any further
changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease
in reported LIBOR, which could have a material adverse effect on our business, financial condition and results of
operations.
We may be subject to risks associated with “covenant-lite” loans.
Some of the loans in which we invest may be “covenant-lite” loans, which means the loans contain fewer
maintenance covenants than other loans (in some cases, none) and do not include terms which allow the lender to monitor
the performance of the borrower and declare a default if certain criteria are breached. Generally, “covenant-lite” loans
provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based,
which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by
a deterioration in the borrower’s financial condition. To the extent we invest in covenant-lite loans, we may have fewer
rights against a borrower and may have a greater risk of loss on such investments as compared to investments in loans with
finance maintenance covenants.
We may not realize gains from our equity investments.
Certain investments that we have made in the past and may make in the future include warrants or other equity
securities. Investments in equity securities involve a number of significant risks, including the risk of further dilution as a
result of additional issuances, inability to access additional capital and failure to pay current distributions. Investments in
preferred securities involve special risks, such as the risk of deferred distributions, credit risk, illiquidity and limited voting
rights. In addition, we may from time to time make non-control, equity investments in portfolio companies. Our goal is
ultimately to realize gains upon our disposition of such equity interests. However, the equity interests we receive may not
appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity
interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other
losses we experience. We also may be unable to realize any value if a portfolio company does not have a liquidity event,
such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity
interests. We often seek puts or similar rights to give us the right to sell our equity securities back to the portfolio company
31
Table of contents
issuer; however, we may be unable to exercise these put rights for the consideration provided in our investment documents
if the issuer is in financial distress.
Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.
Our investment strategy contemplates potential investments in debt securities of foreign companies. Investing in
foreign companies may expose us to additional risks not typically associated with investing in securities of U.S. companies.
These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of
foreign taxes, less liquid markets and less available information than is generally the case in the U.S., higher transaction
costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in
enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.
Although most of our investments will be U.S. dollar denominated, any investments denominated in a foreign
currency will be subject to the risk that the value of a particular currency will change in relation to one or more other
currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates,
differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital
appreciation, and political developments.
RISKS RELATED TO LEVERAGE
Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the
risk of investing in us.
Borrowings, also known as leverage, magnify the potential for loss on investments in our indebtedness and gain or
loss on investments in our equity capital. As we use leverage to partially finance our investments, you will experience
increased risks of investing in our securities. Accordingly, any event that adversely affects the value of an investment
would be magnified to the extent we use leverage. Such events could result in a substantial loss to us, which would be
greater than if leverage had not been used. In addition, our investment objectives are dependent on the continued
availability of leverage at attractive relative interest rates.
We may also borrow from banks and other lenders and may issue debt securities or enter into other types of
borrowing arrangements in the future. Lenders of these senior securities will have fixed dollar claims on our assets that are
superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets
in the event of a default. We have the ability to pledge up to 100% of our assets and can grant a security interest in all of
our assets under the terms of any debt instruments we could enter into with lenders. The terms of our existing indebtedness
require us to comply with certain financial and operational covenants, and we expect similar covenants in future debt
instruments. Failure to comply with such covenants could result in a default under the applicable credit facility or debt
instrument if we are unable to obtain a waiver from the applicable lender or holder, and such lender or holder could
accelerate repayment under such indebtedness and negatively affect our business, financial condition, results of operations
and cash flows. In addition, under the terms of any credit facility or other debt instrument we enter into, in the event of a
default, we are likely to be required by its terms to use the net proceeds of any investments that we sell to repay a portion of
the amount borrowed under such facility or instrument before applying such net proceeds to any other uses. See Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital
Resources — Capital Resources for a discussion regarding our outstanding indebtedness.
If the value of our assets decreases, leveraging would cause NAV to decline more sharply than it otherwise would
have had we not leveraged our business. Similarly, any decrease in our income would cause net investment income to
decline more sharply than it would have had we not leveraged our business. Such a decline could negatively affect our
ability to pay common stock dividends, scheduled debt payments or other payments related to our securities.
Illustration: The following table illustrates the effect of leverage on returns from an investment in our common
stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual
returns may be higher or lower than those appearing below.
Assumed Return on Our Portfolio(1) (net of expenses)
Corresponding Net Return to Common Stock Holder(2)
______________________
(10.0) %
(5.0) %
(24.6) %
(14.6) %
0.0 %
(4.6) %
5.0 %
5.5 %
10.0 %
15.5 %
32
Table of contents
(1) Assumes, as of December 31, 2022, $4,241.9 million in total assets, $2,007.0 million in debt outstanding, $2,108.6
million in net assets, and a weighted-average interest rate of 4.8%. Actual interest payments may be different.
(2) In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our
December 31, 2022 total assets of at least 2.3%.
Our ability to achieve our investment objective may depend in part on our ability to access additional leverage on
favorable terms and there can be no assurance that such additional leverage can in fact be achieved. If we are unable to
obtain leverage or if the interest rates of such leverage are not attractive, we could experience diminished returns. The
number of leverage providers and the total amount of financing available could decrease or remain static.
All of our assets are subject to security interests under our senior securities and if we default on our obligations under
our senior securities, we may suffer adverse consequences, including foreclosure on our assets.
Substantially all of our assets are currently pledged as collateral under our senior securities, including any credit
facilities or notes. If we default on our obligations under our senior securities, our lenders may have the right to foreclose
upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claim. In such event,
we may be forced to sell our investments to raise funds to repay our outstanding borrowings in order to avoid foreclosure
and these forced sales may be at times and at prices we would not consider advantageous. Moreover, such deleveraging of
our company could significantly impair our ability to effectively operate our business in the manner in which we have
historically operated. As a result, we could be forced to curtail or cease new investment activities and lower or eliminate
the dividends that we have historically paid to our stockholders. In addition, if the lenders exercise their right to sell the
assets pledged under our senior securities, such sales may be completed at distressed sale prices, thereby diminishing or
potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under the senior
securities.
If our operating performance declines and we are not able to generate sufficient cash flow to service our debt
obligations, we may in the future need to refinance or restructure our debt, sell assets, reduce or delay capital investments,
seek to raise additional capital or seek to obtain waivers from the required lenders under our senior securities to avoid being
in default. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment
obligations under our senior securities. If we breach our covenants under our senior securities and seek a waiver, we may
not be able to obtain a waiver from the required lenders or debt holders. If this occurs, we would be in default under our
senior securities, the lenders or debt holders could exercise their rights as described above, and we could be forced into
bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations could proceed against the
collateral securing the debt. Because certain of our senior securities have customary cross-default provisions, if the
indebtedness under our senior securities is accelerated, we may be unable to repay or finance the amounts due.
We are subject to risks associated with any revolving credit facility that utilizes a Structured Subsidiary as our interests
in any Structured Subsidiary are subordinated and we could be prevented from receiving cash on our equity interests
from a Structured Subsidiary.
We own directly or indirectly 100% of the equity interests in MSCC Funding I, LLC (“MSCC Funding”), a
special purpose Structured Subsidiary utilized in our senior secured special purpose vehicle revolving credit facility (the
“SPV Facility”). We consolidate the financial statements of the MSCC Funding in our consolidated financial statements
and treat the indebtedness under the SPV Facility as our leverage. Our interest in MSCC Funding is subordinated in
priority of payment to every other obligation of MSCC Funding and is subject to certain payment restrictions set forth in
the SPV Facility.
We receive cash from MSCC Funding only to the extent that we receive distributions on our equity interests
therein. MSCC Funding could make distributions on its equity interests only to the extent permitted by the payment priority
provisions of the SPV Facility. The SPV Facility generally provides that payments on the respective interests could not be
made on any payment date unless all amounts owing to the lenders and other secured parties are paid in full. In addition, if
MSCC Funding does not meet the asset coverage tests or the interest coverage test set forth in the agreement governing the
SPV Facility, a default could occur. In the event of a default under the SPV Facility credit agreement, cash would be
diverted from us to pay the applicable lenders and other secured parties in amounts sufficient to cause such tests to be
satisfied. In the event that we fail to receive cash from MSCC Funding, we could be unable to make distributions to our
stockholders in amounts sufficient to maintain our status as a RIC, or at all. We also could be forced to sell investments in
portfolio companies at less than their fair value in order to continue making such distributions. We cannot assure you that
33
Table of contents
distributions on the assets held by MSCC Funding will be sufficient to make any distributions to us or that such
distributions will meet our expectations.
Our equity interest in MSCC Funding ranks behind all of the secured and unsecured creditors, known or unknown,
including the lenders in the SPV Facility. Consequently, to the extent that the value of MSCC Funding’s portfolio of loan
investments has been reduced as a result of conditions in the credit markets, defaulted loans, capital gains and losses on the
underlying assets, prepayment or changes in interest rates, the returns on our investments in MSCC Funding could be
reduced. Accordingly, our investments in MSCC Funding could be subject to up to 100% loss.
The ability to sell investments held by a Structured Subsidiary is limited.
The credit agreement governing the SPV Facility places significant restrictions on our ability, as servicer, to sell
investments. As a result, there could be times or circumstances during which we are unable to sell investments or take other
actions that might be in our best interests.
We may invest in derivatives or other assets that expose us to certain risks, including market risk, liquidity risk and
other risks similar to those associated with the use of leverage.
We may invest in derivatives and other assets that are subject to many of the same types of risks related to the use
of leverage. In October 2020, the SEC adopted Rule 18f-4 under the 1940 Act regarding the ability of a BDC to use
derivatives and other transactions that create future payment or delivery obligations. Under Rule 18f-4, BDCs that use
derivatives are subject to a value-at-risk leverage limit, a derivatives risk management program and testing requirements
and requirements related to board reporting. These requirements apply unless the BDC qualifies as a “limited derivatives
user,” as defined under Rule 18f-4. Under Rule 18f-4, a BDC may enter into an unfunded commitment agreement (which
may include delayed draw and revolving loans) that will not be deemed to be a derivatives transaction, such as an
agreement to provide financing to a portfolio company, if the BDC has, among other things, a reasonable belief, at the time
it enters into such an agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to
all of its unfunded commitment agreements, in each case as it becomes due. Collectively, these requirements may limit our
ability to use derivatives and/or enter into certain other financial contracts.
We have adopted updated policies and procedures in compliance with Rule 18f-4. We expect to qualify as a
“limited derivatives user.” Future legislation or rules may modify how we treat derivatives and other financial
arrangements for purposes of our compliance with the leverage limitations of the 1940 Act. Future legislation or rules, may
modify how leverage is calculated under the 1940 Act and, therefore, may increase or decrease the amount of leverage
currently available to us under the 1940 Act, which may be materially adverse to us and our investors.
RISKS RELATED TO OUR INVESTMENT MANAGEMENT ACTIVITIES
Our executive officers and employees, through the External Investment Manager, may manage other investment funds
that operate in the same or a related line of business as we do, and may invest in such funds, which may result in
significant conflicts of interest.
Our executive officers and employees, through the External Investment Manager, may manage other investment
funds or assets for other clients that operate in the same or a related line of business as we do, and which funds may be
invested in by us and/or our executive officers and employees. Accordingly, they may have obligations to, or pecuniary
interests in, such other entities, and the fulfillment of such obligations may not be in the best interests of us or our
stockholders and may create conflicts of interest.
We have made and, in the future, intend to make co-investments with other funds or clients advised by the
External Investment Manager in accordance with the conditions of an exemptive relief order from the SEC permitting such
co-investment transactions. The order requires, among other things, that we and the External Investment Manager consider
whether each such investment opportunity is appropriate for us and the External Investment Manager’s advised clients and,
if it is appropriate, to propose an allocation of the investment opportunity between such other parties. As a consequence, it
may be more difficult for us to maintain or increase the size of our Investment Portfolio in the future. Although we will
endeavor to allocate investment opportunities in a fair and equitable manner, including in accordance with the conditions
set forth in the order issued by the SEC when relying on such order, we may face conflicts in allocating investment
opportunities between us and other funds and accounts managed by the External Investment Manager. Because the
External Investment Manager may receive performance-based fee compensation from other funds and accounts it manages,
34
Table of contents
this may provide the Company and the External Investment Manager an incentive to allocate opportunities to other funds
and accounts the External Investment Manager manages, instead of us. We and the External Investment Manager have
implemented an allocation policy to ensure the equitable distribution of investment opportunities and, as a result, may be
unable to participate in certain investments based upon such allocation policy.
We, through the External Investment Manager, derive revenues from managing third-party funds pursuant to
management agreements that may be terminated.
The External Investment Manager earns management fees based on the assets of the funds or other clients under
management and may earn incentive fees, or a carried interest, based on the performance of the funds or accounts managed.
The terms of fund investment management agreements generally give the manager of the fund and the fund itself the right
to terminate the management agreement in certain circumstances. With respect to funds that are not exempt from regulation
under the 1940 Act, the fund’s investment management agreement must be approved annually by (a) such fund’s board of
directors or by the vote of a majority of such fund’s stockholders and (b) the majority of the independent members of such
fund’s board of directors and, in certain cases, by its stockholders, as required by law. The funds’ investment management
agreements can also be terminated by the majority of such fund’s stockholders. Termination of any such management
agreements would reduce the fees we earn from the relevant funds or other clients through the External Investment
Manager, which could have a material adverse effect on our results of operations.
RISKS RELATED TO BDCs
Failure to comply with applicable laws or regulations and changes in laws or regulations governing our operations may
adversely affect our business or cause us to alter our business strategy.
We, the Funds, and our portfolio companies are subject to applicable local, state and federal laws and regulations.
Failure to comply with any applicable local, state or federal law or regulation could negatively impact our reputation and
our business results. New legislation may also be enacted or new interpretations, rulings or regulations could be adopted,
including those governing the types of investments we are permitted to make, any of which could harm us and our
stockholders, potentially with retroactive effect. Additionally, any changes to the laws and regulations governing our
operations relating to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new
or different opportunities. Such changes could result in material differences to the strategies and plans set forth herein and
may result in our investment focus shifting from the areas of expertise of our investment team to other types of investments
in which our investment team may have less expertise or little or no experience. Thus, any such changes, if they occur,
could have a material adverse effect on our results of operations and the value of your investment.
Failure to maintain our status as a BDC would reduce our operating flexibility.
If we do not remain a BDC, we might be regulated as a closed-end investment company under the 1940 Act,
which would subject us to substantially more regulatory restrictions under the 1940 Act and correspondingly decrease our
operating flexibility.
Operating under the constraints imposed on us as a BDC and RIC may hinder the achievement of our investment
objectives.
The 1940 Act and the Code impose numerous constraints on the operations of BDCs and RICs that do not apply to
certain of the other investment vehicles that we may compete with. BDCs are required, for example, to invest at least 70%
of their total assets in certain qualifying assets, including U.S. private or thinly traded public companies, cash, cash
equivalents, U.S. government securities and other high-quality debt instruments that mature in one year or less from the
date of investment. Moreover, qualification for taxation as a RIC requires satisfaction of source-of-income, asset
diversification and distribution requirements. Operating under these constraints may hinder our ability to take advantage of
attractive investment opportunities and to achieve our investment objective. Any failure to do so could subject us to
enforcement action by the SEC, cause us to fail to satisfy the requirements associated with RIC status and subject us to
entity-level corporate income taxation, cause us to fail the 70% test described above or otherwise have a material adverse
effect on our business, financial condition or results of operations.
35
Table of contents
Regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional
capital.
Our business will require capital to operate and grow. We may acquire such additional capital from the following
sources:
Senior Securities
We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions,
which we refer to collectively as senior securities. As a result of issuing senior securities, we will be exposed to additional
risks, including the following:
•
•
•
Prior to the approval of our stockholders, under the provisions of the 1940 Act we were permitted, as a BDC,
to issue senior securities only in amounts such that our BDC asset coverage ratio, as defined in the 1940 Act,
equaled at least 200% immediately after each issuance of senior securities. Following the approval of our
stockholders of the reduced asset coverage requirements in Section 61(a)(2) of the 1940 Act and subject to
our compliance with certain disclosure requirements, effective as of May 3, 2022, under the provisions of the
1940 Act, we are permitted to issue senior securities in amounts such that our BDC asset coverage ratio, as
defined in the 1940 Act, equals at least 150% of gross assets less all liabilities and indebtedness not
represented by senior securities, after each issuance of senior securities. If the value of our assets declines, we
may be unable to satisfy this test. If that happens, we will be prohibited from issuing debt securities or
preferred stock and/or borrowing money from banks or other financial institutions and may not be permitted
to declare a dividend or make any distribution to stockholders or repurchase shares until such time as we
satisfy this test.
Any amounts that we use to service our debt or make payments on preferred stock will not be available for
dividends to our common stockholders.
It is likely that any senior securities or other indebtedness we issue will be governed by an indenture or other
instrument containing covenants restricting our operating flexibility. Additionally, some of these securities or
other indebtedness may be rated by rating agencies, and in obtaining a rating for such securities and other
indebtedness, we may be required to abide by operating and investment guidelines that further restrict
operating and financial flexibility.
• We and, indirectly, our stockholders will bear the cost of issuing and servicing such securities and other
indebtedness.
•
•
Preferred stock or any convertible or exchangeable securities that we issue in the future may have rights,
preferences and privileges more favorable than those of our common stock, including separate voting rights
and could delay or prevent a transaction or a change in control to the detriment of the holders of our common
stock.
Any unsecured debt issued by us would generally rank (i) pari passu with our current and future unsecured
indebtedness and effectively subordinated to all of our existing and future secured indebtedness, to the extent
of the value of the assets securing such indebtedness, and (ii) structurally subordinated to all existing and
future indebtedness and other obligations of any of our subsidiaries.
Additional Common Stock
We are not generally able to issue and sell our common stock at a price below NAV per share. We may, however,
sell our common stock, warrants, options or rights to acquire our common stock, at a price below the current NAV of the
common stock if our Board of Directors determines that such sale is in the best interests of our stockholders, and our
stockholders approve such sale. See Risk Factors — Risks Related to our Securities — Stockholders may incur dilution if
we sell shares of our common stock in one or more offerings at prices below the then current NAV per share of our
common stock or issue securities to subscribe to, convert to or purchase shares of our common stock. for a discussion
related to us issuing shares of our common stock below NAV. Our stockholders have authorized us to issue warrants,
options or rights to subscribe for, convert to, or purchase shares of our common stock at a price per share below the NAV
per share, subject to the applicable requirements of the 1940 Act. There is no expiration date on our ability to issue such
36
Table of contents
warrants, options, rights or convertible securities based on this stockholder approval. If we raise additional funds by issuing
more common stock or senior securities convertible into, or exchangeable for, our common stock, the percentage
ownership of our stockholders at that time would decrease, and they may experience dilution. Moreover, we can offer no
assurance that we will be able to issue and sell additional equity securities in the future, on favorable terms or at all.
RISKS RELATED TO OUR SECURITIES
Investing in our securities may involve a high degree of risk.
The investments we make in accordance with our investment objective may result in a higher amount of risk than
alternative investment options and a higher risk of volatility or loss of principal. Our investments in portfolio companies
involve higher levels of risk, and therefore, an investment in our securities may not be suitable for someone with lower risk
tolerance.
Shares of closed-end investment companies, including BDCs, may trade at a discount to their NAV.
Shares of closed-end investment companies, including BDCs, may trade at a discount to NAV. This characteristic
of closed-end investment companies and BDCs is separate and distinct from the risk that our NAV per share may decline.
We cannot predict whether our common stock will trade at, above or below NAV. In addition, if our common stock trades
below our NAV per share, we will generally not be able to issue additional common stock at the market price unless our
stockholders approve such a sale and our Board of Directors makes certain determinations. See Risk Factors — Risks
Related to our Securities — Stockholders may incur dilution if we sell shares of our common stock in one or more offerings
at prices below the then current NAV per share of our common stock or issue securities to subscribe to, convert to or
purchase shares of our common stock. for a discussion related to us issuing shares of our common stock below NAV.
The market price of our securities may be volatile and fluctuate significantly.
Fluctuations in the trading prices of our securities may adversely affect the liquidity of the trading market for our
securities and, if we seek to raise capital through future securities offerings, our ability to raise such capital. The market
price and liquidity of the market for our securities may be significantly affected by numerous factors, some of which are
beyond our control and may not be directly related to our operating performance. These factors include:
•
•
•
•
•
•
•
•
•
•
•
significant volatility in the market price and trading volume of securities of BDCs or other companies in our
sector, which are not necessarily related to the operating performance of these companies;
changes in regulatory policies, accounting pronouncements or tax guidelines;
the exclusion of BDC common stock from certain market indices, such as what happened with respect to the
Russell indices and the Standard and Poor’s indices, could reduce the ability of certain investment funds to
own our common stock and limit the number of owners of our common stock and otherwise negatively
impact the market price of our common stock;
inability to obtain any exemptive relief that may be required by us in the future from the SEC;
loss of our BDC or RIC status or any of the Funds’ status as an SBIC;
changes in our earnings or variations in our operating results;
changes in the value of our portfolio of investments;
any shortfall in our investment income or net investment income or any increase in losses from levels
expected by investors or securities analysts;
loss of a major funding source;
fluctuations in interest rates;
the operating performance of companies comparable to us;
37
Table of contents
•
•
•
•
departure of our key personnel;
proposed, or completed, offerings of our securities, including classes other than our common stock;
global or national credit market changes; and
general economic trends and other external factors.
We may not be able to pay distributions to our stockholders, our distributions may not grow over time, and a portion of
distributions paid to our stockholders may be a return of capital.
We intend to pay distributions to our stockholders out of assets legally available for distribution. We cannot assure
you that we will achieve investment results that will allow us to pay a specified level of cash distributions, previously
projected distributions for future periods, or year-to-year increases in cash distributions. Our ability to pay distributions
might be adversely affected by, among other things, the impact of one or more of the risk factors described herein. In
addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions.
All distributions will be paid at the discretion of our Board of Directors and will depend on our earnings, our financial
condition, maintenance of our RIC status, compliance with applicable BDC regulations, compliance with our debt
covenants and such other factors as our Board of Directors may deem relevant from time to time. We cannot assure you
that we will pay distributions to our stockholders in the future.
When we make distributions, we will be required to determine the extent to which such distributions are paid out
of current or accumulated taxable earnings, recognized capital gains or capital. To the extent there is a return of capital,
investors will be required to reduce their basis in our stock for U.S. federal income tax purposes, which may result in
higher tax liability when the shares are sold, even if they have not increased in value or have lost value. In addition, any
return of capital will be net of any sales load and offering expenses associated with sales of shares of our common stock. In
the future, our distributions may include a return of capital.
Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then
current NAV per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our
common stock.
The 1940 Act prohibits us from selling shares of our common stock at a price below the current NAV per share of
such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below NAV provided
that our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our
common stock below the then current NAV per share of our common stock at our 2022 Annual Meeting of Stockholders,
and have not sought such authorization since 2012, because our common stock price per share had been trading
significantly above the NAV per share of our common stock since 2011. We may, however, seek such authorization at
future annual or special meetings of stockholders. Our stockholders have previously approved a proposal to authorize us to
issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. Any decision
to sell shares of our common stock below the then current NAV per share of our common stock or securities to subscribe
to, convert to, or purchase shares of our common stock would be subject to the determination by our Board of Directors
that such issuance is in our and our stockholders’ best interests.
If we were to sell shares of our common stock below NAV per share, such sales would result in an immediate
dilution to the NAV per share. This dilution would occur as a result of the sale of shares at a price below the then current
NAV per share of our common stock and a proportionately greater decrease in a stockholder’s interest in our earnings and
assets and voting interest in us than the increase in our assets resulting from such issuance. In addition, if we issue
securities to subscribe to, convert to or purchase shares of common stock, the exercise or conversion of such securities
would increase the number of outstanding shares of our common stock. Any such exercise would be dilutive on the voting
power of existing stockholders and could be dilutive with regard to dividends and our NAV, and other economic aspects of
the common stock.
Because the number of shares of common stock that could be so issued and the timing of any issuance is not
currently known, the actual dilutive effect cannot be predicted; however, the example below illustrates the effect of dilution
to existing stockholders resulting from the sale of common stock at prices below the NAV of such shares.
38
Table of contents
Illustration: Example of Dilutive Effect of the Issuance of Shares Below NAV. Assume that Company
XYZ has 1,000,000 total shares outstanding, $15,000,000 in total assets and $5,000,000 in total liabilities. The
NAV per share of the common stock of Company XYZ is $10.00. The following table illustrates the reduction to
NAV and the dilution experienced by Stockholder A following the sale of 40,000 shares of the common stock of
Company XYZ at $9.50 per share, a price below its NAV per share.
Prior to Sale
Below NAV
Following Sale
Below NAV
Percentage
Change
Reduction to NAV
Total Shares Outstanding
NAV per share
Dilution to Existing Stockholder
Shares Held by Stockholder A
Percentage Held by Stockholder A
1,000,000
1,040,000
$
10.00 $
9.98
10,000
1.00 %
10,000 (1)
0.96 %
99,808
4.0 %
(0.2) %
0.0 %
(3.8) %
(0.2) %
Total Interest of Stockholder A in NAV
$
100,000 $
______________________
(1) Assumes that Stockholder A does not purchase additional shares in the sale of shares below NAV.
Provisions of the Maryland General Corporation Law and our articles of incorporation and bylaws could deter takeover
attempts and have an adverse impact on the price of our common stock.
The Maryland General Corporation Law and our articles of incorporation and bylaws contain provisions that may
have the effect of discouraging, delaying or making difficult a change in control of our company or the removal of our
incumbent directors. The existence of these provisions, among others, may have a negative impact on the price of our
common stock and may discourage third-party bids for ownership of our company. These provisions may prevent any
premiums being offered to you for our common stock.
We may in the future determine to issue preferred stock, which could adversely affect the market value of our common
stock.
The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other
economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock
by making an investment in the common stock less attractive. In addition, the dividends on any preferred stock we issue
must be cumulative. Payment of dividends and repayment of the liquidation preference of preferred stock must take
preference over any dividends or other payments to our common stockholders, and holders of preferred stock are not
subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their
stated preference (other than convertible preferred stock that converts into common stock). In addition, under the 1940 Act,
preferred stock constitutes a “senior security” for purposes of the asset coverage test.
RISKS RELATED TO OUR SBIC FUNDS
We, through the Funds, issue debt securities guaranteed by the SBA and sold in the capital markets. As a result of its
guarantee of the debt securities, the SBA has fixed dollar claims on the assets of the Funds that are superior to the
claims of our securities holders.
We, through the Funds, have outstanding SBIC debentures guaranteed by the SBA. The debentures guaranteed by
the SBA have a maturity of ten years from the date of issuance and require semiannual payments of interest. We will need
to generate sufficient cash flow to make required interest payments on the debentures. If we are unable to meet the
financial obligations under the debentures, the SBA, as a creditor, will have a superior claim to the assets of the Funds over
our securities holders in the event we liquidate or the SBA exercises its remedies under such debentures as the result of a
default by us.
The Funds are licensed by the SBA, and therefore subject to SBIC regulations.
The Funds, our wholly-owned subsidiaries, are licensed to act as SBICs and are regulated by the SBA. The SBA
also places certain limitations on the financing terms of investments by SBICs in portfolio companies and prohibits SBICs
39
Table of contents
from providing funds for certain purposes or to businesses in a few prohibited industries. Compliance with SBA
requirements may cause the Funds to forego attractive investment opportunities that are not permitted under SBIC
regulations.
Further, the SBIC regulations require, among other things, that a licensed SBIC be periodically examined by the
SBA and audited by an independent auditor, in each case to determine the SBIC’s compliance with the relevant SBIC
regulations. The SBA prohibits, without prior SBA approval, a “change of control” of an SBIC or transfers that would
result in any person (or a group of persons acting in concert) owning 10% or more of a class of capital stock of a licensed
SBIC. If the Funds fail to comply with applicable SBIC regulations, the SBA could, depending on the severity of the
violation, limit or prohibit their use of SBIC debentures, declare outstanding SBIC debentures immediately due and
payable, and/or limit them from making new investments. In addition, the SBA can revoke or suspend a license for willful
or repeated violation of, or willful or repeated failure to observe, any provision of the Small Business Investment Act of
1958 or any rule or regulation promulgated thereunder. Such actions by the SBA would, in turn, negatively affect us.
Each of the Funds, as an SBIC, may be unable to make distributions to us that will enable us to meet or maintain RIC
status, which could result in the imposition of an entity-level tax.
In order for us to continue to qualify for RIC tax treatment and to minimize corporate-level U.S. federal taxes, we
will be required to distribute substantially all of our net ordinary taxable income and net capital gain income, including
taxable income from certain of our subsidiaries, which includes the income from the Funds. We will be partially dependent
on the Funds for cash distributions to enable us to meet the RIC distribution requirements. The Funds may be limited by
SBIC regulations from making certain distributions to us that may be necessary to enable us to maintain our status as a
RIC. We may have to request a waiver of the SBA’s restrictions for the Funds to make certain distributions to maintain our
eligibility for RIC status. We cannot assure you that the SBA will grant such waiver and if the Funds are unable to obtain a
waiver, compliance with the SBIC regulations may result in loss of RIC tax treatment and a consequent imposition of an
entity-level tax on us.
FEDERAL INCOME TAX RISKS
We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M
of the Code.
To maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source
and asset diversification requirements:
•
•
•
The Annual Distribution Requirement for a RIC will be satisfied if we distribute to our stockholders on an
annual basis at least 90% of our net ordinary taxable income and realized net short-term capital gains in
excess of realized net long-term capital losses, if any. Depending on the level of taxable income earned in a
tax year, we may choose to carry forward taxable income in excess of current year distributions into the next
tax year and pay a 4% U.S. federal excise tax on such income. Any such carryover taxable income must be
distributed through a dividend declared prior to filing the final tax return related to the year which generated
such taxable income. For more information regarding tax treatment, see Business — Regulation — Taxation
as a Regulated Investment Company. Because we use debt financing, we are subject to certain asset coverage
ratio requirements under the 1940 Act and are (and may in the future become) subject to certain financial
covenants under loan and credit agreements that could, under certain circumstances, restrict us from making
distributions necessary to satisfy the distribution requirement. In addition, because we receive non-cash
sources of income such as PIK interest which involves us recognizing taxable income without receiving the
cash representing such income, we may have difficulty meeting the distribution requirement. If we are unable
to obtain cash from other sources, we could fail to qualify for RIC tax treatment and thus become subject to
corporate-level U.S. federal income tax.
The source-of-income requirement will be satisfied if we obtain at least 90% of our gross income for each
year from distributions, interest, gains from the sale of stock or securities or similar sources.
The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at
the end of each quarter of our taxable year. To satisfy this requirement, at least 50% of the value of our assets
must consist of cash, cash equivalents, U.S. government securities, securities of other RICs, and other
acceptable securities; and no more than 25% of the value of our assets can be invested in the securities, other
40
Table of contents
than U.S. government securities or securities of other RICs, (i) of one issuer, (ii) of two or more issuers that
are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar
or related trades or businesses or (iii) of certain “qualified publicly traded partnerships.”
Failure to meet these requirements may result in our having to dispose of certain investments quickly in order to
prevent the loss of RIC status. Because most of our investments are in privately held companies, and therefore illiquid, any
such dispositions could be made at disadvantageous prices and could result in substantial losses. Moreover, if we fail to
maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could
substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.
We may have difficulty paying the distributions required to maintain RIC tax treatment under the Code if we recognize
income before or without receiving cash representing such income.
We will include in income certain amounts that we have not yet received in cash, such as: (i) amortization of
original issue discount, which may arise if we receive warrants in connection with the origination of a loan such that
ascribing a value to the warrants creates original issue discount in the debt instrument, if we invest in a debt investment at a
discount to the par value of the debt security or possibly in other circumstances; (ii) contractual payment-in-kind, or PIK,
interest, which represents contractual interest added to the loan balance and due at the end of the loan term; (iii) contractual
preferred dividends, which represents contractual dividends added to the preferred stock and due at the end of the preferred
stock term, subject to adequate profitability at the portfolio company; or (iv) amortization of market discount, which is
associated with loans purchased in the secondary market at a discount to par value. Such amortization of original issue
discounts, increases in loan balances as a result of contractual PIK arrangements, cumulative preferred dividends, or
amortization of market discount will be included in income before we receive the corresponding cash payments. We also
may be required to include in income certain other amounts before we receive such amounts in cash. Investments
structured with these features may represent a higher level of credit risk compared to investments generating income which
must be paid in cash on a current basis.
Since, in certain cases, we may recognize taxable income before or without receiving cash representing such
income, we may have difficulty meeting the Annual Distribution Requirement necessary to maintain RIC tax treatment
under the Code. Accordingly, we may have to sell some of our investments at times and/or at prices we would not consider
advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not
able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-
level U.S. federal income tax. For additional discussion regarding the tax implications of a RIC, please see Business —
Regulation — Taxation as a Regulated Investment Company.
We may in the future choose to pay dividends in our own stock, in which case you may be required to pay tax in excess
of the cash you receive.
We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of
the Code and the Treasury regulations, distributions payable by us in cash or in shares of stock (at the stockholders’
election) would satisfy the Annual Distribution Requirement. Taxable stockholders receiving such dividends will be
required to include the full amount of the dividend as ordinary income (or as long-term capital gain to the extent such
dividend is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits
for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such
dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this
tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the
market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to
withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in
stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes
owed on dividends, it may put downward pressure on the trading price of our stock.
Stockholders may have current tax liability on dividends they elect to reinvest in our common stock but would not
receive cash from such dividends to pay such tax liability.
If stockholders participate in our dividend reinvestment plan, they will be deemed to have received, and for
federal income tax purposes will be taxed on, the amount reinvested in our common stock to the extent the amount
reinvested was not a tax-free return of capital. As a result, unless a stockholder is a tax-exempt entity, it may have to use
41
Table of contents
funds from other sources to pay its tax liability on the value of the dividend that they have elected to have reinvested in our
common stock.
Legislative or regulatory tax changes could adversely affect our stockholders.
At any time, the federal income tax laws governing RICs or the administrative interpretations of those laws or
regulations may be amended. Any new laws, regulations or interpretations may take effect retroactively and could
adversely affect the taxation of us or our stockholders. Therefore, changes in tax laws, regulations or administrative
interpretations or any amendments thereto could diminish the value of an investment in our shares or the value or the resale
potential of our investments. If we do not comply with applicable laws and regulations, we could lose any licenses that we
then hold for the conduct of our business and may be subject to civil fines and criminal penalties.
GENERAL RISK FACTORS
Events outside of our control, including public health crises, supply chain disruptions and inflation, could negatively
affect our portfolio companies and the results of our operations.
Periods of market volatility could occur in response to pandemics or other events outside of our control. We and
the portfolio companies in which we invest in could be affected by force majeure events (i.e., events beyond the control of
the party claiming that the event has occurred, such as acts of God, fire, flood, earthquakes, outbreaks of an infectious
disease, pandemic or any other serious public health concern, war, terrorism, labor strikes, major plant breakdowns,
pipeline or electricity line ruptures, failure of technology, defective design and construction, accidents, demographic
changes, government macroeconomic policies, social instability, etc.). Some force majeure events could adversely affect
the ability of a party (including us, a portfolio company or a counterparty to us) to perform its obligations until it is able to
remedy the force majeure event. In addition, force majeure events, such as the cessation of the operation of equipment for
repair or upgrade, could similarly lead to the unavailability of essential equipment and technologies. These risks could,
among other effects, adversely impact the cash flows available from a portfolio company, cause personal injury or loss of
life, including to an officer, director or a member of our investment team, damage property, or instigate disruptions of
service. In addition, the cost to a portfolio company or us of repairing or replacing damaged assets resulting from such
force majeure event could be considerable.
It will not be possible to insure against all such events, and insurance proceeds received, if any, could be
inadequate to completely or even partially cover any loss of revenues or investments, any increases in operating and
maintenance expenses, or any replacements or rehabilitation of property. Certain events causing catastrophic loss could be
either uninsurable, or insurable at such high rates as to adversely impact us or portfolio companies, as applicable. Force
majeure events that are incapable of or are too costly to cure could have permanent adverse effects. Certain force majeure
events (such as war or an outbreak of an infectious disease) could have a broader negative impact on the world economy
and international business activity generally, or in any of the countries in which we invest or our portfolio companies
operate specifically. Such force majeure events could result in or coincide with: increased volatility in the global securities,
derivatives and currency markets; a decrease in the reliability of market prices and difficulty in valuing assets; greater
fluctuations in currency exchange rates; increased risk of default (by both government and private issuers); further social,
economic, and political instability; nationalization of private enterprise; greater governmental involvement in the economy
or in social factors that impact the economy; less governmental regulation and supervision of the securities markets and
market participants and decreased monitoring of the markets by governments or self-regulatory organizations and reduced
enforcement of regulations; limited, or limitations on, the activities of investors in such markets; controls or restrictions on
foreign investment, capital controls and limitations on repatriation of invested capital; inability to purchase and sell
investments or otherwise settle security or derivative transactions (i.e., a market freeze); unavailability of currency hedging
techniques; substantial, and in some periods extremely high, rates of inflation, which can last many years and have
substantial negative effects on credit and securities markets as well as the economy as a whole; recessions; and difficulties
in obtaining and/or enforcing legal judgments.
We are currently operating in a period of capital markets disruption and economic uncertainty, and capital markets may
experience periods of disruption and instability in the future. These market conditions may materially and adversely
affect debt and equity capital markets in the United States and abroad, which may have a negative impact on our
business and operations.
The success of our activities is affected by general economic and market conditions, including, among others,
interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, and trade barriers. These factors
42
Table of contents
could affect the level and volatility of securities prices and the liquidity of our investments. Volatility or illiquidity could
impair our profitability or result in losses. These factors also could adversely affect the availability or cost of our leverage,
which would result in lower returns.
These disruptions in the capital markets have increased the spread between the yields realized on risk-free and
higher risk securities, resulting in illiquidity in parts of the capital markets. Such disruptions could adversely affect our
business, financial condition, results of operations and cash flows, and future market disruptions and/or illiquidity could
negatively impact us. These unfavorable economic conditions could increase our funding costs and limit our access to the
capital markets, and could result in a decision by lenders not to extend credit to us in the future. These events could limit
our investments, our ability to grow and could negatively impact our operating results and the fair values of our debt and
equity investments.
Government intervention in the credit markets could adversely affect our business.
The central banks and, in particular, the U.S. Federal Reserve, have taken unprecedented steps since the financial
crises of 2008-2009 and the COVID-19 global pandemic and in response to inflationary pressures. It is impossible to
predict if, how, and to what extent the United States and other governments would further intervene in the credit markets.
Such intervention is often prompted by politically sensitive issues involving family homes, student loans, real estate
speculation, credit card receivables, pandemics, etc., and could, as a result, be contrary to what we would predict from an
“economically rational” perspective.
On the other hand, recent governmental intervention could mean that the willingness of governmental bodies to
take additional extraordinary action is diminished. As a result, in the event of near-term major market disruptions, like
those caused by the COVID-19 pandemic, there might be only limited additional government intervention, resulting in
correspondingly greater market dislocation and materially greater market risk.
We may experience fluctuations in our operating results.
We could experience fluctuations in our operating results due to a number of factors, including our ability or
inability to make investments in companies that meet our investment criteria, the interest rate payable on the debt securities
we acquire, the level of portfolio dividend and fee income, the level of our expenses, variations in and the timing of the
recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and
general economic conditions. As a result of these factors, operating results for any period should not be relied upon as
being indicative of performance in future periods.
Technological innovations and industry disruptions may negatively impact us.
Technological innovations have disrupted traditional approaches in multiple industries and can permit younger
companies to achieve success and in the process disrupt markets and market practices. We can provide no assurance that
new businesses and approaches will not be created that would compete with us and/or our portfolio companies or alter the
market practices in which we have been designed to function within and on which we depend on for our investment return.
New approaches could damage our investments, disrupt the market in which we operate and subject us to increased
competition, which could materially and adversely affect our business, financial condition and results of investments.
We are highly dependent on information systems and systems failures could significantly disrupt our business, which
may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.
Our business is highly dependent on our and third parties’ communications and information systems. Any failure
or interruption of those systems, including as a result of the termination of an agreement with any third-party service
providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or
other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number
of factors including events that are wholly or partially beyond our control and adversely affect our business. There could
be:
•
•
sudden electrical or telecommunications outages;
natural disasters such as earthquakes, tornadoes and hurricanes;
43
Table of contents
•
•
•
disease pandemics;
events arising from local or larger scale political or social matters, including terrorist acts; and
cyber attacks, including software viruses, ransomware, malware and phishing and vishing schemes.
The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems
and management continuity planning could impair our ability to conduct business effectively.
The occurrence of a disaster such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack
or war, events unanticipated in our disaster recovery systems, or a support failure from external providers, could have an
adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if
those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. If a
significant number of our managers were unavailable in the event of a disaster, our ability to effectively conduct our
business could be severely compromised.
We depend heavily upon computer systems to perform necessary business functions. Despite our implementation
of a variety of security measures, our computer systems could be subject to cyber-attacks and unauthorized access, such as
physical and electronic break-ins or unauthorized tampering. Like other companies, we may experience threats to our data
and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or
more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed
and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or
malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs,
regulatory penalties and/or customer dissatisfaction or loss.
Third parties with which we do business (including, but not limited to, service providers, such as accountants,
custodians, transfer agents and administrators, and the issuers of securities in which we invest) may also be sources or
targets of cyber security or other technological risks. While we engage in actions to reduce our exposure resulting from
outsourcing, we cannot control the cyber security plans and systems put in place by these third parties and ongoing threats
may result in unauthorized access, loss, exposure or destruction of data, or other cybersecurity incidents, with increased
costs and other consequences, including those described above. Privacy and information security laws and regulation
changes, and compliance with those changes, may also result in cost increases due to system changes and the development
of new administrative processes.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
We do not own any real estate or other physical properties materially important to our operations. Currently, we
lease office space in Houston, Texas for our corporate headquarters.
Item 3. Legal Proceedings
We may, from time to time, be involved in litigation arising out of our operations in the normal course of business
or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio
companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not
expect any current matters will materially affect our financial condition or results of operations; however, there can be no
assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of
operations in any future reporting period.
Item 4. Mine Safety Disclosures
Not applicable.
44
Table of contents
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
COMMON STOCK AND HOLDERS
Our common stock is traded on the NYSE under the symbol “MAIN.”
The following table sets forth, for the periods indicated, the range of high and low closing prices of our common
stock as reported on the NYSE, and the sales price as a percentage of the NAV per share of our common stock.
Year ending December 31, 2023
First Quarter (through February 23,
2023)
Year ended December 31, 2022
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Year ended December 31, 2021
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Price Range
Premium of
High Sales
Price to
Premium of
Low Sales
Price to
NAV(1)
High
Low
NAV(2)
NAV(2)
* $
40.28 $
36.87
*
*
$
26.86 $
39.50 $
25.94
25.37
25.89
45.28
43.65
44.88
$
25.29 $
46.61 $
24.27
23.42
22.65
42.81
43.41
39.56
32.57
33.23
34.59
39.94
41.35
40.20
38.14
31.35
47 %
75 %
72 %
73 %
84 %
76 %
85 %
75 %
21 %
28 %
36 %
54 %
64 %
66 %
63 %
38 %
______________________
* NAV has not yet been determined for the first quarter of 2023.
(1) NAV 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 closing prices. The net asset values shown are based on outstanding shares at the end of each
period.
(2) Calculated for each quarter as (i) NAV subtracted from the respective high or low share price divided by (ii) NAV.
On February 23, 2023, the last sale price of our common stock on the NYSE was $40.19 per share, and there were
381 holders of record of the common stock which did not include stockholders for whom shares are held in “nominee” or
“street name.” The NAV per share of our common stock on December 31, 2022 was $26.86, and the premium of the
February 23, 2023 closing price of our common stock was 50% to this NAV per share.
Shares of BDCs 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 from NAV per share or at premiums that are
unsustainable over the long term are separate and distinct from the risk that our NAV per share will decrease. It is not
possible to predict whether our common stock will trade at, above, or below NAV per share. Since our IPO in October
2007, our shares of common stock have traded at prices both less than and exceeding our NAV per share.
45
Table of contents
DIVIDEND/DISTRIBUTION POLICY
We currently intend to distribute dividends or make distributions to our stockholders out of assets legally available
for distribution. Our dividends and other distributions, if any, will be determined by our Board of Directors from time to
time. Our ability to declare dividends depends on our earnings, our overall financial condition (including our liquidity
position), maintenance of our RIC status and such other factors as our Board of Directors may deem relevant from time to
time. When we make distributions, we are required to determine the extent to which such distributions are paid out of
current or accumulated earnings, recognized capital gains or capital. To the extent there is a return of capital (a distribution
of the stockholders’ invested capital), investors will be required to reduce their basis in our stock for federal tax purposes.
In the future, our distributions may include a return of capital.
We have adopted a dividend reinvestment and direct stock purchase plan (the “Plan”). The dividend reinvestment
feature of the Plan (the “DRIP”) provides for the reinvestment of dividends on behalf of our stockholders, unless a
stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our stockholders who have
not “opted out” of the DRIP by the dividend record date will have their cash dividend automatically reinvested into
additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of
new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly
issued shares will be valued based upon the final closing price of MSCC’s common stock on a valuation date determined
for each dividend by our Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be
valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any
associated brokerage or other costs. Our DRIP is administered by our transfer agent on behalf of our record holders and
participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in our DRIP
but may provide a similar dividend reinvestment plan for their clients.
SALES OF UNREGISTERED SECURITIES
During the year ended December 31, 2022, we issued a total of 625,196 shares of our common stock under the
DRIP. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended. The
aggregate value of the shares of our common stock issued under the DRIP during 2022 was $24.1 million.
PURCHASES OF EQUITY SECURITIES
Upon vesting of restricted stock awarded pursuant to our employee equity compensation plan, shares may be
withheld to meet applicable tax withholding requirements. Any withheld shares are treated as common stock purchases by
the Company in our consolidated financial statements as they reduce the number of shares received by employees upon
vesting (see “Purchase of vested stock for employee payroll tax withholding” in the consolidated statements of changes in
net assets for share amounts withheld).
46
Table of contents
STOCK PERFORMANCE GRAPH
The following graph compares the stockholder return on our common stock from October 5, 2007 to
December 31, 2022 with the S&P 500 Index, the Russell 2000 Index, the KBW Regional Bank Index and the S&P BDC
Index. This comparison assumes $100.00 was invested on October 5, 2007 (the date our common stock began to trade in
connection with our initial public offering) in our common stock and in the comparison groups and assumes the
reinvestment of all cash dividends prior to any tax effect. The comparisons in the graph below are based on historical data
and are not intended to forecast the possible future performance of our common stock.
COMPARISON OF STOCKHOLDER RETURN(1)
Among Main Street Capital Corporation, the S&P 500 Index, the Russell 2000 Index, the KBW
Regional Bank Index, the Main Street Peer Group(2)(3) and the S&P BDC Index(3)
(For the Period October 5, 2007 to December 31, 2022)
TOTAL RETURN PERFORMANCE SINCE IPO
______________________
(1) Total return includes reinvestment of dividends through December 31, 2022.
(2) The Main Street Peer Group is composed of Ares Capital Corporation, Barings BDC Inc., Bain Capital Specialty
Finance Inc., Blackrock Capital Investment Corp., Crescent Capital BDC Inc., Carlyle Secured Lending Inc., Capital
Southwest Corporation, Fidus Investment Corp., FS KKR Capital Corp., Gladstone Investment Corporation, Golub
Capital BDC Inc., Gladstone Capital Corporation, Goldman Sachs BDC Inc., Horizon Technology Finance Corp.,
Hercules Capital Inc., MidCap Financial Investment Corp., Monroe Capital Corp., New Mountain Finance Corp.,
Oaktree Specialty Lending Corp., OFS Capital Corp., Owl Rock Capital Corp., PennantPark Floating Rate Capital
Ltd., PennantPark Investment Corp., Prospect Capital Corporation, Portman Ridge Finance Corp., Saratoga Investment
Corp., Stellus Capital Investment Corp., SLR Investment Corp., BlackRock TCP Capital Corp, Triplepoint Venture
Growth BDC Corp., Sixth Street Specialty Lending Inc. and White Horse Finance Inc.
(3) Beginning with the Form 10-K for our fiscal year ending December 31, 2023, the Main Street Peer Group will be
removed from the comparison graph above and replaced by the S&P BDC Index, which we believe is a better
representation of performance among our peers.
47
Table of contents
Item 6. [Reserved.]
48
Table of contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our consolidated financial statements and the notes
thereto included elsewhere in this Annual Report on Form 10-K.
Statements we make in the following discussion which express a belief, expectation or intention, as well as those
that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our
actual results, performance or achievements, or industry results, could differ materially from those we express in the
following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the
headings “Cautionary Statement Concerning Forward-Looking Statements” and “Risk Factors” in Part I of this report.
INVESTMENT PORTFOLIO SUMMARY
The following tables provide a summary of our investments in the LMM, Private Loan and Middle Market
portfolios as of December 31, 2022 and 2021 (this information excludes Other Portfolio investments, short-term portfolio
investments and the External Investment Manager which are discussed further below):
As of December 31, 2022
LMM (a)
Private Loan
Middle Market
Number of portfolio companies
Fair value
Cost
Debt investments as a % of portfolio (at cost)
Equity investments as a % of portfolio (at cost)
% of debt investments at cost secured by first priority lien
Weighted-average annual effective yield (b)
(dollars in millions)
78
85
$
$
2,060.5
1,719.9
$
$
1,471.5
1,500.3
$
$
73.7 %
26.3 %
99.1 %
12.3 %
97.1 %
2.9 %
99.6 %
11.6 %
Average EBITDA (c)
$
8.0
$
38.1
$
31
329.1
401.7
93.8 %
6.2 %
98.8 %
11.0 %
68.7
______________________
(a) At December 31, 2022, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted
equity ownership in those portfolio companies was 41%.
(b) The weighted-average annual effective yields were computed using the effective interest rates for all debt investments
at cost as of December 31, 2022, including amortization of deferred debt origination fees and accretion of original
issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-
accrual status. The weighted-average annual effective yield on our debt portfolio as of December 31, 2022 including
debt investments on non-accrual status was 11.6% for our LMM portfolio, 11.2% for our Private Loan portfolio and
10.3% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an
investor in shares of our common stock will realize on its investment because it does not reflect changes in the market
value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales load paid by an
investor.
(c) The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the
Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three
LMM portfolio companies and two Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric
for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real
estate.
49
Table of contents
Number of portfolio companies
Fair value
Cost
As of December 31, 2021
LMM (a)
Private Loan
Middle Market
(dollars in millions)
73
75
36
$
$
1,716.4
1,455.7
$
$
1,141.8
1,157.5
$
$
395.2
440.9
Debt investments as a % of portfolio (at cost)
Equity investments as a % of portfolio (at cost)
% of debt investments at cost secured by first priority lien
Weighted-average annual effective yield (b)
70.9 %
29.1 %
99.0 %
11.2 %
95.7 %
4.3 %
98.7 %
8.2 %
Average EBITDA (c)
$
6.2
$
41.3
$
93.3 %
6.7 %
98.7 %
7.5 %
76.0
______________________
(a) At December 31, 2021, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted
equity ownership in those portfolio companies was 40%.
(b) The weighted-average annual effective yields were computed using the effective interest rates for all debt investments
at cost as of December 31, 2021, including amortization of deferred debt origination fees and accretion of original
issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-
accrual status. The weighted-average annual effective yield on our debt portfolio as of December 31, 2021 including
debt investments on non-accrual status was 10.6% for our LMM portfolio, 8.0% for our Private Loan portfolio and
6.9% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an
investor in shares of our common stock will realize on its investment because it does not reflect changes in the market
value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales load paid by an
investor.
(c) The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the
Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three
LMM portfolio companies, three Private Loan portfolio companies and one Middle Market portfolio company, as
EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio
companies whose primary purpose is to own real estate.
For the years ended December 31, 2022 and 2021, we achieved a total return on investments of 11.1% and 16.6%,
respectively. Total return on investments is calculated using the interest, dividend, and fee income, as well as the realized
and unrealized change in fair value of the Investment Portfolio for the specified period. Our total return on investments is
not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect
changes in the market value of our stock, our utilization of debt capital in our capital structure, our expenses or any sales
load paid by an investor.
As of December 31, 2022, we had Other Portfolio investments in 14 companies, collectively totaling $116.3
million in fair value and $120.4 million in cost basis and which comprised 2.8% and 3.2% of our Investment Portfolio at
fair value and cost, respectively. As of December 31, 2021, we had Other Portfolio investments in 13 companies,
collectively totaling $166.1 million in fair value and $173.7 million in cost basis and which comprised 4.7% and 5.3% of
our Investment Portfolio at fair value and cost, respectively.
As previously discussed, the External Investment Manager is a wholly-owned subsidiary that is treated as a
portfolio investment. As of December 31, 2022, this investment had a fair value of $122.9 million and a cost basis of $29.5
million, which comprised 3.0% and 0.8% of our Investment Portfolio at fair value and cost, respectively. As of
December 31, 2021, this investment had a fair value of $140.4 million and a cost basis of $29.5 million, which comprised
3.9% and 0.9% of our Investment Portfolio at fair value and cost, respectively.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in conformity with generally accepted accounting
principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, and contingent assets and liabilities at the date of the financial statements, and revenues and expenses
during the periods reported. Actual results could materially differ from those estimates. Critical accounting policies are
50
Table of contents
those that require management to make subjective or complex judgments about the effect of matters that are inherently
uncertain and may change in subsequent periods. Changes that may be required in the underlying assumptions or estimates
in these areas could have a material impact on our current and future financial condition and results of operations.
Management has discussed the development and selection of each critical accounting policy and estimate with the
Audit Committee of the Board of Directors. Our critical accounting policies and estimates include the Investment Portfolio
Valuation and Revenue Recognition policies described below. Our significant accounting policies are described in greater
detail in Note B — Summary of Significant Accounting Policies to the consolidated financial statements included in Item 8.
Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Investment Portfolio Valuation
The most significant determination inherent in the preparation of our consolidated financial statements is the
valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We consider this
determination to be a critical accounting estimate, given the significant judgments and subjective measurements required.
As of both December 31, 2022 and 2021, our Investment Portfolio valued at fair value represented 97% of our total assets.
We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value
Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair
value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure
requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the
principal market to independent market participants, which may be a hypothetical market. Market participants are defined
as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See
Note B.1. — Valuation of the Investment Portfolio included in Item 8. Consolidated Financial Statements and
Supplementary Data of this Annual Report on Form 10-K for a detailed discussion of our Investment Portfolio valuation
process and procedures.
Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment
Portfolio may differ materially from the values that would have been determined had a ready market for the securities
existed. In addition, changes in the market environment, portfolio company performance and other events that may occur
over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially
different than the valuations currently assigned. We determine the fair value of each individual investment and record
changes in fair value as unrealized appreciation or depreciation.
In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to
designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment
portfolio, subject to the active oversight of the board. Our Board of Directors has approved policies and procedures
pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of our executive officers to serve as the
Board of Directors’ valuation designee. We believe our Investment Portfolio as of December 31, 2022 and 2021
approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on
those reporting dates.
Revenue Recognition
Interest and Dividend Income
We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected.
Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the
portfolio company to make a distribution. In accordance with our valuation policies, we evaluate accrued interest and
dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we
otherwise do not expect the debtor to be able to service its debt obligation, we will generally place the loan or debt security
on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has
demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves
regarding the debtor’s ability to service the debt obligation, or if a loan or debt security is sold or written off, we remove it
from non-accrual status.
Fee Income
We may periodically provide services, including structuring and advisory services to our portfolio companies or
other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is
51
Table of contents
recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in
connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees
and are deferred and accreted into income over the life of the financing.
Payment-in-Kind (“PIK”) Interest and Cumulative Dividends
We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and
cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is
periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this
interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income,
and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these
dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax
treatment (as discussed in Note B.9. — Summary of Significant Accounting Policies — Income Taxes included in Item 8.
Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K), these non-cash sources
of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the
PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any
accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears
are no longer collectible. For the years ended December 31, 2022, 2021 and 2020 (i) 1.4%, 2.6% and 2.8%, respectively, of
our total investment income was attributable to PIK interest income not paid currently in cash and (ii) 0.5%, 0.6% and
0.8%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in
cash.
INVESTMENT PORTFOLIO COMPOSITION
The following tables summarize the composition of our total combined LMM, Private Loan and Middle Market
portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM, Private Loan
and Middle Market portfolio investments as of December 31, 2022 and 2021 (this information excludes Other Portfolio
investments, short-term portfolio investments and the External Investment Manager).
Cost:
First lien debt
Equity
Second lien debt
Equity warrants
Other
Fair Value:
First lien debt
Equity
Second lien debt
Equity warrants
Other
December 31, 2022
December 31, 2021
85.0 %
14.2
0.3
0.2
0.3
82.5 %
16.2
0.6
0.3
0.4
100.0 %
100.0 %
December 31, 2022
December 31, 2021
75.2 %
24.1
0.3
0.1
0.3
74.3 %
24.6
0.5
0.2
0.4
100.0 %
100.0 %
Our LMM, Private Loan and Middle Market portfolio investments carry a number of risks including: (1) investing
in companies which may have limited operating histories and financial resources; (2) holding investments that generally are
not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to
investing in below investment-grade debt and equity investments in our Investment Portfolio. Please see Item 1A. Risk
Factors — Risks Related to our Investments contained in this Annual Report on Form 10-K for a more complete discussion
of the risks involved with investing in our Investment Portfolio.
52
Table of contents
PORTFOLIO ASSET QUALITY
We utilize an internally developed investment rating system to rate the performance of each LMM, Private Loan
and Middle Market portfolio company and to monitor our expected level of returns on each of our LMM, Private Loan and
Middle Market investments in relation to our expectations for the portfolio company. The investment rating system takes
into consideration various factors, including each investment’s expected level of returns, the collectability of our debt
investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors
and other industry participants, the portfolio company’s future outlook and other factors that are deemed to be significant to
the portfolio company.
As of December 31, 2022, our total Investment Portfolio had 12 investments on non-accrual status, which
comprised 0.6% of its fair value and 3.7% of its cost. As of December 31, 2021, our total Investment Portfolio had nine
investments on non-accrual status, which comprised 0.7% of its fair value and 3.3% of its cost.
The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the
United States economy. In periods during which the United States economy contracts, it is likely that the financial results
of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from
current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in
defaults on our debt investments or in realized losses on our investments and to difficulty in maintaining historical dividend
payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the
performance of certain portfolio companies will not be negatively impacted by future economic cycles or other conditions,
which could also have a negative impact on our future results.
53
Table of contents
DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Set forth below is a comparison of the results of operations and changes in financial condition for the years ended
December 31, 2022 and 2021. The comparison of, and changes between, the fiscal years ended December 31, 2021 and
2020 can be found within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations included in Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which is
incorporated herein by reference.
Comparison of the years ended December 31, 2022 and 2021
Total investment income
Total expenses
Net investment income
Net realized gain (loss) from investments
Net unrealized appreciation from investments
Income tax provision
Year Ended
December 31,
Net Change
2022
2021
Amount
%
$
376,860 $
289,047 $
87,813
(dollars in thousands)
(131,533)
(106,382)
(25,151)
245,327
(5,212)
24,816
182,665
45,336
135,624
62,662
(50,548)
(110,808)
(23,325)
(32,863)
9,538
30 %
24 %
34 %
NM
NM
NM
Net increase in net assets resulting from operations
$
241,606 $
330,762 $
(89,156)
(27) %
Net investment income
Share-based compensation expense
Deferred compensation expense (benefit)
Distributable net investment income (a)
Net investment income per share—Basic and diluted
Distributable net investment income per share—Basic and
diluted (a)
______________________
NM — Net Change % not meaningful
Year Ended
December 31,
Net Change
2022
2021
Amount
%
(dollars in thousands, except per share amounts)
$
245,327 $
182,665 $
62,662
13,629
(1,434)
10,887
1,190
2,742
(2,624)
257,522 $
194,742 $
62,780
3.29 $
2.65 $
0.64
3.46 $
2.82 $
0.64
$
$
$
34 %
25 %
NM
32 %
24 %
23 %
(a) Distributable net investment income is net investment income as determined in accordance with U.S. GAAP,
excluding the impacts of share-based compensation expense and deferred compensation expense or benefit. We
believe presenting distributable net investment income and the related per share amounts is useful and appropriate
supplemental disclosure for analyzing our financial performance since share-based compensation does not require
settlement in cash and deferred compensation expense or benefit does not result in a net cash impact to Main Street
upon settlement. However, distributable net investment income is a non-U.S. GAAP measure and should not be
considered as a replacement for net investment income or other earnings measures presented in accordance with U.S.
GAAP and should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial
performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment
income is detailed in the table above.
54
Table of contents
Investment Income
Total investment income for the year ended December 31, 2022 was $376.9 million, a 30% increase from the
$289.0 million of total investment income for the prior year. The following table provides a summary of the changes in the
comparable period activity.
Interest income
Dividend income
Fee income
Year Ended
December 31,
Net Change
2022
2021
Amount
%
(dollars in thousands)
$
284,746 $
193,667 $
91,079
76,375
15,739
81,153
14,227
(4,778)
1,512
Total investment income
$
376,860 $
289,047 $
87,813
47 % (a)
(6) % (b)
11 % (c)
30 % (d)
______________________
(a) The increase in interest income was primarily due to (i) higher average levels of Investment Portfolio debt investments
and (ii) higher floating interest rates on Investment Portfolio debt investments based upon the increase in the market
index rates for these floating rate investments, which are primarily London Interbank Offered Rate (“LIBOR”) and the
Secured Overnight Financing Rate (“SOFR”). These increases were partially offset by a $1.2 million decrease in
accelerated, prepayment, repricing and other activity related to certain Investment Portfolio debt investments.
(b) The decrease in dividend income from Investment Portfolio equity investments was primarily a result of an $11.3
million decrease in dividend income considered to be less consistent or non-recurring, partially offset by increased
dividend income from certain of our portfolio companies resulting from the improved operating results, financial
condition and liquidity positions.
(c) The increase in fee income was primarily related to (i) a $0.6 million increase related to higher originations of
Investment Portfolio investments, as discussed above, and (ii) a $0.9 million increase from refinancing and
prepayment of debt investments.
(d) The increase in total investment income includes a net reduction of $12.5 million in the impact of certain income
considered less consistent or non-recurring, including (i) an $11.3 million decrease in dividend income and (ii) a $1.2
million decrease in accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt
investments.
Expenses
Total expenses for the year ended December 31, 2022 were $131.5 million, a 24% increase from $106.4 million in
the prior year. The following table provides a summary of the changes in the comparable period activity.
Year Ended
December 31,
Net Change
2022
2021
Amount
%
(dollars in thousands)
Cash compensation
$
37,977 $
33,002 $
Deferred compensation plan expense (benefit)
Compensation
General and administrative
Interest
Share-based compensation
Gross expenses
(1,434)
36,543
16,050
78,276
13,629
1,440
34,442
12,494
58,836
10,887
144,498
116,659
Expenses allocated to the External Investment Manager
(12,965)
(10,277)
Total expenses
$
131,533 $
106,382 $
4,975
(2,874)
2,101
3,556
19,440
2,742
27,839
(2,688)
25,151
15 % (a)
(200) % (b)
6 %
28 %
33 % (c)
25 %
24 %
26 %
24 %
______________________
(a) The increase in cash compensation expense was primarily related to increased base compensation rates, incentive
compensation accruals and headcount.
55
Table of contents
(b) The change in the non-cash deferred compensation plan expense (benefit) was due to the reduction to compensation
expense resulting from a decrease in the fair value of deferred compensation plan assets and corresponding liabilities
during 2022 compared to an increase in such fair values in 2021.
(c) The increase in interest expense was primarily related to increased borrowings to support our investment activity,
including borrowings under our Credit Facilities (as defined in Liquidity and Capital Resources below) and an
aggregate of $100.0 million in principal amount of our December 2025 Notes issued in December 2022 (as defined in
Liquidity and Capital Resources below), partially offset by the repayment of $185.0 million in principal amount of our
December 2022 Notes (as defined in Liquidity and Capital Resources below).
Net Investment Income
Net investment income for the year ended December 31, 2022 increased 34% to $245.3 million, or $3.29 per
share, compared to net investment income of $182.7 million, or $2.65 per share, in 2021. The increase in net investment
income was principally attributable to the increase in total investment income, partially offset by higher operating
expenses, both as discussed above. The increase in net investment income per share reflects these changes and the impact
of the increase in weighted average shares outstanding for the year ended December 31, 2022, primarily due to (i) shares
issued through our public offering in August 2022 and our at-the-market equity program (the “ATM Program”), (ii) shares
issued through our equity incentive plans and (iii) shares issued through our dividend reinvestment plan. The increase in
net investment income on a per share basis includes (i) a $0.18 per share decrease in investment income considered less
consistent or non-recurring, partially offset by a decrease in deferred compensation expense of $0.04 per share resulting
from the comparable period difference in the fair value of deferred compensation plan assets and corresponding liabilities,
both of which are discussed above.
Distributable Net Investment Income
Distributable net investment income for the year ended December 31, 2022 increased 32% to $257.5 million, or
$3.46 per share, compared with $194.7 million, or $2.82 per share, in 2021. The increase in distributable net investment
income was primarily due to the increased level of total investment income, partially offset by higher operating expenses,
excluding the impact of share-based compensation expense and deferred compensation expense (benefit), both as discussed
above. The increase in distributable net investment income per share reflects the net impact of the increase in weighted
average shares outstanding for the year ended December 31, 2022, primarily due to (i) shares issued through our public
offering in August 2022 and our ATM Program, (ii) shares issued through our equity incentive plans and (iii) shares issued
through our dividend reinvestment plan. The increase in distributable net investment income on a per share basis includes a
$0.18 per share decrease in investment income considered less consistent or non-recurring, as discussed above.
Net Realized Gain (Loss)
The following table provides a summary of the primary components of the total net realized loss on investments of
$5.2 million for the year ended December 31, 2022:
Year Ended December 31, 2022
Full Exits
Partial Exits
Restructures
Other (a)
Total
Net Gain/
(Loss)
# of
Investments
Net Gain/
(Loss)
# of
Investments
Net Gain/
(Loss)
# of
Investments
Net Gain/
(Loss)
Net Gain/
(Loss)
LMM portfolio
Private Loan portfolio
$ —
10,415
Middle Market portfolio
(6,265)
Other Portfolio
Short-term portfolio
—
—
Total net realized gain (loss) $ 4,150
— $ 1,219
4
3
—
—
— 3,119
—
—
7 $ 4,338
(dollars in thousands)
1 $ (5,822)
—
(8,395)
—
2
—
—
—
—
1 $
(774) $ (5,377)
2
—
—
—
313
2,333
59
(6,206)
875
3,994
44
44
3 $ (14,217)
3 $
517 $ (5,212)
(a) Other activity includes realized gains and losses from transactions involving 17 portfolio companies which are not
considered to be significant individually or in the aggregate.
56
Table of contents
The following table provides a summary of the primary components of the total net realized gain on investments
of $45.3 million for the year ended December 31, 2021:
Year Ended December 31, 2021
Full Exits
Partial Exits
Restructures
Other (a)
Total
Net Gain/
(Loss)
# of
Investments
Net Gain/
(Loss)
# of
Investments
Net Gain/
(Loss)
# of
Investments
Net Gain/
(Loss)
Net Gain/
(Loss)
(dollars in thousands)
LMM portfolio
Private Loan portfolio
Middle Market portfolio
Other Portfolio
Short-term portfolio
$ 51,019
5,547
(3,749)
(4,449)
—
Total net realized gain (loss)
$ 48,368
7 $ —
2
—
3 6,153
1 5,920
—
—
13 $ 12,073
— $ (10,925)
—
—
1
(4,528)
4
—
—
—
1 $
(493) $ 39,601
—
1
—
—
45
5,592
464
(1,660)
351
1,822
(19)
(19)
5 $ (15,453)
2 $
348 $ 45,336
(a) Other activity includes realized gains and losses from transactions involving 27 portfolio companies which are not
considered to be significant individually or in the aggregate.
Net Unrealized Appreciation (Depreciation)
The following table provides a summary of the total net unrealized appreciation of $24.8 million for the year
ended December 31, 2022:
Year Ended December 31, 2022
LMM (a)
Private
Loan
Middle
Market
Other
Total
(dollars in thousands)
Accounting reversals of net unrealized (appreciation)
depreciation recognized in prior periods due to net
realized (gains / income) losses recognized during
the current period
Net unrealized appreciation (depreciation) relating to
portfolio investments
Total net unrealized appreciation (depreciation)
relating to portfolio investments
$
6,055 $
(2,008) $
4,966 $
(3,702)
$
5,311
$ 73,840 $ (10,545) $ (31,836) $ (11,955) (b) $ 19,505
$ 79,895 $ (12,553) $ (26,870) $ (15,657)
$ 24,816
______________________
(a)
Includes unrealized appreciation on 38 LMM portfolio investments and unrealized depreciation on 28 LMM portfolio
investments.
(b) Other includes (i) $17.5 million of unrealized depreciation relating to the External Investment Manager and (ii) $1.7
million of net unrealized depreciation relating to the assets of the deferred compensation plan, partially offset by $7.2
million of net unrealized appreciation relating to the Other Portfolio.
57
Table of contents
The following table provides a summary of the total net unrealized appreciation of $135.6 million for the year
ended December 31, 2021:
Year Ended December 31, 2021
LMM (a)
Private
Loan
Middle
Market
Other
Total
(dollars in thousands)
Accounting reversals of net unrealized
(appreciation) depreciation recognized in prior
periods due to net realized (gains / income) losses
recognized during the current period
Net unrealized appreciation (depreciation) relating to
portfolio investments
Total net unrealized appreciation (depreciation)
relating to portfolio investments
$ (27,451) $
(3,698) $
1,501 $
4,181
$ (25,467)
107,187
17,153
(3,679)
40,430 (b)
161,091
$ 79,736 $ 13,455 $
(2,178) $ 44,611
$ 135,624
______________________
(a)
Includes unrealized appreciation on 43 LMM portfolio investments and unrealized depreciation on 23 LMM portfolio
investments.
(b) Includes (i) $23.7 million of unrealized appreciation relating to the External Investment Manager and (ii) $16.3 million
of net unrealized appreciation relating to the Other Portfolio.
Income Tax Benefit (Provision)
The income tax provision for the year ended December 31, 2022 of $23.3 million principally consisted of (i) a
deferred tax provision of $18.1 million, which is primarily the result of the net activity relating to our portfolio investments
held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/
depreciation and other temporary book-tax differences, and (ii) a current tax provision of $5.2 million related to a $2.8
million provision for excise tax on our estimated undistributed taxable income and a $2.4 million provision for current U.S.
federal and state income taxes.
The income tax provision for the year ended December 31, 2021 of $32.9 million principally consisted of (i) a
deferred tax provision of $27.1 million and (ii) a current tax provision of $5.7 million primarily related to a $3.1 million
provision for current U.S. federal and state income taxes and a $2.6 million provision for excise tax on our estimated
undistributed taxable income.
Net Increase in Net Assets Resulting from Operations
The net increase in net assets resulting from operations for the year ended December 31, 2022 was $241.6 million,
or $3.24 per share, compared with $330.8 million, or $4.80 per share, during the year ended December 31, 2021. The tables
above provide a summary of the reasons for the change in net assets resulting from operations for the year ended
December 31, 2022 as compared to the year ended December 31, 2021.
58
Table of contents
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
For the year ended December 31, 2022, we realized a net increase in cash and cash equivalents of $16.5 million,
which is the result of $246.9 million of cash used in our operating activities and $263.4 million of cash provided by our
financing activities.
The $246.9 million of cash used in our operating activities resulted primarily from (i) cash uses totaling $1,152.6
million for the funding of new and follow-on portfolio company investments and settlement of accruals for portfolio
investments existing as of December 31, 2021 and (ii) cash payments of $14.2 million related to changes in other assets
and liabilities, partially offset by (i) cash proceeds totaling $680.0 million from the sales and repayments of debt
investments and sales of and return on capital from equity investments and (ii) cash flows that we generated from the
operating profits earned totaling $239.9 million, which is our distributable net investment income, excluding the non-cash
effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization
expense for deferred financing costs.
The $263.4 million of cash provided by our financing activities principally consisted of (i) $287.0 million in net
proceeds from our multi-year corporate-level revolving credit facility (the “Corporate Facility”) and the SPV Facility
(together, the “Credit Facilities”), (ii) $265.6 million in net cash proceeds from equity offerings from our ATM Program
and Equity Offering (both as described below) and direct stock purchase plan and (iii) $100.0 million in proceeds from the
initial issuance of the December 2025 Notes (as defined below), partially offset by (i) $194.2 million in cash dividends paid
to stockholders, (ii) $185.0 million for the redemption of the December 2022 Notes (as defined below), (iii) $5.1 million
for payments of deferred debt issuance costs, SBIC debenture fees and other costs, net of debt issuance premiums, and (iv)
$4.9 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements upon the
vesting of such restricted stock.
For the year ended December 31, 2021, we experienced a net increase in cash and cash equivalents in the amount
of $0.7 million, which is the net result of $515.4 million of cash used in our operating activities and $516.1 million of cash
provided by our financing activities.
The $515.4 million of cash used in our operating activities resulted primarily from cash uses totaling $1,763.8
million for the funding of new and follow-on portfolio company investments and settlement of accruals for portfolio
investments existing as of December 31, 2020, partially offset by (i) cash proceeds totaling $1,054.5 million from the sales
and repayments of debt investments and sales of and return on capital from equity investments, (ii) cash flows generated
from the operating profits earned totaling $171.7 million, which is our distributable net investment income, excluding the
non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the
amortization expense for deferred financing costs, and (iii) cash proceeds of $22.2 million related to changes in other assets
and liabilities.
The $516.1 million of cash provided by our financing activities principally consisted of (i) $500.0 million in
proceeds from the initial and follow-on issuance of the July 2026 Notes (as defined below), (ii) $98.9 million in net cash
proceeds from our ATM Program (described below) and direct stock purchase plan, (iii) $80.2 million in cash proceeds
from the issuance of SBIC debentures and (iv) $51.0 million in net proceeds from the Corporate Facility, partially offset by
(i) $160.5 million in cash dividends paid to stockholders, (ii) $40.0 million in repayment of SBIC debentures, (iii) $8.2
million for debt issuance premiums, net of payments of deferred debt issuance costs, SBIC debenture fees and other costs,
and (iv) $5.3 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements
upon the vesting of such restricted stock.
Capital Resources
As of December 31, 2022, we had $49.1 million in cash and cash equivalents and $568.0 million of unused
capacity under the Credit Facilities which we maintain to support our investment and operating activities. As of
December 31, 2022, our NAV totaled $2,108.6 million, or $26.86 per share.
As of December 31, 2022, we had $407.0 million outstanding and $513.0 million of undrawn commitments under
the Corporate Facility, and $200.0 million outstanding and $55.0 million of undrawn commitments under our SPV Facility,
both of which we estimated approximated fair value. Availability under the Credit Facilities are both subject to certain
59
Table of contents
borrowing base limitations, various covenants, reporting requirements and other customary requirements for similar credit
facilities. For further information on our Credit Facilities, including key terms and financial covenants, refer to Note E —
Debt included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Through the Funds, we have the ability to issue SBIC debentures guaranteed by the SBA at favorable interest rates
and favorable terms and conditions. Under existing SBIC regulations, SBA-approved SBICs under common control have
the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Under
existing SBA-approved commitments, we had $350.0 million of outstanding SBIC debentures guaranteed by the SBA as of
December 31, 2022 through our wholly-owned SBICs, which bear a weighted-average annual fixed interest rate of 2.9%,
paid semiannually, and mature ten years from issuance. The first maturity related to our SBIC debentures occurs in March
2023, and the weighted-average remaining duration is 5.1 years as of December 31, 2022. Debentures guaranteed by the
SBA have fixed interest rates that equal prevailing 10-year Treasury Note rates plus a market spread and have a maturity of
ten years with interest payable semiannually. The principal amount of the debentures is not required to be paid before
maturity, but may be pre-paid at any time with no prepayment penalty. We expect to maintain SBIC debentures under the
SBIC program in the future, subject to periodic repayments and borrowings, in an amount up to the regulatory maximum
amount for affiliated SBIC funds.
In November 2017, we issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due
December 1, 2022 (the “December 2022 Notes”). In December 2022, we repaid the entire principal amount of the
outstanding December 2022 Notes. The outstanding aggregate principal amount of the December 2022 Notes was $185.0
million as of December 31, 2021.
In April 2019, we issued $250.0 million in aggregate principal amount of 5.20% unsecured notes due May 1, 2024
(the “May 2024 Notes”). In December 2019 and July 2020, we issued an additional $75.0 million and $125.0 million,
respectively, in aggregate principal amount of the May 2024 Notes. The outstanding aggregate principal amount of the
May 2024 Notes was $450.0 million as of both December 31, 2022 and December 31, 2021.
In January 2021, we issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due July 14,
2026 (the “July 2026 Notes”). In October 2021, we issued an additional $200.0 million in aggregate principal amount of
the July 2026 Notes. The outstanding aggregate principal amount of the July 2026 Notes was $500.0 million as of both
December 31, 2022 and December 31, 2021.
In December 2022, we issued $100.0 million in aggregate principal amount of 7.84% Series A unsecured notes
due December 23, 2025 (the “December 2025 Notes”), all of which remained outstanding as of December 31, 2022.
We maintain a program with certain selling agents through which we can sell shares of our common stock by
means of at-the-market offerings from time to time (the “ATM Program”).
During the year ended December 31, 2022, we sold 5,407,382 shares of our common stock at a weighted-average
price of $39.29 per share and raised $212.4 million of gross proceeds under the ATM Program. Net proceeds were $209.9
million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2022, sales
transactions representing 43,217 shares had not settled and are not included in shares issued and outstanding on the face of
the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated
Statements of Operations and in the shares used to calculate the NAV per share. In March 2022, we entered into new
distribution agreements to sell up to 15,000,000 shares through the ATM Program. As of December 31, 2022, 10,462,684
shares remained available for sale under the ATM Program.
In August 2022, we completed a public equity offering (the “Equity Offering”) of 1,345,500 shares of common
stock at a public offering price of $42.85 per share, including the underwriters’ full exercise of their option to purchase
175,500 additional shares, resulting in total net proceeds, including exercise of the underwriters’ option to purchase
additional shares and after deducting underwriting discounts and estimated offering expenses payable by us, of
approximately $55.1 million.
During the year ended December 31, 2021, we sold 2,332,795 shares of our common stock at a weighted-average
price of $42.71 per share and raised $99.6 million of gross proceeds under the ATM Program. Net proceeds were $98.4
million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2021, sales
transactions representing 36,136 shares had not settled and are not included in shares issued and outstanding on the face of
the Consolidated Balance Sheets but are included in the weighted average shares outstanding in the Consolidated
Statements of Operations and in the shares used to calculate the NAV per share.
60
Table of contents
We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents,
cash flows generated through our ongoing operating activities, utilization of available borrowings under our Credit
Facilities, and a combination of future issuances of debt and equity capital. Our primary uses of funds will be investments
in portfolio companies, operating expenses, cash distributions to holders of our common stock and repayments of note and
debenture obligations as they come due.
We periodically invest excess cash balances into marketable securities and idle funds investments. The primary
investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess
cash balances prior to utilizing those funds for investment in our LMM, Private Loan and Middle Market portfolio
investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated
debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and
equity investments. We may also invest in short-term portfolio investments that are atypical of our LMM, Private Loan and
Middle Market portfolio investments in that they are intended to be a short-term deployment of capital and are more liquid
than investments within the other portfolios. Short-term portfolio investments consist primarily of investments in secured
debt investments and independently rated debt investments.
If our common stock trades below our NAV per share, we will generally not be able to issue additional common
stock at the market price, unless our stockholders approve such a sale and our Board of Directors makes certain
determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current NAV
per share of our common stock at our 2022 Annual Meeting of Stockholders, and have not sought such authorization since
2012, because our common stock price per share has generally traded significantly above the NAV per share of our
common stock since 2011. We would therefore need future approval from our stockholders to issue shares below the then
current NAV per share.
In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after
consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income
from one tax year into the next tax year, substantially all of our taxable income.
In addition, as a BDC, we generally are required to meet a coverage ratio, or BDC asset coverage ratio, of total
assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least
200% (or 150% if certain requirements are met). In January 2008, we received an exemptive order from the SEC to
exclude SBA-guaranteed debt securities issued by the Funds and any other wholly-owned subsidiaries of ours which
operate as SBICs from the BDC asset coverage ratio which, in turn, enables us to fund more investments with debt capital.
In May 2022, our stockholders also approved the application of the reduced BDC asset coverage ratio. As a result, the BDC
asset coverage ratio applicable to us decreased from 200% to 150% effective May 3, 2022. As of December 31, 2022, our
BDC asset coverage ratio was 227%.
Although we have been able to secure access to additional liquidity, including through the Credit Facilities, public
and private debt issuances, leverage available through the SBIC program and equity offerings, there is no assurance that
debt or equity capital will be available to us in the future on favorable terms, or at all.
Recently Issued or Adopted Accounting Standards
From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that
are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are
not yet effective will not have a material impact on our consolidated financial statements upon adoption. For a description
of recently issued or adopted accounting standards, see Note B.13. — Recently Issued or Adopted Accounting Standards
included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Inflation
Inflation has not historically had a significant effect on our results of operations in any of the reporting periods
presented herein. However, our portfolio companies have experienced, specifically including over the last few years, as a
result of recent geopolitical events, supply chain and labor issues, and may continue to experience, the increasing impacts
of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third-party
services and required energy consumption. These issues and challenges related to inflation are receiving significant
attention from our investment teams and the management teams of our portfolio companies as we work to manage these
growing challenges. Prolonged or more severe impacts of inflation to our portfolio companies could continue to impact
61
Table of contents
their operating profits and, thereby, increase their borrowing costs, and as a result negatively impact their ability to service
their debt obligations and/or reduce their available cash for distributions. In addition, these factors could have a negative
impact on the fair value of our investments in these portfolio companies. The combined impacts of these impacts in turn
could negatively affect our results of operations.
Off-Balance Sheet Arrangements
We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet
the financial needs of our portfolio companies. These instruments include commitments to extend credit and fund equity
capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the
Consolidated Balance Sheets. At December 31, 2022, we had a total of $274.4 million in outstanding commitments
comprised of (i) 83 investments with commitments to fund revolving loans that had not been fully drawn or term loans
with additional commitments not yet funded and (ii) ten investments with equity capital commitments that had not been
fully called.
Contractual Obligations
As of December 31, 2022, the future fixed commitments for cash payments in connection with our SBIC
debentures, the May 2024 Notes, the July 2026 Notes, the December 2025 Notes, and rent obligations under our office
lease for each of the next five years and thereafter are as follows (dollars in thousands):
July 2026 Notes
Interest due on July 2026
Notes
May 2024 Notes
Interest due on May 2024
Notes
SBIC debentures
Interest due on SBIC
debentures
December 2025 Notes
Interest due on December
2025 Notes
Operating Lease Obligation
(1)
2023
2024
2025
2026
2027
Thereafter
Total
$
— $
— $
— $ 500,000 $
— $
— $ 500,000
15,017
15,000
15,000
15,000
—
450,000
11,700
63,800
—
—
—
—
—
—
—
—
—
—
—
—
75,000
195,200
8,455
7,228
7,228
6,512
9,053
—
100,000
7,840
7,840
7,753
—
—
—
—
—
—
23,400
16,000
9,960
—
60,017
450,000
35,100
350,000
48,436
100,000
23,433
389
1,020
1,115
1,135
1,155
7,673
12,487
Total
$ 72,606 $ 557,815 $ 131,096 $ 523,363 $ 82,667 $ 211,926 $ 1,579,473
______________________
(1) Operating Lease Obligation means a rent payment obligation under a lease classified as an operating lease and
disclosed pursuant to ASC 842, as may be modified or supplemented.
As of December 31, 2022, we had $407.0 million in borrowings outstanding under our Corporate Facility, and the
Corporate Facility is scheduled to mature in August 2027. As of December 31, 2022, we had $200.0 million in borrowings
outstanding under our SPV Facility, and the SPV Facility is scheduled to mature in November 2027.
Related Party Transactions and Agreements
We have entered into agreements and transactions with the External Investment Manager, MSC Income and the
Private Loan Fund, whereby we have made debt and equity investments and receive certain fees, expense reimbursements
and investment income. See Note D — External Investment Manager and Note L — Related Party Transactions included in
Item 8. Consolidated Financial Statements and Supplementary Data of this Annual Report on Form 10-K for additional
information regarding these related party transactions and agreements.
In addition, we have a deferred compensation plan, whereby non-employee directors and certain key employees
may defer receipt of some or all of their cash compensation and directors’ fees, subject to certain limitations. See Note L —
62
Table of contents
Related Party Transactions included in Item 8. Consolidated Financial Statements and Supplementary Data of this Annual
Report on Form 10-K for additional information regarding the deferred compensation plan.
Recent Developments
In January 2023, we expanded our total commitments under the Corporate Facility from $920.0 million to $980.0
million. The recent increase in total commitments was executed under the accordion feature of the Corporate Facility which
allows for an increase up to $1.4 billion in total commitments under the facility from new and existing lenders on the same
terms and conditions as the existing commitments.
In February 2023, we entered into a first supplement to the Master Note Purchase Agreement dated December 23,
2022, governing the issuance of $50.0 million in aggregate principal amount of 7.53% Series B unsecured notes (the
“December 2025 Follow-On Notes”) to qualified institutional investors in a private placement. The December 2025
Follow-On Notes were issued on February 2, 2023 and will mature on December 23, 2025 unless redeemed, purchased or
prepaid prior to such date by us or our affiliates in accordance with their terms. Interest on the December 2025 Follow-On
Notes will be due semiannually on June 23 and December 23. In addition, we are obligated to offer to repay the December
2025 Follow-On Notes at par plus accrued and unpaid interest if certain change in control events occur. The December
2025 Follow-On Notes are general unsecured obligations of ours that rank pari passu with all of our outstanding and future
unsecured unsubordinated indebtedness.
In February 2023, we declared a supplemental cash dividend of $0.175 per share payable in March 2023. This
supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared of
$0.225 per share for each of January, February and March 2023, or total regular monthly cash dividends of $0.675 per
share for the first quarter of 2023.
In February 2023, we declared regular monthly dividends of $0.225 per share for each of April, May and June of
2023. These regular monthly dividends equal a total of $0.675 per share for the second quarter of 2023, representing a
4.7% increase from the regular monthly dividends paid in the second quarter of 2022. Including the regular monthly and
supplemental dividends declared for the first and second quarters of 2023 we will have paid $36.645 per share in
cumulative dividends since our October 2007 initial public offering.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are subject to financial market risks, including changes in interest rates, and changes in interest rates may
affect both our interest expense on the debt outstanding under our Credit Facilities and our interest income from portfolio
investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate
policies and limits and to continually monitor these risks. Our investment income will be affected by changes in various
interest rate indices, including LIBOR, SOFR and Prime rates, to the extent that any debt investments include floating
interest rates. See Risk Factors—Risks Related to our Investments — The interest rates of some of our investments are
priced using a spread over LIBOR, which will be phased out in the future., Risk Factors — Risks Related to our Business
and Structure — We are subject to risks associated with the interest rate environment and changes in interest rates will
affect our cost of capital, net investment income and the value of our investments. and Risk Factors — Risks Related to
Leverage — Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may
increase the risk of investing in us. included in Item 1A. Risk Factors of this Annual Report on Form 10-K for more
information regarding risks associated with our debt investments and borrowings that utilize LIBOR, SOFR or Prime as a
reference rate.
The majority of our debt investments are made with either fixed interest rates or floating rates that are subject to
contractual minimum interest rates for the term of the investment. As of December 31, 2022, 73% of our debt Investment
Portfolio (at cost) bore interest at floating rates, 92% of which were subject to contractual minimum interest rates. As of
December 31, 2022, 70% of our debt obligations bore interest at fixed rates. Our interest expense will be affected by
changes in the published SOFR rate in connection with our Credit Facilities; however, the interest rates on our outstanding
SBIC debentures, May 2024 Notes, July 2026 Notes and December 2025 Notes which collectively comprise the majority
of our outstanding debt, are fixed for the life of such debt. As of December 31, 2022, we had not entered into any interest
rate hedging arrangements. Due to our limited use of derivatives, we have claimed an exclusion from the definition of the
term “commodity pool operator” under the Commodity Exchange Act and, therefore, are not subject to registration or
regulation as a pool operator under such Act. The Company intends to operate as a “limited derivatives user” under Rule
18f-4 under the 1940 Act.
63
Table of contents
The following table shows the approximate annualized increase or decrease in the components of net investment
income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as
of December 31, 2022.
Basis Point Change
(200)
(175)
(150)
(125)
(100)
(75)
(50)
(25)
25
50
75
100
125
150
175
200
Increase
(Decrease)
in Interest
Income
(Increase)
Decrease
in Interest
Expense
Increase
(Decrease) in Net
Investment
Income
Increase
(Decrease) in Net
Investment
Income per
Share
(dollars in thousands, except per share amounts)
$
(46,771) $
12,747 $
(34,024) $
(41,022)
(35,273)
(29,524)
(23,775)
(18,026)
(12,277)
(6,528)
4,992
10,720
16,469
22,218
27,967
33,716
39,465
45,214
11,230
9,712
8,195
6,677
5,160
3,642
2,125
(911)
(2,428)
(3,946)
(5,463)
(6,981)
(8,498)
(10,016)
(11,533)
(29,792)
(25,561)
(21,329)
(17,098)
(12,866)
(8,635)
(4,403)
4,081
8,292
12,523
16,755
20,986
25,218
29,449
33,681
(0.43)
(0.38)
(0.33)
(0.27)
(0.22)
(0.16)
(0.11)
(0.06)
0.05
0.11
0.16
0.21
0.27
0.32
0.38
0.43
Although we believe that this analysis is indicative of the impact of interest rate changes to our Net Investment
Income as of December 31, 2022, the analysis does not take into consideration future changes in the credit market, credit
quality or other business or economic developments that could affect our Net Investment Income. Accordingly, we can
offer no assurances that actual results would not differ materially from the analysis above. The hypothetical results assume
that all LIBOR, SOFR and Prime rate changes would be effective on the first day of the period. However, the contractual
LIBOR, SOFR and Prime rate reset dates would vary throughout the period. The majority of our investments are based on
contracts which reset quarterly, while our Credit Facilities reset monthly. The hypothetical results would also be impacted
by the changes in the amount of debt outstanding under our Credit Facilities (with an increase (decrease) in the debt
outstanding under the Credit Facilities resulting in an (increase) decrease in the hypothetical interest expense).
64
Table of Contents
Item 8. Consolidated Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248)
Consolidated Balance Sheets—As of December 31, 2022 and December 31, 2021
Consolidated Statements of Operations—For the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Net Assets—For the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Cash Flows— For the years ended December 31, 2022, 2021 and 2020
Consolidated Schedule of Investments—December 31, 2022
Consolidated Schedule of Investments—December 31, 2021
Notes to Consolidated Financial Statements
Consolidated Schedules of Investments in and Advances to Affiliates— For the years ended December 31,
2022 and 2021
66
69
70
71
72
73
105
131
177
65
Table of contents
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
Main Street Capital Corporation
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Main Street Capital Corporation (a Maryland
corporation) and subsidiaries (the “Company”), including the consolidated schedule of investments, as of December 31,
2022 and 2021, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three
years in the period ended December 31, 2022, and the related notes and financial statement schedule included under Item
15(2) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with
accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on
criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”), and our report dated February 24, 2023 expressed an unqualified
opinion.
Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts
or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matter does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate
opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Fair Value Investments
As described further in Note C to the financial statements, the Company’s investments at fair value were
$4,102,177 thousand at December 31, 2022, of which $4,100,273 thousand were categorized as Level 3 investments within
the fair value hierarchy. Management’s valuation techniques of these investments, for which there are no readily available
market values, are measured using significant unobservable inputs and assumptions, and generally use valuation
techniques such as the income and market approach. The significant unobservable inputs disclosed by management
include, among others, weighted-average cost of capital (“WACC”) inputs and market multiples for equity investments,
and risk adjusted discount rates, percentage of expected principal recovery and third-party quotes for debt investments.
Changes in these assumptions could have a significant impact on the determination of fair value. As such, we identified fair
value of Level 3 investments measured using significant unobservable inputs and assumptions as a critical audit matter.
66
Table of contents
Report of Independent Registered Public Accounting Firm
The principal considerations for our determination that fair value of Level 3 investments measured using
significant unobservable inputs is a critical audit matter are the significant management judgements used in developing
complex valuation techniques and inherent estimation uncertainty. Auditing these investments requires a high degree of
subjective auditor judgement, including use of valuation professionals with specialized skills and knowledge, to evaluate
the reasonableness of unobservable inputs and assumptions.
Our audit procedures related to the critical audit matter included the following, among others:
•
•
Testing the design and operating effectiveness of controls over management’s process to determine
investment fair value. Specifically, we identified and tested key attributes of management’s fair value
determination review. These attributes addressed the relevance, adequacy and appropriateness of the data,
assumptions, valuation methods, and mathematical accuracy used to determine investment fair value as of the
reporting date.
Evaluated the ability to estimate fair value by comparing prior period fair values to transaction prices of
transactions occurring subsequent to the prior period valuation date.
• With the assistance of internal valuation specialists to evaluate and test management’s process to develop the
valuation estimates, we performed substantive audit procedures to determine mathematical accuracy and to
determine that the data, valuation methods, and significant unobservable inputs and assumptions used to
determine investment fair value as of the Company’s reporting date were reasonable. We tested certain key
inputs/assumptions for a selection of investments, including the following, as applicable:
•
•
•
•
•
enterprise values,
weighted-average cost of capital (“WACC”),
discount rates,
forecasted cash flows and long-term growth rates,
discount for lack of marketability,
• market multiples,
•
•
•
•
weighting between valuation techniques,
risk adjusted discount factor,
percentage of expected principal recovery, and
third party quotes, in conjunction with other inputs
In testing the above, we considered available third-party market information and published studies, current
economic conditions and subsequent events, and other information that could be corroborated to source information.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2007.
Houston, Texas
February 24, 2023
Board of Directors and Stockholders
Main Street Capital Corporation
67
Table of contents
Opinion on internal control over financial reporting
Report of Independent Registered Public Accounting Firm
We have audited the internal control over financial reporting of Main Street Capital Corporation (a Maryland
corporation) and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in the 2013 Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2022, based on criteria established in the 2013 Internal Control—Integrated Framework
issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended
December 31, 2022, and our report dated February 24, 2023 expressed an unqualified opinion on those financial
statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
/s/ GRANT THORNTON LLP
Houston, Texas
February 24, 2023
68
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Balance Sheets
(dollars in thousands, except shares and per share amounts)
ASSETS
Investments at fair value:
Control investments (cost: $1,270,802 and $1,107,597 as of December 31, 2022 and
December 31, 2021, respectively)
Affiliate investments (cost: $635,536 and $578,539 as of December 31, 2022 and
December 31, 2021, respectively)
Non-Control/Non-Affiliate investments (cost: $1,867,414 and $1,573,110 as of
December 31, 2022 and December 31, 2021, respectively)
Total investments (cost: $3,773,752 and $3,259,246 as of December 31, 2022 and
December 31, 2021, respectively)
Cash and cash equivalents
Interest and dividend receivable and other assets
Receivable for securities sold
Deferred financing costs (net of accumulated amortization of $10,603 and $9,462 as of
December 31, 2022 and December 31, 2021, respectively)
Total assets
LIABILITIES
Credit Facilities
$
July 2026 Notes (par: $500,000 as of both December 31, 2022 and December 31, 2021)
May 2024 Notes (par: $450,000 as of both December 31, 2022 and December 31,
2021)
SBIC debentures (par: $350,000 ($16,000 due within one year) as of both
December 31, 2022 and December 31, 2021)
$
December 2025 Notes (par: $100,000 as of December 31, 2022)
December 2022 Notes (par: $185,000 as of December 31, 2021)
Accounts payable and other liabilities
Payable for securities purchased
Interest payable
Dividend payable
Deferred tax liability, net
Total liabilities
December 31,
2022
December 31,
2021
$
1,703,172 $
1,489,257
618,359
549,214
1,780,646
1,523,360
4,102,177
49,121
82,731
381
3,561,831
32,629
56,488
35,125
7,475
4,241,885 $
4,217
3,690,290
607,000 $
498,136
320,000
497,609
450,727
451,272
343,914
99,325
—
52,092
—
16,580
17,676
47,849
2,133,299
342,731
—
184,444
40,469
5,111
14,926
15,159
29,723
1,901,444
Commitments and contingencies (Note K)
NET ASSETS
Common stock, $0.01 par value per share (150,000,000 shares authorized; 78,463,599
and 70,700,885 shares issued and outstanding as of December 31, 2022 and
December 31, 2021, respectively)
Additional paid-in capital
Total undistributed earnings
Total net assets
Total liabilities and net assets
NET ASSET VALUE PER SHARE
784
2,030,531
77,271
2,108,586
4,241,885 $
26.86 $
707
1,736,346
51,793
1,788,846
3,690,290
25.29
$
$
The accompanying notes are an integral part of these consolidated financial statements
69
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Statements of Operations
(dollars in thousands, except shares and per share amounts)
INVESTMENT INCOME:
Interest, fee and dividend income:
Control investments
Affiliate investments
Non-Control/Non-Affiliate investments
Total investment income
EXPENSES:
Interest
Compensation
General and administrative
Share-based compensation
Expenses allocated to the External Investment Manager
Total expenses
NET INVESTMENT INCOME
NET REALIZED GAIN (LOSS):
Control investments
Affiliate investments
Non-Control/Non-Affiliate investments
Realized loss on extinguishment of debt
Total net realized gain (loss)
NET UNREALIZED APPRECIATION (DEPRECIATION):
Control investments
Affiliate investments
Non-Control/Non-Affiliate investments
SBIC debentures
Total net unrealized appreciation (depreciation)
INCOME TAXES:
Federal and state income, excise and other taxes
Deferred taxes
Income tax benefit (provision)
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS
NET INVESTMENT INCOME PER SHARE—BASIC AND
DILUTED
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS PER SHARE—BASIC AND DILUTED
WEIGHTED AVERAGE SHARES
OUTSTANDING—BASIC AND DILUTED
Year Ended December 31,
2021
2020
2022
$
155,967 $
122,277 $
54,963
165,930
376,860
51,278
115,492
289,047
(78,276)
(36,543)
(16,050)
(13,629)
12,965
(58,836)
(34,442)
(12,494)
(10,887)
10,277
(131,533)
(106,382)
245,327
182,665
(5,822)
(3,319)
3,929
—
6,494
17,181
21,661
—
81,155
32,435
109,024
222,614
(49,587)
(18,981)
(12,702)
(10,828)
7,429
(84,669)
137,945
(59,594)
2,203
(58,556)
(534)
(5,212)
45,336
(116,481)
56,682
10,314
(42,180)
—
24,816
99,420
21,989
14,215
—
135,624
(5,199)
(18,126) $
(23,325)
(5,732)
(27,131)
(32,863)
37,924
(29,038)
(14,968)
460
(5,622)
(590)
14,131
13,541
241,606 $
330,762 $
29,383
3.29 $
2.65 $
3.24 $
4.80 $
2.10
0.45
$
$
$
$
74,482,176
68,960,923
65,705,963
The accompanying notes are an integral part of these consolidated financial statements
70
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Statements of Changes in Net Assets
(dollars in thousands, except shares)
Common Stock
Par
Value
Number of
Shares
Additional
Paid-In
Capital
Total
Undistributed
Earnings
Total Net
Asset
Value
64,252,937 $
643 $ 1,512,435 $
23,312 $ 1,536,390
67,762,032 $
677 $ 1,615,940 $
(101,850) $ 1,514,767
Balances at December 31, 2019
Public offering of common stock, net of offering
costs
Share-based compensation
Purchase of vested stock for employee payroll tax
withholding
Dividend reinvestment
Amortization of directors’ deferred compensation
2,662,777
—
(89,447)
517,796
—
Issuance of restricted stock, net of forfeited shares
417,969
Dividends to stockholders
Reclassification for certain permanent book-to-tax
differences
Net increase resulting from operations
Balances at December 31, 2020
Public offering of common stock, net of offering
costs
Share-based compensation
Purchase of vested stock for employee payroll tax
withholding
Dividend reinvestment
Dividends to stockholders
Reclassification for certain permanent book-to-tax
differences
Net increase resulting from operations
Balances at December 31, 2021
Public offering of common stock, net of offering
costs
Share-based compensation
Purchase of vested stock for employee payroll tax
withholding
Dividend reinvestment
2,345,554
—
(134,238)
404,384
—
—
—
—
—
—
6,763,166
—
(116,177)
625,196
Amortization of directors’ deferred compensation
—
Issuance of restricted stock, net of forfeited shares
359,289
Amortization of directors’ deferred compensation
—
Issuance of restricted stock, net of forfeited shares
497,610
Dividends to stockholders
Reclassification for certain permanent book-to-tax
differences
Net increase resulting from operations
—
—
—
27
—
(1)
4
—
4
—
—
—
84,354
10,828
(1,890)
16,230
853
(4)
385
(7,251)
—
—
—
—
—
—
—
84,381
10,828
(1,891)
16,234
853
—
(161,796)
(161,411)
7,251
29,383
—
29,383
24
—
(1)
4
—
3
—
—
—
98,865
10,887
(5,302)
16,279
652
(3)
406
(1,378)
—
67
—
(1)
6
—
5
—
—
—
265,553
13,629
(4,942)
24,125
519
(5)
466
(5,160)
—
—
—
—
—
—
—
98,889
10,887
(5,303)
16,283
652
—
(178,497)
(178,091)
1,378
—
330,762
330,762
51,793 $ 1,788,846
—
—
—
—
—
—
265,620
13,629
(4,943)
24,131
519
—
(221,288)
(220,822)
5,160
—
241,606
241,606
70,737,021 $
707 $ 1,736,346 $
Balances at December 31, 2022
78,506,816 $
784 $ 2,030,531 $
77,271 $ 2,108,586
The accompanying notes are an integral part of these consolidated financial statements
71
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Statements of Cash Flows
(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations
Adjustments to reconcile net increase (decrease) in net assets resulting from
operations to net cash provided by (used in) operating activities:
Investments in portfolio companies
Proceeds from sales and repayments of debt investments in portfolio companies
Proceeds from sales and return of capital of equity investments in portfolio
companies
Net unrealized (appreciation) depreciation
Net realized (gain) loss
Accretion of unearned income
Payment-in-kind interest
Cumulative dividends
Share-based compensation expense
Amortization of deferred financing costs
Deferred tax (benefit) provision
Changes in other assets and liabilities:
Interest and dividend receivable and other assets
Interest payable
Accounts payable and other liabilities
Deferred fees and other
Net cash used in operating activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from public offering of common stock, net of offering costs
Proceeds from public offering of May 2024 Notes
Proceeds from public offering of July 2026 Notes
Proceeds from public offering of December 2025 Notes
Dividends paid
Proceeds from issuance of SBIC debentures
Repayments of SBIC debentures
Redemption of December 2022 Notes
Proceeds from credit facility
Repayments on credit facility
Debt issuance premiums (costs), net
Purchases of vested stock for employee payroll tax withholding
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT END OF PERIOD
Supplemental cash flow disclosures:
Interest paid
Taxes paid
Operating non-cash activities:
Right-of-use assets obtained in exchange for operating lease liabilities
Non-cash financing activities:
Value of shares issued pursuant to the DRIP
Year Ended
December 31,
2021
2022
2020
$ 241,606 $ 330,762 $ 29,383
(1,152,594) (1,763,755) (669,007)
443,573
920,828
608,330
71,695
(24,816)
5,212
(13,413)
(5,352)
(1,770)
13,629
2,863
18,126
133,644
(135,624)
(45,336)
(15,619)
(7,573)
(1,739)
10,887
2,998
27,131
34,439
5,622
116,481
(11,756)
(6,225)
(1,791)
10,828
2,513
(14,131)
(28,186)
1,654
12,254
3,826
(246,936)
(5,504)
6,268
20,289
6,970
(515,373)
4,599
1,366
(2,846)
2,868
(54,084)
265,620
—
—
100,000
(194,174)
—
—
(185,000)
1,032,000
(745,000)
(5,075)
(4,943)
263,428
84,381
98,889
125,000
—
—
500,000
—
—
(144,462)
(160,537)
40,000
80,200
(42,000)
(40,000)
—
—
1,100,000
399,000
(1,049,000) (430,000)
729
(1,891)
30,757
(8,166)
(5,303)
516,083
16,492
32,629
(23,327)
55,246
$ 49,121 $ 32,629 $ 31,919
710
31,919
$ 73,635 $ 50,729 $ 45,582
3,136
$
6,596 $
2,233 $
$
5,449 $
— $
—
$ 24,131 $ 16,283 $ 16,234
The accompanying notes are an integral part of these consolidated financial statements
72
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Control Investments (5)
Analytical Systems Keco Holdings, LLC
Manufacturer of Liquid and Gas
Analyzers
ASC Interests, LLC
Recreational and Educational
Shooting Facility
Secured Debt
Secured Debt
(9) (25)
(9)
Preferred Member Units
Preferred Member Units
Warrants
(27)
Secured Debt
Secured Debt
Member Units
8/16/2019
8/16/2019
8/16/2019
5/20/2021
8/16/2019
12/31/2019
8/1/2013
8/1/2013
14.13%
13.00%
13.00%
3,200
2,427
420
1,500
ATS Workholding, LLC
(10) Manufacturer of Machine Cutting
Tools and Accessories
Secured Debt
Secured Debt
(14)
(14)
11/16/2017
11/16/2017
5.00%
5.00%
Preferred Member Units
11/16/2017
3,725,862
L+ 10.00%
8/16/2024
$
— $
(3) $
(3)
14.13%
L+ 10.00%
8/16/2024
4,665
8/16/2029
7/31/2024
7/31/2024
400
1,650
8/16/2023
8/16/2023
1,901
3,015
4,545
3,200
2,427
316
4,545
—
3,504
—
10,485
8,046
400
1,649
1,500
3,549
1,901
2,857
3,726
8,484
711
1,584
2,295
400
1,649
800
2,849
634
1,005
—
1,639
711
3,320
4,031
Barfly Ventures, LLC
(10) Casual Restaurant Group
Batjer TopCo, LLC
HVAC Mechanical Contractor
Secured Debt
Member Units
Secured Debt
Secured Debt
Secured Debt
Preferred Stock
10/15/2020
7.00%
10/31/2024
711
10/26/2020
37
(25)
(25)
(8)
3/7/2022
3/7/2022
3/7/2022
3/7/2022
11.00%
4,073
3/31/2027
3/31/2027
3/31/2027
—
—
(8)
—
(8)
—
11,025
10,933
10,933
4,095
4,095
15,020
15,020
Bolder Panther Group, LLC
Consumer Goods and Fuel Retailer
Brewer Crane Holdings, LLC
Provider of Crane Rental and
Operating Services
Secured Debt
(9) (29) (40)
12/31/2020
13.39% SF+ 9.26%
10/31/2027
99,194
98,576
99,194
Class B Preferred Member
Units
(8)
12/31/2020
140,000
8.00%
14,000
31,420
112,576
130,614
73
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
Portfolio Company (1) (20)
Business Description
Bridge Capital Solutions Corporation
Financial Services and Cash Flow
Solutions Provider
December 31, 2022
(dollars in thousands)
Type of Investment
(2) (3) (15)
Secured Debt
Preferred Member Units
(9)
(8)
Investment
Date
(24)
1/9/2018
1/9/2018
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
14.12%
L+ 10.00%
1/9/2023
5,964
2,950
5,964
4,280
5,964
7,080
10,244
13,044
8,813
1,000
1,000
2,132
8,813
1,000
1,000
4,340
12,945
15,153
1,742
2,210
Secured Debt
Secured Debt
(30)
7/25/2016
7/25/2016
13.00%
13.00%
Preferred Member Units
(8) (30)
7/25/2016
17,742
12/11/2024
12/11/2024
8,813
1,000
Warrants
(27)
7/25/2016
82
7/25/2026
Café Brazil, LLC
Casual Restaurant Group
Member Units
(8)
6/9/2006
1,233
California Splendor Holdings LLC
Processor of Frozen Fruits
CBT Nuggets, LLC
Produces and Sells IT Training
Certification Videos
Centre Technologies Holdings, LLC
Provider of IT Hardware Services
and Software Solutions
Chamberlin Holding LLC
Roofing and Waterproofing
Specialty Contractor
Charps, LLC
Pipeline Maintenance and
Construction
Secured Debt
Preferred Member Units
Preferred Member Units
(9)
(8)
(8)
3/30/2018
3/30/2018
7/31/2019
6,157
3,671
Member Units
(8)
6/1/2006
416
13.75%
L+ 10.00%
7/29/2026
28,000
27,951
28,000
15.00%
15.00%
10,775
25,495
3,994
3,994
42,720
57,489
1,300
49,002
Secured Debt
Secured Debt
(9) (25)
(9)
1/4/2019
1/4/2019
L+
L+
9.00%
9.00%
13.13%
1/4/2026
1/4/2026
—
—
—
15,030
14,954
14,954
Preferred Member Units
1/4/2019
13,309
6,122
8,700
21,076
23,654
Secured Debt
Secured Debt
Member Units
Member Units
(9) (25)
(9)
(8)
2/26/2018
2/26/2018
2/26/2018
4,347
(8) (30)
11/2/2018
1,047,146
L+
L+
6.00%
8.00%
12.13%
2/26/2023
2/26/2023
—
—
—
16,945
16,935
16,945
11,440
22,920
1,773
2,710
30,148
42,575
Unsecured Debt
8/26/2020
10.00%
1/31/2026
5,694
4,643
5,694
74
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Preferred Member Units
(8)
2/3/2017
1,829
1,963
6,606
13,340
19,034
Clad-Rex Steel, LLC
Specialty Manufacturer of Vinyl-
Clad Metal
Secured Debt
Secured Debt
Secured Debt
Member Units
Member Units
(9) (25) (29)
10/28/2022
SF+ 9.00%
(9) (29)
12/20/2016
13.23% SF+ 9.00%
1/15/2024
1/15/2024
—
—
—
10,480
10,440
10,440
(8)
(30)
12/20/2016
12/20/2016
12/20/2016
717
800
10.00%
12/20/2036
1,049
CMS Minerals Investments
Oil & Gas Exploration &
Production
Member Units
(8) (30)
4/1/2016
100
Cody Pools, Inc.
Designer of Residential and
Commercial Pools
Secured Debt
Secured Debt
(9)
(9)
Preferred Member Units
(8) (30)
3/6/2020
3/6/2020
3/6/2020
587
Colonial Electric Company LLC
Provider of Electrical Contracting
Services
15.38%
L+ 10.50%
12/17/2026
1,462
1,443
1,462
15.38%
L+ 10.50%
12/17/2026
40,801
40,521
40,801
8,317
58,180
50,281
100,443
3/31/2026
3/31/2026
—
—
—
23,310
23,151
23,151
Secured Debt
Secured Debt
(25)
3/31/2021
3/31/2021
12.00%
Preferred Member Units
(8)
3/31/2021
17,280
CompareNetworks Topco, LLC
Internet Publishing and Web Search
Portals
Secured Debt
Secured Debt
Preferred Member Units
(9) (17) (25)
1/29/2019
(9)
(8)
1/29/2019
13.13%
1/29/2019
1,975
L+
L+
9.00%
9.00%
1/29/2022
1/29/2024
—
5,241
Copper Trail Fund Investments
(12) (13)
Investment Partnership
LP Interests (CTMH, LP)
(31)
7/17/2017
38.75%
Datacom, LLC
Technology and
Telecommunications Provider
1,039
7,280
210
1,039
8,220
610
18,969
20,309
1,304
1,670
7,680
9,160
30,831
32,311
—
5,232
1,975
7,207
—
5,241
19,830
25,071
588
588
Secured Debt
Secured Debt
3/1/2022
3/31/2021
7.50%
7.50%
12/31/2025
223
12/31/2025
8,622
223
8,190
223
7,789
75
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Preferred Member Units
(8)
3/31/2021
9,000
2,610
2,670
11,023
10,682
Digital Products Holdings LLC
Designer and Distributor of
Consumer Electronics
Secured Debt
Preferred Member Units
(9)
(8)
4/1/2018
4/1/2018
3,857
14.13%
L+ 10.00%
4/1/2023
15,533
15,523
15,523
9,501
9,835
25,024
25,358
Direct Marketing Solutions, Inc.
Provider of Omni-Channel Direct
Marketing Services
Elgin AcquireCo, LLC
Manufacturer and Distributor of
Engine and Chassic Components
Gamber-Johnson Holdings, LLC
Manufacturer of Ruggedized
Computer Mounting Systems
Garreco, LLC
Manufacturer and Supplier of
Dental Products
GRT Rubber Technologies LLC
Manufacturer of Engineered
Rubber Products
Secured Debt
Secured Debt
Secured Debt
Common Stock
Common Stock
Secured Debt
Secured Debt
Member Units
Secured Debt
Member Units
Secured Debt
Secured Debt
Member Units
Secured Debt
Secured Debt
Preferred Stock
(9) (25)
2/13/2018
L+ 11.00%
(9)
(8)
12/27/2022
15.13%
L+ 11.00%
2/13/2018
8,400
(9) (25) (29)
10/3/2022
SF+ 6.00%
10/3/2022
10/3/2022
10/3/2022
10/3/2022
378
939
12.00%
9.00%
(30)
2/13/2026
2/13/2026
—
(88)
—
27,267
27,122
27,267
8,400
22,220
35,434
49,487
10/3/2027
10/3/2027
10/3/2052
—
(9)
(9)
18,773
18,594
18,594
6,357
6,294
7,603
1,558
6,294
7,603
1,558
34,040
34,040
(9) (25) (29)
6/24/2016
SF+ 8.50%
(9) (29)
12/15/2022
11.50% SF+ 8.50%
1/1/2028
1/1/2028
—
—
—
64,078
63,685
64,078
(8)
6/24/2016
9,042
(9) (37)
7/15/2013
9.50%
L+
8.00%
7/31/2023
3,826
(8)
7/15/2013
1,200
17,692
50,890
81,377
114,968
3,826
1,200
5,026
3,826
1,800
5,626
12/21/2018
12/19/2014
10.12%
12.12%
L+
L+
6.00%
8.00%
12/21/2023
670
670
670
10/29/2026
40,493
40,313
40,493
(8)
12/19/2014
5,879
13,065
44,440
54,048
85,603
76
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Gulf Manufacturing, LLC
Business Description
Manufacturer of Specialty
Fabricated Industrial Piping
Products
Gulf Publishing Holdings, LLC
Energy Industry Focused Media
and Publishing
Harris Preston Fund Investments
(12) (13)
Investment Partnership
Harrison Hydra-Gen, Ltd.
Manufacturer of Hydraulic
Generators
Jensen Jewelers of Idaho, LLC
Retail Jewelry Store
Johnson Downie Opco, LLC
Executive Search Services
JorVet Holdings, LLC
Supplier and Distributor of
Veterinary Equipment and Supplies
KBK Industries, LLC
Manufacturer of Specialty Oilfield
and Industrial Products
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Member Units
(8)
8/31/2007
438
2,980
6,790
Secured Debt
Secured Debt
Preferred Equity
Member Units
(9) (25)
9/29/2017
L+
9.50%
7/1/2022
7/1/2022
4/29/2016
63,720
3,681
12.50%
7/1/2027
7/1/2027
—
2,400
LP Interests (2717 MH,
L.P.)
LP Interests (2717 HPP-MS,
L.P.)
(31)
(31)
10/1/2017
49.26%
3/11/2022
49.26%
Common Stock
6/4/2010
107,456
—
2,400
5,600
3,681
—
2,284
3,780
—
11,681
6,064
3,895
7,552
248
4,143
248
7,800
718
3,280
Secured Debt
Secured Debt
Member Units
(25)
(9)
(8)
8/29/2017
11/14/2006
11/14/2006
627
P+
P+
6.75%
6.75%
13.75%
11/14/2023
—
—
—
11/14/2023
2,450
2,444
2,450
811
14,970
3,255
17,420
Secured Debt
Secured Debt
Preferred Equity
(9) (25)
12/10/2021
L+ 11.50%
12/10/2026
—
(14)
—
(9)
(8)
12/10/2021
15.63%
L+ 11.50%
12/10/2026
9,999
12/10/2021
3,150
9,920
3,150
9,999
5,540
13,056
15,539
Secured Debt
3/28/2022
12.00%
3/28/2027
25,650
25,432
25,432
Preferred Equity
(8)
3/28/2022
107,406
Member Units
(8)
1/23/2006
325
77
10,741
10,741
36,173
36,173
783
15,570
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Kickhaefer Manufacturing Company, LLC
Precision Metal Parts
Manufacturing
Market Force Information, LLC
Provider of Customer Experience
Management Services
MetalForming AcquireCo, LLC
Distributor of Sheet Metal Folding
and Metal Forming Equipment
Secured Debt
Secured Debt
Preferred Equity
Member Units
Secured Debt
Secured Debt
Member Units
Secured Debt
Secured Debt
Preferred Equity
Common Stock
10/31/2018
10/31/2018
10/31/2018
(8) (30)
10/31/2018
11.50%
9.00%
581
800
10/31/2023
20,415
20,374
20,374
10/31/2048
3,879
3,842
12,240
992
3,842
7,220
2,850
37,448
34,286
(9)
(14)
(25)
(8)
7/28/2017
7/28/2017
15.13%
L+ 11.00%
7/28/2023
6,275
6,253
12.00%
12.00% 7/28/2023
26,079
25,952
7/28/2017
743,921
16,642
48,847
6,090
1,610
—
7,700
10/19/2022
10/19/2022
12.75%
10/19/2027
23,802
23,576
23,576
10/19/2024
—
—
—
10/19/2022
5,915,585
8.00%
8.00%
10/19/2022
1,537,219
MH Corbin Holding LLC
Manufacturer and Distributor of
Traffic Safety Products
Secured Debt
Preferred Member Units
Preferred Member Units
8/31/2015
13.00%
12/31/2022
6,156
3/15/2019
66,000
9/1/2015
4,000
6,010
1,537
6,010
1,537
31,123
31,123
6,156
4,400
6,000
4,548
—
—
16,556
4,548
MS Private Loan Fund I, LP
(12) (13)
Investment Partnership
MSC Adviser I, LLC
(16) Third Party Investment Advisory
Services
Secured Debt
LP Interests
(25)
1/26/2021
(8) (31)
1/26/2021
14.51%
Member Units
(8)
11/22/2013
1
12/31/2024
—
—
—
14,250
14,833
14,250
14,833
29,500
122,930
MSC Income Fund, Inc.
(12) (13) Business Development Company
Common Equity
(8)
5/2/2022
94,697
750
753
78
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Mystic Logistics Holdings, LLC
Business Description
Logistics and Distribution Services
Provider for Large Volume Mailers
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
Secured Debt
Common Stock
(25)
(8)
8/18/2014
8/18/2014
8/18/2014
5,873
10.00%
1/31/2024
1/31/2024
—
5,746
NAPCO Precast, LLC
Precast Concrete Manufacturing
Member Units
1/31/2008
2,955
Nebraska Vet AcquireCo, LLC
Mixed-Animal Veterinary and
Animal Health Product Provider
—
5,746
2,720
8,466
—
5,746
22,830
28,576
2,975
11,830
Secured Debt
Secured Debt
Secured Debt
(9) (25)
12/31/2020
L+
7.00%
12/31/2025
—
—
—
12/31/2020
12/31/2020
12.00%
12.00%
12/31/2025
20,094
19,972
20,094
12/31/2025
10,500
10,434
10,500
Preferred Member Units
12/31/2020
6,987
6,987
7,700
37,393
38,294
NexRev LLC
Provider of Energy Efficiency
Products & Services
Secured Debt
Secured Debt
(25)
2/28/2018
2/28/2018
11.00%
Preferred Member Units
(8)
2/28/2018
103,144,186
NRP Jones, LLC
Manufacturer of Hoses, Fittings and
Assemblies
NuStep, LLC
Designer, Manufacturer and
Distributor of Fitness Equipment
OMi Topco, LLC
Manufacturer of Overhead Cranes
2/28/2025
2/28/2025
—
—
11,465
11,335
—
8,477
1,110
9,587
2,080
4,790
6,870
8,213
19,548
2,080
3,717
5,797
Secured Debt
Member Units
12/21/2017
12.00%
3/20/2023
2,080
(8)
12/22/2011
65,962
(9)
Secured Debt
Secured Debt
Preferred Member Units
Preferred Member Units
1/31/2017
1/31/2017
1/31/2017
11/2/2022
406
2,062
10.63%
L+
6.50%
12.00%
1/31/2025
1/31/2025
4,400
4,399
4,399
18,440
18,414
18,414
10,200
2,062
8,040
5,150
35,075
36,003
Secured Debt
8/31/2021
12.00%
8/31/2026
15,750
15,634
15,750
Preferred Member Units
(8)
4/1/2008
900
1,080
22,810
16,714
38,560
79
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Orttech Holdings, LLC
Business Description
Distributor of Industrial Clutches,
Brakes and Other Components
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
Secured Debt
(9) (25)
(9)
7/30/2021
7/30/2021
L+ 11.00%
15.13%
L+ 11.00%
7/31/2026
7/31/2026
—
—
—
23,600
23,429
23,429
Pearl Meyer Topco LLC
Provider of Executive
Compensation Consulting Services
Preferred Stock
(8) (30)
7/30/2021
10,000
PPL RVs, Inc.
Recreational Vehicle Dealer
Principle Environmental, LLC
Noise Abatement Service Provider
Quality Lease Service, LLC
Provider of Rigsite
Accommodation Unit Rentals and
Related Services
River Aggregates, LLC
Processor of Construction
Aggregates
Robbins Bros. Jewelry, Inc.
Bridal Jewelry Retailer
Secured Debt
Secured Debt
Secured Debt
Preferred Equity
Secured Debt
Secured Debt
Common Stock
Common Stock
Secured Debt
Secured Debt
Preferred Member Units
(8)
Common Stock
(25)
(25)
(8)
4/27/2020
4/27/2020
4/27/2020
4/27/2020
13,800
12.00%
(9) (25)
10/31/2019
(9)
(8)
(25)
11/15/2016
10.25%
6/10/2010
2,000
6/14/2022
238,421
2/1/2011
7/1/2011
2/1/2011
1/27/2021
21,806
1,037
13.00%
10,000
11,750
33,429
35,179
4/27/2025
4/27/2025
4/27/2025
—
—
—
—
—
—
28,681
28,537
28,681
13,000
43,260
41,537
71,941
L+
L+
7.00%
7.00%
11/15/2027
—
(9)
—
11/15/2027
21,655
21,408
21,655
11/15/2026
—
11/15/2026
5,897
2,150
18,950
238
238
23,787
40,843
—
5,806
5,709
1,200
—
5,806
12,420
590
12,715
18,816
Member Units
6/8/2015
1,000
7,513
525
Member Units
(30)
12/20/2013
1,500
369
3,620
Secured Debt
Secured Debt
Preferred Equity
(9) (25)
12/15/2021
12/15/2026
—
(35)
(35)
(9)
12/15/2021
12.50%
12/15/2026
35,685
35,404
35,404
12/15/2021
11,070
11,070
14,880
80
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
46,439
50,249
Tedder Industries, LLC
Manufacturer of Firearm Holsters
and Accessories
Secured Debt
Secured Debt
8/31/2018
8/31/2018
12.00%
12.00%
8/31/2023
8/31/2023
1,840
1,840
1,840
15,200
15,192
15,120
Televerde, LLC
Provider of Telemarketing and Data
Services
Trantech Radiator Topco, LLC
Transformer Cooling Products and
Services
Preferred Member Units
8/31/2018
544
Member Units
Preferred Stock
1/6/2011
1/26/2022
460
248
Secured Debt
Secured Debt
Common Stock
(25)
(8)
5/31/2019
5/31/2019
5/31/2019
615
12.00%
5/31/2024
5/31/2024
—
7,920
Vision Interests, Inc.
Manufacturer / Installer of
Commercial Signage
Series A Preferred Stock
(8)
12/23/2011
3,000,000
VVS Holdco LLC
Omnichannel Retailer of Animal
Health Products
9,245
7,681
26,277
24,641
1,290
718
2,008
5,408
1,794
7,202
(5)
—
7,894
4,655
7,920
7,800
12,544
15,720
3,000
3,000
Secured Debt
Secured Debt
(9) (25) (30)
12/1/2021
L+
6.00%
(30)
12/1/2021
11.50%
12/1/2023
12/1/2026
—
(21)
(21)
30,400
30,158
30,161
Ziegler’s NYPD, LLC
Casual Restaurant Group
Preferred Equity
(8) (30)
12/1/2021
11,840
Secured Debt
Secured Debt
Secured Debt
6/1/2015
10/1/2008
10/1/2008
12.00%
6.50%
14.00%
Preferred Member Units
6/30/2015
10,072
Warrants
(27)
7/1/2015
587
450
1,000
2,750
10/1/2024
10/1/2024
10/1/2024
10/1/2025
Subtotal Control Investments (80.8% of net
assets at fair value)
Affiliate Investments
AAC Holdings, Inc.
(11) Substance Abuse Treatment Service
Provider
81
11,840
11,940
41,977
42,080
450
1,000
2,750
2,834
600
7,634
450
945
2,676
240
—
4,311
$ 1,270,802 $ 1,703,172
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Secured Debt
Common Stock
Warrants
Investment
Date
(24)
12/11/2020
Shares/
Units
Total Rate
18.00%
12/11/2020
593,928
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
18.00% 6/25/2025
$
11,726 $
11,590 $
11,550
(27)
12/11/2020
554,353
12/11/2025
AFG Capital Group, LLC
Provider of Rent-to-Own Financing
Solutions and Services
Preferred Member Units
(8)
11/7/2014
186
ATX Networks Corp.
(11) Provider of Radio Frequency
Management Equipment
BBB Tank Services, LLC
Maintenance, Repair and
Construction Services to the
Above-Ground Storage Tank
Market
Boccella Precast Products LLC
Manufacturer of Precast Hollow
Core Concrete
Buca C, LLC
Casual Restaurant Group
Secured Debt
Unsecured Debt
Common Stock
(9)
9/1/2021
9/1/2021
9/1/2021
583
12.23%
L+
7.50%
9/1/2026
10.00%
10.00% 9/1/2028
6,783
3,396
Unsecured Debt
Unsecured Debt
Member Units
(9) (17)
(9) (17)
4/8/2016
4/8/2016
15.12%
L+ 11.00%
15.12%
L+ 11.00%
4/8/2021
4/8/2021
800
4,000
4/8/2016
800,000
Preferred Stock (non-voting)
12/17/2018
15.00%
Secured Debt
Member Units
9/23/2021
10.00%
2/28/2027
320
(8)
6/30/2017
2,160,000
Career Team Holdings, LLC
Provider of Workforce Training and
Career Development Services
Secured Debt
Secured Debt
Common Stock
Chandler Signs Holdings, LLC
(10) Sign Manufacturer
Secured Debt
Preferred Member Units
6/30/2015
6/30/2015
6
9.00%
6.00%
6.00%
6/30/2023
17,355
17,355
12,337
4,770
—
22,125
12,337
(9) (25)
12/17/2021
L+
6.00%
12/17/2026
—
(9)
(9)
12/17/2021
12.50%
12/17/2026
20,250
20,090
20,090
12/17/2021
450,000
3,148
—
—
—
14,738
11,550
1,200
9,400
6,208
2,291
—
6,343
2,598
3,270
8,499
12,211
800
4,000
800
162
800
2,086
—
—
5,762
2,886
320
2,256
2,576
320
2,970
3,290
4,500
4,500
24,581
24,581
1,500
1,790
Class A Units
1/4/2016
1,500,000
82
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Classic H&G Holdings, LLC
Provider of Engineered Packaging
Solutions
Congruent Credit Opportunities Funds
(12) (13)
Investment Partnership
Secured Debt
Secured Debt
(9)
3/12/2020
3/12/2020
9.75%
L+
6.00%
8.00%
3/12/2025
3/12/2025
4,560
4,560
4,560
19,274
19,182
19,274
Preferred Member Units
(8)
3/12/2020
154
LP Interests (Congruent
Credit Opportunities Fund
III, LP)
(8) (31)
2/4/2015
13.32%
5,760
24,637
29,502
48,471
8,096
7,657
DMA Industries, LLC
Distributor of aftermarket ride
control products
Secured Debt
Preferred Equity
Dos Rios Partners
(12) (13)
Investment Partnership
11/19/2021
12.00%
11/19/2026
21,200
21,035
21,200
11/19/2021
5,944
LP Interests (Dos Rios
Partners, LP)
LP Interests (Dos Rios
Partners - A, LP)
(31)
(31)
4/25/2013
20.24%
4/25/2013
6.43%
5,944
7,260
26,979
28,460
6,459
9,127
2,051
8,510
2,898
12,025
Dos Rios Stone Products LLC
(10) Limestone and Sandstone
Dimension Cut Stone Mining
Quarries
EIG Fund Investments
(12) (13)
Investment Partnership
Flame King Holdings, LLC
Propane Tank and Accessories
Distributor
Freeport Financial Funds
(12) (13)
Investment Partnership
Class A Preferred Units
(30)
6/27/2016
2,000,000
2,000
1,330
LP Interests (EIG Global
Private Debt Fund-A, L.P.)
(8) (31)
11/6/2015
5,000,000
1,060
1,013
10/29/2021
10/29/2021
10/29/2021
9,360
10.75%
13.25%
L+
L+
6.50%
9.00%
10/31/2026
7,600
7,537
7,600
10/31/2026
21,200
21,038
21,200
10,400
17,580
38,975
46,380
Secured Debt
Secured Debt
Preferred Equity
(9)
(9)
(8)
83
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
GFG Group, LLC.
Grower and Distributor of a Variety
of Plants and Products to Other
Wholesalers, Retailers and Garden
Centers
Harris Preston Fund Investments
(12) (13)
Investment Partnership
Hawk Ridge Systems, LLC
Value-Added Reseller of
Engineering Design and
Manufacturing Solutions
Type of Investment
(2) (3) (15)
LP Interests (Freeport
Financial SBIC Fund LP)
LP Interests (Freeport First
Lien Loan Fund III LP)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
(31)
3/23/2015
9.30%
(8) (31)
7/31/2015
5.95%
3,507
3,483
6,303
9,810
5,848
9,331
Secured Debt
3/31/2021
9.00%
3/31/2026
11,345
11,269
11,345
Preferred Member Units
(8)
3/31/2021
226
LP Interests (HPEP 3, L.P.)
(31)
LP Interests (HPEP 4, L.P.)
(31)
8/9/2017
7/12/2022
8.22%
8.71%
LP Interests (423 COR, LP)
(31)
6/2/2022
22.93%
Secured Debt
Secured Debt
Preferred Member Units
Preferred Member Units
(9)
(8)
(30)
12/2/2016
12/2/2016
12/2/2016
12/2/2016
226
226
4,900
7,140
16,169
18,485
2,558
2,332
1,400
6,290
4,331
2,332
1,400
8,063
10.13%
L+
6.00%
9.00%
1/15/2026
1/15/2026
3,185
3,183
3,185
37,800
37,685
37,800
Houston Plating and Coatings, LLC
Provider of Plating and Industrial
Coating Services
Unsecured Convertible Debt
5/1/2017
8.00%
10/2/2024
3,000
Member Units
1/8/2003
322,297
I-45 SLF LLC
(12) (13)
Investment Partnership
Member Units (Fully diluted
20.0%; 21.75% profits
interest)
(8)
10/20/2015
20.00%
Iron-Main Investments, LLC
Consumer Reporting Agency
Providing Employment Background
Checks and Drug Testing
2,850
17,460
150
920
43,868
59,365
3,000
2,352
5,352
3,000
2,400
5,400
19,000
11,758
Secured Debt
Secured Debt
Secured Debt
Secured Debt
8/2/2021
9/1/2021
11/15/2021
11/15/2021
12.50%
12.50%
12.50%
12.50%
11/15/2026
11/15/2026
11/15/2026
4,534
3,154
8,944
4,500
3,130
8,944
4,500
3,130
8,944
11/15/2026
19,712
19,559
19,559
84
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
OnAsset Intelligence, Inc.
Provider of Transportation
Monitoring / Tracking Products and
Services
Common Stock
8/3/2021
179,778
Oneliance, LLC
Construction Cleaning Company
Rocaceia, LLC (Quality Lease and Rental
Holdings, LLC)
Provider of Rigsite
Accommodation Unit Rentals and
Related Services
SI East, LLC
Rigid Industrial Packaging
Manufacturing
Slick Innovations, LLC
Text Message Marketing Platform
Sonic Systems International, LLC
(10) Nuclear Power Staffing Services
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Unsecured Debt
Preferred Stock
Common Stock
Warrants
(14)
(14)
(14)
(14)
(14)
5/20/2014
3/21/2014
5/10/2013
4/18/2011
6/5/2017
4/18/2011
4/15/2021
912
635
12.00%
12.00%
12.00%
12.00%
10.00%
7.00%
12.00% 12/31/2023
12.00% 12/31/2023
12.00% 12/31/2023
12.00% 12/31/2023
10.00% 12/31/2023
7.00%
964
983
2,116
4,415
305
(27)
4/18/2011
4,699
12/31/2023
Secured Debt
Secured Debt
Preferred Stock
(9) (25)
(9)
8/6/2021
8/6/2021
8/6/2021
1,056
L+ 11.00%
15.13%
L+ 11.00%
8/6/2023
8/6/2026
—
5,600
1,798
1,798
37,931
37,931
964
983
2,116
4,415
305
1,981
830
1,089
569
580
1,249
2,606
305
—
—
—
12,683
5,309
—
5,559
1,056
6,615
—
5,559
1,056
6,615
Secured Debt
(14) (17)
(39)
6/30/2015
12.00%
1/8/2018
Preferred Member Units
1/8/2013
250
30,369
29,865
2,500
32,365
—
—
—
Secured Debt
Secured Debt
(25)
8/31/2018
8/31/2018
9.50%
Preferred Member Units
(8)
8/31/2018
157
8/31/2023
8/31/2023
—
—
—
89,786
89,708
89,786
1,218
13,650
90,926
103,436
9/13/2018
14.00%
12/22/2027
13,840
13,698
13,840
9/13/2018
70,000
456
1,530
14,154
15,370
8/20/2021
11.24%
L+
7.50%
8/20/2026
15,769
15,527
15,769
8/20/2021
9,968
1,356
1,280
Secured Debt
Common Stock
Secured Debt
Common Stock
(8)
(9)
85
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
16,883
17,049
Student Resource Center, LLC
(10) Higher Education Services
Superior Rigging & Erecting Co.
Provider of Steel Erecting, Crane
Rental & Rigging Services
The Affiliati Network, LLC
Performance Marketing Solutions
Secured Debt
Preferred Equity
12/31/2022
13.27%
L+
8.50%
12/31/2027
5,000
4,556
4,556
12/31/2022
5,907,649
—
—
4,556
4,556
Secured Debt
8/31/2020
12.00%
8/31/2025
21,500
21,378
21,378
Preferred Member Units
8/31/2020
1,571
Secured Debt
Secured Debt
8/9/2021
8/9/2021
13.00%
13.00%
8/9/2026
8/9/2026
120
9,521
Preferred Stock
(8)
8/9/2021
1,280,000
UnionRock Energy Fund II, LP
(12) (13)
Investment Partnership
LP Interests
(8) (31)
6/15/2020
11.11%
UniTek Global Services, Inc.
(11) Provider of Outsourced
Infrastructure Services
Secured Debt
Secured Debt
(9) (29)
(9) (29)
Secured Convertible Debt
10/15/2018
8/27/2018
1/1/2021
10.76% SF+ 5.50%
2.00% 8/20/2024
10.76% SF+ 5.50%
2.00% 8/20/2024
15.00%
15.00% 2/20/2025
406
1,814
2,403
Preferred Stock
Preferred Stock
Preferred Stock
Preferred Stock
Common Stock
(8)
8/29/2019
1,133,102
20.00%
8/21/2018
1,521,122
20.00%
6/30/2017
2,281,682
19.00%
1/15/2015
4,336,866
13.50%
4/1/2020
945,507
20.00%
20.00%
19.00%
13.50%
Universal Wellhead Services Holdings, LLC
(10) Provider of Wellhead Equipment,
Designs, and Personnel to the Oil &
Gas Industry
Volusion, LLC
Provider of Online Software-as-a-
Service eCommerce Solutions
Preferred Member Units
Member Units
(30)
(30)
12/7/2016
716,949
14.00%
14.00%
12/7/2016
4,000,000
4,500
4,500
25,878
25,878
106
9,442
6,400
106
9,442
6,400
15,948
15,948
3,734
5,855
405
1,807
2,403
2,141
2,188
3,667
7,924
—
382
1,712
4,592
2,833
1,991
—
—
—
20,535
11,510
1,032
4,000
5,032
220
—
220
Secured Debt
(17)
Unsecured Convertible Debt
1/26/2015
5/16/2018
11.50%
8.00%
1/26/2020
16,734
16,734
14,914
11/16/2023
409
409
—
86
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Preferred Member Units
1/26/2015
4,876,670
Warrants
(27)
1/26/2015
1,831,355
1/26/2025
14,000
2,576
—
—
33,719
14,914
World Micro Holdings, LLC
Supply Chain Management
Subtotal Affiliate Investments (29.3% of net
assets at fair value)
Non-Control Investments
AB Centers Acquisition Corporation
(10) Applied Behavior Analysis Therapy
Provider
Acousti Engineering Company of Florida
(10)
Interior Subcontractor Providing
Acoustical Walls and Ceilings
Acumera, Inc.
(10) Managed Security Service Provider
Adams Publishing Group, LLC
(10) Local Newspaper Operator
ADS Tactical, Inc.
AMEREQUIP LLC.
(11) Value-Added Logistics and Supply
Chain Provider to the Defense
Industry
(10) Full Service Provider of
Comprehensive Commercial
Production Services, Including the
Design, Engineering, and
Manufacturing of Products It
Secured Debt
Preferred Equity
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Secured Debt
12/12/2022
13.00%
12/12/2027 $
14,280 $
14,140 $
14,140
12/12/2022
3,845
$
$
3,845 $
3,845
17,985 $
17,985
$ 635,536 $ 618,359
(9) (25) (29)
9/6/2022
(9) (29)
(9) (29)
9/6/2022
9/6/2022
(9)
(9)
(9)
(9)
(9)
11/2/2020
11/2/2020
5/26/2021
6/28/2022
6/28/2022
SF+ 6.00%
9/6/2028
$
— $
(39) $
10.20% SF+ 6.00%
10.58% SF+ 6.00%
9/6/2028
9/6/2028
(39)
741
741
653
17,052
16,602
17,052
17,216
17,754
13.23%
13.23%
L+
L+
8.50%
8.50%
16.17%
L+ 12.50%
11/2/2025
11/2/2025
11/2/2025
1,678
9,891
807
1,669
9,825
800
1,678
9,891
807
12,294
12,376
13.88%
13.57%
L+
L+
9.50%
9.00%
10/26/2027
14,618
14,291
14,618
10/26/2027
4,368
4,270
4,368
18,561
18,986
Secured Debt
Secured Debt
(9) (36)
(9) (36)
3/11/2022
3/11/2022
10.00%
10.00%
L+
L+
6.00%
7.50%
3/11/2027
3/11/2027
4,729
4,729
4,729
24,086
24,033
24,086
28,762
28,815
Secured Debt
(9)
3/29/2021
10.14%
L+
5.75%
3/19/2026
21,077
20,781
18,969
87
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
American Health Staffing Group, Inc.
(10) Healthcare Temporary Staffing
American Nuts, LLC
(10) Roaster, Mixer and Packager of
Bulk Nuts and Seeds
American Teleconferencing Services, Ltd.
(11) Provider of Audio Conferencing
and Video Collaboration Solutions
ArborWorks, LLC
(10) Vegetation Management Services
Archer Systems, LLC
(10) Mass Tort Settlement
Administration Solutions Provider
Arrow International, Inc
(10) Manufacturer and Distributor of
Charitable Gaming Supplies
ATS Operating, LLC
(10) For-Profit Thrift Retailer
Type of Investment
(2) (3) (15)
Secured Debt
Secured Debt
Common Stock
Investment
Date
(24)
Shares/
Units
Total Rate
(9) (25) (29)
8/31/2022
Reference
Rate and
Spread (29)
SF+ 7.40%
PIK
Rate
(19)
(9) (29)
8/31/2022
11.72% SF+ 7.40%
8/31/2022
235
Secured Debt
Secured Debt
(9) (25)
11/19/2021
(9)
11/19/2021
11.12%
L+
L+
6.00%
6.00%
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
8/31/2027
8/31/2027
—
(137)
(137)
37,491
36,819
37,463
1,779
1,779
38,461
39,105
11/19/2026
—
(10)
(10)
11/19/2026
6,617
6,565
6,555
6,617
6,607
Secured Debt
Secured Debt
(9) (29)
(9) (29)
3/11/2022
3/11/2022
10.46% SF+ 6.75%
12.46% SF+ 8.75%
4/10/2026
4/10/2026
15,628
15,408
14,606
15,628
15,408
14,654
30,816
29,260
Secured Debt
Secured Debt
(14)
(9) (14)
9/17/2021
5/19/2016
7.50%
7.50%
L+
L+
6.50%
6.50%
1/31/2023
6/8/2023
2,980
2,980
14,370
13,706
16,686
168
808
976
Secured Debt
Secured Debt
Common Equity
Secured Debt
Secured Debt
Common Stock
(9)
(9)
11/9/2021
11/9/2021
13.41%
13.56%
L+
L+
9.00%
9.00%
11/9/2026
11/9/2026
4,678
4,569
3,945
29,722
29,261
25,065
11/9/2021
234
234
—
34,064
29,010
(9) (25) (29)
8/11/2022
SF+ 6.50%
(9) (29)
8/11/2022
10.92% SF+ 6.50%
8/11/2027
8/11/2027
—
(135)
(135)
67,597
66,330
66,511
8/11/2022
1,387,832
1,388
1,388
67,583
67,764
Secured Debt
(9) (23) (29)
12/21/2020
10.36% SF+ 6.60%
12/21/2025
36,000
35,737
36,000
Secured Debt
Secured Debt
Secured Debt
Common Stock
(9) (25) (29)
1/18/2022
(9) (29)
(9) (29)
1/18/2022
1/18/2022
SF+ 5.50%
9.32%
SF+ 5.50%
11.32% SF+ 7.50%
1/18/2027
1/18/2027
1/18/2027
—
6,660
6,660
1/18/2022
720,000
—
6,660
6,660
720
—
6,582
6,593
660
88
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
AVEX Aviation Holdings, LLC
(10) Specialty Aircraft Dealer
Secured Debt
Secured Debt
Common Equity
Berry Aviation, Inc.
(10) Charter Airline Services
(9) (25) (29)
12/23/2022
SF+ 7.25%
12/23/2027
—
(57)
(57)
(9) (29)
12/23/2022
12.17% SF+ 7.25%
12/23/2027
29,071
27,927
27,927
14,040
13,835
12/15/2021
360
Secured Debt
7/6/2018
12.00%
10.50% 1.50%
1/6/2024
195
Preferred Member Units
(8) (30)
7/6/2018
1,548,387
8.00%
Preferred Member Units
(8) (25) (30)
11/12/2019
122,416
8.00%
16.00%
Bettercloud, Inc.
(10) SaaS Provider of Workflow
Management and Business
Application Solutions
Secured Debt
Secured Debt
(9) (25) (29)
6/30/2022
(9) (29)
6/30/2022
SF+ 1.00%
6.00% 6/30/2028
—
(76)
(76)
11.40% SF+ 1.00%
6.00% 6/30/2028
27,505
27,020
27,505
Binswanger Enterprises, LLC
(10) Glass Repair and Installation
Service Provider
Member Units
3/10/2017
1,050,000
Bluestem Brands, Inc.
(11) Multi-Channel Retailer of General
Merchandise
Secured Debt
Secured Debt
Common Stock
Warrants
(9) (25)
10/19/2022
(9)
(8)
(27)
8/28/2020
12.94%
10/1/2020
723,184
10/19/2022
163,295
L+
L+
8.50%
8.50%
8/28/2025
8/28/2025
—
—
3,239
2,280
10/19/2032
Brainworks Software, LLC
(10) Advertising Sales and Newspaper
Circulation Software
Brightwood Capital Fund Investments
(12) (13)
Investment Partnership
Secured Debt
Secured Debt
(9) (14) (17)
8/12/2014
(9) (14) (17)
8/12/2014
12.50%
12.50%
P+
P+
9.25%
9.25%
7/22/2019
7/22/2019
761
7,056
360
406
28,230
28,276
195
1,161
—
1,356
195
4,561
270
5,026
26,944
27,429
1,050
420
—
3,139
4,860
1,095
9,094
761
2,916
3,677
1
1,036
3,317
761
7,056
7,817
LP Interests (Brightwood
Capital Fund III, LP)
LP Interests (Brightwood
Capital Fund IV, LP)
LP Interests (Brightwood
Capital Fund V, LP)
(8) (31)
7/21/2014
1.55%
(8) (31)
10/26/2016
0.59%
(31)
7/12/2021
1.31%
89
7,062
4,727
4,350
4,541
2,000
2,229
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
13,412
11,497
Burning Glass Intermediate Holding Company,
Inc.
(10) Provider of Skills-Based Labor
Market Analytics
Cadence Aerospace LLC
(10) Aerostructure Manufacturing
CAI Software LLC
Provider of Specialized Enterprise
Resource Planning Software
Camin Cargo Control, Inc.
(11) Provider of Mission Critical
Inspection, Testing and Fuel
Treatment Services
CaseWorthy, Inc.
(10) SaaS Provider of Case Management
Solutions
Channel Partners Intermediateco, LLC
(10) Outsourced Consumer Services
Provider
Clarius BIGS, LLC
(10) Prints & Advertising Film
Financing
Computer Data Source, LLC
(10) Third Party Maintenance Provider
to the Data Center Ecosystem
Secured Debt
Secured Debt
(9) (25)
(9)
6/14/2021
6/14/2021
L+
L+
5.00%
5.00%
8.91%
6/10/2026
6/10/2028
—
(28)
—
19,933
19,656
19,933
19,628
19,933
Secured Debt
(9) (34)
11/14/2017
11.99%
L+
8.50%
0.01% 11/14/2023
28,328
28,264
28,328
Preferred Equity
Preferred Equity
(8)
12/13/2021
1,788,527
12/13/2021
596,176
1,789
1,789
—
—
1,789
1,789
Secured Debt
(9)
6/14/2021
10.88%
L+
6.50%
6/4/2026
15,218
15,110
14,685
Secured Debt
Secured Debt
Secured Debt
Common Equity
(9) (25)
(9)
(9)
5/18/2022
5/18/2022
5/18/2022
L+
L+
L+
6.00%
6.00%
5.75%
10.73%
10.48%
5/18/2027
5/18/2027
5/18/2027
—
7,993
6,133
12/30/2022
245,926
(11)
(11)
7,914
6,079
246
7,914
6,133
246
14,228
14,282
Secured Debt
Secured Debt
(9) (29) (42)
2/7/2022
10.72% SF+ 6.25%
(9) (28 ) (29)
2/7/2022
10.71% SF+ 6.25%
2/7/2027
2/7/2027
1,868
1,767
1,841
39,047
38,396
38,484
40,163
40,325
Secured Debt
(14) (17)
9/23/2014
15.00%
15.00% 1/5/2015
2,712
2,712
19
Secured Debt
Secured Debt
(9) (43)
(9)
8/6/2021
8/6/2021
12.56%
12.56%
L+
L+
8.00%
8.00%
8/6/2026
8/6/2026
5,000
4,928
4,621
18,588
18,315
17,178
90
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
23,243
21,799
Construction Supply Investments, LLC
(10) Distribution Platform of Specialty
Construction Materials to
Professional Concrete and Masonry
Contractors
Dalton US Inc.
(10) Provider of Supplemental Labor
Services
DTE Enterprises, LLC
(10)
Industrial Powertrain Repair and
Services
Dynamic Communities, LLC
(10) Developer of Business Events and
Online Community Groups
Eastern Wholesale Fence LLC
(10) Manufacturer and Distributor of
Residential and Commercial
Fencing Solutions
Emerald Technologies Acquisition Co, Inc.
(11) Design & Manufacturing
Member Units
(8)
12/29/2016
861,618
3,335
21,165
Secured Debt
Secured Debt
Secured Debt
Common Stock
(9) (29)
8/16/2022
11.90% SF+ 8.00%
(9) (25) (29)
8/16/2022
SF+ 8.00%
(9) (29)
8/16/2022
12.56% SF+ 8.00%
8/16/2027
8/16/2027
8/16/2027
1,092
—
871
1,077
(74)
(74)
14,389
14,125
14,186
8/16/2022
201
201
201
15,123
15,390
Secured Debt
Secured Debt
(9) (25)
(9)
4/13/2018
4/13/2018
L+
L+
7.50%
7.50%
12.24%
4/13/2023
4/13/2023
—
(1)
(1)
6,074
6,065
5,934
Class A Preferred Member
Units
Class AA Preferred Member
Units (non-voting)
(8)
4/13/2018
776,316
8.00%
4/13/2018
10.00%
8.00%
10.00%
Secured Debt
Secured Debt
Preferred Equity
Preferred Equity
Common Equity
(9) (29)
(9) (29)
12/20/2022
12/20/2022
9.18%
SF+ 4.50%
9.18% 12/31/2026
11.18% SF+ 6.50% 11.18% 12/31/2026
1,875
1,875
12/20/2022
125,000
12/20/2022
2,376,241
12/20/2022
1,250,000
776
380
1,161
8,001
1,161
7,474
1,717
1,642
128
—
—
1,717
1,642
128
—
—
3,487
3,487
Secured Debt
Secured Debt
Secured Debt
(9)
(9)
(9)
11/19/2020
11/19/2020
11/19/2020
11.73%
11.73%
11.73%
L+
L+
L+
7.00%
7.00%
7.00%
10/30/2025
10/30/2025
3,346
5,021
3,290
4,967
3,276
4,916
10/30/2025
23,456
23,149
22,967
31,406
31,159
Secured Debt
(9) (29)
2/10/2022
10.67% SF+ 6.25%
2/10/2028
9,258
9,099
8,787
91
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
EnCap Energy Fund Investments
(12) (13)
Investment Partnership
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
LP Interests (EnCap Energy
Capital Fund VIII, L.P.)
LP Interests (EnCap Energy
Capital Fund VIII Co-
Investors, L.P.)
LP Interests (EnCap Energy
Capital Fund IX, L.P.)
LP Interests (EnCap Energy
Capital Fund X, L.P.)
LP Interests (EnCap
Flatrock Midstream Fund II,
L.P.)
LP Interests (EnCap
Flatrock Midstream Fund
III, L.P.)
(8) (31)
1/22/2015
0.14%
(8) (31)
1/21/2015
0.38%
(8) (31)
1/22/2015
0.10%
(8) (31)
3/25/2015
0.15%
(31)
3/30/2015
0.84%
(8) (31)
3/27/2015
0.25%
3,566
2,092
1,984
1,037
3,699
2,019
8,236
9,351
5,358
1,688
6,023
5,718
28,866
21,905
Engineering Research & Consulting, LLC
(10) Provider of Engineering &
Consulting Services to US
Department of Defense
EPIC Y-Grade Services, LP
(11) NGL Transportation & Storage
Event Holdco, LLC
(10) Event and Learning Management
Software for Healthcare
Organizations and Systems
Flip Electronics LLC
(10) Distributor of Hard-to-Find and
Obsolete Electronic Components
Fuse, LLC
(11) Cable Networks Operator
GeoStabilization International (GSI)
(11) Geohazard Engineering Services &
Maintenance
Secured Debt
Secured Debt
(9) (29)
(9) (29)
5/23/2022
5/23/2022
11.68% SF+ 6.50%
10.92% SF+ 6.50%
5/23/2027
5/23/2028
131
85
131
16,338
16,047
16,338
16,132
16,469
Secured Debt
(9)
6/22/2018
10.70%
L+
6.00%
6/30/2027
6,823
6,764
6,141
Secured Debt
Secured Debt
(9) (30)
(9) (30)
12/22/2021
12/22/2021
10.67%
10.67%
L+
L+
7.00%
7.00%
12/22/2026
3,692
3,663
3,507
12/22/2026
44,308
43,955
42,083
47,618
45,590
Secured Debt
Secured Debt
(9) (29)
(9) (29)
3/24/2022
1/4/2021
11.21% SF+ 7.50%
12.19% SF+ 7.50%
1/2/2026
1/2/2026
736
736
736
11,095
10,852
11,095
Secured Debt
Common Stock
6/30/2019
12.00%
6/28/2024
1,810
6/30/2019
10,429
11,588
11,831
1,810
256
2,066
1,512
—
1,512
92
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Secured Debt
Investment
Date
(24)
1/2/2019
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
9.44%
SF+ 5.25%
12/19/2025
20,497
20,427
19,472
GS HVAM Intermediate, LLC
(10) Specialized Food Distributor
GULF PACIFIC ACQUISITION, LLC
(10) Rice Processor and Merchandiser
HDC/HW Intermediate Holdings
(10) Managed Services and Hosting
Provider
HEADLANDS OP-CO LLC
(10) Clinical Trial Sites Operator
Heartland Dental, LLC
(10) Dental Support Organization
HOWLCO LLC
(11) (13) (21) Provider of Accounting and
Business Development Software to
Real Estate End Markets
Hybrid Promotions, LLC
(10) Wholesaler of Licensed, Branded
and Private Label Apparel
IG Parent Corporation
(11) Software Engineering
Secured Debt
Secured Debt
(9)
(9)
10/18/2019
10/18/2019
11.20%
11.24%
L+
L+
6.50%
6.50%
10/2/2024
10/2/2024
2,177
2,169
2,171
10,734
10,695
10,705
Secured Debt
Secured Debt
Secured Debt
(9) (29)
9/30/2022
10.42% SF+ 6.00%
(9) (25) (29)
9/30/2022
SF+ 6.00%
(9) (29)
9/30/2022
10.73% SF+ 6.00%
9/30/2028
9/30/2028
9/30/2028
252
—
3,661
Secured Debt
Secured Debt
(9) (29)
(9) (29)
12/21/2018
12/21/2018
14.34% SF+ 9.50%
2.00% 12/21/2023
320
14.34% SF+ 9.50%
2.00% 12/21/2023
3,277
12,864
12,876
233
(15)
3,591
3,809
319
3,262
3,581
252
(15)
3,661
3,898
311
3,186
3,497
Secured Debt
Secured Debt
Secured Debt
(9) (25) (29)
8/1/2022
(9) (25) (29)
8/1/2022
SF+ 6.50%
SF+ 6.50%
(9) (29)
8/1/2022
10.62% SF+ 6.50%
8/1/2027
8/1/2027
8/1/2027
—
—
(62)
(62)
(62)
(62)
16,791
16,483
16,791
16,359
16,667
Secured Debt
(9)
9/9/2020
10.88%
L+
6.50%
4/30/2025
14,663
14,430
13,599
Secured Debt
(9)
8/19/2021
10.69%
L+
6.00%
10/23/2026
25,290
25,290
24,381
Secured Debt
(29)
6/30/2021
12.07% SF+ 8.25%
6/30/2026
7,088
6,986
6,144
Secured Debt
Secured Debt
(9) (29) (41)
7/30/2021
10.17% SF+ 5.75%
(9) (29)
7/30/2021
10.17% SF+ 5.75%
7/30/2026
7/30/2028
698
670
698
14,499
14,304
14,499
14,974
15,197
93
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Implus Footcare, LLC
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
(10) Provider of Footwear and Related
Accessories
Secured Debt
(9)
6/1/2017
13.98%
L+
7.75%
1.50% 4/30/2024
18,515
18,384
17,464
Independent Pet Partners Intermediate
Holdings, LLC
(10) Omnichannel Retailer of Specialty
Pet Products
(9) (35)
8/20/2020
13.00%
P+
5.50% 13.00% 2/27/2023
7,027
7,027
6.00%
6.00% 11/20/2023
18,428
17,664
14.42% SF+ 10.00% 14.42% 2/27/2023
806
6.00%
6.00%
Secured Debt
Secured Debt
Secured Debt
Preferred Stock (non-voting)
Preferred Stock (non-voting)
Member Units
Warrants
(14)
(29)
12/10/2020
11/28/2022
12/10/2020
12/10/2020
11/20/2018
1,558,333
(25) (38)
11/20/2018
242,914
11/19/2028
Industrial Services Acquisition, LLC
(10)
Industrial Cleaning Services
Secured Debt
Secured Debt
Preferred Member Units
Preferred Member Units
Member Units
(9)
(9)
(8) (30)
(8) (30)
(30)
8/13/2021
8/13/2021
1/31/2018
5/17/2019
6/17/2016
144
80
900
11.50%
11.50%
10.00%
20.00%
30,253
15,429
L+
L+
6.75%
6.75%
8/13/2026
8/13/2026
463
430
463
19,239
18,956
19,239
10.00%
20.00%
Infolinks Media Buyco, LLC
(10) Exclusive Placement Provider to
the Advertising Ecosystem
Interface Security Systems, L.L.C
(10) Commercial Security & Alarm
Services
Intermedia Holdings, Inc.
(11) Unified Communications as a
Service
Invincible Boat Company, LLC.
(10) Manufacturer of Sport Fishing
Boats
Secured Debt
Secured Debt
(9) (25)
(9)
11/1/2021
11/1/2021
L+
L+
5.50%
5.50%
10.23%
11/1/2026
11/1/2026
—
8,593
Secured Debt
Secured Debt
Common Stock
(44)
(9) (14)
12/9/2021
8/7/2019
14.22%
L+ 10.00%
8/7/2023
12.07%
L+
7.00%
1.00%
8/7/2023
1,682
7,313
12/7/2021
2,143
Secured Debt
(9)
8/3/2018
10.38%
L+
6.00%
7/19/2025
20,467
20,418
15,811
Secured Debt
(9)
8/28/2019
10.14%
L+
6.50%
8/28/2025
622
618
622
94
7,027
7,633
769
—
—
—
—
769
3,235
—
1,558
—
129
92
900
145
93
600
20,507
20,540
(19)
(19)
8,461
8,442
8,593
8,574
1,682
7,237
—
1,682
1,082
—
8,919
2,764
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
INW Manufacturing, LLC
(11) Manufacturer of Nutrition and
Wellness Products
Isagenix International, LLC
(11) Direct Marketer of Health &
Wellness Products
Jackmont Hospitality, Inc.
(10) Franchisee of Casual Dining
Restaurants
Joerns Healthcare, LLC
(11) Manufacturer and Distributor of
Health Care Equipment & Supplies
JTI Electrical & Mechanical, LLC
(10) Electrical, Mechanical and
Automation Services
Type of Investment
(2) (3) (15)
Secured Debt
(9)
Investment
Date
(24)
8/28/2019
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
10.17%
L+
6.50%
8/28/2025
16,889
16,784
16,889
17,402
17,511
Secured Debt
(9)
5/19/2021
10.48%
L+
5.75%
3/25/2027
7,125
6,968
6,092
Secured Debt
(9) (14)
6/21/2018
9.93%
L+
7.75%
6/14/2025
5,053
5,038
1,537
Secured Debt
Secured Debt
Preferred Equity
Secured Debt
Secured Debt
Common Stock
Secured Debt
Secured Debt
Common Equity
(9)
(9)
(8)
(14)
10/26/2022
11/8/2021
12.23%
12.23%
L+
L+
7.50%
7.50%
11/4/2024
11/4/2024
500
2,079
11/8/2021
2,826,667
12.00%
12.00%
11/15/2021
8/21/2019
18.00%
19.75%
8/21/2019
472,579
1/31/2024
19.75% 8/21/2024
2,297
4,034
483
2,079
123
2,685
2,297
3,997
4,429
500
2,079
623
3,202
2,297
504
—
10,723
2,801
(9) (25)
12/22/2021
(9)
12/22/2021
10.73%
L+
L+
6.00%
6.00%
12/22/2026
—
(135)
(135)
12/22/2026
36,947
36,358
36,947
12/22/2021
1,684,211
KMS, LLC
(10) Wholesaler of Closeout and Value-
priced Products
Secured Debt
Secured Debt
(9)
(9)
10/4/2021
10/4/2021
12.00%
12.00%
L+
L+
7.25%
7.25%
10/4/2026
10/4/2026
1,064
7,505
Kore Wireless Group Inc.
(11) Mission Critical Software Platform
Secured Debt
(29)
12/31/2018
10.08% SF+ 5.50%
9/21/2024
11,326
11,280
10,930
Lightbox Holdings, L.P.
(11) Provider of Commercial Real Estate
Software
Secured Debt
5/9/2019
9.73%
L+
5.00%
5/9/2026
14,475
14,349
13,968
95
1,684
2,840
37,907
39,652
1,019
7,391
8,410
995
7,022
8,017
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
LKCM Headwater Investments I, L.P.
(12) (13)
Investment Partnership
LP Interests
(8) (31)
1/25/2013
2.27%
1,746
3,197
LL Management, Inc.
(10) Medical Transportation Service
Provider
LLFlex, LLC
(10) Provider of Metal-Based Laminates
Logix Acquisition Company, LLC
(10) Competitive Local Exchange
Carrier
Looking Glass Investments, LLC
(12) (13) Specialty Consumer Finance
Mako Steel, LP
(10) Self-Storage Design &
Construction
MB2 Dental Solutions, LLC
(11) Dental Partnership Organization
Microbe Formulas, LLC
(10) Nutritional Supplements Provider
Mills Fleet Farm Group, LLC
(10) Omnichannel Retailer of Work,
Farm and Lifestyle Merchandise
Secured Debt
Secured Debt
Secured Debt
(9) (29)
(9) (29)
(9) (29)
5/2/2019
5/2/2019
5/12/2022
11.21% SF+ 7.25%
11.67% SF+ 7.25%
11.67% SF+ 7.25%
9/25/2023
9/25/2023
9/25/2023
8,106
9,197
8,087
9,160
8,047
9,130
10,827
10,733
10,749
27,980
27,926
Secured Debt
(9)
8/16/2021
12.74%
L+
9.00%
8/16/2026
4,444
4,370
4,350
Secured Debt
(9)
1/8/2018
10.13%
L+
5.75%
12/22/2024
19,662
19,033
16,221
Member Units
7/1/2015
3
125
25
Secured Debt
Secured Debt
(9) (45)
(9)
3/15/2021
3/15/2021
11.79%
11.09%
L+
L+
7.25%
7.25%
3/15/2026
3/15/2026
3,103
3,063
3,083
15,324
15,122
15,224
18,185
18,307
Secured Debt
Secured Debt
(9) (29)
(9) (29)
1/28/2021
1/28/2021
10.42% SF+ 6.00%
10.42% SF+ 6.00%
1/29/2027
1/29/2027
8,338
7,876
8,267
7,784
8,338
7,876
16,051
16,214
Secured Debt
Secured Debt
(9) (25) (29)
4/4/2022
SF+ 6.25%
(9) (29)
4/4/2022
9.86%
SF+ 6.25%
4/3/2028
4/3/2028
—
(63)
(63)
26,075
25,619
25,181
25,556
25,118
Secured Debt
(9)
10/24/2018
10.66%
L+
6.25%
10/24/2024
18,769
18,562
18,338
96
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
MonitorUS Holding, LLC
(10) (13) (21) SaaS Provider of Media
Intelligence Services
NBG Acquisition Inc
(11) Wholesaler of Home Décor
Products
NinjaTrader, LLC
(10) Operator of Futures Trading
Platform
NTM Acquisition Corp.
(11) Provider of B2B Travel Information
Content
NWN Corporation
(10) Value Added Reseller and Provider
of Managed Services to a Diverse
Set of Industries
Ospemifene Royalty Sub LLC
(10) Estrogen-Deficiency Drug
Manufacturer and Distributor
OVG Business Services, LLC
(10) Venue Management Services
Paragon Healthcare, Inc.
(10)
Infusion Therapy Treatment
Provider
Secured Debt
Secured Debt
Secured Debt
Common Stock
(9) (25)
(9)
(9)
5/24/2022
5/24/2022
5/24/2022
L+
L+
L+
7.00%
7.00%
7.00%
11.73%
11.73%
5/24/2027
5/24/2027
5/24/2027
—
(64)
(64)
10,107
9,923
10,714
17,038
16,746
17,038
8/30/2022
44,445,814
889
889
27,494
28,577
Secured Debt
(9)
4/28/2017
9.67%
L+
5.50%
4/26/2024
3,849
3,834
1,251
Secured Debt
Secured Debt
Secured Debt
(9) (25)
(9) (25)
(9)
12/18/2019
12/18/2019
12/18/2019
L+
L+
L+
6.25%
6.25%
6.25%
9.99%
12/18/2024
12/18/2024
—
—
(1)
(38)
—
(38)
12/18/2024
21,666
21,418
21,666
21,379
21,628
Secured Debt
(9)
7/12/2016
9.50%
L+
6.25%
1.00%
6/7/2024
4,358
4,358
4,228
Secured Debt
Secured Debt
Secured Debt
(9) (29) (46)
5/7/2021
10.85% SF+ 8.00%
(9) (29)
5/7/2021
12.56% SF+ 8.00%
5/7/2026
5/7/2026
3,941
3,797
3,720
39,851
39,094
37,616
12/16/2022
20.00%
20.00% 8/6/2026
6,509
6,194
6,194
49,085
47,530
Secured Debt
(14)
7/8/2013
11.50%
11/15/2026
4,489
4,489
103
Secured Debt
(9)
11/29/2021
10.64%
L+
6.25%
11/19/2028
13,930
13,813
13,094
97
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Project Eagle Holdings, LLC
(10) Provider of Secure Business
Collaboration Software
PTL US Bidco, Inc
(10) (13) Manufacturers of Equipment,
Including Drilling Rigs and
Equipment, and Providers of
Supplies and Services to
Companies Involved In the
Drilling, Evaluation and
Completion of Oil and Gas Wells.
RA Outdoors LLC
(10) Software Solutions Provider for
Outdoor Activity Management
Research Now Group, Inc. and Survey
Sampling International, LLC
(11) Provider of Outsourced Online
Surveying
RM Bidder, LLC
(10) Scripted and Unscripted TV and
Digital Programming Provider
Roof Opco, LLC
(10) Residential Re-Roofing/Repair
RTIC Subsidiary Holdings, LLC
(10) Direct-To-Consumer eCommerce
Provider of Outdoor Products
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Secured Debt
Secured Debt
Secured Debt
(9) (29)
1/19/2022
10.26% SF+ 5.75%
(9) (29) (47)
1/19/2022
9.96%
SF+ 5.75%
(9) (29)
1/19/2022
9.81%
SF+ 5.75%
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
1/19/2027
1/19/2027
1/19/2027
541
2,701
437
2,609
530
2,649
18,293
17,852
17,939
20,898
21,118
Secured Debt
Secured Debt
(9) (25)
(9)
7/6/2020
7/6/2020
L+
L+
6.25%
6.25%
10.64%
7/6/2026
7/6/2026
—
(18)
(18)
29,475
29,040
29,419
29,022
29,401
Secured Debt
Secured Debt
(9) (25) (29)
8/19/2022
SF+ 7.25%
(9) (29)
8/19/2022
11.80% SF+ 7.25%
8/19/2027
8/19/2027
—
(174)
(174)
28,265
27,749
27,911
27,575
27,737
Secured Debt
Secured Debt
(9) (25) (29)
4/8/2021
SF+ 6.75%
(9) (29)
4/8/2021
10.56% SF+ 6.75%
4/8/2026
4/8/2026
—
(11)
(11)
13,369
13,241
12,094
13,230
12,083
Secured Debt
(9)
12/29/2017
8.84%
L+
5.50%
12/20/2024
19,966
19,745
15,116
Member Units
Warrants
Secured Debt
Secured Debt
Secured Debt
11/12/2015
2,779
(26)
11/12/2015
327,532
10/20/2025
(9) (29)
(9) (29)
(9) (29)
8/27/2021
8/27/2021
8/27/2021
10.97% SF+ 6.50%
10.32% SF+ 6.50%
10.32% SF+ 6.50%
8/27/2026
8/27/2026
8/27/2026
311
2,333
3,173
46
425
471
300
2,291
3,125
5,716
19
—
19
311
2,333
3,173
5,817
Secured Debt
(9) (29) (48)
9/1/2020
12.02% SF+ 7.75%
9/1/2025
1,361
1,343
1,258
98
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Rug Doctor, LLC.
(10) Carpet Cleaning Products and
Machinery
Savers, Inc.
(11) For-Profit Thrift Retailer
SIB Holdings, LLC
(10) Provider of Cost Reduction
Services
South Coast Terminals Holdings, LLC
(10) Specialty Toll Chemical
Manufacturer
SPAU Holdings, LLC
(10) Digital Photo Product Provider
Staples Canada ULC
(10) (13) (21) Office Supplies Retailer
Stellant Systems, Inc.
(11) Manufacturer of Traveling Wave
Tubes and Vacuum Electronic
Devices
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
(9) (29)
9/1/2020
11.49% SF+ 7.75%
9/1/2025
16,623
16,506
15,367
17,849
16,625
Secured Debt
Secured Debt
(9) (29)
(9) (29)
7/16/2021
7/16/2021
13.02% SF+ 6.25%
2.00% 11/16/2024
13.02% SF+ 6.25%
2.00% 11/16/2024
5,625
8,340
5,590
8,223
5,037
7,478
13,813
12,515
Secured Debt
(9) (29)
5/14/2021
10.34% SF+ 5.50%
4/26/2028
11,286
11,199
10,938
Secured Debt
Secured Debt
Secured Debt
Common Equity
Secured Debt
Secured Debt
Common Equity
Secured Debt
Secured Debt
Common Stock
(9)
(9)
(9)
10/29/2021
10/29/2021
10/29/2021
11.01%
11.01%
11.01%
L+
L+
L+
6.25%
6.25%
6.25%
10/29/2026
10/29/2026
10/29/2026
417
1,553
7,750
10/29/2021
95,238
408
1,527
7,626
200
9,761
393
1,433
7,151
146
9,123
(9) (25)
12/10/2021
(9)
12/10/2021
9.69%
L+
L+
5.75%
5.75%
12/13/2026
—
(71)
(71)
12/13/2026
41,255
40,603
41,255
12/10/2021
863,636
864
1,316
41,396
42,500
(9) (25) (29)
7/1/2022
SF+ 7.50%
(9) (29)
7/1/2022
11.06% SF+ 7.50%
7/1/2027
7/1/2027
—
(57)
(57)
15,928
15,641
15,928
7/1/2022
638,710
639
639
16,223
16,510
Secured Debt
(9) (22)
9/14/2017
11.83%
L+
7.00%
9/12/2024
13,740
13,698
12,481
Tacala Investment Corp.
(33) Quick Service Restaurant Group
Secured Debt
(9) (32)
3/19/2021
7.88%
L+
3.50%
2/5/2027
1,974
1,974
1,904
Secured Debt
(9) (29)
10/22/2021
10.05% SF+ 5.50%
10/1/2028
7,623
7,559
7,166
99
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Team Public Choices, LLC
(11) Home-Based Care Employment
Service Provider
Secured Debt
(9)
12/22/2020
9.93%
L+
5.00%
12/18/2027
14,964
14,690
14,290
Tectonic Financial, LLC
Financial Services Organization
Common Stock
(8)
5/15/2017
200,000
2,000
5,630
Tex Tech Tennis, LLC
(10) Sporting Goods & Textiles
Preferred Equity
(30)
7/7/2021
1,000,000
1,000
1,830
U.S. TelePacific Corp.
(11) Provider of Communications and
Managed Services
USA DeBusk LLC
(10) Provider of Industrial Cleaning
Services
Veregy Consolidated, Inc.
(11) Energy Service Company
Vida Capital, Inc
(11) Alternative Asset Manager
Vistar Media, Inc.
(10) Operator of Digital Out-of-Home
Advertising Platform
VORTEQ Coil Finishers, LLC
(10) Specialty Coating of Aluminum and
Light-Gauge Steel
Wahoo Fitness Acquisition L.L.C.
(11) Fitness Training Equipment
Provider
Secured Debt
(9) (29)
5/17/2017
11.57% SF+ 1.25%
7.25%
5/2/2026
18,352
18,284
6,859
Secured Debt
(9)
10/22/2019
9.82%
L+
5.75%
9/8/2026
33,577
33,031
33,577
Secured Debt
Secured Debt
(9) (25)
(9)
11/9/2020
11/9/2020
L+
L+
5.25%
6.00%
10.41%
11/3/2025
11/3/2027
—
(630)
(630)
17,685
17,381
15,479
16,751
14,849
Secured Debt
10/10/2019
10.38%
L+
6.00%
10/1/2026
15,448
15,313
12,049
Preferred Stock
4/3/2019
70,207
767
2,250
Common Equity
(8)
11/30/2021
1,038,462
1,038
3,930
100
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
(9) (29)
8/17/2021
10.64% SF+ 5.75%
8/12/2028
14,625
14,268
8,409
Wall Street Prep, Inc.
(10) Financial Training Services
Watterson Brands, LLC
(10) Facility Management Services
West Star Aviation Acquisition, LLC
(10) Aircraft, Aircraft Engine and
Engine Parts
Secured Debt
Secured Debt
Common Stock
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Common Stock
Winter Services LLC
(10) Provider of Snow Removal and Ice
Management Services
(9) (25)
(9)
7/19/2021
7/19/2021
L+
L+
7.00%
7.00%
10.74%
7/19/2026
7/19/2026
—
4,235
7/19/2021
400,000
(9)
(9)
(9)
12/17/2021
12/17/2021
12/17/2021
10.73%
10.73%
10.73%
L+
L+
L+
6.00%
6.00%
6.00%
12/17/2026
12/17/2026
371
391
12/17/2026
28,957
28,591
28,947
29,286
29,708
(9) (25) (29)
3/1/2022
SF+ 6.00%
(9) (29)
3/1/2022
8.59%
SF+ 6.00%
3/1/2028
3/1/2028
—
(20)
(20)
10,794
10,608
10,685
3/1/2022
1,541,400
(6)
(6)
4,173
400
4,567
334
361
4,146
420
4,560
370
391
1,541
1,950
12,129
12,615
(34)
(17)
9,848
9,797
—
(17)
9,992
9,975
Secured Debt
Secured Debt
Secured Debt
(9) (25)
(9) (25)
(9)
11/19/2021
11/19/2021
11/19/2021
L+
L+
L+
7.00%
7.00%
7.00%
10.74%
11/19/2026
11/19/2026
—
—
11/19/2026
10,000
Xenon Arc, Inc.
(10) Tech-enabled Distribution Services
to Chemicals and Food Ingredients
Primary Producers
YS Garments, LLC
(11) Designer and Provider of Branded
Activewear
Zips Car Wash, LLC
(10) Express Car Wash Operator
Secured Debt
Secured Debt
Secured Debt
(25)
12/17/2021
12/17/2021
12/17/2021
L+
L+
L+
5.25%
5.25%
5.25%
10.84%
8.63%
12/17/2026
—
(218)
(218)
12/17/2027
24,300
23,864
24,135
12/17/2027
38,311
37,691
38,051
61,337
61,968
Secured Debt
(9)
8/22/2018
9.51%
L+
5.50%
8/9/2024
12,659
12,619
12,127
Secured Debt
Secured Debt
(9) (29)
2/11/2022
11.67% SF+ 7.25%
(9) (29) (33)
2/11/2022
11.67% SF+ 7.25%
3/1/2024
3/1/2024
17,512
17,279
17,512
4,389
4,360
4,379
101
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date
(24)
Shares/
Units
Total Rate
Reference
Rate and
Spread (29)
PIK
Rate
(19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Subtotal Non-Control/Non-Affiliate Investments
(84.4% of net assets at fair value)
Total Portfolio Investments, December 31, 2022
(194.5% of net assets at fair value)
21,639
21,891
$ 1,867,414 $ 1,780,646
$ 3,773,752 $ 4,102,177
____________________
(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C — Fair Value Hierarchy for Investments — Portfolio
Composition for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered
either as security for the Company’s Corporate Facility or SPV Facility (each as defined in Note B.5. — Deferred Financing Costs, and together the “Credit
Facilities”) or in support of the SBA-guaranteed debentures issued by the Funds.
Debt investments are income producing, unless otherwise noted by footnote (14), as described below. Equity and warrants are non-income producing, unless
otherwise noted by footnote (8), as described below.
See Note C — Fair Value Hierarchy for Investments — Portfolio Composition and Schedule 12-14 for a summary of geographic location of portfolio
companies.
Principal is net of repayments. Cost is net of repayments and accumulated unearned income. Negative cost is the result of the capitalized discount being greater
than the principal amount outstanding on the loan.
Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate
greater than 50% of the board representation is maintained.
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the
investments are not classified as Control investments.
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.
Income producing through dividends or distributions.
Index based floating interest rate is subject to contractual minimum interest rate. As noted in this schedule, 66% of these floating rate loans (based on the par
amount) contain LIBOR or Term SOFR (“SOFR”) floors which range between 0.50% and 2.00%, with a weighted-average floor of 1.04%.
Private Loan portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Private Loan portfolio
investments.
Middle Market portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Middle Market
portfolio investments.
Other Portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Other Portfolio investments.
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of
acquisition of any additional non-qualifying assets.
Non-accrual and non-income producing investment.
All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”
External Investment Manager. Investment is not encumbered as security for the Company’s Credit Facilities or in support of the SBA-guaranteed debentures
issued by the Funds.
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
102
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(28)
(29)
(30)
(31)
(32)
(33)
(34)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.
Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C — Fair Value Hierarchy for Investments —
Portfolio Composition for further discussion. Negative fair value is the result of the capitalized discount on the loan or the unfunded commitment being valued
below par.
Investments may have a portion, or all, of their income received from Paid-in-Kind (“PIK”) interest or dividends. PIK interest income and cumulative dividend
income represent income not paid currently in cash. The difference between the Total Rate and PIK Rate represents the cash rate as of December 31, 2022.
All portfolio company headquarters are based in the United States, unless otherwise noted.
Portfolio company headquarters are located outside of the United States.
In connection with the Company’s debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange
rates during the term of the Company’s investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $16.9 million
Canadian Dollars and receive $13.1 million U.S. Dollars with a settlement date of September 14, 2023. The unrealized appreciation on the forward foreign
currency contract was $0.6 million as of December 31, 2022.
The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first
out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore,
the Company receives a higher interest rate than the contractual stated interest rate of SOFR+6.00% (Floor 1.00%) per the credit agreement and the
Consolidated Schedule of Investments above reflects such higher rate.
Investment date represents the date of initial investment in the security position.
The position is unfunded and no interest income is being earned as of December 31, 2022. The position may earn a nominal unused facility fee on committed
amounts.
Warrants are presented in equivalent units with a strike price of $14.28 per unit.
Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.
As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+6.25% (Floor 1.00%). Due to an amendment and subsequent funding
during the quarter, the term loan facility has different floating rate reset dates. The rate presented represents a weighted-average rate for borrowings under the
facility, as of December 31, 2022.
A majority of the variable rate loans in the Company’s Investment Portfolio bear interest at a rate that may be determined by reference to either LIBOR (“L”),
SOFR (“SF”) or an alternate Base rate (commonly based on the Federal Funds Rate or the Prime rate (“P”)), which typically resets every one, three, or six
months at the borrower’s option. SOFR based contracts may include a credit spread adjustment (the “Adjustment”) that is charged in addition to the stated
spread. The Adjustment is applied when the SOFR rate, plus the Adjustment, exceeds the stated floor rate, as applicable. As of December 31, 2022, SOFR
based contracts in the portfolio had Adjustments ranging from 0.10% to 0.35%.
Shares/Units represent ownership in a related Real Estate or HoldCo entity.
Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.
Short-term portfolio investments. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of short-term portfolio
investments.
As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+7.25% (Floor 1.00%). Each new draw on the delayed draw term loan
facility has a different floating rate reset date. The rate presented represents a weighted-average rate for borrowings under the facility, as of December 31,
2022.
The security has an effective contractual interest rate of 2.00% PIK + LIBOR+6.50%, Floor 1.00%, but the issuer may, in its discretion, elect to pay the PIK
interest in cash. The rate presented represents the effective current yield based on actual payments received during the period.
103
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2022
(dollars in thousands)
(35)
(36)
(37)
(38)
(39)
(40)
(41)
(42)
(43)
(44)
(45)
(46)
(47)
(48)
As of December 31, 2022, borrowings under the loan facility bore interest at LIBOR+6.50% PIK or Prime+5.50% PIK. Revolving facility permits the
borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for
borrowings under the facility, as of December 31, 2022.
Index based floating interest rate is subject to contractual maximum base rate of 2.50%.
Index based floating interest rate is subject to contractual maximum base rate of 1.50%.
Warrants are presented in equivalent shares/units with a strike price of $1.00 per share/unit.
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investment in this portfolio company will not be finally determined
until such process is complete. As noted in footnote (14), our debt investment in this portfolio company is on non-accrual status.
The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first
out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore,
the Company receives a higher interest rate than the contractual stated interest rate of SOFR+8.00% (Floor 1.50%) per the credit agreement and the
Consolidated Schedule of Investments above reflects such higher rate.
As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+5.75% (Floor 1.00%). RLOC facility permits the borrower to make an
interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the
facility, as of December 31, 2022.
As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+6.25% (Floor 1.00%). RLOC facility permits the borrower to make an
interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the
facility, as of December 31, 2022.
As of December 31, 2022, borrowings under the loan facility bore interest at LIBOR+8.00% (Floor 1.00%). RLOC facility permits the borrower to make an
interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the
facility, as of December 31, 2022.
As of December 31, 2022, borrowings under the loan facility bore interest at LIBOR+10.00%. RLOC facility permits the borrower to make an interest rate
election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the facility, as of
December 31, 2022.
As of December 31, 2022, borrowings under the loan facility bore interest at LIBOR+7.25% (Floor 0.75%). RLOC facility permits the borrower to make an
interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the
facility, as of December 31, 2022.
As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+8.00% (Floor 1.00%). RLOC facility permits the borrower to make an
interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the
facility, as of December 31, 2022.
As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+5.75% (Floor 1.00%). Delayed draw term loan facility permits the
borrower to make an interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for
borrowings under the facility, as of December 31, 2022.
As of December 31, 2022, borrowings under the loan facility bore interest at SOFR+7.75% (Floor 1.25%). RLOC facility permits the borrower to make an
interest rate election regarding the base rate on each draw under the facility. The rate presented represents a weighted-average rate for borrowings under the
facility, as of December 31, 2022.
104
Table of contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Control Investments (5)
Analytical Systems Keco Holdings, LLC
Manufacturer of Liquid and Gas
Analyzers
ASC Interests, LLC
Recreational and Educational
Shooting Facility
ATS Workholding, LLC
(10) Manufacturer of Machine Cutting
Tools and Accessories
Barfly Ventures, LLC
(10) Casual Restaurant Group
Bolder Panther Group, LLC
Consumer Goods and Fuel Retailer
Brewer Crane Holdings, LLC
Provider of Crane Rental and
Operating Services
Bridge Capital Solutions Corporation
Financial Services and Cash Flow
Solutions Provider
12.00 % L +
10.00 %
8/16/2024
$
4,945 $
4,736 $
4,736
Secured Debt
(9)
Preferred Member Units
Preferred Member Units
Warrants
(27)
Secured Debt
Secured Debt
Member Units
8/16/2019
8/16/2019
5/20/2021
8/16/2019
12/31/2019
8/1/2013
8/1/2013
3,200
2,427
420
1,500
8/16/2029
13.00 %
13.00 %
7/31/2022
7/31/2022
200
1,650
Secured Debt
(14)
11/16/2017
5.00 %
8/16/2023
4,794
Preferred Member Units
11/16/2017
3,725,862
Secured Debt
Member Units
10/15/2020
10/26/2020
7.00 %
37
10/31/2024
711
Secured Debt
Class A Preferred Member
Units
Class B Preferred Member
Units
Secured Debt
Preferred Member Units
(9)
(8)
(8)
(9)
(8)
Secured Debt
Warrants
(27)
105
12/31/2020
12/31/2020
14.00 %
10.50 % L +
9.00 %
12/31/2025
39,000
38,687
39,000
12/31/2020
140,000
8.00 %
1/9/2018
1/9/2018
2,950
11.00 % L +
10.00 %
1/9/2023
8,060
7/25/2016
7/25/2016
13.00 %
82
12/11/2024
8,813
7/25/2026
8,813
2,132
8,813
4,060
3,200
2,427
316
—
4,894
—
10,679
9,630
200
1,636
1,500
3,336
4,635
3,726
8,361
711
1,584
2,295
200
1,636
720
2,556
3,005
—
3,005
711
1,930
2,641
10,194
10,194
14,000
62,881
23,170
72,364
8,037
4,280
8,037
7,710
12,317
15,747
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
Portfolio Company (1) (20)
Business Description
Café Brazil, LLC
Casual Restaurant Group
California Splendor Holdings LLC
Processor of Frozen Fruits
CBT Nuggets, LLC
Produces and Sells IT Training
Certification Videos
Centre Technologies Holdings, LLC
Provider of IT Hardware Services and
Software Solutions
Chamberlin Holding LLC
Roofing and Waterproofing Specialty
Contractor
Charps, LLC
Pipeline Maintenance and
Construction
Clad-Rex Steel, LLC
Specialty Manufacturer of Vinyl-Clad
Metal
Member Units
Secured Debt
Preferred Member Units
Preferred Member Units
Member Units
Secured Debt
Preferred Member Units
Secured Debt
Member Units
Member Units
(8)
(9)
(8)
(8)
(8)
(9)
(9)
(8)
December 31, 2021
(dollars in thousands)
Type of Investment
(2) (3) (15)
Secured Debt
(30)
Preferred Member Units
(8) (30)
Investment
Date (24)
7/25/2016
7/25/2016
6/9/2006
1,233
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
13.00 %
12/11/2024
1,000
17,742
3/30/2018
7/31/2019
3/30/2018
6,725
15.00 %
15.00 %
6,157
11.00 % L +
10.00 %
3/30/2023
28,000
27,915
27,915
6/1/2006
416
1/4/2019
1/4/2019
12,696
12.00 % L +
10.00 %
1/4/2024
9,416
2/26/2018
2/26/2018
4,347
(8) (30)
11/2/2018
1,047,146
9.00 % L +
8.00 %
2/26/2023
17,817
17,738
17,817
1,000
1,000
1,000
1,000
12,945
14,873
1,742
2,570
9,510
9,510
10,775
48,200
13,275
50,700
1,300
50,620
9,370
5,840
8,864
5,840
15,210
14,704
11,440
24,140
1,322
1,540
30,500
43,497
4,599
1,963
6,562
5,694
13,990
19,684
Unsecured Debt
Preferred Member Units
(8)
8/26/2020
2/3/2017
1,829
10.00 %
1/31/2024
5,694
Secured Debt
Member Units
Secured Debt
Member Units
(9)
(8)
(30)
12/20/2016
12/20/2016
12/20/2016
12/20/2016
717
800
10.50 % L +
9.50 %
1/15/2024
10,480
10,401
10,401
10.00 %
12/20/2036
1,081
7,280
1,071
210
10,250
1,071
530
18,962
22,252
CMS Minerals Investments
Oil & Gas Exploration & Production
106
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Member Units
(8) (30)
4/1/2016
100
1,838
1,974
Cody Pools, Inc.
Designer of Residential and
Commercial Pools
Colonial Electric Company LLC
Provider of Electrical Contracting
Services
CompareNetworks Topco, LLC
Internet Publishing and Web Search
Portals
Secured Debt
(9)
Preferred Member Units
(8) (30)
3/6/2020
3/6/2020
587
12.25 % L +
10.50 %
12/17/2026
42,497
42,117
42,484
8,317
47,640
50,434
90,124
Secured Debt
Preferred Member Units
(8)
3/31/2021
3/31/2021
17,280
12.00 %
3/31/2026
24,570
24,351
24,351
7,680
9,130
32,031
33,481
6,452
1,975
8,427
6,477
12,000
18,477
710
710
8,296
2,610
7,668
2,610
10,906
10,278
Copper Trail Fund Investments
(12) (13)
Investment Partnership
LP Interests (CTMH, LP)
(31)
7/17/2017
38.8 %
Secured Debt
Preferred Member Units
(9)
(8)
1/29/2019
1/29/2019
1,975
10.00 % L +
9.00 %
1/29/2024
6,477
Datacom, LLC
Technology and Telecommunications
Provider
Digital Products Holdings LLC
Designer and Distributor of Consumer
Electronics
Direct Marketing Solutions, Inc.
Provider of Omni-Channel Direct
Marketing Services
Gamber-Johnson Holdings, LLC
Manufacturer of Ruggedized
Computer Mounting Systems
3/31/2021
3/31/2021
4/1/2018
4/1/2018
2/13/2018
2/13/2018
6/24/2016
6/24/2016
9,000
3,857
8,400
9,042
Secured Debt
Preferred Member Units
Secured Debt
Preferred Member Units
Secured Debt
Preferred Stock
Secured Debt
Member Units
(9)
(8)
(9)
(8)
(9)
(8)
107
5.00 %
12/31/2025
8,892
11.00 % L +
10.00 %
4/1/2023
16,853
16,801
16,801
9,501
9,835
26,302
26,636
12.00 % L +
11.00 %
2/13/2024
24,070
23,911
24,048
8,400
18,350
32,311
42,398
9.50 % L +
7.50 %
1/1/2025
21,598
21,535
21,598
17,692
39,227
49,700
71,298
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Garreco, LLC
Business Description
Manufacturer and Supplier of Dental
Products
GRT Rubber Technologies LLC
Manufacturer of Engineered Rubber
Products
Gulf Manufacturing, LLC
Manufacturer of Specialty Fabricated
Industrial Piping Products
Gulf Publishing Holdings, LLC
Energy Industry Focused Media and
Publishing
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
Member Units
(9) (35)
(8)
7/15/2013
7/15/2013
Secured Debt
Member Units
(8)
12/19/2014
12/19/2014
1,200
5,879
9.00 % L +
8.00 %
7/31/2022
4,196
8.10 % L +
8.00 %
10/29/2026
38,885
4,196
1,200
5,396
4,196
2,270
6,466
38,672
13,065
51,737
38,885
46,190
85,075
Member Units
(8)
8/31/2007
438
2,980
5,640
Harris Preston Fund Investments
(12) (13)
Investment Partnership
LP Interests (2717 MH,
L.P.)
(31)
10/1/2017
49.3 %
17,503
9,974
2,703
3,971
Secured Debt
Secured Debt
Member Units
(9) (17)
(17)
9/29/2017
4/29/2016
4/29/2016
10.50 % L +
9.50 %
5.25 % 9/30/2020
257
257
12.50 %
6.25 % 4/29/2021
13,565
13,565
3,681
3,681
257
9,717
—
Harrison Hydra-Gen, Ltd.
Manufacturer of Hydraulic Generators
Jensen Jewelers of Idaho, LLC
Retail Jewelry Store
Johnson Downie Opco, LLC
Executive Search Services
KBK Industries, LLC
Manufacturer of Specialty Oilfield
and Industrial Products
Common Stock
6/4/2010
107,456
718
3,530
Secured Debt
Member Units
Secured Debt
Preferred Equity
(9)
(8)
(9)
11/14/2006
11/14/2006
12/10/2021
12/10/2021
627
3,150
10.00 % P +
6.75 %
11/14/2023
2,550
2,536
2,550
811
12,420
3,347
14,970
13.00 % L +
11.50 %
12/10/2026
11,475
11,344
11,344
3,150
3,150
14,494
14,494
Member Units
(8)
1/23/2006
325
783
13,620
108
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Kickhaefer Manufacturing Company,
LLC
Precision Metal Parts Manufacturing
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Market Force Information, LLC
Provider of Customer Experience
Management Services
MH Corbin Holding LLC
Manufacturer and Distributor of
Traffic Safety Products
MS Private Loan Fund I, LP
(12) (13)
Investment Partnership
MSC Adviser I, LLC
(16) Third Party Investment Advisory
Services
Mystic Logistics Holdings, LLC
Logistics and Distribution Services
Provider for Large Volume Mailers
NAPCO Precast, LLC
Precast Concrete Manufacturing
Nebraska Vet AcquireCo, LLC
Mixed-Animal Veterinary and Animal
Health Product Provider
Secured Debt
Common Stock
Member Units
Secured Debt
Secured Debt
Secured Debt
Member Units
Secured Debt
Member Units
Secured Debt
Secured Debt
Member Units
(8) (30)
(9)
(17)
Secured Debt
Preferred Member Units
Preferred Member Units
Unsecured Debt
LP Interests
(31)
10/31/2018
10/31/2018
10/31/2018
10/31/2018
7/28/2017
7/28/2017
7/28/2017
8/31/2015
3/15/2019
9/1/2015
2/11/2021
1/26/2021
Member Units
(8)
11/22/2013
11.50 %
9.00 %
581
800
10/31/2023
20,415
20,324
20,324
10/31/2048
3,915
12,240
12,310
3,876
992
3,876
2,460
37,432
38,970
12.00 % L +
11.00 %
7/28/2023
3,400
3,400
12.00 %
12.00 % 7/28/2023
26,079
25,952
743,921
16,642
3,400
8,936
—
13.00 %
3/31/2022
8,250
45,994
12,336
8,241
4,400
6,000
5,934
—
—
18,641
5,934
5.00 %
2/28/2022
63,151
63,151
63,151
66,000
4,000
12.1 %
2,500
2,581
65,651
65,732
29,500
140,400
6,377
2,720
9,097
6,378
8,840
15,218
2,975
13,560
12.00 %
1/17/2022
6,378
(8)
(8)
8/18/2014
8/18/2014
5,873
1/31/2008
2,955
12/31/2020
12/31/2020
12.00 %
12.00 %
12/31/2025
10,500
10,412
10,412
12/31/2025
4,868
4,829
4,829
109
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Preferred Member Units
12/31/2020
6,987
6,987
7,700
22,228
22,941
NexRev LLC
Provider of Energy Efficiency
Products & Services
Secured Debt
2/28/2018
11.00 %
2/28/2023
16,217
16,173
14,045
Preferred Member Units
(8)
2/28/2018
86,400,000
12/21/2017
12/22/2011
65,962
12.00 %
3/20/2023
2,080
6,880
2,690
23,053
16,735
2,080
3,717
5,797
2,080
6,440
8,520
NRP Jones, LLC
Manufacturer of Hoses, Fittings and
Assemblies
NuStep, LLC
Designer, Manufacturer and
Distributor of Fitness Equipment
OMi Topco, LLC
Orttech Holdings, LLC
Distributor of Industrial Clutches,
Brakes and Other Components
Pearl Meyer Topco LLC
Provider of Executive Compensation
Consulting Services
PPL RVs, Inc.
Recreational Vehicle Dealer
Principle Environmental, LLC
Noise Abatement Service Provider
Secured Debt
Member Units
Secured Debt
Secured Debt
Preferred Member Units
(8)
(9)
Manufacturer of Overhead
Cranes
Secured Debt
Preferred Member Units
(8)
1/31/2017
1/31/2017
1/31/2017
8/31/2021
4/1/2008
406
900
Secured Debt
Preferred Stock
(9)
(8) (30)
7/30/2021
7/30/2021
10,000
Secured Debt
Member Units
Secured Debt
Secured Debt
Common Stock
4/27/2020
4/27/2020
13,800
10/31/2019
11/15/2016
6/10/2010
2,000
(8)
(9)
(9)
(8)
110
7.50 % L +
6.50 %
1/31/2025
1,720
1,720
1,720
11.00 %
1/31/2025
17,240
17,236
17,240
10,200
13,500
29,156
32,460
12.00 %
8/31/2026
18,000
17,831
18,000
1,080
20,210
18,911
38,210
12.00 % L +
11.00 %
7/31/2026
24,375
24,151
24,151
12.00 %
4/27/2025
32,674
10,000
10,000
34,151
34,151
32,438
13,000
45,438
32,674
26,970
59,644
7.50 % L +
7.50 % L +
7.00 %
7.00 %
11/15/2022
750
726
726
11/15/2022
11,655
11,655
11,655
2,150
14,360
14,531
26,741
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
Secured Debt
Preferred Member Units
Common Stock
2/1/2011
7/1/2011
2/1/2011
1/27/2021
13.00 %
13.00 %
21,806
1,037
11/15/2026
11/15/2026
1,473
5,924
1,465
5,808
5,709
1,200
1,465
5,808
11,160
710
14,182
19,143
Member Units
6/8/2015
1,000
9,213
2,149
Member Units
(8) (30)
12/20/2013
1,500
369
3,280
Secured Debt
Preferred Equity
(9)
12/15/2021
12/15/2021
11,070
12.00 % L +
11.00 %
12/15/2026
36,360
35,956
35,956
Secured Debt
Preferred Member Units
8/31/2018
8/31/2018
12.00 %
505
11,070
11,070
47,026
47,026
8/31/2022
16,240
16,181
16,181
8,579
8,579
24,760
24,760
Member Units
1/6/2011
460
1,290
7,280
Quality Lease Service, LLC
Provider of Rigsite Accommodation
Unit Rentals and Related Services
River Aggregates, LLC
Processor of Construction Aggregates
Robbins Bros. Jewelry, Inc.
Bridal Jewelry Retailer
Tedder Industries, LLC
Manufacturer of Firearm Holsters and
Accessories
Televerde, LLC
Provider of Telemarketing and Data
Services
Trantech Radiator Topco, LLC
Transformer Cooling Products and
Services
Secured Debt
Common Stock
(8)
5/31/2019
5/31/2019
12.00 %
615
5/31/2024
8,720
UnionRock Energy Fund II, LP
(12) (13)
Investment Partnership
LP Interests
(8) (31)
6/15/2020
49.6 %
Vision Interests, Inc.
Manufacturer / Installer of
Commercial Signage
8,663
4,655
8,712
8,660
13,318
17,372
3,828
6,122
Series A Preferred Stock
12/23/2011
3,000,000
3,000
3,000
111
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
VVS Holdco LLC
Business Description
Omnichannel Retailer of Animal
Health Products
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
Secured Debt
Preferred Equity
(9)(30)
(30)
(30)
Secured Debt
Secured Debt
Secured Debt
Preferred Member Units
Warrants
(27)
12/1/2021
12/1/2021
12/1/2021
6/1/2015
10/1/2008
10/1/2008
6/30/2015
7/1/2015
7.00 % L +
6.00 %
12/1/2026
1,200
1,170
1,169
11.50 %
12/1/2026
30,400
30,100
30,100
11,840
10,072
587
12.00 %
6.50 %
14.00 %
625
1,000
2,750
10/1/2022
10/1/2022
10/1/2022
10/1/2025
11,840
11,840
43,110
43,109
625
1,000
2,750
2,834
600
7,809
625
1,000
2,750
2,130
—
6,505
$ 1,107,597 $ 1,489,257
Ziegler’s NYPD, LLC
Casual Restaurant Group
Subtotal Control Investments (83.3% of
net assets at fair value)
Affiliate Investments (6)
AAC Holdings, Inc.
(11) Substance Abuse Treatment Service
Provider
Secured Debt
Common Stock
Warrants
12/11/2020
12/11/2020
12/11/2020
593,928
554,353
(27)
18.00 %
8.00 % 6/25/2025
$
10,202 $
10,011 $
9,794
12/11/2025
AFG Capital Group, LLC
Provider of Rent-to-Own Financing
Solutions and Services
ATX Networks Corp.
(11) Provider of Radio Frequency
Management Equipment
BBB Tank Services, LLC
Maintenance, Repair and Construction
Services to the Above-Ground Storage
Tank Market
Secured Debt
Preferred Member Units
(8)
4/25/2019
11/7/2014
10.00 %
186
5/25/2022
144
Secured Debt
Unsecured Debt
Common Stock
(9)
9/1/2021
9/1/2021
9/1/2021
583
8.50 % L +
7.50 %
9/1/2026
10.00 %
10.00 % 9/1/2028
7,667
3,067
Unsecured Debt
(9) (17)
4/8/2016
12.00 % L +
11.00 %
4/8/2021
4,800
Preferred Stock (non-voting)
(8)
12/17/2018
15.00 %
15.00 %
112
3,148
—
2,079
1,940
13,159
13,813
144
1,200
1,344
7,092
1,963
—
144
7,740
7,884
7,092
1,963
—
9,055
9,055
4,800
162
2,508
—
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Boccella Precast Products LLC
Manufacturer of Precast Hollow Core
Concrete
Member Units
4/8/2016
800,000
Secured Debt
Member Units
9/23/2021
10.00 %
2/28/2027
320
(8)
6/30/2017
2,160,000
Brightwood Capital Fund Investments
(12) (13)
Investment Partnership
LP Interests (Brightwood
Capital Fund V, LP)
(31)
7/12/2021
15.8 %
Buca C, LLC
Casual Restaurant Group
800
5,762
—
2,508
320
2,256
2,576
320
4,830
5,150
1,000
1,000
Career Team Holdings, LLC
Provider of Workforce Training and
Career Development Services
Chandler Signs Holdings, LLC
(10) Sign Manufacturer
Classic H&G Holdings, LLC
Provider of Engineered Packaging
Solutions
Congruent Credit Opportunities Funds
(12) (13)
Investment Partnership
DMA Industries, LLC
Distributor of aftermarket ride control
products
Dos Rios Partners
(12) (13)
Investment Partnership
Secured Debt
(9) (17)
Preferred Member Units
6/30/2015
6/30/2015
10.25 % L +
9.25 %
6/30/2020
19,491
19,491
14,370
6
6.00 %
6.00 %
4,770
—
24,261
14,370
Secured Debt
12/17/2021
12.50 %
12/17/2026
20,250
20,050
20,050
Class A Common Units
12/17/2021
450,000
Class A Units
1/4/2016
1,500,000
4,500
4,500
24,550
24,550
1,500
460
Secured Debt
Secured Debt
(9)
Preferred Member Units
(8)
3/12/2020
3/12/2020
3/12/2020
154
7.00 % L +
6.00 %
3/12/2025
4,000
4,000
4,000
8.00 %
3/12/2025
19,274
19,139
19,274
5,760
15,260
28,899
38,534
LP Interests (Congruent
Credit Opportunities Fund
III, LP)
(8) (31)
2/4/2015
17.4 %
10,256
9,959
Secured Debt
Preferred Equity
11/19/2021
11/19/2021
5,944
12.00 %
11/19/2026
21,200
20,993
20,993
5,944
5,944
26,937
26,937
113
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
LP Interests (Dos Rios
Partners, LP)
LP Interests (Dos Rios
Partners - A, LP)
(31)
(31)
4/25/2013
20.2 %
4/25/2013
6.4 %
Dos Rios Stone Products LLC
(10) Limestone and Sandstone Dimension
Cut Stone Mining Quarries
EIG Fund Investments
(12) (13)
Investment Partnership
Flame King Holdings, LLC
Propane Tank and Accessories
Distributor
Freeport Financial Funds
(12) (13)
Investment Partnership
Class A Preferred Units
(30)
6/27/2016
2,000,000
LP Interests (EIG Global
Private Debt Fund-A, L.P.)
(8) (31)
11/6/2015
5,000,000
Secured Debt
Secured Debt
Preferred Equity
(9)
(9)
10/29/2021
10/29/2021
10/29/2021
LP Interests (Freeport
Financial SBIC Fund LP)
LP Interests (Freeport First
Lien Loan Fund III LP)
(31)
3/23/2015
(8) (31)
7/31/2015
9,360
9.3 %
6.0 %
GFG Group, LLC.
Grower and Distributor of a Variety of
Plants and Products to Other
Wholesalers, Retailers and Garden
Centers
Secured Debt
Preferred Member Units
(8)
3/31/2021
3/31/2021
12.00 %
226
Harris Preston Fund Investments
(12) (13)
Investment Partnership
LP Interests (HPEP 3, L.P.)
(31)
8/9/2017
8.2 %
Hawk Ridge Systems, LLC
(13) Value-Added Reseller of Engineering
Design and Manufacturing Solutions
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
6,605
10,329
2,097
8,702
3,280
13,609
2,000
640
594
547
7.50 % L +
6.50 %
10/31/2026
6,400
6,324
6,324
12.00 % L +
11.00 %
10/31/2026
21,200
20,996
20,996
10,400
10,400
37,720
37,720
5,974
6,078
7,629
7,231
13,603
13,309
3/31/2026
12,545
12,435
12,545
4,900
6,990
17,335
19,535
3,193
4,712
Secured Debt
Secured Debt
Preferred Member Units
Preferred Member Units
(9)
(8)
(30)
12/2/2016
12/2/2016
12/2/2016
12/2/2016
226
226
7.00 % L +
6.00 %
1/15/2026
2,585
2,585
2,585
8.00 %
1/15/2026
34,800
34,672
34,800
2,850
14,680
150
770
40,257
52,835
114
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Houston Plating and Coatings, LLC
Business Description
Provider of Plating and Industrial
Coating Services
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Unsecured Convertible Debt
Member Units
(8)
5/1/2017
1/8/2003
322,297
8.00 %
5/1/2022
3,000
I-45 SLF LLC
(12) (13)
Investment Partnership
Member Units (Fully diluted
20.0%; 24.40% profits
interest) (8)
(8)
10/20/2015
Iron-Main Investments, LLC
Consumer Reporting Agency
Providing Employment Background
Checks and Drug Testing
3,000
2,352
5,352
2,960
3,210
6,170
19,000
14,387
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Common Stock
8/3/2021
9/1/2021
8/3/2021
8/3/2021
8/3/2021
13.00 %
12.50 %
12.50 %
12.50 %
179,778
8/1/2026
9/1/2026
4,600
3,200
4,557
3,170
4,557
3,170
11/30/2026
20,000
19,805
19,805
12.50 % 3/31/2022
8,944
8,944
1,798
8,944
1,798
38,274
38,274
L.F. Manufacturing Holdings, LLC
(10) Manufacturer of Fiberglass Products
OnAsset Intelligence, Inc.
Provider of Transportation
Monitoring / Tracking Products and
Services
Preferred Member Units
(non-voting)
(8)
1/1/2019
14.00 %
14.00 %
Member Units
12/23/2013
2,179,001
Oneliance, LLC
Construction Cleaning Company
5/20/2014
3/21/2014
5/10/2013
4/18/2011
6/5/2017
4/18/2011
4/15/2021
4/18/2011
8/6/2021
8/6/2021
912
635
4,699
1,056
12.00 %
12.00 %
12.00 %
12.00 %
10.00 %
7.00 %
12.00 % 12/31/2022
12.00 % 12/31/2022
12.00 % 12/31/2022
12.00 % 12/31/2022
10.00 % 12/31/2022
7.00 %
935
954
2,055
4,286
192
5/10/2023
12.00 % L +
11.00 %
8/6/2026
5,600
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Unsecured Debt
Preferred Stock
Common Stock
Warrants
Secured Debt
Preferred Stock
(27)
(9)
115
107
2,019
2,126
935
954
2,055
4,286
192
1,981
830
1,089
107
2,557
2,664
935
954
2,055
4,286
192
—
—
—
12,322
8,422
5,547
1,056
6,603
5,547
1,056
6,603
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Rocaceia, LLC (Quality Lease and
Rental Holdings, LLC)
Business Description
Provider of Rigsite Accommodation
Unit Rentals and Related Services
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
(14) (17) (36)
6/30/2015
12.00 %
1/8/2018
30,369
29,865
Preferred Member Units
1/8/2013
250
2,500
32,365
—
—
—
SI East, LLC
Rigid Industrial Packaging
Manufacturing
Slick Innovations, LLC
Text Message Marketing Platform
Sonic Systems International, LLC
(10) Nuclear Power Staffing Services
Superior Rigging & Erecting Co.
Provider of Steel Erecting, Crane
Rental & Rigging Services
The Affiliati Network, LLC
Performance Marketing Solutions
UniTek Global Services, Inc.
(11) Provider of Outsourced Infrastructure
Services
Secured Debt
Preferred Member Units
(8)
8/31/2018
8/31/2018
10.25 %
157
8/31/2023
65,850
65,738
65,850
1,218
11,570
66,956
77,420
9/13/2018
9/13/2018
9/13/2018
8/20/2021
8/20/2021
8/31/2020
8/31/2020
8/9/2021
8/9/2021
8/9/2021
10/15/2018
8/27/2018
1/1/2021
Secured Debt
Common Stock
Warrants
Secured Debt
Common Stock
(27)
(9)
Secured Debt
Preferred Member Units
Secured Debt
Secured Debt
Preferred Stock
(8)
Secured Debt
Secured Debt
Secured Convertible Debt
Preferred Stock
Preferred Stock
Preferred Stock
(9)
(9)
(8)
116
13.00 %
9/13/2023
5,320
5,248
9/13/2028
700
181
6,129
5,320
1,510
400
7,230
8.50 % L +
7.50 %
8/20/2026
11,982
11,757
11,757
1,070
1,070
12,827
12,827
12.00 %
8/31/2025
21,500
21,332
21,332
70,000
18,084
7,866
1,571
4,500
4,500
25,832
25,832
8/9/2026
8/9/2026
280
262
262
12,961
12,834
12,834
7.00 %
11.83 %
1,280,000
8.50 % L +
5.50 %
2.00 % 8/20/2024
8.50 % L +
5.50 %
2.00 % 8/20/2024
15.00 %
15.00 % 2/20/2025
397
1,986
1,197
8/29/2019
1,133,102
20.00 %
8/21/2018
1,521,122
20.00 %
1/15/2015
4,336,866
13.50 %
20.00 %
20.00 %
13.50 %
6,400
6,400
19,496
19,496
396
1,974
1,197
1,757
2,188
7,924
371
1,852
2,375
2,833
1,498
—
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Universal Wellhead Services Holdings,
LLC
(10) Provider of Wellhead Equipment,
Designs, and Personnel to the Oil &
Gas Industry
Volusion, LLC
Provider of Online Software-as-a-
Service eCommerce Solutions
Subtotal Affiliate Investments (30.7% of
net assets at fair value)
Non-Control/Non-Affiliate Investments
(7)
Acousti Engineering Company of
Florida
(10)
Interior Subcontractor Providing
Acoustical Walls and Ceilings
ADS Tactical, Inc.
(11) Value-Added Logistics and Supply
Chain Provider to the Defense
Industry
American Health Staffing Group, Inc.
(10) Healthcare Temporary Staffing
American Nuts, LLC
(10) Roaster, Mixer and Packager of Bulk
Nuts and Seeds
American Teleconferencing Services,
Ltd.
(11) Provider of Audio Conferencing and
Video Collaboration Solutions
Preferred Stock
Common Stock
6/30/2017
2,281,682
19.00 %
19.00 %
4/1/2020
945,507
Preferred Member Units
Member Units
(30)
(30)
12/7/2016
716,949
14.00 %
14.00 %
12/7/2016
4,000,000
Secured Debt
(17)
Unsecured Convertible Debt
1/26/2015
5/16/2018
11.50 %
8.00 %
Preferred Member Units
1/26/2015
4,876,670
3,667
—
—
—
19,103
8,929
1,032
4,000
5,032
—
—
—
1/26/2020
17,434
17,434
17,434
11/16/2023
409
409
14,000
2,576
409
5,990
—
Warrants
(27)
1/26/2015
1,831,355
1/26/2025
34,419
23,833
$ 578,539 $ 549,214
Secured Debt
Secured Debt
Secured Debt
Secured Debt
(9)
(9)
(9)
(9)
11/2/2020
5/26/2021
10.00 % L +
8.50 %
11/2/2025
$
12,111 $
12,005 $
12,111
14.00 % L +
12.50 %
11/2/2025
850
841
850
12,846
12,961
3/29/2021
6.75 % L +
5.75 %
3/19/2026
22,136
21,734
22,012
11/19/2021
7.00 % L +
6.00 %
11/19/2026
7,067
6,988
6,988
Secured Debt
(9)
12/21/2018
9.00 % L +
8.00 %
4/10/2025
12,017
11,854
12,017
117
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
ArborWorks, LLC
(10) Vegetation Management Services
Arrow International, Inc
(10) Manufacturer and Distributor of
Charitable Gaming Supplies
AVEX Aviation Holdings, LLC
(10) Specialty Aircraft Dealer
Berry Aviation, Inc.
(10) Charter Airline Services
Binswanger Enterprises, LLC
(10) Glass Repair and Installation Service
Provider
Bluestem Brands, Inc.
(11) Multi-Channel Retailer of General
Merchandise
Brainworks Software, LLC
(10) Advertising Sales and Newspaper
Circulation Software
Brightwood Capital Fund Investments
(12) (13)
Investment Partnership
Secured Debt
Secured Debt
(9) (14) (17)
9/17/2021
(9) (14)
5/19/2016
7.50 % L +
7.50 % L +
6.50 %
6.50 %
9/9/2021
2,980
2,980
6/28/2023
14,370
13,706
16,686
89
431
520
Secured Debt
Common Equity
(9)
11/9/2021
11/9/2021
234
8.00 % L +
7.00 %
11/9/2026
32,605
31,873
31,873
234
234
32,107
32,107
Secured Debt
(9) (23)
12/21/2020
9.18 % L +
7.93 %
12/21/2025
22,500
22,300
22,500
Secured Debt
Common Equity
(9)
12/15/2021
12/15/2021
360
7.50 % L +
6.50 %
12/15/2026
13,320
13,005
13,005
Secured Debt
7/6/2018
12.00 %
1.50 % 1/6/2024
4,694
Preferred Member Units
(8)(30)
11/12/2019
122,416
16.00 %
Preferred Member Units
(30)
7/6/2018
1,548,387
8.00 %
16.00 %
8.00 %
360
360
13,365
13,365
4,674
168
1,671
6,513
4,694
208
2,487
7,389
Secured Debt
Member Units
(9)
3/10/2017
9.50 % L +
8.50 %
3/10/2023
12,194
12,107
12,194
3/10/2017
1,050,000
1,050
730
13,157
12,924
Secured Debt
Common Stock
(9)
(8)
8/28/2020
10/1/2020
723,184
10.00 % L +
8.50 %
8/28/2025
5,357
5,357
1
5,358
5,337
1,515
6,852
Secured Debt
(9) (14) (17)
8/12/2014
12.50 % P +
9.25 %
7/22/2019
7,817
7,817
4,201
LP Interests (Brightwood
Capital Fund III, LP)
LP Interests (Brightwood
Capital Fund IV, LP)
(8) (31)
7/21/2014
(8) (31)
10/26/2016
1.6 %
0.6 %
118
7,200
4,269
4,350
4,394
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Burning Glass Intermediate Holding
Company, Inc.
(10) Provider of Skills-Based Labor
Market Analytics
Cadence Aerospace LLC
(10) Aerostructure Manufacturing
CAI Software LLC
Provider of Specialized Enterprise
Resource Planning Software
Camin Cargo Control, Inc.
(11) Provider of Mission Critical
Inspection, Testing and Fuel
Treatment Services
Cenveo Corporation
(11) Provider of Digital Marketing Agency
Services
Chisholm Energy Holdings, LLC
(10) Oil & Gas Exploration & Production
Clarius BIGS, LLC
(10) Prints & Advertising Film Financing
Computer Data Source, LLC
(10) Third Party Maintenance Provider to
the Data Center Ecosystem
Construction Supply Investments, LLC
(10) Distribution Platform of Specialty
Construction Materials to Professional
Concrete and Masonry Contractors
Darr Equipment LP
(10) Heavy Equipment Dealer
Secured Debt
Secured Debt
(9)
(9)
6/14/2021
6/14/2021
6.00 % L +
6.00 % L +
5.00 %
5.00 %
11,550
8,663
6/10/2026
465
429
429
6/10/2028
20,134
19,803
20,232
19,985
20,414
Secured Debt
(32)
11/14/2017
9.28 %
0.22 % 11/14/2023
28,540
28,399
26,767
Preferred Equity
Preferred Equity
12/13/2021
1,788,527
12/13/2021
596,176
1,789
1,789
—
—
1,789
1,789
Secured Debt
(9)
6/14/2021
7.50 % L +
6.50 %
6/4/2026
15,920
15,775
15,840
Common Stock
9/7/2018
322,907
6,183
2,852
Secured Debt
(9)
5/15/2019
7.75 % L +
6.25 %
5/15/2026
2,857
2,804
2,663
Secured Debt
(14) (17)
9/23/2014
15.00 %
15.00 % 1/5/2015
2,756
2,756
33
Secured Debt
(9)
8/6/2021
8.50 % L +
7.50 %
8/6/2026
21,681
21,234
21,234
Member Units
(8)
12/29/2016
861,618
3,335
14,640
Secured Debt
12/26/2017
12.50 %
1.00 % 6/22/2023
4,685
4,685
4,227
119
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Warrants
(28)
4/15/2014
915,734
12/23/2023
474
5,159
160
4,387
DTE Enterprises, LLC
(10)
Industrial Powertrain Repair and
Services
Secured Debt
Class AA Preferred Member
Units (non-voting)
Class A Preferred Member
Units
(9)
(9)
4/13/2018
4/13/2018
10.00 %
4/13/2018
776,316
8.00 %
9.50 % L +
8.00 %
4/13/2023
9,324
9,259
8,884
10.00 %
8.00 %
1,051
1,051
776
320
11,086
10,255
Dynamic Communities, LLC
(10) Developer of Business Events and
Online Community Groups
Eastern Wholesale Fence LLC
(10) Manufacturer and Distributor of
Residential and Commercial Fencing
Solutions
EnCap Energy Fund Investments
(12) (13)
Investment Partnership
Secured Debt
(9)
7/17/2018
9.50 % L +
8.50 %
7/17/2023
5,681
5,638
5,569
Secured Debt
(9)
11/19/2020
8.00 % L +
7.00 %
10/30/2025
31,810
31,238
31,810
LP Interests (EnCap Energy
Capital Fund VIII, L.P.)
LP Interests (EnCap Energy
Capital Fund VIII Co-
Investors, L.P.)
LP Interests (EnCap Energy
Capital Fund IX, L.P.)
LP Interests (EnCap Energy
Capital Fund X, L.P.)
LP Interests (EnCap
Flatrock Midstream Fund II,
L.P.)
LP Interests (EnCap
Flatrock Midstream Fund
III, L.P.)
(8) (31)
1/22/2015
0.1 %
(31)
1/21/2015
(8) (31)
1/22/2015
(8) (31)
3/25/2015
0.4 %
0.1 %
0.1 %
(31)
3/30/2015
0.8 %
(8) (31)
3/27/2015
0.2 %
3,745
1,599
2,097
777
4,047
2,284
8,443
8,276
6,582
2,796
6,082
5,064
30,996
20,796
EPIC Y-Grade Services, LP
(11) NGL Transportation & Storage
Event Holdco, LLC
(10) Event and Learning Management
Software for Healthcare Organizations
and Systems
Secured Debt
(9)
6/22/2018
7.00 % L +
6.00 %
6/30/2027
6,892
6,819
5,862
Secured Debt
(9)(30)
12/22/2021
8.00 % L +
7.00 %
12/22/2026
51,692
51,135
51,135
120
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Flip Electronics LLC
Business Description
(10) Distributor of Hard-to-Find and
Obsolete Electronic Components
Fortna Acquisition Co., Inc.
(10) Process, Physical Distribution and
Logistics Consulting Services
Fuse, LLC
(11) Cable Networks Operator
GeoStabilization International (GSI)
(11) Geohazard Engineering Services &
Maintenance
GoWireless Holdings, Inc.
(11) Provider of Wireless
Telecommunications Carrier Services
Grupo Hima San Pablo, Inc.
(11) Tertiary Care Hospitals
GS HVAM Intermediate, LLC
(10) Specialized Food Distributor
GS Operating, LLC
(10) Distributor of Industrial and Specialty
Parts
HDC/HW Intermediate Holdings
(10) Managed Services and Hosting
Provider
Heartland Dental, LLC
(10) Dental Support Organization
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
(9) (33)
1/4/2021
9.09 % L +
8.09 %
1/2/2026
5,400
5,304
5,287
Secured Debt
7/23/2019
5.09 % L +
5.00 %
4/8/2025
7,595
7,525
7,595
Secured Debt
Common Stock
6/30/2019
6/30/2019
10,429
12.00 %
6/28/2024
1,810
1,810
256
2,066
1,672
—
1,672
Secured Debt
1/2/2019
5.35 % L +
5.25 %
12/19/2025
20,710
20,615
20,606
Secured Debt
(9)
1/10/2018
7.50 % L +
6.50 %
12/22/2024
18,534
18,440
18,576
Secured Debt
Secured Debt
Secured Debt
(9) (14) (17)
3/7/2013
9.25 % L +
7.00 %
4/30/2019
(14) (17)
(17)
3/7/2013
3/7/2013
13.75 %
12.00 %
10/15/2018
12/24/2021
4,504
2,055
147
4,504
2,040
147
6,691
1,269
49
147
1,465
Secured Debt
(9)
10/18/2019
6.75 % L +
5.75 %
10/2/2024
13,243
13,167
13,243
Secured Debt
(9)
2/24/2020
8.00 % L +
6.50 %
2/24/2025
28,451
28,068
28,451
12/21/2018
8.50 % L +
7.50 %
12/21/2023
3,449
3,419
3,059
9/9/2020
7.50 % L +
6.50 %
4/30/2025
14,813
14,477
14,887
Secured Debt
Secured Debt
(9)
(9)
121
Table of Contents
Portfolio Company (1) (20)
HOWLCO LLC
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
(11) (13) (21) Provider of Accounting and Business
Development Software to Real Estate
End Markets
Secured Debt
(9)
8/19/2021
7.00 % L +
6.00 %
10/23/2026
25,546
25,546
25,546
Hybrid Promotions, LLC
(10) Wholesaler of Licensed, Branded and
Private Label Apparel
IG Parent Corporation
(11) Software Engineering
Implus Footcare, LLC
(10) Provider of Footwear and Related
Accessories
Secured Debt
Secured Debt
(9)
(9)
6/30/2021
9.25 % L +
8.25 %
6/30/2026
7,088
6,957
7,028
7/30/2021
6.75 % L +
5.75 %
7/30/2026
9,591
9,419
9,419
Independent Pet Partners Intermediate
Holdings, LLC
(10) Omnichannel Retailer of Specialty Pet
Products
Industrial Services Acquisition, LLC
(10)
Industrial Cleaning Services
Infolinks Media Buyco, LLC
(10) Exclusive Placement Provider to the
Advertising Ecosystem
Interface Security Systems, L.L.C
(10) Commercial Security & Alarm
Services
Intermedia Holdings, Inc.
(11) Unified Communications as a Service
Secured Debt
(9)
6/1/2017
8.75 % L +
7.75 %
4/30/2024
18,702
18,471
17,743
Secured Debt
Secured Debt
(29)
Preferred Stock (non-voting)
Preferred Stock (non-voting)
8/20/2020
12/10/2020
12/10/2020
12/10/2020
7.20 %
6.00 %
6.00 %
Member Units
11/20/2018
1,558,333
12/22/2022
6,563
6,563
6,563
6.00 % 11/20/2023
17,891
16,861
16,861
6.00 %
3,235
4,329
—
1,558
—
—
28,217
27,753
Secured Debt
Preferred Member Units
Preferred Member Units
Member Units
(9)
(8) (30)
(8) (30)
(30)
8/13/2021
1/31/2018
5/17/2019
6/17/2016
7.75 % L +
6.75 %
8/13/2026
19,897
19,490
19,490
144
10.00 %
80
20.00 %
900
10.00 %
20.00 %
120
81
900
164
99
730
20,591
20,483
Secured Debt
(9)
11/1/2021
7.00 % L +
6.00 %
11/1/2026
8,680
8,487
8,487
Secured Debt
Secured Debt
(9)
(9) (14)
12/9/2021
8/7/2019
11.75 % L +
10.00 %
8/7/2023
9.75 % L +
7.00 %
1.00 % 8/7/2023
525
7,313
525
7,237
7,762
525
5,233
5,758
122
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Invincible Boat Company, LLC.
(10) Manufacturer of Sport Fishing Boats
Type of Investment
(2) (3) (15)
Secured Debt
Secured Debt
(9)
(9)
INW Manufacturing, LLC
(11) Manufacturer of Nutrition and
Wellness Products
Investment
Date (24)
8/3/2018
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
7.00 % L +
6.00 %
7/19/2025
20,627
20,559
20,527
8/28/2019
8.00 % L +
6.50 %
8/28/2025
17,510
17,354
17,510
Secured Debt
(9)
5/19/2021
6.50 % L +
5.75 %
3/25/2027
7,406
7,205
7,258
Isagenix International, LLC
(11) Direct Marketer of Health & Wellness
Products
Jackmont Hospitality, Inc.
(10) Franchisee of Casual Dining
Restaurants
Joerns Healthcare, LLC
(11) Manufacturer and Distributor of
Health Care Equipment & Supplies
JTI Electrical & Mechanical, LLC
(10) Electrical, Mechanical and
Automation Services
Klein Hersh, LLC
(10) Executive and C-Suite Placement for
the Life Sciences and Healthcare
Industries
KMS, LLC
(10) Wholesaler of Closeout and Value-
priced Products
Kore Wireless Group Inc.
(11) (13) Mission Critical Software Platform
Secured Debt
(9)
6/21/2018
6.75 % L +
5.75 %
6/14/2025
5,158
5,135
3,865
Secured Debt
Preferred Equity
Secured Debt
Secured Debt
Common Stock
Secured Debt
Common Equity
(9)
5/26/2015
8.00 % L +
7.00 %
11/4/2024
2,100
11/8/2021
2,826,667
(9)
8/21/2019
11/15/2021
7.00 % L +
6.00 %
8/21/2024
15.00 %
15.00 % 11/8/2022
4,034
1,000
8/21/2019
472,579
2,100
314
2,414
3,989
1,004
4,429
9,422
2,100
314
2,414
3,658
1,004
—
4,662
(9)
12/22/2021
7.00 % L +
6.00 %
12/22/2026
37,895
36,972
36,972
12/22/2021
1,684,211
1,684
1,684
38,656
38,656
Secured Debt
(9)
11/13/2020
7.75 % L +
7.00 %
11/13/2025
43,321
42,342
43,278
Secured Debt
(9)
10/4/2021
8.25 % L +
7.25 %
10/4/2026
7,581
7,415
7,415
Secured Debt
12/31/2018
5.72 % L +
5.50 %
12/20/2024
11,415
11,345
11,400
123
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Laredo Energy, LLC
(10) Oil & Gas Exploration & Production
LaserAway Intermediate Holdings II,
LLC
(11) Aesthetic Dermatology Service
Provider
Lightbox Holdings, L.P.
(11) Provider of Commercial Real Estate
Software
LKCM Headwater Investments I, L.P.
(12) (13)
Investment Partnership
LL Management, Inc.
(10) Medical Transportation Service
Provider
LLFlex, LLC
(10) Provider of Metal-Based Laminates
Logix Acquisition Company, LLC
(10) Competitive Local Exchange Carrier
Looking Glass Investments, LLC
(12) (13) Specialty Consumer Finance
Mac Lean-Fogg Company
(10) Manufacturer and Supplier for Auto
and Power Markets
Mako Steel, LP
(10) Self-Storage Design & Construction
MB2 Dental Solutions, LLC
(11) Dental Partnership Organization
Member Units
5/4/2020
1,155,952
11,560
9,659
Secured Debt
(9)
10/18/2021
6.50 % L +
5.75 %
10/14/2027
4,130
4,050
4,115
Secured Debt
5/23/2019
5.22 % L +
5.00 %
5/9/2026
14,625
14,460
14,442
LP Interests
(8) (31)
1/25/2013
2.3 %
1,746
2,541
Secured Debt
Secured Debt
Secured Debt
Member Units
Secured Debt
Preferred Stock
Secured Debt
Secured Debt
(9)
(9)
(9)
(9)
(9)
(9)
124
5/2/2019
8.25 % L +
7.25 %
9/25/2023
17,438
17,309
17,438
8/16/2021
10.00 % L +
9.00 %
8/16/2026
4,478
4,382
4,382
1/8/2018
6.75 % L +
5.75 %
12/22/2024
25,850
24,605
24,428
7/1/2015
3
125
25
4/22/2019
10/1/2019
5.88 % L +
5.25 %
12/22/2025
17,080
16,995
17,080
13.75 %
9.25 %
1,920
1,920
18,915
19,000
3/15/2021
8.00 % L +
7.25 %
3/13/2026
17,589
17,267
17,589
1/28/2021
7.00 % L +
6.00 %
1/29/2027
11,682
11,531
11,682
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Mills Fleet Farm Group, LLC
(10) Omnichannel Retailer of Work, Farm
and Lifestyle Merchandise
NBG Acquisition Inc
(11) Wholesaler of Home Décor Products
NinjaTrader, LLC
(10) Operator of Futures Trading Platform
Secured Debt
Secured Debt
Secured Debt
(9)
(9)
(9)
10/24/2018
7.25 % L +
6.25 %
10/24/2024
17,781
17,563
17,781
4/28/2017
6.50 % L +
5.50 %
4/26/2024
3,987
3,961
2,758
12/18/2019
7.25 % L +
6.25 %
12/18/2024
31,425
30,837
31,368
NNE Partners, LLC
(10) Oil & Gas Exploration & Production
Northstar Group Services, Inc
(11) Commercial & Industrial Services
NTM Acquisition Corp.
(11) Provider of B2B Travel Information
Content
NWN Corporation
(10) Value Added Reseller and Provider of
Managed Services to a Diverse Set of
Industries
Ospemifene Royalty Sub LLC
(10) Estrogen-Deficiency Drug
Manufacturer and Distributor
OVG Business Services, LLC
(10) Venue Management Services
Project Eagle Holdings, LLC
(10) Provider of Secure Business
Collaboration Software
PT Network, LLC
(10) Provider of Outpatient Physical
Therapy and Sports Medicine Services
Secured Debt
3/2/2017
9.37 % L +
4.75 %
4.50 % 12/31/2023
24,781
24,709
23,154
Secured Debt
(9)
11/1/2021
6.50 % L +
5.50 %
11/12/2026
10,000
9,952
10,034
Secured Debt
(9)
7/12/2016
8.25 % L +
6.25 %
1.00 % 6/7/2024
4,598
4,598
4,552
Secured Debt
(9)
5/7/2021
7.50 % L +
6.50 %
5/7/2026
42,972
42,108
42,323
Secured Debt
(14)
7/8/2013
11.50 %
11/15/2026
4,562
4,562
112
Secured Debt
(9)
11/29/2021
7.25 % L +
6.25 %
11/19/2028
14,000
13,861
13,861
Secured Debt
(9)
7/6/2020
7.75 % L +
6.75 %
7/6/2026
29,738
29,151
29,714
Secured Debt
(9)
10/12/2017
8.50 % L +
5.50 %
2.00 % 11/30/2023
8,889
8,889
8,889
125
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
RA Outdoors LLC
(10) Software Solutions Provider for
Outdoor Activity Management
Research Now Group, Inc. and Survey
Sampling International, LLC
(11) Provider of Outsourced Online
Surveying
RM Bidder, LLC
(10) Scripted and Unscripted TV and
Digital Programming Provider
Roof Opco, LLC
(10) Residential Re-Roofing/Repair
RTIC Subsidiary Holdings, LLC
(10) Direct-To-Consumer eCommerce
Provider of Outdoor Products
Rug Doctor, LLC.
(10) Carpet Cleaning Products and
Machinery
Salient Partners L.P.
(11) Provider of Asset Management
Services
Savers, Inc.
(11) For-Profit Thrift Retailer
SIB Holdings, LLC
(10) Provider of Cost Reduction Services
South Coast Terminals Holdings, LLC
(10) Specialty Toll Chemical Manufacturer
Type of Investment
(2) (3) (15)
Common Stock
Investment
Date (24)
1/1/2020
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
2
—
80
8,889
8,969
Secured Debt
(9)
4/8/2021
7.75 % L +
6.75 %
4/8/2026
19,374
19,193
18,352
Secured Debt
(9)
12/29/2017
6.50 % L +
5.50 %
12/20/2024
20,124
19,789
19,899
Member Units
Warrants
(26)
11/12/2015
11/12/2015
2,779
187,161
10/20/2025
46
425
471
26
—
26
Secured Debt
(9)
8/27/2021
7.00 % L +
6.00 %
8/27/2026
2,800
2,704
2,704
Secured Debt
(9)
9/1/2020
9.00 % L +
7.75 %
9/1/2025
18,191
17,997
18,191
Secured Debt
(9)
7/16/2021
7.25 % L +
6.25 %
11/16/2024
11,145
10,902
10,902
8/31/2018
9/30/2021
7.00 % L +
6.00 % L +
6.00 %
5.00 %
10/30/2022
10/30/2022
6,251
1,250
6,247
1,250
7,497
4,063
2,435
6,498
5/14/2021
6.25 % L +
5.50 %
4/26/2028
11,400
11,295
11,386
10/29/2021
10/29/2021
95,238
7.00 % L +
6.00 %
10/29/2026
6,282
6,134
200
6,334
6,145
200
6,345
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Common Equity
(9)
(9)
(9)
(9)
126
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Business Description
Staples Canada ULC
(10) (13) (21) Office Supplies Retailer
Stellant Systems, Inc.
(11) Manufacturer of Traveling Wave
Tubes and Vacuum Electronic
Devices
Student Resource Center, LLC
(10) Higher Education Services
Tacala Investment Corp.
(34) Quick Service Restaurant Group
Team Public Choices, LLC
(11) Home-Based Care Employment
Service Provider
Tectonic Financial, LLC
Financial Services Organization
Tex Tech Tennis, LLC
(10) Sporting Goods & Textiles
U.S. TelePacific Corp.
(11) Provider of Communications and
Managed Services
USA DeBusk LLC
(10) Provider of Industrial Cleaning
Services
Veregy Consolidated, Inc.
(11) Energy Service Company
Type of Investment
(2) (3) (15)
Secured Debt
Common Equity
(9)
Investment
Date (24)
12/10/2021
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
7.25 % L +
6.25 %
12/13/2026
50,704
49,589
49,589
12/10/2021
863,636
864
864
50,453
50,453
Secured Debt
(9) (22)
9/14/2017
8.00 % L +
7.00 %
9/12/2024
16,116
16,039
15,620
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Common Stock
(9)
(9)
(9)
(9)
(8)
10/22/2021
6.25 % L +
5.50 %
10/1/2028
7,700
7,625
7,700
6/25/2021
9.00 % L +
8.00 %
6/25/2026
10,969
10,753
10,826
3/19/2021
4.25 % L +
3.50 %
2/5/2027
1,995
1,995
1,994
12/22/2020
6.00 % L +
5.00 %
12/18/2027
15,109
14,778
15,071
5/15/2017
200,000
2,000
4,650
Common Stock
(30)
7/7/2021
1,000,000
1,000
1,000
Secured Debt
(9)
5/17/2017
7.00 % L +
6.00 %
5/2/2023
17,088
16,985
12,917
Secured Debt
Secured Debt
Secured Debt
(9)
(9)
(9)
127
10/22/2019
6.75 % L +
5.75 %
9/8/2026
37,281
36,510
37,281
11/9/2020
11/9/2020
6.25 % L +
7.00 % L +
5.25 %
6.00 %
11/3/2025
5,875
5,111
5,111
11/3/2027
14,888
14,524
14,925
19,635
20,036
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
Portfolio Company (1) (20)
Vida Capital, Inc
Business Description
(11) Alternative Asset Manager
Vistar Media, Inc.
(10) Operator of Digital Out-of-Home
Advertising Platform
VORTEQ Coil Finishers, LLC
(10) Specialty Coating of Aluminum and
Light-Gauge Steel
Wahoo Fitness Acquisition L.L.C.
(11) Fitness Training Equipment Provider
Wall Street Prep, Inc.
(10) Financial Training Services
Watterson Brands, LLC
(10) Facility Management Services
Winter Services LLC
(10) Provider of Snow Removal and Ice
Management Services
Xenon Arc, Inc.
(10) Tech-enabled Distribution Services to
Chemicals and Food Ingredients
Primary Producers
YS Garments, LLC
(11) Designer and Provider of Branded
Activewear
Subtotal Non-Control/Non-Affiliate
Investments (85.2% of net assets at fair
value)
Total Portfolio Investments,
December 31, 2021 (199.2% of net
assets at fair value)
Type of Investment
(2) (3) (15)
Investment
Date (24)
Shares/Units
Total
Rate
Reference Rate
and Spread (25)
PIK
Rate (19)
Maturity
Date
Principal
(4)
Cost (4)
Fair Value
(18)
Secured Debt
10/10/2019
6.10 % L +
6.00 %
10/1/2026
17,089
16,905
15,850
Preferred Stock
4/3/2019
70,207
767
1,726
Secured Debt
Common Equity
Secured Debt
Secured Debt
Common Stock
(9)
11/30/2021
8.50 % L +
7.50 %
11/30/2026
25,962
25,450
25,450
11/30/2021
1,038,462
1,038
1,038
26,488
26,488
(9)
(9)
8/17/2021
6.75 % L +
5.75 %
8/12/2028
15,000
14,569
14,916
7/19/2021
7/19/2021
400,000
8.00 % L +
7.00 %
7/19/2026
4,373
4,288
400
4,688
4,285
400
4,685
Secured Debt
(9)
12/17/2021
7.25 % L +
6.25 %
12/17/2026
25,876
25,267
25,267
Secured Debt
(9)
11/19/2021
8.00 % L +
7.00 %
11/19/2026
10,278
10,018
10,061
Secured Debt
(9)
12/17/2021
6.75 % L +
6.00 %
12/17/2026
38,600
37,423
37,423
Secured Debt
(9)
8/22/2018
6.50 % L +
5.50 %
8/9/2024
13,034
12,967
12,578
$ 1,573,110 $ 1,523,360
$ 3,259,246 $ 3,561,831
128
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
____________________
(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C — Fair Value Hierarchy for Investments — Portfolio
Composition for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered
either as security for the Company’s Corporate Facility or in support of the SBA-guaranteed debentures issued by the Funds.
Debt investments are income producing, unless otherwise noted by footnote (14), as described below. Equity and warrants are non-income producing, unless
otherwise noted by footnote (8), as described below.
See Note C — Fair Value Hierarchy for Investments — Portfolio Composition and Schedule 12-14 for a summary of geographic location of portfolio
companies.
Principal is net of repayments. Cost is net of repayments and accumulated unearned income.
Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate
greater than 50% of the board representation is maintained.
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the
investments are not classified as Control investments.
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.
Income producing through dividends or distributions.
Index based floating interest rate is subject to contractual minimum interest rate. As noted in this schedule, 67% of these floating rate loans (based on the par
amount) contain LIBOR floors which range between 0.50% and 2.00%, with a weighted-average LIBOR floor of 1.06%.
Private Loan portfolio investment. See Note C—Fair Value Hierarchy for Investments — Portfolio Composition for a description of Private Loan portfolio
investments.
Middle Market portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Middle Market
portfolio investments.
Other Portfolio investment. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of Other Portfolio investments.
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of
acquisition of any additional non-qualifying assets.
Non-accrual and non-income producing investment.
All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”
External Investment Manager. Investment is not encumbered as security for the Company’s Corporate Facility or in support of the SBA-guaranteed debentures
issued by the Funds.
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.
Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C — Fair Value Hierarchy for Investments —
Portfolio Composition for further discussion.
Investments may have a portion, or all, of their income received from Paid-in-Kind (“PIK”) interest or dividends. PIK interest income and cumulative dividend
income represent income not paid currently in cash. The difference between the Total Rate and PIK Rate represents the cash rate as of December 31, 2021.
All portfolio company headquarters are based in the United States, unless otherwise noted.
Portfolio company headquarters are located outside of the United States.
In connection with the Company’s debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange
rates during the term of the Company’s investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $21.4 million
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
129
Table of Contents
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments (Continued)
December 31, 2021
(dollars in thousands)
(23)
(24)
(25)
(26)
(27)
(28)
(29)
(30)
(31)
(32)
(33)
(34)
(35)
(36)
Canadian Dollars and receive $16.9 million U.S. Dollars with a settlement date of September 14, 2022. The unrealized depreciation on the forward foreign
currency contract was not significant as of December 31, 2021.
The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first
out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore,
the Company receives a higher interest rate than the contractual stated interest rate of LIBOR+7.25% (Floor 1.25%) per the credit agreement and the
Consolidated Schedule of Investments above reflects such higher rate.
Investment date represents the date of initial investment in the security position.
A majority of the variable rate loans in the Company’s Investment Portfolio bear interest at a rate that may be determined by reference to either LIBOR (“L”)
or an alternate Base rate (commonly based on the Federal Funds Rate or the Prime rate (“P”)), which typically resets every one, three, or six months at the
borrower’s option.
Warrants are presented in equivalent units with a strike price of $14.28 per unit.
Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.
Warrants are presented in equivalent units with a strike price of $1.50 per unit.
As of December 31, 2021, borrowings under the loan facility bore interest at LIBOR+6.00% or Prime+5.00%. Delayed draw term loan facility permits the
borrower to make an interest rate election on each new tranche of borrowings under the facility. The rate presented represents a weighted-average rate for
borrowings under the facility.
Shares/Units represent ownership in a related Real Estate or HoldCo entity.
Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.
The security has an effective contractual interest rate of 2.00% PIK + LIBOR+6.50%, Floor 1.00%, but the issuer may, in its discretion, elect to pay the PIK
interest in cash. The rate presented represents the effective current yield based on actual payments received during the period.
The Company has entered into an intercreditor agreement that entitles the Company to the “last out” tranche of the first lien secured loans, whereby the “first
out” tranche will receive priority as to the “last out” tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore,
the Company receives a higher interest rate than the contractual stated interest rate of LIBOR+7.96% (Floor 1.00%) per the credit agreement and the
Consolidated Schedule of Investments above reflects such higher rate.
Short-term portfolio investments. See Note C — Fair Value Hierarchy for Investments — Portfolio Composition for a description of short-term portfolio
investments.
Index based floating interest rate is subject to contractual maximum index rate of 1.50% as of December 31, 2021.
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investment in this portfolio company will not be finally determined
until such process is complete. As noted in footnote (14), our debt investment in this portfolio company is on non-accrual status.
130
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements
NOTE A — ORGANIZATION AND BASIS OF PRESENTATION
1.
Organization
Main Street Capital Corporation (“MSCC”) is a principal investment firm primarily focused on providing
customized debt and equity financing to lower middle market (“LMM”) companies and debt capital to middle market
(“Middle Market”) companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to
support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate
in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and
generally provides “one-stop” financing alternatives within its LMM investment strategy. MSCC and its consolidated
subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM
companies based in the United States and in secured debt investments of Middle Market companies generally
headquartered in the United States.
MSCC was formed in March 2007 to operate as an internally managed business development company (“BDC”)
under the Investment Company Act of 1940, as amended (the “1940 Act”). Because MSCC is internally managed, all of
the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external
investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio
management professionals.
MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP (“MSMF”) and Main
Street Capital III, LP (“MSC III” and, together with MSMF, the “Funds”), and each of their general partners. The Funds
are each licensed as a Small Business Investment Company (“SBIC”) by the United States Small Business Administration
(“SBA”).
MSC Adviser I, LLC (the “External Investment Manager”) was formed in November 2013 as a wholly-owned
subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries
(“External Parties”) and receives fee income for such services. MSCC has been granted no-action relief by the Securities
and Exchange Commission (“SEC”) to allow the External Investment Manager to register as a registered investment
adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its
investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not
included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial statements.
MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”)
under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, MSCC generally does
not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to
its stockholders.
MSCC has certain direct and indirect wholly-owned subsidiaries that have elected to be taxable entities (the
“Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in
portfolio companies which are “pass-through” entities for tax purposes. MSCC also has certain direct and indirect wholly-
owned subsidiaries formed for financing purposes (the “Structured Subsidiaries”).
Unless otherwise noted or the context otherwise indicates, the terms “we,” “us,” “our,” the “Company” and “Main
Street” refer to MSCC and its consolidated subsidiaries, which include the Funds, the Taxable Subsidiaries and the
Structured Subsidiaries.
2.
Basis of Presentation
Main Street’s consolidated financial statements are prepared in accordance with generally accepted accounting
principles in the United States of America (“U.S. GAAP”). The Company is an investment company following accounting
and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
946, Financial Services—Investment Companies (“ASC 946”). For each of the periods presented herein, Main Street’s
consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment
131
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Portfolio, as used herein, refers to all of Main Street’s investments in LMM portfolio companies, investments in Private
Loan portfolio companies, investments in Middle Market portfolio companies, Other Portfolio investments and the
investment in the External Investment Manager (see Note C — Fair Value Hierarchy for Investments — Portfolio
Composition — Investment Portfolio Composition for additional discussion of Main Street’s Investment Portfolio and
definitions for the defined terms Private Loan and Other Portfolio). Main Street’s results of operations and cash flows for
the years ended December 31, 2022, 2021 and 2020 and financial position as of December 31, 2022 and 2021, are
presented on a consolidated basis. The effects of all intercompany transactions between MSCC and its consolidated
subsidiaries have been eliminated in consolidation.
Principles of Consolidation
Under ASC 946, Main Street is precluded from consolidating other entities in which Main Street has equity
investments, including those in which it has a controlling interest, unless the other entity is another investment company.
An exception to this general principle in ASC 946 occurs if Main Street holds a controlling interest in an operating
company that provides all or substantially all of its services directly to Main Street or to its portfolio companies.
Accordingly, as noted above, MSCC’s consolidated financial statements include the financial position and operating results
for the Funds, the Taxable Subsidiaries and the Structured Subsidiaries. Main Street has determined that none of its
portfolio investments qualify for this exception, including the investment in the External Investment Manager. Therefore,
Main Street’s Investment Portfolio is carried on the Consolidated Balance Sheets at fair value, as discussed further in Note
B.1. — Summary of Significant Accounting Policies — Valuation of the Investment Portfolio, with any adjustments to fair
value recognized as “Net Unrealized Appreciation (Depreciation)” until the investment is realized, usually upon exit,
resulting in any gain or loss being recognized as a “Net Realized Gain (Loss)”, in both cases on the Consolidated
Statements of Operations.
Portfolio Investment Classification
Main Street classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the
1940 Act, (a) “Control Investments” are defined as investments in which Main Street owns more than 25% of the voting
securities or has rights to maintain greater than 50% of the board representation, (b) “Affiliate Investments” are defined as
investments in which Main Street owns between 5% and 25% (inclusive) of the voting securities and does not have rights
to maintain greater than 50% of the board representation and (c) “Non-Control/Non-Affiliate Investments” are defined as
investments that are neither Control Investments nor Affiliate Investments. For purposes of determining the classification
of its Investment Portfolio, Main Street has excluded consideration of any voting securities or board appointment rights
held by third-party investment funds advised by the External Investment Manager.
NOTE B — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.
Valuation of the Investment Portfolio
Main Street accounts for its Investment Portfolio at fair value. As a result, Main Street follows the provisions of
ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework
for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and
enhances disclosure requirements for fair value measurements. ASC 820 requires Main Street to assume that the portfolio
investment is to be sold in the principal market to independent market participants, which may be a hypothetical market.
Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and
willing and able to transact.
Main Street’s portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by
privately held, LMM companies and debt securities issued by Middle Market companies that are generally larger in size
than the LMM companies and that can be more liquid than the debt securities issued by LMM companies. Main Street
categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio
investments, which are primarily debt securities in privately held companies that either (i) primarily have been originated
directly by Main Street or (ii) to a lesser extent or secondarily, through strategic relationships with other investment funds
on a collaborative basis, and are often referred to in the debt markets as “club deals” because of the small lender group size.
In both cases, our Private Loan investments are typically made to a company to support the acquisition of the company by
132
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
a private equity sponsor. Private Loan investments are made in companies that are consistent with the size of companies
Main Street invests in through its LMM portfolio and Middle Market portfolio. Main Street’s portfolio also includes Other
Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM,
Private Loan or Middle Market portfolio investments, including investments which may be managed by third parties. Main
Street’s portfolio may also include short-term portfolio investments that are atypical of Main Street’s LMM, Private Loan
and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital and are more
liquid than investments within the other portfolios. Main Street’s portfolio investments may be subject to restrictions on
resale.
For LMM portfolio investments, Main Street generally reviews external events, including private mergers, sales
and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise
value waterfall methodology (“Waterfall”) for its LMM equity investments and an income approach using a yield-to-
maturity model (“Yield-to-Maturity”) valuation method for its LMM debt investments. For Private Loan and Middle
Market portfolio investments in debt securities for which it has determined that third-party quotes or other independent
pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it
believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-
to-Maturity valuation method. For Middle Market and short-term portfolio investments in debt securities for which it has
determined that third-party quotes or other independent prices are available, Main Street primarily uses quoted prices in the
valuation process. Main Street determines the appropriateness of the use of third-party broker quotes, if any, in determining
fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether
the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of
changes in broker quotes with underlying performance of the portfolio company and other market indices. For its Other
Portfolio equity investments, Main Street generally calculates the fair value of the investment primarily based on the net
asset value (“NAV”) of the fund and adjusts the fair value for other factors deemed relevant that would affect the fair value
of the investment. All of the valuation approaches for Main Street’s portfolio investments estimate the value of the
investment as if Main Street were to sell, or exit, the investment as of the measurement date.
These valuation approaches consider the value associated with Main Street’s ability to control the capital structure
of the portfolio company, as well as the timing of a potential exit. For valuation purposes, “control” portfolio investments
are composed of debt and equity securities in companies for which Main Street has a controlling interest in the equity
ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. For
valuation purposes, “non-control” portfolio investments are generally composed of debt and equity securities in companies
for which Main Street does not have a controlling interest in the equity ownership of the portfolio company or the ability to
nominate a majority of the portfolio company’s board of directors.
Under the Waterfall valuation method, Main Street estimates the enterprise value of a portfolio company using a
combination of market and income approaches or other appropriate valuation methods, such as considering recent
transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then
performs a Waterfall calculation by allocating the enterprise value over the portfolio company’s securities in order of their
preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction
between two willing parties, other than through a forced or liquidation sale. Typically, privately held companies are bought
and sold based on multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash flows, net
income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any
one portfolio company, enterprise value is generally described as a range of values from which a single estimate of
enterprise value is derived. In estimating the enterprise value of a portfolio company, Main Street analyzes various factors
including the portfolio company’s historical and projected financial results. Due to SEC deadlines for Main Street’s
quarterly and annual financial reporting, the operating results of a portfolio company used in the current period valuation
are generally the results from the period ended three months prior to such valuation date and may include unaudited,
projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to
normalize the operating results that may require significant judgment in determining. In addition, projecting future
financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results,
Main Street also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining
the appropriate enterprise value, Main Street allocates the enterprise value to investments in order of the legal priority of
the various components of the portfolio company’s capital structure. In applying the Waterfall valuation method, Main
Street assumes the loans are paid-off at the principal amount in a change in control transaction and are not assumed by the
buyer, which Main Street believes is consistent with its past transaction history and standard industry practices.
133
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Under the Yield-to-Maturity valuation method, Main Street also uses the income approach to determine the fair
value of debt securities based on projections of the discounted future free cash flows that the debt security will likely
generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth
in the associated loan agreements, as well as the financial position and credit risk of the portfolio company. Main Street’s
estimate of the expected repayment date of its debt securities is generally the maturity date of the instrument, as Main
Street generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers
changes in leverage levels, credit quality, portfolio company performance, changes in market-based interest rates and other
factors. Main Street will generally use the value determined by the Yield-to-Maturity analysis as the fair value for that
security; however, because of Main Street’s general intent to hold its loans to maturity, the fair value will not exceed the
principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions
that Main Street uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could
have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in
workout status, Main Street may consider other factors in determining the fair value of the debt security, including the
value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most
likely be received in a liquidation analysis.
Under the NAV valuation method, for an investment in an investment fund that does not have a readily
determinable fair value, Main Street measures the fair value of the investment predominately based on the NAV of the
investment fund as of the measurement date and adjusts the investment’s fair value for factors known to Main Street that
would affect that fund’s NAV, including, but not limited to, fair values for individual investments held by the fund if Main
Street holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the
investment, Main Street considers whether adjustments to the NAV are necessary in certain circumstances, based on the
analysis of any restrictions on redemption of Main Street’s investment as of the measurement date, recent actual sales or
redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the
rate of return on those cash flows compared to an implied market return on equity required by market participants, or other
uncertainties surrounding Main Street’s ability to realize the full NAV of its interests in the investment fund.
Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation
procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at
estimates of fair value for its investments in its LMM portfolio companies, Main Street, among other things, consults with
a nationally recognized independent financial advisory services firm (the “Financial Advisory Firm”). The Financial
Advisory Firm analyzes and provides observations, recommendations and an assurance certification regarding the
Company’s determinations of the fair value of its LMM portfolio company investments. The Financial Advisory Firm is
generally consulted relative to Main Street’s investments in each LMM portfolio company at least once every
calendar year, and for Main Street’s investments in new LMM portfolio companies, at least once in the twelve-month
period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and
as a result is not in its stockholders’ best interest, to consult with the Financial Advisory Firm on its investments in one or
more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main
Street’s investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio.
Main Street consulted with and received an assurance certification from the Financial Advisory Firm in arriving at Main
Street’s determination of fair value on its investments in a total of 66 LMM portfolio companies for the year ended
December 31, 2022, representing 94% of the total LMM portfolio at fair value as of December 31, 2022, and on a total of
54 LMM portfolio companies for the year ended December 31, 2021, representing 81% of the total LMM portfolio at fair
value as of December 31, 2021. Excluding its investments in LMM portfolio companies that, as of December 31, 2022 and
2021, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment
or whose primary purpose is to own real estate for which a third-party appraisal is obtained on at least an annual basis, the
percentage of the LMM portfolio reviewed and certified by the Financial Advisory Firm for both of the years ended
December 31, 2022 and 2021 was 99% of the total LMM portfolio at fair value.
For valuation purposes, all of Main Street’s Private Loan portfolio investments are non-control investments. For
Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not
available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes
hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using
the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the
Waterfall valuation method.
134
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private
Loan portfolio companies, Main Street, among other things, consults with the Financial Advisory Firm. The Financial
Advisory Firm analyzes and provides observations and recommendations and an assurance certification regarding the
Company’s determinations of the fair value of its Private Loan portfolio company investments. The Financial Advisory
Firm is generally consulted relative to Main Street’s investments in each Private Loan portfolio company at least once
every calendar year, and for Main Street’s investments in new Private Loan portfolio companies, at least once in the
twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not
cost-effective, and as a result is not in its stockholders’ best interest, to consult with the Financial Advisory Firm on its
investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations
where the fair value of Main Street’s investment in a Private Loan portfolio company is determined to be insignificant
relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from the
Financial Advisory Firm in arriving at its determination of fair value on its investments in a total of 59 Private Loan
portfolio companies for the year ended December 31, 2022, representing 76% of the total Private Loan portfolio at fair
value as of December 31, 2022, and on a total of 39 Private Loan portfolio companies for the year ended December 31,
2021, representing 60% of the total Private Loan portfolio at fair value as of December 31, 2021. Excluding its investments
in Private Loan portfolio companies that, as of December 31, 2022 and 2021, as applicable, had not been in the Investment
Portfolio for at least twelve months subsequent to the initial investment and its investments in Private Loan portfolio
companies that were not reviewed because the investment is valued based upon third-party quotes or other independent
pricing, the percentage of the Private Loan portfolio reviewed and certified by the Financial Advisory Firm for the years
ended December 31, 2022 and 2021 was 97% and 93% of the total Private Loan portfolio at fair value as of December 31,
2022 and 2021, respectively.
For valuation purposes, all of Main Street’s Middle Market portfolio investments are non-control investments. To
the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to
determine the fair value of these investments through obtaining third party quotes or other independent pricing. For Middle
Market portfolio investments for which it has determined that third party quotes or other independent pricing are not
available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes
hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale
using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale
using the Waterfall valuation method. The Company generally consults on a limited basis with a financial advisory services
firm in connection with determining the fair value of its Middle Market portfolio investments due to the nature of these
investments. The vast majority (89% and 93%
as of December 31, 2022 and 2021, respectively) of the Middle Market portfolio investments (i) are valued using
third-party quotes or other independent pricing services, (ii) Main Street has consulted with and received an assurance
certification from the Financial Advisory Firm within the last twelve months or (iii) are new investments that have not been
in the Investment Portfolio for at least twelve months subsequent to the initial investment.
For valuation purposes, all of Main Street’s short-term portfolio investments are non-control investments. To the
extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine
the fair value of these investments through obtaining third-party quotes or other independent pricing. Because all of the
short-term portfolio investments are typically valued using third-party quotes or other independent pricing services, Main
Street generally does not consult with any financial advisory services firms in connection with determining the fair value of
its short-term portfolio investments.
For valuation purposes, all of Main Street’s Other Portfolio investments are non-control investments. Main
Street’s Other Portfolio investments comprised 2.8% and 4.7% of Main Street’s Investment Portfolio at fair value as of
December 31, 2022 and 2021, respectively. Similar to the LMM investment portfolio, market quotations for Other
Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street
generally determines the fair value of these investments using the NAV valuation method.
For valuation purposes, Main Street’s investment in the External Investment Manager is a control investment.
Market quotations are not readily available for this investment, and as a result, Main Street determines the fair value of the
External Investment Manager using the Waterfall valuation method under the market approach. In estimating the enterprise
value, Main Street analyzes various factors, including the entity’s historical and projected financial results, as well as its
135
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
size, marketability and performance relative to the population of market comparables. This valuation approach estimates
the value of the investment as if Main Street were to sell, or exit, the investment. In addition, Main Street considers its
ability to control the capital structure of the company, as well as the timing of a potential exit, in connection with
determining the fair value of the External Investment Manager. Main Street consulted with and received an assurance
certification from the Financial Advisory Firm in arriving at its determination of fair value for its investment in the
External Investment Adviser as of December 31, 2022.
Due to the inherent uncertainty in the valuation process, Main Street’s determination of fair value for its
Investment Portfolio may differ materially from the values that would have been determined had a ready market for the
securities existed. In addition, changes in the market environment, portfolio company performance and other events that
may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be
materially different than the valuations currently assigned. Main Street determines the fair value of each individual
investment and records changes in fair value as unrealized appreciation or depreciation.
Main Street uses an internally developed portfolio investment rating system in connection with its investment
oversight, portfolio management and analysis and investment valuation procedures for its LMM, Private Loan and Middle
Market portfolio companies. This system takes into account both quantitative and qualitative factors of each LMM, Private
Loan and Middle Market portfolio company.
In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to
designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment
portfolio, subject to the active oversight of the board. Main Street’s Board of Directors has approved policies and
procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of its executive officers to serve
as the Board of Directors’ valuation designee. Main Street believes its Investment Portfolio as of December 31, 2022 and
2021 approximates fair value as of those dates based on the markets in which it operates and other conditions in existence
on those reporting dates.
2.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results
may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1. —
Summary of Significant Accounting Policies—Valuation of the Investment Portfolio, the consolidated financial statements
include investments in the Investment Portfolio whose values have been estimated by Main Street, pursuant to valuation
policies and procedures approved and overseen by Main Street’s Board of Directors, in the absence of readily ascertainable
market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may
differ materially from the values that would have been determined had a ready market for the securities existed.
Macroeconomic factors, including the COVID-19 pandemic, risk of recession, inflation, supply chain constraints
or disruptions, geopolitical disruptions and rising interest rates, and the related effect on the U.S. and global economies,
have impacted, and may continue to impact, the businesses and operating results of certain of Main Street’s portfolio
companies, as well as market interest rate spreads. As a result of these and other current effects of macroeconomic factors,
as well as the uncertainty regarding the extent and duration of their impact, the valuation of Main Street’s Investment
Portfolio has and may continue to experience increased volatility.
3.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months
or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.
At December 31, 2022, cash balances totaling $46.3 million exceeded Federal Deposit Insurance Corporation
insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company’s cash
deposits are held at large established high credit quality financial institutions and management believes that the risk of loss
associated with any uninsured balances is remote.
136
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
4.
Interest, Dividend and Fee Income
Main Street records interest and dividend income on the accrual basis to the extent amounts are expected to be
collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation
exists for the portfolio company to make a distribution. In accordance with Main Street’s valuation policies, Main Street
evaluates accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90
days or more past due, and if Main Street otherwise does not expect the debtor to be able to service its debt obligation,
Main Street will generally place the loan or debt security on non-accrual status and cease recognizing interest income on
that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a
loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt obligation, or if a loan
or debt security is sold or written off, Main Street removes it from non-accrual status.
As of December 31, 2022, Main Street’s total Investment Portfolio had 12 investments on non-accrual status,
which comprised 0.6% of its fair value and 3.7% of its cost. As of December 31, 2021, Main Street’s total Investment
Portfolio had nine investments on non-accrual status, which comprised 0.7% of its fair value and 3.3% of its cost.
Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-
in-kind (“PIK”) interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in
each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the
actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are
recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The
actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold.
To maintain RIC tax treatment (as discussed in Note B.9. — Summary of Significant Accounting Policies—Income Taxes
below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though
Main Street may not have collected the PIK interest and cumulative dividends in cash. Main Street stops accruing PIK
interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it
determines that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31,
2022, 2021 and 2020 (i) 1.4%, 2.6% and 2.8%, respectively, of Main Street’s total investment income was attributable to
PIK interest income not paid currently in cash and (ii) 0.5%, 0.6% and 0.8%, respectively, of Main Street’s total investment
income was attributable to cumulative dividend income not paid currently in cash.
Main Street may periodically provide services, including structuring and advisory services, to its portfolio
companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value,
fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees
received in connection with debt financing transactions for services that do not meet these criteria are treated as debt
origination fees and are deferred and accreted into income over the life of the financing.
A presentation of total investment income Main Street received from its Investment Portfolio in each of the
periods presented is as follows:
Interest, fee and dividend income:
Interest income
Dividend income
Fee income
Year Ended December 31,
2022
2021
2020
(dollars in thousands)
$
284,746 $
193,667 $
173,676
76,375
15,739
81,153
14,227
36,373
12,565
Total interest, fee and dividend income
$
376,860 $
289,047 $
222,614
5.
Deferred Financing Costs
Deferred financing costs include commitment fees and other direct costs related to Main Street’s multi-year
revolving credit facility (the “Corporate Facility”) and special purpose vehicle revolving credit facility (the “SPV Facility”
137
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
and, together with the Corporate Facility, the “Credit Facilities”) and its unsecured notes, as well as the commitment fees
and leverage fees (3.4% of the total commitment and draw amounts, as applicable) on the SBIC debentures. See further
discussion of Main Street’s debt in Note E — Debt. Deferred financing costs in connection with the Credit Facilities are
capitalized as an asset. Deferred financing costs in connection with all other debt arrangements are a direct deduction from
the principal amount outstanding.
6.
Equity Offering Costs
The Company’s offering costs are charged against the proceeds from equity offerings when the proceeds are
received.
7.
Unearned Income—Debt Origination Fees and Original Issue Discount and Discounts / Premiums to Par
Value
Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as
unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into
income over the life of the financing.
In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants or
warrants with an exercise price below the fair value of the underlying equity (together, “nominal cost equity”) that are
valued as part of the negotiation process with the particular portfolio company. When Main Street receives nominal cost
equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time
of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon
the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any
discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted
against the applicable debt investment, and accreted into interest income over the life of the debt investment. The actual
collection of this interest is deferred until the time of debt principal repayment.
Main Street may also purchase debt securities at a discount or at a premium to the par value of the debt security.
In the case of a purchase at a discount, Main Street records the investment at the par value of the debt security net of the
discount, and the discount is accreted into interest income over the life of the debt investment. In the case of a purchase at a
premium, Main Street records the investment at the par value of the debt security plus the premium, and the premium is
amortized as a reduction to interest income over the life of the debt investment.
To maintain RIC tax treatment (as discussed in Note B.9. — Summary of Significant Accounting Policies —
Income Taxes below), these non-cash sources of income may need to be paid out to stockholders in the form of
distributions, even though Main Street may not have collected the interest income. For the years ended December 31, 2022,
2021 and 2020, 1.8%, 2.0% and 2.7%, respectively, of Main Street’s total investment income was attributable to interest
income from the accretion of discounts associated with debt investments, net of any premium reduction.
8.
Share-Based Compensation
Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC
718, Compensation — Stock Compensation. Accordingly, for restricted stock awards, Main Street measures the grant date
fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the
awards as share-based compensation expense over the requisite service period, which is generally the vesting term.
Main Street has also adopted Accounting Standards Update (“ASU”) 2016-09, Compensation — Stock
Compensation: Improvements to Employee Share-Based Payment Accounting, which requires that all excess tax benefits
and tax deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax
expense or benefit in the income statement and not delay recognition of a tax benefit until the tax benefit is realized
through a reduction to taxes payable. Accordingly, the tax effects of exercised or vested awards are treated as discrete items
in the reporting period in which they occur. Additionally, Main Street has elected to account for forfeitures as they occur.
138
Table of contents
9.
Income Taxes
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC’s taxable income includes
the taxable income generated by MSCC and certain of its subsidiaries, including the Funds and Structured Subsidiaries,
which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S.
federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC
must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary
taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its
tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining
RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given
fiscal year may be distributed up to twelve months subsequent to the end of that fiscal year, provided such dividends are
declared on or prior to the later of (i) the filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the
fifteenth day of the ninth month following the close of the year in which such taxable income was generated.
The Taxable Subsidiaries primarily hold certain equity investments for Main Street. The Taxable Subsidiaries
permit Main Street to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes
and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The
Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio
investments held by the Taxable Subsidiaries are included in Main Street’s consolidated financial statements as portfolio
investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes
and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain
portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss,
due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at
corporate income tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax
assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street’s consolidated financial statements.
The External Investment Manager is an indirect wholly-owned subsidiary of MSCC owned through a Taxable
Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing
agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio
investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC’s consolidated financial
statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial
reporting purposes the External Investment Manager is treated as if it is taxed at corporate income tax rates based on its
taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or
benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External
Investment Manager’s separate financial statements.
The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income
taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and
liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year
in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against
deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.
Main Street’s net assets as included on the Consolidated Balance Sheets and Consolidated Statements of Changes in Net
Assets include an adjustment to classification as a result of permanent book-to-tax differences, which include differences in
the book and tax treatment of income and expenses.
Taxable income generally differs from net income for financial reporting purposes due to temporary and
permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized
appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.
10.
Net Realized Gains or Losses and Net Unrealized Appreciation or Depreciation
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of
an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to
unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net
139
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
of recoveries and realized gains or losses from in-kind redemptions. Net unrealized appreciation or depreciation reflects the
net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period
unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.
11.
Fair Value of Financial Instruments
Fair value estimates are made at discrete points in time based on relevant information. These estimates may be
subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with
precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash
equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term
nature of these instruments.
To estimate the fair value of Main Street’s multiple tranches of unsecured debt instruments as disclosed in Note E
– Debt, Main Street uses quoted market prices. For the estimated fair value of Main Street’s SBIC debentures, Main Street
uses the Yield-to-Maturity valuation method based on projections of the discounted future free cash flows that the debt
security will likely generate, including both the discounted cash flows of the associated interest and principal amounts for
the debt security.
12.
Earnings per Share
Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common
stock outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock
awarded pursuant to Main Street’s equity compensation plans are participating securities and, therefore, are included in the
basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings
per share and basic earnings per share amounts.
13.
Recently Issued or Adopted Accounting Standards
In March 2020, the FASB issued ASU 2020-04, Reference rate reform (Topic 848) — Facilitation of the effects of
reference rate reform on financial reporting. The amendments in this update provide optional expedients and exceptions
for applying U.S. GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate
expected to be discontinued due to reference rate reform and became effective upon issuance for all entities. The Company
has agreements that have LIBOR as a reference rate with certain portfolio companies and also with certain lenders. Many
of these agreements include language for choosing an alternative successor rate if LIBOR reference is no longer considered
to be appropriate. Contract modifications are required to be evaluated in determining whether the modifications result in
the establishment of new contracts or the continuation of existing contracts. The Company adopted this amendment in
March 2020 and plans to apply the amendments in this update to account for contract modifications due to changes in
reference rates when LIBOR reference is no longer used. The Company utilized the optional expedients and exceptions
provided by ASU 2020-04 during the year ended December 31, 2022, the effect of which was not material to the
consolidated financial statements and the notes thereto. The Company does not expect ASU 2020-04 to have a material
impact to the consolidated financial statements and the notes thereto.
In December 2021, the SEC published Staff Accounting Bulletin No. 120 (“SAB 120”) to provide accounting and
disclosure guidance for stock compensation awards made to executives and conforming amendments to the Staff
Accounting Bulletin Series to align with the current authoritative accounting guidance in ASC 718, Compensation — Stock
Compensation. In part, SAB 120 requires that an entity disclose how it determines the current price of underlying shares
for grant-date fair value, the policy for when an adjustment to the share price is required, how it determines the amount of
an adjustment to the share price and any significant assumptions used in determining an adjustment to the share price. SAB
120 is effective for all stock compensation awards issued after December 1, 2021. Main Street is in compliance with the
guidance pursuant to SAB 120 for any share-based compensation disclosures. See Note J — Share-Based Compensation
for further discussion of Main Street’s policies and procedures regarding share-based compensation. The impact of SAB
120 was not material to the consolidated financial statements and the notes thereto.
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to
Contractual Sale Restrictions. The amendments in this update provide that a contractual restriction on the sale of
140
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in
measuring fair value. The amendments in this update also require additional disclosures for equity securities subject to
contractual sales restrictions. ASU 2022-03 is effective for years beginning after December 15, 2023, though early
adoption is permitted. The Company has elected to early adopt ASU 2022-03 as of December 31, 2022 and it did not have
a material impact on the consolidated financial statements and the notes thereto.
In November 2022, the FASB issued ASU 2022-06, Reference rate reform (Topic 848) — Deferral of the Sunset
Date of Topic 848. The amendments in this update defer the sunset date of Topic 848 from December 31, 2022 to
December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company utilized
the optional expedients provided by ASU 2020-04 during the year ended December 31, 2022, the effect of which was not
material to the consolidated financial statements and the notes thereto. The Company will continue to utilize the optional
expedients provided by ASU 2020-04 and extended by ASU 2022-06 through the year end December 31, 2024. The
Company does not expect ASU 2022-06 to have a material impact to the consolidated financial statements and the notes
thereto.
From time to time, new accounting pronouncements are issued by the FASB or other standards-setting bodies that
are adopted by Main Street as of the specified effective date. Main Street believes that the impact of recently issued
standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon
adoption.
NOTE C — FAIR VALUE HIERARCHY FOR INVESTMENTS — PORTFOLIO COMPOSITION
ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy
based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value
measurements. Main Street accounts for its investments at fair value.
Fair Value Hierarchy
In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the
valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted
prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).
Investments recorded on Main Street’s Consolidated Balance Sheets are categorized based on the inputs to the
valuation techniques as follows:
Level 1—Investments whose values are based on unadjusted quoted prices for identical assets in an
active market that Main Street has the ability to access (examples include investments in active exchange-traded
equity securities and investments in most U.S. government and agency securities).
Level 2—Investments whose values are based on quoted prices in markets that are not active or model
inputs that are observable either directly or indirectly for substantially the full term of the investment. Level 2
inputs include the following:
•
•
•
•
Quoted prices for similar assets in active markets (for example, investments in restricted stock);
Quoted prices for identical or similar assets in non-active markets (for example, investments in
thinly traded public companies);
Pricing models whose inputs are observable for substantially the full term of the investment (for
example, market interest rate indices); and
Pricing models whose inputs are derived principally from, or corroborated by, observable market
data through correlation or other means for substantially the full term of the investment.
141
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Level 3—Investments whose values are based on prices or valuation techniques that require inputs that
are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid
securities issued by privately held companies). These inputs reflect management’s own assumptions about the
assumptions a market participant would use in pricing the investment.
As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy,
the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the
fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are
observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to
such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both
observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).
As of December 31, 2022 and 2021, all of Main Street’s LMM portfolio investments consisted of illiquid
securities issued by privately held companies and the fair value determination for these investments primarily consisted of
unobservable inputs. As a result, all of Main Street’s LMM portfolio investments were categorized as Level 3 as of
December 31, 2022 and 2021.
As of December 31, 2022 and 2021, Main Street’s Private Loan portfolio investments primarily consisted of
investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a
combination of observable inputs in non-active markets for which sufficient observable inputs were not available to
determine the fair value of these investments and unobservable inputs. As a result, all of Main Street’s Private Loan
portfolio investments were categorized as Level 3 as of December 31, 2022 and 2021.
As of December 31, 2022 and 2021, Main Street’s Middle Market portfolio investments consisted primarily of
investments in secured and unsecured debt investments and independently rated debt investments. The fair value
determination for these investments consisted of a combination of observable inputs in non-active markets for which
sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As
a result, all of Main Street’s Middle Market portfolio investments were categorized as Level 3 as of December 31, 2022
and 2021.
As of December 31, 2022 and 2021, Main Street’s Other Portfolio investments consisted of illiquid securities
issued by privately held companies and the fair value determination for these investments primarily consisted of
unobservable inputs. As a result, all of Main Street’s Other Portfolio investments were categorized as Level 3 as of
December 31, 2022 and 2021.
As of both December 31, 2022 and 2021, Main Street held one short-term portfolio investment, which was a
secured debt investment. The fair value determination for this investment consisted of available observable inputs in non-
active markets sufficient to determine the fair value of the investment. As a result, Main Street’s short-term portfolio
investment was categorized as Level 2 as of both December 31, 2022 and 2021.
The fair value determination of each portfolio investment categorized as Level 3 required one or more of the
following unobservable inputs:
•
•
•
•
•
Financial information obtained from each portfolio company, including unaudited statements of operations
and balance sheets for the most recent period available as compared to budgeted numbers;
Current and projected financial condition of the portfolio company;
Current and projected ability of the portfolio company to service its debt obligations;
Type and amount of collateral, if any, underlying the investment;
Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio)
applicable to the investment;
142
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio);
Pending debt or capital restructuring of the portfolio company;
Projected operating results of the portfolio company;
Current information regarding any offers to purchase the investment;
Current ability of the portfolio company to raise any additional financing as needed;
Changes in the economic environment which may have a material impact on the operating results of the
portfolio company;
Internal occurrences that may have an impact (both positive and negative) on the operating performance of
the portfolio company;
Qualitative assessment of key management;
Contractual rights, obligations or restrictions associated with the investment; and
Other factors deemed relevant.
•
•
•
•
•
•
•
•
•
•
The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting
date. The significant unobservable inputs used in the fair value measurement of Main Street’s LMM equity securities,
which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise
value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the
weighted-average cost of capital (“WACC”). Significant increases (decreases) in EBITDA multiple inputs in isolation
would result in a significantly higher (lower) fair value measurement. On the contrary, significant increases (decreases) in
WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant
unobservable inputs used in the fair value measurement of Main Street’s LMM, Private Loan and Middle Market securities
are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (see Note B.1. — Summary of
Significant Accounting Policies — Valuation of the Investment Portfolio) and (ii) the percentage of expected principal
recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower
(higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages
in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain
investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair
values as determined by independent third parties, which are not presented in the tables below.
The following tables provide a summary of the significant unobservable inputs used to fair value Main Street’s
Level 3 portfolio investments as of December 31, 2022 and 2021:
Type of
Investment
Equity
investments
Debt
investments
Debt
investments
Total Level 3
investments
$
$
$
$
Fair Value as of
December 31, 2022
(in thousands)
Valuation
Technique
Significant Unobservable
Inputs
1,172,077 Discounted cash flow WACC
Range(3)
9.4% - 22.5%
Weighted
Average(3)
Median(3)
14.5 %
15.4 %
Market comparable /
Enterprise value
EBITDA multiple (1)
4.3x - 8.3x (2)
6.7x
6.0x
2,663,958 Discounted cash flow Risk adjusted discount
factor
5.7% - 15.7% (2)
10.0 %
10.3 %
264,238 Market approach
Third-party quote
5.6 - 98.5
87.0
91.4
Expected principal recovery
percentage
0.0% - 100.0%
99.4 %
100.0 %
4,100,273
143
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
______________________
(1) EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each
investment.
(2) Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range
for EBITDA multiple is 2.0x - 15.7x and the range for risk adjusted discount factor is 3.8% - 43.3%.
(3) Does not include investments for which the valuation technique does not include the use of the applicable fair value
input.
Type of
Investment
Equity
investments
Debt
investments
Debt
investments
Total Level 3
investments
$
$
$
$
Fair Value as of
December 31, 2021
(in thousands)
Valuation
Technique
Significant Unobservable
Inputs
1,050,269 Discounted cash flow WACC
Range(3)
9.1% - 20.6%
Weighted
Average(3)
Median(3)
13.8 %
14.8 %
Market comparable /
Enterprise value
EBITDA multiple (1)
4.8x - 7.7x (2)
2,158,424 Discounted cash flow Risk adjusted discount
5.6% - 15.7%(2)
6.6x
9.8 %
5.9x
9.3 %
factor
Expected principal recovery
percentage
0.0% - 100.0%
99.6 %
100.0 %
351,144 Market approach
Third-party quote
3.0 - 100.5
94.4
99.0
3,559,837
______________________
(1) EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each
investment.
(2) Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range
for EBITDA multiple is 2.2x - 11.0x and the range for risk adjusted discount factor is 4.2% - 38.5%.
(3) Does not include investments for which the valuation technique does not include the use of the applicable fair value
input.
The following tables provide a summary of changes in fair value of Main Street’s Level 3 portfolio investments
for the years ended December 31, 2022 and 2021 (amounts in thousands):
Type of
Investment
Debt
Equity
Equity
Warrant
Fair Value as
of
December 31,
2021
Transfers
Into Level 3
Hierarchy
Redemptions/
Repayments
New
Investments
Net Changes
from
Unrealized to
Realized
Net
Unrealized
Appreciation
(Depreciation)
Other(1)
Fair Value as
of
December 31,
2022
$ 2,509,568 $
— $ (590,740) $ 1,085,808 $
19,674 $
(89,178) $
(6,936) $ 2,928,196
1,043,709
6,560
—
—
(55,197)
74,274
(12,234)
109,154
6,936
1,166,643
(655)
1,036
(1,834)
327
—
5,434
$ 3,559,837 $
— $ (646,592) $ 1,161,118 $
5,606 $
20,303 $
— $ 4,100,273
______________________
(1) Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional
cash flow information in the Consolidated Statements of Cash Flows.
144
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Type of
Investment
Debt
Equity
Equity
Warrant
Fair Value as
of
December 31,
2020
Transfers
Into Level 3
Hierarchy
Redemptions/
Repayments
New
Investments
Net Changes
from
Unrealized to
Realized
Net
Unrealized
Appreciation
(Depreciation)
Other(1)
Fair Value as
of
December 31,
2021
$ 1,807,134 $
— $ (909,464) $ 1,608,143 $
18,397 $
(10,844) $
(3,798) $ 2,509,568
866,734
10,998
—
—
(78,824)
106,193
(27,260)
170,786
6,080
1,043,709
(1,071)
—
(2,159)
1,074
(2,282)
6,560
$ 2,684,866 $
— $ (989,359) $ 1,714,336 $
(11,022) $ 161,016 $
— $ 3,559,837
______________________
(1) Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional
cash flow information in the Consolidated Statements of Cash Flows.
At December 31, 2022 and 2021, Main Street’s investments at fair value were categorized as follows in the fair
value hierarchy for ASC 820 purposes:
At December 31, 2022
Fair Value
Fair Value Measurements
(in thousands)
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
LMM portfolio investments
$
2,060,459 $
— $
— $
Private Loan portfolio investments
1,471,466
Middle Market portfolio investments
Other Portfolio investments
External Investment Manager
Short-term portfolio investments
329,119
116,299
122,930
1,904
—
—
—
—
—
—
—
—
—
1,904
2,060,459
1,471,466
329,119
116,299
122,930
—
Total investments
$
4,102,177 $
— $
1,904 $
4,100,273
At December 31, 2021
Fair Value
Fair Value Measurements
(in thousands)
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
LMM portfolio investments
Private Loan portfolio investments
$
1,716,415 $
1,141,772
Middle Market portfolio investments
Other Portfolio investments
External Investment Manager
Short-term portfolio investments
395,167
166,083
140,400
1,994
— $
—
—
—
—
—
— $
—
—
—
—
1,994
1,716,415
1,141,772
395,167
166,083
140,400
—
Total investments
$
3,561,831 $
— $
1,994 $
3,559,837
Investment Portfolio Composition
Main Street’s principal investment objective is to maximize its portfolio’s total return by generating current
income from its debt investments and current income and capital appreciation from its equity and equity-related
investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company.
Main Street seeks to achieve its investment objective through its LMM, Private Loan and Middle Market investment
strategies.
145
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Main Street’s LMM investment strategy involves investments in secured debt, equity warrants and direct equity
investments in privately held, LMM companies based in the United States. Main Street’s LMM portfolio companies
generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size
from $5 million to $75 million. The LMM debt investments are typically secured by a first priority lien on the assets of the
portfolio company, can include either fixed or floating rate terms and generally have a term of between five and seven
years from the original investment date. In most LMM portfolio investments, Main Street receives nominally priced equity
warrants and/or makes direct equity investments in connection with a debt investment.
Main Street’s private loan (“Private Loan”) investment strategy involves investments in privately held companies
that are generally consistent with the size of its LMM portfolio companies or Middle Market portfolio companies, and its
Private Loan investments generally range in size from $10 million to $75 million. Main Street’s Private Loan investments
generally consist of loans that either (i) primarily have been originated directly by Main Street or (ii) to a lesser extent,
through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt
markets as “club deals” because of the small lender group size. In both cases, our Private Loan investments are typically
made to a company to support the acquisition of the company by a private equity sponsor. Main Street’s Private Loan
portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically
have a term of between three and seven years from the original investment date. Main Street may have the option to invest
alongside the sponsor in the equity securities of its Private Loan portfolio companies.
Main Street’s Middle Market investment strategy involves investments in syndicated loans to or debt securities in
Middle Market companies, which Main Street defines as companies with annual revenues between $150 million and
$1.5 billion, and its Middle Market investments generally range in size from $3 million to $25 million. Main Street’s
Middle Market portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio
company and typically have an expected duration of between three and seven years from the original investment date.
Main Street’s other portfolio (“Other Portfolio”) investments primarily consist of investments that are not
consistent with the typical profiles for its LMM, Private Loan or Middle Market portfolio investments, including
investments which may be managed by third parties. In the Other Portfolio, Main Street may incur indirect fees and
expenses in connection with investments managed by third parties, such as investments in other investment companies or
private funds. For Other Portfolio investments, Main Street generally receives distributions related to the assets held by the
portfolio company. Those assets are typically expected to be liquidated over a five to ten-year period.
Based upon Main Street’s liquidity and capital structure management activities, Main Street’s Investment
Portfolio may also include short-term portfolio investments that are atypical of Main Street’s LMM, Private Loan and
Middle Market portfolio investments in that they are intended to be a short-term deployment of capital. Those assets are
typically expected to be liquidated in one year or less. These short-term portfolio investments are not expected to be a
significant portion of the overall Investment Portfolio.
Main Street’s external asset management business is conducted through its External Investment Manager. The
External Investment Manager earns management fees based on the assets under management for external parties and may
earn incentive fees, or a carried interest, based on the performance of the assets managed. Main Street entered into an
agreement with the External Investment Manager to share employees in connection with its asset management business
generally, and specifically for its relationship with MSC Income Fund, Inc. (“MSC Income”). Through this agreement,
Main Street shares employees with the External Investment Manager, including their related infrastructure, business
relationships, management expertise and capital raising capabilities. Main Street allocates the related expenses to the
External Investment Manager pursuant to the sharing agreement. Main Street’s total expenses for the years ended
December 31, 2022, 2021 and 2020 are net of expenses allocated to the External Investment Manager of $13.0 million,
$10.3 million and $7.4 million, respectively.
Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors,
including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment
income in any given year could also be highly concentrated among several portfolio companies. For the years ended
December 31, 2022, 2021 and 2020, Main Street did not record investment income from any single portfolio company in
excess of 10% of total investment income.
146
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
The following tables provide a summary of Main Street’s investments in the LMM, Private Loan and Middle
Market portfolios as of December 31, 2022 and 2021 (this information excludes Other Portfolio investments, short-term
portfolio investments and the External Investment Manager, which are discussed further below):
As of December 31, 2022
LMM (a)
Private Loan
Middle Market
Number of portfolio companies
Fair value
Cost
Debt investments as a % of portfolio (at cost)
Equity investments as a % of portfolio (at cost)
% of debt investments at cost secured by first priority lien
Weighted-average annual effective yield (b)
(dollars in millions)
78
85
$
$
2,060.5
1,719.9
$
$
1,471.5
1,500.3
$
$
73.7 %
26.3 %
99.1 %
12.3 %
97.1 %
2.9 %
99.6 %
11.6 %
Average EBITDA (c)
$
8.0
$
38.1
$
31
329.1
401.7
93.8 %
6.2 %
98.8 %
11.0 %
68.7
______________________
(a) At December 31, 2022, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully
diluted equity ownership in those portfolio companies was 41%.
(b) The weighted-average annual effective yields were computed using the effective interest rates for all debt investments
at cost as of December 31, 2022, including amortization of deferred debt origination fees and accretion of original
issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-
accrual status. The weighted-average annual effective yield on Main Street’s debt portfolio as of December 31, 2022
including debt investments on non-accrual status was 11.6% for its LMM portfolio, 11.2% for its Private Loan
portfolio and 10.3% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of
what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect
changes in the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure,
Main Street’s expenses or any sales load paid by an investor.
(c) The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the
Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three
LMM portfolio companies and two Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric
for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to
own real estate.
As of December 31, 2021
LMM (a)
Private Loan
Middle Market
Number of portfolio companies
Fair value
Cost
Debt investments as a % of portfolio (at cost)
Equity investments as a % of portfolio (at cost)
% of debt investments at cost secured by first priority lien
Weighted-average annual effective yield (b)
(dollars in millions)
73
75
$
$
1,716.4
1,455.7
$
$
1,141.8
1,157.5
$
$
70.9 %
29.1 %
99.0 %
11.2 %
95.7 %
4.3 %
98.7 %
8.2 %
Average EBITDA (c)
$
6.2
$
41.3
$
36
395.2
440.9
93.3 %
6.7 %
98.7 %
7.5 %
76.0
______________________
(a) At December 31, 2021, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully
diluted equity ownership in those portfolio companies was 40%.
147
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
(b) The weighted-average annual effective yields were computed using the effective interest rates for all debt investments
at cost as of December 31, 2021, including amortization of deferred debt origination fees and accretion of original
issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-
accrual status. The weighted-average annual effective yield on Main Street’s debt portfolio as of December 31, 2021
including debt investments on non-accrual status was 10.6% for its LMM portfolio, 8.0% for its Private Loan portfolio
and 6.9% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an
investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in
the market value of Main Street’s stock, Main Street’s utilization of debt capital in its capital structure, Main Street’s
expenses or any sales load paid by an investor.
(c) The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the
Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three
LMM portfolio companies, three Private Loan portfolio companies and one Middle Market portfolio company, as
EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those
portfolio companies whose primary purpose is to own real estate.
For the years ended December 31, 2022 and 2021, Main Street achieved a total return on investments of 11.1%
and 16.6%, respectively. Total return on investments is calculated using the interest, dividend, and fee income, as well as
the realized and unrealized change in fair value of the Investment Portfolio for the specified period. Main Street’s total
return on investments is not reflective of what an investor in shares of Main Street’s common stock will realize on its
investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of debt
capital in its capital structure, Main Street’s expenses or any sales load paid by an investor.
As of December 31, 2022, Main Street had Other Portfolio investments in 14 companies, collectively totaling
$116.3 million in fair value and $120.4 million in cost basis and which comprised 2.8% and 3.2% of Main Street’s
Investment Portfolio at fair value and cost, respectively. As of December 31, 2021, Main Street had Other Portfolio
investments in 13 companies, collectively totaling $166.1 million in fair value and $173.7 million in cost basis and which
comprised 4.7% and 5.3% of Main Street’s Investment Portfolio at fair value and cost, respectively.
As discussed further in Note A.1. — Organization and Basis of Presentation — Organization, Main Street holds
an investment in the External Investment Manager, a wholly-owned subsidiary that is treated as a portfolio investment. As
of December 31, 2022, this investment had a fair value of $122.9 million and a cost basis of $29.5 million, which
comprised 3.0% and 0.8% of Main Street’s Investment Portfolio at fair value and cost, respectively. As of December 31,
2021, this investment had a fair value of $140.4 million and a cost basis of $29.5 million, which comprised 3.9% and 0.9%
of Main Street’s Investment Portfolio at fair value and cost, respectively.
The following tables summarize the composition of Main Street’s total combined LMM, Private Loan and Middle
Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM,
Private Loan and Middle Market portfolio investments, as of December 31, 2022 and 2021 (this information excludes
Other Portfolio investments, short-term portfolio investments and the External Investment Manager, which are discussed
above).
Cost:
First lien debt
Equity
Second lien debt
Equity warrants
Other
December 31, 2022
December 31, 2021
85.0 %
14.2
0.3
0.2
0.3
82.5 %
16.2
0.6
0.3
0.4
100.0 %
100.0 %
148
Table of contents
Fair Value:
First lien debt
Equity
Second lien debt
Equity warrants
Other
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
December 31, 2022
December 31, 2021
75.2 %
24.1
0.3
0.1
0.3
74.3 %
24.6
0.5
0.2
0.4
100.0 %
100.0 %
The following tables summarize the composition of Main Street’s total combined LMM, Private Loan and Middle
Market portfolio investments by geographic region of the United States and other countries at cost and fair value as a
percentage of the total combined LMM, Private Loan and Middle Market portfolio investments, as of December 31, 2022
and 2021 (this information excludes Other Portfolio investments, short-term portfolio investments and the External
Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the
portfolio company.
Cost:
West
Southwest
Northeast
Midwest
Southeast
Canada
Other Non-United States
Fair Value:
West
Southwest
Northeast
Midwest
Southeast
Canada
Other Non-United States
December 31, 2022
December 31, 2021
28.5 %
28.3 %
20.1
19.0
16.3
14.0
0.6
1.5
21.6
22.6
15.1
11.6
0.8
—
100.0 %
100.0 %
December 31, 2022
December 31, 2021
28.7 %
28.5 %
21.4
18.8
16.6
12.4
0.6
1.5
23.0
21.9
15.8
10.0
0.8
—
100.0 %
100.0 %
149
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Main Street’s LMM, Private Loan and Middle Market portfolio investments are in companies conducting business
in a variety of industries. The following tables summarize the composition of Main Street’s total combined LMM, Private
Loan and Middle Market portfolio investments by industry at cost and fair value as of December 31, 2022 and 2021 (this
information excludes Other Portfolio investments, short-term portfolio investments and the External Investment Manager).
Cost:
Internet Software & Services
Machinery
Commercial Services & Supplies
Construction & Engineering
Distributors
Health Care Providers & Services
Diversified Consumer Services
Leisure Equipment & Products
Professional Services
Energy Equipment & Services
IT Services
Specialty Retail
Tobacco
Containers & Packaging
Media
Aerospace & Defense
Computers & Peripherals
Building Products
Textiles, Apparel & Luxury Goods
Diversified Telecommunication Services
Software
Communications Equipment
Auto Components
Food Products
Electronic Equipment, Instruments & Components
Diversified Financial Services
Internet & Catalog Retail
Health Care Equipment & Supplies
Food & Staples Retailing
Chemicals
Hotels, Restaurants & Leisure
Electrical Equipment
Household Durables
Life Sciences Tools & Services
Oil, Gas & Consumable Fuels
Other (1)
______________________
December 31, 2022
December 31, 2021
8.0 %
7.2 %
7.4
6.7
5.8
5.1
4.7
4.5
4.5
4.2
3.7
3.3
3.2
3.1
2.6
2.4
2.3
2.2
1.9
1.9
1.9
1.9
1.8
1.7
1.6
1.6
1.5
1.3
1.3
1.2
1.1
1.1
1.0
0.8
0.5
0.4
1.8
7.3
5.9
7.8
4.7
3.9
3.4
4.1
4.6
4.0
3.5
3.5
2.1
2.3
1.8
1.9
1.3
2.3
2.2
2.6
1.8
2.3
0.9
2.0
1.4
2.1
1.6
0.3
0.8
1.7
1.4
0.7
1.0
1.4
1.8
2.4
100.0 %
100.0 %
150
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
(1) Includes various industries with each industry individually less than 1.0% of the total combined LMM, Private Loan
and Middle Market portfolio investments at each date.
Fair Value:
Machinery
Diversified Consumer Services
Internet Software & Services
Commercial Services & Supplies
Construction & Engineering
Distributors
Health Care Providers & Services
Leisure Equipment & Products
Professional Services
Specialty Retail
Tobacco
IT Services
Media
Computers & Peripherals
Containers & Packaging
Energy Equipment & Services
Aerospace & Defense
Software
Building Products
Textiles, Apparel & Luxury Goods
Diversified Telecommunication Services
Food Products
Diversified Financial Services
Auto Components
Internet & Catalog Retail
Food & Staples Retailing
Chemicals
Health Care Equipment & Supplies
Construction Materials
Electrical Equipment
Communications Equipment
Hotels, Restaurants & Leisure
Life Sciences Tools & Services
Oil, Gas & Consumable Fuels
Other (1)
December 31, 2022
December 31, 2021
8.4 %
8.5 %
6.8
6.8
6.1
5.7
5.5
4.3
4.0
3.8
3.5
3.4
3.1
3.0
3.0
2.8
2.7
2.2
2.1
1.9
1.8
1.8
1.8
1.7
1.6
1.3
1.1
1.1
1.0
1.0
1.0
0.9
0.7
0.4
0.3
3.4
5.9
6.4
5.5
7.7
4.7
3.6
4.0
3.9
4.1
2.2
3.3
2.2
2.2
2.5
2.8
1.7
2.0
2.2
2.1
2.5
1.9
2.3
0.8
1.5
0.8
1.6
0.1
1.1
0.8
1.5
1.0
1.3
1.4
3.9
______________________
(1) Includes various industries with each industry individually less than 1.0% of the total combined LMM, Private Loan
and Middle Market portfolio investments at each date.
100.0 %
100.0 %
151
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
At December 31, 2022 and 2021, Main Street had no portfolio investment that was greater than 10% of the
Investment Portfolio at fair value.
Unconsolidated Significant Subsidiaries
In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, Main Street must determine which of its
unconsolidated controlled portfolio companies, if any, are considered “significant subsidiaries.” In evaluating its
unconsolidated controlled portfolio companies in accordance with Regulation S-X, there are two tests that Main Street
must utilize to determine if any of Main Street’s Control Investments (as defined in Note A — Organization and Basis of
Presentation, including those unconsolidated portfolio companies defined as Control Investments in which Main Street
does not own greater than 50% of the voting securities nor have rights to maintain greater than 50% of the board
representation) are considered significant subsidiaries: the investment test and the income test. The investment test is
generally measured by dividing Main Street’s investment in the Control Investment by the value of Main Street’s total
investments. The income test is generally measured by dividing the absolute value of the combined sum of total investment
income, net realized gain (loss) and net unrealized appreciation (depreciation) from the relevant Control Investment for the
period being tested by the absolute value of Main Street’s change in net assets resulting from operations for the same
period. Rules 3-09 and 4-08(g) of Regulation S-X require Main Street to include (1) separate audited financial statements
of an unconsolidated majority-owned subsidiary (Control Investments in which Main Street owns greater than 50% of the
voting securities) in an annual report and (2) summarized financial information of a Control Investment in a quarterly
report, respectively, if certain thresholds of the investment or income tests are exceeded and the unconsolidated portfolio
company qualifies as a significant subsidiary.
As of December 31, 2022, 2021 and 2020, Main Street had no single investment that qualified as a significant
subsidiary under either the investment or income tests.
NOTE D — EXTERNAL INVESTMENT MANAGER
As discussed further in Note A.1. — Organization and Basis of Presentation — Organization and Note C — Fair
Value Hierarchy for Investments — Portfolio Composition — Investment Portfolio Composition, the External Investment
Manager provides investment management and other services to External Parties. The External Investment Manager is
accounted for as a portfolio investment of MSCC since the External Investment Manager conducts all of its investment
management activities for External Parties.
The External Investment Manager serves as the investment adviser and administrator to MSC Income pursuant to
an Investment Advisory and Administrative Services Agreement entered into in October 2020 between the External
Investment Manager and MSC Income (the “Advisory Agreement”). Under the Advisory Agreement, the External
Investment Manager earns a 1.75% annual base management fee on MSC Income’s average total assets, an incentive fee
equal to 20% of pre-investment fee net investment income above a specified investment return hurdle rate and a 20%
incentive fee on cumulative net realized capital gains in exchange for providing advisory services to MSC Income.
As described more fully in Note L — Related Party Transactions, the External Investment Manager also serves as
the investment adviser and administrator to MS Private Loan Fund I, LP, a private investment fund with a strategy to co-
invest with Main Street in Private Loan portfolio investments (the “Private Loan Fund”). The External Investment Manager
entered into an Investment Management Agreement in December 2020 with the Private Loan Fund, pursuant to which the
External Investment Manager provides investment advisory and management services to the Private Loan Fund in
exchange for an asset-based fee and certain incentive fees. The External Investment Manager may also advise other clients,
including funds and separately managed accounts, pursuant to advisory and services agreements with such clients in
exchange for asset-based and incentive fees.
The External Investment Manager provides administrative services for certain External Party clients that, to the
extent not waived, are reported as administrative services fees. The administrative services fees generally represent expense
reimbursements for a portion of the compensation, overhead and related expenses for certain professionals directly
attributable to performing administrative services for clients. These fees are recognized as other revenue in the period in
which the related services are rendered.
152
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method
under the market approach (see further discussion in Note B.1. — Summary of Significant Accounting Policies — Valuation
of the Investment Portfolio). Any change in fair value of the investment in the External Investment Manager is recognized
on Main Street’s Consolidated Statements of Operations in “Net Unrealized Appreciation (Depreciation)—Control
investments.”
The External Investment Manager is an indirect wholly-owned subsidiary of MSCC owned through a Taxable
Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing
agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio
investment of Main Street and is not included as a consolidated subsidiary of Main Street in its consolidated financial
statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for financial reporting purposes
the External Investment Manager is treated as if it is taxed at corporate income tax rates based on its taxable income and, as
a result of its activities, may generate income tax expense or benefit. Main Street owns the External Investment Manager
through the Taxable Subsidiary to allow MSCC to continue to comply with the “source-of-income” requirements contained
in the RIC tax provisions of the Code. The taxable income, or loss, of the External Investment Manager may differ from its
book income, or loss, due to temporary book and tax timing differences and permanent differences. As a result of the above
described financial reporting and tax treatment, the External Investment Manager provides for any income tax expense, or
benefit, and any tax assets or liabilities in its separate financial statements.
Main Street shares employees with the External Investment Manager and allocates costs related to such shared
employees to the External Investment Manager generally based on a combination of the direct time spent, new investment
origination activity and assets under management, depending on the nature of the expense. The total contribution of the
External Investment Manager to Main Street’s net investment income consists of the combination of the expenses allocated
to the External Investment Manager and the dividend income earned from the External Investment Manager. For the years
ended December 31, 2022, 2021 and 2020, the total contribution to Main Street’s net investment income was $22.3 million,
$16.5 million and $9.9 million, respectively.
Summarized financial information from the separate financial statements of the External Investment Manager as
of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 is as follows:
Cash
Accounts receivable - advisory clients
Intangible Asset
Total assets
Accounts payable to MSCC and its subsidiaries
Dividend payable to MSCC and its subsidiaries
Equity
Total liabilities and equity
As of
December 31,
2022
As of
December 31,
2021
(dollars in thousands)
$
$
$
— $
8,130
29,500
37,630 $
4,455 $
3,675
29,500
$
37,630 $
—
5,595
29,500
35,095
3,288
2,307
29,500
35,095
153
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Management fee income
Incentive fees
Administrative services fees
Total revenues
Expenses allocated from MSCC or its subsidiaries:
Salaries, share-based compensation and other personnel costs
Other G&A expenses
Total allocated expenses
Pre-tax income
Tax expense
Net income
NOTE E — DEBT
Summary of debt as of December 31, 2022 is as follows:
Year Ended
December 31,
2022
2021
2020
(dollars in thousands)
$
21,776 $
17,665 $
10,665
2,516
605
24,897
622
—
—
—
18,287
10,665
(10,129)
(2,835)
(8,417)
(1,860)
(12,964)
(10,277)
11,933
8,010
(2,636)
(1,795)
$
9,297 $
6,215 $
(4,984)
(2,445)
(7,429)
3,236
(745)
2,491
Unamortized
Debt
Issuance
(Costs)/
Premiums (1)
Outstanding
Balance
Recorded Value
Estimated Fair
Value (2)
SBIC Debentures
Corporate Facility
SPV Facility
May 2024 Notes
July 2026 Notes
December 2025 Notes
Total Debt
$
350,000 $
(6,086) $
343,914 $
(dollars in thousands)
407,000
200,000
450,000
500,000
100,000
2,007,000 $
$
—
—
727
(1,864)
(675)
(7,898) $
407,000
200,000
450,727
498,136
99,325
1,999,102 $
106,607
1,882,810
290,204
407,000
200,000
444,749
434,250
___________________________
(1) The unamortized debt issuance costs for the Credit Facilities are reflected as Deferred financing costs on the
Consolidated Balance Sheets, while the deferred debt issuance costs related to the July 2026 Notes, May 2024 Notes,
December 2025 Notes and SBIC Debentures are reflected as contra-liabilities on the Consolidated Balance Sheets.
(2) Estimated fair value for outstanding debt if Main Street had adopted the fair value option under ASC 825. See
discussion of the methods used to estimate the fair value of Main Street’s debt in Note B.11. — Summary of Significant
Accounting Policies — Fair Value of Financial Instruments.
154
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Summary of debt as of December 31, 2021 is as follows:
SBIC Debentures
Corporate Facility
December 2022 Notes
May 2024 Notes
July 2026 Notes
Total Debt
Unamortized
Debt
Issuance
(Costs)/
Premiums (1)
Outstanding
Balance
Recorded Value
Estimated Fair
Value (2)
$
350,000 $
(7,269) $
342,731 $
(dollars in thousands)
320,000
185,000
450,000
500,000
—
(556)
1,272
(2,391)
320,000
184,444
451,272
497,609
328,206
320,000
190,043
480,767
502,285
$
1,805,000 $
(8,944) $
1,796,056 $
1,821,301
___________________________
(1) The unamortized debt issuance costs for the Corporate Facility are reflected as Deferred financing costs on the
Consolidated Balance Sheets, while the deferred debt issuance costs related to the July 2026 Notes, May 2024 Notes,
December 2022 Notes and SBIC Debentures are reflected as contra-liabilities on the Consolidated Balance Sheets.
(2) Estimated fair value for outstanding debt if Main Street had adopted the fair value option under ASC 825. See
discussion of the methods used to estimate the fair value of Main Street’s debt in Note B.11. — Summary of Significant
Accounting Policies — Fair Value of Financial Instruments.
Summarized interest expense for the years ended December 31, 2022, 2021 and 2020 is as follows:
SBIC Debentures
Corporate Facility
SPV Facility
May 2024 Notes
July 2026 Notes
December 2022 Notes
December 2025 Notes
Total Interest Expense
SBIC Debentures
Year Ended December 31,
2022
2021
2020
(dollars in thousands)
$
11,337 $
10,857 $
18,820
1,375
22,855
15,526
8,188
174
78,276 $
5,204
—
22,855
10,988
8,932
—
58,836 $
$
11,867
9,232
—
19,556
—
8,932
—
49,587
Under existing SBIC regulations, SBA-approved SBICs under common control have the ability to issue
debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Main Street’s SBIC debentures
payable, under existing SBA-approved commitments, were $350.0 million at both December 31, 2022 and 2021. SBIC
debentures provide for interest to be paid semiannually, with principal due at the applicable 10-year maturity date of each
debenture. Main Street expects to maintain SBIC debentures under the SBIC program in the future, subject to periodic
repayments and borrowings, in an amount up to the regulatory maximum amount for affiliated SBIC funds. The weighted-
average annual interest rate on the SBIC debentures was 2.9% as of both years ended December 31, 2022 and 2021. The
first principal maturity due under the existing SBIC debentures is in March 2023, and the weighted-average remaining
duration as of December 31, 2022 was 5.1 years. In accordance with SBIC regulations, the Funds are precluded from
incurring additional non-SBIC debt without the prior approval of the SBA.
155
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
As of December 31, 2022, the SBIC debentures consisted of (i) $175.0 million par value of SBIC debentures
outstanding issued by MSMF, with a recorded value of $172.0 million that was net of unamortized debt issuance costs of
$3.0 million and (ii) $175.0 million par value of SBIC debentures issued by MSC III with a recorded value of $171.9
million that was net of unamortized debt issuance costs of $3.1 million.
The maturity dates and fixed interest rates for Main Street’s SBIC Debentures as of December 31, 2022 and 2021
are summarized in the following table:
Maturity Date
Fixed Interest Rate
3/1/2023
3/1/2024
3/1/2024
3/1/2027
9/1/2027
3/1/2028
9/1/2028
3/1/2030
9/1/2030
9/1/2030
3/1/2031
9/1/2031
3.16%
3.95%
3.55%
3.52%
3.19%
3.41%
3.55%
2.35%
1.13%
1.31%
1.94%
1.58%
December 31,
2022
December 31,
2021
$ 16,000,000 $ 16,000,000
39,000,000
39,000,000
24,800,000
24,800,000
40,400,000
40,400,000
34,600,000
34,600,000
43,000,000
43,000,000
32,000,000
32,000,000
15,000,000
15,000,000
10,000,000
10,000,000
10,000,000
10,000,000
25,200,000
25,200,000
60,000,000
60,000,000
Ending Balance
$ 350,000,000 $ 350,000,000
Corporate Facility
Main Street maintains the Corporate Facility to provide additional liquidity to support its investment and
operational activities. As of December 31, 2022, the Corporate Facility included total commitments of $920.0 million from
a diversified group of 18 lenders and contained an accordion feature with the right to request an increase in commitments
under the facility from new and existing lenders on the same terms and conditions as the existing commitments up to a total
of $1.4 billion. The revolving period under the Corporate Facility expires in August 2026 and the Corporate Facility is
scheduled to mature in August 2027.
As of December 31, 2022, borrowings under the Corporate Facility bore interest, subject to Main Street’s election
and resetting on a monthly basis on the first of each month, on a per annum basis at a rate equal to the applicable SOFR
rate plus an applicable credit spread adjustment of 0.10% plus (i) 1.875% (or the applicable Prime rate plus 0.875%) as
long as Main Street meets certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the
applicable Prime Rate plus 1.0%) otherwise. Main Street pays unused commitment fees of 0.25% per annum on the unused
lender commitments under the Corporate Facility. The Corporate Facility is secured by a first lien on the assets of MSCC
and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. In
connection with the Corporate Facility, MSCC has made customary representations and warranties and is required to
comply with various covenants, reporting requirements and other customary requirements for similar credit facilities.
As of December 31, 2022, the interest rate on the Corporate Facility was 6.1%. The average interest rate for
borrowings under the Corporate Facility was 3.6% and 2.0% for the years ended December 31, 2022 and 2021,
respectively. As of December 31, 2022, Main Street was in compliance with all financial covenants of the Corporate
Facility.
156
Table of contents
SPV Facility
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
In November 2022 and December 2022, MSCC Funding I, LLC (“MSCC Funding”), a wholly-owned Structured
Subsidiary that primarily holds originated loan investments, entered into (i) the SPV Facility with MSCC as collateral
manager and (ii) a lender joinder agreement (the “Joinder Agreement”) to the SPV Facility that increased the total number
of lenders from three to four lenders and increased the total commitments under the SPV Facility from $240.0 million to
$255.0 million. As of December 31, 2022, the SPV Facility included total commitments of $255.0 million and an accordion
feature, subject to the satisfaction of various conditions, that could bring total commitments and borrowing availability to
up to $450.0 million. The revolving period under the SPV Facility expires in November 2025 and the SPV Facility is
scheduled to mature in November 2027. Advances under the SPV Facility bear interest at a per annum rate equal to the
one-month SOFR in effect, plus a 0.10% credit spread adjustment plus an applicable margin of 2.50% during the revolving
period and 2.625% and 2.75% during the first and second years thereafter, respectively. MSCC Funding pays a
commitment fee of 0.50% per annum on the unused lender commitments up to 35% the total lender commitments and
0.75% per annum on the unused lender commitments greater than 35% of the total lender commitments. The SPV Facility
is secured by a collateral loan on the assets of MSCC Funding and its subsidiaries. In connection with the SPV Facility,
MSCC Funding has made customary representations and warranties and is required to comply with various covenants,
reporting requirements and other customary requirements for similar credit facilities.
As of December 31, 2022, the interest rate on the SPV Facility was 6.7%. The average interest rate for borrowings
under the SPV Facility was 6.7% for the year ended December 31, 2022. As of December 31, 2022, MSCC Funding was in
compliance with all financial covenants of the SPV Facility.
A balance sheet and statement of operations of MSCC Funding as of December 31, 2022 and for the period from
November 22, 2022 (date of inception of MSCC Funding and the SPV Facility) through December 31, 2022 are as follows:
157
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Balance Sheet
(dollars in thousands)
ASSETS
Investments at fair value:
Non-Control Investments (cost: $314,752 as of December 31, 2022)
Cash and cash equivalents
Interest and dividend receivable and other assets
Accounts receivable from MSCC and its subsidiaries
Receivable for securities sold
Deferred financing costs (net of accumulated amortization of $141 as of December 31, 2022)
Total assets
LIABILITIES
SPV Facility
Accounts payable and other liabilities
Interest payable
Total liabilities
Commitments and contingencies (Note K)
NET ASSETS
Contributed capital
Total undistributed earnings
Total net assets
Total liabilities and net assets
INVESTMENT INCOME:
Interest, fee and dividend income:
Non-Control/Non-Affiliate investments
EXPENSES:
Interest
Management fee
General and administrative
Total expenses
Statement of Operations
(dollars in thousands)
NET INVESTMENT INCOME (LOSS)
NET UNREALIZED APPRECIATION (DEPRECIATION):
Non-Control/Non-Affiliate investments
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
$
158
December 31, 2022
$
$
$
$
316,507
10,838
2,828
556
369
2,630
333,728
200,000
112
1,272
201,384
126,010
6,334
132,344
333,728
Period from
November 22, 2022 to
December 31, 2022
$
3,454
(1,414)
(89)
(25)
(1,528)
1,926
4,408
6,334
Table of contents
December 2022 Notes
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
In November 2017, Main Street issued $185.0 million in aggregate principal amount of 4.50% unsecured notes
due December 1, 2022 (the “December 2022 Notes”) at an issue price of 99.16%. The December 2022 Notes bore interest
at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. In December 2022, Main Street
repaid the entire principal amount of the issued and outstanding December 2022 Notes at par value plus the accrued and
unpaid interest.
May 2024 Notes
In April 2019, Main Street issued $250.0 million in aggregate principal amount of 5.20% unsecured notes due
May 1, 2024 (the “May 2024 Notes”) at an issue price of 99.125%. Subsequently, in December 2019, Main Street issued an
additional $75.0 million aggregate principal amount of the May 2024 Notes at an issue price of 105.0% and, in July 2020,
Main Street issued an additional $125.0 million aggregate principal amount at an issue price of 102.7%. The May 2024
Notes issued in December 2019 and July 2020 have identical terms as, and are a part of a single series with, the May 2024
Notes issued in April 2019. The May 2024 Notes are unsecured obligations and rank pari passu with Main Street’s current
and future unsecured indebtedness. The May 2024 Notes may be redeemed in whole or in part at any time at Main Street’s
option subject to certain make-whole provisions. The May 2024 Notes bear interest at a rate of 5.20% per year payable
semiannually on May 1 and November 1 of each year.
As of December 31, 2022, Main Street was in compliance with all covenants and other requirements of the May
2024 Notes.
July 2026 Notes
In January 2021, Main Street issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due
July 14, 2026 (the “July 2026 Notes”) at an issue price of 99.004%. Subsequently, in October 2021, Main Street issued an
additional $200.0 million aggregate principal amount of the July 2026 Notes at an issue price of 101.741%. The July 2026
Notes issued in October 2021 have identical terms as, and are a part of a single series with, the July 2026 Notes issued in
January 2021. The July 2026 Notes are unsecured obligations and rank pari passu with Main Street’s current and future
unsecured indebtedness. The July 2026 Notes may be redeemed in whole or in part at any time at Main Street’s option
subject to certain make-whole provisions. The July 2026 Notes bear interest at a rate of 3.00% per year payable
semiannually on January 14 and July 14 of each year.
As of December 31, 2022, Main Street was in compliance with all covenants and other requirements of the July
2026 Notes.
December 2025 Notes
In December 2022, Main Street issued $100.0 million in aggregate principal amount of 7.84% Series A unsecured
notes due December 23, 2025 (the “December 2025 Notes”) at par. The December 2025 Notes are unsecured obligations
and rank pari passu with Main Street’s current and future unsecured indebtedness. The December 2025 Notes may be
redeemed in whole or in part at any time at Main Street’s option at par plus accrued interest to the prepayment date, subject
to certain make-whole provisions. The December 2025 Notes bear interest at a rate of 7.84% per year payable semiannually
on June 23 and December 23 of each year. In addition, the Company is obligated to offer to repay the December 2025
Notes at par plus accrued and unpaid interest if certain change in control events occur. The December 2025 Notes will bear
interest at an increased rate from the date that (i) the December 2025 Notes receive a below investment grade rating by a
rating agency if there is one or two rating agencies providing ratings of the December 2025 Notes, or two-thirds of the
rating agencies if there are three rating agencies who are rating the notes (a “Below Investment Grade Event”), or (ii) the
ratio of the Company’s consolidated secured indebtedness (other than indebtedness of the Funds or any Structured
Subsidiaries) to the value of its consolidated total assets is greater than 0.35 to 1.00 (a “Secured Debt Ratio Event”), to and
until the date on which the Below Investment Grade Event and the Secured Debt Ratio Event are no longer continuing. The
governing agreement for the December 2025 Notes contains customary terms and conditions for senior unsecured notes
issued in a private placement, as well as customary events of default with customary cure and notice periods.
159
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
As of December 31, 2022, the Company was in compliance with all covenants and other requirements of the
December 2025 Notes.
Contractual Payment Obligations
A summary of Main Street’s contractual payment obligations for the repayment of outstanding indebtedness at
December 31, 2022 is as follows:
SBIC debentures
Corporate Facility
SPV Facility
May 2024 Notes
July 2026 Notes
December 2025 Notes
2023
2024
2025
2026
2027
Thereafter
Total
(dollars in thousands)
$ 16,000 $ 63,800 $
— $
— $ 75,000 $ 195,200 $ 350,000
—
—
—
—
—
—
—
450,000
—
—
—
—
—
—
—
—
—
500,000
100,000
—
407,000
200,000
—
—
—
—
—
—
—
—
407,000
200,000
450,000
500,000
100,000
Total
$ 16,000 $ 513,800 $ 100,000 $ 500,000 $ 682,000 $ 195,200 $ 2,007,000
Senior Securities
Information about Main Street’s senior securities is shown in the following table as of December 31 for the years
indicated in the table, unless otherwise noted.
SBIC Debentures
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Corporate Facility
2013
2014
2015
2016
2017
Total
Amount
Outstanding
Exclusive of
Treasury
Securities(1)
(dollars in
thousands)
$
$
200,200
225,000
225,000
240,000
295,800
345,800
311,800
309,800
350,000
350,000
237,000
218,000
291,000
343,000
64,000
160
Asset
Coverage per
Unit(2)
Involuntary
Liquidating
Preference
per Unit(3)
Average
Market Value
per Unit(4)
2,476
2,323
2,368
2,415
2,687
2,455
2,363
2,244
1,985
2,044
2,476
2,323
2,368
2,415
2,687
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Asset
Coverage per
Unit(2)
Involuntary
Liquidating
Preference
per Unit(3)
Average
Market Value
per Unit(4)
Total
Amount
Outstanding
Exclusive of
Treasury
Securities(1)
(dollars in
thousands)
301,000
300,000
269,000
320,000
407,000
2,455
2,363
2,244
1,985
2,044
$
$
$
$
$
$
200,000
2,044
90,882
90,823
90,738
90,655
90,655
175,000
175,000
175,000
175,000
175,000
185,000
185,000
185,000
185,000
185,000
325,000
450,000
450,000
450,000
500,000
500,000
2,476
2,323
2,368
2,415
2,687
2,323
2,368
2,415
2,687
2,455
2,687
2,455
2,363
2,244
1,985
2,363
2,244
1,985
2,044
1,985
2,044
$
100,000
2,044
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
N/A
N/A
N/A
N/A
N/A
N/A
24.35
24.78
25.40
25.76
25.93
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2018
2019
2020
2021
2022
SPV Facility
2022
April 2023 Notes
2013
2014
2015
2016
2017
December 2019 Notes
2014
2015
2016
2017
2018
December 2022 Notes
2017
2018
2019
2020
2021
May 2024 Notes
2019
2020
2021
2022
July 2026 Notes
2021
2022
December 2025 Notes
2022
___________________________
(1) Total amount of each class of senior securities outstanding at the end of the period presented.
161
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
(2) Asset coverage per unit is the ratio of the carrying value of Main Street’s total consolidated assets, less all liabilities
and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing
indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.
(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. The “—” indicates information that the SEC expressly does not require to be
disclosed for certain types of senior securities.
(4) Average market value per unit for the April 2023 Notes represents the average of the daily closing prices as reported
on the NYSE during the period presented. Average market value per unit for all other senior securities included in the
table is not applicable because these are not registered for public trading.
NOTE F — FINANCIAL HIGHLIGHTS
Year Ended December 31,
Per Share Data:
2022
2021
2020
2019
2018
NAV at the beginning of the period
$
25.29 $
22.35 $
23.91 $
24.09 $
Net investment income (1)
Net realized gain (loss) (1)(2)
Net unrealized appreciation (depreciation)
(1)(2)
Income tax benefit (provision) (1)(2)
Net increase in net assets resulting from
operations (1)
3.29
(0.07)
0.33
2.65
0.66
1.97
(0.31)
(0.48)
3.24
4.80
2.10
2.50
(1.77)
(0.33)
(0.09)
0.21
0.45
(0.09)
(0.02)
2.06
Dividends paid from net investment income
(2.95)
(2.58)
(2.46)
(2.91)
Distributions from capital gains
—
—
—
—
Dividends paid
(2.95)
(2.58)
(2.46)
(2.91)
23.53
2.60
(0.03)
0.32
(0.09)
2.80
(2.69)
(0.16)
(2.85)
Impact of the net change in monthly
dividends declared prior to the end of the
period and paid in the subsequent period
Accretive effect of stock offerings (issuing
shares above NAV per share)
Accretive effect of DRIP issuance (issuing
shares above NAV per share)
Other (3)
NAV at the end of the period
Market value at the end of the period
$
$
(0.01)
(0.01)
1.17
0.09
0.03
26.86 $
36.95 $
0.58
0.09
0.06
25.29 $
44.86 $
—
0.41
0.08
(0.04)
22.35 $
32.26 $
(0.01)
(0.01)
0.55
0.12
0.01
23.91 $
43.11 $
0.47
0.09
0.06
24.09
33.81
Shares outstanding at the end of the period
78,506,816
70,737,021
67,762,032
64,252,937
61,264,861
162
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Per Share Data:
2017
2016
2015
2014
2013
NAV at the beginning of the period
$
22.10 $
21.24 $
20.85 $
19.89 $
18.59
Year Ended December 31,
Net investment income (1)
Net realized gain (loss) (1)(2)
Net unrealized appreciation (depreciation) (1)(2)
Income tax benefit (provision) (1)(2)
Net increase in net assets resulting from operations (1)
Dividends paid from net investment income
Distributions from capital gains
Dividends paid
Impact of the net change in monthly dividends
declared prior to the end of the period and paid in the
subsequent period
Accretive effect of stock offerings (issuing shares
above NAV per share)
Accretive effect of DRIP issuance (issuing shares
above NAV per share)
Other (3)
NAV at the end of the period
Market value at the end of the period
2.39
0.19
0.86
(0.43)
3.01
(2.47)
(0.32)
(2.79)
2.23
0.56
(0.14)
0.02
2.67
(1.99)
(0.74)
(2.73)
2.18
(0.43)
0.20
0.18
2.13
(2.49)
(0.16)
(2.65)
2.20
0.53
(0.27)
(0.15)
2.31
(2.17)
(0.38)
(2.55)
2.06
0.07
0.52
—
2.65
(2.29)
(0.37)
(2.66)
(0.01)
(0.01)
(0.01)
(0.01)
(0.02)
1.07
0.06
0.09
0.76
0.08
0.09
0.74
0.12
0.06
1.07
0.12
0.02
$
$
23.53 $
22.10 $
21.24 $
20.85 $
39.73 $
36.77 $
29.08 $
29.24 $
1.13
0.13
0.07
19.89
32.69
Shares outstanding at the end of the period
58,660,680 54,354,857 50,413,744 45,079,150 39,852,604
___________________________
(1) Based on weighted-average number of common shares outstanding for the period.
(2) Net realized gains or losses, net unrealized appreciation or depreciation, and income tax provision or benefit can
fluctuate significantly from period to period.
(3) Includes the impact of the different share amounts as a result of calculating certain per share data based on the
weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding
as of a period end or transaction date.
163
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
NAV at end of period
Average NAV
Average outstanding debt
Ratio of total expenses, including income
tax expense, to average NAV (1)(2)
Ratio of operating expenses to average
NAV (2)
Ratio of operating expenses, excluding
interest expense, to average NAV (2)
Ratio of net investment income to average
NAV
Portfolio turnover ratio
Total investment return (3)
Total return based on change in NAV (4)
NAV at end of period
Average NAV
Average outstanding debt
Ratio of total expenses, including income
tax expense, to average NAV (1)(2)
Ratio of operating expenses to average
NAV (2)
Ratio of operating expenses, excluding
interest expense, to average NAV (2)
Ratio of net investment income to average
NAV
Portfolio turnover ratio
Total investment return (3)
Total return based on change in NAV (4)
2022
2021
2020
2019
2018
Year Ended December 31,
(dollars in thousands)
$ 2,108,586 $ 1,788,846 $ 1,514,767 $ 1,536,390 $ 1,476,049
$ 1,923,134 $ 1,626,585 $ 1,436,291 $ 1,517,615 $ 1,441,163
$ 1,882,462 $ 1,417,831 $ 1,152,108 $ 1,055,800 $
947,694
8.05 %
8.56 %
4.95 %
5.75 %
5.75 %
6.84 %
6.54 %
5.89 %
5.67 %
5.32 %
2.77 %
2.92 %
2.44 %
2.36 %
2.30 %
12.76 %
16.79 %
(11.18) %
13.51 %
11.23 %
29.81 %
48.24 %
21.84 %
9.60 %
18.00 %
(19.11) %
1.91 %
10.37 %
18.86 %
36.86 %
8.78 %
10.87 %
29.13 %
(8.25) %
12.19 %
2017
2016
2015
2014
2013
Year Ended December 31,
(dollars in thousands)
$ 1,380,368 $ 1,201,481 $ 1,070,894 $
939,982 $
792,533
$ 1,287,639 $ 1,118,567 $ 1,053,313 $
885,568 $
706,056
$
843,993 $
801,048 $
759,396 $
575,524 $
444,331
7.37 %
5.48 %
4.63 %
5.82 %
5.82 %
5.47 %
5.59 %
5.45 %
5.11 %
5.82 %
2.63 %
2.58 %
2.41 %
2.44 %
2.95 %
10.51 %
38.18 %
16.02 %
14.20 %
10.35 %
24.63 %
37.36 %
12.97 %
10.15 %
25.37 %
8.49 %
11.11 %
10.79 %
35.71 %
(3.09) %
12.71 %
10.68 %
36.10 %
16.68 %
15.06 %
___________________________
(1) Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/
benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized appreciation/
depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards,
which are non-cash in nature and may vary significantly from period to period. Main Street is required to include net
deferred tax provision/benefit in calculating its total expenses even though these net deferred taxes are not currently
payable/receivable.
(2) Unless otherwise noted, operating expenses include interest, compensation, general and administrative and share-based
compensation expenses, net of expenses allocated to the External Investment Manager of $13.0 million, $10.3 million,
$7.4 million, $6.7 million, $6.8 million, $6.4 million, $5.1 million, $4.3 million and $2.0 million for the years ended
December 31, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015 and 2014, respectively. There were no expenses
allocated to the External Investment Manager for the year ended December 31, 2013.
164
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
(3) Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the
current market price on the last day of each period reported on the table and assumes reinvestment of dividends at
prices obtained by Main Street’s dividend reinvestment plan during the period. The return does not reflect any sales
load that may be paid by an investor.
(4) Total return based on change in NAV was calculated using the sum of ending NAV plus dividends to stockholders and
other non-operating changes during the period, divided by the beginning NAV. Non-operating changes include any
items that affect NAV other than the net increase in net assets resulting from operations, such as the effects of stock
offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items.
NOTE G — DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME
Main Street currently pays regular monthly dividends to its stockholders and periodically pays supplemental
dividends to its stockholders. Future dividends, if any, will be determined by its Board of Directors on a quarterly basis.
During 2022, Main Street paid regular monthly dividends of $0.215 per share for each month of January through
September 2022 and regular monthly dividends of $0.22 per share for each month of October through December 2022. The
2022 regular monthly dividends, which total $192.3 million, or $2.595 per share, represent a 4.8% increase from the
regular monthly dividends paid totaling $170.2 million, or $2.475 per share, for the year ended December 31, 2021.
During 2022, Main Street also paid supplemental dividends in March 2022, June 2022, September 2022 and
December 2022 of $5.4 million, or $0.075 per share, $5.5 million, or $0.075 per share, $7.6 million, or $0.10 per share, and
$7.8 million, or $0.10 per share, respectively, totaling $26.4 million, or $0.35 per share. During 2021, Main Street paid a
supplemental dividend in December 2021 of $7.1 million, or $0.10 per share.
During the year ended December 31, 2022, the regular monthly dividends and supplemental dividends paid totaled
$218.7 million, or $2.945 per share, representing a 23.4% increase from the year-ended December 31, 2021. During the
year ended December 31, 2021, the regular monthly dividends and supplemental dividends paid totaled $177.3 million, or
$2.575 per share.
For tax purposes, the 2022 dividends were comprised of (i) ordinary income totaling $2.629 per share and (ii)
qualified dividend income totaling $0.317 per share. As of December 31, 2022, Main Street estimates that it has generated
undistributed taxable income of $66.9 million, or $0.87 per share, that will be carried forward toward distributions to be
paid in 2023.
MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC’s taxable income includes
the taxable income generated by MSCC and certain of its subsidiaries, including the Funds and Structured Subsidiaries,
which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S.
federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC
must generally distribute at least 90% of its “investment company taxable income” (which is generally its net ordinary
taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its
tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining
RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given
fiscal year may be distributed up to twelve months subsequent to the end of that fiscal year, provided such dividends are
declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the
fifteenth day of the ninth month following the close of the year in which such taxable income was generated.
The determination of the tax attributes for Main Street’s distributions is made annually, based upon its taxable
income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may
not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC
do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from
domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form
of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions
will generally include both ordinary income and qualified dividends, but may also include either one or both of capital
165
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
gains and return of capital. The tax character of distributions paid for the years ended December 31, 2022, 2021 and 2020
was as follows:
Ordinary income (1)
Qualified dividends
Distributions on tax basis
___________________________
Year Ended December 31,
2022
2021
2020
(dollars in thousands)
$
$
195,238 $
129,625 $
135,128
22,991
47,202
12,398
218,229 $
176,827 $
147,526
(1) The years ended December 31, 2022, 2021 and 2020 include $2.3 million, $1.8 million and $1.5 million, respectively,
that was reported for tax purposes as compensation for services in accordance with Section 83 of the Code.
Listed below is a reconciliation of “Net increase in net assets resulting from operations” to taxable income and to
total distributions declared to common stockholders for the years ended December 31, 2022, 2021 and 2020.
Year Ended December 31,
2022
2021
2020
(estimated, dollars in thousands)
Net increase in net assets resulting from operations
$
241,606 $
330,762 $
29,383
Book-tax difference from share-based compensation expense
Net unrealized (appreciation) depreciation
Income tax provision (benefit)
Pre-tax book (income) loss not consolidated for tax purposes
Book income and tax income differences, including debt origination,
structuring fees, dividends, realized gains and changes in estimates
Estimated taxable income (1)
Taxable income earned in prior year and carried forward for
distribution in current year
Taxable income earned prior to period end and carried forward for
distribution next period
Dividend payable as of period end and paid in the following period
Total distributions accrued or paid to common stockholders
___________________________
142
(3,213)
(24,816)
(135,624)
23,325
32,863
(37,630)
(59,634)
17,043
219,670
39,819
204,973
5,139
5,622
(13,541)
37,420
93,025
157,048
50,834
24,359
29,107
(66,892)
17,676
221,288 $
(65,994)
15,159
178,497 $
(38,248)
13,889
161,796
$
(1) MSCC’s taxable income for each period is an estimate and will not be finally determined until MSCC files its tax
return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried
forward for distribution in the following period, may be different than this estimate.
The Taxable Subsidiaries primarily hold certain equity investments for Main Street. The Taxable Subsidiaries
permit Main Street to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes
and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The
Taxable Subsidiaries are consolidated with MSCC for U.S. GAAP financial reporting purposes, and the portfolio
investments held by the Taxable Subsidiaries are included in Main Street’s consolidated financial statements as portfolio
investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes
and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain
portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss,
due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at
166
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
corporate income tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax
assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street’s consolidated financial statements.
The income tax expense (benefit) for Main Street is generally composed of (i) deferred tax expense (benefit),
which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries,
including changes in loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book
tax differences, and (ii) current tax expense, which is primarily the result of current U.S. federal income and state taxes and
excise taxes on Main Street’s estimated undistributed taxable income. The income tax expense, or benefit, and the related
tax assets and liabilities generated by the Taxable Subsidiaries, if any, are reflected in Main Street’s Consolidated
Statements of Operations. Main Street’s provision for income taxes was comprised of the following for the years ended
December 31, 2022, 2021 and 2020:
Current tax expense (benefit):
Federal
State
Excise
Total current tax expense
Deferred tax expense (benefit):
Federal
State
Total deferred tax expense (benefit)
Year Ended December 31,
2022
2021
2020
(dollars in thousands)
$
516 $
(235) $
1,845
2,838
5,199
13,176
4,950
18,126
3,377
2,590
5,732
23,205
3,926
27,131
497
(1,554)
1,647
590
(13,082)
(1,049)
(14,131)
Total income tax provision (benefit)
$
23,325 $
32,863 $
(13,541)
MSCC operates in a manner to maintain its RIC status and to eliminate corporate-level U.S. federal income tax
(other than the 4% excise tax) by distributing sufficient investment company taxable income and long-term capital gains.
As a result, MSCC will have an effective tax rate equal to 0% before the excise tax and income taxes incurred by the
Taxable Subsidiaries. As such, a reconciliation of the differences between Main Street’s reported income tax expense and
its tax expense at the federal statutory rate of 21% is not meaningful.
As of December 31, 2022, the cost of investments for U.S. federal income tax purposes was $3,754.5 million, with
such investments having a gross unrealized appreciation of $701.0 million and gross unrealized depreciation of $353.3
million.
Management believes that the realization of the deferred tax assets is more likely than not based on expectations
as to future taxable income and scheduled reversals of temporary differences. Accordingly, Main Street did not record a
167
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
valuation allowance related to its deferred tax assets at December 31, 2022 and 2021. The following table sets forth the
significant components of net deferred tax assets and liabilities as of December 31, 2022 and 2021:
Deferred tax assets:
Net operating loss carryforwards
Interest expense carryforwards
Other
Total deferred tax assets
Deferred tax liabilities:
Net unrealized appreciation of portfolio investments
Net basis differences in portfolio investments
Total deferred tax liabilities
Total deferred tax liabilities, net
Year Ended December 31,
2022
2021
(dollars in thousands)
$
35,043 $
6,171
3,401
44,615
(64,219)
(28,245)
(92,464)
$
(47,849) $
34,102
11,283
2,809
48,194
(49,658)
(28,259)
(77,917)
(29,723)
The net deferred tax liability at December 31, 2022 and 2021 was $47.8 million and $29.7 million, respectively,
with the change primarily related to changes in net unrealized appreciation or depreciation, changes in loss carryforwards,
and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. At
December 31, 2022, for U.S. federal income tax purposes, the Taxable Subsidiaries had a net operating loss carryforward
from prior years which, if unused, will expire in various taxable years from 2034 through 2037. Any net operating losses
generated in 2018 and future periods are not subject to expiration and will carryforward indefinitely until utilized.
Additionally, the Taxable Subsidiaries have interest expense limitation carryforwards which have an indefinite
carryforward period. In addition, as of December 31, 2022, for U.S. federal income tax purposes at the RIC level, MSCC
had net capital loss carryforwards totaling $56.1 million available to offset future capital gains, to the extent available and
permitted by U.S. federal income tax law. However, as long as MSCC maintains its RIC status, any capital loss
carryforwards at the RIC are not subject to a federal income tax-effect and are not subject to an expiration date.
NOTE H — COMMON STOCK
Main Street maintains a program with certain selling agents through which it can sell shares of its common stock
by means of at-the-market offerings from time to time (the “ATM Program”).
During the year ended December 31, 2022, Main Street sold 5,407,382 shares of its common stock at a weighted-
average price of $39.29 per share and raised $212.4 million of gross proceeds under the ATM Program. Net proceeds were
$209.9 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2022, sales
transactions representing 43,217 shares had not settled and are not included in shares issued and outstanding on the face of
the Consolidated Balance Sheets, but are included in the weighted-average shares outstanding in the Consolidated
Statements of Operations and in the shares used to calculate the NAV per share. In March 2022, Main Street entered into
new distribution agreements to sell up to 15,000,000 shares through the ATM Program. As of December 31, 2022,
10,462,684 shares remained available for sale under the ATM Program.
During August 2022, Main Street completed a public equity offering of 1,345,500 shares of common stock at a
public offering price of $42.85 per share, including the underwriters’ full exercise of their option to purchase 175,500
additional shares, resulting in total net proceeds, including exercise of the underwriters’ option to purchase additional
shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of
approximately $55.1 million.
During the year ended December 31, 2021, Main Street sold 2,332,795 shares of its common stock at a weighted-
average price of $42.71 per share and raised $99.6 million of gross proceeds under the ATM Program. Net proceeds were
$98.4 million after commissions to the selling agents on shares sold and offering costs.
168
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
During the year ended December 31, 2020, Main Street sold 2,645,778 shares of its common stock at a weighted-
average price of $32.10 per share and raised $84.9 million of gross proceeds under the ATM Program. Net proceeds were
$83.8 million after commissions to the selling agents on shares sold and offering costs.
NOTE I — DIVIDEND REINVESTMENT PLAN
The dividend reinvestment feature of Main Street’s dividend reinvestment and direct stock purchase plan (the
“DRIP”) provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to
receive dividends in cash. As a result, if Main Street declares a cash dividend, its stockholders who have not “opted out” of
the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of
MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common
stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares will be
valued based upon the final closing price of MSCC’s common stock on the valuation date determined for each dividend by
Main Street’s Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued
based upon the average price of the applicable shares purchased, before any associated brokerage or other costs. Main
Street’s DRIP is administered by its transfer agent on behalf of Main Street’s record holders and participating brokerage
firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street’s DRIP but may
provide a similar dividend reinvestment plan for their clients.
Summarized DRIP information for the years ended December 31, 2022, 2021 and 2020 is as follows:
DRIP participation
Shares issued for DRIP
NOTE J — SHARE-BASED COMPENSATION
Year Ended December 31,
2022
2021
2020
($ in thousands)
$
24,131 $
16,283 $
625,196
404,384
16,234
517,796
Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC
718, Compensation—Stock Compensation. Accordingly, for restricted stock awards (“RSAs”), Main Street measured the
grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value
of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.
Main Street’s Board of Directors approves the issuance of shares of restricted stock to Main Street employees
pursuant to the Main Street Capital Corporation 2022 Equity and Incentive Plan (the “Equity and Incentive Plan”). These
shares generally vest over a three-year period from the grant date. The fair value is expensed over the service period,
starting on the grant date. The following table summarizes the restricted stock issuances approved by Main Street’s Board
of Directors under the Equity and Incentive Plan, net of shares forfeited, if any, and the remaining shares of restricted stock
available for issuance as of December 31, 2022.
Restricted stock authorized under the plan
Less net restricted stock granted during:
Year ended December 31, 2022
Restricted stock available for issuance as of December 31, 2022
5,000,000
(14,245)
4,985,755
As of December 31, 2022, the following table summarizes the restricted stock issued to Main Street’s non-
employee directors and the remaining shares of restricted stock available for issuance pursuant to the Main Street Capital
Corporation 2022 Non-Employee Director Restricted Stock Plan. These shares are granted upon appointment or election to
169
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
the board and vest on the day immediately preceding the annual meeting of stockholders following the respective grant date
and are expensed over such service period.
Restricted stock authorized under the plan
Less net restricted stock granted during:
Year ended December 31, 2022
Restricted stock available for issuance as of December 31, 2022
300,000
(4,590)
295,410
For the years ended December 31, 2022, 2021 and 2020, Main Street recognized total share-based compensation
expense of $13.6 million, $10.9 million and $10.8 million, respectively, related to the restricted stock issued to Main Street
employees and non-employee directors.
Summarized RSAs for the year ended December 31, 2022 is as follows:
Restricted Stock Awards (RSAs):
Non-vested, December 31, 2021
Granted (1)
Vested (1)(2)
Forfeited
Number
of Shares
673,350
499,274
(321,211)
(34,012)
$
Non-vested, December 31, 2022
817,401
$
Aggregate intrinsic value as of December 31, 2022 (in thousands) $ 30,203 (3)
Year Ended December 31, 2022
Weighted-Average Grant-Date Fair Value
( $ per share)
33.05
42.50
32.60
38.92
38.78
___________________________
(1) Restricted units generally vest over a three-year period from the grant date (as noted above).
(2) Vested shares included 116,177 shares withheld for payroll taxes paid on behalf of employees.
(3) Aggregate intrinsic value is the product of total non-vested restricted shares as of December 31, 2022 and $36.95 per
share, the closing price of our common stock on December 31, 2022.
The total fair value of RSAs that vested during the years ended December 31, 2022, 2021 and 2020, was $10.5
million, $10.9 million and $10.3 million, respectively.
As of December 31, 2022, there was $21.6 million of total unrecognized compensation expense related to Main
Street’s non-vested restricted shares. This compensation expense is expected to be recognized over a remaining weighted-
average period of 2.2 years as of December 31, 2022.
170
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
NOTE K — COMMITMENTS AND CONTINGENCIES
At December 31, 2022, Main Street had the following outstanding commitments (in thousands):
Investments with equity capital commitments that have not yet funded:
Amount
Brightwood Capital Fund Investments
Brightwood Capital Fund V, LP
Brightwood Capital Fund III, LP
Freeport Fund Investments
Freeport First Lien Loan Fund III LP
Freeport Financial SBIC Fund LP
Harris Preston Fund Investments
HPEP 4, L.P.
HPEP 3, L.P.
HPEP 423 COR, LP
2717 MH, L.P.
MS Private Loan Fund I, LP
UnionRock Energy Fund II, LP
Total Equity Commitments (1)(2)
Investments with commitments to fund revolving loans that have not been fully drawn or term loans with
additional commitments not yet funded:
Dalton US Inc.
Xenon Arc, Inc.
HEADLANDS OP-CO LLC
MS Private Loan Fund I, LP
PTL US Bidco, Inc
JTI Electrical & Mechanical, LLC
AMEREQUIP LLC.
SI East, LLC
NinjaTrader, LLC
Archer Systems, LLC
Veregy Consolidated, Inc.
Watterson Brands, LLC
Pearl Meyer Topco LLC
Paragon Healthcare, Inc.
Robbins Bros. Jewelry, Inc.
South Coast Terminals Holdings, LLC
171
$
$
$
$
$
$
$
$
$
$
3,000
300
3,300
6,197
3,841
10,038
7,668
1,555
600
52
9,875
750
2,124
26,087
18,985
12,406
10,125
10,000
9,542
8,421
7,704
7,500
7,472
7,115
5,875
5,028
5,000
4,867
4,500
4,465
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Winter Services LLC
Channel Partners Intermediateco, LLC
Direct Marketing Solutions, Inc.
Bettercloud, Inc.
AB Centers Acquisition Corporation
AVEX Aviation Holdings, LLC
Microbe Formulas, LLC
Classic H&G Holdco, LLC
Bluestem Brands, Inc.
MonitorUS Holding, LLC
VVS Holdco, LLC
SPAU Holdings, LLC
Adams Publishing Group, LLC
MetalForming AcquireCo, LLC
Batjer TopCo, LLC
GRT Rubber Technologies LLC
Infolinks Media Buyco, LLC
Nebraska Vet AcquireCo, LLC
Engineering Research & Consulting, LLC
CaseWorthy, Inc.
West Star Aviation Acquisition, LLC
Centre Technologies Holdings, LLC
Burning Glass Intermediate Holding Company, Inc.
GULF PACIFIC ACQUISITION, LLC
RTIC Subsidiary Holdings, LLC
MB2 Dental Solutions, LLC
PPL RVs, Inc.
The Affiliati Network, LLC
Elgin AcquireCo, LLC
Evergreen North America Acquisitions, LLC
IG Parent Corporation
ATS Operating, LLC
Career Team Holdings, LLC
Johnson Downie Opco, LLC
Chamberlin Holding LLC
Colonial Electric Company LLC
Trantech Radiator Topco, LLC
Cody Pools, Inc.
American Health Staffing Group, Inc.
RA Outdoors LLC
Project Eagle Holdings, LLC
Roof Opco, LLC
Gamber-Johnson Holdings, LLC
Eastern Wholesale Fence LLC
KMS, LLC
Mako Steel, LP
Hawk Ridge Systems, LLC
Mystic Logistics Holdings, LLC
Orttech Holdings, LLC
Project BarFly, LLC
DTE Enterprises, LLC
172
4,444
4,346
4,250
4,189
3,707
3,684
3,601
3,440
3,365
3,322
3,200
3,194
3,153
2,795
2,700
2,680
2,520
2,500
2,490
2,459
2,411
2,400
2,323
2,272
2,063
2,023
2,000
1,880
1,877
1,854
1,802
1,800
1,800
1,800
1,600
1,600
1,600
1,488
1,333
1,278
1,250
1,244
1,200
1,115
1,086
953
815
800
800
760
750
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
Market Force Information, LLC
Jensen Jewelers of Idaho, LLC
Invincible Boat Company, LLC.
NWN Corporation
Flame King Holdings, LLC
Gulf Publishing Holdings, LLC
Wall Street Prep, Inc.
Jackmont Hospitality, Inc.
Clad-Rex Steel, LLC
Acousti Engineering Company of Florida
Acumera, Inc.
725
500
457
438
400
400
400
400
400
53
15
Total Loan Commitments
$
248,309
Total Commitments
____________________
(1) This table excludes commitments related to six additional Other Portfolio investments for which the investment period
has expired and remaining commitments may only be drawn to pay fund expenses. The Company does not expect any
material future capital to be called on its commitment to these investments and as a result has excluded those
commitments from this table.
$
274,396
(2) This table excludes commitments related to three additional Other Portfolio investments for which the investment
period has expired and remaining commitments may only be drawn to pay fund expenses or for follow on investments
in existing portfolio companies. The Company does not expect any material future capital to be called on its
commitment to these investments to pay fund expenses, and based on representations from the fund manager, the
Company does not expect any further capital will be called on its commitment for follow on investments. As a result,
the Company has excluded those commitments from this table.
Main Street will fund its unfunded commitments from the same sources it uses to fund its investment
commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and
borrowings under the Credit Facilities). Main Street follows a process to manage its liquidity and ensure that it has
available capital to fund its unfunded commitments as necessary. The Company had no unrealized appreciation or
depreciation on the outstanding unfunded commitments as of December 31, 2022.
As of December 31, 2022, Main Street had one operating lease for its office space that commenced May 15, 2017,
was amended on April 25, 2022, expires March 31, 2034, and contains two five-year extension options for a final
expiration date of March 31, 2044.
In accordance with ASC 842, Main Street has recorded this lease as a right-of-use asset and a lease liability and
records lease expense on a straight-line basis.
Total operating lease cost incurred by Main Street for each of the years ended December 31, 2022, 2021 and 2020
was $0.7 million. As of December 31, 2022, the asset related to the operating lease was $8.7 million and is included in the
interest receivable and other assets balance on the Consolidated Balance Sheets. The lease liability was $11.1 million and is
included in the accounts payable and other liabilities balance, net of tenant improvement allowances, on the Consolidated
Balance Sheets. As of December 31, 2022, the remaining lease term was 11.3 years and the discount rate was 2.0%.
173
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
The following table shows future minimum payments under Main Street’s operating lease as of December 31,
2022 (in thousands):
For the Years Ended December 31,
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: lease payments representing interest
Present value of lease liabilities
Amount
389
1,020
1,115
1,135
1,155
7,673
12,487
(1,434)
11,053
$
$
Main Street may, from time to time, be involved in litigation arising out of its operations in the normal course of
business or otherwise. Furthermore, third parties may try to impose liability on Main Street in connection with the activities
of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with
certainty, Main Street does not expect any current matters will materially affect its financial condition or results of
operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect
on Main Street’s financial condition or results of operations in any future reporting period.
NOTE L — RELATED PARTY TRANSACTIONS
As discussed further in Note D — External Investment Manager, the External Investment Manager is treated as a
wholly-owned portfolio company of Main Street and is included as part of Main Street’s Investment Portfolio. At
December 31, 2022, Main Street had a receivable of $8.1 million due from the External Investment Manager, which
included (i) $4.5 million related primarily to operating expenses incurred by Main Street as required to support the External
Investment Manager’s business and amounts due from the External Investment Manager to Main Street under a tax sharing
agreement (see further discussion in Note D — External Investment Manager) and (ii) $3.7 million of dividends declared
but not paid by the External Investment Manager. MSCC has entered into an agreement with the External Investment
Manager to share employees in connection with its asset management business generally, and specifically for the External
Investment Manager’s relationship with MSC Income and its other clients (see further discussion in Note A.1. —
Organization and Basis of Presentation — Organization and Note D — External Investment Manager).
From time to time, Main Street may make investments in clients of the External Investment Manager in the form
of debt or equity capital on terms approved by Main Street’s Board of Directors.
In May 2022, Main Street purchased 94,697 shares of common stock of MSC Income from MSC Income at the
price shares were purchased by MSC Income stockholders pursuant to MSC Income’s dividend reinvestment plan for its
May dividend on such date. Main Street’s purchase of MSC Income common stock was unanimously approved by the
Board of Directors and MSC Income’s board of directors, including each director who is not an “interested person,” as
such term is defined in Section 2(a)(19) of the 1940 Act, of each board. As of December 31, 2022, Main Street owned
94,697 shares of MSC Income. In addition, certain of Main Street’s officers and employees own shares of MSC Income
and therefore have direct pecuniary interests in MSC Income.
In December 2020, the External Investment Manager entered into an Investment Management Agreement with the
Private Loan Fund to provide investment advisory and management services in exchange for an asset-based fee and certain
incentive fees. The Private Loan Fund is a private investment fund exempt from registration under the 1940 Act that co-
invests with Main Street in Main Street’s Private Loan investment strategy. In connection with the Private Loan Fund’s
initial closing in December 2020, Main Street committed to contribute up to $10.0 million as a limited partner and is
entitled to distributions on such interest. In February 2022, Main Street increased its total commitment to the Private Loan
Fund from $10.0 million to $15.0 million. In addition, certain of Main Street’s officers and employees (and certain of their
174
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
immediate family members) have made capital commitments to the Private Loan Fund as limited partners and therefore
have direct pecuniary interests in the Private Loan Fund. As of December 31, 2022, Main Street has funded $14.3 million
of its limited partner commitment and Main Street’s unfunded commitment was $0.7 million. Main Street’s limited partner
commitment to the Private Loan Fund was unanimously approved by the Board of Directors, including each director who is
not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act.
Additionally, Main Street provided the Private Loan Fund with a revolving line of credit pursuant to an Unsecured
Revolving Promissory Note, dated February 5, 2021 and was subsequently amended on November 30, 2021 and on
December 29, 2021 (as amended, the “PL Fund 2021 Note”), in an aggregate amount equal to the amount of limited partner
capital commitments to the Private Loan Fund up to $85.0 million. Borrowings under the PL Fund 2021 Note bore interest
at a fixed rate of 5.00% per annum and matured on February 28, 2022. The PL Fund 2021 Note was unanimously approved
by Main Street’s Board of Directors, including each director who is not an “interested person,” as such term is defined in
Section 2(a)(19) of the 1940 Act. In February 2022, the Private Loan Fund fully repaid all borrowings outstanding under
the PL Fund 2021 Note and the PL Fund 2021 Note was extinguished.
In March 2022, Main Street provided the Private Loan Fund with a revolving line of credit pursuant to a Secured
Revolving Promissory Note, dated March 17, 2022 (the “PL Fund 2022 Note”), which provides for borrowings up to $10.0
million. Borrowings under the PL Fund 2022 Note bear interest at a fixed rate of 5.00% per annum and mature on the date
upon which the Private Loan Fund’s investment period concludes, which is scheduled to occur in March 2026. Available
borrowings under the PL Fund 2022 Note are subject to a 0.25% non-use fee. The PL Fund 2022 Note was unanimously
approved by Main Street’s Board of Directors, including each director who is not an “interested person,” as such term is
defined in Section 2(a)(19) of the 1940 Act. As of December 31, 2022, there were no borrowings outstanding under the PL
Fund 2022 Note.
In November 2015, Main Street’s Board of Directors approved and adopted the Main Street Capital Corporation
Deferred Compensation Plan (the “2015 Deferred Compensation Plan”). The 2015 Deferred Compensation Plan became
effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously
adopted by the Board of Directors in June 2013 (the “2013 Deferred Compensation Plan”). Under the 2015 Deferred
Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash
compensation and directors’ fees, subject to certain limitations. Individuals participating in the 2015 Deferred
Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other
events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives
permitted from time to time under the plan, including phantom Main Street stock units. As of December 31, 2022, $15.3
million of compensation, plus net unrealized gains and losses and investment income, and minus previous distributions,
was deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred
Compensation Plan). Of this amount, $6.1 million is deferred into phantom Main Street stock units, representing 165,248
shares of Main Street’s common stock. Any amounts deferred under the plan represented by phantom Main Street stock
units will not be issued or included as outstanding on the Consolidated Statements of Changes in Net Assets until such
shares are actually distributed to the participant in accordance with the plan, but the related phantom stock units are
included in weighted-average shares outstanding with the related dollar amount of the deferral included in total expenses in
Main Street’s Consolidated Statements of Operations as the deferred fees represented by such phantom stock units are
earned over the service period. The dividend amounts related to additional phantom stock units are included in the
Consolidated Statements of Changes in Net Assets as an increase to dividends to stockholders offset by a corresponding
increase to additional paid-in capital.
NOTE M — SUBSEQUENT EVENTS
In January 2023, Main Street expanded its total commitments under the Corporate Facility from $920.0 million to
$980.0 million. The recent increase in total commitments was executed under the accordion feature of the Corporate
Facility which allows for an increase up to $1.4 billion in total commitments under the facility from new and existing
lenders on the same terms and conditions as the existing commitments.
In February 2023, Main Street entered into a first supplement to the Master Note Purchase Agreement dated
December 23, 2022, governing the issuance of $50.0 million in aggregate principal amount of 7.53% Series B unsecured
notes (the “December 2025 Follow-On Notes”) to qualified institutional investors in a private placement. The December
175
Table of contents
MAIN STREET CAPITAL CORPORATION
Notes to the Consolidated Financial Statements (Continued)
2025 Follow-On Notes were issued on February 2, 2023 and will mature on December 23, 2025 unless redeemed,
purchased or prepaid prior to such date by Main Street or its affiliates in accordance with their terms. Interest on the
December 2025 Follow-On Notes will be due semiannually on June 23 and December 23. In addition, Main Street is
obligated to offer to repay the December 2025 Follow-On Notes at par plus accrued and unpaid interest if certain change in
control events occur. The December 2025 Follow-On Notes are general unsecured obligations of Main Street’s that rank
pari passu with all of Main Street’s outstanding and future unsecured unsubordinated indebtedness.
In February 2023, Main Street declared a supplemental cash dividend of $0.175 per share payable in March 2023.
This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that Main
Street declared $0.225 per share for each of January, February and March 2023 or total regular monthly cash dividends of
$0.675 per share first quarter of 2023.
In February 2023, Main Street also declared regular monthly dividends of $0.225 per share for each of April, May
and June of 2023. These regular monthly dividends equal a total of $0.675 per share for the second quarter of 2023,
representing a 4.7% increase from the regular monthly dividends paid in the second quarter of 2022. Including the
regular monthly and supplemental dividends declared for the first and second quarters of 2023, Main Street will have paid
$36.645 per share in cumulative dividends since its October 2007 initial public offering.
176
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates
December 31, 2022
(dollars in thousands)
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1) (10) (11)
Geography
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Company
Majority-owned investments
ASK (Analytical Systems Keco
Holdings, LLC)
L+
10.00%
14.13% L+
10.00%
14.13%
Brewer Crane Holdings, LLC
14.12% L+
10.00%
Café Brazil, LLC
California Splendor Holdings LLC 13.75% L+
10.00%
Clad-Rex Steel, LLC
15.00%
SF+
13.23% SF+
10.00%
9.00%
9.00%
CMS Minerals Investments
Cody Pools, Inc.
15.38% L+
15.38% L+
10.50%
10.50%
Secured Debt
Secured Debt
Preferred Member Units
Preferred Member Units
Warrants
Secured Debt
Preferred Member Units
Member Units
Secured Debt
Preferred Member Units
15.00% Preferred Member Units
Secured Debt
Secured Debt
Secured Debt
Member Units
Member Units
Member Units
Secured Debt
Secured Debt
CompareNetworks Topco, LLC
L+
Datacom, LLC
13.13% L+
7.50%
7.50%
Preferred Member Units
9.00%
9.00%
Secured Debt
Secured Debt
Preferred Member Units
Secured Debt
Secured Debt
Preferred Member Units
Direct Marketing Solutions, Inc.
L+
15.13% L+
L+
11.00%
11.00%
11.00%
Elgin AcquireCo, LLC
SF+
6.00%
12.00%
9.00%
Gamber-Johnson Holdings, LLC
SF+
11.50% SF+
8.50%
8.50%
Secured Debt
Secured Debt
Secured Debt
Preferred Stock
Secured Debt
Secured Debt
Secured Debt
Common Stock
Common Stock
Secured Debt
Secured Debt
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2021 Fair
Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2022 Fair
Value (13)
$
6
$
(4) $
1
$
—
$
(3)
690
—
—
—
862
828
178
3,454
250
933
4
1,255
107
758
—
198
119
5,615
4,015
—
642
632
4
829
96
235
327
2,953
1,371
2
948
144
—
—
6
4,740
—
4,894
—
8,037
7,710
2,570
27,915
13,275
9,510
—
10,401
1,071
10,250
530
1,974
(13)
42,497
47,640
—
6,477
12,000
—
7,668
2,610
(22)
—
24,070
18,350
—
—
—
—
—
—
—
85
—
—
—
23
—
—
85
12,220
933
—
39
1
—
80
230
4,971
86
10,540
—
16
7,830
223
391
60
4,272
27,267
—
3,870
—
18,594
6,301
9,668
1,558
—
64,078
280
—
1,390
—
2,096
630
360
—
—
6,449
—
—
33
2,030
—
534
3,496
1,782
—
—
1,252
—
—
270
—
4,250
—
24,070
—
9
—
7
2,065
—
—
—
4,545
—
3,504
—
5,964
7,080
2,210
28,000
25,495
3,994
—
10,440
1,039
8,220
610
1,670
1,462
40,801
58,180
—
5,241
19,830
223
7,789
2,670
—
27,267
—
22,220
(9)
18,594
6,294
7,603
1,558
—
64,078
393
1,152
—
—
—
(1,390)
—
—
(630)
(360)
49
12,220
—
—
—
—
(2,030)
80
230
19
(86)
10,540
—
(16)
7,830
—
228
60
88
145
(137)
3,870
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(8)
(8)
(8)
(8)
(8)
(9)
(9)
(8)
(9)
(9)
(9)
(5)
(5)
(5)
(5)
(5)
(9)
(8)
(8)
(8)
(9)
(9)
(9)
(8)
(8)
(8)
(9)
(9)
(9)
(9)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
$
177
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2022
(dollars in thousands)
Type of Investment(1) (10) (11)
Geography
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2021 Fair
Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2022 Fair
Value (13)
Company
Total
Rate
Base
Rate
L+
GRT Rubber Technologies LLC
10.12% L+
12.12% L+
PIK
Rate
Spread
7.50%
6.00%
8.00%
Gulf Publishing Holdings, LLC
L+
9.50%
Secured Debt
Member Units
Secured Debt
Secured Debt
Member Units
Secured Debt
12.50%
Jensen Jewelers of Idaho, LLC
P+
Kickhaefer Manufacturing
Company, LLC
13.75% P+
11.50%
9.00%
6.75%
6.75%
Market Force Information, LLC
15.13% L+
11.00%
6.25% Secured Debt
Secured Debt
Member Units
Preferred Equity
Secured Debt
Secured Debt
Member Units
Secured Debt
Secured Debt
Preferred Equity
Member Units
Secured Debt
12.00%
12.00% Secured Debt
MetalForming AcquireCo, LLC
12.75%
8.00%
MH Corbin Holding LLC
13.00%
MSC Adviser I, LLC
Mystic Logistics Holdings, LLC
10.00%
OMi Topco, LLC
12.00%
PPL RVs, Inc.
L+
10.25% L+
7.00%
7.00%
Principle Environmental, LLC
Member Units
Secured Debt
Secured Debt
8.00% Preferred Equity
Common Stock
Secured Debt
Preferred Member Units
Preferred Member Units
Member Units
Secured Debt
Secured Debt
Common Stock
Secured Debt
Preferred Member Units
Secured Debt
Secured Debt
Common Stock
Common Stock
Secured Debt
—
—
—
—
—
—
(5,822)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(63)
1,190
—
(33)
(1,750)
—
3,848
(116)
—
(1,820)
—
(8)
2,550
—
—
(5,090)
390
(163)
(7,325)
—
—
—
—
—
699
—
—
(17,470)
—
(1)
13,990
(53)
2,600
9
247
4,590
—
—
(5)
(5)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(9)
(9)
(9)
(5)
(5)
(5)
(5)
(9)
(9)
(9)
(7)
(7)
(7)
(7)
(5)
(5)
(5)
(8)
(6)
(6)
(6)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
178
2,233
895
25
3,973
2,525
7
503
77
—
—
3
292
2,784
2,430
352
—
113
592
—
—
16
1,143
95
—
999
—
—
9,297
4
607
4,202
2,135
2,154
79
1,714
1,627
—
104
21,598
49,700
—
38,885
46,190
257
9,717
—
—
—
—
2,550
12,420
20,324
3,876
12,310
2,460
3,400
8,936
—
—
—
—
—
5,934
—
—
140,400
—
6,378
8,840
18,000
20,210
727
11,655
14,360
—
1,465
—
1,190
670
1,641
—
—
—
2,400
—
5,600
—
8
2,550
50
2
—
390
2,853
—
—
—
23,576
6,010
1,537
708
—
—
—
—
1
13,990
53
2,600
1,273
10,000
4,590
238
9
21,598
—
—
33
1,750
257
9,717
116
—
1,820
—
108
—
—
36
5,090
—
163
7,326
—
—
—
—
—
2,094
—
—
—
50,890
670
40,493
44,440
—
—
2,284
—
3,780
—
2,450
14,970
20,374
3,842
7,220
2,850
6,090
1,610
—
—
23,576
6,010
1,537
4,548
—
—
17,470
122,930
—
633
—
2,303
—
2,000
—
—
—
1,474
—
5,746
22,830
15,750
22,810
—
21,655
18,950
238
—
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2022
(dollars in thousands)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
13.00%
Quality Lease Service, LLC
Robbins Bros. Jewelry, Inc.
Trantech Radiator Topco, LLC
Ziegler’s NYPD, LLC
Other controlled investments
2717 MH, L.P.
ASC Interests, LLC
ATS Workholding, LLC
12.50%
12.00%
12.00%
6.50%
14.00%
13.00%
13.00%
5.00%
5.00%
Barfly Ventures, LLC
7.00%
Batjer TopCo, LLC
11.00%
Bolder Panther Group, LLC
13.39% SF+
9.26%
Bridge Capital Solutions
Corporation
8.00%
13.00%
13.00%
Type of Investment(1) (10) (11)
Geography
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2021 Fair
Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2022 Fair
Value (13)
Secured Debt
Preferred Member Units
Common Stock
Member Units
Secured Debt
Secured Debt
Preferred Equity
Secured Debt
Secured Debt
Common Stock
Secured Debt
Secured Debt
Secured Debt
Preferred Member Units
Warrants
LP Interests (2717 MH, L.P.)
LP Interests (2717 HPP-MS, L.P.)
Secured Debt
Secured Debt
Member Units
Secured Debt
Secured Debt
Preferred Member Units
Secured Debt
Member Units
Secured Debt
Secured Debt
Secured Debt
Preferred Stock
Secured Debt
Secured Debt
Class A Preferred Member Units
Class B Preferred Member Units
Secured Debt
Secured Debt
Preferred Member Units
Warrants
(8)
(8)
(8)
(7)
(9)
(9)
(9)
(7)
(7)
(7)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(9)
(9)
(9)
(5)
(5)
(8)
(8)
(8)
(8)
(9)
(9)
(9)
(9)
(6)
(6)
(6)
(6)
179
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,260
(120)
76
—
—
3,810
5
(23)
(860)
—
(55)
(74)
(1,890)
—
2,389
—
—
—
80
(620)
(869)
—
—
1,390
—
—
—
—
—
305
—
8,250
—
—
—
117
804
1,355
—
—
32
4,678
558
7
1,044
116
71
66
390
—
—
—
—
36
266
—
—
—
—
51
—
5
—
1,139
631
23
9,164
2,466
1,210
1,162
132
100
—
5,808
11,160
710
2,148
(44)
36,000
11,070
(8)
8,720
8,660
625
1,000
2,750
2,130
—
3,971
—
200
1,636
720
1,088
1,917
—
710
1,930
—
—
—
—
—
39,000
10,194
23,170
8,813
1,000
1,000
1,712
24
1,260
—
77
9
78
3,810
8
23
—
—
—
—
—
—
3,581
248
230
13
80
188
—
—
1
1,390
451
—
10,933
4,095
—
60,194
—
8,250
—
—
—
116
26
—
120
1,700
—
674
—
—
823
860
175
55
74
1,890
—
—
—
30
—
—
642
912
—
—
—
459
—
—
—
—
—
10,194
—
—
—
—
—
5,806
12,420
590
525
(35)
35,404
14,880
—
7,920
7,800
450
945
2,676
240
—
7,552
248
400
1,649
800
634
1,005
—
711
3,320
(8)
—
10,933
4,095
—
99,194
—
31,420
8,813
1,000
1,000
1,828
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2022
(dollars in thousands)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1) (10) (11)
Geography
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2021 Fair
Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2022 Fair
Value (13)
CBT Nuggets, LLC
Centre Technologies Holdings,
LLC
L+
9.00%
13.13% L+
9.00%
Chamberlin Holding LLC
L+
12.13% L+
6.00%
8.00%
Charps, LLC
10.00%
Colonial Electric Company LLC
12.00%
Copper Trail Energy Fund I, LP -
CTMH
Warrants
Member Units
Secured Debt
Secured Debt
Preferred Member Units
Secured Debt
Secured Debt
Member Units
Member Units
Unsecured Debt
Preferred Member Units
Secured Debt
Secured Debt
Preferred Member Units
LP Interests (CTMH, LP)
Digital Products Holdings LLC
14.13% L+
10.00%
Secured Debt
Preferred Member Units
Garreco, LLC
9.50% L+
8.00%
Gulf Manufacturing, LLC
Harrison Hydra-Gen, Ltd.
Johnson Downie Opco, LLC
L+
15.63% L+
11.50%
11.50%
JorVet Holdings, LLC
12.00%
KBK Industries, LLC
MS Private Loan Fund
MSC Income Fund, Inc.
NAPCO Precast, LLC
Nebraska Vet AcquireCo, LLC
(NVS)
L+
7.00%
12.00%
12.00%
Secured Debt
Member Units
Member Units
Common Stock
Secured Debt
Secured Debt
Preferred Equity
Secured Debt
Preferred Equity
Member Units
Secured Debt
Secured Debt
LP Interests
Common Equity
Member Units
Secured Debt
Secured Debt
Secured Debt
NexRev LLC
Preferred Member Units
Secured Debt
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
163
(1,620)
—
507
2,578
—
(68)
(1,220)
719
(44)
(650)
—
—
30
—
—
—
—
(470)
1,150
(250)
14
79
2,390
—
—
1,950
—
—
502
3
(1,730)
—
122
66
—
—
—
3,305
28
1,767
120
8
1,845
1,853
78
613
764
48
2,953
1,397
—
1,991
200
383
240
1,715
—
13
1,503
1,062
2,680
922
1,671
28
431
742
30
4
10
1,778
1,299
—
29
2,348
50,620
—
8,864
5,840
—
17,817
24,140
1,540
5,694
13,990
—
24,351
9,130
710
16,801
9,835
4,196
2,270
5,640
3,530
(18)
11,362
3,150
—
—
13,620
—
63,151
2,581
—
13,560
—
4,829
10,412
7,700
800
164
—
1,440
6,476
2,860
—
68
—
1,170
44
—
1,600
60
30
—
43
—
—
—
1,150
—
18
114
2,390
25,432
10,741
1,950
5,300
13,700
12,252
753
—
—
15,265
88
—
—
—
1,618
1,440
386
—
—
940
1,220
—
44
650
1,600
1,260
—
122
1,321
—
370
470
—
250
—
1,477
—
—
—
—
5,300
76,851
—
—
1,730
—
—
—
—
800
2,512
49,002
—
14,954
8,700
—
16,945
22,920
2,710
5,694
13,340
—
23,151
9,160
588
15,523
9,835
3,826
1,800
6,790
3,280
—
9,999
5,540
25,432
10,741
15,570
—
—
14,833
753
11,830
—
20,094
10,500
7,700
—
(6)
(9)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(5)
(5)
(6)
(6)
(6)
(9)
(5)
(5)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(9)
(9)
(5)
(8)
(8)
(8)
(8)
(8)
(5)
(5)
(5)
(5)
(8)
180
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2022
(dollars in thousands)
Type of Investment(1) (10) (11)
Geography
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2021 Fair
Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2022 Fair
Value (13)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
11.00%
NRP Jones, LLC
12.00%
NuStep, LLC
10.63% L+
6.50%
12.00%
Orttech Holdings, LLC
L+
15.13% L+
11.00%
11.00%
Pearl Meyer Topco LLC
River Aggregates, LLC
Tedder Industries, LLC
Televerde, LLC
Vision Interests, Inc.
VVS Holdco LLC
12.00%
12.00%
12.00%
L+
6.00%
11.50%
Secured Debt
Preferred Member Units
Secured Debt
Member Units
Member Units
Secured Debt
Secured Debt
Preferred Member Units
Preferred Member Units
Secured Debt
Secured Debt
Preferred Stock
Secured Debt
Secured Debt
Secured Debt
Preferred Equity
Member Units
Secured Debt
Secured Debt
Preferred Member Units
Member Units
Preferred Stock
Series A Preferred Stock
Secured Debt
Secured Debt
Preferred Equity
Other
Amounts related to investments
transferred to or from other
1940 Act classification during
the period
Total Control investments
Affiliate Investments
AAC Holdings, Inc.
18.00%
18.00% Secured Debt
AFG Capital Group, LLC
Common Stock
Warrants
Secured Debt
Preferred Member Units
(8)
(8)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(6)
(6)
(6)
(6)
(8)
(9)
(9)
(9)
(8)
(8)
(9)
(5)
(5)
(5)
(7)
(7)
(7)
(8)
(8)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(729)
(2,913)
—
(1,585)
(65)
—
(4)
(5,460)
3,088
—
—
1,750
—
—
(92)
16,290
340
—
(71)
(1,564)
(1,872)
1,076
—
—
—
100
—
—
—
1,923
13,245
81
253
578
17
323
2,180
—
—
16
3,207
900
31
—
3,714
8,204
—
215
1,900
—
2
—
144
55
3,606
518
—
—
—
2,690
2,080
6,200
240
1,720
17,240
13,500
—
175
23,976
10,000
—
—
32,674
26,970
3,280
1,040
15,141
8,579
7,280
—
3,000
1,169
30,100
11,840
—
—
—
—
1,333
—
—
—
2,679
1,178
—
5,150
—
53
1,750
1,500
—
92
16,290
340
800
51
666
—
1,794
—
811
61
100
—
—
—
3,677
1,491
6,123
—
4,768
2,913
—
1,585
65
—
4
5,460
—
175
600
—
1,500
—
4,085
—
—
—
72
1,564
1,872
—
—
2,001
—
—
—
—
—
—
8,477
1,110
2,080
4,615
175
4,399
18,414
8,040
5,150
—
23,429
11,750
—
—
28,681
43,260
3,620
1,840
15,120
7,681
5,408
1,794
3,000
(21)
30,161
11,940
—
—
—
—
(5,822) $
56,682
$
155,967
$
1,489,257
$
488,176
$
268,138
$
1,703,172
—
—
—
—
—
$
178
$
2,032
$
9,794
$
1,756
$
—
$
11,550
(2,079)
(1,940)
—
1,660
—
—
2
200
2,079
1,940
144
7,740
—
—
—
1,660
2,079
1,940
144
—
—
—
—
9,400
$
$
181
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2022
(dollars in thousands)
Type of Investment(1) (10) (11)
Geography
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
December 31,
2021 Fair
Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2022 Fair
Value (13)
Company
ATX Networks Corp.
Total
Rate
Base
Rate
12.23% L+
10.00%
PIK
Rate
Spread
7.50%
BBB Tank Services, LLC
15.12% L+
15.12% L+
11.00%
11.00%
Secured Debt
10.00% Unsecured Debt
Common Stock
Unsecured Debt
Unsecured Debt
Member Units
15.00%
Preferred Stock (non-voting)
Boccella Precast Products LLC
10.00%
Buca C, LLC
9.00%
6.00%
Career Team Holdings, LLC
L+
6.00%
12.50%
Chandler Signs Holdings, LLC
Classic H&G Holdings, LLC
9.75% L+
6.00%
8.00%
Secured Debt
Member Units
Secured Debt
6.00% Preferred Member Units
Secured Debt
Secured Debt
Common Stock
Class A Units
Secured Debt
Secured Debt
Congruent Credit Opportunities
Funds
DMA Industries, LLC
12.00%
Dos Rios Partners
Dos Rios Stone Products LLC
EIG Fund Investments
Flame King Holdings, LLC
10.75% L+
13.25% L+
6.50%
9.00%
Freeport Financial SBIC Fund LP
GFG Group, LLC.
9.00%
Hawk Ridge Systems, LLC
10.13% L+
6.00%
9.00%
Preferred Member Units
LP Interests (Congruent Credit
Opportunities Fund
III, LP)
Secured Debt
Preferred Equity
LP Interests (Dos Rios Partners, LP)
LP Interests (Dos Rios Partners - A,
LP)
Class A Preferred Units
LP Interests (EIG Global Private Debt
Fund-A, L.P.)
Secured Debt
Secured Debt
Preferred Equity
LP Interests (Freeport Financial SBIC
Fund LP)
LP Interests (Freeport First Lien Loan
Fund III LP)
Secured Debt
Preferred Member Units
Secured Debt
Secured Debt
Preferred Member Units
(6)
(6)
(6)
(8)
(8)
(8)
(8)
(6)
(6)
(7)
(7)
(6)
(6)
(6)
(8)
(6)
(6)
(6)
(8)
(7)
(7)
(8)
(8)
(8)
(8)
(9)
(9)
(9)
(5)
(5)
(5)
(5)
(9)
(9)
(9)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
758
329
—
105
527
—
—
32
66
1,894
—
10
7,092
1,963
—
800
1,707
—
—
320
4,830
14,370
—
—
2,607
20,050
—
—
639
1,606
1,711
566
2,621
—
1
—
—
103
669
2,739
2,153
4,500
460
4,000
19,274
15,260
9,959
20,993
5,944
10,329
3,280
640
547
6,324
20,996
10,400
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
134
306
3,270
—
379
—
—
—
(1,860)
103
—
—
—
—
1,330
—
(43)
9,380
(142)
165
1,316
202
(1,055)
(335)
690
—
60
162
7,180
(128)
3
6,078
(57)
(34)
150
3
(13)
2,780
442
1,248
577
230
3,054
803
7,231
12,545
6,990
2,585
34,800
14,680
64
—
20
—
—
—
—
—
—
—
—
—
—
182
362
635
3,270
—
379
—
—
—
—
103
—
621
40
—
1,330
11,720
43
9,377
—
207
1,316
202
64
690
1,102
1,276
204
7,180
—
—
34
150
600
3,013
2,780
1,111
—
—
—
—
—
—
—
1,860
2,136
—
630
—
—
—
11,160
43
—
2,302
—
—
1,404
446
—
636
—
—
—
2,595
1,383
1,234
—
—
13
—
6,343
2,598
3,270
800
2,086
—
—
320
2,970
12,337
—
(9)
20,090
4,500
1,790
4,560
19,274
24,637
7,657
21,200
7,260
9,127
2,898
1,330
1,013
7,600
21,200
17,580
3,483
5,848
11,345
7,140
3,185
37,800
17,460
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2022
(dollars in thousands)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1) (10) (11)
Geography
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2021 Fair
Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2022 Fair
Value (13)
Houston Plating and Coatings,
LLC
8.00%
HPEP 3, L.P.
I-45 SLF LLC
Iron-Main Investments, LLC
L.F. Manufacturing Holdings,
LLC
OnAsset Intelligence, Inc.
12.50%
12.50%
12.50%
12.50%
12.00%
12.00%
12.00%
12.00%
10.00%
7.00%
Preferred Member Units
Unsecured Convertible Debt
Member Units
LP Interests (HPEP 3, L.P.)
LP Interests (HPEP 4, L.P.)
LP Interests (423 COR, LP)
Member Units (Fully diluted 20.0%;
21.75% profits interest)
Secured Debt
Secured Debt
Secured Debt
Secured Debt
Common Stock
14.00%
Preferred Member Units (non-voting)
Member Units
12.00% Secured Debt
12.00% Secured Debt
12.00% Secured Debt
12.00% Secured Debt
10.00% Unsecured Debt
7.00% Preferred Stock
Oneliance, LLC
L+
15.13% L+
11.00%
11.00%
Rocaceia, LLC (Quality Lease and
Rental Holdings, LLC)
12.00%
SI East, LLC (Stavig)
9.50%
Slick Innovations, LLC
14.00%
Sonic Systems International, LLC
11.24% L+
7.50%
Student Resource Center, LLC
13.27% L+
8.50%
Common Stock
Warrants
Secured Debt
Secured Debt
Preferred Stock
Secured Debt
Preferred Member Units
Secured Debt
Secured Debt
Preferred Member Units
Secured Debt
Common Stock
Warrants
Secured Debt
Common Stock
Secured Debt
—
—
—
779
—
—
—
—
—
—
—
—
—
617
—
—
—
—
—
—
—
—
—
—
—
(86)
—
—
—
—
—
—
1,219
—
—
—
150
40
(810)
254
—
—
(2,629)
—
—
—
—
—
—
(541)
(395)
(403)
(867)
(1,809)
—
—
—
—
—
—
—
—
—
—
(34)
2,080
70
264
(219)
242
(76)
—
—
243
17
(48)
—
—
2,028
591
411
1,134
2,572
—
9
224
28
29
62
129
5
—
—
—
—
750
2
—
—
237
8,409
647
936
456
—
1,434
43
—
770
2,960
3,210
4,712
—
—
14,387
4,557
3,170
8,944
19,805
1,798
107
2,560
935
954
2,055
4,285
192
—
—
—
—
5,547
1,056
—
—
2,250
63,600
11,570
5,320
1,510
400
11,757
1,070
—
150
40
—
1,033
2,332
1,400
—
10
7
—
42
—
10
617
28
29
62
129
113
—
—
—
—
12
—
—
—
3,750
31,159
2,080
10,080
264
1,219
4,012
286
4,556
—
—
810
1,414
—
—
920
3,000
2,400
4,331
2,332
1,400
2,629
11,758
67
47
—
288
—
117
3,177
394
403
868
1,808
—
—
—
—
—
—
—
—
—
6,000
4,973
—
1,560
244
1,619
—
76
—
4,500
3,130
8,944
19,559
1,798
—
—
569
580
1,249
2,606
305
—
—
—
—
5,559
1,056
—
—
—
89,786
13,650
13,840
1,530
—
15,769
1,280
4,556
(9)
(8)
(8)
(8)
(8)
(8)
(8)
(5)
(5)
(5)
(5)
(5)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(7)
(7)
(7)
(8)
(8)
(7)
(7)
(7)
(6)
(6)
(6)
(8)
(8)
(6)
183
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2022
(dollars in thousands)
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
(5,991)
4,000
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1) (10) (11)
Geography
Superior Rigging & Erecting Co.
12.00%
The Affiliati Network, LLC
13.00%
13.00%
UnionRock Energy Fund II, LP
Secured Debt
Preferred Equity
Secured Debt
Preferred Member Units
Secured Debt
Secured Debt
Preferred Stock
LP Interests
UniTek Global Services, Inc.
10.76% SF+
5.50% 2.00% Secured Debt
10.76% SF+
5.50% 2.00% Secured Debt
15.00%
20.00%
20.00%
19.00%
13.50%
14.00%
11.50%
8.00%
Universal Wellhead Services
Holdings, LLC
Volusion, LLC
World Micro Holdings, LLC
13.00%
Other
Amounts related to investments
transferred to or from other
1940 Act classification during
the period
Total Affiliate investments
15.00% Secured Convertible Debt
20.00% Preferred Stock
20.00% Preferred Stock
19.00% Preferred Stock
13.50% Preferred Stock
Common Stock
14.00%
Preferred Member Units
Member Units
Secured Debt
Unsecured Convertible Debt
Preferred Member Units
Warrants
Secured Debt
Preferred Equity
(6)
(6)
(7)
(7)
(9)
(9)
(9)
(9)
(6)
(6)
(6)
(6)
(6)
(6)
(6)
(6)
(8)
(8)
(8)
(8)
(8)
(8)
(7)
(7)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(143)
—
—
—
—
—
—
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2021 Fair
Value
6
—
2,662
—
32
1,520
403
596
40
201
269
384
—
—
—
—
—
—
1,982
33
3
—
248
—
—
10,839
—
21,332
4,500
262
12,834
6,400
6,123
371
1,852
2,375
2,832
1,498
—
—
—
—
—
17,434
409
5,990
—
—
—
—
Gross
Additions(3)
Gross
Reductions(4)
5,877
16,716
—
46
—
3,764
48
—
2,491
11
72
2,217
385
493
—
—
—
220
—
—
—
—
—
14,140
3,845
—
—
—
—
3,920
3,440
—
2,759
—
212
—
384
—
—
—
—
—
—
2,520
409
5,990
—
—
—
—
December 31,
2022 Fair
Value (13)
—
—
21,378
4,500
106
9,442
6,400
5,855
382
1,712
4,592
2,833
1,991
—
—
—
220
—
14,914
—
—
—
14,140
3,845
—
—
—
—
—
—
—
(174)
3
26
1,011
(384)
493
—
—
—
220
—
(1,821)
(409)
(5,990)
—
—
—
—
$
(3,319) $
10,314
$
54,963
$
549,214
$
157,996
$
104,813
$
618,359
(3,538)
(1,491)
(15,962)
10,853
10,853
—
______________________
(1) The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the Consolidated Schedule of
Investments included in Item 8. Consolidated Financial Statements of this Annual Report on Form 10-K.
(2) Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or
Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related
to the time period it was in the category other than the one shown at period end is included in “Amounts related to investments transferred from other 1940 Act
classifications during the period.”
184
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2022
(dollars in thousands)
(3) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the
exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in
net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.
(4) Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities
for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the
movement of an existing portfolio company out of this category and into a different category.
(5) Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2022 for control
investments located in this region was $346,535. This represented 21.7% of net assets as of December 31, 2022. The fair value as of December 31, 2022 for
affiliate investments located in this region was $67,491. This represented 12.2% of net assets as of December 31, 2022.
(6) Portfolio company located in the Northeast region and Canada as determined by location of the corporate headquarters. The fair value as of December 31, 2022 for
control investments located in this region was $144,681. This represented 9.0% of net assets as of December 31, 2022. The fair value as of December 31, 2022 for
affiliate investments located in this region was $105,372. This represented 19.1% of net assets as of December 31, 2022.
(7) Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2022 for control
investments located in this region was $16,360. This represented 1.0% of net assets as of December 31, 2022. The fair value as of December 31, 2022 for affiliate
investments located in this region was $196,507. This represented 35.6% of net assets as of December 31, 2022.
(8) Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2022 for control
investments located in this region was $593,513. This represented 37.1% of net assets as of December 31, 2022. The fair value as of December 31, 2022 for
affiliate investments located in this region was $99,261. This represented 18.0% of net assets as of December 31, 2022.
(9) Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of December 31, 2022 for control
investments located in this region was $498,340. This represented 31.2% of net assets as of December 31, 2022. The fair value as of December 31, 2022 for
affiliate investments located in this region was $83,950. This represented 15.2% of net assets as of December 31, 2022.
(10) All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.
(11) This schedule should be read in conjunction with the Consolidated Schedule of Investments and Notes to the Consolidated Financial Statements included in Item 8.
Consolidated Financial Statements of this Annual Report on Form 10-K. Supplemental information can be located within the Consolidated Schedule of
Investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was
determined using significant unobservable inputs.
(12) Investment has an unfunded commitment as of December 31, 2022 (see Note K — Commitments and Contingencies in Item 8. Consolidated Financial Statements
of this Annual Report on Form 10-K). The fair value of the investment includes the impact of the fair value of any unfunded commitments.
(13) Negative fair value is the result of the capitalized discount being greater than the principal amount outstanding on the loan.
185
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates
December 31, 2021
(dollars in thousands)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1)(10)(11)
Geogra
phy
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2020
Fair Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2021
Fair Value
Majority-owned investments
ASK (Analytical Systems Keco Holdings,
LLC)
12.00% L+
10.00%
Secured Debt
Preferred Member Units
Warrants
Brewer Crane Holdings, LLC
11.00% L+
10.00%
Secured Debt
Café Brazil, LLC
Preferred Member Units
Member Units
California Splendor Holdings LLC
11.00% L+
10.00%
Secured Debt
Preferred Member Units
Clad-Rex Steel, LLC
10.00%
Secured Debt
10.50% L+
9.50%
Secured Debt
CMS Minerals Investments
Member Units
Member Units
Cody Pools, Inc.
12.25% L+
10.50%
Secured Debt
Preferred Member Units
CompareNetworks Topco, LLC
10.00% L+
9.00%
Secured Debt
Datacom, LLC
5.00%
8.00%
Preferred Member Units
Secured Debt
Secured Debt
Preferred Member Units
Direct Marketing Solutions, Inc.
12.00% L+
11.00%
Secured Debt
Preferred Stock
Gamber-Johnson Holdings, LLC
9.50% L+
7.50%
Secured Debt
GRT Rubber Technologies LLC
8.10% L+
8.00%
Secured Debt
Member Units
Jensen Jewelers of Idaho, LLC
10.00% P+
6.75%
Secured Debt
Member Units
(8)
(8)
(8)
(9)
(9)
(8)
(9)
(9)
(5)
(5)
(5)
(9)
(8)
(8)
(9)
(9)
(8)
(8)
(8)
(9)
(9)
(5)
(5)
(8)
(8)
(9)
$
—
$
—
$
691
$
4,873
$
153
$
290
$
4,736
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(3,601)
(7,324)
—
—
—
—
—
—
—
(733)
(10)
—
1,860
540
36
7,034
—
—
1,640
691
242
32,700
(18)
5,220
(628)
2,130
7,324
137
(1,030)
32
(5,638)
213
1,290
(13)
—
—
940
927
1,012
3,381
1,505
110
1,167
2,391
50
2,357
3,100
777
474
793
1
—
2,034
672
2,019
3,921
1,786
4,264
313
3,200
10
8,513
5,850
2,030
35,833
14,496
1,100
10,853
9,140
1,624
14,216
14,940
7,954
6,780
—
12,146
—
15,006
19,380
19,838
52,490
16,775
44,900
3,400
4,894
3,200
—
20
1,860
540
211
8,289
—
(52)
1,640
691
32,737
32,700
18
5,220
8,404
2,130
9,934
9,512
—
1,761
2,848
22,110
1,290
13
10
496
—
—
8,129
—
29
400
—
341
4,469
—
1,495
—
736
14,276
7,324
470
1,030
1
5,638
—
—
863
4,894
—
8,037
7,710
2,570
27,915
22,785
1,071
10,401
10,780
1,974
42,484
47,640
6,477
12,000
7,668
—
2,610
24,048
18,350
21,598
49,700
38,885
46,190
2,550
186
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2021
(dollars in thousands)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1)(10)(11)
Geogra
phy
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
December 31,
2020
Fair Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2021
Fair Value
10.00% P+
6.75%
Secured Debt
Kickhaefer Manufacturing Company, LLC
11.50%
9.00%
Member Units
Secured Debt
Secured Debt
Member Units
Market Force Information, LLC
12.00% L+
11.00%
Secured Debt
MH Corbin Holding LLC
MSC Adviser I, LLC
Mystic Logistics Holdings, LLC
12.00%
OMi Holdings, Inc.
12.00%
12.00%
13.00%
12.00% Secured Debt
Secured Debt
Preferred Member Units
Member Units
Secured Debt
Common Stock
Secured Debt
Preferred Member Units
PPL RVs, Inc.
7.50% L+
7.00%
Secured Debt
Principle Environmental, LLC
13.00%
Quality Lease Service, LLC
Common Stock
Secured Debt
Common Stock
Preferred Member Units
Warrants
Member Units
Robbins Bros. Jewelry, Inc.
12.00% L+
11.00%
Secured Debt
Trantech Radiator Topco, LLC
12.00%
Ziegler’s NYPD, LLC
12.00%
14.00%
6.50%
Preferred Equity
Secured Debt
Common Stock
Secured Debt
Secured Debt
Secured Debt
Preferred Member Units
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(9)
(9)
(5)
(5)
(5)
(9)
(9)
(5)
(5)
(8)
(6)
(6)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(8)
(7)
(9)
(9)
(7)
(7)
(8)
(8)
(8)
(8)
187
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
3
1,937
2,526
354
92
387
—
1,137
—
—
4,800
—
—
1,370
—
(4,626)
(2,059)
(2,370)
—
7,620
22,269
3,909
13,400
1,600
13,562
8,280
2,370
—
4,800
55
—
1,370
1,800
—
34
—
23,638
6,216
116,760
23,640
1
(150)
169
(170)
(25)
2,860
(62)
(490)
(449)
330
(461)
—
—
49
2,630
—
—
21
350
820
1,271
1,109
1,578
957
555
929
—
—
—
—
621
—
1,084
116
76
390
66
—
6,723
8,990
10
—
—
18,000
20,380
11,806
11,500
6,397
—
10,500
870
4,460
—
—
8,644
6,030
625
2,750
979
1,780
—
801
2,860
2,938
1,200
1,109
330
—
35,956
11,070
68
2,630
—
—
21
350
—
—
2,000
33
—
—
4,626
2,380
2,370
—
355
150
—
170
225
—
2,062
490
449
1,200
2,312
—
—
—
—
—
—
—
—
—
12,420
20,324
3,876
14,770
3,400
8,936
5,934
—
140,400
6,378
8,840
18,000
20,210
12,382
14,360
7,273
710
11,160
—
2,148
35,956
11,070
8,712
8,660
625
2,750
1,000
2,130
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2021
(dollars in thousands)
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1)(10)(11)
Geogra
phy
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2020
Fair Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2021
Fair Value
Company
Other controlled investments
2717 MH, L.P.
ASC Interests, LLC
13.00%
ATS Workholding, LLC
Barfly Ventures, LLC
5.00%
7.00%
LP Interests (2717 HPP-MS, L.P.)
LP Interests (2717 MH, L.P.)
Secured Debt
Member Units
Secured Debt
Secured Debt
Member Units
Bolder Panther Group, LLC
10.50% L+
9.00%
Secured Debt
Bond-Coat, Inc.
Class A Preferred Member Units
Class B Preferred Member Units
Common Stock
Bridge Capital Solutions Corporation
13.00%
Preferred Member Units
CBT Nuggets, LLC
Preferred Member Units
Warrants
Member Units
Centre Technologies Holdings, LLC
12.00% L+
10.00%
Secured Debt
Preferred Member Units
Chamberlin Holding LLC
9.00% L+
8.00%
Secured Debt
Charps, LLC
10.00%
15.00%
Member Units
Unsecured Debt
Secured Debt
Preferred Member Units
Colonial Electric Company LLC
12.00%
Secured Debt
Copper Trail Energy Fund I, LP - CTMH
Preferred Member Units
LP Interests (CTMH, LP)
Digital Products Holdings LLC
11.00% L+
10.00%
Secured Debt
Preferred Member Units
Garreco, LLC
9.00% L+
8.00%
Secured Debt
—
—
—
—
—
—
—
—
—
—
(2,320)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(8)
(8)
(8)
(8)
(9)
(5)
(5)
(9)
(9)
(9)
(8)
(6)
(6)
(6)
(9)
(8)
(8)
(8)
(8)
(5)
(5)
(5)
(6)
(6)
(9)
(5)
(5)
(8)
188
—
1,165
—
(400)
(154)
—
346
313
—
9,170
4,310
—
—
840
4,540
(507)
(320)
2
(3,660)
260
—
1,907
—
1,450
—
—
—
—
—
—
261
—
—
49
—
3,686
1,427
3,100
—
1,705
100
—
2,308
1,266
120
1,544
3,922
1,007
4
4,839
2,705
1,480
—
250
2,702
1,715
1,120
3,347
343
1,584
27,225
10,194
14,000
2,040
9,401
1,000
3,220
46,080
11,549
6,160
15,212
29,340
8,475
669
10,520
—
—
747
1,978
18,077
200
405
9,835
4,519
—
1,269
121
—
—
367
346
12,275
—
9,170
4,310
412
—
840
4,540
33
—
4,001
270
559
—
3,470
24,981
9,130
—
44
—
—
250
—
—
400
342
—
—
500
—
—
6,350
—
—
—
—
2,718
320
1,396
3,930
3,340
669
—
630
—
37
—
3,971
1,836
720
3,005
710
1,930
39,000
10,194
23,170
—
9,813
1,000
4,060
50,620
8,864
5,840
17,817
25,680
5,694
—
13,990
24,351
9,130
710
1,320
16,801
—
323
9,835
4,196
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2021
(dollars in thousands)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1)(10)(11)
Geogra
phy
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2020
Fair Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2021
Fair Value
Gulf Manufacturing, LLC
Member Units
Member Units
Gulf Publishing Holdings, LLC
10.50% L+
9.50%
Secured Debt
12.50%
6.25%
Secured Debt
Harrison Hydra-Gen, Ltd.
J&J Services, Inc.
11.50%
Common Stock
Secured Debt
Preferred Stock
Johnson Downie Opco, LLC
13.00% L+
11.50%
Secured Debt
KBK Industries, LLC
MS Private Loan Fund
5.00%
MSC Income Fund Inc.
5.00%
NAPCO Precast, LLC
Nebraska Vet AcquireCo, LLC (NVS)
12.00%
Preferred Equity
Member Units
Unsecured Debt
LP Interests
Unsecured Debt
Member Units
Secured Debt
Preferred Member Units
NexRev LLC
11.00%
Secured Debt
NRI Clinical Research, LLC
9.00%
NRP Jones, LLC
NuStep, LLC
12.00%
11.00%
Preferred Member Units
Secured Debt
Member Units
Warrants
Secured Debt
Member Units
Secured Debt
7.50% L+
6.50%
Secured Debt
Preferred Member Units
Orttech Holdings, LLC
12.00% L+
11.00%
Secured Debt
Pearl Meyer Topco LLC
12.00%
Preferred Stock
Secured Debt
(8)
(8)
(8)
(8)
(8)
(7)
(7)
(8)
(8)
(5)
(8)
(8)
(8)
(8)
(5)
(5)
(8)
(8)
(9)
(9)
(9)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(6)
189
—
—
—
—
—
—
860
1,130
—
(2,757)
(1,920)
(103)
10,952
(5,595)
—
—
420
—
81
—
(2,540)
—
713
300
2,109
21
1,410
4,510
250
1,282
12,044
—
1,264
—
208
—
992
1,402
—
2,179
1,553
1,466
—
5,450
12,800
12,680
—
—
13,200
—
—
—
16,100
10,395
6,500
(1,839)
1,883
16,727
1,220
(48)
(4,835)
(1,238)
—
3,619
4
—
2,720
—
—
236
80
380
2,805
—
253
(45)
1,470
5,620
5,600
1,490
2,080
2,821
1,991
17,193
58
—
1,522
130
4,259
—
10,780
—
—
37,201
—
—
—
—
—
—
—
—
—
—
—
—
8,787
—
—
—
—
—
—
—
—
—
860
1,130
14
849
—
103
—
11,344
3,150
420
66,726
2,581
—
—
7
3,176
1,920
12,903
12,680
—
—
—
3,575
—
60,000
60,000
2,270
5,640
257
9,717
3,530
—
—
11,344
3,150
13,620
63,151
2,581
—
13,560
15,241
7,700
—
4,846
1,200
38
1,220
48
(749)
—
—
3,619
47
2,120
2,720
24,151
12,600
311
2,540
—
—
2,720
14,045
—
5,668
4,851
1,490
—
—
—
400
—
—
2,600
4,838
2,690
—
—
—
2,080
6,440
17,240
1,720
13,500
24,151
10,000
32,674
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2021
(dollars in thousands)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1)(10)(11)
Geogra
phy
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2020
Fair Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2021
Fair Value
Pegasus Research Group, LLC
River Aggregates, LLC
Tedder Industries, LLC
12.00%
UnionRock Energy Fund II, LP
Vision Interests, Inc.
13.00%
Member Units
Member Units
Member Units
Secured Debt
Preferred Member Units
LP Interests
Secured Debt
Series A Preferred Stock
VVS Holdco LLC
11.50%
Secured Debt
7.00% L+
6.00%
Secured Debt
Preferred Equity
Other
Amounts related to investments
transferred to or from other 1940 Act
classification during the period
Total Control investments
Affiliate Investments
AAC Holdings, Inc.
18.00%
8.00%
Secured Debt
AFG Capital Group, LLC
10.00%
Common Stock
Warrants
Secured Debt
Preferred Member Units
ATX Networks Corp.
10.00%
10.00% Unsecured Debt
8.50% L+
7.50%
Secured Debt
8.75% L+
6.25% 1.50%
Secured Debt
BBB Tank Services, LLC
12.00% L+
11.00%
Unsecured Debt
Boccella Precast Products LLC
10.00%
Member Units
Preferred Stock (non-voting)
Secured Debt
Member Units
(6)
(8)
(8)
(9)
(9)
(9)
(9)
(9)
(5)
(5)
(5)
(7)
(7)
(7)
(8)
(8)
(6)
(6)
(6)
(8)
(8)
(8)
(6)
(6)
—
—
—
—
—
—
—
—
—
—
—
—
—
11,030
3,599
15,940
11,030
—
26,970
(1,550)
40
—
—
2,295
—
(160)
—
—
—
—
—
—
125
8,830
3,240
2,009
16,301
—
273
244
—
913
7
—
—
—
8,136
2,894
2,028
3,160
—
—
—
—
—
—
40
2,280
443
3,669
—
—
30,100
1,169
11,840
—
—
1,550
—
7,280
3,280
2,400
16,181
—
440
2,028
160
—
—
—
—
—
8,579
6,123
—
3,000
30,100
1,169
11,840
—
—
$
6,494
$
99,420
$
122,277
$
1,113,725
$
592,022
$
216,490
$
1,489,257
—
(217)
1,817
9,187
1,095
488
9,794
$
—
$
(1,069) $
—
$
3,148
$
—
$
1,069
$
2,079
—
—
—
—
—
(998)
—
1,930
—
—
(4,528)
1,133
(2,242)
(280)
(162)
—
—
31
200
—
168
—
612
—
11
9
2,938
491
5,810
—
—
12,263
4,722
280
151
—
(1,210)
398
6,040
—
—
—
—
—
190
—
—
1,930
1,963
7,092
1,521
27
—
11
320
—
998
347
—
—
—
13,784
2,242
280
162
—
1,940
144
7,740
1,963
7,092
—
2,507
—
—
320
1,210
4,830
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2021
(dollars in thousands)
Company
Brightwood Capital Fund Investments - Fund
V
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1)(10)(11)
LP Interests (Brightwood Capital
Fund V, LP)
Buca C, LLC
10.25% L+
9.25%
Secured Debt
CAI Software LLC
12.50%
Career Team Holdings, LLC
12.50%
Chandler Signs Holdings, LLC
Charlotte Russe, Inc
Secured Debt
Member Units
Secured Debt
Class A Common Units
Class A Units
Common Stock
Classic H&G Holdings, LLC
7.00% L+
6.00%
Secured Debt
8.00%
Secured Debt
Congruent Credit Opportunities Funds
Copper Trail Energy Fund I, LP
DMA Industries, LLC
12.00%
Dos Rios Partners
Dos Rios Stone Products LLC
East Teak Fine Hardwoods, Inc.
EIG Fund Investments
Preferred Member Units
LP Interests (Congruent Credit
Opportunities Fund III, LP)
LP Interests (Congruent Credit
Opportunities Fund II, LP)
LP Interests (Copper Trail Energy
Fund I, LP)
Secured Debt
Preferred Equity
LP Interests (Dos Rios Partners - A,
LP)
LP Interests (Dos Rios Partners, LP)
Class A Preferred Units
Common Stock
LP Interests (EIG Global Private
Debt Fund-A, L.P.)
Flame King Holdings, LLC
12.00% L+
11.00%
Secured Debt
7.50% L+
6.50%
Secured Debt
Freeport Financial SBIC Fund LP
Preferred Equity
LP Interests (Freeport Financial
SBIC Fund LP)
LP Interests (Freeport First Lien
Loan Fund III LP)
GFG Group, LLC.
12.00%
Secured Debt
Preferred Member Units
Geogra
phy
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
December 31,
2020
Fair Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2021
Fair Value
—
—
—
—
(373)
(340)
10,252
(5,095)
—
—
—
—
—
(1,000)
(3,141)
3,141
—
—
—
—
—
(82)
5,750
(96)
(4,449)
4,355
(203)
—
—
715
2,252
—
(80)
9
—
—
—
—
—
—
—
379
—
—
1,560
4,912
(610)
180
166
—
—
—
814
66
110
2,090
(6)
(7)
(6)
(6)
(6)
(6)
(8)
(9)
(6)
(6)
(6)
(8)
(8)
(9)
(7)
(7)
(8)
(8)
(8)
(7)
(8)
(9)
(9)
(9)
(5)
(5)
(5)
(5)
191
—
1,782
7,570
2,380
513
—
—
—
83
2,210
1,070
776
—
378
521
—
—
—
—
100
53
884
77
—
—
751
1,601
629
—
14,256
47,474
7,190
—
—
1,460
—
—
24,800
9,510
11,540
94
1,782
—
—
1,720
5,417
1,250
300
526
—
—
—
5,264
10,321
—
—
1,000
487
—
373
23,940
71,414
—
7,190
20,050
4,500
—
3,141
4,000
82
5,750
—
4,355
379
20,993
5,944
1,560
4,912
—
180
200
20,996
6,324
10,400
814
66
15,745
6,990
—
—
1,000
3,141
—
5,608
—
1,581
4,449
2,161
—
—
—
—
610
480
179
—
—
—
—
3,156
3,200
—
1,000
14,370
—
—
20,050
4,500
460
—
4,000
19,274
15,260
9,959
—
—
20,993
5,944
3,280
10,329
640
—
547
20,996
6,324
10,400
6,078
7,231
12,545
6,990
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2021
(dollars in thousands)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1)(10)(11)
Geogra
phy
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
Hawk Ridge Systems, LLC
7.00% L+
6.00%
Secured Debt
8.00%
Secured Debt
Preferred Member Units
Houston Plating and Coatings, LLC
8.00%
Unsecured Convertible Debt
HPEP 3, L.P.
I-45 SLF LLC
Iron-Main Investments, LLC
L.F. Manufacturing Holdings, LLC
Meisler Operating LLC
OnAsset Intelligence, Inc.
12.50%
12.50%
12.50%
13.00%
10.00%
12.00%
Member Units
LP Interests (HPEP 3, L.P.)
Member Units (Fully diluted 20.0%;
24.40% profits interest)
Secured Debt
12.50% Secured Debt
Secured Debt
Secured Debt
Common Stock
Member Units
Preferred Member Units (non-voting)
Common Stock
10.00% Unsecured Debt
12.00% Secured Debt
Common Stock
Warrants
Oneliance, LLC
12.00% L+
11.00%
Secured Debt
PCI Holding Company, Inc.
SI East, LLC (Stavig)
10.25%
Slick Innovations, LLC
13.00%
Preferred Stock
Preferred Stock
Secured Debt
Preferred Member Units
Secured Debt
Common Stock
Warrants
Sonic Systems International, LLC
8.50% L+
7.50%
Secured Debt
Superior Rigging & Erecting Co.
12.00%
Common Stock
Secured Debt
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
94
7,000
60
(1,870)
1,332
(202)
—
—
—
—
—
510
—
17,048
(7,413)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(830)
830
—
—
(203)
(90)
6,572
(42)
180
40
—
—
—
(9)
(9)
(9)
(8)
(8)
(8)
(8)
(5)
(5)
(5)
(5)
(5)
(8)
(8)
(5)
(8)
(8)
(8)
(8)
(7)
(7)
(9)
(7)
(7)
(6)
(6)
(6)
(8)
(8)
(7)
192
December 31,
2020
Fair Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2021
Fair Value
—
2,585
18,400
16,400
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
70
2,023
1,914
243
261
177
1,861
15,789
8,450
2,900
5,080
3,258
—
—
—
—
—
2,050
93
64
7,299
—
—
—
—
4,130
32,962
9,780
5,720
1,330
360
—
—
201
408
731
346
—
—
14
—
11
930
—
—
335
—
2,852
4,032
2,340
731
—
—
394
37
2,650
21,298
—
—
—
—
1,870
252
2,202
—
144
—
—
—
—
—
7,000
60
—
1,706
800
3,170
9,088
19,805
4,557
1,798
510
14
139
930
830
830
5,547
1,056
—
36,765
6,572
42
180
40
11,757
1,070
34
11
—
830
830
—
—
4,130
3,877
4,782
442
—
—
—
—
—
2,585
34,800
15,450
2,960
3,210
4,712
14,387
3,170
8,944
19,805
4,557
1,798
2,560
107
—
192
8,229
—
—
5,547
1,056
—
65,850
11,570
5,320
1,510
400
11,757
1,070
21,332
16,010
(550)
15,460
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2021
(dollars in thousands)
Company
Total
Rate
Base
Rate
Spread
PIK
Rate
Type of Investment(1)(10)(11)
Geogra
phy
Amount of
Realized
Gain/(Loss)
Amount of
Unrealized
Gain/(Loss)
December 31,
2020
Fair Value
Gross
Additions(3)
Gross
Reductions(4)
December 31,
2021
Fair Value
The Affiliati Network, LLC
11.83%
7.00%
Preferred Member Units
Secured Debt
Secured Debt
Preferred Stock
UniTek Global Services, Inc.
15.00%
15.00% Secured Convertible Debt
8.50% L+
5.50% 2.00%
Secured Debt
Volusion, LLC
11.50%
8.00%
Other
Amounts related to investments
transferred to or from other 1940 Act
classification during the period
Total Affiliate investments
Preferred Stock
Secured Debt
Unsecured Convertible Debt
Preferred Member Units
Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
—
842
9
270
151
236
315
4,500
—
—
—
—
2,425
3,208
2,248
19,243
33
—
—
291
5,990
—
(11)
(12,263)
(7)
(9)
(9)
(9)
(6)
(6)
(6)
(8)
(8)
(8)
—
—
—
—
—
—
—
—
—
—
—
(694)
—
—
—
—
1,178
115
807
991
118
—
—
—
—
13,873
1,462
6,400
2,461
259
1,439
991
118
—
—
—
—
1,039
1,200
—
86
462
316
4,500
12,834
262
6,400
2,375
2,222
4,331
2,800
17,434
—
—
—
—
409
5,990
—
—
$
17,181
$
21,989
$
51,278
$
366,301
$
336,505
$
165,855
$
549,214
______________________
(1) The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the Consolidated Schedule of
Investments included in Item 8. Consolidated Financial Statements of this Annual Report on Form 10-K.
(2) Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or
Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related
to the time period it was in the category other than the one shown at period end is included in “Amounts from investments transferred from other 1940 Act
classifications during the period.”
(3) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the
exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in
net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.
(4) Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities
for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the
movement of an existing portfolio company out of this category and into a different category.
(5) Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control
investments located in this region was $297,953. This represented 25.9% of net assets as of December 31, 2021. The fair value as of December 31, 2021 for
affiliate investments located in this region was $41,535. This represented 13.9% of net assets as of December 31, 2021.
193
Table of contents
Schedule 12-14
MAIN STREET CAPITAL CORPORATION
Consolidated Schedule of Investments In and Advances to Affiliates (Continued)
December 31, 2021
(dollars in thousands)
(6) Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control
investments located in this region was $117,017. This represented 10.8% of net assets as of December 31, 2021. The fair value as of December 31, 2021 for
affiliate investments located in this region was $144,241. This represented 21.7% of net assets as of December 31, 2021.
(7) Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control
investments located in this region was $44,538. This represented 1.2% of net assets as of December 31, 2021. The fair value as of December 31, 2021 for affiliate
investments located in this region was $134,602. This represented 40.5% of net assets as of December 31, 2021.
(8) Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control
investments located in this region was $573,437. This represented 44.4% of net assets as of December 31, 2021. The fair value as of December 31, 2021 for
affiliate investments located in this region was $109,522. This represented 20.5% of net assets as of December 31, 2021.
(9) Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control
investments located in this region was $303,273. This represented 37.3% of net assets as of December 31, 2021. The fair value as of December 31, 2021 for
affiliate investments located in this region was $55,239. This represented 17.3% of net assets as of December 31, 2021.
(10) All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.
(11) This schedule should be read in conjunction with the Consolidated Schedule of Investments and Notes to the Consolidated Financial Statements included in Item 8.
Consolidated Financial Statements of this Annual Report on Form 10-K. Supplemental information can be located within the Consolidated Schedule of
Investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was
determined using significant unobservable inputs.
(12) Investment has an unfunded commitment as of December 31, 2021 (see Note K — Commitments and Contingencies in Item 8. Consolidated Financial Statements
of this Annual Report on Form 10-K). The fair value of the investment includes the impact of the fair value of any unfunded commitments.
194
Table of contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this annual report
on Form 10-K, we carried out an evaluation, under the supervision and with the participation of our management, including
our Chief Executive Officer, President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer,
of our disclosure controls and procedures (as defined in Rule 13a-15 of the Exchange Act). Based on that evaluation, our
Chief Executive Officer, President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer have
concluded that our current disclosure controls and procedures are effective in timely alerting them of material information
relating to us that is required to be disclosed in the reports we file or submit under the Exchange Act.
(b) Management’s Report on Internal Control Over Financial Reporting. The management of Main Street Capital
Corporation and its subsidiaries (the Company) is responsible for establishing and maintaining adequate internal control
over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the
participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted
an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteria
established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on the Company’s evaluation under the framework in Internal Control —
Integrated Framework, management concluded that the Company’s internal control over financial reporting was effective
as of December 31, 2022. Grant Thornton LLP, the Company’s independent registered public accounting firm, has issued
an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31,
2022, as stated in its report which is included herein.
(c) Attestation Report of the Registered Public Accounting Firm. Our independent registered public accounting
firm, Grant Thornton LLP, has issued an attestation report on the effectiveness of our internal control over financial
reporting, which is set forth above in Reports of Independent Registered Public Accounting Firm in Item 8. Consolidated
Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
(d) Changes in Internal Control over Financial Reporting. There have been no changes in our internal control
over financial reporting that occurred during the fiscal quarter ended December 31, 2022 that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
Fees and Expenses
The following table is being provided to update, as of December 31, 2022, certain information in the Company’s
effective shelf registration statement on Form N-2 (File No. 333-263258) filed with the SEC on March 3, 2022 as
supplemented by the prospectus supplements relating to our ATM Program and to the direct stock purchase feature of the
Plan. The information is intended to assist you in understanding the costs and expenses that an investor in the Company
will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and
may vary. Except where the context suggests otherwise, whenever this Annual Report on Form 10-K contains a reference
195
Table of contents
to fees or expenses paid by “you,” “us” or “Main Street,” or that “we” will pay fees or expenses, stockholders will
indirectly bear such fees or expenses as investors in us.
Stockholder Transaction Expenses:
Sales load (as a percentage of offering price)
Offering expenses (as a percentage of offering price)
Dividend reinvestment and direct stock purchase plan expenses
Total stockholder transaction expenses (as a percentage of offering price)
Annual Expenses of the Company (as a percentage of net assets attributable to common stock):
Operating expenses
Interest payments on borrowed funds
Income tax expense
Acquired fund fees and expenses
Total annual expenses
— % (1)
— % (2)
— % (3)
— % (4)
3.14 % (5)
4.41 % (6)
1.11 % (7)
0.26 % (8)
8.92 %
______________________
(1) The maximum agent commission with respect to the shares of our common stock sold by us in the ATM Program is
1.00%. Purchasers of shares of common stock through the direct stock purchase feature of the Plan will not pay any
sales load. In the event that our securities are sold to or through underwriters, a corresponding prospectus or prospectus
supplement will disclose the applicable sales load.
(2) Estimated offering expenses payable by us for the estimated duration of the ATM Program are $0.8 million. In the
event that we conduct an offering of our securities, a corresponding prospectus or prospectus supplement will disclose
the estimated offering expenses.
(3) The expenses of administering the Plan are included in operating expenses. Additional costs may be charged to
participants in the direct stock purchase feature of the plan for certain types of transactions.
(4) Total stockholder transaction expenses may include sales load and will be disclosed in a future prospectus or
prospectus supplement, if any.
(5) Operating expenses in this table represent our estimated expenses.
(6) Interest payments on borrowed funds represent our estimated annual interest payments on borrowed funds based on
current debt levels as adjusted for projected increases (but not decreases) in debt levels over the next twelve months.
(7) Income tax expense relates to the accrual of (a) deferred tax provision (benefit) primarily related to loss carryforwards,
timing differences in net unrealized appreciation or depreciation and other temporary book-tax differences from our
portfolio investments held in Taxable Subsidiaries and (b) excise, state and other taxes. Deferred taxes are non-cash in
nature and may vary significantly from period to period. We are required to include deferred taxes in calculating our
annual expenses even though deferred taxes are not currently payable or receivable. Due to the variable nature of
deferred tax expense, which can be a large portion of the income tax expense, and the difficulty in providing an
estimate for future periods, this income tax expense estimate is based upon the actual amount of income tax expense
for the year ended December 31, 2022.
(8) Acquired fund fees and expenses represent the estimated indirect expense incurred due to investments in other
investment companies and private funds.
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 we would have no additional leverage and that our annual operating expenses would
196
Table of contents
remain at the levels set forth in the table above and that you would pay either no sales load or a sales load of up to 1.00%
(the commission to be paid by us with respect to common stock sold by us in the ATM Program).
You would pay the following expenses on a $1,000 investment,
assuming a 5.0% annual return and no sales load
You would pay the following expenses on a $1,000 investment,
assuming a 5.0% annual return and a 1.00% sales load
$
$
87 $
252 $
404 $
735
97 $
262 $
414 $
745
1 Year
3 Years
5 Years
10 Years
The example and the expenses in the table above should not be considered a representation of our future
expenses, and actual expenses may be greater or less than those shown. While the example assumes, as required by the
SEC, a 5.0% annual return, our performance will vary and may result in a return greater or less than 5.0%. In addition,
while the example assumes reinvestment of all dividends at NAV, participants in our dividend reinvestment plan will
receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to
a participant by (i) the market price per share of our common stock at the close of trading on a valuation date determined
by our Board of Directors for each dividend in the event that we use newly issued shares to satisfy the share requirements
of the dividend reinvestment plan or (ii) the average purchase price of all shares of common stock purchased by the plan
administrator in the event that shares are purchased in the open market to satisfy the share requirements of the dividend
reinvestment plan, which may be at, above or below NAV. See the description in Item 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Common Stock and Holders for
additional information regarding our dividend reinvestment plan.
Executive Officers
On February 21, 2023, our Board appointed Ryan R. Nelson to serve as our Vice President, Chief Accounting
Officer and Assistant Treasurer, effective as of March 13, 2023.
Mr. Nelson, age 40, a certified public accountant, is currently our Vice President of Finance and has served in this
role since joining Main Street in December 2022. Prior to joining Main Street, Mr. Nelson spent four years with Conn’s,
Inc. (Nasdaq: CONN), a furniture, mattress, electronics and appliance store chain, where he worked in several leadership
roles, including Vice President and Chief Accounting Officer. Prior to joining Conn’s, Mr. Nelson spent seven years with
EnLink Midstream Partners, a midstream energy services company, where he worked in several leadership roles in their
accounting group. Mr. Nelson started his career at KPMG LLP.
There is no arrangement or understanding between Mr. Nelson and any other persons pursuant to which he is
being appointed as our Vice President, Chief Accounting Officer and Assistant Treasurer. There are no current or proposed
transactions between us and Mr. Nelson or his immediate family members that would require disclosure under Item 404(a)
of Regulation S-K promulgated by the SEC.
In connection with the promotion of Mr. Nelson, and in accordance with the transition previously disclosed, Mr.
Lance A. Parker’s role as the Company’s Vice President, Chief Accounting Officer and Assistant Treasurer will cease,
effective as of March 13, 2023, while he will continue to assist in the transitioning his duties and responsibilities for a
period of time thereafter.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this Item will be contained in the definitive proxy statement relating to our 2023
Annual Meeting of Stockholders (the “Proxy Statement”) under the headings “Election of Directors,” “Corporate
Governance” and “Executive Officers” to be filed with the Securities and Exchange Commission on or prior to April 30,
2023, and is incorporated herein by reference.
197
Table of contents
We have adopted a code of business conduct and ethics that applies to directors, officers and employees of Main
Street. This code of ethics is published on our website at www.mainstcapital.com. We intend to disclose any substantive
amendments to, or waivers from, this code of conduct within four business days of the waiver or amendment through a
website posting.
Item 11. Executive Compensation
The information required by this Item will be contained in the Proxy Statement under the headings “Compensation
of Executive Officers,” “Compensation of Directors,” “Compensation Discussion and Analysis,” “Compensation
Committee Interlocks and Insider Participation” and “Compensation Committee Report,” to be filed with the Securities and
Exchange Commission on or prior to April 30, 2023, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table provides information regarding our equity compensation plans as of December 31, 2022:
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
Number of securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column)
$
$
— $
165,248
165,248 $
— $
—
— $
5,281,165
—
5,281,165
Plan Category
Equity compensation plans approved by
security holders(1)
Equity compensation plans not approved
by security holders(2)
Total
______________________
(1) Consists of our Main Street Capital Corporation 2022 Equity and Incentive Plan and our Main Street Capital
Corporation 2022 Non-Employee Director Restricted Stock Plan. As of December 31, 2022, we had issued 18,835
shares of restricted stock pursuant to these plans, of which no shares had vested or were forfeited. Pursuant to each of
these plans, if any award issued thereunder shall for any reason expire or otherwise terminate or be forfeited, in whole
or in part, the shares of stock not acquired under such award shall revert to and again become available for issuance
under such plan. For more information regarding these plans, see Note J — Share-Based Compensation to the
consolidated financial statements included in Item 8. Consolidated Financial Statements and Supplementary Data of
this Annual Report on Form 10-K.
(2) Consists of our 2015 Deferred Compensation Plan. For more information regarding this plan, see Note L — Related
Party Transactions to the consolidated financial statements included in Item 8. Consolidated Financial Statements and
Supplementary Data of this Annual Report on Form 10-K.
The other information required by this Item will be contained in the Proxy Statement under the heading “Security
Ownership of Certain Beneficial Owners and Management,” to be filed with the Securities and Exchange Commission on
or prior to April 30, 2023, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item will be contained in the Proxy Statement under the headings “Certain
Relationships and Related Party Transactions” and “Corporate Governance,” to be filed with the Securities and Exchange
Commission on or prior to April 30, 2023, and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The information required by this Item will be contained in the Proxy Statement under the heading “Ratification of
Appointment of Independent Registered Public Accounting Firm for Year Ending December 31, 2023,” to be filed with the
Securities and Exchange Commission on or prior to April 30, 2023, and is incorporated herein by reference.
198
Table of contents
Item 15. Exhibits and Consolidated Financial Statement Schedules
PART IV
The following documents are filed or incorporated by reference as part of this Annual Report:
1.
Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248)
Consolidated Balance Sheets—As of December 31, 2022 and December 31, 2021
Consolidated Statements of Operations—For the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Changes in Net Assets—For the years ended December 31, 2022, 2021 and 2020
Consolidated Statements of Cash Flows—For the years ended December 31, 2022, 2021 and 2020
Consolidated Schedule of Investments—December 31, 2022
Consolidated Schedule of Investments—December 31, 2021
Notes to Consolidated Financial Statements
2.
Consolidated Financial Statement Schedule
Schedule of Investments in and Advances to Affiliates for the Years Ended December 31, 2022 and 2021
3.
Exhibits
66
69
70
71
72
73
105
131
177
Listed below are the exhibits which are filed as part of this report (according to the number assigned to them in
Item 601 of Regulation S-K):
Exhibit
Number
3.1*
3.2*
4.1*
4.2*
4.3*
4.4*
4.5*
4.6*
Description
Articles of Amendment and Restatement of Main Street Capital Corporation (previously filed as Exhibit (a)
to Main Street Capital Corporation’s Pre-Effective Amendment No. 2 to the Registration Statement on Form
N-2 filed on August 15, 2007 (Reg. No. 333-142879))
Amended and Restated Bylaws of Main Street Capital Corporation (previously filed as Exhibit 3.1 to Main
Street Capital Corporation’s Current Report on Form 8-K filed on March 6, 2013 (File No. 1-33723))
Form of Common Stock Certificate (previously filed as Exhibit (d) to Main Street Capital Corporation’s Pre-
Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on August 15, 2007 (Reg. No.
333-142879))
Dividend Reinvestment and Direct Stock Purchase Plan, effective May 10, 2019 (previously filed as Exhibit
99.1 to Main Street Capital Corporation’s Current Report on Form 8-K filed on May 10, 2019 (File No.
1-33723))
Main Street Mezzanine Fund, LP SBIC debentures guaranteed by the SBA (previously filed as Exhibit (f)(1)
to Main Street Capital Corporation’s Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-2 filed on June 22, 2007 (Reg. No. 333-142879))
Main Street Capital III, LP SBIC debentures guaranteed by the SBA (see Exhibit (f)(1) to Main Street
Capital Corporation’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed on
June 22, 2007 for a substantially identical copy of the form of debentures)
Form of Indenture between Main Street Capital Corporation and The Bank of New York Mellon Trust
Company, N.A. (previously filed as Exhibit (d)(6) to Main Street Capital Corporation’s Post-Effective
Amendment No. 2 to the Registration Statement on Form N-2 filed on March 28, 2013 (Reg. No.
333-183555))
Form of Fourth Supplemental Indenture relating to the May 2024 Notes, between Main Street Capital
Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(11) to
Main Street Capital Corporation’s Post-Effective Amendment No. 7 to the Registration Statement on Form
N-2 filed on April 18, 2019 (Reg. No. 333-223483))
4.7*
Form of May 2024 Notes (incorporated by reference to Exhibit 4.8)
199
Table of contents
Exhibit
Number
4.8*
4.9*
4.10*
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
10.8
10.9*
10.10*
10.11*
10.12
10.13*
10.14
10.15*†
Description
Fifth Supplemental Indenture relating to the July 2026 Notes, between Main Street Capital Corporation and
The Bank of New York Mellon Trust Company, N.A., as trustee (previously filed as Exhibit 4.1 to Main
Street Capital Corporation’s Current Report on Form 8-K filed on January 14, 2021 (File No. 1-33723))
Form of July 2026 Notes (incorporated by reference to Exhibit 4.10)
Description of Main Street Capital Corporation’s securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 (previously filed as Exhibit 4.11 to Main Street Capital Corporation’s
Annual Report on Form 10-K filed on February 28, 2020 (File No. 1-33723))
Omnibus Amendment No. 1, dated as of April 7, 2021, by and among Main Street, the guarantors party
thereto, Truist Bank, as administrative agent, solely with respect to Section 2 thereof, the withdrawing
lender, and the lenders party thereto (previously filed as Exhibit 10.1 to Main Street Capital Corporation’s
Current Report on Form 8-K filed on April 8, 2021 (File No. 1-33723))
Third Amended and Restated General Security Agreement dated June 5, 2018 (previously filed as Exhibit
10.2 to Main Street Capital Corporation’s Current Report on Form 8-K filed on June 6, 2018 (File No.
1-33723))
Third Amended and Restated Equity Pledge Agreement dated June 5, 2018 (previously filed as Exhibit 10.3
to Main Street Capital Corporation’s Current Report on Form 8-K filed on June 6, 2018 (File No. 1-33723))
Amended and Restated Custodial Agreement dated September 20, 2010 (previously filed as Exhibit 10.3 to
Main Street Capital Corporation’s Current Report on Form 8-K filed September 21, 2010 (File No.
1-33723))
Third Amendment to Amended and Restated Credit Agreement and First Amendment to Amended and
Restated Custodial Agreement dated November 21, 2011 (previously filed as Exhibit 10.1 to Main Street
Capital Corporation’s Current Report on Form 8-K filed November 22, 2011 (File No. 1-33723))
Third Amendment, dated as of August 4, 2022, to the Third Amended and Restated Credit Agreement by
and among Main Street, the guarantors party thereto, Truist Bank, as administrative agent, and the lenders
party thereto (previously filed as Exhibit 10.1 to Main Street Capital Corporation’s Current Report on Form
8-K filed on August 4, 2022 (File No. 1-33723))
Fourth Amendment, dated as of December 22, 2022, to the Third Amended and Restated Credit Agreement
by and among Main Street, the guarantors party thereto, Truist Bank, as administrative agent, and the lenders
party thereto (previously filed as Exhibit 10.2 to Main Street Capital Corporation’s Current Report on Form
8-K filed on December 27, 2022 (File No. 1-33723))
Joinder Agreement and Supplement, dated January 13, 2023, to the Third Amended and Restated Credit
Agreement
Revolving Credit and Security Agreement, dated as of November 22, 2022, among MSCC Funding I, LLC,
as the borrower, Main Street Capital Corporation, as the collateral manager, the lenders party from time to
time thereto, Truist Bank, as administrative agent and swingline lender, Citibank N.A., as collateral agent,
document custodian and custodian and Virtus Group, L.P. as collateral administrator (previously filed as
Exhibit 10.1 to Main Street Capital Corporation’s Current Report on Form 8-K filed on November 28, 2022
(File No. 1-33723))
Purchase and Contribution Agreement, dated as of November 22, 2022, among Main Street Capital
Corporation, as the seller, and MSCC Funding I, LLC, as the buyer (previously filed as Exhibit 10.2 to Main
Street Capital Corporation’s Current Report on Form 8-K filed on November 28, 2022 (File No. 1-33723))
Lender Joinder Agreement, dated December 6, 2022, to the Revolving Credit and Security Agreement
(previously filed as Exhibit 10.1 to Main Street Capital Corporation’s Current Report on Form 8-K filed on
December 6, 2022 (File No. 1-33723))
First Amendment to Credit Agreement, dated as of February 2, 2023, among MSCC Funding I, LLC, as the
borrower, Main Street Capital Corporation, as the collateral manager, the lenders party thereto, Truist Bank,
as administrative agent and swingline lender, Citibank N.A., as collateral agent document custodian and
custodian and Virtus Group, L.P., as collateral administrator
Note Purchase Agreement, dated as of December 23, 2022, by and among Main Street Capital Corporation
and the Purchasers party thereto (previously filed as Exhibit 10.1 to Main Street Capital Corporation’s
Current Report on Form 8-K filed on December 27, 2022 (File No. 1-33723))
First Supplement to Note Purchase Agreement, dated as of February 2, 2023, by and among Main Street
Capital Corporation and the Purchasers party thereto
Main Street Capital Corporation 2022 Equity and Incentive Plan (previously filed as Exhibit 4.4 to Main
Street Capital Corporation’s Registration Statement on Form S-8 filed on May 3, 2022 (Reg. No.
333-264643))
200
Table of contents
Exhibit
Number
10.16*†
10.17*†
10.18*†
10.19*
10.20*†
10.21*†
10.22*
10.23*†
10.24*
14.1**
21.1**
23.1**
31.1**
31.2**
32.1**
32.2**
Description
Main Street Capital Corporation 2022 Non-Employee Director Restricted Stock Plan (previously filed as
Exhibit 4.5 to Main Street Capital Corporation’s Registration Statement on Form S-8 filed on May 3, 2022
(Reg. No. 333-264643))
Form of Restricted Stock Agreement for Executive Officers — Main Street Capital Corporation 2022 Equity
and Incentive Plan (previously filed as Exhibit 4.6 to Main Street Capital Corporation’s Registration
Statement on Form S-8 filed on May 3, 2022 (Reg. No. 333-264643))
Form of Restricted Stock Agreement for Non-Employee Directors — Main Street Capital Corporation 2022
Non-Employee Director Restricted Stock Plan (previously filed as Exhibit 4.7 to Main Street Capital
Corporation’s Registration Statement on Form S-8 filed on May 3, 2022 (Reg. No. 333-264643))
Custody Agreement (previously filed as Exhibit (j) to Main Street Capital Corporation’s Pre-Effective
Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No.
333-142879))
Form of Confidentiality and Non-Compete Agreement by and between Main Street Capital Corporation and
Vincent D. Foster (previously filed as Exhibit (k)(12) to Main Street Capital Corporation’s Pre-Effective
Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No.
333-142879))
Form of Indemnification Agreement by and between Main Street Capital Corporation and each executive
officer and director (previously filed as Exhibit (k)(13) to Main Street Capital Corporation’s Pre-Effective
Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No.
333-142879))
Investment Advisory and Administrative Services Agreement dated October 30, 2020 by and among MSC
Adviser I, LLC and MSC Income Fund, Inc. (previously filed as Exhibit 10.1 to Main Street Capital
Corporation’s Current Report on Form 8-K filed on November 3, 2020 (File No. 1-33723))
Main Street Capital Corporation Deferred Compensation Plan Adoption Agreement and Plan Document
(previously filed as Exhibit 4.1 to Main Street Capital Corporation’s Registration Statement on Form S-8
filed on December 18, 2015 (File No. 333-208643))
Form of Equity Distribution Agreement dated March 3, 2022 (previously filed as Exhibit 1.1 to Main Street
Capital Corporation’s Current Report on Form 8-K filed on March 3, 2022 (File No. 1-33723))
Code of Business Conduct and Ethics
List of Subsidiaries
Consent of Grant Thornton LLP, independent registered public accounting firm
Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer
Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer
Section 1350 certification of Chief Executive Officer
Section 1350 certification of Chief Financial Officer
______________________
*
Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by
reference.
**
†
Furnished herewith.
Management contract or compensatory plan or arrangement.
201
Table of contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MAIN STREET CAPITAL CORPORATION
By:
/s/ DWAYNE L. HYZAK
Dwayne L. Hyzak
Chief Executive Officer and Director
Date: February 24, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
/s/ DWAYNE L. HYZAK
Dwayne L. Hyzak
Title
Chief Executive Officer and Director
(principal executive officer)
Date
February 24, 2023
/s/ JESSE E. MORRIS
Chief Financial Officer, Chief Operating Officer
February 24, 2023
Jesse E. Morris
(principal financial officer)
/s/ LANCE A. PARKER
Vice President, Chief Accounting Officer
February 24, 2023
Lance A. Parker
(principal accounting officer)
/s/ VINCENT D. FOSTER
Vincent D. Foster
/s/ J. KEVIN GRIFFIN
J. Kevin Griffin
/s/ JOHN E. JACKSON
John E. Jackson
/s/ BRIAN E. LANE
Brian E. Lane
/s/ KAY MATTHEWS
Kay Matthews
/s/ DUNIA A. SHIVE
Dunia A. Shive
/s/ STEPHEN B. SOLCHER
Stephen B. Solcher
Chairman of the Board
February 24, 2023
Director
February 24, 2023
Director
February 24, 2023
Director
February 24, 2023
Director
February 24, 2023
Director
February 24, 2023
Director
February 24, 2023
202