MIDCAP FINANCIAL INVESTMENT CORPORATION The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this report. Some of the statements in this report constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained herein involve risks and uncertainties, including statements as to: •our future operating results; •our business prospects and the prospects of our portfolio companies; •the impact of investments that we expect to make; •our contractual arrangements and relationships with third parties; •the dependence of our future success on the general economy and its impact on the industries in which we invest; •the ability of our portfolio companies to achieve their objectives; •our expected financings and investments; •the adequacy of our cash resources and working capital; •the current and future effects of the COVID-19 pandemic on us and our portfolio companies; and •the timing of cash flows, if any, from the operations of our portfolio companies. We generally use words such as "anticipates," "believes," "expects," "intends" and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including any factors set forth in "Risk Factors" and elsewhere in this report. We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with theSecurities and Exchange Commission ("SEC"), including any annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. OverviewApollo Investment Corporation (the "Company," "Apollo Investment ," "AIC," "we," "us," or "our") was incorporated under the Maryland General Corporation Law inFebruary 2004 . We have elected to be treated as a business development company ("BDC") under the Investment Company Act of 1940 (the "1940 Act"). As such, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in "qualifying assets," including securities of private or thinly traded publicU.S. companies, cash equivalents,U.S. government securities and high-quality debt investments that mature in one year or less. In addition, for federal income tax purposes we have elected to be treated as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). Pursuant to this election and assuming we qualify as a RIC, we generally do not have to pay corporate-level federal income taxes on any income we distribute to our stockholders. We commenced operations onApril 8, 2004 upon completion of our initial public offering that raised$870 million in net proceeds from selling 62 million shares of common stock at a price of$15.00 per share (20.7 million shares at a price of$45.00 per share adjusted for the one-for-three reverse stock split). Since then, and throughMarch 31, 2020 , we have raised approximately$2.21 billion in net proceeds from additional offerings of common stock and we have repurchased common stock for$223.1 million . 58 -------------------------------------------------------------------------------- Table of ContentsApollo Investment Management, L.P. (the "Investment Adviser" or "AIM") is our investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries ("AGM"). The Investment Adviser, subject to the overall supervision of our Board of Directors, manages the day-to-day operations of, and provides investment advisory services to the Company. AGM and other affiliates manage other funds that may have investment mandates that are similar, in whole or in part, with ours. AIM and its affiliates may determine that an investment is appropriate both for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, AIM may determine that we should invest on a side-by-side basis with one or more other funds. We make all such investments subject to compliance with applicable regulations and interpretations, and our allocation procedures. Certain types of negotiated co-investments may be made only in accordance with the terms of the exemptive order (the "Order") we received from theSEC permitting us to do so. Under the terms of the Order, a "required majority" (as defined in Section 57(o) of the 1940 Act) of our independent directors must be able to reach certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our Board of Directors' approved criteria. In certain situations where co-investment with one or more funds managed by AIM or its affiliates is not covered by the Order, the personnel of AIM or its affiliates will need to decide which fund will proceed with the investment. Such personnel will make these determinations based on allocation policies and procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. The Order is subject to certain terms and conditions so there can be no assurance that we will be permitted to co-invest with certain of our affiliates other than in the circumstances currently permitted by regulatory guidance and the Order.Apollo Investment Administration, LLC (the "Administrator" or "AIA"), an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. In addition to furnishing us with office facilities, equipment, and clerical, bookkeeping and recordkeeping services, AIA also oversees our financial records as well as prepares our reports to stockholders and reports filed with theSEC . AIA also performs the calculation and publication of our net asset value, the payment of our expenses and oversees the performance of various third-party service providers and the preparation and filing of our tax returns. Furthermore, AIA provides on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance. COVID-19 Developments InMarch 2020 , theWorld Health Organization declared the outbreak of a novel coronavirus (COVID-19) a pandemic, which has resulted in uncertainty and disruption in the global economy and financial markets. The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses. Such actions are creating disruption in global supply chains, and adversely impacting many industries. While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as that of our portfolio companies, for an indefinite period of time. Depending on the duration and extent of the disruption to the operations of our portfolio companies, we expect that certain portfolio companies will experience financial distress and possibly default on their financial obligations to us and their other capital providers. We also expect that some of our portfolio companies may significantly curtail business operations, furlough or lay off employees and terminate service providers, and defer capital expenditures if subjected to prolonged and severe financial distress, which would likely impair their business on a permanent basis. These developments would likely result in a decrease in the value of our investment in any such portfolio company. The COVID-19 pandemic and the related disruption and financial distress experienced by our portfolio companies may have material adverse effects on our investment income, particularly our interest income, received from our investments. In connection with the adverse effects of the COVID-19 pandemic, we may need to restructure our investments in some of our portfolio companies, which could result in reduced interest payments, an increase in the amount of PIK interest we receive, or result in permanent impairments on our investments. As ofMarch 31, 2020 , the fair value of our investments has been adversely impacted by the COVID-19 pandemic. Our investment valuations are inherently less certain than they would be absent the current and potential impacts of COVID-19 and the values assigned as of this date may materially differ from the values that may ultimately be realized. The downturn in the aviation industry from COVID-19 has resulted inMerx Aviation recording impairment losses related to aircraft leasing and impacted its financial condition. This may result in the further unrealized depreciation in value on the Company's investments in Merx. Further, any additional write downs in the value of our investments may reduce our net asset value. These events may also limit our investment origination pipeline and may increase our future funding costs. 59
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We have had a significant reduction in our net change in unrealized losses as ofMarch 31, 2020 as compared toMarch 31, 2019 , which is primarily the result of the impact of the COVID-19 pandemic. The decrease primarily resulted from an increase in the aggregate unrealized depreciation of our investment portfolio resulting from decreases in the fair value of some of our portfolio company investments primarily due to the immediate adverse economic effects of the COVID-19 pandemic and the continuing uncertainty surrounding its long-term impact, as well as the re-pricing of credit risk in the broadly syndicated credit market. We believe that the COVID-19 pandemic represents an extraordinary circumstance that materially impacts the fair value of our investments. As a result, the fair value of our portfolio investments may be negatively impacted afterMarch 31, 2020 by circumstances and events that are not yet known. We are also subject to financial risks, including changes in market interest rates. As ofMarch 31, 2020 , all of our debt portfolio investments bore interest at variable rates, which generally are LIBOR-based (or based on an equivalent applicable currency rate), and many of which are subject to certain floors. In connection with the COVID-19 pandemic, theU.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in in our operating expenses, including with respect to our income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR. See "Item 3. Quantitative and Qualitative Disclosures About Market Risk" for an analysis of the impact of hypothetical base rate changes in interest rates. Investments Our investment objective is to generate current income and capital appreciation. We invest primarily in various forms of debt investments, including secured and unsecured debt, loan investments, and/or equity in private middle-market companies. We may also invest in the securities of public companies and in structured products and other investments such as collateralized loan obligations ("CLOs") and credit-linked notes ("CLNs"). Our portfolio is comprised primarily of investments in debt, including secured and unsecured debt of private middle-market companies that, in the case of senior secured loans, generally are not broadly syndicated and whose aggregate tranche size is typically less than$250 million . Our portfolio may also include equity interests such as common stock, preferred stock, warrants or options. Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, the competitive environment for the types of investments we make and, more recently, market disruptions due to COVID-19.. As a BDC, we must not acquire any assets other than "qualifying assets" specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). As ofMarch 31, 2020 , non-qualifying assets represented approximately 17.2% of the total assets of the Company. Revenue We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment securities that we may acquire in portfolio companies. Our debt investments, whether in the form of mezzanine or senior secured loans, generally have a stated term of five to ten years and bear interest at a fixed rate or a floating rate usually determined on the basis of a benchmark, such as the London Interbank Offered Rate ("LIBOR"), the Euro Interbank Offered Rate ("EURIBOR"), the federal funds rate, or the prime rate. Interest on debt securities is generally payable quarterly or semiannually and whileU.S. subordinated debt and corporate notes typically accrue interest at fixed rates, some of our investments may include zero coupon and/or step-up bonds that accrue income on a constant yield to call or maturity basis. In addition, some of our investments provide for payment-in-kind ("PIK") interest or dividends. Such amounts of accrued PIK interest or dividends are added to the cost of the investment on the respective capitalization dates and generally become due at maturity of the investment or upon the investment being called by the issuer. We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable, consulting fees, etc. 60 -------------------------------------------------------------------------------- Table of Contents Expenses For all investment professionals of AIM and their staff, when and to the extent engaged in providing investment advisory and management services to us, the compensation and routine overhead expenses of that personnel which is allocable to those services are provided and paid for by AIM. We bear all other costs and expenses of our operations and transactions, including those relating to: •investment advisory and management fees; •expenses incurred by AIM payable to third parties, including agents, consultants or other advisors, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies; •calculation of our net asset value (including the cost and expenses of any independent valuation firm); •direct costs and expenses of administration, including independent registered public accounting and legal costs; •costs of preparing and filing reports or other documents with theSEC ; •interest payable on debt, if any, incurred to finance our investments; •offerings of our common stock and other securities; •registration and listing fees; •fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments; •transfer agent and custodial fees; •taxes; •independent directors' fees and expenses; •marketing and distribution-related expenses; •the costs of any reports, proxy statements or other notices to stockholders, including printing and postage costs; •our allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; •organizational costs; and •all other expenses incurred by us or the Administrator in connection with administering our business, such as our allocable portion of overhead under the administration agreement, including rent and our allocable portion of the cost of our Chief Financial Officer, Chief Legal Officer and Chief Compliance Officer and their respective staffs. We expect our general and administrative operating expenses related to our ongoing operations to increase moderately in dollar terms. During periods of asset growth, we generally expect our general and administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities relative to comparative periods, among other factors. 61 -------------------------------------------------------------------------------- Table of Contents Portfolio and Investment Activity Our portfolio and investment activity during the years endedMarch 31, 2020 andMarch 31, 2019 was as follows: Year Ended March 31, (in millions)* 2020 2019 Investments made in portfolio companies$ 1,866.3 $ 1,278.1 Investments sold (167.1) (205.2) Net activity before repaid investments 1,699.1 1,072.8 Investments repaid (1,098.5) (881.6) Net investment activity
Portfolio companies at beginning of period 113 90 Number of new portfolio companies 60 42 Number of exited portfolio companies (21) (19) Portfolio companies at end of period 152 113 Number of investments made in existing portfolio companies 87 46
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*Totals may not foot due to rounding.
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Our portfolio composition and weighted average yields as of March 31, 2020 and
March 31, 2019 were as follows:
March 31, 2020 March 31, 2019
Portfolio composition, at fair value:
First lien secured debt 81 % 66 %
Second lien secured debt 13 % 23 %
Total secured debt 94 % 89 %
Unsecured debt - -
Structured products and other 0 % 2 %
Preferred equity 0 % 1 %
Common equity/interests and warrants 6 % 8 %
Weighted average yields, at amortized cost (1):
First lien secured debt (2) 8.5 % 9.9 %
Second lien secured debt (2) 10.2 % 11.4 %
Secured debt portfolio (2) 8.7 % 10.2 %
Unsecured debt portfolio (2) - -
Total debt portfolio (2) 8.7 % 10.2 %
Total portfolio (3) 8.0 % 9.6 %
Interest rate type, at fair value (4):
Fixed rate amount - -
Floating rate amount$2.2 billion $1.5 billion Fixed rate, as percentage of total -
-
Floating rate, as percentage of total 100 % 100 % Interest rate type, at amortized cost (4): Fixed rate amount -
-
Floating rate amount$2.3 billion $1.5 billion Fixed rate, as percentage of total -
-
Floating rate, as percentage of total 100 %
100 %
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(1)An investor's yield may be lower than the portfolio yield due to sales loads and other expenses. (2)Exclusive of investments on non-accrual status. (3)Inclusive of all income generating investments, non-income generating investments and investments on non-accrual status. (4)The interest rate type information is calculated using the Company's corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status. Since the initial public offering ofApollo Investment inApril 2004 and throughMarch 31, 2020 , invested capital totaled$21.2 billion in 538 portfolio companies. Over the same period,Apollo Investment completed transactions with more than 100 different financial sponsors. Recent Developments OnJanuary 3, 2020 ,James C. Zelter , a member of the Board of Directors of the Company, tendered a letter of resignation from the Board effective immediately, which was accepted by the Board. There was no disagreement betweenMr. Zelter and the Company on any matter relating to the Company's operations, policies or practices. In accordance with the Company's Articles of Incorporation, the number of directors will remain ten. The Board may seek to fill the resulting vacancy.Mr. Zelter will continue to serve as Co-President of AGM. 63 -------------------------------------------------------------------------------- Table of Contents Critical Accounting Policies Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States of America ("GAAP"). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, gains and losses. Changes in the economic environment, financial markets, credit worthiness of portfolio companies and any other parameters used in determining such estimates could cause actual results to differ materially. In addition to the discussion below, our critical accounting policies are further described in the notes to the financial statements. Fair Value Measurements The Company follows guidance in ASC 820, Fair Value Measurement ("ASC 820"), where fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are determined within a framework that establishes a three-tier hierarchy which maximizes the use of observable market data and minimizes the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the inputs for the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities may not be an indication of the risks associated with investing in those assets or liabilities. ASC 820 classifies the inputs used to measure these fair values into the following hierarchy: Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date. Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices. Level 3: Unobservable inputs for the asset or liability. In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may differ materially from the values that would be received upon an actual disposition of such investments. As ofMarch 31, 2020 ,$2.79 billion or 100.0% of the Company's investments were classified as Level 3. The high proportion of Level 3 investments relative to our total investments is directly related to our investment philosophy and target portfolio, which consists primarily of long-term secured debt, as well as unsecured and mezzanine positions of private middle-market companies. A fundamental difference exists between our investments and those of comparable publicly traded fixed income investments, namely high-yield bonds, and this difference affects the valuation of our private investments relative to comparable publicly traded instruments. Senior secured loans, or senior loans, are higher in the capital structure than high-yield bonds, and are typically secured by assets of the borrowing company. This improves their recovery prospects in the event of default and affords senior loans a structural advantage over high-yield bonds. Many of the Company's investments are also privately negotiated and contain covenant protections that limit the issuer to take actions that could harm us as a creditor. High-yield bonds typically do not contain such covenants. Given the structural advantages of capital seniority and covenant protection, the valuation of our private debt portfolio is driven more by investment specific credit factors than movements in the broader debt capital markets. Each security is evaluated individually and as indicated below, we value our private investments based upon a multi-step valuation process, including valuation recommendations from independent valuation firms. 64 -------------------------------------------------------------------------------- Table of Contents Investment Valuation Process Under procedures established by our Board of Directors, we value investments, including certain secured debt, unsecured debt, and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value). We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker, primary market dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are deemed not to represent fair value, we typically utilize independent third party valuation firms to assist us in determining fair value. Accordingly, such investments go through our multi-step valuation process as described below. In each case, our independent valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations for such investments. Investments purchased within the quarter before the valuation date and debt investments with remaining maturities of 60 days or less may each be valued at cost with interest accrued or discount accreted/premium amortized to the date of maturity (although they are typically valued at available market quotations), unless such valuation, in the judgment of our Investment Adviser, does not represent fair value. In this case, such investments shall be valued at fair value as determined in good faith by or under the direction of our Board of Directors, including using market quotations where available. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of our Board of Directors. Such determination of fair values may involve subjective judgments and estimates. With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, our Board of Directors has approved a multi-step valuation process each quarter, as described below: 1.Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of our Investment Adviser who are responsible for the portfolio investment. 2.Preliminary valuation conclusions are then documented and discussed with senior management of our Investment Adviser. 3.Independent valuation firms are engaged by our Board of Directors to conduct independent appraisals by reviewing our Investment Adviser's preliminary valuations and then making their own independent assessment. 4.The Audit Committee of the Board of Directors reviews the preliminary valuation of our Investment Adviser and the valuation prepared by the independent valuation firms and responds, if warranted, to the valuation recommendation of the independent valuation firms. 5.The Board of Directors discusses valuations and determines in good faith the fair value of each investment in our portfolio based on the input of our Investment Adviser, the applicable independent valuation firm, and the Audit Committee of the Board of Directors. 6.For Level 3 investments entered into within the current quarter, the cost (purchase price adjusted for accreted original issue discount/amortized premium) or any recent comparable trade activity on the security investment shall be considered to reasonably approximate the fair value of the investment, provided that no material change has since occurred in the issuer's business, significant inputs or the relevant environment. 65 -------------------------------------------------------------------------------- Table of Contents Investments determined by these valuation procedures which have a fair value of less than$1 million during the prior fiscal quarter may be valued based on inputs identified by the Investment Adviser without the necessity of obtaining valuation from an independent valuation firm, if once annually an independent valuation firm using the procedures described herein provides a valuation. Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, seniority of investment in the investee company's capital structure, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When readily available, broker quotations and/or quotations provided by pricing services are considered in the valuation process of independent valuation firms. During the year endedMarch 31, 2020 , there were no significant changes to the Company's valuation techniques and related inputs considered in the valuation process. Investment Income Recognition The Company records interest and dividend income, adjusted for amortization of premium and accretion of discount, on an accrual basis. Some of our loans and other investments, including certain preferred equity investments, may have contractual PIK interest or dividends. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date. Certain PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are reversed from the related receivable through interest or dividend income, respectively. The Company does not reverse previously capitalized PIK interest or dividends. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if the Company believes that PIK is expected to be realized. Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in management's judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on non-accrual designated investments may be recognized as income or applied to principal depending upon management's judgment. Loan origination fees, original issue discount ("OID"), and market discounts are capitalized and accreted into interest income over the respective terms of the applicable loans using the effective interest method or straight-line, as applicable. Upon the prepayment of a loan, prepayment premiums, any unamortized loan origination fees, OID, or market discounts are recorded as interest income. Other income generally includes amendment fees, administrative fees, management fees, bridge fees, and structuring fees which are recorded when earned. The Company records as dividend income the accretable yield from its beneficial interests in structured products such as CLOs based upon a number of cash flow assumptions that are subject to uncertainties and contingencies. Such assumptions include the rate and timing of principal and interest receipts (which may be subject to prepayments and defaults) of the underlying pools of assets. These assumptions are updated on at least a quarterly basis to reflect changes related to a particular security, actual historical data, and market changes. A structured product investment typically has an underlying pool of assets. Payments on structured product investments are payable solely from the cash flows from such assets. As such, any unforeseen event in these underlying pools of assets might impact the expected recovery and future accrual of income. 66 -------------------------------------------------------------------------------- Table of Contents Expenses Expenses include management fees, performance-based incentive fees, insurance expenses, administrative service fees, legal fees, directors' fees, audit and tax service expenses, third-party valuation fees and other general and administrative expenses. Expenses are recognized on an accrual basis. Net Realized Gains (Losses) and Net Change in Unrealized Gains (Losses) We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized, but considering unamortized upfront fees and prepayment penalties. Net change in unrealized gain (loss) reflects the net change in portfolio investment values during the reporting period, including the reversal of previously recorded unrealized gains or losses. Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported. Results of Operations For information regarding results of operations for the year endedMarch 31, 2018 , see the Company's Form 10-K for the fiscal year endedMarch 31, 2019 .
Operating results for the years ended
Year Ended March 31,
(in millions)* 2020 2019
Investment Income
Interest income (excluding Payment-in-kind ("PIK") interest
income) $ 249.6 $ 223.1
Dividend income 8.8 15.3
PIK interest income 10.9 8.6
Other income 7.6 8.1
Total investment income $ 276.9 $ 255.1
Expenses
Management and performance-based incentive fees, net of
amounts waived $ 42.3 $ 51.4
Interest and other debt expenses, net of reimbursements 73.3 58.0
Administrative services expense, net of reimbursements 6.0 6.5
Other general and administrative expenses 10.0 11.4
Net Expenses $ 131.6 $ 127.3
Net Investment Income $
145.3
$ (6.3) $ (50.0)
Net change in unrealized gains (losses) (255.0) (5.8)
Net Realized and Change in Unrealized Gains (Losses) $
(261.3)
$
(116.0)
Net Investment Income on Per Average Share Basis (1) $ 2.16$ 1.81 Earnings per share - basic (1) $
(1.73)
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*Totals may not foot due to rounding.
(1)Based on the weighted average number of shares outstanding for the period
presented.
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-------------------------------------------------------------------------------- Table of Contents Total Investment Income For the year endedMarch 31, 2020 as compared to the year endedMarch 31, 2019 The increase in total investment income of$21.8 million for the year endedMarch 31, 2020 compared to the year endedMarch 31, 2019 was primarily driven by the increase in total interest income (including PIK) of$28.9 million . The increase in total interest income (including PIK) was due to an increase in the income-bearing investment portfolio. This was partially offset by a decrease in average yield for the total debt portfolio to 9.4% from 10.4%. Furthermore, there was a increase in prepayment fees and income recognized from the acceleration of discount, premium, or deferred fees on repaid investments which totaled$9.2 million and$8.4 million for the year endedMarch 31, 2020 and year endedMarch 31, 2019 , respectively. The decrease in dividend income of$6.5 million was due to a decrease in dividends fromMerx Aviation Finance, LLC , which totaled$2.5 million for the year endedMarch 31, 2020 compared to$9.4 million for the year endedMarch 31, 2019 . Furthermore, there was a decrease in other income of$0.5 million primarily due to lower bridge fees. Net Expenses For the year endedMarch 31, 2020 as compared to the year endedMarch 31, 2019 The increase in net expenses of$4.3 million for the year endedMarch 31, 2020 compared to the year endedMarch 31, 2019 was primarily due to the increase in interest and other debt expenses. The increase of interest and other debt expenses of$15.2 million was due to the change in the average debt outstanding and net leverage from$0.99 billion and 0.83x, respectively during the year endedMarch 31, 2019 , to$1.53 billion and 1.71x, respectively during the year endedMarch 31, 2020 . This was partially offset by the decrease in the weighted average interest cost from 5.31% for the year endedMarch 31, 2019 to 4.42% for the year endedMarch 31, 2020 . The increase in net expenses was partially offset by a decrease in management and performance-based incentive fees (net of amounts waived) of$9.0 million which was due to lower performance based incentive fee expenses (net of amounts waived) of$1.9 million for the year endedMarch 31, 2020 from$15.6 million for the year endedMarch 31, 2019 . Performance based incentive fees for the year endedMarch 31, 2020 were lower as a total return based fee became effectiveJanuary 1, 2019 . Furthermore, the decrease of$1.4 million in other general and administrative expenses was primarily due to a decrease in legal fees from$5.2 million for the year endedMarch 31, 2019 to$3.5 million for the year endedMarch 31, 2020 . Net Realized Gains (Losses) During the year endedMarch 31, 2020 , we recognized gross realized gains of$18.2 million and gross realized losses of$24.5 million , resulting in net realized losses of$6.3 million . Significant realized gains (losses) for the year endedMarch 31, 2020 are summarized below: (in millions) Net Realized Gain (Loss) Asset Repackaging Trust Six B.V. (Israel Electric) $ 7.0 Renew Financial LLC (f/k/a Renewable Funding, LLC) 2.8 SquareTwo (CA Holdings, Collect America, Ltd.) 1.2 NFA Group 1.0
(9.0)
Crowne Automotive (6.4)
Solarplicity Group Limited (f/k/a AMP Solar UK ) (4.7)
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-------------------------------------------------------------------------------- Table of Contents During the year endedMarch 31, 2019 , we recognized gross realized gains of$2.6 million and gross realized losses of$52.6 million , resulting in net realized losses of$50.0 million . Significant realized gains (losses) for the year endedMarch 31, 2019 are summarized below: (in millions) Net Realized Gain
(Loss)
Renew Financial LLC (f/k/aRenewable Funding, LLC ) $
2.0
WTI Crude Oil Call/Put Options
(30.0)
Accelerate Parent Corp. (American Tire )
(10.1)
Elements Behavioral Health, Inc.
(11.9) *
*Elements Behavioral Health, Inc. was written off during the period as no proceeds were expected to be realized and the realized loss was previously recorded as an unrealized loss. Net Change in Unrealized Gains (Losses) During the year endedMarch 31, 2020 , we recognized gross unrealized gains of$16.6 million and gross unrealized losses of$271.7 million , including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized losses of$255.0 million . The net change is primarily due to the immediate adverse economic effects of the COVID-19 pandemic and the continuing uncertainty surrounding its long-term impact, as well as the re-pricing of credit risk in the broadly syndicated credit market and was not the result of changes to expectations regarding the collectability of principal amounts outstanding. Additional significant changes in unrealized gains (losses) for the year endedMarch 31, 2020 are summarized below: Net Change in Unrealized (in millions) Gain (Loss) Crowne Automotive $ 6.8 AMP Solar Group, Inc. 2.5 Sprint Industrial Holdings, LLC. 2.2 BioClinica Holding I, LP 1.1 Spotted Hawk (63.2)
(32.4)
Merx Aviation Finance, LLC (25.8)
Glacier Oil & Gas Corp. (f/k/a Miller Energy Resources, Inc. ) (25.6)
Renew Financial LLC (f/k/a Renewable Funding, LLC ) (15.6)
KLO Holdings, LLC (10.7)
MYCOM (7.0)
Asset Repackaging Trust Six B.V. (Israel Electric ) (6.2)
ZPower, LLC (4.7)
Solarplicity Group Limited (f/k/a AMP Solar UK ) (4.7)
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-------------------------------------------------------------------------------- Table of Contents During the year endedMarch 31, 2019 , we recognized gross unrealized gains of$66.5 million and gross unrealized losses of$72.3 million , including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized losses of$5.8 million . Significant changes in unrealized gains (losses) for the year endedMarch 31, 2019 are summarized below: Net Change in Unrealized (in millions) Gain (Loss) WTI Crude Oil Call/Put Options $ 19.1 Elements Behavioral Health, Inc. 11.9 Merx Aviation Finance, LLC 11.9 Sprint Industrial Holdings, LLC. 5.8 Asset Repackaging Trust Six B.V. (Israel Electric) 3.3 AMP Solar Group, Inc. 1.2 MSEA Tankers LLC 1.1 Glacier Oil & Gas Corp. (f/k/a Miller Energy Resources, Inc.) (17.0) Crowne Automotive (7.1) Renew Financial LLC (f/k/a Renewable Funding, LLC) (6.6) Dynamic Product Tankers (Prime), LLC (6.3) Solarplicity Group Limited (f/k/a AMP Solar UK) (5.5) Accelerate Parent Corp. (American Tire) (2.6) BioClinica Holding I, LP (1.8) LabVantage Solutions (1.6) Pelican (1.6) Niacet Corporation (1.5) 70
-------------------------------------------------------------------------------- Table of Contents Liquidity and Capital Resources The Company's liquidity and capital resources are generated and generally available through periodic follow-on equity and debt offerings, our Senior Secured Facility (as defined in Note 8 to the financial statements), our senior secured notes, our senior unsecured notes, investments in special purpose entities in which we hold and finance particular investments on a non-recourse basis, as well as from cash flows from operations, investment sales of liquid assets and repayments of senior and subordinated loans and income earned from investments. For liquidity and capital resources information for the year endedMarch 31, 2018 , see the Company's Form 10-K for the fiscal year endedMarch 31, 2019 . We believe that our current cash and cash equivalents on hand, our short-term investments, proceeds from the sale of our 2025 Notes, our available borrowing capacity under our Senior Secured Facility and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months. This "Liquidity and Capital Resources" section should be read in conjunction with "Our Response to COVID-19" above. The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only securities with a maturity of three months or less from the date of purchase would qualify, with limited exceptions. The Company deems that certain money market funds,U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities would qualify as cash equivalents (See Note 2 to the financial statements.) At the end of each fiscal quarter, we consider taking proactive steps utilizing cash equivalents with the objective of enhancing our investment flexibility during the following quarter, pursuant to Section 55 of the 1940 Act. More specifically, we may purchaseU.S. Treasury bills from time-to-time on the last business day of the quarter and typically close out that position on the following business day, settling the sale transaction on a net cash basis with the purchase, subsequent to quarter end.Apollo Investment may also utilize repurchase agreements or other balance sheet transactions, including drawing down on our Senior Secured Facility, as we deem appropriate. The amount of these transactions or such drawn cash for this purpose is excluded from total assets for purposes of computing the asset base upon which the management fee is determined. Debt See Note 8 to the financial statements for information on the Company's debt. The following table shows the contractual maturities of our debt obligations as ofMarch 31, 2020 : Payments Due by Period (in millions) Total Less than 1 Year 1 to 3 Years 3 to 5 Years More than 5 Years
Senior Secured Facility (1)
$ - $ 1,449.4 $ -
2025 Notes 350.0 - - 350.0 -
Total Debt Obligations $ 1,799.4 $ - $ - $ 1,799.4 $ -
____________________
(1)As of March 31, 2020 , aggregate lender commitments under the Senior Secured
Facility totaled $1.81 billion and have $354.4 million of unused capacity. As of
March 31, 2020 , there were $6.2 million of letters of credit issued under the
Senior Secured Facility as shown as part of total commitments in Note 10 to the
financial statements.
Stockholders' Equity
See Note 9 to the financial statements for information on the Company's public
offerings and share repurchase plans.
Distributions
Distributions paid to stockholders during the years ended March 31, 2020 and
2019 totaled $121.8 million ($1.80 per share) and $128.0 million ($1.80 per
share), respectively. For income tax purposes, distributions made to
stockholders are reported as ordinary income, capital gains, non-taxable return
of capital, or a combination thereof. Although the tax character of
distributions paid to stockholders through March 31, 2020 may include return of
capital, the exact amount cannot be determined at this point. The final
determination of the tax character of distributions will not be made until we
file our tax return for the tax year ended March 31, 2020 . Tax characteristics
of all distributions will be reported to stockholders on Form 1099 after the end
of the calendar year. Our quarterly distributions, if any, will be determined by
our Board of Directors.
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To maintain our RIC status, we must distribute at least 90% of our ordinary
income and realized net short-term capital gains in excess of realized net
long-term capital losses, if any, at least annually, out of the assets legally
available for distribution. Although we currently intend to distribute realized
net capital gains (i.e., net long-term capital gains in excess of short-term
capital losses), if any, at least annually, out of the assets legally available
for such distributions, we may in the future decide to retain such capital gains
for investment. Currently, we have substantial net capital loss carryforwards
and consequently do not expect to generate cumulative net capital gains in the
foreseeable future.
We maintain an "opt out" dividend reinvestment plan for our common stockholders.
As a result, if we declare a dividend, then stockholders' cash dividends will be
automatically reinvested in additional shares of our common stock, unless they
specifically "opt out" of the dividend reinvestment plan so as to receive cash
dividends.
We may not be able to achieve operating results that will allow us to make
distributions at a specific level or to increase the amount of these
distributions from time to time. In addition, due to the asset coverage test
applicable to us as a BDC, we may in the future be limited in our ability to
make distributions. Also, our revolving credit facility may limit our ability to
declare dividends if we default under certain provisions or fail to satisfy
certain other conditions. If we do not distribute a certain percentage of our
income annually, we may suffer adverse tax consequences, including possible loss
of the tax benefits available to us as a RIC. In addition, in accordance with
GAAP and tax regulations, we include in income certain amounts that we have not
yet received in cash, such as contractual PIK, which represents contractual
interest added to the loan balance that becomes due at the end of the loan term,
or the accrual of original issue or market discount. Since we may recognize
income before or without receiving cash representing such income, we may not be
able to meet the requirement to distribute at least 90% of our investment
company taxable income to obtain tax benefits as a RIC.
With respect to the distributions to stockholders, income from origination,
structuring, closing, commitment and other upfront fees associated with
investments in portfolio companies is treated as taxable income and accordingly,
distributed to stockholders.
PIK Income
For the years ended March 31, 2020 and 2019, PIK income totaled $10.9 million
and $8.6 million on total investment income of $276.9 million and $255.1
million , respectively. In order to maintain the Company's status as a RIC, this
non-cash source of income must be paid out to stockholders annually in the form
of distributions, even though the Company has not yet collected the cash. See
Note 5 to the financial statements for more information on the Company's PIK
income.
Related Party Transactions
See Note 3 to the financial statements for information on the Company's related
party transactions.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates.
During the year ended March 31, 2020 , many of the loans in our portfolio had
floating interest rates. These loans are usually based on LIBOR and typically
have durations of one to six months after which they reset to current market
interest rates. The Company also has a Senior Secured Facility that is based on
LIBOR rates.
The following table shows the estimated annual impact on net investment income
of base rate changes in interest rates (considering interest rate flows for
variable rate instruments) to our loan portfolio and outstanding debt as of
March 31, 2020 , assuming no changes in our investment and borrowing structure:
Basis Point Change Net Investment Income Net Investment Income Per Share
Up 200 basis points $ 12.4 million $ 0.190
Up 100 basis points 6.0 million 0.092
Down 100 basis points 2.7 million 0.042
Down 200 basis points 1.9 million 0.030
We may hedge against interest rate fluctuations from time-to-time by using
standard hedging instruments such as futures, options and forward contracts
subject to the requirements of the 1940 Act and applicable commodities laws.
While hedging activities may insulate us against adverse changes in interest
rates, they may also limit our ability to participate in the benefits of lower
interest rates with respect to our portfolio of investments.
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Item 8. Financial Statements and Supplementary Data
Index to Financial StatementsPage
Management's Report on Internal Control Over Financial Reporting
74
Report of Independent Registered Public Accounting Firm
75
Statements of Assets and Liabilities
77
Statements of Operations
78
Statements of Changes in Net Assets 79
Statements of Cash Flows 80
Schedules of Investments 81
Notes to Financial Statements 134
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Management's Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal
control over financial reporting, and for performing an assessment of the
effectiveness of internal control over financial reporting as of March 31, 2020 .
Internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. The Company's internal control over
financial reporting includes those policies and procedures that (i) pertain to
assets of the Company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company's assets that could have a
material effect on the financial statements.
Management performed an assessment of the effectiveness of the Company's
internal control over financial reporting as of March 31, 2020 based upon
criteria in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based
on our assessment, management determined that the Company's internal control
over financial reporting was effective as of March 31, 2020 based on the
criteria on Internal Control - Integrated Framework issued by COSO.
The effectiveness of the Company's internal control over financial reporting as
of March 31, 2020 has been audited by PricewaterhouseCoopers LLP , an independent
registered public accounting firm, as stated in their report which appears
herein.
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, ofApollo Investment Corporation (the "Company") as ofMarch 31, 2020 and 2019, and the related statements of operations, changes in net assets and cash flows for each of the three years in the period endedMarch 31, 2020 , including the related notes (collectively referred to as the "financial statements"). We also have audited the Company's internal control over financial reporting as ofMarch 31, 2020 , based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of theTreadway Commission (COSO). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofMarch 31, 2020 and 2019, and the results of its operations, changes in its net assets and its cash flows for each of the three years in the period endedMarch 31, 2020 in conformity with accounting principles generally accepted inthe United States of America . Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as ofMarch 31, 2020 , based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company's financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with thePublic Company Accounting Oversight Board (United States ) (PCAOB) and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as ofMarch 31, 2020 and 2019 by correspondence with the custodian, administrative agents and portfolio companies. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (i) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of
As described in Notes 2 and 5 to the financial statements, level 3 investments represent 100% of the$2,785 million of investments held as ofMarch 31, 2020 . Management values its level 3 investments through a multi-step valuation process. As a part of that multi-step valuation process, the Board of Directors and the Audit Committee of the Board of Directors review the valuation models and assumptions prepared by the investment professionals of the Company's investment advisor and valuations prepared by independent third-party valuation firms. The Company's level 3 investments are valued using market quotations when readily available, if and when market quotations are unavailable or deemed not representative of fair value, the level 3 investments are valued using a market approach, an income approach, or both approaches, as determined to be appropriate by management. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) discounted to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that management may take into account in fair value pricing investments include observable market inputs together with significant unobservable inputs, including as relevant comparable company multiples, discount rates, commodity prices, expected volatility, recoverable amounts, liquidation, and recent transactions. The principal considerations for our determination that performing procedures relating to the valuation of level 3 investments is a critical audit matter are there was significant judgment by management to determine the fair value of these level 3 investments, which included significant unobservable inputs related to comparable company multiples and discount rates. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing audit procedures and evaluating the audit evidence obtained related to the comparable company multiples and discount rates. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the effectiveness of controls relating to the valuation of Level 3 investments, including controls over the Company's methods, data, and significant unobservable inputs. These procedures also included, among others, testing the completeness, accuracy, reliability, and relevance of key data used in the models and the involvement of professionals with specialized skill and knowledge to assist in either (i) testing management's process, which entails evaluating the appropriateness of the methodology applied by management and the reasonableness of significant unobservable inputs used in the methodology, specifically comparable company multiples and discount rates for certain investments, as applicable; or (ii) developing an independent fair value range for the investments, and comparison of the fair value range to the fair value estimates prepared by management for certain investments.
/s/
New York, New York May 21, 2020
We have served as the Company's auditor since 2004.
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APOLLO INVESTMENT CORPORATION
STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except share and per share data)
March 31, 2020 March 31, 2019 Assets
Investments at fair value: Non-controlled/non-affiliated investments (cost -$2,298,548 and$1,654,322 , respectively)
60,241 49,681
Controlled investments (cost -
533,865 731,045
Cash and cash equivalents 37,301 36,280
Foreign currencies (cost - $6,369 and $4,963 , respectively) 6,375 4,909
Receivable for investments sold 978 336
Interest receivable 19,151 24,280
Dividends receivable 5,034 3,748
Deferred financing costs 16,054 19,776
Prepaid expenses and other assets 732 336
Total Assets $ 2,871,058 $ 2,497,797
Liabilities
Debt $ 1,794,617 $ 1,128,686
Payable for investments purchased - 677
Distributions payable 29,367 31,040
Management and performance-based incentive fees payable 10,289 8,880
Interest payable 2,887 5,818
Accrued administrative services expense 2,796 2,983
Other liabilities and accrued expenses 6,787 7,086
Total Liabilities $ 1,846,743 $ 1,185,170
Commitments and contingencies (Note 10)
Net Assets
Net Assets
Common stock,
$ 65 $ 69
Capital in excess of par value 2,099,876 2,155,836
Accumulated under-distributed (over-distributed) earnings (1,075,626) (843,278)
Net Assets $ 1,024,315 $ 1,312,627
Net Asset Value Per Share $ 15.70 $ 19.06
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended March 31,
2020 2019 2018
Investment Income
Non-controlled/non-affiliated investments:
Interest income (excluding Payment-in-kind ("PIK") interest income) $ 201,908 $ 164,186 $ 157,076
Dividend income 331 4 -
PIK interest income 7,208 3,365 7,176
Other income 7,609 8,135 6,548
Non-controlled/affiliated investments:
Interest income (excluding PIK interest income) 484 - 266
Dividend income 1,286 1,198 2,528
PIK interest income 515 - 7,626
Other income - - (306)
Controlled investments:
Interest income (excluding PIK interest income) 47,212 58,868 55,781
Dividend income 7,150 14,100 17,153
PIK interest income 3,213 5,220 5,439
Other income - - -
Total Investment Income $ 276,916 $ 255,076 $ 259,287
Expenses
Management fees
1,983 21,190 28,710
Interest and other debt expenses 73,398 58,319 53,039
Administrative services expense 6,335 6,772 6,915
Other general and administrative expenses 9,999 11,378 9,599
Total expenses 132,075 133,392 146,200
Management and performance-based incentive fees waived - (5,542) (19,718)
Expense reimbursements (433) (523) (582)
Net Expenses $ 131,642 $ 127,327 $ 125,900
Net Investment Income
(731) 2,007 (167,416)
Controlled investments - - -
Option contracts - (29,995) (4,275)
Foreign currency transactions 4,816 64 15,851 Extinguishment of debt (4,375) - (5,790) Net realized gains (losses) (6,318) (50,033) (258,128) Net change in unrealized gains (losses): Non-controlled/non-affiliated investments (80,303) (5,454) 86,870 Non-controlled/affiliated investments (57,714) (12,403) 173,674 Controlled investments (116,183) (11,571) 7,622 Option contracts - 19,145 (19,145) Foreign currency translations (820) 4,513 (37,251) Net change in unrealized gains (losses) (255,020) (5,770) 211,770 Net Realized and Change in Unrealized Gains (Losses)
$ (1.73) $ 1.02 $ 1.19 See notes to financial statements. 78
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APOLLO INVESTMENT CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS
(In thousands, except share data)
Year Ended
2020 2019 2018
Operations
Net investment income$ 145,274 $ 127,749 $ 133,387 Net realized gains (losses) (6,318) (50,033) (258,128) Net change in unrealized gains (losses) (255,020) (5,770) 211,770
Net Increase (Decrease) in Net Assets Resulting from Operations
$ (116,064)
Distributions to Stockholders Distribution of net investment income$ (120,107) $ (112,042) $ (86,906) Distribution of return of capital - (14,533) (44,088)
Net Increase (Decrease) in Net Assets Resulting from Distributions to Stockholders
$ (120,107)
Capital Share Transactions
Repurchase of common stock$ (52,141)
$ (52,141)
Net Assets Net decrease in net assets during the period$ (288,312) $ (105,459) $ (63,711) Net assets at beginning of period 1,312,627 1,418,086 1,481,797 Net Assets at End of Period$ 1,024,315
Capital Share Activity
Shares repurchased during the period (3,617,810) (3,227,046) (1,127,519)
Shares issued and outstanding at beginning of period 68,876,986 72,104,032 73,231,551
Shares Issued and Outstanding at End of Period 65,259,176 68,876,986 72,104,032
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended March 31,
2020 2019 2018Operating Activities Net increase (decrease) in net assets resulting from operations
$ (116,064) $ 71,946 $ 87,029 Net realized (gains) losses 6,318 50,033 258,128 Net change in unrealized (gains) losses 255,020 5,770 (211,770)
Net amortization of premiums and accretion of discounts on investments
(9,458) (6,430) (6,616)
Accretion of discount on notes 595 593 593
Amortization of deferred financing costs 5,015 4,842 4,739
Increase in gains/(losses) from foreign currency
transactions 4,816 64 15,850
PIK interest and dividends capitalized (20,083) (6,412) (14,616)
Changes in operating assets and liabilities:
Purchases of investments (1,866,949) (1,319,211) (1,021,505)
Proceeds from sales and repayments of investments 1,256,910 1,083,139 1,181,545
Purchases of option contracts - - (12,627)
Proceeds from option contracts - - 8,330
Net settlement of option contracts - (9,002) (20,970)
Decrease (increase) in interest receivable 5,110 (2,012) (5,199)
Decrease (increase) in dividends receivable (1,286) (1,198) 3,939
Decrease (increase) in prepaid expenses and other assets (396) 83 294
Increase (decrease) in management and performance-based incentive fees payable
1,409 (7,705) 279
Increase (decrease) in interest payable (2,931) 508 (2,009)
Increase (decrease) in accrued administrative services expense
(187) 476 257
Increase (decrease) in other liabilities and accrued expenses
(299) 1,884 (1,873)
Net Cash Used in/Provided by Operating Activities $ (482,460) $ (132,632) $ 263,798
Financing Activities
Issuances of debt $ 1,450,431 $ 973,250 $ 1,123,983
Payments of debt (790,778) (631,000) (1,226,945)
Financing costs paid and deferred (844) (9,908) (522)
Repurchase of common stock (52,141) (50,830) (19,746)
Distributions paid (121,781) (127,980) (131,502)
Net Cash Used in/Provided Financing Activities $ 484,887 Cash, Cash Equivalents, Foreign Currencies and Collateral on Option Contracts Net increase (decrease) in cash, cash equivalents, foreign currencies and collateral on option contracts during the period
$ 2,427
60 (60) 3
Cash, cash equivalents, foreign currencies and collateral on option contracts at beginning of period
41,189 20,349 11,280
Cash, Cash Equivalents, Foreign Currencies and Collateral on Option Contracts at the End of Period
$ 43,676
Supplemental Disclosure of Cash Flow Information Cash interest paid$ 70,748 $ 52,436 $ 49,595 Non-Cash Activity PIK income$ 10,936 $ 8,585 $ 20,241 See notes to financial statements. 80
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Par/Shares Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date (12) Cost (28) (1)(29)
Advertising, Printing & Publishing
Learfield Communications
A-L Parent LLC Second Lien Secured Debt 8.25% (1M L+725, 1.00% 12/02/24 $ 5,536 $ 5,503 $ 4,882
Floor)
Simplifi Holdings, Inc.
Simplifi Holdings, Inc. First Lien Secured Debt 7.20% (3M L+575, 1.00% 08/02/25 38,829 38,188 37,164 (9)
Floor)
First Lien Secured Debt - 7.20% (1M L+575, 1.00% 08/02/25 1,200 1,200 1,148 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 08/02/25 1,200 (49) (51) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 08/02/25 6,091 (57) (187) (8)(9)(21)(23)
Unfunded Delayed Draw
39,282 38,074
Total Advertising , Printing & Publishing $ 44,785 $ 42,956
Aerospace & Defense
Erickson Inc
Erickson Inc First Lien Secured Debt - 9.41% (3M L+750, 1.50% 04/28/22 $ 31,812 $ 31,812 $ 31,096 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 04/28/22 7,425 (233) (167) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 7.50% 04/30/20 - 1,263 - (27) (8)(9)(23)
Letters of Credit 07/15/22
31,579 30,902
PAE Holding Corporation
PAE Holding Corporation Second Lien Secured Debt 10.50% (1M L+950, 1.00% 10/20/23 13,637 13,462 12,353
Floor)
Total Aerospace & Defense $ 45,041 $ 43,255
Automotive
Accelerate Parent Corp. (American Tire )
Accelerate Parent Corp. Common Equity/Interests - N/A N/A 1,664,046 1,714 250 (13)(19)
Common Stock Shares
Arlington
Arlington Industries Group First Lien Secured Debt 5.75% (1M E+525, 0.50% 03/29/24 € 3,189 3,572 3,309 (9)(17)
Limited Floor)
First Lien Secured Debt 5.87% (1M GBPL+525, 0.50% 03/29/24 £ 7,818 9,972 9,204 (9)(17)
Floor)
First Lien Secured Debt - 1.25% Unfunded 03/29/24 £ 2,700 (57) (191) (8)(9)(17)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 1.00% Unfunded 03/29/24 £ 1,300 (28) (77) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
13,459 12,245
Crowne Automotive
Vari-Form Group, LLC First Lien Secured Debt L+11.00% (7.00% Cash plus 02/02/23 5,859 937 762 (9)(13)(14)
4.00% PIK)
Vari-Form Inc. First Lien Secured Debt L+11.00% (7.00% Cash plus 02/02/23 2,110 391 274 (9)(13)(14)
4.00% PIK)
1,328 1,036
K&N Parent, Inc.
K&N Parent, Inc. Second Lien Secured Debt 9.82% (3M L+875, 1.00% 10/21/24 23,765 23,489 22,220
Floor)
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Par/Shares Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date (12) Cost (28) (1)(29)
Truck-Lite Co., LLC
Truck-Lite Co., LLC First Lien Secured Debt 7.32% (6M L+625, 1.00% 12/14/26 25,148 24,573 24,446 (9)
Floor)
First Lien Secured Debt - 7.25% (1M L+625, 1.00% 12/13/24 1,308 1,308 1,277 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.32% (6M L+625, 1.00% 12/13/24 654 654 638 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 12/13/24 1,005 (67) (24) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 7.25% 11/30/20 - 85 - (2) (8)(9)(23)
Letters of Credit 12/21/20
First Lien Secured Debt - 1.00% Unfunded 12/14/26 3,707 (84) (103) (8)(9)(21)(23)
Unfunded Delayed Draw
TL Lighting Holdings , Common Equity/Interests - N/A N/A 350 Shares 350 241 (9)(13)
LLC Class A Common Units
26,734 26,473
Total Automotive $ 66,724 $ 62,224
Aviation and Consumer Transport
Merx Aviation Finance, LLC
Merx Aviation Finance, First Lien Secured Debt - 12.00% 10/31/23 $ 305,300 $ 305,300 $ 305,300 (23)
LLC (5) Revolver
First Lien Secured Debt - 2.25% 07/13/20 177 - - (23)
Letter of Credit
Common Equity/Interests - N/A N/A N/A 15,000 28,447
Membership Interests
320,300 333,747
PrimeFlight
PrimeFlight Aviation First Lien Secured Debt 6.50% (1M L+550, 1.00% 05/09/24 13,367 13,184 12,790 (9)
Services, Inc. Floor)
First Lien Secured Debt 7.02% (1M L+550, 1.00% 05/09/24 1,375 1,362 1,316 (9)
Floor)
First Lien Secured Debt - 0.50% Unfunded 05/09/24 2,842 (85) (122) (8)(9)(21)(23)
Unfunded Delayed Draw
14,461 13,984
Total Aviation and Consumer Transport $ 334,761 $ 347,731
Beverage, Food & Tobacco
Bolthouse Farms
Wm. Bolthouse Farms, Common Equity/Interests - N/A N/A 1,000,000 $ 1,000 $ 940 (13)
Inc. Common Stock Shares
Eagle Foods
Eagle Foods Family Group, First Lien Secured Debt 8.68% (6M L+675, 1.00% 06/14/24 $ 24,562 24,369 23,703 (9)
LLC Floor)
First Lien Secured Debt - 7.75% (1M L+675, 1.00% 06/14/23 167 167 161 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.75% (3M L+675, 1.00% 06/14/23 333 333 322 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.95% (3M L+675, 1.00% 06/14/23 167 167 161 (9)(23)
Revolver Floor)
First Lien Secured Debt - 8.36% (6M L+675, 1.00% 06/14/23 667 667 643 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 06/14/23 2,417 (27) (85) (8)(9)(21)(23)
Unfunded Revolver
25,676 24,905
Florida Food Products, Inc.
Florida Food Products, First Lien Secured Debt 8.20% (3M L+675, 1.00% 09/08/25 22,938 22,492 22,594 (9)
Inc. Floor)
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Par/Shares Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date (12) Cost (28) (1)(29)
Florida Food Products, First Lien Secured Debt - 7.75% (1M L+675, 1.00% 09/06/23 240 240 236 (9)(23)
LLC Revolver Floor)
First Lien Secured Debt - 8.20% (3M L+675, 1.00% 09/06/23 1,473 1,443 1,450 (9)(23)
Revolver Floor)
24,175 24,280
Orgain, Inc.
Butterfly Fighter Common Equity/Interests - N/A N/A 1,000,000 1,000 1,000 (13)
Co-Invest, L.P. Membership Interests Shares
TNT Crust LLC
TNT Crust LLC First Lien Secured Debt 7.75% (1M L+675, 1.00% 11/06/23 20,618 20,318 20,102 (9)
Floor)
First Lien Secured Debt 8.01% (1M L+675, 1.00% 11/06/23 4,878 4,785 4,756 (9)
Floor)
First Lien Secured Debt - 7.75% (1M L+675, 1.00% 11/06/23 748 748 729 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 11/06/23 2,504 (50) (63) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 1.00% Unfunded 11/06/23 976 (43) (24) (8)(9)(21)(23)
Unfunded Delayed Draw
Common Equity/Interests - N/A N/A 244 Shares 30 275 (9)(13)
Series A Units
25,788 25,775
Turkey Hill
IC Holdings LLC Common Equity/Interests - N/A N/A 169 Shares 169 153 (9)(13)
Series A Units
THLP CO. LLC First Lien Secured Debt 6.50% (1M L+550, 1.00% 05/30/25 19,562 19,225 19,268 (9)
Floor)
First Lien Secured Debt - 7.75% (P+450) 05/31/24 2,247 2,247 2,213 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 05/31/24 2,247 (75) (34) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 1.00% Unfunded 05/30/25 5,618 (33) (84) (8)(9)(21)(23)
Unfunded Delayed Draw
21,533 21,516
Total Beverage, Food & Tobacco $ 99,172 $ 98,416
Business Services
Access Information
Access CIG, LLC Second Lien Secured Debt 9.53% (3M L+775) 02/27/26 $ 15,900 $ 15,789 $ 15,299
Ambrosia Buyer Corp.
Ambrosia Buyer Corp. Second Lien Secured Debt 9.08% (3M L+800, 1.00% 08/28/25 21,429 21,066 17,751
Floor)
Claritas
Claritas, LLC First Lien Secured Debt 7.45% (3M L+600, 1.00% 12/21/23 3,845 3,815 3,787 (9)
Floor)
First Lien Secured Debt - 7.00% (1M L+600, 1.00% 12/21/23 619 619 609 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.26% (1M L+600, 1.00% 12/21/23 129 129 127 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 12/21/23 284 (8) (4) (8)(9)(21)(23)
Unfunded Revolver
4,555 4,519
Continuum
Continuum Global First Lien Secured Debt - 7.08% (1M L+550, 1.00% 02/15/22 8,791 8,791 8,527 (9)(23)
Solutions, LLC Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 02/15/22 11,209 (304) (336) (8)(9)(21)(23)
Unfunded Revolver
Preferred Equity - Preferred N/A N/A 775 Shares 78 78 (9)(13)
Stock
8,565 8,269
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
CT Technologies Intermediate Holdings, Inc
CT Technologies Second Lien Secured 10.45% (3M L+900, 12/01/22 31,253 30,803 27,815 (9)
Intermediate Holdings, Debt 1.00% Floor)
Inc
Education Personnel
Education Personnel First Lien Secured 5.42% (3M GBPL+475, 08/31/24 £ 4,076 5,190 4,790 (9)(17)
Debt 0.50% Floor)
First Lien Secured 5.42% (3M GBPL+475, 08/31/24 £ 1,471 1,873 1,727 (9)(17)(23)
Debt - Revolver 0.50% Floor)
7,063 6,517
Electro Rent Corporation
Electro Rent Corporation Second Lien Secured 10.64% (3M L+900, 01/31/25 34,235 33,546 33,208 (9)
Debt 1.00% Floor)
Elo Touch
TGG TS Acquisition First Lien Secured 7.40% (3M L+650) 12/14/23 500 500 480 (23)
Company Debt - Revolver
First Lien Secured 0.50% Unfunded 12/14/23 1,250 - (50) (8)(21)(23)
Debt - Unfunded
Revolver
500 430
Ensemble Health
EHL Merger Sub, LLC First Lien Secured 6.00% (P+275) 08/01/24 1,662 1,662 1,512 (23)
Debt - Revolver
First Lien Secured 0.25% Unfunded 08/01/24 2,493 (330) (224) (8)(21)(23)
Debt - Unfunded
Revolver
1,332 1,288
Jacent
Jacent Strategic First Lien Secured 7.36% (3M L+575, 04/23/24 22,579 22,304 21,315 (9)
Merchandising Debt 1.00% Floor)
First Lien Secured 7.36% (3M L+575, 04/23/24 1,400 1,400 1,320 (9)(23)
Debt - Revolver 1.00% Floor)
First Lien Secured 6.82% (3M L+575, 04/23/24 467 467 440 (9)(23)
Debt - Revolver 1.00% Floor)
First Lien Secured 7.53% (3M L+575, 04/23/24 700 700 660 (9)(23)
Debt - Revolver 1.00% Floor)
First Lien Secured 6.75% (3M L+575, 04/23/24 933 891 880 (9)(23)
Debt - Revolver 1.00% Floor)
Common Equity - N/A N/A 5,000 Shares 500 204 (9)(13)
Common Stock
26,262 24,819
Jones & Frank
JF Acquisition, LLC First Lien Secured 6.77% (3M L+550, 07/31/24 5,272 5,179 5,087 (9)
Debt 1.00% Floor)
First Lien Secured 7.28% (3M L+550, 07/31/24 8,118 7,977 7,832 (9)
Debt 1.00% Floor)
First Lien Secured 6.50% (1M L+550, 07/31/24 628 600 605 (9)(23)
Debt - Revolver 1.00% Floor)
First Lien Secured 7.28% (3M L+550, 07/31/24 188 188 182 (9)(23)
Debt - Revolver 1.00% Floor)
First Lien Secured 7.75% (P+450) 07/31/24 753 753 726 (9)(23)
Debt - Revolver
14,697 14,432
MAKS
Trident Bidco Limited First Lien Secured 7.25% (1M L+625, 11/08/25 35,000 34,019 33,649 (9)(17)
Debt 1.00% Floor)
McLarens
Margaux Acquisition Inc. First Lien Secured 7.41% (3M L+550, 12/19/24 18,800 18,526 17,800 (9)
Debt 1.00% Floor)
First Lien Secured 6.50% (1M L+550, 12/19/24 1,601 1,576 1,516 (9)(23)
Debt - Revolver 1.00% Floor)
First Lien Secured 1.00% Unfunded 12/19/24 4,461 (92) (236) (8)(9)(21)(23)
Debt - Unfunded
Delayed Draw
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
Margaux UK Finance First Lien Secured Debt 6.50% (3M GBPL+550, 12/19/24 £ 5,896 7,332 6,930 (9)(17)
Limited 1.00% Floor)
First Lien Secured Debt - 6.50% (1M GBPL+550, 12/19/24 £ 538 632 631 (9)(17)(23)
Revolver 1.00% Floor)
First Lien Secured Debt - 0.50% Unfunded 12/19/24 £ 4 (11) - (8)(9)(17)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 1.00% Unfunded 12/19/24 £ 1,353 (27) (89) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
27,936 26,552
Ministry Brands, LLC
Ministry Brands, LLC Second Lien Secured Debt 10.51% (2M L+925, 06/02/23 10,000 9,925 9,795
1.00% Floor)
Newscycle Solutions, Inc.
Newscycle Solutions , First Lien Secured Debt 8.45% (3M L+700, 1.00% 12/29/22 14,641 14,434 14,202 (9)
Inc. Floor)
First Lien Secured Debt 8.58% (3M L+700, 1.00% 12/29/22 1,131 1,121 1,097 (9)
Floor)
First Lien Secured Debt - 8.00% (1M L+700, 1.00% 12/29/22 40 33 39 (9)(23)
Revolver Floor)
First Lien Secured Debt - 8.45% (1M L+700, 1.00% 12/29/22 460 460 446 (9)(23)
Revolver Floor)
16,048 15,784
PSI Services, LLC
Lifelong Learner First Lien Secured Debt 6.75% (1M L+575, 1.00% 10/19/26 32,865 32,234 31,334 (9)
Holdings, LLC Floor)
First Lien Secured Debt - 6.75% (3M L+575, 1.00% 10/20/25 478 478 457 (9)(23)
Revolver Floor)
First Lien Secured Debt - 6.87% (3M L+575, 1.00% 10/20/25 1,373 1,373 1,315 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.33% (3M L+575, 1.00% 10/20/25 239 239 229 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.71% (3M L+575, 1.00% 10/20/25 299 299 286 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 10/20/25 597 (55) (25) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.00% Unfunded 10/19/26 2,388 (18) (111) (8)(9)(21)(23)
Unfunded Delayed Draw
34,550 33,485
RA Outdoors, LLC (Active Outdoors)
RA Outdoors, LLC First Lien Secured Debt 5.82% (6M L+475, 1.00% 09/11/24 6,626 6,542 6,428 (9)
Floor)
First Lien Secured Debt - 0.50% Unfunded 09/09/22 1,200 (12) (24) (8)(9)(21)(23)
Unfunded Revolver
Second Lien Secured Debt 9.82% (6M L+875, 1.00% 09/11/25 31,950 31,404 30,352 (9)
Floor)
37,934 36,756
Soliant
Soliant Holdings, LLC First Lien Secured Debt 6.50% (1M L+550, 1.00% 12/31/26 18,064 17,715 17,587 (9)
Floor)
First Lien Secured Debt - 6.50% (1M L+550, 1.00% 12/31/24 323 323 310 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 12/31/24 1,614 (37) (62) (8)(9)(21)(23)
Unfunded Revolver
Soliant Health, Inc. Common Equity/Interests - N/A N/A 300 Shares 300 300 (9)(13)
Common Stock
18,301 18,135
Transplace Holdings, Inc.
Transplace Holdings, Second Lien Secured Debt 9.82% (3M L+875, 1.00% 10/06/25 8,599 8,449 8,169
Inc. Floor)
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
US Legal Support
US Legal Support Common Equity/Interests - N/A N/A 631,972 Shares 632 623 (9)(13)
Investment Holdings, LLC Series A-1 Units
USLS Acquisition, Inc. First Lien Secured Debt 6.82% (6M L+575, 1.00% 12/02/24 24,498 24,111 23,630 (9)
Floor)
First Lien Secured Debt - 6.82% (6M L+575) 12/02/24 1,522 1,497 1,436 (9)(23)
Revolver
First Lien Secured Debt - 5.75% 06/06/20 - 86 - (5) (8)(9)(23)
Letters of Credit 12/21/20
26,240 25,684
Vertafore
Vertafore, Inc. First Lien Secured Debt - 0.50% Unfunded 06/30/23 14,576 (1,121) (1,676) (8)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 3.25% 01/17/21 424 - (49) (8)(23)
Letter of Credit
(1,121) (1,725)
Total Business Services $ 376,459 $ 360,631
Chemicals, Plastics & Rubber
Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC )
Carbonfree Caustic SPE LLC First Lien Secured Debt 5.00% 12/31/24 $ 13,111 $ 13,111 $ 13,111 (4)
Carbonfree Chemicals SPE I First Lien Secured Debt 3.00% 12/31/24 17,057 17,057 4,389 LLC (f/k/aMaxus Capital Carbon SPE I LLC ) (4) Carbonfree Chemicals Common Equity/Interests - N/A N/A 1,446 Shares 30,886 15,105 (13) Holdings LLC (4) Common StockCarbonfree Chemicals SA Common Equity/Interests - N/A N/A 1,313 Shares 15,403 - (13) LLC (4) Class B Units 76,457 32,605 Niacet Corporation Hare Bidco, Inc. Second Lien Secured Debt 9.75% (1M E+875) 08/01/24 € 13,574 14,506 14,671Westfall Technik, Inc. Westfall Technik, Inc. First Lien Secured Debt 7.20% (3M L+575, 1.00%09/13/24 15,268 15,033 14,839 (9)
Floor)
First Lien Secured Debt 7.02% (3M L+575, 1.00% 09/13/24 671 665 653 (9)
Floor)
First Lien Secured Debt - 7.21% (3M L+550, 1.00% 09/13/24 135 105 131 (9)(23)
Revolver Floor)
First Lien Secured Debt - 8.00% (P+475) 09/13/24 1,885 1,885 1,831 (9)(23)
Revolver
First Lien Secured Debt - 1.00% Unfunded 09/13/24 12,829 (112) (360) (8)(9)(21)(23)
Unfunded Delayed Draw
17,576 17,094
Total Chemicals, Plastics & Rubber $ 108,539 $ 64,370 Construction & Building EnglertGutter Buyer, Inc. First Lien Secured Debt 7.25% (1M L+625, 1.00%03/06/25 $ 26,915 $ 26,479 $ 25,873 (9) Floor) First Lien Secured Debt - 8.50% (P+525)03/06/24 2,727 2,674 2,621 (9)(23) Revolver First Lien Secured Debt - 1.00% Unfunded03/06/25 2,045 (42) (79) (8)(9)(21)(23) Unfunded Delayed DrawGutter Holdings, LP Common Equity/Interests - N/A N/A 500 Shares 500 558 (9)(13) Common StockTotal Construction & Building $ 29,611 $ 28,973 See notes to financial statements. 86
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Table of Contents
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28)
(1)(29)
Consumer Goods - Durable
A&V
A&V Holdings Midco, First Lien Secured Debt 5.75% (3M L+475, 1.00% 03/10/27 $ 11,137 $ 11,027 $ 11,027
LLC Floor)
First Lien Secured Debt - 5.50% (1M L+450, 1.00% 03/10/25 813 813 805 (23)
Revolver Floor)
First Lien Secured Debt - 5.50% (3M L+450, 1.00% 03/10/25 90 90 89 (23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 03/10/25 602 (134) (6) (8)(21)(23)
Unfunded Revolver
11,796 11,915
Dan Dee
Project Comfort Buyer, First Lien Secured Debt 8.00% (6M L+700, 1.00% 02/03/25 26,283 25,665 24,969 (9)
Inc. Floor)
First Lien Secured Debt 9.25% (P+600) 02/03/25 867 846 823 (9)
First Lien Secured Debt - 0.50% Unfunded 02/01/24 3,461 (80) (173) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 02/03/25 2,308 (28) (115) (8)(9)(21)(23)
Unfunded Delayed Draw
Preferred Equity - Preferred N/A N/A 461,538 Shares 462 231 (9)(13)
Stock
26,865 25,735
Hayward Industries, Inc.
Hayward Industries, Second Lien Secured Debt 9.24% (1M L+825) 08/04/25 21,919 21,693 20,639
Inc.
KDC
KDC US Holdings First Lien Secured Debt - 5.50% (P+225) 12/21/23 5,731 5,732 5,173 (23)
Revolver
First Lien Secured Debt - 0.25% Unfunded 12/21/23 214 - (22) (8)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 3.25% 11/06/20 - 65 - (6) (8)(23)
Letters of Credit 03/08/21
First Lien Secured Debt - 3.25% 02/05/21 £ 10 - - (8)(23)
Letter of Credit
5,732 5,145
KLO Holdings, LLC
9357-5991 Quebec Inc. First Lien Secured Debt 11.82% (3M L+775 Cash 04/07/22 9,562 8,653 2,118 (13)(14)
plus 2.00% PIK)
KLO Acquisition LLC First Lien Secured Debt 11.82% (3M L+775 Cash 04/07/22 5,373 4,838 30 (13)(14)
plus 2.00% PIK)
13,491 2,148
NSi Industries
Wildcat BuyerCo, Inc. First Lien Secured Debt 7.14% (3M L+550, 1.00% 02/27/26 6,087 5,946 5,946
Floor)
First Lien Secured Debt - 0.50% Unfunded 02/27/26 717 (16) (16) (8)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 5.50% 08/30/20 8 - - (23)
Letter of Credit
First Lien Secured Debt - 0.00% Unfunded 02/27/26 3,188 (35) (72) (8)(21)(23)
Unfunded Delayed Draw
Wildcat Parent LP Common Equity/Interests - N/A N/A 1,000 Shares 100 100 (13)
Common Stock
5,995 5,958
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
Liqui-Box
Liqui-Box Holdings, First Lien Secured Debt - 5.95% (3M L+450, 1.00% 02/26/25 475 475 470 (23)
Inc. Revolver Floor)
First Lien Secured Debt - 5.50% (3M L+450, 1.00% 02/26/25 712 712 705 (23)
Revolver Floor)
First Lien Secured Debt - 5.73% (3M L+450, 1.00% 02/26/25 1,186 1,186 1,175 (23)
Revolver Floor)
First Lien Secured Debt - 5.77% (3M L+450, 1.00% 02/26/25 712 712 705 (23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 02/26/25 401 (35) (4) (8)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 4.50% 09/27/20 - 32 - - (23)
Letters of Credit 10/01/20
First Lien Secured Debt - 4.50% 06/30/21 € 42 - - (23)
Letter of Credit
3,050 3,051
Sorenson Holdings, LLC
Sorenson Holdings, LLC Common Equity/Interests - N/A N/A 587 Shares - 418 (10)(13)
Membership Interests
Total Consumer Goods - Durable $ 88,622 $ 75,009
Consumer Goods - Non-durable
3D Protein
Protein For Pets Opco, First Lien Secured Debt 6.00% (1M L+500, 1.00% 11/28/25 $ 12,717 $ 12,495 $ 12,399 (9)
LLC Floor)
First Lien Secured Debt - 6.22% (3M L+500, 1.00% 05/31/24 444 444 433 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 05/31/24 1,775 (48) (44) (8)(9)(21)(23)
Unfunded Revolver
12,891 12,788
Beauty Industry Group (BIG)
BIG Buyer, LLC First Lien Secured Debt 7.57% (6M L+650, 1.00% 11/20/23 22,368 21,889 21,504 (9)
Floor)
First Lien Secured Debt - 7.57% (6M L+650, 1.00% 11/20/23 120 120 114 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.50% (1M L+650, 1.00% 11/20/23 602 602 570 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 11/20/23 1,083 (39) (57) (8)(9)(21)(23)
Unfunded Revolver
22,572 22,131
DMC
Lion Cashmere Midco First Lien Secured Debt 6.75% (6M L+575, 1.00% 03/21/25 13,053 12,863 11,969 (9)(17)
Limited Floor)
First Lien Secured Debt - 5.75% (3M E+525) 03/21/24 € 356 392 357 (9)(17)(23)
Revolver
First Lien Secured Debt - 5.75% (6M E+525) 03/21/24 € 605 655 608 (9)(17)(23)
Revolver
First Lien Secured Debt - 5.86% (6M GBPL+525) 03/21/24 € 225 247 226 (9)(17)(23)
Revolver
First Lien Secured Debt - 2.01% Unfunded 03/21/25 € 2,371 (39) (216) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
14,118 12,944
Olaplex
Olaplex, Inc. First Lien Secured Debt 7.50% (1M L+650, 1.00% 01/08/26 26,200 25,696 25,696 (9)
Floor)
First Lien Secured Debt - 7.50% (1M L+650, 1.00% 01/08/25 3,800 3,727 3,724 (9)(23)
Revolver Floor)
29,423 29,420
See notes to financial statements.
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Table of Contents
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
Sequential Brands Group, Inc.
Sequential Brands Second Lien Secured 9.75% (1M L+875) 02/07/24 12,965 $ 12,882 $ 12,289 (17)
Group, Inc. Debt
Total Consumer Goods - Non-durable $ 91,886 $ 89,572
Consumer Services
1A Smart Start LLC
1A Smart Start LLC Second Lien Secured 9.32% (3M L+825, 1.00% 08/22/22 $ 25,100 $ 24,842 $ 24,282
Debt Floor)
Clarus Commerce
Marlin DTC-LS Midco 2, First Lien Secured 6.57% (6M L+550, 1.00% 07/01/25 9,245 9,103 8,806
LLC Debt Floor)
First Lien Secured 0.50% Unfunded 07/01/25 685 (10) (33) (8)(21)(23)
Debt - Unfunded
Revolver
9,093 8,773
First Heritage
First Heritage Credit, First Lien Secured 6.33% (1M L+475) 04/02/22 18,450 18,340 17,959 (9)
LLC Debt
First Lien Secured 7.08% (1M L+550) 04/02/22 517 517 504 (9)(23)
Debt - Revolver
First Lien Secured 0.50% Unfunded 04/02/22 3,233 (25) (83) (8)(9)(21)(23)
Debt - Unfunded
Revolver
First Lien Secured 0.50% Unfunded 04/02/22 7,800 (65) (207) (8)(9)(21)(23)
Debt - Unfunded
Delayed Draw
18,767 18,173
Only About Children
Nemo (BC) Bidco Pty Ltd First Lien Secured 6.75% (1M BBSW+575, 04/06/24 A$ 6,768 4,923 3,894 (17)
Debt 1.00% Floor)
First Lien Secured 2.59% Unfunded 04/06/24 A$ 232 (7) (9) (8)(17)(21)(23)
Debt - Unfunded
Delayed Draw
4,916 3,885
Paper Source
Paper Source, Inc. First Lien Secured 8.78% (3M L+700, 1.00% 05/22/24 11,620 11,427 10,981 (9)
Debt Floor)
First Lien Secured 9.25% (P+600) 05/22/24 1,890 1,890 1,786 (9)(23)
Debt - Revolver
First Lien Secured 8.70% (3M L+700, 1.00% 05/22/24 205 154 194 (9)(23)
Debt - Revolver Floor)
First Lien Secured 8.74% (3M L+700, 1.00% 05/22/24 411 411 388 (9)(23)
Debt - Revolver Floor)
First Lien Secured 8.83% (3M L+700, 1.00% 05/22/24 205 205 194 (9)(23)
Debt - Revolver Floor)
First Lien Secured 8.85% (3M L+700, 1.00% 05/22/24 370 370 350 (9)(23)
Debt - Revolver Floor)
14,457 13,893
Pinstripe Holdings, LLC
Pinstripe Holdings, First Lien Secured 7.08% (6M L+600, 1.00% 01/17/25 6,930 6,819 6,547
LLC Debt Floor)
The Club Company
Eldrickco Limited First Lien Secured 6.04% (3M GBPL+550, 11/21/25 £ 750 938 869 (9)(17)
Debt 0.50% Floor)
First Lien Secured 6.23% (3M GBPL+550, 11/21/25 £ 9,914 12,376 11,336 (9)(17)
Debt 0.50% Floor)
First Lien Secured 5.52% (3M GBPL+500, 05/21/25 £ 345 394 394 (9)(17)(23)
Debt - Revolver 0.50% Floor)
First Lien Secured 1.93% Unfunded 11/21/25 £ 3,991 (104) (326) (8)(9)(17)(21)(23)
Debt - Unfunded
Delayed Draw
13,604 12,273
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
Tidewater Consumer Receivables, LLC
Tidewater Consumer First Lien Secured 7.33% (1M L+575) 12/28/23 11,333 11,248 11,090 (9)(17)
Receivables, LLC Debt
First Lien Secured Debt 7.33% (1M L+575) 12/28/23 1,537 1,537 1,504 (9)(17)(23)
- Revolver
First Lien Secured Debt 0.00% Unfunded 12/28/23 130 (9) (3) (8)(9)(17)(21)(23)
- Unfunded Revolver
12,776 12,591
US Auto
U.S. Auto Finance, Inc. First Lien Secured 6.33% (3M L+475) 04/17/22 20,893 20,824 20,351 (9)
Debt
First Lien Secured Debt 7.08% (3M L+550) 04/17/22 3,052 3,052 2,973 (9)(23)
- Revolver
First Lien Secured Debt 0.50% Unfunded 04/17/22 16,948 (71) (441) (8)(9)(21)(23)
- Unfunded Revolver
23,805 22,883
Total Consumer Services $ 129,079 $ 123,300
Containers, Packaging & Glass
TricorBraun Holdings, Inc.
TricorBraun Holdings, First Lien Secured Debt 4.05% (1M L+325) 11/30/21 $ 1,500 $ 1,500 $ 1,478 (23)
Inc. - Revolver
First Lien Secured Debt 5.50% (P+225) 11/30/21 3,750 3,750 3,695 (23)
- Revolver
First Lien Secured Debt 0.50% Unfunded 11/30/21 375 (169) (6) (8)(21)(23)
- Unfunded Revolver
Total Containers, Packaging & Glass $ 5,081 $ 5,167
Diversified Investment Vehicles, Banking, Finance, Real Estate
Celink
Compu-Link Corporation First Lien Secured Debt 6.50% (1M L+550, 1.00% 06/11/24 $ 45 $ 3 $ 44 (9)(23)
- Revolver Floor)
First Lien Secured Debt 6.72% (3M L+550, 1.00% 06/11/24 2,227 2,227 2,152 (9)(23)
- Revolver Floor)
Peer Advisors, LLC First Lien Secured 6.50% (1M L+550, 1.00% 06/11/24 21,875 21,461 21,138 (9)
Debt Floor)
23,691 23,334
Exeter Property Group, LLC
Exeter Property Group, First Lien Secured 6.08% (1M L+450) 08/28/24 4,772 4,714 4,618 (9)
LLC Debt
First Lien Secured Debt 0.50% Unfunded 08/28/24 192 (2) (6) (8)(9)(21)(23)
- Unfunded Revolver
4,712 4,612
Flock Financial, LLC
Flock SPV I, LLC First Lien Secured 8.08% (1M L+650) 08/30/22 13,067 13,018 12,788 (9)(17)
Debt
First Lien Secured Debt 0.50% Unfunded 08/30/22 1,333 (8) (28) (8)(9)(17)(21)(23)
- Unfunded Revolver
First Lien Secured Debt 0.50% Unfunded 08/30/22 5,600 (64) (119) (8)(9)(17)(21)(23)
- Unfunded Delayed
Draw
12,946 12,641
Golden Bear
Golden Bear 2016-R, LLC Structured Products and N/A 09/20/42 - 16,729 9,748 (3)(17)
(4) Other - Membership
Interests
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Par/Shares Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date (12) Cost (28) (1)(29)
Purchasing Power, LLC
Purchasing Power Funding First Lien Secured Debt - 8.08% (1M L+650) 01/24/22 4,608 4,608 4,529 (9)(23)
I, LLC Revolver
First Lien Secured Debt - 0.50% Unfunded 01/24/22 4,504 - (77) (8)(9)(21)(23)
Unfunded Revolver
4,608 4,452
Taupo River II, LLC
Taupo River II, LLC First Lien Secured Debt 7.16% (3M L+525, 1.00% 06/08/20 14,000 13,993 13,966 (9)(17)
Floor)
Ten-X, LLC
Ten-X, LLC First Lien Secured Debt - 4.00% (1M L+325) 09/29/22 3,120 3,120 2,911 (23)
Revolver
First Lien Secured Debt - 4.19% (1M L+325) 09/29/22 1,560 1,350 1,455 (23)
Revolver
4,470 4,366
Total Diversified Investment Vehicles, Banking, Finance, Real Estate
$ 81,149 $ 73,119 Education NFA GroupSSCP Spring Bidco Limited First Lien Secured Debt 6.94% (6M GPBL+625, 0.50%07/30/25 £ 535$ 641 $ 634 (9)(17)
Floor)
First Lien Secured Debt 6.99% (6M GBPL+625, 0.50% 07/30/25 £ 28,370 33,983 33,627 (9)(17)
Floor)
First Lien Secured Debt - 1.88% Unfunded 07/30/25 £ 1,095 (29) (60) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
Total Education $ 34,595 $ 34,201
Energy - Electricity
AMP Solar Group, Inc.
AMP Solar Group, Inc. (4) Common Equity/Interests - N/A N/A 243,646 $ 10,000 $ 8,736 (13)(17)
Class A Common Unit Shares
Renew Financial LLC (f/k/a Renewable Funding, LLC )
AIC SPV Holdings II, LLC Preferred Equity - Preferred N/A N/A 143 Shares 534 442 (15)(17)
(4) Stock
Renew Financial LLC (f/k/a Preferred Equity - Series B N/A N/A 1,505,868 8,343 3,284 (13)
Renewable Funding, LLC) Preferred Stock Shares
(4)
Preferred Equity - Series D N/A N/A 436,689 5,568 2,101 (13)
Preferred Stock Shares
Renew JV LLC (4) Common Equity/Interests - N/A N/A 893,336 893 914 (13)(17)
Membership Interests Shares
15,338 6,741
Solarplicity Group Limited (f/k/a AMP Solar UK )
Solarplicity UK Holdings First Lien Secured Debt 4.00% 03/08/23 £ 5,562 7,637 3,787 (13)(14)(17)
Limited
Preferred Equity - Preferred N/A N/A 4,286 5,861 - (2)(13)(17)
Stock Shares
Common Equity - Ordinary N/A N/A 2,825 4 - (2)(13)(17)
Shares Shares
13,502 3,787
Total Energy - Electricity $ 38,840 $ 19,264
Energy - Oil & Gas
Glacier Oil & Gas Corp. (f/k/a Miller Energy Resources, Inc. )
Glacier Oil & Gas Corp. Second Lien Secured Debt 10.00% PIK Toggle (8.00% 03/29/21 $ 37,234 $ 36,926 $ 14,711 (13)(14)
(f/k/a Miller Energy Cash)
Resources, Inc. ) (5)
Common Equity/Interests - N/A N/A 5,000,000 30,078 - (13)
Common Stock Shares
67,004 14,711
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Par/Shares Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date (12) Cost (28) (1)(29)
Pelican
Pelican Energy, LLC (4) Common Equity/Interests - N/A N/A 1,444 16,822 2,411 (13)(16)(17) Membership Interests Shares Spotted Hawk SHD Oil & Gas, LLC (5) First Lien Secured Debt - 12.00% 07/31/21 24,000 24,000 24,720 Tranche C Note First Lien Secured Debt - 4.00% (4.00% Cash plus07/31/21 45,457 44,998 22,495 (13)(14) Tranche A Note 0.00% PIK) First Lien Secured Debt - 3.00% PIK07/31/21 84,484 44,380 - (13)(14) Tranche B Note Common Equity/Interests - N/A N/A 7,600,000 1,411 - (13)(16) Series A Units Shares 114,789 47,215 Total Energy - Oil & Gas$ 198,615 $ 64,337 Environmental Industries Denali Dispatch Acquisition First Lien Secured Debt 7.27% (3M L+550, 1.00% 01/29/27$ 16,342 $ 15,983 $ 15,983 (9) Holdings, LLC Floor) First Lien Secured Debt - 7.28% (3M L+550, 1.00%01/29/26 325 325 317 (9)(23) Revolver Floor) First Lien Secured Debt - 7.27% (3M L+550, 1.00%01/29/26 812 812 793 (9)(23) Revolver Floor) First Lien Secured Debt - 7.75% (P+450)01/29/26 325 325 317 (9)(23) Revolver First Lien Secured Debt - 0.50% Unfunded01/29/26 1,786 (71) (40) (8)(9)(21)(23) Unfunded Revolver First Lien Secured Debt - 0.75% Unfunded01/29/27 5,411 (66) (122) (8)(9)(21)(23) Unfunded Delayed Draw 17,308 17,248Ortega National Parks Ortega National Parks, First Lien Secured Debt 6.32% (6M L+525, 1.00% 10/31/25 11,229 11,020 10,551 (9) LLC Floor) First Lien Secured Debt 6.52% (3M L+525, 1.00% 10/31/25 492 487 462 (9) Floor) First Lien Secured Debt - 6.45% (3M L+525, 1.00%10/31/25 1,503 1,465 1,411 (9)(23) Revolver Floor) First Lien Secured Debt - 7.04% (3M L+525, 1.00%10/31/25 273 273 257 (9)(23) Revolver Floor) First Lien Secured Debt - 7.16% (3M L+525, 1.00%10/31/25 273 273 257 (9)(23) Revolver Floor) First Lien Secured Debt - 1.00% Unfunded10/31/25 6,202 (62) (375) (8)(9)(21)(23) Unfunded Delayed Draw 13,456 12,563Total Environmental Industries $ 30,764 $ 29,811 Food & Grocery Bumble Bee Foods S.À R.L. Bumble Bee Holdings Inc First Lien Secured Debt N/A 01/31/24$ 443 $ -$ 430 Connors Bros Clover Leaf First Lien Secured Debt N/A 01/31/24 126 - 122 Seafoods Company Tonos US LLC First Lien Secured Debt 8.96% (3M L+725, 1.50% 01/31/24 15,123 15,319 14,670 Floor) Total Food & Grocery$ 15,319 $ 15,222 Healthcare & Pharmaceuticals Altasciences, Inc. 9360-1367Quebec Inc. First Lien Secured Debt 8.49% (3M CADL+625,06/09/23 C$ 2,357$ 1,734 $ 1,602 (9)(17) 1.00% Floor) First Lien Secured Debt 7.32% (6M L+625, 1.00%06/09/23 $ 2,821 2,787 2,730 (9)(17) Floor) First Lien Secured Debt 7.25% (1M L+625, 1.00%06/09/23 19 19 18 (9)(17) Floor)
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
Altasciences US First Lien Secured Debt 7.32% (6M L+625, 1.00% 06/09/23 5,959 5,879 5,765 (9)
Acquistion, Inc. Floor)
First Lien Secured Debt 7.25% (1M L+625, 1.00% 06/09/23 37 37 36 (9)
Floor)
First Lien Secured Debt - 7.30% (3M L+625, 1.00% 06/09/23 392 392 379 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.45% (3M L+625, 1.00% 06/09/23 456 456 441 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.52% (3M L+625, 1.00% 06/09/23 570 570 552 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.25% Unfunded 06/09/23 7 (17) - (8)(9)(11)(21)(23)
Unfunded Revolver
11,857 11,523
American Veterinary Group
AVG Intermediate Holdings First Lien Secured Debt 9.00% (1M L+800, 1.00% 02/08/24 11,759 11,642 11,097 (9)
LLC Floor)
First Lien Secured Debt - 1.00% Unfunded 02/08/24 1,466 (113) (83) (8)(9)(21)(23)
Unfunded Delayed Draw
11,529 11,014
AmeriVet
Amerivet Partners First Lien Secured Debt 7.75% (1M L+675, 1.00% 06/05/24 26,429 25,944 25,480 (9)
Management, Inc. Floor)
First Lien Secured Debt - 9.00% (P+575) 06/05/24 524 524 505 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 06/05/24 282 (14) (10) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 06/05/24 7,648 (95) (275) (8)(9)(21)(23)
Unfunded Delayed Draw
Amerivet Partners Parent Common Equity/Interests - N/A N/A 13 Shares 125 144 (9)(13)
LP Class D Partnership Units
26,484 25,844
Analogic
Analogic Corporation First Lien Secured Debt 6.25% (1M L+525, 1.00% 06/22/24 18,215 17,894 17,851 (9)
Floor)
First Lien Secured Debt - 6.25% (1M L+525, 1.00% 06/22/23 157 157 153 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 06/22/23 1,670 (42) (33) (8)(9)(21)(23)
Unfunded Revolver
18,009 17,971
BioClinica Holding I, LP
BioClinica Holding I, LP Second Lien Secured Debt 9.25% (1M L+825, 1.00% 10/21/24 24,612 24,303 23,345
Floor)
BK Medical
BK Medical Holding First Lien Secured Debt 6.25% (1M L+525, 1.00% 06/22/24 7,304 7,235 7,234 (9)
Company, Inc. Floor)
First Lien Secured Debt - 0.50% Unfunded 06/22/23 783 (7) (8) (8)(9)(21)(23)
Unfunded Revolver
7,228 7,226
CARE Fertility
Royton Bidco Limited First Lien Secured Debt 6.29% (3M GBPL+575, 05/09/25 £ 559 647 650 (9)(17)
0.50% Floor)
First Lien Secured Debt 6.42% (3M GBPL+575, 05/09/25 £ 15,588 19,794 18,130 (9)(17)
0.50% Floor)
First Lien Secured Debt 6.48% (6M GBPL+575, 05/09/25 £ 293 370 340 (9)(17)
0.50% Floor)
First Lien Secured Debt - 2.01% Unfunded 05/09/25 £ 3,559 (74) (274) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
20,737 18,846
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
Cerus
Cerus Corporation First Lien Secured Debt 7.25% (1M L+545, 1.80% 03/01/24 12,000 11,952 12,146 (9)(17)
Floor)
First Lien Secured Debt - 5.55% (1M L+375, 1.80% 03/01/24 187 187 189 (9)(17)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 03/01/24 313 (1) - (9)(17)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.00% Unfunded 03/01/24 9,000 (36) - (9)(17)(21)(23)
Unfunded Delayed Draw
12,102 12,335
Dohmen Life Science Services
LSCS Holdings, Inc Second Lien Secured Debt 9.70% (3M L+825) 03/16/26 19,818 19,473 18,901
Emmes Corporation
Emmes Blocker, Inc. Common Equity/Interests - N/A N/A 306 Shares 306 314 (9)(13)
Common Stock
The Emmes Company, LLC First Lien Secured Debt 6.58% (1M L+500, 1.00% 03/03/25 12,122 11,973 11,819 (9)
Floor)
First Lien Secured Debt - 6.00% (1M L+500, 1.00% 03/03/25 2,449 2,419 2,388 (9)(23)
Revolver Floor)
14,698 14,521
Genesis Healthcare, Inc.
Genesis Healthcare, First Lien Secured Debt 12.58% (1M L+1100, 03/06/23 8,370 8,370 8,197 (9)
Inc. 1.00% Floor)
First Lien Secured Debt 7.58% (1M L+600, 0.50% 03/06/23 25,000 24,780 24,237 (9)
Floor)
First Lien Secured Debt - 7.58% (1M L+600, 0.50% 03/08/23 14,069 14,069 13,605 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 03/08/23 46,801 (462) (1,542) (8)(9)(21)(23)
Unfunded Revolver
46,757 44,497
Gossamer
GB001, Inc. First Lien Secured Debt 8.15% (1M L+615, 2.00% 05/01/24 6,000 5,970 6,049 (9)(17)
Floor)
First Lien Secured Debt - 0.00% Unfunded 05/01/24 24,000 (196) - (9)(17)(21)(23)
Unfunded Delayed Draw
5,774 6,049
Health & Safety Institute
HSI Halo Acquisition, First Lien Secured Debt 6.75% (1M L+575, 1.00% 08/31/26 25,288 25,053 24,360 (9)
Inc. Floor)
First Lien Secured Debt - 8.00% (P+475) 08/30/25 2,049 2,049 1,983 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 08/30/25 410 (22) (13) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 1.00% Unfunded 08/31/26 2,131 (38) (78) (8)(9)(21)(23)
Unfunded Delayed Draw
Common Equity/Interests - N/A N/A 500 Shares 500 398 (9)(13)
Common Stock
27,542 26,650
IMA Group
IMA Group Management First Lien Secured Debt 6.57% (6M L+550, 1.00% 05/30/24 5,126 5,083 4,921
Company, LLC Floor)
IM Acquirer LLC First Lien Secured Debt - 6.50% (1M L+550, 1.00% 05/30/24 289 287 277 (23)
Revolver Floor)
5,370 5,198
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
KureSmart
Clearway Corporation Common Equity/Interests - N/A N/A 133 Shares 133 120 (9)(13)
(f/k/a NP/Clearway Partnership Interests
Holdings, Inc.)
Kure Pain Holdings, Inc. First Lien Secured Debt 6.50% (1M L+550, 1.00% 08/27/24 22,102 21,810 21,015 (9)
Floor)
First Lien Secured Debt - 6.50% (1M L+550, 1.00% 08/27/24 2,654 2,619 2,522 (9)(23)
Revolver Floor)
24,562 23,657
Lanai Holdings III, Inc. (Patterson Medical)
Lanai Holdings III, Inc. Second Lien Secured Debt 10.28% (3M L+1050 PIK, 08/28/23 17,391 17,138 14,383
1.00% Floor)
Mannkind Corporation
Mannkind Corporation First Lien Secured Debt 8.75% (1M L+675, 2.00% 08/01/24 13,867 13,806 13,639 (9)
Floor)
First Lien Secured Debt - 0.00% Unfunded 08/01/24 12,133 (53) (199) (8)(9)(21)(23)
Unfunded Delayed Draw
13,753 13,440
Maxor National Pharmacy Services, LLC
Maxor National Pharmacy First Lien Secured Debt 6.95% (3M L+550, 1.00% 11/22/23 24,476 24,107 23,754 (9)
Services, LLC Floor)
First Lien Secured Debt - 7.75% (P+450) 11/22/22 779 779 760 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 11/22/22 779 (21) (19) (8)(9)(21)(23)
Unfunded Revolver
24,865 24,495
Medical Guardian
Medical Guardian, LLC First Lien Secured Debt 9.50% (1M L+850, 1.00% 12/31/24 34,286 33,635 33,600 (9)
Floor)
First Lien Secured Debt - 9.50% (1M L+850, 1.00% 12/31/24 381 381 373 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 12/31/24 5,333 (108) (107) (8)(9)(21)(23)
Unfunded Revolver
33,908 33,866
Orchard
Orchard Therapeutics plc First Lien Secured Debt 7.58% (1M L+600, 1.00% 05/24/24 8,333 8,299 8,257 (9)(17)
Floor)
First Lien Secured Debt - 0.00% Unfunded 05/24/24 16,667 (69) (153) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
8,230 8,104
Ovation Fertility
FPG Services, LLC First Lien Secured Debt 6.95% (3M L+550, 1.00% 06/13/25 12,537 12,319 11,820 (9)
Floor)
First Lien Secured Debt - 6.50% (6M L+550, 1.00% 06/13/24 2,105 2,070 1,985 (9)(23)
Revolver Floor)
First Lien Secured Debt - 1.00% Unfunded 06/13/25 5,263 (46) (301) (8)(9)(21)(23)
Unfunded Delayed Draw
14,343 13,504
Partner Therapeutics, Inc
Partner Therapeutics, Inc First Lien Secured Debt 8.23% (1M L+665, 1.00% 01/01/23 10,000 9,896 9,945 (9)
Floor)
Preferred Equity - Preferred N/A N/A 55,556 Shares 333 333 (9)(13)
Stock
Warrants N/A N/A 33,333 Shares 135 88 (9)(13)
10,364 10,366
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
PHS
PHS Buyer, Inc. First Lien Secured 6.70% (3M L+525, 1.00% 01/31/25 12,870 12,636 12,548 (9)
Debt Floor)
First Lien Secured 0.50% Unfunded 01/31/25 2,000 (36) (50) (8)(9)(21)(23)
Debt - Unfunded
Revolver
12,600 12,498
ProPharma
ProPharma Group Intermediate, First Lien Secured 6.74% (1M L+575, 0.50% 07/12/23 € 6,357 7,196 6,835
LLC Debt Floor)
First Lien Secured 6.74% (1M L+575, 0.50% 07/12/23 £ 4,220 5,490 5,128
Debt Floor)
First Lien Secured 6.74% (1M L+575, 0.50% 07/12/23 11,358 11,276 11,132
Debt Floor)
First Lien Secured 7.20% (1M L+575, 0.50% 07/12/23 1,032 1,025 1,012 (23)
Debt - Revolver Floor)
24,987 24,107
PTC Therapeutics, Inc
PTC Therapeutics, Inc First Lien Secured 7.73% (1M L+615, 1.00% 05/01/21 7,389 7,379 7,463 (9)(17)
Debt Floor)
Radius Health
Radius Health, Inc. First Lien Secured 7.75% (1M L+575, 2.00% 06/01/24 3,000 2,993 2,993 (9)(17)
Debt Floor)
First Lien Secured 0.00% Unfunded 06/01/24 2,000 (5) (5) (8)(9)(17)(21)(23)
Debt - Unfunded
Revolver
First Lien Secured 0.00% Unfunded 06/01/24 13,500 - (33) (8)(9)(17)(21)(23)
Debt - Unfunded
Delayed Draw
2,988 2,955
RHA Health Services
Pace Health Companies, LLC First Lien Secured 5.95% (3M L+450, 1.00% 08/02/24 547 538 525 (9)
Debt Floor)
First Lien Secured 5.50% (1M L+450, 1.00% 08/02/24 433 424 415 (9)(23)
Debt - Revolver Floor)
First Lien Secured 4.50% 12/10/20 68 - (3) (8)(9)(23)
Debt - Letter of
Credit
First Lien Secured 0.00% Unfunded 08/02/24 3,950 (35) (163) (8)(9)(21)(23)
Debt - Unfunded
Delayed Draw
927 774
Rigel Pharmaceuticals
Rigel Pharmaceuticals, Inc. First Lien Secured 7.23% (1M L+565, 1.50% 09/01/24 3,000 3,001 2,959 (9)
Debt Floor)
First Lien Secured 0.00% Unfunded 09/01/24 3,000 - (41) (8)(9)(21)(23)
Debt - Unfunded
Delayed Draw
3,001 2,918
RiteDose Holdings I, Inc.
RiteDose Holdings I, Inc. First Lien Secured 8.41% (3M L+650, 1.00% 09/13/23 14,662 14,387 14,114 (9)
Debt Floor)
First Lien Secured 0.50% Unfunded 09/13/22 2,000 (32) (57) (8)(9)(21)(23)
Debt - Unfunded
Revolver
14,355 14,057
Teladoc, Inc.
Teladoc, Inc. First Lien Secured 0.50% Unfunded 07/14/20 1,306 (6) - (17)(21)(23)
Debt - Unfunded
Revolver
First Lien Secured 7.25% 05/11/20 - 360 - - (17)(23)
Debt - Letters of 07/14/20
Credit
(6) -
Wright Medical Group, Inc.
Wright Medical Group, Inc. First Lien Secured 9.43% (1M L+785, 1.00% 12/23/21 6,667 6,603 6,733 (9)(17)
Debt Floor)
First Lien Secured 5.83% (1M L+425, 0.75% 12/23/21 7,666 7,666 7,724 (9)(17)(23)
Debt - Revolver Floor)
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
First Lien Secured 0.50% Unfunded 12/23/21 50,667 (224) - (9)(17)(21)(23)
Debt - Unfunded
Revolver
First Lien Secured 0.00% Unfunded 12/23/21 11,667 (63) - (9)(17)(21)(23)
Debt - Unfunded
Delayed Draw
13,982 14,457
Total Healthcare & Pharmaceuticals $ 479,239 $ 464,964
High Tech Industries
Acronis AG
Acronis AG First Lien Secured 7.43% (1M L+585, 1.50% 12/18/24 $ 21,000 $ 20,901 $ 20,217 (9)(17)
Debt Floor)
American Megatrends
AMI US Holdings Inc. First Lien Secured 6.83% (1M L+525, 1.00% 04/01/25 21,872 21,507 21,216 (9)
Debt Floor)
First Lien Secured 6.25% (1M L+525) 04/01/24 1,395 1,395 1,351 (9)(23)
Debt - Revolver
First Lien Secured 6.32% (6M L+525) 04/01/24 698 698 675 (9)(23)
Debt - Revolver
First Lien Secured 6.83% (1M L+525) 04/01/24 581 581 563 (9)(23)
Debt - Revolver
First Lien Secured 0.50% Unfunded 04/01/24 233 (46) (7) (8)(9)(21)(23)
Debt - Unfunded
Revolver
24,135 23,798
Calero Holdings, Inc.
Telesoft Holdings, LLC First Lien Secured 7.20% (3M L+575, 1.00% 12/16/25 22,727 22,240 21,723
Debt Floor)
First Lien Secured 6.75% (1M L+575, 1.00% 12/16/25 1,515 1,515 1,448 (23)
Debt - Revolver Floor)
First Lien Secured 0.50% Unfunded 12/16/25 758 (49) (33) (8)(21)(23)
Debt - Unfunded
Revolver
23,706 23,138
ChargePoint
ChargePoint, Inc. First Lien Secured 8.13% (1M L+655, 1.25% 06/01/23 10,500 10,432 10,321 (9)
Debt Floor)
ChyronHego Corporation
ChyronHego Corporation First Lien Secured 7.43% (P+468) 3/9/20 3,725 3,725 3,650 (27)
Debt
First Lien Secured 7.43% (P+468) 3/9/20 34,579 34,382 29,738 (18)(27)
Debt
First Lien Secured 5.54% (1M L+390, 1.00% 3/9/20 34,753 30,630 31,625 (27)
Debt Floor)
First Lien Secured 5.54% (1M L+390, 1.00% 3/9/20 5,050 5,050 4,848 (23)(27)
Debt - Revolver Floor)
First Lien Secured 0.375% Unfunded 3/9/20 700 (678) (28) (8)(21)(23)(27)
Debt - Unfunded
Revolver
73,109 69,833
Digital Reasoning
Digital Reasoning First Lien Secured 8.25% (1M L+625, 2.00% 08/01/24 3,750 3,721 3,630 (9)
Systems, Inc. Debt Floor)
First Lien Secured 0.00% Unfunded 08/01/24 1,250 (11) (40) (8)(9)(21)(23)
Debt - Unfunded
Delayed Draw
Warrants N/A N/A 48,596 Shares - 48 (9)(13)
3,710 3,638
FiscalNote
FiscalNote, Inc. First Lien Secured 9.00% (1M L+800, 1.00% 08/21/23 28,431 27,905 27,075 (9)
Debt Floor)
First Lien Secured 9.00% (1M L+800, 1.00% 08/21/23 3,867 3,867 3,654 (9)(23)
Debt - Revolver Floor)
First Lien Secured 0.50% Unfunded 08/21/23 2,508 (79) (138) (8)(9)(21)(23)
Debt - Unfunded
Revolver
Preferred Equity - N/A N/A 259,565 Shares 1,500 1,500 (9)(13)
Series F Preferred
Stock
33,193 32,091
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type InterestRate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)GoHealth Norvax, LLC First Lien Secured 7.96% (3M L+650, 1.00% 09/15/25 31,659 30,939 30,222 (9) Debt Floor) First Lien Secured 0.50% Unfunded09/13/24 3,182 (71) (129) (8)(9)(21)(23) Debt - Unfunded Revolver 30,868 30,093International Cruise & Excursion Gallery, Inc. International Cruise & First Lien Secured 6.32% (3M L+525, 1.00% 06/06/25 14,737 14,517 13,439 Excursion Gallery, Inc. Debt Floor) LabVantage Solutions LabVantage Solutions First Lien Secured 9.15% (1M L+750, 1.00% 12/29/20 10,324 10,274 10,221 Inc. Debt Floor) LabVantage Solutions First Lien Secured 8.50% (1M E+750, 1.00% 12/29/20 € 10,513 11,262 11,420 (17) Limited Debt Floor) First Lien Secured 0.50% Unfunded12/29/20 € 3,435 (11) (38) (8)(17)(21)(23) Debt - Unfunded Revolver 21,525 21,603 Magnitude Software New Amsterdam Software First Lien Secured 5.00% (3M E+500, 1.00% 05/01/26 € 743 819 783 (9) BidCo LLC Debt Floor) First Lien Secured 6.77% (3M L+500, 1.00% 05/01/26 6,865 6,745 6,590 (9) Debt Floor) First Lien Secured 0.50% Unfunded05/01/26 2,250 (20) (90) (8)(9)(21)(23) Debt - Unfunded Delayed Draw 7,544 7,283 MYCOM Magnate Holding Corp. First Lien Secured 7.32% (6M L+625, 1.00% 12/16/24 16,587 16,392 10,597 (9)(17) Debt Floor) First Lien Secured 7.32% (6M L+625, 1.00%12/14/23 1,025 1,025 655 (9)(17)(23) Debt - Revolver Floor) First Lien Secured 7.23% (6M L+625, 1.00%12/14/23 999 999 638 (9)(17)(23) Debt - Revolver Floor) First Lien Secured 7.90% (3M L+625, 1.00%12/14/23 666 666 426 (9)(17)(23) Debt - Revolver Floor) First Lien Secured 1.75% Unfunded12/14/23 500 (37) (181) (8)(9)(17)(21)(23) Debt - Unfunded Revolver First Lien Secured 5.00%04/22/20 140 - (50) (8)(9)(17)(23) Debt - Letter of Credit 19,045 12,085 Omnitracs, LLCOmnitracs, LLC First Lien Secured 0.50% Unfunded03/23/23 3,750 (201) (375) (8)(21)(23) Debt - Unfunded Revolver Schlesinger Group Schlesinger Global, LLC First Lien Secured 7.45% (3M L+600, 1.00% 07/12/25 8,984 8,764 8,764 (9) Debt Floor) First Lien Secured 7.00% (1M L+600, 1.00% 07/12/25 154 151 151 (9) Debt Floor) First Lien Secured 1.00% Unfunded07/12/25 846 (10) (21) (8)(9)(21)(23) Debt - Unfunded Delayed Draw 8,905 8,894 Simeio Simeio Group Holdings, First Lien Secured 7.53% (3M L+575, 1.00% 01/30/26 8,654 8,528 8,528 (9) Inc. Debt Floor) First Lien Secured 7.20% (3M L+575, 1.00% 01/30/26 577 577 568 (9)(23) Debt - Revolver Floor) First Lien Secured 8.00% (P+475) 01/30/26 577 577 568 (9)(23) Debt - Revolver First Lien Secured 6.80% (3M L+575, 1.00% 01/30/26 577 552 568 (9)(23) Debt - Revolver Floor) First Lien Secured 0.75% Unfunded01/30/26 4,615 (34) (69) (8)(9)(21)(23) Debt - Unfunded Delayed Draw 10,200 10,163 See notes to financial statements. 98
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Table of Contents
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
Sirsi Corporation
Sirsi Corporation First Lien Secured 5.75% (1M L+475, 1.00% 03/15/24 6,895 6,813 6,722 (9)
Debt Floor)
First Lien Secured 5.75% (1M L+475, 1.00% 03/15/24 43 43 42 (9)(23)
Debt - Revolver Floor)
First Lien Secured 7.00% (P+375) 03/15/24 43 43 42 (9)(23)
Debt - Revolver
First Lien Secured 0.50% Unfunded 03/15/24 343 (5) (9) (8)(9)(21)(23)
Debt - Unfunded
Revolver
6,894 6,797
Springbrook
Springbrook Holding First Lien Secured 7.20% (3M L+575, 1.00% 12/23/26 9,853 9,691 9,656
Company, LLC Debt Floor)
First Lien Secured 0.50% Unfunded 12/23/26 1,463 (25) (29) (8)(21)(23)
Debt - Unfunded
Revolver
First Lien Secured 0.50% Unfunded 12/23/26 3,658 (34) (73) (8)(21)(23)
Debt - Unfunded
Delayed Draw
9,632 9,554
Telestream Holdings Corporation
Telestream Holdings First Lien Secured 7.61% (3M L +645, 1.00% 03/24/22 38,085 37,891 36,942 (18)
Corporation Debt Floor)
ZPower, LLC
ZPower, LLC First Lien Secured L+600 07/01/22 6,716 6,853 2,066 (9)(13)(14)
Debt
Warrants N/A N/A 29,630 Shares 48 - (9)(13)
6,901 2,066
Total High Tech Industries $ 362,907 $ 341,580
Hotel, Gaming, Leisure, Restaurants
Garden Fresh
GFRC Holdings LLC First Lien Secured L+800 Cash (L+800 PIK 02/01/22 $ 2,500 $ 2,500 $ 2,425 (13)(14)
Debt Toggle)
Total Hotel , Gaming, Leisure, Restaurants $ 2,500 $ 2,425
Insurance
PGM Holdings Corporation
Turbo Buyer, Inc. First Lien Secured 7.52% (1M L+600, 1.00% 12/02/25 11,942 11,660 11,524 (9)
Debt Floor)
First Lien Secured 7.00% (6M L+600, 1.00% 12/02/25 923 901 891 (9)(23)
Debt - Revolver Floor)
First Lien Secured 1.00% Unfunded 12/02/25 2,105 (25) (74) (8)(9)(21)(23)
Debt - Unfunded
Delayed Draw
12,536 12,341
PIB Group
Ivy Finco Limited First Lien Secured 5.27% (1M GBPL+500) 06/07/25 £ 12,131 $ 15,103 $ 14,154 (9)(17)
Debt
First Lien Secured 5.73% (1M GBPL+500) 06/07/25 £ 2,657 3,348 3,100 (9)(17)
Debt
First Lien Secured 1.50% Unfunded 06/07/25 £ 2,712 (131) (198) (8)(9)(17)(21)(23)
Debt - Unfunded
Delayed Draw
18,320 17,056
Relation Insurance
AQ Sunshine, Inc. First Lien Secured 7.42% (6M L+550, 1.00% 04/15/25 $ 17,008 16,773 16,354 (9)
Debt Floor)
First Lien Secured 7.42% (6M L+550, 1.00% 04/15/24 588 588 569 (9)(23)
Debt - Revolver Floor)
First Lien Secured 6.57% (3M L+550, 1.00% 04/15/24 471 471 455 (9)(23)
Debt - Revolver Floor)
First Lien Secured 0.50% Unfunded 04/15/24 79 (19) (3) (8)(9)(21)(23)
Debt - Unfunded
Revolver
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
First Lien Secured Debt - 5.50% 04/30/20 38 - (1) (8)(9)(23)
Letter of Credit
First Lien Secured Debt - 1.00% Unfunded 04/15/25 1,694 (79) (65) (8)(9)(21)(23)
Unfunded Delayed Draw
17,734 17,309
Risk Strategies
RSC Acquisition , Inc. First Lien Secured Debt 7.28% (3M L+550, 1.00% 11/02/26 16,121 15,832 15,468 (17)
Floor)
First Lien Secured Debt 6.95% (3M L+550, 1.00% 11/02/26 1,003 1,010 962 (17)
Floor)
First Lien Secured Debt - 0.50% Unfunded 11/02/26 494 (9) (20) (8)(17)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 5.50% 04/07/20 5 - - (17)(23)
Letter of Credit
First Lien Secured Debt - 1.00% Unfunded 11/02/26 2,714 (86) (110) (8)(17)(21)(23)
Unfunded Delayed Draw
16,747 16,300
Total Insurance $ 65,337 $ 63,006
Manufacturing, Capital Equipment
AVAD, LLC
AVAD Canada Ltd. First Lien Secured Debt - 5.58% (1M L+400, 1.00% 10/02/23 $ 534 $ 534 $ 511 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 10/02/23 800 (14) (35) (8)(9)(21)(23)
Unfunded Revolver
AVAD, LLC First Lien Secured Debt 9.33% (1M L+775, 1.00% 10/02/23 8,587 8,464 8,231 (9)
Floor)
First Lien Secured Debt - 5.58% (1M L+400, 1.00% 10/02/23 10,086 10,086 9,649 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 10/02/23 8,580 (219) (372) (8)(9)(21)(23)
Unfunded Revolver
18,851 17,984
Kauffman
Kauffman Holdco, LLC Common Equity/Interests - N/A N/A 250,000 Shares 250 187 (9)(13)
Class A Units
Kauffman Intermediate, LLC First Lien Secured Debt 7.20% (3M L+575, 1.00% 05/08/25 16,839 16,552 16,275 (9)
Floor)
First Lien Secured Debt - 6.97% (3M L+575, 1.00% 05/08/25 1,243 1,243 1,199 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.50% (3M L+575, 1.00% 05/08/25 233 233 225 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 05/08/25 932 (44) (33) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 5.75% 07/25/20 155 - (6) (8)(9)(23)
Letter of Credit
18,234 17,847
MedPlast Holdings Inc.
MedPlast Holdings Inc. Second Lien Secured Debt 9.20% (3M L+775) 07/02/26 8,000 7,937 7,538
Total Manufacturing, Capital Equipment $ 45,022 $ 43,369
Media - Diversified & Production
New Wave Entertainment
NW Entertainment, Inc. First Lien Secured Debt 8.00% (1M L+700, 1.00% 08/16/24 $ 23,700 $ 23,285 $ 22,738 (9)
Floor)
First Lien Secured Debt - 8.00% (1M L+700, 1.00% 08/16/24 2,400 2,400 2,297 (9)(23)
Revolver Floor)
First Lien Secured Debt - 8.36% (1M L+700, 1.00% 08/16/24 600 548 574 (9)(23)
Revolver Floor)
First Lien Secured Debt - 1.00% Unfunded 08/16/24 3,000 (52) (122) (8)(9)(21)(23)
Unfunded Delayed Draw
26,181 25,487
See notes to financial statements.
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Table of Contents
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
Nitro World Entertainment
NWE OPCO LP First Lien Secured Debt 8.50% (1M L+650, 2.00% 12/19/22 5,000 4,977 4,755 (9)
Floor)
Sonar Entertainment
Sonar Entertainment, Inc. First Lien Secured Debt 9.18% (1M L+760, 1.25% 11/15/21 8,058 7,981 7,917 (9)
Floor)
First Lien Secured Debt - 9.18% (1M L+760, 1.25% 11/15/21 4,097 4,097 4,025 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 11/15/21 18,734 (216) (328) (8)(9)(21)(23)
Unfunded Revolver
11,862 11,614
Total Media - Diversified & Production $ 43,020 $ 41,856
Metals & Mining
Magnetation, LLC
Magnetation, LLC First Lien Secured Debt 9.91% (6M L+800 Cash (PIK 12/31/19 $ 1,213 $ 581 $ - (13)(14)(26)
Toggle))
Total Metals & Mining $ 581 $ -
Retail
IPS
SI Holdings, Inc. First Lien Secured Debt 7.45% (3M L+600, 1.00% 07/25/25 $ 31,641 $ 31,067 $ 30,420 (9)
Floor)
First Lien Secured Debt - 7.45% (3M L+600, 1.00% 07/25/24 853 853 820 (9)(23)
Revolver Floor)
First Lien Secured Debt - 7.20% (3M L+600, 1.00% 07/25/24 2,560 2,501 2,460 (9)(23)
Revolver Floor)
34,421 33,700
Rapid Displays
Rapid Displays Acquisition First Lien Secured Debt 6.00% (1M L+500, 1.00% 07/01/25 440 432 423 (9)
Corporation Floor)
First Lien Secured Debt 6.76% (3M L+500, 1.00% 07/01/25 10,385 10,203 9,991 (9)
Floor)
First Lien Secured Debt 6.78% (3M L+500, 1.00% 07/01/25 577 571 555 (9)
Floor)
First Lien Secured Debt - 7.25% (P+400) 07/01/25 2,308 2,267 2,214 (9)(23)
Revolver
First Lien Secured Debt - 1.00% Unfunded 07/01/25 1,154 (15) (44) (8)(9)(21)(23)
Unfunded Delayed Draw
13,458 13,139
Total Retail $ 47,879 $ 46,839
Telecommunications
IPC Corporation
IPC Corporation First Lien Secured Debt 6.78% (3M L+500, 1.00% 08/06/21 $ 10,000 $ 9,959 $ 8,996 (9)
Floor)
IPC Information Systems UK First Lien Secured Debt 8.21% (3M L+650, 1.50% 08/06/21 843 815 789 (9)(17)
Holdings Limited Floor)
First Lien Secured Debt 8.24% (3M L+650, 1.50% 08/06/21 562 543 526 (9)(17)
Floor)
11,317 10,311
Securus Technologies Holdings, Inc.
Securus Technologies Second Lien Secured Debt 9.25% (1M L+825, 1.00% 11/01/25 12,878 12,788 10,817
Holdings, Inc. Floor)
Total Telecommunications $ 24,105 $ 21,128
Transportation - Cargo, Distribution
Dynamic Product Tankers (Prime), LLC
Dynamic Product Tankers, LLC First Lien Secured Debt 8.94% (3M L+700) 06/30/23 $ 42,000 $ 41,870 $ 42,000 (17)
(5)
First Lien Secured Debt - 2.25% 09/20/20 - 6,050 - - (17)(23)
Letters of Credit 03/31/21
Common Equity/Interests - N/A N/A N/A 49,806 36,457 (13)(17)(24)
Class A Units
91,676 78,457
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Fair Value
Industry / Company Investment Type Interest Rate (20) Maturity Date Par/Shares (12) Cost (28) (1)(29)
Heniff and Superior
Heniff Holdco, LLC First Lien Secured Debt 7.25% (1M L+575, 1.00% Floor) 12/03/26 31,075 30,477 29,611 (9)
First Lien Secured Debt - 6.75% (1M L+575, 1.00% Floor) 12/03/24 327 327 315 (9)(23)
Revolver
First Lien Secured Debt - 7.25% (1M L+575, 1.00% Floor) 12/03/24 327 327 315 (9)(23)
Revolver
First Lien Secured Debt - 6.80% (3M L+575, 1.00% Floor) 12/03/24 981 981 944 (9)(23)
Revolver
First Lien Secured Debt - Unfunded 0.50% Unfunded 12/03/24 2,290 (73) (87) (8)(9)(21)(23)
Revolver
32,039 31,098
MSEA Tankers LLC
MSEA Tankers LLC (5) Common Equity/Interests - Class A N/A N/A N/A 61,950 59,735 (17)(25)
Units
Total Transportation - Cargo, Distribution $ 185,665 $ 169,290
Wholesale
Banner Solutions
Banner Buyer, LLC First Lien Secured Debt 6.75% (1M L+575, 1.00% Floor) 10/31/25 $ 12,549 $ 12,345 $ 11,915 (9)
First Lien Secured Debt - 6.75% (1M L+575, 1.00% Floor) 10/31/25 1,548 1,548 1,469 (9)(23)
Revolver
First Lien Secured Debt - Unfunded 0.50% Unfunded 10/31/25 387 (32) (20) (8)(9)(21)(23)
Revolver
First Lien Secured Debt - Unfunded 0.75% Unfunded 10/31/25 5,484 (45) (277) (8)(9)(21)(23)
Delayed Draw
Banner Parent Holdings, Common Equity/Interests - Common N/A N/A 5,000 Shares 500 331 (9)(13)
Inc Stock
Total Wholesale $ 14,316 $ 13,418
Total Investments before Cash Equivalents $ 3,089,613 $ 2,785,433
J.P. Morgan U.S. Government Money Market Fund $ 37,301 $ 37,301 $ 37,301 (22)
Total Investments after Cash Equivalents $ 3,126,914 $ 2,822,734 (6)(7)
____________________
(1)Fair value is determined in good faith by or under the direction of the Board
of Directors of the Company (See Note 2 to the financial statements).
(2)Preferred and ordinary shares in Solarplicity UK Holdings Limited are GBP
denominated equity investments.
(3)Denotes investments in which the Company owns greater than 25% of the equity,
where the governing documents of each entity preclude the Company from
exercising a controlling influence over the management or policies of such
entity. The Company does not have the right to elect or appoint more than 25% of
the directors or another party has the right to elect or appoint more directors
than the Company and has the right to appoint certain members of senior
management. Therefore, the Company has determined that these entities are not
controlled affiliates. As of March 31, 2020, we had a 100% equity ownership
interest in Golden Bear 2016-R, LLC.
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
(4)Denotes investments in which we are an "Affiliated Person," as defined in the
1940 Act, due to holding the power to vote or owning 5% or more of the
outstanding voting securities of the investment but not controlling the company.
Fair value as of March 31, 2019 and March 31, 2020 along with transactions
during the year ended March 31, 2020 in these affiliated investments are as
follows:
Net Change in
Fair Value at Gross Gross Unrealized Gains Fair Value at Net Realized
Name of Issuer March 31, 2019 Additions ? Reductions ? (Losses) March 31, 2020 Gains (Losses) Interest/Dividend/Other Income AIC SPV Holdings II, LLC, Preferred $ 440 $ - $
- $ 2 $ 442 $ - $ 94
Stock
AMP Solar Group, Inc., Class A Common 6,236 - - 2,500 8,736 - -
Unit
Carbonfree Caustic SPE LLC, Term Loan - 13,111 - - 13,111 -
524
Carbonfree Chemicals SA LLC, Class B - 15,403 - (15,403) - - -
Units
Carbonfree Chemicals Holdings LLC, - 30,886 - (15,781) 15,105 - - Common Equity / Interest Carbonfree Chemicals SPE I LLC (f/k/a - 17,057 - (12,668) 4,389 -
318
Maxus Capital Carbon SPE I LLC), Term Loan Golden Bear 2016-R, LLC, Membership 12,936 83 - (3,271) 9,748 -
1,192
Interests
Pelican Energy, LLC, Membership 5,320 - (1,553) (1,356) 2,411 - -
Interests
Renew Financial LLC (f/k/a Renewable 14,573 - - (11,289) 3,284 - -
Funding, LLC), Series B Preferred
Stock
Renew Financial LLC (f/k/a Renewable 5,890 - - (3,789) 2,101 - -
Funding, LLC), Series D Preferred
Stock
Renew JV LLC, Membership Interests 2,296 4,216 (5,118) (480) 914 2,800 -
SquareTwo Financial Corp. (CA - - - - - 1,209 -
Holdings, Collect America, Ltd.)
Solarplicity Group Limited, First 1,990 - (5,811) 3,821 - (4,740) -
Lien Term Loan
$ 49,681 $ 80,756 $ (12,482) $ (57,714) $ 60,241 $ (731) $ 2,128
____________________
? Gross additions includes increases in the basis of investments resulting from
new portfolio investments, payment-in-kind interest or dividends, the accretion
of discounts, the exchange of one or more existing securities for one or more
new securities and the movement of an existing portfolio company into this
category from a different category.
? Gross reductions include decreases in the basis of investments resulting from
principal collections related to investment repayments or sales, the
amortization of premiums, the exchange of one or more existing securities for
one or more new securities and the movement of an existing portfolio company out
of this category into a different category.
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
(5)Denotes investments in which we are deemed to exercise a controlling
influence over the management or policies of a company, as defined in the 1940
Act, due to beneficially owning, either directly or through one or more
controlled companies, more than 25% of the outstanding voting securities of the
investment. Fair value as of March 31, 2019 and March 31, 2020 along with
transactions during the year ended March 31, 2020 in these controlled
investments are as follows:
Net Change in
Fair Value at Gross Gross Unrealized Gains Fair Value at Net Realized Gains Interest/Dividend/Other
Name of Issuer March 31, 2019 Additions ?
Reductions ? (Losses) March 31, 2020 (Losses)
Income
Dynamic Product Tankers, LLC, Class $ 36,879 $ - $
- $ (422) $ 36,457 $ - $ - A Units Dynamic Product Tankers, LLC, First 42,000 40 - (40) 42,000 -
3,969
Lien Term Loan Dynamic Product Tankers, LLC, - - - - - - -
Letters of Credit
Glacier Oil & Gas Corp. (f/k/a 33,705 3,222 - (22,216) 14,711 -
3,221
Miller Energy Resources , Inc.), Second Lien Term Loan Glacier Oil & Gas Corp. (f/k/a 9,000 - (9,000) - - - 416Miller Energy Resources , Inc.), First Lien Term Loan Glacier Oil & Gas Corp. (f/k/a 3,346 - - (3,346) - - -Miller Energy Resources , Inc.), Common Stock Merx Aviation Finance, LLC, 54,281 - - (25,834) 28,447 - 2,500
Membership Interests Merx Aviation Finance, LLC, Revolver 371,200 13,100 (79,000)
- 305,300 - 38,679
Merx Aviation Finance, LLC, Letters - - - - - - -
of Credit
MSEA Tankers LLC, Class A Units 73,369 - (12,500) (1,135) 59,735 - 4,649
SHD Oil & Gas, LLC, Series A Units - - - - - - -
SHD Oil & Gas, LLC, Tranche A Note 46,821 - (460) (23,866) 22,495 - 1,400
SHD Oil & Gas, LLC, Tranche B Note 39,432 - - (39,432) - - - SHD Oil & Gas, LLC, Tranche C Note 21,012 3,600 - 108 24,720 -
2,741
$ 731,045 $ 19,962 $ (100,960) $ (116,183) $ 533,865 $ - $ 57,575
____________________
? Gross additions includes increases in the basis of investments resulting from new portfolio investments, payment-in-kind interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category. ? Gross reductions include decreases in the basis of investments resulting from principal collections related to investment repayments or sales, the amortization of premiums, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
As of March 31, 2020, the Company had a 85%, 47%, 100%, 98% and 38% equity
ownership interest in Dynamic Product Tankers, LLC; Glacier Oil & Gas Corp.
(f/k/a
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
(6)Aggregate gross unrealized gain and loss for federal income tax purposes is
$49,776 and $405,396, respectively. Net unrealized loss is $355,620 based on a
tax cost of $3,178,354.
(7)Substantially all securities are pledged as collateral to our multi-currency
revolving credit facility (the "Senior Secured Facility" as defined in Note 8 to
the financial statements). As such, these securities are not available as
collateral to our general creditors.
(8)The negative fair value is the result of the commitment being valued below
par.
(9)These are co-investments made with the Company's affiliates in accordance
with the terms of the exemptive order the Company received from the Securities
and Exchange Commission (the "SEC") permitting us to do so. (See Note 3 to the
financial statements for discussion of the exemptive order from the SEC .)
(10)Other than the investments noted by this footnote, the fair value of the
Company's investments is determined using unobservable inputs that are
significant to the overall fair value measurement. See Note 2 to the financial
statements for more information regarding ASC 820, Fair Value Measurements ("ASC
820").
(11)The unused line fees of 0.25% are collected for the Unfunded Revolver,
respectively from both Altasciences US Acquisition, Inc. and
Altasciences/9360-1367 Quebec Inc. as each borrower has access to the respective
lending facilities.
(12)Par amount is denominated in USD unless otherwise noted, Euro ("€"), British
Pound ("£"), Canadian Dollar ("C$"), and Australian Dollar ("A$") .
(13)Non-income producing security.
(14)Non-accrual status (See Note 2 to the financial statements).
(15)The underlying investments of AIC SPV Holdings II, LLC is a securitization
in which the Company has a 14.25% ownership interest in the residual tranche.
(16)AIC Spotted Hawk Holdings, LLC, AIC SHD Holdings, LLC and AIC Pelican
Holdings, LLC are consolidated wholly-owned special purpose vehicles which only
hold equity investments of the underlying portfolio companies and have no other
significant assets or liabilities. AIC Spotted Hawk Holdings, LLC and AIC SHD
Holdings, LLC hold equity investments in SHD Oil & Gas, LLC. AIC Pelican
Holdings, LLC holds an equity investment in Pelican Energy, LLC.
(17)Investments that the Company has determined are not "qualifying assets"
under Section 55(a) of 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. The Company monitors the status of
these assets on an ongoing basis. As of March 31, 2020, non-qualifying assets
represented approximately 17.23% of the total assets of the Company.
(18)In addition to the interest earned based on the stated rate of this loan,
the Company may be entitled to receive additional interest as a result of its
arrangement with other lenders in a syndication.
(19)The Company holds some warrants for this investment as part of the
restructuring of the underlying portfolio company. The warrants have no cost
and no fair value as of March 31, 2020.
(20)Generally, the interest rate on floating interest rate investments is at
benchmark rate plus spread. The borrower has an option to choose the benchmark
rate, such as the London Interbank Offered Rate ("LIBOR"), the Euro Interbank
Offered Rate ("EURIBOR"), the federal funds rate or the prime rate. The spread
may change based on the type of rate used. The terms in the Schedule of
Investments disclose the actual interest rate in effect as of the reporting
period. LIBOR loans are typically indexed to 30-day, 60-day, 90-day or 180-day
LIBOR rates (1M L, 2M L, 3M L or 6M L, respectively), EURIBOR loans are
typically indexed to 90-day EURIBOR rates (3M E), Bank Bill Swap rates are
typically index to 90-day Bank Bill Swap rates (3M BBSW), GBP LIBOR loans are
typically indexed to 90-day GBP LIBOR rates (3M GBP L) and EUR LIBOR loans are
typically indexed to 90-day EUR LIBOR rates (3M E L) at the borrower's option.
LIBOR and EURIBOR loans may be subject to interest floors. As of March 31, 2020,
rates for 1M L, 2M L, 3M L, 6M L, 1M E, 3M E, 3M BBSW, 3M GBP L, 3M E L and
Prime are 0.99%, 1.26%, 1.45%, 1.18%, (0.42%), (0.36%), 0.42%, 0.59%, (0.25%)
and 3.25%, respectively.
(21)The rates associated with these undrawn committed revolvers and delayed draw
term loans represent rates for commitment and unused fees.
(22)This security is included in the Cash and Cash Equivalents on the Statements
of Assets and Liabilities.
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
(23)As of March 31, 2020, the Company had the following commitments to fund
various revolving and delayed draw senior secured and subordinated loans,
including commitments to issue letters of credit through a financial
intermediary on behalf of certain portfolio companies. Such commitments are
subject to the satisfaction of certain conditions set forth in the documents
governing these loans and letters of credit and there can be no assurance that
such conditions will be satisfied. See Note 10 to the financial statements for
further information on revolving and delayed draw loan commitments, including
commitments to issue letters of credit, related to certain portfolio companies.
Portfolio Company Total Commitment Drawn Commitment Letters of Credit Undrawn Commitment A&V Holdings Midco, LLC
$ 1,505 $ 903 $ - $ 602
Altasciences US Acquistion, Inc. 1,425 1,418 - 7
Amerivet Partners Management, Inc. 8,454 524 - 7,930
AMI US Holdings Inc. 2,907 2,674 - 233
Analogic Corporation 1,827 157 - 1,670
AQ Sunshine, Inc. 2,870 1,059 38 1,773
Arlington Industries Group Limited* 4,960 - - 4,960
AVAD Canada Ltd. 1,334 534 - 800
AVAD, LLC 18,666 10,086 - 8,580
AVG Intermediate Holdings LLC 1,466 - - 1,466
Banner Buyer, LLC 7,419 1,548 - 5,871
BIG Buyer, LLC 1,805 722 - 1,083
BK Medical Holding Company, Inc. 783 - - 783
Cerus Corporation 9,500 187 - 9,313
ChyronHego Corporation 5,750 5,050 - 700
Claritas, LLC 1,032 748 - 284
Compu-Link Corporation 2,272 2,272 - -
Continuum Global Solutions, LLC 20,000 8,791 - 11,209
Digital Reasoning Systems, Inc. 1,250 - - 1,250
Dispatch Acquisition Holdings, LLC 8,659 1,462 - 7,197
Dynamic Product Tankers, LLC 6,050 - 6,050 -
Eagle Foods Family Group, LLC 3,751 1,334 - 2,417
Education Personnel* 1,823 1,823 - -
EHL Merger Sub, LLC 4,155 1,662 - 2,493
Eldrickco Limited* 5,377 428 - 4,949
Erickson Inc 40,500 31,812 1,263 7,425
Exeter Property Group, LLC 192 - - 192
First Heritage Credit, LLC 11,550 517 - 11,033
FiscalNote, Inc. 6,375 3,867 - 2,508
Flock SPV I, LLC 6,933 - - 6,933
Florida Food Products, LLC 1,713 1,713 - -
FPG Services, LLC 7,368 2,105 - 5,263
GB001, Inc. 24,000 - - 24,000
Genesis Healthcare, Inc. 60,870 14,069 - 46,801
Gutter Buyer, Inc. 4,772 2,727 - 2,045
Heniff Holdco, LLC 3,925 1,635 - 2,290
HSI Halo Acquisition, Inc. 4,590 2,049 - 2,541
IM Acquirer LLC 289 289 - -
Ivy Finco Limited* 3,363 - - 3,363
Jacent Strategic Merchandising 3,500 3,500 - -
JF Acquisition, LLC 1,569 1,569 - -
Kauffman Intermediate, LLC 2,563 1,476 155 932
KDC US Holdings* 6,023 5,731 78 214
Kure Pain Holdings, Inc. 2,654 2,654 - -
LabVantage Solutions Limited* 3,769 - - 3,769
Lifelong Learner Holdings, LLC 5,374 2,389 - 2,985
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Portfolio Company Total Commitment Drawn Commitment Letters of Credit Undrawn Commitment Lion Cashmere Midco Limited*
3,903 1,301 - 2,602
Liqui-Box Holdings, Inc.* 3,563 3,085 77 401
Magnate Holding Corp. 3,330 2,690 140 500
Mannkind Corporation 12,133 - - 12,133
Margaux Acquisition Inc. 6,062 1,601 - 4,461
Margaux UK Finance Limited* 2,350 667 - 1,683
Marlin DTC-LS Midco 2, LLC 685 - - 685
Maxor National Pharmacy Services, LLC 1,558 779 - 779
Medical Guardian, LLC 5,714 381 - 5,333
Merx Aviation Finance, LLC 305,477 305,300 177 -
Nemo (BC) Bidco Pty Ltd* 142 - - 142
New Amsterdam Software BidCo LLC* 2,250 - - 2,250
Newscycle Solutions, Inc. 500 500 - -
Norvax, LLC 3,182 - - 3,182
NW Entertainment, Inc. 6,000 3,000 - 3,000
Olaplex, Inc. 3,800 3,800 - -
Omnitracs, LLC 3,750 - - 3,750
Orchard Therapeutics plc 16,667 - - 16,667
Ortega National Parks, LLC 8,251 2,049 - 6,202
Pace Health Companies, LLC 4,451 433 68 3,950
Paper Source, Inc. 3,081 3,081 - -
PHS Buyer, Inc. 2,000 - - 2,000
PrimeFlight Aviation Services, Inc. 2,842 - - 2,842
Project Comfort Buyer, Inc. 5,769 - - 5,769
ProPharma Group Intermediate, LLC* 1,032 1,032 - -
Protein For Pets Opco, LLC 2,219 444 - 1,775
Purchasing Power Funding I, LLC 9,112 4,608 - 4,504
RA Outdoors, LLC 1,200 - - 1,200
Radius Health, Inc. 15,500 - - 15,500
Rapid Displays Acquisition Corporation 3,462 2,308 - 1,154
Rigel Pharmaceuticals, Inc. 3,000 - - 3,000
RiteDose Holdings I, Inc. 2,000 - - 2,000
Royton Bidco Limited* 4,413 - - 4,413
RSC Acquisition , Inc. 3,213 - 5 3,208
Schlesinger Global, LLC 846 - - 846
SI Holdings, Inc. 3,413 3,413 - -
Simeio Group Holdings, Inc. 6,346 1,731 - 4,615
Simplifi Holdings, Inc. 8,491 1,200 - 7,291
Sirsi Corporation 429 86 - 343
Soliant Holdings, LLC 1,937 323 - 1,614
Sonar Entertainment, Inc. 22,831 4,097 - 18,734
Springbrook Holding Company, LLC 5,121 - - 5,121
SSCP Spring Bidco Limited* 1,358 - - 1,358
Teladoc, Inc. 1,666 - 360 1,306
Telesoft Holdings, LLC 2,273 1,515 - 758
Ten-X, LLC 4,680 4,680 - -
TGG TS Acquisition Company 1,750 500 - 1,250
The Emmes Company, LLC 2,449 2,449 - -
THLP CO. LLC 10,112 2,247 - 7,865
Tidewater Consumer Receivables, LLC 1,667 1,537 - 130
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Undrawn
Portfolio Company Total Commitment Drawn Commitment Letters of Credit Commitment
TNT Crust LLC 4,228 748 - 3,480
TricorBraun Holdings, Inc. 5,625 5,250 - 375
Truck-Lite Co., LLC 6,759 1,962 85 4,712
Turbo Buyer, Inc. 3,028 923 - 2,105
U.S. Auto Finance, Inc. 20,000 3,052 - 16,948
USLS Acquisition, Inc. 1,608 1,522 86 -
Vertafore, Inc. 15,000 - 424 14,576
Westfall Technik, Inc. 14,849 2,020 - 12,829
Wildcat BuyerCo, Inc. 3,913 - 8 3,905
Wright Medical Group, Inc. 70,000 7,666 - 62,334
Total Commitments $ 999,922 $ 505,464 $ 9,014 $ 485,444
____________________
* These investments are in a foreign currency and the total commitment has been
converted to USD using the March 31, 2020 exchange rate.
(24)As of March 31, 2020, Dynamic Product Tankers, LLC had various classes of
limited liability interests outstanding of which the Company holds Class A-1 and
Class A-3 units which are identical except that Class A-1 unit is voting and
Class A-3 unit is non-voting. The units entitle the Company to appoint three out
of five managers to the board of managers.
(25)As of March 31, 2020, MSEA Tankers, LLC had various classes of limited
liability interests outstanding of which the Company holds Class A-1 and Class
A-2 units which are identical except that Class A-1 unit is voting and Class A-2
unit is non-voting. The units entitle the Company to appoint two out of three
managers to the board of managers.
(26)This investment has matured but is still held for any potential future cash
proceeds. No value has been attributed to these future recoveries.
(27)The maturity date for these investments are expected to be extended past
March 31, 2020. The final terms of the extension are still under negotiation
between the Company and the respective portfolio company.
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)(28)The following shows the composition of the Company's portfolio at cost by control designation, investment type and industry as of March 31, 2020:
Structured
First Lien - Second Lien - Products and Preferred Common
Industry Secured Debt Secured Debt Unsecured Debt Other Equity Equity/Interests Warrants Total Non-Controlled / Non-Affiliated Investments
Advertising, Printing & Publishing $ 39,282 $ 5,503 $
- $ - $ - $ - $ - $ 44,785
Aerospace & Defense 31,579 13,462 - - - - - 45,041
Automotive 41,171 23,489 - - - 2,064 - 66,724
Aviation and Consumer Transport 14,461 - - - - - - 14,461
Beverage, Food & Tobacco 96,973 - - - - 2,199 99,172
Business Services 223,967 150,982 - - 78 1,432 - 376,459
Chemicals, Plastics & Rubber 17,576 14,506 - - - - - 32,082
Construction & Building 29,111 - - - - 500 - 29,611
Consumer Goods - Durable 66,367 21,693 - - 462 100 - 88,622
Consumer Goods - Non-Durable 79,004 12,882 - - - - - 91,886
Consumer Services 104,237 24,842 - - - - - 129,079
Containers, Packaging & Glass 5,081 - - - - - - 5,081
Diversified Investment Vehicles, Banking, Finance, Real Estate 64,420 - - - - - - 64,420 Education 34,595 - - - - - 34,595 Energy - Electricity 7,637 - - - 5,861 4 - 13,502 Environmental Industries 30,764 - - - - - 30,764 Food & Grocery 15,319 - - - - - - 15,319 Healthcare & Pharmaceuticals 416,793 60,914 - - 333 1,064 135 479,239 High Tech Industries 361,359 - - - 1,500 - 48 362,907 Hotel, Gaming, Leisure, Restaurants 2,500 - - - - - - 2,500 Insurance 65,337 - - - - - - 65,337 Manufacturing, Capital Equipment 36,835 7,937 - - - 250 -
45,022
Media - Diversified & Production 43,020 - - - - - - 43,020
Metals & Mining 581 - - - - - - 581
Retail 47,879 - - - - - - 47,879
Telecommunications 11,317 12,788 - - - - - 24,105
Transportation - Cargo,
Distribution 32,039 - - - - - - 32,039
Wholesale 13,816 - - - - 500 - 14,316
Total Non-Controlled /
Non-Affiliated Investments $ 1,933,020 $ 348,998 $ - $ - $ 8,234 $ 8,113 $ 183 $ 2,298,548
Non-Controlled / Affiliated Investments
Chemicals, Plastics & Rubber $ 30,168 $ - $ - $ - $ - $ 46,289 $ - $ 76,457
Diversified Investment Vehicles,
Banking, Finance, Real Estate - - - 16,729 - - - 16,729
Energy - Electricity - - - - 14,445 10,893 - 25,338
Energy - Oil & Gas - - - - - 16,822 - 16,822
Total Non-Controlled / Affiliated
Investments $ 30,168 $ - $ - $ 16,729 $ 14,445 $ 74,004 $ - $ 135,346
Controlled Investments
Aviation and Consumer Transport $ 305,300 $ - $ - $ - $ - $ 15,000 $ - $ 320,300
Energy - Oil & Gas 113,378 36,926 - - - 31,489 - 181,793
Transportation - Cargo,
Distribution 41,870 - - - - 111,756 - 153,626
Total Controlled Investments $ 460,548 $ 36,926 $ - $ - $ - $ 158,245 $ - $ 655,719
Total $ 2,423,736 $ 385,924 $ - $ 16,729 $ 22,679 $ 240,362 $ 183 $ 3,089,613
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)(29)The following shows the composition of the Company's portfolio at fair value by control designation, investment type and industry as of March 31, 2020:
First Lien - Second Lien - Structured % of Net
Industry Secured Debt Secured Debt Unsecured Debt Products and Other Preferred Equity Common Equity/Interests Warrants Total Assets Non-Controlled / Non-Affiliated Investments
Advertising, Printing & Publishing $ 38,074 $ 4,882 $
- $ - $ - $ - $ - $ 42,956 4.2 %
Aerospace & Defense 30,902 12,353 - - - - - 43,255 4.2 %
Automotive 39,513 22,220 - - - 491 - 62,224 6.1 %
Aviation and Consumer Transport 13,984 - - - - - - 13,984 1.4 %
Beverage, Food & Tobacco 96,048 - - - - 2,368 - 98,416 9.6 %
Business Services 217,036 142,390 - - 78 1,127 - 360,631 35.2 %
Chemicals, Plastics & Rubber 17,094 14,671 - - - - - 31,765 3.1 %
Construction & Building 28,415 - - - - 558 - 28,973 2.8 %
Consumer Goods - Durable 53,621 20,639 - - 231 518 - 75,009 7.3 %
Consumer Goods - Non-durable 77,283 12,289 - - - - - 89,572 8.7 %
Consumer Services 99,018 24,282 - - - - - 123,300 12.0 %
Containers, Packaging & Glass 5,167 - - - - - - 5,167 0.5 %
Diversified Investment Vehicles,
Banking, Finance, Real Estate 63,371 - - - - - - 63,371 6.2 %
Education 34,201 - - - - - - 34,201 3.3 %
Energy - Electricity 3,787 - - - - - - 3,787 0.4 %
Environmental Industries 29,811 - - - - - - 29,811 2.9 %
Food & Grocery 15,222 - - - - - - 15,222 1.5 %
Healthcare & Pharmaceuticals 406,941 56,627 - - 332 976 88 464,964 45.4 %
High Tech Industries 340,032 - - - 1,500 - 48 341,580 33.4 %
Hotel, Gaming, Leisure,
Restaurants 2,425 - - - - - - 2,425 0.2 %
Insurance 63,006 - - - - - - 63,006 6.2 %
Manufacturing, Capital Equipment 35,644 7,538 - - - 187 - 43,369 4.2 %
Media - Diversified & Production 41,856 - - - - - - 41,856 4.1 %
Metals & Mining - - - - - - - - - %
Retail 46,839 - - - - - - 46,839 4.6 %
Telecommunications 10,310 10,818 - - - - - 21,128 2.1 %
Transportation - Cargo,
Distribution 31,098 - - - - - - 31,098 3.0 %
Wholesale 13,087 - - - - 331 - 13,418 1.3 %
Total Non-Controlled /
Non-Affiliated Investments $ 1,853,785 $ 328,709 $ - $ - $ 2,141 $ 6,556 $ 136 $ 2,191,327 213.9 %
% of Net Assets 181.0 % 32.1 % - % - % 0.2 % 0.6 % - % 213.9 %
Non-Controlled / Affiliated Investments
Chemicals, Plastics & Rubber $ 17,500 $ - $ - $ - $ - $ 15,105 $ - $ 32,605 3.2 %
Diversified Investment Vehicles,
Banking, Finance, Real Estate - - - 9,748 - - - 9,748 1.0 %
Energy - Electricity - - - - 5,827 9,650 - 15,477 1.5 %
Energy - Oil & Gas - - - - - 2,411 - 2,411 0.2 %
Total Non-Controlled / Affiliated
Investments $ 17,500 $ - $ - $ 9,748 $ 5,827 $ 27,166 $ - $ 60,241 5.9 %
% of Net Assets 1.7 % - % - % 1.0 % 0.6 % 2.6 % - % 5.9 %
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
First Lien - Second Lien - Structured Common % of Net
Industry Secured Debt Secured Debt Unsecured Debt Products and Other Preferred Equity Equity/Interests
Warrants Total Assets
Controlled Investments
Aviation and Consumer Transport $ 305,300 $ - $ - $ - $ - $ 28,447 $ - $ 333,747 32.6 %
Energy - Oil & Gas 47,215 14,711 - - - - - 61,926 6.0 %
Transportation - Cargo,
Distribution 42,000 - - - - 96,192 - 138,192 13.5 %
Total Controlled Investments $ 394,515 $ 14,711 $ - $ - $ - $ 124,639 $ - $ 533,865 52.1 %
% of Net Assets 38.5 % 1.4 % - % - % - % 12.2 % - % 52.1 %
Total $ 2,265,800 $ 343,420 $ - $ 9,748 $ 7,968 $ 158,361 $ 136 $ 2,785,433 271.9 %
% of Net Assets 221.2 % 33.5 % - % 1.0 % 0.8 % 15.4 % 0.0 % 271.9 %
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2020
(In thousands, except share data)
Percentage of Total
Investments (at Fair Value)
Industry Classification as of March 31, 2020
Healthcare & Pharmaceuticals 16.7%
Business Services 12.9%
Aviation and Consumer Transport 12.5%
High Tech Industries
12.3%
Transportation - Cargo, Distribution 6.1% Consumer Services 4.4% Beverage, Food & Tobacco 3.5% Consumer Goods - Non-durable 3.2% Consumer Goods - Durable 2.7% Diversified Investment Vehicles, Banking, Finance, Real Estate 2.6% Chemicals, Plastics & Rubber 2.3% Energy - Oil & Gas 2.3% Insurance 2.3% Automotive 2.2% Retail 1.7% Manufacturing, Capital Equipment
1.6%
Aerospace & Defense
1.6%
Advertising, Printing & Publishing
1.5%
Media - Diversified & Production 1.5%
Education 1.2%
Environmental Industries 1.1%
Construction & Building 1.0%
Telecommunications 0.8%
Energy - Electricity 0.7%
Food & Grocery 0.5%
Wholesale 0.5%
Containers, Packaging & Glass 0.2%
Hotel, Gaming, Leisure, Restaurants 0.1%
Metals & Mining 0.0%
Total Investments 100.0%
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)
Advertising, Printing & Publishing
A-L Parent LLC Second Lien Secured Debt 9.75% (1M L+725, 1.00% 12/02/24 $ 5,536 $ 5,496 $ 5,522 (10)
Floor)
Simplifi Holdings, Inc. First Lien Secured Debt 8.00% (1M L+550, 1.00% 09/28/22 25,363 24,948 25,110 (9)
Floor)
First Lien Secured Debt - 0.50% Unfunded 09/28/22 2,400 (50) (24) (8)(9)(21)(23)
Unfunded Revolver
24,898 25,086
Total Advertising, Printing & Publishing $ 30,394 $ 30,608
Aerospace & Defense
Erickson Inc First Lien Secured Debt - 10.09% (3M L+750, 1.00% 04/28/22 $ 27,169 $ 27,169 $ 26,558 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 04/28/22 11,381 (346) (256) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 7.50% 4/21/19 - 10/01/22 6,449 - (144) (8)(9)(23)
Letters of Credit
26,823 26,158
ILC Dover LP Second Lien Secured Debt 11.38% (6M L+850, 1.00% 06/28/24 20,000 19,635 19,550
Floor)
PAE Holding Corporation Second Lien Secured Debt 12.00% (1M L+950, 1.00% 10/20/23 28,097 27,540 27,816 (10)
Floor)
Total Aerospace & Defense $ 73,998 $ 73,524
Automotive
Accelerate Parent Corp. Common Equity/Interests - N/A N/A 1,076 $ 1,714 $ - (13)(28)
Common Stock Shares
Crowne Automotive
Vari-Form Group, LLC First Lien Secured Debt 13.60% (3M L+11.00% (7.00% 02/02/23 $ 6,196 5,766 960 (9)(13)(14)
Cash plus 4.00% PIK), 1.00%
Floor)
Vari-Form Inc. First Lien Secured Debt 13.60% (3M L+11.00% (7.00% 02/02/23 2,110 2,604 327 (9)(13)(14)
Cash plus 4.00% PIK), 1.00%
Floor)
8,370 1,287
K&N Parent, Inc. Second Lien Secured Debt 11.25% (1M L+875, 1.00% 10/21/24 23,764 23,428 22,991 (10)
Floor)
Total Automotive $ 33,512 $ 24,278
Aviation and Consumer Transport
Merx Aviation Finance, LLC First Lien Secured Debt - 12.00% 10/31/23 $ 371,200 $ 371,200 $ 371,200 (23)
(5) Revolver
First Lien Secured Debt - 2.25% 07/13/19 177 - - (23)
Letter of Credit
Common Equity/Interests - N/A N/A N/A 15,000 54,281
Membership Interests
Total Aviation and Consumer Transport $ 386,200 $ 425,481
Beverage, Food & Tobacco
Eagle Foods Family Group, First Lien Secured Debt 9.24% (3M L+650, 1.00% 06/14/24 $ 24,813 $ 24,571 $ 24,440 (9)
LLC Floor)
First Lien Secured Debt - 0.00% Unfunded 06/14/23 3,750 (35) (56) (8)(9)(21)(23)
Unfunded Revolver
24,536 24,384
Florida Food Products
Florida Food Products , First Lien Secured Debt 9.25% (1M L+675, 1.00% 09/08/25 23,171 22,639 22,940 (9)
Inc. Floor)
Florida Food Products , First Lien Secured Debt - 9.25% (1M L+675, 1.00% 09/06/23 1,336 1,336 1,322 (9)(23)
LLC Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 09/06/23 377 (38) (4) (8)(9)(21)(23)
Unfunded Revolver
23,937 24,258
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)
TNT Crust LLC First Lien Secured Debt 8.75% (1M L+625, 1.00% 11/06/23 9,083 8,916 8,992 (9)
Floor)
First Lien Secured Debt - 0.50% Unfunded 11/06/23 1,626 (30) (16) (8)(9)(21)(23)
Unfunded Revolver
Common Equity/Interests - N/A N/A 244 244 323 (9)(13)
Series A Units Shares
9,130 9,299
Total Beverage, Food & Tobacco $ 57,603 $ 57,941
Business Services
Access CIG, LLC Second Lien Secured Debt 10.25% (1M L+775) 02/27/26 $ 15,900 $ 15,771 $ 15,741 (10)
Aero Operating LLC First Lien Secured Debt 9.75% (1M L+725, 1.00% 12/29/22 37,040 36,325 36,669 (9)
Floor)
First Lien Secured Debt - 9.75% (1M L+725) 12/29/22 2,663 2,663 2,636 (9)(23)
Revolver
First Lien Secured Debt - 1.00% Unfunded 12/29/22 2,032 (90) (20) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 7.25% 5/4/2019 - 6/21/19 118 - (1) (8)(9)(23)
Letter of Credit
38,898 39,284
Ambrosia Buyer Corp. Second Lien Secured Debt 10.50% (1M L+ 800, 1.00% 08/28/25 21,429 20,999 20,975
Floor)
Aptean, Inc. Second Lien Secured Debt 12.11% (3M L+950, 1.00% 12/20/23 11,148 11,064 11,148 (10)
Floor)
Claritas, LLC First Lien Secured Debt 8.50% (1M L+600, 1.00% 12/21/23 3,944 3,905 3,905 (9)
Floor)
First Lien Secured Debt - 0.50% Unfunded 12/21/23 1,031 (10) (10) (8)(9)(21)(23)
Unfunded Revolver
3,895 3,895
Continuum Global First Lien Secured Debt - 8.00% (1M L+550, 1.00% 02/15/22 6,219 6,219 6,095 (9)(23)
Solutions, LLC Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 02/15/22 4,550 (207) (91) (8)(9)(21)(23)
Unfunded Revolver
Preferred Equity - Preferred N/A N/A 620 62 62 (9)(13)
Stock Shares
6,074 6,066
CT Technologies First Lien Secured Debt 6.75% (1M L+425, 1.00% 12/01/21 4,460 3,853 3,897 (9)(10)
Intermediate Holdings, Floor)
Inc
Second Lien Secured Debt 11.50% (1M L+900, 1.00% 12/01/22 31,253 30,636 29,378 (9)
Floor)
34,489 33,275
Education Personnel First Lien Secured Debt 5.60% (3M GBP L+475, 0.50% 08/31/24 £ 4,118 5,219 5,315 (9)(17)
Floor)
First Lien Secured Debt - 5.60% (3M GBP L+475, 0.50% 08/31/24 £ 1,471 1,864 1,898 (9)(17)(23)
Revolver Floor)
First Lien Secured Debt - 1.66% Unfunded 08/31/24 £ 4,412 - - (9)(17)(21)(23)
Unfunded Delayed Draw
7,083 7,213
Electro Rent Corporation Second Lien Secured Debt 11.60% (3M L+900, 1.00% 01/31/25 34,235 33,427 33,551 (9)
Floor)
McLarens Global Ltd.
Margaux Acquisition Inc. First Lien Secured Debt 8.18% (3M L+600, 1.00% 12/19/24 17,614 17,279 17,262 (9)
Floor)
First Lien Secured Debt 8.60% (3M L+600, 1.00% 12/19/24 1,373 1,373 1,345 (9)
Floor)
First Lien Secured Debt - 8.60% (3M L+600) 12/19/24 172 172 168 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 12/19/24 1,430 (31) (29) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 1.00% Unfunded 12/19/24 4,461 (111) (89) (8)(9)(21)(23)
Unfunded Delayed Draw
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Fair
Industry / Company Investment Type Interest Rate (20) Date Shares (12) Cost (29) Value (1) (30)
Margaux UK Finance First Lien Secured Debt 8.59% (3M L+600, 1.00% 12/19/24 £ 5,955 7,381 7,605 (9)(17)
Limited Floor)
First Lien Secured Debt - 0.50% Unfunded 12/19/24 £ 541 (13) (14) (8)(9)(17)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 1.00% Unfunded 12/19/24 £ 1,353 (33) (35) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
26,017 26,213
Ministry Brands, LLC Second Lien Secured Debt 11.88% (1M L+925, 1.00% 06/02/23 10,000 9,902 10,050
Floor)
Newscycle Solutions, First Lien Secured Debt 9.50% (1M L+700, 1.00% 12/29/22 16,646 16,334 16,479 (9)
Inc. Floor)
First Lien Secured Debt - 9.50% (1M L+700, 1.00% 12/29/22 160 160 158 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 12/29/22 340 (9) (3) (8)(9)(21)(23)
Unfunded Revolver
16,485 16,634
PSI Services, LLC First Lien Secured Debt 7.50% (1M L+500, 1.00% 01/20/23 4,575 4,502 4,552 (9)
Floor)
First Lien Secured Debt - 7.48% (1M L+500, 1.00% 01/20/22 119 119 119 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 01/20/22 278 (6) (1) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 01/20/22 £ 47 - - (8)(9)(21)(23)
Unfunded Revolver
Second Lien Secured Debt 11.50% (1M L+900, 1.00% 01/20/24 37,893 37,117 37,925 (9)
Floor)
41,732 42,595
RA Outdoors, LLC First Lien Secured Debt 7.25% (1M L+475, 1.00% 09/11/24 7,138 7,027 6,995 (9)
Floor)
First Lien Secured Debt - 0.50% Unfunded 09/09/22 1,176 (17) (24) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 4.75% 08/28/19 24 - - (8)(9)(23)
Letter of Credit
Second Lien Secured Debt 11.25% (1M L+875, 1.00% 09/11/25 34,200
33,510 33,345 (9)
Floor)
40,520 40,316
STG-Fairway Acquisitions, Second Lien Secured Debt 11.75% (1M L+925, 1.00% 06/30/23 15,000 14,800 14,325 (10)
Inc. Floor)
TGG TS Acquisition First Lien Secured Debt - 8.99% (1M L+650) 12/14/23 690 690 673 (23)
Company Revolver
First Lien Secured Debt - 0.50% Unfunded 12/14/23 1,060 - (27) (8)(21)(23)
Unfunded Revolver
690 646
Transplace Holdings, Second Lien Secured Debt 11.23% (1M L+875, 1.00% 10/06/25 8,599 8,422 8,448 (10)
Inc. Floor)
U.S. Legal Support
USLS Acquisition, Inc. First Lien Secured Debt 8.38% (3M L+575, 1.00% 12/02/24 20,049 19,670 19,658 (9)
Floor)
First Lien Secured Debt 8.35% (3M L+575, 1.00% 12/02/24 1,099 1,088 1,077 (9)
Floor)
First Lien Secured Debt - 8.38% (3M L+575) 12/02/24 536 536 526 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 12/02/24 986 (30) (19) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 12/02/24 3,591 (44) (70) (8)(9)(21)(23)
Unfunded Delayed Draw
First Lien Secured Debt - 5.75% 12/02/24 86 - (1) (8)(9)(23)
Letter of Credit
US Legal Support Common Equity/Interests - N/A N/A 602,978 603 696 (9)(13)
Investment Holdings, LLC Series A-1 Units Shares
21,823 21,867
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)Vertafore, Inc. First Lien Secured Debt - 0.50% Unfunded 06/30/23 14,576 (1,467) (1,531) (8)(21)(23) Unfunded Revolver First Lien Secured Debt - 3.25% 01/17/20 424 - (45) (8)(23) Letter of Credit (1,467) (1,576) Total Business Services $ 350,624 $ 350,666 Chemicals, Plastics & Rubber Carbon Free Chemicals Carbonfree Chemicals SPE First Lien Secured Debt 5.215% PIK 12/31/21 $ 50,305 $ 50,305 $ 47,806 I LLC (f/k/a Maxus Capital Carbon SPE I LLC) First Lien Secured Debt - 0.00% Unfunded 12/31/21 2,911 - - (21)(23) Unfunded Delayed Draw Common Equity/Interests - N/A N/A 9,000,000 9,000 - (13) Residual Interests shares Carbonfree Caustic SPE First Lien Secured Debt 5.00% 12/31/21 10,200 10,200 10,200 LLC 69,505 58,006 Hare Bidco, Inc. Second Lien Secured Debt 9.75% (3M E+875) 08/01/24 € 13,574 14,465 14,937Westfall Technik, Inc. First Lien Secured Debt 7.85% (3M L+525, 1.00% 09/13/24 12,318 12,158 12,071 (9) Floor) First Lien Secured Debt - 7.69% (3M L+500, 1.00% 09/13/24 135 135 132 (9)(23) Revolver Floor) First Lien Secured Debt - 0.50% Unfunded 09/13/24 1,885 (37) (38) (8)(9)(21)(23) Unfunded Revolver First Lien Secured Debt - 1.00% Unfunded 09/13/24 3,140 (98) (63) (8)(9)(21)(23) Unfunded Delayed Draw 12,158 12,102 Total Chemical, Plastics & Rubber $ 96,128 $ 85,045 Construction & Building Englert Gutter Buyer, Inc. First Lien Secured Debt 8.73% (1M L+625, 1.00% 03/06/25 $ 23,864 $ 23,274 $ 23,268 (9) Floor) First Lien Secured Debt - 0.50% Unfunded 03/06/24 2,727 (67) (68) (8)(9)(21)(23) Unfunded Revolver First Lien Secured Debt - 0.00% Unfunded 03/06/25 3,409 (51) (85) (8)(9)(21)(23) Unfunded Delayed Draw Gutter Holdings, LP Common Equity/Interests - N/A N/A 500 shares 500 478 (9)(13) Common Stock Total Construction & Building $ 23,656 $ 23,593 Consumer Goods - Durable Hayward Industries, Inc. Second Lien Secured Debt 10.75% (1M L+825) 08/04/25 $ 21,918 $ 21,649 $ 21,589 KDC US Holdings First Lien Secured Debt - 5.75% (1M L+325) 12/21/23 1,204 1,204 1,099 (23) Revolver First Lien Secured Debt - 0.00% Unfunded 12/21/23 4,712 - (409) (8)(21)(23) Unfunded Revolver First Lien Secured Debt - 3.25% 12/31/19- 03/08/20 104 - (9) (8)(23) Letters of Credit 1,204 681 KLO Holdings 9357-5991 Quebec Inc. First Lien Secured Debt 10.25% (1M L+775, 1.50% 04/07/22 8,763 8,697 8,282
Floor)
KLO Acquisition LLC First Lien Secured Debt 10.25% (1M L+775, 1.50% 04/07/22 5,073 5,035 4,795
Floor)
13,732 13,077
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)
Project Comfort Buyer, First Lien Secured Debt 9.81% (6M L+700, 1.00% Floor) 02/03/25 23,769 23,075 23,056 (9)
Inc.
First Lien Secured Debt - 0.50% Unfunded 02/01/24 3,462 (100) (104) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 02/03/25 2,308 (34) (69) (8)(9)(21)(23)
Unfunded Delayed Draw
Preferred Equity - Preferred N/A N/A 461,538 462 462 (9)(13)
Stock Shares
23,403 23,345
Sorenson Holdings, LLC Common Equity/Interests - N/A N/A 587 Shares - 470 (10)(13)
Membership Interests
Total Consumer Goods - Durable $ 59,988 $ 59,162
Consumer Goods - Non-Durable
ABG Intermediate Holdings Second Lien Secured Debt 10.25% (1M L+775, 1.00% 09/29/25 $ 7,371 $ 7,345 $ 7,298 (10)
2, LLC Floor)
BIG Buyer, LLC First Lien Secured Debt 9.10% (3M L+650, 1.00% Floor) 11/20/23 29,264 28,503 28,970 (9)
First Lien Secured Debt - 9.10% (3M L+650, 1.00% Floor) 11/20/23 271 271 268 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 11/20/23 1,535 (50) (15) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 3.25% Unfunded 11/20/23 1,368 (75) (14) (8)(9)(21)(23)
Unfunded Delayed Draw
28,649 29,209
Lion Cashmere Midco First Lien Secured Debt 8.42% (6M L+575, 1.00% Floor) 03/21/25 13,053 12,825 12,694 (9)(17)
Limited
First Lien Secured Debt - 7.92% (6M L+525, 1.00% Floor) 03/21/24 € 225 256 246 (9)(17)(23)
Revolver
First Lien Secured Debt - 1.84% Unfunded 03/21/24 € 960 (23) (30) (8)(9)(17)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 2.01% Unfunded 03/21/25 € 2,372 (47) (73) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
13,011 12,837
Reddy Ice Corporation First Lien Secured Debt 10.00% (1M L+750, 1.00% 06/30/23 31,316 30,917 31,026 (9)
Floor)
First Lien Secured Debt - 12.00% (P+650) 06/30/23 1,045 1,045 1,036 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 06/30/23 1,874 (37) (17) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 4.50% 04/05/19 9,750 - (90) (8)(9)(23)
Letter of Credit
First Lien Secured Debt - 0.00% Unfunded 06/30/23 2,681 (11) (25) (8)(9)(21)(23)
Unfunded Delayed Draw
31,914 31,930
Sequential Brands Group, Second Lien Secured Debt 11.24% (1M L+875) 02/07/24 13,052 12,947 12,919 (17)
Inc.
Total Consumer Goods - Non-Durable $ 93,866 $ 94,193
Consumer Services
1A Smart Start LLC Second Lien Secured Debt 10.75% (1M L+825, 1.00% 08/22/22 $ 25,100 $ 24,734 $ 24,708
Floor)
Nemo (BC) Bidco Pty Ltd First Lien Secured Debt 7.65% (1M BBSW+575, 1.00% 04/06/24 A$ 6,768 4,909 4,712 (17)
Floor)
First Lien Secured Debt - 2.59% Unfunded 04/06/24 A$ 232 (9) (2) (8)(17)(21)(23)
Unfunded Delayed Draw
4,900 4,710
Pinstripe Holdings, LLC First Lien Secured Debt 8.50% (2M L+600) 01/17/25 7,000 6,864 6,895
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)
Tidewater Consumer First Lien Secured Debt 8.25% (1M L+575) 12/28/23 11,333 11,226 11,220 (9)(17)
Receivables, LLC
First Lien Secured Debt - 8.25% (1M L+575) 12/28/23 792 792 784 (9)(17)(23)
Revolver
First Lien Secured Debt - 0.00% Unfunded 12/28/23 1,542 (11) (8) (8)(9)(17)(21)(23)
Unfunded Revolver
12,007 11,996
Total Consumer Services $ 48,505 $ 48,309
Containers, Packaging & Glass
Sprint Industrial Holdings , Second Lien Secured Debt 13.5% PIK 11/14/19 $ 21,782 $ 18,107 $ 15,912 (13)(14)
LLC
Common Equity/Interests - N/A N/A 7,341 - - (13)(26)
Warrants Warrants
18,107 15,912
TricorBraun Holdings, Inc. First Lien Secured Debt - 7.75% (P+225) 11/30/21 1,628 1,628 1,630 (23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 11/30/21 3,998 (270) - (21)(23)
Unfunded Revolver
1,358 1,630
Total Containers, Packaging & Glass $19,465 $ 17,542 Diversified Investment Vehicles, Banking, Finance, Real Estate Alera Group Intermediate
First Lien Secured Debt - 1.00% Unfunded 08/01/25 $ 28,000 $ (242) $ (252) (8)(21)(23) Holdings
Unfunded Delayed Draw
Exeter Property Group, LLC First Lien Secured Debt 7.00% (1M L+450) 08/28/24 4,808 4,737 4,736 (9)
First Lien Secured Debt - 0.50% Unfunded 08/28/24 192 (3) (3) (8)(9)(21)(23)
Unfunded Revolver
4,734 4,733
Flock SPV I, LLC First Lien Secured Debt 9.00% (1M L+650) 08/30/22 9,333 9,265 9,251 (9)(17)
First Lien Secured Debt - 0.50% Unfunded 08/30/22 1,333 (11) (12) (8)(9)(17)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 08/30/22 9,333 (91) (83) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
9,163 9,156
N/A 09/20/42 - 16,645 12,936 (3)(17)
Membership Interests
Mayfield Agency Borrower Second Lien Secured Debt 11.00% (1M L+850) 03/02/26 5,000 4,935 4,913 (10)
Inc.
Purchasing Power, LLC First Lien Secured Debt 8.00% (1M L+550) 05/09/19 17,100 17,099 17,087 (9)
First Lien Secured Debt - 7.99% (1M L+550) 05/09/19 3,000 2,998 2,998 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 05/09/19 9,900 (14) (7) (8)(9)(21)(23)
Unfunded Delayed Draw
20,083 20,078
Taupo River II, LLC First Lien Secured Debt 7.84% (3M L+525, 1.00% 06/08/20 14,000 13,956 13,955 (9)(17)
Floor)
Ten-X, LLC First Lien Secured Debt - 0.50% Unfunded 09/29/22 4,680 (295) (310) (8)(21)(23)
Unfunded Revolver
Total Diversified Investment Vehicles, Banking, Finance, Real Estate
$ 68,979 $ 65,209
Energy - Electricity
AMP Solar Group, Inc. (4) Common Equity/Interests - Class N/A N/A 243,646 $ 10,000 $ 6,236 (13)(17)
A Common Unit Shares
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)
Renew Financial
AIC SPV Holdings II, LLC Preferred Equity - Preferred N/A N/A 143 Shares 534 440 (17)(15)
(4) Stock
Renew Financial LLC Preferred Equity - Series B N/A N/A 1,505,868 8,343 14,573 (13)
(f/k/a Renewable Funding, Preferred Stock Shares
LLC) (4)
Preferred Equity - Series D N/A N/A 436,689 5,568 5,890 (13)
Preferred Stock Shares
Renew JV LLC (4) Common Equity/Interests - N/A N/A N/A 1,796 2,296 (13)(17)
Membership Interests
16,241 23,199
Solarplicity Group
Solarplicity Group First Lien Secured Debt N/A 11/30/22 £ 4,331 5,811 1,990 (3)(17)
Limited (4)
Solarplicity UK Holdings First Lien Secured Debt 4.00% 03/08/23 £ 5,562 7,637 7,173 (17)
Limited
Preferred Equity - Preferred N/A N/A 4,286 5,861 4,922 (2)(13)(17)
Stock Shares
Common Equity/Interests - N/A N/A 2,825 4 223 (2)(13)(17)
Ordinary Shares Shares
19,313 14,308
Total Energy - Electricity $ 45,554 $ 43,743
Energy - Oil & Gas
Glacier Oil & Gas Corp. First Lien Secured Debt 8.00% Cash (10.00% PIK 03/29/20 $ 9,000 $ 9,000 $ 9,000
(f/k/a Miller Energy Toggle)
Resources, Inc.) (5)
Second Lien Secured Debt 10.00% PIK Toggle (8.00% 03/29/21 33,705
33,705 33,705
Cash)
Common Equity/Interests - N/A N/A 5,000,000 30,078 3,346 (13)
Common Stock Shares
72,783 46,051
Pelican Energy, LLC (4) Common Equity/Interests - N/A N/A 1,444 18,375 5,320 (13)(16)(17)
Membership Interests Shares
SHD Oil & Gas, LLC (5) First Lien Secured Debt - 12.00% 03/31/20 20,400 20,400 21,012
Tranche C Note
First Lien Secured Debt - 4.00% 03/31/20 45,457 45,457 46,821
Tranche A Note
First Lien Secured Debt - 3.00% PIK 03/31/20 81,956 44,380 39,432 (13)(14)
Tranche B Note
First Lien Secured Debt - 0.00% Unfunded 03/31/20 1,600 - - (21)(23)
Unfunded Delayed Draw
Common Equity/Interests - N/A N/A 7,600,000 1,411 - (13)(16)
Series A Units Shares
111,648 107,265
Total Energy - Oil & Gas $ 202,806 $ 158,636
Food & Grocery
Bumble Bee Foods
Bumble Bee Holdings, First Lien Secured Debt 10.64% (3M L+800, 1.00% 08/15/23 $ 15,351 $ 15,110 $ 14,890
Inc. Floor)
Connors Bros Clover Leaf First Lien Secured Debt 10.64% (3M L+800, 1.00% 08/15/23 4,349 4,281 4,219
Seafoods Company Floor)
19,391 19,109
Grocery Outlet, Inc. Second Lien Secured Debt 9.85% (3M L+725) 10/22/26 10,500 10,400 10,474 (10)
Total Food & Grocery $ 29,791 $ 29,583
See notes to financial statements.
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Table of Contents
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Fair
Industry / Company Investment Type Interest Rate (20) Date Shares (12) Cost (29) Value (1) (30)
Healthcare & Pharmaceuticals
Altasciences
9360-1367 Quebec Inc. First Lien Secured Debt 8.49% (3M L+625, 1.00% 06/09/23 $ 2,394 $ 1,755 $ 1,725 (9)(17)
Floor)
First Lien Secured Debt 8.88% (3M L+625, 1.00% 06/09/23 $ 2,870 2,824 2,762 (9)(17)
Floor)
Altasciences US First Lien Secured Debt 8.88% (3M L+625, 1.00% 06/09/23 5,182 5,101 4,988 (9)
Acquisition, Inc. Floor)
First Lien Secured Debt 8.85% (3M L+625, 1.00% 06/09/23 922 922 887 (9)
Floor)
First Lien Secured Debt - 8.86% (3M L+625, 1.00% 06/09/23 535 535 515 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.25% Unfunded 06/09/23 891 (22) (33) (8)(9)(21)(23)(27)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 06/09/23 1,929 (25) (72) (8)(9)(21)(23)(27)
Unfunded Delayed Draw
11,090 10,772
Amerivet Partners First Lien Secured Debt 8.25% (1M L+575, 1.00% 06/05/24 14,372 14,145 14,046 (9)
Management, Inc. Floor)
First Lien Secured Debt 10.25% (P+475) 06/05/24 1,635 1,619 1,598 (9)
First Lien Secured Debt - 10.25% (P+475) 06/05/24 81 81 79 (9)(23)
Revolver
First Lien Secured Debt - 0.50% Unfunded 06/05/24 725 (17) (16) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 06/05/24 10,141 (214) (230) (8)(9)(21)(23)
Unfunded Delayed Draw
15,614 15,477
Analogic Corporation First Lien Secured Debt 8.50% (1M L+600, 1.00% 06/22/24 27,254 26,661 26,982 (9)
Floor)
First Lien Secured Debt - 0.50% Unfunded 06/22/23 2,609 (55) (26) (8)(9)(21)(23)
Unfunded Revolver
26,606 26,956
Aptevo Therapeutics Inc. First Lien Secured Debt 10.10% (1M L+760, 0.50% 02/01/23 8,571 8,730 8,521 (9)
Floor)
Argon Medical Devices Second Lien Secured Debt 10.50% (1M L+800, 1.00% 01/23/26 19,600 19,516 19,306 (10)
Holdings, Inc. Floor)
AVG Intermediate Holdings First Lien Secured Debt 12.50% (P+700) 02/08/24 15,000 14,672 14,651 (9)
LLC
First Lien Secured Debt - 1.00% Unfunded 02/08/24 14,500 (317) (338) (8)(9)(21)(23)
Unfunded Delayed Draw
14,355 14,313
BioClinica Holding I, LP Second Lien Secured Debt 11.00% (3M L+825, 1.00% 10/21/24 24,612 24,251 22,151 (10)
Floor)
Cerus Corporation First Lien Secured Debt 7.95% (1M L+545, 1.80% 03/01/24 12,000 11,940 11,940 (9)(17)
Floor)
First Lien Secured Debt - 0.00% Unfunded 03/01/24 500 (1) (4) (8)(9)(17)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.00% Unfunded 03/01/24 9,000 (44) (46) (8)(9)(17)(21)(23)
Unfunded Delayed Draw
11,895 11,890
Emmes Corporation
Emmes Blocker, Inc. Common Equity/Interests - N/A N/A 306 306 306 (9)(13)
Common Stock Shares
The Emmes Company, LLC First Lien Secured Debt 8.00% (1M L+550, 1.00% 03/03/25 12,245 12,064 11,939 (9)
Floor)
First Lien Secured Debt - 0.50% Unfunded 03/03/25 2,449 (36) (61) (8)(9)(21)(23)
Unfunded Revolver
12,334 12,184
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)
Genesis Healthcare, Inc. First Lien Secured Debt 8.59% (3M L+600, 0.50% 03/06/23 25,000 24,705 24,713 (9)
Floor)
First Lien Secured Debt 13.59% (3M L+1100, 03/06/23 9,130 8,987 9,026 (9)
1.00% Floor)
First Lien Secured Debt - 8.59% (3M L+600, 0.50% 03/06/23 11,077 11,077 10,953 (9)(23)
Revolver Floor)
First Lien Secured Debt - 5.84% (3M L+325, 0.50% 03/06/23 9,030 9,030 8,928 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 03/06/23 36,097 (556) (404) (8)(9)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 02/02/20 4,666 (161) (52) (8)(9)(21)(23)
Unfunded Revolver
53,082 53,164
Lanai Holdings III, Inc. Second Lien Secured Debt 11.24% (3M L+850, 1.00% 08/28/23 17,391 17,064 15,652 (10)
Floor)
LSCS Holdings, Inc Second Lien Secured Debt 10.83% (2M L+825) 03/16/26 19,818 19,415 19,718
Maxor National Pharmacy First Lien Secured Debt 8.60% (3M L+600, 1.00% 11/22/23 24,732 24,257 24,278 (9)
Services, LLC Floor)
First Lien Secured Debt - 0.50% Unfunded 11/22/22 1,558 (28) (28) (8)(9)(21)(23)
Unfunded Revolver
24,229 24,250
Partner Therapeutics, First Lien Secured Debt 9.15% (1M L+665, 1.00% 01/01/23 10,000 9,859 9,785 (9)
Inc Floor)
Preferred Equity - Preferred N/A N/A 55,556 333 333 (9)
Stock Shares
Common Equity/Interests - N/A N/A 33,333 135 93 (9)(13)
Warrants Warrants
10,327 10,211
PHS Buyer, Inc. First Lien Secured Debt 7.99% (3M L+525, 1.00% 01/31/25 13,000 12,716 12,708 (9)
Floor)
First Lien Secured Debt - 0.50% Unfunded 01/31/25 2,000 (44) (45) (8)(9)(21)(23)
Unfunded Revolver
12,672 12,663
ProPharma Group First Lien Secured Debt 8.50% (1M L+600, 0.50% 07/12/23 11,062 10,957 10,951
Intermediate, LLC Floor)
First Lien Secured Debt 8.50% (1M L+600, 0.50% 01/13/20 412 410 408
Floor)
First Lien Secured Debt 8.50% (1M L+600, 0.50% 07/12/23 € 6,422 7,253 7,138
Floor)
First Lien Secured Debt 8.50% (1M L+600, 0.50% 07/12/23 £ 1,878 2,439 2,423
Floor)
First Lien Secured Debt 8.50% (1M L+600, 0.50% 01/13/20 £ 2,389 3,111 3,082
Floor)
First Lien Secured Debt - 8.48% (1M L+600, 0.50% 07/12/23 757 757 750 (23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 07/12/23 275 (10) (3) (8)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 0.50% Unfunded 01/13/20 1 (1) (4) (8)(21)(23)
Unfunded Delayed Draw
24,916 24,745
PTC Therapeutics, Inc First Lien Secured Debt 8.65% (1M L+615, 1.00% 05/01/21 12,666 12,633 12,792 (9)(17)
Floor)
RiteDose Holdings I, First Lien Secured Debt 9.09% (3M L+650, 1.00% 09/13/23 14,813 14,454 14,377 (9)
Inc. Floor)
First Lien Secured Debt - 0.50% Unfunded 09/13/22 2,000 (45) (51) (8)(9)(21)(23)
Unfunded Revolver
14,409 14,326
Teladoc, Inc. First Lien Secured Debt - 0.50% Unfunded 07/14/20 1,306 (29) - (17)(21)(23)
Unfunded Revolver
First Lien Secured Debt - 7.25% 04/12/19- 05/15/20 360 - - (17)(23)
Letters of Credit
(29) -
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)
TherapeuticsMD, Inc. First Lien Secured 10.25% (1M L+775, 1.50% 05/01/23 22,500 22,459 22,275 (9)(17)
Debt Floor)
First Lien Secured Debt 0.00% Unfunded 05/01/23 37,500 (313) (375) (8)(9)(17)(21)(23)
- Unfunded Delayed
Draw
22,146 21,900
Wright Medical Group, Inc. First Lien Secured 10.35% (1M L+785, 1.00% 12/23/21 6,666 6,565 6,666 (9)(17)
Debt Floor)
First Lien Secured Debt 6.75% (1M L+425, 0.75% 12/23/21 7,666 7,666 7,590 (9)(17)(23)
- Revolver Floor)
First Lien Secured Debt 0.50% Unfunded 12/23/21 50,667 (354) (507) (8)(9)(17)(21)(23)
- Unfunded Revolver
First Lien Secured Debt 0.00% Unfunded 12/23/21 11,667 (100) - (9)(17)(21)(23)
- Unfunded Delayed
Draw
13,777 13,749
Total Healthcare & Pharmaceuticals $ 369,032 $ 364,740
High Tech Industries
API Healthcare Holding First Lien Secured Debt 1.00% Unfunded 02/11/22 $ 5,000 $ (96) $ - (9)(21)(23)
Corporation -
Unfunded Revolver
ChargePoint, Inc. First Lien Secured 9.05% (1M L+655, 1.25% 06/01/23 10,500 10,410 10,422 (9)
Debt Floor)
First Lien Secured Debt 0.00% Unfunded 06/01/23 3,000 (26) - (9)(21)(23)
- Unfunded Delayed
Draw
10,384 10,422
ChyronHego Corporation First Lien Secured 7.43% (3M L+643, 1.00% 03/09/20 34,346 34,200 32,286 (18)
Debt Floor)
DigiCert Holdings, Inc. Second Lien Secured 10.50% (1M L+800, 1.00% 10/31/25 12,157 12,107 11,998 (10)
Debt Floor)
FiscalNote, Inc. First Lien Secured 10.50% (1M L+800, 1.00% 08/21/23 28,125 27,446 27,352 (9)
Debt Floor)
First Lien Secured Debt 10.50% (1M L+800, 1.00% 08/21/23 1,313 1,313 1,276 (9)(23)
- Revolver Floor)
First Lien Secured Debt 0.50% Unfunded 08/21/23 1,313 (63) (36) (8)(9)(21)(23)
- Unfunded Revolver
Preferred Equity - N/A N/A 259,565 1,500 1,500 (9)
Series F Preferred Shares
Stock
30,196 30,092
International Cruise & First Lien Secured 7.75% (1M L+525, 1.00% 06/06/25 14,888 14,622 14,776
Excursion Gallery, Inc. Debt Floor)
LabVantage Solutions
LabVantage Solutions Inc. First Lien Secured 10.00% (1M L+750, 1.00% 12/29/20 11,543 11,411 11,428
Debt Floor)
LabVantage Solutions Limited First Lien Secured 8.50% (E+750, 1.00% 12/29/20 € 11,630 12,373 12,928 (17)
Debt Floor)
First Lien Secured Debt 0.50% Unfunded 12/29/20 € 3,435 (36) (39) (8)(17)(21)(23)
- Unfunded Revolver
12,337 12,889
Magnate Holding Corp. First Lien Secured 8.60% (3M L+600, 1.00% 12/16/24 16,670 16,433 16,430 (9)(17)
Debt Floor)
First Lien Secured Debt 7.60% (3M L+500, 1.00% 12/14/23 1,857 1,857 1,830 (9)(17)(23)
- Revolver Floor)
First Lien Secured Debt 1.75% Unfunded 12/14/23 1,473 (47) (21) (8)(9)(17)(21)(23)
- Unfunded Revolver
18,243 18,239
Omnitracs, LLC First Lien Secured Debt 0.50% Unfunded 03/23/23 3,750 (268) (338) (8)(21)(23)
- Unfunded Revolver
Sirsi Corporation First Lien Secured 7.23% (1M L+475, 1.00% 03/15/24 7,071 6,966 6,965 (9)
Debt Floor)
First Lien Secured Debt 0.50% Unfunded 03/15/24 429 (6) (6) (8)(9)(21)(23)
- Unfunded Revolver
6,960 6,959
See notes to financial statements.
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Table of Contents
APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)
Telestream Holdings First Lien Secured Debt 7.61% (6M L+645, 1.00% 03/24/22 35,980 35,754 35,261 (18)
Corporation Floor)
Tibco Software Inc. First Lien Secured Debt - 0.50% Unfunded 12/05/19 6,000 (8) (450) (8)(21)(23)
Unfunded Revolver
ZPower, LLC First Lien Secured Debt
10.25% (1M L+775, 1.00% 07/01/22 6,666 6,711 6,617 (9)
Floor)
First Lien Secured Debt - 0.00% Unfunded 07/01/22 1,667 (6) (13) (8)(9)(21)(23)
Unfunded Delayed Draw
Common Equity/Interests - N/A N/A 29,630 48 57 (9)(13)
Warrants Warrants
6,753 6,661
Total High Tech Industries $ 192,595 $ 190,223
Hotel, Gaming, Leisure, Restaurants
GFRC Holdings LLC First Lien Secured Debt 10.63% (3M L+800 Cash 02/01/22 $ 2,500 $ 2,500 $ 2,500
(L+800 PIK Toggle), 1.50%
Floor)
Total Hotel, Gaming, Leisure, Restaurants $ 2,500 $ 2,500
Manufacturing, Capital Equipment
AVAD
AVAD Canada Ltd. First Lien Secured Debt - 6.50% (1M L+400, 1.00% 10/2/23 $ 636 636 626 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 10/2/23 364 (18) (6) (8)(9)(21)(23)
Unfunded Revolver
AVAD, LLC First Lien Secured Debt 10.25% (1M L+775, 1.00% 10/2/23 9,653 9,476 9,457 (9)
Floor)
First Lien Secured Debt - 6.50% (1M L+400, 1.00% 10/2/23 11,650 11,650 11,461 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 10/2/23 4,016 (282) (65) (8)(9)(21)(23)
Unfunded Revolver
21,462 21,473
MedPlast Holdings Inc. Second Lien Secured Debt 10.35% (3M L+775) 07/02/26 8,000 7,927 8,000 (10)
Total Manufacturing, Capital Equipment $ 29,389 $ 29,473
Media - Diversified & Production
SESAC Holdco II LLC First Lien Secured Debt - 0.50% Unfunded 02/23/22 $ 587 $ (31) $ (44) (8)(10)(21)(23)
Unfunded Revolver
Second Lien Secured Debt 9.75% (1M L+725, 1.00% 02/24/25 3,241 3,217 3,217 (10)
Floor)
3,186 3,173
Sonar Entertainment, Inc. First Lien Secured Debt 10.10% (1M L+760, 1.25% 11/15/21 9,267 9,125 9,104 (9)
Floor)
First Lien Secured Debt - 10.10% (1M L+760, 1.25% 11/15/21 5,856 5,856 5,753 (9)(23)
Revolver Floor)
First Lien Secured Debt - 0.50% Unfunded 11/15/21 16,975 (349) (297) (8)(9)(21)(23)
Unfunded Revolver
14,632 14,560
Total Media - Diversified & Production $ 17,818 $ 17,733
Metals & Mining
Magnetation, LLC First Lien Secured Debt 10.60% (3M L+800 Cash (PIK 12/31/19 $ 1,225 $ 1,146 $ 221 (13)(14)
Toggle))
Total Metals & Mining $ 1,146 $ 221
Telecommunications
IPC Corporation First Lien Secured Debt 7.76% (3M L+500, 1.00% 08/06/21 $ 10,000 $ 9,928 $ 8,888 (9)
Floor)
Securus Technologies Second Lien Secured Debt 10.75% (1M L+825, 1.00% 11/01/25 12,878 12,772 12,653 (10)
Holdings, Inc. Floor)
Total Telecommunications $ 22,700 $ 21,541
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Maturity Par / Shares Fair
Industry / Company Investment Type Interest Rate (20) Date (12) Cost (29) Value (1) (30)
Transportation - Cargo, Distribution
Dynamic Product Tankers, First Lien Secured Debt 9.60% (3M L+700) 06/30/23 $ 42,000 41,830 42,000 (17)
LLC (5)
First Lien Secured Debt - 2.25% 9/20/19 - 3/31/21 6,050 - - (17)(23)
Letters of Credit
Common Equity/Interests - N/A N/A N/A 49,806 36,879 (17)(24)
Class A Units
91,636 78,879
MSEA Tankers LLC (5) Common Equity/Interests - N/A N/A N/A 74,450 73,369 (17)(25)
Class A Units
PT Intermediate Holdings Second Lien Secured Debt 10.60% (3M L+800, 1.00% 12/08/25 9,375 9,296 9,281
III, LLC Floor)
Total Transportation - Cargo, Distribution $ 175,382 $ 161,529
Utilities - Electric
Asset Repackaging Trust Structured Products and Other 12.05% 05/18/27 $ 58,411 $ 26,480 $ 32,659 (11)(17)(19)
Six B.V.
Total Utilities - Electric $ 26,480 $ 32,659
Total Investments before Cash Equivalents and Option Contracts $ 2,458,111 $ 2,408,132
J.P. Morgan U.S. N/A N/A N/A $ 36,280 $ 36,280 $ 36,280 (22)
Government Money Market
Fund
Total Investments after Cash Equivalents $ 2,494,391 $ 2,444,412 (6)(7)
____________________
(1)Fair value is determined in good faith by or under the direction of the Board
of Directors of the Company (See Note 2 to the financial statements).
(2)Preferred and ordinary shares in Solarplicity UK Holdings Limited are GBP
denominated equity investments.
(3)Denotes investments in which the Company owns greater than 25% of the equity,
where the governing documents of each entity preclude the Company from
exercising a controlling influence over the management or policies of such
entity. The Company does not have the right to elect or appoint more than 25% of
the directors or another party has the right to elect or appoint more directors
than the Company and has the right to appoint certain members of senior
management. Therefore, the Company has determined that these entities are not
controlled affiliates. As of March 31, 2019, we had a 100% and 28% equity
ownership interest in Golden Bear 2016-R, LLC and Solarplicity Group Limited,
respectively. Equity ownership in Solarplicity Group Limited was written off as
it was deemed worthless.
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
(4)Denotes investments in which we are an "Affiliated Person," as defined in the
1940 Act, due to holding the power to vote or owning 5% or more of the
outstanding voting securities of the investment but not controlling the company.
Fair value as of March 31, 2018 and March 31, 2019 along with transactions
during the year ended March 31, 2019 in these affiliated investments are as
follows:
Net Change in
Fair Value at Gross Gross Unrealized Gains Fair Value at Net Realized
Name of Issuer March 31, 2018 Additions ? Reductions ? (Losses) March 31, 2019 Gains (Losses) Interest/Dividend/Other Income AIC SPV Holdings II, LLC, Preferred $ 925 $ 534 $ (534) $ (485) $ 440 $ - $
81
Stock
AMP Solar Group, Inc., Class A 5,051 - - 1,185 6,236 - - Common Unit Golden Bear 2016-R, LLC, Membership 14,147 140 - (1,351) 12,936 -
1,117
Interests
Pelican Energy, LLC, Membership 12,946 - (6,066) (1,560) 5,320 - -
Interests
Renew Financial LLC (f/k/a Renewable 19,035 - - (4,462) 14,573 - -
Funding, LLC), Series B Preferred
Stock
Renew Financial LLC (f/k/a Renewable 6,676 - - (786) 5,890 - -
Funding, LLC), Series D Preferred
Stock
Renew JV LLC, Membership Interests 4,111 839 (1,783) (871) 2,296 2,007 -
Solarplicity Group Limited, First 6,063 - - (4,073) 1,990 - -
Lien Term Loan
$ 68,954 $ 1,513 $ (8,383) $ (12,403) $ 49,681 $ 2,007 $ 1,198
____________________
? Gross additions includes increases in the basis of investments resulting from
new portfolio investments, payment-in-kind interest or dividends, the accretion
of discounts, the exchange of one or more existing securities for one or more
new securities and the movement of an existing portfolio company into this
category from a different category.
? Gross reductions include decreases in the basis of investments resulting from
principal collections related to investment repayments or sales, the
amortization of premiums, the exchange of one or more existing securities for
one or more new securities and the movement of an existing portfolio company out
of this category into a different category.
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
(5)Denotes investments in which we are deemed to exercise a controlling
influence over the management or policies of a company, as defined in the 1940
Act, due to beneficially owning, either directly or through one or more
controlled companies, more than 25% of the outstanding voting securities of the
investment. Fair value as of March 31, 2018 and March 31, 2019 along with
transactions during the year ended March 31, 2019 in these controlled
investments are as follows:
Fair Value at Gross Gross Net Change in Fair Value at Interest/Dividend/Other
Name of Issuer March 31, 2018 Additions ? Reductions ? Unrealized Losses March 31, 2019 Net Realized Losses
Income
Dynamic Product Tankers, LLC, First $ 42,000 $ 40 $
- $ (40) $ 42,000 $ - $
4,045
Lien Term Loan Dynamic Product Tankers, LLC, - - - - - -
16
Letters of Credit Dynamic Product Tankers, LLC, Class 41,479 1,700 - (6,300) 36,879 -
-
A Units Glacier Oil & Gas Corp. (f/k/a 15,000 - (6,000) - 9,000 -
1,051
Miller Energy Resources , Inc.), First Lien Term Loan Glacier Oil & Gas Corp. (f/k/a 30,510 3,195 - - 33,705 -
3,246
Miller Energy Resources , Inc.), Second Lien Term Loan Glacier Oil & Gas Corp. (f/k/a 20,303 - - (16,957) 3,346 -
-
Miller Energy Resources , Inc.), Common Stock Merx Aviation Finance, LLC, Revolver 359,800 96,000 (84,600) - 371,200 - 48,180 Merx Aviation Finance, LLC, 42,381 - - 11,900 54,281 - 9,400 Membership Interests MSEA Tankers LLC, Class A Units 72,256 - - 1,113 73,369 -
4,700
SHD Oil & Gas, LLC, Tranche A Note 44,739 2,021 - 61 46,821 -
5,163
SHD Oil & Gas, LLC, Tranche B Note 40,816 - - (1,384) 39,432 -
-
SHD Oil & Gas, LLC, Tranche C Note 19,776 1,200 - 36 21,012 - 2,387
$ 729,060 $ 104,156 $ (90,600) $ (11,571) $ 731,045 $ - $ 78,188
____________________
? Gross additions includes increases in the basis of investments resulting from
new portfolio investments, payment-in-kind interest or dividends, the accretion
of discounts, the exchange of one or more existing securities for one or more
new securities and the movement of an existing portfolio company into this
category from a different category.
? Gross reductions include decreases in the basis of investments resulting from
principal collections related to investment repayments or sales, the
amortization of premiums, the exchange of one or more existing securities for
one or more new securities and the movement of an existing portfolio company out
of this category into a different category.
As of March 31, 2019, the Company had a 85%, 47%, 100%, 98% and 38% equity
ownership interest in Dynamic Product Tankers, LLC; Glacier Oil & Gas Corp.
(f/k/a
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
(6)Aggregate gross unrealized gain and loss for federal income tax purposes is
$126,359 and $186,864, respectively. Net unrealized loss is $60,504 based based
on a tax cost of $2,504,916.
(7)Substantially all securities are pledged as collateral to our multi-currency
revolving credit facility (the "Senior Secured Facility" as defined in Note 8 to
the financial statements). As such, these securities are not available as
collateral to our general creditors.
(8)The negative fair value is the result of the commitment being valued below
par.
(9)These are co-investments made with the Company's affiliates in accordance
with the terms of the exemptive order the Company received from the Securities
and Exchange Commission (the "SEC") permitting us to do so. (See Note 3 to the
financial statements for discussion of the exemptive order from the SEC .)
(10)Other than the investments noted by this footnote, the fair value of the
Company's investments is determined using unobservable inputs that are
significant to the overall fair value measurement. See Note 2 to the financial
statements for more information regarding ASC 820, Fair Value Measurements ("ASC
820").
(11)These securities are exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in transactions that are
exempt from registration, normally to qualified institutional buyers.
(12)Par amount is denominated in USD unless otherwise noted, Euro ("€"), British
Pound ("£"), and Canadian Dollar ("C$"), and Australian Dollar ("A$").
(13)Non-income producing security.
(14)Non-accrual status (See Note 2 to the financial statements).
(15)The underlying investments of AIC SPV Holdings II, LLC is a securitization
in which the Company has a 14.25% ownership interest in the residual tranche.
(16)AIC Spotted Hawk Holdings, LLC, AIC SHD Holdings, LLC and AIC Pelican
Holdings, LLC are consolidated wholly-owned special purpose vehicles which only
hold equity investments of the underlying portfolio companies and have no other
significant assets or liabilities. AIC Spotted Hawk Holdings, LLC and AIC SHD
Holdings, LLC hold equity investments in SHD Oil & Gas, LLC. AIC Pelican
Holdings, LLC holds an equity investment in Pelican Energy, LLC.
(17)Investments that the Company has determined are not "qualifying assets"
under Section 55(a) of 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. The Company monitors the status of
these assets on an ongoing basis. As of March 31, 2019, non-qualifying assets
represented approximately 16.25% of the total assets of the Company.
(18)In addition to the interest earned based on the stated rate of this loan,
the Company may be entitled to receive additional interest as a result of its
arrangement with other lenders in a syndication.
(19)This investment represents a leveraged subordinated interest in a trust that
holds one foreign currency denominated bond and a derivative instrument.
(20)Generally, the interest rate on floating interest rate investments is at
benchmark rate plus spread. The borrower has an option to choose the benchmark
rate, such as the London Interbank Offered Rate ("LIBOR"), the Euro Interbank
Offered Rate ("EURIBOR"), the federal funds rate or the prime rate. The spread
may change based on the type of rate used. The terms in the Schedule of
Investments disclose the actual interest rate in effect as of the reporting
period. LIBOR loans are typically indexed to 30-day, 60-day, 90-day or 180-day
LIBOR rates (1M L, 2M L, 3M L or 6M L, respectively), and EURIBOR loans are
typically indexed to 90-day EURIBOR rates (3M E), at the borrower's option.
LIBOR and EURIBOR loans may be subject to interest floors. As of March 31, 2019,
rates for 1M L, 2M L, 3M L, 6M L, 1M E, 3M E, 1M BBSW, 3M BBSW, 3M GBP L and
Prime are 2.49%, 2.56%, 2.60%, 2.66%, (0.42%), (0.35%), 1.80%, 1.77%, 0.84%, and
5.50%, respectively.
(21)The rates associated with these undrawn committed revolvers and delayed draw
term loans represent rates for commitment and unused fees.
(22)This security is included in the Cash and Cash Equivalents on the Statements
of Assets and Liabilities.
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
(23)As of March 31, 2019, the Company had the following commitments to fund
various revolving and delayed draw senior secured and subordinated loans,
including commitments to issue letters of credit through a financial
intermediary on behalf of certain portfolio companies. Such commitments are
subject to the satisfaction of certain conditions set forth in the documents
governing these loans and letters of credit and there can be no assurance that
such conditions will be satisfied. See Note 10 to the financial statements for
further information on revolving and delayed draw loan commitments, including
commitments to issue letters of credit, related to certain portfolio companies
Undrawn
Portfolio Company Total Commitment Drawn Commitment Letters of Credit Commitment
Aero Operating LLC $ 4,813 $ 2,663 $ 118 $ 2,032
Alera Group Intermediate Holdings 28,000 - - 28,000
Altasciences US Acquistion, Inc. 3,355 535 - 2,820
Amerivet Partners Management, Inc. 10,947 81 - 10,866
Analogic Corporation 2,609 - - 2,609
API Healthcare Holding Corporation 5,000 - - 5,000
AVAD 16,666 12,286 - 4,380
AVG Intermediate Holdings LLC 14,500 - - 14,500
BIG Buyer, LLC 3,174 271 - 2,903
Carbonfree Chemicals SPE I LLC (f/k/a Maxus
Capital Carbon SPE I LLC) 2,911 - - 2,911
Cerus Corporation 9,500 - - 9,500
ChargePoint, Inc. 3,000 - - 3,000
Claritas, LLC 1,031 - - 1,031
Continuum Global Solutions, LLC 10,769 6,219 - 4,550
Dynamic Product Tankers, LLC 6,050 - 6,050 -
Eagle Foods Family Group, LLC 3,750 - - 3,750
Education Personnel* 7,665 1,916 - 5,749
Erickson Inc 44,999 27,169 6,449 11,381
Exeter Property Group, LLC 192 - - 192
FiscalNote, Inc. 2,626 1,313 - 1,313
Flock SPV I, LLC 10,666 - - 10,666
Florida Food Products, LLC 1,713 1,336 - 377
Genesis Healthcare, Inc. 60,870 20,107 - 40,763
Gutter Buyer, Inc. 6,136 - - 6,136
KDC US Holdings 6,020 1,204 104 4,712
LabVantage Solutions Limited* 3,857 - - 3,857
Lion Cashmere Midco Limited* 3,994 253 - 3,741
Magnate Holding Corp. 3,330 1,857 - 1,473
Maxor National Pharmacy Services, LLC 1,558 - - 1,558
Mclarens Global Ltd. * 8,532 172 - 8,360
Merx Aviation Finance, LLC 177 - 177 -
Nemo (BC) Bidco Pty Ltd * 165 - - 165
Newscycle Solutions, Inc. 500 160 - 340
Omnitracs, LLC 3,750 - - 3,750
PHS Buyer, Inc. 2,000 - - 2,000
Project Comfort Buyer, Inc. 5,769 - - 5,769
ProPharma Group Intermediate, LLC* 1,033 757 - 276
PSI Services, LLC 458 119 - 339
Purchasing Power, LLC 12,900 3,000 - 9,900
RA Outdoors, LLC 1,200 - 24 1,176
Reddy Ice Corporation 15,350 1,045 9,750 4,555
RiteDose Holdings I, Inc. 2,000 - - 2,000
SESAC Holdco II LLC 587 - - 587
SHD Oil & Gas, LLC 1,600 - - 1,600
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Letters of Undrawn
Portfolio Company Total Commitment Drawn Commitment Credit Commitment
Simplifi Holdings, Inc. 2,400 - - 2,400
Sirsi Corporation 429 - - 429
SONAR ENTERTAINMENT, INC. 22,831 5,856 - 16,975
Teladoc, Inc. 1,666 - 360 1,306
Ten-X, LLC 4,680 - - 4,680
TGG TS Acquisition Company 1,750 690 - 1,060
The Emmes Company, LLC 2,449 - - 2,449
TherapeuticsMD, Inc. 37,500 - - 37,500
Tibco Software Inc. 6,000 - - 6,000
Tidewater Consumer Receivables, LLC 2,334 792 - 1,542
TNT Crust LLC 1,626 - - 1,626
TricorBraun Holdings, Inc. 5,626 1,628 - 3,998
USLS Acquisition, Inc. 5,199 536 86 4,577
Vertafore, Inc. 15,000 - 424 14,576
Westfall Technik, Inc. 5,159 135 - 5,024
Wright Medical Group, Inc. 70,000 7,666 - 62,334
ZPower, LLC 1,667 - - 1,667
Total Commitments $ 522,038 $ 99,766 $ 23,542 $ 398,730
____________________
* These investments are in a foreign currency and the total commitment has been
converted to USD using the March 31, 2019 exchange rate.
(24)As of March 31, 2019, Dynamic Product Tankers, LLC had various classes of
limited liability interests outstanding of which the Company holds Class A-1 and
Class A-3 units which are identical except that Class A-1 unit is voting and
Class A-3 unit is non-voting. The units entitle the Company to appoint three out
of five managers to the board of managers.
(25)As of March 31, 2019, MSEA Tankers, LLC had various classes of limited
liability interests outstanding of which the Company holds Class A-1 and Class
A-2 units which are identical except that Class A-1 unit is voting and Class A-2
unit is non-voting. The units entitle the Company to appoint two out of three
managers to the board of managers.
(26)The Company holds three classes of warrants in Sprint Industrial Holdings,
LLC . The Company holds 5,595 warrants of Class G, 507 warrants of Class H, and
1,239 warrants of Class I.
(27)The unused line fees of 0.50% and 0.25% are collected for the Unfunded
Delayed Draw and Unfunded Revolver, respectively from both Altasciences US
Acquisition, Inc. and Altasciences / 9360-1367 Quebec Inc. as each borrower has
access to the respective lending facilities.
(28)The Company holds some warrants for this investment as part of the
restructuring of the underlying portfolio company. The warrants have no cost
and no fair value as of March 31, 2019.
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)(29)The following shows the composition of the Company's portfolio at cost by control designation, investment type and industry as of March 31, 2019:
Structured
First Lien - Second Lien - Products and Preferred Common
Industry Secured Debt Secured Debt Unsecured Debt Other Equity Equity/Interests Warrants Total
Non-Controlled / Non-Affiliated Investments
Advertising, Printing & Publishing $ 24,898 $ 5,496 $ - $ - $ - $ - $ - $ 30,394
Aerospace & Defense 26,823 47,175 - - - - - 73,998
Automotive 8,370 23,428 - - - 1,714 - 33,512
Beverage, Food & Tobacco 57,359 - - - - 244 - 57,603
Business Services 134,311 215,648 - - 62 603 - 350,624
Chemicals, Plastics & Rubber 72,663 14,465 - - - 9,000 - 96,128
Construction & Building 23,156 - - - - 500 - 23,656
Consumer Goods - Durable 37,877 21,649 - - 462 - - 59,988
Consumer Goods - Non-Durable 73,574 20,292 - - - - - 93,866
Consumer Services 23,771 24,734 - - - - - 48,505
Containers, Packaging & Glass 1,358 18,107 - - - - - 19,465
Diversified Investment Vehicles,
Banking, Finance, Real Estate 47,399 4,935 - - - - - 52,334
Energy - Electricity 7,637 - - - 5,861 4 - 13,502
Food & Grocery 19,391 10,400 - - - - - 29,791
Healthcare & Pharmaceuticals 288,012 80,246 - - 333 306 135 369,032
High Tech Industries 178,940 12,107 - - 1,500 - 48 192,595
Hotel, Gaming, Leisure, Restaurants 2,500 - - - - - - 2,500
Manufacturing, Capital Equipment 21,462 7,927 - - - - -
29,389
Media - Diversified & Production 14,601 3,217 - - - - - 17,818
Metals & Mining 1,146 - - - - - - 1,146
Telecommunications 9,928 12,772 - - - - - 22,700
Transportation - Cargo,
Distribution - 9,296 - - - - - 9,296
Utilities - Electric - - - 26,480 - - - 26,480
Total Non-Controlled /
Non-Affiliated Investments $ 1,075,176 $ 531,894 $ - $ 26,480 $ 8,218 $ 12,371 $ 183 $ 1,654,322
Non-Controlled / Affiliated Investments
Diversified Investment Vehicles,
Banking, Finance, Real Estate $ - $ - $ - $ 16,645 $ - $ - $ - $ 16,645
Energy - Electricity 5,811 - - - 14,445 11,796 - 32,052
Energy - Oil & Gas - - - - - 18,375 - 18,375
Total Non-Controlled / Affiliated
Investments $ 5,811 $ - $ - $ 16,645 $ 14,445 $ 30,171 $ - $ 67,072
Controlled Investments
Aviation and Consumer Transport $ 371,200 $ - $ - $ - $ - $ 15,000 $ - $ 386,200
Energy - Oil & Gas 119,237 33,705 - - - 31,489 - 184,431
Transportation - Cargo,
Distribution 41,830 - - - - 124,256 - 166,086
Total Controlled Investments $ 532,267 $ 33,705 $ - $ - $ - $ 170,745 $ - $ 736,717
Total $ 1,613,254 $ 565,599 $ - $ 43,125 $ 22,663 $ 213,287 $ 183 $ 2,458,111
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
(30)The following shows the composition of the Company's portfolio at fair value by control designation, investment type and industry as of March 31, 2019:
First Lien - Second Lien - Structured Preferred % of Net
Industry Secured Debt Secured Debt Unsecured Debt Products and Other Equity Common Equity/Interests
Warrants Total Assets Non-Controlled / Non-Affiliated Investments Advertising, Printing & Publishing $ 25,086 $ 5,522 $ - $ - $ - $ - $ - $ 30,608 2.3 % Aerospace & Defense 26,158 47,366 - - - - - 73,524 5.6 % Automotive 1,287 22,991 - - - - - 24,278 1.8 % Beverage, Food & Tobacco 57,618 - - - - 323 - 57,941 4.4 % Business Services 135,022 214,886 - - 62 696 - 350,666 26.7 % Chemicals, Plastics & Rubber 70,108 14,937 - - - - - 85,045 6.5 % Construction & Building 23,115 - - - - 478 - 23,593 1.8 % Consumer Goods - Durable 36,641 21,589 - - 462 470 - 59,162 4.5 % Consumer Goods - Non-Durable 73,976 20,217 - - - - - 94,193 7.2 % Consumer Services 23,601 24,708 - - - - - 48,309 3.7 % Containers, Packaging & Glass 1,630 15,912 - - - - - 17,542 1.3 % Diversified Investment Vehicles, Banking, Finance, Real Estate 47,360 4,913 - - - - - 52,273 4.0 % Energy - Electricity 7,173 - - - 4,922 223 - 12,318 0.9 % Food & Grocery 19,109 10,474 - - - - - 29,583 2.3 % Healthcare & Pharmaceuticals 287,181 76,827 - - 333 306 93 364,740 27.8 % High Tech Industries 176,668 11,998 - - 1,500 - 57 190,223 14.5 % Hotel, Gaming, Leisure, Restaurants 2,500 - - - - - - 2,500 0.2 % Manufacturing, Capital Equipment 21,473 8,000 - - - - - 29,473 2.3 % Media - Diversified & Production 14,516 3,217 - - - - - 17,733 1.4 % Metals & Mining 221 - - - - - - 221 - % Telecommunications 8,888 12,653 - - - - - 21,541 1.6 % Transportation - Cargo, Distribution - 9,281 - - - - - 9,281 0.7 % Utilities - Electric - - - 32,659 - - - 32,659 2.5 % Total Non-Controlled / Non-Affiliated Investments $ 1,059,331 $ 525,491 $ - $ 32,659 $ 7,279 $ 2,496 $ 150 $ 1,627,406 124.0 % % of Net Assets 80.7 % 40.0 % - % 2.5 % 0.6 % 0.2 % 0% 124.0 % Non-Controlled / Affiliated Investments Diversified Investment Vehicles, Banking, Finance, Real Estate $ - $ - $ - $ 12,936 $ - $ - $ - $ 12,936 1.0 % Energy - Electricity 1,990 - - - 20,903 8,532 - 31,425 2.4 % Energy - Oil & Gas - - - - - 5,320 - 5,320 0.4 % Total Non-Controlled / Affiliated Investments $ 1,990 $ - $ - $ 12,936 $ 20,903 $ 13,852 $ - $ 49,681 3.8 % % of Net Assets 0.2 % - % - % 1.0 % 1.6 % 1.0 % - % 3.8 %
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Structured
First Lien - Second Lien - Products and Preferred Common % of Net
Industry Secured Debt Secured Debt Unsecured Debt Other Equity Equity/Interests Warrants Total Assets
Controlled Investments
Aviation and Consumer Transport $ 371,200 $ - $ - $ - $ - $ 54,281 $ - $ 425,481 32.4 %
Energy - Oil & Gas 116,265 33,705 - - - 3,346 - 153,316 11.7 %
Transportation - Cargo,
Distribution 42,000 - - - - 110,248 - 152,248 11.6 %
Total Controlled Investments $ 529,465 $ 33,705 $ - $ - $ - $ 167,875 $ - $ 731,045 55.7 %
% of Net Assets 40.3 % 2.6 % - % - % - % 12.8 % - % 55.7 %
Total $ 1,590,786 $ 559,196 $ - $ 45,595 $ 28,182 $ 184,223 $ 150 $ 2,408,132 183.5 %
% of Net Assets 121.2 % 42.6 % - % 3.5 % 2.2 % 14.0 % 0% 183.5 %
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
SCHEDULE OF INVESTMENTS
March 31, 2019
(In thousands, except share data)
Percentage of Total
Investments (at Fair Value)
Industry Classification as of March 31, 2019
Aviation and Consumer Transport 17.7%
Healthcare & Pharmaceuticals 15.1%
Business Services 14.6%
High Tech Industries 7.9%
Transportation - Cargo, Distribution 6.7%
Energy - Oil & Gas 6.6%
Consumer Goods - Non-durable 3.9%
Chemicals, Plastics & Rubber 3.5%
Aerospace & Defense 3.1%
Diversified Investment Vehicles, Banking, Finance, Real Estate 2.7%
Consumer Goods - Durable 2.5%
Beverage, Food & Tobacco 2.4%
Consumer Services 2.0%
Energy - Electricity 1.8%
Utilities - Electric 1.4%
Advertising, Printing & Publishing 1.3%
Food & Grocery
1.2%
Manufacturing, Capital Equipment 1.2% Automotive 1.0% Construction & Building 1.0% Telecommunications 0.9% Media - Diversified & Production
0.7%
Containers, Packaging & Glass
0.7%
Hotel, Gaming, Leisure, Restaurants 0.1%
Metals & Mining 0.0%
Total Investments 100.0%
See notes to financial statements.
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 1. Organization
Apollo Investment Corporation (the "Company," "Apollo Investment ," "AIC," "we,"
"us," or "our"), a Maryland corporation incorporated on February 2, 2004, is a
closed-end, externally managed, non-diversified management investment company
that has elected to be treated as a business development company ("BDC") under
the Investment Company Act of 1940 (the "1940 Act"). In addition, for tax
purposes we have elected to be treated as a regulated investment company ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). We commenced operations on April 8, 2004 receiving net proceeds of
$870,000 from our initial public offering by selling 62 million shares of common
stock at a price of $15.00 per share (20.7 million shares at a price of $45.00
per share adjusted for the one-for-three reverse stock split). Since then, and
through March 31, 2020, we have raised approximately $2,210,067 in net proceeds
from additional offerings of common stock and repurchased common stock for
$223,072.
Apollo Investment Management, L.P. (the "Investment Adviser" or "AIM") is our
investment adviser and an affiliate of Apollo Global Management, Inc. and its
consolidated subsidiaries ("AGM"). The Investment Adviser, subject to the
overall supervision of our Board of Directors, manages the day-to-day operations
of and provides investment advisory services to the Company.
Apollo Investment Administration, LLC (the "Administrator" or "AIA"), an
affiliate of AGM, provides, among other things, administrative services and
facilities for the Company. Furthermore, AIA provides on our behalf managerial
assistance to those portfolio companies to which we are required to provide such
assistance.
Our investment objective is to generate current income and capital appreciation.
We invest primarily in various forms of debt investments, including secured and
unsecured debt, loan investments, and/or equity in private middle-market
companies. We may also invest in the securities of public companies and in
structured products and other investments such as collateralized loan
obligations ("CLOs") and credit-linked notes ("CLNs"). Our portfolio is
comprised primarily of investments in debt, including secured and unsecured debt
of private middle-market companies that, in the case of senior secured loans,
generally are not broadly syndicated and whose aggregate tranche size is
typically less than $250 million. Our portfolio may include equity interests
such as common stock, preferred stock, warrants and/or options.
Note 2. Significant Accounting Policies
The following is a summary of the significant accounting and reporting policies
used in preparing the financial statements.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America
("GAAP") pursuant to the requirements on Form 10-K, ASC 946, Financial Services
- Investment Companies ("ASC 946"), and Articles 6, 10 and 12 of Regulation S-X.
In the opinion of management, all adjustments, which are of a normal recurring
nature, considered necessary for the fair presentation of the financial
statements for the periods presented, have been included.
Under the 1940 Act, ASC 946, and the regulations pursuant to Article 6 of
Regulation S-X, we are precluded from consolidating any entity other than
another investment company or an operating company which provides substantially
all of its services to benefit us. Consequently, as of March 31, 2020, the
Company consolidated some special purposes entities. These special purposes
entities only hold investments of the Company and have no other significant
asset and liabilities. All significant intercompany transactions and balances
have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities at the date of the financial statements and the reported
amounts of income, expenses, gains and losses during the reported periods.
Changes in the economic environment, financial markets, credit worthiness of our
portfolio companies, and the global outbreak of a novel coronavirus (COVID-19)
during the first quarter of 2020, and any other parameters used in determining
these estimates could cause actual results to differ materially.
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) TheWorld Health Organization has designated COVID-19 as a pandemic, and numerous countries, includingthe United States , have declared national emergencies with respect to COVID-19. The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading, and limiting operations of non-essential businesses. Such actions are creating disruption in global supply chains, and adversely impacting many industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The Company believes the estimates and assumptions underlying our financial statements are reasonable and supportable based on the information available as of March 31, 2020. However uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and the Company's business in particular, makes any estimates and assumptions as of March 31, 2020 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may ultimately differ from those estimates. Cash and Cash Equivalents The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and near maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only securities with a maturity of three months or less from the date of purchase would qualify, with limited exceptions. The Company deems that certain money market funds,U.S. Treasury bills, repurchase agreements, and other high-quality, short-term debt securities would qualify as cash equivalents. Cash and cash equivalents are carried at cost which approximates fair value. Cash equivalents held as of March 31, 2020 was $37,301. Cash equivalents held as of March 31, 2019 was $36,280. Collateral on Option Contracts Collateral on option contracts represents restricted cash held by our counterparty as collateral against our derivative instruments until such contracts mature or are settled upon per agreement of buyer and seller of the contract. In accordance with Accounting Standards Update No. 2016-18, Statement of Cash Flows: Restricted Cash, the Statements of Cash Flows outline the changes in cash, including both restricted and unrestricted cash, cash equivalents and foreign currencies. Investment Transactions Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains and losses related to that instrument. Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade date basis. Amounts for investments recognized or derecognized but not yet settled are reported as a receivable for investments sold and a payable for investments purchased, respectively, in the Statements of Assets and Liabilities. Fair Value Measurements The Company follows guidance in ASC 820, Fair Value Measurement ("ASC 820"), where fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are determined within a framework that establishes a three-tier hierarchy which maximizes the use of observable market data and minimizes the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the inputs for the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities may not be an indication of the risks associated with investing in those assets or liabilities. 135
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) ASC 820 classifies the inputs used to measure these fair values into the following hierarchy: Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date. Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices. Level 3: Unobservable inputs for the asset or liability. In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may differ materially from the values that would be received upon an actual disposition of such investments. Investment Valuation Process Under procedures established by our Board of Directors, we value investments, including certain secured debt, unsecured debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value). We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker, primary market dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are unavailable or are deemed not to represent fair value, we typically utilize independent third party valuation firms to assist us in determining fair value. Accordingly, such investments go through our multi-step valuation process as described below. In each case, our independent third party valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations for such investments. Investments purchased within the quarter before the valuation date and debt investments with remaining maturities of 60 days or less may each be valued at cost with interest accrued or discount accreted/premium amortized to the date of maturity (although they are typically valued at available market quotations), unless such valuation, in the judgment of our Investment Adviser, does not represent fair value. In this case such investments shall be valued at fair value as determined in good faith by or under the direction of our Board of Directors including using market quotations where available. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of our Board of Directors. Such determination of fair values may involve subjective judgments and estimates. With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, our Board of Directors has approved a multi-step valuation process each quarter, as described below: 1.Our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of our Investment Adviser who are responsible for the portfolio investment. 2.Preliminary valuation conclusions are then documented and discussed with senior management of our Investment Adviser. 3.Independent valuation firms are engaged by our Board of Directors to conduct independent appraisals by reviewing our Investment Adviser's preliminary valuations and then making their own independent assessment. 4.The Audit Committee of the Board of Directors reviews the preliminary valuation of our Investment Adviser and the valuation prepared by the independent valuation firms and responds, if warranted, to the valuation recommendation of the independent valuation firms. 5.The Board of Directors discusses valuations and determines in good faith the fair value of each investment in our portfolio based on the input of our Investment Adviser, the applicable independent valuation firm, and the Audit Committee of the Board of Directors. 136
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) 6.For Level 3 investments entered into within the current quarter, the cost (purchase price adjusted for accreted original issue discount/amortized premium) or any recent comparable trade activity on the security investment shall be considered to reasonably approximate the fair value of the investment, provided that no material change has since occurred in the issuer's business, significant inputs or the relevant environment. Investments determined by these valuation procedures which have a fair value of less than $1 million during the prior fiscal quarter may be valued based on inputs identified by the Investment Adviser without the necessity of obtaining valuation from an independent valuation firm, if once annually an independent valuation firm using the procedures described herein provides an independent assessment of value. Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, seniority of investment in the investee company's capital structure, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company's ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When readily available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. During the year ended March 31, 2020, there were no significant changes to the Company's valuation techniques and related inputs considered in the valuation process. Derivative Instruments The Company recognizes all derivative instruments as assets or liabilities at fair value in its financial statements. Derivative contracts entered into by the Company are not designated as hedging instruments, and as a result the Company presents changes in fair value and realized gains or losses through current period earnings. Derivative instruments are measured in terms of the notional contract amount and derive their value based upon one or more underlying instruments. Derivative instruments are subject to various risks similar to non-derivative instruments including market, credit, liquidity, and operational risks. The Company manages these risks on an aggregate basis as part of its risk management process. The derivatives may require the Company to pay or receive an upfront fee or premium. These upfront fees or premiums are carried forward as cost or proceeds to the derivatives. Exchange-traded derivatives which include put and call options are valued based on the last reported sales price on the date of valuation. Over-the-counter ("OTC") derivatives, including credit default swaps, are valued by the Investment Adviser using quotations from counterparties. In instances where models are used, the value of the OTC derivative is derived from the contractual terms of, and specific risks inherent in, the instrument as well as the availability and reliability of observable inputs, such as credit spreads. Offsetting Assets and Liabilities The Company has elected not to offset cash collateral against the fair value of derivative contracts. The fair values of these derivatives are presented on a gross basis, even when derivatives are subject to master netting agreements. The Company's disclosures regarding offsetting are discussed in Note 7 to the financial statements.
Valuation of Other Financial Assets and Financial Liabilities
ASC 825, Financial Instruments, permits an entity to choose, at specified
election dates, to measure certain assets and liabilities at fair value (the
"Fair Value Option"). We have not elected the Fair Value Option to report
selected financial assets and financial liabilities. Debt issued by the Company
is reported at amortized cost (see Note 8 to the financial statements). The
carrying value of all other financial assets and liabilities approximates fair
value due to their short maturities or their close proximity of the originations
to the measurement date.
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) Realized Gains or Losses Security transactions are accounted for on a trade date basis. Realized gains or losses on investments are calculated by using the specific identification method. Securities that have been called by the issuer are recorded at the call price on the call effective date. Investment Income Recognition The Company records interest and dividend income, adjusted for amortization of premium and accretion of discount, on an accrual basis. Some of our loans and other investments, including certain preferred equity investments, may have contractual payment-in-kind ("PIK") interest or dividends. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not fully expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are reversed from the related receivable through interest or dividend income, respectively. The Company does not reverse previously capitalized PIK interest or dividends. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if the Company believes that PIK is expected to be realized. Investments that are expected to pay regularly scheduled interest and/or dividends in cash are generally placed on non-accrual status when principal or interest/dividend cash payments are past due 30 days or more and/or when it is no longer probable that principal or interest/dividend cash payments will be collected. Such non-accrual investments are restored to accrual status if past due principal and interest or dividends are paid in cash, and in management's judgment, are likely to continue timely payment of their remaining interest or dividend obligations. Interest or dividend cash payments received on non-accrual designated investments may be recognized as income or applied to principal depending upon management's judgment. Loan origination fees, original issue discount ("OID"), and market discounts are capitalized and accreted into interest income over the respective terms of the applicable loans using the effective interest method or straight-line, as applicable. Upon the prepayment of a loan, prepayment premiums, any unamortized loan origination fees, OID, or market discounts are recorded as interest income. Other income generally includes amendment fees, bridge fees, and structuring fees which are recorded when earned. The Company records as dividend income the accretable yield from its beneficial interests in structured products such as CLOs based upon a number of cash flow assumptions that are subject to uncertainties and contingencies. Such assumptions include the rate and timing of principal and interest receipts (which may be subject to prepayments and defaults) of the underlying pool of assets. These assumptions are updated on at least a quarterly basis to reflect changes related to a particular security, actual historical data, and market changes. A structured product investment typically has an underlying pool of assets. Payments on structured product investments are and will be payable solely from the cash flows from such assets. As such, any unforeseen event in these underlying pools of assets might impact the expected recovery of principal and future accrual of income. Expenses Expenses include management fees, performance-based incentive fees, insurance expenses, administrative service fees, legal fees, directors' fees, audit and tax service expenses, third-party valuation fees and other general and administrative expenses. Expenses are recognized on an accrual basis. Financing Costs The Company records expenses related to shelf filings and applicable offering costs as deferred financing costs in the Statements of Assets and Liabilities. To the extent such expenses relate to equity offerings, these expenses are charged as a reduction of capital upon utilization, in accordance with ASC 946-20-25, or charged to expense if no offering is completed. 138
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) The Company records origination and other expenses related to its debt obligations as deferred financing costs. The deferred financing cost for all outstanding debt is presented as a direct deduction from the carrying amount of the related debt liability, except that incurred under the Senior Secured Facility (as defined in Note 8 to the financial statements), which the Company presents as an asset on the Statements of Assets and Liabilities. These expenses are deferred and amortized as part of interest expense using the straight-line method over the stated life of the obligation which approximates the effective yield method. In the event that we modify or extinguish our debt before maturity, the Company follows the guidance in ASC 470-50, Modification and Extinguishments ("ASC 470-50"). For modifications to or exchanges of our Senior Secured Facility (as defined in Note 8 to the financial statements), any unamortized deferred financing costs relating to lenders who are not part of the new lending group are expensed. For extinguishments of our senior secured notes and senior unsecured notes, any unamortized deferred financing costs are deducted from the carrying amount of the debt in determining the gain or loss from the extinguishment. Foreign Currency Translations The accounting records of the Company are maintained inU.S. dollars. All assets and liabilities denominated in foreign currencies are translated intoU.S. dollars based on the foreign exchange rate on the date of valuation. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. The Company's investments in foreign securities may involve certain risks, including without limitation: foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to theU.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company. Dividends and Distributions Dividends and distributions to common stockholders are recorded as of the ex-dividend date. The amount to be paid out as a distribution is determined by the Board of Directors each quarter. Net realized capital gains, if any, are generally distributed or deemed distributed at least annually. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Share Repurchases In connection with the Company's share repurchase program, the cost of shares repurchased is charged to net assets on the trade date. Federal and State Income Taxes We have elected to be treated as a RIC under the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must (among other requirements) meet certain source-of-income and asset diversification requirements and timely distribute to its stockholders at least 90% of its investment company taxable income as defined by the Code, for each year. The Company (among other requirements) has made and intends to continue to make the requisite distributions to its stockholders, which will generally relieve the Company from corporate-level income taxes. For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of distributions paid to stockholders through March 31, 2020 may include return of capital, however, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until we file our tax return for the tax year ending March 31, 2020. The character of income and gains that we will distribute is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to stockholder dividend and distributions and other permanent book and tax difference are reclassified to paid-in capital. If we do not distribute (or are not deemed to have distributed) at least 98% of our annual ordinary income and 98.2% of our capital gains in the calendar year earned, we will generally be required to pay excise tax equal to 4% of the amount by which 98% of our annual ordinary income and 98.2% of our capital gains exceed the distributions from such taxable income for the year. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, we accrue excise taxes, if any, on estimated undistributed taxable income. 139
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) If we fail to satisfy the annual distribution requirement or otherwise fail to qualify as a RIC in any taxable year, we would be subject to tax on all of our taxable income at regular corporate rates. Distribution would generally be taxable to our individual and other non-corporate taxable stockholders as ordinary dividend income eligible for the reduced maximum rate applicable to qualified dividend income to the extent of our current and accumulated earnings and profits provided certain holding period and other requirements are met. Subject to certain limitation under the Code, corporate distributions would be eligible for the dividend-received deduction. To qualify again to be taxed as a RIC in a subsequent year, we would be required to distribute to our stockholders our accumulated earnings and profits attributable to non-RIC years. In addition, if we failed to qualify as a RIC for a period greater than two taxable years, then, in order to qualify as a RIC in a subsequent year, we would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if we had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of five years. We follow ASC 740, Income Taxes ("ASC 740"). ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Penalties or interest, if applicable, that may be assessed relating to income taxes would be classified as other operating expenses in the financial statements. As of March 31, 2020, there were no uncertain tax positions and no amounts accrued for interest or penalties. Management's determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although we file both federal and state income tax returns, our major tax jurisdiction is federal. Our tax returns for each of our federal tax years since 2017 remain subject to examination by the Internal Revenue Service. Retroactive Adjustments for Common Stock Reverse Split The Company's Board of Directors approved a one-for-three reverse stock split of the Company's common stock on October 30, 2018 which was effective as of close of business November 2018 (the "Reverse Stock Split"). All common share and common per share amounts in the financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to this reverse stock split as disclosed in Note 9. Recent Accounting Pronouncements In August 2018, the FASB issued guidance which changes the fair value disclosure requirements. The new guidance includes new, eliminated and modified fair value disclosures. Among other requirements, the guidance requires disclosure of the range and weighted average of the significant unobservable inputs for Level 3 fair value measurements and the way it is calculated. The guidance also eliminated the following disclosures: (i) amount and reason for transfers between Level 1 and Level 2, (ii) policy for timing of transfers between levels of the fair value hierarchy and (iii) valuation processes for Level 3 fair value measurement. The guidance is effective for all entities for interim and annual periods beginning after December 15, 2019. The Company has evaluated the impact of this guidance and determined that there is no material effect on the Company's financial statements. In April 2019, the FASB issued Accounting Standards Update No. 2019-04, "Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments." This guidance amends how credit losses are recorded for financial assets and certain other instruments that are not measured at fair value, including trade and interest receivables. The ASU allows for the guidance to be adopted through an accounting policy election effective for interim and annual periods beginning after December 15, 2019. The Company has evaluated the impact of this guidance and determined that there is no material effect on the Company's financial statements. In March 2020, the FASB issued Accounting Standards Update No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The guidance provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The Company is evaluating the potential impact that the adoption of this guidance will have on the Company's financial statements. 140
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) SEC Disclosure Update and Simplification In August 2018, theU.S. Securities and Exchange Commission ("SEC") adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification which amends certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. The amendments are intended to facilitate the disclosure of information to investors and simplify compliance. The final rule is effective for all filings on or after November 5, 2018. The Company has evaluated the impact of the amendments and determined the effect of the adoption of the simplification rules on financial statements were limited to the modification and removal of certain disclosures. Note 3. Related Party Agreements and Transactions Investment Advisory Agreement with AIM The Company has an investment advisory management agreement with the Investment Adviser (the "Investment Advisory Agreement") under which AIM receives a fee from the Company, consisting of two components - a base management fee and a performance-based incentive fee. Base Management Fee Effective April 1, 2018, the base management fee is calculated initially at an annual rate of 1.50% (0.375% per quarter) of the lesser of (i) the average of the value of the Company's gross assets, net of average of any payable for investments (excluding cash or cash equivalents but including other assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters and (ii) the average monthly value (measured as of the last day of each month) of the Company's gross assets (excluding cash or cash equivalents but including other assets purchased with borrowed amounts) during the most recently completed calendar quarter; provided, however, in each case, the base management fee is calculated at an annual rate of 1.00% (0.250% per quarter) of the average of the value of the Company's gross assets (excluding cash or cash equivalents but including other assets purchased with borrowed amounts) that exceeds the product of (A) 200% and (B) the value of the Company's net asset value at the end of the prior calendar quarter. The base management fee will be payable quarterly in arrears. The value of the Company's gross assets shall be calculated in accordance with the Company's valuation policies. For the period from April 1, 2017 through March 31, 2018, the base management fee was calculated at an annual rate of 2% (0.50% per quarter) of the average of the value of the Company's gross assets (excluding cash or cash equivalents but including other assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters. For the same period, the Investment Adviser agreed to waive 25% of its base management fee so the base management fee was reduced from 2% to 1.50%. Performance-based Incentive Fee The incentive fee (the "Incentive Fee") consists of two components that are determined independent of each other, with the result that one component may be payable even if the other is not. A portion of the Incentive Fee is based on income and a portion is based on capital gains, each as described below: 141
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) A. Incentive Fee based on Income (i) Incentive Fee on Pre-Incentive Fee Net Investment Income - (April 1, 2017 - December 31, 2018) The first part of the incentive fee is calculated and payable quarterly in arrears based on our pre-incentive fee net investment income for the immediately preceding calendar quarter at an annual rate of 20%. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including, without limitation, any accrued income that the Company has not yet received in cash and any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies) accrued during the calendar quarter, minus the Company's operating expenses accrued during the calender quarter (including, without limitation, the Base Management Fee, administration expenses and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the Incentive Fee on Income and the Incentive Fee on Capital Gains). Pre-incentive fee net investment income does not include any realized or unrealized gains or losses. Pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter, is compared to the rate of 1.75% per quarter (7% annualized) (the "performance threshold"). For the period from April, 2017 through December 31, 2018, if the resulting incentive fee rate was less than 20% due to the incentive fee waiver discussed below, the percentage at which the Investment Adviser's 100% catch-up is complete would also be reduced ratably from 2.1875% (8.75% annualized) to as low as 2.06% (8.24% annualized) ("catch-up threshold"). The Company pays the Investment Adviser an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which our pre-incentive fee net investment income does not exceed the performance threshold; and (2) 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds 1.75% but does not exceed the catch-up threshold in any calendar quarter; and (3) for the period from April 1, 2017 through December 31, 2018, 15% to 20% of the amount of our pre-incentive fee net investment income, if any, that exceeds the catch-up threshold in any calendar quarter. These calculations are appropriately prorated for any period of less than three months. The effect of the fee calculation described above is that if pre-incentive fee net investment income is equal to or exceeds the catch-up threshold, the Investment Adviser will receive a fee of 15% to 20% of our pre-incentive fee net investment income for the quarter. Incentive Fee Waiver For the period from April 1, 2018 through December 31, 2018, the Investment Adviser has agreed to waive 25% of its performance based incentive fee so that the incentive fee on pre-incentive fee net investment income is accrued at 15%. For the period April 1, 2017 through March 31, 2018, the Investment Adviser has agreed to waive up to 25% of its performance-based incentive fee so that the incentive fee on pre-incentive fee net investment income could be accrued at as low a rate as 15% to the extent the Company experienced cumulative net realized and change in unrealized losses during the waiver period ("cumulative net losses"). The inclusion of cumulative net gains and cumulative net losses were measured on a cumulative basis from April 1, 2017 through the end of each quarter during the waiver period. Any cumulative net gains resulted in a dollar for dollar increase in the incentive fee payable up to a maximum rate of 20% and any cumulative net losses resulted in a dollar for dollar decrease in the incentive fee payable down to a minimum rate of 15%. (ii) Incentive Fee on Pre-Incentive Fee Net Income - effective from January 1, 2019 Beginning January 1, 2019, the incentive fee on pre-incentive fee net investment income will be determined and paid quarterly in arrears by calculating the amount by which (x) the aggregate amount of the pre-incentive fee net investment income with respect of the current calendar quarter and each of the eleven preceding calendar quarters beginning with the calendar quarter that commences on or after April 1, 2018 (the "trailing twelve quarters") exceeds (y) the preferred return amount in respect of the trailing twelve quarters. The preferred return amount will be determined on a quarterly basis, and will be calculated by summing the amounts obtained by multiplying 1.75% by the Company's net asset value at the beginning of each applicable calendar quarter comprising the relevant trailing twelve quarters. The preferred return amount will be calculated after making appropriate adjustments to the Company's net asset value at the beginning of each applicable calendar quarter for Company capital issuances and distributions during the applicable calendar quarter. 142
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) The amount of the Incentive Fee on Income that will be paid to the Investment Adviser for a particular quarter will equal the excess of the incentive fee on pre-incentive fee net investment income, so calculated less the aggregate incentive fee on pre-incentive fee net investment income that were paid to the Investment Adviser (excluding waivers, if any) in the preceding eleven calendar quarters comprising the relevant trailing twelve quarters. The Company will pay the Investment Adviser an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows: (1) no incentive fee in any calendar quarter in which our pre-incentive fee net investment income for the trailing twelve quarters does not exceed the preferred return amount. (2) 100% of our pre-incentive fee net investment income for the trailing twelve quarters, if any, that exceeds the preferred return amount but is less than or equal to an amount (the "catch-up amount") determined by multiplying 2.1875% by the Company's net asset value at the beginning of each applicable calendar quarter comprising the relevant trailing twelve quarters. (3) for any quarter in which the Company's pre-incentive fee net investment income for the trailing twelve quarters exceeds the catch-up amount, the incentive fee shall equal 20% of the amount of the Company's pre-incentive fee net investment income for such trailing twelve quarters. The Incentive Fee on Income as calculated is subject to a cap (the "IncentiveFee Cap "). The IncentiveFee Cap in any quarter is an amount equal to (a) 20% of the Cumulative Pre-Incentive Fee Net Return (as defined below) during the relevant trailing twelve quarters less (b) the aggregate Incentive Fees on Income that were paid to the Investment Adviser (excluding waivers, if any) in the preceding eleven calendar quarters (or portion thereof) comprising the relevant trailing twelve quarters. For this purpose, "Cumulative Pre-Incentive Fee Net Return" during the relevant trailing twelve quarters means (x) Pre-Incentive Fee Net Investment Income in respect of the trailing twelve quarters less (y) any Net Capital Loss, since April 1, 2018, in respect of the trailing twelve quarters. If, in any quarter, the IncentiveFee Cap is zero or a negative value, the Company shall pay no Incentive Fee on Income to the Investment Adviser in that quarter. If, in any quarter, the IncentiveFee Cap is a positive value but is less than the Incentive Fee on Income calculated in accordance with the calculation described above, the Company shall pay the Investment Adviser the IncentiveFee Cap for such quarter. If, in any quarter, the IncentiveFee Cap is equal to or greater than the Incentive Fee on Income calculated in accordance with the calculation described above, the Company shall pay the Investment Adviser the Incentive Fee on Income for such quarter. "Net Capital Loss" in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in such period and (ii) aggregate capital gains, whether realized or unrealized, in such period. B. Incentive Fee Based on Cumulative Net Realized Gains The Incentive Fee on Capital Gains is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory management agreement). This fee shall equal 20.0% of the sum of the Company's realized capital gains on a cumulative basis, calculated as of the end of each calendar year (or upon termination of investment advisory management agreement), computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any Incentive Fees on Capital Gains previously paid to the Investment Adviser. The aggregate unrealized capital depreciation of the Company shall be calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company's portfolio as of the applicable calculation date and (b) the accreted or amortized cost basis of such investment. For accounting purposes only, we are required under GAAP to accrue a theoretical capital gains incentive fee based upon net realized capital gains and unrealized capital gain and loss on investments held at the end of each period. The accrual of this theoretical capital gains incentive fee assumes all unrealized capital gain and loss is realized in order to reflect a theoretical capital gains incentive fee that would be payable to the Investment Adviser at each measurement date. There was no accrual for theoretical capital gains incentive fee for the years ended March 31, 2020 and 2019. It should be noted that a fee so calculated and accrued would not be payable under the Advisers Act or the investment advisory management agreement, and would not be paid based upon such computation of capital gains incentive fees in subsequent periods. Amounts actually paid to the Investment Adviser will be consistent with the Advisers Act and formula reflected in the investment advisory management agreement which specifically excludes consideration of unrealized capital gain. 143
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) Deferred Payment of Certain Incentive Fees For the period between April 1, 2013 and March 31, 2018, AIM has agreed to be paid the portion of the incentive fee that is attributable to interest or dividend income on PIK securities when the Company receives such interest or dividend income in cash. The accrual of incentive fee shall be reversed if such interest or dividend income is written off or determined to be no longer realizable. Upon payment of the deferred incentive fee, AIM will also receive interest on the deferred incentive fee at an annual rate of 3.25% for the period between the date in which the incentive fee is earned and the date of payment. Effective April 1, 2018, with changes in the incentive fees calculation there will be no more deferral of incentive fees on PIK income. The interest will only continue to accrue on the deferred incentive fees payable to AIM as of March 31, 2018. For the years ended March 31, 2020, 2019 and 2018, the Company recognized $40,360, $35,733 and $47,937, respectively, of management fees, and $1,983, $21,190 and $28,710, respectively, of incentive fees before impact of waived fees. For the years ended March 31, 2020 and 2019, no management fees were waived (as not applicable) and for the year ended March 31, 2018, management fees waived was $11,984. For the years ended March 31, 2020, 2019 and 2018, incentive fees waived were $0, $5,542 and $7,734, respectively. As of March 31, 2020 and March 31, 2019, management and performance-based incentive fees payable were $10,289 and $8,880, respectively. For the years ended March 31, 2020 and 2019 there were no amounts of incentive fees on PIK income for which payments have been deferred, and for the year ended March 31, 2018, the amount of incentive fees on PIK income for which payments have been deferred was $1,543. For the years ended March 31, 2020, 2019 and 2018, the Company reversed $0, $979 and $2,224, respectively, of the deferred incentive fee payable related to PIK income which were deemed to be no longer realizable. As of March 31, 2020 and March 31, 2019, there were no cumulative deferred incentive fees on PIK income included in management and performance-based incentive fee payable line of the Statements of Assets and Liabilities. For the years ended March 31, 2020, 2019 and 2018, the amount of interest on deferred incentive fees accrued were $0, $62 and $100. For the years ended March 31, 2020, 2019 and 2018, the Company reversed $0, $41 and $43 of the accrued interest payable on deferred incentive fees related to PIK income which were deemed to be no longer realizable. As of March 31, 2020 and March 31, 2019, there was no accrued interest payable on deferred incentive fees. Fee Offset On January 16, 2019, the Company and AIM entered into a fee offset agreement in connection with revenue realized by AIM and its affiliates for the management of certain aircraft assets. The Company will receive an offsetting credit against total incentive fees otherwise due to AIM under the investment advisory management agreement. The amount offset will initially be 20% of the management fee revenue earned and incentive fee revenue realized by AIM and its affiliates in connection with managing aircraft assets on related insurance balance sheets ("New Balance Sheet Investments"), new aircraft managed account capital ("New Managed Accounts") and new dedicated aircraft funds (New Aircraft Funds"). Once the aggregate capital raised by the New Aircraft Funds or New Manged Accounts and capital invested by the New Balance Sheet Investments exceeds $3 billion cumulatively, the fee offset will step down to 10% of the amount of incremental management fee revenue earned and incentive fee revenue realized by AIM and its affiliates. The fee offset will be in place for seven years, however the incentive fees realized by AIM and its affiliates after this seven-year period from applicable investments that were raised or made within the seven-year period will also be used to offset incentive fees payable to AIM by the Company. The offset will be limited to the amount of incentive fee payable by the Company to AIM and any unapplied fee offset which exceeds the incentive fees payable in a given quarter will carry forward to be credited against the incentive fees payable by the Company in subsequent quarters. For the years ended March 31, 2020, 2019 and 2018 there was no fee offset. 144
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) Administration Agreement with AIA The Company has also entered into an administration agreement with the Administrator (the "Administration Agreement") under which AIA provides administrative services for the Company. For providing these services, facilities and personnel, the Company reimburses the Administrator for the allocable portion of overhead and other expenses incurred by the Administrator and requested to be reimbursed by the Administrator in performing its obligations under the Administration Agreement. The expenses include rent and the Company's allocable portion of compensation and other related expenses for its Chief Financial Officer, Chief Legal Officer and Chief Compliance Officer and their respective staffs. For the years ended March 31, 2020, 2019 and 2018, the Company recognized administrative services expense under the Administration Agreement of $6,335, $6,772 and $6,915, respectively. There was no payable to AIA and its affiliates for expenses paid on our behalf as of March 31, 2020 and March 31, 2019. Administrative Service Expense Reimbursement Merx Aviation Finance, LLC ("Merx"), a wholly-owned portfolio company of the Company, has entered into an administration agreement with the Administrator (the "Merx Administration Agreement") under which AIA provides administrative services to Merx and several Merx managed entities. For the years ended March 31, 2020, 2019 and 2018, the Company recognized administrative service expense reimbursements of $300, $250 and $250, respectively, under the Merx Administration Agreement. Debt Expense Reimbursements The Company has also entered into debt expense reimbursement agreements with Merx and several other portfolio companies, which will reimburse the Company for reasonable out-of-pocket expenses incurred, including any interest, fees or other amounts incurred by the Company in connection with letters of credit issued on their behalf. For the years ended March 31, 2020, 2019 and 2018, the Company recognized debt expense reimbursements of $133, $273 and $332, respectively, under the debt expense reimbursement agreements. Co-Investment Activity We may co-invest on a concurrent basis with affiliates of ours, subject to compliance with applicable regulations and our allocation procedures. Certain types of negotiated co-investments may be made only in accordance with the terms of the exemptive order we received from theSEC permitting us to do so. On March 29, 2016, we received an exemptive order from theSEC (the "Order") permitting us greater flexibility to negotiate the terms of co-investment transactions with certain of our affiliates, including investment funds managed by AIM or its affiliates, subject to the conditions included therein. Under the terms of the Order, a "required majority" (as defined in Section 57(o) of the 1940 Act) of our independent directors must be able to reach certain conclusions in connection with a co-investment transaction, including that (1) the terms of the proposed transaction are reasonable and fair to us and our stockholders and do not involve overreaching of us or our stockholders on the part of any person concerned, and (2) the transaction is consistent with the interests of our stockholders and is consistent with our Board of Directors' approved criteria. In certain situations where co-investment with one or more funds managed by AIM or its affiliates is not covered by the Order, the personnel of AIM or its affiliates will need to decide which fund will proceed with the investment. Such personnel will make these determinations based on allocation policies and procedures, which are designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. The Order is subject to certain terms and conditions so there can be no assurance that we will be permitted to co-invest with certain of our affiliates other than in the circumstances currently permitted by regulatory guidance and the Order. As of March 31, 2020, the Company's co-investment holdings were 59% of the portfolio or $1,653,269, measured at fair value. On a cost basis, 55% of the portfolio or $1,711,258 were co-investments. As of March 31, 2019, the Company's co-investment holdings were 40% of the portfolio or $954,774, measured at fair value. On a cost basis, 39% of the portfolio or $963,227 were co-investments. 145
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Merx Aviation
Effective January 16, 2019, Mr. Gary Rothschild , President and Chief Executive
Officer of Merx, became an employee of Apollo Management Holdings, L.P. ("AMH"),
an affiliate of the Company's investment adviser. Mr. Rothschild also retained
his role as the President and Chief Executive Officer of Merx.
Effective January 16, 2019, Merx entered into a series of service arrangements
with affiliates of AGM. Under a servicing agreement with Apollo Capital
Management, L.P. ("ACM"), Merx serves as technical servicer to aircraft clients
of ACM and its affiliates. Under a research support agreement with ACM, Merx
employees assist ACM with technical due-diligence and underwriting of new
aircraft-related investment opportunities. Under a technical support agreement,
Merx and AMH share the services of Mr. Gary Rothschild , who is the President and
Chief Executive Officer of Merx and an employee of AMH.
Note 4. Earnings Per Share
The following table sets forth the computation of earnings (loss) per share
("EPS"), pursuant to ASC 260-10, for the years ended March 31, 2020, 2019 and
2018:
Year Ended March 31,
2020 2019 2018
Basic and Diluted Earnings (Loss) Per Share
Net increase (decrease) in net assets resulting from $ (116,064) $ 71,946 $ 87,029 operations Weighted average shares outstanding
67,228,771 70,645,944 72,874,613
Basic and diluted earnings (loss) per share $ (1.73) $ 1.02 $ 1.19
Note 5. Investments
Fair Value Measurement and Disclosures
The following table shows the composition of our investment portfolio as of
March 31, 2020, with the fair value disaggregated into the three levels of the
fair value hierarchy in accordance with ASC 820:
Fair Value Hierarchy
Cost Fair Value Level 1 Level 2 Level 3
First Lien Secured Debt $ 2,423,736 $ 2,265,800 $ - $ - $ 2,265,800 Second Lien Secured Debt
385,924 343,420 - - 343,420
Unsecured Debt - - - - -
Structured Products and Other 16,729 9,748 - - 9,748
Preferred Equity 22,679 7,968 - - 7,968
Common Equity/Interests 240,362 158,361 - 418 157,943
Warrants 183 136 - - 136Total Investments before Cash Equivalents $ 3,089,613 $ 2,785,433 $ - $ 418 $ 2,785,015
Money Market Fund $ 37,301 $
37,301 $ 37,301 $ - $ - Total Cash Equivalents
$ 37,301 $ 37,301 $ 37,301 $ - $ - Total Investments after Cash Equivalents $ 3,126,914 $ 2,822,734 $ 37,301 $ 418 $ 2,785,015
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
The following table shows the composition of our investment and derivative portfolio as of March 31, 2019, with the fair value disaggregated into the three levels of the fair value hierarchy in accordance with ASC 820:
Fair Value Hierarchy
Cost Fair Value Level 1 Level 2 Level 3
First Lien Secured Debt $ 1,613,254 $ 1,590,786 $ - $ 3,855 $ 1,586,931 Second Lien Secured Debt
565,599 559,196 - 221,651 337,545
Unsecured Debt - - - - -
Structured Products and Other 43,125 45,595 - - 45,595
Preferred Equity 22,663 28,182 - - 28,182
Common Equity/Interests 213,287 184,223 - 469 183,754
Warrants 183 150 - - 150Total Investments before Cash Equivalents $ 2,458,111 $ 2,408,132 $ - $ 225,975 $ 2,182,157
Money Market Fund $ 36,280 $
36,280 $ 36,280 $ - $ - Total Cash Equivalents
$ 36,280 $ 36,280 $ 36,280 $ - $ - Total Investments after Cash Equivalents $ 2,494,391 $ 2,444,412 $ 36,280 $ 225,975 $ 2,182,157
The following table shows changes in the fair value of our Level 3 investments during the year ended March 31, 2020:
Structured
First Lien Second Lien Products and Common
Secured Debt (2) Secured Debt (2) Unsecured Debt Other Preferred Equity Equity/Interests Warrants Total
Fair value as of March 31, 2019 $ 1,586,931 $ 337,545 $ - $ 45,595 $ 28,182 $ 183,754 $ 150 $ 2,182,157
Net realized gains (losses) (9,464) - - 7,023 - (4,401) - (6,842)
Net change in unrealized gains (losses) (135,442) (30,649) - (9,451) (20,229) (52,886) (14) (248,671)
Net amortization on investments 7,693 871 - 317 - - - 8,881
Purchases, including capitalized PIK (3) 1,902,442 7,255 - 84 15 55,459 - 1,965,255
Sales (3) (1,086,360) (90,608) - (33,820) - (23,983) - (1,234,771)
Transfers out of Level 3 (1) - - - - - - - -
Transfers into Level 3 (1) - 119,006 - - - - - 119,006 Fair value as of March 31, 2020 $ 2,265,800 $ 343,420 $ - $ 9,748 $ 7,968 $ 157,943 $ 136 $ 2,785,015
Net change in unrealized gains (losses) on Level 3 investments still held as of March 31, 2020 $ (142,749) $ (38,785)
$ - $ (3,272) $ (20,229) $ (61,386) $ (14) $ (266,435)
____________________
(1)Transfers out of Level 3 are due to an increase in the quantity and
reliability of broker quotes obtained and transfers into Level 3 are due to a
decrease in the quantity and reliability of broker quotes obtained as assessed
by the Investment Adviser. Transfers are assumed to have occurred at the end of
the period. There were no transfers between Level 1 and Level 2 fair value
measurements during the period shown.
(2)Includes unfunded commitments measured at fair value of $13,795.
(3)Includes reorganizations and restructuring of investments.
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data)
The following table shows changes in the fair value of our Level 3 investments during the year ended March 31, 2019:
Structured
First Lien Second Lien Products and Preferred Common
Secured Debt (2) Secured Debt (2) Unsecured Debt Other Equity Equity/Interests Warrants Total
Fair value as of March 31, 2018 $ 1,131,943 $ 415,338 $ 90,117 $ 67,967 $ 31,052 $ 207,657 $ 251 $ 1,944,325
Net realized gains (losses) (1) (11,845) - (292) (1) 2,007 (180) (10,312)
Net change in unrealized gains (losses) (9,865) 13,930 (198) 2,729 (5,458) (23,742) 79 (22,525)
Net amortization on investments 4,221 1,124 - 449 - - -
5,794
Purchases, including capitalized PIK (3) 1,207,568 35,256
762 140 2,559 14,692 - 1,260,977
Sales (3) (746,979) (110,736) (90,681) (25,398) 30 (16,390) - (990,154)
Transfers out of Level 3 (1) 44 (5,522) - - - (470) - (5,948)
Transfers into Level 3 (1) - - - - - - - -Fair value as of March 31, 2019 $ 1,586,931 $ 337,545 $
- $ 45,595 $ 28,182 $ 183,754 $ 150 $ 2,182,157
Net change in unrealized gains (losses)
on Level 3 investments still held as of
March 31, 2019 $ (12,413) $ 3,036 $ - $ 1,998 $ (6,673) $ (22,527) $ (32) $ (36,611)
____________________
(1)Transfers out of Level 3 are due to an increase in the quantity and
reliability of broker quotes obtained and transfers into Level 3 are due to a
decrease in the quantity and reliability of broker quotes obtained as assessed
by the Investment Adviser. Transfers are assumed to have occurred at the end of
the period. There were no transfers between Level 1 and Level 2 fair value
measurements during the period shown.
(2)Includes unfunded commitments measured at fair value of $(7,865).
(3)Includes reorganizations and restructuring of investments.
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) The following tables summarize the significant unobservable inputs the Company used to value its investments categorized within Level 3 as of March 31, 2020 and March 31, 2019. In addition to the techniques and inputs noted in the tables below, according to our valuation policy we may also use other valuation techniques and methodologies when determining our fair value measurements. The below tables are not intended to be all-inclusive, but rather provide information on the significant unobservable inputs as they relate to the Company's determination of fair values. The unobservable inputs used in the fair value measurement of our Level 3 investments as of March 31, 2020 were as follows: Quantitative Information about Level 3 Fair Value
Measurements
Asset Category Fair Value Valuation Techniques/Methodologies Unobservable Input Range Weighted Average (1)
First Lien Secured Debt $ 347,299 Discounted Cash Flow Discount Rate 2.3% 14.7% 12.3%
61,471 Recovery Analysis Recoverable Amount N/A N/A N/A
Market Comparable Technique Comparable Multiple 1.3x 9.3x 6.3x
96,729 Recent Transaction Recent Transaction N/A N/A N/A
47,215 Recovery Analysis Commodity Price 30.00 57.50 57.04
2,066 Recovery Analysis Liquidation N/A N/A N/A
1,036 Recovery Analysis Recoverable Amount N/A N/A N/A
1,709,984 Yield Analysis Discount Rate 4.3% 31.1% 9.5%
Second Lien Secured Debt 14,711 Recovery Analysis Commodity Price 34.00 60.00 56.25
328,709 Yield Analysis Discount Rate 6.1% 17.5% 12.8%
Structured Products and Other 9,748 Discounted Cash Flow Discount Rate 13.5% 13.5% 13.5%
Preferred Equity 442 Discounted Cash Flow Discount Rate 13.5% 13.5% 13.5%
2,142 Market Comparable Technique Comparable Multiple 3.3x 4.7x 3.7x
5,384 Option Pricing Model Expected Volatility 47.0% 47.0% 47.0%
- Yield Analysis Discount Rate 20.0% 20.0% 0.0%
Common Equity/Interests 135,288 Discounted Cash Flow Discount Rate 12.2% 31.3% 14.9%
20,144 Market Comparable Technique Comparable Multiple 3.2x 13.0x 6.0x
100 Recent Transaction Recent Transaction N/A N/A N/A
2,411 Recovery Analysis Commodity Price 30.00 60.00 56.06
Warrants 136 Option Pricing Model Expected Volatility 35.0% 70.0% 57.7%
- Recovery Analysis Liquidation N/A N/A N/A
Total Level 3 Investments $ 2,785,015
___________________
(1)The weighted average information is generally derived by assigning each
disclosed unobservable input a proportionate weight based on the fair value of
the related investment. For the commodity price unobservable input, the weighted
average price is an undiscounted price based upon the estimated production level
from the underlying reserves.
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data)
The unobservable inputs used in the fair value measurement of our Level 3 investments as of March 31, 2019 were as follows:
Quantitative Information about Level 3 Fair Value Measurements
Asset Category Fair Value Valuation Techniques/Methodologies Unobservable Input Range Weighted Average (1)
First Lien Secured Debt $ 25,930 Broker Quoted Broker Quote N/A N/A N/A
413,200 Discounted Cash Flow Discount Rate 2.3% 14.2% 12.2%
58,004 Recovery Analysis Recoverable Amount N/A N/A N/A
Market Comparable Technique Comparable Multiple 5.1x 5.1x 5.1x
35,582 Recent Transaction Recent Transaction N/A N/A N/A
116,265 Recovery Analysis Commodity Price $60.00 $70.00 $66.64
1,509 Recovery Analysis Recoverable Amount N/A N/A N/A
1,990 Transaction Price Expected Proceeds N/A N/A N/A
934,451 Yield Analysis Discount Rate 4.4% 20.3% 10.3%
Second Lien Secured Debt 50,590 Broker Quoted Broker Quote N/A N/A N/A
15,912 Market Comparable Technique Comparable Multiple 7.2x 7.2x 7.2x
33,705 Recovery Analysis Commodity Price $67.38 $70.00 $68.86
237,338 Yield Analysis Discount Rate 10.90% 14.80% 12.70%
Structured Products and Other 45,595 Discounted Cash Flow Discount Rate 9.1% 9.5% 9.2%
Preferred Equity 440 Discounted Cash Flow Discount Rate 10.5% 10.5% 10.5%
2,357 Market Comparable Technique Comparable Multiple 2.2x 6.2x 5.3x
20,463 Option Pricing Model Expected Volatility 35.5% 35.5% 35.5%
4,922 Yield Analysis Discount Rate 15.5% 15.5% 15.5%
Common Equity/Interests 173,285 Discounted Cash Flow Discount Rate 10.5% 29.5% 13.2%
1,803 Market Comparable Technique Comparable Multiple 5.1x 11.1x 9.2x
- Recovery Analysis Recoverable Amount N/A N/A N/A
8,666 Recovery Analysis Commodity Price $60.00 $70.00 $65.84
Warrants 150 Option Pricing Model Expected Volatility 32.5% 60.0% 49.5%
Total Level 3 Investments $ 2,182,157
____________________
(1)The weighted average information is generally derived by assigning each
disclosed unobservable input a proportionate weight based on the fair value of
the related investment. For the commodity price unobservable input, the weighted
average price is an undiscounted price based upon the estimated production level
from the underlying reserves.
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) The significant unobservable inputs used in the fair value measurement of the Company's debt and equity securities are primarily earnings before interest, taxes, depreciation and amortization ("EBITDA") comparable multiples and market discount rates. The Company typically uses EBITDA comparable multiples on its equity securities to determine the fair value of investments. The Company uses market discount rates for debt securities to determine if the effective yield on a debt security is commensurate with the market yields for that type of debt security. If a debt security's effective yield is significantly less than the market yield for a similar debt security with a similar credit profile, the resulting fair value of the debt security may be lower. For certain investments where fair value is derived based on a recovery analysis, the Company uses underlying commodity prices from third party market pricing services to determine the fair value and/or recoverable amount, which represents the proceeds expected to be collected through asset sales or liquidation. Further, for certain investments, the Company also considered the probability of future events which are not in management's control. Significant increases or decreases in any of these inputs in isolation would result in a significantly lower or higher fair value measurement. The significant unobservable inputs used in the fair value measurement of the structured products include the discount rate applied in the valuation models in addition to default and recovery rates applied to projected cash flows in the valuation models. Specifically, when a discounted cash flow model is used to determine fair value, the significant input used in the valuation model is the discount rate applied to present value the projected cash flows. Increases in the discount rate can significantly lower the fair value of an investment; conversely decreases in the discount rate can significantly increase the fair value of an investment. The discount rate is determined based on the market rates an investor would expect for a similar investment with similar risks. For certain investments such as warrants, the Company may use an option pricing technique, of which the applicable method is the Black-Scholes Option Pricing Method ("BSM"), to perform valuations. The BSM is a model of price variation over time of financial instruments, such as equity, that is used to determine the price of call or put options. Various inputs are required but the primary unobservable input into the BSM model is the underlying asset volatility. Investment Transactions For the years ended March 31, 2020, 2019 and 2018, purchases of investments on a trade date basis were $1,866,272, $1,278,061 and $1,049,363, respectively. For the years ended March 31, 2020, 2019 and 2018, sales and repayments (including prepayments and unamortized fees) of investments on a trade date basis were $1,265,631, $1,086,779 and $1,153,978, respectively. PIK Income The Company holds loans and other investments, including certain preferred equity investments, that have contractual PIK income. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date. During the years ended March 31, 2020, 2019 and 2018, PIK income earned was $10,936, $8,585 and $20,241, respectively. The following table shows the change in capitalized PIK balance for the years ended March 31, 2020, 2019 and 2018:
Year Ended March 31,
2020 2019 2018
PIK balance at beginning of period $ 23,720 $ 24,454 $ 53,262
PIK income capitalized 20,083 6,412 14,616
Adjustments due to investments exited or written off - (2,446) (43,054)
PIK income received in cash (6,322) (4,700) (370)
PIK balance at end of period $ 37,481 $ 23,720 $ 24,454
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) Dividend Income on CLOs The Company holds structured products and other investments. The CLO equity investments are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after payment of the contractual payments to debt holders and fund expenses. The Company records as dividend income the accretable yield from its beneficial interests in structured products such as CLOs based upon a number of cash flow assumptions that are subject to uncertainties and contingencies. During the years ended March 31, 2020, 2019 and 2018 dividend income from structured products was $1,286, $1,198 and $2,461, respectively. Investments on Non-Accrual Status As of March 31, 2020, 5.1% of total investments at amortized cost, or 1.7% of total investments at fair value, were on non-accrual status. As of March 31, 2019, 2.9% of total investments at amortized cost, or 2.4% of total investments at fair value, were on non-accrual status. Unconsolidated Significant Subsidiary Our investments are generally in small and mid-sized companies in a variety of industries. In accordance with Rules 3-09 and 4-08(g) of Regulation S-X ("Rule 3-09" and "Rule 4-08(g)," respectively), we must determine which of our unconsolidated controlled portfolio companies are considered "significant subsidiaries," if any. In evaluating these investments, there are three tests utilized to determine if any of our controlled investments are considered significant subsidiaries: the investment test, the asset test, and the income test. Rule 3-09 requires separate audited financial statements of an unconsolidated majority-owned subsidiary in an annual report if any of the three tests exceeds 20%. Rule 4-08(g) requires summarized financial information in an annual report if any of the three tests exceeds 10% and summarized financial information in a quarterly report if any of the three tests exceeds 20%. Under Rule 3-09, our investment in Merx Aviation Finance, LLC as of March 31, 2020 exceeded the 20% threshold in at least one of the tests. Accordingly, we are attaching the audited financial statements of Merx Aviation Finance, LLC to Form 10-K. Note 6. Derivative Instruments In the normal course of business, the Company enters into derivative instruments which serve as components of the Company's investment strategies and are utilized primarily to structure the portfolio to economically match the investment strategies of the Company. These instruments are subject to various risks, similar to non-derivative instruments, including market, credit and liquidity risks. The Investment Adviser manages these risks on an aggregate basis along with the risks associated with the Company's investing activities as part of its overall risk management policy. Purchased Put Options Purchased put option contracts give the Company the right, but not the obligation, to sell within a limited time, a financial instrument, commodity or currency at a contracted price that may also be settled in cash, based on differentials between specified indices or prices. Purchasing put options tends to decrease exposure to the underlying instrument. The Company pays a premium, which is recorded as an asset and subsequently marked-to-market to reflect the current value of the option. Premiums paid for purchasing options which expire unexercised are treated as realized losses. Premiums paid for purchasing options which are exercised are added to the amounts paid for, or offset against the proceeds received on, the underlying security or reference investment. The risk associated with purchasing put options is limited to the premium paid. 152
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Written Call Options
Written call options obligate the Company to buy within a limited time, a
financial instrument, commodity or currency at a contracted price that may also
be settled in cash, based on differentials between specified indices or prices.
When the Company writes a call option, an amount equal to the premium received
by the Company is treated as a liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the written
call option. If an option which the Company has written either expires
unexercised on its stipulated expiration date or the Company enters into a
closing purchase transaction, the Company realizes a gain or loss (if the cost
of a closing purchase transaction is less than or exceeds, respectively, the
premium received when the option was written) without regard to any unrealized
gain or loss on the underlying security or derivative instrument, and the
liability related to such option is extinguished. If a call option which the
Company has written is exercised, the Company recognizes a realized gain or loss
from the sale of the underlying security or derivative instrument and the
proceeds from the sale are increased by the premium originally received. In
writing a call option, the Company bears the market risk of an unfavorable
change in the price, potentially unlimited in amount, of the derivative
instrument or security underlying the written call option.
As of March 31, 2020, and March 31, 2019 the Company did not hold any derivative
contracts. The volume of the derivatives, based on the base notional value of
option contracts, for the year ended March 31, 2019 was $153,150 for purchased
call options, 13,750 for purchased put options, $(13,575) for written call
options and $(146,969) for written put options.
The effect of transactions in derivative instruments to the Statements of
Operations during the years ended March 31, 2020, 2019 and 2018 were as follows:
Year Ended March 31,
2020 2019 2018
Net Change in Unrealized Losses on Derivatives
Purchased Put Options $ - $ 4,531 $ (4,531)
Written Call Options - 14,614 (14,614)
Net Change in Unrealized Losses on Derivatives $ - $ 19,145 $ (19,145)
Year Ended March 31,
2020 2019 2018
Net Realized Losses on Derivatives
Purchased Put Options $ - $ (5,472) $ (2,609)
Written Call Options - (24,523) (1,666)
Net Realized Losses on Derivatives $ - $ (29,995) $ (4,275)
The Investment Adviser is exempt from registration with theU.S. Commodity Futures Trading Commission ("CFTC") as a commodity pool operator ("CPO") with respect to the Company. To the extent such exemption is no longer available and the Investment Adviser is required to register with the CFTC as a CPO, compliance with the CFTC's disclosure, reporting and recordkeeping requirements may increase the Company's expenses and may affect the ability of the Company to use commodity interests (including futures, option contracts, commodities, and swaps) to the extent or in the manner desired. Note 7. Offsetting Assets and Liabilities The Company entered into centrally cleared derivative contracts withChicago Mercantile Exchange ("CME"). Upon entering into the centrally cleared derivative contracts, the Company is required to deposit with the relevant clearing organization cash or securities, which is referred to as the initial margin. Cash deposited as initial margin is reported as cash collateral on the Statements of Assets and Liabilities. Centrally cleared derivative contracts entered into with CME are considered settled-to-market contracts where daily variation margin posted is legally characterized as a settlement payment as opposed to collateral. The settlement payment does not terminate the derivative contract and the contract will continue to exist with no changes to its terms. Daily changes in fair value are recorded as a payable or receivable on the Statements of Assets and Liabilities as variation margin. 153
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
The Company has elected not to offset assets and liabilities in the Statements
of Assets and Liabilities that may be received or paid as part of collateral
arrangements, even when an enforceable master netting arrangement or other
agreement is in place that provides the Company, in the event of counterparty
default, the right to liquidate collateral and the right to offset a
counterparty's rights and obligations. As of March 31, 2020 and March 31, 2019,
the Company did not hold any derivative contracts.
Note 8. Debt and Foreign Currency Transactions and Translations
On April 4, 2018, the Company's Board of Directors, including a "required
majority" (as defined in Section 57(o) of the Investment Company Act of 1940, as
amended) of the Board, approved the application of the modified asset coverage
requirements set forth in Section 61(a)(2) of the Investment Company Act of
1940. As a result, effective on April 4, 2019, our asset coverage requirement
applicable to senior securities was reduced from 200% to 150% (i.e., the revised
regulatory leverage limitation permits BDCs to double the amount of borrowings,
such that we would be able to borrow up to two dollars for every dollar we have
in assets less all liabilities and indebtedness not represented by senior
securities issued by us).
The Company's outstanding debt obligations as of March 31, 2020 were as follows:
Total Aggregate
Principal Amount Principal Amount
Date Issued/Amended Committed Outstanding Fair Value Final Maturity Date
Senior Secured Facility 11/19/2018 $ 1,810,000 $ 1,449,402 * $ 1,386,914 (1) 11/19/2023
2025 Notes 3/3/2015 350,000 350,000 262,500 (1) 3/3/2025
Total Debt Obligations $ 2,160,000 $ 1,799,402 $ 1,649,414
Deferred Financing Cost and Debt Discount $ (4,785)
Total Debt Obligations, net of Deferred Financing Cost and Debt Discount
$ 1,794,617
____________________
*Includes foreign currency debt obligations as outlined in Foreign Currency
Transactions and Translations within this note to the financial statements.
(1)The fair value of these debt obligations would be categorized as Level 3
under ASC 820 as of March 31, 2020. The valuation is based on a yield analysis
and discount rate commensurate with the market yields for similar types of debt.
The Company's outstanding debt obligations as of March 31, 2019 were as follows:
Total Aggregate
Principal Amount Principal Amount
Date Issued/Amended Committed Outstanding Fair Value Final Maturity Date
Senior Secured Facility 11/19/2018 $ 1,640,000 $ 638,888 * $ 650,757 (1) 11/19/2023
2025 Notes 3/3/2015 350,000 350,000 348,370 (3) 3/3/2025
2043 Notes 6/17/2013 150,000 150,000 155,700 (2) 7/15/2043
Total Debt Obligations $ 2,140,000 $ 1,138,888 $ 1,154,827
Deferred Financing Cost and Debt Discount $ (10,202)
Total Debt Obligations, net of Deferred Financing Cost and Debt
Discount $ 1,128,686
____________________
*Includes foreign currency debt obligations as outlined in Foreign Currency
Transactions and Translations within this note.
(1)The fair value of these debt obligations would be categorized as Level 3
under ASC 820 as of March 31, 2019. The valuation is based on a yield analysis
and discount rate commensurate with the market yields for similar types of debt.
(2)The fair value of these debt obligations would be categorized as Level 1
under ASC 820 as of March 31, 2019. The valuation is based on quoted prices of
identical liabilities in active markets.
(3)The fair value of these debt obligations would be categorized as Level 2
under ASC 820 as of March 31, 2019. The valuation is based on broker quoted
prices.
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APOLLO INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS (Continued) (In thousands, except share and per share data) Senior Secured Facility On November 19, 2018, the Company amended and restated its senior secured, multi-currency, revolving credit facility (the "Senior Secured Facility") from the previous December 22, 2016 amendment. The amendment reduced the Company's minimum asset coverage financial covenant from 200% to 150%, increased the lenders commitments from $1,190,000 to $1,590,00, extended the final maturity date through November 19, 2023, and included an accordion provision which allows the Company to increase the total commitments under the existing revolving facility up to an aggregate principal amount of $2,385,000 from new or existing lenders on the same terms and conditions as the existing commitments. On February 28, 2019, the Company entered into an amendment to its Senior Secured Facility to increase the multicurrency commitments by $50,000 from $1,590,000 to $1,640,000.On May 31, 2019, the Company entered into an amendment to its Senior Secured Facility to increase the multicurrency commitments by $70,000 from $1,640,000 to $1,710,000. On March 13, 2020, the Company entered into an amendment to its Senior Secured Facility to increase the multicurrency commitments by $100,000 from $1,710,000 to $1,810,000 pursuant to the accordion provisions therein. The accordion provisions under the Senior Secured Facility allow the Company to increase the total commitments under the existing revolving facility up to an aggregate principal amount of $2,385,000 from new or existing lenders on the same terms and conditions as the existing commitments. The Senior Secured Facility is secured by substantially all of the assets in the Company's portfolio, including cash and cash equivalents. Commencing November 30, 2022, the Company is required to repay, in twelve consecutive monthly installments of equal size, the outstanding amount under the Senior Secured Facility as of November 19, 2022. In addition, the stated interest rate on the facility remains as a formula-based calculation based on a minimum borrowing base, resulting in a stated interest rate, depending on the type of borrowing, of (a) either LIBOR plus 1.75% per annum or LIBOR plus 2.00% per annum, or (b) either Alternate Base Rate plus 0.75% per annum or Alternate Base Rate plus 1% per annum. As of March 31, 2020, the stated interest rate on the facility was LIBOR plus 2.00%. The Company is required to pay a commitment fee of 0.375% per annum on any unused portion of the Senior Secured Facility and participation fees and fronting fees of up to 2.25% per annum on the letters of credit issued. The Senior Secured Facility contains affirmative and restrictive covenants, events of default and other customary provisions for similar debt facilities, including: (a) periodic financial reporting requirements, (b) maintaining minimum stockholders' equity of the greater of (i) 30% of the total assets of the Company and its consolidated subsidiaries as of the last day of any fiscal quarter and (ii) the sum of (A) $870,000 plus (B) 25% of the net proceeds from the sale of equity interests in the Company after the closing date of the Senior Secured Facility, (c) maintaining a ratio of total assets, less total liabilities (other than indebtedness) to total indebtedness, in each case of the Company and its consolidated subsidiaries, of not less than 1.5:1.0, (d) limitations on the incurrence of additional indebtedness, including a requirement to meet a certain minimum liquidity threshold before the Company can incur such additional debt, (e) limitations on liens, (f) limitations on investments (other than in the ordinary course of the Company's business), (g) limitations on mergers and disposition of assets (other than in the normal course of the Company's business activities), (h) limitations on the creation or existence of agreements that permit liens on properties of the Company's consolidated subsidiaries and (i) limitations on the repurchase or redemption of certain unsecured debt and debt securities. In addition to the asset coverage ratio described in clause (c) of the preceding sentence, borrowings under the Senior Secured Facility (and the incurrence of certain other permitted debt) are subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company's portfolio. The advance rate applicable to any specific type of asset in the Company's portfolio will also depend on the relevant asset coverage ratio as of the date of determination. Borrowings under the Senior Secured Facility will also continue to be subject to the leverage restrictions contained in the Investment Company Act of 1940, as amended. The Senior Secured Facility also provides for the issuance of letters of credit up to an aggregate amount of $150,000. As of March 31, 2020 and March 31, 2019, the Company had $6,227 and $15,977, respectively, in standby letters of credit issued through the Senior Secured Facility. The amount available for borrowing under the Senior Secured Facility is reduced by any standby letters of credit issued through the Senior Secured Facility. Under GAAP, these letters of credit are considered commitments because no funding has been made and as such are not considered a liability. These letters of credit are not senior securities because they are not in the form of a typical financial guarantee and the portfolio companies are obligated to refund any drawn amounts. The available remaining capacity under the Senior Secured Facility was $354,371 and $985,135 as of March 31, 2020 and March 31, 2019, respectively. Terms used in this disclosure have the meanings set forth in the Senior Secured Facility agreement. 155
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Senior Secured Notes - Series A and Series B
On September 29, 2011, the Company closed a private offering of $45,000
aggregate principal amount of senior secured notes consisting of two series:
$29,000 aggregate principal amount of 5.875% Senior Secured Notes, Series A, due
September 29, 2016 (the "Series A Notes"); and $16,000 aggregate principal
amount of 6.250% Senior Secured Notes, Series B, due September 29, 2018 (the
"Series B Notes," and together with the Series A Notes, the "Series A and B
Notes"). The Series A and B Notes were issued in a private placement only to
qualified institutional buyers pursuant to Rule 144A under the Securities Act of
1933, as amended. Interest on the Series A and B Notes is due semi-annually on
March 29 and September 29, commencing on March 29, 2012.
On September 29, 2016, the Series A Notes, which had an outstanding principal
balance of $29,000, matured and were repaid in full. The Series B Notes, which
had an outstanding principal balance of $16,000, matured and were repaid on
October 1, 2018.
Senior Unsecured Notes
2025 Notes
On March 3, 2015, the Company issued $350,000 aggregate principal amount of
senior unsecured notes for net proceeds of $343,650 (the "2025 Notes"). The 2025
Notes will mature on March 3, 2025. Interest on the 2025 Notes is due
semi-annually on March 3 and September 3, at an annual rate of 5.25%, commencing
on September 3, 2015. The 2025 Notes are general, unsecured obligations and rank
equal in right of payment with all of our existing and future senior unsecured
indebtedness.
2043 Notes
On June 17, 2013, the Company issued $135,000 aggregate principal amount of
senior unsecured notes and on June 24, 2013, an additional $15,000 in aggregate
principal amount of such notes was issued pursuant to the underwriters'
over-allotment option exercise. In total, $150,000 of aggregate principal was
issued for net proceeds of $145,275 (the "2043 Notes"). The 2043 Notes will
mature on July 15, 2043. Interest on the 2043 Notes is paid quarterly on January
15, April 15, July 15 and October 15, at an annual rate of 6.875%, commencing on
October 15, 2013. The Company may redeem the 2043 Notes in whole or in part at
any time or from time to time on or after July 15, 2018. The 2043 Notes are
general, unsecured obligations and rank equal in right of payment with all of
our existing and future senior, unsecured indebtedness. The 2043 Notes were
listed on the New York Stock Exchange under the ticker symbol "AIY."
On August 12, 2019, the Company redeemed the entire $150,000 aggregate principal
amount outstanding of the 2043 Notes in accordance with the terms of the
indenture governing the 2043 Notes, before its stated maturity date, which
resulted in a realized loss on the extinguishment of debt of $4,375.
The following table summarizes the average and maximum debt outstanding, and the
interest and debt issuance cost for the years ended March 31, 2020, 2019 and
2018:
Year Ended March 31,
2020 2019 2018
Average debt outstanding $ 1,529,524 $ 993,158 $ 899,289
Maximum amount of debt outstanding 1,878,950 1,274,562 1,056,929
Weighted average annualized interest cost (1) 4.42 % 5.31 % 5.28 % Annualized amortized debt issuance cost 0.37 % 0.55 % 0.60 % Total annualized interest cost 4.79 %
5.86 % 5.88 %
____________________
(1)Includes the stated interest expense and commitment fees on the unused portion of the Senior Secured Facility. Commitment fees for the years ended March 31, 2020, 2019 and 2018 were $2,150, $3,142 and $3,188, respectively.
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Foreign Currency Transactions and Translations
The Company had the following foreign-denominated debt outstanding on the Senior
Secured Facility as of March 31, 2020:
Original Principal Original Principal Principal Amount Unrealized
Amount (Local) Amount (USD) Outstanding Gain/(Loss) Reset Date
Canadian Dollar C$ 2,300 $ 1,894 $ 1,616 $ 278 4/30/2020
Euro € 36,400 39,960 39,940 20 4/30/2020
British Pound £ 3,500 4,456 4,340 116 4/14/2020
British Pound £ 9,000 11,631 11,159 472 4/24/2020
British Pound £ 1,500 1,943 1,860 83 4/27/2020
British Pound £ 87,000 107,751 107,876 (125) 4/30/2020
British Pound £ 3,000 3,523 3,720 (197) 4/20/2020
Australian Dollar A$ 1,000 701 612 89 4/14/2020
Australian Dollar A$ 6,000 4,406
3,672 734 4/30/2020
$ 176,265 $ 174,795 $ 1,470
The Company had the following foreign-denominated debt outstanding on the Senior Secured Facility as of March 31, 2019:
Original Principal Original Principal Principal Amount Unrealized
Amount (Local) Amount (USD) Outstanding Gain/(Loss) Reset Date
Canadian Dollar C$ 2,300 $ 1,894 $ 1,722 $ 172 4/26/2019
Euro € 24,700 27,285 27,734 (449) 4/23/2019
Euro € 9,000 10,272 10,106 166 4/26/2019
Euro € 15,000 16,424 16,843 (419) 4/29/2019
British Pound £ 1,700 2,236 2,215 21 4/8/2019
British Pound £ 8,300 10,487 10,815 (328) 4/23/2019
British Pound £ 20,100 $ 29,219 $ 26,191 $ 3,028 4/29/2019
Australian Dollar A$ 6,000 $ 4,406 $ 4,262 $ 144 4/26/2019
$ 102,223 $ 99,888 $ 2,335
As of March 31, 2020 and March 31, 2019, the Company was in compliance with all
debt covenants for all outstanding debt obligations.
Note 9. Stockholders' Equity
There were no equity offerings of common stock during the years ended March 31,
2020 and March 31, 2019.
The Company adopted the following plans, approved by the Board of Directors, for
the purpose of repurchasing its common stock in accordance with applicable rules
specified in the Securities Exchange Act of 1934 (the "1934 Act") (the
"Repurchase Plans"):
Maximum Cost of Shares That Cost of Shares Remaining Cost of Shares That
Date of Agreement/Amendment May Be Repurchased
Repurchased May Be Repurchased
August 5, 2015 $ 50,000 $ 50,000 $ -
December 14, 2015 50,000 50,000 -
September 14, 2016 50,000 50,000 -
October 30, 2018 50,000 50,000 -
February 6, 2019 50,000 23,071 26,929
Total as of March 31, 2020 $ 250,000 $ 223,071 $ 26,929
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
The Repurchase Plans were designed to allow the Company to repurchase its shares
both during its open window periods and at times when it otherwise might be
prevented from doing so under applicable insider trading laws or because of
self-imposed trading blackout periods. A broker selected by the Company will
have the authority under the terms and limitations specified in an agreement
with the Company to repurchase shares on the Company's behalf in accordance with
the terms of the Repurchase Plans. Repurchases are subject to SEC regulations as
well as certain price, market volume and timing constraints specified in the
Repurchase Plans. Pursuant to the Repurchase Plans, the Company may from time to
time repurchase a portion of its shares of common stock and the Company is
hereby notifying stockholders of its intention as required by applicable
securities laws.
Under the Repurchase Plans described above, the Company allocated the following
amounts to be repurchased in accordance with SEC Rule 10b5-1 (the "10b5-1
Repurchase Plans"):
Effective Date Termination Date Amount Allocated to 10b5-1 Repurchase Plans
September 15, 2015 November 5, 2015 $ 5,000
January 1, 2016 February 5, 2016 10,000
April 1, 2016 May 19, 2016 5,000
July 1, 2016 August 5, 2016 15,000
September 30, 2016 November 8, 2016 20,000
January 4, 2017 February 6, 2017 10,000
March 31, 2017 May 19, 2017 10,000
June 30, 2017 August 7, 2017 10,000
October 2, 2017 November 6, 2017 10,000
January 3, 2018 February 8, 2018 10,000
June 18, 2018 August 9, 2018 10,000
September 17, 2018 October 31, 2018 10,000
December 12, 2018 February 7, 2019 10,000
February 25, 2019 May 17, 2019 25,000
March 18, 2019 May 17, 2019 10,000
June 4, 2019 August 7, 2019 25,000
June 17, 2019 August 7, 2019 20,000
September 16, 2019 November 6, 2019 20,000
December 6, 2019 February 5, 2020 25,000
December 16, 2019 February 5, 2020 15,000
March 12, 2020 March 19, 2020 20,000
During the year ended March 31, 2020, the Company repurchased 3,617,810 shares
at a weighted average price per share of $14.41, inclusive of commissions, for a
total cost of $52,141. This represents a discount of approximately 20.57% of the
average net asset value per share for the year ended March 31, 2020.
During the year ended March 31, 2019, the Company repurchased 3,227,046 shares
at a weighted average price per share of $15.75, inclusive of commissions, for a
total cost of $50,830. This represents a discount of approximately 18.45% of the
average net asset value per share for the year ended March 31, 2019.
Since the inception of the Repurchase Plans through March 31, 2020, the Company
repurchased 13,654,578 shares at a weighted average price per share of $16.34,
inclusive of commissions, for a total cost of $223,072. Including fractional
shares, the Company has repurchased 13,654,608 shares at a weighted average
price per share of $16.34, inclusive of commissions for a total cost of
$223,072.
On October 30, 2018, the Company's Board of Directors approved a one-for-three
reverse stock split of the Company's common stock which was effective as of the
close of business on November 30, 2018. The Company's common stock began trading
on a split-adjusted basis on December 3, 2018. The fractional shares that
resulted from the Reverse Stock Split were approximately 29 shares and they were
canceled by paying cash in lieu of the fair value.
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
On July 22, 2019 the Board of Directors approved Articles of Amendment which
amended the Company's charter to reduce the amount of authorized capital stock
from 400,000,000 shares, par value $0.001 per share, to 130,000,000 shares, par
value $0.001 per share. The Articles of Amendment were accepted for record by
the Department of Assessments and Taxation of the State of Maryland on July 22,
2019 and immediately became effective.
On March 19, 2020 the Company announced a suspension of its stock repurchase
program, including amounts allocated to Rule 10b5-1 repurchase plans. The
Company retained the right to reinstate the stock repurchase program.
Note 10. Commitments and Contingencies
The Company has various commitments to fund various revolving and delayed draw
senior secured and subordinated loans, including commitments to issue letters of
credit through a financial intermediary on behalf of certain portfolio
companies. As of March 31, 2020 and March 31, 2019, the Company had the
following unfunded commitments to its portfolio companies:
March 31, 2020 March 31, 2019 Unfunded revolver obligations and bridge loan commitments (1)
$ 269,716 $ 225,782
Standby letters of credit issued and outstanding (2) 9,014 23,542
Unfunded delayed draw loan commitments (including
commitments with performance thresholds not met)(3) 230,778 172,948
Total Unfunded Commitments(4) $ 509,508 $ 422,272
____________________
(1)The unfunded revolver obligations may or may not be funded to the borrowing
party in the future. The amounts relate to loans with various maturity dates,
but the entire amount was eligible for funding to the borrowers as of March 31,
2020 and March 31, 2019, subject to the terms of each loan's respective credit
agreements which includes borrowing covenants that need to be met prior to
funding. As of March 31, 2020 and March 31, 2019, the bridge loan commitments
included in the balances were $15,050 and $0, respectively.
(2)For all these letters of credit issued and outstanding, the Company would be
required to make payments to third parties if the portfolio companies were to
default on their related payment obligations. None of the letters of credit
issued and outstanding are recorded as a liability on the Company's Statements
of Assets and Liabilities as such letters of credit are considered in the
valuation of the investments in the portfolio company.
(3)The Company's commitment to fund delayed draw loans is triggered upon the
satisfaction of certain pre-negotiated terms and conditions which can include
covenants to maintain specified leverage levels and other related borrowing base
covenants. For commitments to fund delayed draw loans with performance
thresholds, borrowers are required to meet certain performance requirements
before the Company is obligated to fulfill these commitments.
(4)The Company also had an unfunded revolver commitment to its fully controlled
affiliate Merx Aviation Finance, LLC of $194,700 and $128,800 for the years
ended of March 31, 2020 and 2019, respectively. Given the Company's controlling
interest, the timing and the amount of the funding has not been determined.
As further discussed in Note 2, the full extent of the impact of COVID-19 on the
global economy generally, and the Company's business in particular is uncertain.
As of March 31, 2020, no contingencies have been recorded on the Company's
Statement of Assets and Liabilities as a result of COVID-19, however as the
global pandemic continues and the economic implications worsen, it may have
long-term impacts on the Company's financial condition, results of operations,
and cash flows. Refer to Note 2 for further discussion of COVID-19.
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Note 11. Income Taxes
For income tax purposes, distributions made to stockholders are reported as
ordinary income, capital gains, non-taxable return of capital, or a combination
thereof. The final determination of the tax character of distributions will not
be made until we file our tax return for each tax year and the tax
characteristics of all distributions will be reported to stockholders on Form
1099 after the end of each calendar year. The tax character of distributions
paid to stockholders during the tax years ended March 31, 2020, 2019 and 2018
were as follows:
Year Ended March 31,
2020 2019 2018
Ordinary income $ 120,107 $ 112,042 $ 86,906
Capital gains - - -
Return of capital - 14,533 44,088Total distributions paid to stockholders $ 120,107 $ 126,575
$ 130,994
Taxable income generally differs from net increase in net assets resulting from
operations for financial reporting purposes due to temporary and permanent
differences in the recognition of income and expenses, and generally excludes
net unrealized gains or losses, as unrealized gains or losses are generally not
included in taxable income until they are realized.
The following table reconciles the net increase in net assets resulting from
operations to taxable income for the tax years ended March 31, 2020, 2019 and
2018:
Year Ended March 31,
2020 2019 2018Net increase (decrease) in net assets resulting from operations
$ (116,064) $ 71,946 $ 87,029
Adjustments:
Net realized losses 6,318 50,033 258,128
Net change in unrealized losses 255,020 5,770 (211,770)
Income not currently taxable - - -
Income (loss) recognized for tax but not book (11,895) (22,478) (38,479)
Expenses not currently deductible - 16,477 749
Expenses incurred for tax but not book - - -
Realized gain/loss differences (1) 41,533 (8,301) (8,243)
Taxable income before deductions for distributions $ 174,912 $ 113,447 $ 87,414
____________________
(1)These pertain to book income/losses treated as capital gains/losses for tax
purposes or book realized gains/losses treated as ordinary income/losses for tax
purposes.
The following table shows the components of accumulated losses on a tax basis
for the years ended March 31, 2020, 2019 and 2018:
Year Ended March 31,
2020 2019 2018
Undistributed ordinary income $ 53,132 $ - $ -
Capital loss carryforward (739,365) (737,529) (1,185,617)
Other temporary book-to-tax differences (35,225) (47,517) (35,513)
Unrealized appreciation (depreciation) (354,168) (58,232) 2,493
Total accumulated under-distributed (over-distributed) $ (1,075,626)
$ (843,278) $ (1,218,637)
earnings
160
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
On December 22, 2010, the Regulated Investment Company Modernization Act (the
"Act") was enacted which changed various technical rules governing the tax
treatment of RICs. The changes are generally effective for taxable years
beginning after the date of enactment. Under the Act, the Company will be
permitted to carry forward capital losses incurred in taxable years beginning
after the date of enactment for an unlimited period. However, any losses
incurred during those future taxable years will be required to be utilized prior
to the losses incurred in pre-enactment taxable years, which carry an expiration
date. As a result of this ordering rule, pre-enactment capital loss
carryforwards may be more likely to expire unused. Additionally, post-enactment
capital losses that are carried forward will retain their character as either
short-term or long-term losses rather than being considered all short-term as
under previous law.
As of March 31, 2020, the Company had a post-enactment short-term capital loss
carryforward of $245,100 and long-term capital loss carryforward of $494,265. As
of March 31, 2019, the Company had a post-enactment short-term capital loss
carryforward of $245,271 and long-term capital loss carryforward of $492,257. As
of March 31, 2018, the Company had a post-enactment short-term capital loss
carryforward of $237,288 and long-term capital loss carryforward of $536,331.
As of March 31, 2020, the Company had no pre-enactment net capital loss
carryforward. None of the pre-enactment net capital loss carryforwards were
utilized in the past three years and none of the pre-enactment net capital loss
carryforwards expired on March 31, 2020.
For tax purposes, the Company may elect to defer any portion of a post-October
capital loss or late-year ordinary loss to the first day of the following fiscal
year.
As of March 31, 2020, the Company deferred no late-year ordinary losses which
are deemed to arise on April 1, 2020. As of March 31, 2019, the Company deferred
late-year ordinary losses of 16,477 which is deemed to arise on April 1, 2019.
As of March 31, 2018, the Company had no net late-year ordinary loss deferral
deemed to arise on April 1, 2018.
As of March 31, 2020, the Company deferred post-October capital loss of $5,858
deemed to arise on April 1, 2020. As of March 31, 2019, the Company had no net
post-October capital loss deferral deemed to arise on April 1, 2019. As of
March 31, 2018, the Company had no net post-October capital loss deferral deemed
to arise on April 1, 2018.
Management has analyzed the Company's tax positions taken, or to be taken, on
federal income tax returns for all open tax years, and has concluded that no
provision for income tax is required in the Company's financial statements. The
Company's federal tax returns are subject to examination by the Internal Revenue
Service for a period of three fiscal years after they are filed.
In general, we may make certain reclassifications to the components of net
assets as a result of permanent book-to-tax differences and book-to-tax
differences relating to stockholder distributions. Accordingly, as of March 31,
2020, we adjusted accumulated net realized loss by $1,088 to $745,645 and
overdistributed net investment income by ($5,631) to $27,244. Total earnings and
net asset value were not affected. As of March 31, 2019, we adjusted accumulated
net realized loss by $478,976 to $737,529 and overdistributed net investment
income by $48,989 to $58,042. Total earnings and net asset value were not
affected.
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Note 12. Financial Highlights
The following is a schedule of financial highlights for each of the five years
ended March 31, 2020.
Year Ended March 31,
2020 2019 2018 2017 2016Per Share Data* Net asset value at beginning of period $ 19.06 $ 19.67 $ 20.22 $ 21.84 $ 24.54 Net investment income (1)
2.16 1.81 1.83 2.01 2.49
Net realized and change in unrealized
gains (losses) (1) (3.89) (0.79) (0.64) (1.77) (3.06)
Net increase (decrease) in net assets
resulting from operations (1.73) 1.02 1.19 0.25 (0.57)
Distribution of net investment income (2) (1.80) (1.59) (1.19) (1.05) (1.44)
Distribution of return of capital (2) - (0.21) (0.60) (0.90) (0.96)
Accretion due to share repurchases 0.20 0.17 0.03 0.12 0.27
Net asset value at end of period $ 15.70 $ 19.06 $ 19.67 $ 20.22 $ 21.84
Per share market value at end of period $ 6.75 $ 15.14 $ 15.66 $ 19.68 $ 16.65 Total return (3)
(48.62) % 8.31 % (12.06) % 31.44 % (17.53) %
Shares outstanding at end of period 65,259,176 68,876,986 72,104,032 73,231,551 75,385,499
Weighted average shares outstanding 67,228,771 70,645,944 72,874,613 74,138,358
77,518,605
Ratio/Supplemental Data Net assets at end of period (in millions) $ 1,024.3 $ 1,312.6 $ 1,418.1 $ 1,481.8 $ 1,645.6 Ratio of operating expenses to average net assets (4) 4.79 % 5.09 % 5.02 % 4.59 % 5.85 % Ratio of interest and other debt expenses to average net assets 6.01 % 4.26 % 3.61 % 3.86 % 4.47 % Ratio of total expenses to average net assets (4) 10.80 % 9.35 % 8.63 % 8.45 % 10.32 % Ratio of net investment income to average net assets 11.91 % 9.38 % 9.15 % 9.66 % 10.70 %
Average debt outstanding (in millions) $ 1,529.5 $ 993.2 $ 899.3 $ 1,048.7 $ 1,456.4 Average debt per share (5)
$ 22.75 $ 14.06 $ 12.33 $ 14.13 $ 18.78 Portfolio turnover rate
46.58 % 46.26 % 45.06 % 23.25 % 34.35 %
Asset coverage per unit (6) $ 1,567 $ 2,153 $ 2,770 $ 2,709 $ 2,235
____________________
*Totals may not foot due to rounding.
(1)Financial highlights are based on the weighted average number of shares
outstanding for the period presented.
(2)The tax character of distributions are determined based on taxable income
calculated in accordance with income tax regulations which may differ from
amounts determined under GAAP. Although the tax character of distributions paid
to stockholders through March 31, 2020 may include return of capital, the exact
amount cannot be determined at this point. Per share amounts are based on actual
rate per share.
(3)Total return is based on the change in market price per share during the
respective periods. Total return also takes into account distributions, if any,
reinvested in accordance with the Company's dividend reinvestment plan.
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
(4)The ratio of operating expenses to average net assets and the ratio of total
expenses to average net assets are shown inclusive of all voluntary management
and incentive fee waivers (See Note 3 to the financial statements). For the
years ended March 31, 2020, the ratio of operating expenses to average net
assets and the ratio of total expenses to average net assets would be 4.81% and
10.83%, respectively, without the voluntary fee waivers. For the year ended
March 31, 2019, the ratio of operating expenses to average net assets and the
ratio of total expenses to average net assets would be 5.51% and 9.79%,
respectively, without the voluntary fee waivers. For the year ended March 31,
2018, the ratio of operating expenses to average net assets and the ratio of
total expenses to average net assets would be 6.39% and 10.03%, respectively,
without the voluntary fee waivers. For the year ended March 31, 2017, the ratio
of operating expenses to average net assets and the ratio of total expenses to
average net assets would be 5.98% and 9.85%, respectively, without the voluntary
fee waivers. For the year ended March 31, 2016, the ratio of operating expenses
to average net assets and the ratio of total expenses to average net assets
would be 6.94% and 11.41%, respectively, without the voluntary fee waivers.
(5)Numbers prior to March 31, 2017 were updated due to the retrospective
application of the new accounting pronouncements (ASU 2015-03 and ASU 2015-15)
adopted as of April 1, 2016.
(6)The asset coverage ratio for a class of senior securities representing
indebtedness is calculated as our total assets, less all liabilities and
indebtedness not represented by senior securities, divided by senior securities
representing indebtedness. This asset coverage ratio is multiplied by one
thousand to determine the asset coverage per unit.
Note 13. Selected Quarterly Financial Data
The following table sets forth selected financial data for each quarter within
the three years ended March 31, 2020:
Net Realized And
Change in
Unrealized Gains Net Increase (Decrease) in Net
Investment Income Net Investment Income (Losses) Assets from Operations - BasicQuarter Ended Total Per Share* Total Per Share* Total Per Share* Total Per Share* March 31, 2020 $ 71,600 $ 1.08 $ 38,786 $ 0.59 $ (186,033) $ (2.81) $ (147,247) $ (2.22) December 31, 2019 68,482 1.03 36,220 0.54 (35,934) (0.54) 286 0.00 September 30, 2019 70,318 1.04 35,734 0.53 (28,666) (0.43) 7,068 0.10 June 30, 2019 66,516 0.97 34,534 0.50 (10,705) (0.16) 23,829 0.35 March 31, 2019 61,410 0.89 32,552 0.47 (708) (0.01) 31,844 0.46 December 31, 2018 64,041 0.91 31,487 0.45 (32,655) (0.47) (1,178) (0.02) September 30, 2018 66,034 0.93 32,163 0.45 (4,134) (0.06) 28,029 0.39 June 30, 2018 63,591 0.88 31,548 0.44 (18,298) (0.25) 13,250 0.18 March 31, 2018 61,489 0.85 31,942 0.44 (11,315) (0.16) 20,627 0.29 December 31, 2017 64,753 0.90 33,968 0.47 (28,134) (0.39) 5,834 0.08 September 30, 2017 66,398 0.92 34,157 0.47 (2,370) (0.03) 31,787 0.44 June 30, 2017 66,647 0.92 33,320 0.47 (4,539) (0.06) 28,781 0.40 ____________________
*Totals may not foot due to rounding.
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APOLLO INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands, except share and per share data)
Note 14. Subsequent Events
Management has evaluated subsequent events through the date of issuance of these
financial statements and has determined that there are no subsequent events
outside the ordinary scope of business that require adjustment to, or disclosure
in, the financial statements other than those disclosed below.
The Company believes the estimates and assumptions underlying our financial
statements are reasonable and supportable based on the information available as
of March 31, 2020. However uncertainty over the ultimate impact COVID-19 will
have on the global economy generally, and the Company's business in particular,
makes any estimates and assumptions as of March 31, 2020 inherently less certain
than they would be absent the current and potential impacts of COVID-19. Actual
results may ultimately differ from those estimates. To the extent the Company's
portfolio companies are adversely impacted by the effects of the COVID-19
pandemic, it may have a material adverse impact on the Company's future net
investment income, the fair value of its portfolio investments, its financial
condition and the results of operations and financial condition of the Company's
portfolio companies. See Note 2 for information regarding the potential impact
of the COVID-19 pandemic.
On May 20, 2020 the Board of Directors, including a majority of the directors
who are not "interested persons" of the Company as defined in the Investment
Company Act of 1940, voted to approve the continuation of the Company's
investment advisory management agreement through May 20, 2021.
On May 20, 2020, the Board of Directors declared a distribution of $0.45 per
share, payable on July 8, 2020 to stockholders of record as of June 18, 2020.
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