Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
ý      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 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: 814-00672
 
 
 
 
OHA Investment Corporation
 
 
(Exact name of registrant as specified in its charter) 
 
 
 
 
Maryland
 
20-1371499
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
 
 
1114 Avenue of the Americas,
27th Floor
 
10036
New York, New York
 
(Zip Code)
(Address of principal executive
offices)
 
 
(212) 852-1900
(Registrant’s telephone number, including area code)
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 ý No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 o
Accelerated filer
 o
Non-accelerated filer
 x
Smaller reporting company
 o
Emerging growth company
 o
 
 
(Do not check if smaller reporting 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 ý
As of May 14, 2019, there were 20,172,392 shares of the registrant’s common stock outstanding.




Table of Contents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I – FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
 
OHA INVESTMENT CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts) 
 
 
March 31, 2019
 
December 31, 2018
 
 
(unaudited)
 
 
Assets
 
 

 
 

Investments in portfolio securities at fair value
 
 

 
 

Affiliate investments (cost: $26,028 and $26,028, respectively)
 
$
2,331

 
$
2,271

Non-affiliate investments (cost: $81,571 and $85,306, respectively)
 
61,011

 
63,335

Total portfolio investments (cost: $107,599 and $111,334, respectively)
 
63,342

 
65,606

Investments in U.S. Treasury Bills at fair value (cost: $9,996 and $14,989, respectively)
 
9,996

 
14,989

Total investments
 
73,338

 
80,595

Cash and cash equivalents
 
4,556

 
3,124

Accounts receivable and other current assets
 
487

 
499

Interest receivable
 
281

 
224

Other prepaid assets
 
32

 
19

Deferred tax asset
 
158

 
316

Total current assets
 
5,514

 
4,182

Total assets
 
$
78,852

 
$
84,777

 
 
 
 
 
Liabilities
 
 

 
 

Current liabilities
 
 

 
 

Due to broker
 
$

 
$
3,251

Distributions payable
 
403

 
403

Accounts payable and accrued expenses
 
1,121

 
683

Due to affiliate (Note 4)
 
231

 
571

Management and incentive fees payable (Note 4)
 
316

 
366

Income taxes payable
 
39

 
39

Repurchase agreement
 
9,796

 
14,689

Short-term debt, net of debt issuance costs
 
29,893

 

Total current liabilities
 
41,799

 
20,002

Long-term debt, net of debt issuance costs
 

 
28,866

Total liabilities
 
41,799

 
48,868

Commitments and contingencies  (Note 6)
 
 

 
 

Net assets
 
 

 
 

Common stock, $.001 par value, 250,000,000 shares authorized; 20,172,392 and 20,172,392 shares issued and outstanding, respectively
 
20

 
20

Paid-in capital in excess of par
 
211,907

 
211,907

Total distributable earnings (loss)
 
(174,874
)
 
(176,018
)
Total net assets
 
37,053

 
35,909

Total liabilities and net assets
 
$
78,852

 
$
84,777

Net asset value per share
 
$
1.84

 
$
1.78

(See accompanying notes to consolidated financial statements)

3



OHA INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

 
 
 
 
For the three months ended March 31,
 
 
 
 
2019
 
2018
Investment income:
 
 
 
 

 
 

Interest income:
 
 
 
 

 
 

Affiliate investments
 
 
 
$

 
$
122

Payment-in-kind from affiliate investments
 
 
 

 
988

Non-affiliate investments
 
 
 
1,503

 
1,118

Money market interest
 
 
 
15

 
49

Other income
 
 
 
11

 
6

Total investment income
 
 
 
1,529

 
2,283

Operating expenses:
 
 
 
 

 
 

Interest expense and bank fees
 
 
 
629

 
823

Management fees (Note 4)
 
 
 
316

 
400

Incentive fees (Note 4)
 
 
 

 
1

Costs related to strategic alternatives review
 
 
 
27

 
75

Professional fees
 
 
 
253

 
643

Other general and administrative expenses
 
 
 
388

 
370

Directors' fees
 
 
 
61

 
61

Total operating expenses
 
 
 
1,674

 
2,373

Waived incentive fees (Note 4)
 
 
 

 
(1
)
Income tax provision, net
 
 
 

 
6

Net investment loss
 
 
 
(145
)
 
(95
)
Realized and unrealized gain (loss) on investments:
 
 
 
 
 
 
Net realized capital gain (loss) on investments
 
 
 
 

 
 

Non-affiliate investments
 
 
 
220

 
13

Provision for taxes
 
 
 

 
(42
)
Total net realized capital gain (loss) on investments
 
 
 
220

 
(29
)
Net unrealized appreciation (depreciation) on investments
 
 
 
 

 
 

Affiliate investments
 
 
 
60

 
(1,006
)
Non-affiliate investments
 
 
 
1,412

 
2,862

Total net unrealized appreciation on investments
 
 
 
1,472

 
1,856

 
 
 
 
 
 
 
Net increase in net assets resulting from operations
 
 
 
$
1,547

 
$
1,732

 
 
 
 
 
 
 
Net increase in net assets resulting from operations per common share
 
 
 
$
0.08

 
$
0.08

 
 
 
 
 
 
 
Distributions declared per common share
 
 
 
$
0.02

 
$
0.02

Weighted average shares outstanding - basic and diluted
 
 
 
20,172

 
20,172


 (See accompanying notes to consolidated financial statements)

4



OHA INVESTMENT CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
(in thousands, except share data)
(unaudited)
 
 
 
Common Stock
 
Paid in Capital in Excess of Par
 
Distributable Earnings (Loss)
 
Total Net Assets
 
 
Shares
 
Par Amount
 
 
 
Balance at December 31, 2018
 
20,172,392

 
$
20

 
$
211,907

 
$
(176,018
)
 
$
35,909

Net investment loss
 

 

 

 
(145
)
 
(145
)
Net realized and unrealized gain
 

 

 

 
1,692

 
1,692

Distributions to common stockholders
 

 

 

 
(403
)
 
(403
)
Balance at March 31, 2019
 
20,172,392

 
$
20

 
$
211,907

 
$
(174,874
)
 
$
37,053

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
Paid in Capital in Excess of Par
 
Distributable Earnings (Loss)
 
Total Net Assets
 
 
Shares
 
Par Amount
 
 
 
Balance at December 31, 2017
 
20,172,392

 
$
20

 
$
234,553

 
$
(186,802
)
 
$
47,771

Net investment loss
 

 

 

 
(95
)
 
(95
)
Net realized and unrealized gain
 

 

 

 
1,827

 
1,827

Distributions to common stockholders
 

 

 

 
(403
)
 
(403
)
Balance at March 31, 2018
 
20,172,392

 
$
20

 
$
234,553

 
$
(185,473
)
 
$
49,100

 
(See accompanying notes to consolidated financial statements)

5



OHA INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
For the three months ended March 31,
 
 
2019
 
2018
Cash flows from operating activities:
 
 

 
 

Net increase in net assets resulting from operations
 
$
1,547

 
$
1,732

Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by (used in) operating activities:
 
 
 
 
Payment-in-kind interest
 

 
(988
)
Net amortization of premiums, discounts and fees
 
(30
)
 
(44
)
Net realized capital loss on investments
 
(220
)
 
(13
)
Net unrealized depreciation (appreciation) on investments
 
(1,472
)
 
(1,856
)
Purchase of investments in portfolio securities
 
(2,345
)
 
(10,858
)
Proceeds from redemption or sale of investments in portfolio securities
 
5,720

 
13,649

Proceeds from revolving loans, net of draws
 

 

Purchase of investments in U.S. Treasury Bills
 
(10,000
)
 
(15,000
)
Proceeds from redemption of investments in U.S. Treasury Bills
 
14,993

 
19,998

Proceeds from ATP production payments applied to cost basis
 
611

 

Amortization of debt issuance costs on Credit Facility
 
27

 
178

Effects of changes in operating assets and liabilities:
 
 
 
 
Accounts receivable and other current assets
 
12

 
(6
)
Interest receivable
 
(57
)
 
175

Prepaid assets
 
(13
)
 
10

Payables and accrued expenses
 
388

 
77

Deferred tax asset
 
158

 
41

Due from broker
 

 
(103
)
Due to broker
 
(3,251
)
 
1,250

Due to affiliate
 
(340
)
 
(466
)
Net cash provided by operating activities
 
5,728

 
7,776

Cash flows from financing activities:
 
 

 
 

Borrowings under credit facilities
 
3,000

 

Borrowings under repurchase agreement
 
9,796

 
14,695

Debt issuance cost paid
 

 
(180
)
Repayments on Credit Facility
 
(2,000
)
 

Repayments on repurchase agreement
 
(14,689
)
 
(19,592
)
Distributions to common stockholders
 
(403
)
 
(403
)
Net cash used in financing activities
 
(4,296
)
 
(5,480
)
Net change in cash and cash equivalents
 
1,432

 
2,296

Cash and cash equivalents, beginning of period
 
3,124

 
19,939

Cash and cash equivalents, end of period
 
$
4,556

 
$
22,235

 
(See accompanying notes to consolidated financial statements)


6



OHA INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
March 31, 2019
(in thousands, except share amounts and percentages)
(unaudited)
Portfolio Company
 
Industry
Segment
 
Investment(1)
 
Principal
 
Cost
 
Fair Value
 
Affiliate Investments - (5% to 25% owned)
OCI Holdings, LLC
 
Home Health Services
 
Subordinated Note
(LIBOR+ 12.0% cash with a 1.0% floor plus 3.0% PIK), 21.49%,
due 8/31/2019
(2)(6)(11)
 
$
27,117

 
$
23,528

 
$
2,331

OCI Holdings, LLC
 
Home Health Services
 
100% of Class A Units in OHA/OCI Investments, LLC representing 20.8% diluted ownership of OCI Holdings, LLC(2)(8)
 
 

 
2,500

 

Subtotal Affiliate Investments - (5% to 25% owned)
 
 

 
$
26,028

 
$
2,331

 
 
 
 
 
 
 
 
 
 
 
Non-affiliate Investments - (Less than 5% owned)
Equinox Holdings, Inc.
 
Leisure Goods, Activities, Movies
 
Second Lien Term Loan
(LIBOR+7.00% with a 1.0% floor), 9.50%, due 9/6/2024
(3)
 
$
7,000

 
$
6,959

 
$
7,044

PAE Holding Corporation
 
Aerospace and Defense
 
Second Lien Term Loan
(LIBOR+9.50% with a 1.0% floor), 12.00%, due 10/20/2023
(3)
 
6,888

 
6,755

 
6,819

Ministry Brands, LLC
 
Business Services
 
Second Lien Term Loan
(LIBOR+8.00% with a 1.0% floor),
10.63%, due 6/2/2023
(2)
 
6,000

 
5,948

 
6,000

ATP Oil & Gas Corporation/Bennu Oil & Gas, LLC
 
Oil & Natural Gas
Production and Development
 
Limited Term Royalty Interest (notional rate of 13.2%)(2)(7)(11)
 
 
 
25,839

 
5,052

CVS Holdings I, LP (MyEyeDr)
 
Retail
 
Second Lien Term Loan
(LIBOR+6.75% with a 1.0% floor), 9.25%, due 2/6/2026
(3)
 
5,000

 
4,978

 
4,913

PowerSchool
 
Business Services
 
Second Lien Term Loan
(LIBOR+6.75%),
9.49%, due 8/1/2026
(3)
 
3,800

 
3,764

 
3,743

Sedgwick
 
Healthcare
 
Unsecured Term Loan,
9.00%, due 12/31/2026
(3)
 
3,300

 
3,251

 
3,300

DexKo Global, Inc.
 
Automotive
 
Second Lien Term Loan
(LIBOR+8.25% with a 1.0% floor),
10.85%, due 7/24/2025
(3)
 
3,000

 
2,980

 
2,985

WASH Multifamily Acquisition, Inc.
 
Industrials - Laundry Equipment
 
Second Lien Term Loan
(LIBOR+7.00% with a 1.0% floor), 9.50%, due 5/14/2023
(3)
 
2,978

 
2,965

 
2,881

TIBCO Software, Inc.
 
Software
 
Senior Unsecured Notes,
11.38%, due 12/1/2021
(3)
 
2,100

 
2,003

 
2,234

Hayward Industries, Inc.
 
Consumer Goods
 
Second Lien Term Loan
(LIBOR+8.25%),
10.75%, due 8/4/2025
(3)
 
2,159

 
2,162

 
2,127

CentralSquare Technologies
 
Software
 
Second Lien Term Loan
(LIBOR+7.50%),
10.00%, due 8/31/2026
(3)
 
2,000

 
1,951

 
1,980

Ensono
 
Telecommunications
 
Second Lien Term Loan
(LIBOR+9.25%),
11.75%, due 6/27/2026
(3)
 
1,700

 
1,636

 
1,657


 

7



OHA INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS - Continued
March 31, 2019
(in thousands, except share amounts and percentages)
(unaudited)

Portfolio Company
 
Industry Segment
 
Investment(1)
 
Principal
 
Cost
 
Fair Value
 
 
 
 
 
 
 

 
 

 
 

Non-affiliate Investments - (Less than 5% owned) - Continued
MW Industries (Helix Acquisition)
 
Industrials
 
Second Lien Term Loan
(LIBOR+8.00%),
10.60%, due 9/29/2025
(3)
 
$
1,400

 
$
1,388

 
$
1,365

Allied Universal Holdco, LLC
 
Business Services
 
Second Lien Term Loan
(LIBOR+8.50% with a 1.0% floor), 11.00%, due 7/28/2023
(3)
 
1,250

 
1,250

 
1,223

PharMerica
 
Healthcare
 
Second Lien Term Loan
(LIBOR+8.50% with a 1.0% floor),
10.98%, due 3/5/2027
(3)
 
1,200

 
1,170

 
1,182

Caliber Collision
 
Automotive
 
Second Lien Term Loan
(LIBOR+7.25%),
9.73%, due 2/5/2027
(3)
 
1,100

 
1,081

 
1,100

Vertafore, Inc.
 
Business Services
 
Second Lien Term Loan
(LIBOR+7.25%),
9.75%, due 7/2/2026
(3)
 
900

 
892

 
891

Safe Fleet Holdings, LLC
 
Industrials
 
Second Lien Term Loan
(LIBOR+6.75% with a 1.0% floor), 9.24%, due 2/1/2026
(3)
 
700

 
697

 
674

Ardonagh(5)
 
Insurance
 
Senior Secured Notes
8.63%, due 7/15/2023
(3)
 
600

 
544

 
513

Coinamatic Canada,
Inc.
(5)
 
Industrials - Laundry Equipment
 
Second Lien Term Loan
(LIBOR+7.00% with a 1.0% floor),
9.50%, due 5/14/2023
(3)
 
522

 
519

 
505

ClearChoice (CC Dental Implants Intermediate)
 
Healthcare
 
First Lien Term Loan (Last Out)
(LIBOR+6.50% with a 1.0% floor),
9.28%, due 1/2/2023
(2)(10)
 
500

 
496

 
495

MedRisk, LLC
 
Healthcare
 
Second Lien Term Loan
(LIBOR+6.75%),
9.25%, due 12/28/2025
(3)
 
500

 
498

 
492

NAVEX
 
Software
 
Second Lien Term Loan
(LIBOR+7.00%),
9.50%, due 9/5/2026
(3)
 
400

 
396

 
394

FirstLight Fiber
 
Telecommunications
 
Second Lien Term Loan
(LIBOR+7.50%),
10.00%, due 7/23/2026
(3)
 
400

 
396

 
392

EaglePicher Technologies, LLC
 
Aerospace and Defense
 
Second Lien Term Loan
(LIBOR+7.25%),
9.75% due 3/9/2026
(3)
 
400

 
392

 
390

ClearChoice (CC Dental Implants Intermediate)
 
Healthcare
 
First Lien Revolver (Last Out)
(Funded: LIBOR+6.50%
with a 1.0% floor),
9.27%, due 1/2/2023
(2)(9)(10)
 
375

 
362

 
358





8



OHA INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS - Continued
March 31, 2019
(in thousands, except share amounts and percentages)
(unaudited)

Portfolio Company
 
Industry Segment
 
Investment(1)
 
Principal
 
Cost
 
Fair Value
 
 
 
 
 
 
 

 
 

 
 

Non-affiliate Investments - (Less than 5% owned) - Continued
Edelman Financial Services, LLC
 
Financial Services
 
Second Lien Term Loan
(LIBOR+6.75%),
9.54%, due 7/20/2026
(3)
 
$
300

 
$
299

 
$
302

Subtotal Non-affiliate Investments - (Less than 5% owned)
 
 

 
$
81,571

 
$
61,011

Subtotal Portfolio Investments (86.4% of total investments)
 
 

 
$
107,599

 
$
63,342

 
 
 
 
 
 
 
 
 
 
 
GOVERNMENT SECURITIES
U.S. Treasury Bills(4)
 
 
 
 
 
$
10,000

 
$
9,996

 
$
9,996

Subtotal Government Securities (13.6% of total investments)
 
 

 
$
9,996

 
$
9,996

 
 
 
 
 
 
 
 
 
 
 
TOTAL INVESTMENTS
 
$
117,595

 
$
73,338



NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS
 
(1) 
We pledged all of our portfolio investments, except our investments in U.S. Treasury Bills, as collateral for obligations under our Credit Facility. See Note 3 to Consolidated Financial Statements. Percentages represent interest rates in effect as of March 31, 2019, and due dates represent the contractual maturity dates. Common stock and units are non-income producing securities, unless otherwise stated.
(2) 
The Audit Committee recommends fair values of each asset to our Board of Directors, which in good faith determines the final fair value for each investment. Fair value is determined using unobservable inputs (Level 3 hierarchy), unless otherwise stated. See Note 7 to the Consolidated Financial Statements.
(3) 
Fair value is determined using prices with observable market inputs (Level 2 hierarchy). See Note 7 to the Consolidated Financial Statements.
(4) 
Fair value is determined using prices for identical securities in active markets (Level 1 hierarchy). See Note 7 to the Consolidated Financial Statements.
(5) 
We have determined that this investment is not a “qualifying asset” under Section 55(a) of the Investment Company Act of 1940, or the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. The status of these assets under the 1940 Act is subject to change. We monitor the status of these assets on an ongoing basis. As of March 31, 2019, 1.6% of our investment portfolio was deemed not to be "qualifying assets" under Section 55(a) of the 1940 Act.
(6) 
During the fourth quarter of 2016, we executed a series of amendments to our note purchase and security agreement with OCI Holdings, LLC, or OCI, to allow the company to PIK its LIBOR+12% cash interest for November and December 2016. Also, default interest of $0.1 million and current unpaid interest of $0.4 million was added to the principal balance in the fourth quarter 2016. OCI remains in financial covenant default. During 2017, we executed a number of amendments to our note purchase and security agreement with OCI that allows the company to continue to PIK its LIBOR+12% cash interest during 2017. Through June 30, 2018, we have allowed the company to continue to PIK its 12% cash interest while paying the 2% default interest in cash. In June 2018, we executed an amendment to our note purchase and security agreement with OCI to extend its maturity date to August 31, 2019. In September 2018, we executed an amendment to our note purchase and security agreement whereby we exchanged $217,625 of cash default interest previously paid to us by the company in 2018 for PIK interest, which was added to the principal outstanding balance of the note, on and as of the date the default interest payment was originally made. This amendment also allows the company to PIK its default interest through December 31, 2018. In 2019, OCI continues to be in default and continues to PIK all of its interest, including default interest. Beginning in the 4th quarter of 2018, OCI subordinated note was placed on non-accrual status.

9



OHA INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS - Continued
March 31, 2019
(in thousands, except share amounts and percentages)


NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS - Continued
(7) 
Effective April 1, 2018, we discontinued income recognition on this investment and it remains on non-accrual status. All production payments received after April 1, 2018 are being applied to our cost basis and considered return of capital. Previously, ATP was on non-accrual status where income was recognized to the extent production payments were received. For more information on ATP, refer to the discussion of the ATP litigation in Note 6 to the Consolidated Financial Statements.
(8) 
Non-income producing equity security.
(9) 
Represents a revolving line of credit of which $1.3 million of the $1.7 million total commitment is unfunded at March 31, 2019. The revolving line of credit includes a 0.75% unused fee applied to the unfunded amount. In February 2019, ClearChoice executed an amendment to the financing agreement which increased the amount committed by OHAI under the revolving line of credit from $1.6 million to $1.7 million and modified certain other loan covenants.
(10) 
Investment is entitled to skim interest which results in a higher interest rate spread of approximately 31 basis points.
(11) 
Investment on non-accrual status and therefore non-income producing.

 (See accompanying notes to consolidated financial statements)


10



OHA INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2018
(in thousands, except share amounts and percentages)

Portfolio Company
 
Industry
Segment
 
Investment(1)
 
Principal
 
Cost
 
Fair Value
 
Affiliate Investments - (5% to 25% owned)
OCI Holdings, LLC
 
Home Health Services
 
Subordinated Note
(LIBOR+ 12.0% cash with a 1.0% floor plus 3.0% PIK), 21.51%,
due 8/31/2019
(2)(6)(11)
 
$
25,711

 
$
23,528

 
$
2,271

OCI Holdings, LLC
 
Home Health Services
 
100% of Class A Units in OHA/OCI Investments, LLC representing 20.8% diluted ownership of OCI Holdings, LLC(2)(8)
 
 

 
2,500

 

Subtotal Affiliate Investments - (5% to 25% owned)
 
 

 
$
26,028

 
$
2,271

 
 
 
 
 
 
 
 
 
 
 
Non-affiliate Investments - (Less than 5% owned)
Equinox Holdings, Inc.
 
Leisure Goods, Activities, Movies
 
Second Lien Term Loan
(LIBOR+7.0% with a 1.0% floor),
9.52%, due 9/6/2024
(3)
 
$
7,000

 
$
6,957

 
$
7,018

PAE Holding Corporation
 
Aerospace and Defense
 
Second Lien Term Loan
(LIBOR+9.50% with a 1.0% floor),
12.12%, due 10/20/2023
(3)
 
6,888

 
6,749

 
6,785

Ministry Brands, LLC
 
Business Services
 
Second Lien Term Loan
(LIBOR+ 8.0% with a 1.0% floor),
10.52%, due 6/2/2023
(2)
 
6,000

 
5,945

 
5,880

Avantor Performance Materials, Inc.
 
Chemicals
 
Senior Unsecured Notes,
9.00%, due 10/1/2025
(3)
 
5,000

 
5,000

 
5,000

ATP Oil & Gas Corporation/Bennu Oil & Gas, LLC
 
Oil & Natural Gas
Production and Development
 
Limited Term Royalty Interest (notional rate of 13.2%)(2)(7)(11)
 
 
 
26,450

 
4,778

CVS Holdings I, LP
(MyEyeDr)
 
Retail
 
Second Lien Term Loan
(LIBOR + 6.75% with a 1.0% floor),
9.28%, due 2/6/2026
(3)
 
5,000

 
4,977

 
4,725

PowerSchool
 
Business Services
 
Second Lien Term Loan
(LIBOR + 6.75%),
9.13%, due 8/1/2026
(3)
 
3,800

 
3,763

 
3,762

WASH Multifamily Acquisition, Inc.
 
Industrials - Laundry Equipment
 
Second Lien Term Loan
(LIBOR + 7.0% with a 1.0% floor),
9.52%, due 5/14/2023
(3)
 
3,404

 
3,388

 
3,293

Sedgwick
 
Healthcare
 
Unsecured Term Loan,
9.00%, due 12/31/2026
(3)
 
3,300

 
3,251

 
3,251

DexKo Global, Inc.
 
Automotive
 
Second Lien Term Loan
(LIBOR+8.25% with a 1.0% floor),
11.05%, due 7/24/2025
(3)
 
3,000

 
2,979

 
3,000




11



OHA INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2018
(in thousands, except share amounts and percentages)
(continued)
Portfolio Company
 
Industry
Segment
 
Investment(1)
 
Principal
 
Cost
 
Fair Value
 
 
 
 
 
 
 

 
 

 
 

Non-affiliate Investments - (Less than 5% owned) - Continued
TIBCO Software, Inc.
 
Software
 
Senior Unsecured Notes,
11.38%, due 12/1/2021
(3)
 
$
2,100

 
$
1,995

 
$
2,200

Hayward Industries, Inc.
 
Consumer Goods
 
Second Lien Term Loan
(LIBOR+8.25%),
10.77%, due 8/04/2025
(3)
 
2,159

 
2,163

 
2,127

CentralSquare Technologies
 
Software
 
Second Lien Term Loan
(LIBOR+7.50%),
10.02%, due 8/31/2026
(3)
 
2,000

 
1,950

 
2,000

Ensono
 
Telecommunications
 
Second Lien Term Loan
(LIBOR+9.25%),
11.77%, due 6/27/2026
(3)
 
1,700

 
1,635

 
1,653

MW Industries (Helix Acquisition)
 
Industrials
 
Second Lien Term Loan
(LIBOR+8.0%),
10.80%, due 9/29/2025
(3)
 
1,400

 
1,388

 
1,379

Allied Universal Holdco, LLC
 
Business Services
 
Second Lien Term Loan
(LIBOR+8.50% with a 1.0% floor),
11.02%, due 7/28/2023
(3)
 
1,250

 
1,250

 
1,191

Vertafore, Inc.
 
Business Services
 
Second Lien Term Loan
(LIBOR+7.25%),
10.05%, due 7/2/2026
(3)
 
900

 
891

 
865

Safe Fleet Holdings, LLC
 
Industrials
 
Second Lien Term Loan
(LIBOR+6.75% with a 1.0% floor),
9.13%, due 2/1/2026
(3)
 
700

 
697

 
665

Coinamatic Canada,
Inc.
(5)
 
Industrials - Laundry Equipment
 
Second Lien Term Loan
(LIBOR+7.0% with a 1.0% floor),
9.52%, due 5/14/2023
(3)
 
596

 
593

 
577

Ardonagh(5)
 
Insurance
 
Senior Secured Notes,
8.625%, due 7/15/2023
(3)
 
600

 
541

 
513

MedRisk, LLC
 
Healthcare
 
Second Lien Term Loan
(LIBOR+6.75%),
9.27%, due 12/28/2025
(3)
 
500

 
498

 
491

ClearChoice (CC Dental Implants Intermediate)
 
Healthcare
 
First Lien Term Loan (Last Out) (LIBOR+6.50% with a 1.0% floor), 9.13%, due 1/2/2023(2)(10)
 
500

 
496

 
487

FirstLight Fiber
 
Telecommunications
 
Second Lien Term Loan
(LIBOR+7.50%),
10.02%, due 7/23/2026
(3)
 
400

 
396

 
393

NAVEX
 
Software
 
Second Lien Term Loan
(LIBOR+7.00%),
9.53%, due 9/5/2026
(3)
 
400

 
396

 
386


 

12



OHA INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2018
(in thousands, except share amounts and percentages)
(continued)
Portfolio Company
 
Industry
Segment
 
Investment(1)
 
Principal
 
Cost
 
Fair Value
 
 
 
 
 
 
 
 
 
 
 
Non-affiliate Investments - (Less than 5% owned) - Continued
ClearChoice (CC Dental Implants Intermediate)
 
Healthcare
 
First Lien Revolver (Last Out) (Funded: LIBOR+6.50% with a 1.0% floor), 9.29%, due 1/2/2023(2)(9)(10)
 
$
375

 
$
361

 
$
336

EaglePicher Technologies, LLC
 
Aerospace and Defense
 
Second Lien Term Loan
(LIBOR+7.25%),
9.77%, due 3/9/2026
(3)
 
300

 
298

 
294

Edelman Financial Services, LLC
 
Financial Services
 
Second Lien Term Loan
(LIBOR+6.75%),
9.19%, due 7/20/2026
(3)
 
300

 
299

 
286

Subtotal Non-affiliate Investments - (Less than 5% owned)
 
$
85,306

 
$
63,335

Subtotal Portfolio Investments (81.4% of total investments)
 
$
111,334

 
$
65,606

 
 
 
 
 
 
 
 
 
 
 
GOVERNMENT SECURITIES
 
 
 
 
 
 
U.S. Treasury Bills (4)
 
 
 
 
 
$
15,000

 
$
14,989

 
$
14,989

Subtotal Government Securities (18.6% of total investments)
 
 
 
$
14,989

 
$
14,989

 
 
 
 
 
 
 
 
 
 
 
TOTAL INVESTMENTS
 
 
 
 
 
 
 
$
126,323

 
$
80,595



NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS

(1) 
We pledged all of our portfolio investments, except our investments in U.S. Treasury Bills, as collateral for obligations under our Credit Facility. See Note 3 to Consolidated Financial Statements. Percentages represent interest rates in effect as of December 31, 2018, and due dates represent the contractual maturity dates. Common stock and units are non-income producing securities, unless otherwise stated.
(2) 
The Audit Committee recommends fair values of each asset to our Board of Directors, which in good faith determines the final fair value for each investment. Fair value is determined using unobservable inputs (Level 3 hierarchy), unless otherwise stated. See Note 10 to the Consolidated Financial Statements.
(3) 
Fair value is determined using prices with observable market inputs (Level 2 hierarchy). See Note 10 to the Consolidated Financial Statements.
(4) 
Fair value is determined using prices for identical securities in active markets (Level 1 hierarchy). See Note 10 to the Consolidated Financial Statements.
(5) 
We have determined that this investment is not a “qualifying asset” under Section 55(a) of the Investment Company Act of 1940, or the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. The status of these assets under the 1940 Act is subject to change. We monitor the status of these assets on an ongoing basis. As of December 31, 2018, 1.4% of our investment portfolio was deemed not to be "qualifying assets" under Section 55(a) of the 1940 Act.






13



OHA INVESTMENT CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2018
(in thousands, except share amounts and percentages)
(continued)

NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS - Continued

(6) 
During the fourth quarter of 2016, we executed a series of amendments to our note purchase and security agreement with OCI Holdings, LLC, or OCI, to allow the company to PIK its LIBOR+12% cash interest for November and December 2016. Also, default interest of $0.1 million and current unpaid interest of $0.4 million was added to the principal balance in the fourth quarter 2016. OCI remains in financial covenant default. During 2017, we executed a number of amendments to our note purchase and security agreement with OCI that allows the company to continue to PIK its LIBOR+12% cash interest during 2017. Through June 30, 2018, we have allowed the company to continue to PIK its 12% cash interest while paying the 2% default interest in cash. In June 2018, we executed an amendment to our note purchase and security agreement with OCI to extend its maturity date to August 31, 2019. In September 2018, we executed an amendment to our note purchase and security agreement whereby we exchanged $217,625 of cash default interest previously paid to us by the company in 2018 for PIK interest, which was added to the principal outstanding balance of the note, on and as of the date the default interest payment was originally made. This amendment also allows the company to PIK its default interest through December 31, 2018. Beginning in the 4th quarter of 2018, OCI subordinated note was placed on non-accrual status.
(7) 
Effective April 1, 2018, we discontinued income recognition on this investment and it remains on non-accrual status. All production payments received after April 1, 2018 are being applied to our cost basis and considered return of capital. Previously, ATP was on non-accrual status where income was recognized to the extent production payments were received. For more information on ATP, refer to the discussion of the ATP litigation in Note 7 to the Consolidated Financial Statements.
(8) 
Non-income producing equity security.
(9) 
Represents a revolving line of credit of which $1.2 million of the $1.6 million total commitment is unfunded at December 31, 2018. The revolving line of credit includes a 0.75% unused fee applied to the unfunded amount.
(10) 
Investment is entitled to skim interest which results in a higher interest rate spread of approximately 28 basis points.
(11) 
Investment on non-accrual status and therefore non-income producing.


(See accompanying notes to consolidated financial statements)



14



OHA INVESTMENT CORPORATION
CONSOLIDATED FINANCIAL HIGHLIGHTS
(unaudited)
 
For the three months ended March 31,
Per Share Data(1)
2019
 
2018
Net asset value, beginning of period
$
1.78

 
$
2.37

Net investment income, net of tax
(0.01
)
 
(0.01
)
Net realized and unrealized gain (loss) on investments
0.08

 
0.09

Net increase in net assets resulting from operations
0.08

 
0.08

Distributions to common stockholders
 
 
 

Distributions from distributable earnings

 
(0.02
)
Return of capital
(0.02
)
 

Net decrease in net assets from distributions
(0.02
)
 
(0.02
)
Net asset value, end of period
$
1.84

 
$
2.43

 
 
 
 
Market value, beginning of period
$
1.01

 
$
1.15

Market value, end of period
$
1.20

 
$
1.40

Market value return(2)(3)
21.2
 %
 
23.8
 %
 
 
 
 
Ratios and Supplemental Data
 

 
 

($ and shares in thousands)
 

 
 

Net assets, end of period
$
37,053

 
$
49,100

Average net assets
$
36,669

 
$
48,516

Common shares outstanding, end of period
20,172

 
20,172

Total operating expenses and taxes/average net assets, before waived incentive fees (4)
18.5
 %
 
19.9
 %
Total operating expenses and taxes/average net assets, net of waived incentive fees (4)
18.5
 %
 
19.9
 %
Net investment loss/average net assets, before waived incentive fees(4)
(1.6
)%
 
(0.8
)%
Net investment loss/average net assets, net of waived incentive fees(4)
(1.6
)%
 
(0.8
)%
Portfolio turnover rate
3.6
 %
 
16.7
 %
 
 
 
 
Expense Ratios (as a percentage of average net assets)(4)
 

 
 

Interest expense and bank fees
7.0
 %
 
6.9
 %
Management fees
3.4
 %
 
3.3
 %
Incentive fees
 %
 
 %
Incentive fees, net of waived incentive fees
 %
 
 %
Costs related to strategic alternatives review
0.3
 %
 
0.6
 %
Other operating expenses, including provision for income taxes
7.8
 %
 
9.1
 %
Total operating expenses, including provision for income taxes, before waived incentive fees
18.5
 %
 
19.9
 %
Total operating expenses, including provision for income taxes, net of waived incentive fees
18.5
 %
 
19.9
 %
 
(1) 
Per share data is based on weighted average number of common shares outstanding for the period. Per share data may not total due to rounding.
(2) 
Total return based on market value is calculated as the change in market value per share during the respective periods, assuming dividends and distributions, if any, are reinvested in accordance with our dividend reinvestment plan.
(3) 
Not annualized.
(4) 
Annualized.
(See accompanying notes to consolidated financial statements)

15



OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2019
(unaudited)

Note 1: Organization
These consolidated financial statements present the financial position, results of operations and cash flows of OHA Investment Corporation and its consolidated subsidiaries (collectively “we,” “us,” “our” and “OHAI”). We are a specialty finance company that was organized in July 2004 as a Maryland corporation. Our investment objective is to generate both current income and capital appreciation primarily through debt investments, some of which include equity components. We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company, or a BDC, under the 1940 Act. For federal income tax purposes we operate so as to be treated as a regulated investment company, or RIC, under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. We have several direct and indirect subsidiaries that are single-member limited liability companies and wholly-owned limited partnerships established to hold certain portfolio investments or provide services to us in accordance with specific rules prescribed for a company operating as a RIC. We consolidate the financial results of our wholly-owned subsidiaries for financial reporting purposes, and we do not consolidate the financial results of our portfolio companies.
On September 30, 2014, our stockholders approved the appointment of Oak Hill Advisors, L.P., or OHA, as our investment advisor, replacing NGP Investment Advisor, LP, which had been our investment advisor since our inception. In connection with this change in investment advisor, we changed our name from NGP Capital Resources Company to OHA Investment Corporation. OHA is a registered investment adviser under the Investment Advisers Act of 1940, or the Advisers Act. OHA acts as our investment advisor and administrator pursuant to an investment advisory agreement and an administration agreement, respectively, each dated as of September 30, 2014, which we refer to as the Investment Advisory Agreement and the Administration Agreement, respectively. See Note 4.

Note 2: Basis of Presentation
These interim unaudited consolidated financial statements include the accounts of OHAI and its consolidated subsidiaries. The effects of all intercompany transactions between OHAI and its subsidiaries have been eliminated in consolidation. We prepare the interim consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). OHAI is an investment company following the accounting and reporting guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 946, Financial Services - Investment Company ("ASC 946"). Under the investment company rules and regulations pursuant to Article 6 of Regulation S-X and ASC 946, we are precluded from consolidating portfolio company investments, including those in which it has a controlling interest, unless the portfolio company is another investment company. An exception to the general principle occurs if OHAI holds a controlling interest in an operating company that provides all or substantially all of its services directly to us or to our portfolio companies. None of the portfolio investments made by OHAI qualify for this exception. Therefore, our investment portfolio is carried on the Consolidated Balance Sheets at fair value.
We omit certain information and footnote disclosures normally included in audited financial statements prepared in accordance with GAAP pursuant to such rules and regulations. We believe we include all adjustments which are of a normal recurring nature, so that these financial statements fairly present our financial position, results of operations and cash flows. Interim results are not necessarily indicative of results for a full year or any other interim period. You should read these unaudited consolidated financial statements in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2018.
Preparing interim consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes thereto, including the estimated fair values of our investment portfolio discussed in Note 7. Although we believe our estimates and assumptions are reasonable, actual results could differ materially from these estimates.
Cash and Cash Equivalents
Cash and cash equivalents include short-term, liquid investments with an original maturity of three months or less in accounts such as demand deposit accounts, money market accounts, certain overnight investment sweep accounts and money market fund accounts. We record cash and cash equivalents at cost, which approximates fair value. As of March 31, 2019, OHAI held $0.9 million in bank demand deposits and $3.7 million in money market funds.


16


OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 2019
(unaudited)

Payment-in-Kind Interest and Dividends
We have investments in our portfolio that contain payment-in-kind, or PIK, interest provisions. We compute PIK interest income at the contractual rate specified in each investment agreement, and we add that amount to the principal balance of the investment. For investments with PIK interest, we calculate our income accruals on the principal balance plus any PIK amounts. If the portfolio company’s projected cash flows, further supported by estimated total enterprise value, are not sufficient to cover the contractual principal and interest, as applicable, we do not accrue PIK interest income on the investment. To maintain our RIC status, we must pay out this non-cash income to stockholders in the form of distributions, even though we have not yet collected the cash. We did not record any PIK interest income for the three months ended March 31, 2019 and we recorded $1.0 million for the three months ended March 31, 2018 related to our investment in OCI subordinated notes. Beginning in October 2018, we discontinued recognizing any PIK interest income on our investment in OCI's subordinated notes from a tax and GAAP perspective.
Distributions
We record distributions to stockholders on the ex-dividend date. We currently intend that our distributions each year will be sufficient to maintain our status as a RIC for federal income tax purposes and to eliminate federal excise tax liability. We currently intend to make distributions to stockholders on a quarterly basis so that substantially all of our net taxable income is distributed on an annual basis. We also intend to make distributions of net realized capital gains, if any, at least annually. However, we may in the future decide to retain such capital gains for investment and designate such retained amounts as deemed distributions. Each quarter, we estimate our annual taxable earnings. The Board of Directors considers this estimate and determines the distribution amount, if any. We generally declare our distributions each quarter and pay them shortly thereafter. The following table summarizes our recent distribution history:
Declaration Date
 
Per Share
Amount
 
Record Date
 
Payment Date
March 14, 2018
 
$
0.02

 
March 31, 2018
 
April 9, 2018
May 8, 2018
 
0.02

 
June 30, 2018
 
July 9, 2018
September 13, 2018
 
0.02

 
September 30, 2018
 
October 9, 2018
December 12, 2018
 
0.02

 
December 31, 2018
 
January 9, 2019
March 13, 2019
 
0.02

 
March 28, 2019
 
April 9, 2019

Note 3: Credit Facilities and Borrowings
We are party to a Credit Agreement (the "Credit Facility"), dated September 9, 2016, with MidCap Financial Trust, as administrative agent. The initial size of the Credit Facility was $56.5 million with a maturity date of March 9, 2018, with an option to extend for a six-month period, subject to certain conditions. The initial proceeds of $40.5 million from the Credit Facility were used to pay off the $38.5 million outstanding balance of our previous credit facility with SunTrust Bank, pay transaction expenses and provide balance sheet cash. The remaining $16.0 million consisted of a delayed draw term loan and was committed for one year.
On November 10, 2017, we entered into an amendment to the Credit Facility whereby we agreed to make a voluntary principal prepayment in the amount of $4.5 million, reducing the total principal amount outstanding to $36.0 million, and the lenders agreed not to test certain covenants at certain determination dates.
On February 2, 2018, we exercised the option to extend the Credit Facility through September 9, 2018, as permitted in our existing Credit Agreement.
On September 7, 2018 we entered into an amendment to extend the maturity date of the Credit Facility to September 9, 2019, which can be extended for an additional six-month period at our option. In connection with the extension, we made a repayment of principal of $7.0 million of its Credit Facility, reducing the principal amount outstanding to $29.0 million. The $7.0 million principal repayment was available to us to be re-borrowed as a delayed draw term loan, which is committed until September 9, 2019. In addition, the interest rate for the borrowings under the Credit Facility was reduced to LIBOR plus 4.95% for Eurodollar Loans and prime plus 3.95% for Base Rate Loans. Certain financial covenants were also amended.
On January 7, 2019 we borrowed an additional $3.0 million under the Credit Facility as a delayed draw term loan. On February 11, 2019 we repaid $2.0 million on our delayed draw term loan leaving $4.0 million available to draw.

17


OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 2019
(unaudited)

As of March 31, 2019, the total amount outstanding under the Credit Facility was $30.0 million with $4.0 million available to draw. As of December 31, 2018, the total amount outstanding under the Credit Facility was $29.0 million with $7.0 million available to draw. The total amount outstanding on the Credit Facility is shown net of unamortized debt issuance costs of $0.1 million and $0.1 million on our Consolidated Balance Sheet as of March 31, 2019 and December 31, 2018, respectively. Substantially all of our assets, except our investments in U.S. Treasury Bills, are pledged as collateral for the obligations under the Credit Facility. The Credit Facility bears an interest rate of Adjusted LIBOR plus 4.95% for Eurodollar Loans, subject to a 1% LIBOR floor, and Base Rate plus 3.95% for Base Rate Loans. As of March 31, 2019, the interest rate on our outstanding principal balance of $30.0 million was 7.44%.
The Credit Facility contains affirmative and reporting covenants and certain financial ratio and restrictive covenants. We have complied with the covenants from the date of the Credit Agreement through March 31, 2019, and had no existing defaults or events of default under the Credit Facility. The financial covenants, with terms as defined in the Credit Agreement, are:
maintain a Debt to Tangible Net Worth Ratio of not more than 1.00:1.00 as determined on the last day of each calendar month,
maintain at all times a minimum liquidity in the form of Cash or Cash Equivalents of at least $1.0 million,
maintain a Debt to Fair Market Value Ratio of not more than 0.50:1.00 at any time, and
maintain the Fair Market Value of Liquid Portfolio Investments as a percentage of outstanding aggregate principal balance to not be less than 100%.

At the end of each quarter, we may take proactive steps to preserve investment flexibility for the next quarter by investing in cash equivalents, which includes purchasing U.S. Treasury Bills, by utilizing repurchase agreements on a temporary basis. On March 27, 2019, we purchased $10.0 million of U.S. Treasury Bills and contemporaneously entered into a $9.8 million repurchase arrangement with a global financial institution to finance such purchase. Under the repurchase arrangement, we transferred $10.0 million of U.S. Treasury Bills and $0.2 million of cash as collateral under the repurchase agreement. We repaid the $9.8 million borrowed under the repurchase agreement, and was returned the $0.2 million cash collateral, net of a $5 thousand financing fee, upon maturity of the U.S. Treasury Bills on April 2, 2019. We account for the transfer of the U.S. Treasury Bills under the repurchase agreement as a secured borrowing in accordance with GAAP. As a result, the U.S. Treasury Bills are recorded on our books as investments in U.S. Treasury Bills, and the amount outstanding under the repurchase agreement is recorded as a current liability at March 31, 2019.
On December 21, 2018, we purchased $15.0 million of U.S. Treasury Bills and contemporaneously entered into a $14.7 million repurchase arrangement with a global financial institution to finance such purchase. Under the repurchase arrangement, we transferred $15.0 million of U.S. Treasury Bills and $0.3 million of cash as collateral under the repurchase agreement. We repaid the $14.7 million borrowed under the repurchase agreement, and was returned the $0.3 million cash collateral, net of a $14 thousand financing fee, upon maturity of the U.S. Treasury Bills on January 2, 2019. We account for the transfer of the U.S. Treasury Bills under the repurchase agreement as a secured borrowing in accordance with GAAP. As a result, the U.S. Treasury Bills are recorded on our books as investments in U.S. Treasury Bills, and the amount outstanding under the repurchase agreement is recorded as a current liability December 31, 2018.

Note 4: Investment Management
Investment Advisory Agreement
On September 30, 2014, we entered into the Investment Advisory Agreement with OHA, an investment adviser registered under the Advisers Act pursuant to which OHA replaced NGP Investment Advisor, LP as our investment advisor. The Investment Advisory Agreement was most recently approved by our Board of Directors, a majority of whom are not “interested” persons (as defined in the 1940 Act) of us, on August 2, 2018. Pursuant to the Investment Advisory Agreement, OHA implements our business strategy on a day-to-day basis and performs certain services for us, subject to the supervision of our Board of Directors. Under the Investment Advisory Agreement, we pay OHA a fee consisting of two components — a base management fee and an incentive fee.
Base Management Fee: The base management fee is paid quarterly in arrears, and is calculated by multiplying the average value of our total assets (excluding cash, cash equivalents and U.S. Treasury Bills that are purchased with borrowed funds solely for the purpose of satisfying quarter-end diversification requirements related to our election to be taxed as a RIC under the Code), as of the end of the two immediately prior fiscal quarters, by a rate of 1.75% per annum, with a 0.25% reduction in this 1.75% annual rate for the first year following September 30, 2014. For the three months ended March 31, 2019 and 2018, we incurred $0.3 million and $0.4 million, respectively, in base management fees.

18


OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 2019
(unaudited)

Incentive Fee: The incentive fee consists of two parts. The first part, the investment income incentive fee, is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the fiscal quarter for which the fee is being calculated. Pre-incentive fee net investment income means interest income, dividend income, royalty payments, net profits interest payments, and any other income (including any other fees, such as commitment, origination, syndication, structuring, diligence, monitoring and consulting fees or other fees that we receive from portfolio companies) accrued during the fiscal quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the Administration Agreement, and any interest expense and distributions paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income that we have not yet received in cash. Accordingly, we may pay an incentive fee based partly on accrued investment income, the collection of which is uncertain or deferred. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses, or unrealized capital appreciation or depreciation. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets (defined as total assets less liabilities at the end of the immediately preceding fiscal quarter) is compared to a “hurdle rate” of 1.75% per quarter (7% annualized). OHA receives no incentive fee for any fiscal quarter in which our pre-incentive fee net investment income does not exceed the hurdle rate. OHA receives an incentive fee equal to 100% of our pre-incentive fee net investment income for any fiscal quarter in which our pre-incentive fee net investment income exceeds the hurdle rate but is less than 2.1875% (8.75% annualized) of net assets (also referred to as the “catch up” provision) plus 20% of our pre-incentive fee net investment income for such fiscal quarter greater than 2.1875% (8.75% annualized) of net assets.
The second part of the incentive fee, the capital gains incentive fee, is determined and payable in arrears as of the end of each fiscal year (or, upon termination of the Investment Advisory Agreement, as of the termination date). The capital gains incentive fee is equal to 20% of our cumulative aggregate realized capital gains from September 30, 2014 through the end of that fiscal year, computed net of our cumulative aggregate realized capital losses and cumulative aggregate unrealized depreciation on investments for the same time period. The aggregate amount of any previously paid capital gains incentive fees to OHA is subtracted from the capital gains incentive fee calculated. If such amount is negative, then there is no capital gains fee for such year. For the purposes of the capital gains incentive fee, any gains and losses associated with our investment portfolio as of September 30, 2014 shall be excluded from the capital gains incentive fee calculation. For the three months ended March 31, 2019 and 2018, we did not accrue any capital gains incentive fees for the three months ended March 31, 2019. For the three months ended March 31, 2018 we estimated $1 thousand in capital gain fees which was subject to the Incentive Fee Waiver Agreement discussed in the following paragraph.
On November 10, 2017, we entered into an Incentive Fee Waiver Agreement with OHA whereby OHA agreed to waive any incentive fees earned relating to fiscal years 2017 and 2018. Under the Incentive Fee Waiver Agreement, any capitalized gains fees that would have been earned and accrued during 2017 and 2018, which under our Investment Advisory Agreement would not have been paid until 2018 and 2019, respectively, has been waived. The Incentive Fee Waiver Agreement with OHA expired on December 31, 2018.
The Investment Advisory Agreement may be terminated at any time, without the payment of any penalty, by a vote of our Board of Directors or a vote of the holders of at least a majority of our outstanding voting securities (within the meaning of the 1940 Act) on 60 days’ written notice to OHA, and would automatically terminate in the event of its “assignment” (within the meaning of the 1940 Act). OHA may terminate the Investment Advisory Agreement without penalty by providing us at least 60 days’ written notice. Pursuant to the Investment Advisory Agreement, OHA pays the compensation expense of its investment professionals, who provide management and investment advisory services to us. We bear all other costs and expenses of our operations and transactions.
Administration Agreement
Under the Administration Agreement, OHA furnishes us with certain administrative services, personnel and facilities. The Administration Agreement was most recently approved by our Board of Directors on August 2, 2018. Payments under the Administration Agreement are equal to our allocable portion of OHA’s overhead in performing its obligations under the Administration Agreement, including all administrative services necessary for our operation and the conduct of our business. The Administration Agreement may be terminated at any time, without penalty, by a vote of our Board of Directors or by OHA upon 60 days’ written notice to the other party.
We owed $0.2 million and $0.6 million to OHA under the Administration Agreement as of March 31, 2019 and December 31, 2018, respectively, for expenses incurred on our behalf for the final month of the respective quarterly period. We include these amounts in accounts payable and due to affiliate on our Consolidated Balance Sheets.



19


OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 2019
(unaudited)

Note 5: Federal Income Taxes
We operate so as to qualify, for tax purposes, as a RIC under Subchapter M of Chapter 1 of the Code. As a RIC, we are generally not subject to corporate-level U.S. federal income taxes on the portion of our investment company taxable income and net capital gain (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) that we distribute to our stockholders. To qualify as a RIC, we are required, among other things, to distribute to our stockholders each year at least 90% of investment company taxable income, as defined by the Code, and to meet certain asset-diversification requirements.
Certain of our wholly owned subsidiaries, or Taxable Subsidiaries, have elected to be taxed as corporations for federal income tax purposes. The Taxable Subsidiaries hold certain of our portfolio investments and are consolidated for financial reporting purposes, but not for income tax reporting purposes. These Taxable Subsidiaries permit us to hold equity investments in portfolio companies that are “pass through” entities for tax purposes, in order to comply with the “source-of-income” requirements that must be satisfied to maintain our qualification as a RIC. The Taxable Subsidiaries may generate net income tax expense or benefit, which is reflected on our Consolidated Statements of Operations.
On December 22, 2017, the U.S. government enacted significant tax legislation commonly referred to as the Tax Act and Job Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including but not limited to, (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent, (2) repealing the Corporate Alternative Minimum Tax (AMT), (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, (4) creating a new limitation on deductible interest expense, (5) changing rules related to the use and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017 and (6) the requirement to pay a one-time transition tax on all undistributed earnings of foreign subsidiaries.
In connection with our analysis of the impact of the Tax Act, we recorded a net tax expense of approximately $12.2 million in the period ending December 31, 2017 which consisted of a reduction of deferred tax assets previously valued at 34%. This tax expense and reduction in deferred tax assets was fully offset by a simultaneous reduction in our valuation allowance. The reduction in the U.S. federal rate is expected to positively impact our future U.S. after tax earnings.
In addition, due to the Tax Act, we are eligible for a full refund of our AMT credit carryforward. Accordingly, the valuation allowance related to this AMT credit carryforward has been released in the amount of $632,000, or $0.03 per share. The valuation allowance related to other net deferred tax assets remains. Therefore, the associated valuation allowance has been released for the full AMT credit carryforward at this time.
Tax years from 2014 forward remain open to examination by the major taxing jurisdictions to which OHAI is subject; however, net operating losses originating in prior years are subject to examination when utilized. Our taxable subsidiaries have federal net operating loss carryforwards of $87.9 million of which $79.7 million expire in various years through 2037 and the remaining $8.2 million may be carried forward indefinitely as per the Tax Act. Federal and state laws impose limitations on the utilization of capital losses and NOLs in the event of an "ownership" change for tax purposes, as defined by Sections 382 and 383 of the Internal Revenue Code. An ownership change at either the RIC entity or Taxable Subsidiary level, if one were to occur, would limit our ability to use pre-ownership change NOLs to offset post-ownership change taxable income. An ownership change would also limit our ability to use pre-ownership change capital losses to offset post-ownership change capital gains.

Note 6: Commitments and Contingencies
As of March 31, 2019, we had investments in 27 active portfolio companies totaling $107.6 million (cost basis). Of these 27 active portfolio companies, OHAI had already funded investments in the amount of $107.6 million and there were outstanding unfunded commitments of $1.3 million related to our investment in the ClearChoice revolving credit facility, $2.9 million related to two new portfolio investments we committed to in the first quarter of 2019 that are not yet closed, and zero due to broker for unsettled trades. In February 2019, ClearChoice executed an amendment to the financing agreement which increased the amount committed by OHAI under the revolving line of credit from $1.6 million to $1.7 million and modified certain other loan covenants. As of December 31, 2018, we had investments in 26 active portfolio companies totaling $111.3 million. Of these 26 active portfolio companies, we had already funded investments in the amount of $108.1 million and there were outstanding unfunded commitments of $1.2 million related to our investment in ClearChoice revolving credit facility, $1.1 million related to an investment we committed to in December of 2018, and $3.3 million due to broker for unsettled trades.
We have continuing obligations under the Investment Advisory Agreement and the Administration Agreement with OHA. See Note 4. The agreements provide that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or the reckless disregard of its duties and obligations, OHA and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with OHA will be entitled to indemnification from us for any damages, liabilities, costs and

20


OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 2019
(unaudited)

expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of services under the agreements or otherwise as our investment advisor or administrator. The agreements also provide that OHA and its affiliates will not be liable to us or any stockholder for any error of judgment, mistake of law, any loss or damage with respect to any of our investments or any action taken or omitted to be taken by OHA in connection with the performance of any of its duties or obligations under the agreements or otherwise as investment advisor or administrator to us, except to the extent specified in Section 36(b) of the 1940 Act concerning loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services. In the normal course of business, we enter into a variety of undertakings containing a variety of representations that may expose us to some risk of loss. We do not expect significant losses, if any, from such undertakings.
In the second quarter ended June 30, 2018, we wrote off our investment in Castex Energy 2005, L.P., or Castex. Previously, Castex filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code on October 16, 2017. According to the filing, Castex and its affiliates in bankruptcy entered into a restructuring support agreement with pre-petition lenders holding approximately 86% in principal amount of claims under the pre-petition credit facility. On February 26, 2018, we agreed to a settlement and agreed to withdraw our confirmation objections to the Debtors' Joint Plan of Reorganization under Chapter 11 of the Bankruptcy code in exchange for the potential to receive some amount of cash and warrants in the reorganized company. This agreement was approved by the Bankruptcy court on February 27, 2018. At this time we are unable to determine the value of a recovery, if any, resulting from the settlement which will be dependent upon the ultimate pool of unsecured claims.
Legal Proceedings
From time to time, we are involved in various legal proceedings arising in the normal course of business. While we cannot predict the outcome of these proceedings with certainty, we do not believe that an adverse result in any pending legal proceeding, other than those described below, individually or in the aggregate, would be material to our business, financial condition or cash flows.
ATP Litigation. This matter is now concluded in our favor. As discussed extensively in prior reports, we filed a lawsuit against ATP Oil & Gas Corporation styled: OHA Investment Corporation v. ATP Oil and Gas Corporation, Adv. Proc. No. 10-03443, in the U.S. Bankruptcy Court for the Southern District of Texas. The claims asserted by the service companies or Statutory Lien Claimants were resolved in OHAI's favor by the United States Court of Appeals for the Fifth Circuit. The deadline for the Statutory Lien Claimants to file a petition for certiorari with the United States Supreme Court was September 4, 2018. No appeal was filed. Accordingly, we consider the matter concluded and the Fifth Circuit's decision final.
Status of Investment. As of March 31, 2019, our unrecovered investment was $41.7 million, and we had received aggregate royalty payments of $39.8 million since the date of ATP’s bankruptcy filing. As of March 31, 2019, we had incurred legal and consulting fees totaling $6.5 million in connection with the enforcement of our rights under the ORRIs. On various occasions, we have provided notice that such legal expenses will be added to our unrecovered investment balance to the extent they are not reimbursed. To date, we have not received any payments on account of legal expenses aside from our receipt of regular monthly production payments. As a result, we add our legal expenses to the unrecovered investment balance in accordance with our transaction documents. As of March 31, 2019, $6.5 million of the $6.5 million in legal and consulting fees have been added to, and are thus included in, the unrecovered investment balance under the terms of our transaction documents. $1.2 million in legal expenses have been added to our unrecovered investment balance during the three months ended March 31, 2019. Production recommenced on the MC941 and MC 942 wells in April 2018. Previously, these wells ceased production in November 2016 as a result of the Bennu Chapter 7 bankruptcy. In August 2017, the bankruptcy court authorized the sale of certain assets including MC 941 and MC 942 to Equinor, formerly known as StatOil USA E&P, Inc. Equinor recommenced production on these wells in April 2018. Equinor disputes that legal fees are eligible to be included in our unrecovered investment balance, but given that current production is not expected to be sufficient to pay the primary sum and notional interest accruing (which Equinor does not dispute), this legal fee issue is not ripe for debate and efforts are not currently ongoing to resolve it. We note that the fair value of our investment in ATP ORRI is $5.1 million as of March 31, 2019.


21


OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 2019
(unaudited)

Note 7: Fair Value
Our investments consisted of the following as of March 31, 2019 and December 31, 2018:
 
 
March 31, 2019
 
December 31, 2018
(Dollar amounts in thousands)
 
Cost
 
% of total
 
Fair Value
 
% of total
 
Cost
 
% of total
 
Fair Value
 
% of total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Portfolio investments
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

First lien secured debt
 
$
496

 
0.4
%
 
$
495

 
0.7
%
 
$
496

 
0.4
%
 
$
487

 
0.6
%
Revolving loan facility
 
362

 
0.3
%
 
358

 
0.5
%
 
361

 
0.3
%
 
336

 
0.4
%
Unsecured term loan
 
3,251

 
2.8
%
 
3,300

 
4.5
%
 
3,251

 
2.5
%
 
3,251

 
4.0
%
Second lien debt
 
49,076

 
41.7
%
 
49,059

 
66.9
%
 
47,212

 
37.4
%
 
46,770

 
58.0
%
Subordinated debt
 
26,075

 
22.2
%
 
5,078

 
6.9
%
 
31,064

 
24.6
%
 
9,984

 
12.4
%
Limited term royalties
 
25,839

 
22.0
%
 
5,052

 
6.9
%
 
26,450

 
20.9
%
 
4,778

 
6.0
%
Equity securities
 
2,500

 
2.1
%
 

 
%
 
2,500

 
2.0
%
 

 
%
Total portfolio investments
 
107,599

 
91.5
%
 
63,342

 
86.4
%
 
111,334

 
88.1
%
 
65,606

 
81.4
%
Government securities
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury Bills
 
9,996

 
8.5
%
 
9,996

 
13.6
%
 
14,989

 
11.9
%
 
14,989

 
18.6
%
Total investments
 
$
117,595

 
100.0
%
 
$
73,338

 
100.0
%
 
$
126,323

 
100.0
%
 
$
80,595

 
100.0
%
 
We account for all of the assets in our investment portfolio at fair value, following the provisions of the FASB ASC Fair Value Measurements, or 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.
On a quarterly basis, the investment team of our investment advisor prepares fair value recommendations for all of the assets in our portfolio in accordance with ASC 820 and presents them to the Audit Committee of our Board of Directors. The Audit Committee recommends fair values of each asset for which market quotations are not readily available to our Board of Directors, which in good faith determines the final fair value for each investment.
Investment Team Valuation. The investment professionals of our investment advisor prepare fair value recommendations for each investment.
Investment Team Valuation Documentation. The investment team documents and discusses its preliminary fair value recommendations with the investment committee and senior management of our investment advisor.
Third Party Valuation Activity. We may, at our discretion, retain an independent valuation firm to review any or all of the valuation analyses and fair value recommendations provided by the investment team of our investment advisor. Our general practice is that we have an independent valuation firm review all Level 3 investments (those whose value is determined using significant unobservable inputs) with recommended fair values in excess of $10 million on a quarterly basis, and review all Level 3 investments with recommended fair values greater than zero at least annually to provide positive assurance on our valuations.
Presentation to Audit Committee. Our investment advisor and senior management present the valuation analyses and fair value recommendations to the Audit Committee of our Board of Directors.
Board of Directors and Audit Committee. The Board of Directors and the Audit Committee review and discuss the valuation analyses and fair value recommendations provided by the investment team of our investment advisor and the independent valuation firm, if applicable.
Final Valuation Determination. Our Board of Directors discusses the fair values recommended by the Audit Committee and determines the fair value of each investment in our portfolio for which market quotations are not readily available, in good faith, based on the input of the investment team of our investment advisor, our Audit Committee and the independent valuation firm, if applicable.

22


OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 2019
(unaudited)

ASC 820 defines fair value as the price that a seller would receive for an asset or pay to transfer a liability in an orderly transaction between independent, knowledgeable and willing market participants at the measurement date. The fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes the use of observable market inputs over unobservable entity-specific inputs. In accordance with ASC 820, we categorize our investments based on the inputs to our valuation methodologies as follows:
Level 1 — Quoted unadjusted prices for identical instruments in active markets to which we have access at the date of measurement.
Level 2  — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.
Level 3 — Model-derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect our own assumptions regarding what market participants would use to price the asset or liability based on the best available information.
Fair value accounting classifies financial assets and liabilities in their entirety based on the lowest level of input that is significant to the estimated fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment that may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels. We did not have any liabilities measured at fair value at March 31, 2019 or December 31, 2018. Amounts outstanding under our Credit Facility are carried at amortized cost in the Consolidated Balance Sheets. As of March 31, 2019, the estimated fair value of our Credit Facility approximated its carrying value of $29.9 million. As of December 31, 2018, the fair value of our Credit Facility approximated its carrying value of $28.9 million. The estimated fair value of the Credit Facility is determined by discounting projected remaining payments using market interest rates for borrowings of OHAI.
The following tables set forth the fair value of our investments by level within the fair value hierarchy as of March 31, 2019 and December 31, 2018 (in thousands):
March 31, 2019
 
Total
 
Level 1
 
Level 2
 
Level 3
Portfolio investments
 
 

 
 

 
 

 
 

Affiliate investments
 
 
 
 
 
 
 
 
Subordinated debt
 
$
2,331

 
$

 
$

 
$
2,331

Total affiliate investments
 
2,331

 

 

 
2,331

Non-affiliate investments
 
 
 
 
 
 
 
 
First lien secured debt
 
495

 

 

 
495

Second lien debt
 
49,059

 

 
43,059

 
6,000

Subordinated debt
 
2,747

 

 
2,747

 

Limited term royalties
 
5,052

 

 

 
5,052

Revolving loan facility
 
358

 

 

 
358

Unsecured term loan
 
3,300

 

 
3,300

 

Total non-affiliate investments
 
61,011

 

 
49,106

 
11,905

Total portfolio investments
 
63,342

 

 
49,106

 
14,236

Government securities
 
 
 
 
 
 
 
 
U.S. Treasury Bills
 
9,996

 
9,996

 

 

Total investments
 
$
73,338

 
$
9,996

 
$
49,106

 
$
14,236

 

23


OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 2019
(unaudited)

December 31, 2018
 
Total
 
Level 1
 
Level 2
 
Level 3
Portfolio investments
 
 

 
 

 
 

 
 

Affiliate investments
 
 

 
 

 
 

 
 

Subordinated debt
 
$
2,271

 
$

 
$

 
$
2,271

Total affiliate investments
 
2,271

 

 

 
2,271

Non-affiliate investments
 
 

 
 

 
 

 
 

First lien secured debt
 
487

 

 

 
487

Second lien debt
 
46,770

 

 
40,890

 
5,880

Subordinated debt
 
7,713

 

 
7,713

 

Limited term royalties
 
4,778

 

 

 
4,778

Revolving loan facility
 
336

 

 

 
336

Unsecured term loan
 
3,251

 

 
3,251

 

Total non-affiliate investments
 
63,335

 

 
51,854

 
11,481

Total portfolio investments
 
65,606

 

 
51,854

 
13,752

Government securities
 
 

 
 

 
 

 
 

U.S. Treasury Bills
 
14,989

 
14,989

 

 

Total investments
 
$
80,595

 
$
14,989

 
$
51,854

 
$
13,752



24


OHA INVESTMENT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
March 31, 2019
(unaudited)

The following tables present roll-forwards of the changes in fair value for all investments for which we determine fair value using unobservable (Level 3) factors for the periods indicated (in thousands):
 
 
First
Lien Secured
Debt and
Limited Term
Royalties
 
Revolving Loan Facility
 
Second
Lien Debt
 
Subordinated
Debt and
Redeemable
Preferred Units
 
Total
Investments
For the three months ended March 31, 2019
 
 
 
 
 
 
Fair value at December 31, 2018
 
$
5,265

 
$
336

 
$
5,880

 
$
2,271

 
$
13,752

Total gains, (losses) and amortization:
 
 
 
 

 
 

 
 

Net realized gains (losses)
 

 

 

 

 

Net unrealized gains (losses)
 
893

 
21

 
118

 
60

 
1,092

Net amortization of premiums, discounts and fees
 

 
1

 
2

 

 
3

New investments, repayments and settlements, net:
 
 
 
 
 
 

 
 

 

New investments
 

 

 

 

 

Payment-in-kind
 
 
 

 

 

 

Repayments and settlements
 
(611
)
 

 

 

 
(611
)
Fair value at March 31, 2019
 
$
5,547

 
$
358

 
$
6,000

 
$
2,331

 
$
14,236

 
 
First
Lien Secured
Debt and
Limited Term
Royalties
 
Revolving Loan Facility
 
Subordinated
Debt and
Redeemable
Preferred Units
 
Equity Securities
 
CLO Residual Interests
 
Total
Investments
For the three months ended March 31, 2018
 
 
 
 
 
 
 
 
Fair value at December 31, 2017
 
$

 
$

 
$
18,015

 
$
164

 
$
209

 
$
18,388

Total gains, (losses) and amortization:
Net realized gains (losses)
 

 

 

 

 

 

Net unrealized gains (losses)
 

 

 
(1,004
)
 
(2
)
 
(27
)
 
(1,033
)
Net amortization of premiums, discounts and fees
 
(5
)
 
(16
)
 
16

 

 

 
(5
)
New investments, repayments and settlements, net:
 
 
 
 
 
 

 
 

 
 
 

New investments
 
500

 
563

 

 

 

 
1,063

Payment-in-kind
 

 

 
988

 

 

 
988

Repayments and settlements
 

 

 

 

 

 

Fair value at March 31, 2018
 
$