Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2019

OR

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

For the transition period from ……………..to ……………..

Commission File Number: 814-00061

CAPITAL SOUTHWEST CORPORATION
(Exact name of registrant as specified in its charter)

Texas
 
75-1072796
(State or other jurisdiction of incorporation
or organization)
 
(I.R.S. Employer
Identification No.)


5400 Lyndon B Johnson Freeway, Suite 1300, Dallas, Texas
 
75240
(Address of principal executive offices)
 
(Zip Code)

Registrant's telephone number, including area code: (214) 238-5700

Securities registered pursuant to Section 12(b) of the Act:
 
 
 
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $0.25 par value per share
CSWC
The Nasdaq Global Select Market
5.95% Notes due 2022
CSWCL
The Nasdaq Global Select Market

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

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

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

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

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

18,627,678 shares of Common Stock, $0.25 value per share, as of January 31, 2020.



TABLE OF CONTENTS

 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





PART I – FINANCIAL INFORMATION


Item 1.
Consolidated Financial Statements
CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except shares and per share data)
 
 
 
 
 
December 31,
 
March 31,
 
2019
 
2019
 
(Unaudited)
 
 
Assets
 
 
 
Investments at fair value:
 
 
 
Non-control/Non-affiliate investments (Cost: $415,222 and $305,596, respectively)
$
409,388

 
$
304,663

Affiliate investments (Cost: $89,481 and $79,277, respectively)
90,870

 
80,905

Control investments (Cost: $68,000 and $93,182, respectively)
58,294

 
138,503

Total investments (Cost: $572,703 and $478,055, respectively),
558,552

 
524,071

Cash and cash equivalents
22,966

 
9,924

Receivables:
 
 
 
Dividends and interest
10,045

 
9,252

Escrow
1,424

 
370

Other
175

 
1,244

Income tax receivable
155

 
183

Deferred tax asset
1,336

 
1,807

Debt issuance costs (net of accumulated amortization of $2,384 and $1,814, respectively)
3,016

 
3,364

Other assets
1,679

 
1,628

Total assets
$
599,348

 
$
551,843

 
 
 
 
Liabilities
 
 
 
December 2022 Notes (Par value: $77,136 and $77,136, respectively)
$
75,688

 
$
75,099

October 2024 Notes (Par value: $75,000 and $0, respectively)
73,393

 

Credit facility
124,000

 
141,000

Other liabilities
5,737

 
6,516

Accrued restoration plan liability
2,992

 
3,073

Income tax payable
4,560

 
192

Deferred tax liability
1,122

 

Total liabilities
287,492

 
225,880

 
 
 
 
Commitments and contingencies (Note 10)
 
 
 
 
 
 
 
Net Assets
 
 
 
Common stock, $0.25 par value: authorized, 40,000,000 shares at December 31, 2019 and 25,000,000 at March 31, 2019; issued, 20,967,227 shares at December 31, 2019 and 19,842,528 shares at March 31, 2019
5,242

 
4,961

Additional paid-in capital
316,322

 
281,205

Total distributable earnings
14,229

 
63,734

Treasury stock - at cost, 2,339,512 shares
(23,937
)
 
(23,937
)
Total net assets
311,856

 
325,963

Total liabilities and net assets
$
599,348

 
$
551,843

Net asset value per share (18,627,715 shares outstanding at December 31, 2019 and 17,503,016 shares outstanding at March 31, 2019)
$
16.74

 
$
18.62

The accompanying Notes are an integral part of these Consolidated Financial Statements.

3


CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except shares and per share data)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
Investment income:
 
 
 
 
 
 
 
Interest income:
 
 
 
 
 
 
 
Non-control/Non-affiliate investments
$
9,526

 
$
7,744

 
$
27,793

 
$
20,825

Affiliate investments
2,159

 
1,886

 
6,210

 
5,136

Control investments

 
440

 
265

 
983

Dividend income:
 
 
 
 
 
 
 
Non-control/Non-affiliate investments
(15
)
 
95

 
140

 
120

Affiliate investments
122

 

 
141

 
82

Control investments
2,581

 
3,257

 
10,013

 
9,383

Interest income from cash and cash equivalents
21

 
12

 
49

 
21

Fees and other income
1,590

 
437

 
2,390

 
1,022

Total investment income
15,984

 
13,871

 
47,001

 
37,572

Operating expenses:
 
 
 
 
 
 
 
Compensation
2,034

 
2,007

 
5,763

 
5,880

Share-based compensation
690

 
607

 
2,212

 
1,564

Interest
4,142

 
3,347

 
11,664

 
8,829

Professional fees
479

 
390

 
1,567

 
1,285

Net pension expense
36

 
40

 
107

 
119

General and administrative
728

 
704

 
2,748

 
2,322

Total operating expenses
8,109

 
7,095

 
24,061

 
19,999

Income before taxes
7,875

 
6,776

 
22,940

 
17,573

Income tax expense
761

 
101

 
1,651

 
736

Net investment income
$
7,114

 
$
6,675

 
$
21,289

 
$
16,837

 
 
 
 
 
 
 
 
Realized gain
 
 
 
 
 
 
 
Non-control/Non-affiliate investments
$
(157
)
 
$
1,849

 
$
1,159

 
$
2,066

Affiliate investments
40

 

 
57

 
77

Control investments
44,399

 
34

 
44,566

 
18,653

Taxes on deemed distribution of long-term capital gains
(3,464
)
 

 
(3,464
)
 

Total net realized gain on investments, net of tax
40,818

 
1,883

 
42,318

 
20,796

 
 
 
 
 
 
 
 
Net unrealized (depreciation) appreciation on investments
 
 
 
 
 
 
 
Non-control/Non-affiliate investments
(1,118
)
 
(4,860
)
 
(4,899
)
 
1,549

Affiliate investments
(1,265
)
 
(95
)
 
(240
)
 
(1,634
)
Control investments
(52,208
)
 
564

 
(55,027
)
 
(15,523
)
Income tax (provision) benefit
(174
)
 
153

 
(832
)
 
535

Total net unrealized (depreciation) appreciation on investments, net of tax
(54,765
)
 
(4,238
)
 
(60,998
)
 
(15,073
)
 
 
 
 
 
 
 
 
Net realized and unrealized (losses) gains on investments
$
(13,947
)
 
$
(2,355
)
 
$
(18,680
)
 
$
5,723

 
 
 
 
 
 
 
 
Net (decrease) increase in net assets from operations
$
(6,833
)
 
$
4,320

 
$
2,609

 
$
22,560

 
 
 
 
 
 
 
 
Pre-tax net investment income per share - basic and diluted
$
0.44

 
$
0.40

 
$
1.29

 
$
1.06

Net investment income per share – basic and diluted
$
0.39

 
$
0.39

 
$
1.20

 
$
1.02

Net (decrease) increase in net assets from operations – basic and diluted
$
(0.38
)
 
$
0.25

 
$
0.15

 
$
1.36

Weighted average shares outstanding – basic
18,100,176

 
17,120,357

 
17,803,005

 
16,541,102

Weighted average shares outstanding – diluted
18,100,176

 
17,122,925

 
17,803,005

 
16,543,524


The accompanying Notes are an integral part of these Consolidated Financial Statements.

4


CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
(In thousands)
 
 
 
 
 
2019
 
2018
 
 
 
 
Net assets, March 31
$
325,963

 
$
308,288

Operations:
 
 
 
Net investment income
7,360

 
4,617

Net realized gain on investments
1,217

 
18,819

Net unrealized depreciation on investments, net of tax
(1,864
)
 
(11,783
)
Net increase in net assets from operations
6,713

 
11,653

Dividends to shareholders ($0.49 and $0.89 per share, respectively)
(8,629
)
 
(14,503
)
Capital share transactions:
 
 
 
Change in restoration plan liability
7

 
11

Issuance of common stock
3,972

 

Exercise of employee stock options

 
1,457

Share-based compensation expense
837

 
475

Common stock withheld for payroll taxes upon vesting of restricted stock
(49
)
 

Increase (decrease) in net assets
2,851

 
(907
)
Net assets, June 30
$
328,814

 
$
307,381

Operations:
 
 
 
Net investment income
6,815

 
5,546

Net realized gain on investments
283

 
94

Net unrealized (depreciation) appreciation on investments, net of tax
(4,369
)
 
948

Net increase in net assets from operations
2,729

 
6,588

Dividends to shareholders ($0.50 and $0.44 per share, respectively)
(8,964
)
 
(7,191
)
Capital share transactions:
 
 
 
Change in pension plan funded status
8

 
12

Issuance of common stock
4,827

 

Exercise of employee stock options

 
576

Share-based compensation expense
685

 
482

(Decrease) increase in net assets
(715
)
 
467

Net assets, September 30
$
328,099

 
$
307,848

Operations:
 
 
 
Net investment income
7,114

 
6,675

Net realized gain on investments
44,282

 
1,883

Taxes on deemed distribution of long-term capital gains
(3,464
)
 

Net unrealized (depreciation) appreciation on investments, net of tax
(54,765
)
 
(4,238
)
Net (decrease) increase in net assets from operations
(6,833
)
 
4,320

Dividends to shareholders ($1.25 and $0.46 per share, respectively)
(23,258
)
 
(7,932
)
Capital share transactions:
 
 
 
Change in pension plan funded status
8

 
11

Issuance of common stock
13,518

 
13,124

Exercise of employee stock options

 
69

Share-based compensation expense
690

 
607

Common stock withheld for payroll taxes upon vesting of restricted stock
(368
)
 
(186
)
Repurchase of common stock

 
(185
)
Decrease (increase) in net assets
(16,243
)
 
9,828

Net assets, December 31
$
311,856

 
$
317,676


The accompanying Notes are an integral part of these Consolidated Financial Statements.

5

Table of Contents

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 
 
 
 
Nine Months Ended
 
December 31,
 
2019
 
2018
Cash flows from operating activities
 
 
 
Net increase in net assets from operations
$
2,609

 
$
22,560

Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
 
 
 
Purchases and originations of investments
(154,415
)
 
(197,088
)
Proceeds from sales and repayments of debt investments in portfolio companies
50,965

 
64,986

Proceeds from sales and return of capital of equity investments in portfolio companies
55,960

 
33,928

Payment of accreted original issue discounts
736

 
465

Depreciation and amortization
1,610

 
1,052

Net pension benefit
(58
)
 
(38
)
Realized gain on investments before income tax
(45,782
)
 
(20,796
)
Taxes payable on deemed distribution of long-term capital gains
3,464

 

Net unrealized depreciation (appreciation) on investments
60,166

 
15,608

Accretion of discounts on investments
(1,427
)
 
(1,054
)
Payment-in-kind interest and dividends
(1,469
)
 
(383
)
Stock option and restricted awards expense
2,212

 
1,564

Deferred income taxes
1,592

 
(434
)
Changes in other assets and liabilities:
 
 
 
Decrease (increase) in dividend and interest receivable
(793
)
 
(2,426
)
Increase in escrow receivables
71

 
310

Decrease in tax receivable
28

 
(58
)
Decrease (increase) in other receivables
1,069

 
(233
)
(Increase) decrease in other assets
(780
)
 
4,442

Increase in taxes payable
905

 
683

Decrease in other liabilities
321

 
(648
)
Decrease in payable for unsettled transaction
(1,158
)
 

Net cash used in operating activities
(24,174
)
 
(77,560
)
Cash flows from financing activities
 
 
 
Proceeds from common stock offering
22,532

 
13,230

Equity offering costs paid
(106
)
 
(92
)
Borrowings under credit facility
102,000

 
127,000

Repayments of credit facility
(119,000
)
 
(45,000
)
Debt issuance costs paid
(442
)
 
(1,816
)
Proceeds from notes
73,500

 
19,524

Dividends to shareholders
(40,851
)
 
(34,151
)
Proceeds from exercise of employee stock options

 
2,103

Repurchase of common stock

 
(185
)
Common stock withheld for payroll taxes upon vesting of restricted stock
(417
)
 
(186
)
Net cash provided by financing activities
37,216

 
80,427

Net increase in cash and cash equivalents
13,042

 
2,867

Cash and cash equivalents at beginning of period
9,924

 
7,907

Cash and cash equivalents at end of period
$
22,966

 
$
10,774

Supplemental cash flow disclosures:
 
 
 
Cash paid for income taxes
$

 
$
11

Cash paid for interest
9,132

 
7,647


The accompanying Notes are an integral part of these Consolidated Financial Statements.


6

Table of Contents

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
(Unaudited)
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Company1
 
Type of Investment2
 
Industry
 
Current Interest Rate3
 
Acquisition Date14
 
Maturity
 
Principal
 
Cost
 
Fair Value4
Non-control/Non-affiliate Investments5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AAC HOLDINGS, INC.
 
First Lien16
 
Healthcare services
 
L+6.75% (Floor 1.00%)/Q, 4.00% PIK, Current Coupon 13.33%
 
6/28/2017
 
6/30/2023
 
$
9,079

 
$
8,916

 
$
5,901

 
 
First Lien - Priming Facility
 
 
 
L+14.50% (Floor 1.00%)/Q, Current Coupon 16.31%
 
3/21/2019
 
4/15/2020
 
1,405

 
1,401

 
1,405

 
 
 
 
 
 
 
 
 
 
 
 
 
 
10,317

 
7,306

ACE GATHERING, INC.
 
Second Lien15
 
Energy services (midstream)
 
L+8.50% (Floor 2.00%)/Q, Current Coupon 10.50%
 
12/13/2018
 
12/13/2023
 
9,750

 
9,586

 
9,750

ADAMS PUBLISHING GROUP, LLC
 
First Lien
 
Media, marketing & entertainment
 
L+7.50% (Floor 1.00%)/Q, Current Coupon 9.44%
 
7/2/2018
 
7/2/2023
 
10,824

 
10,651

 
10,737

 
 
Delayed Draw Term Loan10
 
 
 
L+7.50% (Floor 1.00%)/Q, Current Coupon 9.45%
 
7/2/2018
 
7/2/2023
 
347

 
322

 
344

 
 
 
 
 
 
 
 
 
 
 
 
 
 
10,973

 
11,081

AG KINGS HOLDINGS INC.8,16
 
First Lien
 
Food, agriculture & beverage
 
L+10.02% (Floor 1.00%)/M, Current Coupon 12.69%
 
8/4/2016
 
8/8/2021
 
9,308

 
9,194

 
5,948

ALLIANCE SPORTS GROUP, L.P.
 
Senior subordinated debt
 
Consumer products & retail
 
11.00%
 
8/1/2017
 
2/1/2023
 
10,100

 
9,971

 
9,615

 
 
3.88% preferred membership interest
 
 
 
 
8/1/2017
 
 

 
2,500

 
2,335

 
 
 
 
 
 
 
 
 
 
 
 
 
 
12,471

 
11,950

AMERICAN NUTS OPERATIONS LLC13
 
First Lien - Term Loan
 
Food, agriculture and beverage
 
L+9.50% (Floor 1.00%)/Q, Current Coupon 11.60%
 
4/10/2018
 
4/10/2023
 
17,238

 
16,990

 
16,824

 
 
First Lien - Term Loan C10
 
 
 
L+9.50% (Floor 1.00%)/Q, Current Coupon 11.60%
 
12/21/2018
 
4/10/2023
 
1,804

 
1,780

 
1,760

 
 
3,000,000 units of Class A common stock9
 
 
 
 
4/10/2018
 
 

 
3,000

 
1,523

 
 
 
 
 
 
 
 
 
 
 
 
 
 
21,770

 
20,107


7

Table of Contents

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
(Unaudited)
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Company1
 
Type of Investment2
 
Industry
 
Current Interest Rate3
 
Acquisition Date14
 
Maturity
 
Principal
 
Cost
 
Fair Value4
AMERICAN TELECONFERENCING SERVICES, LTD. (DBA PREMIERE GLOBAL SERVICES, INC.)
 
First Lien
 
Telecommunications
 
L+6.50% (Floor 1.00%)/Q, Current Coupon 8.40%
 
9/21/2016
 
6/8/2023
 
5,929

 
5,853

 
3,569

 
 
Second Lien
 
 
 
0.50%, L+9.00% PIK (Floor 1.00%)/Q, Current Coupon 11.48%
 
11/3/2016
 
6/6/2024
 
2,052

 
2,010

 
770

 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,863

 
4,339

AMWARE FULFILLMENT LLC
 
First Lien
 
Distribution
 
L+9.50% (Floor 1.00%)/M, Current Coupon 11.41%
 
7/29/2016
 
12/31/2020
 
12,209

 
12,156

 
12,111

ASC ORTHO MANAGEMENT COMPANY, LLC13
 
Revolving Loan10
 
Healthcare services
 
L+7.50% (Floor 1.00%)
 
8/31/2018
 
8/31/2023
 

 
(22
)
 

 
 
First Lien
 
 
 
L+7.50% (Floor 1.00%)/Q, Current Coupon 9.60%
 
8/31/2018
 
8/31/2023
 
9,087

 
8,944

 
8,932

 
 
Second Lien
 
 
 
13.25% PIK
 
8/31/2018
 
12/1/2023
 
3,586

 
3,523

 
3,579

 
 
2,042 Common Units9
 
 
 
 
8/31/2018
 
 

 
750

 
569

 
 
 
 
 
 
 
 
 
 
 
 
 
 
13,195

 
13,080

BINSWANGER HOLDING CORP.
 
First Lien
 
Distribution
 
L+8.50% (Floor 1.00%)/M, Current Coupon 10.41%
 
3/9/2017
 
3/9/2022
 
11,687

 
11,570

 
11,243

 
 
900,000 shares of common stock
 
 
 
 
3/9/2017
 
 

 
900

 
636

 
 
 
 
 
 
 
 
 
 
 
 
 
 
12,470

 
11,879

BLASCHAK COAL CORP.
 
Second Lien15
 
Commodities & mining
 
L+10.00%/Q, 1.00% PIK, Current Coupon 13.09%
 
7/30/2018
 
7/30/2023
 
8,601

 
8,468

 
8,257

CALIFORNIA PIZZA KITCHEN, INC.
 
First Lien
 
Restaurants
 
L+6.00% (Floor 1.00%)/M, Current Coupon 7.91%
 
8/19/2016
 
8/23/2022
 
4,837

 
4,813

 
4,223

CAPITAL PAWN HOLDINGS, LLC
 
First Lien
 
Consumer products & retail
 
L+9.50%/Q, Current Coupon 11.60%
 
12/21/2017
 
7/8/2020
 
11,448

 
11,391

 
11,425


8

Table of Contents

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
(Unaudited)
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Company1
 
Type of Investment2
 
Industry
 
Current Interest Rate3
 
Acquisition Date14
 
Maturity
 
Principal
 
Cost
 
Fair Value4
CLICKBOOTH.COM, LLC
 
Revolving Loan10
 
Media, marketing & entertainment
 
L+8.50% (Floor 1.00%)
 
12/5/2017
 
12/5/2022
 

 
(12
)
 

 
 
First Lien
 
 
 
L+8.50% (Floor 1.00%)/Q, Current Coupon 10.59%
 
12/5/2017
 
12/5/2022
 
15,533

 
15,328

 
15,533

 
 
 
 
 
 
 
 
 
 
 
 
 
 
15,316

 
15,533

DANFORTH ADVISORS, LLC13
 
Revolving Loan10
 
Business services
 
L+7.25% (Floor 2.00%)
 
9/28/2018
 
9/28/2023
 

 
(15
)
 

 
 
First Lien
 
 
 
L+7.25% (Floor 2.00%)/Q, Current Coupon 9.35%
 
9/28/2018
 
9/28/2023
 
7,250

 
7,135

 
7,250

 
 
875 Class A equity units9
 
 
 
 
9/28/2018
 
 

 
875

 
1,445

 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,995

 
8,695

DELPHI INTERMEDIATE HEALTHCO, LLC
 
Revolving Loan10
 
Healthcare services
 
L+9.50% (Floor 1.00%)/Q, Current Coupon 11.97%
 
10/2/2019
 
10/3/2022
 
408

 
408

 
408

 
 
First Lien16
 
 
 
L+9.50% (Floor 1.00%)/Q, Current Coupon 11.20%
 
11/3/2017
 
10/3/2022
 
10,605

 
10,533

 
6,321

 
 
 
 
 
 
 
 
 
 
 
 
 
 
10,941

 
6,729

DIGITAL RIVER, INC.
 
First Lien
 
Software & IT services
 
L+6.00% (Floor 1.00%)/Q, Current Coupon 7.90%
 
1/25/2016
 
2/12/2021
 
12,662

 
12,657

 
12,637

DRIVEN, INC.
 
First Lien
 
Business services
 
L+8.00% (Floor 2.00%)/Q, Current Coupon 10.10%
 
6/28/2019
 
6/28/2024
 
11,970

 
11,750

 
11,755

DUNN PAPER, INC.
 
Second Lien
 
Paper & forest products
 
L+8.75% (Floor 1.00%)/M, Current Coupon 10.55%
 
9/28/2016
 
8/25/2023
 
3,000

 
2,963

 
3,000

ENVIRONMENTAL PEST SERVICE MANAGEMENT COMPANY, LLC
 
First Lien
 
Consumer services
 
L+7.00%/Q, Current Coupon 9.09%
 
6/22/2018
 
6/22/2023
 
15,332

 
15,131

 
15,332

 
 
Delayed Draw Term Loan10
 
 
 
L+7.00%/Q, Current Coupon 9.09%
 
6/22/2018
 
6/22/2023
 
6,127

 
6,028

 
6,127

 
 
 
 
 
 
 
 
 
 
 
 
 
 
21,159

 
21,459


9

Table of Contents

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
(Unaudited)
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Company1
 
Type of Investment2
 
Industry
 
Current Interest Rate3
 
Acquisition Date14
 
Maturity
 
Principal
 
Cost
 
Fair Value4
FAST SANDWICH, LLC
 
Revolving Loan10
 
Restaurants
 
L+9.00% (Floor 1.00%)
 
5/24/2018
 
 

 
(47
)
 

 
 
First Lien
 
 
 
L+9.00% (Floor 1.00%)/Q, 5.00% PIK, Current Coupon 16.10%
 
5/24/2018
 
5/23/2023
 
3,413

 
3,373

 
3,359

 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,326

 
3,359

ICS DISTRIBUTION, LLC8
 
First Lien
 
Industrial services
 
L+8.22% (Floor 2.00%)/Q, Current Coupon 10.22%
 
10/31/2019
 
10/29/2024
 
18,000

 
17,601

 
17,601

IENERGIZER LIMITED9
 
First Lien
 
Business services
 
L+6.00% (Floor 1.00%)/M, Current Coupon 7.79%
 
4/17/2019
 
4/17/2024
 
12,750

 
12,637

 
12,750

JVMC HOLDINGS CORP.
 
First Lien
 
Financial services
 
L+6.50% (Floor 1.00%)/M, Current Coupon 8.30%
 
2/28/2019
 
2/28/2024
 
8,526

 
8,452

 
8,526

LANDPOINT LLC
 
First Lien
 
Business services
 
L+7.00% (Floor 1.00%)/Q, Current Coupon 8.96%
 
12/30/2019
 
12/30/2024
 
19,500

 
19,110

 
19,110

LGM PHARMA, LLC13
 
First Lien
 
Healthcare products
 
L+8.50% (Floor 1.00%)/M, Current Coupon 10.21%
 
11/15/2017
 
11/15/2022
 
11,571

 
11,419

 
11,444

 
 
110,000 units of Class A common stock9
 
 
 
 
11/15/2017
 
 

 
1,100

 
821

 
 
 
 
 
 
 
 
 
 
 
 
 
 
12,519

 
12,265

LIGHTING RETROFIT INTERNATIONAL, LLC (DBA ENVOCORE)
 
First Lien
 
Environmental services
 
6.00% (Floor 2.00%)/Q, L+3.00% PIK, Current Coupon 11.00%
 
6/30/2017
 
6/30/2022
 
13,270

 
13,189

 
12,514

 
 
25,603 shares of Series C preferred stock
 
 
 
 
8/13/2018
 
 

 
26

 
31

 
 
396,825 shares of Series B preferred stock
 
 
 
 
6/30/2017
 
 

 
500

 
160

 
 
 
 
 
 
 
 
 
 
 
 
 
 
13,715

 
12,705

MEDIA RECOVERY, INC.
 
Earnout
 
Industrial products
 
 
 
 
 

 
1,517

 
1,517


10

Table of Contents

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
(Unaudited)
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Company1
 
Type of Investment2
 
Industry
 
Current Interest Rate3
 
Acquisition Date14
 
Maturity
 
Principal
 
Cost
 
Fair Value4
NINJATRADER, LLC13
 
Revolving Loan10
 
Financial services
 
L+6.00% (Floor 1.50%)/Q, Current Coupon 7.90%
 
12/18/2019
 
12/18/2024
 
1,100

 
1,093

 
1,078

 
 
First Lien
 
 
 
L+6.00% (Floor 1.50%)/Q, Current Coupon 7.90%
 
12/18/2019
 
12/18/2024
 
18,250

 
17,887

 
17,887

 
 
2,000,000 Preferred units9
 
 
 
 
12/18/2019
 
 

 
2,000

 
2,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,980

 
20,965

RESEARCH NOW GROUP, INC.
 
Second Lien
 
Business services
 
L+9.50% (Floor 1.00%)/M, Current Coupon 11.41%
 
12/8/2017
 
12/20/2025
 
10,500

 
9,887

 
10,216

SCRIP INC.8
 
First Lien
 
Healthcare products
 
L+9.91% (Floor 2.00%)/M, Current Coupon 11.91%
 
3/21/2019
 
3/21/2024
 
16,750

 
16,310

 
16,650

 
 
100 shares of common stock
 
 
 
 
3/21/2019
 
 

 
1,000

 
1,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
17,310

 
17,650

TAX ADVISORS GROUP, LLC13
 
143.3 Class A units9
 
Financial services
 
 
6/23/2017
 
 

 
541

 
1,053

TINUITI INC.
 
1,114 Preferred Units
 
Media, marketing & entertainment
 
 
2/1/2017
 
 

 
1,114

 
2,944

 
 
1,443 Common Units
 
 
 
 
2/1/2017
 
 

 
277

 
2,390

 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,391

 
5,334

TRINITY 3, LLC13
 
First Lien
 
Technology products & components
 
L+7.50% (Floor 1.50%)/Q, Current Coupon 9.41%
 
11/15/2019
 
11/15/2024
 
14,250

 
13,971

 
13,971

 
 
562.5 Class A units9
 
 
 
 
11/15/2019
 
 

 
563

 
563

 
 
 
 
 
 
 
 
 
 
 
 
 
 
14,534

 
14,534

VISTAR MEDIA INC.
 
First Lien
 
Media, marketing & entertainment
 
L+8.00% (Floor 2.00%)/M, Current Coupon 10.00%
 
2/17/2017
 
4/3/2023
 
12,131

 
11,205

 
12,131

 
 
171,617 shares of Series A preferred stock
 
 
 
 
4/3/2019
 
 

 
1,874

 
4,776

 
 
Warrants (Expiration - April 3, 2029)
 
 
 
 
4/3/2019
 
 

 
620

 
2,718

 
 
 
 
 
 
 
 
 
 
 
 
 
 
13,699

 
19,625


11

Table of Contents

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
(Unaudited)
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Company1
 
Type of Investment2
 
Industry
 
Current Interest Rate3
 
Acquisition Date14
 
Maturity
 
Principal
 
Cost
 
Fair Value4
VTX HOLDINGS, INC.8
 
First Lien
 
Software & IT services
 
L+8.91% (Floor 2.00%)/Q, Current Coupon 11.01%
 
7/23/2019
 
7/23/2024
 
20,075

 
19,555

 
19,914

 
 
1,000,000 Series A Preferred Units
 
 
 
 
7/23/2019
 
 

 
1,000

 
1,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,555

 
20,914

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Non-control/Non-affiliate Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
$
415,222

 
$
409,388

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Affiliate Investments6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CHANDLER SIGNS, LLC13
 
1,500,000 units of Class A-1 common stock9
 
Business services
 
 
1/4/2016
 
 

 
$
1,500

 
$
2,886

DYNAMIC COMMUNITIES, LLC13
 
Revolving Loan10
 
Business services
 
L+8.00% (Floor 1.00%)
 
7/17/2018
 
7/17/2023
 

 
(4
)
 

 
 
First Lien
 
 
 
L+8.00% (Floor 1.00%)/M, Current Coupon 9.80%
 
7/17/2018
 
7/17/2023
 
10,850

 
10,684

 
10,601

 
 
2,000,000 Preferred Units9
 
 
 
 
7/17/2018
 
 

 
2,000

 
2,552

 
 
 
 
 
 
 
 
 
 
 
 
 
 
12,680

 
13,153

GRAMMATECH, INC.
 
Revolving Loan10
 
Software & IT services
 
L+7.00% (Floor 2.00%)
 
11/1/2019
 
11/1/2024
 

 
(42
)
 

 
 
First Lien
 
 
 
L+7.00% (Floor 2.00%)/Q, Current Coupon 9.00%
 
11/1/2019
 
11/1/2024
 
11,500

 
11,304

 
11,304

 
 
1,000 Class A units
 
 
 
 
11/1/2019
 
 

 
1,000

 
1,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
12,262

 
12,304


12

Table of Contents

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
(Unaudited)
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Company1
 
Type of Investment2
 
Industry
 
Current Interest Rate3
 
Acquisition Date14
 
Maturity
 
Principal
 
Cost
 
Fair Value4
ITA HOLDINGS GROUP, LLC13
 
Revolving Loan10
 
Transportation & logistics
 
L+9.00% (Floor 1.00%)
 
2/14/2018
 
2/14/2023
 

 
(32
)
 

 
 
First Lien - Term Loan
 
 
 
L+8.00% (Floor 1.00%)/Q, Current Coupon 10.10%
 
2/14/2018
 
2/14/2023
 
10,030

 
9,898

 
9,970

 
 
First Lien - Term B Loan
 
 
 
L+11.00% (Floor 1.00%)/Q, Current Coupon 13.10%
 
6/5/2018
 
2/14/2023
 
5,015

 
4,935

 
5,065

 
 
First Lien - PIK Note A
 
 
 
10.00% PIK
 
3/29/2019
 
2/14/2023
 
2,365

 
1,866

 
2,212

 
 
First Lien - PIK Note B
 
 
 
10.00% PIK
 
3/29/2019
 
2/14/2023
 
93

 
93

 
87

 
 
Warrants (Expiration - March 29, 2029)9
 
 
 
 
3/29/2019
 
 

 
539

 
2,762

 
 
9.25% Class A Membership Interest9
 
 
 
 
2/14/2018
 
 

 
1,500

 
2,099

 
 
 
 
 
 
 
 
 
 
 
 
 
 
18,799

 
22,195

ROSELAND MANAGEMENT, LLC
 
Revolving Loan10
 
Healthcare services
 
L+7.00% (Floor 2.00%)
 
11/9/2018
 
11/9/2023
 

 
(27
)
 

 
 
First Lien
 
 
 
L+7.00% (Floor 2.00%)/Q, Current Coupon 9.10%
 
11/9/2018
 
11/9/2023
 
10,395

 
10,247

 
10,395

 
 
10,000 Class A Units
 
 
 
 
11/9/2018
 
 

 
1,000

 
1,789

 
 
 
 
 
 
 
 
 
 
 
 
 
 
11,220

 
12,184

SIMR, LLC
 
First Lien
 
Healthcare services
 
L+10.00% (Floor 2.00%)/M, 7.00% PIK, Current Coupon 19.00%
 
9/7/2018
 
9/7/2023
 
11,520

 
11,340

 
11,024

 
 
9,374,510.2 Class B Common Units
 
 
 
 
9/7/2018
 
 

 
6,107

 
3,322

 
 
 
 
 
 
 
 
 
 
 
 
 
 
17,447

 
14,346


13

Table of Contents

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF INVESTMENTS
(Unaudited)
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio Company1
 
Type of Investment2
 
Industry
 
Current Interest Rate3
 
Acquisition Date14
 
Maturity
 
Principal
 
Cost
 
Fair Value4
ZENFOLIO INC.
 
Revolving Loan10
 
Business services
 
L+9.00% (Floor 1.00%)
 
7/17/2017
 
7/17/2022
 

 
(10
)
 

 
 
First Lien
 
 
 
L+9.00% (Floor 1.00%)/Q, Current Coupon 11.09%
 
7/17/2017
 
7/17/2022
 
13,906

 
13,683

 
13,530

 
 
190 shares of common stock
 
 
 
 
7/17/2017
 
 

 
1,900

 
272

 
 
 
 
 
 
 
 
 
 
 
 
 
 
15,573

 
13,802

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Affiliate Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
$
89,481

 
$
90,870

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Control Investments7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
I-45 SLF LLC9,11
 
80% LLC equity interest
 
Multi-sector holdings
 
 
10/20/2015
 
 

 
$
68,000

 
$
58,294

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Control Investments