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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

Table of Contents

Filed Pursuant to Rule 497
Registration Statement No. 333-223483

PROSPECTUS SUPPLEMENT
(to Prospectus dated April 27, 2018)

LOGO

Up to 1,000,000 Shares
Common Stock



          This prospectus supplement describes our Dividend Reinvestment and Direct Stock Purchase Plan, or the Plan, and 1,000,000 shares of our common stock, par value $0.01 per share, to be offered for purchase under the direct stock purchase feature of the Plan. The direct share purchase feature of the Plan is designed to provide new investors and existing holders of our common stock with a convenient and economical method to purchase shares of our common stock. American Stock Transfer & Trust Company will act as the administrator for the Plan (the "Plan Administrator").

          Key aspects of the direct stock purchase feature of the Plan include:

          We are a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million.

          The LMM and Middle Market securities in which we invest generally would be rated below investment grade if they were rated by rating agencies. Below investment grade securities, which are often referred to as "junk," have predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. They may also be difficult to value and are illiquid.

          Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company.

          We are an internally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended.

          Our common stock is listed on the NYSE under the symbol "MAIN." On May 7, 2018, the last reported sale price of our common stock on the NYSE was $38.79 per share, and the net asset value per share of our common stock on March 31, 2018 (the last date prior to the date of this prospectus supplement on which we determined our net asset value per share) was $23.67.

          Investing in our common stock involves a high degree of risk, and should be considered highly speculative. See "Supplementary Risk Factors" beginning on page S-6 on this prospectus supplement and "Risk Factors" beginning on page 15 of the accompanying prospectus to read about factors you should consider, including the risk of leverage and dilution, before investing in our common stock.

          This prospectus supplement and the accompanying prospectus contain important information about us that a prospective investor should know before investing in our common stock. Please read this prospectus supplement and the accompanying prospectus before investing and keep them for future reference. We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, or SEC. This information is available free of charge by contacting us at 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056 or by telephone at (713) 350-6000 or on our website at www.mainstcapital.com. Information contained on our website is not incorporated by reference into this prospectus supplement or the accompanying prospectus, and you should not consider that information to be part of this prospectus supplement or the accompanying prospectus. The SEC also maintains a website at www.sec.gov that contains such information.

          Neither the Securities and Exchange Commission nor any state securities commission, nor any other regulatory body, has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement is May 8, 2018


Table of Contents


TABLE OF CONTENTS

Prospectus Supplement

 
  Page  

About this Document

    S-1  

Summary of the Direct Stock Purchase Feature of the Plan

    S-2  

Fees and Expenses

    S-4  

Supplementary Risk Factors

    S-6  

Use of Proceeds

    S-7  

Selected Financial Data

    S-8  

Interim Management's Discussion and Analysis of Financial Condition and Results of Operations

    S-10  

Terms and Conditions of the Direct Stock Purchase Feature of the Plan

    S-31  

Legal Matters

    S-43  

Independent Registered Public Accounting Firm

    S-43  

Available Information

    S-43  

Interim Financial Statements

    S-44  


Prospectus

 
  Page  

Prospectus Summary

    1  

Fees and Expenses

    13  

Risk Factors

    15  

Cautionary Statement Concerning Forward-Looking Statements

    42  

Use of Proceeds

    43  

Price Range of Common Stock and Distributions

    44  

Ratios of Earnings to Fixed Charges

    50  

Selected Financial Data

    51  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    53  

Senior Securities

    79  

Business

    80  

Portfolio Companies

    93  

Management

    121  

Certain Relationships and Related Party Transactions

    148  

Control Persons and Principal Stockholders

    148  

Sales of Common Stock Below Net Asset Value

    151  

Dividend Reinvestment and Direct Stock Purchase Plan

    156  

Description of Common Stock

    157  

Description of Our Preferred Stock

    164  

Description of Our Subscription Rights

    165  

Description of Our Debt Securities

    166  

Material U.S. Federal Income Tax Considerations

    180  

Regulation

    188  

Plan of Distribution

    194  

Custodian, Transfer and Distribution Paying Agent and Registrar

    195  

Brokerage Allocation and Other Practices

    195  

Legal Matters

    196  

Independent Registered Public Accounting Firm

    196  

Available Information

    196  

Privacy Notice

    196  

Index to Financial Statements

    F-1  

Table of Contents


ABOUT THIS DOCUMENT

        This document is in two parts. The first part is this prospectus supplement, which describes the terms of this offering of common stock and also adds to and updates information contained in the accompanying prospectus. The second part is the accompanying prospectus, which provides more information about us and related matters. To the extent the information contained in this prospectus supplement differs from the information contained in the accompanying prospectus, the information in this prospectus supplement shall control.

        You should rely only on the information contained in this prospectus supplement and the accompanying prospectus. We have not authorized any other person to provide you with different information from that contained in this prospectus supplement or the accompanying prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus supplement and the accompanying prospectus do not constitute an offer to sell, or a solicitation of an offer to buy, any shares of our common stock by any person in any jurisdiction where it is unlawful for that person to make such an offer or solicitation or to any person in any jurisdiction to whom it is unlawful to make such an offer or solicitation. The information contained in this prospectus supplement and the accompanying prospectus is complete and accurate only as of their respective dates, regardless of the time of their delivery or sale of our common stock. This prospectus supplement supersedes the accompanying prospectus to the extent it contains information different from or additional to the information in that prospectus.

Forward-Looking Statements

        Information contained in this prospectus supplement and the accompanying prospectus may contain forward-looking statements, which can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," or "continue" or the negative thereof or other variations thereon or comparable terminology. The matters described in the sections titled "Supplementary Risk Factors" in this prospectus supplement and "Risk Factors" in the accompanying prospectus and certain other factors noted throughout this prospectus supplement and the accompanying prospectus constitute cautionary statements identifying important factors with respect to any such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. We undertake no obligation to revise or update any forward-looking statements but advise you to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. We note that the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995 does not apply to statements made in this prospectus supplement or the accompanying prospectus.

S-1


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SUMMARY OF THE DIRECT STOCK PURCHASE FEATURE OF THE PLAN

        The following summary highlights selected information about the direct stock purchase feature of the Plan, but may not contain all of the information that may be important to you. You should carefully read the detailed description of the direct stock purchase feature of the Plan contained in this prospectus supplement before you decide to participate in the direct stock purchase feature of the Plan.

Participation

        Current Stockholders.    If you currently own shares in the Company, you can participate in the direct stock purchase feature of the Plan by completing an authorization form and submitting it to American Stock Transfer & Trust Company LLC, the Plan Administrator. The initial investment for existing record holders is $100. Please see Question 6 under the section entitled "Terms and Conditions of the Direct Stock Purchase Feature of the Plan" for more detailed information.

        New Investors.    If you do not own any shares in the Company, you can participate in the direct stock purchase feature of the Plan by enrolling in the Plan and making an initial purchase of the Company's shares through the direct stock purchase feature of the Plan with a minimum initial investment of at least $250 (or $100 if you sign up for automatic monthly investments), but not more than $25,000. Once you are a stockholder, the minimum purchase amount is reduced to $100. Please see Question 6 under the section entitled "Terms and Conditions of the Direct Stock Purchase Feature of the Plan" for more detailed information.

Advantages and Disadvantages

        The primary advantages of the direct stock purchase feature of the Plan are as follows:

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        The risks associated with participating in the direct stock purchase feature of the Plan are described under the heading "Supplementary Risk Factors" beginning on page S-6 of this prospectus supplement.

Source of Shares

        The Plan Administrator will purchase shares directly from us as newly issued common stock, in the open market or in privately negotiated transactions with third parties. Please see Questions 10 and 12 under the section entitled "Terms and Conditions of the Direct Stock Purchase Feature of the Plan" for more detailed information.

Purchase Price

        The purchase price for shares under the direct stock purchase feature of the Plan depends on whether the Plan Administrator obtains your shares by purchasing them directly from us, in the open market or in privately negotiated transactions with third parties:

Tracking Your Investments

        As a participant in the direct stock purchase feature of the Plan, you will receive periodic statements showing the details of each transaction and the share balance in your Plan account. Please see Question 22 under the section entitled "Terms and Conditions of the Direct Stock Purchase Feature of the Plan" for more detailed information.

Plan Administrator

        We have appointed American Stock Transfer & Trust Company LLC as the administrator of the Plan. Please see Question 2 under the section entitled "Terms and Conditions of the Direct Stock Purchase Feature of the Plan" for more detailed information.

S-3


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FEES AND EXPENSES

        The following table is intended to assist you in understanding the costs and expenses that an investor in this offering will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this prospectus supplement contains a reference to fees or expenses paid by "you," "us" or "Main Street," or that "we" will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in us.

Stockholder Transaction Expenses:

       

Sales load (as a percentage of offering price)

    —% (1)

Offering expenses (as a percentage of offering price)

    0.19% (2)

Dividend reinvestment and direct stock purchase plan expenses

    —% (3)

Total stockholder transaction expenses (as a percentage of offering price)

    0.19%  

Annual Expenses of the Company (as a percentage of net assets attributable to common stock):

       

Operating expenses

    2.96% (4)

Interest payments on borrowed funds

    3.28% (5)

Income tax expense

    1.75% (6)

Acquired fund fees and expenses

    0.50% (7)

Total annual expenses

    8.49%  

(1)
Purchasers of shares of common stock through the direct stock purchase feature of the Plan will not pay any sales load.

(2)
The percentage reflects estimated offering expenses payable by us of approximately $75,000 for the estimated duration of this offering.

(3)
The expenses of administering our dividend reinvestment and direct stock purchase plan are included in operating expenses. Additional costs may be charged to participants in the Plan for certain types of transactions described in Question 21 under the section entitled "Terms and Conditions of the Direct Stock Purchase Feature of the Plan."

(4)
Operating expenses in this table represent the estimated expenses of Main Street and its consolidated subsidiaries.

(5)
Interest payments on borrowed funds represent our estimated annual interest payments on borrowed funds based on current debt levels as adjusted for projected increases (but not decreases) in debt levels over the next twelve months.

(6)
Income tax expense relates to the accrual of (a) deferred tax provision (benefit) primarily related to loss carryforwards, timing differences in net unrealized appreciation or depreciation and other temporary book-tax differences from our portfolio investments held in Taxable Subsidiaries and (b) excise, state and other taxes. Deferred taxes are non-cash in nature and may vary significantly from period to period. We are required to include deferred taxes in calculating our annual expenses even though deferred taxes are not currently payable or receivable. Due to the variable nature of deferred tax expense, which can be a large portion of the income tax expense, and the difficulty in providing an estimate for future periods, this income tax expense estimate is based upon the actual amount of income tax expense for the year ended December 31, 2017.

(7)
Acquired fund fees and expenses represent the estimated indirect expense incurred due to investments in other investment companies and private funds.

S-4


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Example

        The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we would have no additional leverage and that our annual operating expenses would remain at the levels set forth in the table above.

 
  1 Year   3 Years   5 Years   10 Years  

You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return

  $ 85   $ 244   $ 391   $ 717  

        The example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses may be greater or less than those shown. While the example assumes, as required by the SEC, a 5.0% annual return, our performance will vary and may result in a return greater or less than 5.0%. In addition, while the example assumes reinvestment of all dividends at net asset value, participants in the dividend reinvestment feature of our dividend reinvestment and direct stock purchase plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by (i) the market price per share of our common stock at the close of trading on a valuation date determined by our Board of Directors for each dividend in the event that we use newly issued shares to satisfy the share requirements of the dividend reinvestment plan or (ii) the average purchase price of all shares of common stock purchased by the Plan Administrator in the event that shares are purchased in the open market to satisfy the share requirements of the dividend reinvestment feature of the dividend reinvestment and direct stock purchase plan, which may be at, above or below net asset value. See "Dividend Reinvestment and Direct Stock Purchase Plan" in the accompanying prospectus for additional information regarding the dividend reinvestment feature of the Plan.

S-5


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SUPPLEMENTARY RISK FACTORS

        Investing in our common stock through the direct stock purchase feature of the Plan involves a number of significant risks. In addition to the other information contained in this prospectus supplement and the accompanying prospectus, you should carefully consider the following supplementary risk factors together with the risk factors set forth in the accompanying prospectus before making an investment in our common stock through the direct stock purchase feature of the Plan. The risks set out below and in the accompanying prospectus are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us might also impair our operations and performance. If any of the events described herein or in the accompanying prospectus occur, our business, financial condition and results of operations could be materially and adversely affected. In such case, the market price of our common stock could decline, and you may lose part or all of your investment.

         No interest will be paid on funds pending investment.

        If you wish to make regular periodic purchases without writing checks, you can authorize automatic monthly withdrawals from your U.S. bank account. Participants' bank accounts are debited on the 10th day of each month (or, if that day is not a business day, then on the prior business day) and funds will be invested beginning on the next applicable Cash Purchase Investment Date. Pending such investment, no interest is paid on optional cash investments held by the Plan Administrator. In addition, optional cash payments of less than the amounts required by the Plan and that portion of any optional cash payment which exceeds the maximum monthly purchase limit of $25,000, are subject to return to you without interest.

         Participants will have no control over the purchase or sale price for shares acquired or disposed of through the Plan.

        Participants have no control over the share price or the timing of the purchase or sale of Plan shares. Participants cannot designate a specific price or a specific date at which to purchase or sell shares of our common stock or the selection of a broker/dealer through or from whom purchases or sales are made. Participants will not know the exact number of shares purchased until after any particular Cash Purchase Investment Date. In addition, because the Plan Administrator must receive funds for a cash purchase prior to the actual Cash Purchase Investment Date of the common stock, your investments may be exposed to changes in market conditions.

         No assurance of a profit or protection from losses on Shares purchased under the direct stock purchase feature of the Plan.

        Other than as described above, the risks related to your investment in the direct stock purchase feature of the Plan is no different from any investment in shares of our common stock held by you. If you choose to participate in the direct stock purchase feature of the Plan, then you should recognize that none of us, our subsidiaries and affiliates, nor the Plan Administrator can assure you of a profit or protect you against loss on the shares that you purchase under the direct stock purchase feature of the Plan. You bear the risk of loss in value and enjoy the benefits of gains with respect to all of your shares.

S-6


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USE OF PROCEEDS

        We intend to initially use the net proceeds from this offering to repay outstanding debt borrowed under our Credit Facility. However, through re-borrowing of the initial repayments under our Credit Facility, we intend to use the net proceeds from this offering to make investments in accordance with our investment objective and strategies described in this prospectus supplement and the accompanying prospectus, to make investments in marketable securities and idle funds investments, which may include investments in secured intermediate term bank debt, rated debt securities and other income producing investments, to pay our operating expenses and other cash obligations, and for general corporate purposes. Our ability to achieve our investment objective may be limited to the extent that the net proceeds from an offering, pending full investment, are held in interest bearing deposits or other short term instruments. See "Risk Factors—Risks Relating to Our Securities—We may be unable to invest a significant portion of the net proceeds from an offering or from exiting an investment or other capital on acceptable terms, which could harm our financial condition and operating results" in the accompanying prospectus.

        On May 7, 2018, we had approximately $288.0 million outstanding under our Credit Facility. Our Credit Facility matures in September 2021, unless extended, and bears interest, at our election, on a per annum basis equal to (A)(i) the applicable LIBOR rate plus 1.875% or (ii) the applicable base rate plus 0.875% so long as we maintain an investment grade rating and satisfy certain agreed upon excess collateral and leverage requirements, (B) 0.125% higher in each case so long as we maintain an investment grade rating but not the agreed upon excess collateral and/or leverage requirements, and (C) 0.375% higher in each case so long as we do not maintain an investment grade rating. Amounts repaid under our Credit Facility will remain available for future borrowings.

S-7


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SELECTED FINANCIAL DATA

        The selected financial and other data below reflects the consolidated financial condition and the consolidated statement of operations of Main Street and its subsidiaries as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, and as of March 31, 2018 and for the three months ended March 31, 2018 and 2017. The selected financial data as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 have been derived from consolidated financial statements that have been audited by Grant Thornton LLP, an independent registered public accounting firm. The selected financial data as of March 31, 2018, and for the three months ended March 31, 2018 and 2017, have been derived from unaudited financial data but, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary to present fairly the financial condition and operating results for such interim periods. Interim results as of and for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. You should read this selected financial and other data in conjunction with our "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Senior Securities" and the financial statements and related notes thereto in the accompanying prospectus and "Interim Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Interim Financial Statements" in this prospectus supplement.

 
  Three Months Ended
March 31,
  Twelve Months Ended December 31,  
 
  2018   2017   2017   2016   2015   2014   2013  
 
  (dollars in thousands, except per share amounts)
 
 
  (Unaudited)
   
   
   
   
   
 

Statement of operations data:

                                           

Investment income:

                                           

Total interest, fee and dividend income

  $ 55,942   $ 47,889   $ 205,741   $ 178,165   $ 163,603   $ 139,939   $ 115,158  

Interest from idle funds and other

                174     986     824     1,339  

Total investment income

    55,942     47,889     205,741     178,339     164,589     140,763     116,497  

Expenses:

                                           

Interest

    (10,265 )   (8,608 )   (36,479 )   (33,630 )   (32,115 )   (23,589 )   (20,238 )

Compensation

    (5,491 )   (4,430 )   (18,560 )   (16,408 )   (14,852 )   (12,337 )   (8,560 )

General and administrative

    (2,974 )   (2,940 )   (11,674 )   (9,284 )   (8,621 )   (7,134 )   (4,877 )

Share-based compensation

    (2,303 )   (2,269 )   (10,027 )   (8,304 )   (6,262 )   (4,215 )   (4,210 )

Expenses allocated to the External Investment Manager

    2,066     1,524     6,370     5,089     4,335     2,048      

Expenses reimbursed to MSCP(1)

                            (3,189 )

Total expenses

    (18,967 )   (16,723 )   (70,370 )   (62,537 )   (57,515 )   (45,227 )   (41,074 )

Net investment income

    36,975     31,166     135,371     115,802     107,074     95,536     75,423  

Total net realized gain (loss) from investments

    7,460     27,565     16,182     29,389     (21,316 )   23,206     7,277  

Total net realized loss from SBIC debentures

    (1,374 )   (5,217 )   (5,217 )               (4,775 )

Total net unrealized appreciation (depreciation) from investments

    (10,882 )   (22,091 )   42,545     (6,576 )   10,871     (776 )   14,503  

Total net unrealized appreciation (depreciation) from SBIC debentures and investment in MSCP(1)

    1,359     5,665     6,212     (943 )   (879 )   (10,931 )   4,392  

Income tax benefit (provision)

    979     (5,638 )   (24,471 )   1,227     8,687     (6,287 )   35  

Net increase in net assets resulting from operations attributable to common stock

  $ 34,517   $ 31,450   $ 170,622   $ 138,899   $ 104,437   $ 100,748   $ 96,855  

Net investment income per share—basic and diluted

  $ 0.63   $ 0.57   $ 2.39   $ 2.23   $ 2.18   $ 2.20   $ 2.06  

Net increase in net assets resulting from operations attributable to common stock per share—basic and diluted

  $ 0.59   $ 0.57   $ 3.01   $ 2.67   $ 2.13   $ 2.31   $ 2.65  

Weighted-average shares outstanding—basic and diluted

    58,852,252     55,125,170     56,691,913     52,025,002     49,071,492     43,522,397     36,617,850  

(1)
Main Street Capital Partners, LLC

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  As of December 31,  
 
  As of
March 31,
2018
 
 
  2017   2016   2015   2014   2013  
 
   
  (dollars in thousands)
 

Balance sheet data:

                                     

Assets:

                                     

Total portfolio investments at fair value

  $ 2,314,034   $ 2,171,305   $ 1,996,906   $ 1,799,996   $ 1,563,330   $ 1,286,188  

Marketable securities and idle funds investments

                3,693     9,067     13,301  

Cash and cash equivalents

    29,090     51,528     24,480     20,331     60,432     34,701  

Interest receivable and other assets

    54,470     38,725     37,123     37,638     46,406     16,054  

Deferred financing costs, net of accumulated amortization

    3,581     3,837     12,645     13,267     14,550     9,931  

Deferred tax asset, net

            9,125     4,003          

Total assets

  $ 2,401,175   $ 2,265,395   $ 2,080,279   $ 1,878,928   $ 1,693,785   $ 1,360,175  

Liabilities and net assets:

                                     

Credit facility

  $ 188,000   $ 64,000   $ 343,000   $ 291,000   $ 218,000   $ 237,000  

SBIC debentures at fair value(1)

    306,182     288,483     239,603     223,660     222,781     187,050  

4.50% Notes due 2022

    182,167     182,015                  

4.50% Notes due 2019

    173,796     173,616     175,000     175,000     175,000      

6.125% Notes

    89,133     89,057     90,655     90,738     90,823     90,882  

Accounts payable and other liabilities

    15,049     20,168     14,205     12,292     10,701     10,549  

Payable for securities purchased

    21,859     40,716     2,184     2,311     14,773     27,088  

Interest payable

    8,510     5,273     4,103     3,959     4,848     2,556  

Dividend payable

    11,192     11,146     10,048     9,074     7,663     6,577  

Deferred tax liability, net

    8,687     10,553             9,214     5,940  

Total liabilities

    1,004,575     885,027     878,798     808,034     753,803     567,642  

Total net asset value

    1,396,600     1,380,368     1,201,481     1,070,894     939,982     792,533  

Total liabilities and net assets

  $ 2,401,175   $ 2,265,395   $ 2,080,279   $ 1,878,928   $ 1,693,785   $ 1,360,175  

Other data:

                                     

Weighted-average effective yield on LMM debt investments(2)(3)

    12.1%     12.0%     12.5%     12.2%     13.2%     14.7%  

Number of LMM portfolio companies

    73     70     73     71     66     62  

Weighted-average effective yield on Middle Market debt investments(2)(3)

    9.2%     9.0%     8.5%     8.0%     7.8%     7.8%  

Number of Middle Market portfolio companies

    59     62     78     86     86     92  

Weighted-average effective yield on Private Loan debt investments(2)(3)

    9.4%     9.2%     9.6%     9.5%     10.1%     11.3%  

Number of Private Loan portfolio companies

    55     54     46     40     31     15  

Expense ratios (as percentage of average net assets):

                                     

Total expenses, including income tax expense

    1.3% (6)   7.4%     5.5%     4.6%     5.8%     5.8%  

Operating expenses

    1.4% (6)   5.5%     5.6%     5.5%     5.1%     5.8%  

Operating expenses, excluding interest expense

    0.6% (6)   2.6%     2.6%     2.4%     2.4%     3.0%  

Total investment return(4)

    –5.7% (6)   16.0%     37.4%     8.5%     –3.1%     16.7%  

Total return based on change in NAV(5)

    2.5% (6)   14.2%     13.0%     11.1%     12.7%     15.1%  

(1)
SBIC debentures for March 31, 2018, December 31, 2017, 2016, 2015, 2014 and 2013 are $313,800, $295,800, $240,000, $225,000, $225,000, and $200,200 at par, respectively, with par of $46,000 for March 31, 2018, $50,000 for December 31, 2017, $75,200 for December 31, 2016, 2015, 2014 and 2013 recorded at fair value of $44,623, $48,608, $74,803, $73,860, $72,981 and $62,050, as of March 31, 2018 and December 31, 2017, 2016, 2015, 2014, and 2013, respectively.

(2)
Weighted-average effective yield is calculated based on our debt investments at the end of each period and includes amortization of deferred debt origination fees and accretion of original issue discount, but excludes liquidation fees payable upon repayment and any debt investments on non-accrual status. Weighted-average annual effective yield is higher than what an investor in shares of Main Street's common stock will realize on its investment because it does not reflect any debt investments on non-accrual status, Main Street's expenses or any sales load paid by an investor. For information on our investments on non-accrual status, see "Interim Management's Discussion and Analysis of Financial Condition and Results of Operations—Portfolio Asset Quality" elsewhere in this prospectus supplement.

(3)
Including investments on non-accrual status, the weighted-average effective yield for LMM, Middle Market, and Private Loan debt investments is 11.4%, 9.2%, and 8.8%, respectively, as of March 31, 2018.

(4)
Total investment return based on purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street's dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.

(5)
Total return based on change in net asset value was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value.

(6)
Not annualized.

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INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with our interim financial statements and notes thereto contained elsewhere in this prospectus supplement.

        Statements we make in the following discussion which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the headings "Forward-Looking Statements" in this prospectus supplement and "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" in the accompanying prospectus.

ORGANIZATION

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF"), Main Street Capital II, LP ("MSC II") and Main Street Capital III, LP ("MSC III" and, collectively with MSMF and MSC II, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

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        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes.

        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our," the "Company" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

OVERVIEW

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million. Our private loan ("Private Loan") portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio.

        We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company's capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution. Providing customized, "one stop" financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

        Our Private Loan portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

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        Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities.

        The following tables provide a summary of our investments in the LMM, Middle Market and Private Loan portfolios as of March 31, 2018 and December 31, 2017 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
  As of March 31, 2018  
 
  LMM(a)   Middle
Market
  Private
Loan
 
 
  (dollars in millions)
 

Number of portfolio companies

    73     59     55  

Fair value

  $ 1,049.8   $ 617.9   $ 496.5  

Cost

  $ 898.9   $ 629.9   $ 521.6  

% of portfolio at cost—debt

    67.7%     96.7%     93.7%  

% of portfolio at cost—equity

    32.3%     3.3%     6.3%  

% of debt investments at cost secured by first priority lien

    98.4%     91.0%     94.3%  

Weighted-average annual effective yield(b)

    12.1%     9.2%     9.4%  

Average EBITDA(c)

  $ 4.8   $ 86.3   $ 43.0  

(a)
At March 31, 2018, we had equity ownership in approximately 97% of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 38%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 31, 2018, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. Weighted-average annual effective yield is higher than what an investor in shares of our common stock will realize on its investment because it does not reflect our expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including six LMM portfolio companies and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for

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  As of December 31, 2017  
 
  LMM(a)   Middle
Market
  Private
Loan
 
 
  (dollars in millions)
 

Number of portfolio companies

    70     62     54  

Fair value

  $ 948.2   $ 609.3   $ 467.5  

Cost

  $ 776.5   $ 629.7   $ 489.2  

% of portfolio at cost—debt

    67.1%     97.3%     93.6%  

% of portfolio at cost—equity

    32.9%     2.7%     6.4%  

% of debt investments at cost secured by first priority lien

    98.1%     90.5%     94.5%  

Weighted-average annual effective yield(b)

    12.0%     9.0%     9.2%  

Average EBITDA(c)

  $ 4.4   $ 78.3   $ 39.6  

(a)
At December 31, 2017, we had equity ownership in approximately 97% of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 39%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2017, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. Weighted-average annual effective yield is higher than what an investor in shares of our common stock will realize on its investment because it does not reflect our expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including six LMM portfolio companies, one Middle Market portfolio company and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

        As of March 31, 2018, we had Other Portfolio investments in eleven companies, collectively totaling approximately $101.1 million in fair value and approximately $107.1 million in cost basis and which comprised approximately 4.4% of our Investment Portfolio (as defined in "—Critical Accounting Policies—Basis of Presentation" below) at fair value. As of December 31, 2017, we had Other Portfolio investments in eleven companies, collectively totaling approximately $104.6 million in fair value and approximately $109.4 million in cost basis and which comprised approximately 4.8% of our Investment Portfolio at fair value.

        As previously discussed, the External Investment Manager is a wholly owned subsidiary that is treated as a portfolio investment. As of March 31, 2018, there was no cost basis in this investment and the investment had a fair value of approximately $48.7 million, which comprised approximately 2.1% of our Investment Portfolio at fair value. As of December 31, 2017, there was no cost basis in this investment and the investment had a fair value of approximately $41.8 million, which comprised approximately 1.9% of our Investment Portfolio at fair value.

        Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different

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regulatory regimes. An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

        The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

        Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio. For the three months ended March 31, 2018 and 2017, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.5% and 1.6%, respectively, on an annualized basis and 1.5% for the year ended December 31, 2017, excluding certain non-recurring professional fees and other expenses. Including those expenses, the ratio for the year ended December 31, 2017 was 1.6%.

        During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-listed BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. The External Investment Manager has conditionally agreed to waive a limited amount of the historical incentive fees otherwise earned. During the three months ended March 31, 2018 and 2017, the External Investment Manager earned $2.8 million and $2.6 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

        During April 2014, we received an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide it an incentive to allocate opportunities to HMS Income instead of us. However, both we and the External Investment Manager have policies and procedures in place to manage this conflict.

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CRITICAL ACCOUNTING POLICIES

        Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For each of the periods presented herein, our consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of our investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager. Our results of operations and cash flows for the three months ended March 31, 2018 and 2017 and financial position as of March 31, 2018 and December 31, 2017, are presented on a consolidated basis. The effects of all intercompany transactions between us and our consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform with the current presentation.

        Our accompanying unaudited consolidated financial statements are presented in conformity with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. The results of operations for the three months ended March 31, 2018 and 2017 are not necessarily indicative of the operating results to be expected for the full year. Also, the unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2017. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

        We are an investment company following the accounting and reporting guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 946, Financial Services—Investment Companies ("ASC 946"). Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and ASC 946, we are precluded from consolidating other entities in which we have equity investments, including those in which we have a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if we hold a controlling interest in an operating company that provides all or substantially all of its services directly to us or to any of our portfolio companies. Accordingly, as noted above, our consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. We have determined that all of our portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, our Investment Portfolio is carried on the consolidated balance sheet at fair value with any adjustments to fair value recognized as "Net Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."

        The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. As of both March 31, 2018 and December 31, 2017, our Investment Portfolio valued at fair value represented approximately 96% of our total assets. We are required to

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report our investments at fair value. We follow the provisions of Financial Accounting Standards Board ("FASB") ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See "Note B.1.—Valuation of the Investment Portfolio" in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

        Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

        Our Board of Directors has the final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements. We believe our Investment Portfolio as of March 31, 2018 and December 31, 2017 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates.

        We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we otherwise do not expect the debtor to be able to service all of its debt or other obligations, we will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security's status significantly improves regarding the debtor's ability to service the debt or other obligations, or if a loan or debt security is sold or written off, we remove it from non-accrual status.

        We may periodically provide services, including structuring and advisory services, to our portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.

        We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is

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recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the three months ended March 31, 2018 and 2017, (i) approximately 1.0% and 3.4%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0% and 1.8%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash.

        We account for our share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

        The Taxable Subsidiaries primarily hold certain portfolio investments for us. The Taxable Subsidiaries permit us to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-of-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with us for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in our consolidated financial statements.

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        The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager's separate financial statements.

        In December 2017, the "Tax Cuts and Jobs Act" legislation was enacted. The Tax Cuts and Jobs Act includes significant changes to the U.S. corporate tax system, including a U.S. Federal corporate income tax rate reduction from 35% to 21% and other changes. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation was enacted. As such, we have accounted for the tax effects as a result of the enactment of the Tax Cuts and Jobs Act beginning with the period ended December 31, 2017.

        The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

        Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

INVESTMENT PORTFOLIO COMPOSITION

        Our LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Our LMM portfolio companies generally have annual revenues between $10 million and $150 million, and our LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, generally bear interest at fixed rates, and generally have a term of between five and seven years from the original investment date. In most LMM portfolio companies, we receive nominally priced equity warrants and/or make direct equity investments in connection with a debt investment.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our Private Loan portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our

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LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our Other Portfolio investments primarily consist of investments which are not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income. Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities, and we allocate the related expenses to the External Investment Manager pursuant to the sharing agreement. Our total expenses for the three months ended March 31, 2018 and 2017 are net of expenses allocated to the External Investment Manager of $2.1 million and $1.5 million, respectively. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. The total contribution of the External Investment Manager to our net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income received from the External Investment Manager. For the three months ended March 31, 2018 and 2017, the total contribution to our net investment income was $2.6 million and $2.2 million, respectively.

        The following tables summarize the composition of our total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments as of March 31, 2018 and December 31, 2017 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31,
2018
  December 31,
2017
 

First lien debt

    78.7%     79.0%  

Equity

    16.1%     15.3%  

Second lien debt

    4.1%     4.5%  

Equity warrants

    0.7%     0.7%  

Other

    0.4%     0.5%  

    100.0%     100.0%  

 

Fair Value:
  March 31,
2018
  December 31,
2017
 

First lien debt

    71.5%     70.5%  

Equity

    23.7%     24.4%  

Second lien debt

    3.8%     4.1%  

Equity warrants

    0.6%     0.6%  

Other

    0.4%     0.4%  

    100.0%     100.0%  

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        Our LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments carry a number of risks including: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment grade debt and equity investments in our Investment Portfolio. Please see "Risk Factors—Risks Related to Our Investments" contained in the accompanying prospectus for a more complete discussion of the risks involved with investing in our Investment Portfolio.

PORTFOLIO ASSET QUALITY

        As of March 31, 2018, our total Investment Portfolio had six investments on non-accrual status, which comprised approximately 0.8% of its fair value and 3.3% of its cost. As of December 31, 2017, our total Investment Portfolio had five investments on non-accrual status, which comprised approximately 0.2% of its fair value and 2.3% of its cost.

        The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In the event that the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in defaults on our debt investments or in realized losses on our investments and to difficulty in maintaining historical dividend payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by economic cycles or other conditions, which could also have a negative impact on our future results.

DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

 
  Three Months Ended
March 31,
  Net Change  
 
  2018   2017   Amount   %  
 
  (dollars in thousands)
 

Total investment income

  $ 55,942   $ 47,889   $ 8,053     17%  

Total expenses

    (18,967 )   (16,723 )   (2,244 )   13%  

Net investment income

    36,975     31,166     5,809     19%  

Net realized gain from investments

    7,460     27,565     (20,105 )      

Net realized loss from SBIC debentures

    (1,374 )   (5,217 )   3,843        

Net unrealized appreciation (depreciation) from:

                         

Portfolio investments

    (10,882 )   (22,091 )   11,209        

SBIC debentures

    1,359     5,665     (4,306 )      

Total net unrealized appreciation (depreciation)

    (9,523 )   (16,426 )   6,903        

Income tax benefit (provision)

    979     (5,638 )   6,617        

Net increase in net assets resulting from operations

  $ 34,517   $ 31,450   $ 3,067     10%  

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  Three Months Ended
March 31,
  Net Change  
 
  2018   2017   Amount   %  
 
  (dollars in thousands, except per share amounts)
 

Net investment income

  $ 36,975   $ 31,166   $ 5,809     19%  

Share-based compensation expense

    2,303     2,269     34     1%  

Distributable net investment income(a)

  $ 39,278   $ 33,435   $ 5,843     17%  

Net investment income per share—Basic and diluted

  $ 0.63   $ 0.57   $ 0.06     11%  

Distributable net investment income per share—Basic and diluted(a)

  $ 0.67   $ 0.61   $ 0.06     10%  

(a)
Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

        For the three months ended March 31, 2018, total investment income was $55.9 million, a 17% increase over the $47.9 million of total investment income for the corresponding period of 2017. This comparable period increase was principally attributable to a $6.8 million increase in dividend income from Investment Portfolio equity investments and $1.1 million net increase in interest income primarily related to higher average levels of Investment Portfolio debt investments, partially offset by a decrease in interest income associated with decreased repricing and other activities involving existing Investment Portfolio debt investments when compared to prior year. The $8.1 million increase in total investment income in the three months ended March 31, 2018 includes elevated levels of dividend income activity from certain Investment Portfolio equity investments, partially offset by a decrease of $1.8 million related to lower accelerated prepayment, repricing and other activity for certain Investment Portfolio debt investments when compared to the same period in 2017.

        For the three months ended March 31, 2018, total expenses increased to $19.0 million from $16.7 million for the corresponding period of 2017. This comparable period increase in operating expenses was principally attributable to (i) a $1.7 million increase in interest expense, primarily due to (a) a $2.2 million increase as a result of the issuance of our 4.50% Notes due 2022 in November 2017 and (b) a $0.4 million increase from the SBIC debentures due to the higher average balance as compared to the same period in 2017, with these increases partially offset by a decrease of $1.0 million related to the Credit Facility due to the lower average balance during 2018 and (ii) a $1.1 million increase in compensation expense related to increases in the number of personnel, base compensation levels and incentive compensation accruals, with these increases partially offset by a $0.5 million increase in the expenses allocated to the External Investment Manager as a result of elevated non-recurring strategic activities at the External Investment Manager during the three months ended

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March 31, 2018, in each case when compared to the same period in the prior year. The ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets for the three months ended March 31, 2018 was 1.5% on an annualized basis compared to 1.6% for the three months ended March 31, 2017 and 1.5% for the year ended December 31, 2017, excluding certain non-recurring professional fees and other expenses incurred in 2017. Including the effect of those non-recurring expenses, the ratio for the year ended December 31, 2017 was 1.6%.

        Net investment income for the three months ended March 31, 2018 was $37.0 million, or a 19% increase, compared to net investment income of $31.2 million for the corresponding period of 2017. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses both as discussed above.

        For the three months ended March 31, 2018, distributable net investment income increased 17% to $39.3 million, or $0.67 per share, compared with $33.4 million, or $0.61 per share in the corresponding period of 2017. The increase in distributable net investment income was primarily due to the higher level of total investment income, partially offset by higher operating expenses both as discussed above. Distributable net investment income on a per share basis for the three months ended March 31, 2018 reflects (i) elevated levels of dividend income activity from certain Investment Portfolio equity investments, (ii) a decrease of approximately $0.03 per share from the comparable period in 2017 attributable to the net decrease in the comparable levels of accelerated prepayment, repricing and other unusual activity for certain Investment Portfolio debt investments and (iii) a greater number of average shares outstanding compared to the corresponding period in 2017 primarily due to shares issued through the ATM Program (as defined in "—Liquidity and Capital Resources—Capital Resources" below), shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan.

        The net increase in net assets resulting from operations during the three months ended March 31, 2018 was $34.5 million, or $0.59 per share, compared with $31.5 million, or $0.57 per share, during the three months ended March 31, 2017. This $3.1 million improvement from the prior year was primarily the result of (i) a $6.9 million improvement in net unrealized appreciation (depreciation) from portfolio investments and SBIC debentures, including the impact of accounting reversals relating to realized gains/income (losses), (ii) a $6.6 million change in the income tax benefit (provision) from an income tax provision of $5.6 million for the three months ended March 31, 2017 to an income tax benefit of $1.0 million for the three months ended March 31, 2018, (iii) a $5.8 million increase in net investment income as discussed above and (iv) a $3.8 million improvement in the net realized loss from SBIC debentures outstanding at MSC II which had previously been accounted for on the fair value method of accounting, with these increases partially offset by a $20.1 million decrease in the net realized gain from investments to a total net realized gain from investments of $7.5 million for the three months ended March 31, 2018. The net realized gain from investments of $7.5 million for the three months ended March 31, 2018 was primarily the result of (i) the realized gain of $13.1 million resulting from gains on the exits of two LMM investments and (ii) realized gains of $3.2 million due to activity in our Other Portfolio, with these gains partially offset by the net realized loss of $8.6 million in our Middle Market portfolio, which is primarily the result of (a) the realized loss of $3.3 million on the exit of a Middle Market investment and (b) the realized loss of $5.3 million on the restructure of a Middle Market investment. The realized loss of $1.4 million on the repayment of SBIC debentures is related to the previously recognized bargain purchase gain resulting from recording the MSC II debentures at fair

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value on the date of the acquisition of the majority of the equity interests of MSC II in 2010. The effect of the realized loss is offset by the reversal of all previously recognized unrealized depreciation on these SBIC debentures due to fair value adjustments since the date of the acquisition in 2010.

        The following table provides a summary of the total net unrealized depreciation of $9.5 million for the three months ended March 31, 2018:

 
  Three Months Ended March 31, 2018  
 
  LMM(a)   Middle
Market
  Private
Loan
  Other(b)   Total  
 
  (dollars in millions)
 

Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains)/(income) losses recognized during the current period

  $ (18.8 ) $ 8.8   $ (0.3 ) $ (0.4 ) $ (10.7 )

Net unrealized appreciation (depreciation) relating to portfolio investments

    (3.3 )   (0.3 )   (2.6 )   6.0     (0.2 )

Total net unrealized appreciation (depreciation) relating to portfolio investments

  $ (22.1 ) $ 8.5   $ (2.9 ) $ 5.6   $ (10.9 )

Unrealized appreciation relating to SBIC debentures(c)

                            1.4  

Total net unrealized depreciation

                          $ (9.5 )

(a)
LMM includes unrealized appreciation on 26 LMM portfolio investments and unrealized depreciation on 9 LMM portfolio investments.

(b)
Other includes $7.0 million of unrealized appreciation relating to the External Investment Manager, partially offset by $1.0 million of net unrealized depreciation relating to the Other Portfolio.

(c)
The $1.4 million of unrealized appreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis is due to the accounting reversals of previously recognized unrealized depreciation recorded due to fair value adjustments since the date of acquisition of MSC II on the debentures repaid.

        The income tax benefit for the three months ended March 31, 2018 of $1.0 million principally consisted of a deferred tax benefit of $1.9 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences, and other current tax expense of $0.9 million related to (i) a $0.4 million accrual for excise tax on our estimated undistributed taxable income and (ii) current tax expense of $0.5 million related to accruals for U.S. federal and state income taxes.

        For the three months ended March 31, 2018, we experienced a net decrease in cash and cash equivalents in the amount of approximately $22.4 million, which is the net result of approximately $143.2 million of cash used in our operating activities and approximately $120.7 million of cash provided by our financing activities.

        During the period, $143.2 million of cash was used in our operating activities, which resulted primarily from (i) cash flows we generated from the operating profits earned through our operating activities totaling $35.8 million, which is our $39.3 million of distributable net investment income,

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excluding the non-cash effects of the accretion of unearned income of $3.2 million, payment-in-kind interest income of $0.6 million, cumulative dividends of $0.6 million and the amortization expense for deferred financing costs of $0.9 million, (ii) cash uses totaling $345.0 million consisting of (a) $340.4 million for the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2017, (b) $2.5 million related to increases in other assets and (c) $2.1 million related to decreases in payables and accruals and (iii) cash proceeds totaling $166.1 million which resulted from the sales and repayments of debt investments and sales of and return on capital of equity investments.

        During the three months ended March 31, 2018, $120.7 million in cash was provided by our financing activities, which principally consisted of (i) $11.3 million in net cash proceeds from the ATM Program (described below), (ii) $124.0 million in cash proceeds from the Credit Facility and (iii) $22.0 million in cash proceeds from issuance of SBIC debentures, partially offset by (i) $31.9 million in cash dividends paid to stockholders, (ii) $4.0 million in repayment of SBIC debentures, (iii) $0.2 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements upon the vesting of such restricted stock and (iv) $0.5 million for payment of deferred debt issuance costs, SBIC debenture fees and other costs.

        As of March 31, 2018, we had $29.1 million in cash and cash equivalents and $397.0 million of unused capacity under the Credit Facility, which we maintain to support our investment and operating activities. As of March 31, 2018, our net asset value totaled $1,396.6 million, or $23.67 per share.

        The Credit Facility, which provides additional liquidity to support our investment and operational activities, provides for total commitments of $585.0 million from a diversified group of fifteen lenders. The Credit Facility matures in September 2021 and contains an accordion feature which allows us to increase the total commitments under the facility to up to $750.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

        Borrowings under the Credit Facility bear interest, subject to our election, on a per annum basis at a rate equal to the applicable LIBOR rate (1.88% as of March 31, 2018) plus (i) 1.875% (or the applicable base rate (Prime Rate of 4.75% as of March 31, 2018) plus 0.875%) as long as we maintain an investment grade rating and meet certain agreed upon excess collateral and maximum leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if we maintain an investment grade rating but do not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%) if we do not maintain an investment grade rating. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. The Credit Facility contains certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio of at least 1.5 to 1.0 and (iv) maintaining a minimum tangible net worth. The Credit Facility is provided on a revolving basis through its final maturity date in September 2021, and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval. As of March 31, 2018, we had $188.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 3.5% and we were in compliance with all financial covenants of the Credit Facility.

        Through the Funds, we have the ability to issue SBIC debentures guaranteed by the SBA at favorable interest rates and favorable terms and conditions. Under existing SBIC regulations, SBA approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up

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to a regulatory maximum amount of $350.0 million. Through the Funds, we have an effective maximum amount of $346.0 million following the prepayment of $4.0 million of existing SBIC debentures as discussed below. During the three months ended March 31, 2018, we issued $22.0 million of SBIC debentures and opportunistically prepaid $4.0 million of our existing SBIC debentures as part of an effort to manage the maturity dates of our oldest SBIC debentures, leaving $32.2 million of remaining capacity under our SBIC licenses. Debentures guaranteed by the SBA have fixed interest rates that equal prevailing 10-year Treasury Note rates plus a market spread and have a maturity of ten years with interest payable semiannually. The principal amount of the debentures is not required to be paid before maturity, but may be pre-paid at any time with no prepayment penalty. We expect to issue new SBIC debentures under the SBIC program in the future in an amount up to the regulatory maximum amount for affiliated SBIC funds. As of March 31, 2018, through our three wholly owned SBICs, we had $313.8 million of outstanding SBIC debentures guaranteed by the SBA, which bear a weighted-average annual fixed interest rate of approximately 3.7%, paid semiannually, and mature ten years from issuance. The first maturity related to our SBIC debentures occurs in 2019, and the weighted-average remaining duration is approximately 5.9 years as of March 31, 2018.

        In April 2013, we issued $92.0 million, including the underwriters' full exercise of their over-allotment option, in aggregate principal amount of the 6.125% Notes (the "6.125% Notes"). The 6.125% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at our option on or after April 1, 2018. We maintained the right from time to time repurchase 6.125% Notes in accordance with the 1940 Act and the rules promulgated thereunder. On March 1, 2018, we announced our intent to redeem the 6.125% Notes on April 1, 2018. As of March 31, 2018, the outstanding balance of the 6.125% Notes was $90.7 million.

        The indenture governing the 6.125% Notes (the "6.125% Notes Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 6.125% Notes and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 6.125% Notes Indenture.

        In November 2014, we issued $175.0 million in aggregate principal amount of 4.50% Notes (the "4.50% Notes due 2019") at an issue price of 99.53%. The 4.50% Notes due 2019 are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2019; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2019 mature on December 1, 2019, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 4.50% Notes due 2019 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year, beginning June 1, 2015. We may from time to time repurchase 4.50% Notes due 2019 in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2018, the outstanding balance of the 4.50% Notes due 2019 was $175.0 million.

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        The indenture governing the 4.50% Notes due 2019 (the "4.50% Notes due 2019 Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50% Notes due 2019 and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2019 Indenture.

        In November 2017, we issued $185.0 million in aggregate principal amount of 4.50% Notes (the "4.50% Notes due 2022") at an issue price of 99.16%. The 4.50% Notes due 2022 are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2022 mature on December 1, 2022, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 4.50% Notes due 2022 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year, beginning June 1, 2018. We may from time to time repurchase 4.50% Notes due 2022 in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2018, the outstanding balance of the 4.50% Notes due 2022 was $185.0 million.

        The indenture governing the 4.50% Notes due 2022 (the "4.50% Notes due 2022 Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50% Notes due 2022 and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2022 Indenture.

        We maintain a program with certain selling agents through which we can sell shares of our common stock by means of at-the-market offerings from time to time (the "ATM Program"). During the three months ended March 31, 2018, we sold 308,678 shares of our common stock at a weighted-average price of $37.27 per share and raised $11.5 million of gross proceeds under the ATM Program. Net proceeds were $11.3 million after commissions to the selling agents on shares sold and offering costs. As of March 31, 2018, sales transactions representing 20,400 shares had not settled and are not included in shares issued and outstanding on the face of the consolidated balance sheet, but are included in the weighted-average shares outstanding in the consolidated statement of operations and in the shares used to calculate net asset value per share. As of March 31, 2018, there were 1,602,678 shares available for sale under the ATM Program.

        During the year ended December 31, 2017, we sold 3,944,972 shares of our common stock at a weighted-average price of $38.72 per share and raised $152.8 million of gross proceeds under the ATM Program. Net proceeds were $150.9 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2017, 1,911,356 shares remained available for sale under the ATM Program.

        We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, cash flows generated through our ongoing operating activities, utilization of available borrowings under our Credit Facility, and a combination of future issuances of debt and equity capital. Our primary uses of funds will be investments in portfolio companies, operating expenses and cash distributions to holders of our common stock.

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        We periodically invest excess cash balances into marketable securities and idle funds investments. The primary investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Middle Market and Private Loan portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments.

        If our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2018 annual meeting of stockholders because our common stock price per share had been trading significantly above the net asset value per share of our common stock since 2011. We would therefore need future approval from our stockholders to issue shares below the then current net asset value per share.

        In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are required to meet a coverage ratio of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200%. This requirement limits the amount that we may borrow. In January 2008, we received an exemptive order from the SEC to exclude SBA-guaranteed debt securities issued by MSMF and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to us, which, in turn, enables us to fund more investments with debt capital.

        Although we have been able to secure access to additional liquidity, including through the Credit Facility, public debt issuances, leverage available through the SBIC program and equity offerings, there is no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all.

        In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements under ASC 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarified the implementation guidance regarding performance obligations and licensing arrangements. In May 2016,

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the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients, which clarified guidance on assessing collectability, presenting sales tax, measuring noncash consideration, and certain transition matters. In December 2016, the FASB issued ASU No. 2016-20, Revenue from Contracts with Customers (Topic 606)—Technical Corrections and Improvements, which provided disclosure relief, and clarified the scope and application of the new revenue standard and related cost guidance. The guidance is effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Substantially all of our income is not within the scope of ASU 2014-09. For those income items that are within the scope (primarily fee income), we have similar performance obligations as compared with deliverables and separate units of account previously identified. As a result, our timing of income recognition remains the same and the adoption of the standard was not material.

        In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. The new guidance is effective for annual periods beginning after December 15, 2018, and interim periods therein. Early application is permitted. While we continue to assess the effect of adoption, we currently believe the most significant change relates to the recognition of a new right-of-use asset and lease liability on our consolidated balance sheet for our office space operating lease. We currently have one operating lease for office space and do not expect a significant change in our leasing activity between now and adoption. See further discussion of our operating lease obligation in "Note M—Commitments and Contingences" in the notes to the consolidated financial statements.

        In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), which is intended to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods therein. Early application is permitted. The impact of the adoption of this new accounting standard on our consolidated financial statements was not material.

        From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

        Inflation has not had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, and may in the future experience, the impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third-party services and required energy consumption.

        We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At March 31, 2018, we had a total of $138.6 million in outstanding commitments comprised of (i) 37 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional

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commitments not yet funded and (ii) 11 investments with equity capital commitments that had not been fully called.

        As of March 31, 2018, the future fixed commitments for cash payments in connection with our SBIC debentures, the 4.50% Notes due 2019, the 4.50% Notes due 2022 and the 6.125% Notes and rent obligations under our office lease for each of the next five years and thereafter are as follows:

 
  2018   2019   2020   2021   2022   Thereafter   Total  

SBIC debentures

  $   $ 16,000   $ 55,000   $ 40,000   $ 5,000   $ 197,800   $ 313,800  

Interest due on SBIC debentures

    5,862     11,798     10,610     8,054     7,042     23,939     67,305  

6.125% Notes

                        90,655     90,655  

Interest due on 6.125% Notes

    5,553     5,553     5,553     5,553     5,553     1,386     29,151  

4.50% Notes due 2019

        175,000                     175,000  

Interest due on 4.50% Notes due 2019

    7,875     7,875                     15,750  

4.50% Notes due 2022

                    185,000         185,000  

Interest due on 4.50% Notes due 2022

    8,533     8,325     8,325     8,325     8,325         41,833  

Operating Lease Obligation(1)

    346     749     763     777     791     4,239     7,665  

Total

  $ 28,169   $ 225,300   $ 80,251   $ 62,709   $ 211,711   $ 318,019   $ 926,159  

(1)
Operating Lease Obligation means a rent payment obligation under a lease classified as an operating lease and disclosed pursuant to FASB ASC 840, as may be modified or supplemented.

        As of March 31, 2018, we had $188.0 million in borrowings outstanding under our Credit Facility, and the Credit Facility is currently scheduled to mature in September 2021. The Credit Facility contains two, one-year extension options which could extend the maturity to September 2023, subject to lender approval. See further discussion of the Credit Facility terms in "—Liquidity and Capital Resources—Capital Resources."

        As discussed further above, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of our Investment Portfolio. At March 31, 2018, we had a receivable of approximately $2.8 million due from the External Investment Manager which included approximately $2.3 million primarily related to operating expenses incurred by us as required to support the External Investment Manager's business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion above in "—Critical Accounting Policies—Income Taxes") and approximately $0.6 million of dividends declared but not paid by the External Investment Manager.

        In November 2015, our Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the "2015 Deferred Compensation Plan"). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the "2013 Deferred Compensation Plan"). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors' fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made

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on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of March 31, 2018, $4.8 million of compensation and directors' fees had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $2.5 million was deferred into phantom Main Street stock units, representing 74,503 shares of our common stock. Including phantom stock units issued through dividend reinvestment, the phantom stock units outstanding as of March 31, 2018 represented 90,411 shares of our common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the consolidated statements of changes in net assets until such shares are actually distributed to the participant in accordance with the plan, but are included in operating expenses and weighted-average shares outstanding in our consolidated statements of operations as earned.

        In April 2018, we made a new portfolio investment to facilitate the minority recapitalization of DPI, Inc. ("DPI"), a leading designer, developer, and distributor of a broad assortment of consumer electronics to national retailers under several proprietary brands. We, along with a co-investor, partnered with DPI's management team to facilitate the transaction, with us funding $35.2 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in St. Louis, Missouri, DPI offers consumer electronics products designed for value-conscious consumers.

        In April 2018, we redeemed the entire principal amount of the issued and outstanding 6.125% Notes effective April 1, 2018 (the "Redemption Date"). The 6.125% Notes were redeemed at par value, plus the accrued and unpaid interest thereon from January 1, 2018, through, but excluding, the Redemption Date. As part of the redemption, we recognized a realized loss of $1.5 million in the second quarter related to the write-off of any remaining unamortized deferred financing costs.

        During April 2018, we declared a semi-annual supplemental cash dividend of $0.275 per share payable in June 2018. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the second quarter of 2018 of $0.19 per share for each of April, May and June 2018.

        During May 2018, we declared regular monthly dividends of $0.19 per share for each month of July, August and September of 2018. These regular monthly dividends equal a total of $0.57 per share for the third quarter of 2018 and represent a 2.7% increase from the regular monthly dividends declared for the third quarter of 2017. Including the semi-annual supplemental dividend declared for June 2018 and the regular monthly dividends declared for the second and third quarters of 2018, we will have paid $23.375 per share in cumulative dividends since our October 2007 initial public offering.

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TERMS AND CONDITIONS OF THE DIRECT
STOCK PURCHASE FEATURE OF THE PLAN

        The following are material terms and conditions of the direct stock purchase feature of the Plan.

PURPOSE

1.     What is the purpose of the direct stock purchase feature of the Plan?

        The primary purpose of the direct stock purchase feature of the Plan is to give holders of shares of our common stock and new investors a convenient and economical way to acquire additional shares of our common stock by making optional cash payments to purchase shares of our common stock. In this way, the direct stock purchase feature of the Plan is intended to benefit our long-term investors by allowing them to increase their investment in our common stock. The direct stock purchase feature of the Plan also provides us with a cost-efficient way to raise additional capital through the direct sale of our common stock to participants in the direct stock purchase feature of the Plan.

ADMINISTRATION

2.     Who will administer the Plan?

        American Stock Transfer & Trust Company LLC has been appointed as administrator of the Plan. You should send all correspondence with the Plan Administrator to:

        All transaction processing should be directed to:

        Please mention Main Street Capital Corporation and this Plan in all correspondence with the Plan Administrator. In addition, you may call the Plan Administrator at 1-866-706-8371 or contact the Plan Administrator via the internet at www.astfinancial.com.

        The Company may replace the Plan Administrator at any time upon written notice to the Plan Administrator and may designate another qualified administrator as successor Plan Administrator for all or a part of the Plan Administrator's functions under the Plan. All participants would be notified of any such change. If the Company changes the Plan Administrator, references in this prospectus to Plan Administrator shall be deemed to be references to the successor Plan Administrator, unless the context requires otherwise.

3.     What are the responsibilities of the Plan Administrator?

        The Plan Administrator's responsibilities principally include:

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        Holding Shares.    If you purchase shares through optional cash payments and do not choose to have the dividends or distributions that are paid with respect to these shares reinvested, you must indicate that the shares are not to be enrolled in the dividend reinvestment feature of the Plan program. The Plan Administrator will hold any shares you choose to enroll in the dividend reinvestment feature of the Plan and will register them in the Plan Administrator's name (or that of its nominee) as your agent.

        Receipt of Dividends or Distributions.    As record holder for the Plan shares, the Plan Administrator will receive dividends or distributions on all Plan shares held on the record date, will credit these dividends or distributions to your Plan account on the basis of whole or fractional Plan shares held in such account, and will automatically reinvest such dividends or distributions in additional common stock unless you select the cash payment only option on the authorization form or direct the Plan Administrator that you wish to receive cash payments only (which instructions can always be changed by providing notice to the Plan Administrator). Any remaining portion of cash dividends or distributions not designated for reinvestment will be sent to you. The record date associated with a particular dividend or distribution is referred to in this Plan as a "dividend record date."

        Other Responsibilities.    The Plan Administrator also acts as dividend disbursing agent, transfer agent and registrar for our common stock.

        Replacement Administrator.    If the Plan Administrator resigns or otherwise ceases to act as Plan Administrator, we will appoint a new Plan Administrator to administer the Plan.

ELIGIBILITY AND ENROLLMENT

4.     Who is eligible to participate in the direct stock purchase feature of the Plan?

        Record Owners.    You are a record owner if you own shares of our common stock that are registered in your name with our transfer agent. If you are a record owner, you may participate directly in any or all of the features of the direct stock purchase feature of the Plan.

        Beneficial Owners.    You are a beneficial owner if you own shares of our common stock that are registered in the name of a broker, bank or other nominee. If you are a beneficial owner, you must either (i) become a record owner by having one or more shares transferred into your own name, or (ii) coordinate your participation in the direct stock purchase feature of the Plan through the broker, bank or other nominee in whose name your common stock is held.

        New Investors.    If you do not currently own shares of our common stock, you can participate in the Plan by making an initial purchase of shares of our common stock through the direct stock purchase feature of the Plan with a minimum investment of $250 (or $100 if you sign up for automatic monthly investments).

5.
Are there limitations on participation in the direct stock purchase feature of the Plan other than those described under Question 4?

Regulations in certain countries may limit or prohibit participation in this type of plan. Persons residing outside the United States who wish to participate in the direct stock purchase feature of the Plan should first determine whether they are subject to any governmental regulation prohibiting their participation.

        You may not participate in the direct stock purchase feature of the Plan if it would be unlawful for you to do so in the jurisdiction where you are a citizen or, if you are a corporation or other entity,

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where you are organized or domiciled. If you are a citizen of, or organized or domiciled in, a country other than the U.S., you should independently confirm that by participating in the direct stock purchase feature of the Plan you will not violate local laws governing, among other matters, taxes, currency and exchange controls, stock registration and foreign investments. We reserve the right to terminate participation of any participant if we deem it advisable under any foreign laws or regulations.

        The direct stock purchase feature of the Plan is designed for long-term investors who would like to invest and build ownership of shares of our common stock over time. The direct stock purchase feature of the Plan is not intended to provide stockholders with a mechanism for generating short-term profits through rapid turnover of shares acquired at a discount. Further, the direct stock purchase feature of the Plan's intended purpose precludes any individual or entity from establishing a series of related accounts for the purpose of conducting arbitrage operations or exceeding the optional monthly cash investment limit. You should not use the direct stock purchase feature of the Plan to engage in short-term trading activities that could change the normal trading volume of shares of our common stock. If you engage in short-term trading activities, we may prevent you from participating in the direct stock purchase feature of the Plan. We reserve the right, in our sole discretion, to modify, deny, suspend or terminate participation by a Plan participant who, in our determination, is using the direct stock purchase feature of the Plan for purposes inconsistent with the intended purpose of the direct stock purchase feature of the Plan or which adversely affect the price of our common stock. In such an event, the Plan Administrator will notify the participant in writing of its action and will continue to hold the participant's shares in book-entry form, but will no longer reinvest the participant's dividends or distributions, or accept optional cash investments from the participant.

6.     How do I become a participant in the direct stock purchase feature of the Plan?

        Record Holders.    Record holders may join the plan by completing and signing an authorization form and returning it to the Plan Administrator, or by following the enrollment procedures specified on the Plan Administrator's website at www.astfinancial.com. Authorization forms may be obtained at any time by written request, by telephoning the Plan Administrator at the address and telephone number provided in Question 2, or via the internet at the Plan Administrator's website. The initial minimum investment for existing record holders is $100.

        Beneficial Holders.    A beneficial holder may request that the number of shares the beneficial holder wishes to be enrolled in the direct stock purchase feature of the Plan be re-registered by the broker, bank or other nominee in the beneficial holder's own name as record owner in order to participate directly in the direct stock purchase feature of the Plan. Alternatively, beneficial holders who wish to join the direct stock purchase feature of the Plan may instruct their broker, bank or other nominee to arrange participation in the direct stock purchase feature of the Plan on the beneficial holder's behalf. The broker, bank or other nominee should then make arrangements with its securities depository, and the securities depository will provide the Plan Administrator with the information necessary to allow the beneficial holder to participate in the direct stock purchase feature of the Plan.

        New Investors.    If you do not currently own any shares of our common stock, you may enroll in the direct stock purchase feature of the Plan by making an initial purchase of shares of our common stock through the direct stock purchase feature of the Plan with a minimum investment of $250 (or $100 if you sign up for automatic monthly investments), but your initial investment cannot exceed $25,000. The new investor should complete the portions of the authorization form for a new investor wishing to become a participant and should designate the amount of the initial investment in our common stock. At the same time, the new participant may designate all, some portion or none of the purchased shares to be enrolled in the dividend reinvestment program. The authorization form should be returned to the Plan Administrator, with payment, on or before the applicable dates described in Question 7. The new investors may also follow the enrollment procedures specified on the Plan Administrator's website at www.astfinancial.com to join the direct stock purchase feature of the Plan.

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Online enrollment should be completed on or before the applicable dates described in Question 7. Once you are a stockholder, the minimum purchase amount is reduced to $100.

7.     When will my participation in the direct stock purchase feature of the Plan begin?

        If you have submitted your authorization form to make automatic monthly investments under the direct stock purchase feature of the Plan, the Plan Administrator must receive authorization two business days before the Cash Purchase Investment Date.

        In the case of new investors making an initial investment, both the authorization form and full payment of their designated initial investment must be received two business days before the Cash Purchase Investment Date.

        Once you enroll in the direct stock purchase feature of the Plan, you will remain enrolled in the direct stock purchase feature of the Plan until you withdraw, we terminate your participation or we terminate the Plan.

8.     What does the Plan Administrator's website provide?

        Instead of submitting an authorization form, you can participate in the direct stock purchase feature of the Plan by accessing the Plan Administrator's website at www.astfinancial.com. The following services are available to you online:

OPTIONAL CASH INVESTMENTS

9.     How do I make optional cash investments?

        Once you have enrolled in the direct stock purchase feature of the Plan by submitting an authorization form, you may make optional cash investments at any time in three ways:

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        Insufficient Funds.    A $25 fee will be assessed if any check or deposit is returned unpaid or if an automatic withdrawal from your bank account fails due to insufficient funds. In addition, the Plan Administrator will consider null and void the request for any optional cash investment associated with insufficient funds and will immediately remove any shares already credited to your account in anticipation of receiving those funds. The foregoing fee and any other incidental costs associated with the insufficient funds will be collected by the Plan Administrator through the sale of an appropriate number of shares from your Plan account. If the net proceeds from the sale of those shares are insufficient to satisfy the balance of the uncollected amounts, the Plan Administrator may sell additional shares from your account as necessary to satisfy the uncollected balance.

        No interest is paid on your payment pending its investment in shares of our common stock. During the period that an optional cash investment is pending, the collected funds in the possession of the Plan Administrator may be invested in money market mutual funds registered under the Investment Company Act of 1940 (including those of an affiliate of the Plan Administrator or for which the Plan Administrator or any of its affiliates provides management advisory or other services) consisting entirely of (i) direct obligations of the United States, or (ii) obligations fully guaranteed by the United States. The Plan Administrator will retain any investment income from such investments and will bear the risk of loss from such investments.

10.   When will shares be purchased?

        If the Plan Administrator acquires shares directly from us, then the date on which the Plan Administrator will make such cash investments, which we refer to as the "Cash Purchase Investment Date," will be (i) on the 15th of each month (or the previous NYSE trading day if the 15th day is not an NYSE trading day), or (ii) in the case of February, on the last NYSE trading day of the month. If the Plan Administrator acquires shares from parties other than us, it will attempt to buy shares of our common stock in the open market through a registered broker-dealer or privately negotiated transaction. Such purchases may begin before or after the Cash Purchase Investment Date, and will be completed no later than thirty (30) days following such date, except where completion at a later date is necessary or advisable under any applicable U.S. federal or state securities laws or regulations.

11.
What are the minimum and maximum amounts for optional cash investments under the direct stock purchase feature of the Plan?

        Optional cash investments are subject to a monthly minimum purchase requirement of $100 and a maximum purchase limit of $25,000. For purposes of the Plan, we may aggregate all dividend reinvestments and optional cash investments for participants with more than one account. We reserve the right to not honor requests for investments if we deem that an individual is using the Plan as a trading account. The Plan has been designed to offer individuals with the opportunity to build equity and not as trading account. In addition, all Plan accounts that we believe to be under common control or management or to have common ultimate beneficial ownership may be aggregated. Unless we have

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determined, in our sole discretion, that reinvestment of dividends and optional cash investments for each such account would be consistent with the purposes of the Plan, we have the right to aggregate all such accounts and to return, without interest, within 30 days of receipt, any amounts in excess of the investment limitations applicable to a single account received in respect of all such accounts.

COMMON STOCK USED TO SATISFY SHARE OBLIGATIONS

12.
What is the source of shares to be purchased under the direct stock purchase feature of the Plan?

        Either newly issued shares or shares purchased on the open market or in privately negotiated transactions with third parties, at our or the Plan Administrator's discretion will be used to satisfy any share obligations under the Plan (subject to the regulatory matter described in Question 14 below). Shares issued directly by us will consist of authorized but unissued shares of common stock. We may change the source of the common stock for the Plan, in our sole discretion, without providing you notice that we are doing so.

13.   At what price will shares be issued or purchased?

        We may, at our sole discretion, offer a discount of up to 5% of the market price, as calculated as set forth herein (exclusive of any applicable fees we may pay on your behalf), on issuances or purchases of common stock under the direct stock purchase feature of the Plan. We are not required to issue or sell shares at a discount under the direct stock purchase feature of the Plan or to pay a discount with respect to shares purchased by the Plan Administrator in the open market. If we implement discounts on any feature of the direct stock purchase feature of the Plan, any such discounts will be made at our sole discretion; and the discount rate we may offer will be subject to change or discontinuance at our discretion and without prior notice to participants in the direct stock purchase feature of the Plan. The discount rate, if any, will be determined by us from time to time based on a review of current market conditions, the level of participation in the direct stock purchase feature of the Plan, our current and projected capital needs and other factors that we deem to be relevant. Any discounts that we are offering under the Plan will be disclosed on the Plan Administrator's website at www.astfinancial.com.

14.   Are there any other limits on the purchase of shares of common stock under the Plan?

        We are prohibited from selling shares of our common stock at a price that is, after deducting any selling commissions, less than the net asset value per share of our common stock at the time of the sale, except (i) with the requisite approval of our common stockholders or (ii) under such other circumstances as the Securities and Exchange Commission may permit. In addition, we cannot issue shares of our common stock below net asset value unless our Board of Directors determines that it would be in our and our stockholders' best interests to do so. We did not seek stockholder

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authorization to issue common stock at a price below net asset value per share at our 2018 annual meeting of stockholders because our common stock price per share has been trading significantly above the current net asset value per share of our common stock, but we may seek such authorization at future annual meetings or special meetings of stockholders.

        Sales by us of our common stock at a discount from our net asset value pose potential risks for our existing stockholders whether or not they participate in the offering, as well as for new investors who participate in the offering. See "Sales of Common Stock Below Net Asset Value" in the accompanying prospectus.

STOCK CERTIFICATES AND SAFEKEEPING

15.
Will I receive certificates for shares purchased through the direct stock purchase feature of the Plan?

        Normally, common stock purchased for you under the direct stock purchase feature of the Plan will be held in the name of the Plan Administrator or its nominee. The Plan Administrator will credit the shares to your direct stock purchase feature of the Plan account in "book-entry" form. This service protects against loss, theft or destruction of certificates evidencing common stock.

16.   Can I get certificates if I want them?

        No certificates will be issued to you for shares in the Plan unless you submit a written request to the Plan Administrator or, in certain cases, until your participation in the direct stock purchase feature of the Plan is terminated. At any time, you may request the Plan Administrator to send a certificate for some or all of the whole shares credited to your account. This request should be mailed to the Plan Administrator at the address set forth in the answer to Question 2 or made via the internet on the Plan Administrator's website at www.astfinancial.com. There is no fee for this service. Any remaining whole shares and any fractions of shares will remain credited to your Plan account. Certificates for fractional shares will not be issued under any circumstances.

17.   May I deposit stock certificates I currently hold into my Plan account for safekeeping?

        You may also elect to deposit with the Plan Administrator certificates for common stock that you own and that are registered in your name for safekeeping under the plan for a fee of $7.50 payable each time you deposit certificates with the Plan Administrator. The Plan Administrator will credit the common stock represented by the certificates to your account in "book-entry" form and will combine the shares with any whole and fractional shares then held in your Plan account. In addition to protecting against the loss, theft or destruction of your certificates, this service is convenient if and when you sell shares of common stock through the Plan. Because you bear the risk of loss in sending certificates to the Plan Administrator, you should send certificates by registered mail, return receipt requested, and properly insured to the address specified in Question 2 above.

18.   In whose name will certificates be registered when issued?

        Your Plan account will be maintained in the name in which your certificates were registered at the time of your enrollment in the direct stock purchase feature of the Plan. Stock certificates for those shares purchased under the direct stock purchase feature of the Plan will be similarly registered when issued upon your request. If your shares are held through a broker, bank or other nominee, such request must be placed through your broker, bank or other nominee.

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SALE AND TRANSFER OF SHARES

19.   How can I sell shares?

        You may instruct the Plan Administrator to sell all or any part of the shares held in your Plan account by doing any of the following:

        If there is more than one individual owner on the Plan account, all participants must authorize the transaction and sign the instruction. As with issuances and purchases, the Plan Administrator aggregates all requests to sell shares and then sells the total share amount on the open market through a broker. Sales will be made daily, unless the Plan Administrator, at its discretion, determines to sell shares less frequently (but not later than five trading days after receipt) if the total number of the shares to be sold is not sufficient.

        If you sell or transfer only a portion of the shares in your Plan account, you will remain a participant in the direct stock purchase feature of the Plan and may continue to make optional cash investments and reinvest dividends or distributions. The Plan Administrator will continue to reinvest the dividends or distributions on the shares credited to your account unless you notify the Plan Administrator that you wish to withdraw from the dividend reinvestment feature of the Plan.

        The Plan requires you to pay all costs associated with the sale of your shares under the Plan. You will receive the proceeds of the sale, less a $15 service fee per transaction and a $0.10 per share commission paid to the Plan Administrator and less any other applicable fees by check. A Form 1099-B will be mailed to you in February of each year related to your sales of shares in the prior year for income tax purposes.

        Termination of Account Upon Sale of All Shares.    If the Plan Administrator sells all shares held in your Plan account, the Plan Administrator will automatically terminate your account. In this case, you will have to complete and file a new authorization form to rejoin the direct stock purchase feature of the Plan.

        Timing and Control.    Because the Plan Administrator will sell the shares on behalf of the Plan, neither we nor any participant in the Plan have the authority or power to control the timing or pricing of shares sold or the selection of the broker making the sales. Therefore, you will not be able to precisely time your sales through the Plan, and will bear the market risk associated with fluctuation in the price of our shares. That is, if you send in a request to sell shares, it is possible that the market price of our shares could go down or up before the broker sells your shares and the per share sales price you receive will be the average price of all shares sold for the Plan participants with respect to that sale date. In addition, you will not earn interest on a sales transaction.

        Alternatively, you can transfer some or all of the shares held in your Plan account to your account with a broker or bank, who can then sell the shares for you. If you need additional assistance regarding the transfer of your shares, please telephone the Plan Administrator, and consult your broker or bank about the fees and expenses related to their sale of your shares.

The price of our common stock fluctuates on a daily basis. The price may rise or fall after you submit your request to sell and prior to the ultimate sale of your shares of our common stock. The price risk

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will be borne solely by you. You cannot revoke your request to sell once it is made. The Plan Administrator will report to both the IRS and the participant Cost Basis for shares purchased or sold.

TERMINATION OF PARTICIPATION

20.   How do I terminate my participation in the direct stock purchase feature of the Plan?

        You may discontinue your participation in the direct stock purchase feature of the Plan at any time by notifying the Plan Administrator in writing at its mailing address or via its internet address specified in the answer to Question 2. Upon termination of your Plan account, you will receive a certificate for the whole shares held for you under the Plan free of charge. A cash payment will be made for any fractional shares held in your account at the time of termination based on the current market value less any applicable sales fees. Alternatively, if you so direct, the Plan Administrator will sell all or part of the shares credited to your Plan account by using the transaction stub on the bottom of your statement and mailing it to the address listed in Question 2. You may also make this request via the Plan Administrator's internet site at www.astfinancial.com.

FEES AND COMMISSIONS

21.   What are the costs of participating in the direct stock purchase feature of the Plan?

        You will not pay any trading fees, brokerage commissions or service fees on common stock purchased through the direct stock purchase feature of the Plan. We will pay all costs of administration of the Plan. You will, however, be responsible for any trading fees, brokerage commissions or service fees paid in connection with your sale of shares from the Plan. Please refer to the following tabular summary of Plan fees and commissions for more information regarding the current costs of participating in the direct stock purchase feature of the Plan:


Summary of Fees and Commissions

Enrollment fee for new investors:

  None

Issuance or purchase of shares by or from us:

  Paid by the Company

Purchase of shares in the open market or in privately negotiated transactions:

  Paid by the Company

Sale of shares (partial or full):

  $15.00 per transaction

Trading fees (applicable when shares are sold in the open market):

  $0.10 per share

Termination fee:

  $15.00 per transaction

Gift or transfer of shares:

  None

Deposit of stock certificates for safekeeping:

  $7.50 per deposit

Issuance of share certificates:

  None

Returned checks for insufficient funds or rejected automatic withdrawals:

  $25.00

Duplicate statements:

  $25.00 (current year free)

        The Plan Administrator will deduct the applicable fees or commissions from the proceeds of the sale.

        We and the Plan Administrator reserve the right to amend or modify this Plan Service Fee schedule at any time and from time to time.

REPORTS AND NOTICES TO PARTICIPANTS

22.   How will I keep track of my investments?

        The Plan Administrator will mail Plan statements after each investment. In addition, a notice will be mailed to you after each issue or purchase, which will include the number of shares issued or

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purchased and the issue or purchase price. You may also view your transaction history online by logging into your account. Details available online include stock price and transaction type and date.

You should retain these statements to determine the tax cost basis of the shares purchased for your account under the Plan. In addition, you will receive copies of other communications sent to our stockholders, including our annual report to stockholders, the notice of annual meeting and proxy statement in connection with our annual meeting of stockholders and Internal Revenue Service information for reporting dividends paid.

        You can also view your account history and balance online by accessing the Plan Administrator's website at www.astfinancial.com.

23.   Where will notices be sent?

        The Plan Administrator will address all of its notices to you at your last known address. You should notify the Plan Administrator promptly, in writing, of any change of address.

FEDERAL TAX CONSEQUENCES

24.   What are some of the U.S. federal income tax consequences of a stockholder's participation in the direct stock purchase feature of the Plan?

        A summary of the U.S. federal income tax consequences of holding shares of our common stock is set forth in the section titled "Material U.S. Federal Income Tax Considerations" in the accompanying prospectus. We advise you to consult your own tax advisors to determine the tax consequences particular to your situation, including any applicable state, local or foreign income and other tax consequences that may result from your participation in the direct stock purchase feature of the Plan and your subsequent sale of shares of common stock acquired pursuant to the direct stock purchase feature of the Plan.

25.   What are the effects of the U.S. federal income tax withholding provisions applicable to U.S. stockholders?

        A summary of the effects of the U.S. federal income tax withholding provisions applicable to U.S. stockholders is set forth in the section titled "Material U.S. Federal Income Tax Considerations" in the accompanying prospectus.

OTHER INFORMATION

26.   How can I vote my shares?

        You will receive proxy material for all shares in your Plan account. You may vote your shares of common stock either by designating the vote of the shares by proxy or by voting the shares in person at the meeting of stockholders. The proxy will be voted in accordance with your direction. If you do not provide voting instructions but timely and properly submit your proxy, all of your shares will be voted in accordance with the recommendations of the board of directors. If you do not return the proxy card or if you return it unsigned, none of your shares will be voted unless you vote in person at the meeting of stockholders.

27.   If we have a rights offering related to the common stock, how will a stockholder's entitlement be computed?

        Your entitlement in a rights offering related to the common stock will be based upon the number of whole shares credited to your Plan account. In the event of a rights offering, transaction processing may be curtailed or suspended by the Plan Administrator for a short period of time following the

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dividend record date for such action to permit the Plan Administrator to calculate the rights allocable to each account.

        Transaction processing may be curtailed or suspended until the completion of any rights offering.

28.   What happens if we declare a dividend payable in stock or declare a stock split?

        Stock Dividends and Stock Splits.    If dividends or distributions are paid in the form of shares of our common stock, or if shares of our common stock are distributed in connection with any stock split or similar transaction, each account balance will be adjusted to reflect the receipt of shares of our common stock paid or distributed. You will receive a statement indicating the number of shares or amount of cash dividends or distributions paid as a result of the transaction. Transaction processing may either be curtailed or suspended until the completion of any stock dividend, stock split or corporate action.

        Other Capitalization Changes.    If there occurs any other transaction that results in the number of outstanding shares of our common stock being increased or decreased, such as a recapitalization, reclassification, reverse stock split or other combination of shares of our common stock, or other increase or decrease in shares of our common stock effectuated without receipt of consideration by us, each account balance will be adjusted to reflect the results of such transaction. You will receive a statement indicating the effects of such transaction on your account balance.

29.   Can the Plan be amended, modified, suspended or terminated?

        We reserve the right to amend, modify, suspend or terminate the Plan at any time in our sole discretion. You will receive written notice of any material amendment, modification, suspension or termination. We and the Plan Administrator also reserve the right to change any administrative procedures of the Plan in our discretion.

        If we terminate the Plan, you will receive a certificate for all whole shares of common stock held in your Plan account and a check representing the value of any fractional shares based on the then-current market price. We also will return to you any uninvested dividends or distributions or optional cash payments held in your Plan account.

        We reserve the right to terminate American Stock Transfer & Trust Company LLC as Plan Administrator and appoint another institution to serve as Plan Administrator, or to administer the Plan ourselves. All participants will receive notice of any such change, which may be by e-mail to participants electing to receive communications electronically of any such change.

30.   Are there any risks associated with the Plan?

        See, "Supplementary Risk Factors" elsewhere in this prospectus supplement. Otherwise, your investment through the direct stock purchase feature of the Plan is no different from any investment in shares of our common stock held by you. If you choose to participate in the direct stock purchase feature of the Plan, then you should recognize that none of us, our subsidiaries and affiliates, nor the Plan Administrator can assure you of a profit or protect you against loss on the shares that you purchase under the direct stock purchase feature of the Plan. You bear the risk of loss in value and enjoy the benefits of gains with respect to all of your shares. You need to make your own independent investment and participation decisions consistent with your situation and needs. None of us, our subsidiaries and affiliates, nor the Plan Administrator can guarantee liquidity in the markets, and the value and marketability of your shares may be adversely affected by market conditions. For more information regarding risks relating to an investment in shares of our common stock, see "Risk Factors" beginning on page 15 of the accompanying prospectus.

        Plan accounts are not insured or protected by the Securities Investor Protection Corporation or any other entity and are not guaranteed by the FDIC or any government agency.

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        Neither we, our subsidiaries, our affiliates, nor the Plan Administrator will be liable for any act, or for any failure to act, as long as we or they have made good faith efforts to carry out the terms of the Plan, as described in this prospectus supplement and the accompanying prospectus and on the forms that are designed to accompany each investment or activity.

        In addition, the purchase price for shares acquired through the direct stock purchase feature of the Plan will vary and cannot be predicted. The purchase price may be different from (more or less than) the price of acquiring shares on the open market on the relevant date. Your investment in direct stock purchase feature of the Plan shares will be exposed to changes in market conditions and changes in the market value of the shares. Your ability to sell—both as to timing and pricing terms and related expenses—or otherwise liquidate shares under the Plan is subject to the terms of the Plan and the withdrawal procedures. Also, no interest will be paid on dividends, distributions, cash or other funds held by the Plan Administrator pending investment or sale.

31.   What are the responsibilities of Main Street and the Plan Administrator?

        Neither we, our subsidiaries, our affiliates, nor the Plan Administrator will be liable for any act, or for any failure to act, as long as we or they have made good faith efforts to carry out the terms of the direct stock purchase feature of the Plan, as described in this prospectus and on the forms that are designed to accompany each investment or activity. This limitation of liability includes, but is not limited to, any claims of liability for:

        We, any of our agents and the Plan Administrator, will not have any duties, responsibilities or liabilities other than those expressly set forth in the Plan or as imposed by applicable laws, including U.S. federal and state securities laws. Since the Plan Administrator has assumed all responsibility for administering the Plan, we specifically disclaim any responsibility for any of the Plan Administrator's actions or inactions in connection with the administration of the Plan. None of our directors, officers, employees or stockholders will have any personal liability under the Plan.

        We, any of our agents and the Plan Administrator, will be entitled to rely on completed forms and the proof of due authority to participate in the direct stock purchase feature of the Plan, without further responsibility of investigation or inquiry.

32.   How will you interpret and regulate the Plan?

        Our officers are authorized to take any actions that are consistent with the Plan's terms and conditions. We reserve the right to interpret and regulate the Plan as we deem necessary and desirable in connection with the Plan's operations. Any such determination by us will be conclusive and binding on Plan participants.

33.   What law governs the Plan?

        The laws of the State of New York govern the Plan.

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LEGAL MATTERS

        Certain legal matters regarding the shares of common stock offered hereby will be passed upon for us by Eversheds Sutherland (US) LLP, Washington D.C.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        The audited consolidated financial statements, financial highlights, Schedule 12-14 and the schedule of Senior Securities of Main Street Capital Corporation, included in this prospectus supplement and elsewhere in the registration statement have been so included in reliance upon the reports of Grant Thornton LLP, independent registered public accountants, as stated in their reports appearing herein. Grant Thornton LLP's principal business address is Grant Thornton Tower, 171 North Clark, Suite 200, Chicago, Illinois, 60601.

AVAILABLE INFORMATION

        We have filed with the SEC a universal shelf registration statement on Form N-2, together with all amendments and related exhibits, under the Securities Act, with respect to our shares of common stock offered by this prospectus supplement. The registration statement contains additional information about us and our shares of common stock being offered by this prospectus supplement.

        We file with or submit to the SEC annual, quarterly and current reports, proxy statements and other information meeting the informational requirements of the Securities Exchange Act of 1934. You may inspect and copy these reports, proxy statements and other information, as well as the registration statement and related exhibits and schedules, at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information filed electronically by us with the SEC, which are available on the SEC's website at www.sec.gov. Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.

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INTERIM FINANCIAL STATEMENTS

MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

(dollars in thousands, except shares and per share amounts)

 
  March 31,
2018
  December 31,
2017
 
 
  (Unaudited)
   
 

ASSETS

             

Investments at fair value:

             

Control investments (cost: $649,096 and $530,034 as of March 31, 2018 and December 31, 2017, respectively)

  $ 846,797   $ 750,706  

Affiliate investments (cost: $382,351 and $367,317 as of March 31, 2018 and December 31, 2017, respectively)

    359,460     338,854  

Non-Control/Non-Affiliate investments (cost: $1,126,103 and $1,107,447 as of March 31, 2018 and December 31, 2017, respectively)

    1,107,777     1,081,745  

Total investments (cost: $2,157,550 and $2,004,798 as of March 31, 2018 and December 31, 2017, respectively)

    2,314,034     2,171,305  

Cash and cash equivalents

    29,090     51,528  

Interest receivable and other assets

    40,159     36,343  

Receivable for securities sold

    14,311     2,382  

Deferred financing costs (net of accumulated amortization of $5,856 and $5,600 as of March 31, 2018 and December 31, 2017, respectively)

    3,581     3,837  

Total assets

  $ 2,401,175   $ 2,265,395  

LIABILITIES

             

Credit facility

  $ 188,000   $ 64,000  

SBIC debentures (par: $313,800 and $295,800 as of March 31, 2018 and December 31, 2017, respectively)

    306,182     288,483  

4.50% Notes due 2022 (par: $185,000 as of both March 31, 2018 and December 31, 2017)

    182,167     182,015  

4.50% Notes due 2019 (par: $175,000 as of both March 31, 2018 and December 31, 2017)

    173,796     173,616  

6.125% Notes (par: $90,655 as of both March 31, 2018 and December 31, 2017)

    89,133     89,057  

Accounts payable and other liabilities

    15,049     20,168  

Payable for securities purchased

    21,859     40,716  

Interest payable

    8,510     5,273  

Dividend payable

    11,192     11,146  

Deferred tax liability, net

    8,687     10,553  

Total liabilities

    1,004,575     885,027  

Commitments and contingencies (Note M)

             

NET ASSETS

             

Common stock, $0.01 par value per share (150,000,000 shares authorized; 58,987,330 and 58,660,680 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively)

    590     586  

Additional paid-in capital

    1,325,998     1,310,780  

Accumulated net investment income, net of cumulative dividends of $696,070 and $662,563 as of March 31, 2018 and December 31, 2017, respectively           

    10,015     7,921  

Accumulated net realized gain from investments (accumulated net realized gain from investments of $72,036 before cumulative dividends of $124,690 as of March 31, 2018 and accumulated net realized gain from investments of $64,576 before cumulative dividends of $124,690 as of December 31, 2017)

    (52,654 )   (60,114 )

Net unrealized appreciation, net of income taxes

    112,651     121,195  

Total net assets

    1,396,600     1,380,368  

Total liabilities and net assets

  $ 2,401,175   $ 2,265,395  

NET ASSET VALUE PER SHARE

  $ 23.67   $ 23.53  

   

The accompanying notes are an integral part of these consolidated financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

(dollars in thousands, except shares and per share amounts)

(Unaudited)

 
  Three Months Ended
March 31,
 
 
  2018   2017  

INVESTMENT INCOME:

             

Interest, fee and dividend income:

             

Control investments

  $ 21,955   $ 12,988  

Affiliate investments

    9,071     9,899  

Non-Control/Non-Affiliate investments

    24,916     25,002  

Total investment income

    55,942     47,889  

EXPENSES:

             

Interest

    (10,265 )   (8,608 )

Compensation

    (5,491 )   (4,430 )

General and administrative

    (2,974 )   (2,940 )

Share-based compensation

    (2,303 )   (2,269 )

Expenses allocated to the External Investment Manager

    2,066     1,524  

Total expenses

    (18,967 )   (16,723 )

NET INVESTMENT INCOME

    36,975     31,166  

NET REALIZED GAIN (LOSS):

             

Control investments

    13,094     (682 )

Affiliate investments

        22,930  

Non-Control/Non-Affiliate investments

    (5,634 )   5,317  

SBIC debentures

    (1,374 )   (5,217 )

Total net realized gain

    6,086     22,348  

NET UNREALIZED APPRECIATION (DEPRECIATION):

             

Control investments

    (22,974 )   11,880  

Affiliate investments

    14,238     (26,121 )

Non-Control/Non-Affiliate investments

    (2,146 )   (7,850 )

SBIC debentures

    1,359     5,665  

Total net unrealized depreciation

    (9,523 )   (16,426 )

INCOME TAXES:

             

Federal and state income, excise and other taxes

    (887 )   (1,252 )

Deferred taxes

    1,866     (4,386 )

Income tax benefit (provision)

    979     (5,638 )

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 34,517   $ 31,450  

NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED

  $ 0.63   $ 0.57  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED

  $ 0.59   $ 0.57  

DIVIDENDS PAID PER SHARE:

             

Regular monthly dividends

  $ 0.570   $ 0.555  

Supplemental dividends

         

Total dividends

  $ 0.570   $ 0.555  

WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED

    58,852,252     55,125,170  

   

The accompanying notes are an integral part of these consolidated financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Changes in Net Assets

(dollars in thousands, except shares)

(Unaudited)

 
   
   
   
   
  Accumulated
Net Realized
Gain From
Investments,
Net of
Dividends
  Net Unrealized
Appreciation
from
Investments,
Net of
Income Taxes
   
 
 
  Common Stock    
  Accumulated
Net
Investment
Income, Net
of Dividends
   
 
 
  Number of
Shares
  Par
Value
  Additional
Paid-In
Capital
  Total Net
Asset Value
 

Balances at December 31, 2016

    54,354,857   $ 543   $ 1,143,883   $ 19,033   $ (58,887 ) $ 96,909   $ 1,201,481  

Public offering of common stock, net of offering costs

    1,035,286     11     37,700                 37,711  

Share-based compensation

            2,269                 2,269  

Purchase of vested stock for employee payroll tax withholding

    (8,964 )       (343 )               (343 )

Dividend reinvestment

    48,675         1,806                 1,806  

Amortization of directors' deferred compensation

            163                 163  

Forfeited shares of terminated employees

    (6,479 )                        

Dividends to stockholders

                (11,039 )   (19,564 )       (30,603 )

Net increase (decrease) resulting from operations

                25,949     27,565     (22,064 )   31,450  

Balances at March 31, 2017

    55,423,375   $ 554   $ 1,185,478   $ 33,943   $ (50,886 ) $ 74,845   $ 1,243,934  

Balances at December 31, 2017

    58,660,680   $ 586   $ 1,310,780   $ 7,921   $ (60,114 ) $ 121,195   $ 1,380,368  

Public offering of common stock, net of offering costs

    309,895     4     11,332                 11,336  

Share-based compensation

            2,303                 2,303  

Purchase of vested stock for employee payroll tax withholding

    (5,392 )       (212 )               (212 )

Dividend reinvestment

    42,423         1,589                 1,589  

Amortization of directors' deferred compensation

            206                 206  

Issuance of restricted stock

    124                          

Dividends to stockholders

                (33,507 )           (33,507 )

Net increase (decrease) resulting from operations

                35,601     7,460     (8,544 )   34,517  

Balances at March 31, 2018

    59,007,730   $ 590   $ 1,325,998   $ 10,015   $ (52,654 ) $ 112,651   $ 1,396,600  

   

The accompanying notes are an integral part of these consolidated financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)

 
  Three Months Ended
March 31,
 
 
  2018   2017  

CASH FLOWS FROM OPERATING ACTIVITIES

             

Net increase in net assets resulting from operations

  $ 34,517   $ 31,450  

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:

             

Investments in portfolio companies

    (340,405 )   (186,922 )

Proceeds from sales and repayments of debt investments in portfolio companies

    133,835     184,487  

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

    32,268     37,041  

Net unrealized depreciation

    9,523     16,426  

Net realized gain

    (6,086 )   (22,348 )

Accretion of unearned income

    (3,238 )   (4,703 )

Payment-in-kind interest

    (576 )   (1,607 )

Cumulative dividends

    (562 )   (877 )

Share-based compensation expense

    2,303     2,269  

Amortization of deferred financing costs

    881     658  

Deferred tax (benefit) provision

    (1,866 )   4,386  

Changes in other assets and liabilities:

             

Interest receivable and other assets

    (3,467 )   (2,175 )

Interest payable

    3,237     (632 )

Accounts payable and other liabilities

    (4,913 )   (2,284 )

Deferred fees and other

    1,392     597  

Net cash provided by (used in) operating activities

    (143,157 )   55,766  

CASH FLOWS FROM FINANCING ACTIVITIES

             

Proceeds from public offering of common stock, net of offering costs

    11,336     37,711  

Dividends paid

    (31,872 )   (28,593 )

Proceeds from issuance of SBIC debentures

    22,000     25,400  

Repayments of SBIC debentures

    (4,000 )   (25,200 )

Proceeds from credit facility

    194,000     83,000  

Repayments on credit facility

    (70,000 )   (138,000 )

Payment of deferred issuance costs and SBIC debenture fees

    (533 )   (616 )

Purchases of vested stock for employee payroll tax withholding

    (212 )   (343 )

Net cash provided by (used in) financing activities

    120,719     (46,641 )

Net increase (decrease) in cash and cash equivalents

    (22,438 )   9,125  

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

    51,528     24,480  

CASH AND CASH EQUIVALENTS AT END OF PERIOD

  $ 29,090   $ 33,605  

Supplemental cash flow disclosures:

             

Interest paid

  $ 6,116   $ 8,552  

Taxes paid

  $ 3,320   $ 1,677  

Non-cash financing activities:

             

Shares issued pursuant to the DRIP

  $ 1,589   $ 1,806  

   

The accompanying notes are an integral part of these consolidated financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Control Investments(5)

 

 

 

 

                   

                           

Access Media Holdings, LLC(10)

 

Private Cable Operator

                       

     

10% PIK Secured Debt (Maturity—July 22, 2020)(14)(19)

  $ 23,828   $ 23,828   $ 15,120  

     

Preferred Member Units (8,550,000 units)

          8,444      

     

Member Units (45 units)

          1      

                  32,273     15,120  

                           

ASC Interests, LLC

 

Recreational and Educational Shooting Facility

                       

     

11% Secured Debt (Maturity—July 31, 2018)

    1,650     1,647     1,647  

     

Member Units (1,500 units)

          1,500     1,370  

                  3,147     3,017  

                           

ATS Workholding, LLC(10)

 

Manufacturer of Machine Cutting Tools and Accessories

                       

     

5% Secured Debt (Maturity—November 16, 2021)

    4,186     3,735     3,735  

     

Preferred Member Units (3,725,862 units)

          3,726     3,726  

                  7,461     7,461  

                           

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

                       

     

12% Secured Debt (Maturity—December 28, 2020)

    11,596     11,596     11,596  

     

Common Stock (57,508 shares)

          6,350     9,370  

                  17,946     20,966  

                           

Brewer Crane Holdings, LLC

 

Provider of Crane Rental and Operating Services

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.66%, Secured Debt (Maturity—January 9, 2023)(9)

    9,920     9,825     9,825  

     

Preferred Member Units (2,950 units)(8)

          4,280     4,280  

                  14,105     14,105  

                           

Café Brazil, LLC

 

Casual Restaurant Group

                       

     

Member Units (1,233 units)(8)

          1,742     4,900  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

California Splendor Holdings LLC

 

Processor of Frozen Fruits

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.38%, Secured Debt (Maturity—March 30, 2023)(9)

    3,730     3,610     3,610  

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.38%, Secured Debt (Maturity—March 30, 2023)(9)

    28,000     27,723     27,723  

     

Preferred Member Units (7,143 units)

          12,500     12,500  

                  43,833     43,833  

                           

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

                       

     

Member Units (416 units)(8)

          1,300     67,340  

                           

Chamberlin Holding LLC

 

Roofing and Waterproofing Specialty Subcontractor

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.13%, Secured Debt (Maturity—February 26, 2023)(9)

    21,600     21,389     21,389  

     

Member Units (4,347 units)

          11,440     11,440  

                  32,829     32,829  

                           

Charps, LLC

 

Pipeline Maintenance and Construction

                       

     

12% Secured Debt (Maturity—February 3, 2022)

    16,800     16,646     16,646  

     

Preferred Member Units (1,600 units)

          400     1,190  

                  17,046     17,836  

                           

Clad-Rex Steel, LLC

 

Specialty Manufacturer of Vinyl-Clad Metal

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 11.16%, Secured Debt (Maturity—December 20, 2021)(9)

    13,280     13,174     13,280  

     

Member Units (717 units)(8)

          7,280     9,780  

     

10% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity—December 20, 2036)

    1,178     1,166     1,178  

     

Member Units (Clad-Rex Steel RE Investor, LLC) (800 units)

          210     280  

                  21,830     24,518  

                           

CMS Minerals Investments

 

Oil & Gas Exploration & Production

                       

     

Member Units (CMS Minerals II, LLC) (100 units)(8)

          3,294     2,385  

                           

Copper Trail Energy Fund I, LP(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 30.1%)(8)

          2,500     2,500  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Datacom, LLC

 

Technology and Telecommunications Provider

                       

     

8% Secured Debt (Maturity—May 30, 2018)

    1,755     1,755     1,755  

     

5.25% Current / 5.25% PIK Secured Debt (Maturity—May 30, 2019)(19)

    12,511     12,479     10,780  

     

Class A Preferred Member Units

          1,181     220  

     

Class B Preferred Member Units (6,453 units)

          6,030      

                  21,445     12,755  

                           

Direct Marketing Solutions, Inc.

 

Provider of Omni-Channel Direct Marketing Services

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.75%, Secured Debt (Maturity—February 13, 2023)(9)

    18,722     18,523     18,523  

     

Preferred Stock (8,400 shares)

          8,400     8,400  

                  26,923     26,923  

                           

Gamber-Johnson Holdings, LLC

 

Manufacturer of Ruggedized Computer Mounting Systems

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.66%, Secured Debt (Maturity—June 24, 2021)(9)

    22,910     22,737     22,910  

     

Member Units (8,619 units)(8)

          14,844     26,530  

                  37,581     49,440  

                           

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.69%, Secured Debt (Maturity—March 31, 2020)(9)

    5,362     5,327     5,327  

     

Member Units (1,200 units)

          1,200     1,940  

                  6,527     7,267  

                           

GRT Rubber Technologies LLC

 

Manufacturer of Engineered Rubber Products

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.66%, Secured Debt (Maturity—December 19, 2019)(9)

    11,393     11,347     11,393  

     

Member Units (5,879 units)(8)

          13,065     23,420  

                  24,412     34,813  

                           

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

                       

     

Member Units (438 units)(8)

          2,980     10,830  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Gulf Publishing Holdings, LLC

 

Energy Industry Focused Media and Publishing

                       

     

12.5% Secured Debt (Maturity—April 29, 2021)

    12,698     12,608     12,608  

     

Member Units (3,681 units)

          3,681     4,840  

                  16,289     17,448  

                           

Harborside Holdings, LLC

 

Real Estate Holding Company

                       

     

Member units (100 units)

          6,306     9,500  

                           

Harris Preston Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (2717 MH, L.P.) (Fully diluted 49.3%)

          536     536  

                           

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

                       

     

Common Stock (107,456 shares)

          718     4,980  

                           

HW Temps LLC

 

Temporary Staffing Solutions

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.66%, Secured Debt (Maturity July 2, 2020)(9)

    9,976     9,922     9,922  

     

Preferred Member Units (3,200 units)

          3,942     3,940  

                  13,864     13,862  

                           

IDX Broker, LLC

 

Provider of Marketing and CRM Tools for the Real Estate Industry

                       

     

11.5% Secured Debt (Maturity—November 15, 2020)

    14,950     14,828     14,950  

     

Preferred Member Units (5,607 units)(8)

          5,952     11,550  

                  20,780     26,500  

                           

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

                       

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 11.25%, Secured Debt (Maturity—November 14, 2019)(9)

    3,805     3,771     3,805  

     

Member Units (627 units)(8)

          811     5,100  

                  4,582     8,905  

                           

KBK Industries, LLC

 

Manufacturer of Specialty Oilfield and Industrial Products

                       

     

10% Secured Debt (Maturity—September 28, 2020)

    75     72     75  

     

12.5% Secured Debt (Maturity—September 28, 2020)

    5,900     5,870     5,900  

     

Member Units (325 units)(8)

          783     4,740  

                  6,725     10,715  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Lamb Ventures, LLC

 

Aftermarket Automotive Services Chain

                       

     

11% Secured Debt (Maturity—July 1, 2022)

    8,339     8,298     8,339  

     

Preferred Equity (non-voting)

          400     400  

     

Member Units (742 units)

          5,273     6,730  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity—March 31, 2027)

    432     428     432  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     520  

                  15,024     16,421  

                           

Marine Shelters Holdings, LLC

 

Fabricator of Marine and Industrial Shelters

                       

     

12% PIK Secured Debt (Maturity—December 28, 2017)(14)

    3,131     3,078      

     

Preferred Member Units (3,810 units)

          5,352      

                  8,430      

                           

Market Force Information, LLC

 

Provider of Customer Experience Management Services

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 13.01%, Secured Debt (Maturity—July 28, 2022)(9)

    22,880     22,676     22,676  

     

Member Units (657,113 units)

          14,700     14,700  

                  37,376     37,376  

                           

MH Corbin Holding LLC

 

Manufacturer and Distributor of Traffic Safety Products

                       

     

10% Secured Debt (Maturity—August 31, 2020)

    12,425     12,238     12,238  

     

Preferred Member Units (4,000 shares)

          6,000     6,000  

                  18,238     18,238  

                           

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

                       

     

10% Secured Debt (Maturity—January 15, 2020)

    1,750     1,743     1,743  

     

12% Secured Debt (Maturity—January 15, 2020)

    3,900     3,867     3,867  

     

Member Units (7,874 units)

          3,001     2,171  

     

9.5% Secured Debt (Mid-Columbia Real Estate, LLC) (Maturity—May 13, 2025)

    780     780     780  

     

Member Units (Mid-Columbia Real Estate, LLC) (500 units)(8)

          790     1,290  

                  10,181     9,851  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

MSC Adviser I, LLC(16)

 

Third Party Investment Advisory Services

                       

     

Member Units (Fully diluted 100.0%)(8)

              48,722  

                           

Mystic Logistics Holdings, LLC

 

Logistics and Distribution Services Provider for Large Volume Mailers

                       

     

12% Secured Debt (Maturity—August 15, 2019)

    7,562     7,501     7,501  

     

Common Stock (5,873 shares)

          2,720     6,050  

                  10,221     13,551  

                           

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

                       

     

LIBOR Plus 8.50%, Current Coupon 10.51%, Secured Debt (Maturity—May 31, 2019)

    11,475     11,445     11,475  

     

Member Units (2,955 units)(8)

          2,975     12,180  

                  14,420     23,655  

                           

NexRev LLC

 

Provider of Energy Efficiency Products & Services

                       

     

11% Secured Debt (Maturity—February 28, 2023)

    17,440     17,268     17,268  

     

Preferred Member Units (86,400,000 units)

          6,880     6,880  

                  24,148     24,148  

                           

NRI Clinical Research, LLC

 

Clinical Research Service Provider

                       

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.19%, Secured Debt (Maturity—January 15, 2019)(9)

    400     400     400  

     

14% Secured Debt (Maturity—January 15, 2019)

    3,865     3,836     3,865  

     

Warrants (251,723 equivalent units; Expiration—January 15, 2026; Strike price—$0.01 per unit)

          252     500  

     

Member Units (1,454,167 units)

          765     2,500  

                  5,253     7,265  

                           

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

                       

     

12% Secured Debt (Maturity—March 20, 2023)

    6,376     6,376     6,376  

     

Member Units (65,962 units)(8)

          3,717     4,130  

                  10,093     10,506  

                           

NuStep, LLC

 

Designer, Manufacturer and Distributor of Fitness Equipment

                       

     

12% Secured Debt (Maturity—January 31, 2022)

    20,600     20,429     20,429  

     

Preferred Member Units (406 units)

          10,200     10,200  

                  30,629     30,629  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

                       

     

Common Stock (1,500 shares)(8)

          1,080     14,290  

                           

Pegasus Research Group, LLC

 

Provider of Telemarketing and Data Services

                       

     

Member Units (460 units)(8)

          1,290     10,310  

                           

PPL RVs, Inc.

 

Recreational Vehicle Dealer

                       

     

LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 8.69%, Secured Debt (Maturity—November 15, 2021)(9)

    16,100     15,978     16,100  

     

Common Stock (1,962 shares)(8)

          2,150     11,660  

                  18,128     27,760  

                           

Principle Environmental, LLC (d/b/a TruHorizon Environmental Solutions)

 

Noise Abatement Service Provider

                       

     

13% Secured Debt (Maturity—April 30, 2020)

    7,477     7,359     7,477  

     

Preferred Member Units (19,631 units)(8)

          4,600     13,090  

     

Warrants (1,018 equivalent units; Expiration—January 31, 2021; Strike price—$0.01 per unit)

          1,200     780  

                  13,159     21,347  

                           

Quality Lease Service, LLC

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

Zero Coupon Secured Debt (Maturity—June 8, 2020)

    7,341     7,341     6,950  

     

Member Units (1,000 units)

          3,293     5,363  

                  10,634     12,313  

                           

River Aggregates, LLC

 

Processor of Construction Aggregates

                       

     

Zero Coupon Secured Debt (Maturity—June 30, 2018)

    750     728     728  

     

Member Units (1,150 units)

          1,150     4,610  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     2,670  

                  2,247     8,008  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                       

     

9% Secured Debt (Maturity—October 2, 2018)

    2,924     2,924     1,510  

     

Series A Preferred Units (2,500 units)

          2,500      

     

Warrants (1,424 equivalent units; Expiration—July 1, 2024; Strike price—$0.01 per unit)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100 units)(8)

          2,300     2,480  

                  8,820     3,990  

                           

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

                       

     

9% Secured Debt (Maturity—January 1, 2019)

    184     184     184  

     

Member Units (1,867 units)(8)

          3,579     3,880  

                  3,763     4,064  

                           

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

                       

     

13% Secured Debt (Maturity—December 23, 2018)

    2,814     2,801     2,801  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,000  

     

Common Stock (1,126,242 shares)

          3,706      

                  9,507     5,801  

Ziegler's NYPD, LLC

 

Casual Restaurant Group

                       

     

6.5% Secured Debt (Maturity—October 1, 2019)

    1,000     997     997  

     

12% Secured Debt (Maturity—October 1, 2019)

    300     300     300  

     

14% Secured Debt (Maturity—October 1, 2019)

    2,750     2,750     2,750  

     

Warrants (587 equivalent units; Expiration—September 29, 2018; Strike price—$0.01 per unit)

          600      

     

Preferred Member Units (10,072 units)

          2,834     3,221  

                  7,481     7,268  

                           

Subtotal Control Investments (36.6% of total investments at fair value)

  $ 649,096   $ 846,797  

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC

 

Provider of Rent-to-Own Financing Solutions and Services

                       

     

Warrants (42 equivalent units; Expiration—November 7, 2024; Strike price—$0.01 per unit)

        $ 259   $ 900  

     

Preferred Member Units (186 units)(8)

          1,200     3,760  

                  1,459     4,660  

                           

Barfly Ventures, LLC(10)

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—August 31, 2020)

    8,715     8,576     8,715  

     

Options (2 equivalent units)

          397     920  

     

Warrant (1 equivalent unit; Expiration—August 31, 2025; Strike price—$1.00 per unit)

          473     520  

                  9,446     10,155  

                           

BBB Tank Services, LLC

 

Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.66%, Secured Debt (Maturity—April 8, 2021)(9)

    720     700     700  

     

15% Secured Debt (Maturity—April 8, 2021)

    4,000     3,883     3,883  

     

Member Units (800,000 units)

          800     550  

                  5,383     5,133  

                           

Boccella Precast Products LLC

 

Manufacturer of Precast Hollow Core Concrete

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.69%, Secured Debt (Maturity—June 30, 2022)(9)

    16,582     16,426     16,582  

     

Member Units (2,160,000 units)(8)

          2,160     4,860  

                  18,586     21,442  

                           

Boss Industries, LLC

 

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

                       

     

Preferred Member Units (2,242 units)(8)

          2,120     4,740  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions Provider

                       

     

13% Secured Debt (Maturity—July 25, 2021)

    7,500     5,962     5,962  

     

Warrants (82 equivalent shares; Expiration—July 25, 2026; Strike price—$0.01 per share)

          2,132     4,020  

     

13% Secured Debt (Mercury Service Group, LLC) (Maturity—July 25, 2021)

    1,000     993     1,000  

     

Preferred Member Units (Mercury Service Group, LLC) (17,742 units)(8)

          1,000     1,000  

                  10,087     11,982  

                           

Buca C, LLC

 

Casual Restaurant Group

                       

     

LIBOR Plus 9.25% (Floor 1.00%), Current Coupon 10.94%, Secured Debt (Maturity—June 30, 2020)(9)

    20,004     19,904     19,904  

     

Preferred Member Units (6 units; 6% cumulative)(8)(19)

          4,238     4,233  

                  24,142     24,137  

                           

CAI Software LLC

 

Provider of Specialized Enterprise Resource Planning Software

                       

     

12% Secured Debt (Maturity—October 10, 2019)

    4,083     4,063     4,083  

     

Member Units (65,356 units)(8)

          654     3,230  

                  4,717     7,313  

                           

Chandler Signs Holdings, LLC(10)

 

Sign Manufacturer

                       

     

12% Secured Debt (Maturity—July 4, 2021)

    4,500     4,470     4,500  

     

Class A Units (1,500,000 units)

          1,500     2,180  

                  5,970     6,680  

                           

Charlotte Russe, Inc(11)

 

Fast-Fashion Retailer to Young Women

                       

     

8.50% Secured Debt (Maturity—February 2, 2023)

    7,992     7,992     7,912  

     

Common Stock (19,041 shares)

          3,141     3,141  

                  11,133     11,053  

                           

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays Provider

                       

     

Member Units (3,936 units)(8)

          100     1,950  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Congruent Credit Opportunities Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          5,210     480  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          17,869     18,754  

                  23,079     19,234  

                           

Dos Rios Partners(12)(13)

 

Investment Partnership

                       

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

          5,996     7,246  

     

LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.4%)

          1,904     2,182  

                  7,900     9,428  

                           

Dos Rios Stone Products LLC(10)

 

Limestone and Sandstone Dimension Cut Stone Mining Quarries

                       

     

Class A Preferred Units (2,000,000 units)(8)

          2,000     1,350  

                           

East Teak Fine Hardwoods, Inc.

 

Distributor of Hardwood Products

                       

     

Common Stock (6,250 shares)(8)

          480     630  

                           

EIG Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EIG Global Private Debt Fund-A, L.P.) (Fully diluted 11.1%)(8)

          451     403  

                           

Freeport Financial Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.3%)(8)

          5,974     5,554  

     

LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.0%)(8)

          8,558     8,506  

                  14,532     14,060  

                           

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Collection of Healthcare and other Business Receivables

                       

     

8% Secured Debt (Maturity—January 1, 2019)

    12,483     12,483     11,532  

     

Warrants (29,032 equivalent units; Expiration—February 9, 2022; Strike price—$0.01 per unit)

          400      

                  12,883     11,532  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Guerdon Modular Holdings, Inc.

 

Multi-Family and Commercial Modular Construction Company

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.19%, Secured Debt (Maturity—March 1, 2019)(9)

    400     394     394  

     

13% Secured Debt (Maturity—March 1, 2019)

    10,988     10,926     10,926  

     

Preferred Stock (404,998 shares)

          1,140      

     

Common Stock (212,033 shares)

          2,983      

                  15,443     11,320  

                           

Harris Preston Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (HPEP 3, L.P.) (Fully diluted 9.9%)

          1,033     1,033  

                           

Hawk Ridge Systems, LLC(13)

 

Value-Added Reseller of Engineering Design and Manufacturing Solutions

                       

     

10.5% Secured Debt (Maturity—December 2, 2021)

    14,300     14,181     14,300  

     

Preferred Member Units (226 units)(8)

          2,850     6,223  

     

Preferred Member Units (HRS Services, ULC) (226 units)(8)

          150     328  

                  17,181     20,851  

                           

Houston Plating and Coatings, LLC

 

Provider of Plating and Industrial Coating Services

                       

     

8% Unsecured Convertible Debt (Maturity—May 1, 2022)

    3,000     3,000     3,200  

     

Member Units (315,756 units)(8)

          2,179     6,660  

                  5,179     9,860  

                           

I-45 SLF LLC(12)(13)

 

Investment Partnership

                       

     

Member Units (Fully diluted 20.0%; 24.4% profits interest)(8)

          16,200     16,841  

                           

L.F. Manufacturing Holdings, LLC(10)

 

Manufacturer of Fiberglass Products

                       

     

Member Units (2,179,001 units)

          2,019     2,000  

                           

Meisler Operating LLC

 

Provider of Short-term Trailer and Container Rental

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.20%, Secured Debt (Maturity—June 7, 2022)(9)

    18,960     18,779     18,779  

     

Member Units (Milton Meisler Holdings LLC) (48,555 units)

          4,855     5,570  

                  23,634     24,349  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

OnAsset Intelligence, Inc.

 

Provider of Transportation Monitoring / Tracking Products and Services

                       

     

12% PIK Secured Debt (Maturity—June 30, 2021)(19)

    5,247     5,247     5,247  

     

10% PIK Unsecured Debt (Maturity—June 30, 2021)(19)

    49     49     49  

     

Preferred Stock (912 shares)

          1,981      

     

Warrants (5,333 equivalent shares; Expiration—April 18, 2021; Strike price—$0.01 per share)

          1,919      

                  9,196     5,296  

                           

OPI International Ltd.(13)

 

Provider of Man Camp and Industrial Storage Services

                       

     

Common Stock (20,766,317 shares)

          1,371      

                           

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

                       

     

12% Current / 3% PIK Secured Debt (Maturity—March 31, 2019)(19)

    12,617     12,571     12,571  

     

Preferred Stock (1,740,000 shares) (non-voting)

          1,740     3,480  

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)(19)

          3,927     290  

                  18,238     16,341  

                           

Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

12% Secured Debt (Maturity—January 8, 2018)(14)(15)

    30,785     30,281     250  

     

Preferred Member Units (250 units)

          2,500      

                  32,781     250  

                           

Tin Roof Acquisition Company

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—November 13, 2018)

    12,559     12,515     12,515  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)(19)

          3,102     3,102  

                  15,617     15,617  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

UniTek Global Services, Inc.(11)

 

Provider of Outsourced Infrastructure Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.81%, Secured Debt (Maturity—January 13, 2019)(9)

    8,535     8,531     8,535  

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.81% / 1.00% PIK, Current Coupon Plus PIK 10.81%, Secured Debt (Maturity—January 13, 2019)(9)(19)

    138     138     138  

     

15% PIK Unsecured Debt (Maturity—July 13, 2019)(19)

    897     897     897  

     

Preferred Stock (2,596,567 shares; 19% cumulative)(8)(19)

          2,993     2,980  

     

Preferred Stock (4,935,377 shares; 13.5% cumulative)(8)(19)

          7,609     7,560  

     

Common Stock (1,075,992 shares)

              2,680  

                  20,168     22,790  

                           

Universal Wellhead Services Holdings, LLC(10)

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                       

     

Preferred Member Units (UWS Investments, LLC) (716,949 units)

          717     860  

     

Member Units (UWS Investments, LLC) (4,000,000 units)

          4,000     2,030  

                  4,717     2,890  

                           

Valley Healthcare Group, LLC

 

Provider of Durable Medical Equipment

                       

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 14.16%, Secured Debt (Maturity—December 29, 2020)(9)

    11,646     11,571     11,571  

     

Preferred Member Units (Valley Healthcare Holding, LLC) (1,600 units)

          1,600     1,740  

                  13,171     13,311  

                           

Volusion, LLC

 

Provider of Online Software-as-a-Service eCommerce Solutions

                       

     

11.5% Secured Debt (Maturity—January 26, 2020)

    16,734     15,358     15,358  

     

Preferred Member Units (4,876,670 units)

          14,000     14,000  

     

Warrants (1,831,355 equivalent units; Expiration—January 26, 2025; Strike price—$0.01 per unit)

          2,577     1,471  

                  31,935     30,829  

Subtotal Affiliate Investments (15.5% of total investments at fair value)

  $ 382,351   $ 359,460  

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Non-Control/Non-Affiliate Investments(7)

             

                           

AAC Holdings, Inc.(11)(13)

 

Substance Abuse Treatment Service Provider

 

 

                   

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.52%, Secured Debt (Maturity—June 30, 2023)(9)

  $ 14,782   $ 14,489   $ 15,041  

                           

Adams Publishing Group, LLC(10)

 

Local Newspaper Operator

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.30%, Secured Debt (Maturity—November 3, 2020)(9)

    9,894     9,678     9,894  

                           

ADS Tactical, Inc.(10)

 

Value-Added Logistics and Supply Chain Provider to the Defense Industry

                       

     

LIBOR Plus 7.50% (Floor 0.75%), Current Coupon 9.81%, Secured Debt (Maturity—December 31, 2022)(9)

    12,948     12,712     12,778  

                           

Aethon United BR LP(10)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.46%, Secured Debt (Maturity—September 8, 2023)(9)

    3,438     3,390     3,390  

                           

Ahead, LLC(10)

 

IT Infrastructure Value Added Reseller

                       

     

LIBOR Plus 6.50%, Current Coupon 8.81%, Secured Debt (Maturity—November 2, 2020)

    8,434     8,283     8,487  

                           

Allflex Holdings III Inc.(11)

 

Manufacturer of Livestock Identification Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.74%, Secured Debt (Maturity—July 19, 2021)(9)

    13,846     13,785     13,935  

                           

American Scaffold Holdings, Inc.(10)

 

Marine Scaffolding Service Provider

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.80%, Secured Debt (Maturity—March 31, 2022)(9)

    6,938     6,858     6,903  

                           

American Teleconferencing Services, Ltd.(11)

 

Provider of Audio Conferencing and Video Collaboration Solutions

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.29%, Secured Debt (Maturity—December 8, 2021)(9)

    15,592     14,964     15,588  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Anchor Hocking, LLC(11)

 

Household Products Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 11.02%, Secured Debt (Maturity—June 4, 2020)(9)

    2,248     2,209     2,226  

     

Member Units (440,620 units)

          4,928     3,718  

                  7,137     5,944  

                           

Apex Linen Service, Inc.

 

Industrial Launderers

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.66%, Secured Debt (Maturity—October 30, 2022)(9)

    2,400     2,400     2,400  

     

16% Secured Debt (Maturity—October 30, 2022)

    14,416     14,349     14,349  

                  16,749     16,749  

                           

Arcus Hunting LLC.(10)

 

Manufacturer of Bowhunting and Archery Products and Accessories

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—November 13, 2019)(9)

    14,175     14,091     14,175  

                           

Arise Holdings, Inc.(10)

 

Tech-Enabled Business Process Outsourcing

                       

     

Preferred Stock (1,000,000 shares)

          1,000     1,000  

                           

ATI Investment Sub, Inc.(11)

 

Manufacturer of Solar Tracking Systems

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.13%, Secured Debt (Maturity—June 22, 2021)(9)

    7,114     6,974     7,106  

                           

ATX Networks Corp.(11)(13)(21)

 

Provider of Radio Frequency Management Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.31% / 1.00% PIK, Current Coupon Plus PIK 8.31%, Secured Debt (Maturity—June 11, 2021)(9)(19)

    9,515     9,414     8,849  

                           

Berry Aviation, Inc.(10)

 

Airline Charter Service Operator

                       

     

Common Stock (553 shares)

          400     1,470  

                           

BigName Commerce, LLC(10)

 

Provider of Envelopes and Complimentary Stationery Products

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.94%, Secured Debt (Maturity—May 11, 2022)(9)

    2,472     2,446     2,446  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Binswanger Enterprises, LLC(10)

 

Glass Repair and Installation Service Provider

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.31%, Secured Debt (Maturity—March 9, 2022)(9)

    15,267     15,016     15,148  

     

Member Units (1,050,000 units)

          1,050     1,000  

                  16,066     16,148  

                           

Bluestem Brands, Inc.(11)

 

Multi-Channel Retailer of General Merchandise

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.38%, Secured Debt (Maturity—November 6, 2020)(9)

    11,939     11,781     8,417  

                           

Brainworks Software, LLC(10)

 

Advertising Sales and Newspaper Circulation Software

                       

     

Prime Plus 9.25% (Floor 3.25%), Current Coupon 14.00%, Secured Debt (Maturity—July 22, 2019)(9)

    6,733     6,709     6,577  

                           

Brightwood Capital Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 1.6%)(8)

          12,000     10,463  

     

LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.8%)(8)

          1,000     1,063  

                  13,000     11,526  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

 

Construction Services Provider

                       

     

10.375% Secured Debt (Maturity—September 1, 2023)

    3,000     2,988     3,195  

                           

Cadence Aerospace LLC(10)

 

Aerostructure Manufacturing

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.33%, Secured Debt (Maturity—November 14, 2023)(9)

    14,963     14,820     14,820  

                           

California Pizza Kitchen, Inc.(11)

 

Casual Restaurant Group

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.88%, Secured Debt (Maturity—August 23, 2022)(9)

    12,837     12,799     12,606  

                           

CapFusion, LLC(13)

 

Non-Bank Lender to Small Businesses

                       

     

13% Secured Debt (Maturity—March 25, 2021)(14)

    6,266     5,206     1,432  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

CDHA Management, LLC(10)

 

Dental Services

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.76%, Secured Debt (Maturity—December 5, 2021)(9)

    5,062     5,006     5,062  

                           

Central Security Group, Inc.(11)

 

Security Alarm Monitoring Service Provider

                       

     

LIBOR Plus 5.63% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—October 6, 2021)(9)

    7,461     7,444     7,480  

                           

Cenveo Corporation(11)

 

Provider of Commercial Printing, Envelopes, Labels, and Printed Office Products

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.79%, Secured Debt (Maturity—November 2, 2018)(9)

    6,089     6,038     6,119  

     

6% Secured Debt (Maturity—August 1, 2019)

    19,130     17,126     8,609  

                  23,164     14,728  

                           

Chloe Ox Parent, LLC(11)

 

In-Home Health Risk Assessment Provider

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 7.30%, Secured Debt (Maturity—December 23, 2024)(9)

    7,400     7,328     7,492  

                           

Clarius BIGS, LLC(10)

 

Prints & Advertising Film Financing

                       

     

15% PIK Secured Debt (Maturity—January 5, 2015)(14)(17)

    2,924     2,924     82  

                           

Clickbooth.com, LLC(10)

 

Provider of Digital Advertising Performance Marketing Solutions

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.19%, Secured Debt (Maturity—December 5, 2022)(9)

    2,981     2,925     2,925  

                           

Community Care Health Network, LLC(11)

 

In-Home Health Risk Assessment Provider

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 6.74%, Secured Debt (Maturity—February 16, 2025)(9)

    3,188     3,180     3,215  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Construction Supply Investments, LLC(10)

 

Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.88%, Secured Debt (Maturity—June 30, 2023)(9)

    6,938     6,905     6,920  

     

Member Units (28,000 units)

          3,723     3,723  

                  10,628     10,643  

                           

CTVSH, PLLC(10)

 

Emergency Care and Specialty Service Animal Hospital

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.01%, Secured Debt (Maturity—August 3, 2022)(9)

    11,700     11,595     11,595  

                           

Darr Equipment LP(10)

 

Heavy Equipment Dealer

                       

     

11.5% Current / 1% PIK Secured Debt (Maturity—June 22, 2023)(19)

    7,247     7,247     7,247  

     

Warrants (915,734 equivalent units; Expiration—December 23, 2023; Strike price—$1.50 per unit)

          474     10  

                  7,721     7,257  

                           

Digital River, Inc.(11)

 

Provider of Outsourced e-Commerce Solutions and Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.61%, Secured Debt (Maturity—February 12, 2021)(9)

    10,146     10,052     10,146  

                           

Drilling Info Holdings, Inc.

 

Information Services for the Oil and Gas Industry

                       

     

Common Stock (3,788,865 shares)(8)

              9,010  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

EnCap Energy Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

          3,487     1,623  

     

LP Interests (EnCap Energy Capital Fund VIII Co-Investors, L.P.) (Fully diluted 0.4%)(8)

          2,072     1,122  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

          4,317     3,732  

     

LP Interests (EnCap Energy Capital Fund X, L.P.) (Fully diluted 0.1%)(8)

          6,870     6,933  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 0.8%)(8)

          5,864     5,015  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.2%)(8)

          3,015     2,716  

                  25,625     21,141  

                           

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)(13)

 

Technology-based Performance Support Solutions

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 10.13%, Secured Debt (Maturity—April 28, 2022)(9)

    6,999     6,883     6,264  

                           

Extreme Reach, Inc.(11)

 

Integrated TV and Video Advertising Platform

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.13%, Secured Debt (Maturity—February 7, 2020)(9)

    14,217     14,205     14,199  

                           

Felix Investments Holdings II(10)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.30%, Secured Debt (Maturity—August 9, 2022)(9)

    3,333     3,270     3,270  

                           

Flavors Holdings Inc.(11)

 

Global Provider of Flavoring and Sweetening Products

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 8.05%, Secured Debt (Maturity—April 3, 2020)(9)

    12,881     12,470     11,657  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

GI KBS Merger Sub LLC(11)

 

Outsourced Janitorial Services to Retail/Grocery Customers

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.98%, Secured Debt (Maturity—October 29, 2021)(9)

    9,270     9,200     9,351  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.27%, Secured Debt (Maturity—April 29, 2022)(9)

    3,915     3,775     3,974  

                  12,975     13,325  

                           

GoWireless Holdings, Inc.(11)

 

Provider of Wireless Telecommunications Carrier Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.38%, Secured Debt (Maturity—December 22, 2024)(9)

    17,775     17,601     17,753  

                           

Great Circle Family Foods, LLC(10)

 

Quick Service Restaurant Franchise

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.69%, Secured Debt (Maturity—October 28, 2019)(9)

    7,119     7,091     7,119  

                           

Grupo Hima San Pablo, Inc.(11)

 

Tertiary Care Hospitals

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.77%, Secured Debt (Maturity—January 31, 2018)(9)(17)

    4,750     4,750     3,543  

     

13.75% Secured Debt (Maturity—July 31, 2018)

    2,055     2,040     226  

                  6,790     3,769  

                           

Guitar Center, Inc.(11)

 

Musical Instruments Retailer

                       

     

6.5% Secured Debt (Maturity—April 15, 2019)

    16,625     16,118     16,558  

                           

Hojeij Branded Foods, LLC(10)

 

Multi-Airport, Multi- Concept Restaurant Operator

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.89%, Secured Debt (Maturity—July 20, 2022)(9)

    12,107     11,999     12,107  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Hoover Group, Inc.(10)(13)

 

Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets

                       

     

LIBOR Plus 6.00%, Current Coupon 7.75%, Secured Debt (Maturity—January 28, 2020)

    7,500     6,744     6,703  

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.15%, Secured Debt (Maturity—January 28, 2021)(9)

    8,438     7,995     7,805  

                  14,739     14,508  

                           

Hostway Corporation(11)

 

Managed Services and Hosting Provider

                       

     

LIBOR Plus 5.25% (Floor 1.25%), Current Coupon 6.94% / 0.50% PIK, Current Coupon Plus PIK 7.44%, Secured Debt (Maturity—December 13, 2019)(9)(19)

    30,610     29,860     29,769  

                           

Houghton Mifflin Harcourt Publishers Inc.(11)(13)

 

Provider of Educational Print and Digital Services

                       

     

LIBOR Plus 3.00% (Floor 1.00%), Current Coupon 4.88%, Secured Debt (Maturity—May 28, 2021)(9)

    15,224     14,279     13,949  

                           

Hunter Defense Technologies, Inc.(10)

 

Provider of Military and Commercial Shelters and Systems

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.30%, Secured Debt (Maturity—March 29, 2023)(9)

    41,022     40,099     40,099  

                           

Hydrofarm Holdings LLC(10)

 

Wholesaler of Horticultural Products

                       

     

LIBOR Plus 7.00%, Current Coupon 8.73%, Secured Debt (Maturity—May 12, 2022)

    6,623     6,510     6,236  

                           

iEnergizer Limited(11)(13)(21)

 

Provider of Business Outsourcing Solutions

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.88%, Secured Debt (Maturity—May 1, 2019)(9)

    11,758     11,571     11,773  

                           

Implus Footcare, LLC(10)

 

Provider of Footwear and Related Accessories

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.74%, Secured Debt (Maturity—April 30, 2021)(9)

    19,270     19,029     19,156  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Industrial Services Acquisition, LLC(10)

 

Industrial Cleaning Services

                       

     

6% Current / 7% PIK Unsecured Debt (Maturity—December 17, 2022)(19)

    4,633     4,561     4,414  

     

Preferred Member Units (Industrial Services Investments, LLC) (144 units; 10% cumulative)(8)(19)

          88     86  

     

Member Units (Industrial Services Investments, LLC) (900 units)

          900     300  

                  5,549     4,800  

                           

Inn of the Mountain Gods Resort and Casino(11)

 

Hotel & Casino Owner & Operator

                       

     

9.25% Secured Debt (Maturity—November 30, 2020)

    6,249     6,013     5,687  

                           

iPayment, Inc.(11)

 

Provider of Merchant Acquisition

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.62%, Secured Debt (Maturity—April 11, 2023)(9)

    11,970     11,865     12,120  

                           

irth Solutions, LLC

 

Provider of Damage Prevention Information Technology Services

                       

     

Member Units (27,893 units)

          1,441     1,970  

                           

Jacent Strategic Merchandising, LLC(10)

 

General Merchandise Distribution

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.53%, Secured Debt (Maturity—September 16, 2020)(9)

    10,982     10,931     10,982  

                           

Jackmont Hospitality, Inc.(10)

 

Franchisee of Casual Dining Restaurants

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.40%, Secured Debt (Maturity—May 26, 2021)(9)

    4,275     4,265     4,275  

                           

Jacuzzi Brands LLC(11)

 

Manufacturer of Bath and Spa Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.30%, Secured Debt (Maturity—June 28, 2023)(9)

    3,925     3,854     3,964  

                           

Joerns Healthcare, LLC(11)

 

Manufacturer and Distributor of Health Care Equipment & Supplies

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.98% Secured Debt (Maturity—May 9, 2020)(9)

    13,387     13,307     12,439  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Keypoint Government Solutions, Inc.(10)

 

Provider of Pre-Employment Screening Services

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.73%, Secured Debt (Maturity—April 18, 2024)(9)

    11,875     11,769     11,875  

                           

Larchmont Resources, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.53%, PIK Secured Debt (Maturity—August 7, 2020)(9)(19)

    2,504     2,504     2,479  

     

Member Units (Larchmont Intermediate Holdco, LLC) (2,828 units)

          353     919  

                  2,857     3,398  

                           

LKCM Headwater Investments I, L.P.(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 2.3%)

          2,069     4,234  

                           

Logix Acquisition Company, LLC(10)

 

Competitive Local Exchange Carrier

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.60%, Secured Debt (Maturity—December 22, 2024)(9)

    9,704     9,500     9,753  

                           

Looking Glass Investments, LLC(12)(13)

 

Specialty Consumer Finance

                       

     

Member Units (2.5 units)

          125     57  

     

Member Units (LGI Predictive Analytics LLC) (190,712 units)

          89     72  

                  214     129  

                           

LSF9 Atlantis Holdings, LLC(11)

 

Provider of Wireless Telecommunications Carrier Services

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.69%, Secured Debt (Maturity—May 1, 2023)(9)

    9,899     9,872     9,879  

                           

Lulu's Fashion Lounge, LLC(10)

 

Fast Fashion E-Commerce Retailer

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.88%, Secured Debt (Maturity—August 28, 2022)(9)

    13,125     12,753     13,519  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Messenger, LLC(10)

 

Supplier of Specialty Stationery and Related Products to the Funeral Industry

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.36%, Secured Debt (Maturity—September 9, 2020)(9)

    17,283     17,208     17,283  

                           

Minute Key, Inc.

 

Operator of Automated Key Duplication Kiosks

                       

     

Warrants (1,437,409 equivalent shares; Expiration—May 20, 2025; Strike price—$0.01 per share)

          280     1,170  

                           

NBG Acquisition Inc(11)

 

Wholesaler of Home Décor Products

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.95%, Secured Debt (Maturity—April 26, 2024)(9)

    4,375     4,311     4,391  

                           

New Media Holdings II LLC(11)(13)

 

Local Newspaper Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.13%, Secured Debt (Maturity—July 14, 2022)(9)

    19,965     19,594     20,096  

                           

NNE Partners, LLC(10)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 8.00%, Current Coupon 10.02%, Secured Debt (Maturity—March 2, 2022)

    15,458     15,326     15,326  

                           

North American Lifting Holdings, Inc.(11)

 

Crane Service Provider

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.80%, Secured Debt (Maturity—November 27, 2020)(9)

    7,725     6,956     7,308  

                           

Novetta Solutions, LLC(11)

 

Provider of Advanced Analytics Solutions for Defense Agencies

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.88%, Secured Debt (Maturity—October 17, 2022)(9)

    15,559     15,105     15,144  

                           

NTM Acquisition Corp.(11)

 

Provider of B2B Travel Information Content

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.55%, Secured Debt (Maturity—June 7, 2022)(9)

    6,104     6,050     6,073  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Ospemifene Royalty Sub LLC (QuatRx)(10)

 

Estrogen-Deficiency Drug Manufacturer and Distributor

                       

     

11.5% Secured Debt (Maturity—November 15, 2026)(14)

    5,058     5,058     1,020  

                           

Paris Presents Incorporated(11)

 

Branded Cosmetic and Bath Accessories

                       

     

LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 10.63%, Secured Debt (Maturity—December 31, 2021)(9)

    4,500     4,472     4,556  

                           

Permian Holdco 2, Inc.(11)

 

Storage Tank Manufacturer

                       

     

14% PIK Unsecured Debt (Maturity—October 15, 2021)(19)

    357     357     357  

     

Preferred Stock (Permian Holdco 1, Inc.) (154,558 units)

          799     1,010  

     

Common Stock (Permian Holdco 1, Inc.) (154,558 units)

              10  

                  1,156     1,377  

                           

Pernix Therapeutics Holdings, Inc.(10)

 

Pharmaceutical Royalty

                       

     

12% Secured Debt (Maturity—August 1, 2020)

    3,031     3,031     1,958  

                           

Pier 1 Imports, Inc.(11)(13)

 

Decorative Home Furnishings Retailer

                       

     

LIBOR Plus 3.50% (Floor 1.00%), Current Coupon 5.95%, Secured Debt (Maturity—April 30, 2021)(9)

    7,513     7,137     7,156  

                           

Point.360(10)

 

Fully Integrated Provider of Digital Media Services

                       

     

Warrants (65,463 equivalent shares; Expiration—July 7, 2020; Strike price—$0.75 per share)

          69      

     

Common Stock (163,658 shares)

          273     10  

                  342     10  

                           

PPC/SHIFT LLC(10)

 

Provider of Digital Solutions to Automotive Industry

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.84%, Secured Debt (Maturity—December 22, 2021)(9)

    6,781     6,667     6,781  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Prowler Acquisition Corp.(11)

 

Specialty Distributor to the Energy Sector

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.34%, Secured Debt (Maturity—January 28, 2020)(9)

    16,872     15,432     16,493  

                           

PT Network, LLC(10)

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.21%, Secured Debt (Maturity—November 30, 2021)(9)

    8,839     8,839     8,839  

                           

QBS Parent, Inc.(11)

 

Provider of Software and Services to the Oil & Gas Industry

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 6.52%, Secured Debt (Maturity—August 7, 2021)(9)

    14,272     14,124     14,201  

                           

Radiology Partners, Inc.(10)

 

Radiology Practice Providing Scan Interpretations

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.59%, Secured Debt (Maturity—December 4, 2023)(9)

    9,731     9,635     9,749  

                           

Research Now Group, Inc. and Survey Sampling International, LLC(11)

 

Provider of Outsourced Online Surveying

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.86%, Secured Debt (Maturity—December 20, 2024)(9)

    13,500     12,845     13,437  

                           

Resolute Industrial, LLC(10)

 

HVAC Equipment Rental and Remanufacturing

                       

     

LIBOR Plus 7.62% (Floor 1.00%), Current Coupon 9.31%, Secured Debt (Maturity—July 26, 2022)(9)(25)

    17,088     16,785     16,785  

     

Member Units (601 units)

          750     750  

                  17,535     17,535  

                           

RGL Reservoir Operations Inc.(11)(13)(21)

 

Oil & Gas Equipment and Services

                       

     

1% Current / 9% PIK Secured Debt (Maturity—December 21, 2024)(19)

    721     407     400  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

RM Bidder, LLC(10)

 

Scripted and Unscripted TV and Digital Programming Provider

                       

     

Warrants (327,532 equivalent units; Expiration—October 20, 2025; Strike price—$14.28 per unit)

          425      

     

Member Units (2,779 units)

          46     16  

                  471     16  

                           

SAFETY Investment Holdings, LLC

 

Provider of Intelligent Driver Record Monitoring Software and Services

                       

     

Member Units (2,000,000 units)

          2,000     1,670  

                           

Salient Partners L.P.(11)

 

Provider of Asset Management Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.32%, Secured Debt (Maturity—June 9, 2021)(9)

    12,002     11,770     11,852  

                           

SiTV, LLC(11)

 

Cable Networks Operator

                       

     

10.375% Secured Debt (Maturity—July 1, 2019)

    10,429     7,051     6,336  

                           

SMART Modular Technologies, Inc.(10)(13)

 

Provider of Specialty Memory Solutions

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.66%, Secured Debt (Maturity—August 9, 2022)(9)

    14,250     13,993     14,179  

                           

Sorenson Communications, Inc.(11)

 

Manufacturer of Communication Products for Hearing Impaired

                       

     

LIBOR Plus 5.75% (Floor 2.25%), Current Coupon 8.06%, Secured Debt (Maturity—April 30, 2020)(9)

    13,199     13,142     13,257  

                           

Staples Canada ULC(10)(13)(21)

 

Office Supplies Retailer

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.68%, Secured Debt (Maturity—September 12, 2023)(9)(22)

    20,000     19,630     18,487  

                           

Strike, LLC(11)

 

Pipeline Construction and Maintenance Services

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.45%, Secured Debt (Maturity—November 30, 2022)(9)

    9,500     9,262     9,642  

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.02%, Secured Debt (Maturity—May 30, 2019)(9)

    409     392     411  

                  9,654     10,053  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Synagro Infrastructure Company, Inc(11)

 

Waste Management Services

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.80%, Secured Debt (Maturity—August 22, 2020)(9)

    11,662     11,259     11,021  

                           

TE Holdings, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

Member Units (97,048 units)

          970     121  

                           

Tectonic Holdings, LLC

 

Financial Services Organization

                       

     

Member Units (200,000 units)(8)

          2,000     2,320  

                           

TeleGuam Holdings, LLC(11)

 

Cable and Telecom Services Provider

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.38%, Secured Debt (Maturity—April 12, 2024)(9)

    7,750     7,606     7,808  

                           

TGP Holdings III LLC(11)

 

Outdoor Cooking & Accessories

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 7.30%, Secured Debt (Maturity—September 25, 2024)(9)

    6,881     6,806     6,935  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.80%, Secured Debt (Maturity—September 25, 2025)(9)

    5,000     4,928     5,075  

                  11,734     12,010  

                           

The Container Store, Inc.(11)(13)

 

Operator of Stores Offering Storage and Organizational Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.31%, Secured Debt (Maturity—August 18, 2021)(9)

    6,831     6,650     6,840  

                           

The Pasha Group(11)

 

Diversified Logistics and Transportation Provided

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.37%, Secured Debt (Maturity—January 26, 2023)(9)

    12,109     11,756     12,230  

                           

TMC Merger Sub Corp.(11)

 

Refractory & Maintenance Services Provider

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.19%, Secured Debt (Maturity—October 31, 2022)(9)(26)

    17,545     17,415     17,676  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

TOMS Shoes, LLC(11)

 

Global Designer, Distributor, and Retailer of Casual Footwear

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.48%, Secured Debt (Maturity—October 30, 2020)(9)

    4,850     4,606     2,861  

                           

Turning Point Brands, Inc.(10)(13)

 

Marketer/Distributor of Tobacco Products

                       

     

LIBOR Plus 7.00%, Current Coupon 8.70%, Secured Debt (Maturity—March 7, 2024)

    8,500     8,415     8,670  

                           

TVG-I-E CMN ACQUISITION, LLC(10)

 

Organic Lead Generation for Online Postsecondary Schools

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.88%, Secured Debt (Maturity—November 3, 2021)(9)

    11,099     10,910     11,099  

                           

U.S. TelePacific Corp.(11)

 

Provider of Communications and Managed Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 7.30%, Secured Debt (Maturity—May 2, 2023)(9)

    20,651     20,463     20,104  

                           

US Joiner Holding Company(11)

 

Marine Interior Design and Installation

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.88%, Secured Debt (Maturity—April 16, 2020)(9)

    13,430     13,341     13,363  

                           

VIP Cinema Holdings, Inc.(11)

 

Supplier of Luxury Seating to the Cinema Industry

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.31%, Secured Debt (Maturity—March 1, 2023)(9)

    7,600     7,567     7,688  

                           

Vistar Media, Inc.(10)

 

Operator of Digital Out-of-Home Advertising Platform

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.31%, Secured Debt (Maturity—February 16, 2022)(9)

    3,319     3,060     3,114  

     

Warrants (70,207 equivalent shares; Expiration—February 17, 2027; Strike price—$0.01 per share)

          331     600  

                  3,391     3,714  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Wellnext, LLC(10)

 

Manufacturer of Supplements and Vitamins

                       

     

LIBOR Plus 10.10% (Floor 1.00%), Current Coupon 11.98%, Secured Debt (Maturity—July 21, 2022)(9)(23)

    9,930     9,861     10,228  

                           

Wireless Vision Holdings, LLC(10)

 

Provider of Wireless Telecommunications Carrier Services

                       

     

LIBOR Plus 8.91% (Floor 1.00%), Current Coupon 10.80%, Secured Debt (Maturity—September 29, 2022)(9)(24)

    12,899     12,634     12,634  

                           

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

                       

     

Preferred Stock (186,777 shares)

          154     260  

     

Warrants (952,500 equivalent shares; Expiration—June 15, 2022; Strike price—$0.001 per share)

          1,071     1,190  

                  1,225     1,450  

Subtotal Non-Control/Non-Affiliate Investments (47.9% of total investments at fair value)

  $ 1,126,103   $ 1,107,777  

Total Portfolio Investments, March 31, 2018

  $ 2,157,550   $ 2,314,034  

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C for a summary of geographic location of portfolio companies.

(4)
Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

(9)
Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at March 31, 2018. As noted in this schedule, 69% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.25%, with a weighted-average LIBOR floor of approximately 1.01%.

(10)
Private Loan portfolio investment. See Note B for a description of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B for a description of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B for a description of Other Portfolio investments.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2018

(dollars in thousands)

(unaudited)

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C for further discussion.

(19)
PIK interest income and cumulative dividend income represent income not paid currently in cash.

(20)
All portfolio company headquarters are based in the United States, unless otherwise noted.

(21)
Portfolio company headquarters are located outside of the United States.

(22)
In connection with the Company's debt investment in Staples Canada ULC to help mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company entered into a forward foreign currency contract with Cadence Bank to lend $24.2 million Canadian Dollars and receive $20.0 million U.S. Dollars with a settlement date of September 12, 2018. The unrealized appreciation on the forward foreign currency contract is $1.1 million as of March 31, 2018. This unrealized appreciation is offset by the foreign currency translation depreciation on the investment.

(23)
The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(24)
The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 8.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(25)
As part of the credit agreement with the portfolio company, the Company is entitled to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche receives priority over the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. The rate the Company receives per the Credit Agreement is the same as the rate reflected in the Consolidated Schedule of Investments above.

(26)
The Company has entered into an intercreditor agreement that entitles the Company to the "first out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a lower interest rate than the contractual stated interest rate of LIBOR plus 6.64% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such lower rate.

(27)
All Company's portfolio investments are generally subject to restrictions on resale as "restricted securities", unless otherwise noted.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Control Investments(5)

 

 

 

 

                   

                           

Access Media Holdings, LLC(10)

 

Private Cable Operator

                       

     

5% Current / 5% PIK Secured Debt (Maturity—July 22, 2020)(19)

  $ 23,828   $ 23,828   $ 17,150  

     

Preferred Member Units (8,248,500 units)

          8,142      

     

Member Units (45 units)

          1      

                  31,971     17,150  

                           

ASC Interests, LLC

 

Recreational and Educational Shooting Facility

                       

     

11% Secured Debt (Maturity—July 31, 2018)

    1,800     1,795     1,795  

     

Member Units (1,500 units)

          1,500     1,530  

                  3,295     3,325  

                           

ATS Workholding, LLC(10)

 

Manufacturer of Machine Cutting Tools and Accessories

                       

     

5% Secured Debt (Maturity—November 16, 2021)

    3,726     3,249     3,249  

     

Preferred Member Units (3,725,862 units)

          3,726     3,726  

                  6,975     6,975  

                           

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

                       

     

12% Secured Debt (Maturity—December 28, 2017)(17)

    11,596     11,596     11,596  

     

Common Stock (57,508 shares)

          6,350     9,370  

                  17,946     20,966  

                           

Café Brazil, LLC

 

Casual Restaurant Group

                       

     

Member Units (1,233 units)(8)

          1,742     4,900  

                           

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

                       

     

Member Units (416 units)(8)

          1,300     89,560  

                           

Charps, LLC

 

Pipeline Maintenance and Construction

                       

     

12% Secured Debt (Maturity—February 3, 2022)

    18,400     18,225     18,225  

     

Preferred Member Units (1,600 units)

          400     650  

                  18,625     18,875  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Clad-Rex Steel, LLC

 

Specialty Manufacturer of Vinyl-Clad Metal

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.86%, Secured Debt (Maturity—December 20, 2021)(9)

    13,280     13,168     13,280  

     

Member Units (717 units)(8)

          7,280     9,500  

     

10% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity—December 20, 2036)

    1,183     1,171     1,183  

     

Member Units (Clad-Rex Steel RE Investor, LLC) (800 units)

          210     280  

                  21,829     24,243  

                           

CMS Minerals Investments

 

Oil & Gas Exploration & Production

                       

     

Member Units (CMS Minerals II, LLC) (100 units)(8)

          3,440     2,392  

                           

Copper Trail Energy Fund I, LP(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 30.1%)

          2,500     2,500  
                             

Datacom, LLC

 

Technology and Telecommunications Provider

                       

     

8% Secured Debt (Maturity—May 30, 2018)

    1,575     1,575     1,575  

     

5.25% Current / 5.25% PIK Secured Debt (Maturity—May 30, 2019)(19)

    12,349     12,311     11,110  

     

Class A Preferred Member Units

          1,181     730  

     

Class B Preferred Member Units (6,453 units)

          6,030      

                  21,097     13,415  

                           

Gamber-Johnson Holdings, LLC

 

Manufacturer of Ruggedized Computer Mounting Systems

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.36%, Secured Debt (Maturity—June 24, 2021)(9)

    23,400     23,213     23,400  

     

Member Units (8,619 units)(8)

          14,844     23,370  

                  38,057     46,770  

                           

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.34%, Secured Debt (Maturity—March 31, 2020)(9)

    5,483     5,443     5,443  

     

Member Units (1,200 units)

          1,200     1,940  

                  6,643     7,383  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

GRT Rubber Technologies LLC

 

Manufacturer of Engineered Rubber Products

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity—December 19, 2019)(9)

    11,603     11,550     11,603  

     

Member Units (5,879 units)(8)

          13,065     21,970  

                  24,615     33,573  

                           

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

                       

     

Member Units (438 units)(8)

          2,980     10,060  

                           

Gulf Publishing Holdings, LLC

 

Energy Industry Focused Media and Publishing

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.86%, Secured Debt (Maturity—September 30, 2020)(9)

    80     80     80  

     

12.5% Secured Debt (Maturity—April 29, 2021)

    12,800     12,703     12,703  

     

Member Units (3,681 units)

          3,681     4,840  

                  16,464     17,623  

                           

Harborside Holdings, LLC

 

Real Estate Holding Company

                       

     

Member units (100 units)

          6,206     9,400  

                           

Harris Preston Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (2717 MH, L.P.) (Fully diluted 49.3%)

          536     536  

                           

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

                       

     

Common Stock (107,456 shares)

          718     3,580  

                           

HW Temps LLC

 

Temporary Staffing Solutions

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.36%, Secured Debt (Maturity July 2, 2020)(9)

    9,976     9,918     9,918  

     

Preferred Member Units (3,200 units)

          3,942     3,940  

                  13,860     13,858  

                           

Hydratec, Inc.

 

Designer and Installer of Micro-Irrigation Systems

                       

     

Common Stock (7,095 shares)(8)

          7,095     15,000  

                           

IDX Broker, LLC

 

Provider of Marketing and CRM Tools for the Real Estate Industry

                       

     

11.5% Secured Debt (Maturity—November 15, 2020)

    15,250     15,116     15,250  

     

Preferred Member Units (5,607 units)(8)

          5,952     11,660  

                  21,068     26,910  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

                       

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 11.00%, Secured Debt (Maturity—November 14, 2019)(9)

    3,955     3,917     3,955  

     

Member Units (627 units)(8)

          811     5,100  

                  4,728     9,055  

                           

KBK Industries, LLC

 

Manufacturer of Specialty Oilfield and Industrial Products

                       

     

10% Secured Debt (Maturity—September 28, 2020)

    375     372     375  

     

12.5% Secured Debt (Maturity—September 28, 2020)

    5,900     5,867     5,900  

     

Member Units (325 units)(8)

          783     4,420  

                  7,022     10,695  

                           

Lamb Ventures, LLC

 

Aftermarket Automotive Services Chain

                       

     

11% Secured Debt (Maturity—July 1, 2022)

    9,942     9,890     9,942  

     

Preferred Equity (non-voting)

          400     400  

     

Member Units (742 units)(8)

          5,273     6,790  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity—March 31, 2027)

    432     428     432  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     520  

                  16,616     18,084  

                           

Marine Shelters Holdings, LLC

 

Fabricator of Marine and Industrial Shelters

                       

     

12% PIK Secured Debt (Maturity—December 28, 2017)(14)

    3,131     3,078      

     

Preferred Member Units (3,810 units)

          5,352      

                  8,430      

                           

Market Force Information, LLC

 

Provider of Customer Experience Management Services

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.48%, Secured Debt (Maturity—July 28, 2022)(9)

    23,360     23,143     23,143  

     

Member Units (657,113 units)

          14,700     14,700  

                  37,843     37,843  

                           

MH Corbin Holding LLC

 

Manufacturer and Distributor of Traffic Safety Products

                       

     

13% Secured Debt (Maturity—August 31, 2020)

    12,600     12,526     12,526  

     

Preferred Member Units (4,000 shares)

          6,000     6,000  

                  18,526     18,526  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

                       

     

10% Secured Debt (Maturity—January 15, 2020)

    1,398     1,390     1,390  

     

12% Secured Debt (Maturity—January 15, 2020)

    3,900     3,863     3,863  

     

Member Units (5,714 units)

          2,405     1,575  

     

9.5% Secured Debt (Mid-Columbia Real Estate, LLC) (Maturity—May 13, 2025)

    791     791     791  

     

Member Units (Mid-Columbia Real Estate, LLC) (500 units)(8)

          790     1,290  

                  9,239     8,909  

                           

MSC Adviser I, LLC(16)

 

Third Party Investment Advisory Services

                       

     

Member Units (Fully diluted 100.0%)(8)

              41,768  

                           

Mystic Logistics Holdings, LLC

 

Logistics and Distribution Services Provider for Large Volume Mailers

                       

     

12% Secured Debt (Maturity—August 15, 2019)

    7,768     7,696     7,696  

     

Common Stock (5,873 shares)

          2,720     6,820  

                  10,416     14,516  

                           

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

                       

     

LIBOR Plus 8.50%, Current Coupon 9.98%, Secured Debt (Maturity—May 31, 2019)

    11,475     11,439     11,475  

     

Member Units (2,955 units)(8)

          2,975     11,670  

                  14,414     23,145  

                           

NRI Clinical Research, LLC

 

Clinical Research Service Provider

                       

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity—January 15, 2018)(9)

    400     400     400  

     

14% Secured Debt (Maturity—January 15, 2018)

    3,865     3,865     3,865  

     

Warrants (251,723 equivalent units; Expiration—September 8, 2021; Strike price—$0.01 per unit)

          252     500  

     

Member Units (1,454,167 units)

          765     2,500  

                  5,282     7,265  

                           

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

                       

     

12% Secured Debt (Maturity—March 20, 2023)

    6,376     6,376     6,376  

     

Member Units (65,208 units)(8)

          3,717     3,250  

                  10,093     9,626  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

NuStep, LLC

 

Designer, Manufacturer and Distributor of Fitness Equipment

                       

     

12% Secured Debt (Maturity—January 31, 2022)

    20,600     20,420     20,420  

     

Preferred Member Units (406 units)

          10,200     10,200  

                  30,620     30,620  

                           

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

                       

     

Common Stock (1,500 shares)(8)

          1,080     14,110  

                           

Pegasus Research Group, LLC

 

Provider of Telemarketing and Data Services

                       

     

Member Units (460 units)(8)

          1,290     10,310  

                           

PPL RVs, Inc.

 

Recreational Vehicle Dealer

                       

     

LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 8.34%, Secured Debt (Maturity—November 15, 2021)(9)

    16,100     15,972     16,100  

     

Common Stock (1,962 shares)(8)

          2,150     12,440  

                  18,122     28,540  

                           

Principle Environmental, LLC (d/b/a TruHorizon Environmental Solutions)

 

Noise Abatement Service Provider

                       

     

13% Secured Debt (Maturity—April 30, 2020)

    7,477     7,347     7,477  

     

Preferred Member Units (19,631 units)

          4,600     11,490  

     

Warrants (1,018 equivalent units; Expiration—January 31, 2021; Strike price—$0.01 per unit)

          1,200     650  

                  13,147     19,617  

                           

Quality Lease Service, LLC

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

Zero Coupon Secured Debt (Maturity—June 8, 2020)

    7,341     7,341     6,950  

     

Member Units (1,000 units)

          2,868     4,938  

                  10,209     11,888  

                           

River Aggregates, LLC

 

Processor of Construction Aggregates

                       

     

Zero Coupon Secured Debt (Maturity—June 30, 2018)

    750     707     707  

     

Member Units (1,150 units)

          1,150     4,610  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     2,559  

                  2,226     7,876  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

SoftTouch Medical Holdings LLC

 

Provider of In-Home Pediatric Durable Medical Equipment

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity—October 31, 2019)(9)

    7,140     7,110     7,140  

     

Member Units (4,450 units)(8)

          4,930     10,089  

                  12,040     17,229  

                           

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                       

     

9% Secured Debt (Maturity—October 2, 2018)

    2,924     2,923     2,410  

     

Series A Preferred Units (2,500 units)

          2,500      

     

Warrants (1,424 equivalent units; Expiration—July 1, 2024; Strike price—$0.01 per unit)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100 units)(8)

          2,300     2,389  

                  8,819     4,799  

                           

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

                       

     

9% Secured Debt (Maturity—January 1, 2019)

    348     348     348  

     

Member Units (1,867 units)(8)

          3,579     3,880  

                  3,927     4,228  

                           

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

                       

     

13% Secured Debt (Maturity—December 23, 2018)

    2,814     2,797     2,797  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,000  

     

Common Stock (1,126,242 shares)

          3,706      

                  9,503     5,797  

                           

Ziegler's NYPD, LLC

 

Casual Restaurant Group

                       

     

6.5% Secured Debt (Maturity—October 1, 2019)

    1,000     996     996  

     

12% Secured Debt (Maturity—October 1, 2019)

    300     300     300  

     

14% Secured Debt (Maturity—October 1, 2019)

    2,750     2,750     2,750  

     

Warrants (587 equivalent units; Expiration—September 29, 2018; Strike price—$0.01 per unit)

          600      

     

Preferred Member Units (10,072 units)

          2,834     3,220  

                  7,480     7,266  

Subtotal Control Investments (34.6% of total investments at fair value)

  $ 530,034   $ 750,706  

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC

 

Provider of Rent-to-Own Financing Solutions and Services

                       

     

Warrants (42 equivalent units; Expiration—November 7, 2024; Strike price—$0.01 per unit)

        $ 259   $ 860  

     

Preferred Member Units (186 units)(8)

          1,200     3,590  

                  1,459     4,450  

                           

Barfly Ventures, LLC(10)

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—August 31, 2020)

    8,715     8,572     8,715  

     

Options (2 equivalent units)

          397     920  

     

Warrant (1 equivalent unit; Expiration—August 31, 2025; Strike price—$1.00 per unit)

          473     520  

                  9,442     10,155  

                           

BBB Tank Services, LLC

 

Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.36%, Secured Debt (Maturity—April 8, 2021)(9)

    800     778     778  

     

15% Secured Debt (Maturity—April 8, 2021)

    4,000     3,876     3,876  

     

Member Units (800,000 units)

          800     500  

                  5,454     5,154  

                           

Boccella Precast Products LLC

 

Manufacturer of Precast Hollow Core Concrete

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.34%, Secured Debt (Maturity—June 30, 2022)(9)

    16,400     16,230     16,400  

     

Member Units (2,160,000 units)

          2,160     3,440  

                  18,390     19,840  

                           

Boss Industries, LLC

 

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

                       

     

Preferred Member Units (2,242 units)(8)

          2,080     3,930  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions Provider

                       

     

13% Secured Debt (Maturity—July 25, 2021)

    7,500     5,884     5,884  

     

Warrants (63 equivalent shares; Expiration—July 25, 2026; Strike price—$0.01 per share)

          2,132     3,520  

     

13% Secured Debt (Mercury Service Group, LLC) (Maturity—July 25, 2021)

    1,000     992     1,000  

     

Preferred Member Units (Mercury Service Group, LLC) (17,742 units)(8)

          1,000     1,000  

                  10,008     11,404  

                           

Buca C, LLC

 

Casual Restaurant Group

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.63%, Secured Debt (Maturity—June 30, 2020)(9)

    20,304     20,193     20,193  

     

Preferred Member Units (6 units; 6% cumulative)(8)(19)

          4,177     4,172  

                  24,370     24,365  

                           

CAI Software LLC

 

Provider of Specialized Enterprise Resource Planning Software

                       

     

12% Secured Debt (Maturity—October 10, 2019)

    4,083     4,060     4,083  

     

Member Units (65,356 units)(8)

          654     3,230  

                  4,714     7,313  

                           

Chandler Signs Holdings, LLC(10)

 

Sign Manufacturer

                       

     

12% Secured Debt (Maturity—July 4, 2021)

    4,500     4,468     4,500  

     

Class A Units (1,500,000 units)(8)

          1,500     2,650  

                  5,968     7,150  

                           

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays Provider

                       

     

Member Units (3,936 units)(8)

          100     1,950  

                           

Congruent Credit Opportunities Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          5,730     1,515  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          17,869     18,632  

                  23,599     20,147  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Dos Rios Partners(12)(13)

 

Investment Partnership

                       

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

          5,996     7,165  

     

LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.4%)

          1,904     1,889  

                  7,900     9,054  

                           

Dos Rios Stone Products LLC(10)

 

Limestone and Sandstone Dimension Cut Stone Mining Quarries

                       

     

Class A Preferred Units (2,000,000 units)(8)

          2,000     1,790  

                           

East Teak Fine Hardwoods, Inc.

 

Distributor of Hardwood Products

                       

     

Common Stock (6,250 shares)(8)

          480     630  

                           

EIG Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EIG Global Private Debt Fund-A, L.P.) (Fully diluted 11.1%)(8)

          1,103     1,055  

Freeport Financial Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.3%)(8)

          5,974     5,614  

     

LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.0%)(8)

          8,558     8,506  

                  14,532     14,120  

                           

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Collection of Healthcare and other Business Receivables

                       

     

10.5% Secured Debt (Maturity—January 1, 2019)

    12,483     12,483     11,532  

     

Warrants (29,032 equivalent units; Expiration—February 9, 2022; Strike price—$0.01 per unit)

          400      

                  12,883     11,532  

                           

Guerdon Modular Holdings, Inc.

 

Multi-Family and Commercial Modular Construction Company

                       

     

13% Secured Debt (Maturity—August 13, 2019)

    10,708     10,632     10,632  

     

Preferred Stock (404,998 shares)

          1,140      

     

Common Stock (212,033 shares)

          2,983      

                  14,755     10,632  

                           

Harris Preston Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (HPEP 3, L.P.) (Fully diluted 9.9%)

          943     943  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Hawk Ridge Systems, LLC(13)

 

Value-Added Reseller of Engineering Design and Manufacturing Solutions

                       

     

11% Secured Debt (Maturity—December 2, 2021)

    14,300     14,175     14,300  

     

Preferred Member Units (226 units)(8)

          2,850     3,800  

     

Preferred Member Units (HRS Services, ULC) (226 units)(8)

          150     200  

                  17,175     18,300  

                           

Houston Plating and Coatings, LLC

 

Provider of Plating and Industrial Coating Services

                       

     

8% Unsecured Convertible Debt (Maturity—May 1, 2022)

    3,000     3,000     3,200  

     

Member Units (315,756 units)

          2,179     6,140  

                  5,179     9,340  

                           

I-45 SLF LLC(12)(13)

 

Investment Partnership

                       

     

Member Units (Fully diluted 20.0%; 24.4% profits interest)(8)

          16,200     16,841  

                           

L.F. Manufacturing Holdings, LLC(10)

 

Manufacturer of Fiberglass Products

                       

     

Member Units (2,179,001 units)

          2,019     2,000  

                           

Meisler Operating LLC

 

Provider of Short-term Trailer and Container Rental

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.84%, Secured Debt (Maturity—June 7, 2022)(9)

    16,800     16,633     16,633  

     

Member Units (Milton Meisler Holdings LLC) (31,976 units)

          3,200     3,390  

                  19,833     20,023  

                           

OnAsset Intelligence, Inc.

 

Provider of Transportation Monitoring / Tracking Products and Services

                       

     

12% PIK Secured Debt (Maturity—June 30, 2021)(19)

    5,094     5,094     5,094  

     

10% PIK Unsecured Debt (Maturity—June 30, 2021)(19)

    48     48     48  

     

Preferred Stock (912 shares)

          1,981      

     

Warrants (5,333 equivalent shares; Expiration—April 18, 2021; Strike price—$0.01 per share)

          1,919      

                  9,042     5,142  

                           

OPI International Ltd.(13)

 

Provider of Man Camp and Industrial Storage Services

                       

     

Common Stock (20,766,317 shares)

          1,371      

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

                       

     

12% Secured Debt (Maturity—March 31, 2019)

    12,650     12,593     12,593  

     

Preferred Stock (1,740,000 shares) (non-voting)

          1,740     2,610  

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)(19)

          3,927     890  

                  18,260     16,093  

                           

Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

12% Secured Debt (Maturity—January 8, 2018)(14)(15)

    30,785     30,281     250  

     

Preferred Member Units (250 units)

          2,500      

                  32,781     250  

                           

Tin Roof Acquisition Company

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—November 13, 2018)

    12,783     12,722     12,722  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)(19)

          3,027     3,027  

                  15,749     15,749  

                           

UniTek Global Services, Inc.(11)

 

Provider of Outsourced Infrastructure Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.20%, Secured Debt (Maturity—January 13, 2019)(9)

    8,535     8,529     8,535  

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.20% / 1.00% PIK, Current Coupon Plus PIK 10.20%, Secured Debt (Maturity—January 13, 2019)(9)(19)

    137     137     137  

     

15% PIK Unsecured Debt (Maturity—July 13, 2019)(19)

    865     865     865  

     

Preferred Stock (2,596,567 shares; 19% cumulative)(8)(19)

          2,858     2,850  

     

Preferred Stock (4,935,377 shares; 13.5% cumulative)(8)(19)

          7,361     7,320  

     

Common Stock (1,075,992 shares)

              2,490  

                  19,750     22,197  

                           

Universal Wellhead Services Holdings, LLC(10)

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                       

     

Preferred Member Units (UWS Investments, LLC) (716,949 units)

          717     830  

     

Member Units (UWS Investments, LLC) (4,000,000 units)

          4,000     1,910  

                  4,717     2,740  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Valley Healthcare Group, LLC

 

Provider of Durable Medical Equipment

                       

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.86%, Secured Debt (Maturity—December 29, 2020)(9)

    11,766     11,685     11,685  

     

Preferred Member Units (Valley Healthcare Holding, LLC) (1,600 units)

          1,600     1,600  

                  13,285     13,285  

                           

Volusion, LLC

 

Provider of Online Software-as-a-Service eCommerce Solutions

                       

     

11.5% Secured Debt (Maturity—January 26, 2020)

    16,734     15,200     15,200  

     

Preferred Member Units (4,876,670 units)

          14,000     14,000  

     

Warrants (1,831,355 equivalent units; Expiration—January 26, 2025; Strike price—$0.01 per unit)

          2,576     2,080  

                  31,776     31,280  

Subtotal Affiliate Investments (15.6% of total investments at fair value)

  $ 367,317   $ 338,854  

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Non-Control/Non-Affiliate Investments(7)

             

                           

AAC Holdings, Inc.(11)

 

Substance Abuse Treatment Service Provider

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.13%, Secured Debt (Maturity—June 30, 2023)(9)

  $ 11,751   $ 11,475   $ 11,810  

                           

Adams Publishing Group, LLC(10)

 

Local Newspaper Operator

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—November 3, 2020)(9)

    10,341     10,116     10,147  

                           

ADS Tactical, Inc.(10)

 

Value-Added Logistics and Supply Chain Provider to the Defense Industry

                       

     

LIBOR Plus 7.50% (Floor 0.75%), Current Coupon 9.19%, Secured Debt (Maturity—December 31, 2022)(9)

    13,014     12,767     12,833  

                           

Aethon United BR LP(10)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.15%, Secured Debt (Maturity—September 8, 2023)(9)

    3,438     3,388     3,388  

                           

Ahead, LLC(10)

 

IT Infrastructure Value Added Reseller

                       

     

LIBOR Plus 6.50%, Current Coupon 8.20%, Secured Debt (Maturity—November 2, 2020)

    11,061     10,848     11,130  

                           

Allflex Holdings III Inc.(11)

 

Manufacturer of Livestock Identification Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.36%, Secured Debt (Maturity—July 19, 2021)(9)

    13,846     13,781     13,955  

                           

American Scaffold Holdings, Inc.(10)

 

Marine Scaffolding Service Provider

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.19%, Secured Debt (Maturity—March 31, 2022)(9)

    7,031     6,947     6,996  

                           

American Teleconferencing Services, Ltd.(11)

 

Provider of Audio Conferencing and Video Collaboration Solutions

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.90%, Secured Debt (Maturity—December 8, 2021)(9)

    10,582     9,934     10,443  

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.85%, Secured Debt (Maturity—June 6, 2022)(9)

    3,714     3,589     3,507  

                  13,523     13,950  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Anchor Hocking, LLC(11)

 

Household Products Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.49%, Secured Debt (Maturity—June 4, 2020)(9)

    2,254     2,211     2,248  

     

Member Units (440,620 units)

          4,928     3,745  

                  7,139     5,993  

                           

Apex Linen Service, Inc.

 

Industrial Launderers

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity—October 30, 2022)(9)

    2,400     2,400     2,400  

     

16% Secured Debt (Maturity—October 30, 2022)

    14,416     14,347     14,347  

                  16,747     16,747  

                           

Arcus Hunting LLC.(10)

 

Manufacturer of Bowhunting and Archery Products and Accessories

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.34%, Secured Debt (Maturity—November 13, 2019)(9)

    15,391     15,294     15,391  

                           

ATI Investment Sub, Inc.(11)

 

Manufacturer of Solar Tracking Systems

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.82%, Secured Debt (Maturity—June 22, 2021)(9)

    7,364     7,215     7,346  

                           

ATX Networks Corp.(11)(13)(21)

 

Provider of Radio Frequency Management Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.33% / 1.00% PIK, Current Coupon Plus PIK 8.33%, Secured Debt (Maturity—June 11, 2021)(9)(19)

    9,567     9,454     9,507  

                           

Berry Aviation, Inc.(10)

 

Airline Charter Service Operator

                       

     

13.75% Secured Debt (Maturity—January 30, 2020)

    5,627     5,598     5,627  

     

Common Stock (553 shares)

          400     1,010  

                  5,998     6,637  

                           

BigName Commerce, LLC(10)

 

Provider of Envelopes and Complimentary Stationery Products

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.59%, Secured Debt (Maturity—May 11, 2022)(9)

    2,488     2,461     2,461  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Binswanger Enterprises, LLC(10)

 

Glass Repair and Installation Service Provider

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.69%, Secured Debt (Maturity—March 9, 2022)(9)

    15,325     15,060     15,192  

     

Member Units (1,050,000 units)

          1,050     1,000  

                  16,110     16,192  

                           

Bluestem Brands, Inc.(11)

 

Multi-Channel Retailer of General Merchandise

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.07%, Secured Debt (Maturity—November 6, 2020)(9)

    12,127     11,955     8,540  

                           

Brainworks Software, LLC(10)

 

Advertising Sales and Newspaper Circulation Software

                       

     

Prime Plus 9.25% (Floor 3.25%), Current Coupon 13.75%, Secured Debt (Maturity—July 22, 2019)(9)

    6,733     6,705     6,573  

                           

Brightwood Capital Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 1.6%)(8)

          12,000     10,328  

     

LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.8%)(8)

          1,000     1,063  

                  13,000     11,391  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

 

Construction Services Provider

                       

     

10.375% Secured Debt (Maturity—September 1, 2023)

    3,000     2,987     3,180  

                           

Cadence Aerospace LLC(10)

 

Aerostructure Manufacturing

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.91%, Secured Debt (Maturity—November 14, 2023)(9)

    15,000     14,853     14,853  

                           

CapFusion, LLC(13)

 

Non-Bank Lender to Small Businesses

                       

     

13% Secured Debt (Maturity—March 25, 2021)(14)

    6,705     5,645     1,871  

                           

California Pizza Kitchen, Inc.(11)

 

Casual Restaurant Group

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—August 23, 2022)(9)

    12,902     12,862     12,677  

                           

CDHA Management, LLC(10)

 

Dental Services

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.76%, Secured Debt (Maturity—December 5, 2021)(9)

    5,365     5,303     5,365  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Central Security Group, Inc.(11)

 

Security Alarm Monitoring Service Provider

                       

     

LIBOR Plus 5.63% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity—October 6, 2021)(9)

    7,481     7,462     7,518  

                           

Cenveo Corporation(11)

 

Provider of Commercial Printing, Envelopes, Labels, and Printed Office Products

                       

     

6% Secured Debt (Maturity—August 1, 2019)

    19,130     17,126     13,582  

                           

Charlotte Russe, Inc(11)

 

Fast-Fashion Retailer to Young Women

                       

     

LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.89%, Secured Debt (Maturity—May 22, 2019)(9)

    19,041     16,473     7,807  

                           

Clarius BIGS, LLC(10)

 

Prints & Advertising Film Financing

                       

     

15% PIK Secured Debt (Maturity—January 5, 2015)(14)(17)

    2,924     2,924     85  

                           

Clickbooth.com, LLC(10)

 

Provider of Digital Advertising Performance Marketing Solutions

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.01%, Secured Debt (Maturity—December 5, 2022)(9)

    3,000     2,941     2,941  

                           

Construction Supply Investments, LLC(10)

 

Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—June 30, 2023)(9)

    7,125     7,090     7,090  

     

Member Units (28,000 units)

          3,723     3,723  

                  10,813     10,813  

                           

CTVSH, PLLC(10)

 

Emergency Care and Specialty Service Animal Hospital

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.48%, Secured Debt (Maturity—August 3, 2022)(9)

    11,850     11,739     11,739  

                           

Darr Equipment LP(10)

 

Heavy Equipment Dealer

                       

     

11.5% Current / 1% PIK Secured Debt (Maturity—June 22, 2023)(19)

    7,229     7,229     7,229  

     

Warrants (915,734 equivalent units; Expiration—December 23, 2023; Strike price—$1.50 per unit)

          474     10  

                  7,703     7,239  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Digital River, Inc.(11)

 

Provider of Outsourced e-Commerce Solutions and Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.08%, Secured Debt (Maturity—February 12, 2021)(9)

    9,313     9,266     9,337  

                           

Drilling Info Holdings, Inc.

 

Information Services for the Oil and Gas Industry

                       

     

Common Stock (3,788,865 shares)(8)

              8,610  

                           

EnCap Energy Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

          3,906     2,202  

     

LP Interests (EnCap Energy Capital Fund VIII Co-Investors, L.P.) (Fully diluted 0.4%)

          2,227     1,549  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

          4,305     3,720  

     

LP Interests (EnCap Energy Capital Fund X, L.P.) (Fully diluted 0.1%)(8)

          6,277     6,225  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 0.8%)(8)

          6,138     6,116  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.2%)

          3,458     3,828  

                  26,311     23,640  

                           

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)(13)

 

Technology-based Performance Support Solutions

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.82%, Secured Debt (Maturity—April 28, 2022)(9)

    6,999     6,878     6,244  

                           

Extreme Reach, Inc.(11)

 

Integrated TV and Video Advertising Platform

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.95%, Secured Debt (Maturity—February 7, 2020)(9)

    10,411     10,397     10,398  

                           

Felix Investments Holdings II(10)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.90%, Secured Debt (Maturity—August 9, 2022)(9)

    3,333     3,267     3,267  

                           

Flavors Holdings Inc.(11)

 

Global Provider of Flavoring and Sweetening Products

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.44%, Secured Debt (Maturity—April 3, 2020)(9)

    13,076     12,616     12,128  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

GI KBS Merger Sub LLC(11)

 

Outsourced Janitorial Services to Retail/Grocery Customers

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.48%, Secured Debt (Maturity—October 29, 2021)(9)

    6,807     6,733     6,833  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.88%, Secured Debt (Maturity—April 29, 2022)(9)

    3,915     3,769     3,793  

                  10,502     10,626  

                           

GoWireless Holdings, Inc.(11)

 

Provider of Wireless Telecommunications Carrier Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.16%, Secured Debt (Maturity—December 22, 2024)(9)

    18,000     17,820     17,865  

                           

Grace Hill, LLC(10)

 

Online Training Tools for the Multi-Family Housing Industry

                       

     

Prime Plus 5.25% (Floor 1.00%), Current Coupon 9.75%, Secured Debt (Maturity—August 15, 2019)(9)

    1,215     1,208     1,215  

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.58%, Secured Debt (Maturity—August 15, 2019)(9)

    11,407     11,356     11,407  

                  12,564     12,622  

                           

Great Circle Family Foods, LLC(10)

 

Quick Service Restaurant Franchise

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.34%, Secured Debt (Maturity—October 28, 2019)(9)

    7,219     7,187     7,219  

                           

Grupo Hima San Pablo, Inc.(11)

 

Tertiary Care Hospitals

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity—January 31, 2018)(9)

    4,750     4,748     3,541  

     

13.75% Secured Debt (Maturity—July 31, 2018)

    2,055     2,040     226  

                  6,788     3,767  

                           

GST Autoleather, Inc.(11)

 

Automotive Leather Manufacturer

                       

     

PRIME Plus 6.50% (Floor 2.25%), Current Coupon 11.00%, Secured Debt (Maturity—April 5, 2018)(9)

    7,578     7,500     7,500  

     

PRIME Plus 6.50% (Floor 2.00%), Current Coupon 11.00%, Secured Debt (Maturity—July 10, 2020)(9)

    15,619     15,120     11,813  

                  22,620     19,313  

                           

Guitar Center, Inc.(11)

 

Musical Instruments Retailer

                       

     

6.5% Secured Debt (Maturity—April 15, 2019)

    16,625     16,009     15,378  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Hojeij Branded Foods, LLC(10)

 

Multi-Airport, Multi-Concept Restaurant Operator

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—July 20, 2022)(9)

    12,137     12,022     12,137  

                           

Hoover Group, Inc.(10)(13)

 

Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.70%, Secured Debt (Maturity—January 28, 2021)(9)

    8,460     7,986     7,783  

                           

Hostway Corporation(11)

 

Managed Services and Hosting Provider

                       

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.44%, Secured Debt (Maturity—December 13, 2019)(9)

    20,150     19,796     19,621  

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.44%, Secured Debt (Maturity—December 13, 2018)(9)

    12,406     11,575     11,692  

                  31,371     31,313  

                           

Hunter Defense Technologies, Inc.(11)

 

Provider of Military and Commercial Shelters and Systems

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity—August 5, 2019)(9)

    20,224     19,851     19,997  

                           

Hydrofarm Holdings LLC(10)

 

Wholesaler of Horticultural Products

                       

     

LIBOR Plus 7.00%, Current Coupon 8.49%, Secured Debt (Maturity—May 12, 2022)

    6,708     6,588     6,699  

                           

iEnergizer Limited(11)(13)(21)

 

Provider of Business Outsourcing Solutions

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.57%, Secured Debt (Maturity—May 1, 2019)(9)

    11,005     10,764     10,977  

                           

Implus Footcare, LLC(10)

 

Provider of Footwear and Related Accessories

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.44%, Secured Debt (Maturity—April 30, 2021)(9)

    19,372     19,115     19,243  

                           

Indivior Finance LLC(11)(13)

 

Specialty Pharmaceutical Company Treating Opioid Dependence

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—December 18, 2022)(9)

    1,176     1,171     1,182  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Industrial Services Acquisition, LLC(10)

 

Industrial Cleaning Services

                       

     

11.25% Current / 0.75% PIK Unsecured Debt (Maturity—December 17, 2022)(19)

    4,553     4,478     4,553  

     

Member Units (Industrial Services Investments, LLC) (900,000 units)

          900     810  

                  5,378     5,363  

                           

Inn of the Mountain Gods Resort and Casino(11)

 

Hotel & Casino Owner & Operator

                       

     

9.25% Secured Debt (Maturity—November 30, 2020)

    6,249     5,994     5,687  

                           

iPayment, Inc.(11)

 

Provider of Merchant Acquisition

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.62%, Secured Debt (Maturity—April 11, 2023)(9)

    11,970     11,861     12,090  

                           

iQor US Inc.(11)

 

Business Process Outsourcing Services Provider

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity—April 1, 2021)(9)

    990     983     986  

                           

irth Solutions, LLC

 

Provider of Damage Prevention Information Technology Services

                       

     

Member Units (27,893 units)

          1,441     1,920  

                           

Jacent Strategic Merchandising, LLC(10)

 

General Merchandise Distribution

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.01%, Secured Debt (Maturity—September 16, 2020)(9)

    11,110     11,054     11,110  

                           

Jackmont Hospitality, Inc.(10)

 

Franchisee of Casual Dining Restaurants

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.32%, Secured Debt (Maturity—May 26, 2021)(9)

    4,390     4,379     4,390  

                           

Jacuzzi Brands LLC(11)

 

Manufacturer of Bath and Spa Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—June 28, 2023)(9)

    3,950     3,876     3,980  

                           

Joerns Healthcare, LLC(11)

 

Manufacturer and Distributor of Health Care Equipment & Supplies

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.48% Secured Debt (Maturity—May 9, 2020)(9)

    13,387     13,299     12,472  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Keypoint Government Solutions, Inc.(10)

 

Provider of Pre-Employment Screening Services

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.35%, Secured Debt (Maturity—April 18, 2024)(9)

    12,031     11,921     12,031  

                           

Larchmont Resources, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.53%, PIK Secured Debt (Maturity—August 7, 2020)(9)(19)

    2,418     2,418     2,394  

     

Member Units (Larchmont Intermediate Holdco, LLC) (2,828 units)

          353     976  

                  2,771     3,370  

                           

LKCM Headwater Investments I, L.P.(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 2.3%)

          2,500     4,234  

                           

Logix Acquisition Company, LLC(10)

 

Competitive Local Exchange Carrier

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.28%, Secured Debt (Maturity—August 9, 2024)(9)

    10,135     9,921     9,921  

                           

Looking Glass Investments, LLC(12)(13)

 

Specialty Consumer Finance

                       

     

Member Units (2.5 units)

          125     57  

     

Member Units (LGI Predictive Analytics LLC) (190,712 units)(8)

          108     92  

                  233     149  

                           

LSF9 Atlantis Holdings, LLC(11)

 

Provider of Wireless Telecommunications Carrier Services

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—May 1, 2023)(9)

    2,963     2,931     2,978  

                           

Lulu's Fashion Lounge, LLC(10)

 

Fast Fashion E-Commerce Retailer

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.57%, Secured Debt (Maturity—August 28, 2022)(9)

    13,381     12,993     13,531  

                           

Messenger, LLC(10)

 

Supplier of Specialty Stationery and Related Products to the Funeral Industry

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.74%, Secured Debt (Maturity—September 9, 2020)(9)

    17,331     17,249     17,331  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Minute Key, Inc.

 

Operator of Automated Key Duplication Kiosks

                       

     

Warrants (1,437,409 equivalent shares; Expiration—May 20, 2025; Strike price—$0.01 per share)

          280     1,170  

                           

NBG Acquisition Inc(11)

 

Wholesaler of Home Décor Products

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity—April 26, 2024)(9)

    4,402     4,336     4,452  

                           

New Media Holdings II LLC(11)(13)

 

Local Newspaper Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.82%, Secured Debt (Maturity—July 14, 2022)(9)

    17,715     17,342     17,864  

                           

NNE Partners, LLC(10)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 8.00%, Current Coupon 9.49%, Secured Debt (Maturity—March 2, 2022)

    11,958     11,854     11,854  

                           

North American Lifting Holdings, Inc.(11)

 

Crane Service Provider

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.19%, Secured Debt (Maturity—November 27, 2020)(9)

    7,745     6,913     7,256  

                           

Novetta Solutions, LLC(11)

 

Provider of Advanced Analytics Solutions for Defense Agencies

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.70%, Secured Debt (Maturity—October 17, 2022)(9)

    14,636     14,189     14,239  

                           

NTM Acquisition Corp.(11)

 

Provider of B2B Travel Information Content

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.94%, Secured Debt (Maturity—June 7, 2022)(9)

    6,186     6,126     6,155  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)

 

Estrogen-Deficiency Drug Manufacturer and Distributor

                       

     

11.5% Secured Debt (Maturity—November 15, 2026)(14)

    5,071     5,071     1,198  

                           

P.F. Chang's China Bistro, Inc.(11)

 

Casual Restaurant Group

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.51%, Secured Debt (Maturity—September 1, 2022)(9)

    4,988     4,846     4,715  

                           

Paris Presents Incorporated(11)

 

Branded Cosmetic and Bath Accessories

                       

     

LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 10.32%, Secured Debt (Maturity—December 31, 2021)(9)

    4,500     4,471     4,477  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Parq Holdings Limited Partnership(11)(13)(21)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.19%, Secured Debt (Maturity—December 17, 2020)(9)

    7,481     7,399     7,528  

                           

Permian Holdco 2, Inc.(11)

 

Storage Tank Manufacturer

                       

     

14% PIK Unsecured Debt (Maturity—October 15, 2021)(19)

    306     306     306  

     

Preferred Stock (Permian Holdco 1, Inc.) (154,558 units)

          799     980  

     

Common Stock (Permian Holdco 1, Inc.) (154,558 units)

              140  

                  1,105     1,426  

                           

Pernix Therapeutics Holdings, Inc.(10)

 

Pharmaceutical Royalty

                       

     

12% Secured Debt (Maturity—August 1, 2020)

    3,129     3,129     1,971  

                           

Point.360(10)

 

Fully Integrated Provider of Digital Media Services

                       

     

Warrants (65,463 equivalent shares; Expiration—July 7, 2020; Strike price—$0.75 per share)

          69      

     

Common Stock (163,658 shares)

          273     11  

                  342     11  

                           

PPC/SHIFT LLC(10)

 

Provider of Digital Solutions to Automotive Industry

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.69%, Secured Debt (Maturity—December 22, 2021)(9)

    6,869     6,748     6,869  

                           

Prowler Acquisition Corp.(11)

 

Specialty Distributor to the Energy Sector

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.19%, Secured Debt (Maturity—January 28, 2020)(9)

    12,830     11,332     12,253  

                           

PT Network, LLC(10)

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.86%, Secured Debt (Maturity—November 30, 2021)(9)

    8,553     8,553     8,553  

                           

QBS Parent, Inc.(11)

 

Provider of Software and Services to the Oil & Gas Industry

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 6.13%, Secured Debt (Maturity—August 7, 2021)(9)

    14,272     14,114     14,165  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Research Now Group, Inc. and Survey Sampling International, LLC(11)

 

Provider of Outsourced Online Surveying

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.13%, Secured Debt (Maturity—December 20, 2024)(9)

    13,500     12,826     12,826  

                           

Resolute Industrial, LLC(10)

 

HVAC Equipment Rental and Remanufacturing

                       

     

LIBOR Plus 7.62% (Floor 1.00%), Current Coupon 8.95%, Secured Debt (Maturity—July 26, 2022)(9)(25)

    17,088     16,770     16,770  

     

Member Units (601 units)

          750     750  

                  17,520     17,520  

                           

RGL Reservoir Operations Inc.(11)(13)(21)

 

Oil & Gas Equipment and Services

                       

     

1% Current / 9% PIK Secured Debt (Maturity—December 21, 2024)(19)

    721     407     407  

                           

RM Bidder, LLC(10)

 

Scripted and Unscripted TV and Digital Programming Provider

                       

     

Warrants (327,532 equivalent units; Expiration—October 20, 2025; Strike price—$14.28 per unit)

          425      

     

Member Units (2,779 units)

          46     20  

                  471     20  

                           

SAFETY Investment Holdings, LLC

 

Provider of Intelligent Driver Record Monitoring Software and Services

                       

     

Member Units (2,000,000 units)

          2,000     1,670  

                           

Salient Partners L.P.(11)

 

Provider of Asset Management Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.85%, Secured Debt (Maturity—June 9, 2021)(9)

    10,081     9,870     9,778  

                           

SiTV, LLC(11)

 

Cable Networks Operator

                       

     

10.375% Secured Debt (Maturity—July 1, 2019)

    10,429     7,006     7,040  

                           

SMART Modular Technologies, Inc.(10)(13)

 

Provider of Specialty Memory Solutions

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.66%, Secured Debt (Maturity—August 9, 2022)(9)

    14,625     14,351     14,552  

                           

Sorenson Communications, Inc.(11)

 

Manufacturer of Communication Products for Hearing Impaired

                       

     

LIBOR Plus 5.75% (Floor 2.25%), Current Coupon 8.00%, Secured Debt (Maturity—April 30, 2020)(9)

    13,234     13,170     13,341  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Staples Canada ULC(10)(13)(21)

 

Office Supplies Retailer

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.43%, Secured Debt (Maturity—September 12, 2023)(9)(22)

    20,000     19,617     18,891  

                           

Strike, LLC(11)

 

Pipeline Construction and Maintenance Services

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—November 30, 2022)(9)

    9,500     9,250     9,643  

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.45%, Secured Debt (Maturity—May 30, 2019)(9)

    2,500     2,479     2,513  

                  11,729     12,156  

                           

Subsea Global Solutions, LLC(10)

 

Underwater Maintenance and Repair Services

                       

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity—March 17, 2020)(9)

    7,687     7,637     7,687  

                           

Synagro Infrastructure Company, Inc(11)

 

Waste Management Services

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity—August 22, 2020)(9)

    9,161     8,933     8,608  

                           

Tectonic Holdings, LLC

 

Financial Services Organization

                       

     

Member Units (200,000 units)(8)

          2,000     2,320  

                           

TE Holdings, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

Member Units (97,048 units)

          970     158  

                           

TeleGuam Holdings, LLC(11)

 

Cable and Telecom Services Provider

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.07%, Secured Debt (Maturity—April 12, 2024)(9)

    7,750     7,602     7,808  

                           

TGP Holdings III LLC(11)

 

Outdoor Cooking & Accessories

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity—September 25, 2024)(9)

    6,898     6,820     6,969  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.19%, Secured Debt (Maturity—September 25, 2025)(9)

    5,000     4,927     5,075  

                  11,747     12,044  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

The Container Store, Inc.(11)

 

Operator of Stores Offering Storage and Organizational Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—August 15, 2021)(9)

    9,938     9,660     9,652  

                           

TMC Merger Sub Corp.(11)

 

Refractory & Maintenance Services Provider

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.88%, Secured Debt (Maturity—October 31, 2022)(9)(26)

    17,653     17,516     17,741  

                           

TOMS Shoes, LLC(11)

 

Global Designer, Distributor, and Retailer of Casual Footwear

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.98%, Secured Debt (Maturity—October 30, 2020)(9)

    4,875     4,610     2,901  

                           

Turning Point Brands, Inc.(10)(13)

 

Marketer/Distributor of Tobacco Products

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.61%, Secured Debt (Maturity—May 17, 2022)(9)(25)

    8,436     8,364     8,605  

                           

TVG-I-E CMN ACQUISITION, LLC(10)

 

Organic Lead Generation for Online Postsecondary Schools

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.56%, Secured Debt (Maturity—November 3, 2021)(9)

    8,170     8,031     8,170  

                           

Tweddle Group, Inc.(11)

 

Provider of Technical Information Services to Automotive OEMs

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.38%, Secured Debt (Maturity—October 21, 2022)(9)

    6,114     6,011     6,023  

                           

U.S. TelePacific Corp.(11)

 

Provider of Communications and Managed Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity—May 2, 2023)(9)

    20,703     20,507     19,862  

                           

US Joiner Holding Company(11)

 

Marine Interior Design and Installation

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity—April 16, 2020)(9)

    13,465     13,366     13,398  

                           

VIP Cinema Holdings, Inc.(11)

 

Supplier of Luxury Seating to the Cinema Industry

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity—March 1, 2023)(9)

    7,700     7,666     7,777  

                           

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)(27)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Vistar Media, Inc.(10)

 

Operator of Digital Out-of-Home Advertising Platform

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.69%, Secured Debt (Maturity—February 16, 2022)(9)

    3,319     3,048     3,102  

     

Warrants (70,207 equivalent shares; Expiration—February 17, 2027; Strike price—$0.01 per share)

          331     499  

                  3,379     3,601  

                           

Wellnext, LLC(10)

 

Manufacturer of Supplements and Vitamins

                       

     

LIBOR Plus 10.10% (Floor 1.00%), Current Coupon 11.67%, Secured Debt (Maturity—July 21, 2022)(9)(23)

    9,930     9,857     9,930  

                           

Wireless Vision Holdings, LLC(10)

 

Provider of Wireless Telecommunications Carrier Services

                       

     

LIBOR Plus 8.91% (Floor 1.00%), Current Coupon 10.27%, Secured Debt (Maturity—September 29, 2022)(9)(24)

    12,932     12,654     12,654  

                           

Wirepath LLC(11)

 

E-Commerce Provider into Connected Home Market

                       

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.87%, Secured Debt (Maturity—August 5, 2024)(9)

    4,988     4,964     5,055  

                           

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

                       

     

Preferred Stock (186,777 shares)

          154     260  

     

Warrants (952,500 equivalent shares; Expiration—June 15, 2022; Strike price—$0.001 per share)

          1,071     1,189  

                  1,225     1,449  

Subtotal Non-Control/Non-Affiliate Investments (49.8% of total investments at fair value)

  $ 1,107,447   $ 1,081,745  

Total Portfolio Investments, December 31, 2017

  $ 2,004,798   $ 2,171,305  

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C for a summary of geographic location of portfolio companies.

(4)
Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

(9)
Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at December 31, 2017. As noted in this schedule, 67% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.25%, with a weighted-average LIBOR floor of approximately 1.02%.

(10)
Private Loan portfolio investment. See Note B for a description of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B for a description of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B for a description of Other Portfolio investments.

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C for further discussion.

(19)
PIK interest income and cumulative dividend income represent income not paid currently in cash.

(20)
All portfolio company headquarters are based in the United States, unless otherwise noted.

(21)
Portfolio company headquarters are located outside of the United States.

(22)
In connection with the Company's debt investment in Staples Canada ULC to help mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company entered into a forward foreign currency contract with Cadence Bank to lend $24.2 million Canadian Dollars and receive $20.0 million U.S. Dollars with a settlement date of September 12, 2018. The unrealized appreciation on the forward foreign currency contract is $0.7 million as of December 31, 2017. This unrealized appreciation is offset by the foreign currency translation depreciation on the investment.

(23)
The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(24)
The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 8.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(25)
As part of the credit agreement with the portfolio company, the Company is entitled to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche receives priority over the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. The rate the Company receives per the Credit Agreement is the same as the rate reflected in the Consolidated Schedule of Investments above.

(26)
The Company has entered into an intercreditor agreement that entitles the Company to the "first out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a lower interest rate than the contractual stated interest rate of LIBOR plus 6.64% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such lower rate.

(27)
All Company's portfolio investments are generally subject to restrictions on resale as "restricted securities", unless otherwise noted.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements

(Unaudited)

NOTE A—ORGANIZATION AND BASIS OF PRESENTATION

1.     Organization

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF"), Main Street Capital II, LP ("MSC II") and Main Street Capital III, LP ("MSC III" and, collectively with MSMF and MSC II, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes.

        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our," the "Company" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

2.     Basis of Presentation

        Main Street's consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The Company is an investment company following accounting and reporting guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 946, Financial Services—Investment Companies ("ASC 946"). For each of the periods presented herein, Main Street's consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of Main Street's investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments and the investment in the External Investment Manager (see Note C—Fair Value Hierarchy for Investments and Debentures—Portfolio Composition—Investment Portfolio Composition for additional discussion of Main Street's Investment Portfolio and definitions for the terms Private Loan and Other Portfolio). Main Street's results of operations and cash flows for the three months ended March 31, 2018 and 2017, and financial position as of March 31, 2018 and December 31, 2017, are presented on a consolidated basis. The effects of all intercompany transactions between Main Street and its consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform with the current presentation.

        The accompanying unaudited consolidated financial statements of Main Street are presented in conformity with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. In the opinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. The results of operations for the three months ended March 31, 2018 and 2017 are not necessarily indicative of the operating results to be expected for the full year. Also, the unaudited financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2017. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein.

        Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and ASC 946, Main Street is precluded from consolidating other entities in which Main Street has equity investments, including those in which it has a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if Main Street holds a controlling interest in an operating company that provides all or substantially all of its services directly to Main Street or to its portfolio companies. Accordingly, as noted above, MSCC's consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. Main Street has determined that all of its portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, Main Street's Investment Portfolio is carried on the consolidated balance sheet at fair value, as discussed further in Note B, with any adjustments to fair value recognized as "Net Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."

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        Main Street classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) "Control Investments" are defined as investments in which Main Street owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) "Affiliate Investments" are defined as investments in which Main Street owns between 5% and 25% of the voting securities and does not have rights to maintain greater than 50% of the board representation, and (c) "Non-Control/Non-Affiliate Investments" are defined as investments that are neither Control Investments nor Affiliate Investments.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.     Valuation of the Investment Portfolio

        Main Street accounts for its Investment Portfolio at fair value. As a result, Main Street follows the provisions of ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires Main Street to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

        Main Street's portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by privately held, LMM companies and more liquid debt securities issued by Middle Market companies that are generally larger in size than the LMM companies. Main Street categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street's portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Middle Market portfolio investments or Private Loan portfolio investments, including investments which may be managed by third parties. Main Street's portfolio investments may be subject to restrictions on resale.

        LMM investments and Other Portfolio investments generally have no established trading market while Middle Market securities generally have established markets that are not active. Private Loan investments may include investments which have no established trading market or have established markets that are not active. Main Street determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by its Board of Directors and in accordance with the 1940 Act. Main Street's valuation policies and processes are intended to provide a consistent basis for determining the fair value of Main Street's Investment Portfolio.

        For LMM portfolio investments, Main Street generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology ("Waterfall") for its LMM equity

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investments and an income approach using a yield-to-maturity model ("Yield-to-Maturity") for its LMM debt investments. For Middle Market portfolio investments, Main Street primarily uses quoted prices in the valuation process. Main Street determines the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Middle Market and Private Loan portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, Main Street generally calculates the fair value of the investment primarily based on the net asset value ("NAV") of the fund and adjusts the fair value for other factors that would affect the fair value of the investment. All of the valuation approaches for Main Street's portfolio investments estimate the value of the investment as if Main Street were to sell, or exit, the investment as of the measurement date.

        These valuation approaches consider the value associated with Main Street's ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, "control" portfolio investments are composed of debt and equity securities in companies for which Main Street has a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors. For valuation purposes, "non-control" portfolio investments are generally composed of debt and equity securities in companies for which Main Street does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors.

        Under the Waterfall valuation method, Main Street estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then performs a waterfall calculation by allocating the enterprise value over the portfolio company's securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, privately held companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, Main Street analyzes various factors including the portfolio company's historical and projected financial results. Due to SEC deadlines for Main Street's quarterly and annual financial reporting, the operating results of a portfolio company used in the current period valuation are generally the results from the period ended three months prior to such valuation date and may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment in its determination. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, Main Street also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, Main Street allocates the enterprise

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value to investments in order of the legal priority of the various components of the portfolio company's capital structure. In applying the Waterfall valuation method, Main Street assumes the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which Main Street believes is consistent with its past transaction history and standard industry practices.

        Under the Yield-to-Maturity valuation method, Main Street also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of the portfolio company. Main Street's estimate of the expected repayment date of its debt securities is generally the maturity date of the instrument, as Main Street generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance and other factors. Main Street will generally use the value determined by the Yield-to-Maturity analysis as the fair value for that security; however, because of Main Street's general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions that Main Street uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, Main Street may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.

        Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, Main Street measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date and adjusts the investment's fair value for factors known to Main Street that would affect that fund's NAV, including, but not limited to, fair values for individual investments held by the fund if Main Street holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the investment, Main Street considers whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of Main Street's investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market participants, or other uncertainties surrounding Main Street's ability to realize the full NAV of its interests in the investment fund.

        Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the Company's determinations of the fair value of its LMM portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street's investments in each LMM portfolio company at least once every calendar year, and for Main Street's investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders' best interest, to consult with the nationally recognized independent

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financial advisory services firm on its investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street's investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at Main Street's determination of fair value on its investments in a total of 13 LMM portfolio companies for the three months ended March 31, 2018, representing approximately 17% of the total LMM portfolio at fair value as of March 31, 2018, and on a total of 12 LMM portfolio companies for the three months ended March 31, 2017, representing approximately 16% of the total LMM portfolio at fair value as of March 31, 2017. Excluding its investments in new LMM portfolio companies which have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment decision as of March 31, 2018 and 2017, as applicable, and its investments in the LMM portfolio companies that were not reviewed because their equity is publicly traded, which represented one LMM portfolio company as of March 31, 2017, or they hold real estate for which a third-party appraisal is obtained on at least an annual basis, the percentage of the LMM portfolio reviewed and certified by its independent financial advisory services firm for the three months ended March 31, 2018 and 2017 was 20% and 18% of the total LMM portfolio at fair value as of March 31, 2018 and 2017, respectively.

        For valuation purposes, all of Main Street's Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. Because the vast majority of the Middle Market portfolio investments are typically valued using third-party quotes or other independent pricing services (including 95% of the Middle Market portfolio investments as of both March 31, 2018 and December 31, 2017), Main Street does not generally consult with any financial advisory services firms in connection with determining the fair value of its Middle Market investments.

        For valuation purposes, all of Main Street's Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.

        In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations and an assurance certification regarding the Company's determinations of the fair value of its Private Loan portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street's investments in each Private Loan portfolio company at least once every calendar year, and for Main Street's investments in new Private Loan portfolio

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companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders' best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street's investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at its determination of fair value on its investments in a total of six Private Loan portfolio companies for the three months ended March 31, 2018, representing approximately 16% of the total Private Loan portfolio at fair value as of March 31, 2018, and on a total of nine Private Loan portfolio companies for the three months ended March 31, 2017, representing approximately 27% of the total Private Loan portfolio at fair value as of March 31, 2017. Excluding its investments in new Private Loan portfolio companies which have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment decision as of March 31, 2018 and 2017, as applicable, and its investments in its Private Loan portfolio companies that were not reviewed because the investment is valued based upon third-party quotes or other independent pricing, the percentage of the Private Loan portfolio reviewed and certified by its independent financial advisory services firm for the three months ended March 31, 2018 and 2017 was 27% and 44% of the total Private Loan portfolio at fair value as of March 31, 2018 and 2017, respectively.

        For valuation purposes, all of Main Street's Other Portfolio investments are non-control investments. Main Street's Other Portfolio investments comprised 4.4% and 4.8% of Main Street's Investment Portfolio at fair value as of March 31, 2018 and December 31, 2017, respectively. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street generally determines the fair value of these investments using the NAV valuation method. For its Other Portfolio debt investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Other Portfolio debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio debt investments for which third-party quotes or other independent pricing are available and appropriate, Main Street determines the fair value of these investments through obtaining third-party quotes or other independent pricing to the extent that these inputs are available and appropriate to determine fair value.

        For valuation purposes, Main Street's investment in the External Investment Manager is a control investment. Market quotations are not readily available for this investment, and as a result, Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach. In estimating the enterprise value, Main Street analyzes various factors, including the entity's historical and projected financial results, as well as its size, marketability and performance relative to the population of market comparables. This valuation approach estimates the value of the investment as if Main Street were to sell, or exit, the investment. In addition, Main Street considers its ability to control the capital structure of the company, as well as the timing of a potential exit, in connection with determining the fair value of the External Investment Manager.

        Due to the inherent uncertainty in the valuation process, Main Street's determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had

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a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. Main Street determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.

        Main Street uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its LMM portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM portfolio company and the investments held therein.

        The Board of Directors of Main Street has the final responsibility for overseeing, reviewing and approving, in good faith, Main Street's determination of the fair value for its Investment Portfolio, as well as its valuation procedures, consistent with 1940 Act requirements. Main Street believes its Investment Portfolio as of March 31, 2018 and December 31, 2017 approximates fair value as of those dates based on the markets in which Main Street operates and other conditions in existence on those reporting dates.

2.     Use of Estimates

        The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1., the consolidated financial statements include investments in the Investment Portfolio whose values have been estimated by Main Street with the oversight, review and approval by Main Street's Board of Directors in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ materially from the values that would have been determined had a ready market for the securities existed.

3.     Cash and Cash Equivalents

        Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.

        At March 31, 2018, cash balances totaling $25.1 million exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company's cash deposits are held at large established high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote.

4.     Interest, Dividend and Fee Income

        Main Street records interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with Main Street's valuation policies, Main Street evaluates accrued interest and dividend

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income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if Main Street otherwise does not expect the debtor to be able to service all of its debt or other obligations, Main Street will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security's status significantly improves regarding the debtor's ability to service the debt or other obligations, or if a loan or debt security is sold or written off, Main Street removes it from non-accrual status.

        As of March 31, 2018, Main Street's total Investment Portfolio had six investments on non-accrual status, which comprised approximately 0.8% of its fair value and 3.3% of its cost. As of December 31, 2017, Main Street's total Investment Portfolio had five investments on non-accrual status, which comprised approximately 0.2% of its fair value and 2.3% of its cost.

        Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-in-kind ("PIK") interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the PIK interest and cumulative dividends in cash. Main Street stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the three months ended March 31, 2018 and 2017, (i) approximately 1.0% and 3.4%, respectively, of Main Street's total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0% and 1.8%, respectively, of Main Street's total investment income was attributable to cumulative dividend income not paid currently in cash.

        Main Street may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.

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        A presentation of the investment income Main Street received from its Investment Portfolio in each of the periods presented is as follows:

 
  Three Months Ended
March 31,
 
 
  2018   2017  
 
  (dollars in
thousands)

 

Interest, fee and dividend income:

             

Interest income

  $ 39,612   $ 38,463  

Dividend income

    13,831     6,982  

Fee income

    2,499     2,444  

Total interest, fee and dividend income

  $ 55,942   $ 47,889  

5.     Deferred Financing Costs

        Deferred financing costs include commitment fees and other costs related to Main Street's multi-year revolving credit facility (the "Credit Facility", as discussed further in Note F) and its notes (as discussed further in Note G), as well as the commitment fees and leverage fees (approximately 3.4% of the total commitment and draw amounts, as applicable) on the SBIC debentures (as discussed further in Note E) which are not accounted for under the fair value option under ASC 825 (as discussed further in Note B.11.). Deferred financing costs in connection with the Credit Facility are capitalized as an asset. Deferred financing costs in connection with all other debt arrangements not using the fair value option are a direct deduction from the related debt liability.

6.     Equity Offering Costs

        The Company's offering costs are charged against the proceeds from equity offerings when the proceeds are received.

7.     Unearned Income—Debt Origination Fees and Original Issue Discount and Discounts / Premiums to Par Value

        Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into income based on the effective interest method over the life of the financing.

        In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, "nominal cost equity") that are valued as part of the negotiation process with the particular portfolio company. When Main Street receives nominal cost equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest

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income based on the effective interest method over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.

        Main Street may also purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, Main Street records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income based on the effective interest method over the life of the debt investment. In the case of a purchase at a premium, Main Street records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income based on the effective interest method over the life of the debt investment.

        To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the interest income. For the three months ended March 31, 2018 and 2017, approximately 2.9% and 3.5%, respectively, of Main Street's total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.

8.     Share-Based Compensation

        Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

9.     Income Taxes

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) the filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

        The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-of-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street's consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not

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(Unaudited)

consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street's consolidated financial statements.

        The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager's separate financial statements.

        In December 2017, the "Tax Cuts and Jobs Act" legislation was enacted. The Tax Cuts and Jobs Act includes significant changes to the U.S. corporate tax system, including a U.S. federal corporate income tax rate reduction from 35% to 21% and other changes. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation was enacted. As such, Main Street has accounted for the tax effects as a result of the enactment of the Tax Cuts and Jobs Act beginning with the period ended December 31, 2017.

        The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

        Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

10.   Net Realized Gains or Losses and Net Unrealized Appreciation or Depreciation

        Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

11.   Fair Value of Financial Instruments

        Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.

        As part of Main Street's acquisition of the majority of the equity interests of MSC II in January 2010 (the "MSC II Acquisition"), Main Street elected the fair value option under ASC 825, Financial Instruments ("ASC 825"), relating to accounting for debt obligations at their fair value, for the MSC II SBIC debentures acquired as part of the acquisition accounting related to the MSC II Acquisition and values those obligations as discussed further in Note C. In order to provide for a more consistent basis of presentation, Main Street has continued to elect the fair value option for SBIC debentures issued by MSC II subsequent to the MSC II Acquisition. When the fair value option is elected for a given SBIC debenture, the deferred loan costs associated with the debenture are fully expensed in the current period to "Net Unrealized Appreciation (Depreciation)—SBIC debentures" as part of the fair value adjustment. Interest incurred in connection with SBIC debentures which are valued at fair value is included in interest expense.

12.   Earnings per Share

        Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Main Street's equity compensation plans are participating securities and, therefore, are included in the basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings per share and basic earnings per share amounts.

13.   Recently Issued or Adopted Accounting Standards

        In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606)). ASU 2014-09 supersedes the revenue recognition requirements under ASC 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarified the implementation guidance regarding performance

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

obligations and licensing arrangements. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients, which clarified guidance on assessing collectability, presenting sales tax, measuring noncash consideration, and certain transition matters. In December 2016, the FASB issued ASU No. 2016-20, Revenue from Contracts with Customers (Topic 606)—Technical Corrections and Improvements, which provided disclosure relief, and clarified the scope and application of the new revenue standard and related cost guidance. The guidance is effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Substantially all of Main Street's income is not within the scope of ASU 2014-09. For those income items that are within the scope (primarily fee income), Main Street has similar performance obligations as compared with deliverables and separate units of account previously identified. As a result, Main Street's timing of its income recognition remains the same and the adoption of the standard was not material.

        In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. The new guidance is effective for annual periods beginning after December 15, 2018, and interim periods therein. Early application is permitted. While Main Street continues to assess the effect of adoption, Main Street currently believes the most significant change relates to the recognition of a new right-of-use asset and lease liability on its consolidated balance sheet for its office space operating lease. Main Street currently has one operating lease for office space and does not expect a significant change in the leasing activity between now and adoption. See further discussion of the operating lease obligation in Note M.

        In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), which is intended to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods therein. Early application is permitted. The impact of the adoption of this new accounting standard on Main Street's consolidated financial statements was not material.

        From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by Main Street as of the specified effective date. Main Street believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon adoption.

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION

        ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Main Street accounts for its investments at fair value.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).

        Investments recorded on Main Street's balance sheet are categorized based on the inputs to the valuation techniques as follows:

        Level 1—Investments whose values are based on unadjusted quoted prices for identical assets in an active market that Main Street has the ability to access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities).

        Level 2—Investments whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the investment. Level 2 inputs include the following:

        Level 3—Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid securities issued by privately held companies). These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the investment.

        As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Main Street conducts reviews of fair value hierarchy classifications on a quarterly basis. During the classification process, Main Street may determine that it is appropriate to transfer investments between fair value hierarchy Levels. These transfers occur when Main Street has concluded that it is appropriate for the classification of an individual asset to be changed due to a change in the factors used to determine the selection of the Level. Any such changes are deemed to be effective during the quarter in which the transfer occurs.

        As of March 31, 2018 and December 31, 2017, all of Main Street's LMM portfolio investments consisted of illiquid securities issued by privately held companies. As a result, the fair value determination for all of Main Street's LMM portfolio investments primarily consisted of unobservable inputs. As a result, all of Main Street's LMM portfolio investments were categorized as Level 3 as of March 31, 2018 and December 31, 2017.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        As of March 31, 2018 and December 31, 2017, Main Street's Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Middle Market portfolio investments were categorized as Level 3 as of March 31, 2018 and December 31, 2017.

        As of March 31, 2018 and December 31, 2017, Main Street's Private Loan portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Private Loan portfolio investments were categorized as Level 3 as of March 31, 2018 and December 31, 2017.

        As of March 31, 2018 and December 31, 2017, Main Street's Other Portfolio investments consisted of illiquid securities issued by privately held companies. The fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street's Other Portfolio investments were categorized as Level 3 as of March 31, 2018 and December 31, 2017.

        The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs:

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        The significant unobservable inputs used in the fair value measurement of Main Street's LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the weighted-average cost of capital ("WACC"). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement. On the contrary, significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of Main Street's LMM, Middle Market, Private Loan and Other Portfolio debt securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (described in Note B.1.—Valuation of the Investment Portfolio) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below.

        The following tables provide a summary of the significant unobservable inputs used to fair value Main Street's Level 3 portfolio investments as of March 31, 2018 and December 31, 2017:

Type of Investment
  Fair Value as
of March 31,
2018
(in thousands)
  Valuation Technique   Significant
Unobservable
Inputs
  Range(3)   Weighted
Average(3)
  Median(3)  

Equity investments

  $ 675,229   Discounted cash flow   WACC   11.3% - 23.6%     13.9 %   14.3%  

        Market comparable / Enterprise Value   EBITDA multiple(1)   4.5x - 8.5x(2)     7.3x     6.0x  

Debt investments

  $ 943,653   Discounted cash flow   Risk adjusted discount factor   7.1% - 16.8%(2)     11.3 %   11.3%  

            Expected principal recovery percentage   2.9% - 100.0%     99.7 %   100.0%  

Debt investments

  $ 695,152   Market approach   Third-party quote   11.0 - 106.5              

Total Level 3 investments

  $ 2,314,034                          

(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 17.5x and the range for risk adjusted discount factor is 4.3% - 35.0%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Type of Investment
  Fair Value
as of
December 31,
2017
(in thousands)
  Valuation
Technique
  Significant
Unobservable
Inputs
  Range(3)   Weighted
Average(3)
  Median(3)  

Equity investments

  $ 653,008   Discounted cash flow   WACC   11.1% - 23.2%     13.7 %   14.0%  

        Market comparable / Enterprise Value   EBITDA multiple(1)   4.3x - 8.5x(2)     7.3x     6.0x  

Debt investments

  $ 858,816   Discounted cash flow   Risk adjusted discount factor   6.7% - 16.1%(2)     11.2 %   11.0%  

            Expected principal recovery percentage   2.9% - 100.0%     99.8 %   100.0%  

Debt investments

  $ 659,481   Market approach   Third-party quote   11.0 - 106.0              

Total Level 3 investments

  $ 2,171,305                          

(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 17.5x and the range for risk adjusted discount factor is 4.3% - 30.0%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

        The following tables provide a summary of changes in fair value of Main Street's Level 3 portfolio investments for the three month periods ended March 31, 2018 and 2017 (amounts in thousands):

Type of Investment
  Fair Value
as of
December 31,
2017
  Transfers
Into
Level 3
Hierarchy
  Redemptions/
Repayments
  New
Investments
  Net
Changes
from
Unrealized
to
Realized
  Net
Unrealized
Appreciation
(Depreciation)
  Other(1)   Fair Value
as of
March 31,
2018
 

Debt

  $ 1,518,297   $   $ (154,935 ) $ 270,617   $ 11,615   $ (3,648 ) $ (3,141 ) $ 1,638,805  

Equity

    641,493         (17,191 )   51,027     (19,069 )   4,153     3,141     663,554  

Equity Warrant

    11,515                     160         11,675  

  $ 2,171,305   $   $ (172,126 ) $ 321,644   $ (7,454 ) $ 665   $   $ 2,314,034  

(1)
Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.
Type of Investment
  Fair Value
as of
December 31,
2016
  Transfers
Into
Level 3
Hierarchy
  Redemptions/
Repayments
  New
Investments
  Net
Changes
from
Unrealized
to
Realized
  Net
Unrealized
Appreciation
(Depreciation)
  Other(1)   Fair Value
as of
March 31,
2017
 

Debt

  $ 1,427,823   $   $ (190,366 ) $ 175,026   $ 1,340   $ (10,108 ) $ (6,056 ) $ 1,397,659  

Equity

    549,453         (9,119 )   25,691     (19,775 )   11,876     6,056     564,182  

Equity Warrant

    17,550         (1,673 )   331     (1,107 )   166         15,267  

  $ 1,994,826   $   $ (201,158 ) $ 201,048   $ (19,542 ) $ 1,934   $   $ 1,977,108  

(1)
Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        As of March 31, 2018 and December 31, 2017, the fair value determination for the SBIC debentures recorded at fair value primarily consisted of unobservable inputs. As a result, the SBIC debentures which are recorded at fair value were categorized as Level 3. Main Street determines the fair value of these instruments primarily using a Yield-to-Maturity approach that analyzes the discounted cash flows of interest and principal for each SBIC debenture recorded at fair value based on estimated market interest rates for debt instruments of similar structure, terms, and maturity. Main Street's estimate of the expected repayment date of principal for each SBIC debenture recorded at fair value is the legal maturity date of the instrument. The significant unobservable inputs used in the fair value measurement of Main Street's SBIC debentures recorded at fair value are the estimated market interest rates used to fair value each debenture using the yield valuation technique described above. Significant increases (decreases) in the estimated market interest rates in isolation would result in a significantly lower (higher) fair value measurement.

        The following tables provide a summary of the significant unobservable inputs used to fair value Main Street's Level 3 SBIC debentures as of March 31, 2018 and December 31, 2017 (amounts in thousands):

Type of Instrument
  Fair Value as of
March 31,
2018
  Valuation Technique   Significant Unobservable Inputs   Range   Weighted
Average
 

SBIC debentures

  $ 44,623   Discounted cash flow   Estimated market interest rates   4.9% - 5.7%     5.1%  

 

Type of Instrument
  Fair Value as of
December 31,
2017
  Valuation Technique   Significant Unobservable Inputs   Range   Weighted
Average
 

SBIC debentures

  $ 48,608   Discounted cash flow   Estimated market interest rates   4.9% - 5.5%     5.1%  

        The following tables provide a summary of changes for the Level 3 SBIC debentures recorded at fair value for the three month periods ended March 31, 2018 and 2017 (amounts in thousands):

Type of Instrument
  Fair Value
as of
December 31,
2017
  Repayments   Net
Realized
Loss
  New SBIC
Debentures
  Net
Unrealized
(Appreciation)
Depreciation
  Fair Value
as of
March 31,
2018
 

SBIC debentures at fair value

  $ 48,608   $ (4,000 ) $ 1,374   $   $ (1,359 ) $ 44,623  

 

Type of Instrument
  Fair Value
as of
December 31,
2016
  Repayments   Net
Realized
Loss
  New SBIC
Debentures
  Net
Unrealized
(Appreciation)
Depreciation
  Fair Value
as of
March 31,
2017
 

SBIC debentures at fair value

  $ 74,803   $ (25,200 ) $ 5,217   $   $ (5,665 ) $ 49,155  

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        At March 31, 2018 and December 31, 2017, Main Street's investments and SBIC debentures at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:

 
   
  Fair Value Measurements  
 
   
  (in thousands)
 
At March 31, 2018
  Fair Value   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

LMM portfolio investments

  $ 1,049,772   $   $   $ 1,049,772  

Middle Market portfolio investments

    617,941             617,941  

Private Loan portfolio investments

    496,533             496,533  

Other Portfolio investments

    101,066             101,066  

External Investment Manager

    48,722             48,722  

Total investments

  $ 2,314,034   $   $   $ 2,314,034  

SBIC debentures at fair value

  $ 44,623   $   $   $ 44,623  

 

 
   
  Fair Value Measurements  
 
   
  (in thousands)
 
At December 31, 2017
  Fair Value   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

LMM portfolio investments

  $ 948,196   $   $   $ 948,196  

Middle Market portfolio investments

    609,256             609,256  

Private Loan portfolio investments

    467,475             467,475  

Other Portfolio investments

    104,610             104,610  

External Investment Manager

    41,768             41,768  

Total investments

  $ 2,171,305   $   $   $ 2,171,305  

SBIC debentures at fair value

  $ 48,608   $   $   $ 48,608  

Investment Portfolio Composition

        Main Street's LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Main Street's LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, generally bear interest at fixed rates, and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, Main Street receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.

        Main Street's Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in Main Street's LMM portfolio. Main Street's Middle Market portfolio companies generally have annual revenues between $150 million

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $20 million. Main Street's Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Main Street's private loan ("Private Loan") portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street's Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Main Street's other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, Main Street may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, Main Street generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be liquidated over a five to ten year period.

        Main Street's external asset management business is conducted through its External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. Main Street entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, Main Street shares employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities. Main Street allocates the related expenses to the External Investment Manager pursuant to the sharing agreement. Main Street's total expenses for the three months ended March 31, 2018 and 2017 are net of expenses allocated to the External Investment Manager of $2.1 million and $1.5 million, respectively.

        Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the three months ended March 31, 2018, Main Street recorded investment income from one portfolio company in excess of 10% of total investment income. For the three months ended March 31, 2017, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

        The following tables provide a summary of Main Street's investments in the LMM, Middle Market and Private Loan portfolios as of March 31, 2018 and December 31, 2017 (this information excludes

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
  As of March 31, 2018  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    73     59     55  

Fair value

  $ 1,049.8   $ 617.9   $ 496.5  

Cost

  $ 898.9   $ 629.9   $ 521.6  

% of portfolio at cost—debt

    67.7%     96.7%     93.7%  

% of portfolio at cost—equity

    32.3%     3.3%     6.3%  

% of debt investments at cost secured by first priority lien

    98.4%     91.0%     94.3%  

Weighted-average annual effective yield(b)

    12.1%     9.2%     9.4%  

Average EBITDA(c)

  $ 4.8   $ 86.3   $ 43.0  

(a)
At March 31, 2018, Main Street had equity ownership in approximately 97% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 38%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 31, 2018, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in shares of Main Street's common stock will realize on its investment because it does not reflect Main Street's expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including six LMM portfolio companies and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.
 
  As of December 31, 2017  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    70     62     54  

Fair value

  $ 948.2   $ 609.3   $ 467.5  

Cost

  $ 776.5   $ 629.7   $ 489.2  

% of portfolio at cost—debt

    67.1%     97.3%     93.6%  

% of portfolio at cost—equity

    32.9%     2.7%     6.4%  

% of debt investments at cost secured by first priority lien

    98.1%     90.5%     94.5%  

Weighted-average annual effective yield(b)

    12.0%     9.0%     9.2%  

Average EBITDA(c)

  $ 4.4   $ 78.3   $ 39.6  

(a)
At December 31, 2017, Main Street had equity ownership in approximately 97% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 39%.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2017, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in shares of Main Street's common stock will realize on its investment because it does not reflect Main Street's expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including six LMM portfolio companies, one Middle Market portfolio company and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

        As of March 31, 2018, Main Street had Other Portfolio investments in eleven companies, collectively totaling approximately $101.1 million in fair value and approximately $107.1 million in cost basis and which comprised approximately 4.4% of Main Street's Investment Portfolio at fair value. As of December 31, 2017, Main Street had Other Portfolio investments in eleven companies, collectively totaling approximately $104.6 million in fair value and approximately $109.4 million in cost basis and which comprised approximately 4.8% of Main Street's Investment Portfolio at fair value.

        As discussed further in Note A.1., Main Street holds an investment in the External Investment Manager, a wholly owned subsidiary that is treated as a portfolio investment. As of March 31, 2018, there was no cost basis in this investment and the investment had a fair value of approximately $48.7 million, which comprised approximately 2.1% of Main Street's Investment Portfolio at fair value. As of December 31, 2017, there was no cost basis in this investment and the investment had a fair value of approximately $41.8 million, which comprised approximately 1.9% of Main Street's Investment Portfolio at fair value.

        The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of March 31, 2018 and December 31, 2017 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31,
2018
  December 31,
2017
 

First lien debt

    78.7%     79.0%  

Equity

    16.1%     15.3%  

Second lien debt

    4.1%     4.5%  

Equity warrants

    0.7%     0.7%  

Other

    0.4%     0.5%  

    100.0%     100.0%  

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Fair Value:
  March 31,
2018
  December 31,
2017
 

First lien debt

    71.5%     70.5%  

Equity

    23.7%     24.4%  

Second lien debt

    3.8%     4.1%  

Equity warrants

    0.6%     0.6%  

Other

    0.4%     0.4%  

    100.0%     100.0%  

        The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of March 31, 2018 and December 31, 2017 (this information excludes the Other Portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Cost:
  March 31,
2018
  December 31,
2017
 

Southwest

    27.4%     26.1%  

West

    24.1%     20.7%  

Midwest

    20.4%     22.3%  

Northeast

    15.6%     15.2%  

Southeast

    10.2%     12.8%  

Canada

    1.4%     1.9%  

Other Non-United States

    0.9%     1.0%  

    100.0%     100.0%  

 

Fair Value:
  March 31,
2018
  December 31,
2017
 

Southwest

    28.4%     26.8%  

West

    26.0%     23.7%  

Midwest

    19.1%     20.3%  

Northeast

    14.9%     14.6%  

Southeast

    9.4%     11.9%  

Canada

    1.3%     1.8%  

Other Non-United States

    0.9%     0.9%  

    100.0%     100.0%  

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        Main Street's LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by industry at cost and fair value as of March 31, 2018 and December 31, 2017 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31,
2018
  December 31,
2017
 

Construction & Engineering

    8.2%     6.4%  

Energy Equipment & Services

    7.0%     6.9%  

Commercial Services & Supplies

    5.4%     4.5%  

Media

    5.4%     4.4%  

Hotels, Restaurants & Leisure

    5.1%     6.2%  

Specialty Retail

    4.8%     5.3%  

Machinery

    4.8%     5.2%  

Diversified Telecommunication Services

    4.1%     4.1%  

Aerospace & Defense

    4.0%     3.3%  

Food Products

    3.9%     1.9%  

Health Care Providers & Services

    3.8%     2.9%  

IT Services

    3.7%     3.9%  

Professional Services

    3.4%     3.7%  

Internet Software & Services

    3.3%     3.4%  

Electronic Equipment, Instruments & Components

    2.8%     3.4%  

Leisure Equipment & Products

    2.7%     3.0%  

Computers & Peripherals

    2.5%     2.8%  

Software

    2.4%     2.5%  

Communications Equipment

    2.2%     2.3%  

Diversified Consumer Services

    2.2%     1.6%  

Distributors

    1.8%     1.9%  

Building Products

    1.8%     1.9%  

Oil, Gas & Consumable Fuels

    1.7%     1.6%  

Construction Materials

    1.5%     1.7%  

Diversified Financial Services

    1.5%     1.6%  

Health Care Equipment & Supplies

    1.3%     2.0%  

Internet & Catalog Retail

    1.2%     1.3%  

Road & Rail

    1.2%     1.0%  

Auto Components

    0.3%     1.9%  

Real Estate Management & Development

    0.3%     1.0%  

Other(1)

    5.7%     6.4%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Fair Value:
  March 31,
2018
  December 31,
2017
 

Construction & Engineering

    7.8%     6.3%  

Energy Equipment & Services

    6.4%     6.2%  

Machinery

    6.3%     6.4%  

Specialty Retail

    5.2%     5.3%  

Diversified Consumer Services

    5.1%     5.9%  

Hotels, Restaurants & Leisure

    4.9%     5.9%  

Commercial Services & Supplies

    4.7%     4.1%  

Media

    4.7%     3.8%  

IT Services

    3.8%     4.0%  

Aerospace & Defense

    3.8%     3.1%  

Health Care Providers & Services

    3.7%     2.8%  

Food Products

    3.7%     1.8%  

Diversified Telecommunication Services

    3.5%     3.4%  

Professional Services

    3.2%     3.5%  

Internet Software & Services

    3.2%     3.2%  

Computers & Peripherals

    2.9%     3.0%  

Leisure Equipment & Products

    2.6%     2.9%  

Software

    2.5%     2.5%  

Electronic Equipment, Instruments & Components

    2.3%     2.8%  

Communications Equipment

    2.1%     2.2%  

Construction Materials

    1.9%     1.9%  

Distributors

    1.7%     1.8%  

Building Products

    1.6%     1.8%  

Diversified Financial Services

    1.5%     1.6%  

Oil, Gas & Consumable Fuels

    1.5%     1.5%  

Health Care Equipment & Supplies

    1.2%     2.1%  

Road & Rail

    1.1%     1.0%  

Internet & Catalog Retail

    1.0%     1.1%  

Air Freight & Logistics

    0.7%     1.0%  

Real Estate Management & Development

    0.4%     1.1%  

Auto Components

    0.3%     1.6%  

Other(1)

    4.7%     4.4%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

        At March 31, 2018 and December 31, 2017, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

Unconsolidated Significant Subsidiaries

        In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, Main Street must determine which of its unconsolidated controlled portfolio companies, if any, are considered "significant subsidiaries." In evaluating these unconsolidated controlled portfolio companies, there are three tests utilized to determine if any of Main Street's Control Investments (as defined in Note A, including those unconsolidated portfolio companies defined as Control Investments in which Main Street does not own greater than 50% of the voting securities) are considered significant subsidiaries: the investment test, the asset test and the income test. Rule 3-09 of Regulation S-X, as interpreted by the SEC, requires Main Street to include separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which Main Street owns greater than 50% of the voting securities) in an annual report if any of the three tests exceed 20% of Main Street's total investments at fair value, total assets or total income, respectively. Rule 4-08(g) of Regulation S-X requires summarized financial information of a Control Investment in an annual report if any of the three tests exceeds 10% of Main Street's annual total amounts and Rule 10-01(b)(1) of Regulation S-X requires summarized financial information in a quarterly report if any of the three tests exceeds 20% of Main Street's year-to-date total amounts.

        As of March 31, 2018 and December 31, 2017, Main Street had no single investment that represented greater than 20% of its total Investment Portfolio at fair value and no single investment whose total assets represented greater than 20% of its total assets. The income test is measured by dividing the absolute value of the combined total of total investment income, net realized gain (loss) and net unrealized appreciation (depreciation) of each Control Investment for the period being tested by the absolute value of Main Street's pre-tax income for the same period. After performing the income test for the three months ended March 31, 2018, Main Street determined that the absolute value of its income from two of its Control Investments individually generated more than 20% of its total income, primarily due to the unrealized appreciation that was recognized on one of the investments and to the unrealized depreciation that was recognized on the other investment. As such, the External Investment Manager was considered a significant subsidiary. The summarized financial information for the External Investment Manager is included in Note D. CBT Nuggets, LLC, an unconsolidated portfolio company that was a Control Investment, but for which Main Street was not the majority owner and did not have rights to maintain greater than 50% of the board representation, was also considered a significant subsidiary at the 20% income level as of March 31, 2018. After performing the income test for the three months ended March 31, 2017, Main Street determined that the income from no single investment generated more than 20% of Main Street's total income.

        The following table shows the summarized financial information for CBT Nuggets, LLC:

 
  As of
March 31,
2018
  As of
December 31,
2017
 
 
  (dollars in thousands)
 

Balance Sheet Data

             

Current Assets

  $ 11,174   $ 14,585  

Noncurrent Assets

    11,601     11,769  

Current Liabilities

    16,853     17,570  

Noncurrent Liabilities

         

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)


 
  Three Months Ended
March 31,
 
 
  2018   2017  
 
  (dollars in thousands)
 

Summary of Operations

             

Total Revenue

  $ 9,903   $ 10,356  

Gross Profit

    8,951     9,218  

Income from Operations

    1,820     3,524  

Net Income

    2,741     3,853  

NOTE D—EXTERNAL INVESTMENT MANAGER

        As discussed further in Note A.1., the External Investment Manager provides investment management and other services to External Parties. The External Investment Manager is accounted for as a portfolio investment of MSCC since the External Investment Manager conducts all of its investment management activities for External Parties.

        During May 2012, Main Street entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-listed BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow it to own a registered investment adviser, Main Street assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on MSCC's ability to meet the source-of-income requirement necessary for it to maintain its RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. The External Investment Manager has conditionally agreed to waive a limited amount of the historical incentive fees otherwise earned. During the three months ended March 31, 2018 and 2017, the External Investment Manager earned $2.8 million and $2.6 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

        The investment in the External Investment Manager is accounted for using fair value accounting, with the fair value determined by Main Street and approved, in good faith, by Main Street's Board of Directors. Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach (see further discussion in Note B.1.). Any change in fair value of the investment in the External Investment Manager is recognized on Main Street's consolidated statements of operations in "Net Unrealized Appreciation (Depreciation)—Portfolio investments."

        The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. Main Street owns the External Investment Manager through the Taxable Subsidiary to allow MSCC to continue to comply with the "source-of-income" requirements contained in the RIC tax provisions of the Code. The taxable income,

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

or loss, of the External Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. As a result of the above described financial reporting and tax treatment, the External Investment Manager provides for any income tax expense, or benefit, and any tax assets or liabilities in its separate financial statements.

        Main Street shares employees with the External Investment Manager and allocates costs related to such shared employees to the External Investment Manager generally based on a combination of the direct time spent, new investment origination activity and assets under management, depending on the nature of the expense. For the three months ended March 31, 2018 and 2017, Main Street allocated $2.1 million and $1.5 million of total expenses, respectively, to the External Investment Manager. The total contribution of the External Investment Manager to Main Street's net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income received from the External Investment Manager. For the three months ended March 31, 2018 and 2017, the total contribution to Main Street's net investment income was $2.6 million and $2.2 million, respectively.

        Summarized financial information from the separate financial statements of the External Investment Manager as of March 31, 2018 and December 31, 2017 and for the three months ended March 31, 2018 and 2017 is as follows:

 
  As of
March 31,
2018
  As of
December 31,
2017
 
 
  (dollars in thousands)
 

Cash

  $   $  

Accounts receivable—HMS Income

    2,838     2,863  

Total assets

  $ 2,838   $ 2,863  

Accounts payable to MSCC and its subsidiaries

  $ 2,265   $ 1,963  

Dividend payable to MSCC and its subsidiaries

    573     900  

Equity

         

Total liabilities and equity

  $ 2,838   $ 2,863  

 

 
  Three Months Ended
March 31,
 
 
  2018   2017  

Management fee income

  $ 2,816   $ 2,620  

Expenses allocated from MSCC or its subsidiaries:

             

Salaries, share-based compensation and other personnel costs

    (1,353 )   (919 )

Other G&A expenses

    (713 )   (605 )

Total allocated expenses

    (2,066 )   (1,524 )

Pre-tax income

    750     1,096  

Tax expense

    (177 )   (402 )

Net income

  $ 573   $ 694  

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE E—SBIC DEBENTURES

        Under existing SBIC regulations, SBA approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Main Street, through the funds, has an effective maximum amount of $346.0 million following the prepayment of $4.0 million of existing SBIC debentures as discussed below. SBIC debentures payable were $313.8 million and $295.8 million at March 31, 2018 and December 31, 2017, respectively. SBIC debentures provide for interest to be paid semiannually, with principal due at the applicable 10-year maturity date of each debenture. During the three months ended March 31, 2018, Main Street issued $22.0 million of SBIC debentures and opportunistically prepaid $4.0 million of existing SBIC debentures as part of an effort to manage the maturity dates of the oldest SBIC debentures, leaving $32.2 million of remaining capacity under Main Street's SBIC licenses. As a result of this prepayment, Main Street recognized a realized loss of $1.4 million due to the previously recognized gain recorded as a result of recording the MSC II debentures at fair value on the date of the acquisition of the majority interests of MSC II. The effect of the realized loss is offset by the reversal of all previously recognized unrealized depreciation due to fair value adjustments since the date of the acquisition. Main Street expects to issue new SBIC debentures under the SBIC program in the future in an amount up to the regulatory maximum amount for affiliated SBIC funds. The weighted-average annual interest rate on the SBIC debentures was 3.7% and 3.6% as of March 31, 2018 and December 31, 2017, respectively. The first principal maturity due under the existing SBIC debentures is in 2019, and the weighted-average remaining duration as of March 31, 2018 was approximately 5.9 years. For the three months ended March 31, 2018 and 2017, Main Street recognized interest expense attributable to the SBIC debentures of $2.9 million and $2.5 million, respectively. Main Street has incurred upfront leverage and other miscellaneous fees of approximately 3.4% of the debenture principal amount. In accordance with SBA regulations, the Funds are precluded from incurring additional non-SBIC debt without the prior approval of the SBA.

        As of March 31, 2018, the recorded value of the SBIC debentures was $306.2 million which consisted of (i) $44.6 million recorded at fair value, or $1.4 million less than the $46.0 million par value of the SBIC debentures issued in MSC II, (ii) $149.8 million par value of SBIC debentures outstanding held in MSMF, with a recorded value of $147.6 million that was net of unamortized debt issuance costs of $2.2 million and (iii) $118.0 million par value of SBIC debentures held in MSC III with a recorded value of $113.9 million that was net of unamortized debt issuance costs of $4.1 million. As of March 31, 2018, if Main Street had adopted the fair value option under ASC 825 for all of its SBIC debentures, Main Street estimates the fair value of its SBIC debentures would be approximately $281.6 million, or $32.2 million less than the $313.8 million face value of the SBIC debentures.

NOTE F—CREDIT FACILITY

        Main Street maintains the Credit Facility to provide additional liquidity to support its investment and operational activities. The Credit Facility includes total commitments of $585.0 million from a diversified group of fifteen lenders. The Credit Facility matures in September 2021 and contains an accordion feature which allows Main Street to increase the total commitments under the facility to up to $750.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

        Borrowings under the Credit Facility bear interest, subject to Main Street's election, on a per annum basis at a rate equal to the applicable LIBOR rate (1.88% as of March 31, 2018) plus

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(i) 1.875% (or the applicable base rate (Prime Rate of 4.75% as of March 31, 2018) plus 0.875%) as long as Main Street maintains an investment grade rating and meets certain agreed upon excess collateral and maximum leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if Main Street maintains an investment grade rating but does not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%) if Main Street does not maintain an investment grade rating. Main Street pays unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. The Credit Facility contains certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio of at least 1.5 to 1.0 and (iv) maintaining a minimum tangible net worth. The Credit Facility is provided on a revolving basis through its final maturity date in September 2021, and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval.

        At March 31, 2018, Main Street had $188.0 million in borrowings outstanding under the Credit Facility. As of March 31, 2018, if Main Street had adopted the fair value option under ASC 825 for its Credit Facility, Main Street estimates its fair value would approximate its recorded value. Main Street recognized interest expense related to the Credit Facility, including unused commitment fees and amortization of deferred issuance costs, of $1.5 million and $2.5 million, respectively, for the three months ended March 31, 2018 and 2017. As of March 31, 2018, the interest rate on the Credit Facility was 3.5%. The average interest rate for the three months ended March 31, 2018 was 3.5%. As of March 31, 2018, Main Street was in compliance with all financial covenants of the Credit Facility.

NOTE G—NOTES

        In April 2013, Main Street issued $92.0 million, including the underwriters full exercise of their option to purchase additional principal amounts to cover over-allotments, in aggregate principal amount of 6.125% Notes due 2023 (the "6.125% Notes"). The 6.125% Notes are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at Main Street's option on or after April 1, 2018. On March 1, 2018, Main Street announced its intent to redeem the 6.125% Notes on April 1, 2018. The 6.125% Notes bear interest at a rate of 6.125% per year payable quarterly on January 1, April 1, July 1 and October 1 of each year. The total net proceeds to Main Street from the 6.125% Notes, after underwriting discounts and estimated offering expenses payable, were approximately $89.0 million. Main Street listed the 6.125% Notes on the New York Stock Exchange under the trading symbol "MSCA." Main Street maintained the right from time to time repurchase the 6.125% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2018, the outstanding balance of the 6.125% Notes was $90.7 million and the recorded value of $89.1 million was net of unamortized debt issuance costs of $1.5 million. As of March 31,

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

2018, if Main Street had adopted the fair value option under ASC 825 for the 6.125% Notes, Main Street estimates the fair value would be approximately $91.5 million. Main Street recognized interest expense related to the 6.125% Notes, including amortization of unamortized deferred issuance costs, of $1.5 million for each of the three months ended March 31, 2018 and 2017.

        The indenture governing the 6.125% Notes (the "6.125% Notes Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 6.125% Notes and the Trustee if Main Street ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 6.125% Notes Indenture. As of March 31, 2018, Main Street was in compliance with these covenants.

        In November 2014, Main Street issued $175.0 million in aggregate principal amount of 4.50% unsecured notes due 2019 (the "4.50% Notes due 2019") at an issue price of 99.53%. The 4.50% Notes due 2019 are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2019; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2019 mature on December 1, 2019, and may be redeemed in whole or in part at any time at Main Street's option subject to certain make-whole provisions. The 4.50% Notes due 2019 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes due 2019, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $171.2 million. Main Street may from time to time repurchase the 4.50% Notes due 2019 in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2018, the outstanding balance of the 4.50% Notes due 2019 was $175.0 million and the recorded value of $173.8 million was net of unamortized debt issuance costs of $1.2 million. As of March 31, 2018, if Main Street had adopted the fair value option under ASC 825 for the 4.50% Notes due 2019, Main Street estimates its fair value would be approximately $176.6 million. Main Street recognized interest expense related to the 4.50% Notes due 2019, including amortization of unamortized deferred issuance costs, of $2.1 million for each of the three months ended March 31, 2018 and 2017.

        The indenture governing the 4.50% Notes due 2019 (the "4.50% Notes due 2019 Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes due 2019 and the Trustee if Main Street ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2019 Indenture. As of March 31, 2018, Main Street was in compliance with these covenants.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        In November 2017, Main Street issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due 2022 (the "4.50% Notes due 2022") at an issue price of 99.16%. The 4.50% Notes due 2022 are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2022 mature on December 1, 2022, and may be redeemed in whole or in part at any time at Main Street's option subject to certain make-whole provisions. The 4.50% Notes due 2022 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes due 2022, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $182.2 million. Main Street may from time to time repurchase the 4.50% Notes due 2022 in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2018, the outstanding balance of the 4.50% Notes due 2022 was $185.0 million and the recorded value of $182.2 million was net of unamortized debt issuance costs of $2.8 million. As of March 31, 2018, if Main Street had adopted the fair value option under ASC 825 for the 4.50% Notes due 2022, Main Street estimates its fair value would be approximately $184.1 million. Main Street recognized interest expense related to the 4.50% Notes due 2022, including amortization of unamortized deferred issuance costs, of $2.2 million for the three months ended March 31, 2018.

        The indenture governing the 4.50% Notes due 2022 (the "4.50% Notes due 2022 Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes due 2022 and the Trustee if Main Street ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2022 Indenture. As of March 31, 2018, Main Street was in compliance with these covenants.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE H—FINANCIAL HIGHLIGHTS

 
  Three Months Ended
March 31,
 
 
  2018   2017  

Per Share Data:

             

NAV at the beginning of the period

  $ 23.53   $ 22.10  

Net investment income(1)

    0.63     0.57  

Net realized gain(1)(2)

    0.10     0.41  

Net unrealized depreciation(1)(2)

    (0.16 )   (0.30 )

Income tax benefit (provision)(1)(2)

    0.02     (0.11 )

Net increase in net assets resulting from operations(1)

    0.59     0.57  

Dividends paid from net investment income

    (0.57 )   (0.21 )

Distributions from capital gains

        (0.35 )

Total dividends paid

    (0.57 )   (0.56 )

Accretive effect of stock offerings (issuing shares above NAV per share)

    0.07     0.26  

Accretive effect of DRIP issuance (issuing shares above NAV per share)

    0.01     0.01  

Other(3)

    0.04     0.06  

NAV at the end of the period

  $ 23.67   $ 22.44  

Market value at the end of the period

  $ 36.90   $ 38.27  

Shares outstanding at the end of the period

    59,007,730     55,423,375  

(1)
Based on weighted-average number of common shares outstanding for the period.

(2)
Net realized gains or losses, net unrealized appreciation or depreciation, and income taxes can fluctuate significantly from period to period.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

(3)
Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.
 
  Three Months Ended
March 31,
 
 
  2018   2017  
 
  (dollars in thousands)
 

NAV at end of period

  $ 1,396,600   $ 1,243,934  

Average NAV

  $ 1,388,484   $ 1,222,708  

Average outstanding debt

  $ 871,205   $ 825,155  

Ratio of total expenses, including income tax expense, to average NAV(1)(2)

    1.30%     1.83%  

Ratio of operating expenses to average NAV(2)(3)

    1.37%     1.37%  

Ratio of operating expenses, excluding interest expense, to average NAV(2)(3)

    0.63%     0.66%  

Ratio of net investment income to average NAV(2)

    2.66%     2.55%  

Portfolio turnover ratio(2)

    7.11%     8.97%  

Total investment return(2)(4)

    –5.70%     5.64%  

Total return based on change in NAV(2)(5)

    2.50%     2.62%  

(1)
Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards, which are non-cash in nature and may vary significantly from period to period. Main Street is required to include net deferred tax provision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable.

(2)
Not annualized.

(3)
Unless otherwise noted, operating expenses include interest, compensation, general and administrative and share-based compensation expenses, net of expenses allocated to the External Investment Manager.

(4)
Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street's dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.

(5)
Total return is based on change in net asset value was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value. Non-operating changes include any items that affect net asset value other than the net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE I—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

        Main Street paid regular monthly dividends of $0.19 per share for each month of January through March 2018, totaling $33.5 million, or $0.57 per share, for the three months ended March 31, 2018. The first quarter 2018 regular monthly dividends represent a 2.7% increase from the regular monthly dividends paid for the first quarter of 2017. The regular monthly dividends equaled a total of approximately $30.4 million, or $0.555 per share, for the three months ended March 31, 2017.

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

        The determination of the tax attributes for Main Street's distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and capital gains, but may also include qualified dividends or return of capital.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        Listed below is a reconciliation of "Net increase in net assets resulting from operations" to taxable income and to total distributions declared to common stockholders for the three months ended March 31, 2018 and 2017.

 
  Three Months Ended
March 31,
 
 
  2018   2017  
 
  (estimated, dollars
in thousands)

 

Net increase in net assets resulting from operations

  $ 34,517   $ 31,450  

Book tax difference from share-based compensation expense

    1,819     1,265  

Net unrealized depreciation

    9,523     16,426  

Income tax provision (benefit)

    (979 )   5,638  

Pre-tax book income not consolidated for tax purposes

    (13,350 )   (6,468 )

Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates

    12,367     4,373  

Estimated taxable income(1)

    43,897     52,684  

Taxable income earned in prior year and carried forward for distribution in current year

    42,357     42,362  

Taxable income earned prior to period end and carried forward for distribution next period

    (63,938 )   (74,695 )

Dividend payable as of period end and paid in the following period

    11,191     10,252  

Total distributions accrued or paid to common stockholders

  $ 33,507   $ 30,603  

(1)
Main Street's taxable income for each period is an estimate and will not be finally determined until the company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.

        The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-of-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street's consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street's consolidated financial statements.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        For the three months ended March 31, 2018, Main Street recognized a net income tax benefit of $1.0 million, principally consisting of a deferred tax benefit of $1.9 million, which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in the loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book-tax differences, and a $0.9 million current tax expense, which is primarily related to a $0.4 million accrual for excise tax on Main Street's estimated undistributed taxable income and $0.5 million provision for current U.S. federal income and state taxes. For the three months ended March 31, 2017, Main Street recognized a net income tax provision of $5.6 million, principally consisting of a deferred tax provision of $4.4 million, which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in the loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book-tax differences, and a $1.3 million current tax expense, which is primarily related to a $0.9 million accrual for excise tax on Main Street's estimated undistributed taxable income, and $0.4 million provision for current U.S. federal income and state taxes.

        The net deferred tax liability at March 31, 2018 was $8.7 million compared to $10.6 million at December 31, 2017, primarily related to loss carryforwards, timing differences in net unrealized appreciation or depreciation and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. The net deferred tax liability as of December 31, 2017 equal to $10.6 million reflects a reduction of $2.8 million resulting from the decrease in the U.S. federal corporate income tax rate from 35% to 21% as enacted by the Tax Cuts and Jobs Act (See further discussion in Note B.9.). At March 31, 2018, for U.S. federal income tax purposes, the Taxable Subsidiaries had a net operating loss carryforward from prior years which, if unused, will expire in various taxable years from 2029 through 2037. Under the Tax Cuts and Jobs Act, any net operating losses generated in 2018 and future periods will have an indefinite carryforward. The timing and manner in which Main Street will utilize any loss carryforwards generated before December 31, 2017 may be limited in the future under the provisions of the Code.

NOTE J—COMMON STOCK

        Main Street maintains a program with certain selling agents through which it can sell shares of its common stock by means of at-the-market offerings from time to time (the "ATM Program"). During the three months ended March 31, 2018, Main Street sold 308,678 shares of its common stock at a weighted-average price of $37.27 per share and raised $11.5 million of gross proceeds under the ATM Program. Net proceeds were $11.3 million after commissions to the selling agents on shares sold and offering costs. As of March 31, 2018, sales transactions representing 20,400 shares had not settled and are not included in shares issued and outstanding on the face of the consolidated balance sheet, but are included in the weighted-average shares outstanding in the consolidated statement of operations and in the shares used to calculate net asset value per share. As of March 31, 2018, there were 1,602,678 shares available for sale under the ATM Program.

        During the year ended December 31, 2017, Main Street sold 3,944,972 shares of its common stock at a weighted-average price of $38.72 per share and raised $152.8 million of gross proceeds under the ATM Program. Net proceeds were $150.9 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2017, 1,911,356 shares remained available for sale under the ATM Program.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE K—DIVIDEND REINVESTMENT PLAN ("DRIP")

        Main Street's DRIP provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Main Street declares a cash dividend, the company's stockholders who have not "opted out" of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common stock or through open market purchases of common stock. Newly issued shares will be valued based upon the final closing price of MSCC's common stock on the valuation date determined for each dividend by Main Street's Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased, before any associated brokerage or other costs. Main Street's DRIP is administered by its transfer agent on behalf of Main Street's record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street's DRIP but may provide a similar dividend reinvestment plan for their clients.

        For the three months ended March 31, 2018, $1.6 million of the total $33.5 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 42,423 newly issued shares. For the three months ended March 31, 2017, $1.8 million of the total $30.4 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 48,675 newly issued shares. The shares disclosed above relate only to Main Street's DRIP and exclude any activity related to broker-managed dividend reinvestment plans.

NOTE L—SHARE-BASED COMPENSATION

        Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measured the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

        Main Street's Board of Directors approves the issuance of shares of restricted stock to Main Street employees pursuant to the Main Street Capital Corporation 2015 Equity and Incentive Plan (the "Equity and Incentive Plan"). These shares generally vest over a three-year period from the grant date. The fair value is expensed over the service period, starting on the grant date. The following table summarizes the restricted stock issuances approved by Main Street's Board of Directors under the Equity and Incentive Plan, net of shares forfeited, if any, and the remaining shares of restricted stock available for issuance as of March 31, 2018.

Restricted stock authorized under the plan

    3,000,000  

Less net restricted stock granted during:

       

Year ended December 31, 2015

    (900 )

Year ended December 31, 2016

    (260,514 )

Year ended December 31, 2017

    (223,812 )

Restricted stock available for issuance as of March 31, 2018

    2,514,774  

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

        As of March 31, 2018, the following table summarizes the restricted stock issued to Main Street's non-employee directors and the remaining shares of restricted stock available for issuance pursuant to the Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan. These shares are granted upon appointment or election to the board and vest on the day immediately preceding the annual meeting of stockholders following the respective grant date and are expensed over such service period.

Restricted stock authorized under the plan

    300,000  

Less net restricted stock granted during:

       

Year ended December 31, 2015

    (6,806 )

Year ended December 31, 2016

    (6,748 )

Year ended December 31, 2017

    (5,948 )

Restricted stock available for issuance as of March 31, 2018

    280,498  

        For each of the three months ended March 31, 2018 and 2017, Main Street recognized total share-based compensation expense of $2.3 million, related to the restricted stock issued to Main Street employees and non-employee directors.

        As of March 31, 2018, there was $8.5 million of total unrecognized compensation expense related to Main Street's non-vested restricted shares. This compensation expense is expected to be recognized over a remaining weighted-average period of approximately 1.6 years as of March 31, 2018.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE M—COMMITMENTS AND CONTINGENCIES

        At March 31, 2018, Main Street had the following outstanding commitments (in thousands):

Investments with equity capital commitments that have not yet funded:
  Amount  

Congruent Credit Opportunities Funds

       

Congruent Credit Opportunities Fund II, LP

  $ 8,488  

Congruent Credit Opportunities Fund III, LP

    12,131  

  $ 20,619  

Encap Energy Fund Investments

       

EnCap Energy Capital Fund VIII, L.P. 

  $ 469  

EnCap Energy Capital Fund IX, L.P. 

    556  

EnCap Energy Capital Fund X, L.P. 

    3,254  

EnCap Flatrock Midstream Fund II, L.P. 

    6,470  

EnCap Flatrock Midstream Fund III, L.P. 

    4,516  

  $ 15,265  

Brightwood Capital Fund Investments

       

Brightwood Capital Fund III, LP

  $ 3,000  

Brightwood Capital Fund IV, LP

    4,000  

  $ 7,000  

Freeport Fund Investments

       

Freeport First Lien Loan Fund III LP

  $ 3,942  

Freeport Financial SBIC Fund LP

    1,375  

  $ 5,317  

EIG Fund Investments

  $ 4,649  

Harris Preston Fund Investments

       

HPEP 3, L.P. 

  $ 3,967  

LKCM Headwater Investments I, L.P. 

  $ 2,931  

Copper Trail Energy Fund I, LP

  $ 2,500  

Dos Rios Partners

       

Dos Rios Partners, LP

  $ 1,594  

Dos Rios Partners—A, LP

    506  

  $ 2,100  

I-45 SLF LLC

  $ 800  

Access Media Holdings, LLC

  $ 675  

Total equity commitments

  $ 65,823  

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)


Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:
  Amount  

California Splendor Holdings LLC

  $ 8,270  

Resolute Industrial, LLC

    5,750  

Hunter Defense Technologies, Inc. 

    5,168  

Radiology Partners, Inc. 

    5,254  

NexRev LLC

    4,000  

PT Network, LLC

    3,618  

Hojeij Branded Foods, LLC

    3,422  

Arcus Hunting LLC

    3,132  

CDHA Management, LLC

    2,343  

Wireless Vision Holdings, LLC

    2,068  

NNE Partners, LLC

    2,042  

Barfly Ventures, LLC

    1,838  

Felix Investments Holdings II

    1,667  

Hawk Ridge Systems, LLC

    1,600  

Meisler Operating LLC

    1,600  

Market Force Information, LLC

    1,600  

Chamberlin Holding LLC

    1,600  

Direct Marketing Solutions, Inc. 

    1,600  

Aethon United BR LP

    1,563  

IDX Broker, LLC

    1,500  

Lamb Ventures, LLC

    1,500  

Messenger, LLC

    1,417  

TGP Holdings III LLC

    1,255  

Gamber-Johnson Holdings, LLC

    1,200  

NuStep, LLC

    1,200  

Boccella Precast Products LLC

    1,142  

KBK Industries, LLC

    925  

CTVSH, PLLC

    800  

NRI Clinical Research, LLC

    600  

ATS Workholding, LLC

    523  

PPC/SHIFT LLC

    500  

UniTek Global Services, Inc. 

    483  

Clad-Rex Steel, LLC

    400  

Gulf Publishing Holdings, LLC

    400  

Jensen Jewelers of Idaho, LLC

    350  

OnAsset Intelligence, Inc. 

    225  

BigName Commerce, LLC

    101  

BBB Tank Services, LLC

    80  

Total loan commitments

  $ 72,736  

Total commitments

  $ 138,559  

        Main Street will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and borrowings under the Credit Facility). Main Street follows a

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary. The Company had total unrealized depreciation of $0.1 million on the outstanding unfunded commitments as of March 31, 2018.

        Main Street has an operating lease for office space. Total rent expense incurred by Main Street for the three months ended March 31, 2018 and 2017 was $0.2 million and $0.1 million, respectively.

        The following table shows future minimum payments under Main Street's operating lease as of March 31, 2018:

For the Years Ended December 31,
  Amount  

2018

  $ 346  

2019

    749  

2020

    763  

2021

    777  

2022

    791  

Thereafter

    4,239  

Total

  $ 7,665  

        Main Street may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to impose liability on Main Street in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, Main Street does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on Main Street's financial condition or results of operations in any future reporting period.

NOTE N—RELATED PARTY TRANSACTIONS

        As discussed further in Note D, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of Main Street's Investment Portfolio. At March 31, 2018, Main Street had a receivable of approximately $2.8 million due from the External Investment Manager which included (i) approximately $2.3 million related primarily to operating expenses incurred by MSCC or its subsidiaries as required to support the External Investment Manager's business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion in Note D) and (ii) approximately $0.6 million of dividends declared but not paid by the External Investment Manager.

        In November 2015, Main Street's Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the "2015 Deferred Compensation Plan"). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the "2013 Deferred Compensation Plan"). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors' fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

phantom Main Street stock units. As of March 31, 2018, $4.8 million of compensation and directors' fees had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $2.5 million was deferred into phantom Main Street stock units, representing 74,503 shares of Main Street's common stock. Including phantom stock units issued through dividend reinvestment, the phantom stock units outstanding as of March 31, 2018 represented 90,411 shares of Main Street's common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the consolidated statements of changes in net assets until such shares are actually distributed to the participant in accordance with the plan, but are included in operating expenses and weighted-average shares outstanding in Main Street's consolidated statements of operations as earned.

NOTE O—SUBSEQUENT EVENTS

        In April 2018, Main Street made a new portfolio investment to facilitate the minority recapitalization of DPI, Inc. ("DPI"), a leading designer, developer, and distributor of a broad assortment of consumer electronics to national retailers under several proprietary brands. Main Street, along with a co-investor, partnered with DPI's management team to facilitate the transaction, with Main Street funding $35.2 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in St. Louis, Missouri, DPI offers consumer electronics products designed for value-conscious consumers.

        In April 2018, Main Street redeemed the entire principal amount of the issued and outstanding 6.125% Notes effective April 1, 2018 (the "Redemption Date"). The 6.125% Notes were redeemed at par value, plus the accrued and unpaid interest thereon from January 1, 2018, through, but excluding, the Redemption Date. As part of the redemption, Main Street recognized a realized loss of $1.5 million in the second quarter related to the write-off of any remaining unamortized deferred financing costs.

        During April 2018, Main Street declared a semi-annual supplemental cash dividend of $0.275 per share payable in June 2018. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that Main Street declared for the second quarter of 2018 of $0.19 per share for each of April, May and June 2018.

        During May 2018, Main Street declared regular monthly dividends of $0.19 per share for each month of July, August and September of 2018. These regular monthly dividends equal a total of $0.57 per share for the third quarter of 2018 and represent a 2.7% increase from the regular monthly dividends declared for the third quarter of 2017. Including the semi-annual supplemental dividend declared for June 2018 and the regular monthly dividends declared for the second and third quarters of 2018, Main Street will have paid $23.375 per share in cumulative dividends since its October 2007 initial public offering.

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Schedule 12-14

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments in and Advances to Affiliates
March 31, 2018
(dollars in thousands)
(unaudited)

Company
  Investment(1)(5)   Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2017
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  March 31,
2018
Fair Value
 

Majority-owned investments

                                               

Café Brazil, LLC

 

Member Units

 
$

 
$

 
$

87
 
$

4,900
 
$

 
$

 
$

4,900
 

California Splendor Holdings LLC

  LIBOR Plus 8.00% (Floor 1.00%)             122         3,610         3,610  

  LIBOR Plus 10.00% (Floor 1.00%)             303         27,723         27,723  

  Preferred Member Units                     12,500         12,500  

Clad-Rex Steel, LLC

  LIBOR Plus 9.50% (Floor 1.00)         (6 )   375     13,280     6     6     13,280  

  Member Units         280     94     9,500     280         9,780  

  10% Secured Debt             30     1,183         5     1,178  

  Member Units                 280             280  

CMS Minerals Investments

  Member Units         139     9     2,392     139     146     2,385  

Direct Marketing Solutions, Inc.

  LIBOR Plus 11.00% (Floor 1.00%)             624         18,602     79     18,523  

  Preferred Stock                     8,400         8,400  

Gamber-Johnson Holdings, LLC

  LIBOR Plus 11.00% (Floor 1.00%)         (15 )   744     23,400     15     505     22,910  

  Member Units         3,160     292     23,370     3,160         26,530  

GRT Rubber Technologies LLC

  LIBOR Plus 9.00% (Floor 1.00%)         (7 )   309     11,603     7     217     11,393  

  Member Units         1,450     308     21,970     1,450         23,420  

Harborside Holdings, LLC

  Member Units                 9,400     100         9,500  

Harris Preston Fund Investments

  LP Interests                 536             536  

Hydratec, Inc.

  Common Stock     7,922     (7,905 )   332     15,000     160     15,160      

IDX Broker, LLC

  11.5% Secured Debt         (12 )   446     15,250     12     312     14,950  

  Preferred Member Units         (110 )   68     11,660         110     11,550  

Jensen Jewelers of Idaho, LLC

  Prime Plus 6.75% (Floor 2.00%)         (4 )   50     3,955     4     154     3,805  

  Member Units             113     5,100             5,100  

Lamb Ventures, LLC

  11% Secured Debt         (10 )   267     9,942     210     1,813     8,339  

  Preferred Equity                 400             400  

  Member Units         (60 )       6,790         60     6,730  

  9.5% Secured Debt             10     432             432  

  Member Units                 520             520  

Mid-Columbia Lumber Products, LLC

  10% Secured Debt             46     1,390     353         1,743  

  12% Secured Debt             121     3,863     4         3,867  

  Member Units             2     1,575     596         2,171  

  9.5% Secured Debt             19     791         11     780  

  Member Units             15     1,290             1,290  

MSC Adviser I, LLC

  Member Units         6,954     573     41,768     6,954         48,722  

Mystic Logistics Holdings, LLC

  12% Secured Debt             241     7,696     11     206     7,501  

  Common Stock         (770 )   2     6,820         770     6,050  

NexRev LLC

  11% Secured Debt             387         17,268         17,268  

  Preferred Equity                     6,880         6,880  

NRP Jones, LLC

  12% Secured Debt             191     6,376             6,376  

  Member Units         880         3,250     880         4,130  

PPL RVs, Inc.

  LIBOR Plus 7.00% (Floor 0.50%)         (7 )   357     16,100     7     7     16,100  

  Common Stock         (780 )   28     12,440         780     11,660  

Principle Environmental, LLC (d/b.a

  13% Secured Debt         (13 )   256     7,477     13     13     7,477  

TruHorizon Environmental Solutions)

  Preferred Member Units         1,600     746     11,490     1,600         13,090  

  Warrants         130         650     130         780  

Quality Lease Service, LLC

  Zero Coupon Secured Debt                 6,950             6,950  

  Member Units                 4,938     425         5,363  

The MPI Group, LLC

  9% Secured Debt         (900 )   66     2,410         900     1,510  

  Series A Preferred Units                              

  Warrants                              

  Member Units         90     11     2,389     91         2,480  

Uvalco Supply, LLC

  9% Secured Debt             5     348         164     184  

  Member Units             80     3,880             3,880  

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Table of Contents

Company
  Investment(1)(5)   Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2017
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  March 31,
2018
Fair Value
 

Vision Interests, Inc.

  13% Secured Debt             95     2,797     4         2,801  

  Series A Preferred Stock                 3,000             3,000  

  Common Stock                              

Ziegler's NYPD, LLC

  6.5% Secured Debt             17     996     1         997  

  12% Secured Debt             9     300             300  

  14% Secured Debt             96     2,750             2,750  

  Warrants                              

  Preferred Member Units                 3,220     1         3,221  

Other controlled investments

                                               

Access Media Holdings, LLC

 

10% PIK Secured Debt

   
   
(2,030

)
 
   
17,150
   
   
2,030
   
15,120
 

  Preferred Member Units         (302 )           302     302      

  Member Units                              

ASC Interests, LLC

  11% Secured Debt         (160 )   51     1,795     3     151     1,647  

  Member Units                 1,530         160     1,370  

ATS Workholding, LLC

  5% Secured Debt             75     3,249     486         3,735  

  Preferred Member Units                 3,726             3,726  

Bond-Coat, Inc.

  12% Secured Debt             348     11,596             11,596  

  Common Stock                 9,370             9,370  

Brewer Crane Holdings, LLC

  LIBOR Plus 10.00% (Floor 1.00%)             366         9,825         9,825  

  Preferred Member Units             30         4,280         4,280  

CBT Nuggets, LLC

  Member Units         (22,219 )   6,042     89,560         22,220     67,340  

Chamberlin Holding LLC

  LIBOR Plus 10.00% (Floor 1.00%)             577         21,389         21,389  

  Member Units                     11,440         11,440  

Charps, LLC

  12% Secured Debt             550     18,225     22     1,601     16,646  

  Preferred Member Units         540         650     540         1,190  

Copper Trail Energy Fund I, LP

  LP Interests             33     2,500             2,500  

Datacom, LLC

  8% Secured Debt             33     1,575     180         1,755  

  5.25% Current / 5.25% PIK Secured Debt             330     11,110     168     498     10,780  

  Class A Preferred Member Units         (510 )       730         510     220  

  Class B Preferred Member Units         (498 )                    

Garreco, LLC

  LIBOR Plus 10.00% (Floor 1.00%)             162     5,443     5     121     5,327  

  Member Units                 1,940             1,940  

Gulf Manufacturing, LLC

  Member Units         770     414     10,060     770         10,830  

Gulf Publishing Holdings, LLC

  LIBOR Plus 9.50% (Floor 1.00%)             1     80         80      

  12.5% Secured Debt             405     12,703     7     102     12,608  

  Member Units                 4,840             4,840  

Harrison Hydra-Gen, Ltd.

  Common Stock         1,400         3,580     1,400         4,980  

HW Temps LLC

  LIBOR Plus 11.00% (Floor 1.00%)             320     9,918     4         9,922  

  Preferred Member Units             35     3,940             3,940  

KBK Industries, LLC

  10% Secured Debt             7     375         300     75  

  12.5% Secured Debt         (3 )   187     5,900     3     3     5,900  

  Member Units         320     153     4,420     320         4,740  

Marine Shelters Holdings, LLC

  12% PIK Secured Debt                              

  Preferred Member Units                              

Market Force Information, LLC

  LIBOR Plus 11.00% (Floor 1.00%)             757     23,143     13     480     22,676  

  Member Units             2     14,700             14,700  

MH Corbin Holding LLC

  10% Secured Debt             357     12,526         288     12,238  

  Preferred Member Units             35     6,000             6,000  

NAPCO Precast, LLC

  LIBOR Plus 8.50%         (6 )   302     11,475     6     6     11,475  

  Member Units         510     293     11,670     510         12,180  

NRI Clinical Research, LLC

  LIBOR Plus 6.50% (Floor 1.50%)             9     400             400  

  14% Secured Debt         30     141     3,865             3,865  

  Warrants                 500             500  

  Member Units                 2,500             2,500  

NuStep, LLC

  12% Secured Debt             628     20,420     9         20,429  

  Preferred Member Units                 10,200             10,200  

OMi Holdings, Inc.

  Common Stock         180     360     14,110     180         14,290  

Pegasus Research Group, LLC

  Member Units                 10,310             10,310  

River Aggregates, LLC

  Zero Coupon Secured Debt             21     707     21         728  

  Member Units                 4,610             4,610  

  Member Units         110         2,559     111         2,670  

SoftTouch Medical Holdings LLC

  LIBOR Plus 9.00% (Floor 1.00%)         (30 )   120     7,140     30     7,170      

  Member Units     5,172     (5,160 )   865     10,089     1,262     11,351      

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Table of Contents

Company
  Investment(1)(5)   Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2017
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  March 31,
2018
Fair Value
 

Other

                                               

Amounts related to investments transferred to or from other 1940 Act classification during the period

                                 

Total Control investments

      $ 13,094   $ (22,974 ) $ 21,955   $ 750,706   $ 164,882   $ 68,791   $ 846,797  

Affiliate Investments

                                               

AFG Capital Group, LLC

 

Warrants

 
$

 
$

40
 
$

 
$

860
 
$

40
 
$

 
$

900
 

  Preferred Member Units         170     10     3,590     170         3,760  

Barfly Ventures, LLC

  12% Secured Debt         (4 )   267     8,715     4     4     8,715  

  Options                 920             920  

  Warrants                 520             520  

BBB Tank Services, LLC

  LIBOR Plus 8.00% (Floor 1.00%)             20     778     414     492     700  

  15% Secured Debt             157     3,876     7         3,883  

  Member Units         50         500     50         550  

Boccella Precast Products LLC

  LIBOR Plus 10.0% (Floor 1.00%)         (13 )   496     16,400     1,213     1,031     16,582  

  Member Units         1,419     463     3,440     1,420         4,860  

Boss Industries, LLC

  Preferred Member Units         770     90     3,930     810         4,740  

Bridge Capital Solutions Corporation

  13% Secured Debt             347     5,884     78         5,962  

  Warrants         500         3,520     500         4,020  

  13% Secured Debt             33     1,000             1,000  

  Preferred Member Units             33     1,000             1,000  

Buca C, LLC

  LIBOR Plus 9.25% (Floor 1.00%)             560     20,193     11     300     19,904  

  Preferred Member Units             61     4,172     61         4,233  

CAI Software LLC

  12% Secured Debt         (3 )   125     4,083     3     3     4,083  

  Member Units             10     3,230             3,230  

Chandler Signs Holdings, LLC

  12% Secured Debt         (2 )   137     4,500     2     2     4,500  

  Class A Units         (470 )       2,650         470     2,180  

Charlotte Russe, Inc

  8.50% Secured Debt         (80 )   113     7,807     16,658     16,553     7,912  

  Common Stock                     3,141         3,141  

Condit Exhibits, LLC

  Member Units             66     1,950             1,950  

Congruent Credit Opportunities Funds

  LP Interests (Fund II)         (515 )       1,515         1,035     480  

  LP Interests (Fund III)         122     361     18,632     122         18,754  

Dos Rios Partners

  LP Interests (Dos Rios Partners, LP)         81         7,165     81         7,246  

  LP Interests (Dos Rios Partners—A, LP)         293         1,889     293         2,182  

Dos Rios Stone Products LLC

  Class A Preferred Units         (440 )   23     1,790         440     1,350  

East Teak Fine Hardwoods, Inc.

  Common Stock             4     630             630  

EIG Fund Investments

  LP Interests (EIG Global Private Debt fund-A, L.P.)                 1,055     377     1,029     403  

Freeport Financial Funds

  LP Interests (Freeport Financial SBIC Fund LP)         (60 )   102     5,614         60     5,554  

  LP Interests (Freeport First Lien Loan Fund III LP)             248     8,506             8,506  

Gault Financial, LLC (RMB

  8% Current Secured Debt             243     11,532             11,532  

Capital, LLC)

  Warrants                              

Guerdon Modular Holdings, Inc.

  LIBOR Plus 8.50% (Floor 1.00%)             2         394         394  

  13% Secured Debt             363     10,632     294         10,926  

  Preferred Stock                              

  Common Stock                              

Harris Preston Fund Investments

  LP Interests   $   $   $   $ 943   $ 90   $   $ 1,033  

Hawk Ridge Systems, LLC

  10.5% Secured Debt         (6 )   389     14,300     6     6     14,300  

  Preferred Member Units         2,422     55     3,800     2,423         6,223  

  Preferred Member Units         128         200     128         328  

Houston Plating and Coatings, LLC

  8% Unsecured Convertible Debt             60     3,200             3,200  

  Member Units         520     48     6,140     520         6,660  

I-45 SLF LLC

  Member Units             705     16,841             16,841  

L.F. Manufacturing Holdings, LLC

  Member Units                 2,000             2,000  

Meisler Operating LLC

  LIBOR Plus 8.50% (Floor 1.00%)             472     16,633     2,146         18,779  

  Member Units         525         3,390     2,180         5,570  

OnAsset Intelligence, Inc.

  12% PIK Secured Debt             153     5,094     153         5,247  

  10% PIK Secured Debt             1     48     1         49  

  Preferred Stock                              

  Warrants                              

OPI International Ltd.

  Common Stock                              

S-155


Table of Contents

Company
  Investment(1)(5)   Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2017
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  March 31,
2018
Fair Value
 

PCI Holding Company, Inc.

  12% Current/3% PIK Secured Debt             685     12,593     304     326     12,571  

  Preferred Stock         (600 )       890         600     290  

  Preferred Stock         870         2,610     870         3,480  

Rocaceia, LLC (Quality Lease and Rental

  12% Secured Debt                 250             250  

Holdings, LLC)

  Preferred Member Units                              

Tin Roof Acquisition Company

  12% Secured Debt             393     12,722     17     224     12,515  

  Class C Preferred Stock             76     3,027     75         3,102  

UniTek Global Services, Inc.

  LIBOR Plus 8.50% (Floor 1.00%)         (1 )   220     8,535     1     1     8,535  

  LIBOR Plus 7.50% (Floor 1.00%)/1.00% PIK             4     137     1         138  

  15% PIK Unsecured Debt             34     865     32         897  

  Preferred Stock         (8 )   248     7,320     248     8     7,560  

  Preferred Stock         (6 )   136     2,850     136     6     2,980  

  Common Stock         190         2,490     190         2,680  

Universal Wellhead Services

  Preferred Member Units         30         830     30         860  

Holdings, LLC

  Member Units         120         1,910     120         2,030  

Valley Healthcare Group, LLC

  LIBOR Plus 12.50% (Floor 0.50%)             419     11,685     6     120     11,571  

  Preferred Member Units         140         1,600     140         1,740  

Volusion, LLC

  11.5% Secured Debt             639     15,200     158         15,358  

  Preferred Member Units                 14,000             14,000  

  Warrants         (610 )       2,080         609     1,471  

Other

                                               

Amounts related to investments

                                               

transferred to or from other 1940 Act

                                               

classification during the period

            8,666         (7,807 )            

Total Affiliate investments

      $   $ 14,238   $ 9,071   $ 338,854   $ 36,118   $ 23,319   $ 359,460  

(1)
The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.

(2)
Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in "Amounts from investments transferred from other 1940 Act classifications during the period."

(3)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.

(4)
Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

(5)
This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs.

S-156


Table of Contents


Schedule 12-14

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments In and Advances to Affiliates
March 31, 2017
(dollars in thousands)
(unaudited)

Company
  Investment(1)(5)   Amount
of
Realized
Gain/
(Loss)
  Amount
of
Unrealized
Gain/
(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2016
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  March 31,
2017
Fair Value
 

Majority-owned investments

                                               

                                               

Café Brazil, LLC

  Member Units   $   $ (140 ) $ 52   $ 6,040   $   $ 140   $ 5,900  

Clad-Rex Steel, LLC

  LIBOR Plus 9.50% (Floor 1.00%)             11     396     1         397  

  LIBOR Plus 9.50% (Floor 1.00%)             375     13,941     5         13,946  

  Member Units                 7,280             7,280  

  10% Secured Debt             30     1,190         4     1,186  

  Member Units                 210             210  

CMS Minerals

  Preferred Member Units         (316 )   51     3,682         411     3,271  

Investments

  Member Units         (148 )   63     3,381         261     3,120  

Gamber-Johnson

  LIBOR Plus 11.00% (Floor 1.00%)         224     735     23,846     234         24,080  

Holdings, LLC

  Member Units         3,160     170     18,920     3,160         22,080  

GRT Rubber

  LIBOR Plus 9.00% (Floor 1.00%)         (8 )   334     13,274     8     217     13,065  

Technologies LLC

  Member Units             127     20,310             20,310  

Harborside Holdings, LLC

  Member Units         3,344             9,400         9,400  

Hydratec, Inc.

  Common Stock             480     15,640             15,640  

IDX Broker, LLC

  12.5% Secured Debt         (7 )   344     10,950     7     307     10,650  

  Member Units         1,160     68     7,040     1,160         8,200  

Jensen Jewelers of

  Prime Plus 6.75% (Floor 2.00%)         (4 )   108     4,055     4     154     3,905  

Idaho, LLC

  Member Units             37     4,460             4,460  

Lamb Ventures, LLC

  LIBOR Plus 5.75%             7         350     45     305  

  11% Secured Debt             209     7,657         78     7,579  

  Preferred Equity                 400             400  

  Member Units         200     40     5,990     200         6,190  

  9.5% Secured Debt             32     1,170     428     1,170     428  

  Member Units         (380 )   407     1,340         380     960  

Lighting

  8% Secured Debt             29     1,514         1,514      

Unlimited, LLC

  Preferred Equity     (434 )   24         410     24     434      

  Warrants     (54 )   54             54     54      

  Member Units     (100 )   100             100     100      

Mid-Columbia Lumber

  10% Secured Debt             44     1,750             1,750  

Products, LLC

  12% Secured Debt             117     3,900             3,900  

  Member Units         (500 )   2     2,480         500     1,980  

  9.5% Secured Debt             20     836         11     825  

  Member Units         80     9     600     620         1,220  

MSC Adviser I, LLC

  Member Units         2,855     695     30,617     2,855         33,472  

Mystic Logistics

  12% Secured Debt         (10 )   286     9,176     11     23     9,164  

Holdings, LLC

  Common Stock         390         5,780     390         6,170  

NRP Jones, LLC

  8% Current / 4% PIK Secured Debt             419     13,915     139         14,054  

  Warrants                 130             130  

  Member Units                 410             410  

PPL RVs, Inc.

  LIBOR Plus 7.00% (Floor 0.50%)             370     17,826     8         17,834  

  Common Stock             100     11,780             11,780  

Principle

  12% Secured Debt             122     4,060             4,060  

Environmental, LLC

  12% Current / 2% PIK Secured Debt             118     3,378     16         3,394  

  Preferred Member Units     (63 )   953         5,370     953     63     6,260  

  Warrants         50         270     50         320  

Quality Lease

  8% PIK Secured Debt             136     7,068     136         7,204  

Service, LLC

  Member Units                 3,188     1,051         4,239  

The MPI Group, LLC

  9% Secured Debt             66     2,922             2,922  

  Series A Preferred Units                              

  Warrants                              

  Member Units         90     35     2,300     90         2,390  

S-157


Table of Contents

Company
  Investment(1)(5)   Amount
of
Realized
Gain/
(Loss)
  Amount
of
Unrealized
Gain/
(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2016
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  March 31,
2017
Fair Value
 

Uvalco Supply, LLC

  9% Secured Debt             18     872         116     756  

  Member Units     69     (69 )   8     4,640         333     4,307  

Vision Interests, Inc.

  13% Secured Debt             91     2,814             2,814  

  Series A Preferred Stock                 3,000             3,000  

  Common Stock                              

Ziegler's NYPD, LLC

  6.5% Secured Debt             17     994             994  

  12% Secured Debt             9     300             300  

  14% Secured Debt             96     2,750             2,750  

  Warrants                 240             240  

  Preferred Member Units                 4,100             4,100  

Other controlled investments

                                               

                                               

Access Media

  5% Current / 5% PIK Secured Debt         (512 )   563     19,700     282     512     19,470  

Holdings, LLC

  Preferred Member Units         (189 )       240     169     189     220  

  Member Units                              

Ameritech College

  10% Secured Debt             13     514             514  

Operations, LLC

  13% Secured Debt             16     489             489  

  13% Secured Debt             98     3,025             3,025  

  Preferred Member Units         (3,381 )       2,291     3,900     3,381     2,810  

ASC Interests, LLC

  11% Secured Debt         (3 )   60     2,100     3     53     2,050  

  Member Units         60         2,680     60         2,740  

Bond-Coat, Inc.

  12% Secured Debt         (9 )   357     11,596     9     9     11,596  

  Common Stock         940         6,660     940         7,600  

CBT Nuggets, LLC

  Member Units         5,141     1,000     55,480     5,140         60,620  

Charps, LLC

  LIBOR Plus 7.00% (Floor 1.00%)             14         781         781  

  12% Secured Debt             630         18,220         18,220  

  Preferred Member Units                     400         400  

Datacom, LLC

  8% Secured Debt             20     900     180         1,080  

  5.25% Current / 5.25% PIK Secured Debt         282     313     11,049     441         11,490  

  Class A Preferred Member Units         51         1,368     51         1,419  

  Class B Preferred Member Units         332         1,529     332         1,861  

Garreco, LLC

  LIBOR Plus 12.00% (Floor 1.00%)             189     5,219     975     225     5,969  

  Member Units         320         1,150     320         1,470  

Gulf

  9% PIK Secured Debt             17     777             777  

Manufacturing, LLC

  Member Units         420     139     8,770     420         9,190  

Gulf Publishing

  12.5% Secured Debt             316     9,911     4         9,915  

Holdings, LLC

  Member Units         336         3,124     336         3,460  

Harrison Hydra-Gen, Ltd.

  Common Stock         (320 )       3,120         320     2,800  

Hawthorne Customs

                                               

and Dispatch

  Member Units                 280             280  

Services, LLC

  Member Units             48     2,040             2,040  

HW Temps LLC

  LIBOR Plus 13.00% (Floor 1.00%)             368     10,500     4     600     9,904  

  Preferred Member Units             35     3,940             3,940  

Indianapolis Aviation

  15% Secured Debt             156     3,100             3,100  

Partners, LLC

  Warrants         61         2,649     61         2,710  

Marine Shelters

  12% PIK Secured Debt         (2,551 )       9,387         9,387      

Holdings, LLC

  Preferred Member Units     (100 )               100     100      

MH Corbin

  10% Secured Debt             335     13,197     8     175     13,030  

Holding LLC

  Preferred Member Units             35     6,000             6,000  

NAPCO Precast, LLC

  Prime Plus 2.00% (Floor 7.00%)         (2 )   63     2,713     2     2     2,713  

  18% Secured Debt         (3 )   181     3,952     3     3     3,952  

  Member Units             29     10,920             10,920  

NRI Clinical

  LIBOR Plus 6.50% (Floor 1.50%)             10     200     200         400  

Research, LLC

  14% Secured Debt         (11 )   160     4,261     11     11     4,261  

  Warrants                 680             680  

  Member Units                 2,462             2,462  

NuStep, LLC

  12% Secured Debt             728         20,394         20,394  

  Preferred Member Units                     10,200         10,200  

OMi Holdings, Inc.

  Common Stock             192     13,080             13,080  

Pegasus Research Group, LLC

  Member Units         (180 )   60     8,620         180     8,440  

S-158


Table of Contents

Company
  Investment(1)(5)   Amount
of
Realized
Gain/
(Loss)
  Amount
of
Unrealized
Gain/
(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2016
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  March 31,
2017
Fair Value
 

River Aggregates, LLC

  Zero Coupon Secured Debt             19     627     19         646  

  Member Units                 4,600             4,600  

  Member Units                 2,510             2,510  

SoftTouch Medical

  LIBOR Plus 9.00% (Floor 1.00%)         (4 )   182     7,140     4     4     7,140  

Holdings LLC

  Member Units             155     9,170             9,170  

Other

                                               

Amounts related to investments transferred to or from other 1940 Act classification during the period

                                 

Total Control investments

      $ (682 ) $ 11,880   $ 12,988   $ 594,282   $ 85,423   $ 21,466   $ 658,239  

Affiliate Investments

                                               

                                               

AFG Capital

  Warrants   $   $ 20   $   $ 670   $ 20   $   $ 690  

Group, LLC

  Preferred Member Units         100     7     2,750     100         2,850  

Barfly Ventures, LLC

  12% Secured Debt             235     5,827     1,808         7,635  

  Options                 490             490  

  Warrants                 280             280  

BBB Tank

  LIBOR Plus 9.50% (Floor 1.00%)             21     797             797  

Services, LLC

  15% Secured Debt             152     3,991     1         3,992  

  Member Units                 800             800  

Boss Industries, LLC

  Preferred Member Units         73     89     2,800     120         2,920  

Bridge Capital

  13% Secured Debt             307     5,610     63         5,673  

Solutions

  Warrants                 3,370             3,370  

Corporation

  13% Secured Debt             33     1,000             1,000  

  Preferred Member Units             25     1,000             1,000  

Buca C, LLC

  LIBOR Plus 7.25% (Floor 1.00%)         (167 )   494     22,671     21     1,634     21,058  

  Preferred Member Units         (728 )   57     4,660     58     728     3,990  

CAI Software LLC

  12% Secured Debt         (3 )   110     3,683     3     203     3,483  

  Member Units         100     30     2,480     100         2,580  

CapFusion, LLC

  13% Secured Debt             518     13,202     50         13,252  

  Warrants                 1,200             1,200  

Chandler Signs

  12% Secured Debt         (2 )   137     4,500     2     2     4,500  

Holdings, LLC

  Class A Units             63     3,240             3,240  

Condit Exhibits, LLC

  Member Units             11     1,840             1,840  

Congruent Credit

  LP Interests (Fund II)         (141 )       1,518         141     1,377  

Opportunities Funds

  LP Interests (Fund III)         281     320     16,181     2,396         18,577  

Daseke, Inc.

  12% Current / 2.5% PIK Secured Debt         (167 )   676     21,799     255     22,054      

  Common Stock     22,859     (18,849 )       24,063         24,063      

Dos Rios Partners

  LP Interests (Dos Rios Partners, LP)         704         4,925     704         5,629  

  LP Interests (Dos Rios Partners—A, LP)         207         1,444     207         1,651  

Dos Rios Stone Products LLC

  Class A Preferred Units                 2,070             2,070  

East Teak Fine Hardwoods, Inc.

  Common Stock         (110 )   29     860         110     750  

East West

                                               

Copolymer &

  12% Current / 2% PIK Secured Debt         (6,390 )       8,630         6,390     2,240  

Rubber, LLC

  Warrants                              

EIG Fund Investments

  LP Interests (EIG Global Private Debt fund-A, L.P.)     71     (99 )   45     2,804     352     1,690     1,466  

  LP Interests (EIG Traverse Co-Investment, L.P.)         68     263     9,905     68         9,973  

Freeport Financial

  LP Interests (Freeport Financial                                            

Fund Investments

  SBIC Fund LP)         55     102     5,620     55         5,675  

  LP Interests (Freeport First Lien Loan Fund III LP)         (52 )   195     4,763     2,796     52     7,507  

Gault Financial, LLC

  10.5% Secured Debt         1,016     326     11,079     1,017     146     11,950  

(RMB Capital, LLC)

  Warrants                              

Glowpoint, Inc.

  12% Secured Debt         (996 )   274     3,997     9     996     3,010  

  Common Stock         190         2,080     190         2,270  

S-159


Table of Contents

Company
  Investment(1)(5)   Amount
of
Realized
Gain/
(Loss)
  Amount
of
Unrealized
Gain/
(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2016
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  March 31,
2017
Fair Value
 

Guerdon Modular

  13% Secured Debt             357     10,594     9         10,603  

Holdings, Inc.

  Preferred Stock                 1,140             1,140  

  Common Stock                 80             80  

Hawk Ridge

  10% Secured Debt             255     9,901     4         9,905  

Systems, LLC

  Preferred Member Units             150     2,850             2,850  

  Preferred Member Units                 150             150  

Houston Plating and Coatings, LLC

  Member Units         230     1     4,000     230         4,230  

I-45 SLF LLC

  Member Units         321     691     14,586     1,321         15,907  

Indianhead Pipeline

  12% Secured Debt             727     5,079     563     225     5,417  

Services, LLC

  Preferred Member Units             98     2,677     98         2,775  

  Warrants                              

  Member Units                              

KBK Industries, LLC

  10% Secured Debt             31     1,250     100     175     1,175  

  12.5% Secured Debt             188     5,889     3         5,892  

  Member Units                 2,780             2,780  

L.F. Manufacturing Holdings, LLC

  Member Units                 1,380             1,380  

OnAsset

  12% PIK Secured Debt             136     4,519     135         4,654  

Intelligence, Inc.

  Preferred Stock                              

  Warrants                              

OPI International Ltd.

  10% Unsecured Debt             12     473             473  

  Common Stock         (1,220 )       1,600         1,220     380  

PCI Holding

  12% Secured Debt         (10 )   400     13,000     10     10     13,000  

Company, Inc.

  Preferred Stock             172     5,370     170         5,540  

Rocaceia, LLC

                                               

(Quality Lease and

                                               

Rental

  12% Secured Debt                 250             250  

Holdings, LLC)

  Preferred Member Units                              

Tin Roof Acquisition

  12% Secured Debt             417     13,385     16     169     13,232  

Company

  Class C Preferred Stock             68     2,738     69         2,807  

UniTek Global

  LIBOR Plus 7.50% (Floor 1.00%)         (1 )   113     5,021     1     1     5,021  

Services, Inc.

  LIBOR Plus 8.50% (Floor 1.00%)             22     824     2         826  

  15% PIK Unsecured Debt             30     745     28         773  

  Preferred Stock         (224 )   434     6,410     434     224     6,620  

  Common Stock         (200 )       3,010         200     2,810  

Universal Wellhead

                                               

Services

  Preferred Member Units                 720             720  

Holdings, LLC

  Member Units                 610             610  

Valley Healthcare

  LIBOR Plus 12.50% (Floor 0.50%)             433     12,844     6     100     12,750  

Group, LLC

  Preferred Member Units                 1,600             1,600  

Volusion, LLC

  11.5% Secured Debt             645     15,298     141         15,439  

  Preferred Member Units                 14,000             14,000  

  Warrants         (127 )       2,576         126     2,450  

Other

                                               

Amounts related to investments transferred to or from other 1940 Act classification during the period

                                 

Total Affiliate investments

      $ 22,930   $ (26,121 ) $ 9,899   $ 375,948   $ 13,735   $ 60,659   $ 329,024  

(1)
The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.

(2)
Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in "Amounts from investments transferred from other 1940 Act classifications during the period."

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(3)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.

(4)
Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

(5)
This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs.

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PROSPECTUS

$1,500,000,000

LOGO

Common Stock
Preferred Stock
Subscription Rights
Debt Securities



           We may offer, from time to time in one or more offerings, up to $1,500,000,000 of our common stock, preferred stock, subscription rights or debt securities, which we refer to, collectively, as the "securities." Our securities may be offered at prices and on terms to be disclosed in one or more supplements to this prospectus. The offering price per share of our common stock, less any underwriting commissions or discounts, will not be less than the net asset value per share of our common stock at the time of the offering, except (i) with the requisite approval of our common stockholders or (ii) under such other circumstances as the Securities and Exchange Commission may permit. We did not seek stockholder authorization to issue common stock at a price below net asset value per share at our 2017 annual meeting of stockholders, and we are not seeking such approval at our 2018 annual meeting of stockholders, because our common stock price per share has been trading significantly above the current net asset value per share of our common stock, but we may seek such authorization at future annual meetings or special meetings of stockholders. Sales of common stock at prices below net asset value per share dilute the interests of existing stockholders, have the effect of reducing our net asset value per share and may reduce our market price per share. In addition, we have received stockholder approval to issue warrants, options or rights to subscribe for, convert to, or purchase shares of our common stock at a price per share below the net asset value per share subject to the applicable requirements of the Investment Company Act of 1940, as amended. There is no expiration date on our ability to issue such warrants, options, rights or convertible securities based on this stockholder approval. Moreover, continuous sales of common stock below net asset value may have a negative impact on total returns and could have a negative impact on the market price of our shares of common stock. See "Sales of Common Stock Below Net Asset Value."

           Shares of closed-end investment companies such as us frequently trade at a discount to their net asset value. This risk is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our common stock will trade above, at or below net asset value. You should read this prospectus and the applicable prospectus supplement carefully before you invest in our common stock.

           Our securities may be offered to one or more purchasers directly by us, through agents designated from time to time by us, or to or through underwriters or dealers. The prospectus supplement relating to the offering will identify any agents or underwriters involved in the sale of our securities, and will disclose any applicable purchase price, fee, commission or discount arrangement between us and our agents or underwriters or among our underwriters or the basis upon which such amount may be calculated. See "Plan of Distribution." We may not sell any of our securities through agents, underwriters or dealers without delivery of a prospectus supplement describing the method and terms of the offering of such securities, which must be delivered to each purchaser at, or prior to, the earlier of delivery of a confirmation of sale or delivery of the securities.

           We are a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million.

           The LMM and Middle Market securities in which we invest generally would be rated below investment grade if they were rated by rating agencies. Below investment grade securities, which are often referred to as "junk," have predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. They may also be difficult to value and are illiquid.

           Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company.

           We are an internally managed, closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended.

           Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "MAIN." On April 26, 2018, the last reported sale price of our common stock on the NYSE was $37.37 per share, and the net asset value per share of our common stock on December 31, 2017 (the last date prior to the date of this prospectus on which we determined our net asset value per share) was $23.53.



           Investing in our securities involves a high degree of risk, and should be considered highly speculative. See "Risk Factors" beginning on page 15 to read about factors you should consider, including the risk of leverage and dilution, before investing in our securities.

           This prospectus and the accompanying prospectus supplement contain important information about us that a prospective investor should know before investing in our securities. Please read this prospectus and the accompanying prospectus supplement before investing and keep them for future reference. We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission, or SEC. This information is available free of charge by contacting us at 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056 or by telephone at (713) 350-6000 or on our website at www.mainstcapital.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider that information to be part of this prospectus. The SEC also maintains a website at www.sec.gov that contains such information.

           Neither the Securities and Exchange Commission nor any state securities commission, nor any other regulatory body, has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.



   

The date of this prospectus is April 27, 2018


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TABLE OF CONTENTS

 
  Page  

Prospectus Summary

    1  

Fees and Expenses

    13  

Risk Factors

    15  

Cautionary Statement Concerning Forward-Looking Statements

    42  

Use of Proceeds

    43  

Price Range of Common Stock and Distributions

    44  

Ratios of Earnings to Fixed Charges

    50  

Selected Financial Data

    51  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    53  

Senior Securities

    79  

Business

    80  

Portfolio Companies

    93  

Management

    121  

Certain Relationships and Related Party Transactions

    148  

Control Persons and Principal Stockholders

    148  

Sales of Common Stock Below Net Asset Value

    151  

Dividend Reinvestment and Direct Stock Purchase Plan

    156  

Description of Common Stock

    157  

Description of Our Preferred Stock

    164  

Description of Our Subscription Rights

    165  

Description of Our Debt Securities

    166  

Material U.S. Federal Income Tax Considerations

    180  

Regulation

    188  

Plan of Distribution

    194  

Custodian, Transfer and Distribution Paying Agent and Registrar

    195  

Brokerage Allocation and Other Practices

    195  

Legal Matters

    196  

Independent Registered Public Accounting Firm

    196  

Available Information

    196  

Privacy Notice

    196  

Index to Financial Statements

    F-1  

        This prospectus is part of a registration statement that we have filed with the Securities and Exchange Commission, or SEC, using the "shelf" registration process. Under the shelf registration process, we may offer, from time to time, up to $1,500,000,000 of our securities on terms to be determined at the time of the offering. This prospectus provides you with a general description of the securities that we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. To the extent required by law, we will amend or supplement the information contained in this prospectus and any accompanying prospectus supplement to reflect any material changes to such information subsequent to the date of the prospectus and any accompanying prospectus supplement and prior to the completion of any offering pursuant to the prospectus and any accompanying prospectus supplement. Please carefully read this prospectus and any accompanying prospectus supplement together with the additional information described under "Available Information" and "Risk Factors" before you make an investment decision.

        No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus or any accompanying supplement to this prospectus. You must not rely on any unauthorized information or representations not contained in this prospectus or any accompanying prospectus supplement as if we had authorized it. This prospectus and any accompanying prospectus supplement do not constitute an offer to sell or a solicitation of any offer to buy any security other than the registered securities to which they relate, nor do they constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. The information contained in this prospectus and any accompanying prospectus supplement is accurate as of the dates on their covers.


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PROSPECTUS SUMMARY

        This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read the entire prospectus and any prospectus supplement carefully, including the section entitled "Risk Factors." Yield information contained in this prospectus related to debt investments in our investment portfolio is not intended to approximate a return on your investment in us and does not take into account other aspects of our business, including our operating and other expenses, or other costs incurred by you in connection with your investment in us.

Organization

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF"), Main Street Capital II, LP ("MSC II") and Main Street Capital III, LP ("MSC III" and, collectively with MSMF and MSC II, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes.

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        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our," the "Company" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

        The following diagram depicts our organizational structure:

GRAPHIC


*
Each of the Taxable Subsidiaries is directly or indirectly wholly owned by MSCC.

**
The External Investment Manager is accounted for as a portfolio investment at fair value, as opposed to a consolidated subsidiary, and is indirectly wholly owned by MSCC.

Overview

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million. Our private loan ("Private Loan") portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio.

        We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company's capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution. Providing customized, "one stop" financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies that are generally larger in size

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than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

        Our Private Loan portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities.

        Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes (see "Regulation"). An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

        The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

        Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio.

        During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-listed BDC, to provide

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certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income.

        During April 2014, we received an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide it an incentive to allocate opportunities to HMS Income instead of us. However, both we and the External Investment Manager have policies and procedures in place to manage this conflict.

        You should be aware that investments in our portfolio companies carry a number of risks including, but not limited to, investing in companies which may have limited operating histories and financial resources and other risks common to investing in below investment grade debt and equity investments in private, smaller companies. Please see "Risk Factors—Risks Related to Our Investments" for a more complete discussion of the risks involved with investing in our portfolio companies.

        Our principal executive offices are located at 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056, and our telephone number is (713) 350-6000. We maintain a website at http://www.mainstcapital.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider that information to be part of this prospectus.

Business Strategies

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We have adopted the following business strategies to achieve our investment objective. Please see "Business—Business Strategies" for a more complete discussion of our business strategies.

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Risk Factors

        Investing in our securities involves a number of significant risks. You should consider carefully the information found in "Risk Factors," including the following risks:

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Investment Criteria

        Our investment team has identified the following investment criteria that it believes are important in evaluating prospective portfolio companies. Our investment team uses these criteria in evaluating investment opportunities. However, not all of these criteria have been, or will be, met in connection with each of our investments. Please see "Business—Investment Criteria" for a more complete discussion of our investment criteria.

Dividend Reinvestment and Direct Stock Purchase Plan

        We have adopted a dividend reinvestment and direct stock purchase plan, or the Plan. The Plan primarily consists of a dividend reinvestment feature and a direct stock purchase feature. The direct stock purchase feature of the Plan is designed to provide new investors and existing holders of our common stock with a convenient and economical method to purchase shares of our common stock and is described in more detail in a separate prospectus supplement. The dividend reinvestment feature of the Plan, or the dividend reinvestment plan, provides for the reinvestment of dividends on behalf of our registered stockholders who hold their shares with American Stock Transfer & Trust Company, LLC, the plan administrator and our transfer agent and registrar, or certain brokerage firms that have elected to participate in our dividend reinvestment plan, unless a stockholder has elected to receive dividends in cash. For more information, see "Dividend Reinvestment and Direct Stock Purchase Plan."

Recent Developments

        During January 2018, we made a new portfolio investment to facilitate the minority recapitalization of Brewer Crane, LLC ("Brewer"), a leading Southern California full-service crane rental service provider. We, along with a co-investor, partnered with Brewer's founder and Chief Executive Officer to facilitate the transaction, with us funding $14.2 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in Lakeside, California, and founded in 1997,

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Brewer provides crane rental services to San Diego County and the surrounding Southern California area, offering mobile cranes, tower cranes, skilled operators, construction hoists, hauling, rigging, storage, service and repairs, and miscellaneous equipment rental.

        In February 2018, we fully exited our debt and equity investments in SoftTouch Medical Holdings, LLC ("SoftTouch"), a leading provider of home medical equipment and services, serving pediatric patients across the states of Georgia and Alabama. SoftTouch provides a broad array of medical equipment and services to chronically ill youth through its diverse product offerings, including respiratory therapy, enteral feeding, phototherapy, ventilators, amongst others. We realized a gain of approximately $5.2 million on the exit of our equity investment in SoftTouch.

        In February 2018, we made a new portfolio investment to facilitate the management led buyout of DMS Holdco, LLC. ("DMS"), a leading provider of omni-channel direct marketing services. We, along with a co-investor, partnered with the DMS' management team to facilitate the transaction, with us funding $27.2 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in Portland, Oregon, and founded in 1982, DMS develops and executes end-to-end, omni-channel direct marketing services including strategy, creative design, direct mail production/fulfillment, and digital marketing to various end markets including the FinTech, banking, telecom and technology industries.

        During February 2018, we declared regular monthly dividends of $0.190 per share for each of April, May and June 2018. These regular monthly dividends equal a total of $0.570 per share for the second quarter of 2018. The second quarter 2018 regular monthly dividends represent a 2.7% increase from the dividends declared for the second quarter of 2017.

        In February 2018, we fully exited our investment in Hydratec, Inc. ("Hydratec"). We realized a gain of approximately $7.9 million on the exit of our equity investment in Hydratec, representing a realized value consistent with our fair market value of this equity investment as of December 31, 2017. Our initial investment in Hydratec in October 2007 consisted of approximately $9.3 million, including a first lien, senior secured debt investment and a direct equity investment. Headquartered in Delano, California, and founded in 1981, Hydratec is a designer and installer of agricultural irrigation products and systems for farmers in the San Joaquin valley of central California. Hydratec has been a leader in applying advances in micro-irrigation techniques for large and small farms across its operating region.

        In February 2018, we made a new portfolio investment to facilitate the recapitalization of Chamberlin Holding LLC, d.b.a. Chamberlin Roofing & Waterproofing ("Chamberlin"), a leading commercial roofing and waterproofing specialty contractor. We, along with a co-investor, partnered with Chamberlin's management team to facilitate the transaction, with us funding $33.0 million in a combination of first-lien, senior secured term debt and a direct equity investment. In addition, we and our co-investor are providing Chamberlin an undrawn credit facility to support our future growth initiatives and working capital needs. Founded in 1897, and now headquartered in Houston, Texas, Chamberlin is a market leading commercial specialty contractor with a focus on installing high quality roofing and waterproofing systems, as well as providing roof maintenance and leak repair services throughout the Southwest, Southeast, and Midwest regions of the United States, with a focus on Texas and Oklahoma.

        In February 2018, we made a new portfolio investment to facilitate the minority recapitalization of NexRev LLC ("NexRev"), a market leader in the energy management and efficiency industry. We, along with a co-investor, partnered with NexRev's management team to facilitate the transaction, with us funding $24.3 million in a combination of first-lien, senior secured term debt and a direct equity investment. In addition, we and our co-investor are providing NexRev an undrawn credit facility to support its future growth initiatives and working capital needs. Headquartered in Plano, Texas, and founded in 1994, NexRev develops, manufactures and fabricates energy and facility management

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products and self-performs integration of HVAC, Electrical, Building Management Systems and Test and Balance services, directly to national account clients.

        In March 2018, we made a new portfolio investment to facilitate the leveraged buyout of California Splendor, Inc. ("California Splendor"), a leading provider of frozen natural fruit ingredients. We, along with a co-investor, partnered with California Splendor's management team to facilitate the transaction, with us funding $40.5 million in a combination of first-lien, senior secured term debt and a direct equity investment. Founded in 1997, and headquartered in San Diego, California, California Splendor processes a variety of organic and conventional fruits for blue-chip customers in both the consumer packaged goods and foodservice sectors. California Splendor's products are used as key ingredients in a variety of end-use applications including spreads and pies, individually quick frozen berries, smoothies and yogurts.

        In April 2018, we made a new portfolio investment to facilitate the minority recapitalization of DPI, Inc. ("DPI"), a leading designer, developer, and distributor of a broad assortment of consumer electronics to national retailers under several proprietary brands. We, along with a co-investor, partnered with DPI's management team to facilitate the transaction, with us funding $35.2 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in St. Louis, Missouri, DPI offers consumer electronics products designed for value-conscious consumers.

        In April 2018, we redeemed the entire principal amount of the issued and outstanding 6.125% Notes effective April 1, 2018 (the "Redemption Date"). The 6.125% Notes were redeemed at par value, plus the accrued and unpaid interest thereon from January 1, 2018, through, but excluding, the Redemption Date. As part of the redemption, we recognized a realized loss of $1.5 million in the second quarter related to the write-off of any remaining unamortized deferred financing costs.

        During April 2018, we declared a semi-annual supplemental cash dividend of $0.275 per share payable in June 2018. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the second quarter of 2018 of $0.19 per share for each of April, May and June 2018.

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The Offering

        We may offer, from time to time, up to $1,500,000,000 of our securities, on terms to be determined at the time of the offering. Our securities may be offered at prices and on terms to be disclosed in one or more prospectus supplements.

        Our securities may be offered directly to one or more purchasers by us or through agents designated from time to time by us, or to or through underwriters or dealers. The prospectus supplement relating to the offering will disclose the terms of the offering, including the name or names of any agents or underwriters involved in the sale of our securities by us, the purchase price, and any fee, commission or discount arrangement between us and our agents or underwriters or among our underwriters or the basis upon which such amount may be calculated. See "Plan of Distribution." We may not sell any of our securities through agents, underwriters or dealers without delivery of a prospectus supplement describing the method and terms of the offering of our securities.

        Set forth below is additional information regarding the offering of our securities:

Use of proceeds

  We intend to use the net proceeds from any offering to make investments in accordance with our investment objective and strategies described in this prospectus or any prospectus supplement, to pay our operating expenses and other cash obligations, and for general corporate purposes. See "Use of Proceeds."

New York Stock Exchange symbol

 

"MAIN"

Dividends and distributions

 

Our dividends and other distributions, if any, will be determined by our Board of Directors from time to time.

 

Our ability to declare dividends depends on our earnings, our overall financial condition (including our liquidity position), maintenance of our RIC status and such other factors as our Board of Directors may deem relevant from time to time.

 

When we make distributions, we are required to determine the extent to which such distributions are paid out of current or accumulated earnings, recognized capital gains or capital. To the extent there is a return of capital (a distribution of the stockholders' invested capital), investors will be required to reduce their basis in our stock for federal tax purposes. In the future, our distributions may include a return of capital.

Taxation

 

MSCC has elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code. Accordingly, we generally will not pay corporate-level U.S. federal income taxes on any net ordinary income or capital gains that we distribute to our stockholders as dividends. To maintain our qualification as a RIC for U.S. federal income tax purposes, we must meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any.

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Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% U.S. federal excise tax on such income. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. See "Material U.S. Federal Income Tax Considerations."

Dividend reinvestment and direct stock purchase plan

 

We have adopted a dividend reinvestment and direct stock purchase plan, or the Plan. The Plan primarily consists of a dividend reinvestment feature and a direct stock purchase feature. The direct stock purchase feature of the Plan is designed to provide new investors and existing holders of our common stock with a convenient and economical method to purchase shares of our common stock and is described in more detail in a separate prospectus supplement. The dividend reinvestment feature of the Plan, or the dividend reinvestment plan, provides for the reinvestment of dividends on behalf of our registered stockholders who hold their shares with American Stock Transfer & Trust Company, LLC, the plan administrator and our transfer agent and registrar, or certain brokerage firms that have elected to participate in our dividend reinvestment plan, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our registered stockholders (or stockholders holding shares through participating brokerage firms) who have not properly "opted out" of the dividend reinvestment plan will have their cash dividend automatically reinvested into additional shares of our common stock. See "Dividend Reinvestment and Direct Stock Purchase Plan."

 

Stockholders who receive dividends in the form of stock will be subject to the same federal, state and local tax consequences as stockholders who elect to receive their dividends in cash. See "Dividend Reinvestment and Direct Stock Purchase Plan."

Trading at a discount

 

Shares of closed-end investment companies frequently trade at a discount to their net asset value. This risk is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our shares will trade above, at or below net asset value.

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Sales of common stock below net asset value

 

The offering price per share of our common stock, less any underwriting commissions or discounts, will not be less than the net asset value per share of our common stock at the time of the offering, except (i) with the requisite approval of our common stockholders or (ii) under such other circumstances as the Securities and Exchange Commission may permit. In addition, we cannot issue shares of our common stock below net asset value unless our Board of Directors determines that it would be in our and our stockholders' best interests to do so. We did not seek stockholder authorization to issue common stock at a price below net asset value per share at our 2017 annual meeting of stockholders, and we are not seeking such approval at our 2018 annual meeting of stockholders, because our common stock price per share has been trading significantly above the current net asset value per share of our common stock, but we may seek such authorization at future annual meetings or special meetings of stockholders.

 

In addition, we have received stockholder approval to issue warrants, options or rights to subscribe for, convert to, or purchase shares of our common stock at a price per share below the net asset value per share subject to the applicable requirements of the 1940 Act. There is no expiration date on our ability to issue such warrants, options, rights or convertible securities based on this stockholder approval.

 

Sales by us of our common stock at a discount from our net asset value pose potential risks for our existing stockholders whether or not they participate in the offering, as well as for new investors who participate in the offering. See "Sales of Common Stock Below Net Asset Value."

Available Information

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC under the Securities Exchange Act of 1934, or the "Exchange Act." You can inspect any materials we file with the SEC, without charge, at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The information we file with the SEC is available free of charge by contacting us at 1300 Post Oak Boulevard, 8th Floor, Houston, TX 77056, by telephone at (713) 350-6000 or on our website at http://www.mainstcapital.com. The SEC also maintains a website that contains reports, proxy statements and other information regarding registrants, including us, that file such information electronically with the SEC. The address of the SEC's website is http://www.sec.gov. Information contained on our website or on the SEC's website about us is not incorporated into this prospectus, and you should not consider information contained on our website or on the SEC's website to be part of this prospectus.

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FEES AND EXPENSES

        The following table is intended to assist you in understanding the costs and expenses that an investor in this offering will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by "you," "us" or "Main Street," or that "we" will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in us.

 
   
 

Stockholder Transaction Expenses:

       

Sales load (as a percentage of offering price)

    —% (1)

Offering expenses (as a percentage of offering price)

    —% (2)

Dividend reinvestment and direct stock purchase plan expenses

    —% (3)

Total stockholder transaction expenses (as a percentage of offering price)

    —% (4)

Annual Expenses of the Company (as a percentage of net assets attributable to common stock):

       

Operating expenses

    2.92% (5)

Interest payments on borrowed funds

    3.31% (6)

Income tax expense

    1.77% (7)

Acquired fund fees and expenses

    0.50% (8)

Total annual expenses

    8.50%  

(1)
In the event that our securities are sold to or through underwriters, a corresponding prospectus supplement will disclose the applicable sales load.

(2)
In the event that we conduct an offering of our securities, a corresponding prospectus supplement will disclose the estimated offering expenses.

(3)
The expenses of administering our dividend reinvestment and direct stock purchase plan are included in operating expenses.

(4)
Total stockholder transaction expenses may include sales load and will be disclosed in a future prospectus supplement, if any.

(5)
Operating expenses in this table represent the estimated expenses of MSCC and its consolidated subsidiaries.

(6)
Interest payments on borrowed funds represent our estimated annual interest payments on borrowed funds based on current debt levels as adjusted for projected increases (but not decreases) in debt levels over the next twelve months.

(7)
Income tax expense relates to the accrual of (a) deferred tax provision (benefit) primarily related to loss carryforwards, timing differences in net unrealized appreciation or depreciation and other temporary book-tax differences from our portfolio investments held in Taxable Subsidiaries and (b) excise, state and other taxes. Deferred taxes are non-cash in nature and may vary significantly from period to period. We are required to include deferred taxes in calculating our annual expenses even though deferred taxes are not currently payable or receivable. Due to the variable nature of deferred tax expense, which can be a large portion of the income tax expense, and the difficulty in providing an estimate for future periods, this income tax expense estimate is based upon the actual amount of income tax expense for the year ended December 31, 2017.

(8)
Acquired fund fees and expenses represent the estimated indirect expense incurred due to investments in other investment companies and private funds.

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Example

        The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we would have no additional leverage and that our annual operating expenses would remain at the levels set forth in the table above. In the event that shares to which this prospectus relates are sold to or through underwriters, a corresponding prospectus supplement will restate this example to reflect the applicable sales load.

 
  1 Year   3 Years   5 Years   10 Years  

You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return

  $ 84   $ 242   $ 389   $ 715  

        The example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses may be greater or less than those shown. While the example assumes, as required by the SEC, a 5.0% annual return, our performance will vary and may result in a return greater or less than 5.0%. In addition, while the example assumes reinvestment of all dividends at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by (i) the market price per share of our common stock at the close of trading on a valuation date determined by our Board of Directors for each dividend in the event that we use newly issued shares to satisfy the share requirements of the dividend reinvestment plan or (ii) the average purchase price of all shares of common stock purchased by the plan administrator in the event that shares are purchased in the open market to satisfy the share requirements of the dividend reinvestment plan, which may be at, above or below net asset value. See "Dividend Reinvestment and Direct Stock Purchase Plan" for additional information regarding our dividend reinvestment plan.

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RISK FACTORS

        Investing in our securities involves a number of significant risks. In addition to the other information contained in this prospectus and any accompanying prospectus supplement, you should consider carefully the following information before making an investment in our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us might also impair our operations and performance. If any of the following events occur, our business, financial condition and results of operations could be materially and adversely affected. In such case, our net asset value, the trading price of our common stock and the value of our other securities could decline, and you may lose all or part of your investment.

RISKS RELATING TO ECONOMIC CONDITIONS

Deterioration in the economy and financial markets increases the likelihood of adverse effects on our financial position and results of operations. Such economic adversity could impair our portfolio companies' financial positions and operating results and affect the industries in which we invest, which could, in turn, harm our operating results.

        The broader fundamentals of the United States economy remain mixed. In the event that the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements and an increase in defaults. In addition, a decline in oil and natural gas prices would adversely affect the credit quality of our debt investments and the underlying operating performance of our equity investments in energy-related businesses. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by economic cycles, industry cycles or other conditions, which could also have a negative impact on our future results.

        Although we have been able to secure access to additional liquidity, including through the Credit Facility, public debt issuances, leverage available through the SBIC program and equity offerings, the potential for volatility in the debt and equity capital markets provides no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all. Further, if the price of our common stock falls below our net asset value per share, we will be limited in our ability to sell new shares if we do not have stockholder authorization to sell shares at a price below net asset value per share. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2017 annual meeting of stockholders, and we are not seeking such approval at our 2018 annual meeting of stockholders, because our common stock price had been trading significantly above the net asset value per share of our common stock since 2011.

RISKS RELATING TO OUR BUSINESS AND STRUCTURE

Our Investment Portfolio is and will continue to be recorded at fair value, with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of fair value and, as a result, there is and will continue to be uncertainty as to the value of our portfolio investments.

        Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value as determined by us with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of fair value and our valuation procedures. Typically, there is not a public market for the securities of the privately held LMM or Private Loan companies in which we have invested and will generally continue to invest. As a result, we value these securities quarterly at fair value based on inputs from management, a nationally recognized independent financial advisory services firm (on a rotational basis) and our audit committee with the oversight, review and approval of our Board of Directors. In

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addition, the market for investments in Middle Market companies is generally not a liquid market, and therefore, we primarily use a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs, which are reviewed by our audit committee with the oversight, review and approval of our Board of Directors. See "Business—Determination of Net Asset Value and Investment Portfolio Valuation Process" for a more detailed description of our investment portfolio valuation process and procedures.

        The determination of fair value and consequently, the amount of unrealized gains and losses in our portfolio, are to a certain degree, subjective and dependent on a valuation process approved by our Board of Directors. Certain factors that may be considered in determining the fair value of our investments include external events, such as private mergers, sales and acquisitions involving comparable companies. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Due to this uncertainty, our fair value determinations may cause our net asset value on a given date to materially understate or overstate the value that we may ultimately realize on one or more of our investments. As a result, investors purchasing our securities based on an overstated net asset value would pay a higher price than the value of our investments might warrant. Conversely, investors selling our securities during a period in which the net asset value understates the value of our investments may receive a lower price for their securities than the value of our investments might warrant.

Our financial condition and results of operations depends on our ability to effectively manage and deploy capital.

        Our ability to achieve our investment objective of maximizing our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company, depends on our ability to effectively manage and deploy capital, which depends, in turn, on our investment team's ability to identify, evaluate and monitor, and our ability to finance and invest in, companies that meet our investment criteria.

        Accomplishing our investment objective on a cost-effective basis is largely a function of our investment team's handling of the investment process, its ability to provide competent, attentive and efficient services and our access to investments offering acceptable terms. In addition to monitoring the performance of our existing investments, members of our investment team are also called upon, from time to time, to provide managerial assistance to some of our portfolio companies. These demands on their time may distract them or slow the rate of investment.

        Even if we are able to grow and build upon our investment operations, any failure to manage our growth effectively could have a material adverse effect on our business, financial condition, results of operations and prospects. The results of our operations will depend on many factors, including the availability of opportunities for investment, readily accessible short and long-term funding alternatives in the financial markets and economic conditions. Furthermore, if we cannot successfully operate our business or implement our investment policies and strategies as described herein, it could negatively impact our ability to pay dividends.

We may face increasing competition for investment opportunities.

        We compete for investments with other investment funds (including private equity funds, debt funds, mezzanine funds, collateralized loan obligation funds, or CLOs, BDCs, and SBICs), as well as traditional financial services companies such as commercial banks and other sources of funding. Many

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of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of capital and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments than we have. These characteristics could allow our competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than we are able to do. We may lose investment opportunities if we do not match our competitors' pricing, terms and structure. If we are forced to match our competitors' pricing, terms and structure, we may not be able to achieve acceptable returns on our investments or may bear substantial risk of capital loss. A significant part of our competitive advantage stems from the fact that the market for investments in LMM companies is underserved by traditional commercial banks and other financing sources. A significant increase in the number and/or the size of our competitors in this target market could force us to accept less attractive investment terms. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC.

We are dependent upon our key investment personnel for our future success.

        We depend on the members of our investment team, particularly Vincent D. Foster, Dwayne L. Hyzak, Curtis L. Hartman, David L. Magdol, K. Colton Braud, III, Alejandro Capetillo, and Nicholas T. Meserve for the identification, review, final selection, structuring, closing and monitoring of our investments. These employees have significant investment expertise and relationships that we rely on to implement our business plan. Although we have entered into a non-compete agreement with Mr. Foster, we have no guarantee that he or any other employees will remain employed with us. If we lose the services of these individuals, we may not be able to operate our business as we expect, and our ability to compete could be harmed, which could cause our operating results to suffer.

Our success depends on attracting and retaining qualified personnel in a competitive environment.

        Our growth will require that we retain new investment and administrative personnel in a competitive market. Our ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors including, but not limited to, our ability to offer competitive wages, benefits and professional growth opportunities. Many of the entities, including investment funds (such as private equity funds, debt funds and mezzanine funds) and traditional financial services companies, with which we compete for experienced personnel have greater resources than we have.

        The competitive environment for qualified personnel may require us to take certain measures to ensure that we are able to attract and retain experienced personnel. Such measures may include increasing the attractiveness of our overall compensation packages, altering the structure of our compensation packages through the use of additional forms of compensation, or other steps. The inability to attract and retain experienced personnel would have a material adverse effect on our business.

Our business model depends to a significant extent upon strong referral relationships, and our inability to maintain or develop these relationships, as well as the failure of these relationships to generate investment opportunities, could adversely affect our business.

        We expect that members of our management team will maintain their relationships with intermediaries, financial institutions, investment bankers, commercial bankers, financial advisors, attorneys, accountants, consultants and other individuals within our network, and we will rely to a significant extent upon these relationships to provide us with potential investment opportunities. If our management team fails to maintain its existing relationships or develop new relationships with sources of investment opportunities, we will not be able to grow our Investment Portfolio. In addition, individuals with whom members of our management team have relationships are not obligated to

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provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.

Our executive officers and employees, through the External Investment Manager, may manage other investment funds, including HMS Income, that operate in the same or a related line of business as we do, which may result in significant conflicts of interest.

        Our executive officers and employees, through the External Investment Manager, may manage other investment funds that operate in the same or a related line of business as we do. Accordingly, they may have obligations to such other entities, the fulfillment of which obligations may not be in the best interests of us or our stockholders. During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, which is the investment advisor to HMS Income, a non-listed BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. The sub-advisory relationship requires us to commit resources to achieving HMS Income's investment objective, while such resources were previously solely devoted to achieving our investment objective. Our investment objective and investment strategies are very similar to those of HMS Income and it is likely that an investment appropriate for us or HMS Income would be appropriate for the other entity. As a result, we and HMS Income requested an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where our co-investing would otherwise be prohibited under the 1940 Act. The SEC granted the exemptive order in April 2014, and we have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. As a consequence, it may be more difficult for us to maintain or increase the size of our Investment Portfolio in the future. Although we will endeavor to allocate investment opportunities in a fair and equitable manner, including in accordance with the conditions set forth in the exemptive order issued by the SEC when relying on such order, we may face conflicts in allocating investment opportunities between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide an incentive to allocate opportunities to HMS Income instead of us. We have implemented an allocation policy to ensure the equitable distribution of investment opportunities and, as a result, may be unable to participate in certain investments based upon such allocation policy.

Regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital.

        Our business will require capital to operate and grow. We may acquire such additional capital from the following sources:

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The Funds are licensed by the SBA, and therefore subject to SBA regulations.

        The Funds, our wholly owned subsidiaries, are licensed to act as SBICs and are regulated by the SBA. The SBA also places certain limitations on the financing terms of investments by SBICs in portfolio companies and prohibits SBICs from providing funds for certain purposes or to businesses in a few prohibited industries. Compliance with SBA requirements may cause the Funds to forego attractive investment opportunities that are not permitted under SBA regulations.

        Further, the SBA regulations require, among other things, that a licensed SBIC be periodically examined by the SBA and audited by an independent auditor, in each case to determine the SBIC's compliance with the relevant SBA regulations. The SBA prohibits, without prior SBA approval, a "change of control" of an SBIC or transfers that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of capital stock of a licensed SBIC. If the Funds fail to comply with applicable SBIC regulations, the SBA could, depending on the severity of the violation, limit or prohibit their use of SBIC debentures, declare outstanding SBIC debentures immediately due and payable, and/or limit them from making new investments. In addition, the SBA can revoke or suspend a license for willful or repeated violation of, or willful or repeated failure to observe, any provision of the Small Business Investment Act of 1958 or any rule or regulation promulgated thereunder. Such actions by the SBA would, in turn, negatively affect us.

Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us.

        Borrowings, also known as leverage, magnify the potential for loss on investments in our indebtedness and gain or loss on investments in our equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. We, through the Funds, issue debt securities guaranteed by the SBA and sold in the capital markets. As a result of its guarantee of the debt securities, the SBA has fixed dollar claims on the assets of the Funds that are superior to the claims of our securities holders. We may also borrow from banks and other lenders, including under our Credit Facility, and may issue debt securities or enter into other types of borrowing arrangements in the future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Resources" for a discussion regarding our outstanding indebtedness. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any decrease in our income would cause net investment income to decline more sharply than it would have had we not leveraged our business. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to our securities. Use of leverage is generally considered a speculative investment technique.

        As of December 31, 2017, we, through the Funds, had $295.8 million of outstanding indebtedness guaranteed by the SBA, which had a weighted-average annualized interest cost of approximately 3.6%. The debentures guaranteed by the SBA have a maturity of ten years, with a current weighted-average remaining maturity of 5.8 years as of December 31, 2017, and require semiannual payments of interest. We will need to generate sufficient cash flow to make required interest payments on the debentures. If we are unable to meet the financial obligations under the debentures, the SBA, as a creditor, will have a superior claim to the assets of the Funds over our securities holders in the event we liquidate or the SBA exercises its remedies under such debentures as the result of a default by us.

        In addition, as of December 31, 2017, we had $64.0 million outstanding under our Credit Facility. Borrowings under the Credit Facility bear interest, subject to our election, on a per annum basis at a

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rate equal to the applicable LIBOR rate (1.56% as of December 31, 2017) plus (i) 1.875% (or the applicable base rate (Prime Rate of 4.50% as of December 31, 2017) plus 0.875%), as long as we maintain an investment grade rating and meet certain agreed upon excess collateral and maximum leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if we maintain an investment grade rating but do not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%) if we do not maintain an investment grade rating. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. If we are unable to meet the financial obligations under the Credit Facility, the Credit Facility lending group will have a superior claim to the assets of MSCC and its subsidiaries (excluding the assets of the Funds) over our stockholders in the event we liquidate or the lending group exercises its remedies under the Credit Facility as the result of a default by us.

        In April 2013, we issued $92.0 million in aggregate principal amount of 6.125% Notes due 2023 (the "6.125% Notes"). As of December 31, 2017, the outstanding balance of the 6.125% Notes was $90.7 million. The 6.125% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at our option on or after April 1, 2018. The 6.125% Notes bear interest at a rate of 6.125% per year.

        In November 2014, we issued $175.0 million in aggregate principal amount of 4.50% unsecured notes due 2019 (the "4.50% Notes due 2019") at an issue price of 99.53%. As of December 31, 2017, the outstanding balance of the 4.50% Notes due 2019 was $175.0 million. The 4.50% Notes due 2019 are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2019; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2019 mature on December 1, 2019, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions.

        In November 2017, we issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due 2022 (the "4.50% Notes due 2022," together with the 4.50% Notes due 2019, the "4.50% Notes" and, both of these together with the 6.125% Notes, the "Notes") at an issue price of 99.16%. As of December 31, 2017, the outstanding balance of the 4.50% Notes due 2022 was $185.0 million. The 4.50% Notes due 2022 are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2022 mature on December 1, 2022, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions.

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Assumed Return on Our Portfolio(1)
(net of expenses)

 
  (10.0)%   (5.0)%   0.0%   5.0%   10.0%  

Corresponding net return to common stockholder(2)

    (19.0)%     (10.8)%     (2.6)%     5.6%     13.8%  

(1)
Assumes $2,265.4 million in total assets, $810.5 million in debt outstanding, $1,380.4 million in net assets, and a weighted-average interest rate of 4.4%. Actual interest payments may be different.

(2)
In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2017 total assets of at least 1.6%.

        Our ability to achieve our investment objective may depend in part on our ability to access additional leverage on favorable terms by issuing debentures guaranteed by the SBA through the Funds, by borrowing from banks or insurance companies or by issuing other debt securities and there can be no assurance that such additional leverage can in fact be achieved.

All of our assets are subject to security interests under our secured Credit Facility or subject to a superior claim over our stockholders by the SBA and if we default on our obligations under the Credit Facility or with respect to our SBA-guaranteed debentures, we may suffer adverse consequences, including foreclosure on our assets.

        Substantially all of our assets are currently pledged as collateral under our Credit Facility or are subject to a superior claim over our stockholders by the SBA. If we default on our obligations under the Credit Facility or our SBA-guaranteed debentures, the lenders and/or the SBA may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claim. In such event, we may be forced to sell our investments to raise funds to repay our outstanding borrowings in order to avoid foreclosure and these forced sales may be at times and at prices we would not consider advantageous. Moreover, such deleveraging of our company could significantly impair our ability to effectively operate our business in the manner in which we have historically operated. As a result, we could be forced to curtail or cease new investment activities and lower or eliminate the dividends that we have historically paid to our stockholders. In addition, if the lenders exercise their right to sell the assets pledged under our Credit Facility, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under the Credit Facility.

Recent legislation may allow us to incur additional leverage.

        The 1940 Act generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). However, recent legislation has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. Under the legislation, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval. Alternatively, the legislation allows a "required majority" (as defined in Section 57(o) of the 1940 Act) of our directors to approve an increase in our leverage capacity, and such approval would become effective after one year from the date of approval. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. As a result of this legislation, we may be able to increase our leverage up to an amount that reduces our asset coverage ratio from 200% to 150% (i.e., the amount of debt may not exceed 662/3% of the value

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of our assets). See "— Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us" for a discussion of the risks associated with leverage.

Further downgrades of the U.S. credit rating, automatic spending cuts or another government shutdown could negatively impact our liquidity, financial condition and earnings.

        Recent U.S. debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns, or a recession in the U.S. Although U.S. lawmakers passed legislation to raise the federal debt ceiling on multiple occasions, ratings agencies have lowered or threatened to lower the long-term sovereign credit rating on the United States. The impact of this or any further downgrades to the U.S. government's sovereign credit rating or its perceived creditworthiness could adversely affect the U.S. and global financial markets and economic conditions. Absent further quantitative easing by the Federal Reserve, these developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. In addition, disagreement over the federal budget has caused the U.S. federal government to shut down for periods of time. Continued adverse political and economic conditions could have a material adverse effect on our business, financial condition and results of operations.

The interest rates of our floating-rate loans to our portfolio companies that extend beyond 2021 might be subject to change based on recent regulatory changes

        LIBOR is the basic rate of interest used in lending transactions between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in floating-rate loans we extend to portfolio companies such that the interest due to us pursuant to a term loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR.

        On July 27, 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. It is unclear if at that time whether LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short term repurchase agreements, backed by Treasury securities. If LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established.

We may experience fluctuations in our operating results.

        We could experience fluctuations in our operating results due to a number of factors, including our ability or inability to make investments in companies that meet our investment criteria, the interest rate payable on the debt securities we acquire, the level of portfolio dividend and fee income, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, operating results for any period should not be relied upon as being indicative of performance in future periods.

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Our Board of Directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse.

        Our Board of Directors has the authority to modify or waive our current operating policies, investment criteria and strategies without prior notice and without stockholder approval. We cannot predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business, net asset value, operating results and value of our stock. However, the effects might be adverse, which could negatively impact our ability to pay interest and principal payments to holders of our debt instruments and dividends to our stockholders and cause our investors to lose all or part of their investment in us.

We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code.

        To maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset diversification requirements:

        Failure to meet these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, and therefore will be illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. Moreover, if we fail to maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.

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We may not be able to pay distributions to our stockholders, our distributions may not grow over time, and a portion of distributions paid to our stockholders may be a return of capital, which is a distribution of the stockholders' invested capital.

        We intend to pay distributions to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to pay a specified level of cash distributions, previously projected distributions for future periods, or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by, among other things, the impact of one or more of the risk factors described herein. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions. All distributions will be paid at the discretion of our Board of Directors and will depend on our earnings, our financial condition, maintenance of our RIC status, compliance with applicable BDC regulations, compliance with our debt covenants, each of the Funds' compliance with applicable SBIC regulations and such other factors as our Board of Directors may deem relevant from time to time. We cannot assure you that we will pay distributions to our stockholders in the future.

        When we make distributions, we will be required to determine the extent to which such distributions are paid out of current or accumulated taxable earnings, recognized capital gains or capital. To the extent there is a return of capital, investors will be required to reduce their basis in our stock for U.S. federal income tax purposes, which may result in higher tax liability when the shares are sold, even if they have not increased in value or have lost value. In addition, any return of capital will be net of any sales load and offering expenses associated with sales of shares of our common stock. In the future, our distributions may include a return of capital.

We may have difficulty paying the distributions required to maintain RIC tax treatment under the Code if we recognize income before or without receiving cash representing such income.

        We will include in income certain amounts that we have not yet received in cash, such as: (i) amortization of original issue discount, which may arise if we receive warrants in connection with the origination of a loan such that ascribing a value to the warrants creates original issue discount in the debt instrument, if we invest in a debt investment at a discount to the par value of the debt security or possibly in other circumstances; (ii) contractual payment-in-kind, or PIK, interest, which represents contractual interest added to the loan balance and due at the end of the loan term; (iii) contractual preferred dividends, which represents contractual dividends added to the preferred stock and due at the end of the preferred stock term, subject to adequate profitability at the portfolio company; or (iv) amortization of market discount, which is associated with loans purchased in the secondary market at a discount to par value. Such amortization of original issue discounts, increases in loan balances as a result of contractual PIK arrangements, cumulative preferred dividends, or amortization of market discount will be included in income before we receive the corresponding cash payments. We also may be required to include in income certain other amounts before we receive such amounts in cash. Investments structured with these features may represent a higher level of credit risk compared to investments generating income which must be paid in cash on a current basis. For the year ended December 31, 2017, (i) approximately 2.4% of our total investment income was attributable to PIK income not paid currently in cash, (ii) approximately 0.6% of our total investment income was attributable to amortization of original issue discount, (iii) approximately 1.6% of our total investment income was attributable to cumulative dividend income not paid currently in cash, and (iv) approximately 2.9% of our total investment income was attributable to amortization of market discount on loans purchased in the secondary market at a discount.

        Since, in certain cases, we may recognize taxable income before or without receiving cash representing such income, we may have difficulty meeting the Annual Distribution Requirement necessary to maintain RIC tax treatment under the Code. Accordingly, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or

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equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax. For additional discussion regarding the tax implications of a RIC, please see "Material U.S. Federal Income Tax Considerations—Taxation as a Regulated Investment Company."

We may in the future choose to pay dividends in our own stock, in which case you may be required to pay tax in excess of the cash you receive.

        We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued guidance providing that a dividend payable in stock or in cash at the election of the stockholders will be treated as a taxable dividend eligible for the dividends paid deduction provided that at least 20% of the total dividend is payable in cash and certain other requirements are satisfied. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain to the extent such dividend is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

Each of the Funds, as an SBIC, may be unable to make distributions to us that will enable us to meet or maintain RIC status, which could result in the imposition of an entity-level tax.

        In order for us to continue to qualify for RIC tax treatment and to minimize corporate-level U.S. federal taxes, we will be required to distribute substantially all of our net ordinary taxable income and net capital gain income, including taxable income from certain of our subsidiaries, which includes the income from the Funds. We will be partially dependent on the Funds for cash distributions to enable us to meet the RIC distribution requirements. The Funds may be limited by SBIC regulations from making certain distributions to us that may be necessary to enable us to maintain our status as a RIC. We may have to request a waiver of the SBA's restrictions for the Funds to make certain distributions to maintain our eligibility for RIC status. We cannot assure you that the SBA will grant such waiver and if the Funds are unable to obtain a waiver, compliance with the SBIC regulations may result in loss of RIC tax treatment and a consequent imposition of an entity-level tax on us.

Because we intend to distribute substantially all of our taxable income to our stockholders to maintain our status as a RIC, we will continue to need additional capital to finance our growth, and regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital and make distributions.

        In order to satisfy the requirements applicable to a RIC and to minimize corporate-level U.S. federal taxes, we intend to distribute to our stockholders substantially all of our net ordinary taxable income and net capital gain income. We may carry forward excess undistributed taxable income into the next year, net of the 4% U.S. federal excise tax. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which

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generated such taxable income. As a BDC, we generally are required to meet an asset coverage ratio, as defined in the 1940 Act, of at least 200% (or 150% if certain requirements are met) immediately after each issuance of senior securities. This requirement limits the amount that we may borrow and may prohibit us from making distributions. Because we will continue to need capital to grow our Investment Portfolio, this limitation may prevent us from incurring debt and require us to raise additional equity at a time when it may be disadvantageous to do so.

        While we expect to be able to borrow and to issue additional debt and equity securities, we cannot assure you that debt and equity financing will be available to us on favorable terms, or at all. In addition, as a BDC, we generally are not permitted to issue equity securities priced below net asset value without stockholder approval. If additional funds are not available to us, we could be forced to curtail or cease new investment activities, and our net asset value could decline.

Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock.

        The 1940 Act prohibits us from selling shares of our common stock at a price below the current net asset value per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below net asset value provided that our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2017 annual meeting of stockholders because our common stock price per share had been trading significantly above the net asset value per share of our common stock, and are not seeking such approval at our 2018 annual meeting of stockholders for the same reason. We may, however, seek such authorization at future annual or special meetings of stockholders. Our stockholders have previously approved a proposal to authorize us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. Any decision to sell shares of our common stock below the then current net asset value per share of our common stock or securities to subscribe to, convert to, or purchase shares of our common stock would be subject to the determination by our Board of Directors that such issuance is in our and our stockholders' best interests.

        If we were to sell shares of our common stock below net asset value per share, such sales would result in an immediate dilution to the net asset value per share. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and a proportionately greater decrease in a stockholder's interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. In addition, if we issue securities to subscribe to, convert to or purchase shares of common stock, the exercise or conversion of such securities would increase the number of outstanding shares of our common stock. Any such exercise would be dilutive on the voting power of existing stockholders, and could be dilutive with regard to dividends and our net asset value, and other economic aspects of the common stock.

        Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted; however, the example below illustrates the effect of dilution to existing stockholders resulting from the sale of common stock at prices below the net asset value of such shares. Please see "Sales of Common Stock Below Net Asset Value" for a more complete discussion of the potentially dilutive impacts of an offering at a price less than net asset value, or NAV, per share.

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  Prior to Sale
Below NAV
  Following Sale
Below NAV
  Percentage
Change

Reduction to NAV

                 

Total Shares Outstanding

    1,000,000     1,040,000     4.0%

NAV per share

  $ 10.00   $ 9.98     (0.2)%

Dilution to Existing Stockholder

                 

Shares Held by Stockholder A

    10,000     10,000 (1)   0.0%

Percentage Held by Stockholder A

    1.00%     0.96%     (3.8)%

Total Interest of Stockholder A in NAV

  $ 100,000   $ 99,808     (0.2)%

(1)
Assumes that Stockholder A does not purchase additional shares in the sale of shares below NAV.

Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.

        We, the Funds, and our portfolio companies are subject to applicable local, state and federal laws and regulations. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect. In addition, any change to the SBA's current debenture SBIC program could have a significant impact on our ability to obtain lower-cost leverage through the Funds, and therefore, our ability to compete with other finance companies.

        Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth herein and may result in our investment focus shifting from the areas of expertise of our investment team to other types of investments in which our investment team may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.

The Tax Cuts and Jobs Act could have a negative effect on us, our subsidiaries, our portfolio companies and the holders of our securities.

        On December 20, 2017, the U.S. House of Representatives and the U.S. Senate each voted to approve H.R. 1 (the "Tax Cuts and Jobs Act") and, on December 22, 2017, President Trump signed the Tax Cuts and Jobs Act into law. The Tax Cuts and Jobs Act makes significant changes to the U.S. federal income tax rules applicable to both individuals and entities, including corporations. The Tax Cuts and Jobs Act includes provisions that, among other things, reduce the U.S. corporate tax rate, introduce a capital investment deduction, limit the interest deduction, limit the use of net operating losses to offset future taxable income and make extensive changes to the U.S. international tax system. The Tax Cuts and Jobs Act is complex and far-reaching, and we cannot predict the impact its enactment will have on us, our subsidiaries, our portfolio companies and the holders of our securities.

Terrorist attacks, acts of war or natural disasters may affect any market for our securities, impact the businesses in which we invest and harm our business, operating results and financial condition.

        Terrorist acts, acts of war or natural disasters may disrupt our operations, as well as the operations of the businesses in which we invest. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities,

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military or security operations, or natural disasters could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact the businesses in which we invest directly or indirectly and, in turn, could have a material adverse impact on our business, operating results and financial condition. Losses from terrorist attacks and natural disasters are generally uninsurable.

We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.

        Our business is highly dependent on our and third parties' communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:

The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.

        The occurrence of a disaster such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events unanticipated in our disaster recovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. If a significant number of our managers were unavailable in the event of a disaster, our ability to effectively conduct our business could be severely compromised.

        We depend heavily upon computer systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computer systems could be subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss.

RISKS RELATED TO OUR INVESTMENTS

Our investments in portfolio companies involve higher levels of risk, and we could lose all or part of our investment.

        Investing in our portfolio companies exposes us indirectly to a number of significant risks. Among other things, these companies:

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        In addition, in the course of providing significant managerial assistance to certain of our portfolio companies, certain of our officers and directors may serve as directors on the boards of such companies. To the extent that litigation arises out of our investments in these companies, our officers and directors may be named as defendants in such litigation, which could result in an expenditure of funds (through our indemnification of such officers and directors) and the diversion of management time and resources.

A decline in oil and natural gas prices could have a material adverse effect on us.

        A decline in oil and natural gas prices could adversely affect (i) the credit quality of our debt investments and (ii) the underlying operating performance of our equity investments in energy-related businesses and in portfolio companies located in geographic areas which are more sensitive to the health of the oil and gas industries. A decrease in credit quality and the operating performance would, in turn, negatively affect the fair value of these investments, which would consequently negatively affect our net asset value. Should a decline in oil and natural gas prices persist for an extended period of time, it is likely that the ability of these investments to satisfy financial or operating covenants imposed by us or other lenders will be adversely affected, thereby negatively impacting their financial condition and their ability to satisfy their debt service and other obligations to us. Likewise, should a decline in oil and natural gas prices persist, it is likely that our energy-related portfolio companies' and other affected companies' cash flow and profit generating capacities would also be adversely affected thereby negatively impacting their ability to pay us dividends or distributions on our equity investments.

We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest.

        Our investments may include original issue discount and contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loan's term. To the extent original issue discount or PIK interest constitute a portion of our income, we are exposed to typical

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risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including the following:

The lack of liquidity in our investments may adversely affect our business.

        We invest in companies whose securities are not publicly traded, and whose securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of these investments may make it difficult for us to sell these investments when desired. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we had previously recorded these investments. As a result, we do not expect to achieve liquidity in our investments in the near-term. Our investments are usually subject to contractual or legal restrictions on resale or are otherwise illiquid because there is usually no established trading market for such investments. The illiquidity of most of our investments may make it difficult for us to dispose of them at a favorable price, and, as a result, we may suffer losses.

We may not have the funds or ability to make additional investments in our portfolio companies.

        We may not have the funds or ability to make additional investments in our portfolio companies. After our initial investment in a portfolio company, we may be called upon from time to time to provide additional funds to such company or have the opportunity to increase our investment through the extension of additional loans, the exercise of a warrant to purchase equity securities, or the funding of additional equity investments. There is no assurance that we will make, or will have sufficient funds to make, follow-on investments. Any decisions not to make a follow-on investment or any inability on our part to make such an investment may have a negative impact on a portfolio company in need of such an investment, may result in a missed opportunity for us to increase our participation in a successful operation, may reduce our ability to protect an existing investment or may reduce the expected yield on the investment.

Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.

        We invest primarily in the secured term debt of LMM, Private Loan and Middle Market companies and equity issued by LMM companies. Our portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt in which we invest. By their terms, such debt instruments may entitle the holders to receive payment of interest or principal

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on or before the dates on which we are entitled to receive payments with respect to the debt instruments in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.

        Even though we may have structured certain of our investments as secured loans, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, and based upon principles of equitable subordination as defined by existing case law, a bankruptcy court could subordinate all or a portion of our claim to that of other creditors and transfer any lien securing such subordinated claim to the bankruptcy estate. The principles of equitable subordination defined by case law have generally indicated that a claim may be subordinated only if its holder is guilty of misconduct or where the senior loan is re-characterized as an equity investment and the senior lender has actually provided significant managerial assistance to the bankrupt debtor. We may also be subject to lender liability claims for actions taken by us with respect to a borrower's business or instances where we exercise control over the borrower. It is possible that we could become subject to a lender liability claim, including as a result of actions taken in rendering significant managerial assistance or actions to compel and collect payments from the borrower outside the ordinary course of business.

Second priority liens on collateral securing loans that we make to our portfolio companies may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and us.

        Certain loans that we make are secured by a second priority security interest in the same collateral pledged by a portfolio company to secure senior debt owed by the portfolio company to commercial banks or other traditional lenders. Often the senior lender has procured covenants from the portfolio company prohibiting the incurrence of additional secured debt without the senior lender's consent. Prior to and as a condition of permitting the portfolio company to borrow money from us secured by the same collateral pledged to the senior lender, the senior lender will require assurances that it will control the disposition of any collateral in the event of bankruptcy or other default. In many such cases, the senior lender will require us to enter into an "intercreditor agreement" prior to permitting the portfolio company to borrow from us. Typically the intercreditor agreements we are requested to execute expressly subordinate our debt instruments to those held by the senior lender and further provide that the senior lender shall control: (1) the commencement of foreclosure or other proceedings to liquidate and collect on the collateral; (2) the nature, timing and conduct of foreclosure or other collection proceedings; (3) the amendment of any collateral document; (4) the release of the security interests in respect of any collateral; and (5) the waiver of defaults under any security agreement. Because of the control we may cede to senior lenders under intercreditor agreements we may enter, we may be unable to realize the proceeds of any collateral securing some of our loans.

        Finally, the value of the collateral securing our debt investment will ultimately depend on market and economic conditions, the availability of buyers and other factors. Therefore, there can be no assurance that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured by our first or second priority liens. There is also a risk that such collateral securing our investments will decrease in value over time, will be difficult to sell in a timely

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manner, will be difficult to appraise and will fluctuate in value based upon the success of the portfolio company and market conditions. If such proceeds are not sufficient to repay amounts outstanding under the loan obligations secured by our second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the company's remaining assets, if any.

We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.

        We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. To the extent that we assume large positions in the securities of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market's assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. Beyond our RIC asset diversification requirements, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies. See "—Risks Related to Our Business and Structure—We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code."

We generally will not control our portfolio companies.

        We do not, and do not expect to, control the decision making in many of our portfolio companies, even though we may have board representation or board observation rights, and our debt agreements may contain certain restrictive covenants. As a result, we are subject to the risk that a portfolio company in which we invest will make business decisions with which we disagree and the management of such company will take risks or otherwise act in ways that do not serve our interests as debt investors or minority equity holders. Due to the lack of liquidity for our investments in non-traded companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like or at an appropriate valuation. As a result, a portfolio company may make decisions that would decrease the value of our portfolio holdings.

Defaults by our portfolio companies will harm our operating results.

        A portfolio company's failure to satisfy financial or operating covenants imposed by us or other lenders could lead to non-payment of interest and other defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company's ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.

Any unrealized depreciation we experience in our portfolio may be an indication of future realized losses, which could reduce our income and gains available for distribution.

        As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at the fair value as determined in good faith by our Board of Directors. Decreases in the market values or fair values of our investments will be recorded as unrealized depreciation. Any unrealized depreciation in our portfolio could be an indication of a portfolio company's inability to meet its repayment obligations to us with respect to affected loans or a potential impairment of the value of affected equity investments. This could result in realized losses in the future and ultimately in reductions of our income and gains available for distribution in future periods.

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Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.

        We are subject to the risk that the investments we make in our portfolio companies may be repaid prior to maturity. When this occurs, we will generally reinvest these proceeds in temporary investments, pending their future investment in new portfolio companies. These temporary investments will typically have substantially lower yields than the debt being prepaid and we could experience significant delays in reinvesting these amounts. Any future investment in a new portfolio company may also be at lower yields than the debt that was repaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us. Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market price of our securities.

Changes in interest rates may affect our cost of capital, net investment income and value of our investments.

        Some of our debt investments will bear interest at variable rates and may be negatively affected by changes in market interest rates. An increase in market interest rates would increase the interest costs and reduce the cash flows of our portfolio companies that have variable rate debt instruments, a situation which could reduce the value of the investment. The value of our investments could also be reduced from an increase in market interest rates as rates available to investors could make an investment in our securities less attractive than alternative investments. In addition, an increase in interest rates would make it more expensive for us to use debt to finance our investments. As a result, a significant increase in market interest rates could increase our cost of capital, which would reduce our net investment income. Conversely, decreases in market interest rates could negatively impact the interest income from our variable rate debt investments. A decrease in market interest rates may also have an adverse impact on our returns by requiring us to accept lower yields on our debt investments and by increasing the risk that our portfolio companies will prepay our debt investments, resulting in the need to redeploy capital at potentially lower rates.

We may not realize gains from our equity investments.

        Certain investments that we have made in the past and may make in the future include warrants or other equity securities. Investments in equity securities involve a number of significant risks, including the risk of further dilution as a result of additional issuances, inability to access additional capital and failure to pay current distributions. Investments in preferred securities involve special risks, such as the risk of deferred distributions, credit risk, illiquidity and limited voting rights. In addition, we may from time to time make non-control, equity investments in portfolio companies. Our goal is ultimately to realize gains upon our disposition of such equity interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience. We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests. We often seek puts or similar rights to give us the right to sell our equity securities back to the portfolio company issuer; however, we may be unable to exercise these put rights for the consideration provided in our investment documents if the issuer is in financial distress.

Our investments in foreign securities may involve significant risks in addition to the risks inherent in U.S. investments.

        Our investments in foreign securities may involve significant risks in addition to the risks inherent in investments in U.S. securities. Our investment strategy contemplates potential investments in debt securities of foreign companies. Investing in foreign companies may expose us to additional risks not

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typically associated with investing in securities of U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the U.S., higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

        Although most of our investments will be U.S. dollar denominated, any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments.

RISKS RELATING TO OUR SECURITIES

Shares of closed-end investment companies, including BDCs, may trade at a discount to their net asset value.

        Shares of closed-end investment companies, including BDCs, may trade at a discount to net asset value. This characteristic of closed-end investment companies and BDCs is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our common stock will trade at, above or below net asset value. In addition, if our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board of Directors makes certain determinations. See "—Risks Relating to Our Business and Structure—Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock" for a discussion related to us issuing shares of our common stock below net asset value.

We may be unable to invest a significant portion of the net proceeds from an offering or from exiting an investment or other capital on acceptable terms, which could harm our financial condition and operating results.

        Delays in investing the net proceeds raised in an offering or other capital raised or proceeds resulting from exiting an investment may cause our performance to be worse than that of other fully invested BDCs or other lenders or investors pursuing comparable investment strategies. We cannot assure you that we will be able to identify any investments that meet our investment objective or that any investment that we make will produce a positive return. We may be unable to invest the net proceeds of any offering or other capital raised or proceeds resulting from exiting an investment on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating results.

        We anticipate that, depending on market conditions and the amount of the capital, it may take us a substantial period of time to invest substantially all the capital in securities meeting our investment objective. During this period, we may invest the capital primarily in marketable securities and idle funds investments, which generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments and may produce returns that are significantly lower than the returns which we expect to achieve when our portfolio is fully invested in securities meeting our investment objective. Many of these investments in debt obligations are, or would be if rated, below investment grade quality. Indebtedness of below investment grade quality, which is often referred to as "junk," is regarded as having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and

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repay principal, similar to our portfolio investments in our portfolio companies. As a result, any distributions that we pay during such period may be substantially lower than the distributions that we may be able to pay when our portfolio is fully invested in securities meeting our investment objective. In addition, until such time as the net proceeds of any offering or from exiting an investment or other capital are invested in new securities meeting our investment objective, the market price for our securities may decline. Thus, the initial return on your investment may be lower than when, if ever, our portfolio is fully invested in securities meeting our investment objective.

Investing in our securities may involve a high degree of risk.

        The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and a higher risk of volatility or loss of principal. Our investments in portfolio companies involve higher levels of risk, and therefore, an investment in our securities may not be suitable for someone with lower risk tolerance.

The market price of our securities may be volatile and fluctuate significantly.

        Fluctuations in the trading prices of our securities may adversely affect the liquidity of the trading market for our securities and, if we seek to raise capital through future securities offerings, our ability to raise such capital. The market price and liquidity of the market for our securities may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

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Provisions of the Maryland General Corporation Law and our articles of incorporation and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.

        The Maryland General Corporation Law and our articles of incorporation and bylaws contain provisions that may have the effect of discouraging, delaying or making difficult a change in control of our company or the removal of our incumbent directors. The existence of these provisions, among others, may have a negative impact on the price of our common stock and may discourage third-party bids for ownership of our company. These provisions may prevent any premiums being offered to you for our common stock.

The Notes are unsecured and therefore effectively subordinated to any current or future secured indebtedness, including indebtedness under the Credit Facility.

        The Notes are not secured by any of our assets or any of the assets of our subsidiaries and rank equally in right of payment with all of our existing and future unsubordinated, unsecured indebtedness. As a result, the Notes are effectively subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes. As of December 31, 2017, we had $64.0 million outstanding under the Credit Facility out of $585.0 million in commitments. The indebtedness under the Credit Facility is senior to the Notes to the extent of the value of the assets securing such indebtedness.

The Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries.

        The Notes are obligations exclusively of Main Street Capital Corporation and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Notes, and the Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. In addition, several of our subsidiaries, specifically the Funds, maintain significant indebtedness and as a result the Notes are structurally subordinated to the indebtedness of these subsidiaries. For example, as of December 31, 2017, the Funds had collectively issued $295.8 million of the current statutory maximum of $350.0 million of SBA-guaranteed debentures, which are included in our consolidated financial statements. The assets of such subsidiaries are not directly available to satisfy the claims of our creditors, including holders of the Notes. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" for more detail on the SBA-guaranteed debentures.

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        Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of other creditors of our subsidiaries have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims. Consequently, the Notes are structurally subordinated to all indebtedness, including the SBA-guaranteed debentures, and other liabilities of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish. In addition, our subsidiaries may incur substantial additional indebtedness in the future, all of which would be structurally senior to the Notes.

The Notes may or may not have an established trading market. If a trading market in the Notes is developed, it may not be maintained.

        The Notes may or may not have an established trading market. If a trading market in the Notes is developed, it may not be maintained. If the Notes are traded, they may trade at a discount to their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, our financial condition or other relevant factors. Accordingly, we cannot assure you that a liquid trading market has been or will develop for the Notes, that you will be able to sell your Notes at a particular time or that the price you receive when you sell will be favorable. To the extent an active trading market does not develop or is not maintained, the liquidity and trading price for the Notes may be harmed. Accordingly, you may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.

A downgrade, suspension or withdrawal of the credit rating assigned by a rating agency to us or the Notes, if any, or change in the debt markets could cause the liquidity or market value of the Notes to decline significantly.

        Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the Notes. These credit ratings may not reflect the potential impact of risks relating to the structure or marketing of the Notes. Credit ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. We undertake no obligation to maintain our credit ratings or to advise holders of Notes of any changes in our credit ratings. The Notes are currently rated by Standard & Poor's Ratings Services. There can be no assurance that our credit ratings will remain for any given period of time or that such credit ratings will not be lowered or withdrawn entirely by the rating agency if in their judgment future circumstances relating to the basis of the credit ratings, such as adverse changes in our company, so warrant. The conditions of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, which could have an adverse effect on the market prices of the Notes.

The indentures under which the Notes were issued contain limited protection for holders of the Notes.

        The indentures under which the Notes were issued offer limited protection to holders of the Notes. The terms of the indentures and the Notes do not restrict our or any of our subsidiaries' ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have an adverse impact on investments in the Notes. In particular, the terms of the indentures and the Notes do not place any restrictions on our or our subsidiaries' ability to:

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        Furthermore, the terms of the indentures and the Notes do not protect holders of the Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, if any, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow or liquidity.

        Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Notes may have important consequences for you as a holder of the Notes, including making it more difficult for us to satisfy our obligations with respect to the Notes or negatively affecting the trading value of the Notes.

        Other debt we issue or incur in the future could contain more protections for its holders than the indentures and the Notes, including additional covenants and events of default. For example, the indentures under which the Notes are issued do not contain cross-default provisions that are contained in the Credit Facility. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of the Notes.

The optional redemption provision may materially adversely affect your return on the Notes.

        The 4.50% Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option. The 6.125% Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option, on or after April 1, 2018. We may choose to redeem the Notes at times when prevailing interest rates are lower than the interest rate paid on the Notes. In this circumstance, you may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the Notes being redeemed.

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We may not be able to repurchase the 4.50% Notes upon a Change of Control Repurchase Event.

        We may not be able to repurchase the 4.50% Notes upon certain change in control events described in the indentures under which the 4.50% Notes were issued (each, a "Change of Control Repurchase Event") because we may not have sufficient funds. Upon a Change of Control Repurchase Event, holders of the 4.50% Notes may require us to repurchase for cash some or all of the 4.50% Notes at a repurchase price equal to 100% of the aggregate principal amount of the 4.50% Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date. The terms of our Credit Facility provide that certain change of control events will constitute an event of default thereunder entitling the lenders to accelerate any indebtedness outstanding under our Credit Facility at that time and to terminate the Credit Facility. In addition, the occurrence of a Change of Control Repurchase Event enabling the holders of the 4.50% Notes to require the mandatory purchase of the 4.50% Notes would constitute an event of default under our Credit Facility entitling the lenders to accelerate any indebtedness outstanding under our Credit Facility at that time and to terminate the Credit Facility. Our and our subsidiaries' future financing facilities may contain similar restrictions and provisions. Our failure to purchase such tendered 4.50% Notes upon the occurrence of such Change of Control Repurchase Event would cause an event of default under the indentures governing the 4.50% Notes and a cross-default under the agreements governing certain of our other indebtedness, which may result in the acceleration of such indebtedness requiring us to repay that indebtedness immediately. If a Change of Control Repurchase Event were to occur, we may not have sufficient funds to repay any such accelerated indebtedness.

If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Notes.

        As of December 31, 2017, we had approximately $810.5 million of indebtedness, including $64.0 million outstanding under the Credit Facility, $295.8 million outstanding from SBA-guaranteed debentures, approximately $90.7 million of the 6.125% Notes, $175.0 million of the 4.50% Notes due 2019 and $185.0 million of the 4.50% Notes due 2022 outstanding. Any default under the agreements governing our indebtedness, including a default under the Credit Facility, under the Notes or under other indebtedness to which we may be a party that is not waived by the required lenders or debt holders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal, premium, if any, and interest on the Notes and substantially decrease the market value of the Notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under the Credit Facility or other debt we may incur in the future could elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. Our ability to generate sufficient cash flow in the future is, to some extent, subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us under the Credit Facility or otherwise, in an amount sufficient to enable us to meet our payment obligations under the Notes and our other debt and to fund other liquidity needs.

        If our operating performance declines and we are not able to generate sufficient cash flow to service our debt obligations, we may in the future need to refinance or restructure our debt, including the Notes, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required lenders under the Credit Facility or the required holders of the Notes

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or other debt that we may incur in the future to avoid being in default. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the Notes and our other debt. If we breach our covenants under the Credit Facility, the Notes or other debt and seek a waiver, we may not be able to obtain a waiver from the required lenders or debt holders. If this occurs, we would be in default under the Credit Facility, the Notes or other debt, the lenders or debt holders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations could proceed against the collateral securing the debt. Because the Credit Facility has, and any future credit facilities will likely have, customary cross-default provisions, if the indebtedness under the Notes, the Credit Facility or under any future credit facility is accelerated, we may be unable to repay or finance the amounts due.

We may in the future determine to issue preferred stock, which could adversely affect the market value of our common stock.

        The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. In addition, the dividends on any preferred stock we issue must be cumulative. Payment of dividends and repayment of the liquidation preference of preferred stock must take preference over any dividends or other payments to our common stockholders, and holders of preferred stock are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference (other than convertible preferred stock that converts into common stock). In addition, under the 1940 Act, preferred stock constitutes a "senior security" for purposes of the asset coverage test.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

        Some of the statements in this prospectus and any accompanying prospectus supplement constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this prospectus and any accompanying prospectus supplement may include statements as to:

        In addition, words such as "anticipate," "believe," "expect" and "intend" indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this prospectus and any accompanying prospectus supplement involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in "Risk Factors" and elsewhere in this prospectus and any accompanying prospectus supplement. Other factors that could cause actual results to differ materially include:

        We have based the forward-looking statements included in this prospectus and will base the forward-looking statements included in any accompanying prospectus supplement on information available to us on the date of this prospectus and any accompanying prospectus supplement, as appropriate, and we assume no obligation to update any such forward-looking statements, except as required by law. 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 refer to any additional disclosures that we may make directly to you, including in the form of a prospectus supplement or post-effective amendment to the registration statement, or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

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USE OF PROCEEDS

        We intend to use the net proceeds from any offering to make investments in accordance with our investment objective and strategies described in this prospectus or any prospectus supplement, to pay our operating expenses and other cash obligations, and for general corporate purposes. Our ability to achieve our investment objective may be limited to the extent that the net proceeds from an offering, pending full investment, are held in interest-bearing deposits or other short-term instruments. See "Risk Factors—Risks Relating to Our Securities—We may be unable to invest a significant portion of the net proceeds from an offering or from exiting an investment or other capital on acceptable terms, which could harm our financial condition and operating results." The supplement to this prospectus relating to an offering will more fully identify the use of proceeds from such an offering.

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PRICE RANGE OF COMMON STOCK AND DISTRIBUTIONS

        Our common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "MAIN." Prior to October 14, 2010, our common stock was traded on the NASDAQ Global Select Market under the same symbol "MAIN." Our common stock began trading on the NASDAQ Global Select Market on October 5, 2007. Prior to that date, there was no established public trading market for our common stock.

        The following table sets forth, for the periods indicated, the range of high and low closing prices of our common stock as reported on the NYSE, and the sales price as a percentage of the net asset value per share of our common stock.

 
   
  Price Range   Premium of
High Sales
Price to
NAV(2)
  Premium of
Low Sales
Price to
NAV(2)
 
 
  NAV(1)   High   Low  

Year ending December 31, 2018

                               

Second Quarter (through April 26, 2018)                              

    *   $ 37.70   $ 36.76     *     *  

First Quarter                             

    *   $ 39.90   $ 35.41     *     *  

Year ending December 31, 2017

                               

Fourth Quarter

  $ 23.53   $ 41.55   $ 39.71     77%     69%  

Third Quarter

    23.02     40.40     38.13     75%     66%  

Second Quarter

    22.62     40.39     37.80     79%     67%  

First Quarter

    22.44     38.27     35.39     71%     58%  

Year ending December 31, 2016

                               

Fourth Quarter

  $ 22.10   $ 37.36   $ 32.23     69%     46%  

Third Quarter

    21.62     34.59     32.61     60%     51%  

Second Quarter

    21.11     32.90     30.52     56%     45%  

First Quarter

    21.18     31.46     26.35     49%     24%  

(1)
Net asset value per share, or NAV, is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of each period. Net asset value has not yet been determined for the first or second quarters of 2018.

(2)
Calculated as the respective high or low share price divided by NAV for such quarter.

        On April 26, 2018, the last sale price of our common stock on the NYSE was $37.37 per share, and there were approximately 329 holders of record of the common stock which did not include stockholders for whom shares are held in "nominee" or "street name." The net asset value per share of our common stock on December 31, 2017 (the last date prior to the date of this prospectus on which we determined our net asset value per share) was $23.53, and the premium of the April 26, 2018 closing price of our common stock was 59% to this net asset value per share.

        Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from net asset value per share or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value per share will decrease. It is not possible to predict whether our common stock will trade at, above, or below net asset value per share. Since our IPO in October 2007, our shares of common stock have traded at prices both less than and exceeding our net asset value per share.

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        We currently pay regular monthly dividends and semiannual supplemental dividends to our stockholders. Our monthly dividends, if any, will be determined by our Board of Directors on a quarterly basis. Our semiannual supplemental dividends, if any, will be determined by our Board of Directors based upon our undistributed taxable income. The following table summarizes our dividends declared to date:

Date Declared
  Record Date   Payment Date   Amount(1)  

Fiscal year 2018

               

April 18, 2018

  June 19, 2018   June 26, 2018   $ 0.275  

February 20, 2018

  May 21, 2018   June 15, 2018   $ 0.190  

February 20, 2018

  April 20, 2018   May 15, 2018   $ 0.190  

February 20, 2018

  March 21, 2018   April 16, 2018   $ 0.190  

October 31, 2017

  February 22, 2018   March 15, 2018   $ 0.190  

October 31, 2017

  January 19, 2018   February 15, 2018   $ 0.190  

October 31, 2017

  December 29, 2017   January 12, 2018   $ 0.190 (2)

          $ 1.415  

Fiscal year 2017

               

October 17, 2017

  December 19, 2017   December 27, 2017   $ 0.275 (2)

August 1, 2017

  November 21, 2017   December 15, 2017   $ 0.190 (2)

August 1, 2017

  October 20, 2017   November 15, 2017   $ 0.190 (2)

August 1, 2017

  September 21, 2017   October 16, 2017   $ 0.190 (2)

May 2, 2017

  August 21, 2017   September 15, 2017   $ 0.185 (2)

May 2, 2017

  July 20, 2017   August 15, 2017   $ 0.185 (2)

May 2, 2017

  June 30, 2017   July 14, 2017   $ 0.185 (2)

April 18, 2017

  June 19, 2017   June 26, 2017   $ 0.275 (2)

February 22, 2017

  May 19, 2017   June 14, 2017   $ 0.185 (2)

February 22, 2017

  April 20, 2017   May 15, 2017   $ 0.185 (2)

February 22, 2017

  March 21, 2017   April 13, 2017   $ 0.185 (2)

November 2, 2016

  February 22, 2017   March 15, 2017   $ 0.185 (2)

November 2, 2016

  January 20, 2017   February 15, 2017   $ 0.185 (2)

November 2, 2016

  December 30, 2016   January 13, 2017   $ 0.185 (3)

          $ 2.785  

Fiscal year 2016

               

October 18, 2016

  December 16, 2016   December 23, 2016   $ 0.275 (3)

August 2, 2016

  November 21, 2016   December 13, 2016   $ 0.185 (3)

August 2, 2016

  October 20, 2016   November 15, 2016   $ 0.185 (3)

August 2, 2016

  September 21, 2016   October 14, 2016   $ 0.185 (3)

May 3, 2016

  August 19, 2016   September 15, 2016   $ 0.180 (3)

May 3, 2016

  July 21, 2016   August 15, 2016   $ 0.180 (3)

May 3, 2016

  July 1, 2016   July 15, 2016   $ 0.180 (3)

April 20, 2016

  June 20, 2016   June 27, 2016   $ 0.275 (3)

February 23, 2016

  May 20, 2016   June 15, 2016   $ 0.180 (3)

February 23, 2016

  April 21, 2016   May 16, 2016   $ 0.180 (3)

February 23, 2016

  March 21, 2016   April 15, 2016   $ 0.180 (3)

November 3, 2015

  February 22, 2016   March 15, 2016   $ 0.180 (3)

November 3, 2015

  January 22, 2016   February 17, 2016   $ 0.180 (3)

November 3, 2015

  December 30, 2015   January 15, 2016   $ 0.180 (4)

          $ 2.725  

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Date Declared
  Record Date   Payment Date   Amount(1)  

Fiscal year 2015

               

October 20, 2015

  December 17, 2015   December 24, 2015   $ 0.275 (4)

August 3, 2015

  November 20, 2015   December 14, 2015   $ 0.180 (4)

August 3, 2015

  October 21, 2015   November 16, 2015   $ 0.180 (4)

August 3, 2015

  September 21, 2015   October 15, 2015   $ 0.180 (4)

May 5, 2015

  August 20, 2015   September 15, 2015   $ 0.175 (4)

May 5, 2015

  July 21, 2015   August 14, 2015   $ 0.175 (4)

May 5, 2015

  July 1, 2015   July 15, 2015   $ 0.175 (4)

April 22, 2015

  June 18, 2015   June 25, 2015   $ 0.275 (4)

February 24, 2015

  May 20, 2015   June 15, 2015   $ 0.175 (4)

February 24, 2015

  April 21, 2015   May 15, 2015   $ 0.175 (4)

February 24, 2015

  March 20, 2015   April 15, 2015   $ 0.175 (4)

November 6, 2014

  February 20, 2015   March 16, 2015   $ 0.170 (4)

November 6, 2014

  January 21, 2015   February 13, 2015   $ 0.170 (4)

November 6, 2014

  December 31, 2014   January 15, 2015   $ 0.170 (5)

Total

          $ 2.650  

Fiscal year 2014

               

Total

          $ 2.545 (5),(6)

Fiscal year 2013

               

Total

          $ 2.660 (6),(7)

Fiscal year 2012

               

Total

          $ 1.710 (7),(8)

Fiscal year 2011

               

Total

          $ 1.560 (8)

Fiscal year 2010

               

Total

          $ 1.500 (9)

Fiscal year 2009

               

Total

          $ 1.500 (10),(11)

Fiscal year 2008

               

Total

          $ 1.425 (11)

Fiscal year 2007

               

Total

          $ 0.330 (12)

Cumulative dividends declared or paid

          $ 22.805  

(1)
The determination of the tax attributes of our distributions is made annually, based upon our taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the tax rate applicable to "qualified dividend income" from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations.

(2)
These dividends attributable to fiscal year 2017 were comprised of ordinary income of $2.218 per share, long term capital gain of $0.490 per share, and qualified dividend income of $0.082 per share, and included dividends with a record date during fiscal year 2017, including the dividend

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(3)
These dividends attributable to fiscal year 2016 were comprised of ordinary income of $1.911 per share, long term capital gain of $0.761 per share, and qualified dividend income of $0.058 per share, and included dividends with a record date during fiscal year 2016, including the dividend declared and accrued as of December 31, 2016 and paid on January 13, 2017, pursuant to the Code.

(4)
These dividends attributable to fiscal year 2015 were comprised of ordinary income of $2.325 per share, long term capital gain of $0.231 per share, and qualified dividend income of $0.105 per share, and included dividends with a record date during fiscal year 2015, including the dividend declared and accrued as of December 31, 2015 and paid on January 15, 2016, pursuant to the Code.

(5)
These dividends attributable to fiscal year 2014 were comprised of ordinary income of $2.083 per share, long term capital gain of $0.419 per share, and qualified dividend income of $0.048 per share, and included dividends with a record date during fiscal year 2014, including the dividend declared and accrued as of December 31, 2014 and paid on January 15, 2015, pursuant to the Code.

(6)
These dividends attributable to fiscal year 2013 were comprised of ordinary income of $1.872 per share, long term capital gain of $0.346 per share, and qualified dividend income of $0.457 per share, and included dividends with a record date during fiscal year 2013, including the dividend declared and accrued as of December 31, 2013 and paid on January 15, 2014, pursuant to the Code.

(7)
These dividends attributable to fiscal year 2012 were comprised of ordinary income of $0.923 per share, long term capital gain of $0.748 per share, and qualified dividend income of $0.054 per share, and included dividends with a record date during fiscal year 2012, including the dividend declared and accrued as of December 31, 2012 and paid on January 15, 2013, pursuant to the Code.

(8)
These dividends attributable to fiscal year 2011 were comprised of ordinary income of $1.253 per share, long term capital gain of $0.373 per share, and qualified dividend income of $0.069 per share, and included dividends with a record date during fiscal year 2011, including the dividend declared and accrued as of December 31, 2011 and paid on January 16, 2012, pursuant to the Code.

(9)
These dividends attributable to fiscal year 2010 were comprised of ordinary income of $1.220 per share, long term capital gain of $0.268 per share, and qualified dividend income of $0.012 per share.

(10)
These dividends attributable to fiscal year 2009 were comprised of ordinary income of $1.218 per share and long term capital gain of $0.157 per share and excluded the $0.125 paid on January 15, 2009 which had been declared and accrued as of December 31, 2008.

(11)
These dividends attributable to fiscal year 2008 were comprised of ordinary income of $0.953 per share and long term capital gain of $0.597 per share, and included dividends with a record date during fiscal year 2008, including the $0.125 per share dividend declared and accrued as of December 31, 2008 and paid on January 15, 2009, pursuant to the Code.

(12)
This quarterly dividend attributable to fiscal year 2007 was comprised of ordinary income of $0.105 per share and long term capital gain of $0.225 per share.

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        In accordance with the IRC sections 871(k) and 881(e), the following percentages represent the portion of our dividends that constitute interest-related dividends and short-term capital gains dividends for non-U.S. residents and foreign corporations.

        Including the long-term capital gains discussed above, the following percentages represent the total dividends which are exempt from U.S. withholding tax.

Payment Dates
  Interest-Related
Dividends and
Short-Term
Capital Gain
Dividend
  Distributions Exempt
from U.S.
Withholding Tax(1)
 

2/15/2017

    59.15 %   78.09 %

From 3/15/2017 to 6/14/2017

    78.09 %   78.09 %

6/26/2017

    70.00 %   70.00 %

From 7/14/2017 to 8/15/2017

    0.00 %   100.00 %

9/15/2017

    12.23 %   58.01 %

From 10/16/2017 to 1/12/2018

    70.00 %   70.00 %

        To the extent non-U.S. resident taxes were withheld on ordinary dividends distributed, this information may be considered in connection with any claims for refund of such taxes to be filed by the non-U.S. resident stockholder with the Internal Revenue Service.

        To obtain and maintain RIC tax treatment, we must, among other things, distribute at least 90% of our net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. We will be subject to a 4% non-deductible U.S. federal excise tax on certain undistributed taxable income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary taxable income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending December 31 in that calendar year and (3) any taxable income recognized, but not distributed, in preceding years on which we paid no U.S. federal income tax. Dividends declared and paid by us in a year will generally differ from taxable income for that year, as such dividends may include the distribution of current year taxable income, less amounts carried over into the following year, and the distribution of prior year taxable income carried over into and distributed in the current year. For amounts we carry over into the following year, we will be required to pay a 4% U.S. federal excise tax on the amount by which 98% of our annual ordinary taxable income and 98.2% of capital gains exceeds our distributions for the year. We may retain for investment some or all of our net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) and treat such amounts as deemed distributions to our stockholders. If we do this, our stockholders will be treated as if they had received actual distributions of the capital gains we retained and then reinvested the net after-tax proceeds in our common stock. In general, our stockholders also would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to their allocable shares of the tax we paid on the capital gains deemed distributed to them. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we may be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

        We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued guidance providing that a dividend payable in stock or in cash at the election of the stockholders will be treated as a taxable dividend eligible for the dividends paid deduction provided that at least 20% of the total dividend is payable in cash and certain other requirements are satisfied. Taxable stockholders receiving such dividends will be required to include the

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full amount of the dividend as ordinary income (or as long-term capital gain to the extent such dividend is properly reported as a capital gain dividend), to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

        We have adopted a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of our stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our stockholders who have not "opted out" of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares will be valued based upon the final closing price of MSCC's common stock on a valuation date determined for each dividend by our Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other costs.

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RATIOS OF EARNINGS TO FIXED CHARGES

        The following table contains our ratio of earnings to fixed charges for the periods indicated, computed as set forth below. You should read these ratios of earnings to fixed charges in connection with our consolidated financial statements, including the notes to those statements, included in this prospectus.

 
  For the Year
Ended
December 31, 2017
  For the Year
Ended
December 31, 2016
  For the Year
Ended
December 31, 2015
  For the Year
Ended
December 31, 2014
  For the Year
Ended
December 31, 2013
 

Earnings to Fixed Charges(1)

    6.35     5.09     3.98     5.54     5.78  

(1)
Earnings include net realized and unrealized gains or losses. Net realized and unrealized gains or losses can vary substantially from period to period.

        For purposes of computing the ratios of earnings to fixed charges, earnings represent net increase in net assets resulting from operations plus (or minus) income tax expense (benefit) including excise tax expense plus fixed charges. Fixed charges include interest and credit facility fees expense and amortization of debt issuance costs.

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SELECTED FINANCIAL DATA

        The selected financial and other data as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 have been derived from consolidated financial statements that have been audited by Grant Thornton LLP, an independent registered public accounting firm. You should read this selected financial and other data in conjunction with our "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Senior Securities" and the financial statements and related notes in this prospectus.

 
  Twelve Months Ended December 31,  
 
  2017   2016   2015   2014   2013  
 
  (dollars in thousands, except per share amounts)
 

Statement of operations data:

                               

Investment income:

                               

Total interest, fee and dividend income

  $ 205,741   $ 178,165   $ 163,603   $ 139,939   $ 115,158  

Interest from idle funds and other

        174     986     824     1,339  

Total investment income

    205,741     178,339     164,589     140,763     116,497  

Expenses:

                               

Interest

    (36,479 )   (33,630 )   (32,115 )   (23,589 )   (20,238 )

Compensation

    (18,560 )   (16,408 )   (14,852 )   (12,337 )   (8,560 )

General and administrative

    (11,674 )   (9,284 )   (8,621 )   (7,134 )   (4,877 )

Share-based compensation

    (10,027 )   (8,304 )   (6,262 )   (4,215 )   (4,210 )

Expenses allocated to the External Investment Manager

    6,370     5,089     4,335     2,048      

Expenses reimbursed to MSCP(1)

                    (3,189 )

Total expenses

    (70,370 )   (62,537 )   (57,515 )   (45,227 )   (41,074 )

Net investment income

    135,371     115,802     107,074     95,536     75,423  

Total net realized gain (loss) from investments

    16,182     29,389     (21,316 )   23,206     7,277  

Total net realized loss from SBIC debentures

    (5,217 )               (4,775 )

Total net change in unrealized appreciation (depreciation) from investments           

    42,545     (6,576 )   10,871     (776 )   14,503  

Total net change in unrealized appreciation (depreciation) from SBIC debentures and investment in MSCP(1)

    6,212     (943 )   (879 )   (10,931 )   4,392  

Income tax benefit (provision)

    (24,471 )   1,227     8,687     (6,287 )   35  

Net increase in net assets resulting from operations attributable to common stock

  $ 170,622   $ 138,899   $ 104,437   $ 100,748   $ 96,855  

Net investment income per share—basic and diluted

  $ 2.39   $ 2.23   $ 2.18   $ 2.20   $ 2.06  

Net increase in net assets resulting from operations attributable to common stock per share—basic and diluted

  $ 3.01   $ 2.67   $ 2.13   $ 2.31   $ 2.65  

Weighted-average shares outstanding—basic and diluted

    56,691,913     52,025,002     49,071,492     43,522,397     36,617,850  

(1)
Main Street Capital Partners, LLC

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  As of December 31,  
 
  2017   2016   2015   2014   2013  
 
   
  (dollars in thousands)
 

Balance sheet data:

                               

Assets:

                               

Total portfolio investments at fair value

  $ 2,171,305   $ 1,996,906   $ 1,799,996   $ 1,563,330   $ 1,286,188  

Marketable securities and idle funds investments

            3,693     9,067     13,301  

Cash and cash equivalents

    51,528     24,480     20,331     60,432     34,701  

Interest receivable and other assets

    38,725     37,123     37,638     46,406     16,054  

Deferred financing costs, net of accumulated amortization

    3,837     12,645     13,267     14,550     9,931  

Deferred tax asset, net

        9,125     4,003          

Total assets

  $ 2,265,395   $ 2,080,279   $ 1,878,928   $ 1,693,785   $ 1,360,175  

Liabilities and net assets:

                               

Credit facility

  $ 64,000   $ 343,000   $ 291,000   $ 218,000   $ 237,000  

SBIC debentures at fair value(1)

    288,483     239,603     223,660     222,781     187,050  

4.50% Notes due 2022

    182,015                  

4.50% Notes due 2019

    173,616     175,000     175,000     175,000      

6.125% Notes

    89,057     90,655     90,738     90,823     90,882  

Accounts payable and other liabilities

    20,168     14,205     12,292     10,701     10,549  

Payable for securities purchased

    40,716     2,184     2,311     14,773     27,088  

Interest payable

    5,273     4,103     3,959     4,848     2,556  

Dividend payable

    11,146     10,048     9,074     7,663     6,577  

Deferred tax liability, net

    10,553             9,214     5,940  

Total liabilities

    885,027     878,798     808,034     753,803     567,642  

Total net asset value

    1,380,368     1,201,481     1,070,894     939,982     792,533  

Total liabilities and net assets

  $ 2,265,395   $ 2,080,279   $ 1,878,928   $ 1,693,785   $ 1,360,175  

Other data:

                               

Weighted-average effective yield on LMM debt investments(2)(3)

    12.0%     12.5%     12.2%     13.2%     14.7%  

Number of LMM portfolio companies

    70     73     71     66     62  

Weighted-average effective yield on Middle Market debt investments(2)(3)

    9.0%     8.5%     8.0%     7.8%     7.8%  

Number of Middle Market portfolio companies

    62     78     86     86     92  

Weighted-average effective yield on Private Loan debt investments(2)(3)

    9.2%     9.6%     9.5%     10.1%     11.3%  

Number of Private Loan portfolio companies

    54     46     40     31     15  

Expense ratios (as percentage of average net assets):

                               

Total expenses, including income tax expense

    7.4%     5.5%     4.6%     5.8%     5.8%  

Operating expenses

    5.5%     5.6%     5.5%     5.1%     5.8%  

Operating expenses, excluding interest expense

    2.6%     2.6%     2.4%     2.4%     3.0%  

Total investment return(4)

    16.0%     37.4%     8.5%     –3.1%     16.7%  

Total return based on change in NAV(5)

    14.2%     13.0%     11.1%     12.7%     15.1%  

(1)
SBIC debentures for December 31, 2017, 2016, 2015, 2014 and 2013 are $295,800, $240,000, $225,000, $225,000, and $200,200 at par, respectively, with par of $50,000 for December 31, 2017, $75,200 for December 31, 2016, 2015, 2014 and 2013 recorded at fair value of $48,608, $74,803, $73,860, $72,981 and $62,050, as of December 31, 2017, 2016, 2015, 2014 and 2013, respectively.

(2)
Weighted-average effective yield is calculated based on our debt investments at the end of each period and includes amortization of deferred debt origination fees and accretion of original issue discount, but excludes liquidation fees payable upon repayment and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in shares of our common stock will realize on its investment because it does not reflect any debt investments on non-accrual status, our expenses or any sales load paid by an investor. For information on our investments on non-accrual status, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Portfolio Asset Quality".

(3)
Including investments on non-accrual status, the weighted-average effective yield for LMM, Middle Market, and Private Loan debt investments was 11.1%, 9.0%, and 9.0%, respectively, as of December 31, 2017.

(4)
Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by our dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.

(5)
Total return is based on change in net asset value and was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value. Non-operating changes include any items that affect net asset value other than the net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus.

        Statements we make in the following discussion which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the headings "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors" in this prospectus.

ORGANIZATION

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF"), Main Street Capital II, LP ("MSC II") and Main Street Capital III, LP ("MSC III" and, collectively with MSMF and MSC II, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit

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MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes.

        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our," the "Company" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

OVERVIEW

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million. Our private loan ("Private Loan") portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio.

        We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company's capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution. Providing customized, "one stop" financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

        Our Private Loan portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

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        Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities.

        The following tables provide a summary of our investments in the LMM, Middle Market and Private Loan portfolios as of December 31, 2017 and 2016 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
  As of December 31, 2017  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    70     62     54  

Fair value

  $ 948.2   $ 609.3   $ 467.5  

Cost

  $ 776.5   $ 629.7   $ 489.2  

% of portfolio at cost—debt

    67.1%     97.3%     93.6%  

% of portfolio at cost—equity

    32.9%     2.7%     6.4%  

% of debt investments at cost secured by first priority lien

    98.1%     90.5%     94.5%  

Weighted-average annual effective yield(b)

    12.0%     9.0%     9.2%  

Average EBITDA(c)

  $ 4.4   $ 78.3   $ 39.6  

(a)
At December 31, 2017, we had equity ownership in approximately 97% of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 39%.

(b)
The weighted average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2017, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. Weighted average annual effective yield is higher than what an investor in shares of our common stock will realize on its investment because it does not reflect our expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including six LMM portfolio companies, one Middle Market portfolio company and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation

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  As of December 31, 2016  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    73     78     46  

Fair value

  $ 892.6   $ 630.6   $ 342.9  

Cost

  $ 760.3   $ 646.8   $ 357.7  

% of portfolio at cost—debt

    69.1%     97.2%     93.5%  

% of portfolio at cost—equity

    30.9%     2.8%     6.5%  

% of debt investments at cost secured by first priority lien

    92.1%     89.1%     89.0%  

Weighted-average annual effective yield(b)

    12.5%     8.5%     9.6%  

Average EBITDA(c)

  $ 5.9   $ 98.6   $ 22.7  

(a)
At December 31, 2016, we had equity ownership in approximately 99% of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 36%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2016, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in shares of our common stock will realize on its investment because it does not reflect our expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including five LMM portfolio companies, one Middle Market portfolio company and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies.

        As of December 31, 2017, we had Other Portfolio investments in eleven companies, collectively totaling approximately $104.6 million in fair value and approximately $109.4 million in cost basis and which comprised approximately 4.8% of our Investment Portfolio (as defined in "—Critical Accounting Policies—Basis of Presentation" below) at fair value. As of December 31, 2016, we had Other Portfolio investments in ten companies, collectively totaling approximately $100.3 million in fair value and approximately $107.1 million in cost basis and which comprised approximately 5.0% of our Investment Portfolio at fair value.

        As previously discussed, the External Investment Manager is a wholly owned subsidiary that is treated as a portfolio investment. As of December 31, 2017, there was no cost basis in this investment and the investment had a fair value of approximately $41.8 million, which comprised approximately 1.9% of our Investment Portfolio at fair value. As of December 31, 2016, there was no cost basis in this investment and the investment had a fair value of approximately $30.6 million, which comprised approximately 1.5% of our Investment Portfolio at fair value.

        Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes. An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

        The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that

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meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

        Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio. For the years ended December 31, 2017 and 2016, the ratio of our total operating expenses, excluding interest expense and the non-recurring professional fees and other expenses discussed below, as a percentage of our quarterly average total assets was 1.5%. Including the effect of the non-recurring expenses, the ratio for the year ended December 31, 2017 was 1.6%.

        During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-listed BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. The External Investment Manager has conditionally agreed to waive a limited amount of the incentive fees otherwise earned. During the years ended December 31, 2017, 2016 and 2015, the External Investment Manager earned $10.9 million, $9.5 million, and $7.8 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

        During April 2014, we received an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide it an incentive to allocate opportunities to HMS Income instead of us. However, both we and the External Investment Manager have policies and procedures in place to manage this conflict.

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CRITICAL ACCOUNTING POLICIES

        Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For each of the periods presented herein, our consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of our investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager. Our results of operations and cash flows for the years ended December 31, 2017, 2016 and 2015 and financial position as of December 31, 2017 and 2016, are presented on a consolidated basis. The effects of all intercompany transactions between us and our consolidated subsidiaries have been eliminated in consolidation.

        We are an investment company following the accounting and reporting guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 946, Financial Services—Investment Companies ("ASC 946"). Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and ASC 946, we are precluded from consolidating other entities in which we have equity investments, including those in which we have a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if we hold a controlling interest in an operating company that provides all or substantially all of its services directly to us or to any of our portfolio companies. Accordingly, as noted above, our consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. We have determined that all of our portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, our Investment Portfolio is carried on the consolidated balance sheet at fair value with any adjustments to fair value recognized as "Net Change in Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."

        The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. As of both December 31, 2017 and 2016, our Investment Portfolio valued at fair value represented approximately 96% of our total assets. We are required to report our investments at fair value. We follow the provisions of Financial Accounting Standards Board ("FASB") ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See "Note B.1.—Valuation of the Investment Portfolio" in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

        Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations

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currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

        Our Board of Directors has the final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements. We believe our Investment Portfolio as of December 31, 2017 and 2016 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates.

        We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we otherwise do not expect the debtor to be able to service all of its debt or other obligations, we will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security's status significantly improves regarding the debtor's ability to service the debt or other obligations, or if a loan or debt security is sold or written off, we remove it from non-accrual status.

        We may periodically provide services, including structuring and advisory services, to our portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.

        We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2017, 2016 and 2015, (i) approximately 2.4%, 3.6%, and 2.2%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.6%, 1.2%, and 1.0%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash.

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        We account for our share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

        The Taxable Subsidiaries primarily hold certain portfolio investments for us. The Taxable Subsidiaries permit us to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-of-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with us for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in our consolidated financial statements.

        The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager's separate financial statements.

        In December 2017, the "Tax Cuts and Jobs Act" legislation was enacted. The Tax Cuts and Jobs Act includes significant changes to the U.S. corporate tax system, including a U.S. Federal corporate income tax rate reduction from 35% to 21% and other changes. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in

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which the legislation was enacted. As such, we have accounted for the tax effects as a result of the enactment of the Tax Cuts and Jobs Act as of December 31, 2017.

        The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

        Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

INVESTMENT PORTFOLIO COMPOSITION

        Our LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Our LMM portfolio companies generally have annual revenues between $10 million and $150 million, and our LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, generally bear interest at fixed rates, and generally have a term of between five and seven years from the original investment date. In most LMM portfolio companies, we receive nominally priced equity warrants and/or make direct equity investments in connection with a debt investment.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our Private Loan portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our Other Portfolio investments primarily consist of investments which are not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its

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relationship with HMS Income. Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities, and we allocate the related expenses to the External Investment Manager pursuant to the sharing agreement. Our total expenses for the years ended December 31, 2017, 2016 and 2015 are net of expenses allocated to the External Investment Manager of $6.4 million, $5.1 million, and $4.3 million, respectively. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. The total contribution of the External Investment Manager to our net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income received from the External Investment Manager. For the years ended December 31, 2017, 2016 and 2015, the total contribution to our net investment income was $9.4 million, $7.9 million, and $6.5 million, respectively.

        The following tables summarize the composition of our total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments as of December 31, 2017 and 2016 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  December 31,
2017
  December 31,
2016
 

First lien debt

    79.0%     76.1%  

Equity

    15.3%     14.5%  

Second lien debt

    4.5%     7.7%  

Equity warrants

    0.7%     1.1%  

Other

    0.5%     0.6%  

    100.0%     100.0%  

 

Fair Value:
  December 31,
2017
  December 31,
2016
 

First lien debt

    70.5%     68.7%  

Equity

    24.4%     22.6%  

Second lien debt

    4.1%     7.2%  

Equity warrants

    0.6%     0.9%  

Other

    0.4%     0.6%  

    100.0%     100.0%  

        Our LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments carry a number of risks including: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment grade debt and equity investments in our Investment Portfolio. Please see "Risk Factors—Risks Related to Our Investments" for a more complete discussion of the risks involved with investing in our Investment Portfolio.

PORTFOLIO ASSET QUALITY

        We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into

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consideration various factors, including each investment's expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company's future outlook and other factors that are deemed to be significant to the portfolio company.

        All new LMM portfolio investments receive an initial Investment Rating of 3.

        The following table shows the distribution of our LMM portfolio investments on the 1 to 5 investment rating scale at fair value as of December 31, 2017 and 2016:

 
  As of December 31, 2017   As of December 31, 2016  
Investment Rating
  Investments
at
Fair Value
  Percentage of
Total
Portfolio
  Investments
at
Fair Value
  Percentage of
Total
Portfolio
 
 
  (dollars in thousands)
 

1

  $ 276,401     29.1%   $ 253,420     28.4%  

2

  $ 251,114     26.5%     258,085     28.9%  

3

  $ 342,881     36.2%     294,807     33.0%  

4

  $ 65,737     6.9%     75,433     8.5%  

5

  $ 12,063     1.3%     10,847     1.2%  

Total

  $ 948,196     100.0%   $ 892,592     100.0%  

        Based upon our investment rating system, the weighted-average rating of our LMM portfolio was approximately 2.2 and 2.3 as of December 31, 2017 and 2016, respectively.

        As of December 31, 2017, our total Investment Portfolio had five investments on non-accrual status, which comprised approximately 0.2% of its fair value and 2.3% of its cost. As of December 31, 2016, our total Investment Portfolio had four investments on non-accrual status, which comprised approximately 0.6% of its fair value and 3.0% of its cost.

        The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In the event that the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in defaults on our debt investments or in realized losses on our investments and to difficulty in maintaining historical dividend payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by economic cycles or other conditions, which could also have a negative impact on our future results.

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DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

 
  Twelve Months Ended
December 31,
  Net Change  
 
  2017   2016   Amount   %  
 
  (dollars in thousands)
 

Total investment income

  $ 205,741   $ 178,339   $ 27,402     15%  

Total expenses

    (70,370 )   (62,537 )   (7,833 )   13%  

Net investment income

    135,371     115,802     19,569     17%  

Net realized gain from investments

    16,182     29,389     (13,207 )      

Net realized loss from SBIC debentures

    (5,217 )       (5,217 )      

Net change in net unrealized appreciation (depreciation) from:

                         

Portfolio investments

    42,545     (8,305 )   50,850        

SBIC debentures and marketable securities and idle funds

    6,212     786     5,426        

Total net change in net unrealized appreciation (depreciation)

    48,757     (7,519 )   56,276        

Income tax benefit (provision)

    (24,471 )   1,227     (25,698 )      

Net increase in net assets resulting from operations

  $ 170,622   $ 138,899   $ 31,723     23%  

 

 
  Twelve Months Ended
December 31,
  Net Change  
 
  2017   2016   Amount   %  
 
  (dollars in thousands, except
per share amounts)

 

Net investment income

  $ 135,371   $ 115,802   $ 19,569     17%  

Share-based compensation expense

    10,027     8,304     1,723     21%  

Distributable net investment income(a)

  $ 145,398   $ 124,106   $ 21,292     17%  

Net investment income per share—Basic and diluted

  $ 2.39   $ 2.23   $ 0.16     7%  

Distributable net investment income per share—Basic and diluted(a)

  $ 2.56   $ 2.39   $ 0.17     7%  

(a)
Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

        For the year ended December 31, 2017, total investment income was $205.7 million, a 15% increase over the $178.3 million of total investment income for the corresponding period of 2016. This comparable period increase was principally attributable to (i) a $23.2 million increase in interest income

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primarily related to higher average levels of portfolio debt investments and increased activities involving existing Investment Portfolio debt investments, (ii) a $2.5 million increase in dividend income from Investment Portfolio equity investments and (iii) a $1.8 million increase in fee income. The $27.4 million increase in total investment income in the year ended December 31, 2017 includes (i) an increase of $6.7 million related to higher accelerated prepayment, repricing and other activity for certain portfolio debt investments when compared to the same period in 2016, (ii) an increase of $2.7 million related to interest income activity from portfolio companies that is considered to be less consistent on a recurring basis or non-recurring during the period when compared to the same period in 2016 and (iii) includes $1.7 million related to dividend income activity from portfolio companies that is considered to be less consistent on a recurring basis or non-recurring which is consistent with the amount from such dividend income activity in the same period in 2016.

        For the year ended December 31, 2017, total expenses increased to $70.4 million from $62.5 million for the corresponding period of 2016. This comparable period increase in operating expenses was principally attributable to (i) a $2.8 million increase in interest expense, primarily due to (a) an increase of $1.4 million on the Credit Facility due to the higher average interest rate during 2017, (b) a $0.9 million increase as a result of the issuance of our 4.50% Notes due 2022 in November 2017 and (c) a $0.5 million increase on the SBIC debentures due to the higher average balance as compared to 2016, (ii) a $2.4 million increase in general and administrative expenses, including approximately $0.6 million related to non-recurring professional fees and other expenses incurred on certain potential new portfolio investment opportunities which were terminated during the due diligence and legal documentation processes, (iii) a $2.2 million increase in compensation expense related to increases in the number of personnel, base compensation levels and incentive compensation accruals and (iv) a $1.7 million increase in share-based compensation expense, with these increases partially offset by a $1.3 million increase in the expenses allocated to the External Investment Manager, in each case when compared to the same period in the prior year. For the years ended December 31, 2017 and 2016, the ratio of our total operating expenses, excluding interest expense and the non-recurring professional fees and other expenses discussed above as a percentage of our quarterly average total assets was 1.5%. Including the effect of the non-recurring expenses, the ratio for the year ended December 31, 2017 was 1.6%.

        Net investment income for the year ended December 31, 2017 was $135.4 million, or a 17% increase, compared to net investment income of $115.8 million for the corresponding period of 2016. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses both as discussed above.

        For the year ended December 31, 2017, distributable net investment income increased 17% to $145.4 million, or $2.56 per share, compared with $124.1 million, or $2.39 per share in 2016. The increase in distributable net investment income was primarily due to the higher level of total investment income, partially offset by higher operating expenses both as discussed above. Distributable net investment income on a per share basis for the year ended December 31, 2017 reflects an (i) increase of approximately $0.16 per share from the comparable period in 2016 attributable to the net increase in the comparable levels of accelerated prepayment, repricing and other, unusual activity for certain Investment Portfolio debt investments and (ii) a greater number of average shares outstanding compared to the corresponding period in 2016 primarily due to shares issued through the ATM Program (as defined in "—Liquidity and Capital Resources—Capital Resources" below), shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan.

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        The net increase in net assets resulting from operations during the year ended December 31, 2017 was $170.6 million, or $3.01 per share, compared with $138.9 million, or $2.67 per share, during the year ended December 31, 2016. This $31.7 million increase from the prior year was primarily the result of (i) a $56.3 million improvement in net change in unrealized appreciation (depreciation) from portfolio investments and SBIC debentures, including the impact of accounting reversals relating to realized gains/income (losses), from net unrealized depreciation of $7.5 million for the year ended December 31, 2016 to net unrealized appreciation of $48.8 million for the year ended December 31, 2017, which includes the impact of approximately $15.0 million of unrealized appreciation in the LMM equity portfolio related to the enactment of the Tax Cuts and Jobs Act (see further discussion above in "—Critical Accounting Policies—Income Taxes") and (ii) a $19.6 million increase in net investment income as discussed above, with these increases partially offset by (i) a $25.7 million change in the income tax benefit (provision) from an income tax benefit of $1.2 million for the year ended December 31, 2016 to an income tax provision of $24.5 million for the year ended December 31, 2017, (ii) a $13.2 million decrease in the net realized gain from investments to a total net realized gain from investments of $16.2 million for the year ended December 31, 2017 and (iii) a $5.2 million realized loss on the repayment of SBIC debentures outstanding at MSC II which had previously been accounted for on the fair value method of accounting. The net realized gain from investments of $16.2 million for the year ended December 31, 2017 was primarily the result of (i) the net realized gain of $11.8 million resulting from gains on the exits of five LMM investments and losses on the exits of four LMM investments, (ii) realized gains of $9.3 million due to activity in our Other Portfolio, (iii) net realized gains of $3.0 million in our Private Loan portfolio resulting from gains on the exits of two Private Loan investments and a loss on the restructure of a Private Loan investment, (iv) realized gains of $2.1 million related to other activity in the LMM portfolio and (v) the net realized loss of $9.8 million in our Middle Market portfolio, which is primarily the result of (a) realized losses of $7.9 million on the exits of two Middle Market investments and (b) the realized loss of $3.5 million on the restructure of a Middle Market investment, with these changes partially offset by $1.5 million of net realized gains on other activity in our Middle Market portfolio. The realized loss of $5.2 million on the repayment of SBIC debentures is related to the previously recognized bargain purchase gain resulting from recording the MSC II debentures at fair value on the date of the acquisition of the majority of the equity interests of MSC II in 2010. The effect of the realized loss is offset by the reversal of all previously recognized unrealized depreciation on these SBIC debentures due to fair value adjustments since the date of the acquisition.

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        The following table provides a summary of the total net unrealized appreciation of $48.8 million for the year ended December 31, 2017:

 
  Twelve Months Ended December 31, 2017  
 
  LMM(a)   Middle
Market
  Private
Loan
  Other(b)   Total  
 
  (dollars in millions)
 

Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains)/(income) losses recognized during the current period

  $ (11.1 ) $ 5.6   $ (3.1 ) $ (8.1 ) $ (16.7 )

Net change in unrealized appreciation (depreciation) relating to portfolio investments

    50.6     (9.6 )   (3.1 )   21.4     59.3  

Total net change in unrealized appreciation (depreciation) relating to portfolio investments

  $ 39.5   $ (4.0 ) $ (6.2 ) $ 13.3   $ 42.6  

Unrealized appreciation relating to SBIC debentures(c)

                            6.2  

Total net change in unrealized appreciation

                          $ 48.8  

(a)
LMM includes unrealized appreciation on 39 LMM portfolio investments and unrealized depreciation on 25 LMM portfolio investments.

(b)
Other includes $11.2 million of unrealized appreciation relating to the External Investment Manager and $10.2 million of net unrealized appreciation relating to the Other Portfolio.

(c)
Relates to unrealized appreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis and includes $6.0 million of accounting reversals resulting from the reversal of previously recognized unrealized depreciation recorded since the date of acquisition of MSC II on the debentures repaid due to fair value adjustments since such date and $0.2 million of current period unrealized appreciation on the remaining SBIC debentures.

        The income tax provision for the year ended December 31, 2017 of $24.5 million principally consisted of a deferred tax provision of $19.3 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences, and other current tax expense of $5.2 million related to (i) a $1.9 million accrual for excise tax on our estimated undistributed taxable income and (ii) current tax expense of $3.3 million related to accruals for U.S. federal and state income taxes.

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  Twelve Months Ended
December 31,
  Net Change  
 
  2016   2015   Amount   %  
 
  (dollars in thousands)
 

Total investment income

  $ 178,339   $ 164,589   $ 13,750     8%  

Total expenses

    (62,537 )   (57,515 )   (5,022 )   9%  

Net investment income

    115,802     107,074     8,728     8%  

Net realized gain (loss) from investments

    29,389     (21,316 )   50,705        

Net change in net unrealized appreciation (depreciation) from:

                         

Portfolio investments

    (8,305 )   11,048     (19,353 )      

SBIC debentures and marketable securities and idle funds

    786     (1,056 )   1,842        

Total net change in net unrealized appreciation (depreciation)

    (7,519 )   9,992     (17,511 )      

Income tax benefit

    1,227     8,687     (7,460 )      

Net increase in net assets resulting from operations

  $ 138,899   $ 104,437   $ 34,462     33%  

 

 
  Twelve Months Ended
December 31,
  Net Change  
 
  2016   2015   Amount   %  
 
  (dollars in thousands, except per share
amounts)

 

Net investment income

  $ 115,802   $ 107,074   $ 8,728     8%  

Share-based compensation expense

    8,304     6,262     2,042     33%  

Distributable net investment income(a)

  $ 124,106   $ 113,336   $ 10,770     10%  

Net investment income per share—Basic and diluted

  $ 2.23   $ 2.18   $ 0.05     2%  

Distributable net investment income per share—Basic and diluted(a)

  $ 2.39   $ 2.31   $ 0.08     3%  

(a)
Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

        For the year ended December 31, 2016, total investment income was $178.3 million, an 8% increase over the $164.6 million of total investment income for the corresponding period of 2015. This comparable period increase was principally attributable to (i) a $7.4 million increase in interest income primarily related to higher average levels of portfolio debt investments and (ii) a $7.9 million increase in dividend income from Investment Portfolio equity investments, partially offset by (i) a $0.7 million decrease in fee income and (ii) a $0.8 million decrease in investment income from marketable

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securities and idle funds investments (as defined below). The $13.8 million increase in total investment income in the year ended December 31, 2016 includes an increase of $1.7 million related to dividend income activity from portfolio companies that is considered to be less consistent on a recurring basis or non-recurring during the period when compared to the same period in 2015, partially offset by a decrease of $0.4 million primarily related to lower accelerated prepayment and repricing activity for certain Investment Portfolio debt investments when compared to the same period in 2015.

        For the year ended December 31, 2016, total expenses increased to $62.5 million from $57.5 million for the corresponding period of 2015. This comparable period increase in operating expenses was principally attributable to (i) a $2.0 million increase in share-based compensation expense, (ii) a $1.6 million increase in compensation expense related to increases in the number of personnel, base compensation levels and incentive compensation accruals, (iii) a $1.5 million increase in interest expense, primarily due to an increase in interest expense on the Credit Facility due to the higher average interest rate and balance outstanding in the year ended December 31, 2016 and (iv) a $0.7 million increase in general and administrative expenses, with these increases partially offset by a $0.8 million increase in the expenses allocated to the External Investment Manager, in each case when compared to the same period in the prior year. For the year ended December 31, 2016, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.5% compared to 1.4% for the year ended December 31, 2015.

        Net investment income for the year ended December 31, 2016 was $115.8 million, or an 8% increase, compared to net investment income of $107.1 million for the corresponding period of 2015. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses as discussed above.

        For the year ended December 31, 2016, distributable net investment income increased 10% to $124.1 million, or $2.39 per share, compared with $113.3 million, or $2.31 per share, in the corresponding period of 2015. The increase in distributable net investment income was primarily due to the higher level of total investment income, partially offset by higher operating expenses both as discussed above. Distributable net investment income on a per share basis for the year ended December 31, 2016 reflects an increase of approximately $0.03 per share from the comparable period in 2015 attributable to the increase in dividend income that is considered to be less consistent on a recurring basis or non-recurring, partially offset by (i) a decrease of approximately $0.01 per share from the comparable period in 2015 attributable to the net decrease in the comparable levels of accelerated prepayment, repricing and other activity for certain Investment Portfolio debt investments and (ii) a greater number of average shares outstanding compared to the corresponding period in 2015 primarily due to the March 2015 equity offering, shares issued through the ATM Program (as defined in "—Liquidity and Capital Resources—Capital Resources" below) and shares issued pursuant to our restricted stock plan and dividend reinvestment plan.

        The net increase in net assets resulting from operations during the year ended December 31, 2016 was $138.9 million, or $2.67 per share, compared with $104.4 million, or $2.13 per share, during the year ended December 31, 2015. This $34.5 million increase from the same period in the prior year period was primarily the result of (i) a $50.7 million increase in the net realized gain (loss) from investments from a net realized loss of $21.3 million during the year ended December 31, 2015 to a net

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realized gain of $29.4 million for the year ended December 31, 2016 and (ii) an $8.7 million increase in net investment income as discussed above, partially offset by (i) a $17.5 million decrease in net change in unrealized appreciation (depreciation), including accounting reversals relating to the realized gains (losses), from net unrealized appreciation of $10.0 million for the year ended December 31, 2015 to net unrealized depreciation of $7.5 million for the year ended December 31, 2016 and (ii) a $7.5 million decrease in the income tax benefit from the same period in the prior year. The net realized gain of $29.4 million for the year ended December 31, 2016 was primarily the result of (i) the net realized gain of $57.5 million on the exit five LMM investments and (ii) the net realized gain of $4.2 million due to activity in our Other Portfolio, partially offset by (i) the realized loss of $9.6 million on the exit of three Private Loan investments, (ii) the realized loss of $17.0 million related to the restructuring of five Middle Market investments, (iii) the net realized loss of $4.7 million on the exit of two Middle Market investments and (iv) the realized loss of $1.6 million on the exit of a marketable securities and idle funds investment.

        The following table provides a summary of the total net unrealized depreciation of $7.5 million for the year ended December 31, 2016:

 
  Twelve Months Ended December 31, 2016  
 
  LMM(a)   Middle
Market
  Private
Loan
  Other(b)   Total  
 
  (dollars in millions)
 

Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains)/losses recognized during period

  $ (53.1 ) $ 25.7   $ 9.5   $ (3.5 ) $ (21.4 )

Net change in unrealized appreciation (depreciation) relating to portfolio investments

    8.2     8.4     (4.0 )   0.5     13.1  

Total net change in unrealized appreciation (depreciation) relating to portfolio investments

  $ (44.9 ) $ 34.1   $ 5.5   $ (3.0 ) $ (8.3 )

Net change in unrealized appreciation relating to marketable securities

                            1.7  

Unrealized depreciation relating to SBIC debentures(c)

                            (0.9 )

Total net change in unrealized appreciation (depreciation)

                          $ (7.5 )

(a)
LMM includes unrealized appreciation on 31 LMM portfolio investments and unrealized depreciation on 27 LMM portfolio investments.

(b)
Other includes $3.3 million of unrealized appreciation relating to the External Investment Manager offset by $2.8 million of net unrealized depreciation relating to the Other Portfolio.

(c)
Relates to unrealized depreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis.

        The income tax benefit for the year ended December 31, 2016 of $1.2 million principally consisted of a deferred tax benefit of $3.3 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences, partially offset by other current tax expense related to (i) a $1.7 million accrual for excise tax on our estimated undistributed taxable income and (ii) other current tax expense of $0.4 million related to accruals for U.S. federal and state income taxes.

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        For the year ended December 31, 2017, we experienced a net increase in cash and cash equivalents in the amount of approximately $27.0 million, which is the result of approximately $72.9 million of cash provided by our operating activities and approximately $45.9 million of cash used in financing activities.

        During the period, $72.9 million of cash was provided by our operating activities, which resulted primarily from (i) cash flows we generated from the operating profits earned through our operating activities totaling $123.1 million, which is our $145.4 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $17.0 million, payment-in-kind interest income of $4.9 million, cumulative dividends of $3.2 million and the amortization expense for deferred financing costs of $2.8 million, (ii) cash uses totaling $876.7 million for the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2016, and (iii) cash proceeds totaling $826.5 million from (a) $819.4 million in cash proceeds from the sales and repayments of debt investments and sales of and return on capital of equity investments, (b) $4.5 million related to decreases in other assets and (c) $2.6 million related to increases in payables and accruals.

        During the year ended December 31, 2017, $45.9 million in cash was used in financing activities, which principally consisted of (i) $150.9 million in net cash proceeds from the ATM Program (described below), (ii) $185.0 million in cash proceeds from the issuance of 4.50% Notes due 2022 in November 2017 and (iii) $81.0 million in cash proceeds from issuance of SBIC debentures, partially offset by (i) $279.0 million in net repayments on the Credit Facility, (ii) $148.4 million in cash dividends paid to stockholders, (iii) $25.2 million in repayment of SBIC debentures, (iv) $4.4 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements upon the vesting of such restricted stock and (v) $5.9 million for payment of deferred debt issuance costs, SBIC debenture fees and other costs.

        For the year ended December 31, 2016, we experienced a net increase in cash and cash equivalents in the amount of approximately $4.1 million, which is the result of approximately $42.7 million of cash used by our operating activities and approximately $46.9 million of cash provided by financing activities.

        During the period, we used $42.7 million of cash from our operating activities, which resulted primarily from (i) cash flows we generated from the operating profits earned through our operating activities totaling $107.8 million, which is our $124.1 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $10.2 million, payment-in-kind interest income of $6.5 million, cumulative dividends of $2.2 million and the amortization expense for deferred financing costs of $2.6 million, (ii) cash uses totaling $641.7 million which primarily resulted from (a) the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2015, which collectively total $641.2 million, and (b) $0.5 million from the purchase of marketable securities and idle funds investments and (iii) cash proceeds totaling $491.2 million from (a) $486.2 million in cash proceeds from the sales and repayments of debt investments and sales of and return on capital of equity investments and (b) $4.3 million of cash proceeds from the sale of marketable securities and idle funds investments and (c) $0.7 million related to increases in payables and accruals.

        During the year ended December 31, 2016, $46.9 million in cash was provided by financing activities, which principally consisted of (i) $112.0 million in net cash proceeds from the ATM Program (described below), (ii) $52.0 million in net cash proceeds from the Credit Facility and (iii) $15.0 million in cash proceeds from issuance of SBIC debentures, partially offset by (i) $127.5 million in cash dividends paid to stockholders, (ii) $2.6 million for purchases of vested restricted stock from employees

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to satisfy their tax withholding requirements upon the vesting of such restricted stock and (iii) $2.0 million for payment of deferred loan costs, SBIC debenture fees and other costs.

        As of December 31, 2017, we had $51.5 million in cash and cash equivalents and $521.0 million of unused capacity under the Credit Facility, which we maintain to support our investment and operating activities. As of December 31, 2017, our net asset value totaled $1,380.4 million, or $23.53 per share.

        The Credit Facility was amended in September 2017 to increase the total commitments to $585.0 million from a diversified group of fifteen lenders. The Credit Facility matures in September 2021 and contains an accordion feature which allows us to increase the total commitments under the facility to up to $750.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

        Borrowings under the Credit Facility bear interest, subject to our election, on a per annum basis at a rate equal to the applicable LIBOR rate (1.56% as of December 31, 2017) plus (i) 1.875% (or the applicable base rate (Prime Rate of 4.50% as of December 31, 2017) plus 0.875%) as long as we maintain an investment grade rating and meet certain agreed upon excess collateral and maximum leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if we maintain an investment grade rating but do not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%) if we do not maintain an investment grade rating. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. The Credit Facility contains certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio of at least 1.5 to 1.0 and (iv) maintaining a minimum tangible net worth. The Credit Facility is provided on a revolving basis through its final maturity date in September 2021, and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval. As of December 31, 2017, we had $64.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 3.2% and we were in compliance with all financial covenants of the Credit Facility.

        Through the Funds, we have the ability to issue SBIC debentures guaranteed by the SBA at favorable interest rates and favorable terms and conditions up to a maximum amount of $350.0 million. During the year ended December 31, 2017, we issued $81.0 million of SBIC debentures and opportunistically prepaid $25.2 million of our existing SBIC debentures as part of an effort to manage the maturity dates of our oldest SBIC debentures, leaving $54.2 million of remaining capacity under our SBIC licenses. Debentures guaranteed by the SBA have fixed interest rates that equal prevailing 10-year Treasury Note rates plus a market spread and have a maturity of ten years with interest payable semiannually. The principal amount of the debentures is not required to be paid before maturity, but may be pre-paid at any time with no prepayment penalty. We expect to issue new SBIC debentures under the SBIC program in the future in an amount up to the regulatory maximum amount of $350.0 million for affiliated SBIC funds. As of December 31, 2017, through our three wholly owned SBICs, we had $295.8 million of outstanding SBIC debentures guaranteed by the SBA, which bear a weighted-average annual fixed interest rate of approximately 3.6%, paid semiannually, and mature ten years from issuance. The first maturity related to our SBIC debentures occurs in 2019, and the weighted-average remaining duration is approximately 5.8 years as of December 31, 2017.

        In April 2013, we issued $92.0 million, including the underwriters' full exercise of their over-allotment option, in aggregate principal amount of the 6.125% Notes (the "6.125% Notes"). The

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6.125% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at our option on or after April 1, 2018. We may from time to time repurchase 6.125% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2017, the outstanding balance of the 6.125% Notes was $90.7 million.

        The indenture governing the 6.125% Notes (the "6.125% Notes Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 6.125% Notes and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 6.125% Notes Indenture.

        In November 2014, we issued $175.0 million in aggregate principal amount of the 4.50% Notes (the "4.50% Notes due 2019") at an issue price of 99.53%. The 4.50% Notes due 2019 are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2019; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2019 mature on December 1, 2019, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 4.50% Notes due 2019 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year, beginning June 1, 2015. We may from time to time repurchase 4.50% Notes due 2019 in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2017, the outstanding balance of the 4.50% Notes due 2019 was $175.0 million.

        The indenture governing the 4.50% Notes due 2019 (the "4.50% Notes due 2019 Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50% Notes due 2019 and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2019 Indenture.

        In November 2017, we issued $185.0 million in aggregate principal amount of the 4.50% Notes (the "4.50% Notes due 2022") at an issue price of 99.16%. The 4.50% Notes due 2022 are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2022 mature on December 1, 2022, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 4.50% Notes due 2022 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year, beginning June 1, 2018. We

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may from time to time repurchase 4.50% Notes due 2022 in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2017, the outstanding balance of the 4.50% Notes due 2022 was $185.0 million.

        The indenture governing the 4.50% Notes due 2022 (the "4.50% Notes due 2022 Indenture") contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50% Notes due 2022 and the Trustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2022 Indenture.

        During March 2015, we completed a follow-on public equity offering of 4,370,000 shares of common stock, including the underwriters' full exercise of their option to purchase 570,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by us, of approximately $127.8 million.

        In November 2015, we commenced a program with certain selling agents through which we can sell shares of our common stock by means of at-the-market offerings from time to time (the "ATM Program"). During the year ended December 31, 2015, we sold 140,568 shares of our common stock at a weighted-average price of $31.98 per share and raised $4.5 million of gross proceeds under the ATM Program. Net proceeds were $4.3 million after commissions to the selling agents on shares sold and offering costs.

        During the year ended December 31, 2016, we sold 3,324,646 shares of our common stock at a weighted-average price of $34.17 per share and raised $113.6 million of gross proceeds under the ATM Program. Net proceeds were $112.0 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2016, sales transactions representing 42,413 shares had not settled and are not included in shares issued and outstanding on the face of the consolidated balance sheet, but are included in the weighted-average shares outstanding in the consolidated statement of operations and in the shares used to calculate our net asset value per share.

        During the year ended December 31, 2017, we sold 3,944,972 shares of our common stock at a weighted-average price of $38.72 per share and raised $152.8 million of gross proceeds under the ATM Program. Net proceeds were $150.9 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2017, 1,911,356 shares remained available for sale under the ATM Program.

        We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, cash flows generated through our ongoing operating activities, utilization of available borrowings under our Credit Facility, and a combination of future issuances of debt and equity capital. Our primary uses of funds will be investments in portfolio companies, operating expenses and cash distributions to holders of our common stock.

        We periodically invest excess cash balances into marketable securities and idle funds investments. The primary investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Middle Market and Private Loan portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments.

        If our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board of

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Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2017 annual meeting of stockholders because our common stock price per share had been trading significantly above the net asset value per share of our common stock since 2011. We would therefore need future approval from our stockholders to issue shares below the then current net asset value per share.

        In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are required to meet a coverage ratio of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200%. This requirement limits the amount that we may borrow. In January 2008, we received an exemptive order from the SEC to exclude SBA-guaranteed debt securities issued by MSMF and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to us, which, in turn, enables us to fund more investments with debt capital.

        Although we have been able to secure access to additional liquidity, including through the Credit Facility, public debt issuances, leverage available through the SBIC program and equity offerings, there is no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all.

        In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements under ASC 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarified the implementation guidance regarding performance obligations and licensing arrangements. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients, which clarified guidance on assessing collectability, presenting sales tax, measuring noncash consideration, and certain transition matters. In December 2016, the FASB issued ASU No. 2016-20, Revenue from Contracts with Customers (Topic 606)—Technical Corrections and Improvements, which provided disclosure relief, and clarified the scope and application of the new revenue standard and related cost guidance. The new guidance will be effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Early adoption would be permitted for annual reporting periods beginning after December 15, 2016. We expect to identify similar performance obligations under ASC 606 as compared with deliverables and separate units of account previously identified. As a result, we expect timing of our revenue recognition to remain the same.

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        In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires debt financing costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the related debt liability, similar to the presentation of debt discounts. Additionally in August 2015, the FASB issued ASU 2015-15, Interest—Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which provides further clarification on the same topic and states that the SEC would not object to the deferral and presentation of debt issuance costs as an asset and subsequent amortization of the deferred costs over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted the guidance for debt arrangements that are not line-of-credit arrangements for the three months ended June 30, 2017. Comparative financial statements of prior interim and annual periods have been adjusted to apply the new method retrospectively. As a result of the adoption, the Company reclassified $7.9 million of deferred financing costs assets to a direct deduction from the related debt liability on the consolidated balance sheet as of December 31, 2016. The adoption of this guidance had no impact on net assets, the consolidated statements of operations or the consolidated statements of cash flows.

        In May 2015, the FASB issued ASU 2015-07, Fair Value Measurements—Disclosures for Certain Entities that Calculate Net Asset Value per Share. This amendment updates guidance intended to eliminate the diversity in practice surrounding how investments measured at net asset value under the practical expedient with future redemption dates have been categorized in the fair value hierarchy. Under the updated guidance, investments for which fair value is measured at net asset value per share using the practical expedient should no longer be categorized in the fair value hierarchy, while investments for which fair value is measured at net asset value per share but the practical expedient is not applied should continue to be categorized in the fair value hierarchy. The updated guidance requires retrospective adoption for all periods presented and is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this standard during the three months ended March 31, 2016. There was no impact of the adoption of this new accounting standard on our consolidated financial statements as none of our investments are measured through the use of the practical expedient.

        In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. The new guidance is effective for annual periods beginning after December 15, 2018, and interim periods therein. Early application is permitted. While we continue to assess the effect of adoption, we currently believe the most significant change relates to the recognition of a new right-of-use asset and lease liability on our consolidated balance sheet for our office space operating lease. We currently have one operating lease for office space and do not expect a significant change in our leasing activity between now and adoption. See further discussion of our operating lease obligation in "Note M—Commitments and Contingences" in the notes to the consolidated financial statements.

        In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2016, and interim periods therein. Early application is permitted. The Company elected to early adopt this standard during the three months ended March 31, 2016. See further discussion of the impact of the adoption of this standard in

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"Note B.8.—Summary of Significant Accounting Policies—Share-based Compensation" in the notes to consolidated financial statements.

        In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), which is intended to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods therein. Early application is permitted. The impact of the adoption of this new accounting standard on our consolidated financial statements is not expected to be material.

        From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

        Inflation has not had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, and may in the future experience, the impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third-party services and required energy consumption.

        We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At December 31, 2017, we had a total of $118.7 million in outstanding commitments comprised of (i) 36 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) 11 investments with equity capital commitments that had not been fully called.

        As of December 31, 2017, the future fixed commitments for cash payments in connection with our SBIC debentures, the 4.50% Notes due 2019, the 4.50% Notes due 2022 and the 6.125% Notes and rent obligations under our office lease for each of the next five years and thereafter are as follows:

 
  2018   2019   2020   2021   2022   Thereafter   Total  

SBIC debentures

  $   $ 20,000   $ 55,000   $ 40,000   $ 5,000   $ 175,800   $ 295,800  

Interest due on SBIC debentures

    10,678     10,907     9,717     7,164     6,152     18,669     63,287  

6.125% Notes

                        90,655     90,655  

Interest due on 6.125% Notes

    5,553     5,553     5,553     5,553     5,553     1,386     29,151  

4.50% Notes due 2019

        175,000                     175,000  

Interest due on 4.50% Notes due 2019

    7,875     7,875                     15,750  

4.50% Notes due 2022

                    185,000         185,000  

Interest due on 4.50% Notes due 2022

    8,533     8,325     8,325     8,325     8,325         41,833  

Operating Lease Obligation(1)

    346     749     763     777     791     4,239     7,665  

Total

  $ 32,985   $ 228,409   $ 79,358   $ 61,819   $ 210,821   $ 290,749   $ 904,141  

(1)
The interest due on the $21.0 million of SBIC debentures drawn in 2017 does not have a final rate that has been fixed by the SBA as of December 31, 2017. In March 2018, the final rate for these SBIC

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(2)
Operating Lease Obligation means a rent payment obligation under a lease classified as an operating lease and disclosed pursuant to FASB ASC 840, as may be modified or supplemented.

        As of December 31, 2017, we had $64.0 million in borrowings outstanding under our Credit Facility, and the Credit Facility is currently scheduled to mature in September 2021. The Credit Facility contains two, one-year extension options which could extend the maturity to September 2023, subject to lender approval. See further discussion of the Credit Facility terms in "—Liquidity and Capital Resources—Capital Resources."

        As discussed further above, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of our Investment Portfolio. At December 31, 2017, we had a receivable of approximately $2.9 million due from the External Investment Manager which included approximately $2.0 million primarily related to operating expenses incurred by us as required to support the External Investment Manager's business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion above in "—Critical Accounting Policies—Income Taxes") and approximately $0.9 million of dividends declared but not paid by the External Investment Manager.

        In November 2015, our Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the "2015 Deferred Compensation Plan"). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the "2013 Deferred Compensation Plan"). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors' fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of December 31, 2017, $4.0 million of compensation and directors' fees had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $2.5 million was deferred into phantom Main Street stock units, representing 74,487 shares of our common stock. Including phantom stock units issued through dividend reinvestment, the phantom stock units outstanding as of December 31, 2017 represented 89,040 shares of our common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the consolidated statements of changes in net assets until such shares are actually distributed to the participant in accordance with the plan, but are included in operating expenses and weighted-average shares outstanding in our consolidated statements of operations as earned.

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SENIOR SECURITIES

        Information about our senior securities is shown in the following table as of December 31 for the years indicated in the table, unless otherwise noted. Grant Thornton LLP's report on the senior securities table as of December 31, 2017, is an exhibit to the registration statement of which this prospectus is a part.

Class and Year
  Total Amount Outstanding
Exclusive of
Treasury Securities(1)
  Asset Coverage
per Unit(2)
  Involuntary Liquidating
Preference per Unit(3)
  Average
Market Value
per Unit(4)
 
 
  (dollars in thousands)
   
   
   
 

SBIC Debentures

                         

2008

  $ 55,000     3,043         N/A  

2009

    65,000     2,995         N/A  

2010

    180,000     2,030         N/A  

2011

    220,000     2,202         N/A  

2012

    225,000     2,763         N/A  

2013

    200,200     2,476         N/A  

2014

    225,000     2,323         N/A  

2015

    225,000     2,368         N/A  

2016

    240,000     2,415         N/A  

2017

    295,800     2,687         N/A  

Credit Facility

   
 
   
 
   
 
   
 
 

2010

  $ 39,000     2,030         N/A  

2011

    107,000     2,202         N/A  

2012

    132,000     2,763         N/A  

2013

    237,000     2,476         N/A  

2014

    218,000     2,323         N/A  

2015

    291,000     2,368         N/A  

2016

    343,000     2,415         N/A  

2017

    64,000     2,687         N/A  

6.125% Notes

   
 
   
 
   
 
   
 
 

2013

  $ 90,882     2,476       $ 24.35  

2014

    90,823     2,323         24.78  

2015

    90,738     2,368         25.40  

2016

    90,655     2,415         25.76  

2017

    90,655     2,687         25.93  

4.50% Notes Due 2019

   
 
   
 
   
 
   
 
 

2014

  $ 175,000     2,323         N/A  

2015

    175,000     2,368         N/A  

2016

    175,000     2,415         N/A  

2017

    175,000     2,687         N/A  

4.50% Notes Due 2022

   
 
   
 
   
 
   
 
 

2017

  $ 185,000     2,687         N/A  

(1)
Total amount of each class of senior securities outstanding at the end of the period presented.

(2)
Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.

(3)
The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The "—" indicates information that the Securities and Exchange Commission expressly does not require to be disclosed for certain types of senior securities.

(4)
Average market value per unit for our 6.125% Notes represents the average of the daily closing prices as reported on the NYSE during the period presented. Average market value per unit for our SBIC Debentures, Credit Facility, 4.50% Notes due 2019 and 4.50% Notes due 2022 are not applicable because these are not registered for public trading.

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BUSINESS

Organization

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF"), Main Street Capital II, LP ("MSC II") and Main Street Capital III, LP ("MSC III" and, collectively with MSMF and MSC II, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes.

        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our," the "Company" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

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        The following diagram depicts our organizational structure:

GRAPHIC


*
Each of the Taxable Subsidiaries is directly or indirectly wholly owned by MSCC.

**
The External Investment Manager is accounted for as a portfolio investment at fair value, as opposed to a consolidated subsidiary, and is indirectly wholly owned by MSCC.

Overview of our Business

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million. Our private loan ("Private Loan") portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio.

        We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company's capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution. Providing customized, "one stop" financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date.

        Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

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        Our Private Loan portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Our other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities.

        Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes (see "Regulation"). An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

        The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

        Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio.

        During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-listed BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such

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arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income.

        During April 2014, we received an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide it an incentive to allocate opportunities to HMS Income instead of us. However, both we and the External Investment Manager have policies and procedures in place to manage this conflict.

Business Strategies

        Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We have adopted the following business strategies to achieve our investment objective:

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Investment Criteria

        Our investment team has identified the following investment criteria that it believes are important in evaluating prospective portfolio companies. Our investment team uses these criteria in evaluating investment opportunities. However, not all of these criteria have been, or will be, met in connection with each of our investments:

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Investment Portfolio

        The Investment Portfolio, as used herein, refers to all of our investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager. Our LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments that we originate on a collaborative basis with other investment funds, and are often referred to in the debt markets as "club deals." Our Other Portfolio investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

        Historically, we have made LMM debt investments principally in the form of single tranche debt. Single tranche debt financing involves issuing one debt security that blends the risk and return profiles of both first lien secured and subordinated debt. We believe that single tranche debt is more appropriate for many LMM companies given their size in order to reduce structural complexity and potential conflicts among creditors.

        Our LMM debt investments generally have a term of five to seven years from the original investment date, with limited required amortization prior to maturity, and provide for monthly or quarterly payment of interest at fixed interest rates generally between 10% and 14% per annum, payable currently in cash. In some instances, we have provided floating interest rates for our single tranche debt securities. In addition, certain LMM debt investments may have a form of interest that is not paid currently but is accrued and added to the loan balance and paid at maturity. We refer to this form of interest as payment-in-kind, or PIK, interest. We typically structure our LMM debt investments with the maximum seniority and collateral that we can reasonably obtain while seeking to achieve our total return target. In most cases, our LMM debt investment will be collateralized by a first priority lien on substantially all the assets of the portfolio company. In addition to seeking a senior lien position in the capital structure of our LMM portfolio companies, we seek to limit the downside potential of our LMM debt investments by negotiating covenants that are designed to protect our LMM debt investments while affording our portfolio companies as much flexibility in managing their businesses as is reasonable. Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control or change of management provisions, key-man life insurance, guarantees, equity pledges, personal guaranties, where appropriate, and put rights. In addition, we typically seek board representation or observation rights in all of our LMM portfolio companies.

        While we will continue to focus our LMM debt investments primarily on single tranche debt investments, we also anticipate structuring some of our debt investments as mezzanine loans. We anticipate that these mezzanine loans will be primarily junior secured or unsecured, subordinated loans that provide for relatively high fixed interest rates payable currently in cash that will provide us with significant interest income plus the additional opportunity for income and gains through PIK interest and equity warrants and other similar equity instruments issued in conjunction with these mezzanine loans. These loans typically will have interest-only payments in the early years, with amortization of principal deferred to the later years of the mezzanine loan term. Typically, our mezzanine loans will

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have maturities of three to five years. We will generally target fixed interest rates of 12% to 14%, payable currently in cash for our mezzanine loan investments with higher targeted total returns from equity warrants or PIK interest.

        We also pursue debt investments in Middle Market companies. Our Middle Market portfolio investments primarily consist of direct investments or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. The debt investments in our Middle Market portfolio have rights and protections that are similar to those in our LMM debt investments, which may include affirmative and negative covenants, default penalties, lien protection, change of control provisions, guarantees and equity pledges. The Middle Market debt investments generally have floating interest rates at the London Interbank Offered Rate ("LIBOR") plus a margin, and are typically subject to LIBOR floors.

        Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments which have been originated through strategic relationships with other investment funds on a collaborative basis. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien and typically have a term of between three and seven years from the original investment date.

        In connection with our debt investments, we occasionally receive equity warrants to establish or increase our equity interest in the portfolio company. Warrants we receive in connection with a debt investment typically require only a nominal cost to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We typically structure the warrants to provide provisions protecting our rights as a minority-interest holder, as well as secured or unsecured put rights, or rights to sell such securities back to the portfolio company, upon the occurrence of specified events. In certain cases, we also may obtain registration rights in connection with these equity interests, which may include demand and "piggyback" registration rights.

        We also will seek to make direct equity investments in situations where it is appropriate to align our interests with key management and stockholders of our LMM portfolio companies, and to allow for participation in the appreciation in the equity values of our LMM portfolio companies. We usually make our direct equity investments in connection with debt investments in our LMM portfolio companies. In addition, we may have both equity warrants and direct equity positions in some of our LMM portfolio companies. We seek to maintain fully diluted equity positions in our LMM portfolio companies of 5% to 50%, and may have controlling equity interests in some instances. We have a value orientation toward our direct equity investments and have traditionally been able to purchase our equity investments at reasonable valuations.

Investment Process

        Our investment committee is responsible for all aspects of our LMM investment process. The current members of our investment committee are Vincent D. Foster, our Chairman and Chief Executive Officer, Dwayne L. Hyzak, our President, Chief Operating Officer and Senior Managing Director, Curtis L. Hartman, our Vice-Chairman, Chief Credit Officer and Senior Managing Director, and David Magdol, our Vice-Chairman, Chief Investment Officer and Senior Managing Director.

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        Our credit committee is responsible for all aspects of our Middle Market portfolio investment process. The current members of our credit committee are Messrs. Foster, Hartman, Hyzak and Nicholas T. Meserve, the Managing Director of our Middle Market investment team.

        Investment process responsibility for each Private Loan portfolio investment is delegated to either the investment committee or the credit committee based upon the nature of the investment and the manner in which it was originated. Similarly, the investment processes for each Private Loan portfolio investment, from origination to close and to eventual exit, will follow the processes for our LMM portfolio investments or our Middle Market portfolio investments as outlined below, or a combination thereof.

        Our investment strategy involves a "team" approach, whereby potential transactions are screened by several members of our investment team before being presented to the investment committee or the credit committee, as applicable. Our investment committee and credit committee each meet on an as needed basis depending on transaction volume. We generally categorize our investment process into seven distinct stages:

        Deal generation and origination is maximized through long-standing and extensive relationships with industry contacts, brokers, commercial and investment bankers, entrepreneurs, service providers such as lawyers, financial advisors, accountants and current and former portfolio companies and investors. Our investment team has focused its deal generation and origination efforts on LMM and Middle Market companies, and we have developed a reputation as a knowledgeable, reliable and active source of capital and assistance in these markets.

        During the screening process, if a transaction initially meets our investment criteria, we will perform preliminary due diligence, taking into consideration some or all of the following information:

        Upon successful screening of a proposed LMM transaction, the investment team makes a recommendation to our investment committee. If our investment committee concurs with moving forward on the proposed LMM transaction, we typically issue a non-binding term sheet to the company. For Middle Market portfolio investments, the initial term sheet is typically issued by the borrower, through the syndicating bank, and is screened by the investment team which makes a recommendation to our credit committee.

        For proposed LMM transactions, the non-binding term sheet will include the key economic terms based upon our analysis performed during the screening process as well as a proposed timeline and our qualitative expectation for the transaction. While the term sheet for LMM investments is non-binding,

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we typically receive an expense deposit in order to move the transaction to the due diligence phase. Upon execution of a term sheet, we begin our formal due diligence process.

        For proposed Middle Market transactions, the initial term sheet will include key economic terms and other conditions proposed by the borrower and its representatives and the proposed timeline for the investment, which are reviewed by our investment team to determine if such terms and conditions are in agreement with our investment objectives.

        Due diligence on a proposed LMM investment is performed by a minimum of two of our investment professionals, whom we refer to collectively as the investment team, and certain external resources, who together conduct due diligence to understand the relationships among the prospective portfolio company's business plan, operations and financial performance. Our LMM due diligence review includes some or all of the following:

        Due diligence on a proposed Middle Market investment is generally performed on materials and information obtained from certain external resources and assessed internally by a minimum of two of our investment professionals, who work to understand the relationships among the prospective portfolio company's business plan, operations and financial performance using the accumulated due diligence information. Our Middle Market due diligence review includes some or all of the following:

        During the due diligence process, significant attention is given to sensitivity analyses and how the company might be expected to perform given downside, base-case and upside scenarios. In certain cases, we may decide not to make an investment based on the results of the diligence process.

        Upon completion of a satisfactory due diligence review of a proposed LMM portfolio investment, the investment team presents the findings and a recommendation to our investment committee. The presentation contains information which can include, but is not limited to, the following:

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        Upon completion of a satisfactory due diligence review of a proposed Middle Market portfolio investment, the investment team presents the findings and a recommendation to our credit committee. The presentation contains information which can include, but is not limited to, the following:

        If any adjustments to the transaction terms or structures are proposed by the investment committee or credit committee, as applicable, such changes are made and applicable analyses are updated prior to approval of the transaction. Approval for the transaction must be made by the affirmative vote from a majority of the members of the investment committee or credit committee, as applicable, with the committee member managing the transaction, if any, abstaining from the vote. Upon receipt of transaction approval, we will re-confirm regulatory compliance, process and finalize all required legal documents, and fund the investment.

        We continuously monitor the status and progress of the portfolio companies. We generally offer managerial assistance to our portfolio companies, giving them access to our investment experience, direct industry expertise and contacts. The same investment team that was involved in the investment

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process will continue its involvement in the portfolio company post-investment. This provides for continuity of knowledge and allows the investment team to maintain a strong business relationship with key management of our portfolio companies for post-investment assistance and monitoring purposes.

        As part of the monitoring process of LMM portfolio investments, the investment team will analyze monthly and quarterly financial statements versus the previous periods and year, review financial projections, meet and discuss issues or opportunities with management, attend board meetings and review all compliance certificates and covenants. While we maintain limited involvement in the ordinary course operations of our LMM portfolio companies, we maintain a higher level of involvement in non-ordinary course financing or strategic activities and any non-performing scenarios. We also monitor the performance of our Middle Market portfolio investments; however, due to the larger size and higher sophistication level of these Middle Market companies in comparison to our LMM portfolio companies, it is not necessary or practical to have as much direct management interface.

        We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including, but not limited to, each investment's expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company's future outlook and other factors that are deemed to be significant to the portfolio company.

        All new LMM portfolio investments receive an initial Investment Rating of 3.

        While we generally exit most investments through the refinancing or repayment of our debt and redemption or sale of our equity positions, we typically assist our LMM portfolio companies in developing and planning exit opportunities, including any sale or merger of our portfolio companies. We may also assist in the structure, timing, execution and transition of the exit strategy. The refinancing or repayment of Middle Market debt investments typically does not require our assistance due to the additional resources available to these larger, Middle Market companies.

Determination of Net Asset Value and Investment Portfolio Valuation Process

        We determine the net asset value per share of our common stock on a quarterly basis. The net asset value per share is equal to our total assets minus liabilities and any noncontrolling interests outstanding divided by the total number of shares of common stock outstanding.

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        We are required to report our investments at fair value. As a result, the most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We follow the provisions of the Financial Accounting Standards Board Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

        We determine in good faith the fair value of our Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by our Board of Directors and in accordance with the 1940 Act. Our valuation policies and processes are intended to provide a consistent basis for determining the fair value of our Investment Portfolio. See "Note B.1.—Valuation of the Investment Portfolio" in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

        Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

        As described below, we undertake a multi-step valuation process each quarter in connection with determining the fair value of our investments, with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements. In addition, the Audit Committee of our Board of Directors periodically evaluates the performance and methodologies of the financial advisory services firm that we consult in connection with valuing our LMM and Private Loan portfolio company investments.

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        Determination of fair value involves subjective judgments and estimates. The notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial results and financial condition.

Competition

        We compete for investments with a number of investment funds (including private equity funds, mezzanine funds, BDCs, and SBICs), as well as traditional financial services companies such as commercial banks and other sources of financing. Many of the entities that compete with us are larger and have more resources available to them. We believe we are able to be competitive with these entities primarily on the basis of our focus toward the underserved LMM, the experience and contacts of our management team, our responsive and efficient investment analysis and decision-making processes, our comprehensive suite of customized financing solutions and the investment terms we offer.

        We believe that some of our competitors make senior secured loans, junior secured loans and subordinated debt investments with interest rates and returns that are comparable to or lower than the rates and returns that we target. Therefore, we do not seek to compete primarily on the interest rates and returns that we offer to potential portfolio companies. For additional information concerning the competitive risks we face, see "Risk Factors—Risks Related to Our Business and Structure—We may face increasing competition for investment opportunities."

Employees

        As of December 31, 2017, we had 58 employees. These employees include investment and portfolio management professionals, operations professionals and administrative staff. As necessary, we will hire additional investment professionals and administrative personnel. All of our employees are located in our Houston, Texas office.

Properties

        We do not own any real estate or other physical properties materially important to our operations. Currently, we lease office space in Houston, Texas for our corporate headquarters.

Legal Proceedings

        We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.

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PORTFOLIO COMPANIES

        The following table sets forth certain unaudited information as of December 31, 2017 (dollars in thousands), for the portfolio companies in which we had a debt or equity investment. Other than these investments, our only formal relationships with our portfolio companies are the managerial assistance ancillary to our investments and the board observer or participation rights we may receive. As of December 31, 2017, none of our portfolio company investments constituted five percent or more of our total assets. The following table excludes our investments in marketable securities and idle funds investments.

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Control Investments(5)

 

 

 

 

                         

                                 

Access Media Holdings, LLC(10)
900 Commerce Drive, Suite 200
Oak Brook, IL 60523

 

Private Cable Operator

                             

     

5% Current / 5% PIK Secured Debt (Maturity—July 22, 2020)(19)

      $ 23,828   $ 23,828   $ 17,150  

     

Preferred Member Units (8,248,500 units)(28)

    45.0%           8,142      

     

Member Units (45 units)

    45.0%           1      

                        31,971     17,150  

                                 

ASC Interests, LLC
16500 Westheimer Parkway
Houston, TX 77082

 

Recreational and Educational Shooting Facility

                             

     

11% Secured Debt (Maturity—July 31, 2018)

        1,800     1,795     1,795  

     

Member Units (1,500 units)

    48.4%           1,500     1,530  

                        3,295     3,325  

                                 

ATS Workholding, LLC(10)
30222 Esperanza
Rancho Santa Margarita, CA 92688

 

Manufacturer of Machine Cutting Tools and Accessories

                             

     

5% Secured Debt (Maturity—November 16, 2021)

        3,726     3,249     3,249  

     

Preferred Member Units (3,725,862 units)(28)

    41.9%           3,726     3,726  

                        6,975     6,975  

                                 

Bond-Coat, Inc.
11901 West CR 125
Odessa, TX 79765

 

Casing and Tubing Coating Services

                             

     

12% Secured Debt (Maturity—December 28, 2017)(17)

        11,596     11,596     11,596  

     

Common Stock (57,508 shares)

    43.8%           6,350     9,370  

                        17,946     20,966  

                                 

Café Brazil, LLC
202 West Main Street, Ste. 100
Allen, TX 75013

 

Casual Restaurant Group

                             

     

Member Units (1,233 units)(8)

    69.0%           1,742     4,900  

                                 

CBT Nuggets, LLC
1550 Valley River Drive
Eugene, OR 97401

 

Produces and Sells IT Training Certification Videos

                             

     

Member Units (416 units)(8)

    40.8%           1,300     89,560  

                                 

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Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Charps, LLC
453 Tower St NW
Clearbrook, MN 56634

 

Pipeline Maintenance and Construction

                             

     

12% Secured Debt (Maturity—February 3, 2022)

        18,400     18,225     18,225  

     

Preferred Member Units (1,600 units)(28)

    80.0%           400     650  

                        18,625     18,875  

                                 

Clad-Rex Steel, LLC
11500 W. King Street
Franklin Park, IL 60131

 

Specialty Manufacturer of Vinyl-Clad Metal

                             

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.86%, Secured Debt (Maturity—December 20, 2021)(9)

        13,280     13,168     13,280  

     

Member Units (717 units)(8)

    71.7%           7,280     9,500  

     

10% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity—December 20, 2036)

        1,183     1,171     1,183  

     

Member Units (Clad-Rex Steel RE Investor, LLC) (800 units)

    80.0%           210     280  

                        21,829     24,243  

                                 

CMS Minerals Investments
3040 Stout Street
Denver, CO 80205

 

Oil & Gas Exploration & Production

                             

     

Member Units (CMS Minerals II, LLC) (100 units)(8)

    100.0%           3,440     2,392  

                                 

Copper Trail Energy Fund I, LP(12)(13)
621 17th Street
Denver, CO 80293

 

Investment Partnership

                             

     

LP Interests (Fully diluted 30.1%)

    30.1%           2,500     2,500  

                                 

Datacom, LLC
100 Enterprise Boulevard
Lafayette, LA 70506

 

Technology and Telecommunications Provider

                             

     

8% Secured Debt (Maturity—May 30, 2018)

        1,575     1,575     1,575  

     

5.25% Current / 5.25% PIK Secured Debt (Maturity May 30, 2019)(19)

        12,349     12,311     11,110  

     

Class A Preferred Member Units(28)

    37.6%           1,181     730  

     

Class B Preferred Member Units (6,453 units)(28)

    37.6%           6,030      

                        21,097     13,415  

                                 

Gamber-Johnson Holdings, LLC
3001 Borham Ave.
Stevens Point, WI 54481

 

Manufacturer of Ruggedized Computer Mounting Systems

                             

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.36%, Secured Debt (Maturity—June 24, 2021)(9)

        23,400     23,213     23,400  

     

Member Units (8,619 units)(8)

    73.8%           14,844     23,370  

                        38,057     46,770  

                                 

Garreco, LLC
430 Hiram Rd.
Heber Springs, AR 72543

 

Manufacturer and Supplier of Dental Products

                             

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.34%, Secured Debt (Maturity—March 31, 2020)(9)

        5,483     5,443     5,443  

     

Member Units (1,200 units)

    32.0%           1,200     1,940  

                        6,643     7,383  

94


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

GRT Rubber Technologies LLC
201 Dana Dr.
Paragould, AR 72450

 

Manufacturer of Engineered Rubber Products

                             

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity—December 19, 2019)(9)

        11,603     11,550     11,603  

     

Member Units (5,879 units)(8)

    60.6%           13,065     21,970  

                        24,615     33,573  

                                 

Gulf Manufacturing, LLC
1221 Indiana St.
Humble, TX 77396

 

Manufacturer of Specialty Fabricated Industrial Piping Products

                             

     

Member Units (438 units)(8)

    35.9%           2,980     10,060  

                                 

Gulf Publishing Holdings, LLC
2 Greenway Plaza, Suite 1020
Houston, TX 77046

 

Energy Industry Focused Media and Publishing

                             

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.86%, Secured Debt (Maturity—September 30, 2020)(9)

        80     80     80  

     

12.5% Secured Debt (Maturity—April 29, 2021)

        12,800     12,703     12,703  

     

Member Units (3,681 units)

    32.1%           3,681     4,840  

                        16,464     17,623  

                                 

Harborside Holdings, LLC
6800 Harborside Dr.
Galveston, TX 77554

 

Real Estate Holding Company

                             

     

Member units (100 units)

    100.0%           6,206     9,400  

                                 

Harris Preston Fund Investments(12)(13)
2901 Via Fortuna
Austin, TX 78746

 

Investment Partnership

                             

     

LP Interests (2717 MH, L.P.) (Fully diluted 49.3%)

    49.3%           536     536  

                                 

Harrison Hydra-Gen, Ltd.
14233 West Road
Houston, TX 77041

 

Manufacturer of Hydraulic Generators

                             

     

Common Stock (107,456 shares)

    33.6%           718     3,580  

                                 

HW Temps LLC
1308 Belmont St
Brockton, MA 02301

 

Temporary Staffing Solutions

                             

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.36%, Secured Debt (Maturity July 2, 2020)(9)

        9,976     9,918     9,918  

     

Preferred Member Units (3,200 units)(28)

    80.0%           3,942     3,940  

                        13,860     13,858  

                                 

Hydratec, Inc.
325 Road 192
Delano, CA 93215

 

Designer and Installer of Micro-Irrigation Systems

                             

     

Common Stock (7,095 shares)(8)

    95.9%           7,095     15,000  

                                 

IDX Broker, LLC
100 E Broadway
Eugene, OR 97401

 

Provider of Marketing and CRM Tools for the Real Estate Industry

                             

     

11.5% Secured Debt (Maturity—November 15, 2020)

        15,250     15,116     15,250  

     

Preferred Member Units (5,607 units)(8)(28)

    97.4%           5,952     11,660  

                        21,068     26,910  

                                 

95


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Jensen Jewelers of Idaho, LLC
130 Second Avenue North
Twin Falls, ID 83301

 

Retail Jewelry Store

                             

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 11.00%, Secured Debt (Maturity—November 14, 2019)(9)

        3,955     3,917     3,955  

     

Member Units (627 units)(8)

    61.4%           811     5,100  

                        4,728     9,055  

                                 

KBK Industries, LLC
East Hwy 96
Rush Center, KS 67575

 

Manufacturer of Specialty Oilfield and Industrial Products

                             

     

10% Secured Debt (Maturity—September 28, 2020)

        375     372     375  

     

12.5% Secured Debt (Maturity—September 28, 2020)

        5,900     5,867     5,900  

     

Member Units (325 units)(8)

    25.5%           783     4,420  

                        7,022     10,695  

                                 

Lamb Ventures, LLC
2113 Wells Branch Pkwy, Suite 4000
Austin, TX 78728

 

Aftermarket Automotive Services Chain

                             

     

11% Secured Debt (Maturity—July 1, 2022)

        9,942     9,890     9,942  

     

Preferred Equity (non-voting)(28)

    100.0%           400     400  

     

Member Units (742 units)(8)

    68.4%           5,273     6,790  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity—March 31, 2027)

        432     428     432  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

    100.0%           625     520  

                        16,616     18,084  

                                 

Marine Shelters Holdings, LLC
6800 Harborside Dr.
Galveston, TX 77554

 

Fabricator of Marine and Industrial Shelters

                             

     

12% PIK Secured Debt (Maturity—December 28, 2017)(14)

        3,131     3,078      

     

Preferred Member Units (3,810 units)(28)

    100.0%           5,352      

                        8,430      

                                 

Market Force Information, LLC
371 Centennial Parkway, Suite 210
Louisville, CO 80027

 

Provider of Customer Experience Management Services

                             

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.48%, Secured Debt (Maturity—July 28, 2022)(9)

        23,360     23,143     23,143  

     

Member Units (657,113 units)

    65.7%           14,700     14,700  

                        37,843     37,843  

                                 

MH Corbin Holding, LLC
8355 Rausch Dr.
Plain City, OH 43064

 

Manufacturer and Distributor of Traffic Safety Products

                             

     

13% Secured Debt (Maturity—August 31, 2020)

        12,600     12,526     12,526  

     

Preferred Member Units (4,000 shares)(28)

    80.0%           6,000     6,000  

                        18,526     18,526  

                                 

96


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Mid-Columbia Lumber Products, LLC
710 "C" Street
Culver, OR 97734

 

Manufacturer of Finger-Jointed Lumber Products

                             

     

10% Secured Debt (Maturity—January 15, 2020)

        1,398     1,390     1,390  

     

12% Secured Debt (Maturity—January 15, 2020)

        3,900     3,863     3,863  

     

Member Units (5,714 units)

    59.5%           2,405     1,575  

     

9.5% Secured Debt (Mid-Columbia Real Estate, LLC) (Maturity—May 13, 2025)

        791     791     791  

     

Member Units (Mid-Columbia Real Estate, LLC) (500 units)(8)

    100.0%           790     1,290  

                        9,239     8,909  

                                 

MSC Adviser I, LLC(16)
1300 Post Oak Boulevard, 8th Floor
Houston, TX 77056

 

Third Party Investment Advisory Services

                             

     

Member Units (Fully diluted 100.0%)(8)

    100.0%               41,768  

                                 

Mystic Logistics Holdings, LLC
2187 New London Tpke
South Glastonbury, CT 06073

 

Logistics and Distribution Services Provider for Large Volume Mailers

                             

     

12% Secured Debt (Maturity—August 15, 2019)

        7,768     7,696     7,696  

     

Common Stock (5,873 shares)

    63.5%           2,720     6,820  

                        10,416     14,516  

                                 

NAPCO Precast, LLC
6949 Low Bid Lane
San Antonio, TX 78250

 

Precast Concrete Manufacturing

                             

     

LIBOR Plus 8.50%, Current Coupon 9.98%, Secured Debt (Maturity—May 31, 2019)

        11,475     11,439     11,475  

     

Member Units (2,955 units)(8)

    44.5%           2,975     11,670  

                        14,414     23,145  

                                 

NRI Clinical Research, LLC
2010 Wilshire Blvd
Los Angeles, CA 90057

 

Clinical Research Service Provider

                             

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity—January 15, 2018)(9)

        400     400     400  

     

14% Secured Debt (Maturity—January 15, 2018)

        3,865     3,865     3,865  

     

Warrants (251,723 equivalent units; Expiration—September 8, 2021; Strike price—$0.01 per unit)

    12.0%           252     500  

     

Member Units (1,454,167 units)

    23.9%           765     2,500  

                        5,282     7,265  

                                 

NRP Jones, LLC
210 Philadelphia St
LaPorte, IN 46350

 

Manufacturer of Hoses, Fittings and Assemblies

                             

     

12% Secured Debt (Maturity—March 20, 2023)

        6,376     6,376     6,376  

     

Member Units (65,208 units)(8)

    47.4%           3,717     3,250  

                        10,093     9,626  

                                 

97


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

NuStep, LLC
5111 Venture Drive
Ann Arbor, MI 48108

 

Designer, Manufacturer and Distributor of Fitness Equipment

                             

     

12% Secured Debt (Maturity—January 31, 2022)

        20,600     20,420     20,420  

     

Preferred Member Units (406 units)(28)

    80.0%           10,200     10,200  

                        30,620     30,620  

                                 

OMi Holdings, Inc.
1515 E I-30 Service Road
Royse City, TX 75189

 

Manufacturer of Overhead Cranes

                             

     

Common Stock (1,500 shares)(8)

    48.0%           1,080     14,110  

                                 

Pegasus Research Group, LLC
4636 E. University Drive
Phoenix, AZ 85034

 

Provider of Telemarketing and Data Services

                             

     

Member Units (460 units)(8)

    43.7%           1,290     10,310  

                                 

PPL RVs, Inc.
10777 Southwest Freeway
Houston, TX 77074

 

Recreational Vehicle Dealer

                             

     

LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 8.34%, Secured Debt (Maturity—November 15, 2021)(9)

        16,100     15,972     16,100  

     

Common Stock (1,962 shares)(8)

    52.2%           2,150     12,440  

                        18,122     28,540  

                                 

Principle Environmental, LLC
(d/b/a TruHorizon Environmental
Solutions)

201 W. Ranch Court
Weatherford, TX 76088

 

Noise Abatement Service Provider

                             

     

13% Secured Debt (Maturity—April 30, 2020)

        7,477     7,347     7,477  

     

Preferred Member Units (19,631 units)(28)

    87.7%           4,600     11,490  

     

Warrants (1,018 equivalent units; Expiration—January 31, 2021; Strike price—$0.01 per unit)

    5.0%           1,200     650  

                        13,147     19,617  

                                 

Quality Lease Service, LLC
23403B NW Zac Lentz Pkwy
Victoria, TX 77905

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                             

     

Zero Coupon Secured Debt (Maturity—June 8, 2020)

        7,341     7,341     6,950  

     

Member Units (1,000 units)

    100.0%           2,868     4,938  

                        10,209     11,888  

                                 

River Aggregates, LLC
PO Box 8609
The Woodlands, TX 77387

 

Processor of Construction Aggregates

                             

     

Zero Coupon Secured Debt (Maturity—June 30, 2018)

        750     707     707  

     

Member Units (1,150 units)

    38.3%           1,150     4,610  

     

Member Units (RA Properties, LLC) (1,500 units)

    50.0%           369     2,559  

                        2,226     7,876  

                                 

98


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

SoftTouch Medical Holdings, LLC
1800 Sandy Plains Ind Pkwy NE #224
Marietta, GA 30066

 

Provider of In-Home Pediatric Durable Medical Equipment

                             

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity—October 31, 2019)(9)

        7,140     7,110     7,140  

     

Member Units (4,450 units)(8)

    45.9%           4,930     10,089  

                        12,040     17,229  

                                 

The MPI Group, LLC
319 North Hills Road
Corbin, KY 40701

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                             

     

9% Secured Debt (Maturity—October 2, 2018)

        2,924     2,923     2,410  

     

Series A Preferred Units (2,500 units)(28)

    100.0%           2,500      

     

Warrants (1,424 equivalent units; Expiration—July 1, 2024; Strike price—$0.01 per unit)

    59.4%           1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100 units)(8)

    100.0%           2,300     2,389  

                        8,819     4,799  

                                 

Uvalco Supply, LLC
2521 E. Main St.
Uvalde, TX 78801

 

Farm and Ranch Supply Store

                             

     

9% Secured Debt (Maturity—January 1, 2019)

        348     348     348  

     

Member Units (1,867 units)(8)

    79.5%           3,579     3,880  

                        3,927     4,228  

                                 

Vision Interests, Inc.
6630 Arroyo Springs St., Ste. 600
Las Vegas, NV 89113

 

Manufacturer / Installer of Commercial Signage

                             

     

13% Secured Debt (Maturity—December 23, 2018)

        2,814     2,797     2,797  

     

Series A Preferred Stock (3,000,000 shares)(28)

    100.0%           3,000     3,000  

     

Common Stock (1,126,242 shares)

    16.7%           3,706      

                        9,503     5,797  

                                 

Ziegler's NYPD, LLC
13901 North 73rd St., #219
Scottsdale, AZ 85260

 

Casual Restaurant Group

                             

     

6.5% Secured Debt (Maturity—October 1, 2019)

        1,000     996     996  

     

12% Secured Debt (Maturity—October 1, 2019)

        300     300     300  

     

14% Secured Debt (Maturity—October 1, 2019)

        2,750     2,750     2,750  

     

Warrants (587 equivalent units; Expiration—September 29, 2018; Strike price—$0.01 per unit)

    4.0%           600      

     

Preferred Member Units (10,072 units)(28)

    100.0%           2,834     3,220  

                        7,480     7,266  

Subtotal Control Investments (34.6% of total investments at fair value)

  $ 530,034   $ 750,706  

99


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Affiliate Investments(6)

 

 

 

 

                         

                                 

AFG Capital Group, LLC
900 McDuff Avenue
Grandview, TX 76050

 

Provider of Rent-to-Own Financing Solutions and Services

                             

     

Warrants (42 equivalent units; Expiration—November 7, 2024; Strike price—$0.01 per unit)

    4.0%         $ 259   $ 860  

     

Member Units (186 units)(8)(28)

    80.0%           1,200     3,590  

                        1,459     4,450  

                                 

Barfly Ventures, LLC(10)
1 Ionia Avenue SW, Suite 200
Grand Rapids, MI 49503

 

Casual Restaurant Group

                             

     

12% Secured Debt (Maturity—August 31, 2020)

        8,715     8,572     8,715  

     

Options (2 equivalent units)

    3.3%           397     920  

     

Warrant (1 equivalent unit; Expiration—August 31, 2025; Strike price—$1.00 per unit)

    1.8%           473     520  

                        9,442     10,155  

                                 

BBB Tank Services, LLC
162 Independence Parkway North
Baytown, TX 77520

 

Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

                             

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.36%, Secured Debt (Maturity—April 8, 2021) (9)

        800     778     778  

     

15% Secured Debt (Maturity—April 8, 2021)

        4,000     3,876     3,876  

     

Member Units (800,000 units)

    10.2%           800     500  

                        5,454     5,154  

                                 

Boccella Precast Products LLC
324 New Brooklyn Rd
Berlin, NJ 08009

 

Manufacturer of Precast Hollow Core Concrete

                             

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.34%, Secured Debt (Maturity—June 30, 2022)(9)

        16,400     16,230     16,400  

     

Member Units (2,160,000 units)

    19.2%           2,160     3,440  

                        18,390     19,840  

                                 

Boss Industries, LLC
1761 Genesis Drive
LaPorte, IN 46350

 

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

                             

     

Preferred Member Units (2,242 units)(8)(28)

    29.5%           2,080     3,930  

                                 

Bridge Capital Solutions Corporation
300 Motor Parkway, Suite 215
Hauppauge, NY 11788

 

Financial Services and Cash Flow Solutions Provider

                             

     

13% Secured Debt (Maturity—July 25, 2021)

        7,500     5,884     5,884  

     

Warrants (63 equivalent shares; Expiration—July 25, 2026; Strike price—$0.01 per share)

    24.0%           2,132     3,520  

     

13% Secured Debt (Mercury Service Group, LLC) (Maturity—July 25, 2021)

        1,000     992     1,000  

     

Preferred Member Units (Mercury Service Group, LLC) (17,742 units)(8)(28)

    62.0%           1,000     1,000  

                        10,008     11,404  

                                 

100


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Buca C, LLC
4700 Millenua Blvd., #400
Orlando, FL 32839

 

Casual Restaurant Group

                             

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.63%, Secured Debt (Maturity—June 30, 2020)(9)

        20,304     20,193     20,193  

     

Preferred Member Units (6 units; 6% cumulative)(8)(19)(28)

    60.0%           4,177     4,172  

                        24,370     24,365  

                                 

CAI Software LLC
36 Thurber Boulevard
Smithfield, RI 02917

 

Provider of Specialized Enterprise Resource Planning Software

                             

     

12% Secured Debt (Maturity—October 10, 2019)

        4,083     4,060     4,083  

     

Member Units (65,356 units)(8)

    14.8%           654     3,230  

                        4,714     7,313  

                                 

Chandler Signs Holdings, LLC(10)
14201 Sovereign Rd
Fort Worth, TX 76155

 

Sign Manufacturer

                             

     

12% Secured Debt (Maturity—July 4, 2021)

        4,500     4,468     4,500  

     

Class A Units (1,500,000 units)(8)

    8.9%           1,500     2,650  

                        5,968     7,150  

                                 

Condit Exhibits, LLC
5151 Bannock St
Denver, CO 80435

 

Tradeshow Exhibits / Custom Displays Provider

                             

     

Member Units (3,936 units)(8)

    15.0%           100     1,950  

                                 

Congruent Credit Opportunities
Funds(12)(13)

3131 McKinney Ave., Suite 850
Dallas, TX 75204

 

Investment Partnership

                             

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

    19.8%           5,730     1,515  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

    17.4%           17,869     18,632  

                        23,599     20,147  

                                 

Dos Rios Partners(12)(13)
205 Wild Basin Road S. Building 3,
Suite 100

Austin, Texas 78746

 

Investment Partnership

                             

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

    20.2%           5,996     7,165  

     

LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.4%)

    6.4%           1,904     1,889  

                        7,900     9,054  

                                 

Dos Rios Stone Products LLC(10)
3500 FM 2843
Florence, TX 76527

 

Limestone and Sandstone Dimension Cut Stone Mining Quarries

                             

     

Class A Units (2,000,000 units)(8)(28)

    17.7%           2,000     1,790  

                                 

East Teak Fine Hardwoods, Inc.
1106 Drake Road
Donalds, SC 29638

 

Distributor of Hardwood Products

                             

     

Common Stock (6,250 shares)(8)

    5.0%           480     630  

                                 

101


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

EIG Fund Investments(12)(13)
Three Allen Center 333 Clay Street
Suite 3500
Houston, TX 77002

 

Investment Partnership

                             

     

LP Interests (EIG Global Private Debt Fund-A, L.P.) (Fully diluted 11.1%)(8)

    11.1%           1,103     1,055  

                                 

Freeport Financial Funds(12)(13)
200 South Wacker Dr, Suite 750
Chicago, Illinois 60606

 

Investment Partnership

                             

     

LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.3%)(8)

    9.3%           5,974     5,614  

     

LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.0%)(8)

    6.0%           8,558     8,506  

                        14,532     14,120  

                                 

Gault Financial, LLC (RMB Capital, LLC)
409 Bearden Circle
Knoxville, TN 37919

 

Purchases and Manages Collection of Healthcare and other Business Receivables

                             

     

10.5% Secured Debt (Maturity—January 1, 2019)

        12,483     12,483     11,532  

     

Warrants (29,032 equivalent units; Expiration—February 9, 2022; Strike price—$0.01 per unit)

    22.5%           400      

                        12,883     11,532  

                                 

Guerdon Modular Holdings, Inc.
5556 S Federal Way
Boise, ID 83716

 

Multi-Family and Commercial Modular Construction Company

                             

     

13% Secured Debt (Maturity—August 13, 2019)

        10,708     10,632     10,632  

     

Preferred Stock (404,998 shares)(28)

    24.2%           1,140      

     

Common Stock (212,033 shares)

    7.3%           2,983      

                        14,755     10,632  

                                 

Harris Preston Fund Investments(12)(13)
2901 Via Fortuna
Austin, TX 78746

 

Investment Partnership

                             

     

LP Interests (HPEP 3, L.P.) (Fully diluted 9.9%)

    9.9%           943     943  

                                 

Hawk Ridge Systems, LLC(13)
575 Clyde Ave
Mountain View, CA 94043

 

Value-Added Reseller of Engineering Design and Manufacturing Solutions

                             

     

11% Secured Debt (Maturity—December 2, 2021)

        14,300     14,175     14,300  

     

Preferred Member Units (226 units)(8)(28)

    80.0%           2,850     3,800  

     

Preferred Member Units (HRS Services, ULC) (226 units)(8)(28)

    80.0%           150     200  

                        17,175     18,300  

                                 

Houston Plating and Coatings, LLC
1315 Georgia St
South Houston, TX 77587

 

Provider of Plating and Industrial Coating Services

                             

     

8% Unsecured Convertible Debt (Maturity—May 1, 2022)

          3,000     3,000     3,200  

     

Member Units (315,756 units)

    14.3%           2,179     6,140  

                        5,179     9,340  

                                 

I-45 SLF LLC(12)(13)
5400 Lyndon B Johnson Freeway
Suite 1300
Dallas, TX 75240

 

Investment Partnership

                             

     

Member Units (Fully diluted 20.0%; 24.4% profits interest)(8)

    20.0%           16,200     16,841  

                                 

102


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

L.F. Manufacturing Holdings, LLC(10)
P.O. Box 578
Giddings, TX 78942

 

Manufacturer of Fiberglass Products

                             

     

Member Units (2,179,001 units)

    14.1%           2,019     2,000  

                                 

Meisler Operating LLC
1103 E. Franklin Street
Evansville, IN 47711

 

Provider of Short-term Trailer and Container Rental

                             

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.84%, Secured Debt (Maturity—June 7, 2022)(9)

        16,800     16,633     16,633  

     

Member Units (Milton Meisler Holdings LLC) (31,976 units)

    18.8%           3,200     3,390  

                        19,833     20,023  

                                 

OnAsset Intelligence, Inc.
8407 Sterling St
Irving, TX 75063

 

Provider of Transportation Monitoring / Tracking Products and Services

                             

     

12% PIK Secured Debt (Maturity—June 30, 2021)(19)

        5,094     5,094     5,094  

     

10% PIK Unsecured Debt (Maturity—June 30, 2021)(19)

          48     48     48  

     

Preferred Stock (912 shares)(28)

    50.0%           1,981      

     

Warrants (5,333 equivalent shares; Expiration—April 18, 2021; Strike price—$0.01 per share)

    14.7%           1,919      

                        9,042     5,142  

                                 

OPI International Ltd.(13)
4545 Post Oak Place Drive
Houston, TX 77027

 

Provider of Man Camp and Industrial Storage Services

                             

     

Common Stock (20,766,317 shares)

    11.5%           1,371      

                                 

PCI Holding Company, Inc.
12201 Magnolia Avenue
Riverside, CA 92503

 

Manufacturer of Industrial Gas Generating Systems

                             

     

12% Secured Debt (Maturity—March 31, 2019)

        12,650     12,593     12,593  

     

Preferred Stock (1,740,000 shares) (non-voting)(28)

    58.0%           1,740     2,610  

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)(19)(28)

    27.8%           3,927     890  

                        18,260     16,093  

                                 

Rocaceia, LLC (Quality Lease and Rental
Holdings, LLC)

23403B NW Zac Lentz Pkwy
Victoria, TX 77905

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                             

     

12% Secured Debt (Maturity—January 8, 2018)(14)(15)

        30,785     30,281     250  

     

Preferred Member Units (250 units)

    22.2%           2,500      

                        32,781     250  

                                 

Tin Roof Acquisition Company
1516 Demonbreun Street
Nashville, TN 37203

 

Casual Restaurant Group

                             

     

12% Secured Debt (Maturity—November 13, 2018)

        12,783     12,722     12,722  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)(19)(28)

    100.0%           3,027     3,027  

                        15,749     15,749  

                                 

103


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class
Held(27)

  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

UniTek Global Services, Inc.(11)
1777 Sentry Parkway West
Gwynedd Hall, Suite 202
Blue Bell, PA 19422

 

Provider of Outsourced Infrastructure Services

                             

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.20%, Secured Debt (Maturity—January 13, 2019)(9)

        8,535     8,529     8,535  

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.20% / 1.00% PIK, Current Coupon Plus PIK 10.20%, Secured Debt (Maturity—January 13, 2019)(9)(19)

        137     137     137  

     

15% PIK Unsecured Debt (Maturity—July 13, 2019)(19)

        865     865     865  

     

Preferred Stock (2,596,567 shares; 19% cumulative)(8)(19)(28)

    8.7%           2,858     2,850  

     

Preferred Stock (4,935,377 shares; 13.5% cumulative)(8)(19)(28)

    7.1%           7,361     7,320  

     

Common Stock (1,075,992 shares)

    7.5%               2,490  

                        19,750     22,197  

                                 

Universal Wellhead Services
Holdings, LLC(10)

5729 Leopard St. Bldg 9
Corpus Christi, TX 78408

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                             

     

Preferred Member Units (UWS Investments, LLC) (716,949 units)(28)

    13.6%           717     830  

     

Member Units (UWS Investments, LLC) (4,000,000 units)

    10.1%           4,000     1,910  

                        4,717     2,740  

                                 

Valley Healthcare Group, LLC
2330 W Broadway, Suite 112
Mesa, AZ 85202

 

Provider of Durable Medical Equipment

                             

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.86%, Secured Debt (Maturity—December 29, 2020)(9)

        11,766     11,685     11,685  

     

Preferred Member Units (Valley Healthcare Holding, LLC) (1,600 units)(28)

    80.0%           1,600     1,600  

                        13,285     13,285  

                                 

Volusion, LLC
1835 Kramer Lane #100
Austin, TX 78758

 

Provider of Online Software-as-a-Service eCommerce Solutions

                             

     

11.5% Secured Debt (Maturity—January 26, 2020)

        16,734     15,200     15,200  

     

Preferred Member Units (4,876,670 units)(28)

    70.0%           14,000     14,000  

     

Warrants (1,831,355 equivalent units; Expiration—January 26, 2025; Strike price—$0.01 per unit)

    2.7%           2,576     2,080  

                        31,776     31,280  

Subtotal Affiliate Investments (15.6% of total investments at fair value)

        $ 367,317   $ 338,854  

104


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Non-Control/Non-Affiliate Investments(7)

                   

                                 

AAC Holdings, Inc.(11)
200 Powell Pl.
Brentwood, TN 37027

 

Substance Abuse Treatment Service Provider

 

 

                         

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.13%, Secured Debt (Maturity—June 30, 2023)(9)

      $ 11,751   $ 11,475   $ 11,810  

                                 

Adams Publishing Group, LLC(10)
1600 West End Boulevard, Suite 100
St. Louis Park, MN 55416

 

Local Newspaper Operator

 

 

                         

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—November 3, 2020)(9)

        10,341     10,116     10,147  

                                 

ADS Tactical, Inc.(10)
621 Lynnhaven Parkway, Suite 400
Virginia Beach, VA 23452

 

Value-Added Logistics and Supply Chain Provider to the Defense Industry

                             

     

LIBOR Plus 7.50% (Floor 0.75%), Current Coupon 9.19%, Secured Debt (Maturity—December 31, 2022)(9)

        13,014     12,767     12,833  

                                 

Aethon United BR LP(10)
12377 Merit Dr. #1200
Dallas, TX 75251

 

Oil & Gas Exploration & Production

                             

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.15%, Secured Debt (Maturity—September 8, 2023)(9)

        3,438     3,388     3,388  

                                 

Ahead, LLC(10)
150 S. Wacker Drive, Suite 2500
Chicago, IL 60606

 

IT Infrastructure Value Added Reseller

                             

     

LIBOR Plus 6.50%, Current Coupon 8.20%, Secured Debt (Maturity—November 2, 2020)

        11,061     10,848     11,130  

                                 

Allflex Holdings III Inc.(11)
2805 East 14th Street
Dallas, TX 75261

 

Manufacturer of Livestock Identification Products

                             

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.36%, Secured Debt (Maturity—July 19, 2021)(9)

        13,846     13,781     13,955  

                                 

American Scaffold Holdings, Inc.(10)
3210 Commercial Street
San Diego, CA 92113

 

Marine Scaffolding Service Provider

                             

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.19%, Secured Debt (Maturity—March 31, 2022)(9)

        7,031     6,947     6,996  

                                 

American Teleconferencing Services, Ltd.(11)
3280 Peachtree Rd N.E., Suite 1000
Atlanta, GA 30305

 

Provider of Audio Conferencing and Video Collaboration Solutions

                             

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.90%, Secured Debt (Maturity—December 8, 2021)(9)

        10,582     9,934     10,443  

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.85%, Secured Debt (Maturity—June 6, 2022)(9)

        3,714     3,589     3,507  

                        13,523     13,950  

                                 

105


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Anchor Hocking, LLC(11)
519 N. Pierce Avenue
Lancaster, OH 43130

 

Household Products Manufacturer

                             

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.49%, Secured Debt (Maturity—June 4, 2020)(9)

        2,254     2,211     2,248  

     

Member Units (440,620 units)

    4.4%           4,928     3,745  

                        7,139     5,993  

                                 

Apex Linen Service, Inc.
6375 Arville Street
Las Vegas, NV 89118

 

Industrial Launderers

                             

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity—October 30, 2022)(9)

        2,400     2,400     2,400  

     

16% Secured Debt (Maturity—October 30, 2022)

        14,416     14,347     14,347  

                        16,747     16,747  

                                 

Arcus Hunting LLC.(10)
14161 Lake Forest Drive, Unit A
Covington, GA 30014

 

Manufacturer of Bowhunting and Archery Products and Accessories

                             

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.34%, Secured Debt (Maturity—November 13, 2019)(9)

        15,391     15,294     15,391  

                                 

ATI Investment Sub, Inc.(11)
3901 Midway Place NE
Albuquerque, NM 87109

 

Manufacturer of Solar Tracking Systems

                             

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.82%, Secured Debt (Maturity—June 22, 2021)(9)

        7,364     7,215     7,346  

                                 

ATX Networks Corp.(11)(13)(21)
1-501 Clements Road West
Ajax, ON L1S 7H4

 

Provider of Radio Frequency Management Equipment

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.33% / 1.00% PIK, Current Coupon Plus PIK 8.33%, Secured Debt (Maturity—June 11, 2021)(9)(19)

        9,567     9,454     9,507  

                                 

Berry Aviation, Inc.(10)

1807 Airport Drive

San Marcos, TX 78666

 

Airline Charter Service Operator

                             

     

13.75% Secured Debt (Maturity—January 30, 2020)

        5,627     5,598     5,627  

     

Common Stock (553 shares)

    2.0%           400     1,010  

                        5,998     6,637  

                                 

BigName Commerce, LLC(10)
5300 New Horizons Blvd.
Amityville, NY 11701

 

Provider of Envelopes and Complimentary Stationery Products

                             

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.59%, Secured Debt (Maturity—May 11, 2022)(9)

        2,488     2,461     2,461  

                                 

Binswanger Enterprises, LLC(10)
965 Ridge Lake Blvd.
Memphis, TN 38120

 

Glass Repair and Installation Service Provider

                             

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.69%, Secured Debt (Maturity—March 9, 2022)(9)

        15,325     15,060     15,192  

     

Member Units (1,050,000 units)

    2.8%           1,050     1,000  

                        16,110     16,192  

                                 

106


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Bluestem Brands, Inc.(11)
6509 Flying Cloud Dr.
Eden Prairie, MN 55344

 

Multi-Channel Retailer of General Merchandise

                             

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.07%, Secured Debt (Maturity—November 6, 2020)(9)

        12,127     11,955     8,540  

                                 

Brainworks Software, LLC(10)
100 South Main Street
Sayville, NY 11782

 

Advertising Sales and Newspaper Circulation Software

                             

     

Prime Plus 9.25% (Floor 3.25%), Current Coupon 13.75%, Secured Debt (Maturity—July 22, 2019)(9)

        6,733     6,705     6,573  

                                 

Brightwood Capital Fund Investments(12)(13)
1540 Broadway, 23rd Floor
New York, NY 10036

 

Investment Partnership

                             

     

LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 1.6%)(8)

    1.6%           12,000     10,328  

     

LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.8%)(8)

    0.8%           1,000     1,063  

                        13,000     11,391  

                                 

Brundage-Bone Concrete Pumping, Inc.(11)
6461 Downing St
Denver, CO 80229

 

Construction Services Provider

                             

     

10.375% Secured Debt (Maturity—September 1, 2023)

        3,000     2,987     3,180  

                                 

Cadence Aerospace LLC(10)
610 Newport Center Drive, Suite 950
Newport Beach, CA 92660

 

Aerostructure Manufacturing

                             

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.91%, Secured Debt (Maturity—November 14, 2023)(9)

        15,000     14,853     14,853  

                                 

CapFusion, LLC(13)
2310 W 75th Street
Prairie Village, KS 66028

 

Non-Bank Lender to Small Businesses

                             

     

13% Secured Debt (Maturity—March 25, 2021)(14)

        6,705     5,645     1,871  

                                 

California Pizza Kitchen, Inc.(11)
12181 Bluff Creek Drive
Playa Vista, CA 90094

 

Casual Restaurant Group

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—August 23, 2022)(9)

        12,902     12,862     12,677  

                                 

CDHA Management, LLC(10)
300 Frank W. Burr Blvd, Suite 5
Teaneck, NJ 07666

 

Dental Services

                             

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.76%, Secured Debt (Maturity—December 5, 2021)(9)

        5,365     5,303     5,365  

                                 

Central Security Group, Inc.(11)
2248 E. 81st St. Suite 4300
Tulsa, OK 74137

 

Security Alarm Monitoring Service Provider

                             

     

LIBOR Plus 5.63% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity—October 6, 2021)(9)

        7,481     7,462     7,518  

                                 

107


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Cenveo Corporation(11)
200 First Stamford Place
Stamford, CT 06902

 

Provider of Commercial Printing, Envelopes, Labels, and Printed Office Products

                             

     

6% Secured Debt (Maturity—August 1, 2019)

        19,130     17,126     13,582  

                                 

Charlotte Russe, Inc.(11)
575 Florida Street
San Francisco, CA 94010

 

Fast-Fashion Retailer to Young Women

                             

     

LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.89%, Secured Debt (Maturity—May 22, 2019)(9)

        19,041     16,473     7,807  

                                 

Clarius BIGS, LLC(10)

311 N Robertson Blvd

Beverly Hills, CA 90211

 

Prints & Advertising Film Financing

                             

     

15% PIK Secured Debt (Maturity—January 5, 2015)(14)(17)

        2,924     2,924     85  

                                 

Clickbooth.com, LLC(10)
5911 N. Honore Avenue Suite 114
Sarasota, FL 34243

 

Provider of Digital Advertising Performance Marketing Solutions

                             

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.01%, Secured Debt (Maturity—December 5, 2022)(9)

        3,000     2,941     2,941  

                                 

Construction Supply Investments, LLC(10)
Nine Greenway Plaza, Suite 2400
Houston, TX 77046

 

Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—June 30, 2023)(9)

        7,125     7,090     7,090  

     

Member Units (28,000 units)

    2.5%           3,723     3,723  

                        10,813     10,813  

                                 

CTVSH, PLLC(10)
4434 Frontier Trail
Austin, TX 78745

 

Emergency Care and Specialty Service Animal Hospital

                             

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.48%, Secured Debt (Maturity—August 3, 2022)(9)

        11,850     11,739     11,739  

                                 

Darr Equipment LP(10)
350 Bank Street
Southlake, TX 76092

 

Heavy Equipment Dealer

                             

     

11.5% Current / 1% PIK Secured Debt (Maturity—June 22, 2023)(19)

        7,229     7,229     7,229  

     

Warrants (915,734 equivalent units; Expiration—December 23, 2023; Strike price—$1.50 per unit)

    1.4%           474     10  

                        7,703     7,239  

                                 

Digital River, Inc.(11)
10380 Bren Road West
Minnetonka, MN 55343

 

Provider of Outsourced e-Commerce Solutions and Services

                             

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.08%, Secured Debt (Maturity—February 12, 2021)(9)

        9,313     9,266     9,337  

                                 

108


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Drilling Info Holdings, Inc.
2901 via Fortuna #200
Austin, TX 78746

 

Information Services for the Oil and Gas Industry

                             

     

Common Stock (3,788,865 shares)(8)

    1.9%               8,610  

                                 

EnCap Energy Fund Investments(12)(13)
1100 Louisiana Street, Suite 4900
Houston, TX 77002

 

Investment Partnership

                             

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

    0.1%           3,906     2,202  

     

LP Interests (EnCap Energy Capital Fund VIII Co-Investors, L.P.) (Fully diluted 0.4%)

    0.4%           2,227     1,549  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

    0.1%           4,305     3,720  

     

LP Interests (EnCap Energy Capital Fund X, L.P.) (Fully diluted 0.1%)(8)

    0.1%           6,277     6,225  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 0.8%)(8)

    0.8%           6,138     6,116  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.2%)

    0.2%           3,458     3,828  

                        26,311     23,640  

                                 

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)(13)
107 Northeastern Blvd.
Nashua, NH 03062

 

Technology-based Performance Support Solutions

                             

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.82%, Secured Debt (Maturity—April 28, 2022)(9)

        6,999     6,878     6,244  

                                 

Extreme Reach, Inc.(11)
75 2nd Avenue, Suite 720
Needham, MA 02494

 

Integrated TV and Video Advertising Platform

                             

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.95%, Secured Debt (Maturity—February 7, 2020)(9)

        10,411     10,397     10,398  

                                 

Felix Investments Holdings II(10)
1530 16th Street, Suite 500
Denver, CO 80202

 

Oil & Gas Exploration & Production

                             

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.90%, Secured Debt (Maturity—August 9, 2022)(9)

        3,333     3,267     3,267  

                                 

Flavors Holdings Inc.(11)

300 Jefferson St.

Camden, NJ 08104

 

Global Provider of Flavoring and Sweetening Products

                             

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.44%, Secured Debt (Maturity—April 3, 2020)(9)

        13,076     12,616     12,128  

                                 

GI KBS Merger Sub LLC(11)
3605 Ocean Ranch Blvd.
Oceanside, CA 92056

 

Outsourced Janitorial Services to Retail/Grocery Customers

                             

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.48%, Secured Debt (Maturity—October 29, 2021)(9)

        6,807     6,733     6,833  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.88%, Secured Debt (Maturity—April 29, 2022)(9)

        3,915     3,769     3,793  

                        10,502     10,626  

                                 

109


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

GoWireless Holdings, Inc.(11)
9970 W. Cheyenne Avenue #100
Las Vegas, NV 89129

 

Provider of Wireless Telecommunications Carrier Services

                             

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.16%, Secured Debt (Maturity—December 22, 2024)(9)

        18,000     17,820     17,865  

                                 

Grace Hill, LLC(10)
15 S Main Street, Suite 500
Greenville, SC 29601

 

Online Training Tools for the Multi-Family Housing Industry

                             

     

Prime Plus 5.25% (Floor 1.00%), Current Coupon 9.75%, Secured Debt (Maturity—August 15, 2019)(9)

        1,215     1,208     1,215  

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.58%, Secured Debt (Maturity—August 15, 2019)(9)

        11,407     11,356     11,407  

                        12,564     12,622  

                                 

Great Circle Family Foods, LLC(10)
4760 E. Los Coyotes Diagonal
Long Beach, CA 90815

 

Quick Service Restaurant Franchise

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.34%, Secured Debt (Maturity—October 28, 2019)(9)

        7,219     7,187     7,219  

                                 

Grupo Hima San Pablo, Inc.(11)
P.O. Box 4980
Caguas, Puerto Rico 00726

 

Tertiary Care Hospitals

                             

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity—January 31, 2018)(9)

        4,750     4,748     3,541  

     

13.75% Secured Debt (Maturity—July 31, 2018)

        2,055     2,040     226  

                        6,788     3,767  

                                 

GST Autoleather, Inc.(11)
20 Oak Hollow Dr Suite 300
Southfield, MI 48033

 

Automotive Leather Manufacturer

                             

     

PRIME Plus 6.50% (Floor 2.25%), Current Coupon 11.00%, Secured Debt (Maturity—April 5, 2018)(9)

        7,578     7,500     7,500  

     

PRIME Plus 6.50% (Floor 2.00%), Current Coupon 11.00%, Secured Debt (Maturity—July 10, 2020)(9)

        15,619     15,120     11,813  

                        22,620     19,313  

                                 

Guitar Center, Inc.(11)
5795 Lindero Canyon Road
Westlake Village, CA 91362

 

Musical Instruments Retailer

                             

     

6.5% Secured Debt (Maturity—April 15, 2019)

        16,625     16,009     15,378  

                                 

Hojeij Branded Foods, LLC(10)
1750 The Exchange, Suite 200
Atlanta, GA 30339

 

Multi-Airport, Multi- Concept Restaurant Operator

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—July 20, 2022)(9)

        12,137     12,022     12,137  

                                 

Hoover Group, Inc.(10)(13)
2135 Highway 6 South
Houston, TX 77077

 

Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets

                             

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.70%, Secured Debt (Maturity—January 28, 2021)(9)

        8,460     7,986     7,783  

                                 

110


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Hostway Corporation(11)
100 N Riverside, Suite 800
Chicago, IL 60606

 

Managed Services and Hosting Provider

                             

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.44%, Secured Debt (Maturity—December 13, 2019)(9)

        20,150     19,796     19,621  

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.44%, Secured Debt (Maturity—December 13, 2018)(9)

        12,406     11,575     11,692  

                        31,371     31,313  

                                 

Hunter Defense Technologies, Inc.(11)
30500 Aurora Road, Suite 100
Solon, OH 44139

 

Provider of Military and Commercial Shelters and Systems

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity—August 5, 2019)(9)

        20,224     19,851     19,997  

                                 

Hydrofarm Holdings LLC(10)

2249 S. Mcdowell Ext

Petaluma, CA 94954

 

Wholesaler of Horticultural Products

                             

     

LIBOR Plus 7.00%, Current Coupon 8.49%, Secured Debt (Maturity—May 12, 2022)

        6,708     6,588     6,699  

                                 

iEnergizer Limited(11)(13)(21)
Mont Crevelt House, Bulwer Avenue St
Sampson, Guernsey GY2 4LH

 

Provider of Business Outsourcing Solutions

                             

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.57%, Secured Debt (Maturity—May 1, 2019)(9)

        11,005     10,764     10,977  

                                 

Implus Footcare, LLC(10)
2001 TW Alexander Drive Box 13925
Durham, NC 27709

 

Provider of Footwear and Related Accessories

                             

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.44%, Secured Debt (Maturity—April 30, 2021)(9)

        19,372     19,115     19,243  

                                 

Indivior Finance LLC(11)(13)
10710 Midlothian Turnpike, Suite 430
Richmond, VA 23235

 

Specialty Pharmaceutical Company Treating Opioid Dependence

                             

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—December 18, 2022)(9)

        1,176     1,171     1,182  

                                 

Industrial Services Acquisition, LLC(10)
9 Greenway Plaza, Suite 2400
Houston, TX 77046

 

Industrial Cleaning Services

                             

     

11.25% Current / 0.75% PIK Unsecured Debt (Maturity— December 17, 2022)(19)

        4,553     4,478     4,553  

     

Member Units (Industrial Services Investments, LLC) (900,000 units)

    0.6%           900     810  

                        5,378     5,363  

                                 

Inn of the Mountain Gods Resort and Casino(11)
287 Carrizo Canyon Road
Mescalero, NM 88340

 

Hotel & Casino Owner & Operator

                             

     

9.25% Secured Debt (Maturity—November 30, 2020)

        6,249     5,994     5,687  

                                 

111


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

iPayment, Inc.(11)
126 East 56th Street
New York, NY 10022

 

Provider of Merchant Acquisition

                             

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.62%, Secured Debt (Maturity—April 11, 2023)(9)

        11,970     11,861     12,090  

                                 

iQor US Inc.(11)
200 Central Avenue
One Progress Plaza 7th Floor
St. Petersburg, FL 33701

 

Business Process Outsourcing Services Provider

                             

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity—April 1, 2021)(9)

        990     983     986  

                                 

irth Solutions, LLC
5009 Horizons Drive
Columbus, OH 43220

 

Provider of Damage Prevention Information Technology Services

                             

     

Member Units (27,893 units)

    2.8%           1,441     1,920  

                                 

Jacent Strategic Merchandising, LLC(10)
860 Welsh Road
Huntingdon Valley, PA 19006

 

General Merchandise Distribution

                             

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.01%, Secured Debt (Maturity—September 16, 2020)(9)

        11,110     11,054     11,110  

                                 

Jackmont Hospitality, Inc.(10)
1760 Peachtree Street, Suite 200
Atlanta, GA 30309

 

Franchisee of Casual Dining Restaurants

                             

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.32%, Secured Debt (Maturity—May 26, 2021)(9)

        4,390     4,379     4,390  

                                 

Jacuzzi Brands LLC(11)
13925 City Center Dr #200
Chino Hills, CA 91709

 

Manufacturer of Bath and Spa Products

                             

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—June 28, 2023)(9)

        3,950     3,876     3,980  

                                 

Joerns Healthcare, LLC(11)
2430 Whitehall Park Drive, Suite 100
Charlotte, NC 28273

 

Manufacturer and Distributor of Health Care Equipment & Supplies

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.48% Secured Debt (Maturity—May 9, 2020)(9)

        13,387     13,299     12,472  

                                 

Keypoint Government Solutions, Inc.(10)
115 East 57th Street
New York, NY 10022

 

Provider of Pre-Employment Screening Services

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.35%, Secured Debt (Maturity—April 18, 2024)(9)

        12,031     11,921     12,031  

                                 

Larchmont Resources, LLC(11)

333 Clay Street, Suite 3500

Houston, TX 77002

 

Oil & Gas Exploration & Production

                             

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.53%, PIK Secured Debt (Maturity—August 7, 2020) (9)(19)

        2,418     2,418     2,394  

     

Member Units (Larchmont Intermediate Holdco, LLC) (2,828 units)

    2.8%           353     976  

                        2,771     3,370  

                                 

112


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

LKCM Headwater
Investments
I, L.P.(12)(13)
301 Commerce Street, Suite 1600
Fort Worth, TX 76102

 

Investment Partnership

                             

     

LP Interests (Fully diluted 2.3%)

    2.3%           2,500     4,234  

                                 

Logix Acquisition Company, LLC(10)
2950 N. Loop W. 8th Floor
Houston, TX 77092

 

Competitive Local Exchange Carrier

                             

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.28%, Secured Debt (Maturity—August 9, 2024)(9)

        10,135     9,921     9,921  

                                 

Looking Glass Investments, LLC(12)(13)
316 E Silver Spring Drive, Suite 206
Milwaukee, WI 53217

 

Specialty Consumer Finance

                             

     

Member Units (2.5 units)

    2.5%           125     57  

     

Member Units (LGI Predictive Analytics LLC) (190,712 units)(8)

    2.6%           108     92  

                        233     149  

                                 

LSF9 Atlantis Holdings, LLC(11)
772 Prairie Center Drive Suite 420
Eden Prairie, MN 55344

 

Provider of Wireless Telecommunications Carrier Services

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—May 1, 2023)(9)

        2,963     2,931     2,978  

                                 

Lulu's Fashion Lounge, LLC(10)
195 Humboldt Ave
Chico, CA 95928

 

Fast Fashion E-Commerce Retailer

                             

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.57%, Secured Debt (Maturity—August 28, 2022)(9)

        13,381     12,993     13,531  

                                 

Messenger, LLC(10)
318 East 7th Street
Auburn, IN 46706

 

Supplier of Specialty Stationery and Related Products to the Funeral Industry

                             

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.74%, Secured Debt (Maturity—September 9, 2020)(9)

        17,331     17,249     17,331  

                                 

Minute Key, Inc.
4760 Walnut Street, Suite 105
Boulder, CO 80301

 

Operator of Automated Key Duplication Kiosks

                             

     

Warrants (1,437,409 equivalent shares; Expiration—May 20, 2025; Strike price—$0.01 per share)

    1.9%           280     1,170  

                                 

NBG Acquisition Inc(11)
12303 Technology Blvd. Suite 950
Austin, TX 78727

 

Wholesaler of Home Décor Products

                             

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity—April 26, 2024)(9)

        4,402     4,336     4,452  

                                 

New Media Holdings II LLC(11)(13)
1345 Avenue of the Americas
New York, NY 10105

 

Local Newspaper Operator

                             

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.82%, Secured Debt (Maturity—July 14, 2022)(9)

        17,715     17,342     17,864  

                                 

NNE Partners, LLC(10)
707 Virginia Street East, Suite 1200
Charleston, WV 07060

 

Oil & Gas Exploration & Production

                             

     

LIBOR Plus 8.00%, Current Coupon 9.49%, Secured Debt (Maturity—March 2, 2022)

        11,958     11,854     11,854  

                                 

113


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

North American Lifting Holdings, Inc.(11)
925 South Loop West
Houston, TX 77054

 

Crane Service Provider

                             

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.19%, Secured Debt (Maturity—November 27, 2020)(9)

        7,745     6,913     7,256  

                                 

Novetta Solutions, LLC(11)
7921 Jones Branch Drive, 5th Floor
McLean, VA 22102

 

Provider of Advanced Analytics Solutions for Defense Agencies

                             

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.70%, Secured Debt (Maturity—October 17, 2022)(9)

        14,636     14,189     14,239  

                                 

NTM Acquisition Corp.(11)
100 Lighting Way
Seacaucus, NJ 07094

 

Provider of B2B Travel Information Content

                             

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.94%, Secured Debt (Maturity—June 7, 2022)(9)

        6,186     6,126     6,155  

                                 

Ospemifene Royalty Sub LLC (QuatRx)(10)

777 East Eisenhower Parkway, Suite 100

Ann Arbor, MI 48108

 

Estrogen-Deficiency Drug Manufacturer and Distributor

                             

     

11.5% Secured Debt (Maturity—November 15, 2026)(14)

        5,071     5,071     1,198  

                                 

P.F. Chang's China Bistro, Inc.(11)
7676 E. Pinnacle Peak Rd.
Scottsdale, AZ 85255

 

Casual Restaurant Group

                             

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.51%, Secured Debt (Maturity—September 1, 2022)(9)

        4,988     4,846     4,715  

                                 

Paris Presents Incorporated(11)
3800 Swanson Ct.
Gurnee, IL 60031

 

Branded Cosmetic and Bath Accessories

                             

     

LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 10.32%, Secured Debt (Maturity—December 31, 2021)(9)

        4,500     4,471     4,477  

                                 

Parq Holdings Limited Partnership(11)(13)(21)
595 Burrard Street, Suite 700
Vancouver, British Columbia V7X1S8

 

Hotel & Casino Operator

                             

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.19%, Secured Debt (Maturity—December 17, 2020)(9)

        7,481     7,399     7,528  

                                 

Permian Holdco 2, Inc.(11)
2701 West Interstate 20
Odessa, TX 79766

 

Storage Tank Manufacturer

                             

     

14% PIK Unsecured Debt (Maturity—October 15, 2021)(19)

        306     306     306  

     

Preferred Stock (Permian Holdco 1, Inc.) (154,558 units)(28)

    1.8%           799     980  

     

Common Stock (Permian Holdco 1, Inc.) (154,558 units)

    0.8%               140  

                        1,105     1,426  

                                 

Pernix Therapeutics Holdings, Inc.(10)
10 North Park Place, Suite 201
Morristown, NJ 07960

 

Pharmaceutical Royalty

                             

     

12% Secured Debt (Maturity—August 1, 2020)

        3,129     3,129     1,971  

                                 

114


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Point.360(10)
2777 North Ontario Street
Burbank, CA 91504

 

Fully Integrated Provider of Digital Media Services

                             

     

Warrants (65,463 equivalent shares; Expiration—July 7, 2020; Strike price—$0.75 per share)

    0.4%           69      

     

Common Stock (163,658 shares)

    1.0%           273     11  

                        342     11  

                                 

PPC/SHIFT LLC(10)
348 E. Maple Rd.
Birmingham, MI 48009

 

Provider of Digital Solutions to Automotive Industry

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.69%, Secured Debt (Maturity—December 22, 2021)(9)

        6,869     6,748     6,869  

                                 

Prowler Acquisition Corp.(11)
1010 Lamar, Suite 1320
Houston, TX 77002

 

Specialty Distributor to the Energy Sector

                             

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.19%, Secured Debt (Maturity—January 28, 2020)(9)

        12,830     11,332     12,253  

                                 

PT Network, LLC(10)
501 Fairmount Avenue, Suite 302
Towson, MD, 21286

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

                             

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.86%, Secured Debt (Maturity—November 30, 2021)(9)

        8,553     8,553     8,553  

                                 

QBS Parent, Inc.(11)
811 Main Street, Suite 2000
Houston, TX 77002

 

Provider of Software and Services to the Oil & Gas Industry

                             

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 6.13%, Secured Debt (Maturity—August 7, 2021)(9)

        14,272     14,114     14,165  

                                 

Research Now Group, Inc. and Survey
Sampling International, LLC(11)
58 West 40th Street, 16th Floor
New York, NY 10018

 

Provider of Outsourced Online Surveying

                             

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.13%, Secured Debt (Maturity—December 20, 2024)(9)

        13,500     12,826     12,826  

                                 

Resolute Industrial, LLC(10)
298 W. Messner Drive
Wheeling, IL 60090

 

HVAC Equipment Rental and Remanufacturing

                             

     

LIBOR Plus 7.62% (Floor 1.00%), Current Coupon 8.95%, Secured Debt (Maturity—July 26, 2022)(9)(25)

        17,088     16,770     16,770  

     

Member Units (601 units)

    0.9%           750     750  

                        17,520     17,520  

                                 

RGL Reservoir Operations Inc.(11)(13)(21)

610, 700 - 2nd Street SW

Calgary, AB, Canada, T2P 2W1

 

Oil & Gas Equipment and Services

                             

     

1% Current / 9% PIK Secured Debt (Maturity—December 21, 2024)(19)

        721     407     407  

                                 

115


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

RM Bidder, LLC(10)
1040 N. Las Palmas Ave, Building 40
Los Angeles, CA 90038

 

Scripted and Unscripted TV and Digital Programming Provider

                             

     

Warrants (327,532 equivalent units; Expiration—October 20, 2025; Strike price—$14.28 per unit)

    1.4%           425      

     

Member Units (2,779 units)

    0.0%           46     20  

                        471     20  

                                 

SAFETY Investment Holdings, LLC
5619 DTC Parkway, Suite 1000
Greenwood Village, CO 80111

 

Provider of Intelligent Driver Record Monitoring Software and Services

                             

     

Member Units (2,000,000 units)

    1.6%           2,000     1,670  

                                 

Salient Partners L.P.(11)
4265 San Felipe, 8th Floor
Houston, TX 77027

 

Provider of Asset Management Services

                             

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.85%, Secured Debt (Maturity—June 9, 2021)(9)

        10,081     9,870     9,778  

                                 

SiTV, LLC(11)
700 N Central Ave
Glendale, CA 91203

 

Cable Networks Operator

                             

     

10.375% Secured Debt (Maturity—July 1, 2019)

        10,429     7,006     7,040  

                                 

SMART Modular Technologies, Inc.(10)(13)
39870 Eureka Dr.
Newark, CA 94560

 

Provider of Specialty Memory Solutions

                             

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.66%, Secured Debt (Maturity—August 9, 2022)(9)

        14,625     14,351     14,552  

                                 

Sorenson Communications, Inc.(11)
4192 South Riverboat Road
Salt Lake City, UT 84123

 

Manufacturer of Communication Products for Hearing Impaired

                             

     

LIBOR Plus 5.75% (Floor 2.25%), Current Coupon 8.00%, Secured Debt (Maturity—April 30, 2020)(9)

        13,234     13,170     13,341  

                                 

Staples Canada ULC(10)(13)(21)
6 Staples Avenue
Richmond Hill
Ontario, Canada ON L4B 4W3

 

Office Supplies Retailer

                             

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.43%, Secured Debt (Maturity—September 12, 2023) (9)(22)

        20,000     19,617     18,891  

                                 

Strike, LLC(11)
1800 Huges Landing Blvd. Suite 500
The Woodlands, TX 77380

 

Pipeline Construction and Maintenance Services

                             

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—November 30, 2022)(9)

        9,500     9,250     9,643  

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.45%, Secured Debt (Maturity—May 30, 2019)(9)

        2,500     2,479     2,513  

                        11,729     12,156  

                                 

Subsea Global Solutions, LLC(10)
12062 NW 27th Avenue
Miami, FL 33167

 

Underwater Maintenance and Repair Services

                             

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity—March 17, 2020)(9)

        7,687     7,637     7,687  

                                 

116


Table of Contents

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Synagro Infrastructure Company, Inc(11)
435 Williams Court, Suite 100
Baltimore, MD 21220

 

Waste Management Services

                             

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity—August 22, 2020)(9)

        9,161     8,933     8,608  

                                 

Tectonic Holdings, LLC
6900 N. Dallas Parkway, Suite 500
Plano, TX 75024

 

Financial Services Organization

                             

     

Member Units (200,000 units)(8)

    3.1%           2,000     2,320  

                                 

TE Holdings, LLC(11)
4727 Gaillardia Parkway
Oklahoma City, OK 73142

 

Oil & Gas Exploration & Production

                             

     

Member Units (97,048 units)

    0.1%           970     158  

                                 

TeleGuam Holdings, LLC(11)

624 North Marine Corps Drive

Tamuning, Guam

 

Cable and Telecom Services Provider

                             

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.07%, Secured Debt (Maturity—April 12, 2024)(9)

        7,750     7,602     7,808  

                                 

TGP Holdings III LLC(11)
1215 E Wilmington Ave Ste 200
Salt Lake City, UT 84106

 

Outdoor Cooking & Accessories

                             

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity—September 25, 2024)(9)

        6,898     6,820     6,969  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.19%, Secured Debt (Maturity—September 25, 2025)(9)

        5,000     4,927     5,075  

                        11,747     12,044  

                                 

The Container Store, Inc.(11)
500 Freeport Parkway
Coppell, TX 75019

 

Operator of Stores Offering Storage and Organizational Products

                             

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—August 15, 2021)(9)

        9,938     9,660     9,652  

                                 

TMC Merger Sub Corp.(11)
1060 Hensley Street
Richmond, CA 94801

 

Refractory & Maintenance Services Provider

                             

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.88%, Secured Debt (Maturity—October 31, 2022) (9)(26)

        17,653     17,516     17,741  

                                 

TOMS Shoes, LLC(11)
5404 Jandy Place
Los Angeles, CA 90066

 

Global Designer, Distributor, and Retailer of Casual Footwear

                             

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.98%, Secured Debt (Maturity—October 30, 2020)(9)

        4,875     4,610     2,901  

                                 

Turning Point Brands, Inc.(10)(13)
5201 Interchange Way
Louisville, KY 40229

 

Marketer/Distributor of Tobacco Products

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.61%, Secured Debt (Maturity—May 17, 2022)(9)(25)

        8,436     8,364     8,605  

                                 

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Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

TVG-I-E CMN ACQUISITION, LLC(10)
1001 McKinney Street, Suite 400
Houston, TX 77002

 

Organic Lead Generation for Online Postsecondary Schools

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.56%, Secured Debt (Maturity—November 3, 2021)(9)

        8,170     8,031     8,170  

                                 

Tweddle Group, Inc.(11)
24700 Maplehurst Dr
Clinton Township, MI 48036

 

Provider of Technical Information Services to Automotive OEMs

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.38%, Secured Debt (Maturity—October 21, 2022)(9)

        6,114     6,011     6,023  

                                 

U.S. TelePacific Corp.(11)
515 S. Flower St. 47th Floor
Los Angeles, CA 90071

 

Provider of Communications and Managed Services

                             

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity—May 2, 2023)(9)

        20,703     20,507     19,862  

                                 

US Joiner Holding Company(11)
5690 Three Noched Rd, Suite 200
Crozet, VA 22932

 

Marine Interior Design and Installation

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity—April 16, 2020)(9)

        13,465     13,366     13,398  

                                 

VIP Cinema Holdings, Inc.(11)
101 Industrial Drive
New Albany, MS 38652

 

Supplier of Luxury Seating to the Cinema Industry

                             

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity—March 1, 2023)(9)

        7,700     7,666     7,777  

                                 

Vistar Media, Inc.(10)
137 5th Ave. 5th Floor
New York, NY 10010

 

Operator of Digital Out-of-Home Advertising Platform

                             

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.69%, Secured Debt (Maturity—February 16, 2022)(9)

        3,319     3,048     3,102  

     

Warrants (70,207 equivalent shares; Expiration—February 17, 2027; Strike price—$0.01 per share)

    1.1%           331     499  

                        3,379     3,601  

                                 

Wellnext, LLC(10)

1301 Sawgrass Corporate Parkway

Sunrise, FL 33323

 

Manufacturer of Supplements and Vitamins

                             

     

LIBOR Plus 10.10% (Floor 1.00%), Current Coupon 11.67%, Secured Debt (Maturity—July 21, 2022) (9)(23)

        9,930     9,857     9,930  

                                 

Wireless Vision Holdings, LLC(10)
40700 Woodward Avenue Suite 250
Bloomfield Hills, MI 48304

 

Provider of Wireless Telecommunications Carrier Services

                             

     

LIBOR Plus 8.91% (Floor 1.00%), Current Coupon 10.27%, Secured Debt (Maturity—September 29, 2022) (9)(24)

        12,932     12,654     12,654  

                                 

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Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Percent of
Class Held(27)

  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Wirepath LLC(11)
1800 Continental Boulevard, Suite 200
Charlotte, NC 28273

 

E-Commerce Provider into Connected Home Market

                             

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.87%, Secured Debt (Maturity—August 5, 2024)(9)

        4,988     4,964     5,055  

                                 

Zilliant Incorporated
3815 S. Capital of Texas Hwy #300
Austin, TX 78704

 

Price Optimization and Margin Management Solutions

                             

     

Preferred Stock (186,777 shares)(28)

    0.7%           154     260  

     

Warrants (952,500 equivalent shares; Expiration—June 15, 2022; Strike price—$0.001 per share)

    2.1%           1,071     1,189  

                        1,225     1,449  

Subtotal Non-Control/Non-Affiliate Investments (49.8% of total investments at fair value)

                      $ 1,107,447   $ 1,081,745  

Total Portfolio Investments, December 31, 2017

                      $ 2,004,798   $ 2,171,305  

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B to our consolidated financial statements included elsewhere herein for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C to our consolidated financial statements included elsewhere herein for a summary of geographic location of portfolio companies.

(4)
Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

(9)
Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted-average annual stated interest rate in effect at December 31, 2017. As noted in this schedule, 67% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.25%, with a weighted-average LIBOR floor of approximately 1.02%.

(10)
Private Loan portfolio investment. See Note B to our consolidated financial statements included elsewhere herein for a description of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B to our consolidated financial statements included elsewhere herein for a description of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B to our consolidated financial statements included elsewhere herein for a description of Other Portfolio investments.

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C to our consolidated financial statements included elsewhere herein for further discussion.

(19)
PIK interest income and cumulative dividend income represent income not paid currently in cash.

(20)
All portfolio company headquarters are based in the United States, unless otherwise noted.

(21)
Portfolio company headquarters are located outside of the United States.

(22)
In connection with the Company's debt investment in Staples Canada ULC to help mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company entered into a forward foreign currency contract with Cadence Bank to lend $24.2 million Canadian Dollars and receive

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(23)
The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.50% (Floor 1.00%) per the Credit Agreement and the table above reflects such higher rate.

(24)
The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 8.50% (Floor 1.00%) per the Credit Agreement and the table above reflects such higher rate.

(25)
As part of the credit agreement with the portfolio company, the Company is entitled to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche receives priority over the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. The rate the Company receives per the Credit Agreement is the same as the rate reflected in the table above.

(26)
The Company has entered into an intercreditor agreement that entitles the Company to the "first out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a lower interest rate than the contractual stated interest rate of LIBOR plus 6.64% (Floor 1.00%) per the Credit Agreement and the table above reflects such lower rate.

(27)
Percent of class held is presented for equity investments only. Unless otherwise noted, for any warrants, convertible or preferred equity instruments, the percent of class represents the percent of common equity class in the portfolio company that such instrument is convertible or exchangeable into as such instrument does not contain any preferred return rights that would change the investment's economic interest in a sale or exit transaction.

(28)
Percent of class for investment represents percent of specific class only, as such investment has contractual return rights specific to its class.

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MANAGEMENT

        Our business and affairs are managed under the direction of our Board of Directors. Our Board of Directors appoints our officers, who serve at the discretion of the Board of Directors. The responsibilities of the Board of Directors include, among other things, the oversight of our investment activities, the quarterly valuation of our assets, oversight of our financing arrangements and corporate governance activities. The Board of Directors has an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, and may establish additional committees from time to time as necessary.

Board of Directors and Executive Officers

        Our Board of Directors consists of ten members, eight of whom are classified under applicable NYSE listing standards as "independent" directors and under Section 2(a)(19) of the 1940 Act as "non-interested" persons. Pursuant to our articles of incorporation, each member of our Board of Directors serves a one year term, with each current director serving until the 2018 annual meeting of stockholders and until his or her respective successor is duly qualified and elected. Our articles of incorporation give our Board of Directors sole authority to appoint directors to fill vacancies that are created either through an increase in the number of directors or due to the resignation, removal or death of any director.

        Information regarding our current Board of Directors is set forth below as of April 18, 2018. We have divided the directors into two groups—independent directors and interested directors. Interested directors are "interested persons" of MSCC as defined in Section 2(a)(19) of the 1940 Act. The address for each director is c/o Main Street Capital Corporation, 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056.

Name
  Age   Director
Since
  Expiration
of Term
 

Michael Appling Jr. 

    51     2007     2018  

Valerie L. Banner

    62     2017     2018  

Joseph E. Canon

    76     2007     2018  

Arthur L. French

    77     2007     2018  

J. Kevin Griffin

    46     2011     2018  

John E. Jackson

    59     2013     2018  

Brian E. Lane

    61     2015     2018  

Stephen B. Solcher

    57     2015     2018  
Name
  Age   Director
Since
  Expiration
of Term
 

Vincent D. Foster

    61     2007     2018  

Dwayne L. Hyzak

    45     2018     2018  

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        Our executive officers serve at the discretion of our Board of Directors. The following persons serve as our executive officers or significant employees in the following capacities (information as of April 18, 2018):

Name
  Age   Position(s) Held

Vincent D. Foster*†

    61   Chairman of the Board and Chief Executive Officer

Dwayne L. Hyzak*†‡

    45   Member of the Board, President, Chief Operating Officer and Senior Managing Director

David L. Magdol*‡

    47   Vice Chairman, Chief Investment Officer and Senior Managing Director

Curtis L. Hartman*†‡

    45   Vice Chairman, Chief Credit Officer and Senior Managing Director

Jason B. Beauvais

    42   Senior Vice President, General Counsel, Chief Compliance Officer and Secretary

Brent D. Smith

    43   Chief Financial Officer and Treasurer

Nicholas T. Meserve†‡

    38   Managing Director

K. Colton Braud‡

    32   Managing Director

Alejandro Capetillo‡

    31   Managing Director

Shannon D. Martin

    48   Vice President, Chief Accounting Officer and Assistant Treasurer

Katherine S. Silva

    38   Vice President and Assistant Treasurer

*
Member of our Investment Committee and our Executive Committee. The Investment Committee is responsible for all aspects of our lower middle market investment process, including approval of such investments. The Executive Committee consults with and advises our Chief Executive Officer on significant firm-wide operational and strategic priorities.

Member of our Credit Committee. The Credit Committee is responsible for all aspects of our investment process with respect to our middle market portfolio investments, including approval of such investments.

Portfolio manager primarily responsible for the day-to-day management of our investment portfolio.

        The address for each executive officer and significant employee is c/o Main Street Capital Corporation, 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056.

Biographical Information

        Michael Appling, Jr. is the Chief Executive Officer of TNT Crane & Rigging Inc., a privately held full service crane and rigging operator. From July 2002 through August 2007, he was the Executive Vice President and Chief Financial Officer of XServ, Inc., a large private equity funded, international industrial services and rental company. Mr. Appling also held the position of CEO and President for United Scaffolding, Inc., an XServ, Inc. operating subsidiary. In February 2007, XServ, Inc. was sold to The Brock Group, a private industrial services company headquartered in Texas. From March 2000 to June 2002, Mr. Appling served as the Chief Financial Officer of CheMatch.com, an online commodities trading forum. ChemConnect, Inc., a venture backed independent trading exchange, acquired CheMatch.com in January 2002. From June 1999 to March 2000, Mr. Appling was Vice President and Chief Financial Officer of American Eco Corporation, a publicly traded, international fabrication, construction and maintenance provider to the energy, pulp and paper and power industries. Mr. Appling worked for ITEQ, Inc., a publicly traded, international fabrication and services company, from September 1997 to May 1999, first as a Director of Corporate Development and then as Vice President, Finance and Accounting. From July 1991 to September 1997, Mr. Appling worked at Arthur

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Andersen, where he practiced as a certified public accountant. We believe Mr. Appling is qualified to serve on our Board of Directors because of his extensive finance and accounting experience, as well as his executive leadership and management experience as a chief executive officer.

        Valerie L. Banner has served as Vice President, General Counsel and Corporate Secretary of Exterran Corporation (NYSE: EXTN) since November 2015. Prior to the spin-off of Exterran Corporation from Archrock, Inc., formerly known as Exterran Holdings, Inc. (NYSE: AROC, formerly EXH), in November 2015, Ms. Banner served as Associate General Counsel of Exterran Holdings from 2008 to 2015 and as special counsel from 2007 to 2008. Prior to the merger of Hanover Compressor Company and Universal Compression Holdings, Inc. in August 2007 to form Exterran Holdings, she served Universal as special counsel from 2000 to 2007, and served as Senior Vice President, General Counsel and Secretary from 1998 through 2000. Prior to joining Universal, Ms. Banner served as counsel for several publicly traded companies and was in private practice, having begun her career as an associate with Andrews & Kurth LLP. Ms. Banner also serves as an officer and director of certain Exterran Corporation subsidiaries. We believe Ms. Banner is qualified to serve on our Board of Directors because of her extensive legal and leadership experience at public companies, including with respect to mergers and acquisitions, corporate finance, compliance and corporate governance.

        Joseph E. Canon, since 1982, has been the Executive Vice President and Executive Director, and a member of the Board of Directors, of Dodge Jones Foundation, a private charitable foundation located in Abilene, Texas. Since 2008, he has also been the Executive Vice President and Executive Director, and a member of the Board of Directors, of Kickapoo Springs Foundation and The Legett Foundation, two private family foundations located in Abilene, Texas. Mr. Canon has also been involved during this time as an executive officer and director of several private companies and partnerships with emphasis on energy, financial and other alternative investments. From 1974 to 1982, he served as Executive Vice President and Trust Officer of First National Bank of Abilene. Mr. Canon served until April 2014 on the Board of Directors of First Financial Bankshares, Inc. (NASDAQ: FFIN), a bank and financial holding company headquartered in Abilene, Texas. Mr. Canon also served until April 2014 on the Board of Directors for several bank and trust/asset management subsidiaries of First Financial Bankshares, Inc. He has also served as an executive officer and member of the Board of Directors of various other organizations including the Abilene Convention and Visitors Bureau, Abilene Chamber of Commerce, Conference of Southwest Foundations, City of Abilene Tax Increment District, West Central Texas Municipal Water District and the John G. and Marie Stella Kenedy Memorial Foundation. We believe Mr. Canon's qualifications to serve on our Board of Directors include his many years of managing and investing assets on behalf of public and private entities, his considerable experience in trust banking activities and practices, and his experience on other public boards of directors.

        Arthur L. French has served in a variety of executive management and board of director roles over the course of his business career. He began his private investment activities in 2000 and served as a director of Fab Tech Industries, a steel fabricator, from November 2000 until August 2009, as a director of Houston Plating and Coatings Company, an industrial coatings company, from 2002 until 2007, as a director of Rawson LP, an industrial distribution and maintenance services company, from May 2003 until June 2009, and as non-executive chairman of Rawson Holdings, LLC from March 2009 until December 2010. From September 2003 through March 2007, Mr. French was a member of the Advisory Board of Main Street Capital Partners, LLC and a limited partner of Main Street Mezzanine Fund, LP (both of which are now subsidiaries of Main Street). Mr. French currently serves as an advisor to LKCM Capital Group, LLC, an alternative investment vehicle for Luther King Capital Management headquartered in Fort Worth, Texas ("LKCM"). In addition, he serves as an independent director, Chairman of the Audit Committee and a member of the Compensation Committee of Relevant Solutions Inc. (previously LKCM Distribution Holdings LP), an LKCM portfolio company which provides industrial instrumentation and controls, air compressor products and systems, heat transfer

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and filter systems and related maintenance services to chemical, petrochemical, oil and gas and power generation customers in Texas, Oklahoma and Louisiana as well as other key markets in the central and western United States. From 1996-1999, Mr. French was Chairman and Chief Executive Officer of Metals USA Inc. (NYSE), where he managed the process of founders acquisition, assembled the management team and took the company through a successful IPO in July 1997. From 1989-1996, he served as Executive Vice President and Director of Keystone International, Inc. (NYSE), a manufacturer of flow controls equipment. After serving as a helicopter pilot in the United States Army, Captain, Corps of Engineers from 1963-1966, Mr. French began his career as a Sales Engineer for Fisher Controls International, Inc., in 1966. During his 23-year career at Fisher Controls, from 1966-1989, Mr. French held various titles, and ended his career at Fisher Controls as President, Chief Operating Officer and Director. We believe Mr. French is qualified to serve on our Board of Directors because of his executive management and leadership roles within numerous public and private companies and his experience in investing in private companies.

        J. Kevin Griffin is the Senior Vice President of Financial Planning & Analysis at Novant Health, a not-for-profit integrated system of 15 hospitals and a medical group consisting of approximately 1,600 physicians in 500 clinic locations, as well as numerous outpatient surgery centers, medical plazas, rehabilitation programs, diagnostic imaging centers, and community health outreach programs. Mr. Griffin's responsibilities at Novant primarily include debt capital market and M&A transactions, along with various other strategic analysis projects. From 2007 to October 2012, Mr. Griffin was a Managing Director of Fennebresque & Co., LLC, a boutique investment banking firm located in Charlotte, North Carolina. From 2003 through 2007, he was a Partner at McColl Partners, LLC, where he originated and executed middle market M&A transactions. Prior to McColl Partners, Mr. Griffin worked in the M&A and corporate finance divisions of Lazard Ltd, JPMorgan, and Bank of America in New York, Chicago, and Charlotte. Mr. Griffin's investment banking experience consists primarily of executing and originating mergers and acquisitions and corporate finance transactions. We believe Mr. Griffin is qualified to serve on our Board of Directors because of his extensive finance and valuation experience, his knowledge of the healthcare industry, and his extensive background in working with middle market companies in an M&A and advisory capacity.

        John E. Jackson is the President and Chief Executive Officer of Spartan Energy Partners, LP, a gas gathering, treating and processing company. He has also been a director of Seitel, Inc., a privately owned provider of onshore seismic data to the oil and gas industry in North America, since August 2007, CNX Midstream Partners, LP, formerly known as CONE Midstream Partners, LP (NYSE: CNXM, formerly CNNX), a master limited partnership that owns and operates natural gas gathering and other midstream energy assets in the Marcellus Shale in Pennsylvania and West Virginia, since January 2015, and Basic Energy Services, Inc. (NYSE: BAS), a provider of well site services in the United States to oil and natural gas drilling and producing companies, since December 2016. Mr. Jackson was Chairman, Chief Executive Officer and President of Price Gregory Services, Inc., a pipeline-related infrastructure service provider in North America, from February 2008 until its sale in October of 2009. He served as a director of Hanover Compressor Company ("Hanover"), now known as Exterran Corporation (NYSE: EXTN) and Archrock, Inc. (NYSE: AROC), from July 2004 until May 2010. Mr. Jackson also served as Hanover's President and Chief Executive Officer from October 2004 to August 2007 and as Chief Financial Officer from January 2002 to October 2004. He also serves on the board of several non-profit organizations. We believe Mr. Jackson's qualifications to serve on our Board of Directors include his extensive background in executive and director roles of public and private companies.

        Brian E. Lane has served as Chief Executive Officer and President of Comfort Systems USA, Inc. (NYSE: FIX), a leading provider of commercial, industrial and institutional heating, ventilation and air conditioning ("HVAC") services, since December 2011 and as a director of Comfort Systems since November 2010. Mr. Lane served as Comfort Systems' President and Chief Operating Officer from

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March 2010 until December 2011. Mr. Lane joined Comfort Systems in October 2003 and served as Vice President and then Senior Vice President for Region One until he was named Executive Vice President and Chief Operating Officer in January 2009. Prior to joining Comfort Systems, Mr. Lane spent fifteen years at Halliburton Company (NYSE: HAL), a global service and equipment company devoted to energy, industrial, and government customers. During his tenure at Halliburton, he held various positions in business development, strategy and project initiatives, and he departed as the Regional Director of Europe and Africa. Mr. Lane's additional experience included serving as a Regional Director of Capstone Turbine Corporation (NASDAQ: CPST), a distributed power manufacturer. He also was a Vice President of Kvaerner, an international engineering and construction company, where he focused on the chemical industry. Mr. Lane is also a member of the Board of Directors of Griffen Dewatering Corporation, a privately held company. Mr. Lane earned a Bachelor of Science in Chemistry from the University of Notre Dame and his MBA from Boston College. We believe Mr. Lane is qualified to serve on our Board of Directors because of his background in executive and director roles of public and private companies and his extensive knowledge of the construction and industrial services industries.

        Stephen B. Solcher has served as the Senior Vice President of Finance and Business Operations and Chief Financial Officer of BMC Software, Inc., a privately held company that is a global leader in software solutions, since 2005. Previously, Mr. Solcher served as BMC's Treasurer and Vice President of Finance. He joined BMC in 1991 as Assistant Treasurer and became Treasurer the following year. During Mr. Solcher's tenure, BMC grew from nearly $130 million in annual revenue to $2.2 billion in annual revenue in 2013, its last year operating as a public company. In addition to leading many M&A transactions as Chief Financial Officer, Mr. Solcher was instrumental in BMC's transition from being a publicly traded company to becoming a private held company in 2013. Prior to joining BMC, he was employed by Arthur Andersen as a certified public accountant. Mr. Solcher also serves on the development board of the Mays Business School at Texas A&M University and has served on the board of numerous nonprofit organizations. He was recognized by Institutional Investor magazine as part of the "All American Executive Team" in 2010 and 2012 and by Houston Business Journal as 2012 Best CFO—Large Public Company. We believe Mr. Solcher's qualifications to serve on our Board of Directors include his thorough knowledge of the information technology and software industries and his accounting, finance and M&A experience as a chief financial officer of a large public and private company qualifying him to be an audit committee financial expert.

        Vincent D. Foster has served as Chairman of Main Street's Board of Directors and Main Street's Chief Executive Officer since 2007 and also served as Main Street's President from 2012 until 2015. He has also been a member of our investment committee since its formation in 2007, a member of our credit committee since its formation in 2011 and a member of our executive committee since its formation in 2015. Mr. Foster also currently serves as a founding director of Quanta Services, Inc. (NYSE: PWR), which provides specialty contracting services to the power, natural gas and telecommunications industries. He also served as a director of U.S. Concrete, Inc. (NASDAQ-CM: USCR) from 1999 until 2010, Carriage Services, Inc. (NYSE: CSV) from 1999 to 2011, HMS Income Fund, Inc., a non-publicly traded business development company of which MSC Adviser I, LLC, a wholly owned subsidiary of Main Street, acts as the investment sub-adviser, from 2012 until 2013 and Team, Inc. (NYSE: TISI) from 2005 until 2017. In addition, Mr. Foster served as a founding director of the Texas TriCities Chapter of the National Association of Corporate Directors from 2004 to 2011. Mr. Foster, a certified public accountant, had a 19 year career with Arthur Andersen, where he was a partner from 1988-1997. Mr. Foster was the director of Andersen's Corporate Finance and Mergers and Acquisitions practice for the Southwest United States and specialized in working with companies involved in consolidating their respective industries. From 1997, Mr. Foster co-founded and has acted as co-managing partner or chief executive of several Main Street predecessor funds and entities, which

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are now subsidiaries of ours. We believe Mr. Foster is qualified to serve on our Board of Directors because of his intimate knowledge of our operations through his day-to-day leadership as Chief Executive Officer of Main Street, along with his comprehensive experience on other public Boards of Directors and his extensive experience in tax, accounting, mergers and acquisitions, corporate governance and finance.

        Dwayne L. Hyzak has served as a member of our Board of Directors since January 2018, as our President since 2015 and as our Chief Operating Officer and Senior Managing Director since 2014. Mr. Hyzak also serves as a member of our investment committee and our executive committee. Previously, he served as Chief Financial Officer and Senior Managing Director from 2011 and in other executive positions at Main Street since 2007. From 2002, Mr. Hyzak has also served as a Senior Managing Director and in other executive positions of several Main Street predecessor funds and entities, which are now subsidiaries of ours. From 2000 to 2002, Mr. Hyzak was a director of integration with Quanta Services, Inc. (NYSE: PWR), which provides specialty contracting services to the power, natural gas and telecommunications industries, where he was principally focused on the company's mergers and acquisitions and corporate finance activities. Prior to joining Quanta Services, Inc., Mr. Hyzak, a certified public accountant, was a manager with Arthur Andersen in its Transaction Advisory Services group. We believe Mr. Hyzak is qualified to serve on our Board of Directors because of his long tenure in leadership roles at Main Street currently as President and Chief Operating Officer, in which roles he has successfully led our lower middle market investment activities, and previously as Chief Financial Officer, along with his extensive experience in investing and managing investments in lower middle market companies, mergers and acquisitions, corporate finance, tax and accounting.

        David L. Magdol has served as Vice Chairman since 2015 and Chief Investment Officer and Senior Managing Director since 2011. Mr. Magdol is also the chairman of our investment committee and a member of our executive committee. Previously, he served as Senior Vice President and in other executive positions at Main Street since 2007. From 2002, Mr. Magdol has served as a Senior Managing Director and in other executive positions of several Main Street predecessor funds and entities, which are now subsidiaries of ours. Mr. Magdol joined Main Street from the investment banking group at Lazard Freres & Co. Prior to Lazard, he managed a portfolio of private equity investments for the McMullen Group, a private investment firm/family office capitalized by Dr. John J. McMullen, the former owner of the New Jersey Devils and the Houston Astros. Mr. Magdol began his career in the structured finance services group of JP Morgan Chase.

        Curtis L. Hartman has served as Vice Chairman since 2015 and Chief Credit Officer and Senior Managing Director since 2011. Mr. Hartman is also the chairman of our credit committee and a member of our investment committee and our executive committee. Previously, he served as Senior Vice President and in other executive positions at Main Street since 2007. From 2000, Mr. Hartman has also served as a Senior Managing Director and in other executive positions of several Main Street predecessor funds and entities, which are now subsidiaries of ours. Mr. Hartman also served on the Board of Directors of HMS Income Fund, Inc., a non-publicly traded business development company of which MSC Adviser I, LLC, a wholly owned subsidiary of Main Street, acts as the investment sub-adviser, from 2013 to April 2016. Mr. Hartman currently serves as an executive officer of the Small Business Investor Alliance (SBIA) and has been a member of SBIA's Board of Governors since 2011 where he previously chaired the BDC Committee. From 1999 to 2000, Mr. Hartman was a Director for Sterling City Capital, LLC, a private investment firm. Concurrently with joining Sterling City Capital, he joined United Glass Corporation, a Sterling City Capital portfolio company, as Director of Corporate Development. Prior to joining Sterling City Capital, Mr. Hartman, a certified public

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accountant, was a manager with PricewaterhouseCoopers LLP in its M&A/Transaction Services group and a senior auditor with Deloitte & Touche LLP in its Financial Assurance Group.

        Jason B. Beauvais has served as Senior Vice President, General Counsel, Chief Compliance Officer and Secretary since 2012. Previously, Mr. Beauvais served as Vice President, General Counsel and Secretary since 2008. From 2006 through 2008, Mr. Beauvais was an attorney with Occidental Petroleum Corporation (NYSE: OXY), an international oil and gas exploration and production company. Prior to joining Occidental Petroleum Corporation, Mr. Beauvais practiced corporate and securities law at Baker Botts L.L.P., where he primarily counseled companies in public issuances and private placements of debt and equity and handled a wide range of general corporate and securities matters as well as mergers and acquisitions.

        Brent D. Smith has served as Chief Financial Officer and Treasurer since November 2014 and previously as Senior Vice President—Finance since August 2014. Mr. Smith previously served as Executive Vice President, Chief Financial Officer and Treasurer of Cal Dive International, Inc. from 2010 through June 2014 and in various finance and accounting roles at Cal Dive from 2005 through 2010. On March 3 2015, Cal Dive and certain of its subsidiaries, excluding its foreign subsidiaries, filed for voluntary protection under Chapter 11 of the Bankruptcy Code. Prior to joining Cal Dive, Mr. Smith was a manager with FTI Consulting (NYSE: FCN). Prior to that, Mr. Smith, a certified public accountant, was employed as a senior auditor at Arthur Andersen LLP.

        Nicholas T. Meserve has served as Managing Director on our middle market investment team since 2012. Mr. Meserve has also served on the Board of Directors of HMS Income Fund, Inc., a non-publicly traded business development company of which MSC Advisor I, LLC, a wholly owned subsidiary of Main Street, acts as the investment sub-advisor, since April 2016. Previously, from 2004 until 2012, Mr. Meserve worked at Highland Capital Management, LP, a large alternative credit manager, and certain of its affiliates, where he managed a portfolio of senior loans and high yield bonds across a diverse set of industries. Prior to Highland, he was a Credit Analyst at JP Morgan Chase & Co.

        K. Colton Braud, III has served as a Managing Director on our lower middle market team since January 2017 and has been with the firm in Associate to Director roles since 2012. Prior to joining Main Street, Mr. Braud spent two years as an Associate at Wellspring Capital Management, a middle market private equity firm based in New York. While at Wellspring, Mr. Braud's responsibilities included evaluating leveraged buyout opportunities, conducting due diligence across a wide array of industries and portfolio management. Prior to Wellspring, Mr. Braud served as an Analyst at J.P. Morgan Securities Inc. in its Financial Sponsor Group.

        Alejandro Capetillo has served as a Managing Director on our lower middle market team since October 2017 and has been with the firm in Analyst to Director roles since 2008. During his time with Main Street, Mr. Capetillo has been part of a lower middle market team that has closed over 30 transactions, including growth financings, dividend recapitalizations, management buyouts and control leveraged buyouts. In addition to having led a number of platform and add-on transactions in diverse industries on behalf of Main Street, Mr. Capetillo has been a member of the board of directors of several of Main Street's portfolio companies, assisting those companies with issues ranging from day-to-day operations to broader growth and exit strategies.

        Shannon D. Martin has served as Vice President, Chief Accounting Officer and Assistant Treasurer since 2012. From 2006 to 2012, Mr. Martin worked as an independent consultant and performed financial advisory services for several clients, including functioning as acting Chief Accounting Officer from 2008 to 2011 for EquaTerra, Inc. From 1999 to 2006, Mr. Martin was a director of accounting integration and audit with Quanta Services, Inc. (NYSE: PWR), which provides specialty contracting services to the power, natural gas and telecommunications industries, where he focused on the development of integrated accounting, business and information system processes and the company's

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acquisition and integration strategies. From 1992 to 1999, Mr. Martin, a certified public accountant, worked at Arthur Andersen as a manager in the Commercial Services group.

        Katherine S. Silva, a certified public accountant, has served as Vice President since 2015, with responsibility for managing Small Business Administration matters and several administrative functions, and Assistant Treasurer since 2010, with responsibility for managing day-to-day treasury activities. She also serves as special assistant to Mr. Foster. Ms. Silva has worked at Main Street since 2005 and holds a Bachelor of Arts in Journalism from the University of Georgia.

CORPORATE GOVERNANCE

        We maintain a corporate governance section on our website which contains copies of the charters for the committees of our Board of Directors. The corporate governance section may be found at http://mainstcapital.com under "Corporate Governance—Governance Docs" in the "Investors" section of our website. The corporate governance section contains the following documents, which are available in print to any stockholder who requests a copy in writing to Main Street Capital Corporation, Corporate Secretary's Office, 1300 Post Oak Blvd., 8th Floor, Houston, Texas 77056:

        In addition, our Code of Business Conduct and Ethics and our Corporate Governance and Stock Ownership Guidelines may be found at http://mainstcapital.com under "Corporate Governance—Governance Docs" in the "Investors" section of our website and are available in print to any stockholder who requests a copy in writing. Our Board of Directors adopted the Code of Business Conduct and Ethics in order to establish policies, guidelines and procedures that promote ethical practices and conduct by Main Street and all its employees, officers and directors. All officers, directors and employees of Main Street are responsible for maintaining the level of integrity and for complying with the policies contained in the Code of Business Conduct and Ethics. Each employee of Main Street is required to acknowledge that he or she has received, read and understands the Code of Business Conduct and Ethics and agrees to observe the policies and procedures contained therein at the time of hire and annually thereafter. We intend to disclose any substantive amendments to, or waivers from, our Code of Business Conduct and Ethics within four business days of the waiver or amendment through a posting on our website. The Corporate Governance and Stock Ownership Guidelines adopted by our Board of Directors establish our corporate governance principles and practices on a variety of topics, including the responsibilities, composition and functioning of the Board, responsibilities of management and interaction with the Board and stock ownership guidelines for management and Board members. The Nominating and Corporate Governance Committee of our Board assesses the Corporate Governance and Stock Ownership Guidelines periodically and makes recommendations to the Board on any changes to implement.

Director Independence

        Our Board of Directors currently consists of ten members, eight of whom are classified under applicable listing standards of the New York Stock Exchange as "independent" directors and under Section 2(a)(19) of the 1940 Act as not "interested persons." Based on these independence standards

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and the recommendation of the Nominating and Corporate Governance Committee, our Board of Directors has affirmatively determined that the following directors are independent:

        Our Board of Directors considered certain portfolio investments and other transactions in which our independent directors may have had a direct or indirect interest, including the transactions, if any, described under the heading "Certain Relationships and Related Party Transactions" in evaluating each director's independence under the 1940 Act and applicable listing standards of the New York Stock Exchange, and the Board of Directors determined that no such transaction would impact the ability of any director to exercise independent judgment or impair his or her independence.

Communications with the Board

        Stockholders or other interested persons may send written communications to the members of our Board of Directors, addressed to Board of Directors, c/o Main Street Capital Corporation, Corporate Secretary's Office, 1300 Post Oak Blvd., 8th Floor, Houston, Texas 77056. All communications received in this manner will be delivered to one or more members of our Board of Directors.

Board Leadership Structure

        Mr. Foster currently serves as both our Chief Executive Officer and as the Chairman of our Board of Directors. As our Chief Executive Officer, Mr. Foster is an "interested person" under Section 2(a)(19) of the 1940 Act. The Board believes that the Company's Chief Executive Officer is currently best situated to serve as Chairman given his history with the Company, his deep knowledge of the Company's business and his extensive experience in managing private debt and equity investments in lower middle market companies and debt investments in middle market companies. The Company's independent directors bring experience, oversight and expertise from outside the Company and industry, while the Chief Executive Officer brings Company-specific and industry-specific experience and expertise. The Board believes that the combined role of Chairman and Chief Executive Officer promotes strategy development and execution while facilitating effective, timely communication between management and the Board. At the present time, the independent directors feel that the combined Chairman and Chief Executive Officer responsibility is optimum for effective corporate governance.

        In January 2018, our Board approved a leadership succession plan for the Company. Pursuant to the plan, Mr. Foster, co-founder of Main Street, and who has served as Chairman and Chief Executive Officer since the 2007 initial public offering, will transition the role and responsibility of Chief Executive Officer to Mr. Hyzak, with this transition planned to occur in the fourth quarter of this year. Mr. Foster will then continue to serve as Executive Chairman of the Main Street Board and will work closely with Mr. Hyzak to ensure a smooth transition. This transfer of leadership responsibility is the cornerstone of the Board of Director's long term management succession planning process for the Company. Further, it is the Board's desire that Mr. Foster continue to serve on the Board long term and eventually transition to independent Chairman.

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        Our Board of Directors designated Arthur L. French as Lead Independent Director to preside at all executive sessions of non-management directors. In the Lead Independent Director's absence, the remaining non-management directors may appoint a presiding director by majority vote. The non-management directors meet in executive session without management on a regular basis. The Lead Independent Director also has the responsibility of consulting with management on Board and committee meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the Chairman and Chief Executive Officer and facilitating collaboration and communication between the non-management directors and management. Stockholders or other interested persons may send written communications to Arthur L. French, addressed to Lead Independent Director, c/o Main Street Capital Corporation, Corporate Secretary's Office, 1300 Post Oak Blvd., 8th Floor, Houston, Texas 77056.

Board of Directors and its Committees

        Board of Directors.    Our Board of Directors met four times and acted by unanimous written consent fifteen times during 2017. All directors attended 100% of the meetings of the Board of Directors and of the committees on which they served during 2017, and all eight directors at the time attended the 2017 annual meeting of stockholders in person. Our Board of Directors expects each director to make a diligent effort to attend all Board and committee meetings, as well as each annual meeting of stockholders.

        Committees.    Our Board of Directors currently has, and appoints the members of, standing Audit, Compensation and Nominating and Corporate Governance Committees. Each of those committees is comprised entirely of independent directors and has a written charter approved by our Board of Directors. The current members of the committees are identified in the following table.

 
  Board Committees
Director
  Audit   Compensation   Nominating and
Corporate
Governance

Michael Appling Jr. 

  ý       ý

Valerie L. Banner

          ý

Joseph E. Canon

      ý   Chair

Arthur L. French

      Chair    

J. Kevin Griffin

  Chair       ý

John E. Jackson

  ý   ý    

Brian E. Lane

      ý   ý

Stephen B. Solcher

  ý        

        Audit Committee.    During the year ended December 31, 2017, the Audit Committee met four times. The Audit Committee is responsible for selecting, engaging and discharging our independent accountants, reviewing the plans, scope and results of the audit engagement with our independent accountants, approving professional services provided by our independent accountants (as well as the compensation for those services), reviewing the independence of our independent accountants and reviewing the adequacy of our internal control over financial reporting. In addition, the Audit Committee is responsible for assisting our Board of Directors with its review and approval of the determination of the fair value of our investments. Our Board of Directors has determined that each of Messrs. Appling, Griffin, Jackson and Solcher is an "Audit Committee financial expert" as defined by the Securities and Exchange Commission, or the SEC. For more information on the backgrounds of these directors, see their biographical information under "Election of Directors" above.

        Compensation Committee.    During the year ended December 31, 2017, the Compensation Committee met four times and acted by unanimous written consent four times. The Compensation

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Committee determines the compensation and related benefits for our executive officers including the amount of salary, bonus and stock-based compensation to be included in the compensation package for each of our executive officers. In addition, the Compensation Committee assists the Board of Directors in developing and evaluating the compensation of our non-management directors and evaluating succession planning with respect to the chief executive officer and other key executive positions. The Compensation Committee has the authority to engage the services of outside advisers, experts and others as it deems necessary to assist the committee in connection with its responsibilities. The actions of the Compensation Committee are generally reviewed and ratified by the entire Board of Directors, except the employee directors do not vote with respect to their compensation.

        Nominating and Corporate Governance Committee.    During the year ended December 31, 2017, the Nominating and Corporate Governance Committee met four times. The Nominating and Corporate Governance Committee is responsible for determining criteria for service on our Board of Directors, identifying, researching and recommending to the Board of Directors director nominees for election by our stockholders, selecting nominees to fill vacancies on our Board of Directors or a committee of the Board, developing and recommending to our Board of Directors any amendments to our corporate governance principles and overseeing the self-evaluation of our Board of Directors and its committees.

Compensation Committee Interlocks and Insider Participation

        Each member of the Compensation Committee is independent for purposes of the applicable listing standards of the New York Stock Exchange. During the year ended December 31, 2017, no member of the Compensation Committee was an officer, former officer or employee of ours or had a relationship disclosable under "Certain Relationships and Related Party Transactions," except as disclosed therein. No interlocking relationship, as defined by the rules adopted by the SEC, existed during the year ended December 31, 2017 between any member of the Board of Directors or the Compensation Committee and an executive officer of Main Street.

Director Nomination Process

        Our Nominating and Corporate Governance Committee has determined that a candidate for election to our Board of Directors must satisfy certain general criteria, including, among other things:

        The Nominating and Corporate Governance Committee seeks to identify potential director candidates who will strengthen the Board of Directors and will contribute to the overall mix of general criteria identified above. In addition to the general criteria, the Nominating and Corporate Governance Committee considers specific criteria, such as particular skills, experiences (whether in business or in

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other areas such as public service, academia or scientific communities), areas of expertise, specific backgrounds, and other characteristics, that should be represented on the Board of Directors to enhance its effectiveness and the effectiveness of its committees. The Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity; however, the Board and the Nominating and Corporate Governance Committee believe that it is essential that the Board members represent diverse experience and viewpoints and a diverse mix of the specific criteria above. The process of identifying potential director candidates includes establishing procedures for soliciting and reviewing potential nominees from directors and for advising those who suggest nominees of the outcome of such review. The Nominating and Corporate Governance Committee also has the authority to retain and terminate any search firm used to identify director candidates.

        Any stockholder may nominate one or more persons for election as one of our directors at an annual meeting of stockholders if the stockholder complies with the notice, information and consent provisions contained in our bylaws and any other applicable law, rule or regulation regarding director nominations. When submitting a nomination to our Company for consideration, a stockholder must provide certain information that would be required under applicable SEC rules, including the following minimum information for each director nominee: full name, age and address; number of any shares of our stock beneficially owned by the nominee, if any; the date such shares were acquired and the investment intent of such acquisition; whether such stockholder believes the nominee is an "interested person" of our Company, as defined in 1940 Act; and all other information required to be disclosed in solicitations of proxies for election of directors in an election contest or is otherwise required, including the nominee's written consent to being named in the proxy statement as a nominee and to serving as a director if elected. See "Stockholders' Proposals" in our 2018 proxy statement and our bylaws for other requirements of stockholder proposals.

        The Nominating and Corporate Governance Committee will consider candidates identified through the processes described above, and will evaluate each of them, including incumbents, based on the same criteria. The Nominating and Corporate Governance Committee also takes into account the contributions of incumbent directors as Board members and the benefits to us arising from their experience on our Board of Directors. Although the Nominating and Corporate Governance Committee will consider candidates identified by stockholders, the Nominating and Corporate Governance Committee may determine not to recommend those candidates to our Board of Directors, and our Board of Directors may determine not to nominate any candidates recommended by the Nominating and Corporate Governance Committee. No director nominee named in our 2018 proxy statement was nominated by stockholders.

Board's Role in the Oversight of Risk Management

        Our Board of Directors as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant Board committees that report on their deliberations to the full Board. The oversight responsibility of the Board and its committees is enabled by management reporting processes that are designed to provide visibility to the Board about the identification, assessment and management of critical risks and management's risk mitigation strategies. Areas of focus include competitive, economic, operational, financial (accounting, credit, liquidity and tax), legal, regulatory, compliance and other risks. The Board and its committees oversee risks associated with

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their respective principal areas of focus, as summarized below. Committees meet in executive session with key management personnel regularly and with representatives of outside advisors as necessary.

Board/Committee
  Primary Areas of Risk Oversight

Full Board

  Strategic, financial and execution risks and exposures associated with the annual operating plan and five-year strategic plan; major litigation and regulatory exposures and other current matters that may present material risk to our operations, plans, prospects or reputation; material acquisitions and divestitures.

Audit Committee

 

Risks and exposures associated with financial matters, particularly investment valuation, financial reporting and disclosure, tax, accounting, oversight of independent accountants, internal control over financial reporting, financial policies and credit and liquidity matters, along with information technology systems and policies including data privacy and security and business continuity and operational risks.

Compensation Committee

 

Risks and exposures associated with leadership assessment, senior management succession planning, executive and director compensation programs and arrangements, including incentive plans, and compensation related regulatory compliance.

Nominating and Corporate Governance Committee

 

Risks and exposures relating to our programs and policies relating to legal compliance, corporate governance, and director nomination, evaluation and succession planning.

COMPENSATION OF DIRECTORS

        The following table sets forth the compensation that we paid during the year ended December 31, 2017 to our non-employee directors. Directors who are also employees of Main Street or any of its subsidiaries do not receive compensation for their services as directors.

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Director Compensation Table

Name
  Fees Earned or
Paid in Cash(2)
  Stock
Awards(3)
  Total  

Arthur L. French

  $ 227,500   $ 29,987   $ 257,487  

Michael Appling Jr. 

    187,500     29,987     217,487  

Valerie L. Banner(1)

    88,000     30,007     118,007  

Joseph E. Canon

    190,000     29,987     219,987  

J. Kevin Griffin

    205,000     29,987     234,987  

John E. Jackson

    190,000     29,987     219,987  

Brian E. Lane

    182,500     29,987     212,487  

Stephen B. Solcher

    182,500     29,987     212,487  

(1)
Ms. Banner was appointed to the Board on October 31, 2017 to fill a newly created vacancy.

(2)
Non-employee directors may elect to defer a portion of their annual cash retainers under the Main Street Capital Corporation Deferred Compensation Plan (the "2015 Deferred Compensation Plan"). Amounts deferred under the plan earn a return based on the returns on certain investment alternatives permitted under the plan, including phantom Main Street stock units, as designated by the participant. The following table sets forth information regarding the activity during 2017 related to the accounts of our non-employee directors under the 2015 Deferred Compensation Plan:
Name
  Aggregate
Balance at
December 31,
2016
  2017
Director
Contributions
  2017
Company
Contributions
  2017
Aggregate
Earnings
  2017
Aggregate
Withdrawals/
Distributions
  Aggregate
Balance at
December 31,
2017
 

Arthur L. French

  $ 392,249   $ 75,000       $ 64,957       $ 532,206  

Michael Appling Jr

    377,164     67,500         62,287         506,951  

Valerie L. Banner

        88,000         39         88,039  

Joseph E. Canon

    565,758     190,000         96,739         852,497  

J. Kevin Griffin

    430,746     100,000         75,360         606,106  

John E. Jackson

    340,489     80,000         56,940         477,429  

Brian E. Lane

    133,547     70,000         23,773         227,320  

Stephen B. Solcher

    163,503     91,250         29,312         284,065  
(3)
Each of Messrs. French, Appling, Canon, Griffin, Jackson, Lane and Solcher received an award of 743 restricted shares on May 2, 2017, and Ms. Banner received an award of 747 restricted shares on October 31, 2017, under the Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan (the "Non-Employee Director Plan"), which will vest 100% on April 30, 2018, the day of the annual meeting since the prior day is not a business day, provided that the grantee has been in continuous service as a member of the Board through such date. These amounts represent the grant date fair value of the 2017 stock awards in accordance with FASB ASC Topic 718 based on the closing price of our common stock on the date of grant. Dividends paid on restricted stock awards are reflected in the grant date fair value and, therefore, are not shown in the table. Pursuant to SEC rules, the amounts shown exclude the impact of any estimated forfeitures related to service-based vesting conditions. These amounts may not correspond to the actual value that will be recognized by our directors upon vesting. Each of Messrs. French, Appling, Canon, Griffin, Jackson, Lane and Solcher had 743, and Ms. Banner had 747, unvested shares of restricted stock outstanding as of December 31, 2017. Please see the discussion of the assumptions made in the valuation of these awards in Note L to the audited consolidated financial statements included in this prospectus.

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        The compensation for non-employee directors for 2017 was comprised of cash compensation paid to or earned by directors in connection with their service as a director. That cash compensation consisted of an annual retainer of $170,000, and an additional $40,000 retainer for the Lead Independent Director. Non-employee directors do not receive fees based on meetings attended absent circumstances that require an exceptionally high number of meetings within an annual period. We also reimburse our non-employee directors for all reasonable expenses incurred in connection with their service on our Board. The chairpersons and members of our Board committees received additional annual retainers for 2017 as follows:

        The Non-Employee Director Plan provides a means through which we may attract and retain qualified non-employee directors to enter into and remain in service on our Board of Directors. Under the Non-Employee Director Plan, at the beginning of each one-year term of service on our Board of Directors, each non-employee director receives a number of shares equivalent to $30,000 based on the closing price of a share of our common stock on the New York Stock Exchange (or other exchange on which our shares are then listed) on the date of grant. These shares are subject to forfeiture provisions that will lapse as to an entire award at the end of the one-year term.

        In November 2015, our Board of Directors approved and adopted the 2015 Deferred Compensation Plan. The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted and approved by the Board in 2013. Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units.

        For the beneficial ownership of our common stock by each of our directors and the dollar range value of such ownership, please see "Control Persons and Principal Stockholders".

COMPENSATION DISCUSSION AND ANALYSIS

        The following Compensation Discussion and Analysis, or CD&A, provides information relating to the compensation of Main Street's Named Executive Officers, or NEOs, for 2017, who were:

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Compensation Philosophy and Objectives

        The Main Street compensation system was developed by the Compensation Committee and approved by all independent directors. The system is designed to attract and retain key executives, motivate them to achieve the Company's business objectives and reward them for performance while aligning management's interests with those of the Company's stockholders. The structure of Main Street's incentive compensation programs is formulated to encourage and reward the following, among other things:

        The Compensation Committee has the primary authority to establish compensation for the NEOs and other key employees and administers all executive compensation arrangements and policies. Main Street's Chief Executive Officer assists the Committee by providing recommendations regarding the compensation of NEOs and other key employees, excluding himself. The Committee exercises its discretion by modifying or accepting these recommendations. The Chief Executive Officer routinely attends a portion of the Committee meetings. However, the Committee often meets in executive session without the Chief Executive Officer or other members of management when discussing compensation matters and on other occasions as determined by the Committee.

        The compensation packages for Main Street NEOs and other key employees are structured to reflect the Compensation Committee's commitment to corporate governance best practices and performance-oriented executive compensation. Specifically, the Compensation Committee has implemented the following practices for NEOs and other key employees:

        The Compensation Committee takes into account competitive market practices with respect to the salaries and total direct compensation of the NEOs and other key employees. Members of the Committee consider market practices by reviewing public and non-public information for executives at comparable companies and funds. The Committee also has the authority to utilize compensation consultants to better understand competitive pay practices and has retained such expertise in the past.

Independent Compensation Consultant

        The Compensation Committee has from time to time engaged independent compensation consultants to assist the Committee and provide advice on a variety of compensation matters relating to NEO, other key employee and independent director compensation, incentive compensation plans and compensation trends, best practices and regulatory matters. Any such compensation consultants are hired by and report directly to the Compensation Committee. Although compensation consultants may work directly with management on behalf of the Compensation Committee, any such work is under the control and supervision of the Compensation Committee. The Compensation Committee did not retain

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any independent compensation consultants or pay any fees for compensation consulting services for fiscal 2017.

Assessment of Market Data

        In assessing the competitiveness of executive compensation levels, the Compensation Committee analyzes market data of certain companies, including internally managed business development companies, or BDCs, private equity firms and other asset management and financial services companies. This analysis focuses on key elements of compensation practices in general, and more specifically, the compensation practices at companies and funds reasonably comparable in asset size, typical investment size and type, market capitalization and general business scope as compared to the Company.

        As regards other internally managed BDCs like Main Street, the Compensation Committee considers the compensation practices and policies pertaining to executive officers as detailed in their company's respective proxies, research analysts' reports and other publicly available information. However, there are relatively few internally managed BDCs and none that are directly comparable to the Company as regards business strategies, assets under management, typical investment size and type and market capitalization. Moreover, regarding the compensation and retention of executive talent, the Company also competes with private equity funds, mezzanine debt funds, hedge funds and other types of specialized investment funds. Since these funds are generally private companies that are not required to publicly disclose their executive compensation practices and policies, the Committee relies on third party compensation surveys as well as other available information to compare compensation practices and policies.

        Items taken into account from comparable companies and funds include, but are not necessarily limited to, base compensation, bonus compensation, stock option awards, restricted stock awards, carried interest and other compensation. In addition to actual levels of cash and equity related compensation, the Compensation Committee also considers other approaches comparable companies are taking with regard to overall executive compensation practices. Such items include, but are not necessarily limited to, the use of employment agreements for certain employees, the mix of cash and equity compensation, the use of third party compensation consultants and certain corporate and executive performance measures that are established to achieve longer term total return for stockholders. Finally, in addition to analyzing comparable companies and funds, the Committee also evaluates the relative cost structure of the Company as compared to the entire BDC sector, including internally and externally managed BDCs, as well as other private funds.

Assessment of Company Performance

        The Compensation Committee believes that sustained financial performance coupled with consistent stockholders' returns as well as proportional employee compensation are essential components for Main Street's long-term business success. Main Street typically makes three to seven year investments in its portfolio companies. However, the Company's business plan involves taking on investment risks over a range of time periods. Accordingly, much emphasis is focused on maintaining the stability of net asset values as well as the continuity of earnings to pass through to stockholders in the form of recurring dividends. The quality of the earnings supporting the dividends as well as the maintenance and growth of dividends are key metrics in the Committee's assessment of financial performance.

        Main Street's primary strategy is to generate current income from debt investments and to realize capital gains from equity-related investments. This income supports the payment of dividends to stockholders. The recurring payment of dividends requires a methodical investment acquisition approach and active monitoring and management of the investment portfolio over time. A meaningful

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part of the Company's employee base is dedicated to the maintenance of asset values and expansion of this recurring income to sustain and grow dividends. The Committee believes that stability of the management team is critical to achieving successful implementation of the Company's strategies. Further, the Committee, in establishing and assessing executive salary and performance incentives, is more focused on Main Street results as compared to its business objectives rather than the performance of Main Street relative to other comparable companies or industry metrics.

Executive Compensation Components

        For 2017, the components of Main Street's direct compensation program for NEOs included:

        The Compensation Committee designs each NEO's direct compensation package to appropriately reward the NEO for his or her contribution to the Company. The judgment and experience of the Committee are weighed with individual and Company performance metrics and consultation with the Chief Executive Officer (except with respect to himself) to determine the appropriate mix of compensation for each individual. The Compensation Committee does not target a specific level of compensation relative to market practice, and only uses such data as a reference point when establishing compensation levels for NEOs. Cash compensation consisting of base salary and discretionary bonuses tied to achievement of individual performance goals that are reviewed and approved by the Committee, as well as corporate objectives, are intended to motivate NEOs to remain with the Company and work to achieve expected business objectives. Stock-based compensation is awarded based on performance expectations approved by the Committee for each NEO. The blend of short-term and long-term compensation may be adjusted from time to time to balance the Committee's views regarding the benefits of current cash compensation and appropriate retention incentives.

        Base salary is used to recognize the experience, skills, knowledge and responsibilities required of the NEOs in their roles. In connection with establishing the base salary of each NEO, the Compensation Committee and management consider a number of factors, including the seniority and experience level of the individual, the functional responsibilities of the position, the experience level of the individual, the Company's ability to replace the executive, the past base salary of the individual and the relative number of well-qualified candidates available in the area. In addition, the Committee considers publicly available information regarding the base salaries paid to similarly situated executive officers and other competitive market practices.

        The salaries of the NEOs are reviewed on an annual basis, as well as at the time of promotion or any substantial change in responsibilities. The key factors in determining increases in salary level are relative performance and competitive pressures.

        Annual cash bonuses are intended to reward individual performance on an annual basis and can therefore be variable from year to year. Cash bonus awards for the NEOs are determined by the Compensation Committee on a discretionary basis based on performance criteria, particularly the Company's dividend performance as well as corporate and individual performance goals and other measures established by the Committee with the Chief Executive Officer's input (except with respect to

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his own performance criteria). Should actual performance exceed expected performance criteria, the Committee may adjust individual cash bonuses to take such superior performance into account.

        Main Street's Board of Directors and stockholders approved the 2015 Equity and Incentive Plan in May 2015 to provide stock-based awards as long-term incentive compensation to employees, including the NEOs. The Company uses stock-based awards to (i) attract and retain key employees, (ii) motivate employees by means of performance-related incentives to achieve long-range performance goals, (iii) enable employees to participate in the Company's long-term growth in value and (iv) link employees' compensation to the long-term interests of stockholders. At the time of each award, the Compensation Committee will determine the terms of the award, including any performance period (or periods) and any performance objectives relating to vesting of the award. Prior to the adoption of the 2015 Equity and Incentive Plan, stock-based awards to employees were made under and are governed by the 2008 Equity Incentive Plan. Terms of the 2008 Equity Incentive Plan are substantially similar to the 2015 Equity and Incentive Plan. After adoption of the 2015 Equity and Incentive Plan no further awards have or will be granted under the 2008 Equity Incentive Plan.

        Restricted Stock.    Main Street has received exemptive relief from the SEC that permits the Company to grant restricted stock in exchange for or in recognition of services by its executive officers and employees. Pursuant to the 2015 Equity and Incentive Plan, the Compensation Committee may award shares of restricted stock to plan participants in such amounts and on such terms as the Committee determines in its sole discretion, provided that such awards are consistent with the conditions set forth in the SEC's exemptive order. Each restricted stock grant will be for a fixed number of shares as set forth in an award agreement between the grantee and Main Street. Award agreements will set forth time and/or performance vesting schedules and other appropriate terms and/or restrictions with respect to awards, including rights to dividends and voting rights. Beginning in 2015, the Committee awarded restricted stock awards to employees, including NEOs, which vest in equal increments over a three year time frame based on continued service during the vesting period. The Committee's previous practice had been to award restricted stock to employees which vested over a four year time frame. The change to the vesting period was made to be more closely aligned with comparable companies.

        Options.    The Compensation Committee may also grant stock options to purchase Main Street's common stock (including incentive stock options and nonqualified stock options). The Committee expects that any options granted will represent a fixed number of shares of common stock, will have an exercise price equal to the fair market value of common stock on the date of grant, and will be exercisable, or "vested," at some later time after grant. Certain stock options may provide for vesting based on the grantee remaining employed by Main Street for a time certain and/or the grantee and/or the Company attaining specified performance criteria. To date, the Committee has not granted stock options to any NEO.

        Main Street's NEOs generally participate in the same benefit plans and programs as the Company's other employees, including comprehensive medical, dental and vision insurance, short term and long term disability insurance and life insurance.

        Main Street maintains a 401(k) plan for all full-time employees who are at least 21 years of age through which the Company makes non-discretionary matching contributions to each participant's plan account on the participant's behalf. For each participating employee, the Company's contribution is a 100% match of the employee's contributions up to a 3% contribution level and a 50% match of the employee's contributions from a 3% to a 6% contribution level, with a maximum annual regular

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matching contribution of $12,150 during 2017. All contributions to the plan, including those made by the Company, vest immediately. The Board of Directors may also, at its sole discretion, provide that the Company will make additional contributions to employee 401(k) plan accounts, which would also vest immediately.

        In November 2015, our Board of Directors approved and adopted the 2015 Deferred Compensation Plan to allow non-employee directors and certain key employees, including each of the NEOs, to defer receipt of some or all of their cash compensation, subject to certain limitations. Although not currently anticipated and subject to prior Compensation Committee approval, discretionary employer contributions are also permitted to the 2015 Deferred Compensation Plan. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. The 2015 Deferred Compensation Plan became effective on January 1, 2016.

        The Company provides no other material benefits, perquisites or retirement benefits to the NEOs.

Potential Payments Upon Change in Control or Termination of Employment

        Unless the terms of an award provide otherwise, in the event of a specified transaction involving a "change in control" (as defined in the 2015 Equity and Incentive Plan) in which there is an acquiring or surviving entity, the Board of Directors may provide for the assumption of some or all outstanding awards, or for the grant of substitute awards, by the acquirer or survivor. In the event no such assumption or substitution occurs, each stock-based award, subject to its terms, will become fully vested or exercisable prior to the change in control on a basis that gives the holder of the award a reasonable opportunity, as determined by the Board of Directors, to participate as a stockholder in the change in control following vesting or exercise. The award will terminate upon consummation of the change in control.

        Transactions involving a "change in control" under the 2015 Equity and Incentive Plan include the following, other than where Main Street's stockholders continue to have substantially the same proportionate ownership in an entity which owns substantially all of Main Street's assets immediately following such transaction:

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        Our restricted stock awards also provide that upon a participant's death, disability, involuntary termination without cause or voluntary termination with good reason (each as defined in the award agreement), the unvested shares of restricted stock will fully vest. The number of shares and value of unvested restricted stock for each NEO as of December 31, 2017 that would have vested under the acceleration scenarios described above is shown under "Compensation of Executive Officers—Outstanding Equity Awards at Fiscal Year-End."

        In addition, NEOs who participate in the 2015 Deferred Compensation Plan could receive a distribution of their balances in that plan in connection with their death, disability or termination of employment, depending on their distribution elections under the plan. The aggregate balance in the 2015 Deferred Compensation Plan of each NEO as of December 31, 2017 is shown under "Compensation of Executive Officers—Nonqualified Deferred Compensation."

        Other than the accelerated vesting of restricted stock and amounts due under the 2015 Deferred Compensation Plan, we would not incur any other payment obligations to our NEOs in the event of a change in control or any of the aforementioned causes of termination of employment.

1940 Act Restrictions on Company Performance Based Compensation

        The 1940 Act provides that a BDC such as Main Street may maintain either an equity incentive plan or a "profit-sharing plan", but not both, for its NEOs and other employees. The Compensation Committee believes that equity incentives strongly align the interests of NEOs and employees with those of the Company's stockholders. Accordingly, Main Street has adopted and maintained equity incentive plans for its NEOs and employees since 2008. As a result, the 1940 Act prohibits Main Street from having a "profit-sharing plan."

        The term "profit-sharing plan" is defined very broadly in the 1940 Act but in this context is generally viewed as referring to incentive and other compensation being directly tied to a company's gross or net income or any other indicia of the company's overall financial performance, such as realized gains or losses and unrealized appreciation or depreciation on investments. In this regard, the SEC has indicated that a compensation program possesses profit-sharing characteristics if a company is obligated to make payments under the program based on company performance metrics.

        Due to these restrictions imposed by the 1940 Act, the Compensation Committee is not permitted to use nondiscretionary or formulaic Company performance goals or criteria to determine executive incentive compensation. Instead, the Committee considers overall Company performance along with other factors, including individual performance criteria, and uses its discretion in determining the appropriate compensation for NEOs and other key employees. The Compensation Committee's objective is to work within the 1940 Act regulatory framework to establish appropriate compensation levels, maintain pay-for-performance alignment and implement compensation best practices.

Tax Deductibility of Compensation

        Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a deduction to public companies to the extent of excess annual compensation over $1 million paid to certain executive officers, except to the extent compensation qualified as performance based compensation within the meaning of Section 162(m). Section 162(m) was amended and expanded by tax legislation enacted at the end of 2017. For amounts paid in 2018 and later years, the Section 162(m) deduction

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limit applies to an expanded group of executive officers and former executive officers, with limited exceptions. In addition, the exception for performance-based compensation is no longer available starting in 2018. Accordingly, annual cash bonuses to be paid for 2018 performance as well as equity awards granted in 2018 and beyond will no longer qualify as performance-based compensation and will be subject to the deduction limits of Section 162(m). Therefore, to the extent any of these executive officers are paid compensation in excess of $1,000,000 for any year after 2017, Main Street generally cannot deduct the compensation for U.S. federal income tax purposes.

        For years before 2018, Main Street's general policy, where consistent with business objectives, was to preserve the deductibility of executive officer compensation and structured compensation programs accordingly. Going forward and in part as a result of the newly enacted tax legislation the Compensation Committee may authorize amounts and forms of compensation that might not be deductible if the Committee deems such to be in the best interests of Main Street and its stockholders.

Stockholder Advisory Vote on Executive Compensation

        At our 2017 annual meeting of stockholders, our stockholders provided an advisory vote with 91% of the votes cast approving our compensation philosophy, policies and procedures and the 2016 fiscal year compensation of our NEOs (the "Advisory Vote"). Subsequently, the Compensation Committee considered the results of the Advisory Vote in determining compensation policies and decisions of the Company. The Advisory Vote affected the Company's executive compensation decisions and policies by reaffirming the Company's compensation philosophies, and the Compensation Committee will continue to use these philosophies and past practice in determining future compensation decisions.

2017 Compensation Determination

        The Compensation Committee analyzed the competitiveness of the components of compensation described above on both an individual and aggregate basis. The Committee believes that the total compensation paid to the NEOs for the fiscal year ended December 31, 2017, is consistent with the overall objectives of Main Street's executive compensation program.

        The Compensation Committee annually reviews the base salary of each executive officer, including each NEO, and determines whether or not to increase it in its sole discretion. Increases to base salary can be awarded to recognize, among other things, relative performance, relative cost of living and competitive pressures.

        In 2017, the Compensation Committee approved base salary increases for each NEO in recognition each NEO's and the Company's performance for the year and also to more closely align each NEO's compensation with similar executive officers of comparable companies.

        The amount of annual base salary paid to each NEO for 2017 is presented under the caption entitled "Compensation of Executive Officers—Summary Compensation Table." The Committee believes that the salary changes and resulting base salaries were competitive in the market place and appropriate for Main Street executives as a key component of an overall compensation package.

        Cash bonuses are determined annually by the Compensation Committee and are based on individual and corporate performance objectives coupled with Committee discretion as appropriate. The

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2017 performance criteria used for determining the cash bonuses for NEOs included, among other things, the following:

        The Company paid cash bonuses to NEOs for 2017 performance in recognition of Main Street's strong financial results, including total stockholder return of 16.0%. The NEOs contributed significantly to the Company's performance. Major achievements considered by the Compensation Committee included increased distributable net investment income per share, increased regular monthly dividends per share, favorable total stockholder return, increased net asset value per share, growth of the investment portfolio, continuation of the Company's low total operating cost structure in comparison to peer organizations, maintaining an investment grade rating from Standard & Poor's Ratings Services, further improving the Company's overall capital structure through its November 2017 investment grade debt offering, low employee turnover, expansion of the Company's third party asset management business and development of talented personnel. The Compensation Committee did not weight these achievements and used discretion in determining the cash bonus amount allocated to each executive. In summary, the performance of the NEO group and the management team overall was at a consistent high level in 2017 resulting in excellent financial results.

        The amount of cash bonus paid to each NEO for 2017 is presented under the caption entitled "Compensation of Executive Officers—Summary Compensation Table." The Committee believes that these cash bonus awards are individually appropriate based on 2017 performance. Such bonuses comprise a key component of the Company's overall compensation program.

        The Company granted restricted shares to our NEOs in 2017 to recognize individual contributions to corporate strategic priorities and to the long-term performance of the Company. Other objectives of restricted stock awards were to assist with retention, align NEO interests with stockholders' and to provide competitive total direct compensation. Contributions to the future success of the Company include expanded roles of NEOs within the Company, recruitment and development of personnel, advancement of strategic initiatives with benefits beyond the current year, development of appropriate capital structure alternatives and enhancement of the Company's reputation with key constituents.

        The amount of restricted shares granted to each NEO in 2017 is presented under the caption entitled "Compensation of Executive Officers—Grants of Plan-Based Awards." The Committee is currently assessing the potential for long-term incentive compensation through grants of restricted shares to our NEOs for 2018, which are expected to be awarded in April 2018.

Risk Management and Compensation Policies and Practices

        We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company. In addition, the Compensation

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Committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks.

        The Compensation Committee has reviewed the elements of executive compensation to determine whether any portion of executive compensation encourages excessive risk taking and concluded:

        Finally, in addition to the factors described above, incentive compensation decisions include subjective considerations that restrain the influence of formulae or objective driven determinations that might lead to excessive risk taking.

COMPENSATION OF EXECUTIVE OFFICERS

        The following table summarizes the compensation of our Named Executive Officers, or NEOs, for the fiscal year ended December 31, 2017.

Summary Compensation Table

Name and Principal Position
  Year   Salary   Bonus(1)   Stock
Awards(2)
  All Other
Compensation(3)
  Total  

Vincent D. Foster

    2017   $ 608,750   $ 1,500,000   $ 1,781,107   $ 12,150   $ 3,902,007  

Chairman of the Board and

    2016     586,250     1,325,000     1,605,277     11,925     3,528,452  

Chief Executive Officer

    2015     568,750     1,300,000     1,556,595     11,925     3,437,270  

Dwayne L. Hyzak

    2017   $ 530,000   $ 1,200,000   $ 1,247,270   $ 12,150   $ 2,989,420  

Member of the Board, President, Chief

    2016     498,750     1,000,000     1,172,125     11,925     2,682,800  

Operating Officer and Senior Managing

    2015     435,000     850,000     1,154,887     11,925     2,451,812  

Director

                                     

David L. Magdol

    2017   $ 381,250   $ 900,000   $ 857,203   $ 12,150   $ 2,150,603  

Vice Chairman, Chief Investment Officer and

    2016     361,250     575,000     815,397     11,925     1,763,572  

Senior Managing Director

    2015     332,500     575,000     753,179     11,925     1,672,604  

Curtis L. Hartman

    2017   $ 381,250   $ 180,000   $ 857,203   $ 12,150   $ 1,430,603  

Vice Chairman, Chief Credit Officer and

    2016     361,250     525,000     815,397     11,925     1,713,572  

Senior Managing Director

    2015     332,500     625,000     803,416     11,925     1,772,841  

Brent D. Smith

    2017   $ 316,250   $ 450,000   $ 533,837   $ 12,150   $ 1,312,237  

Chief Financial Officer and Treasurer

    2016     300,000     415,000     509,607     11,925     1,236,532  

    2015     282,500     400,000         11,925     694,425  

(1)
These amounts reflect annual cash bonuses earned by the NEOs based on individual and corporate performance as determined by the Compensation Committee.

(2)
These amounts represent the fair value of restricted stock awards in accordance with FASB ASC Topic 718 based on the closing price of our common stock on the grant date. Dividends paid on restricted stock awards are reflected in the grant date fair value and, therefore, are not shown in the table. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. These amounts do not correspond to the actual value that will be recognized by our NEOs upon the vesting of such grants. Please see the discussion of the assumptions made in the valuation of these awards in Note L to the audited consolidated financial statements included in this prospectus.

(3)
These amounts reflect employer matching contributions we made to each NEO's account in our 401(k) plan.

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Grants of Plan-Based Awards

        The following table sets forth information regarding restricted stock awards granted to our NEOs in fiscal 2017:

Name
  Grant Date   Stock Awards;
Number of
Shares of
Stock(1)
  Grant Date
Fair Value
of Stock
Awards
 

Vincent D. Foster

    April 3, 2017     46,383   $ 1,781,107  

Dwayne L. Hyzak

    April 3, 2017     32,481     1,247,270  

David L. Magdol

    April 3, 2017     22,323     857,203  

Curtis L. Hartman

    April 3, 2017     22,323     857,203  

Brent D. Smith

    April 3, 2017     13,902     533,837  

(1)
Restricted stock grants to NEOs under the 2015 Equity and Incentive Plan in 2017 vest ratably over three years from the grant date, and all underlying shares are entitled to dividends and voting rights beginning on the grant date.

Outstanding Equity Awards at Fiscal Year-End

        The following table sets forth the awards of restricted stock for which forfeiture provisions have not lapsed and remain outstanding at December 31, 2017:

 
  Stock Awards  
Name
  Number of Shares of Stock That Have Not Vested(1)   Market Value of Shares of Stock That Have Not Vested(2)  

Vincent D. Foster

    108,631 (3) $ 4,315,910  

Dwayne L. Hyzak

    78,353 (4)   3,112,965  

David L. Magdol

    55,046 (5)   2,186,978  

Curtis L. Hartman

    53,192 (6)   2,113,318  

Brent D. Smith

    24,767 (7)   983,993  

(1)
No restricted stock awards have been transferred.

(2)
The market value of shares of stock that have not vested was determined based on the closing price of our common stock on the New York Stock Exchange at December 29, 2017.

(3)
49,409 shares will vest on April 1, 2018; 11,188 shares will vest on June 20, 2018; 32,573 shares will vest on April 1, 2019; and 15,461 shares will vest on April 1, 2020, subject in each case to the NEO still being employed by us on the respective vesting date.

(4)
35,813 shares will vest on April 1, 2018; 8,391 shares will vest on June 20, 2018; 23,322 shares will vest on April 1, 2019; and 10,827 shares will vest on April 1, 2020, subject in each case to the NEO still being employed by us on the respective vesting date.

(5)
24,279 shares will vest on April 1, 2018; 7,193 shares will vest on June 20, 2018; 16,133 shares will vest on April 1, 2019; and 7,441 shares will vest on April 1, 2020, subject in each case to the NEO still being employed by us on the respective vesting date.

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(6)
24,823 shares will vest on April 1, 2018; 4,795 shares will vest on June 20, 2018; 16,133 shares will vest on April 1, 2019; and 7,441 shares will vest on April 1, 2020, subject in each case to the NEO still being employed by us on the respective vesting date.

(7)
10,066 shares will vest on April 1, 2018; 10,067 shares will vest on April 1, 2019; and 4,634 shares will vest on April 1, 2020, subject in each case to the NEO still being employed by us on the respective vesting date.

Equity Awards Vested in Fiscal Year

        The following table sets forth information regarding shares of restricted stock for which forfeiture restrictions lapsed during the fiscal year ended December 31, 2017:

 
  Stock Awards  
Name
  Number of
Shares
Acquired on
Vesting(1)
  Value
Realized on
Vesting(2)
 

Vincent D. Foster

    56,606   $ 2,172,991  

Dwayne L. Hyzak

    42,421     1,628,443  

David L. Magdol

    31,972     1,227,271  

Curtis L. Hartman

    29,412     1,129,060  

Brent D. Smith

    9,904     380,179  

(1)
Number of shares acquired upon vesting is before withholding of vesting shares by the Company to satisfy tax withholding obligations.

(2)
Value realized upon vesting is based on the closing price of our common stock on the vesting date.

Nonqualified Deferred Compensation

        The following table sets forth information regarding the activity during the fiscal year ended December 31, 2017 related to the accounts of our NEOs under the 2015 Deferred Compensation Plan:

Name
  Aggregate
Balance at
December 31,
2016
  2017 Executive
Contributions(1)
  2017
Company
Contributions
  2017
Aggregate
Earnings(2)
  2017
Aggregate
Withdrawals/
Distributions
  Aggregate
Balance at
December 31,
2017(3)
 

Vincent D. Foster

  $ 63,280   $ 389,562       $ 69,589       $ 522,431  

Dwayne L. Hyzak

    92,535     138,849         36,295         267,679  

David L. Magdol

    92,570     171,693         43,571         307,834  

Curtis L. Hartman

    55,037     205,497         35,485         296,019  

Brent D. Smith

    33,528     48,494         8,927         90,949  

(1)
The 2017 Executive Contributions shown above include amounts reported in the "Salary" column of the Summary Compensation Table for 2017 as follows: $58,312 for Mr. Foster; $88,849 for Mr. Hyzak; and $36,521 for Mr. Magdol. The remaining amounts included in 2017 Executive Contributions shown above represent contributions from (i) dividends on unvested stock held by our NEOs and (ii) bonuses that accrued in 2016 but were paid in 2017. The dividends are not separately reported in the Summary Compensation Table but are included in the value shown in the "Stock Awards" column in the year of grant.

(2)
The 2017 Aggregate Earnings shown above represents earnings on amounts in the 2015 Deferred Compensation Plan during 2017. These amounts are not reported in the Summary Compensation Table.

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(3)
The Aggregate Balance at December 31, 2017 shown above includes amounts reported in the Summary Compensation Table for prior years as follows: $389,875 for Mr. Foster; $137,281 for Mr. Hyzak; $93,625 for Mr. Magdol; and $105,000 for Mr. Hartman.

        In November 2015, our Board of Directors approved and adopted the 2015 Deferred Compensation Plan, an unfunded, nonqualified deferred compensation plan, to allow non-employee directors and certain key employees, including each of the NEOs, to defer receipt of some or all of their cash compensation, subject to certain limitations. Pursuant to the 2015 Deferred Compensation Plan, executives may contribute on a pre-tax basis up to 100% of their salary, bonus and dividends paid on shares of unvested Company stock. Although not currently anticipated and subject to prior Compensation Committee approval, discretionary employer contributions are also permitted to the 2015 Deferred Compensation Plan. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan. Amounts deferred under the plan earn a return based on the returns on certain investment alternatives permitted under the plan, including phantom Main Street stock units, as designated by the participant. The 2015 Deferred Compensation Plan became effective on January 1, 2016.

Potential Payments Upon Change in Control or Termination of Employment

        As described in "Compensation Discussion and Analysis," our restricted stock awards to employees, including NEOs, provide that upon certain transactions involving a change in control, or upon a participant's death, disability, involuntary termination without cause or voluntary termination with good reason (each as defined in the award agreement), the unvested shares of restricted stock will fully vest. The number of shares and value of unvested restricted stock for each NEO as of December 31, 2017 that would have vested under the acceleration scenarios described above is shown under the heading "—Outstanding Equity Awards at Fiscal Year-End."

        In addition, NEOs who participate in the 2015 Deferred Compensation Plan could receive a distribution of their balances in that plan in connection with their death, disability or termination of employment, depending on their distribution elections under the plan. The aggregate balance in the 2015 Deferred Compensation Plan of each NEO as of December 31, 2017 is shown under the heading "—Nonqualified Deferred Compensation."

        Other than the accelerated vesting of restricted stock and amounts due under the 2015 Deferred Compensation Plan, we would not incur any other payment obligations to our NEOs in the event of a change in control or any of the aforementioned causes of termination of employment.

Chief Executive Officer Pay Ratio

        For 2017, our last completed fiscal year, the median of the annual total compensation of all of our employees (other than Mr. Foster, our Chief Executive Officer (our "CEO")) was $141,684, and the annual total compensation of our CEO, as reported in the Summary Compensation Table, was $3,902,007. Based on this information, our CEO's 2017 annual total compensation was approximately 28 times that of the median of the 2017 annual total compensation of all of our employees.

        We selected December 31, 2017 as the date used to identify our "median employee" whose annual total compensation was the median of the annual total compensation of all our employees (other than our CEO) for 2017. As of December 31, 2017, our employee population consisted of 58 individuals, all located in our Houston, Texas office. We compared the annual total compensation for our employee population in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, which included salary, bonus, stock awards and employer matching contributions to employee accounts in our 401(k) plan. In making this determination, we annualized the compensation of eight employees who were hired in 2017 but did not work for us the entire fiscal year.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        We have procedures in place for the review, approval and monitoring of transactions involving us and certain persons related to us. As a BDC, the 1940 Act restricts us from participating in transactions with any persons affiliated with us, including our officers, directors and employees and any person controlling or under common control with us, subject to certain exceptions.

        In the ordinary course of business, we enter into transactions with portfolio companies that may be considered related party transactions. We have implemented certain policies and procedures, both written and unwritten, to ensure that we do not engage in any prohibited transactions with any persons affiliated with us. If such affiliations are found to exist, we seek Board and/or appropriate Board committee review and approval or exemptive relief for such transactions, as appropriate.

        In addition, our Code of Business Conduct and Ethics, which is applicable to all of our employees, officers and directors, requires that all employees, officers and directors avoid any conflict, or the appearance of a conflict, between an individual's personal interests and our interests. Our Code of Business Conduct and Ethics is available at http://mainstcapital.com under "Corporate Governance—Governance Docs" in the "Investors" section of our website.


CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS

        The following table sets forth information with respect to the beneficial ownership of our common stock by:

        Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. There is no common stock subject to options that are currently exercisable or exercisable within 60 days of April 13, 2018. Percentage of beneficial ownership is based on 59,388,275 shares of common stock outstanding as of April 13, 2018.

        Unless otherwise indicated, to our knowledge, each stockholder listed below has sole voting and investment power with respect to the shares beneficially owned by the stockholder, and maintains an

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address c/o Main Street Capital Corporation. Our address is 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056.

 
  Shares Owned
Beneficially
 
Name
  Number   Percentage  

Independent Directors:

             

Michael Appling Jr. 

    126,480 (1)   *  

Valerie L. Banner

    3,004 (2)   *  

Joseph E. Canon

    67,370 (3)   *  

Arthur L. French

    62,891 (4)   *  

J. Kevin Griffin

    27,556 (5)   *  

John E. Jackson

    26,743 (6)   *  

Brian E. Lane

    8,888 (7)   *  

Stephen B. Solcher

    10,338 (8)   *  

Interested Directors:

             

Vincent D. Foster

    1,736,724 (9)   2.92%  

Dwayne L. Hyzak

    338,187     *  

Executive Officers:

             

David L. Magdol

    323,396     *  

Curtis L. Hartman

    250,284     *  

Jason B. Beauvais

    102,127     *  

Brent D. Smith

    49,156     *  

Nicholas T. Meserve

    54,584     *  

Shannon D. Martin

    42,431     *  

All Directors and Executive Officers as a Group (16 persons)

    3,230,159     5.44%  

*
Less than 1%

(1)
Includes 12,955 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(2)
Includes 2,250 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(3)
Includes 21,785 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(4)
Includes 46,548 shares of common stock held by Flying F, LLC, which are beneficially owned by Mr. French, and 13,600 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(5)
Includes 13,942 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(6)
Includes 1,222 shares of common stock held by Mr. Jackson's wife and 12,201 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment

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(7)
Includes 5,809 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(8)
Includes 7,259 phantom stock units under the 2015 Deferred Compensation Plan. The director has no investment or voting powers for phantom stock units held under the 2015 Deferred Compensation Plan.

(9)
Includes 186,141 shares of common stock held by family and charitable trusts. For each of these trusts, Mr. Foster acts as trustee, may from time to time direct the trustee to vote or dispose of these shares and/or holds a remainder interest therein.

        The Board of Directors has established stock ownership guidelines pursuant to which independent directors and certain key employees, including each executive officer listed in the table above, are required to achieve and maintain minimum levels of stock ownership. Our Corporate Governance and Stock Ownership Guidelines may be found at http://mainstcapital.com under "Corporate Governance—Governance Docs" in the "Investors" section of our website.

        Our insider trading policy prohibits our directors, officers and employees from holding shares of our common stock or other securities issued by us in a margin account, hedging any such securities or pledging any such securities as collateral for a loan except in limited cases with the pre-approval of our chief compliance officer.

        The following table sets forth, as of April 13, 2018, the dollar range of our equity securities that is beneficially owned by each of our directors.

 
  Dollar Range
of Equity
Securities
Beneficially
Owned(1)(2)(3)
 

Interested Directors:

       

Vincent D. Foster

  over $ 100,000  

Dwayne L. Hyzak

  over $ 100,000  

Independent Directors:

       

Michael Appling Jr. 

  over $ 100,000  

Valerie L. Banner

  over $ 100,000  

Joseph E. Canon

  over $ 100,000  

Arthur L. French

  over $ 100,000  

J. Kevin Griffin

  over $ 100,000  

John E. Jackson

  over $ 100,000  

Brian E. Lane

  over $ 100,000  

Stephen B. Solcher

  over $ 100,000  

(1)
Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Exchange Act.

(2)
The dollar range of equity securities beneficially owned by our directors is based on the closing price of our common stock on the New York Stock Exchange of $37.00 per share as of April 13, 2018.

(3)
The dollar ranges of equity securities beneficially owned are: none, $1-$10,000, $10,001-$50,000, $50,001-$100,000, or over $100,000.

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SALES OF COMMON STOCK BELOW NET ASSET VALUE

        Our stockholders may from time to time vote to allow us to issue common stock at a price below the net asset value (NAV) per share of our common stock. In such an approval, our stockholders may not specify a maximum discount below net asset value at which we are able to issue our common stock. In order to sell shares pursuant to such a stockholder authorization:

        We are also permitted to sell shares of common stock below NAV per share in rights offerings. Any offering of common stock below NAV per share will be designed to raise capital for investment in accordance with our investment objectives and business strategies.

        In making a determination that an offering below NAV per share is in our and our stockholders' best interests, our Board of Directors would consider a variety of factors including:

        We did not seek stockholder authorization to issue common stock at a price below net asset value per share at our 2017 annual meeting of stockholders, and we are not seeking such approval at our 2018 annual meeting of stockholders, because our common stock price per share has been trading significantly above the current net asset value per share of our common stock, but we may seek such authorization at future annual meetings or special meetings of stockholders.

        Sales by us of our common stock at a discount from NAV pose potential risks for our existing stockholders whether or not they participate in the offering, as well as for new investors who participate in the offering.

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        The following three headings and accompanying tables will explain and provide hypothetical examples on the impact of an offering at a price less than NAV per share on three different sets of investors:

Impact on Existing Stockholders who do not Participate in the Offering

        Our existing stockholders who do not participate in an offering below NAV per share or who do not buy additional shares in the secondary market at the same or lower price we obtain in the offering (after expenses and commissions) face the greatest potential risks. These stockholders will experience an immediate decrease (often called dilution) in the NAV of the shares they hold and their NAV per share. These stockholders will also experience a disproportionately greater decrease in their participation in our earnings and assets and their voting power than the increase we will experience in our assets, potential earning power and voting interests due to the offering. These stockholders may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discount to NAV increases.

        The following table illustrates the level of NAV dilution that would be experienced by a nonparticipating stockholder in four different hypothetical offerings of different sizes and levels of discount from NAV per share. Actual sales prices and discounts may differ from the presentation below.

        The examples assume that Company XYZ has 1,000,000 common shares outstanding, $15,000,000 in total assets and $5,000,000 in total liabilities. The current NAV and NAV per share are thus $10,000,000 and $10.00. The table illustrates the dilutive effect on nonparticipating Stockholder A of (1) an offering of 50,000 shares (5% of the outstanding shares) at $9.50 per share after offering expenses and commissions (a 5% discount from NAV), (2) an offering of 100,000 shares (10% of the outstanding shares) at $9.00 per share after offering expenses and commissions (a 10% discount from NAV), (3) an offering of 250,000 shares (25% of the outstanding shares) at $8.00 per share after offering expenses and commissions (a 20% discount from NAV) and (4) an offering of 250,000 shares (25% of the outstanding shares) at $0.01 per share after offering expenses and commissions (a 100% discount from NAV). The prospectus supplement pursuant to which any discounted offering is made

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will include a chart based on the actual number of shares in such offering and the actual discount to the most recently determined NAV.

 
   
  Example 1
5% Offering at
5% Discount
  Example 2
10% Offering at
10% Discount
  Example 3
25% Offering at
20% Discount
  Example 4
25% Offering at
100% Discount
 
 
  Prior to
Sale Below
NAV
  Following
Sale
  % Change   Following
Sale
  % Change   Following
Sale
  % Change   Following
Sale
  % Change  

Offering Price

                                                       

Price per Share to Public(1)

      $ 10.00       $ 9.47       $ 8.42       $ 0.01      

Net Proceeds per Share to Issuer

      $ 9.50       $ 9.00       $ 8.00       $ 0.01      

Increase in Shares and Decrease to NAV

                                                       

Total Shares Outstanding

    1,000,000     1,050,000     5.00%     1,100,000     10.00%     1,250,000     25.00%     1,250,000     25.00%  

NAV per Share

  $ 10.00   $ 9.98     (0.20)%   $ 9.91     (0.90)%   $ 9.60     (4.00)%   $ 8.00     (20.00)%  

Dilution to Nonparticipating Stockholder A

                                                       

Share Dilution

                                                       

Shares Held by Stockholder A

    10,000     10,000         10,000         10,000         10,000      

Percentage Outstanding Held by Stockholder A

    1.00%     0.95%     (4.76)%     0.91%     (9.09)%     0.80%     (20.00)%     0.80%     (20.00)%  

NAV Dilution

                                                       

Total NAV Held by Stockholder A

  $ 100,000   $ 99,800     (0.20)%   $ 99,100     (0.90)%   $ 96,000     (4.00)%   $ 80,000     (20.00)%  

Total Investment by Stockholder A (Assumed to be $10.00 per Share)

  $ 100,000   $ 100,000       $ 100,000       $ 100,000       $ 100,000      

Total Dilution to Stockholder A (Total NAV Less Total Investment)

        $ (200 )     $ (900 )     $ (4,000 )     $ (20,000 )    

NAV Dilution per Share

                                                       

NAV per Share Held by Stockholder A

        $ 9.98       $ 9.91       $ 9.60       $ 8.00      

Investment per Share Held by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale)

  $ 10.00   $ 10.00       $ 10.00       $ 10.00       $ 10.00      

NAV Dilution per Share Experienced by Stockholder A (NAV per Share Less Investment per Share)

        $ (0.02 )     $ (0.09 )     $ (0.40 )     $ (2.00 )    

Percentage NAV Dilution Experienced by Stockholder A (NAV Dilution per Share Divided by Investment per Share)

                (0.20)%           (0.90)%           (4.00)%           (20.00)%  

(1)
Assumes 5% in selling compensation and expenses paid by us.

Impact on Existing Stockholders who do Participate in the Offering

        Our existing stockholders who participate in an offering below NAV per share or who buy additional shares in the secondary market at the same or lower price as we obtain in the offering (after expenses and commissions) will experience the same types of NAV dilution as the nonparticipating stockholders, albeit at a lower level, to the extent they purchase less than the same percentage of the discounted offering as their interest in our shares immediately prior to the offering. The level of NAV dilution to such stockholders will decrease as the number of shares such stockholders purchase increases. Existing stockholders who buy more than their proportionate percentage will experience NAV dilution but will, in contrast to existing stockholders who purchase less than their proportionate share of the offering, experience an increase (often called accretion) in NAV per share over their investment per share and will also experience a disproportionately greater increase in their participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests due to the offering. The level of accretion will increase as the excess number of shares purchased by such stockholder increases. Even a stockholder who over-participates will, however, be subject to the risk that we may make additional discounted offerings in which such stockholder does not participate, in which case such a stockholder will experience NAV dilution as described above in such subsequent offerings. These stockholders may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and the level of discount to NAV increases.

        The following chart illustrates the level of dilution and accretion in the hypothetical 25% offering at a 20% discount from the prior chart (Example 3) for a stockholder that acquires shares equal to (1) 50% of its proportionate share of the offering (i.e., 1,250 shares, which is 0.5% of an offering of 250,000 shares rather than its 1.0% proportionate share) and (2) 150% of such percentage

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(i.e., 3,750 shares, which is 1.5% of an offering of 250,000 shares rather than its 1.0% proportionate share). The prospectus supplement pursuant to which any discounted offering is made will include a chart for this example based on the actual number of shares in such offering and the actual discount from the most recently determined NAV per share.

 
   
  50% Participation   150% Participation  
 
  Prior to
Sale Below
NAV
  Following
Sale
  % Change   Following
Sale
  % Change  

Offering Price

                               

Price per Share to Public(1)

      $ 8.42       $ 8.42      

Net Proceeds per Share to Issuer

      $ 8.00       $ 8.00      

Increase in Shares and Decrease to NAV

                               

Total Shares Outstanding

    1,000,000     1,250,000     25.00%     1,250,000     25.00%  

NAV per Share

  $ 10.00   $ 9.60     (4.00)%   $ 9.60     (4.00)%  

Dilution/Accretion to Participating Stockholder A

                               

Share Dilution/Accretion

                               

Shares Held by Stockholder A

    10,000     11,250     12.50%     13,750     37.50%  

Percentage Outstanding Held by Stockholder A

    1.00%     0.90%     (10.00)%     1.10%     10.00%  

NAV Dilution/Accretion

                               

Total NAV Held by Stockholder A

  $ 100,000   $ 108,000     8.00%   $ 132,000     32.00%  

Total Investment by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale)

      $ 110,525       $ 131,575      

Total Dilution/Accretion to Stockholder A (Total NAV Less Total Investment)

      $ (2,525 )     $ 425      

NAV Dilution/Accretion per Share

                               

NAV per Share Held by Stockholder A

      $ 9.60       $ 9.60      

Investment per Share Held by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale)

  $ 10.00   $ 9.82     (1.76)%   $ 9.57     (4.31)%  

NAV Dilution/Accretion per Share Experienced by Stockholder A (NAV per Share Less Investment per Share)

      $ (0.22 )     $ 0.03      

Percentage NAV Dilution/Accretion Experienced by Stockholder A (NAV Dilution/Accretion per Share Divided by Investment per Share)

            (2.28)%         0.32%  

(1)
Assumes 5% in selling compensation and expenses paid by us.

Impact on New Investors

        Investors who are not currently stockholders, but who participate in an offering below NAV and whose investment per share is greater than the resulting NAV per share due to selling compensation and expenses paid by us will experience an immediate decrease, albeit small, in the NAV of their shares and their NAV per share compared to the price they pay for their shares (Example 1 below). On the other hand, investors who are not currently stockholders, but who participate in an offering below NAV per share and whose investment per share is also less than the resulting NAV per share will experience an immediate increase in the NAV of their shares and their NAV per share compared to the price they pay for their shares (Examples 2, 3 and 4 below). These latter investors will experience a disproportionately greater participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests. These investors will, however, be subject to the risk that we may make additional discounted offerings in which such new stockholder does not participate, in which case such new stockholder will experience dilution as described above in such subsequent offerings. These investors may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discount to NAV increases.

        The following chart illustrates the level of dilution or accretion for new investors that would be experienced by a new investor in the same hypothetical discounted offerings as described in the first

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chart above. The illustration is for a new investor who purchases the same percentage (1.00%) of the shares in the offering as Stockholder A in the prior examples held immediately prior to the offering. The prospectus supplement pursuant to which any discounted offering is made will include a chart for these examples based on the actual number of shares in such offering and the actual discount from the most recently determined NAV per share.

 
   
  Example 1
5% Offering at
5% Discount
  Example 2
10% Offering at
10% Discount
  Example 3
25% Offering at
20% Discount
  Example 4
25% Offering at
100% Discount
 
 
  Prior to
Sale Below
NAV
  Following
Sale
  % Change   Following
Sale
  % Change   Following
Sale
  % Change   Following
Sale
  % Change  

Offering Price

                                                       

Price per Share to Public(1)

      $ 10.00       $ 9.47       $ 8.42       $ 0.01      

Net Proceeds per Share to Issuer

      $ 9.50       $ 9.00       $ 8.00       $ 0.01      

Increase in Shares and Decrease to NAV

                                                       

Total Shares Outstanding

    1,000,000     1,050,000     5.00%     1,100,000     10.00%     1,250,000     25.00%     1,250,000     25.00%  

NAV per Share

  $ 10.00   $ 9.98     (0.20)%   $ 9.91     (0.90)%   $ 9.60     (4.00)%   $ 8.00     (20.00)%  

Dilution/Accretion to New Investor A

                                                       

Share Dilution

                                                       

Shares Held by Investor A

        500         1,000         2,500         2,500      

Percentage Outstanding Held by Investor A

    0.00%     0.05%         0.09%         0.20%         0.20%      

NAV Dilution

                                                       

Total NAV Held by Investor A

      $ 4,990       $ 9,910       $ 24,000       $ 20,000      

Total Investment by Investor A (At Price to Public)

      $ 5,000       $ 9,470       $ 21,050       $ 25      

Total Dilution/Accretion to Investor A (Total NAV Less Total Investment)

      $ (10 )     $ 440       $ 2,950       $ 19,975      

NAV Dilution per Share

                                                       

NAV per Share Held by Investor A

        $ 9.98       $ 9.91       $ 9.60       $ 8.00      

Investment per Share Held by Investor A

      $ 10.00       $ 9.47       $ 8.42       $ 0.01      

NAV Dilution/Accretion per Share Experienced by Investor A (NAV per Share Less Investment per Share)

      $ (0.02 )     $ 0.44       $ 1.18       $ 7.99      

Percentage NAV Dilution/Accretion Experienced by Investor A (NAV Dilution/Accretion per Share Divided by Investment per Share)

            (0.20)%         4.65%         14.01%         79,900.00%  

(1)
Assumes 5% in selling compensation and expenses paid by us.

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DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN

        We have adopted a dividend reinvestment and direct stock purchase plan, or the Plan. The direct stock purchase feature of the Plan is designed to provide new investors and existing holders of our common stock with a convenient and economical method to purchase shares of our common stock and is described in more detail in a separate prospectus supplement. The dividend reinvestment feature of the Plan, or the dividend reinvestment plan, provides for the reinvestment of dividends on behalf of our registered stockholders who hold their shares with American Stock Transfer & Trust Company, LLC, the Plan Administrator and our transfer agent and registrar, or certain brokerage firms that have elected to participate in our dividend reinvestment plan, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our registered stockholders (or stockholders holding shares through participating brokerage firms) who have not properly "opted out" of the dividend reinvestment plan will have their cash dividend automatically reinvested into additional shares of our common stock.

        No action will be required on the part of a registered stockholder to have their cash dividends reinvested in shares of our common stock. A registered stockholder may elect to receive an entire dividend in cash by notifying the Plan Administrator in writing so that such notice is received by the Plan Administrator no later than three business days before the payment date for a particular dividend to stockholders. The Plan Administrator will set up an account for shares acquired through the dividend reinvestment plan for each registered stockholder who has not elected to receive dividends in cash and hold such shares in non-certificated form. Upon request by a stockholder participating in the dividend reinvestment plan, the Plan Administrator will issue a certificate registered in the participant's name for some of all of the whole shares of our common stock credited to a participant's account. Those stockholders whose shares are held by a broker or other financial intermediary may receive dividends in cash by notifying their broker or other financial intermediary of their election.

        The share requirements of the dividend reinvestment plan may be satisfied through the issuance of new shares of common stock or through open market purchases of common stock by the Plan Administrator. Newly-issued shares will be valued based upon the final closing price of our common stock on a valuation date determined for each dividend by our Board of Directors. Shares purchased in the open market to satisfy the dividend reinvestment plan requirements will be valued based upon the average price of the applicable shares purchased by the Plan Administrator, before any associated brokerage or other costs.

        There will be no brokerage charges or other charges for dividend reinvestment to stockholders who participate in the dividend reinvestment plan. We will pay the Plan Administrator's fees under the dividend reinvestment plan.

        Stockholders who receive dividends in the form of stock generally are subject to the same federal, state and local tax consequences as are stockholders who elect to receive their dividends in cash. A stockholder's basis for determining gain or loss upon the sale of stock received in a dividend from us will be equal to the total dollar amount of the dividend payable to the stockholder. Any stock received in a dividend will have a holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. stockholder's account.

        Participants may terminate their accounts under the dividend reinvestment plan by notifying the Plan Administrator via its website at www.astfinancial.com, by filling out the transaction request form located at the bottom of their statement and sending it to the Plan Administrator at 6201 15th Avenue, Brooklyn, New York 11219 or by calling the Plan Administrator at 1-866-706-8371.

        We may amend, modify, suspend or terminate the Plan, including the dividend reinvestment plan, at any time in our sole discretion. Participants will receive written notice of any material amendment, modification, suspension or termination. All correspondence concerning the plan should be directed to the Plan Administrator by mail at 6201 15th Avenue, Brooklyn, New York 11219 or by telephone at 1-866-706-8371.

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DESCRIPTION OF COMMON STOCK

        The following description is based on relevant portions of the Maryland General Corporation Law and on our articles of incorporation and bylaws. This summary may not contain all of the information that is important to you, and we refer you to the Maryland General Corporation Law and our articles of incorporation and bylaws for a more detailed description of the provisions summarized below.

        Under the terms of our articles of incorporation, our authorized capital stock consists of 150,000,000 shares of common stock, par value $0.01 per share. Set forth below is a chart describing the classes of our common stock outstanding as of April 18, 2018:

(1)   (2)   (3)   (4)  
Title of Class
  Amount
Authorized
  Amount Held
by us or for
Our Account
  Amount Outstanding
Exclusive of Amount
Under Column 3
 

Common Stock

    150,000,000         59,441,081  

        Under our articles of incorporation, our Board of Directors is authorized to classify and reclassify any unissued shares of stock into other classes or series of stock, and to cause the issuance of such shares, without obtaining stockholder approval. In addition, as permitted by the Maryland General Corporation Law, but subject to the 1940 Act, our articles of incorporation provide that the Board of Directors, without any action by our stockholders, may amend the articles of incorporation from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. Under Maryland law, our stockholders generally are not personally liable for our debts or obligations.

        All shares of our common stock have equal voting rights and rights to earnings, assets and distributions, except as described below. When shares are issued, upon payment therefor, they will be duly authorized, validly issued, fully paid and nonassessable. Distributions may be paid to the holders of our common stock if, as and when authorized by our Board of Directors and declared by us out of assets legally available therefore. Shares of our common stock have no conversion, exchange, preemptive or redemption rights. In the event of our liquidation, dissolution or winding up, each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time. Each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of our common stock will possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock will elect all of our directors, and holders of less than a majority of such shares will be unable to elect any director.

Limitation on Liability of Directors and Officers; Indemnification and Advance of Expenses

        Maryland law permits a Maryland corporation to include in its articles of incorporation a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our articles of incorporation contain such a provision that eliminates directors' and officers' liability to the maximum extent permitted by Maryland law, subject to the requirements of the 1940 Act.

        Our articles of incorporation require us, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while a director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or

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other enterprise as a director, officer, partner or trustee, from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her service in any such capacity, except with respect to any matter as to which such person shall have been finally adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his or her action was in our best interest or to be liable to us or our stockholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office.

        Our bylaws obligate us, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while a director or officer and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee and who is made, or threatened to be made, a party to a proceeding by reason of his or her service in any such capacity from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity, except with respect to any matter as to which such person shall have been finally adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his or her action was in our best interest or to be liable to us or our stockholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office. Our bylaws also require that, to the maximum extent permitted by Maryland law, we may pay certain expenses incurred by any such indemnified person in advance of the final disposition of a proceeding upon receipt of an undertaking by or on behalf of such indemnified person to repay amounts we have so paid if it is ultimately determined that indemnification of such expenses is not authorized under our bylaws.

        Maryland law requires a corporation (unless its articles of incorporation provide otherwise, which our articles of incorporation do not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or threatened to be made, a party by reason of his or her service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation's receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

        In addition, we have entered into Indemnity Agreements with our directors and executive officers. The Indemnity Agreements generally provide that we will, to the extent specified in the agreements and to the fullest extent permitted by the 1940 Act and Maryland law as in effect on the day the agreement is executed, indemnify and advance expenses to each indemnitee that is, or is threatened to be made, a party to or a witness in any civil, criminal or administrative proceeding. We will indemnify the indemnitee against all expenses, judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred in connection with any such proceeding unless it is established that (i) the act

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or omission of the indemnitee was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) the indemnitee actually received an improper personal benefit, or (iii) in the case of a criminal proceeding, the indemnitee had reasonable cause to believe his or her conduct was unlawful. Additionally, for so long as we are subject to the 1940 Act, no advancement of expenses will be made until (i) the indemnitee provides a security for his or her undertaking, (ii) we are insured against losses arising by reason of any lawful advances, or (iii) the majority of a quorum of our disinterested directors, or independent counsel in a written opinion, determine based on a review of readily available facts that there is reason to believe that the indemnitee ultimately will be found entitled to indemnification. The Indemnity Agreements also provide that if the indemnification rights provided for therein are unavailable for any reason, we will pay, in the first instance, the entire amount incurred by the indemnitee in connection with any covered proceeding and waive and relinquish any right of contribution we may have against the indemnitee. The rights provided by the Indemnity Agreements are in addition to any other rights to indemnification or advancement of expenses to which the indemnitee may be entitled under applicable law, our articles of incorporation, our bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment or repeal of the Indemnity Agreements will limit or restrict any right of the indemnitee in respect of any action taken or omitted by the indemnitee prior to such amendment or repeal. The Indemnity Agreements will terminate upon the later of (i) ten years after the date the indemnitee has ceased to serve as our director or officer, or (ii) one year after the final termination of any proceeding for which the indemnitee is granted rights of indemnification or advancement of expenses or which is brought by the indemnitee. The above description of the Indemnity Agreements is subject to, and is qualified in its entirety by reference to, all the provisions of the form of Indemnity Agreement.

        We have obtained primary and excess insurance policies insuring our directors and officers against certain liabilities they may incur in their capacity as directors and officers. Under such policies, the insurer, on our behalf, may also pay amounts for which we have granted indemnification to the directors or officers.

Provisions of the Maryland General Corporation Law and Our Articles of Incorporation and Bylaws

        The Maryland General Corporation Law and our articles of incorporation and bylaws contain provisions that could make it more difficult for a potential acquiror to acquire us by means of a tender offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our Board of Directors. We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.

        Our bylaws provide that in uncontested elections, directors are elected by a majority of the votes cast in the election of directors, such that a nominee for director will be elected to the Board of Directors if the votes cast for such nominee's election exceed the votes cast against such nominee's election. In a contested election (i.e., the number of nominees exceeds the number of directors to be elected), directors would be elected by a plurality of the votes cast in such election. Pursuant to our corporate governance guidelines, incumbent directors must agree to tender their resignation if they fail to receive the required number of votes for re-election, and in such event the Nominating and Corporate Governance Committee of our Board of Directors will act on an expedited basis to determine whether to accept the director's resignation and will submit such recommendation for prompt consideration by the Board of Directors. These procedures are described in more detail in our Corporate Governance and Stock Ownership Guidelines, which are available at http://mainstcapital.com under "Corporate Governance—Governance Docs" in the "Investors" section of our website. Pursuant to our articles of incorporation and bylaws, our Board of Directors may amend the bylaws to alter the vote required to elect directors.

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        Our articles of incorporation provide that the number of directors will be set only by the Board of Directors in accordance with our bylaws. Our bylaws provide that a majority of our entire Board of Directors may at any time increase or decrease the number of directors. However, unless the bylaws are amended, the number of directors may never be less than one or more than twelve. We have elected to be subject to the provision of Subtitle 8 of Title 3 of the Maryland General Corporation Law regarding the filling of vacancies on the Board of Directors. Accordingly, at such time, except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable requirements of the 1940 Act. Our articles of incorporation provide that a director may be removed only for cause, as defined in the articles of incorporation, and then only by the affirmative vote of at least two-thirds of the votes entitled to be cast in the election of directors.

        Under the Maryland General Corporation Law, stockholder action may be taken only at an annual or special meeting of stockholders or by unanimous consent in lieu of a meeting (unless the articles of incorporation provide for stockholder action by less than unanimous written consent, which our articles of incorporation do not). These provisions, combined with the requirements of our bylaws regarding the calling of a stockholder-requested special meeting of stockholders discussed below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.

        Our bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to the Board of Directors and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by the Board of Directors or (3) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of the bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of persons for election to the Board of Directors at a special meeting may be made only (1) pursuant to our notice of the meeting, (2) by the Board of Directors or (3) provided that the Board of Directors has determined that directors will be elected at the meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the bylaws.

        The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our Board of Directors a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by our Board of Directors, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do not give our Board of Directors any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders.

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        Our bylaws provide that special meetings of stockholders may be called by our Board of Directors and certain of our officers. Additionally, our bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders shall be called by our secretary upon the written request of stockholders entitled to cast not less than a majority of all of the votes entitled to be cast at such meeting.

        Under Maryland law, a Maryland corporation generally cannot dissolve, amend its articles of incorporation, merge, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business, unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its articles of incorporation for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Our articles of incorporation generally provide for approval of amendments to our articles of incorporation and extraordinary transactions by the stockholders entitled to cast at least a majority of the votes entitled to be cast on the matter. Our articles of incorporation also provide that certain amendments and any proposal for our conversion, whether by merger or otherwise, from a closed-end company to an open-end company or any proposal for our liquidation or dissolution requires the approval of the stockholders entitled to cast at least 75.0% of the votes entitled to be cast on such matter. However, if such amendment or proposal is approved by at least 75.0% of our continuing directors (in addition to approval by our Board of Directors), such amendment or proposal may be approved by the stockholders entitled to cast a majority of the votes entitled to be cast on such a matter. The "continuing directors" are defined in our articles of incorporation as our current directors, as well as those directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of the continuing directors then on the Board of Directors.

        Currently, our articles of incorporation and bylaws provide that the Board of Directors will have the exclusive power to make, alter, amend or repeal any provision of our bylaws. We are seeking stockholder approval at our 2018 annual meeting of stockholders to approve an amendment to our articles of incorporation to allow our stockholders to amend our bylaws by the affirmative vote of a majority of all votes entitled to be cast on the matter. If the amendment to our articles of incorporation is approved by our stockholders, we expect that our Board of Directors will similarly amend our bylaws.

        Except with respect to appraisal rights that may arise in connection with the Maryland Control Share Acquisition Act, or Control Share Act, discussed below, as permitted by the Maryland General Corporation Law, our articles of incorporation provide that stockholders will not be entitled to exercise appraisal rights.

        The Control Share Act provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power

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(except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power:

        The requisite stockholder approval must be obtained each time an acquiror crosses one of the thresholds of voting power set forth above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition means the acquisition of control shares, subject to certain exceptions.

        A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

        If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may repurchase for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to repurchase control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of stockholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

        The Control Share Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the articles of incorporation or bylaws of the corporation.

        We are not currently subject to the Control Share Act since our bylaws contain a provision exempting from the Control Share Act any and all acquisitions by any person of our shares of stock. There can be no assurance that such provision will not be otherwise amended or eliminated at any time in the future. It is our understanding that it is the view of the SEC staff that amending our bylaws to subject us to the Control Share Act is inconsistent with 1940 Act Section 18(i), made applicable to BDCs by Section 61 thereunder.

        However, we will amend our bylaws to be subject to the Control Share Act only if the Board of Directors determines that it would be in our best interests and if the staff of the SEC permits us to do so after we determine that our being subject to the Control Share Act does not conflict with the 1940 Act.

        Under the Maryland Business Combination Act, or the Business Combination Act, "business combinations" between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger,

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consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:

        A person is not an interested stockholder under this statute if the board of directors approved in advance the transaction by which such stockholder otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

        After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:

        These super-majority vote requirements do not apply if the corporation's common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

        The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors before the time that the interested stockholder becomes an interested stockholder. Our Board of Directors has adopted a resolution exempting any business combination between us and any other person from the provisions of the Business Combination Act, provided that the business combination is first approved by the Board of Directors, including a majority of the directors who are not interested persons as defined in the 1940 Act. This resolution, however, may be altered or repealed in whole or in part at any time. If these resolutions are repealed, or the Board of Directors does not otherwise approve a business combination, the statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

        Our bylaws provide that, if and to the extent that any provision of the Maryland General Corporation Law, or any provision of our articles of incorporation or bylaws conflicts with any provision of the 1940 Act, the applicable provision of the 1940 Act will control.

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DESCRIPTION OF OUR PREFERRED STOCK

        Our articles of incorporation authorize our Board of Directors to classify and reclassify any unissued shares of stock into other classes or series of stock, including preferred stock. Prior to issuance of shares of each class or series, the Board of Directors is required by Maryland law and by our articles of incorporation to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the Board of Directors could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our securities or otherwise be in their best interest. You should note, however, that any issuance of preferred stock must comply with the requirements of the 1940 Act. The 1940 Act requires, among other things, that (1) immediately after issuance and before any dividend or other distribution is made with respect to our securities and before any purchase of securities is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50.0% of our total assets after deducting the amount of such dividend, distribution or purchase price, as the case may be, and (2) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if distributions on such preferred stock are in arrears by two years or more. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a business development company. Further, the 1940 Act requires that any distributions we make on preferred stock be cumulative. We believe that the availability for issuance of preferred stock will provide us with increased flexibility in structuring future financings and acquisitions.

        For any series of preferred stock that we may issue, our Board of Directors will determine and the prospectus supplement relating to such series will describe:

        All shares of preferred stock that we may issue will be identical and of equal rank except as to the particular terms thereof that may be fixed by our Board of Directors, and all shares of each series of preferred stock will be identical and of equal rank except as to the dates from which cumulative dividends, if any, thereon will be cumulative.

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DESCRIPTION OF OUR SUBSCRIPTION RIGHTS

        We may issue subscription rights to purchase common stock. Subscription rights may be issued independently or together with any other offered security and may or may not be transferable by the person purchasing or receiving the subscription rights. In connection with any subscription rights offering to our stockholders, we may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters or other persons would purchase any offered securities remaining unsubscribed for after such subscription rights offering. In connection with a subscription rights offering to our stockholders, we would distribute certificates evidencing the subscription rights and a prospectus supplement to our stockholders on the record date that we set for receiving subscription rights in such subscription rights offering. Our common stockholders will indirectly bear the expenses of such subscription rights offerings, regardless of whether our common stockholders exercise any subscription rights.

        The applicable prospectus supplement would describe the following terms of subscription rights in respect of which this prospectus is being delivered:

Exercise of Subscription Rights

        Each subscription right would entitle the holder of the subscription right to purchase for cash such amount of shares of common stock or other securities at such exercise price as shall in each case be set forth in, or be determinable as set forth in, the prospectus supplement relating to the subscription rights offered thereby or another report filed with the SEC. Subscription rights may be exercised at any time up to the close of business on the expiration date for such subscription rights set forth in the applicable prospectus supplement. After the close of business on the expiration date, all unexercised subscription rights would become void. We have not previously completed such an offering of subscription rights.

        Subscription rights may be exercised as set forth in the prospectus supplement relating to the subscription rights offered thereby. Upon receipt of payment and the subscription rights certificate properly completed and duly executed at the corporate trust office of the subscription rights agent or any other office indicated in the prospectus supplement, we will forward, as soon as practicable, the shares of common stock purchasable upon such exercise. We may determine to offer any unsubscribed offered securities directly to stockholders, persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including pursuant to standby underwriting or other arrangements, as set forth in the applicable prospectus supplement.

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DESCRIPTION OF OUR DEBT SECURITIES

        We may issue debt securities in one or more series. The specific terms of each series of debt securities will be described in the particular prospectus supplement relating to that series. The prospectus supplement may or may not modify the general terms found in this prospectus and will be filed with the SEC. For a complete description of the terms of a particular series of debt securities, you should read both this prospectus and the prospectus supplement relating to that particular series.

        As required by federal law for all bonds and notes of companies that are publicly offered, the debt securities are governed by a document called an "indenture." An indenture is a contract between us and a financial institution acting as trustee on your behalf, and is subject to and governed by the Trust Indenture Act of 1939, as amended. The trustee has two main roles. First, the trustee can enforce your rights against us if we default. There are some limitations on the extent to which the trustee acts on your behalf, described in the second paragraph under "Events of Default—Remedies if an Event of Default Occurs." Second, the trustee performs certain administrative duties for us with respect to the debt securities.

        Because this section is a summary, it does not describe every aspect of the debt securities and the indenture. We urge you to read the indenture because it, and not this description, defines your rights as a holder of debt securities. A copy of the form of indenture is attached to the registration statement of which this prospectus is a part. We will file a supplemental indenture with the SEC in connection with any debt offering, at which time the supplemental indenture would be publicly available. See "Available Information" for information on how to obtain a copy of the indenture.

        The prospectus supplement, which will accompany this prospectus, will describe the particular series of debt securities being offered by including:

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        The debt securities may be secured or unsecured obligations. Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue debt only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if certain requirements are met) after each issuance of debt. Unless the prospectus supplement states otherwise, principal (and premium, if any) and interest, if any, will be paid by us in immediately available funds.

General

        The indenture provides that any debt securities proposed to be sold under this prospectus and the accompanying prospectus supplement ("offered debt securities") may be issued under the indenture in one or more series.

        For purposes of this prospectus, any reference to the payment of principal of or premium or interest, if any, on debt securities will include additional amounts if required by the terms of the debt securities.

        The indenture does not limit the amount of debt securities that may be issued thereunder from time to time. Debt securities issued under the indenture, when a single trustee is acting for all debt securities issued under the indenture, are called the "indenture securities". The indenture also provides that there may be more than one trustee thereunder, each with respect to one or more different series of indenture securities. See "Resignation of Trustee" below. At a time when two or more trustees are acting under the indenture, each with respect to only certain series, the term "indenture securities" means the one or more series of debt securities with respect to which each respective trustee is acting. In the event that there is more than one trustee under the indenture, the powers and trust obligations of each trustee described in this prospectus will extend only to the one or more series of indenture securities for which it is trustee. If two or more trustees are acting under the indenture, then the indenture securities for which each trustee is acting would be treated as if issued under separate indentures.

        The indenture does not contain any provisions that give you protection in the event we issue a large amount of debt or we are acquired by another entity.

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        We refer you to the prospectus supplement for information with respect to any deletions from, modifications of or additions to the Events of Default or our covenants that are described below, including any addition of a covenant or other provision providing event risk protection or similar protection.

        We have the ability to issue indenture securities with terms different from those of indenture securities previously issued and, without the consent of the holders thereof, to reopen a previous issue of a series of indenture securities and issue additional indenture securities of that series unless the reopening was restricted when that series was created.

Conversion and Exchange

        If any debt securities are convertible into or exchangeable for other securities, the prospectus supplement will explain the terms and conditions of the conversion or exchange, including the conversion price or exchange ratio (or the calculation method), the conversion or exchange period (or how the period will be determined), if conversion or exchange will be mandatory or at the option of the holder or us, provisions for adjusting the conversion price or the exchange ratio and provisions affecting conversion or exchange in the event of the redemption of the underlying debt securities. These terms may also include provisions under which the number or amount of other securities to be received by the holders of the debt securities upon conversion or exchange would be calculated according to the market price of the other securities as of a time stated in the prospectus supplement.

Issuance of Securities in Registered Form

        We may issue the debt securities in registered form, in which case we may issue them either in book-entry form only or in "certificated" form. Debt securities issued in book-entry form will be represented by global securities. We expect that we will usually issue debt securities in book-entry only form represented by global securities.

        We will issue registered debt securities in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. This means debt securities will be represented by one or more global securities registered in the name of a depositary that will hold them on behalf of financial institutions that participate in the depositary's book-entry system. These participating institutions, in turn, hold beneficial interests in the debt securities held by the depositary or its nominee. These institutions may hold these interests on behalf of themselves or customers.

        Under the indenture, only the person in whose name a debt security is registered is recognized as the holder of that debt security. Consequently, for debt securities issued in book-entry form, we will recognize only the depositary as the holder of the debt securities and we will make all payments on the debt securities to the depositary. The depositary will then pass along the payments it receives to its participants, which in turn will pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so under agreements they have made with one another or with their customers; they are not obligated to do so under the terms of the debt securities.

        As a result, investors will not own debt securities directly. Instead, they will own beneficial interests in a global security, through a bank, broker or other financial institution that participates in the depositary's book-entry system or holds an interest through a participant. As long as the debt securities are represented by one or more global securities, investors will be indirect holders, and not holders, of the debt securities.

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        In the future, we may issue debt securities in certificated form or terminate a global security. In these cases, investors may choose to hold their debt securities in their own names or in "street name." Debt securities held in street name are registered in the name of a bank, broker or other financial institution chosen by the investor, and the investor would hold a beneficial interest in those debt securities through the account he or she maintains at that institution.

        For debt securities held in street name, we will recognize only the intermediary banks, brokers and other financial institutions in whose names the debt securities are registered as the holders of those debt securities and we will make all payments on those debt securities to them. These institutions will pass along the payments they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required to do so. Investors who hold debt securities in street name will be indirect holders, and not holders, of the debt securities.

        Our obligations, as well as the obligations of the applicable trustee and those of any third parties employed by us or the applicable trustee, run only to the legal holders of the debt securities. We do not have obligations to investors who hold beneficial interests in global securities, in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a debt security or has no choice because we are issuing the debt securities only in book-entry form.

        For example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that holder is required, under agreements with depositary participants or customers or by law, to pass it along to the indirect holders but does not do so. Similarly, if we want to obtain the approval of the holders for any purpose (for example, to amend an indenture or to relieve us of the consequences of a default or of our obligation to comply with a particular provision of an indenture), we would seek the approval only from the holders, and not the indirect holders, of the debt securities. Whether and how the holders contact the indirect holders is up to the holders.

        When we refer to you in this "Description of Our Debt Securities", we mean those who invest in the debt securities being offered by this prospectus, whether they are the holders or only indirect holders of those debt securities. When we refer to your debt securities, we mean the debt securities in which you hold a direct or indirect interest.

        If you hold debt securities through a bank, broker or other financial institution, either in book-entry form or in street name, we urge you to check with that institution to find out:

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        As noted above, we usually will issue debt securities as registered securities in book-entry form only. A global security represents one or any other number of individual debt securities. Generally, all debt securities represented by the same global securities will have the same terms.

        Each debt security issued in book-entry form will be represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depositary for all debt securities issued in book-entry form.

        A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. We describe those situations below under "Special Situations when a Global Security Will Be Terminated". As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all debt securities represented by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another institution that has an account with the depositary. Thus, an investor whose security is represented by a global security will not be a holder of the debt security, but only an indirect holder of a beneficial interest in the global security.

        As an indirect holder, an investor's rights relating to a global security will be governed by the account rules of the investor's financial institution and of the depositary, as well as general laws relating to securities transfers. The depositary that holds the global security will be considered the holder of the debt securities represented by the global security.

        If debt securities are issued only in the form of a global security, an investor should be aware of the following:

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        If a global security is terminated, interests in it will be exchanged for certificates in non-book-entry form (certificated securities). After that exchange, the choice of whether to hold the certificated debt securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred on termination to their own names, so that they will be holders. We have described the rights of legal holders and street name investors under "Issuance of Securities in Registered Form" above.

        The prospectus supplement may list situations for terminating a global security that would apply only to the particular series of debt securities covered by the prospectus supplement. If a global security is terminated, only the depositary, and not we or the applicable trustee, is responsible for deciding the names of the investors in whose names the debt securities represented by the global security will be registered and, therefore, who will be the holders of those debt securities.

Payment and Paying Agents

        We will pay interest (either in cash or by delivery of additional indenture securities, as applicable) to the person listed in the applicable trustee's records as the owner of the debt security at the close of business on a particular day in advance of each due date for interest, even if that person no longer owns the debt security on the interest due date. That day, usually about two weeks in advance of the interest due date, is called the "record date." Because we will pay all the interest for an interest period to the holders on the record date, holders buying and selling debt securities must work out between themselves the appropriate purchase price. The most common manner is to adjust the sales price of the debt securities to prorate interest fairly between buyer and seller based on their respective ownership periods within the particular interest period. This prorated interest amount is called "accrued interest."

        We will make payments on a global security in accordance with the applicable policies of the depositary as in effect from time to time. Under those policies, we will make payments directly to the depositary, or its nominee, and not to any indirect holders who own beneficial interests in the global security. An indirect holder's right to those payments will be governed by the rules and practices of the depositary and its participants, as described under "—Special Considerations for Global Securities."

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        We will make payments on a certificated debt security as follows. We will pay interest that is due on an interest payment date to the holder of debt securities as shown on the trustee's records as of the close of business on the regular record date. We will make all payments of principal and premium, if any, by check at the office of the applicable trustee and/or at other offices that may be specified in the prospectus supplement or in a notice to holders against surrender of the debt security.

        Alternatively, at our option, we may pay any cash interest that becomes due on the debt security by mailing a check to the holder at his or her address shown on the trustee's records as of the close of business on the regular record date or by transfer to an account at a bank in the United States, in either case, on the due date.

        If any payment is due on a debt security on a day that is not a business day, we will make the payment on the next day that is a business day. Payments made on the next business day in this situation will be treated under the indenture as if they were made on the original due date, except as otherwise indicated in the attached prospectus supplement. Such payment will not result in a default under any debt security or the indenture, and no interest will accrue on the payment amount from the original due date to the next day that is a business day.

        Book-entry and other indirect holders should consult their banks or brokers for information on how they will receive payments on their debt securities.

Events of Default

        You will have rights if an Event of Default occurs in respect of the debt securities of your series and is not cured, as described later in this subsection.

        The term "Event of Default" in respect of the debt securities of your series means any of the following:

        An Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series of debt securities issued under the same or any other indenture. The trustee may withhold notice to the holders of debt securities of any default, except in the payment

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of principal, premium, interest or sinking or purchase fund installment, if it in good faith considers the withholding of notice to be in the interest of the holders.

        If an Event of Default has occurred and has not been cured, the trustee or the holders of at least 25% in principal amount of the debt securities of the affected series may (and the trustee shall at the request of such holders) declare the entire principal amount of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity. A declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the debt securities of the affected series if (1) we have deposited with the trustee all amounts due and owing with respect to the securities (other than principal that has become due solely by reason of such acceleration) and certain other amounts, and (2) all Events of Default have been cured or waived.

        Except in cases of default, where the trustee has some special duties, the trustee is not required to take any action under the indenture at the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability (called an "indemnity"). If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or remedy will be treated as a waiver of that right, remedy or Event of Default.

        Before you are allowed to bypass your trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the debt securities, the following must occur:

        However, you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date.

        Holders of a majority in principal amount of the debt securities of the affected series may waive any past defaults other than:

        Book-entry and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the trustee and how to declare or cancel an acceleration of maturity.

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        Each year, we will furnish to each trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance with the indenture and the debt securities or else specifying any default.

Merger or Consolidation

        Under the terms of the indenture, we are generally permitted to consolidate or merge with another entity. We are also permitted to sell all or substantially all of our assets to another entity. However, we may not take any of these actions unless all the following conditions are met:

Modification or Waiver

        There are three types of changes we can make to the indenture and the debt securities issued thereunder.

        First, there are changes that we cannot make to your debt securities without your specific approval. The following is a list of those types of changes:

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        The second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications, establishment of the form or terms of new securities of any series as permitted by the indenture and certain other changes that would not adversely affect holders of the outstanding debt securities in any material respect. We also do not need any approval to make any change that affects only debt securities to be issued under the indenture after the change takes effect.

        Any other change to the indenture and the debt securities would require the following approval:

        In each case, the required approval must be given by written consent.

        The holders of a majority in principal amount of a series of debt securities issued under the indenture, voting together as one class for this purpose, may waive our compliance with some of our covenants applicable to that series of debt securities. However, we cannot obtain a waiver of a payment default or of any of the matters covered by the bullet points included above under "—Changes Requiring Your Approval."

        When taking a vote, we will use the following rules to decide how much principal to attribute to a debt security:

        Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption or if we, any other obligor, or any affiliate of us or any obligor own such debt securities. Debt securities will also not be eligible to vote if they have been fully defeased as described later under "Defeasance—Full Defeasance."

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        We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding indenture securities that are entitled to vote or take other action under the indenture. However, the record date may not be more than 30 days before the date of the first solicitation of holders to vote on or take such action. If we set a record date for a vote or other action to be taken by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding indenture securities of those series on the record date and must be taken within eleven months following the record date.

        Book-entry and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the indenture or the debt securities or request a waiver.

Defeasance

        The following provisions will be applicable to each series of debt securities unless we state in the applicable prospectus supplement that the provisions of covenant defeasance and full defeasance will not be applicable to that series.

        Under current U.S. federal tax law and the indenture, we can make the deposit described below and be released from some of the restrictive covenants in the indenture under which the particular series was issued. This is called "covenant defeasance". In that event, you would lose the protection of those restrictive covenants but would gain the protection of having money and government securities set aside in trust to repay your debt securities. If we achieved covenant defeasance and your debt securities were subordinated as described under "Indenture Provisions—Subordination" below, such subordination would not prevent the Trustee from applying due funds available to it from the deposit described in the first bullet below to the payment of amounts in respect of such debt securities. In order to achieve covenant defeasance, we must do the following:

        If we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there were a shortfall in the trust deposit or the trustee is prevented from making payment. For example, if one of the remaining Events of Default occurred (such as our bankruptcy) and the debt

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securities became immediately due and payable, there might be such a shortfall. However, there is no assurance that we would have sufficient funds to make payment of the shortfall.

        If there is a change in U.S. federal tax law or we obtain an IRS ruling, as described below, we can legally release ourselves from all payment and other obligations on the debt securities of a particular series (called "full defeasance") if we put in place the following other arrangements for you to be repaid:

        If we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt securities. You could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent. If your debt securities were subordinated as described below under "Indenture Provisions—Subordination," such subordination would not prevent the Trustee from applying the funds available to it from the deposit referred to in the first bullet of the preceding paragraph to the payment of amounts due in respect of such debt securities.

Form, Exchange and Transfer of Certificated Registered Securities

        If registered debt securities cease to be issued in book-entry form, they will be issued:

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        Holders may exchange their certificated securities for debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed and as long as the denomination is greater than the minimum denomination for such securities.

        Holders may exchange or transfer their certificated securities at the office of the trustee. We have appointed the trustee to act as our agent for registering debt securities in the names of holders transferring debt securities. We may appoint another entity to perform these functions or perform them ourselves.

        Holders will not be required to pay a service charge to transfer or exchange their certificated securities, but they may be required to pay any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer agent is satisfied with the holder's proof of legal ownership.

        If we have designated additional transfer agents for your debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts.

        If any certificated securities of a particular series are redeemable and we redeem less than all the debt securities of that series, we may block the transfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers or exchanges of any certificated securities selected for redemption, except that we will continue to permit transfers and exchanges of the unredeemed portion of any debt security that will be partially redeemed.

        If a registered debt security is issued in book-entry form, only the depositary will be entitled to transfer and exchange the debt security as described in this subsection, since it will be the sole holder of the debt security.

Resignation of Trustee

        Each trustee may resign or be removed with respect to one or more series of indenture securities provided that a successor trustee is appointed to act with respect to these series and has accepted such appointment. In the event that two or more persons are acting as trustee with respect to different series of indenture securities under the indenture, each of the trustees will be a trustee of a trust separate and apart from the trust administered by any other trustee.

Indenture Provisions—Subordination

        Upon any distribution of our assets upon our dissolution, winding up, liquidation or reorganization, the payment of the principal of (and premium, if any, on) and interest, if any, on any indenture securities denominated as subordinated debt securities is to be subordinated to the extent provided in the indenture in right of payment to the prior payment in full of all Designated Senior Indebtedness (as defined below), but our obligation to you to make payment of the principal of (and premium, if any, on) and interest, if any, on such subordinated debt securities will not otherwise be affected. In addition, no payment on account of principal (or premium, if any), sinking fund or interest, if any, may be made on such subordinated debt securities at any time unless full payment of all amounts due in respect of the principal (and premium, if any), sinking fund and interest on Designated Senior Indebtedness has been made or duly provided for in money or money's worth.

        In the event that, notwithstanding the foregoing, any payment by us is received by the trustee in respect of subordinated debt securities or by the holders of any of such subordinated debt securities,

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upon our dissolution, winding up, liquidation or reorganization before all Designated Senior Indebtedness is paid in full, the payment or distribution must be paid over to the holders of the Designated Senior Indebtedness or on their behalf for application to the payment of all the Designated Senior Indebtedness remaining unpaid until all the Designated Senior Indebtedness has been paid in full, after giving effect to any concurrent payment or distribution to the holders of the Designated Senior Indebtedness. Subject to the payment in full of all Designated Senior Indebtedness upon this distribution by us, the holders of such subordinated debt securities will be subrogated to the rights of the holders of the Designated Senior Indebtedness to the extent of payments made to the holders of the Designated Senior Indebtedness out of the distributive share of such subordinated debt securities.

        By reason of this subordination, in the event of a distribution of our assets upon our insolvency, certain of our senior creditors may recover more, ratably, than holders of any subordinated debt securities or the holders of any indenture securities that are not Designated Senior Indebtedness. The indenture provides that these subordination provisions will not apply to money and securities held in trust under the defeasance provisions of the indenture.

        Designated Senior Indebtedness is defined in the indenture as the principal of (and premium, if any, on) and unpaid interest on:

        If this prospectus is being delivered in connection with the offering of a series of indenture securities denominated as subordinated debt securities, the accompanying prospectus supplement will set forth the approximate amount of our Designated Senior Indebtedness and of our other indebtedness outstanding as of a recent date.

Secured Indebtedness

        Certain of our indebtedness, including certain series of indenture securities, may be secured. The prospectus supplement for each series of indenture securities will describe the terms of any security interest for such series and will indicate the approximate amount of our secured indebtedness as of a recent date. In the event of a distribution of our assets upon our insolvency, the holders of unsecured indenture securities may recover less, ratably, than holders of any of our secured indebtedness.

The Trustee under the Indenture

        The Bank of New York Mellon Trust Company, N.A. will serve as the trustee under the indenture.

Certain Considerations Relating to Foreign Currencies

        Debt securities denominated or payable in foreign currencies may entail significant risks. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved and will be more fully described in the applicable prospectus supplement.

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

        The following discussion is a general summary of the material U.S. federal income tax considerations applicable to us and to an investment in our shares. This summary does not purport to be a complete description of the U.S. federal income tax considerations applicable to such an investment. For example, we have not described tax consequences that may be relevant to certain types of holders subject to special treatment under U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, dealers in securities, pension plans and trusts, and financial institutions. This summary assumes that investors hold our common stock as capital assets (within the meaning of the Code). The discussion is based upon the Code, Treasury regulations, and administrative and judicial interpretations, each as of the date of this prospectus and all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion. We have not sought and will not seek any ruling from the Internal Revenue Service ("IRS") regarding this offering. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. It does not discuss the special treatment under U.S. federal income tax laws that could result if we invested in tax-exempt securities or certain other investment assets.

        If we issue preferred stock that may be convertible into or exercisable or exchangeable for securities or other property or preferred stock with other terms that may have different U.S. federal income tax consequences than those described in this summary, the U.S. federal income tax consequences of such preferred stock will be described in the relevant prospectus supplement. This summary does not discuss the consequences of an investment in our subscription rights or debt securities. The U.S. federal income tax consequences of such an investment will be discussed in the relevant prospectus supplement.

        A "U.S. stockholder" generally is a beneficial owner of shares of our common stock who is for U.S. federal income tax purposes:

        A "Non-U.S. stockholder" generally is a beneficial owner of shares of our common stock that is not a U.S. stockholder.

        If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A prospective stockholder that is a partner of a partnership holding shares of our common stock should consult his, her or its tax advisers with respect to the purchase, ownership and disposition of shares of our common stock.

        Tax matters are very complicated and the tax consequences to an investor of an investment in our shares will depend on the facts of his, her or its particular situation. We encourage investors to consult their own tax advisers regarding the specific consequences of such an investment, including tax reporting requirements, the applicability of federal, state, local and foreign tax laws, eligibility for the benefits of any applicable tax treaty and the effect of any possible changes in the tax laws.

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Taxation as a Regulated Investment Company

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Code. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, we generally will not pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders as dividends. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, in order to obtain RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our "investment company taxable income," which is generally our net ordinary taxable income plus the excess of realized net short-term capital gains over realized net long-term capital losses, and 90% of our tax-exempt income (the "Annual Distribution Requirement"). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

        For any taxable year in which we qualify as a RIC and satisfy the Annual Distribution Requirement, we will not be subject to U.S. federal income tax on the portion of our income or capital gains we distribute (or are deemed to distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gains not distributed (or deemed distributed) to our stockholders.

        We are subject to a 4% non-deductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary taxable income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending December 31 in that calendar year and (3) any taxable income recognized, but not distributed, in preceding years on which we paid no U.S. federal income tax (the "Excise Tax Avoidance Requirement"). Dividends declared and paid by us in a year will generally differ from taxable income for that year as such dividends may include the distribution of current year taxable income, exclude amounts carried over into the following year, and include the distribution of prior year taxable income carried over into and distributed in the current year. For amounts we carry over into the following year, we will be required to pay the 4% U.S. federal excise tax based on 98% of our annual taxable income and 98.2% of our capital gain net income in excess of distributions for the year.

        In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:

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        In order to comply with the 90% Income Test, we formed the Taxable Subsidiaries as wholly owned taxable subsidiaries for the primary purpose of permitting us to own equity interests in portfolio companies which are "pass-through" entities for tax purposes. Absent the taxable status of the Taxable Subsidiaries, a portion of the gross income from such portfolio companies would flow directly to us for purposes of the 90% Income Test. To the extent such income did not consist of income derived from securities, such as dividends and interest, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. The Taxable Subsidiaries are consolidated with Main Street for generally accepted accounting principles in the United States of America ("U.S. GAAP") purposes and are included in our consolidated financial statements, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated financial statements. The Taxable Subsidiaries are not consolidated with Main Street for income tax purposes and may generate income tax expense, or benefit, as a result of their ownership of the portfolio investments. The income tax expense, or benefit, if any, and any related tax assets and liabilities, are reflected in our consolidated financial statements.

        The External Investment Manager is accounted for as a portfolio investment for U.S. GAAP purposes and is an indirect wholly owned subsidiary of MSCC, owned through a Taxable Subsidiary. The External Investment Manager is owned by a Taxable Subsidiary in order to comply with the 90% Income Test, since the External Investment Manager's income would likely not consist of income derived from securities, such as dividends and interest, and as result, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. As a result of its ownership by a Taxable Subsidiary, the External Investment Manager is a disregarded entity for tax purposes. The External Investment Manager has also entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager's separate financial statements.

        We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants and debt securities invested in at a discount to par), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in income other amounts that we have not yet received in cash such as PIK interest, cumulative dividends or amounts that are received in non-cash compensation such as warrants or stock. Because any original issue discount or other amounts accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.

        Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements. However, under the 1940 Act, we are not permitted to make distributions to our stockholders in certain circumstances while our debt obligations and other senior securities are outstanding unless certain "asset coverage" tests are met. See "Regulation—Regulation as a Business Development Company—Senior Securities." Moreover, our ability to dispose

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of assets to meet our distribution requirements may be limited by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make such dispositions at times that, from an investment standpoint, are not advantageous.

        We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the U.S. Department of Treasury ("Treasury") regulations, distributions payable by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued guidance indicating that this rule will apply even where the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. According to this guidance, if too many stockholders elect to receive their distributions in cash, each such stockholder would receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as (i) ordinary income (including any qualified dividend income that, in the case of a noncorporate stockholder, may be eligible for the same reduced maximum tax rate applicable to long-term capital gains to the extent such distribution is properly reported by us as qualified dividend income and such stockholder satisfies certain minimum holding period requirements with respect to our stock) or (ii) long-term capital gain (to the extent such distribution is properly reported as a capital gain dividend), to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

        The remainder of this discussion assumes that we qualify as a RIC and have satisfied the Annual Distribution Requirement.

Taxation of U.S. Stockholders

        Distributions by us generally are taxable to U.S. stockholders as ordinary income or capital gains. Distributions of our "investment company taxable income" (which is, generally, our net ordinary income plus realized net short-term capital gains in excess of realized net long-term capital losses) will be taxable as ordinary income to U.S. stockholders to the extent of our current or accumulated earnings and profits, whether paid in cash or reinvested in additional common stock. To the extent such distributions paid by us to non-corporate stockholders (including individuals) are attributable to dividends from U.S. corporations and certain qualified foreign corporations, such distributions ("Qualifying Dividends") may be eligible for a maximum tax rate of 20.0% (plus the 3.8% Medicare surtax discussed below, if applicable). In this regard, it is anticipated that distributions paid by us will generally not be attributable to dividends and, therefore, generally will not qualify for the 20.0% (plus the 3.8% Medicare surtax, if applicable) maximum rate applicable to Qualifying Dividends. Distributions of our net capital gains (which is generally our realized net long-term capital gains in excess of realized net short-term capital losses) properly designated by us as "capital gain dividends" will be taxable to a U.S. stockholder as long-term capital gains that are currently taxable at a maximum rate of 20.0% (plus the 3.8% Medicare surtax, if applicable) in the case of individuals, trusts or estates, regardless of the U.S. stockholder's holding period for his, her or its common stock and regardless of

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whether paid in cash or reinvested in additional common stock. Distributions in excess of our earnings and profits first will reduce a U.S. stockholder's adjusted tax basis in such stockholder's common stock and, after the adjusted basis is reduced to zero, will constitute capital gains to such U.S. stockholder.

        We may retain some or all of our realized net long-term capital gains in excess of realized net short-term capital losses, but to designate the retained net capital gain as a "deemed distribution." In that case, among other consequences, we will pay tax on the retained amount, each U.S. stockholder will be required to include his, her or its share of the deemed distribution in income as if it had been actually distributed to the U.S. stockholder, and the U.S. stockholder will be entitled to claim a credit equal to his, her or its allocable share of the tax paid thereon by us. Because we expect to pay tax on any retained capital gains at our regular corporate tax rate, and because that rate is in excess of the maximum rate currently payable by individuals on long-term capital gains, the amount of tax that individual U.S. stockholders will be treated as having paid will exceed the tax they owe on the capital gain distribution and such excess generally may be refunded or claimed as a credit against the U.S. stockholder's other U.S. federal income tax obligations. The amount of the deemed distribution net of such tax will be added to the U.S. stockholder's cost basis for his, her or its common stock. In order to utilize the deemed distribution approach, we must provide written notice to our stockholders prior to the expiration of 60 days after the close of the relevant taxable year. We cannot treat any of our investment company taxable income as a "deemed distribution."

        In any fiscal year, we may elect to make distributions to our stockholders in excess of our taxable earnings for that fiscal year. As a result, a portion of those distributions may be deemed a return of capital to our stockholders.

        For purposes of determining (1) whether the Annual Distribution Requirement is satisfied for any year and (2) the amount of capital gain dividends paid for that year, we may, under certain circumstances, elect to treat a dividend that is paid during the following taxable year as if it had been paid during the taxable year in question. If we make such an election, the U.S. stockholder will still be treated as receiving the dividend in the taxable year in which the distribution is made. However, any dividend declared by us in October, November or December of any calendar year, payable to stockholders of record on a specified date in such month and actually paid during January of the following year, will be treated as if it had been received by our U.S. stockholders on December 31 of the year in which the dividend was declared.

        If an investor purchases shares of our common stock shortly before the record date of a distribution, the price of the shares will include the value of the distribution and the investor will be subject to tax on the distribution even though economically it may represent a return of his, her or its investment.

        A stockholder generally will recognize taxable gain or loss if the stockholder sells or otherwise disposes of his, her or its shares of our common stock. The amount of gain or loss will be measured by the difference between such stockholder's adjusted tax basis in the common stock sold and the amount of the proceeds received in exchange. Any gain arising from such sale or disposition generally will be treated as long-term capital gain or loss if the stockholder has held his, her or its shares for more than one year. Otherwise, it will be classified as short-term capital gain or loss. However, any capital loss arising from the sale or disposition of shares of our common stock held for six months or less will be treated as long-term capital loss to the extent of the amount of capital gain dividends received, or undistributed capital gain deemed received, with respect to such shares. In addition, all or a portion of any loss recognized upon a disposition of shares of our common stock may be disallowed if other shares of our common stock are purchased (whether through reinvestment of distributions or otherwise) within 30 days before or after the disposition.

        In general, individual U.S. stockholders currently are subject to a maximum U.S. federal income tax rate of 20.0% on their net capital gain (i.e., the excess of realized net long-term capital gains over

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realized net short-term capital losses), including any long-term capital gain derived from an investment in our shares. Such rate is lower than the maximum rate on ordinary income currently payable by individuals. In addition, individuals with modified adjusted gross income in excess of $200,000 ($250,000 in the case of married individuals filing jointly) and certain estates and trusts are subject to an additional 3.8% Medicare surtax on their "net investment income," which generally includes net income from interest, dividends, annuities, royalties, and rents, and net capital gains (other than certain amounts earned from trades or businesses). Corporate U.S. stockholders currently are subject to U.S. federal income tax on net capital gain at the maximum 21.0% rate also applied to ordinary income. Non-corporate stockholders with net capital losses for a year (i.e., capital losses in excess of capital gains) generally may deduct up to $3,000 of such losses against their ordinary income each year; any net capital losses of a non-corporate stockholder in excess of $3,000 generally may be carried forward and used in subsequent years as provided in the Code. Corporate stockholders generally may not deduct any net capital losses for a year, but may carryback such losses for three years or carry forward such losses for five years.

        We, or the applicable withholding agent, will send to each of our U.S. stockholders, as promptly as possible after the end of each calendar year, a notice detailing, on a per share and per distribution basis, the amounts includible in such U.S. stockholder's taxable income for such year as ordinary income and as long-term capital gain. In addition, the U.S. federal tax status of each year's distributions generally will be reported to the Internal Revenue Service (including the amount of dividends, if any, eligible for the 20.0% maximum rate). Dividends paid by us generally will not be eligible for the dividends-received deduction or the preferential tax rate applicable to Qualifying Dividends because our income generally will not consist of dividends. Distributions may also be subject to additional state, local and foreign taxes depending on a U.S. stockholder's particular situation.

        We may be required to withhold U.S. federal income tax ("backup withholding") from all taxable distributions to any U.S. stockholder that is not otherwise exempt (1) who fails to furnish us with a correct taxpayer identification number or a certificate that such stockholder is exempt from backup withholding or (2) with respect to whom the IRS notifies us that such stockholder has failed to properly report certain interest and dividend income to the IRS and to respond to notices to that effect. An individual's taxpayer identification number is his or her social security number. Any amount withheld under backup withholding is allowed as a credit against the U.S. stockholder's U.S. federal income tax liability, provided that proper information is provided to the IRS.

Taxation of Non-U.S. Stockholders

        Whether an investment in the shares is appropriate for a Non-U.S. stockholder will depend upon that person's particular circumstances. An investment in the shares by a Non-U.S. stockholder may have adverse tax consequences. Non-U.S. stockholders should consult their tax advisers before investing in our common stock.

        Distributions of our "investment company taxable income" to Non-U.S. stockholders (including interest income and realized net short-term capital gains in excess of realized long-term capital losses, which generally would be free of withholding if paid to Non-U.S. stockholders directly) will be subject to withholding of U.S. federal tax at a 30.0% rate (or lower rate provided by an applicable treaty) to the extent of our current and accumulated earnings and profits unless an applicable exception applies. If the distributions are effectively connected with a U.S. trade or business of the Non-U.S. stockholder, and, if an income tax treaty applies, attributable to a permanent establishment in the United States, we will not be required to withhold U.S. federal tax if the Non-U.S. stockholder complies with applicable certification and disclosure requirements, although the distributions will be subject to U.S. federal income tax at the rates applicable to U.S. persons. (Special certification requirements apply to a Non-U.S. stockholder that is a foreign partnership or a foreign trust, and such entities are urged to consult their own tax advisers.)

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        We generally are not required to withhold any amounts with respect to certain distributions of (i) U.S. source interest income, and (ii) net short term capital gains in excess of net long term capital losses, in each case to the extent we properly reported such distributions and certain other requirements were satisfied. We anticipate that a portion of our distributions will be eligible for this exemption from withholding; however, we cannot determine what portion of our distributions (if any) will be eligible for this exception until after the end of our taxable year. No certainty can be provided that any of our distributions will be reported as eligible for this exception.

        Actual or deemed distributions of our net capital gains to a Non-U.S. stockholder, and gains realized by a Non-U.S. stockholder upon the sale of our common stock, will not be subject to U.S. federal withholding tax and generally will not be subject to U.S. federal income tax unless the distributions or gains, as the case may be, are effectively connected with a U.S. trade or business of the Non-U.S. stockholder and, if an income tax treaty applies, are attributable to a permanent establishment maintained by the Non-U.S. stockholder in the United States.

        If we distribute our net capital gains in the form of deemed rather than actual distributions, a Non-U.S. stockholder will be entitled to a U.S. federal income tax credit or tax refund equal to the stockholder's allocable share of the tax we pay on the capital gains deemed to have been distributed. In order to obtain the refund, the Non-U.S. stockholder must obtain a U.S. taxpayer identification number and file a U.S. federal income tax return even if the Non-U.S. stockholder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. federal income tax return. For a corporate Non-U.S. stockholder, distributions (both actual and deemed), and gains realized upon the sale of our common stock that are effectively connected to a U.S. trade or business may, under certain circumstances, be subject to an additional "branch profits tax" at a 30.0% rate (or at a lower rate if provided for by an applicable treaty). Accordingly, investment in the shares may not be appropriate for a Non-U.S. stockholder.

        A Non-U.S. stockholder who is a non-resident alien individual, and who is otherwise subject to withholding of U.S. federal tax, may be subject to information reporting and backup withholding of U.S. federal income tax on dividends unless the Non-U.S. stockholder provides us or the dividend paying agent with an IRS Form W-8BEN or IRS Form W-8BEN-E (or an acceptable substitute form) or otherwise meets documentary evidence requirements for establishing that it is a Non-U.S. stockholder or otherwise establishes an exemption from backup withholding.

        Legislation commonly referred to as the "Foreign Account Tax Compliance Act," or "FATCA," generally imposes a 30% withholding tax on payments of certain types of income to foreign financial institutions ("FFIs") unless such FFIs either (i) enter into an agreement with the U.S. Treasury to report certain required information with respect to accounts held by U.S. persons (or held by foreign entities that have U.S. persons as substantial owners) or (ii) reside in jurisdictions that have entered into an intergovernmental agreement ("IGA") with the United States to collect and share such information and are in compliance with the terms of such IGA and any enabling legislation or regulations. The types of income subject to the tax include U.S. source interest and dividends, and the gross proceeds from the sale of any property that could produce U.S. source interest or dividends received after December 31, 2018. The information required to be reported includes the identity and taxpayer identification number of each account holder that is a U.S. person and transaction activity within the holder's account. In addition, subject to certain exceptions, this legislation also imposes a 30% withholding on payments to foreign entities that are not FFIs unless the foreign entity certifies that it does not have a greater than 10% U.S. owner or provides the withholding agent with identifying information on each greater than 10% U.S. owner. Depending on the status of a Non-U.S. stockholder and the status of the intermediaries through which it holds our common stock, a Non-U.S. stockholder could be subject to this 30% withholding tax with respect to distributions on our common stock and proceeds from the sale of our common stock. Under certain circumstances, a Non-U.S. stockholder might be eligible for refunds or credits of such taxes.

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        Non-U.S. persons should consult their own tax advisers with respect to the U.S. federal income tax and withholding tax, and state, local and foreign tax consequences of an investment in the shares.

Failure to Qualify as a RIC

        If we fail to satisfy the 90% Income Test or the Diversification Tests for any taxable year, we may nevertheless continue to qualify as a RIC for such year if certain relief provisions are applicable (which may, among other things, require us to pay certain corporate-level U.S. federal taxes or to dispose of certain assets).

        If we were unable to qualify for treatment as a RIC and the foregoing relief provisions are not applicable, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would they be required to be made. If we were subject to tax on all of our taxable income at regular corporate rates, then distributions we make after being subject to such tax would be taxable to our stockholders and, provided certain holding period and other requirements were met, could qualify for treatment as "qualified dividend income" eligible for the maximum 20% rate (plus a 3.8% Medicare surtax, if applicable) applicable to qualified dividends to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate taxpayers would be eligible for a dividends-received deduction on distributions they receive. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder's tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the nonqualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent five years, unless we made a special election to pay corporate-level U.S. federal income tax on such built-in gain at the time of our requalification as a RIC.

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REGULATION

Regulation as a Business Development Company

        We have elected to be regulated as a BDC under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates, principal underwriters and affiliates of those affiliates or underwriters. The 1940 Act requires that a majority of the members of the board of directors of a BDC be persons other than "interested persons," as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved by a majority of our outstanding voting securities.

        The 1940 Act defines "a majority of the outstanding voting securities" as the lesser of (i) 67% or more of the voting securities present at a meeting if the holders of more than 50% of our outstanding voting securities are present or represented by proxy or (ii) more than 50% of our outstanding voting securities.

        Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company's total assets. The principal categories of qualifying assets relevant to our business are any of the following:

        In addition, a BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) above.

        An eligible portfolio company is defined in the 1940 Act as any issuer which:

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        As noted above, a BDC must be operated for the purpose of making investments in the type of securities described in (1), (2) or (3) above under the heading entitled "—Qualifying Assets." In addition, BDCs must generally offer to make available to such issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where we purchase such securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the BDC, through its directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.

        Pending investment in "qualifying assets," as described above, our investments may consist of cash, cash equivalents, U.S. government securities and high-quality debt securities maturing in one year or less from time of investment therein, so that 70% of our assets are qualifying assets.

        We are permitted, under specified conditions, to issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 200% of all debt and/or senior stock immediately after each such issuance. However, recent legislation has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. We are permitted to increase our leverage capacity if shareholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so. If we receive such shareholder approval, we would be permitted to increase our leverage capacity on the first day after such approval. Alternatively, we pay increase the maximum amount of leverage we may incur to an asset coverage ratio of 150% if the "required majority" of our independent directors as defined in Section 57(o) of the 1940 Act approve such increase with such approval becoming effective after one year. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. In addition, while any senior securities remain outstanding (other than senior securities representing indebtedness issued in consideration of a privately arranged loan which is not intended to be publicly distributed), we must make provisions to

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prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage. For a discussion of the risks associated with leverage, see "Risk Factors—Risks Relating to Our Business and Structure," including, without limitation, "—Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us."

        We have previously received an exemptive order from the SEC to exclude debt securities issued by MSMF and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to Main Street. The exemptive order provides for the exclusion of all debt securities issued by the Funds, including the $295.8 million of outstanding debt as of December 31, 2017, issued pursuant to the SBIC program. This exemptive order provides us with expanded capacity and flexibility in obtaining future sources of capital for our investment and operational objectives.

        We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, warrants, options or rights to acquire our common stock, at a price below the current net asset value of the common stock if our Board of Directors determines that such sale is in our best interests and that of our stockholders, and our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price which, in the determination of our Board of Directors, closely approximates the market value of such securities (less any distributing commission or discount). We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2017 annual meeting of stockholders, and we are not seeking such approval at our 2018 annual meeting of stockholders, because our common stock price had been trading significantly above the net asset value per share of our common stock since 2011. Our stockholders have previously approved a proposal that authorizes us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. We may also make rights offerings to our stockholders at prices per share less than the net asset value per share, subject to applicable requirements of the 1940 Act. See "Risk Factors—Risks Relating to Our Business and Structure—Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock."

        We have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to the code may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such investments are made in accordance with the code's requirements. You may read and copy the code of ethics at the SEC's Public Reference Room located at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the code of ethics is available on the EDGAR Database on the SEC's Web site at http://www.sec.gov.

        We vote proxies relating to our portfolio securities in a manner in which we believe is consistent with the best interest of our stockholders. We review on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held by us. Although we

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generally vote against proposals that we expect would have a negative impact on our portfolio securities, we may vote for such a proposal if there exists compelling long-term reasons to do so.

        Our proxy voting decisions are made by the investment team which is responsible for monitoring each of our investments. To ensure that our vote is not the product of a conflict of interest, we require that anyone involved in the decision-making process discloses to our chief compliance officer any potential conflict regarding a proxy vote of which he or she is aware.

        Stockholders may obtain information, without charge, regarding how we voted proxies with respect to our portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056.

        We are also prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our Board of Directors who are not interested persons and, in some cases, prior approval by the SEC.

        We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office.

        We are required to adopt and implement written policies and procedures reasonably designed to prevent violation of the federal securities laws, review these policies and procedures no less frequently than annually for their adequacy and the effectiveness of their implementation, and to designate a chief compliance officer to be responsible for administering the policies and procedures.

        We may be periodically examined by the SEC for compliance with the 1940 Act.

Small Business Investment Company Regulations

        Each of the Funds is licensed by the SBA to operate as a SBIC under Section 301(c) of the Small Business Investment Act of 1958. MSMF obtained its SBIC license in 2002, MSC II obtained its license in 2006 and MSC III obtained its license in 2016.

        SBICs are designed to stimulate the flow of private capital to eligible small businesses. Under SBIC regulations, SBICs may make loans to eligible small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services. Each of the Funds has typically invested in secured debt, acquired warrants and/or made equity investments in qualifying small businesses.

        The Funds are subject to regulation and oversight by the SBA, including requirements with respect to reporting financial information, such as the extent of capital impairment if applicable, on a regular basis and annual examinations conducted by the SBA. The SBA, as a creditor, will have a superior claim to the Funds' assets over our stockholders in the event the Funds are liquidated or the SBA exercises its remedies under the SBA-guaranteed debentures issued by the Funds upon an event of default.

        We have received exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures of the Funds from our 200% asset coverage test under the 1940 Act. As such, our ratio of total consolidated assets to outstanding indebtedness may be less than 200%. This provides us with increased investment flexibility but also increases our risks related to leverage. See "Risk Factors—Risks related to our business and structure—Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us."

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        Under present SBIC regulations, eligible small businesses generally include businesses that (together with their affiliates) have a tangible net worth not exceeding $19.5 million or have average annual net income after U.S. federal income taxes not exceeding $6.5 million (average net income to be computed without benefit of any carryover loss) for the two most recent fiscal years. In addition, an SBIC must devote 25% of its investment activity to "smaller" enterprises as defined by the SBA. A smaller enterprise generally includes businesses that have a tangible net worth not exceeding $6 million and have average annual net income after U.S. federal income taxes not exceeding $2 million (average net income to be computed without benefit of any net carryover loss) for the two most recent fiscal years. SBIC regulations also provide alternative size standard criteria to determine eligibility for designation as an eligible small business or smaller enterprise, which criteria depend on the primary industry in which the business is engaged and are based on such factors as the number of employees and gross revenue. However, once an SBIC has invested in a company, it generally may continue to make follow-on investments in the company, regardless of the size of the portfolio company at the time of the follow-on investment, up to the time of the portfolio company's initial public offering.

        The SBA prohibits an SBIC from providing funds to small businesses for certain purposes, such as relending and investment outside the United States, to businesses engaged in certain prohibited industries, and to certain "passive" (non-operating) companies. In addition, without prior SBA approval, an SBIC may not invest an amount equal to more than approximately 30% of the SBIC's regulatory capital, as defined by the SBA, in any one portfolio company and its affiliates.

        The SBA places certain limitations on the financing terms of investments by SBICs in portfolio companies (such as limiting the permissible interest rate on debt securities held by an SBIC in a portfolio company). Included in such limitations are SBA regulations which allow an SBIC to exercise control over a small business for a period of seven years from the date on which the SBIC initially acquires its control position. This control period may be extended for an additional period of time with the SBA's prior written approval.

        The SBA restricts the ability of an SBIC to lend money to any of its officers, directors and employees or to invest in affiliates thereof. The SBA also prohibits, without prior SBA approval, a "change of control" of an SBIC or transfers that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of equity of a licensed SBIC. A "change of control" is any event which would result in the transfer of the power, direct or indirect, to direct the management and policies of an SBIC, whether through ownership, contractual arrangements or otherwise.

        The SBIC licenses allow the Funds to incur leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment and certain approvals by the SBA and customary procedures. SBA-guaranteed debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt. Under applicable regulations, an SBIC may generally have outstanding debentures guaranteed by the SBA in amounts up to twice the amount of the privately-raised funds of the SBIC. Debentures guaranteed by the SBA have a maturity of ten years, require semiannual payments of interest, do not require any principal payments prior to maturity, and are not subject to prepayment penalties. As of December 31, 2017, we, through the Funds, had $295.8 million of outstanding SBA-guaranteed debentures, which had an annual weighted-average interest rate of approximately 3.6%.

        SBICs must invest idle funds that are not being used to make loans in investments permitted under SBIC regulations in the following limited types of securities: (i) direct obligations of, or obligations guaranteed as to principal and interest by, the United States government, which mature within 15 months from the date of the investment; (ii) repurchase agreements with federally insured institutions with a maturity of seven days or less (and the securities underlying the repurchase obligations must be direct obligations of or guaranteed by the federal government); (iii) certificates of

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deposit with a maturity of one year or less, issued by a federally insured institution; (iv) a deposit account in a federally insured institution that is subject to a withdrawal restriction of one year or less; (v) a checking account in a federally insured institution; or (vi) a reasonable petty cash fund.

        SBICs are periodically examined and audited by the SBA's staff to determine their compliance with SBIC regulations and are periodically required to file certain financial information and other documents with the SBA.

        Neither the SBA nor the U.S. government or any of its agencies or officers has approved any ownership interest to be issued by us or any obligation that we or any of our subsidiaries may incur.

Securities Exchange Act of 1934 and Sarbanes-Oxley Act Compliance

        We are subject to the reporting and disclosure requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), including the filing of quarterly, annual and current reports, proxy statements and other required items. In addition, we are subject to the Sarbanes-Oxley Act of 2002, which imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. For example:

The New York Stock Exchange Corporate Governance Regulations

        The New York Stock Exchange ("NYSE") has adopted corporate governance regulations that listed companies must comply with. We believe we are in compliance with such corporate governance listing standards. We intend to monitor our compliance with all future listing standards and to take all necessary actions to ensure that we stay in compliance.

Investment Adviser Regulations

        The External Investment Manager, which is wholly owned by us, is subject to regulation under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The Advisers Act establishes, among other things, recordkeeping and reporting requirements, disclosure requirements, limitations on transactions between the adviser's account and an advisory client's account, limitations on transactions between the accounts of advisory clients, and general anti-fraud prohibitions. The External Investment Manager may be examined by the SEC from time to time for compliance with the Advisers Act.

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PLAN OF DISTRIBUTION

        We may offer, from time to time, up to $1,500,000,000 of our common stock, preferred stock, subscription rights or debt securities. We may sell the securities directly or through underwriters or dealers, "at the market" to or through a market maker or into an existing market or otherwise, directly to one or more purchasers through or without agents or through a combination of any such methods of sale. Any underwriter or agent involved in the offer and sale of the securities will be named in the applicable prospectus supplement. A prospectus supplement or supplements will also describe the terms of the offering of the securities, including: the purchase price of the securities and the proceeds we will receive from the sale; any over-allotment options under which underwriters may purchase additional securities from us; any agency fees or underwriting discounts and other items constituting agents' or underwriters' compensation; the public offering price; any discounts or concessions allowed or re-allowed or paid to dealers; and any securities exchange or market on which the securities may be listed.

        The distribution of our securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at prevailing market prices at the time of sale, at prices related to such prevailing market prices, or at negotiated prices, provided, however, that the offering price per share of our common stock less any underwriting commissions or discounts must equal or exceed the net asset value per share of our common stock except (i) with the requisite approval of our stockholders or (ii) under such other circumstances as the SEC may permit. See "Risk Factors—Risks Relating to Our Business and Structure—Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock" for a discussion of proposals approved by our stockholders that permit us to issue shares of our common stock below net asset value.

        In connection with the sale of our securities, underwriters or agents may receive compensation from us or from purchasers of our securities, for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters may sell our securities to or through dealers and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of our securities may be deemed to be underwriters under the Securities Act, and any discounts and commissions they receive from us and any profit realized by them on the resale of our securities may be deemed to be underwriting discounts and commissions under the Securities Act. Any such underwriter or agent will be identified and any such compensation received from us will be described in the applicable prospectus supplement.

        We may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third parties in such sale transactions will be underwriters and, if not identified in this prospectus, will be identified in the applicable prospectus supplement (or a post-effective amendment).

        Unless otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no trading market, other than our common stock, which is traded on the New York Stock Exchange. We may elect to list any other class or series of securities on any exchanges, but we are not obligated to do so. We cannot guarantee the liquidity of the trading markets for any securities.

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        Under agreements into which we may enter, underwriters, dealers and agents who participate in the distribution of our securities may be entitled to indemnification by us against certain liabilities, including liabilities under the Securities Act. Underwriters, dealers and agents may engage in transactions with, or perform services for, us in the ordinary course of business.

        If so indicated in the applicable prospectus supplement, we will authorize underwriters or other persons acting as our agents to solicit offers by certain institutions to purchase our securities from us pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must be approved by us. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of our securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts. Such contracts will be subject only to those conditions set forth in the prospectus supplement, and the prospectus supplement will set forth the commission payable for solicitation of such contracts.

        In order to comply with the securities laws of certain states, if applicable, our securities offered hereby will be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states, our securities may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

        The maximum amount of any compensation to be received by any member of the Financial Industry Regulatory Authority, Inc. will not be greater than 10% for the sale of any securities being registered.


CUSTODIAN, TRANSFER AND DISTRIBUTION PAYING AGENT AND REGISTRAR

        Our securities are held under custody agreements by Amegy Bank National Association, whose address is 1801 Main Street, 8th Floor, Houston, Texas 77002, and Branch Banking and Trust Company, whose address is 5130 Parkway Plaza Boulevard, Charlotte, North Carolina 28217. American Stock Transfer & Trust Company, LLC acts as our transfer agent, distribution paying agent and registrar. The principal business address of our transfer agent is 6201 15th Avenue, Brooklyn, New York, telephone number: (212) 936-5100.


BROKERAGE ALLOCATION AND OTHER PRACTICES

        Since we generally acquire and dispose of our investments in privately negotiated transactions, we infrequently use brokers in the normal course of our business. Our investment team is primarily responsible for the execution of the publicly traded securities portion of our portfolio transactions and the allocation of brokerage commissions. We do not expect to execute transactions through any particular broker or dealer, but will seek to obtain the best net results for us, taking into account such factors as price (including the applicable brokerage commission or dealer spread), size of order, difficulty of execution, and operational facilities of the firm and the firm's risk and skill in positioning blocks of securities. While we will generally seek reasonably competitive trade execution costs, we will not necessarily pay the lowest spread or commission available. Subject to applicable legal requirements, we may select a broker based partly upon brokerage or research services provided to us. In return for such services, we may pay a higher commission than other brokers would charge if we determine in good faith that such commission is reasonable in relation to the services provided.

        We also pay brokerage commissions incurred in connection with open-market purchases of our publicly traded securities from time to time, including pursuant to our dividend reinvestment plan.

        We did not pay significant brokerage commissions during the three years ended December 31, 2017 in connection with the acquisition and/or disposal of our investments.

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LEGAL MATTERS

        Certain legal matters in connection with the securities offered hereby will be passed upon for us by Eversheds Sutherland (US) LLP, Washington D.C. Certain legal matters will be passed upon for underwriters, if any, by the counsel named in the prospectus supplement, if any.


INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        The audited consolidated financial statements, financial highlights, Schedule 12-14 and the Senior Securities table of Main Street Capital Corporation, included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the reports of Grant Thornton LLP, independent registered public accountants, as stated in their reports appearing herein. Grant Thornton LLP's principal business address is Grant Thornton Tower, 171 North Clark, Suite 200, Chicago, Illinois, 60601.


AVAILABLE INFORMATION

        We have filed with the SEC a universal shelf registration statement on Form N-2, together with all amendments and related exhibits, under the Securities Act, with respect to the securities offered by this prospectus or any prospectus supplement. The registration statement contains additional information about us and our securities being offered by this prospectus or any prospectus supplement.

        We file with or submit to the SEC annual, quarterly and current reports, proxy statements and other information meeting the informational requirements of the Securities Exchange Act of 1934. You may inspect and copy these reports, proxy statements and other information, as well as the registration statement and related exhibits and schedules, at the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information filed electronically by us with the SEC, which are available on the SEC's website at www.sec.gov. Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following e-mail address: publicinfo@sec.gov, or by writing the SEC's Public Reference Section, 100 F Street, N.E., Washington, D.C. 20549.


PRIVACY NOTICE

        We are committed to protecting your privacy. This privacy notice explains the privacy policies of Main Street and its affiliated companies. This notice supersedes any other privacy notice you may have received from Main Street, and its terms apply both to our current stockholders and to former stockholders as well.

        We will safeguard, according to strict standards of security and confidentiality, all information we receive about you. The only information we collect from you is your name, address, and number of shares you hold. This information is used only so that we can send you annual reports and other information about us, and send you proxy statements or other information required by law.

        We do not share this information with any non-affiliated third party except as described below.

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INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

    F-2  

Consolidated Balance Sheets as of December 31, 2017 and 2016

    F-3  

Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016, and 2015

    F-4  

Consolidated Statements of Changes in Net Assets for the Years Ended December 31, 2017, 2016, and 2015

    F-5  

Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016, and 2015

    F-6  

Consolidated Schedules of Investments as of December 31, 2017 and 2016

    F-7  

Notes to Consolidated Financial Statements

    F-68  

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Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders'
Main Street Capital Corporation

Opinion on the financial statements

        We have audited the accompanying consolidated balance sheets of Main Street Capital Corporation (a Maryland corporation) and subsidiaries (the "Company"), including the consolidated schedule of investments, as of December 31, 2017 and 2016, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes, schedules and financial highlights (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, and the financial highlights for each of the five years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"), and our report dated February 23, 2018 expressed an unqualified opinion.

Basis for opinion

        These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

        We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence supporting 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 verification by confirmation of securities as of December 31, 2017 and 2016, by correspondence with the portfolio companies and custodians, or by other appropriate auditing procedures where replies were not received. We believe that our audits provide a reasonable basis for our opinion.

/s/ GRANT THORNTON LLP

We have served as the Company's auditor since 2007.
Houston, Texas
February 23, 2018

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MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

 
  December 31,
2017
  December 31,
2016
 

ASSETS

 

Portfolio investments at fair value:

             

Control investments (cost: $530,034 and $439,674 as of December 31, 2017 and 2016, respectively)

  $ 750,706   $ 594,282  

Affiliate investments (cost: $367,317 and $394,699 as of December 31, 2017 and 2016, respectively)

    338,854     375,948  

Non-Control/Non-Affiliate investments (cost: $1,107,447 and $1,037,510 as of December 31, 2017 and 2016, respectively)

    1,081,745     1,026,676  

Total investments (cost: $2,004,798 and $1,871,883 as of December 31, 2017 and 2016, respectively)

    2,171,305     1,996,906  

Cash and cash equivalents

    51,528     24,480  

Interest receivable and other assets

    36,343     35,133  

Receivable for securities sold

    2,382     1,990  

Deferred financing costs (net of accumulated amortization of $5,600 and $4,598 as of December 31, 2017 and 2016, respectively)

    3,837     4,718  

Deferred tax asset, net

        9,125  

Total assets

  $ 2,265,395   $ 2,072,352  

LIABILITIES

 

Credit facility

  $ 64,000   $ 343,000  

SBIC debentures (par: $295,800 and $240,000 as of December 31, 2017 and 2016, respectively)

    288,483     235,686  

4.50% Notes due 2022 (par: $185,000 and $0 as of December 31, 2017 and 2016, respectively)

    182,015      

4.50% Notes due 2019 (par: $175,000 as of both December 31, 2017 and 2016)

    173,616     172,893  

6.125% Notes (par: $90,655 as of both December 31, 2017 and 2016)

    89,057     88,752  

Accounts payable and other liabilities

    20,168     14,205  

Payable for securities purchased

    40,716     2,184  

Interest payable

    5,273     4,103  

Dividend payable

    11,146     10,048  

Deferred tax liability, net

    10,553      

Total liabilities

    885,027     870,871  

Commitments and contingencies (Note M)

             

NET ASSETS

             

Common stock, $0.01 par value per share (150,000,000 shares authorized; 58,660,680 and 54,312,444 shares issued and outstanding as of December 31, 2017 and 2016, respectively)

    586     543  

Additional paid-in capital

    1,310,780     1,143,883  

Accumulated net investment income, net of cumulative dividends of $662,563 and $521,297 as of December 31, 2017 and 2016, respectively

    7,921     19,033  

Accumulated net realized gain from investments (accumulated net realized gain from investments of $64,576 before cumulative dividends of $124,690 as of December 31, 2017 and accumulated net realized gain from investments of $48,394 before cumulative dividends of $107,281 as of December 31, 2016)

    (60,114 )   (58,887 )

Net unrealized appreciation, net of income taxes

    121,195     96,909  

Total net assets

    1,380,368     1,201,481  

Total liabilities and net assets

  $ 2,265,395   $ 2,072,352  

NET ASSET VALUE PER SHARE

  $ 23.53   $ 22.10  

   

The accompanying notes are an integral part of these consolidated financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

(dollars in thousands, except shares and per share amounts)

 
  Twelve Months Ended December 31,  
 
  2017   2016   2015  

INVESTMENT INCOME:

                   

Interest, fee and dividend income:

                   

Control investments

  $ 62,762   $ 52,221   $ 49,832  

Affiliate investments

    37,509     37,702     27,200  

Non-Control/Non-Affiliate investments

    105,470     88,242     86,571  

Interest, fee and dividend income

    205,741     178,165     163,603  

Interest, fee and dividend income from marketable securities and idle funds investments

        174     986  

Total investment income

    205,741     178,339     164,589  

EXPENSES:

                   

Interest

    (36,479 )   (33,630 )   (32,115 )

Compensation

    (18,560 )   (16,408 )   (14,852 )

General and administrative

    (11,674 )   (9,284 )   (8,621 )

Share-based compensation

    (10,027 )   (8,304 )   (6,262 )

Expenses allocated to the External Investment Manager

    6,370     5,089     4,335  

Total expenses

    (70,370 )   (62,537 )   (57,515 )

NET INVESTMENT INCOME

    135,371     115,802     107,074  

NET REALIZED GAIN (LOSS):

                   

Control investments

    259     32,220     (582 )

Affiliate investments

    8,044     25,167     5,827  

Non-Control/Non-Affiliate investments

    7,879     (26,317 )   (25,147 )

Marketable securities and idle funds investments

        (1,681 )   (1,414 )

SBIC debentures

    (5,217 )        

Total net realized gain (loss)

    10,965     29,389     (21,316 )

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):

                   

Portfolio investments

    42,545     (8,305 )   11,048  

Marketable securities and idle funds investments

        1,729     (177 )

SBIC debentures

    6,212     (943 )   (879 )

Total net change in unrealized appreciation (depreciation)

    48,757     (7,519 )   9,992  

INCOME TAXES:

                   

Federal and state income, excise and other taxes

    (5,206 )   (2,089 )   (2,964 )

Deferred taxes

    (19,265 )   3,316     11,651  

Income tax benefit (provision)

    (24,471 )   1,227     8,687  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $ 170,622   $ 138,899   $ 104,437  

NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED

  $ 2.39   $ 2.23   $ 2.18  

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED

  $ 3.01   $ 2.67   $ 2.13  

DIVIDENDS PAID PER SHARE:

                   

Regular monthly dividends

  $ 2.235   $ 2.175   $ 2.100  

Supplemental dividends

    0.550     0.550   $ 0.550  

Total dividends

  $ 2.785   $ 2.725   $ 2.650  

WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED

    56,691,913     52,025,002     49,071,492  

   

The accompanying notes are an integral part of these consolidated financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Changes in Net Assets

(dollars in thousands, except shares)

 
   
   
   
   
  Accumulated
Net Realized
Gain From
Investments,
Net of
Dividends
   
   
 
 
  Common Stock    
   
  Net Unrealized
Appreciation from
Investments,
Net of Income
Taxes
   
 
 
   
  Accumulated
Net Investment
Income, Net
of Dividends
   
 
 
  Number of
Shares
  Par
Value
  Additional
Paid-In
Capital
  Total Net
Asset Value
 

Balances at December 31, 2014

    45,079,150   $ 451   $ 853,606   $ 23,665   $ (20,456 ) $ 82,716   $ 939,982  

Public offering of common stock, net of offering costs

    4,510,568     46     132,003                 132,049  

Share-based compensation

            6,262                 6,262  

Purchase of vested stock for employee payroll tax withholding

    (54,840 )   (1 )   (1,739 )               (1,740 )

Dividend reinvestment

    636,079     6     19,348                 19,354  

Amortization of directors' deferred compensation

            423                 423  

Issuance of restricted stock, net of forfeited shares

    242,787     2     (2 )                

Other

            1,566                 1,566  

Dividends to stockholders

                (123,558 )   (7,881 )       (131,439 )

Net increase (decrease) resulting from operations

                107,074     (21,316 )   18,679     104,437  

Balances at December 31, 2015

    50,413,744   $ 504   $ 1,011,467   $ 7,181   $ (49,653 ) $ 101,395   $ 1,070,894  

Balances at December 31, 2015

    50,413,744   $ 504   $ 1,011,467   $ 7,181   $ (49,653 ) $ 101,395   $ 1,070,894  

Public offering of common stock, net of offering costs

    3,324,646     33     112,006                 112,039  

Share-based compensation

            8,304                 8,304  

Purchase of vested stock for employee payroll tax withholding

    (80,750 )   (1 )   (2,592 )               (2,593 )

Dividend reinvestment

    434,631     4     14,073                 14,077  

Amortization of directors' deferred compensation

            628                 628  

Issuance of restricted stock, net of forfeited shares

    262,586     3     (3 )                

Dividends to stockholders

                (103,950 )   (38,623 )       (142,573 )

Cumulative-effect to retained earnings for excess tax benefit

                        1,806     1,806  

Net increase (decrease) resulting from operations

                115,802     29,389     (6,292 )   138,899  

Balances at December 31, 2016

    54,354,857   $ 543   $ 1,143,883   $ 19,033   $ (58,887 ) $ 96,909   $ 1,201,481  

Balances at December 31, 2016

    54,354,857   $ 543   $ 1,143,883   $ 19,033   $ (58,887 ) $ 96,909   $ 1,201,481  

Public offering of common stock, net of offering costs

    3,947,165     40     150,946                 150,986  

Share-based compensation

            10,027                 10,027  

Purchase of vested stock for employee payroll tax withholding

    (113,371 )   (1 )   (4,350 )               (4,351 )

Investment through issuance of unregistered shares

    11,464         442                 442  

Dividend reinvestment

    234,513     2     9,154                 9,156  

Amortization of directors' deferred compensation

            680                 680  

Issuance of restricted stock, net of forfeited shares

    226,052     2     (2 )                

Dividends to stockholders

                (141,266 )   (17,409 )       (158,675 )

Net increase (decrease) resulting from operations

                130,154     16,182     24,286     170,622  

Balances at December 31, 2017

    58,660,680   $ 586   $ 1,310,780   $ 7,921   $ (60,114 ) $ 121,195   $ 1,380,368  

   

The accompanying notes are an integral part of these consolidated financial statements

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MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(dollars in thousands)

 
  Twelve Months Ended December 31,  
 
  2017   2016   2015  

CASH FLOWS FROM OPERATING ACTIVITIES

                   

Net increase in net assets resulting from operations

  $ 170,622   $ 138,899   $ 104,437  

Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:

                   

Investments in portfolio companies

    (876,744 )   (641,197 )   (838,441 )

Proceeds from sales and repayments of debt investments in portfolio companies

    737,297     409,542     570,454  

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

    82,128     76,731     34,780  

Investments in marketable securities and idle funds investments

        (523 )   (5,767 )

Proceeds from sales and repayments of marketable securities and idle funds investments

        4,316     9,529  

Net change in net unrealized (appreciation) depreciation

    (48,757 )   7,519     (9,992 )

Net realized (gain) loss

    (10,965 )   (29,389 )   21,316  

Accretion of unearned income

    (17,008 )   (10,211 )   (8,940 )

Payment-in-kind interest

    (4,884 )   (6,497 )   (3,624 )

Cumulative dividends

    (3,226 )   (2,200 )   (1,607 )

Share-based compensation expense

    10,027     8,304     6,262  

Amortization of deferred financing costs

    2,784     2,582     2,553  

Deferred tax (benefit) provision

    19,265     (3,316 )   (11,651 )

Changes in other assets and liabilities:

                   

Interest receivable and other assets

    2,080     (2,564 )   (3,220 )

Interest payable

    1,170     144     (889 )

Accounts payable and other liabilities

    6,643     2,541     1,639  

Deferred fees and other

    2,470     2,589     1,769  

Net cash provided by (used in) operating activities

    72,902     (42,730 )   (131,392 )

CASH FLOWS FROM FINANCING ACTIVITIES

                   

Proceeds from public offering of common stock, net of offering costs

    150,986     112,039     132,049  

Proceeds from public offering of 4.50% Notes due 2022

    185,000          

Dividends paid

    (148,421 )   (127,522 )   (110,673 )

Proceeds from issuance of SBIC debentures

    81,000     15,000      

Repayments of SBIC debentures

    (25,200 )        

Proceeds from credit facility

    448,000     390,000     534,000  

Repayments on credit facility

    (727,000 )   (338,000 )   (461,000 )

Payment of deferred loan costs and SBIC debenture fees

    (5,868 )   (1,962 )   (1,260 )

Purchases of vested stock for employee payroll tax withholding

    (4,351 )   (2,593 )   (1,740 )

Other

        (83 )   (85 )

Net cash provided by (used in) financing activities

    (45,854 )   46,879     91,291  

Net increase in cash and cash equivalents

    27,048     4,149     (40,101 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

    24,480     20,331     60,432  

CASH AND CASH EQUIVALENTS AT END OF PERIOD

  $ 51,528   $ 24,480   $ 20,331  

Supplemental cash flow disclosures:

                   

Interest paid

  $ 32,411   $ 30,756   $ 30,450  

Taxes paid

  $ 2,398   $ 1,495   $ 2,687  

Non-cash financing activities:

                   

Shares issued pursuant to the DRIP

  $ 9,156   $ 14,077   $ 19,354  

   

The accompanying notes are an integral part of these consolidated financial statements

F-6


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Control Investments(5)

 

 

 

 

                   

                           

Access Media Holdings, LLC(10)

 

Private Cable Operator

 

 

                   

     

5% Current / 5% PIK Secured Debt (Maturity—July 22, 2020)(19)

  $ 23,828   $ 23,828   $ 17,150  

     

Preferred Member Units (8,248,500 units)

          8,142      

     

Member Units (45 units)

          1      

                  31,971     17,150  

                           

ASC Interests, LLC

 

Recreational and Educational Shooting Facility

                       

     

11% Secured Debt (Maturity—July 31, 2018)

    1,800     1,795     1,795  

     

Member Units (1,500 units)

          1,500     1,530  

                  3,295     3,325  

                           

ATS Workholding, LLC(10)

 

Manufacturer of Machine Cutting Tools and Accessories

                       

     

5% Secured Debt (Maturity—November 16, 2021)

    3,726     3,249     3,249  

     

Preferred Member Units (3,725,862 units)

          3,726     3,726  

                  6,975     6,975  

                           

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

                       

     

12% Secured Debt (Maturity—December 28, 2017)(17)

    11,596     11,596     11,596  

     

Common Stock (57,508 shares)

          6,350     9,370  

                  17,946     20,966  

                           

Café Brazil, LLC

 

Casual Restaurant Group

                       

     

Member Units (1,233 units)(8)

          1,742     4,900  

                           

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

                       

     

Member Units (416 units)(8)

          1,300     89,560  

                           

Charps, LLC

 

Pipeline Maintenance and Construction

                       

     

12% Secured Debt (Maturity—February 3, 2022)

    18,400     18,225     18,225  

     

Preferred Member Units (1,600 units)

          400     650  

                  18,625     18,875  

                           

F-7


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Clad-Rex Steel, LLC

 

Specialty Manufacturer of Vinyl-Clad Metal

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.86%, Secured Debt (Maturity—December 20, 2021)(9)

    13,280     13,168     13,280  

     

Member Units (717 units)(8)

          7,280     9,500  

     

10% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity—December 20, 2036)

    1,183     1,171     1,183  

     

Member Units (Clad-Rex Steel RE Investor, LLC) (800 units)

          210     280  

                  21,829     24,243  

                           

CMS Minerals Investments

 

Oil & Gas Exploration & Production

                       

     

Member Units (CMS Minerals II, LLC) (100 units)(8)

          3,440     2,392  

                           

Copper Trail Energy Fund I, LP(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 30.1%)

          2,500     2,500  

                           

Datacom, LLC

 

Technology and Telecommunications Provider

                       

     

8% Secured Debt (Maturity—May 30, 2018)

    1,575     1,575     1,575  

     

5.25% Current / 5.25% PIK Secured Debt (Maturity—May 30, 2019)(19)

    12,349     12,311     11,110  

     

Class A Preferred Member Units

          1,181     730  

     

Class B Preferred Member Units (6,453 units)

          6,030      

                  21,097     13,415  

                           

Gamber-Johnson Holdings, LLC

 

Manufacturer of Ruggedized Computer Mounting Systems

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.36%, Secured Debt (Maturity—June 24, 2021)(9)

    23,400     23,213     23,400  

     

Member Units (8,619 units)(8)

          14,844     23,370  

                  38,057     46,770  

                           

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.34%, Secured Debt (Maturity—March 31, 2020)(9)

    5,483     5,443     5,443  

     

Member Units (1,200 units)

          1,200     1,940  

                  6,643     7,383  

                           

F-8


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

GRT Rubber Technologies LLC

 

Manufacturer of Engineered Rubber Products

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity—December 19, 2019)(9)

    11,603     11,550     11,603  

     

Member Units (5,879 units)(8)

          13,065     21,970  

                  24,615     33,573  

                           

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

                       

     

Member Units (438 units)(8)

          2,980     10,060  

                           

Gulf Publishing Holdings, LLC

 

Energy Industry Focused Media and Publishing

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.86%, Secured Debt (Maturity—September 30, 2020)(9)

    80     80     80  

     

12.5% Secured Debt (Maturity—April 29, 2021)

    12,800     12,703     12,703  

     

Member Units (3,681 units)

          3,681     4,840  

                  16,464     17,623  

                           

Harborside Holdings, LLC

 

Real Estate Holding Company

                       

     

Member units (100 units)

          6,206     9,400  

                           

Harris Preston Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (2717 MH, L.P.) (Fully diluted 49.3%)

          536     536  

                           

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

                       

     

Common Stock (107,456 shares)

          718     3,580  

                           

HW Temps LLC

 

Temporary Staffing Solutions

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.36%, Secured Debt (Maturity July 2, 2020)(9)

    9,976     9,918     9,918  

     

Preferred Member Units (3,200 units)

          3,942     3,940  

                  13,860     13,858  

                           

Hydratec, Inc.

 

Designer and Installer of Micro-Irrigation Systems

                       

     

Common Stock (7,095 shares)(8)

          7,095     15,000  

                           

IDX Broker, LLC

 

Provider of Marketing and CRM Tools for the Real Estate Industry

                       

     

11.5% Secured Debt (Maturity—November 15, 2020)

    15,250     15,116     15,250  

     

Preferred Member Units (5,607 units)(8)

          5,952     11,660  

                  21,068     26,910  

                           

F-9


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

                       

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 11.00%, Secured Debt (Maturity—November 14, 2019)(9)

    3,955     3,917     3,955  

     

Member Units (627 units)(8)

          811     5,100  

                  4,728     9,055  

                           

KBK Industries, LLC

 

Manufacturer of Specialty Oilfield and Industrial Products

                       

     

10% Secured Debt (Maturity—September 28, 2020)

    375     372     375  

     

12.5% Secured Debt (Maturity—September 28, 2020)

    5,900     5,867     5,900  

     

Member Units (325 units)(8)

          783     4,420  

                  7,022     10,695  

                           

Lamb Ventures, LLC

 

Aftermarket Automotive Services Chain

                       

     

11% Secured Debt (Maturity—July 1, 2022)

    9,942     9,890     9,942  

     

Preferred Equity (non-voting)

          400     400  

     

Member Units (742 units)(8)

          5,273     6,790  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity—March 31, 2027)

    432     428     432  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     520  

                  16,616     18,084  

                           

Marine Shelters Holdings, LLC

 

Fabricator of Marine and Industrial Shelters

                       

     

12% PIK Secured Debt (Maturity—December 28, 2017)(14)

    3,131     3,078      

     

Preferred Member Units (3,810 units)

          5,352      

                  8,430      

                           

Market Force Information, LLC

 

Provider of Customer Experience Management Services

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.48%, Secured Debt (Maturity—July 28, 2022)(9)

    23,360     23,143     23,143  

     

Member Units (657,113 units)

          14,700     14,700  

                  37,843     37,843  

                           

MH Corbin Holding LLC

 

Manufacturer and Distributor of Traffic Safety Products

                       

     

13% Secured Debt (Maturity—August 31, 2020)

    12,600     12,526     12,526  

     

Preferred Member Units (4,000 shares)

          6,000     6,000  

                  18,526     18,526  

                           

F-10


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

                       

     

10% Secured Debt (Maturity—January 15, 2020)

    1,398     1,390     1,390  

     

12% Secured Debt (Maturity—January 15, 2020)

    3,900     3,863     3,863  

     

Member Units (5,714 units)

          2,405     1,575  

     

9.5% Secured Debt (Mid-Columbia Real Estate, LLC) (Maturity—May 13, 2025)

    791     791     791  

     

Member Units (Mid-Columbia Real Estate, LLC) (500 units)(8)

          790     1,290  

                  9,239     8,909  

                           

MSC Adviser I, LLC(16)

 

Third Party Investment Advisory Services

                       

     

Member Units (Fully diluted 100.0%)(8)

              41,768  

                           

Mystic Logistics Holdings, LLC

 

Logistics and Distribution Services Provider for Large Volume Mailers

                       

     

12% Secured Debt (Maturity—August 15, 2019)

    7,768     7,696     7,696  

     

Common Stock (5,873 shares)

          2,720     6,820  

                  10,416     14,516  

                           

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

                       

     

LIBOR Plus 8.50%, Current Coupon 9.98%, Secured Debt (Maturity—May 31, 2019)

    11,475     11,439     11,475  

     

Member Units (2,955 units)(8)

          2,975     11,670  

                  14,414     23,145  

                           

NRI Clinical Research, LLC

 

Clinical Research Service Provider

                       

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity—January 15, 2018)(9)

    400     400     400  

     

14% Secured Debt (Maturity—January 15, 2018)

    3,865     3,865     3,865  

     

Warrants (251,723 equivalent units; Expiration—September 8, 2021; Strike price—$0.01 per unit)

          252     500  

     

Member Units (1,454,167 units)

          765     2,500  

                  5,282     7,265  

                           

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

                       

     

12% Secured Debt (Maturity—March 20, 2023)

    6,376     6,376     6,376  

     

Member Units (65,208 units)(8)

          3,717     3,250  

                  10,093     9,626  

                           

F-11


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

NuStep, LLC

 

Designer, Manufacturer and Distributor of Fitness Equipment

                       

     

12% Secured Debt (Maturity—January 31, 2022)

    20,600     20,420     20,420  

     

Preferred Member Units (406 units)

          10,200     10,200  

                  30,620     30,620  

                           

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

                       

     

Common Stock (1,500 shares)(8)

          1,080     14,110  

                           

Pegasus Research Group, LLC

 

Provider of Telemarketing and Data Services

                       

     

Member Units (460 units)(8)

          1,290     10,310  

                           

PPL RVs, Inc.

 

Recreational Vehicle Dealer

                       

     

LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 8.34%, Secured Debt (Maturity—November 15, 2021)(9)

    16,100     15,972     16,100  

     

Common Stock (1,962 shares)(8)

          2,150     12,440  

                  18,122     28,540  

                           

Principle Environmental, LLC (d/b/a TruHorizon Environmental Solutions)

 

Noise Abatement Service Provider

                       

     

13% Secured Debt (Maturity—April 30, 2020)

    7,477     7,347     7,477  

     

Preferred Member Units (19,631 units)

          4,600     11,490  

     

Warrants (1,018 equivalent units; Expiration—January 31, 2021; Strike price—$0.01 per unit)

          1,200     650  

                  13,147     19,617  

                           

Quality Lease Service, LLC

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

Zero Coupon Secured Debt (Maturity—June 8, 2020)

    7,341     7,341     6,950  

     

Member Units (1,000 units)

          2,868     4,938  

                  10,209     11,888  

                           

River Aggregates, LLC

 

Processor of Construction Aggregates

                       

     

Zero Coupon Secured Debt (Maturity—June 30, 2018)

    750     707     707  

     

Member Units (1,150 units)

          1,150     4,610  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     2,559  

                  2,226     7,876  

                           

F-12


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

SoftTouch Medical Holdings LLC

 

Provider of In-Home Pediatric Durable Medical Equipment

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity—October 31, 2019)(9)

    7,140     7,110     7,140  

     

Member Units (4,450 units)(8)

          4,930     10,089  

                  12,040     17,229  

                           

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                       

     

9% Secured Debt (Maturity—October 2, 2018)

    2,924     2,923     2,410  

     

Series A Preferred Units (2,500 units)

          2,500      

     

Warrants (1,424 equivalent units; Expiration—July 1, 2024; Strike price—$0.01 per unit)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100 units)(8)

          2,300     2,389  

                  8,819     4,799  

                           

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

                       

     

9% Secured Debt (Maturity—January 1, 2019)

    348     348     348  

     

Member Units (1,867 units)(8)

          3,579     3,880  

                  3,927     4,228  

                           

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

                       

     

13% Secured Debt (Maturity—December 23, 2018)

    2,814     2,797     2,797  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,000  

     

Common Stock (1,126,242 shares)

          3,706      

                  9,503     5,797  

                           

Ziegler's NYPD, LLC

 

Casual Restaurant Group

                       

     

6.5% Secured Debt (Maturity—October 1, 2019)

    1,000     996     996  

     

12% Secured Debt (Maturity—October 1, 2019)

    300     300     300  

     

14% Secured Debt (Maturity—October 1, 2019)

    2,750     2,750     2,750  

     

Warrants (587 equivalent units; Expiration—September 29, 2018; Strike price—$0.01 per unit)

          600      

     

Preferred Member Units (10,072 units)

          2,834     3,220  

                  7,480     7,266  

Subtotal Control Investments (34.6% of total investments at fair value)

  $ 530,034   $ 750,706  

F-13


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC

 

Provider of Rent-to-Own Financing Solutions and Services

                       

     

Warrants (42 equivalent units; Expiration—November 7, 2024; Strike price—$0.01 per unit)

        $ 259   $ 860  

     

Member Units (186 units)(8)

          1,200     3,590  

                  1,459     4,450  

                           

Barfly Ventures, LLC(10)

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—August 31, 2020)

    8,715     8,572     8,715  

     

Options (2 equivalent units)

          397     920  

     

Warrant (1 equivalent unit; Expiration—August 31, 2025; Strike price—$1.00 per unit)

          473     520  

                  9,442     10,155  

                           

BBB Tank Services, LLC

 

Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.36%, Secured Debt (Maturity—April 8, 2021)(9)

    800     778     778  

     

15% Secured Debt (Maturity—April 8, 2021)

    4,000     3,876     3,876  

     

Member Units (800,000 units)

          800     500  

                  5,454     5,154  

                           

Boccella Precast Products LLC

 

Manufacturer of Precast Hollow Core Concrete

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.34%, Secured Debt (Maturity—June 30, 2022)(9)

    16,400     16,230     16,400  

     

Member Units (2,160,000 units)

          2,160     3,440  

                  18,390     19,840  

                           

Boss Industries, LLC

 

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

                       

     

Preferred Member Units (2,242 units)(8)

          2,080     3,930  

                           

F-14


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions Provider

                       

     

13% Secured Debt (Maturity—July 25, 2021)

    7,500     5,884     5,884  

     

Warrants (63 equivalent shares; Expiration—July 25, 2026; Strike price—$0.01 per share)

          2,132     3,520  

     

13% Secured Debt (Mercury Service Group, LLC) (Maturity—July 25, 2021)

    1,000     992     1,000  

     

Preferred Member Units (Mercury Service Group, LLC) (17,742 units)(8)

          1,000     1,000  

                  10,008     11,404  

                           

Buca C, LLC

 

Casual Restaurant Group

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.63%, Secured Debt (Maturity—June 30, 2020)(9)

    20,304     20,193     20,193  

     

Preferred Member Units (6 units; 6% cumulative)(8)(19)

          4,177     4,172  

                  24,370     24,365  

                           

CAI Software LLC

 

Provider of Specialized Enterprise Resource Planning Software

                       

     

12% Secured Debt (Maturity—October 10, 2019)

    4,083     4,060     4,083  

     

Member Units (65,356 units)(8)

          654     3,230  

                  4,714     7,313  

                           

Chandler Signs Holdings, LLC(10)

 

Sign Manufacturer

                       

     

12% Secured Debt (Maturity—July 4, 2021)

    4,500     4,468     4,500  

     

Class A Units (1,500,000 units)(8)

          1,500     2,650  

                  5,968     7,150  

                           

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays Provider

                       

     

Member Units (3,936 units)(8)

          100     1,950  

                           

Congruent Credit Opportunities Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          5,730     1,515  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          17,869     18,632  

                  23,599     20,147  

                           

Dos Rios Partners(12)(13)

 

Investment Partnership

                       

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

          5,996     7,165  

     

LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.4%)

          1,904     1,889  

                  7,900     9,054  

                           

F-15


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Dos Rios Stone Products LLC(10)

 

Limestone and Sandstone Dimension Cut Stone Mining Quarries

                       

     

Class A Units (2,000,000 units)(8)

          2,000     1,790  

                           

East Teak Fine Hardwoods, Inc.

 

Distributor of Hardwood Products

                       

     

Common Stock (6,250 shares)(8)

          480     630  

                           

EIG Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EIG Global Private Debt Fund-A, L.P.) (Fully diluted 11.1%)(8)

          1,103     1,055  

                           

Freeport Financial Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.3%)(8)

          5,974     5,614  

     

LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.0%)(8)

          8,558     8,506  

                  14,532     14,120  

                           

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Collection of Healthcare and other Business Receivables

                       

     

10.5% Secured Debt (Maturity—January 1, 2019)

    12,483     12,483     11,532  

     

Warrants (29,032 equivalent units; Expiration—February 9, 2022; Strike price—$0.01 per unit)

          400      

                  12,883     11,532  

                           

Guerdon Modular Holdings, Inc.

 

Multi-Family and Commercial Modular Construction Company

                       

     

13% Secured Debt (Maturity—August 13, 2019)

    10,708     10,632     10,632  

     

Preferred Stock (404,998 shares)

          1,140      

     

Common Stock (212,033 shares)

          2,983      

                  14,755     10,632  

                           

Harris Preston Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (HPEP 3, L.P.) (Fully diluted 9.9%)

          943     943  

                           

Hawk Ridge Systems, LLC(13)

 

Value-Added Reseller of Engineering Design and Manufacturing Solutions

                       

     

11% Secured Debt (Maturity—December 2, 2021)

    14,300     14,175     14,300  

     

Preferred Member Units (226 units)(8)

          2,850     3,800  

     

Preferred Member Units (HRS Services, ULC) (226 units)(8)

          150     200  

                  17,175     18,300  

                           

F-16


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Houston Plating and Coatings, LLC

 

Provider of Plating and Industrial Coating Services

                       

     

8% Unsecured Convertible Debt (Maturity—May 1, 2022)

    3,000     3,000     3,200  

     

Member Units (315,756 units)

          2,179     6,140  

                  5,179     9,340  

                           

I-45 SLF LLC(12)(13)

 

Investment Partnership

                       

     

Member Units (Fully diluted 20.0%; 24.4% profits interest)(8)

          16,200     16,841  

                           

L.F. Manufacturing Holdings, LLC(10)

 

Manufacturer of Fiberglass Products

                       

     

Member Units (2,179,001 units)

          2,019     2,000  

                           

Meisler Operating LLC

 

Provider of Short-term Trailer and Container Rental

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.84%, Secured Debt (Maturity—June 7, 2022)(9)

    16,800     16,633     16,633  

     

Member Units (Milton Meisler Holdings LLC) (31,976 units)

          3,200     3,390  

                  19,833     20,023  

                           

OnAsset Intelligence, Inc.

 

Provider of Transportation Monitoring / Tracking Products and Services

                       

     

12% PIK Secured Debt (Maturity—June 30, 2021)(19)

    5,094     5,094     5,094  

     

10% PIK Unsecured Debt (Maturity—June 30, 2021)(19)

    48     48     48  

     

Preferred Stock (912 shares)

          1,981      

     

Warrants (5,333 equivalent shares; Expiration—April 18, 2021; Strike price—$0.01 per share)

          1,919      

                  9,042     5,142  

                           

OPI International Ltd.(13)

 

Provider of Man Camp and Industrial Storage Services

                       

     

Common Stock (20,766,317 shares)

          1,371      

                           

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

                       

     

12% Secured Debt (Maturity—March 31, 2019)

    12,650     12,593     12,593  

     

Preferred Stock (1,740,000 shares)

          1,740     2,610  

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)(19)

          3,927     890  

                  18,260     16,093  

                           

F-17


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

12% Secured Debt (Maturity—January 8, 2018)(14)(15)

    30,785     30,281     250  

     

Preferred Member Units (250 units)

          2,500      

                  32,781     250  

                           

Tin Roof Acquisition Company

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—November 13, 2018)

    12,783     12,722     12,722  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)(19)

          3,027     3,027  

                  15,749     15,749  

                           

UniTek Global Services, Inc.(11)

 

Provider of Outsourced Infrastructure Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.20%, Secured Debt (Maturity—January 13, 2019)(9)

    8,535     8,529     8,535  

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.20% / 1.00% PIK, Current Coupon Plus PIK 10.20%, Secured Debt (Maturity—January 13, 2019)(9)(19)

    137     137     137  

     

15% PIK Unsecured Debt (Maturity—July 13, 2019)(19)

    865     865     865  

     

Preferred Stock (2,596,567 shares; 19% cumulative)(8)(19)

          2,858     2,850  

     

Preferred Stock (4,935,377 shares; 13.5% cumulative)(8)(19)

          7,361     7,320  

     

Common Stock (1,075,992 shares)

              2,490  

                  19,750     22,197  

                           

Universal Wellhead Services Holdings, LLC(10)

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                       

     

Preferred Member Units (UWS Investments, LLC) (716,949 units)

          717     830  

     

Member Units (UWS Investments, LLC) (4,000,000 units)

          4,000     1,910  

                  4,717     2,740  

                           

Valley Healthcare Group, LLC

 

Provider of Durable Medical Equipment

                       

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.86%, Secured Debt (Maturity—December 29, 2020)(9)

    11,766     11,685     11,685  

     

Preferred Member Units (Valley Healthcare Holding, LLC) (1,600 units)

          1,600     1,600  

                  13,285     13,285  

                           

F-18


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Volusion, LLC

 

Provider of Online Software-as-a-Service eCommerce Solutions

                       

     

11.5% Secured Debt (Maturity—January 26, 2020)

    16,734     15,200     15,200  

     

Preferred Member Units (4,876,670 units)

          14,000     14,000  

     

Warrants (1,831,355 equivalent units; Expiration—January 26, 2025; Strike price—$0.01 per unit)

          2,576     2,080  

                  31,776     31,280  

Subtotal Affiliate Investments (15.6% of total investments at fair value)

  $ 367,317   $ 338,854  

F-19


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Non-Control/Non-Affiliate Investments(7)

             

                           

AAC Holdings, Inc.(11)

 

Substance Abuse Treatment Service Provider

 

 

                   

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.13%, Secured Debt (Maturity—June 30, 2023)(9)

  $ 11,751   $ 11,475   $ 11,810  

                           

Adams Publishing Group, LLC(10)

 

Local Newspaper Operator

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—November 3, 2020)(9)

    10,341     10,116     10,147  

                           

ADS Tactical, Inc.(10)

 

Value-Added Logistics and Supply Chain Provider to the Defense Industry

                       

     

LIBOR Plus 7.50% (Floor 0.75%), Current Coupon 9.19%, Secured Debt (Maturity—December 31, 2022)(9)

    13,014     12,767     12,833  

                           

Aethon United BR LP(10)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.15%, Secured Debt (Maturity—September 8, 2023)(9)

    3,438     3,388     3,388  

                           

Ahead, LLC(10)

 

IT Infrastructure Value Added Reseller

                       

     

LIBOR Plus 6.50%, Current Coupon 8.20%, Secured Debt (Maturity—November 2, 2020)

    11,061     10,848     11,130  

                           

Allflex Holdings III Inc.(11)

 

Manufacturer of Livestock Identification Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.36%, Secured Debt (Maturity—July 19, 2021)(9)

    13,846     13,781     13,955  

                           

American Scaffold Holdings, Inc.(10)

 

Marine Scaffolding Service Provider

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.19%, Secured Debt (Maturity—March 31, 2022)(9)

    7,031     6,947     6,996  

                           

F-20


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

American Teleconferencing Services, Ltd.(11)

 

Provider of Audio Conferencing and Video Collaboration Solutions

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.90%, Secured Debt (Maturity—December 8, 2021)(9)

    10,582     9,934     10,443  

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.85%, Secured Debt (Maturity—June 6, 2022)(9)

    3,714     3,589     3,507  

                  13,523     13,950  

                           

Anchor Hocking, LLC(11)

 

Household Products Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.49%, Secured Debt (Maturity—June 4, 2020)(9)

    2,254     2,211     2,248  

     

Member Units (440,620 units)

          4,928     3,745  

                  7,139     5,993  

                           

Apex Linen Service, Inc.

 

Industrial Launderers

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity—October 30, 2022)(9)

    2,400     2,400     2,400  

     

16% Secured Debt (Maturity—October 30, 2022)

    14,416     14,347     14,347  

                  16,747     16,747  

                           

Arcus Hunting LLC.(10)

 

Manufacturer of Bowhunting and Archery Products and Accessories

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.34%, Secured Debt (Maturity—November 13, 2019)(9)

    15,391     15,294     15,391  

                           

ATI Investment Sub, Inc.(11)

 

Manufacturer of Solar Tracking Systems

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.82%, Secured Debt (Maturity—June 22, 2021)(9)

    7,364     7,215     7,346  

                           

ATX Networks Corp.(11)(13)(21)

 

Provider of Radio Frequency Management Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.33% / 1.00% PIK, Current Coupon Plus PIK 8.33%, Secured Debt (Maturity—June 11, 2021)(9)(19)

    9,567     9,454     9,507  

                           

Berry Aviation, Inc.(10)

 

Airline Charter Service Operator

                       

     

13.75% Secured Debt (Maturity—January 30, 2020)

    5,627     5,598     5,627  

     

Common Stock (553 shares)

          400     1,010  

                  5,998     6,637  

                           

F-21


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

BigName Commerce, LLC(10)

 

Provider of Envelopes and Complimentary Stationery Products

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.59%, Secured Debt (Maturity—May 11, 2022)(9)

    2,488     2,461     2,461  

                           

Binswanger Enterprises, LLC(10)

 

Glass Repair and Installation Service Provider

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.69%, Secured Debt (Maturity—March 9, 2022)(9)

    15,325     15,060     15,192  

     

Member Units (1,050,000 units)

          1,050     1,000  

                  16,110     16,192  

                           

Bluestem Brands, Inc.(11)

 

Multi-Channel Retailer of General Merchandise

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.07%, Secured Debt (Maturity—November 6, 2020)(9)

    12,127     11,955     8,540  

                           

Brainworks Software, LLC(10)

 

Advertising Sales and Newspaper Circulation Software

                       

     

Prime Plus 9.25% (Floor 3.25%), Current Coupon 13.75%, Secured Debt (Maturity—July 22, 2019)(9)

    6,733     6,705     6,573  

                           

Brightwood Capital Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 1.6%)(8)

          12,000     10,328  

     

LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.8%)(8)

          1,000     1,063  

                  13,000     11,391  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

 

Construction Services Provider

                       

     

10.375% Secured Debt (Maturity—September 1, 2023)

    3,000     2,987     3,180  

                           

Cadence Aerospace LLC(10)

 

Aerostructure Manufacturing

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.91%, Secured Debt (Maturity—November 14, 2023)(9)

    15,000     14,853     14,853  

                           

CapFusion, LLC(13)

 

Non-Bank Lender to Small Businesses

                       

     

13% Secured Debt (Maturity—March 25, 2021)(14)

    6,705     5,645     1,871  

                           

F-22


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

California Pizza Kitchen, Inc.(11)

 

Casual Restaurant Group

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—August 23, 2022)(9)

    12,902     12,862     12,677  

                           

CDHA Management, LLC(10)

 

Dental Services

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.76%, Secured Debt (Maturity—December 5, 2021)(9)

    5,365     5,303     5,365  

                           

Central Security Group, Inc.(11)

 

Security Alarm Monitoring Service Provider

                       

     

LIBOR Plus 5.63% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity—October 6, 2021)(9)

    7,481     7,462     7,518  

                           

Cenveo Corporation(11)

 

Provider of Commercial Printing, Envelopes, Labels, and Printed Office Products

                       

     

6% Secured Debt (Maturity—August 1, 2019)

    19,130     17,126     13,582  

                           

Charlotte Russe, Inc(11)

 

Fast-Fashion Retailer to Young Women

                       

     

LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.89%, Secured Debt (Maturity—May 22, 2019)(9)

    19,041     16,473     7,807  

                           

Clarius BIGS, LLC(10)

 

Prints & Advertising Film Financing

                       

     

15% PIK Secured Debt (Maturity—January 5, 2015)(14)(17)

    2,924     2,924     85  

                           

Clickbooth.com, LLC(10)

 

Provider of Digital Advertising Performance Marketing Solutions

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.01%, Secured Debt (Maturity—December 5, 2022)(9)

    3,000     2,941     2,941  

                           

Construction Supply Investments, LLC(10)

 

Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—June 30, 2023)(9)

    7,125     7,090     7,090  

     

Member Units (28,000 units)

          3,723     3,723  

                  10,813     10,813  

                           

F-23


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

CTVSH, PLLC(10)

 

Emergency Care and Specialty Service Animal Hospital

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.48%, Secured Debt (Maturity—August 3, 2022)(9)

    11,850     11,739     11,739  

                           

Darr Equipment LP(10)

 

Heavy Equipment Dealer

                       

     

11.5% Current / 1% PIK Secured Debt (Maturity—June 22, 2023)(19)

    7,229     7,229     7,229  

     

Warrants (915,734 equivalent units; Expiration—December 23, 2023; Strike price—$1.50 per unit)

          474     10  

                  7,703     7,239  

                           

Digital River, Inc.(11)

 

Provider of Outsourced e-Commerce Solutions and Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.08%, Secured Debt (Maturity—February 12, 2021)(9)

    9,313     9,266     9,337  

                           

Drilling Info Holdings, Inc.

 

Information Services for the Oil and Gas Industry

                       

     

Common Stock (3,788,865 shares)(8)

              8,610  

                           

EnCap Energy Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

          3,906     2,202  

     

LP Interests (EnCap Energy Capital Fund VIII Co-Investors, L.P.) (Fully diluted 0.4%)

          2,227     1,549  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

          4,305     3,720  

     

LP Interests (EnCap Energy Capital Fund X, L.P.) (Fully diluted 0.1%)(8)

          6,277     6,225  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 0.8%)(8)

          6,138     6,116  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.2%)

          3,458     3,828  

                  26,311     23,640  

                           

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)(13)

 

Technology-based Performance Support Solutions

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.82%, Secured Debt (Maturity—April 28, 2022)(9)

    6,999     6,878     6,244  

                           

F-24


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Extreme Reach, Inc.(11)

 

Integrated TV and Video Advertising Platform

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.95%, Secured Debt (Maturity—February 7, 2020)(9)

    10,411     10,397     10,398  

                           

Felix Investments Holdings II(10)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.90%, Secured Debt (Maturity—August 9, 2022)(9)

    3,333     3,267     3,267  

                           

Flavors Holdings Inc.(11)

 

Global Provider of Flavoring and Sweetening Products

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.44%, Secured Debt (Maturity—April 3, 2020)(9)

    13,076     12,616     12,128  

                           

GI KBS Merger Sub LLC(11)

 

Outsourced Janitorial Services to Retail/Grocery Customers

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.48%, Secured Debt (Maturity—October 29, 2021)(9)

    6,807     6,733     6,833  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.88%, Secured Debt (Maturity—April 29, 2022)(9)

    3,915     3,769     3,793  

                  10,502     10,626  

                           

GoWireless Holdings, Inc.(11)

 

Provider of Wireless Telecommunications Carrier Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.16%, Secured Debt (Maturity—December 22, 2024)(9)

    18,000     17,820     17,865  

                           

Grace Hill, LLC(10)

 

Online Training Tools for the Multi-Family Housing Industry

                       

     

Prime Plus 5.25% (Floor 1.00%), Current Coupon 9.75%, Secured Debt (Maturity—August 15, 2019)(9)

    1,215     1,208     1,215  

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.58%, Secured Debt (Maturity—August 15, 2019)(9)

    11,407     11,356     11,407  

                  12,564     12,622  

                           

Great Circle Family Foods, LLC(10)

 

Quick Service Restaurant Franchise

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.34%, Secured Debt (Maturity—October 28, 2019)(9)

    7,219     7,187     7,219  

                           

F-25


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Grupo Hima San Pablo, Inc.(11)

 

Tertiary Care Hospitals

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity—January 31, 2018)(9)

    4,750     4,748     3,541  

     

13.75% Secured Debt (Maturity—July 31, 2018)

    2,055     2,040     226  

                  6,788     3,767  

                           

GST Autoleather, Inc.(11)

 

Automotive Leather Manufacturer

                       

     

PRIME Plus 6.50% (Floor 2.25%), Current Coupon 11.00%, Secured Debt (Maturity—April 5, 2018)(9)

    7,578     7,500     7,500  

     

PRIME Plus 6.50% (Floor 2.00%), Current Coupon 11.00%, Secured Debt (Maturity—July 10, 2020)(9)

    15,619     15,120     11,813  

                  22,620     19,313  

                           

Guitar Center, Inc.(11)

 

Musical Instruments Retailer

                       

     

6.5% Secured Debt (Maturity—April 15, 2019)

    16,625     16,009     15,378  

                           

Hojeij Branded Foods, LLC(10)

 

Multi-Airport, Multi- Concept Restaurant Operator

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—July 20, 2022)(9)

    12,137     12,022     12,137  

                           

Hoover Group, Inc.(10)(13)

 

Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.70%, Secured Debt (Maturity—January 28, 2021)(9)

    8,460     7,986     7,783  

                           

Hostway Corporation(11)

 

Managed Services and Hosting Provider

                       

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.44%, Secured Debt (Maturity—December 13, 2019)(9)

    20,150     19,796     19,621  

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.44%, Secured Debt (Maturity—December 13, 2018)(9)

    12,406     11,575     11,692  

                  31,371     31,313  

                           

Hunter Defense Technologies, Inc.(11)

 

Provider of Military and Commercial Shelters and Systems

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity—August 5, 2019)(9)

    20,224     19,851     19,997  

                           

F-26


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Hydrofarm Holdings LLC(10)

 

Wholesaler of Horticultural Products

                       

     

LIBOR Plus 7.00%, Current Coupon 8.49%, Secured Debt (Maturity—May 12, 2022)

    6,708     6,588     6,699  

                           

iEnergizer Limited(11)(13)(21)

 

Provider of Business Outsourcing Solutions

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.57%, Secured Debt (Maturity—May 1, 2019)(9)

    11,005     10,764     10,977  

                           

Implus Footcare, LLC(10)

 

Provider of Footwear and Related Accessories

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.44%, Secured Debt (Maturity—April 30, 2021)(9)

    19,372     19,115     19,243  

                           

Indivior Finance LLC(11)(13)

 

Specialty Pharmaceutical Company Treating Opioid Dependence

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—December 18, 2022)(9)

    1,176     1,171     1,182  

                           

Industrial Services Acquisition, LLC(10)

 

Industrial Cleaning Services

                       

     

11.25% Current / 0.75% PIK Unsecured Debt (Maturity—December 17, 2022)(19)

    4,553     4,478     4,553  

     

Member Units (Industrial Services Investments, LLC) (900,000 units)

          900     810  

                  5,378     5,363  

                           

Inn of the Mountain Gods Resort and Casino(11)

 

Hotel & Casino Owner & Operator

                       

     

9.25% Secured Debt (Maturity—November 30, 2020)

    6,249     5,994     5,687  

                           

iPayment, Inc.(11)

 

Provider of Merchant Acquisition

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.62%, Secured Debt (Maturity—April 11, 2023)(9)

    11,970     11,861     12,090  

                           

iQor US Inc.(11)

 

Business Process Outsourcing Services Provider

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity—April 1, 2021)(9)

    990     983     986  

                           

irth Solutions, LLC

 

Provider of Damage Prevention Information Technology Services

                       

     

Member Units (27,893 units)

          1,441     1,920  

                           

F-27


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Jacent Strategic Merchandising, LLC(10)

 

General Merchandise Distribution

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.01%, Secured Debt (Maturity—September 16, 2020)(9)

    11,110     11,054     11,110  

                           

Jackmont Hospitality, Inc.(10)

 

Franchisee of Casual Dining Restaurants

                       

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.32%, Secured Debt (Maturity—May 26, 2021)(9)

    4,390     4,379     4,390  

                           

Jacuzzi Brands LLC(11)

 

Manufacturer of Bath and Spa Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—June 28, 2023)(9)

    3,950     3,876     3,980  

                           

Joerns Healthcare, LLC(11)

 

Manufacturer and Distributor of Health Care Equipment & Supplies

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.48% Secured Debt (Maturity—May 9, 2020)(9)

    13,387     13,299     12,472  

                           

Keypoint Government Solutions, Inc.(10)

 

Provider of Pre-Employment Screening Services

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.35%, Secured Debt (Maturity—April 18, 2024)(9)

    12,031     11,921     12,031  

                           

Larchmont Resources, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.53%, PIK Secured Debt (Maturity—August 7, 2020)(9)(19)

    2,418     2,418     2,394  

     

Member Units (Larchmont Intermediate Holdco, LLC) (2,828 units)

          353     976  

                  2,771     3,370  

                           

LKCM Headwater Investments I, L.P.(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 2.3%)

          2,500     4,234  

                           

Logix Acquisition Company, LLC(10)

 

Competitive Local Exchange Carrier

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.28%, Secured Debt (Maturity—August 9, 2024)(9)

    10,135     9,921     9,921  

                           

F-28


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Looking Glass Investments, LLC(12)(13)

 

Specialty Consumer Finance

                       

     

Member Units (2.5 units)

          125     57  

     

Member Units (LGI Predictive Analytics LLC) (190,712 units)(8)

          108     92  

                  233     149  

                           

LSF9 Atlantis Holdings, LLC(11)

 

Provider of Wireless Telecommunications Carrier Services

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity—May 1, 2023)(9)

    2,963     2,931     2,978  

                           

Lulu's Fashion Lounge, LLC(10)

 

Fast Fashion E-Commerce Retailer

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.57%, Secured Debt (Maturity—August 28, 2022)(9)

    13,381     12,993     13,531  

                           

Messenger, LLC(10)

 

Supplier of Specialty Stationery and Related Products to the Funeral Industry

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.74%, Secured Debt (Maturity—September 9, 2020)(9)

    17,331     17,249     17,331  

                           

Minute Key, Inc.

 

Operator of Automated Key Duplication Kiosks

                       

     

Warrants (1,437,409 equivalent shares; Expiration—May 20, 2025; Strike price—$0.01 per share)

          280     1,170  

                           

NBG Acquisition Inc(11)

 

Wholesaler of Home Décor Products

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity—April 26, 2024)(9)

    4,402     4,336     4,452  

                           

New Media Holdings II LLC(11)(13)

 

Local Newspaper Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.82%, Secured Debt (Maturity—July 14, 2022)(9)

    17,715     17,342     17,864  

                           

NNE Partners, LLC(10)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 8.00%, Current Coupon 9.49%, Secured Debt (Maturity—March 2, 2022)

    11,958     11,854     11,854  

                           

North American Lifting Holdings, Inc.(11)

 

Crane Service Provider

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.19%, Secured Debt (Maturity—November 27, 2020)(9)

    7,745     6,913     7,256  

                           

F-29


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Novetta Solutions, LLC(11)

 

Provider of Advanced Analytics Solutions for Defense Agencies

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.70%, Secured Debt (Maturity—October 17, 2022)(9)

    14,636     14,189     14,239  

                           

NTM Acquisition Corp.(11)

 

Provider of B2B Travel Information Content

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.94%, Secured Debt (Maturity—June 7, 2022)(9)

    6,186     6,126     6,155  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)

 

Estrogen-Deficiency Drug Manufacturer and Distributor

                       

     

11.5% Secured Debt (Maturity—November 15, 2026)(14)

    5,071     5,071     1,198  

                           

P.F. Chang's China Bistro, Inc.(11)

 

Casual Restaurant Group

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.51%, Secured Debt (Maturity—September 1, 2022)(9)

    4,988     4,846     4,715  

                           

Paris Presents Incorporated(11)

 

Branded Cosmetic and Bath Accessories

                       

     

LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 10.32%, Secured Debt (Maturity—December 31, 2021)(9)

    4,500     4,471     4,477  

                           

Parq Holdings Limited Partnership(11)(13)(21)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.19%, Secured Debt (Maturity—December 17, 2020)(9)

    7,481     7,399     7,528  

                           

Permian Holdco 2, Inc.(11)

 

Storage Tank Manufacturer

                       

     

14% PIK Unsecured Debt (Maturity—October 15, 2021)(19)

    306     306     306  

     

Preferred Stock (Permian Holdco 1, Inc.) (154,558 units)

          799     980  

     

Common Stock (Permian Holdco 1, Inc.) (154,558 units)

              140  

                  1,105     1,426  

                           

Pernix Therapeutics Holdings, Inc.(10)

 

Pharmaceutical Royalty

                       

     

12% Secured Debt (Maturity—August 1, 2020)

    3,129     3,129     1,971  

                           

F-30


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Point.360(10)

 

Fully Integrated Provider of Digital Media Services

                       

     

Warrants (65,463 equivalent shares; Expiration—July 7, 2020; Strike price—$0.75 per share)

          69      

     

Common Stock (163,658 shares)

          273     11  

                  342     11  

                           

PPC/SHIFT LLC(10)

 

Provider of Digital Solutions to Automotive Industry

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.69%, Secured Debt (Maturity—December 22, 2021)(9)

    6,869     6,748     6,869  

                           

Prowler Acquisition Corp.(11)

 

Specialty Distributor to the Energy Sector

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.19%, Secured Debt (Maturity—January 28, 2020)(9)

    12,830     11,332     12,253  

                           

PT Network, LLC(10)

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.86%, Secured Debt (Maturity—November 30, 2021)(9)

    8,553     8,553     8,553  

                           

QBS Parent, Inc.(11)

 

Provider of Software and Services to the Oil & Gas Industry

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 6.13%, Secured Debt (Maturity—August 7, 2021)(9)

    14,272     14,114     14,165  

                           

Research Now Group, Inc. and Survey Sampling International, LLC(11)

 

Provider of Outsourced Online Surveying

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.13%, Secured Debt (Maturity—December 20, 2024)(9)

    13,500     12,826     12,826  

                           

Resolute Industrial, LLC(10)

 

HVAC Equipment Rental and Remanufacturing

                       

     

LIBOR Plus 7.62% (Floor 1.00%), Current Coupon 8.95%, Secured Debt (Maturity—July 26, 2022)(9)(25)

    17,088     16,770     16,770  

     

Member Units (601 units)

          750     750  

                  17,520     17,520  

                           

F-31


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

RGL Reservoir Operations Inc.(11)(13)(21)

 

Oil & Gas Equipment and Services

                       

     

1% Current / 9% PIK Secured Debt (Maturity—December 21, 2024)(19)

    721     407     407  

                           

RM Bidder, LLC(10)

 

Scripted and Unscripted TV and Digital Programming Provider

                       

     

Warrants (327,532 equivalent units; Expiration—October 20, 2025; Strike price—$14.28 per unit)

          425      

     

Member Units (2,779 units)

          46     20  

                  471     20  

                           

SAFETY Investment Holdings, LLC

 

Provider of Intelligent Driver Record Monitoring Software and Services

                       

     

Member Units (2,000,000 units)

          2,000     1,670  

                           

Salient Partners L.P.(11)

 

Provider of Asset Management Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.85%, Secured Debt (Maturity—June 9, 2021)(9)

    10,081     9,870     9,778  

                           

SiTV, LLC(11)

 

Cable Networks Operator

                       

     

10.375% Secured Debt (Maturity—July 1, 2019)

    10,429     7,006     7,040  

                           

SMART Modular Technologies, Inc.(10)(13)

 

Provider of Specialty Memory Solutions

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.66%, Secured Debt (Maturity—August 9, 2022)(9)

    14,625     14,351     14,552  

                           

Sorenson Communications, Inc.(11)

 

Manufacturer of Communication Products for Hearing Impaired

                       

     

LIBOR Plus 5.75% (Floor 2.25%), Current Coupon 8.00%, Secured Debt (Maturity—April 30, 2020)(9)

    13,234     13,170     13,341  

                           

Staples Canada ULC(10)(13)(21)

 

Office Supplies Retailer

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.43%, Secured Debt (Maturity—September 12, 2023)(9)(22)

    20,000     19,617     18,891  

                           

F-32


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Strike, LLC(11)

 

Pipeline Construction and Maintenance Services

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—November 30, 2022)(9)

    9,500     9,250     9,643  

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.45%, Secured Debt (Maturity—May 30, 2019)(9)

    2,500     2,479     2,513  

                  11,729     12,156  

                           

Subsea Global Solutions, LLC(10)

 

Underwater Maintenance and Repair Services

                       

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity—March 17, 2020)(9)

    7,687     7,637     7,687  

                           

Synagro Infrastructure Company, Inc(11)

 

Waste Management Services

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity—August 22, 2020)(9)

    9,161     8,933     8,608  

                           

Tectonic Holdings, LLC

 

Financial Services Organization

                       

     

Member Units (200,000 units)(8)

          2,000     2,320  

                           

TE Holdings, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

Member Units (97,048 units)

          970     158  

                           

TeleGuam Holdings, LLC(11)

 

Cable and Telecom Services Provider

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.07%, Secured Debt (Maturity—April 12, 2024)(9)

    7,750     7,602     7,808  

                           

TGP Holdings III LLC(11)

 

Outdoor Cooking & Accessories

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity—September 25, 2024)(9)

    6,898     6,820     6,969  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.19%, Secured Debt (Maturity—September 25, 2025)(9)

    5,000     4,927     5,075  

                  11,747     12,044  

                           

The Container Store, Inc.(11)

 

Operator of Stores Offering Storage and Organizational Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity—August 15, 2021)(9)

    9,938     9,660     9,652  

                           

F-33


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

TMC Merger Sub Corp.(11)

 

Refractory & Maintenance Services Provider

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.88%, Secured Debt (Maturity—October 31, 2022)(9)(26)

    17,653     17,516     17,741  

                           

TOMS Shoes, LLC(11)

 

Global Designer, Distributor, and Retailer of Casual Footwear

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.98%, Secured Debt (Maturity—October 30, 2020)(9)

    4,875     4,610     2,901  

                           

Turning Point Brands, Inc.(10)(13)

 

Marketer/Distributor of Tobacco Products

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.61%, Secured Debt (Maturity—May 17, 2022)(9)(25)

    8,436     8,364     8,605  

                           

TVG-I-E CMN ACQUISITION, LLC(10)

 

Organic Lead Generation for Online Postsecondary Schools

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.56%, Secured Debt (Maturity—November 3, 2021)(9)

    8,170     8,031     8,170  

                           

Tweddle Group, Inc.(11)

 

Provider of Technical Information Services to Automotive OEMs

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.38%, Secured Debt (Maturity—October 21, 2022)(9)

    6,114     6,011     6,023  

                           

U.S. TelePacific Corp.(11)

 

Provider of Communications and Managed Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity—May 2, 2023)(9)

    20,703     20,507     19,862  

                           

US Joiner Holding Company(11)

 

Marine Interior Design and Installation

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity—April 16, 2020)(9)

    13,465     13,366     13,398  

                           

VIP Cinema Holdings, Inc.(11)

 

Supplier of Luxury Seating to the Cinema Industry

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity—March 1, 2023)(9)

    7,700     7,666     7,777  

                           

F-34


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Vistar Media, Inc.(10)

 

Operator of Digital Out-of-Home Advertising Platform

                       

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.69%, Secured Debt (Maturity—February 16, 2022)(9)

    3,319     3,048     3,102  

     

Warrants (70,207 equivalent shares; Expiration—February 17, 2027; Strike price—$0.01 per share)

          331     499  

                  3,379     3,601  

                           

Wellnext, LLC(10)

 

Manufacturer of Supplements and Vitamins

                       

     

LIBOR Plus 10.10% (Floor 1.00%), Current Coupon 11.67%, Secured Debt (Maturity—July 21, 2022)(9)(23)

    9,930     9,857     9,930  

                           

Wireless Vision Holdings, LLC(10)

 

Provider of Wireless Telecommunications Carrier Services

                       

     

LIBOR Plus 8.91% (Floor 1.00%), Current Coupon 10.27%, Secured Debt (Maturity—September 29, 2022)(9)(24)

    12,932     12,654     12,654  

                           

Wirepath LLC(11)

 

E-Commerce Provider into Connected Home Market

                       

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.87%, Secured Debt (Maturity—August 5, 2024)(9)

    4,988     4,964     5,055  

                           

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

                       

     

Preferred Stock (186,777 shares)

          154     260  

     

Warrants (952,500 equivalent shares; Expiration—June 15, 2022; Strike price—$0.001 per share)

          1,071     1,189  

                  1,225     1,449  

Subtotal Non-Control/Non-Affiliate Investments (49.8% of total investments at fair value)

  $ 1,107,447   $ 1,081,745  

Total Portfolio Investments, December 31, 2017

  $ 2,004,798   $ 2,171,305  

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C for a summary of geographic location of portfolio companies.

(4)
Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2017

(dollars in thousands)

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

(9)
Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at December 31, 2017. As noted in this schedule, 67% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.25%, with a weighted-average LIBOR floor of approximately 1.02%.

(10)
Private Loan portfolio investment. See Note B for a description of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B for a description of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B for a description of Other Portfolio investments.

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C for further discussion.

(19)
PIK interest income and cumulative dividend income represent income not paid currently in cash.

(20)
All portfolio company headquarters are based in the United States, unless otherwise noted.

(21)
Portfolio company headquarters are located outside of the United States.

(22)
In connection with the Company's debt investment in Staples Canada ULC to help mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company entered into a forward foreign currency contract with Cadence Bank to lend $24.2 million Canadian Dollars and receive $20.0 million U.S. Dollars with a settlement date of September 12, 2018. The unrealized appreciation on the forward foreign currency contract is $0.7 million as of December 31, 2017. This unrealized appreciation is offset by the foreign currency translation depreciation on the investment.

(23)
The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(24)
The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 8.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(25)
As part of the credit agreement with the portfolio company, the Company is entitled to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche receives priority over the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. The rate the Company receives per the Credit Agreement is the same as the rate reflected in the Consolidated Schedule of Investments above.

(26)
The Company has entered into an intercreditor agreement that entitles the Company to the "first out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a lower interest rate than the contractual stated interest rate of LIBOR plus 6.64% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such lower rate.

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Control Investments(5)

 

 

 

 

                   

                           

Access Media Holdings, LLC(10)

 

Private Cable Operator

                       

     

5% Current / 5% PIK Secured Debt (Maturity—July 22, 2020)(19)

  $ 22,664   $ 22,664   $ 19,700  

     

Preferred Member Units (6,581,250 units)

          6,475     240  

     

Member Units (45 units)

          1      

                  29,140     19,940  

                           

Ameritech College Operations, LLC

 

For-Profit Nursing and Healthcare College

                       

     

10% Secured Debt (Maturity—November 30, 2019)

    514     514     514  

     

13% Secured Debt (Maturity—November 30, 2019)

    489     489     489  

     

13% Secured Debt (Maturity—January 31, 2020)

    3,025     3,025     3,025  

     

Preferred Member Units (294 units)

          2,291     2,291  

                  6,319     6,319  

                           

ASC Interests, LLC

 

Recreational and Educational Shooting Facility

                       

     

11% Secured Debt (Maturity—July 31, 2018)

    2,100     2,084     2,100  

     

Member Units (1,500 units)(8)

          1,500     2,680  

                  3,584     4,780  

                           

Bond-Coat, Inc.

 

Casing and Tubing Coating Services

                       

     

12% Secured Debt (Maturity—December 28, 2017)

    11,596     11,556     11,596  

     

Common Stock (57,508 shares)

          6,350     6,660  

                  17,906     18,256  

                           

Café Brazil, LLC

 

Casual Restaurant Group

                       

     

Member Units (1,233 units)(8)

          1,742     6,040  

                           

CBT Nuggets, LLC

 

Produces and Sells IT Training Certification Videos

                       

     

Member Units (416 units)(8)

          1,300     55,480  

                           

F-37


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Clad-Rex Steel, LLC

 

Specialty Manufacturer of Vinyl-Clad Metal

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—December 20, 2018)(9)

    400     396     396  

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—December 20, 2021)(9)

    14,080     13,941     13,941  

     

Member Units (717 units)

          7,280     7,280  

     

10% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity—December 20, 2036)

    1,202     1,190     1,190  

     

Member Units (Clad-Rex Steel RE Investor, LLC) (800 units)

          210     210  

                  23,017     23,017  

                           

CMS Minerals Investments

 

Oil & Gas Exploration & Production

                       

     

Preferred Member Units (CMS Minerals LLC) (458 units)(8)

          2,104     3,682  

     

Member Units (CMS Minerals II, LLC) (100 units)(8)

          3,829     3,381  

                  5,933     7,063  

                           

Datacom, LLC

 

Technology and Telecommunications Provider

                       

     

8% Secured Debt (Maturity—May 30, 2017)

    900     900     900  

     

5.25% Current / 5.25% PIK Secured Debt (Maturity—May 30, 2019)(19)

    11,713     11,651     11,049  

     

Class A Preferred Member Units

          1,181     1,368  

     

Class B Preferred Member Units (6,453 units)

          6,030     1,529  

                  19,762     14,846  

                           

Gamber-Johnson Holdings, LLC

 

Manufacturer of Ruggedized Computer Mounting Systems

                       

     

LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.00%, Secured Debt (Maturity—June 24, 2021)(9)

    24,080     23,846     23,846  

     

Member Units (8,619 units)

          14,844     18,920  

                  38,690     42,766  

                           

Garreco, LLC

 

Manufacturer and Supplier of Dental Products

                       

     

14% Secured Debt (Maturity—January 12, 2018)

    5,250     5,219     5,219  

     

Member Units (1,200 units)

          1,200     1,150  

                  6,419     6,369  

                           

F-38


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

GRT Rubber Technologies LLC

 

Manufacturer of Engineered Rubber Products

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—December 19, 2019)(9)

    13,274     13,188     13,274  

     

Member Units (5,879 units)(8)

          13,065     20,310  

                  26,253     33,584  

                           

Gulf Manufacturing, LLC

 

Manufacturer of Specialty Fabricated Industrial Piping Products

                       

     

9% PIK Secured Debt (Ashland Capital IX, LLC) (Maturity—June 30, 2017)(19)

    777     777     777  

     

Member Units (438 units)(8)

          2,980     8,770  

                  3,757     9,547  

                           

Gulf Publishing Holdings, LLC

 

Energy Industry Focused Media and Publishing

                       

     

12.5% Secured Debt (Maturity—April 29, 2021)

    10,000     9,911     9,911  

     

Member Units (3,124 units)

          3,124     3,124  

                  13,035     13,035  

                           

Harrison Hydra-Gen, Ltd.

 

Manufacturer of Hydraulic Generators

                       

     

Common Stock (107,456 shares)(8)

          718     3,120  

                           

Hawthorne Customs and Dispatch Services, LLC

 

Facilitator of Import Logistics, Brokerage, and Warehousing

                       

     

Member Units (500 units)

          589     280  

     

Member Units (Wallisville Real Estate, LLC) (588,210 units)(8)

          1,215     2,040  

                  1,804     2,320  

                           

HW Temps LLC

 

Temporary Staffing Solutions

                       

     

LIBOR Plus 13.00% (Floor 1.00%), Current Coupon 14.00%, Secured Debt (Maturity July 2, 2020)(9)

    10,576     10,500     10,500  

     

Preferred Member Units (3,200 units)(8)

          3,942     3,940  

                  14,442     14,440  

                           

Hydratec, Inc.

 

Designer and Installer of Micro-Irrigation Systems

                       

     

Common Stock (7,095 shares)(8)

          7,095     15,640  

                           

IDX Broker, LLC

 

Provider of Marketing and CRM Tools for the Real Estate Industry

                       

     

12.5% Secured Debt (Maturity—November 15, 2018)

    10,950     10,904     10,950  

     

Member Units (5,400 units)(8)

          5,606     7,040  

                  16,510     17,990  

                           

F-39


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Indianapolis Aviation Partners, LLC

 

Fixed Base Operator

                       

     

15% Secured Debt (Maturity—January 15, 2017)

    3,100     3,100     3,100  

     

Warrants (1,046 equivalent units; Expiration—September 15, 2019; Strike price—$0.01 per unit)

          1,129     2,649  

                  4,229     5,749  

                           

Jensen Jewelers of Idaho, LLC

 

Retail Jewelry Store

                       

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 10.25%, Secured Debt (Maturity—November 14, 2019)(9)

    4,055     3,996     4,055  

     

Member Units (627 units)(8)

          811     4,460  

                  4,807     8,515  

                           

Lamb Ventures, LLC

 

Aftermarket Automotive Services Chain

                       

     

11% Secured Debt (Maturity—May 31, 2018)

    7,657     7,657     7,657  

     

Preferred Equity (non-voting)

          400     400  

     

Member Units (742 units)(8)

          5,273     5,990  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity—December 31, 2041)

    1,170     1,170     1,170  

     

Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

          625     1,340  

                  15,125     16,557  

                           

Lighting Unlimited, LLC

 

Commercial and Residential Lighting Products and Design Services

                       

     

8% Secured Debt (Maturity—August 22, 2017)

    1,514     1,514     1,514  

     

Preferred Equity (non-voting)

          434     410  

     

Warrants (71 equivalent units; Expiration—June 14, 2021; Strike price—$0.01 per unit)

          54      

     

Member Units (700 units)

          100      

                  2,102     1,924  

                           

Marine Shelters Holdings, LLC

 

Fabricator of Marine and Industrial Shelters

                       

     

12% PIK Secured Debt (Maturity—December 28, 2017)(14)

    9,967     9,914     9,387  

     

Preferred Member Units (3,810 units)

          5,352      

                  15,266     9,387  

                           

MH Corbin Holding LLC

 

Manufacturer and Distributor of Traffic Safety Products

                       

     

10% Secured Debt (Maturity—August 31, 2020)

    13,300     13,197     13,197  

     

Preferred Member Units (4,000 shares)

          6,000     6,000  

                  19,197     19,197  

                           

F-40


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Mid-Columbia Lumber Products, LLC

 

Manufacturer of Finger-Jointed Lumber Products

                       

     

10% Secured Debt (Maturity—December 18, 2017)

    1,750     1,750     1,750  

     

12% Secured Debt (Maturity—December 18, 2017)

    3,900     3,900     3,900  

     

Member Units (3,554 units)

          1,810     2,480  

     

9.5% Secured Debt (Mid—Columbia Real Estate, LLC) (Maturity—May 13, 2025)

    836     836     836  

     

Member Units (Mid—Columbia Real Estate, LLC) (250 units)(8)

          250     600  

                  8,546     9,566  

                           

MSC Adviser I, LLC(16)

 

Third Party Investment Advisory Services

                       

     

Member Units (Fully diluted 100.0%)(8)

              30,617  

                           

Mystic Logistics Holdings, LLC

 

Logistics and Distribution Services Provider for Large Volume Mailers

                       

     

12% Secured Debt (Maturity—August 15, 2019)

    9,176     9,053     9,176  

     

Common Stock (5,873 shares)

          2,720     5,780  

                  11,773     14,956  

                           

NAPCO Precast, LLC

 

Precast Concrete Manufacturing

                       

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity—February 1, 2019)(9)

    2,713     2,693     2,713  

     

18% Secured Debt (Maturity—February 1, 2019)

    3,952     3,922     3,952  

     

Member Units (2,955 units)(8)

          2,975     10,920  

                  9,590     17,585  

                           

NRI Clinical Research, LLC

 

Clinical Research Service Provider

                       

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity—September 8, 2017)(9)

    200     200     200  

     

14% Secured Debt (Maturity—September 8, 2017)

    4,261     4,228     4,261  

     

Warrants (251,723 equivalent units; Expiration—September 8, 2021; Strike price—$0.01 per unit)

          252     680  

     

Member Units (1,454,167 units)

          765     2,462  

                  5,445     7,603  

                           

F-41


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

NRP Jones, LLC

 

Manufacturer of Hoses, Fittings and Assemblies

                       

     

6% Current / 6% PIK Secured Debt (Maturity—December 22, 2016)(17)(19)

    13,915     13,915     13,915  

     

Warrants (14,331 equivalent units; Expiration—December 22, 2022; Strike price—$0.01 per unit)

          817     130  

     

Member Units (50,877 units)

          2,900     410  

                  17,632     14,455  

                           

OMi Holdings, Inc.

 

Manufacturer of Overhead Cranes

                       

     

Common Stock (1,500 shares)(8)

          1,080     13,080  

                           

Pegasus Research Group, LLC

 

Provider of Telemarketing and Data Services

                       

     

Member Units (460 units)(8)

          1,290     8,620  

                           

PPL RVs, Inc.

 

Recreational Vehicle Dealer

                       

     

LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 7.93%, Secured Debt (Maturity—November 15, 2021)(9)

    18,000     17,826     17,826  

     

Common Stock (1,962 shares)(8)

          2,150     11,780  

                  19,976     29,606  

                           

Principle Environmental, LLC

 

Noise Abatement Service Provider

                       

     

12% Secured Debt (Maturity—April 30, 2017)

    4,060     4,060     4,060  

     

12% Current / 2% PIK Secured Debt (Maturity—April 30, 2017)(19)

    3,378     3,378     3,378  

     

Preferred Member Units (19,631 units)

          4,663     5,370  

     

Warrants (1,036 equivalent units; Expiration—January 31, 2021; Strike price—$0.01 per unit)

          1,200     270  

                  13,301     13,078  

                           

Quality Lease Service, LLC

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

8% PIK Secured Debt (Maturity—June 8, 2020)(19)

    7,068     7,068     7,068  

     

Member Units (1,000 units)

          1,118     3,188  

                  8,186     10,256  

                           

River Aggregates, LLC

 

Processor of Construction Aggregates

                       

     

Zero Coupon Secured Debt (Maturity—June 30, 2018)

    750     627     627  

     

Member Units (1,150 units)(8)

          1,150     4,600  

     

Member Units (RA Properties, LLC) (1,500 units)

          369     2,510  

                  2,146     7,737  

                           

F-42


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

SoftTouch Medical Holdings LLC

 

Provider of In-Home Pediatric Durable Medical Equipment

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—October 31, 2019)(9)

    7,140     7,096     7,140  

     

Member Units (4,450 units)(8)

          4,930     9,170  

                  12,026     16,310  

                           

The MPI Group, LLC

 

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                       

     

9% Secured Debt (Maturity—October 2, 2018)

    2,924     2,922     2,922  

     

Series A Preferred Units (2,500 units)

          2,500      

     

Warrants (1,424 equivalent units; Expiration—July 1, 2024; Strike price—$0.01 per unit)

          1,096      

     

Member Units (MPI Real Estate Holdings, LLC) (100 units)(8)

          2,300     2,300  

                  8,818     5,222  

                           

Uvalco Supply, LLC

 

Farm and Ranch Supply Store

                       

     

9% Secured Debt (Maturity—January 1, 2019)

    872     872     872  

     

Member Units (2,011 units)(8)

          3,843     4,640  

                  4,715     5,512  

                           

Vision Interests, Inc.

 

Manufacturer / Installer of Commercial Signage

                       

     

13% Secured Debt (Maturity—December 23, 2018)

    2,814     2,814     2,814  

     

Series A Preferred Stock (3,000,000 shares)

          3,000     3,000  

     

Common Stock (1,126,242 shares)

          3,706      

                  9,520     5,814  

                           

Ziegler's NYPD, LLC

 

Casual Restaurant Group

                       

     

6.5% Secured Debt (Maturity—October 1, 2019)

    1,000     994     994  

     

12% Secured Debt (Maturity—October 1, 2019)

    300     300     300  

     

14% Secured Debt (Maturity—October 1, 2019)

    2,750     2,750     2,750  

     

Warrants (587 equivalent units; Expiration—September 29, 2018; Strike price—$0.01 per unit)

          600     240  

     

Preferred Member Units (10,072 units)

          2,834     4,100  

                  7,478     8,384  

                           

Subtotal Control Investments (29.8% of total investments at fair value)

        $ 439,674   $ 594,282  

                           

F-43


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Affiliate Investments(6)

 

 

 

 

                   

                           

AFG Capital Group, LLC

 

Provider of Rent-to-Own Financing Solutions and Services

                       

     

Warrants (42 equivalent units; Expiration—November 7, 2024; Strike price—$0.01 per unit)

        $ 259   $ 670  

     

Member Units (186 units)(8)

          1,200     2,750  

                  1,459     3,420  

                           

Barfly Ventures, LLC(10)

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—August 31, 2020)

    5,958     5,860     5,827  

     

Options (2 equivalent units)

          397     490  

     

Warrant (1 equivalent unit; Expiration—August 31, 2025; Strike price—$1.00 per unit)

          473     280  

                  6,730     6,597  

                           

BBB Tank Services, LLC

 

Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—April 8, 2021)(9)

    800     797     797  

     

15% Current Secured Debt (Maturity—April 8, 2021)

    4,027     3,991     3,991  

     

Member Units (800,000 units)

          800     800  

                  5,588     5,588  

                           

Boss Industries, LLC

 

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

                       

     

Preferred Member Units (2,242 units)(8)

          2,426     2,800  

                           

Bridge Capital Solutions Corporation

 

Financial Services and Cash Flow Solutions Provider

                       

     

13% Secured Debt (Maturity—July 25, 2021)

    7,500     5,610     5,610  

     

Warrants (63 equivalent shares; Expiration—April 18, 2022; Strike price—$0.01 per share)

          2,132     3,370  

     

13% Secured Debt (Mercury Service Group, LLC) (Maturity—July 25, 2021)

    1,000     991     1,000  

     

Preferred Member Units (Mercury Service Group, LLC) (17,742 units)(8)

          1,000     1,000  

                  9,733     10,980  

                           

Buca C, LLC

 

Casual Restaurant Group

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—June 30, 2020)(9)

    22,671     22,504     22,671  

     

Preferred Member Units (6 units; 6% cumulative)(8)(19)

          3,937     4,660  

                  26,441     27,331  

                           

F-44


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

CAI Software LLC

 

Provider of Specialized Enterprise Resource Planning Software

                       

     

12% Secured Debt (Maturity—October 10, 2019)

    3,683     3,660     3,683  

     

Member Units (65,356 units)(8)

          654     2,480  

                  4,314     6,163  

                           

CapFusion, LLC(13)

 

Non-Bank Lender to Small Businesses

                       

     

13% Secured Debt (Maturity—March 25, 2021)

    14,400     13,202     13,202  

     

Warrants (1,600 equivalent units; Expiration—March 24, 2026; Strike price—$0.01 per unit)

          1,200     1,200  

                  14,402     14,402  

                           

Chandler Signs Holdings, LLC(10)

 

Sign Manufacturer

                       

     

12% Secured Debt (Maturity—July 4, 2021)

    4,500     4,461     4,500  

     

Class A Units (1,500,000 units)(8)

          1,500     3,240  

                  5,961     7,740  

                           

Condit Exhibits, LLC

 

Tradeshow Exhibits / Custom Displays Provider

                       

     

Member Units (3,936 units)(8)

          100     1,840  

                           

Congruent Credit Opportunities Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

          5,730     1,518  

     

LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

          15,754     16,181  

                  21,484     17,699  

                           

Daseke, Inc.

 

Specialty Transportation Provider

                       

     

12% Current / 2.5% PIK Secured Debt (Maturity—July 31, 2018)(19)

    21,799     21,632     21,799  

     

Common Stock (19,467 shares)

          5,213     24,063  

                  26,845     45,862  

                           

Dos Rios Partners(12)(13)

 

Investment Partnership

                       

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

          5,996     4,925  

     

LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.4%)

          1,904     1,444  

                  7,900     6,369  

                           

Dos Rios Stone Products LLC(10)

 

Limestone and Sandstone Dimension Cut Stone Mining Quarries

                       

     

Class A Units (2,000,000 units)(8)

          2,000     2,070  

                           

East Teak Fine Hardwoods, Inc.

 

Distributor of Hardwood Products

                       

     

Common Stock (6,250 shares)(8)

          480     860  

                           

F-45


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

East West Copolymer & Rubber, LLC

 

Manufacturer of Synthetic Rubbers

                       

     

12% Current / 2% PIK Secured Debt (Maturity—October 17, 2019)(19)

    9,699     9,591     8,630  

     

Warrants (2,510,790 equivalent units; Expiration—October 15, 2024; Strike price—$0.01 per unit)

          50      

                  9,641     8,630  

                           

EIG Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EIG Global Private Debt fund-A, L.P.) (Fully diluted 11.1%)(8)

          2,804     2,804  

                           

EIG Traverse Co-Investment, L.P.(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 22.2%)(8)

          9,805     9,905  

                           

Freeport Financial Funds(12)(13)

 

Investment Partnership

                       

     

LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.3%)(8)

          5,974     5,620  

     

LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.0%)(8)

          4,763     4,763  

                  10,737     10,383  

                           

Gault Financial, LLC (RMB Capital, LLC)

 

Purchases and Manages Collection of Healthcare and other Business Receivables

                       

     

10% Current Secured Debt (Maturity—January 1, 2019)

    13,046     13,046     11,079  

     

Warrants (29,025 equivalent units; Expiration—February 9, 2022; Strike price—$0.01 per unit)

          400      

                  13,446     11,079  

                           

Glowpoint, Inc.

 

Provider of Cloud Managed Video Collaboration Services

                       

     

12% Secured Debt (Maturity—October 18, 2018)

    9,000     8,949     3,997  

     

Common Stock (7,711,517 shares)(24)

          3,958     2,080  

                  12,907     6,077  

                           

Guerdon Modular Holdings, Inc.

 

Multi-Family and Commercial Modular Construction Company

                       

     

9% Current / 4% PIK Secured Debt (Maturity—August 13, 2019)(19)

    10,708     10,594     10,594  

     

Preferred Stock (404,998 shares)

          1,140     1,140  

     

Common Stock (212,033 shares)

          2,983     80  

                  14,717     11,814  

                           

F-46


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Hawk Ridge Systems, LLC(13)

 

Value-Added Reseller of Engineering Design and Manufacturing Solutions

                       

     

10% Secured Debt (Maturity—December 2, 2021)

    10,000     9,901     9,901  

     

Preferred Member Units (226 units)(8)

          2,850     2,850  

     

Preferred Member Units (HRS Services, ULC) (226 units)

          150     150  

                  12,901     12,901  

                           

Houston Plating and Coatings, LLC

 

Provider of Plating and Industrial Coating Services

                       

     

Member Units (265,756 units)

          1,429     4,000  

                           

I-45 SLF LLC(12)(13)

 

Investment Partnership

                       

     

Member units (Fully diluted 20.0%; 24.4% profits interest)(8)

          14,200     14,586  

                           

Indianhead Pipeline Services, LLC

 

Provider of Pipeline Support Services

                       

     

12% Secured Debt (Maturity—February 6, 2017)

    5,100     5,079     5,079  

     

Preferred Member Units (33,819 units; 8% cumulative)(8)(19)

          2,339     2,677  

     

Warrants (31,928 equivalent units; Expiration—August 6, 2022; Strike price—$0.001 per unit)

          459      

     

Member Units (14,732 units)

          1      

                  7,878     7,756  

                           

KBK Industries, LLC

 

Manufacturer of Specialty Oilfield and Industrial Products

                       

     

10% Secured Debt (Maturity—September 28, 2017)

    1,250     1,250     1,250  

     

12.5% Secured Debt (Maturity—September 28, 2017)

    5,900     5,889     5,889  

     

Member Units (250 units)

          341     2,780  

                  7,480     9,919  

                           

L.F. Manufacturing Holdings, LLC(10)

 

Manufacturer of Fiberglass Products

                       

     

Member Units (2,179,001 units)

          2,019     1,380  

                           

OnAsset Intelligence, Inc.

 

Provider of Transportation Monitoring / Tracking Products and Services

                       

     

12% PIK Secured Debt (Maturity—December 31, 2015)(17)(19)

    4,519     4,519     4,519  

     

Preferred Stock (912 shares)

          1,981      

     

Warrants (5,333 equivalent shares; Expiration—April 18, 2021; Strike price—$0.01 per share)

          1,919      

                  8,419     4,519  

                           

F-47


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

OPI International Ltd.(13)

 

Provider of Man Camp and Industrial Storage Services

                       

     

10% Unsecured Debt (Maturity—April 8, 2018)

    473     473     473  

     

Common Stock (20,766,317 shares)

          1,371     1,600  

                  1,844     2,073  

                           

PCI Holding Company, Inc.

 

Manufacturer of Industrial Gas Generating Systems

                       

     

12% Secured Debt (Maturity—March 31, 2019)

    13,000     12,898     13,000  

     

Preferred Stock (1,500,000 shares; 20% cumulative)(8)(19)

          3,379     5,370  

                  16,277     18,370  

                           

Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

 

Provider of Rigsite Accommodation Unit Rentals and Related Services

                       

     

12% Secured Debt (Maturity—January 8, 2018)(14)(15)

    30,785     30,281     250  

     

Preferred Member Units (250 units)

          2,500      

                  32,781     250  

                           

Tin Roof Acquisition Company

 

Casual Restaurant Group

                       

     

12% Secured Debt (Maturity—November 13, 2018)

    13,511     13,385     13,385  

     

Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)(19)

          2,738     2,738  

                  16,123     16,123  

                           

UniTek Global Services, Inc.(11)

 

Provider of Outsourced Infrastructure Services

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—January 13, 2019)(9)

    5,021     5,010     5,021  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—January 13, 2019)(9)

    824     824     824  

     

15% PIK Unsecured Debt (Maturity—July 13, 2019)(19)

    745     745     745  

     

Preferred Stock (4,935,377 shares; 13.5% cumulative)(8)(19)

          5,814     6,410  

     

Common Stock (705,054 shares)

              3,010  

                  12,393     16,010  

                           

Universal Wellhead Services Holdings, LLC(10)

 

Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                       

     

Preferred Member Units (UWS Investments, LLC) (716,949 units)

          717     720  

     

Member Units (UWS Investments, LLC) (4,000,000 units)

          4,000     610  

                  4,717     1,330  

                           

F-48


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair
Value(18)

 
   

Valley Healthcare Group, LLC

 

Provider of Durable Medical Equipment

                       

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.12%, Secured Debt (Maturity—December 29, 2020)(9)

    12,956     12,844     12,844  

     

Preferred Member Units (Valley Healthcare Holding, LLC) (1,600 units)

          1,600     1,600  

                  14,444     14,444  

                           

Volusion, LLC

 

Provider of Online Software-as-a-Service eCommerce Solutions

                       

     

11.5% Secured Debt (Maturity—January 26, 2020)

    17,500     15,298     15,298  

     

Preferred Member Units (4,876,670 units)

          14,000     14,000  

     

Warrants (1,831,355 equivalent units; Expiration—January 26, 2025; Strike price—$0.01 per unit)

          2,576     2,576  

                  31,874     31,874  

                           

Subtotal Affiliate Investments (18.8% of total investments at fair value)

        $ 394,699   $ 375,948  

F-49


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Non-Control/Non-Affiliate Investments(7)

             

                           

Adams Publishing Group, LLC(10)

 

Local Newspaper Operator

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—November 3, 2020)(9)

  $ 7,662   $ 7,544   $ 7,662  

                           

Ahead, LLC(10)

 

IT Infrastructure Value Added Reseller

                       

     

LIBOR Plus 6.50%, Current Coupon 7.50%, Secured Debt (Maturity—November 2, 2020)

    14,250     13,906     14,303  

                           

Allflex Holdings III Inc.(11)

 

Manufacturer of Livestock Identification Products

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—July 19, 2021)(9)

    14,795     14,706     14,809  

                           

American Scaffold Holdings, Inc.(10)

 

Marine Scaffolding Service Provider

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—March 31, 2022)(9)

    7,359     7,258     7,323  

                           

American Seafoods Group, LLC(11)

 

Catcher and Processor of Alaskan Pollock

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—August 19, 2021)(9)

    9,634     9,624     9,634  

                           

American Teleconferencing Services, Ltd.(11)

 

Provider of Audio Conferencing and Video Collaboration Solutions

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—December 8, 2021)(9)

    11,163     10,345     10,933  

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—June 6, 2022)(9)

    3,714     3,569     3,569  

                  13,914     14,502  

                           

Anchor Hocking, LLC(11)

 

Household Products Manufacturer

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—June 4, 2018)(9)

    2,277     2,277     2,231  

     

Member Units (440,620 units)

          4,928     3,305  

                  7,205     5,536  

                           

F-50


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

AP Gaming I, LLC(10)

 

Developer, Manufacturer, and Operator of Gaming Machines

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—December 20, 2020)(9)

    7,209     7,099     7,194  

                           

Apex Linen Service, Inc.

 

Industrial Launderers

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—October 30, 2022)(9)

    2,400     2,400     2,400  

     

13% Secured Debt (Maturity—October 30, 2022)

    14,416     14,337     14,337  

                  16,737     16,737  

                           

Applied Products, Inc.(10)

 

Adhesives Distributor

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—September 30, 2019)(9)

    3,527     3,499     3,518  

                           

Arcus Hunting LLC.(10)

 

Manufacturer of Bowhunting and Archery Products and Accessories

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—November 13, 2019)(9)

    13,947     13,796     13,947  

                           

Artel, LLC(11)

 

Provider of Secure Satellite Network and IT Solutions

                       

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity—November 27, 2017)(9)

    7,050     6,920     6,592  

                           

ATI Investment Sub, Inc.(11)

 

Manufacturer of Solar Tracking Systems

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—June 22, 2021)(9)

    9,500     9,322     9,476  

                           

ATS Workholding, Inc.(10)

 

Manufacturer of Machine Cutting Tools and Accessories

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—March 10, 2019)(9)

    6,173     6,146     5,924  

                           

ATX Networks Corp.(11)(13)(21)

 

Provider of Radio Frequency Management Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—June 11, 2021)(9)

    11,790     11,604     11,584  

                           

F-51


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Berry Aviation, Inc.(10)

 

Airline Charter Service Operator

                       

     

13.75% Secured Debt (Maturity—January 30, 2020)

    5,627     5,588     5,627  

     

Common Stock (553 shares)

          400     820  

                  5,988     6,447  

                           

Bluestem Brands, Inc.(11)

 

Multi-Channel Retailer of General Merchandise

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—November 6, 2020)(9)

    12,880     12,635     11,227  

                           

Brainworks Software, LLC(10)

 

Advertising Sales and Newspaper Circulation Software

                       

     

Prime Plus 9.25% (Floor 3.25%), Current Coupon 13.00%, Secured Debt (Maturity—July 22, 2019)(9)

    6,733     6,684     6,733  

                           

Brightwood Capital Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 1.6%)(8)

          12,000     11,094  

     

LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.9%)

          500     500  

                  12,500     11,594  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

 

Construction Services Provider

                       

     

10.375% Secured Debt (Maturity—September 1, 2021)

    3,000     2,985     3,240  

                           

California Pizza Kitchen, Inc.(11)

 

Casual Restaurant Group

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—August 23, 2022)(9)

    4,988     4,940     4,976  

                           

Cenveo Corporation(11)

 

Provider of Commercial Printing, Envelopes, Labels, and Printed Office Products

                       

     

6% Secured Debt (Maturity—August 1, 2019)

    13,130     11,097     11,719  

                           

CDHA Management, LLC(10)

 

Dental Services

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—December 5, 2021)(9)

    4,491     4,415     4,415  

                           

Charlotte Russe, Inc(11)

 

Fast-Fashion Retailer to Young Women

                       

     

LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.75%, Secured Debt (Maturity—May 22, 2019)(9)

    14,346     14,141     8,724  

                           

F-52


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Clarius BIGS, LLC(10)

 

Prints & Advertising Film Financing

                       

     

15% PIK Secured Debt (Maturity—January 5, 2015)(14)(17)

    2,928     2,928     88  

                           

Compact Power Equipment, Inc.

 

Equipment / Tool Rental

                       

     

12% Secured Debt (Maturity—October 1, 2017)

    4,100     4,095     4,100  

     

Series A Preferred Stock (4,298,435 shares)

          1,079     4,180  

                  5,174     8,280  

                           

Compuware Corporation(11)

 

Provider of Software and Supporting Services

                       

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity—December 15, 2019)(9)

    8,345     8,187     8,398  

                           

Construction Supply Investments, LLC(10)

 

Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

                       

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—June 30, 2023)(9)

    8,500     8,416     8,416  

     

Member Units (20,000 units)

          2,000     2,000  

                  10,416     10,416  

                           

ContextMedia Health, LLC(11)

 

Provider of Healthcare Media Content

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—December 23, 2021)(9)

    8,000     7,201     7,320  

                           

Covenant Surgical Partners, Inc.(11)

 

Ambulatory Surgical Centers

                       

     

8.75% Secured Debt (Maturity—August 1, 2019)

    800     800     772  

                           

CRGT Inc.(11)

 

Provider of Custom Software Development

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—December 19, 2020)(9)

    6,366     6,286     6,382  

                           

CST Industries Inc.(11)

 

Storage Tank Manufacturer

                       

     

LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 7.75%, Secured Debt (Maturity—May 22, 2017)(9)

    9,102     9,084     9,102  

                           

F-53


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Darr Equipment LP(10)

 

Heavy Equipment Dealer

                       

     

12% Current / 2% PIK Secured Debt (Maturity—April 15, 2020)(19)

    21,130     20,697     20,748  

     

Warrants (915,734 equivalent units; Expiration—April 15, 2024; Strike price—$1.50 per unit)

          474     10  

                  21,171     20,758  

                           

Digital River, Inc.(11)

 

Provider of Outsourced e-Commerce Solutions and Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—February 12, 2021)(9)

    15,184     15,086     15,317  

                           

Digital Room LLC(11)

 

Pure-Play e-Commerce Print Business

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—November 21, 2022)(9)

    7,625     7,475     7,549  

                           

Drilling Info Holdings, Inc.

 

Information Services for the Oil and Gas Industry

                       

     

Common Stock (3,788,865 shares)

          1,335     10,410  

                           

ECP-PF Holdings Group, Inc.(10)

 

Fitness Club Operator

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity—November 26, 2019)(9)

    5,625     5,589     5,625  

                           

EnCap Energy Fund Investments(12)(13)

 

Investment Partnership

                       

     

LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

          3,877     1,955  

     

LP Interests (EnCap Energy Capital Fund VIII Co-Investors, L.P.) (Fully diluted 0.4%)

          2,200     1,225  

     

LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

          3,957     3,680  

     

LP Interests (Encap Energy Capital Fund X, L.P.)(Fully diluted 0.1%)

          3,039     3,039  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.)(Fully diluted 0.8%)(8)

          9,116     10,452  

     

LP Interests (EnCap Flatrock Midstream Fund III, L.P.)(Fully diluted 0.2%)(8)

          2,513     2,461  

                  24,702     22,812  

                           

Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)(13)

 

Technology-based Performance Support Solutions

                       

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—April 28, 2022)(9)

    7,000     6,857     5,274  

                           

F-54


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Flavors Holdings Inc.(11)

 

Global Provider of Flavoring and Sweetening Products and Solutions

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity—April 3, 2020)(9)

    12,483     12,082     10,174  

                           

GI KBS Merger Sub LLC(11)

 

Outsourced Janitorial Services to Retail/Grocery Customers

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—October 29, 2021)(9)

    3,900     3,851     3,842  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—April 29, 2022)(9)

    800     787     760  

                  4,638     4,602  

                           

Grace Hill, LLC(10)

 

Online Training Tools for the Multi-Family Housing Industry

                       

     

Prime Plus 5.25% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity—August 15, 2019)(9)

    634     623     634  

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—August 15, 2019)(9)

    11,552     11,472     11,552  

                  12,095     12,186  

                           

Great Circle Family Foods, LLC(10)

 

Quick Service Restaurant Franchise

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—October 28, 2019)(9)

    7,648     7,598     7,648  

                           

Grupo Hima San Pablo, Inc.(11)

 

Tertiary Care Hospitals

                       

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity—January 31, 2018)(9)

    4,813     4,787     3,734  

     

13.75% Secured Debt (Maturity—July 31, 2018)

    2,000     1,962     1,205  

                  6,749     4,939  

                           

GST Autoleather, Inc.(11)

 

Automotive Leather Manufacturer

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—July 10, 2020)(9)

    13,317     13,215     13,017  

                           

Guitar Center, Inc.(11)

 

Musical Instruments Retailer

                       

     

6.5% Secured Debt (Maturity—April 15, 2019)

    14,625     13,890     13,272  

                           

F-55


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Hojeij Branded Foods, LLC(10)

 

Multi-Airport, Multi-Concept Restaurant Operator

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—July 27, 2021)(9)

    5,432     5,390     5,432  

                           

Hoover Group, Inc.(10)(13)

 

Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—January 28, 2021)(9)

    8,546     7,963     7,963  

                           

Horizon Global Corporation(11)(13)

 

Auto Parts Manufacturer

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—June 30, 2021)(9)

    9,375     9,249     9,551  

                           

Hostway Corporation(11)

 

Managed Services and Hosting Provider

                       

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity—December 13, 2019)(9)

    10,577     10,515     10,028  

                           

Hunter Defense Technologies, Inc.(11)

 

Provider of Military and Commercial Shelters and Systems

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—August 5, 2019)(9)

    9,606     9,120     8,933  

                           

Hygea Holdings, Corp.(10)

 

Provider of Physician Services

                       

     

LIBOR Plus 9.25%, Current Coupon 10.17%, Secured Debt (Maturity—February 24, 2019)

    7,875     7,381     7,615  

     

Warrants (5,990,452 equivalent shares; Expiration—February 24, 2023; Strike price—$0.01 per share)

          369     1,530  

                  7,750     9,145  

                           

iEnergizer Limited(11)(13)(21)

 

Provider of Business Outsourcing Solutions

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—May 1, 2019)(9)

    9,918     9,467     9,621  

                           

Indivior Finance LLC(11)(13)

 

Specialty Pharmaceutical Company Treating Opioid Dependence

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—December 19, 2019)(9)

    6,750     6,455     6,809  

                           

F-56


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Industrial Container Services, LLC(10)

 

Steel Drum Reconditioner

                       

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity—December 31, 2018)(9)

    8,949     8,932     8,949  

                           

Industrial Services Acquisition, LLC(10)

 

Industrial Cleaning Services

                       

     

11.25% Current / 0.75% PIK Unsecured Debt (Maturity—December 17, 2022)(19)

    4,519     4,433     4,433  

     

Member Units (Industrial Services Investments, LLC) (900,000 units)

          900     900  

                  5,333     5,333  

                           

Infinity Acquisition Finance Corp.(11)

 

Application Software for Capital Markets

                       

     

7.25% Unsecured Debt (Maturity—August 1, 2022)

    5,700     5,366     4,802  

                           

Inn of the Mountain Gods Resort and Casino(11)

 

Hotel & Casino Owner & Operator

                       

     

9.25% Secured Debt (Maturity—November 30, 2020)

    6,249     5,924     5,687  

                           

Intertain Group Limited(11)(13)(21)

 

Business-to-Consumer Online Gaming Operator

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—April 8, 2022)(9)

    4,426     4,364     4,465  

                           

iPayment, Inc.(11)

 

Provider of Merchant Acquisition

                       

     

LIBOR Plus 5.25% (Floor 1.50%), Current Coupon 6.75%, Secured Debt (Maturity—May 8, 2017)(9)

    14,918     14,907     14,395  

                           

iQor US Inc.(11)

 

Business Process Outsourcing Services Provider

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—April 1, 2021)(9)

    9,812     9,671     9,413  

                           

irth Solutions, LLC

 

Provider of Damage Prevention Information Technology Services

                       

     

Member Units (27,893 units)

          1,441     1,790  

                           

Jackmont Hospitality, Inc.(10)

 

Franchisee of Casual Dining Restaurants

                       

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25% / 2.50% PIK, Current Coupon Plus PIK 7.75%, Secured Debt (Maturity—May 26, 2021)(9)(19)

    4,445     4,429     4,445  

                           

F-57


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Joerns Healthcare, LLC(11)

 

Manufacturer and Distributor of Health Care Equipment & Supplies

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—May 9, 2020)(9)

    14,655     14,560     13,776  

                           

JSS Holdings, Inc.(11)

 

Aircraft Maintenance Program Provider

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—August 31, 2021)(9)

    12,829     12,562     12,765  

                           

Kendra Scott, LLC(11)

 

Jewelry Retail Stores

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—July 17, 2020)(9)

    5,578     5,536     5,550  

                           

Keypoint Government Solutions, Inc.(11)

 

Provider of Pre-Employment Screening Services

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity—November 13, 2017)(9)

    5,459     5,443     5,431  

                           

LaMi Products, LLC(10)

 

General Merchandise Distribution

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—September 16, 2020)(9)

    10,735     10,658     10,735  

                           

Larchmont Resources, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, PIK Secured Debt (Maturity—August 7, 2020)(9)(19)

    2,260     2,260     2,209  

     

Member Units (Larchmont Intermediate Holdco, LLC) (2,828 units)

          353     1,193  

                  2,613     3,402  

                           

LKCM Headwater Investments I, L.P.(12)(13)

 

Investment Partnership

                       

     

LP Interests (Fully diluted 2.3%)

          2,500     3,627  

                           

Logix Acquisition Company, LLC(10)

 

Competitive Local Exchange Carrier

                       

     

LIBOR Plus 8.28% (Floor 1.00%), Current Coupon 9.28%, Secured Debt (Maturity—June 24, 2021)(9)(22)

    8,593     8,457     8,593  

                           

F-58


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Looking Glass Investments, LLC(12)(13)

 

Specialty Consumer Finance

                       

     

9% Unsecured Debt (Maturity—June 30, 2020)

    188     188     188  

     

Member Units (2.5 units)

          125     125  

     

Member Units (LGI Predictive Analytics LLC) (190,712 units)(8)

          160     160  

                  473     473  

                           

Messenger, LLC(10)

 

Supplier of Specialty Stationery and Related Products to the Funeral Industry

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—September 9, 2020)(9)

    14,403     14,326     14,403  

                           

Minute Key, Inc.

 

Operator of Automated Key Duplication Kiosks

                       

     

10% Current / 2% PIK Secured Debt (Maturity—September 19, 2019)(19)

    15,700     15,404     15,404  

     

Warrants (1,437,409 equivalent shares; Expiration—May 20, 2025; Strike price—$0.01 per share)

          280     470  

                  15,684     15,874  

                           

Mood Media Corporation(11)(13)

 

Provider of Electronic Equipment

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—May 1, 2019)(9)

    14,805     14,645     14,312  

                           

New Media Holdings II LLC(11)(13)

 

Local Newspaper Operator

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—June 4, 2020)(9)

    14,888     14,632     14,813  

                           

North American Lifting Holdings, Inc.(11)

 

Crane Service Provider

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—November 27, 2020)(9)

    3,865     3,235     3,375  

                           

North Atlantic Trading Company, Inc.(11)

 

Marketer/Distributor of Tobacco Products

                       

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity—January 13, 2020)(9)

    9,396     9,343     9,337  

                           

Novitex Intermediate, LLC(11)

 

Provider of Document Management Services

                       

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity—July 7, 2020)(9)

    9,335     9,175     8,985  

                           

F-59


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

NTM Acquisition Corp.(11)

 

Provider of B2B Travel Information Content

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—June 7, 2022)(9)

    4,144     4,085     4,128  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)

 

Estrogen-Deficiency Drug Manufacturer and Distributor

                       

     

11.5% Secured Debt (Maturity—November 15, 2026)(14)

    5,071     5,071     2,088  

                           

Pardus Oil and Gas, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

13% PIK Secured Debt (Maturity—November 12, 2021)(19)

    1,869     1,869     1,869  

     

5% PIK Secured Debt (Maturity—May 13, 2022)(19)

    992     992     562  

     

Member Units (2,472 units)

          2,472     970  

                  5,333     3,401  

                           

Paris Presents Incorporated(11)

 

Branded Cosmetic and Bath Accessories

                       

     

LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 9.75%, Secured Debt (Maturity—December 31, 2021)(9)

    2,000     1,969     1,960  

                           

Parq Holdings Limited Partnership(11)(13)(21)

 

Hotel & Casino Operator

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—December 17, 2020)(9)

    7,500     7,394     7,388  

                           

Permian Holdco 2, Inc.(11)

 

Storage Tank Manufacturer

                       

     

14% PIK Unsecured Debt (Maturity—October 15, 2021)(19)

    198     198     198  

     

Preferred Stock (Permian Holdco 1, Inc.) (154,558 units)

          799     799  

     

Common Stock (Permian Holdco 1, Inc.) (154,558 units)

               

                  997     997  

                           

Pernix Therapeutics Holdings, Inc.(10)

 

Pharmaceutical Royalty

                       

     

12% Secured Debt (Maturity—August 1, 2020)

    3,447     3,447     3,326  

                           

Pet Holdings ULC(11)(13)(21)

 

Retailer of Pet Products and Supplies to Consumers

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—July 5, 2022)(9)

    2,494     2,470     2,503  

                           

F-60


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Pike Corporation(11)

 

Construction and Maintenance Services for Electric Transmission and Distribution Infrastructure

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—June 22, 2022)(9)

    14,000     13,720     14,082  

                           

Point.360(10)

 

Fully Integrated Provider of Digital Media Services

                       

     

Warrants (65,463 equivalent shares; Expiration—July 7, 2020; Strike price—$0.75 per share)

          69      

     

Common Stock (163,658 shares)

          273     63  

                  342     63  

                           

Polycom, Inc.(11)

 

Provider of Audio and Video Communication Solutions

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—September 27, 2023)(9)

    12,089     11,617     12,194  

                           

PPC/SHIFT LLC(10)

 

Provider of Digital Solutions to Automotive Industry

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—June 6, 2022)(9)

    7,000     6,852     6,852  

                           

Prowler Acquisition Corp.(11)

 

Specialty Distributor to the Energy Sector

                       

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity—January 28, 2020)(9)

    9,519     7,904     7,044  

                           

PT Network, LLC(10)

 

Provider of Outpatient Physical Therapy and Sports Medicine Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—November 30, 2021)(9)

    16,225     15,979     15,979  

                           

QBS Parent, Inc.(11)

 

Provider of Software and Services to the Oil & Gas Industry

                       

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity—August 7, 2021)(9)

    11,274     11,201     11,161  

                           

Raley's(11)

 

Family-Owned Supermarket Chain

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—May 18, 2022)(9)

    4,195     4,125     4,242  

                           

F-61


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Redbox Automated Retail, LLC(11)

 

Operator of Home Media Entertainment Kiosks

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—September 27, 2021)(9)

    15,000     14,581     14,629  

                           

Renaissance Learning, Inc.(11)

 

Technology-based K-12 Learning Solutions

                       

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—April 11, 2022)(9)

    3,000     2,978     2,987  

                           

RGL Reservoir Operations Inc.(11)(13)(21)

 

Oil & Gas Equipment and Services

                       

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—August 13, 2021)(9)

    3,910     3,826     880  

                           

RM Bidder, LLC(10)

 

Scripted and Unscripted TV and Digital Programming Provider

                       

     

Warrants (327,532 equivalent units; Expiration—October 20, 2025; Strike price—$14.28 per unit)

          425     300  

     

Member Units (2,779 units)

          46     44  

                  471     344  

                           

SAExploration, Inc.(10)(13)(21)

 

Geophysical Services Provider

                       

     

Common Stock (50 shares)

          65     3  

                           

SAFETY Investment Holdings, LLC

 

Provider of Intelligent Driver Record Monitoring Software and Services

                       

     

Member Units (2,000,000 units)

          2,000     2,000  

                           

Salient Partners L.P.(11)

 

Provider of Asset Management Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—June 9, 2021)(9)

    10,812     10,538     10,352  

                           

School Specialty, Inc.(11)

 

Distributor of Education Supplies and Furniture

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—June 11, 2019)(9)

    5,712     5,632     5,784  

                           

Sigma Electric Manufacturing Corporation(10)(13)

 

Manufacturer and Distributor of Electrical Fittings and Parts

                       

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—October 13, 2021)(9)

    12,500     12,200     12,200  

                           

F-62


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Sorenson Communications, Inc.(11)

 

Manufacturer of Communication Products for Hearing Impaired

                       

     

LIBOR Plus 5.75% (Floor 2.25%), Current Coupon 8.00%, Secured Debt (Maturity—April 30, 2020)(9)

    13,371     13,283     13,271  

                           

Strike, LLC(11)

 

Pipeline Construction and Maintenance Services

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity—November 30, 2022)(9)

    10,000     9,666     9,864  

                           

Subsea Global Solutions, LLC(10)

 

Underwater Maintenance and Repair Services

                       

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity—March 17, 2020)(9)

    5,629     5,588     5,624  

                           

Synagro Infrastructure Company, Inc(11)

 

Waste Management Services

                       

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.25%, Secured Debt (Maturity—August 22, 2020)(9)

    4,714     4,659     4,136  

                           

Targus International, LLC(11)

 

Distributor of Protective Cases for Mobile Devices

                       

     

15% PIK Secured Debt (Maturity—December 31, 2019)(19)

    1,140     1,140     1,140  

     

Common Stock (Targus Cayman HoldCo Limited) (249,614 shares)(13)

          2,555     2,260  

                  3,695     3,400  

                           

TE Holdings, LLC(11)

 

Oil & Gas Exploration & Production

                       

     

Member Units (97,048 units)

          970     728  

                           

TeleGuam Holdings, LLC(11)

 

Cable and Telecom Services Provider

                       

     

LIBOR Plus 4.00% (Floor 1.25%), Current Coupon 5.25%, Secured Debt (Maturity—December 10, 2018)(9)

    7,622     7,613     7,546  

     

LIBOR Plus 7.50% (Floor 1.25%), Current Coupon 8.75%, Secured Debt (Maturity—June 10, 2019)(9)

    10,500     10,442     10,290  

                  18,055     17,836  

                           

The Topps Company, Inc.(11)

 

Trading Cards & Confectionary

                       

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—October 2, 2020)(9)

    2,218     2,208     2,226  

                           

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

TMC Merger Sub Corp.(11)

 

Refractory & Maintenance Services Provider

                       

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity—October 31, 2022)(9)(23)

    12,500     12,376     12,438  

                           

TOMS Shoes, LLC(11)

 

Global Designer, Distributor, and Retailer of Casual Footwear

                       

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity—October 30, 2020)(9)

    4,913     4,567     3,635  

                           

Travel Leaders Group, LLC(11)

 

Travel Agency Network Provider

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—December 7, 2020)(9)

    10,994     10,936     10,975  

                           

Truck Bodies and Equipment International, Inc.(10)

 

Manufacturer of Dump Truck Bodies and Dump Trailers

                       

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—March 31, 2021)(9)

    15,750     15,602     15,602  

                           

TVG-I-E CMN ACQUISITION, LLC(10)

 

Organic Lead Generation for Online Postsecondary Schools

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—November 3, 2021)(9)

    6,459     6,334     6,334  

                           

Tweddle Group, Inc.(11)

 

Provider of Technical Information Services to Automotive OEMs

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—October 21, 2022)(9)

    8,462     8,295     8,419  

                           

UniRush, LLC

 

Provider of Prepaid Debit Card Solutions

                       

     

12% Secured Debt (Maturity—February 1, 2019)

    12,000     10,981     12,000  

     

Warrants (444,725 equivalent units; Expiration—February 2, 2026; Strike price—$10.27 per unit)

          1,250     1,250  

                  12,231     13,250  

                           

US Joiner Holding Company(11)

 

Marine Interior Design and Installation

                       

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—April 16, 2020)(9)

    11,514     11,435     11,456  

                           

F-64


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

U.S. TelePacific Corp.(10)

 

Provider of Communications and Managed Services

                       

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—February 24, 2021)(9)

    7,500     7,377     7,377  

                           

VCVH Holding Corp. (Verisk)(11)

 

Healthcare Technology Services Focused on Revenue Maximization

                       

     

LIBOR Plus 9.25% (Floor 1.00%), Current Coupon 10.25%, Secured Debt (Maturity—June 1, 2024)(9)

    1,500     1,464     1,488  

                           

Virtex Enterprises, LP(10)

 

Specialty, Full-Service Provider of Complex Electronic Manufacturing Services

                       

     

12% Secured Debt (Maturity—December 27, 2018)

    1,667     1,559     1,559  

     

Preferred Class A Units (14 units; 5% cumulative)(8)

          333     612  

     

Warrants (11 equivalent units; Expiration—December 27, 2023; Strike price—$0.001 per unit)

          186     220  

                  2,078     2,391  

                           

Wellnext, LLC(10)

 

Manufacturer of Supplements and Vitamins

                       

     

LIBOR Plus 9.00% (Floor 0.50%), Current Coupon 9.85%, Secured Debt (Maturity—May 23, 2021)(9)

    10,058     9,968     10,058  

                           

Western Dental Services, Inc.(11)

 

Dental Care Services

                       

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—November 1, 2018)(9)

    4,904     4,902     4,885  

                           

Wilton Brands LLC(11)

 

Specialty Housewares Retailer

                       

     

LIBOR Plus 7.25% (Floor 1.25%), Current Coupon 8.50%, Secured Debt (Maturity—August 30, 2018)(9)

    1,153     1,147     1,093  

                           

Worley Claims Services, LLC(10)

 

Insurance Adjustment Management and Services Provider

                       

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity—October 31, 2020)(9)

    6,386     6,342     6,386  

                           

YP Holdings LLC(11)

 

Online and Offline Advertising Operator

                       

     

LIBOR Plus 11.00% (Floor 1.25%), Current Coupon 12.25%, Secured Debt (Maturity—June 4, 2018)(9)

    11,428     10,969     11,398  

                           

F-65


Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

Portfolio Company(1)(20)
  Business Description
  Type of Investment(2)(3)
  Principal(4)
  Cost(4)
  Fair Value(18)
 
   

Zilliant Incorporated

 

Price Optimization and Margin Management Solutions

                       

     

Preferred Stock (186,777 shares)

          154     260  

     

Warrants (952,500 equivalent shares; Expiration—June 15, 2022; Strike price—$0.001 per share)

          1,071     1,190  

                  1,225     1,450  

Subtotal Non-Control/Non-Affiliate Investments (51.4% of total investments at fair value)

  $ 1,037,510   $ 1,026,676  

Total Portfolio Investments, December 31, 2016

  $ 1,871,883   $ 1,996,906  

(1)
All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(2)
Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

(3)
See Note C for a summary of geographic location of portfolio companies.

(4)
Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

(5)
Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

(6)
Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

(7)
Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

(8)
Income producing through dividends or distributions.

(9)
Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at December 31, 2016. As noted in this schedule, 64% (based on the par amount of the loans) of the loans contain LIBOR floors which range between 0.50% and 2.25%, with a weighted-average LIBOR floor of approximately 1.04%.

(10)
Private Loan portfolio investment. See Note B for a description of Private Loan portfolio investments.

(11)
Middle Market portfolio investment. See Note B for a description of Middle Market portfolio investments.

(12)
Other Portfolio investment. See Note B for a description of Other Portfolio investments.

(13)
Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

(14)
Non-accrual and non-income producing investment.

(15)
Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

(16)
External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

(17)
Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

(18)
Investment value was determined using significant unobservable inputs, unless otherwise noted.

(19)
PIK interest income and cumulative dividend income represent income not paid currently in cash.

(20)
All portfolio company headquarters are based in the United States, unless otherwise noted.

(21)
Portfolio company headquarters are located outside of the United States.

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Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

(22)
The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

(23)
The Company has entered into an intercreditor agreement that entitles the Company to the "first out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a lower interest rate than the contractual stated interest rate of LIBOR plus 6.64% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such lower rate.

(24)
Investment fair value was determined using observable inputs in non-active markets for which sufficient observable inputs were available. See note C for further discussion.

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NOTE A—ORGANIZATION AND BASIS OF PRESENTATION

1.     Organization

        Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

        MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF"), Main Street Capital II, LP ("MSC II") and Main Street Capital III, LP ("MSC III" and, collectively with MSMF and MSC II, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

        MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receive fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

        MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

        MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes.

        Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our," the "Company" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

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2.     Basis of Presentation

        Main Street's consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The Company is an investment company following accounting and reporting guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 946, Financial Services—Investment Companies ("ASC 946"). For each of the periods presented herein, Main Street's consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of Main Street's investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments and the investment in the External Investment Manager (see Note C—Fair Value Hierarchy for Investments and Debentures—Portfolio Composition—Investment Portfolio Composition for additional discussion of Main Street's Investment Portfolio and definitions for the terms Private Loan and Other Portfolio). Main Street's results of operations and cash flows for the years ended December 31, 2017, 2016 and 2015 and financial position as of December 31, 2017 and 2016, are presented on a consolidated basis. The effects of all intercompany transactions between Main Street and its consolidated subsidiaries have been eliminated in consolidation.

        Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and ASC 946, Main Street is precluded from consolidating other entities in which Main Street has equity investments, including those in which it has a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if Main Street holds a controlling interest in an operating company that provides all or substantially all of its services directly to Main Street or to its portfolio companies. Accordingly, as noted above, MSCC's consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. Main Street has determined that all of its portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, Main Street's Investment Portfolio is carried on the consolidated balance sheet at fair value, as discussed further in Note B, with any adjustments to fair value recognized as "Net Change in Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."

        Main Street classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) "Control Investments" are defined as investments in which Main Street owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) "Affiliate Investments" are defined as investments in which Main Street owns between 5% and 25% of the voting securities and does not have rights to maintain greater than 50% of the board representation, and (c) "Non-Control/Non-Affiliate Investments" are defined as investments that are neither Control Investments nor Affiliate Investments.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.     Valuation of the Investment Portfolio

        Main Street accounts for its Investment Portfolio at fair value. As a result, Main Street follows the provisions of ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value

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measurements. ASC 820 requires Main Street to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

        Main Street's portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by privately held, LMM companies and more liquid debt securities issued by Middle Market companies that are generally larger in size than the LMM companies. Main Street categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street's portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Middle Market portfolio investments or Private Loan portfolio investments, including investments which may be managed by third parties. Main Street's portfolio investments may be subject to restrictions on resale.

        LMM investments and Other Portfolio investments generally have no established trading market while Middle Market securities generally have established markets that are not active. Private Loan investments may include investments which have no established trading market or have established markets that are not active. Main Street determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by its Board of Directors and in accordance with the 1940 Act. Main Street's valuation policies and processes are intended to provide a consistent basis for determining the fair value of Main Street's Investment Portfolio.

        For LMM portfolio investments, Main Street generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology ("Waterfall") for its LMM equity investments and an income approach using a yield-to-maturity model ("Yield-to-Maturity") for its LMM debt investments. For Middle Market portfolio investments, Main Street primarily uses quoted prices in the valuation process. Main Street determines the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Middle Market and Private Loan portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, Main Street generally calculates the fair value of the investment primarily based on the net asset value ("NAV") of the fund and adjusts the fair value for other factors that would affect the fair value of the investment. All of the valuation approaches for Main Street's portfolio investments estimate the value of the investment as if Main Street were to sell, or exit, the investment as of the measurement date.

        These valuation approaches consider the value associated with Main Street's ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation

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purposes, "control" portfolio investments are composed of debt and equity securities in companies for which Main Street has a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors. For valuation purposes, "non-control" portfolio investments are generally composed of debt and equity securities in companies for which Main Street does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company's board of directors.

        Under the Waterfall valuation method, Main Street estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then performs a waterfall calculation by allocating the enterprise value over the portfolio company's securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, private companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, Main Street analyzes various factors including the portfolio company's historical and projected financial results. Due to SEC deadlines for Main Street's quarterly and annual financial reporting, the operating results of a portfolio company used in the current period valuation are generally the results from the period ended three months prior to such valuation date and may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment in its determination. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, Main Street also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, Main Street allocates the enterprise value to investments in order of the legal priority of the various components of the portfolio company's capital structure. In applying the Waterfall valuation method, Main Street assumes the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which Main Street believes is consistent with its past transaction history and standard industry practices.

        Under the Yield-to-Maturity valuation method, Main Street also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of the portfolio company. Main Street's estimate of the expected repayment date of its debt securities is generally the maturity date of the instrument, as Main Street generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance and other factors. Main Street will generally use the value determined by the Yield-to-Maturity analysis as the fair value for that security; however, because of Main Street's general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions that Main Street uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, Main Street may consider other factors in determining the fair value of the debt security,

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including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.

        Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, Main Street measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date and adjusts the investment's fair value for factors known to Main Street that would affect that fund's NAV, including, but not limited to, fair values for individual investments held by the fund if Main Street holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the investment, Main Street considers whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of Main Street's investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market participants, or other uncertainties surrounding Main Street's ability to realize the full NAV of its interests in the investment fund.

        Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the Company's determinations of the fair value of its LMM portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street's investments in each LMM portfolio company at least once every calendar year, and for Main Street's investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders' best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street's investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at Main Street's determination of fair value on its investments in a total of 53 LMM portfolio companies for the year ended December 31, 2017, representing approximately 91% of the total LMM portfolio at fair value as of December 31, 2017, and on a total of 62 LMM portfolio companies for the year ended December 31, 2016, representing approximately 93% of the total LMM portfolio at fair value as of December 31, 2016. Excluding its investments in new LMM portfolio companies which have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment as of December 31, 2017 and 2016, as applicable, and its investments in the LMM portfolio companies that were not reviewed because their equity is publicly traded, which represented one LMM portfolio company as of December 31, 2016, or they hold real estate for which a third-party appraisal is obtained on at least an annual basis, the percentage of the LMM portfolio reviewed and certified by its independent financial advisory services firm for the years ended December 31, 2017 and 2016 was 97% and 98% of the total LMM portfolio at fair value as of December 31, 2017 and 2016, respectively.

        For valuation purposes, all of Main Street's Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-

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party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. Because the vast majority of the Middle Market portfolio investments are typically valued using third-party quotes or other independent pricing services (including 95% and 94% of the Middle Market portfolio investments as of December 31, 2017 and 2016, respectively), Main Street does not generally consult with any financial advisory services firms in connection with determining the fair value of its Middle Market investments.

        For valuation purposes, all of Main Street's Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.

        In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations and an assurance certification regarding the Company's determinations of the fair value of its Private Loan portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street's investments in each Private Loan portfolio company at least once every calendar year, and for Main Street's investments in new Private Loan portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders' best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street's investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at its determination of fair value on its investments in a total of 26 Private Loan portfolio companies for the year ended December 31, 2017, representing approximately 57% of the total Private Loan portfolio at fair value as of December 31, 2017, and on a total of 26 Private Loan portfolio companies for the year ended December 31, 2016, representing approximately 68% of the total Private Loan portfolio at fair value as of December 31, 2016. Excluding its investments in new Private Loan portfolio companies which have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment decision as of December 31, 2017 and 2016, as applicable, and its investments in its Private Loan portfolio companies that were not reviewed because the investment is valued based upon third-party quotes or other independent pricing, the percentage of the Private Loan portfolio reviewed and certified by its independent financial advisory services firm for the years ended December 31, 2017 and 2016 was 94% and 97% of the total Private Loan portfolio at fair value as of December 31, 2017 and 2016, respectively.

        For valuation purposes, all of Main Street's Other Portfolio investments are non-control investments. Main Street's Other Portfolio investments comprised 4.8% and 5.0% of Main Street's

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Investment Portfolio at fair value as of December 31, 2017 and 2016, respectively. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street generally determines the fair value of its investments using the NAV valuation method. For its Other Portfolio debt investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Other Portfolio debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio debt investments for which third-party quotes or other independent pricing are available and appropriate, Main Street determines the fair value of these investments through obtaining third-party quotes or other independent pricing to the extent that these inputs are available and appropriate to determine fair value.

        For valuation purposes, Main Street's investment in the External Investment Manager is a control investment. Market quotations are not readily available for this investment, and as a result, Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach. In estimating the enterprise value, Main Street analyzes various factors, including the entity's historical and projected financial results, as well as its size, marketability and performance relative to the population of market comparables. This valuation approach estimates the value of the investment as if Main Street were to sell, or exit, the investment. In addition, Main Street considers its ability to control the capital structure of the company, as well as the timing of a potential exit, in connection with determining the fair value of the External Investment Manager.

        Due to the inherent uncertainty in the valuation process, Main Street's determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. Main Street determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.

        Main Street uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its LMM portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM portfolio company and the investments held therein.

        The Board of Directors of Main Street has the final responsibility for overseeing, reviewing and approving, in good faith, Main Street's determination of the fair value for its Investment Portfolio, as well as its valuation procedures, consistent with 1940 Act requirements. Main Street believes its Investment Portfolio as of December 31, 2017 and 2016 approximates fair value as of those dates based on the markets in which Main Street operates and other conditions in existence on those reporting dates.

2.     Use of Estimates

        The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1., the consolidated financial statements include investments in the Investment Portfolio whose values have been estimated by Main Street with

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the oversight, review and approval by Main Street's Board of Directors in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ materially from the values that would have been determined had a ready market for the securities existed.

3.     Cash and Cash Equivalents

        Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.

        At December 31, 2017, cash balances totaling $47.9 million exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company's cash deposits are held at large established high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote.

4.     Interest, Dividend and Fee Income

        Main Street records interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with Main Street's valuation policies, Main Street evaluates accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if Main Street otherwise does not expect the debtor to be able to service all of its debt or other obligations, Main Street will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security's status significantly improves regarding the debtor's ability to service the debt or other obligations, or if a loan or debt security is sold or written off, Main Street removes it from non-accrual status.

        As of December 31, 2017, Main Street's total Investment Portfolio had five investments on non-accrual status, which comprised approximately 0.2% of its fair value and 2.3% of its cost. As of December 31, 2016, Main Street's total Investment Portfolio had four investments on non-accrual status, which comprised approximately 0.6% of its fair value and 3.0% of its cost.

        Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-in-kind ("PIK") interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the PIK interest and cumulative dividends in cash. Main Street stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2017, 2016 and 2015, (i) approximately 2.4%, 3.6% and 2.2%, respectively, of Main Street's total investment income was

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attributable to PIK interest income not paid currently in cash and (ii) approximately 1.6%, 1.2% and 1.0%, respectively, of Main Street's total investment income was attributable to cumulative dividend income not paid currently in cash.

        Main Street may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.

        A presentation of the investment income Main Street received from its Investment Portfolio in each of the periods presented is as follows:

 
  Twelve Months Ended December 31,  
 
  2017   2016   2015  
 
  (dollars in thousands)
 

Interest, fee and dividend income:

                   

Interest income

  $ 161,934   $ 138,689   $ 131,333  

Dividend income

    34,704     32,182     24,266  

Fee income

    9,103     7,294     8,004  

Total interest, fee and dividend income

  $ 205,741   $ 178,165   $ 163,603  

5.     Deferred Financing Costs

        Deferred financing costs include commitment fees and other costs related to Main Street's multi-year revolving credit facility (the "Credit Facility", as discussed further in Note F) and its notes (as discussed further in Note G), as well as the commitment fees and leverage fees (approximately 3.4% of the total commitment and draw amounts, as applicable) on the SBIC debentures (as discussed further in Note E) which are not accounted for under the fair value option under ASC 825 (as discussed further in Note B.11.). Deferred financing costs in connection with the Credit Facility are capitalized as an asset. Deferred financing costs in connection with all other debt arrangements not using the fair value option are a direct deduction from the related debt liability.

6.     Equity Offering Costs

        The Company's equity offering costs are charged against the proceeds from equity offerings when the proceeds are received.

7.     Unearned Income—Debt Origination Fees and Original Issue Discount and Discounts/Premiums to Par Value

        Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into income based on the effective interest method over the life of the financing.

        In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, "nominal cost equity") that are valued as part of the negotiation process with the particular portfolio

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company. When Main Street receives nominal cost equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest income based on the effective interest method over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.

        Main Street may also purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, Main Street records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income based on the effective interest method over the life of the debt investment. In the case of a purchase at a premium, Main Street records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income based on the effective interest method over the life of the debt investment.

        To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the interest income. For the years ended December 31, 2017, 2016 and 2015, approximately 3.6%, 3.1% and 2.6%, respectively, of Main Street's total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.

8.     Share-Based Compensation

        Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

        Effective January 1, 2016, Main Street elected early adoption of Accounting Standards Update ("ASU") 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09," as discussed further below in Note B.13.). ASU 2016-09 requires that all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit in the income statement and no longer delay recognition of a tax benefit until the tax benefit is realized through a reduction to taxes payable. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. Additionally, ASU 2016-09 allows an entity to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, net of forfeitures, (current GAAP) or account for forfeitures when they occur. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures and intrinsic value should be applied using a modified retrospective transition method by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is adopted. As such, Main Street recorded a $1.8 million adjustment to "Net Unrealized Appreciation, Net of Income Taxes" on the consolidated balance sheet to capture the cumulative tax effect as of January 1, 2016. Main Street has elected to account for forfeitures as they occur and this change had no impact on its consolidated financial statements. The additional amendments (cash flows

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classification, minimum statutory tax withholding requirements and classification of awards as either a liability or equity) did not have an effect on Main Street's consolidated financial statements.

9.     Income Taxes

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) the filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

        The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-of-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street's consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street's consolidated financial statements.

        The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager's separate financial statements.

        In December 2017, the "Tax Cuts and Jobs Act" legislation was enacted. The Tax Cuts and Jobs Act includes significant changes to the U.S. corporate tax system, including a U.S. federal corporate income tax rate reduction from 35% to 21% and other changes. ASC 740, Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in

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which the legislation was enacted. As such, we have accounted for the tax effects as a result of the enactment of the Tax Cuts and Jobs Act as of December 31, 2017.

        The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

        Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

10.   Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

        Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net change in unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

11.   Fair Value of Financial Instruments

        Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.

        As part of Main Street's acquisition of the majority of the equity interests of MSC II in January 2010 (the "MSC II Acquisition"), Main Street elected the fair value option under ASC 825, Financial Instruments ("ASC 825"), relating to accounting for debt obligations at their fair value, for the MSC II SBIC debentures acquired as part of the acquisition accounting related to the MSC II Acquisition and values those obligations as discussed further in Note C. In order to provide for a more consistent basis of presentation, Main Street has continued to elect the fair value option for SBIC debentures issued by MSC II subsequent to the MSC II Acquisition. When the fair value option is elected for a given SBIC debenture, the deferred loan costs associated with the debenture are fully expensed in the current period to "Net Change in Unrealized Appreciation (Depreciation)—SBIC debentures" as part of the fair value adjustment. Interest incurred in connection with SBIC debentures which are valued at fair value is included in interest expense.

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12.   Earnings per Share

        Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Main Street's equity compensation plans are participating securities and, therefore, are included in the basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings per share and basic earnings per share amounts.

13.   Recently Issued or Adopted Accounting Standards

        In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements under ASC 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarified the implementation guidance regarding performance obligations and licensing arrangements. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients, which clarified guidance on assessing collectability, presenting sales tax, measuring noncash consideration, and certain transition matters. In December 2016, the FASB issued ASU No. 2016-20, Revenue from Contracts with Customers (Topic 606)—Technical Corrections and Improvements, which provided disclosure relief, and clarified the scope and application of the new revenue standard and related cost guidance. The new guidance will be effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Early adoption would be permitted for annual reporting periods beginning after December 15, 2016. Main Street expects to identify similar performance obligations under ASC 606 as compared with deliverables and separate units of account previously identified. As a result, Main Street expects timing of its revenue recognition to remain the same.

        In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires debt financing costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the related debt liability, similar to the presentation of debt discounts. Additionally in August 2015, the FASB issued ASU 2015-15, Interest—Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which provides further clarification on the same topic and states that the SEC would not object to the deferral and presentation of debt issuance costs as an asset and subsequent amortization of the deferred costs over the term of the line-of-credit

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arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. Main Street adopted the guidance for debt arrangements that are not line-of-credit arrangements as of June 30, 2017. Comparative financial statements of prior interim and annual periods have been adjusted to apply the new method retrospectively. As a result of the adoption, Main Street reclassified $7.9 million of deferred financing costs assets to a direct deduction from the related debt liability on the consolidated balance sheet as of December 31, 2016. The adoption of this guidance had no impact on net assets, the consolidated statements of operations or the consolidated statements of cash flows.

        In May 2015, the FASB issued ASU 2015-07, Fair Value Measurements—Disclosures for Certain Entities that Calculate Net Asset Value per Share. This amendment updates guidance intended to eliminate the diversity in practice surrounding how investments measured at net asset value under the practical expedient with future redemption dates have been categorized in the fair value hierarchy. Under the updated guidance, investments for which fair value is measured at net asset value per share using the practical expedient should no longer be categorized in the fair value hierarchy, while investments for which fair value is measured at net asset value per share but the practical expedient is not applied should continue to be categorized in the fair value hierarchy. The updated guidance requires retrospective adoption for all periods presented and is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. Main Street adopted this standard during the three months ended March 31, 2016. There was no impact of the adoption of this new accounting standard on Main Street's consolidated financial statements as none of its investments are measured through the use of the practical expedient.

        In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. The new guidance is effective for annual periods beginning after December 15, 2018, and interim periods therein. Early application is permitted. While Main Street continues to assess the effect of adoption, Main Street currently believes the most significant change relates to the recognition of a new right-of-use asset and lease liability on its consolidated balance sheet for its office space operating lease. Main Street currently has one operating lease for office space and does not expect a significant change in the leasing activity between now and adoption. See further discussion of the operating lease obligation in Note M.

        In March 2016, the FASB issued ASU 2016-09, which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new guidance is effective for annual periods beginning after December 15, 2016, and interim periods therein. Early application is permitted. Main Street elected to early adopt this standard during the three months ended March 31, 2016. See further discussion of the impact of the adoption of this standard in Note B.8.

        In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), which is intended to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods therein. Early application is permitted. The

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impact of the adoption of this new accounting standard on Main Street's consolidated financial statements is not expected to be material.

        From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by Main Street as of the specified effective date. Main Street believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon adoption.

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION

        ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Main Street accounts for its investments at fair value.

Fair Value Hierarchy

        In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).

        Investments recorded on Main Street's balance sheet are categorized based on the inputs to the valuation techniques as follows:

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        As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). Main Street conducts reviews of fair value hierarchy classifications on a quarterly basis. During the classification process, Main Street may determine that it is appropriate to transfer investments between fair value hierarchy Levels. These transfers occur when Main Street has concluded that it is appropriate for the classification of an individual asset to be changed due to a change in the factors used to determine the selection of the Level. Any such changes are deemed to be effective during the quarter in which the transfer occurs.

        As of December 31, 2017, all of Main Street's LMM portfolio investments consisted of illiquid securities issued by private companies. As a result, as of December 31, 2017, the fair value determination for all of Main Street's LMM portfolio investments primarily consisted of unobservable inputs. As a result, all of Main Street's LMM portfolio investments were categorized as Level 3 as of December 31, 2017. As of December 31, 2016, all of Main Street's LMM portfolio investments except for the equity investment in one portfolio company consisted of illiquid securities issued by private companies. The investment which was the exception was in a company with publicly traded equity. As a result, the fair value determination for the LMM portfolio investments primarily consisted of unobservable inputs. The fair value determination for the publicly traded equity security consisted of observable inputs in non-active markets for which sufficient observable inputs were available to determine the fair value. As a result, all of Main Street's LMM portfolio investments were categorized as Level 3 as of December 31, 2016, except for the one publicly traded equity security which was categorized as Level 2.

        As of December 31, 2017 and 2016, Main Street's Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Middle Market portfolio investments were categorized as Level 3 as of December 31, 2017 and 2016.

        As of December 31, 2017 and 2016, Main Street's Private Loan portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Private Loan portfolio investments were categorized as Level 3 as of December 31, 2017 and 2016.

        As of December 31, 2017 and 2016, Main Street's Other Portfolio investments consisted of illiquid securities issued by private companies. The fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street's Other Portfolio investments were categorized as Level 3 as of December 31, 2017 and 2016.

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        The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs:

        The significant unobservable inputs used in the fair value measurement of Main Street's LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the weighted-average cost of capital ("WACC"). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement. On the contrary, significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of Main Street's LMM, Middle Market, Private Loan and Other Portfolio debt securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (described in Note B.1.—Valuation of the Investment Portfolio) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below.

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        The following tables provide a summary of the significant unobservable inputs used to fair value Main Street's Level 3 portfolio investments as of December 31, 2017 and 2016:

Type of Investment
  Fair Value
as of
December 31,
2017
(in thousands)
  Valuation Technique   Significant Unobservable Inputs   Range(3)   Weighted Average(3)   Median(3)  

Equity investments

  $ 653,008   Discounted cash flow   WACC   11.1% - 23.2%     13.7%     14.0%  

        Market comparable / Enterprise Value   EBITDA multiple(1)   4.3x - 8.5x(2)     7.3x     6.0x  

Debt investments

 
$

858,816
 

Discounted cash flow

 

Risk adjusted discount factor

 

6.7% - 16.1%(2)

   
11.2%
   
11.0%
 

            Expected principal recovery percentage   2.9% - 100.0%     99.8%     100.0%  

Debt investments

 
$

659,481
 

Market approach

 

Third-party quote

 

11.0 - 106.0

             

Total Level 3 investments

  $ 2,171,305                          

(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 17.5x and the range for risk adjusted discount factor is 4.3% - 30.0%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.
Type of Investment
  Fair Value
as of
December 31, 2016
(in thousands)
  Valuation Technique   Significant Unobservable Inputs   Range(3)   Weighted
Average(3)
  Median(3)  

Equity investments

  $ 567,003   Discounted cash flow   Weighted-average cost of capital   10.4% - 23.1%     13.0%     13.7%  

        Market comparable / Enterprise Value   EBITDA multiple(1)   4.5x - 8.5x(2)     7.1x     6.0x  

Debt investments

 
$

808,895
 

Discounted cash flow

 

Risk adjusted discount factor

 

7.4% - 15.9%(2)

   
11.8%
   
11.6%
 

            Expected principal recovery percentage   3.0% - 100.0%     99.7%     100.0%  

Debt investments

 
$

618,928
 

Market approach

 

Third-party quote

 

22.5 - 108.0

             

Total Level 3 investments

  $ 1,994,826                          

(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 3.3x - 17.5x and the range for risk adjusted discount factor is 4.8% - 38.0%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

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        The following tables provide a summary of changes in fair value of Main Street's Level 3 portfolio investments for the years ended December 31, 2017 and 2016 (amounts in thousands):

Type of Investment
  Fair Value
as of
December 31,
2016
  Transfers
Into Level 3
Hierarchy
  Redemptions/
Repayments
  New
Investments
  Net Changes
from
Unrealized
to Realized
  Net
Unrealized
Appreciation
(Depreciation)
  Other(1)   Fair Value
as of
December 31,
2017
 

Debt

  $ 1,427,823   $   $ (753,240 ) $ 848,014   $ 25,146   $ (19,664 ) $ (9,782 ) $ 1,518,297  

Equity

    549,453         (44,773 )   74,227     (25,596 )   77,583     10,599     641,493  

Equity Warrant

    17,550         (4,697 )   331     (549 )   (303 )   (817 )   11,515  

  $ 1,994,826   $   $ (802,710 ) $ 922,572   $ (999 ) $ 57,616   $   $ 2,171,305  

(1)
Includes the impact of non-cash conversions.
Type of Investment
  Fair Value
as of
December 31,
2015
  Transfers
Into Level 3
Hierarchy
  Redemptions/
Repayments
  New
Investments
  Net Changes
from
Unrealized
to Realized
  Net
Unrealized
Appreciation
(Depreciation)
  Other(1)   Fair Value
as of
December 31,
2016
 

Debt

  $ 1,265,544   $   $ (431,871 ) $ 555,490   $ 44,515   $ 1,295   $ (7,150 ) $ 1,427,823  

Equity

    519,966         (15,799 )   86,037     (60,544 )   12,643     7,150     549,453  

Equity Warrant

    10,646         (1,011 )   5,928     1,011     976         17,550  

  $ 1,796,156   $   $ (448,681 ) $ 647,455   $ (15,018 ) $ 14,914   $   $ 1,994,826  

(1)
Includes the impact of non-cash conversions.

        As of December 31, 2017 and 2016, the fair value determination for the SBIC debentures recorded at fair value primarily consisted of unobservable inputs. As a result, the SBIC debentures which are recorded at fair value were categorized as Level 3. Main Street determines the fair value of these instruments primarily using a Yield-to-Maturity approach that analyzes the discounted cash flows of interest and principal for each SBIC debenture recorded at fair value based on estimated market interest rates for debt instruments of similar structure, terms, and maturity. Main Street's estimate of the expected repayment date of principal for each SBIC debenture recorded at fair value is the legal maturity date of the instrument. The significant unobservable inputs used in the fair value measurement of Main Street's SBIC debentures recorded at fair value are the estimated market interest rates used to fair value each debenture using the yield valuation technique described above. Significant increases (decreases) in the estimated market interest rates in isolation would result in a significantly lower (higher) fair value measurement.

        The following tables provide a summary of the significant unobservable inputs used to fair value Main Street's Level 3 SBIC debentures as of December 31, 2017 and 2016 (amounts in thousands):

Type of Instrument
  Fair Value as of
December 31, 2017
  Valuation Technique   Significant Unobservable Inputs   Range   Weighted Average  

SBIC debentures

  $ 48,608   Discounted cash flow   Estimated market interest rates   4.9% - 5.5%     5.1%  

 

Type of Instrument
  Fair Value as of
December 31, 2016
  Valuation Technique   Significant Unobservable Inputs   Range   Weighted Average  

SBIC debentures

  $ 74,803   Discounted cash flow   Estimated market interest rates   3.4% - 5.3%     4.2%  

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        The following tables provide a summary of changes for the Level 3 SBIC debentures recorded at fair value for the years ended December 31, 2017 and 2016 (amounts in thousands):

Type of Instrument
  Fair Value as of
December 31, 2016
  Repayments   Net Realized
Loss
  New SBIC
Debentures
  Net
Unrealized
(Appreciation)
Depreciation
  Fair Value as of
December 31, 2017
 

SBIC debentures at fair value

  $ 74,803   $ (25,200 ) $ 5,217   $   $ (6,212 ) $ 48,608  

 

Type of Instrument
  Fair Value as of
December 31, 2015
  Repayments   New SBIC
Debentures
  Net
Unrealized
(Appreciation)
Depreciation
  Fair Value as of
December 31, 2016
 

SBIC debentures at fair value

  $ 73,860   $   $   $ 943   $ 74,803  

        At December 31, 2017 and 2016, Main Street's investments and SBIC debentures at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:

 
   
  Fair Value Measurements  
 
   
  (in thousands)
 
At December 31, 2017
  Fair Value   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable Inputs
(Level 2)
  Significant
Unobservable Inputs
(Level 3)
 

LMM portfolio investments

  $ 948,196   $   $   $ 948,196  

Middle Market portfolio investments

    609,256             609,256  

Private Loan portfolio investments

    467,475             467,475  

Other Portfolio investments

    104,610             104,610  

External Investment Manager

    41,768             41,768  

Total portfolio investments

    2,171,305             2,171,305  

Marketable securities and idle funds investments

                 

Total investments

  $ 2,171,305   $   $   $ 2,171,305  

SBIC debentures at fair value

  $ 48,608   $   $   $ 48,608  

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  Fair Value Measurements  
 
   
  (in thousands)
 
At December 31, 2016
  Fair Value   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant Other
Observable Inputs
(Level 2)
  Significant
Unobservable Inputs
(Level 3)
 

LMM portfolio investments

  $ 892,592   $   $ 2,080   $ 890,512  

Middle Market portfolio investments

    630,578             630,578  

Private Loan portfolio investments

    342,867             342,867  

Other Portfolio investments

    100,252             100,252  

External Investment Manager

    30,617             30,617  

Total portfolio investments

    1,996,906         2,080     1,994,826  

Marketable securities and idle funds investments

                 

Total investments

  $ 1,996,906   $   $ 2,080   $ 1,994,826  

SBIC debentures at fair value

  $ 74,803   $   $   $ 74,803  

Investment Portfolio Composition

        Main Street's LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Main Street's LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, generally bear interest at fixed rates, and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, Main Street receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.

        Main Street's Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in Main Street's LMM portfolio. Main Street's Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $20 million. Main Street's Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

        Main Street's private loan ("Private Loan") portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street's Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

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        Main Street's other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, Main Street may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, Main Street generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be liquidated over a five to ten year period.

        Main Street's external asset management business is conducted through its External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. Main Street entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, Main Street shares employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities. Main Street allocates the related expenses to the External Investment Manager pursuant to the sharing agreement. Main Street's total expenses for the years ended December 31, 2017, 2016 and 2015 are net of expenses allocated to the External Investment Manager of $6.4 million, $5.1 million and $4.3 million, respectively.

        Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the years ended December 31, 2017, 2016 and 2015, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

        The following tables provide a summary of Main Street's investments in the LMM, Middle Market and Private Loan portfolios as of December 31, 2017 and 2016 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
  As of December 31, 2017  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    70     62     54  

Fair value

  $ 948.2   $ 609.3   $ 467.5  

Cost

  $ 776.5   $ 629.7   $ 489.2  

% of portfolio at cost—debt

    67.1%     97.3%     93.6%  

% of portfolio at cost—equity

    32.9%     2.7%     6.4%  

% of debt investments at cost secured by first priority lien

    98.1%     90.5%     94.5%  

Weighted-average annual effective yield(b)

    12.0%     9.0%     9.2%  

Average EBITDA(c)

  $ 4.4   $ 78.3   $ 39.6  

(a)
At December 31, 2017, Main Street had equity ownership in approximately 97% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 39%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2017, including amortization of

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(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including six LMM portfolio companies, one Middle Market portfolio company and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.
 
  As of December 31, 2016  
 
  LMM(a)   Middle Market   Private Loan  
 
  (dollars in millions)
 

Number of portfolio companies

    73     78     46  

Fair value

  $ 892.6   $ 630.6   $ 342.9  

Cost

  $ 760.3   $ 646.8   $ 357.7  

% of portfolio at cost—debt

    69.1%     97.2%     93.5%  

% of portfolio at cost—equity

    30.9%     2.8%     6.5%  

% of debt investments at cost secured by first priority lien

    92.1%     89.1%     89.0%  

Weighted-average annual effective yield(b)

    12.5%     8.5%     9.6%  

Average EBITDA(c)

  $ 5.9   $ 98.6   $ 22.7  

(a)
At December 31, 2016, Main Street had equity ownership in approximately 99% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 36%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2016, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in shares of Main Street's common stock will realize on its investment because it does not reflect Main Street's expenses or any sales load paid by an investor.

(c)
The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including five LMM portfolio companies, one Middle Market portfolio company and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies.

        As of December 31, 2017, Main Street had Other Portfolio investments in eleven companies, collectively totaling approximately $104.6 million in fair value and approximately $109.4 million in cost basis and which comprised approximately 4.8% of Main Street's Investment Portfolio at fair value. As of December 31, 2016, Main Street had Other Portfolio investments in ten companies, collectively totaling approximately $100.3 million in fair value and approximately $107.1 million in cost basis and which comprised approximately 5.0% of Main Street's Investment Portfolio at fair value.

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        As discussed further in Note A.1., Main Street holds an investment in the External Investment Manager, a wholly owned subsidiary that is treated as a portfolio investment. As of December 31, 2017, there was no cost basis in this investment and the investment had a fair value of approximately $41.8 million, which comprised approximately 1.9% of Main Street's Investment Portfolio at fair value. As of December 31, 2016, there was no cost basis in this investment and the investment had a fair value of approximately $30.6 million, which comprised approximately 1.5% of Main Street's Investment Portfolio at fair value.

        The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of December 31, 2017 and 2016 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  December 31, 2017   December 31, 2016  

First lien debt

    79.0%     76.1%  

Equity

    15.3%     14.5%  

Second lien debt

    4.5%     7.7%  

Equity warrants

    0.7%     1.1%  

Other

    0.5%     0.6%  

    100.0%     100.0%  

 

Fair Value:
  December 31, 2017   December 31, 2016  

First lien debt

    70.5%     68.7%  

Equity

    24.4%     22.6%  

Second lien debt

    4.1%     7.2%  

Equity warrants

    0.6%     0.9%  

Other

    0.4%     0.6%  

    100.0%     100.0%  

        The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of December 31, 2017 and 2016 (this information excludes the Other Portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Cost:
  December 31, 2017   December 31, 2016  

Southwest

    26.1%     29.7%  

Midwest

    22.3%     23.0%  

West

    20.7%     16.1%  

Northeast

    15.2%     14.8%  

Southeast

    12.8%     13.1%  

Canada

    1.9%     1.7%  

Other Non-United States

    1.0%     1.6%  

    100.0%     100.0%  

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Fair Value:
  December 31,
2017
  December 31,
2016
 

Southwest

    26.8%     31.0%  

West

    23.7%     18.3%  

Midwest

    20.3%     21.2%  

Northeast

    14.6%     13.9%  

Southeast

    11.9%     12.7%  

Canada

    1.8%     1.4%  

Other Non-United States

    0.9%     1.5%  

    100.0%     100.0%  

        Main Street's LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by industry at cost and fair value

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as of December 31, 2017 and 2016 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  December 31,
2017
  December 31,
2016
 

Energy Equipment & Services

    6.9%     7.5%  

Construction & Engineering

    6.4%     5.3%  

Hotels, Restaurants & Leisure

    6.2%     6.5%  

Specialty Retail

    5.3%     4.4%  

Machinery

    5.2%     5.6%  

Commercial Services & Supplies

    4.5%     5.0%  

Media

    4.4%     5.7%  

Diversified Telecommunication Services

    4.1%     3.3%  

IT Services

    3.9%     3.9%  

Professional Services

    3.7%     1.4%  

Electronic Equipment, Instruments & Components

    3.4%     4.5%  

Internet Software & Services

    3.4%     3.6%  

Aerospace & Defense

    3.3%     0.9%  

Leisure Equipment & Products

    3.0%     0.9%  

Health Care Providers & Services

    2.9%     3.0%  

Computers & Peripherals

    2.8%     2.2%  

Software

    2.5%     2.6%  

Communications Equipment

    2.3%     2.3%  

Health Care Equipment & Supplies

    2.0%     2.3%  

Distributors

    1.9%     1.1%  

Food Products

    1.9%     2.6%  

Building Products

    1.9%     2.1%  

Auto Components

    1.9%     3.0%  

Construction Materials

    1.7%     0.7%  

Diversified Consumer Services

    1.6%     2.8%  

Diversified Financial Services

    1.6%     2.3%  

Oil, Gas & Consumable Fuels

    1.6%     1.2%  

Internet & Catalog Retail

    1.3%     0.7%  

Road & Rail

    1.0%     1.5%  

Real Estate Management & Development

    1.0%     0.7%  

Air Freight & Logistics

    0.9%     1.0%  

Consumer Finance

    0.7%     1.5%  

Other(1)

    4.8%     7.9%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

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Fair Value:
  December 31,
2017
  December 31,
2016
 

Machinery

    6.4%     6.7%  

Construction & Engineering

    6.3%     5.6%  

Energy Equipment & Services

    6.2%     5.8%  

Hotels, Restaurants & Leisure

    5.9%     6.5%  

Diversified Consumer Services

    5.9%     5.5%  

Specialty Retail

    5.3%     4.6%  

Commercial Services & Supplies

    4.1%     5.0%  

IT Services

    4.0%     3.7%  

Media

    3.8%     5.2%  

Professional Services

    3.5%     1.3%  

Diversified Telecommunication Services

    3.4%     2.5%  

Internet Software & Services

    3.2%     3.5%  

Aerospace & Defense

    3.1%     0.8%  

Computers & Peripherals

    3.0%     2.3%  

Leisure Equipment & Products

    2.9%     0.9%  

Electronic Equipment, Instruments & Components

    2.8%     3.9%  

Health Care Providers & Services

    2.8%     2.9%  

Software

    2.5%     2.6%  

Communications Equipment

    2.2%     2.3%  

Health Care Equipment & Supplies

    2.1%     2.4%  

Construction Materials

    1.9%     1.0%  

Distributors

    1.8%     1.1%  

Food Products

    1.8%     2.4%  

Building Products

    1.8%     1.9%  

Diversified Financial Services

    1.6%     2.3%  

Auto Components

    1.6%     2.9%  

Oil, Gas & Consumable Fuels

    1.5%     1.1%  

Real Estate Management & Development

    1.1%     0.7%  

Internet & Catalog Retail

    1.1%     0.6%  

Air Freight & Logistics

    1.0%     1.1%  

Road & Rail

    1.0%     2.5%  

Consumer Finance

    0.6%     1.3%  

Other(1)

    3.8%     7.1%  

    100.0%     100.0%  

(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

        At December 31, 2017 and 2016, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

Unconsolidated Significant Subsidiaries

        In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, Main Street must determine which of its unconsolidated controlled portfolio companies, if any, are considered "significant subsidiaries." In evaluating these unconsolidated controlled portfolio companies, there are three tests utilized to determine if any of Main Street's Control Investments (as defined in Note A, including those unconsolidated portfolio companies defined as Control Investments in which Main Street does not own

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greater than 50% of the voting securities) are considered significant subsidiaries: the investment test, the asset test and the income test. Rule 3-09 of Regulation S-X, as interpreted by the SEC, requires Main Street to include separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which Main Street owns greater than 50% of the voting securities) in an annual report if any of the three tests exceed 20% of Main Street's total investments at fair value, total assets or total income, respectively. Rule 4-08(g) of Regulation S-X requires summarized financial information of a Control Investment in an annual report if any of the three tests exceeds 10% of Main Street's annual total amounts and Rule 10-01(b)(1) of Regulation S-X requires summarized financial information in a quarterly report if any of the three tests exceeds 20% of Main Street's year-to-date total amounts.

        As of December 31, 2017 and 2016, Main Street had no single investment that represented greater than 10% of its total Investment Portfolio at fair value and no single investment whose total assets represented greater than 10% of its total assets. After performing the income test for the years ended December 31, 2017 and 2016, Main Street determined that its income from one of its Control Investments individually generated more than 10% of its total income, primarily due to the unrealized appreciation that was recognized on the investment. As such, CBT Nuggets, LLC, an unconsolidated portfolio company that was a Control Investment, but for which Main Street was not the majority owner and did not have rights to maintain greater than 50% of the board representation, was considered a significant subsidiary at the 10% level as of December 31, 2017 and 2016. Additionally, after performing the income test for the year ended December 31, 2015, excluding investments which were fully exited after December 31, 2015, CBT Nuggets, LLC and the wholly owned External Investment Manager were each considered significant subsidiaries at the 10% income level (see further discussion and summarized financial information of the External Investment Manager in Note D).

        The following table shows the summarized financial information for CBT Nuggets, LLC:

 
  As of December 31,  
 
  2017   2016  
 
  (dollars in thousands)
 

Balance Sheet Data

             

Current Assets

  $ 14,585   $ 7,288  

Noncurrent Assets

    11,769     13,609  

Current Liabilities

    17,570     17,871  

Noncurrent Liabilities

         

 

 
  Twelve Months Ended
December 31,
 
 
  2017   2016   2015  
 
  (dollars in thousands)
 

Summary of Operations

                   

Total Revenue

  $ 40,802   $ 38,779   $ 33,924  

Gross Profit

    35,837     33,661     29,352  

Income from Operations

    9,018     13,117     12,099  

Net Income

    18,379     12,819     12,343  

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NOTE D—EXTERNAL INVESTMENT MANAGER

        As discussed further in Note A.1., the External Investment Manager provides investment management and other services to External Parties. The External Investment Manager is accounted for as a portfolio investment of MSCC since the External Investment Manager conducts all of its investment management activities for External Parties.

        During May 2012, Main Street entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-listed BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow it to own a registered investment adviser, Main Street assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on MSCC's ability to meet the source-of-income requirement necessary for it to maintain its RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. The External Investment Manager has conditionally agreed to waive a limited amount of the incentive fees otherwise earned. During the years ended December 31, 2017, 2016 and 2015, the External Investment Manager earned $10.9 million, $9.5 million and $7.8 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

        The investment in the External Investment Manager is accounted for using fair value accounting, with the fair value determined by Main Street and approved, in good faith, by Main Street's Board of Directors. Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach (see further discussion in Note B.1.). Any change in fair value of the investment in the External Investment Manager is recognized on Main Street's consolidated statements of operations in "Net Change in Unrealized Appreciation (Depreciation)—Portfolio investments."

        The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. Main Street owns the External Investment Manager through the Taxable Subsidiary to allow MSCC to continue to comply with the "source-of-income" requirements contained in the RIC tax provisions of the Code. The taxable income, or loss, of the External Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. As a result of the above described financial reporting and tax treatment, the External Investment Manager provides for any income tax expense, or benefit, and any tax assets or liabilities in its separate financial statements.

        Main Street shares employees with the External Investment Manager and allocates costs related to such shared employees to the External Investment Manager generally based on a combination of the direct time spent, new investment origination activity and assets under management, depending on the nature of the expense. For the years ended December 31, 2017, 2016 and 2015, Main Street allocated $6.4 million, $5.1 million and $4.3 million of total expenses, respectively, to the External Investment Manager. The total contribution of the External Investment Manager to Main Street's net investment

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income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income received from the External Investment Manager. For the years ended December 31, 2017, 2016 and 2015, the total contribution to Main Street's net investment income was $9.4 million, $7.9 million and $6.5 million, respectively.

        Summarized financial information from the separate financial statements of the External Investment Manager as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015 is as follows:

 
  As of
December 31,
 
 
  2017   2016  
 
  (dollars
in thousands)

 

Cash

  $   $  

Accounts receivable—HMS Income

    2,863     2,496  

Total assets

  $ 2,863   $ 2,496  

Accounts payable to MSCC and its subsidiaries

  $ 1,963   $ 1,635  

Dividend payable to MSCC and its subsidiaries

    900     719  

Taxes payable

        142  

Equity

         

Total liabilities and equity

  $ 2,863   $ 2,496  

 

 
  Twelve Months Ended December,  
 
  2017   2016   2015  
 
  (dollars in thousands)
 

Management fee income

  $ 10,946   $ 9,540   $ 7,767  

Expenses allocated from MSCC or its subsidiaries:

                   

Salaries, share-based compensation and other personnel costs

    (3,989 )   (3,470 )   (3,005 )

Other G&A expenses

    (2,381 )   (1,619 )   (1,330 )

Total allocated expenses

    (6,370 )   (5,089 )   (4,335 )

Pre-tax income

    4,576     4,451     3,432  

Tax expense

    (1,544 )   (1,623 )   (1,235 )

Net income

  $ 3,032   $ 2,828   $ 2,197  

NOTE E—SBIC DEBENTURES

        Due to each of the Funds' status as a licensed SBIC, Main Street has the ability to issue, through the Funds, debentures guaranteed by the SBA up to a maximum amount of $350.0 million through its three existing SBIC licenses. SBIC debentures payable were $295.8 million and $240.0 million at December 31, 2017 and 2016, respectively. SBIC debentures provide for interest to be paid semiannually, with principal due at the applicable 10-year maturity date of each debenture. During the year ended December 31, 2017, Main Street issued $81.0 million of SBIC debentures and opportunistically prepaid $25.2 million of existing SBIC debentures as part of an effort to manage the maturity dates of the oldest SBIC debentures, leaving $54.2 million of additional capacity under Main Street's SBIC licenses. As a result of this prepayment, Main Street recognized a realized loss of

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$5.2 million due to the previously recognized gain recorded as a result of recording the MSC II debentures at fair value on the date of the acquisition of the majority interests of MSC II. The effect of the realized loss is offset by the reversal of all previously recognized unrealized depreciation due to fair value adjustments since the date of the acquisition. Main Street expects to issue new SBIC debentures under the SBIC program in the future in an amount up to the regulatory maximum amount of $350.0 million for affiliated SBIC funds. The weighted-average annual interest rate on the SBIC debentures was 3.6% and 4.1% as of December 31, 2017 and 2016, respectively. The first principal maturity due under the existing SBIC debentures is in 2019, and the weighted-average remaining duration as of December 31, 2017 was approximately 5.8 years. For the years ended December 31, 2017, 2016 and 2015, Main Street recognized interest expense attributable to the SBIC debentures of $10.5 million, $10.0 million and $9.9 million, respectively. Main Street has incurred upfront leverage and other miscellaneous fees of approximately 3.4% of the debenture principal amount. In accordance with SBA regulations, the Funds are precluded from incurring additional non-SBIC debt without the prior approval of the SBA.

        As of December 31, 2017, the recorded value of the SBIC debentures was $288.5 million which consisted of (i) $48.6 million recorded at fair value, or $1.4 million less than the $50.0 million par value of the SBIC debentures issued in MSC II, (ii) $149.8 million par value of SBIC debentures outstanding held in MSMF, with a recorded value of $147.5 million that was net of unamortized debt issuance costs of $2.3 million and (iii) $96.0 million par value of SBIC debentures held in MSC III with a recorded value of $92.4 million that was net of unamortized debt issuance costs of $3.6 million. As of December 31, 2017, if Main Street had adopted the fair value option under ASC 825 for all of its SBIC debentures, Main Street estimates the fair value of its SBIC debentures would be approximately $266.3 million, or $29.5 million less than the $295.8 million face value of the SBIC debentures.

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        The maturity dates and fixed interest rates for Main Street's SBIC Debentures as of December 31, 2017 and 2016 are summarized in the following table:

Maturity Date
  Fixed
Interest
Rate
  December 31,
2017
  December 31,
2016
 

9/1/2017

    6.43%         15,000,000  

3/1/2018

    6.38%         10,200,000  

9/1/2019

    4.95%     20,000,000     20,000,000  

3/1/2020

    4.51%     10,000,000     10,000,000  

9/1/2020

    3.50%     35,000,000     35,000,000  

9/1/2020

    3.93%     10,000,000     10,000,000  

3/1/2021

    4.37%     10,000,000     10,000,000  

3/1/2021

    4.60%     20,000,000     20,000,000  

9/1/2021

    3.39%     10,000,000     10,000,000  

9/1/2022

    2.53%     5,000,000     5,000,000  

3/1/2023

    3.16%     16,000,000     16,000,000  

3/1/2024

    3.95%     8,000,000     8,000,000  

3/1/2024

    3.95%     12,000,000     12,000,000  

3/1/2024

    3.95%     11,400,000     11,400,000  

3/1/2024

    3.95%     7,600,000     7,600,000  

3/1/2024

    3.55%     24,800,000     24,800,000  

3/1/2027

    3.52%     40,400,000     15,000,000  

9/1/2027

    3.19%     34,600,000      

3/1/2028(1)

    2.02%     21,000,000      

Ending Balance

          295,800,000     240,000,000  

(1)
The interest rate for this tranche of SBIC debentures represents an initial rate that has not been fixed by the SBA as of December 31, 2017. In March 2018, the rate for this tranche of SBIC debentures will be determined and, thereafter, the rate will be fixed for the ensuing 10 years.

NOTE F—CREDIT FACILITY

        Main Street maintains the Credit Facility to provide additional liquidity to support its investment and operational activities. The Credit Facility was amended in September 2017 to increase total commitments to $585.0 million from a diversified group of fifteen lenders. The Credit Facility matures in September 2021 and contains an accordion feature which allows Main Street to increase the total commitments under the facility to up to $750.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

        Borrowings under the Credit Facility bear interest, subject to Main Street's election, on a per annum basis at a rate equal to the applicable LIBOR rate (1.56% as of December 31, 2017) plus (i) 1.875% (or the applicable base rate (Prime Rate of 4.50% as of December 31, 2017) plus 0.875%) as long as Main Street maintains an investment grade rating and meets certain agreed upon excess collateral and maximum leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if Main Street maintains an investment grade rating but does not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%) if Main Street does not maintain an investment grade rating. Main Street pays unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a

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first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. The Credit Facility contains certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio of at least 1.5 to 1.0 and (iv) maintaining a minimum tangible net worth. The Credit Facility is provided on a revolving basis through its final maturity date in September 2021, and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval.

        At December 31, 2017, Main Street had $64.0 million in borrowings outstanding under the Credit Facility. As of December 31, 2017, if Main Street had adopted the fair value option under ASC 825 for its Credit Facility, Main Street estimates its fair value would approximate its recorded value. Main Street recognized interest expense related to the Credit Facility, including unused commitment fees and amortization of deferred issuance costs, of $10.6 million, $9.2 million and $7.7 million, respectively, for the years ended December 31, 2017, 2016 and 2015. As of December 31, 2017, the interest rate on the Credit Facility was 3.2%. The average interest rate for the year ended December 31, 2017 was 3.0%. Main Street was in compliance with all financial covenants of the Credit Facility.

NOTE G—NOTES

        In April 2013, Main Street issued $92.0 million, including the underwriters full exercise of their option to purchase additional principal amounts to cover over-allotments, in aggregate principal amount of 6.125% Notes due 2023 (the "6.125% Notes"). The 6.125% Notes are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at Main Street's option on or after April 1, 2018. The 6.125% Notes bear interest at a rate of 6.125% per year payable quarterly on January 1, April 1, July 1 and October 1 of each year. The total net proceeds to Main Street from the 6.125% Notes, after underwriting discounts and estimated offering expenses payable, were approximately $89.0 million. Main Street has listed the 6.125% Notes on the New York Stock Exchange under the trading symbol "MSCA." Main Street may from time to time repurchase the 6.125% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2017, the outstanding balance of the 6.125% Notes was $90.7 million and the recorded value of $89.1 million was net of unamortized debt issuance costs of $1.6 million. As of December 31, 2017, if Main Street had adopted the fair value option under ASC 825 for the 6.125% Notes, Main Street estimates the fair value would be approximately $91.6 million. Main Street recognized interest expense related to the 6.125% Notes, including amortization of unamortized deferred issuance costs, of $5.9 million for each of the years ended December 31, 2017, 2016 and 2015.

        The indenture governing the 6.125% Notes (the "6.125% Notes Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 6.125% Notes and the Trustee if Main Street ceases to be subject to

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the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 6.125% Notes Indenture. As of December 31, 2017, Main Street was in compliance with these covenants.

        In November 2014, Main Street issued $175.0 million in aggregate principal amount of 4.50% unsecured notes due 2019 (the "4.50% Notes due 2019") at an issue price of 99.53%. The 4.50% Notes due 2019 are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2019; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2019 mature on December 1, 2019, and may be redeemed in whole or in part at any time at Main Street's option subject to certain make-whole provisions. The 4.50% Notes due 2019 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes due 2019, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $171.2 million. Main Street may from time to time repurchase the 4.50% Notes due 2019 in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2017, the outstanding balance of the 4.50% Notes due 2019 was $175.0 million and the recorded value of $173.6 million was net of unamortized debt issuance costs of $1.4 million. As of December 31, 2017, if Main Street had adopted the fair value option under ASC 825 for the 4.50% Notes due 2019, Main Street estimates its fair value would be approximately $177.0 million. Main Street recognized interest expense related to the 4.50% Notes due 2019, including amortization of unamortized deferred issuance costs, of $8.6 million for each of the years ended December 31, 2017, 2016 and 2015.

        The indenture governing the 4.50% Notes due 2019 (the "4.50% Notes due 2019 Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes due 2019 and the Trustee if Main Street ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2019 Indenture. As of December 31, 2017, Main Street was in compliance with these covenants.

        In November 2017, Main Street issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due 2022 (the "4.50% Notes due 2022") at an issue price of 99.16%. The 4.50% Notes due 2022 are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2022 mature on December 1, 2022, and may be redeemed in whole or in part at any time at Main Street's option subject to certain make-whole

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provisions. The 4.50% Notes due 2022 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes due 2022, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $182.2 million. Main Street may from time to time repurchase the 4.50% Notes due 2022 in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2017, the outstanding balance of the 4.50% Notes due 2022 was $185.0 million and the recorded value of $182.0 million was net of unamortized debt issuance costs of $3.0 million. As of December 31, 2017, if Main Street had adopted the fair value option under ASC 825 for the 4.50% Notes due 2022, Main Street estimates its fair value would be approximately $186.6 million. Main Street recognized interest expense related to the 4.50% Notes due 2022, including amortization of unamortized deferred issuance costs, of $0.9 million for the year ended December 31, 2017.

        The indenture governing the 4.50% Notes due 2022 (the "4.50% Notes due 2022 Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes due 2022 and the Trustee if Main Street ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2022 Indenture. As of December 31, 2017, Main Street was in compliance with these covenants.

NOTE H—FINANCIAL HIGHLIGHTS

 
  Twelve Months Ended December 31,  
Per Share Data:
  2017   2016   2015   2014   2013  

NAV at the beginning of the period

  $ 22.10   $ 21.24   $ 20.85   $ 19.89   $ 18.59  

Net investment income(1)

    2.39     2.23     2.18     2.20     2.06  

Net realized gain(1)(2)

    0.19     0.56     (0.43 )   0.53     0.07  

Net change in net unrealized appreciation (depreciation)(1)(2)

    0.86     (0.14 )   0.20     (0.27 )   0.52  

Income tax benefit (provision)(1)(2)

    (0.43 )   0.02     0.18     (0.15 )    

Net increase in net assets resulting from operations(1)

    3.01     2.67     2.13     2.31     2.65  

Dividends paid from net investment income

    (2.47 )   (1.99 )   (2.49 )   (2.17 )   (2.29 )

Distributions from capital gains

    (0.32 )   (0.74 )   (0.16 )   (0.38 )   (0.37 )

Total dividends paid

    (2.79 )   (2.73 )   (2.65 )   (2.55 )   (2.66 )

Impact of the net change in monthly dividends declared prior to the end of the period and paid in the subsequent period

    (0.01 )   (0.01 )   (0.01 )   (0.01 )   (0.02 )

Accretive effect of stock offerings (issuing shares above NAV per share)

    1.07     0.76     0.74     1.07     1.13  

Accretive effect of DRIP issuance (issuing shares above NAV per share)

    0.06     0.08     0.12     0.12     0.13  

Other(3)

    0.09     0.09     0.06     0.02     0.07  

NAV at the end of the period

  $ 23.53   $ 22.10   $ 21.24   $ 20.85   $ 19.89  

Market value at the end of the period

  $ 39.73   $ 36.77   $ 29.08   $ 29.24   $ 32.69  

Shares outstanding at the end of the period

    58,660,680     54,354,857     50,413,744     45,079,150     39,852,604  

(1)
Based on weighted-average number of common shares outstanding for the period.

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(2)
Net realized gains or losses, net change in unrealized appreciation or depreciation, and income taxes can fluctuate significantly from period to period.

(3)
Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.
 
  Twelve Months Ended December 31,  
 
  2017   2016   2015   2014   2013  
 
  (dollars in thousands)
 

NAV at end of period

  $ 1,380,368   $ 1,201,481   $ 1,070,894   $ 939,982   $ 792,533  

Average NAV

  $ 1,287,639   $ 1,118,567   $ 1,055,313   $ 885,568   $ 706,056  

Average outstanding debt

  $ 843,993   $ 801,048   $ 759,396   $ 575,524   $ 444,331  

Ratio of total expenses, including income tax expense, to average NAV(1)

    7.37%     5.48%     4.63%     5.82%     5.82%  

Ratio of operating expenses to average NAV(2)

    5.47%     5.59%     5.45%     5.11%     5.82%  

Ratio of operating expenses, excluding interest expense, to average NAV(2)

    2.63%     2.58%     2.41%     2.44%     2.95%  

Ratio of net investment income to average NAV

    10.51%     10.35%     10.15%     10.79%     10.68%  

Portfolio turnover ratio

    38.18%     24.63%     25.37%     35.71%     36.10%  

Total investment return(3)

    16.02%     37.36%     8.49%     –3.09%     16.68%  

Total return based on change in NAV(4)

    14.20%     12.97%     11.11%     12.71%     15.06%  

(1)
Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards, which are non-cash in nature and may vary significantly from period to period. Main Street is required to include net deferred tax provision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable.

(2)
Unless otherwise noted, operating expenses include interest, compensation, general and administrative and share-based compensation expenses, net of expenses allocated to the External Investment Manager.

(3)
Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street's dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.

(4)
Total return is based on change in net asset value was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value. Non-operating changes include any items that affect net asset value other than the net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items.

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NOTE I—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

        During 2017, Main Street paid supplemental dividends of $0.275 per share in each of June and December 2017, regular monthly dividends of $0.185 per share for each month of January through September 2017, regular monthly dividends of $0.190 per share for each month of October through December 2017, with such dividends totaling $157.6 million, or $2.785 per share. The 2017 regular monthly dividends, which total $125.9 million, or $2.235 per share, represent a 2.8% increase from the regular monthly dividends paid per share for the year ended 2016. For tax purposes, the 2017 dividends, which included the effects of accrued dividends, total $2.79 per share and were comprised of (i) ordinary income totaling approximately $2.218 per share, (ii) long term capital gain totaling approximately $0.490 per share, and (iii) qualified dividend income totaling approximately $0.082 per share. As of December 31, 2017, Main Street estimates that it has generated undistributed taxable income of approximately $53.5 million, or $0.91 per share, that will be carried forward toward distributions to be paid in 2018. For the years ended December 31, 2016 and 2015, Main Street paid total dividends of approximately $141.6 million, or $2.725 per share, and $130.0 million, or $2.650 per share, respectively.

        MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

        Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and capital gains, but may also include qualified dividends or return of capital. The tax character of distributions paid for the years ended December 31, 2017, 2016 and 2015 was as follows:

 
  Twelve Months Ended December 31,  
 
  2017   2016   2015  
 
  (dollars in thousands)
 

Ordinary income(1)

  $ 126,540   $ 100,059   $ 114,975  

Qualified dividends

    4,656     2,992     5,179  

Distributions of long term capital gains

    27,479     39,522     11,285  

Distributions on tax basis

  $ 158,675   $ 142,573   $ 131,439  

(1)
The years ended December 31, 2017, 2016 and 2015 include $1.5 million, $1.6 million and $1.5 million, respectively, that was reported as compensation for services for tax purposes in accordance with Section 83 of the Code.

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        Listed below is a reconciliation of "Net increase in net assets resulting from operations" to taxable income and to total distributions declared to common stockholders for the years ended December 31, 2017, 2016 and 2015.

 
  Year Ended December 31,  
 
  2017   2016   2015  
 
  (estimated, dollars in thousands)
 

Net increase in net assets resulting from operations

  $ 170,622   $ 138,899   $ 104,437  

Book tax difference from share-based compensation expense

    (867 )   1,619     1,006  

Net change in net unrealized (appreciation) depreciation

    (48,757 )   7,519     (9,992 )

Income tax provision (benefit)

    24,471     (1,227 )   (8,687 )

Pre-tax book loss not consolidated for tax purposes

    2,357     15,742     32,323  

Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains (losses) and changes in estimates

    10,844     (7,300 )   3,397  

Estimated taxable income(1)

    158,670     155,252     122,484  

Taxable income earned in prior year and carried forward for distribution in current year

    42,362     29,683     38,638  

Taxable income earned prior to period end and carried forward for distribution next period

    (53,503 )   (52,410 )   (38,757 )

Dividend payable as of period end and paid in the following period

    11,146     10,048     9,074  

Total distributions accrued or paid to common stockholders

  $ 158,675   $ 142,573   $ 131,439  

(1)
Main Street's taxable income for each period is an estimate and will not be finally determined until the company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.

        The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-of-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street's consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street's consolidated financial statements.

        The income tax expense, or benefit, and the related tax assets and liabilities generated by the Taxable Subsidiaries, if any, are reflected in Main Street's consolidated statement of operations. Main

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Street's provision for income taxes was comprised of the following for the years ended December 31, 2017, 2016 and 2015 (amounts in thousands):

 
  Twelve Months Ended December 31,  
 
  2017   2016   2015  

Current tax expense:

                   

Federal

  $ 1,865   $ 1   $ 607  

State

    1,415     347     1,181  

Total current tax expense

    3,280     348     1,788  

Deferred tax expense (benefit):

                   

Federal

    15,248     (5,359 )   (10,781 )

State

    4,017     2,043     (870 )

Total deferred tax expense (benefit)

    19,265     (3,316 )   (11,651 )

Excise tax

    1,926     1,741     1,176  

Total income tax provision (benefit)

  $ 24,471   $ (1,227 ) $ (8,687 )

        As of December 31, 2017, the cost of investments for U.S. federal income tax purposes was $2,002.1 million, with such investments having a gross unrealized appreciation of $329.4 million and gross unrealized depreciation of $154.3 million.

        The net deferred tax liability at December 31, 2017 was $10.6 million compared to a net deferred tax asset of $9.1 million at December 31, 2016, primarily related to loss carryforwards, timing differences in net unrealized appreciation or depreciation and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. In addition, during the three months ended March 31, 2016, Main Street recorded a one-time $1.8 million increase to deferred tax assets for previously unrecognized excess tax benefits associated with share-based compensation due to the early adoption of the new accounting standard ASU 2016-09 (See further discussion in Note B.8.). The net deferred tax liability as of December 31, 2017 equal to $10.6 million reflects a reduction of $2.8 million resulting from the decrease in the U.S. federal corporate income tax rate from 35% to 21% as enacted by the Tax Cuts and Jobs Act (See further discussion in Note B.9.). For the year ended December 31, 2017, for U.S. federal income tax purposes, the Taxable Subsidiaries utilized capital loss carryforwards totaling approximately $9.1 million. At December 31, 2017, for U.S. federal income tax purposes, the Taxable Subsidiaries had a capital loss carryforward of $4.6 million which, if unused, will expire in taxable year 2021. At December 31, 2017, for U.S. federal income tax purposes, the Taxable Subsidiaries had a net operating loss carryforward which, if unused, will expire in various taxable years from 2029 through 2037. The timing and manner in which Main Street will utilize any loss carryforwards in any year, or in total, may be limited in the future under the provisions of the Code.

        Management believes that the realization of the deferred tax assets is more likely than not based on expectations as to future taxable income and scheduled reversals of temporary differences. Accordingly, Main Street did not record a valuation allowance related to its deferred tax assets at

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2017 and 2016. The following table sets forth the significant components of net deferred tax assets and liabilities as of December 31, 2017 and 2016 (amounts in thousands):

 
  Years Ended December 31,  
 
  2017   2016  

Deferred tax assets:

             

Net operating loss carryforwards

  $ 28,422   $ 38,880  

Capital loss carryforwards

    1,011     5,175  

Other

    893      

Total deferred tax assets

    30,326     44,055  

Deferred tax liabilities:

             

Net unrealized appreciation of portfolio investments

    (31,711 )   (21,807 )

Net basis differences in portfolio investments

    (9,168 )   (13,112 )

Other

        (11 )

Total deferred tax liabilities

    (40,879 )   (34,930 )

Total deferred tax asset (liabilities), net

  $ (10,553 ) $ 9,125  

NOTE J—COMMON STOCK

        In November 2015, Main Street commenced a program with certain selling agents through which it can sell shares of its common stock by means of at-the-market offerings from time to time (the "ATM Program"). During the year ended December 31, 2017, Main Street sold 3,944,972 shares of its common stock at a weighted-average price of $38.72 per share and raised $152.8 million of gross proceeds under the ATM Program. Net proceeds were $150.9 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2017, 1,911,356 shares remained available for sale under the ATM Program.

        During the year ended December 31, 2016, Main Street sold 3,324,646 shares of its common stock at a weighted-average price of $34.17 per share and raised $113.6 million of gross proceeds under the ATM Program. Net proceeds were $112.0 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2016, sales transactions representing 42,413 shares had not settled and are not included in shares issued and outstanding on the face of the consolidated balance sheet, but are included in the weighted-average shares outstanding in the consolidated statement of operations and in the shares used to calculate net asset value per share.

        During November and December 2015, Main Street sold 140,568 shares of its common stock at a weighted-average price of $31.98 per share and raised $4.5 million of gross proceeds under the ATM Program. Net proceeds were $4.3 million after commissions to the selling agents on shares sold and offering costs.

        During March 2015, Main Street completed a follow-on public equity offering of 4,370,000 shares of common stock, including the underwriters' full exercise of their option to purchase 570,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $127.8 million.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE K—DIVIDEND REINVESTMENT PLAN ("DRIP")

        Main Street's DRIP provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Main Street declares a cash dividend, the company's stockholders who have not "opted out" of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common stock or through open market purchases of common stock. Newly issued shares will be valued based upon the final closing price of MSCC's common stock on the valuation date determined for each dividend by Main Street's Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased, before any associated brokerage or other costs. Main Street's DRIP is administered by its transfer agent on behalf of Main Street's record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street's DRIP but may provide a similar dividend reinvestment plan for their clients.

        For the year ended December 31, 2017, $9.2 million of the total $157.6 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 234,513 newly issued shares. For the year ended December 31, 2016, $14.1 million of the total $141.6 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 434,631 newly issued shares. For the year ended December 31, 2015, $19.4 million of the total $130.0 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 636,079 newly issued shares and with the purchase of 3,131 shares of common stock in the open market. The shares disclosed above relate only to Main Street's DRIP and exclude any activity related to broker-managed dividend reinvestment plans.

NOTE L—SHARE-BASED COMPENSATION

        Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measured the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

        Main Street's Board of Directors approves the issuance of shares of restricted stock to Main Street employees pursuant to the Main Street Capital Corporation 2015 Equity and Incentive Plan (the "Equity and Incentive Plan"). These shares generally vest over a three-year period from the grant date. The fair value is expensed over the service period, starting on the grant date. The following table summarizes the restricted stock issuances approved by Main Street's Board of Directors under the

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Equity and Incentive Plan, net of shares forfeited, if any, and the remaining shares of restricted stock available for issuance as of December 31, 2017.

Restricted stock authorized under the plan

    3,000,000  

Less net restricted stock granted during:

       

Year ended December 31, 2015

    (900 )

Year ended December 31, 2016

    (260,514 )

Year ended December 31, 2017

    (223,812 )

Restricted stock available for issuance as of December 31, 2017

    2,514,774  

        As of December 31, 2017, the following table summarizes the restricted stock issued to Main Street's non-employee directors and the remaining shares of restricted stock available for issuance pursuant to the Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan. These shares are granted upon appointment or election to the board and vest on the day immediately preceding the annual meeting of stockholders following the respective grant date and are expensed over such service period.

Restricted stock authorized under the plan

    300,000  

Less net restricted stock granted during:

       

Year ended December 31, 2015

    (6,806 )

Year ended December 31, 2016

    (6,748 )

Year ended December 31, 2017

    (5,948 )

Restricted stock available for issuance as of December 31, 2017

    280,498  

        For the years ended December 31, 2017, 2016 and 2015, Main Street recognized total share-based compensation expense of $10.0 million, $8.3 million and $6.3 million, respectively, related to the restricted stock issued to Main Street employees and independent directors. As of December 31, 2017, there was $10.8 million of total unrecognized compensation expense related to Main Street's non-vested restricted shares. This compensation expense is expected to be recognized over a remaining weighted-average period of approximately 1.7 years as of December 31, 2017.

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE M—COMMITMENTS AND CONTINGENCIES

        As of December 31, 2017, Main Street had the following outstanding commitments (in thousands):

 
  Amount  

Investments with equity capital commitments that have not yet funded:

       

Congruent Credit Opportunities Funds

       

Congruent Credit Opportunities Fund II, LP

  $ 8,488  

Congruent Credit Opportunities Fund III, LP

    12,131  

  $ 20,619  

Encap Energy Fund Investments

       

EnCap Energy Capital Fund VIII, L.P. 

  $ 377  

EnCap Energy Capital Fund IX, L.P. 

    591  

EnCap Energy Capital Fund X, L.P. 

    3,856  

EnCap Flatrock Midstream Fund II, L.P. 

    7,117  

EnCap Flatrock Midstream Fund III, L.P. 

    4,042  

  $ 15,983  

Brightwood Capital Fund Investments

       

Brightwood Capital Fund III, LP

  $ 3,000  

Brightwood Capital Fund IV, LP

    4,000  

  $ 7,000  

Freeport Fund Investments

       

Freeport First Lien Loan Fund III LP

  $ 3,942  

Freeport Financial SBIC Fund LP

    1,375  

  $ 5,317  

EIG Fund Investments

  $ 3,980  

Harris Preston Fund Investments

       

HPEP 3, L.P. 

  $ 4,057  

LKCM Headwater Investments I, L.P. 

  $ 2,500  

Copper Trail Energy Fund I, LP

  $ 2,500  

Dos Rios Partners

       

Dos Rios Partners, LP

  $ 1,594  

Dos Rios Partners—A, LP

    506  

  $ 2,100  

I-45 SLF LLC

  $ 800  

Access Media Holdings, LLC

  $ 302  

Total equity commitments

  $ 65,158  

Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:

       

Resolute Industrial, LLC

  $ 5,750  

NNE Partners, LLC

    5,542  

PT Network, LLC

    3,947  

Hojeij Branded Foods, LLC

    3,422  

CDHA Management, LLC

    2,343  

Wireless Vision Holdings, LLC

    2,068  

Boccella Precast Products LLC

    2,000  

Arcus Hunting LLC

    1,951  

Barfly Ventures, LLC

    1,838  

Felix Investments Holdings II

    1,667  

Hawk Ridge Systems, LLC

    1,600  

Meisler Operating LLC

    1,600  

Market Force Information, LLC

    1,600  

Aethon United BR LP

    1,563  

IDX Broker, LLC

    1,500  

Lamb Ventures, LLC

    1,500  

GST Autoleather, Inc. 

    1,437  

Messenger, LLC

    1,417  

TGP Holdings III LLC

    1,255  

Gamber-Johnson Holdings, LLC

    1,200  

NuStep, LLC

    1,200  

Subsea Global Solutions, LLC

    1,114  

CTVSH, PLLC

    800  

Mystic Logistics Holdings, LLC

    800  

KBK Industries, LLC

    625  

NRI Clinical Research, LLC

    600  

PPC/SHIFT LLC

    500  

UniTek Global Services, Inc. 

    483  

ATS Workholding, LLC

    461  

Grace Hill, LLC

    444  

Clad-Rex Steel, LLC

    400  

Gulf Publishing Holdings, LLC

    320  

OnAsset Intelligence, Inc. 

    225  

Jensen Jewelers of Idaho, LLC

    200  

BigName Commerce, LLC

    101  

Permian Holdco 2, Inc. 

    39  

Total loan commitments

  $ 53,512  

Total commitments

  $ 118,670  

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

        Main Street will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and borrowings under the Credit Facility). Main Street follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary. The Company had total unrealized depreciation of $0.1 million on the outstanding unfunded commitments as of December 31, 2017.

        Main Street has an operating lease for office space. Total rent expense incurred by Main Street for the years ended December 2017, 2016 and 2015 was $0.7 million, $0.6 million and $0.5 million, respectively.

        The following table shows future minimum payments under Main Street's operating lease as of December 31, 2017:

For the Years Ended December 31,
  Amount  

2018

    346  

2019

    749  

2020

    763  

2021

    777  

2022

    791  

Thereafter

    4,239  

Total

  $ 7,665  

        Main Street may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to impose liability on Main Street in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, Main Street does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on Main Street's financial condition or results of operations in any future reporting period.

NOTE N—SELECTED QUARTERLY DATA (UNAUDITED)

 
  2017  
 
  (dollars in thousands,
except per share amounts)
 
 
  Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4  

Total investment income

  $ 47,889   $ 50,271   $ 51,786   $ 55,795  

Net investment income

  $ 31,166   $ 32,693   $ 34,029   $ 37,483  

Net increase in net assets resulting from operations

  $ 31,450   $ 42,829   $ 34,899   $ 61,444  

Net investment income per share—basic and diluted

  $ 0.57   $ 0.58   $ 0.60   $ 0.64  

Net increase in net assets resulting from operations per share—basic and diluted

  $ 0.57   $ 0.76   $ 0.61   $ 1.05  

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 
  2016  
 
  (dollars in thousands,
except per share amounts)
 
 
  Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4  

Total investment income

  $ 42,006   $ 42,902   $ 46,599   $ 46,830  

Net investment income

  $ 27,164   $ 27,648   $ 30,557   $ 30,432  

Net increase in net assets resulting from operations

  $ 16,812   $ 30,911   $ 43,181   $ 47,993  

Net investment income per share—basic and diluted

  $ 0.54   $ 0.54   $ 0.58   $ 0.57  

Net increase in net assets resulting from operations per share—basic and diluted

  $ 0.33   $ 0.60   $ 0.82   $ 0.90  

 

 
  2015  
 
  (dollars in thousands,
except per share amounts)
 
 
  Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4  

Total investment income

  $ 37,179   $ 41,308   $ 42,608   $ 43,493  

Net investment income

  $ 23,491   $ 27,201   $ 27,861   $ 28,520  

Net increase in net assets resulting from operations

  $ 35,424   $ 40,802   $ 20,668   $ 7,543  

Net investment income per share—basic and diluted

  $ 0.51   $ 0.55   $ 0.56   $ 0.57  

Net increase in net assets resulting from operations per share—basic and diluted

  $ 0.77   $ 0.82   $ 0.41   $ 0.15  

NOTE O—RELATED PARTY TRANSACTIONS

        As discussed further in Note D, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of Main Street's Investment Portfolio. At December 31, 2017, Main Street had a receivable of approximately $2.9 million due from the External Investment Manager which included (i) approximately $2.0 million related primarily to operating expenses incurred by MSCC or its subsidiaries as required to support the External Investment Manager's business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion in Note D) and (ii) approximately $0.9 million of dividends declared but not paid by the External Investment Manager.

        In November 2015, Main Street's Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the "2015 Deferred Compensation Plan"). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the "2013 Deferred Compensation Plan"). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors' fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of December 31, 2017, $4.0 million of compensation and directors' fees had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan). Of this amount, $2.5 million was deferred into phantom Main Street stock units, representing 74,487 shares of Main Street's common stock. Including phantom stock units issued through dividend reinvestment, the phantom stock units outstanding as of December 31, 2017 represented 89,040 shares of Main Street's common stock. Any

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MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the consolidated statements of changes in net assets until such shares are actually distributed to the participant in accordance with the plan, but are included in operating expenses and weighted-average shares outstanding in Main Street's consolidated statements of operations as earned.

NOTE P—SUBSEQUENT EVENTS

        During January 2018, Main Street made a new portfolio investment to facilitate the minority recapitalization of Brewer Crane, LLC ("Brewer"), a leading Southern California full-service crane rental service provider. Main Street, along with a co-investor, partnered with Brewer's founder and Chief Executive Officer to facilitate the transaction, with Main Street funding $14.2 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in Lakeside, California, and founded in 1997, Brewer provides crane rental services to San Diego County and the surrounding Southern California area, offering mobile cranes, tower cranes, skilled operators, construction hoists, hauling, rigging, storage, service and repairs, and miscellaneous equipment rental.

        In February 2018, Main Street fully exited its debt and equity investments in SoftTouch Medical Holdings, LLC ("SoftTouch"), a leading provider of home medical equipment and services, serving pediatric patients across the states of Georgia and Alabama. SoftTouch provides a broad array of medical equipment and services to chronically ill youth through its diverse product offerings, including respiratory therapy, enteral feeding, phototherapy, ventilators, amongst others. Main Street realized a gain of approximately $5.2 million on the exit of its equity investment in SoftTouch.

        In February 2018, Main Street made a new portfolio investment to facilitate the management led buyout of DMS Holdco, LLC. ("DMS"), a leading provider of omni-channel direct marketing services. Main Street, along with a co-investor, partnered with the DMS' management team to facilitate the transaction, with Main Street funding $27.2 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in Portland, Oregon, and founded in 1982, DMS develops and executes end-to-end, omni-channel direct marketing services including strategy, creative design, direct mail production/fulfillment, and digital marketing to various end markets including the FinTech, banking, telecom and technology industries.

        During February 2018, Main Street declared regular monthly dividends of $0.190 per share for each of April, May and June 2018. These regular monthly dividends equal a total of $0.570 per share for the second quarter of 2018. The second quarter 2018 regular monthly dividends represent a 2.7% increase from the dividends declared for the second quarter of 2017. Including the dividends declared for the second quarter of 2018, Main Street will have paid $22.530 per share in cumulative dividends since its October 2007 initial public offering.

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Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders'
Main Street Capital Corporation

Opinion on financial statement schedule

        We have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB") the consolidated financial statements of Main Street Capital Corporation, and subsidiaries, (the "Company") referred to in our report dated February 23, 2018, which is included in the annual report on Form 10-K. Our audits of the consolidated financial statements also included the audit of the financial statement schedule listed in the index appearing under Item 15(2). In our opinion, this financial statement schedule, when considered in relation to the consolidated financial statements as a whole, presents fairly, in all material respects, the information set forth therein.

Basis for opinion

        This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement schedule based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

/s/ GRANT THORNTON LLP

Houston, Texas
February 23, 2018

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Schedule 12-14

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments in and Advances to Affiliates
December 31, 2017
(dollars in thousands)

Company
 
Investment(1)
  Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2016
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2017
Fair Value
 

Majority-owned investments

                                               

2717 MH, L.P.

  LP Interests   $   $   $   $   $ 536   $   $ 536  

Café Brazil, LLC

  Member Units         (1,140 )   179     6,040         1,140     4,900  

Clad-Rex Steel, LLC

  LIBOR Plus 9.50% (Floor 1.00)         112     1,542     14,337     143     1,200     13,280  

  Member Units         2,220     520     7,280     2,220         9,500  

  10% Secured Debt         12     119     1,190     12     19     1,183  

  Member Units         70         210     70         280  

CMS Minerals Investments

  Preferred Member Units     1,405     (1,578 )   96     3,682         3,682      

  Member Units         (600 )   212     3,381         989     2,392  

Gamber-Johnson Holdings, LLC

  LIBOR Plus 11.00% (Floor 1.00%)         187     2,988     23,846     235     681     23,400  

  Member Units         4,450     592     18,920     4,450         23,370  

GRT Rubber Technologies LLC

  LIBOR Plus 9.00% (Floor 1.00%)         (34 )   1,314     13,274     34     1,705     11,603  

  Member Units         1,660     746     20,310     1,660         21,970  

Harborside Holdings, LLC

  Member Units         3,194             9,400         9,400  

Hydratec, Inc.

  Common Stock         (640 )   1,631     15,640         640     15,000  

IDX Broker, LLC

  11.5% Secured Debt         88     1,316     10,950     5,500     1,200     15,250  

  Preferred Member Units         4,274     136     7,040     4,620         11,660  

Jensen Jewelers of Idaho, LLC

  Prime Plus 6.75% (Floor 2.00%)         (20 )   451     4,055     520     620     3,955  

  Member Units         640     207     4,460     640         5,100  

Lamb Ventures, LLC

  11% Secured Debt         52     994     7,657     2,850     565     9,942  

  Preferred Equity                 400             400  

  Member Units         800     40     5,990     800         6,790  

  9.5% Secured Debt         4     65     1,170     432     1,170     432  

  Member Units         (820 )   845     1,340         820     520  

Lighting Unlimited, LLC

  8% Secured Debt             29     1,514         1,514      

  Preferred Equity     (434 )   24         410     24     434      

  Warrants     (54 )   54             54     54      

  Member Units     (100 )   100             100     100      

Mid-Columbia Lumber

  10% Secured Debt             176     1,750     593     953     1,390  

Products, LLC

  12% Secured Debt             477     3,900         37     3,863  

  Member Units         (1,500 )   6     2,480     595     1,500     1,575  

  9.5% Secured Debt             78     836         45     791  

  Member Units         150     72     600     690         1,290  

MSC Adviser I, LLC

  Member Units         11,151     3,032     30,617     11,151         41,768  

Mystic Logistics Holdings, LLC

  12% Secured Debt         (124 )   1,073     9,176     52     1,532     7,696  

  Common Stock         1,040         5,780     1,040         6,820  

NRP Jones, LLC

  12% Secured Debt             4,117     13,915     7,821     15,360     6,376  

  Warrants         687         130     687     817      

  Member Units         2,023     18     410     2,840         3,250  

PPL RVs, Inc.

  LIBOR Plus 7.00% (Floor 0.50%)         128     1,473     17,826     174     1,900     16,100  

  Common Stock         660     80     11,780     660         12,440  

Principle Environmental, LLC

  13% Secured Debt         131     998     7,438     39         7,477  

(d/b.a TruHorizon

  Preferred Member Units     (63 )   6,183         5,370     6,183     63     11,490  

Environmental Solutions)

  Warrants         380         270     380         650  

Quality Lease Service, LLC

  Zero Coupon Secured Debt         (391 )   273     7,068     273     391     6,950  

  Member Units                 3,188     1,750         4,938  

The MPI Group, LLC

  9% Secured Debt         (513 )   268     2,922     1     513     2,410  

  Series A Preferred Units                              

  Warrants                              

  Member Units         90     92     2,300     89         2,389  

Uvalco Supply, LLC

  9% Secured Debt             54     872         524     348  

  Member Units     69     (496 )   235     4,640         760     3,880  

Vision Interests, Inc.

  13% Secured Debt             382     2,814         17     2,797  

  Series A Preferred Stock                 3,000             3,000  

  Common Stock                              

F-115


Table of Contents

Company
 
Investment(1)
  Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2016
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2017
Fair Value
 

Ziegler's NYPD, LLC

  6.5% Secured Debt             68     994     2         996  

  12% Secured Debt             37     300             300  

  14% Secured Debt             390     2,750             2,750  

  Warrants         (240 )       240         240      

  Preferred Member Units         (880 )       4,100         880     3,220  

Other controlled investments

                                               

Access Media Holdings, LLC

  5% Current/5% PIK Secured Debt         (3,714 )   2,379     19,700     1,164     3,714     17,150  

  Preferred Member Units         (1,908 )       240     1,668     1,908      

  Member Units                              

Ameritech College Operations, LLC

  13% Secured Debt             96     1,003         1,003      

  13% Secured Debt             285     3,025         3,025      

  Preferred Member Units     (3,321 )       198     2,291     3,900     6,191      

ASC Interests, LLC

  11% Secured Debt         (16 )   232     2,100     11     316     1,795  

  Member Units         (1,150 )   (12 )   2,680         1,150     1,530  

ATS Workholding, LLC

  5% Secured Debt             36         3,249         3,249  

  Preferred Member Units                     3,726         3,726  

Bond-Coat, Inc.

  12% Secured Debt         (40 )   1,450     11,596     40     40     11,596  

  Common Stock         2,710         6,660     2,710         9,370  

CBT Nuggets, LLC

  Member Units         34,080     9,439     55,480     34,080         89,560  

Charps, LLC

  12% Secured Debt             2,371         19,025     800     18,225  

  Preferred Member Units         250             650         650  

Copper Trail Energy Fund I, LP

  LP Interests                     2,500         2,500  

Datacom, LLC

  8% Secured Debt             101     900     945     270     1,575  

  5.25% Current / 5.25% PIK Secured Debt         (599 )   1,296     11,049     660     599     11,110  

  Class A Preferred Member Units         (638 )       1,368         638     730  

  Class B Preferred Member Units         (1,529 )       1,529         1,529      

Garreco, LLC

  LIBOR Plus 10.00% (Floor 1.00%)             702     5,219     991     767     5,443  

  Member Units         790         1,150     790         1,940  

Gulf Manufacturing, LLC

  9% PIK Secured Debt             51     777         777      

  Member Units         1,290     437     8,770     1,290         10,060  

Gulf Publishing Holdings, LLC

  LIBOR Plus 9.50% (Floor 1.00%)             5         80         80  

  12.5% Secured Debt             1,557     9,911     2,792         12,703  

  Member Units         1,159     40     3,124     1,716         4,840  

Harrison Hydra-Gen, Ltd.

  Common Stock         460         3,120     460         3,580  

Hawthorne Customs and Dispatch

  Member Units     (159 )   309         280     309     589      

Services, LLC

  Member Units     632     (825 )   127     2,040         2,040      

HW Temps LLC

  LIBOR Plus 11.00% (Floor 1.00%)             1,430     10,500     18     600     9,918  

  Preferred Member Units             140     3,940             3,940  

Indianapolis Aviation Partners, LLC

  15% Secured Debt             292     3,100         3,100      

  Warrants     2,384     (1,520 )       2,649         2,649      

KBK Industries, LLC

  10% Secured Debt         3     100     1,250     100     975     375  

  12.5% Secured Debt         33     788     5,889     11         5,900  

  Member Units         1,197     183     2,780     1,640         4,420  

Marine Shelters Holdings, LLC

  12% PIK Secured Debt         (2,551 )       9,387         9,387      

  Preferred Member Units     (100 )               100     100      

Market Force Information, LLC

  LIBOR Plus 11.00% (Floor 1.00%)             1,541         23,815     672     23,143  

  Member Units                     14,700         14,700  

MH Corbin Holding LLC

  13% Secured Debt             2,030     13,197     29     700     12,526  

  Preferred Member Units             140     6,000             6,000  

NAPCO Precast, LLC

  LIBOR Plus 8.50%         36     917         11,475         11,475  

  Prime Plus 2.00% (Floor 7.00%)         (20 )   122     2,713     20     2,733      

  18% Secured Debt         (30 )   327     3,952     30     3,982      

  Member Units         750     393     10,920     750         11,670  

NRI Clinical Research, LLC

  LIBOR Plus 6.50% (Floor 1.50%)             36     200     200         400  

  14% Secured Debt         (33 )   650     4,261     33     429     3,865  

  Warrants         (180 )       680         180     500  

  Member Units         38         2,462     360     322     2,500  

NuStep, LLC

  12% Secured Debt             2,646         20,420         20,420  

  Preferred Member Units                     10,200         10,200  

OMi Holdings, Inc.

  Common Stock         1,030     1,081     13,080     1,030         14,110  

Pegasus Research Group, LLC

  Member Units         1,690     157     8,620     1,690         10,310  

River Aggregates, LLC

  Zero Coupon Secured Debt             80     627     80         707  

  Member Units         10         4,600     10         4,610  

  Member Units         50         2,510     49         2,559  

F-116


Table of Contents

Company
 
Investment(1)
  Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2016
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2017
Fair Value
 

SoftTouch Medical Holdings LLC

  LIBOR Plus 9.00% (Floor 1.00%)         (15 )   748     7,140     15     15     7,140  

  Member Units         920     969     9,170     919         10,089  

Other

                                               

Amounts related to investments transferred to or from other 1940 Act classification during the period

                (219 )   (9,919 )            

      $ 259   $ 63,625   $ 62,762   $ 594,282   $ 239,770   $ 93,265   $ 750,706  

Affiliate Investments

                                               

AFG Capital Group, LLC

  Warrants   $   $ 840   $   $ 670   $ 190   $   $ 860  

  Member Units         190     34     2,750     840         3,590  

Barfly Ventures, LLC

  12% Secured Debt         176     1,005     5,827     2,888         8,715  

  Options         430         490     430         920  

  Warrants         240         280     240         520  

BBB Tank Services, LLC

  LIBOR Plus 8.00% (Floor 1.00%)             84     797     861     880     778  

  15% Secured Debt             623     3,991         115     3,876  

  Member Units         (300 )       800         300     500  

Boccella Precast Products LLC

  LIBOR Plus 10.0% (Floor 1.00%)         170     1,203         16,400         16,400  

  Member Units         1,280     37         3,440         3,440  

Boss Industries, LLC

  Preferred Member Units         1,476     193     2,800     1,667     537     3,930  

Bridge Capital Solutions Corporation

  13% Secured Debt             1,262     5,610     274         5,884  

  Warrants         151         3,370     150         3,520  

  13% Secured Debt         (2 )   133     1,000     2     2     1,000  

  Preferred Member Units             100     1,000             1,000  

Buca C, LLC

  LIBOR Plus 7.25% (Floor 1.00%)         (167 )   1,891     22,671     56     2,534     20,193  

  Preferred Member Units         (728 )   240     4,660     240     728     4,172  

CAI Software LLC

  12% Secured Debt             456     3,683     800     400     4,083  

  Member Units         750     87     2,480     750         3,230  

Chandler Signs Holdings, LLC

  12% Secured Debt         (7 )   555     4,500     7     7     4,500  

  Class A Units         (590 )   13     3,240         590     2,650  

Condit Exhibits, LLC

  Member Units         110     41     1,840     110         1,950  

Congruent Credit Opportunities

  LP Interests (Fund II)         (3 )   2     1,518         3     1,515  

Funds

  LP Interests (Fund III)         336     1,555     16,181     2,451         18,632  

Daseke, Inc.

  12% Current / 2.5% PIK Secured Debt         (167 )   676     21,799     255     22,054      

  Common Stock     22,859     (18,849 )       24,063         24,063      

Dos Rios Partners

  LP Interests (Dos Rios Partners, LP)         2,240         4,925     2,240         7,165  

  LP Interests (Dos Rios Partners—A, LP)         445         1,444     445         1,889  

Dos Rios Stone Products LLC

  Class A Units         (280 )   23     2,070         280     1,790  

East Teak Fine Hardwoods, Inc.

  Common Stock         (230 )   66     860         230     630  

East West Copolymer &

  12% Current/2% PIK Secured Debt     (3,626 )   961         8,630     961     9,591      

Rubber, LLC

  Warrants     (50 )   50             50     50      

EIG Fund Investments

  LP Interests (EIG Global Private Debt fund-A, L.P.)     71     (48 )   90     2,804     1,160     2,909     1,055  

  LP Interests (EIG Traverse Co-Investment, L.P.)         (100 )   1,534     9,905         9,905      

Freeport Financial Fund Investments

  LP Interests (Freeport Financial SBIC Fund LP)         (6 )   408     5,620         6     5,614  

  LP Interests (Freeport First Lien Loan Fund III LP)         (52 )   688     4,763     3,795     52     8,506  

Gault Financial, LLC (RMB

  10.5% Current Secured Debt         1,016     1,302     11,079     1,016     563     11,532  

Capital, LLC)

  Warrants                              

Glowpoint, Inc.

  12% Secured Debt     (6,450 )   4,951     685     3,997     5,003     9,000      

  Common Stock     (3,974 )   1,878         2,080     1,878     3,958      

Guerdon Modular Holdings, Inc.

  13% Secured Debt             1,450     10,594     38         10,632  

  Preferred Stock         (1,140 )       1,140         1,140      

  Common Stock         (80 )       80         80      

Hawk Ridge Systems, LLC

  11% Secured Debt         125     1,229     9,901     4,899     500     14,300  

  Preferred Member Units         950     320     2,850     950         3,800  

  Preferred Member Units         50     6     150     50         200  

Houston Plating and Coatings, LLC

  8% Unsecured Convertible Debt         200     165         3,200         3,200  

  Member Units         1,390     5     4,000     2,140         6,140  

HPEP 3, L.P.

  LP Interests                     1,343     400     943  

I-45 SLF LLC

  Member Units         255     2,881     14,586     2,255         16,841  

F-117


Table of Contents

Company
 
Investment(1)
  Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2016
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2017
Fair Value
 

Indianhead Pipeline Services, LLC

  12% Secured Debt             947     5,079     562     5,641      

  Preferred Member Units         (338 )   514     2,677     514     3,191      

  Warrants     134     459             459     459      

  Member Units     272     1             1     1      

L.F. Manufacturing Holdings, LLC

  Member Units         620         1,380     620         2,000  

Meisler Operating LLC

  LIBOR Plus 8.50% (Floor 1.00%)             1,249         16,633         16,633  

  Member Units         190             3,390         3,390  

OnAsset Intelligence, Inc.

  12% PIK Secured Debt     (29 )       576     4,519     575         5,094  

  10% PIK Secured Debt             3         48         48  

  Preferred Stock                              

  Warrants                              

OPI International Ltd.

  10% Unsecured Debt     (86 )   (473 )   16     473         473      

  Common Stock         (1,600 )       1,600         1,600      

PCI Holding Company, Inc.

  12% Secured Debt         (102 )   1,922     13,000     345     752     12,593  

  Preferred Stock         (5,028 )   548     5,370     548     5,028     890  

  Preferred Stock         870             2,610         2,610  

Rocaceia, LLC (Quality Lease and

  12% Secured Debt                 250             250  

Rental Holdings, LLC)

  Preferred Member Units                              

Tin Roof Acquisition Company

  12% Secured Debt             1,656     13,385     66     729     12,722  

  Class C Preferred Stock             288     2,738     289         3,027  

UniTek Global Services, Inc.

  LIBOR Plus 8.50% (Floor 1.00%)         (5 )   722     5,021     3,519     5     8,535  

  LIBOR Plus 7.50% (Floor 1.00%)             9     824     3     690     137  

  15% PIK Unsecured Debt             129     745     120         865  

  Preferred Stock         (637 )   1,547     6,410     1,547     637     7,320  

  Preferred Stock         (8 )   339         2,858     8     2,850  

  Common Stock         (520 )       3,010         520     2,490  

Universal Wellhead Services

  Preferred Member Units         109         720     110         830  

Holdings, LLC

  Member Units         1,300         610     1,300         1,910  

Valley Healthcare Group, LLC

  LIBOR Plus 12.50% (Floor 0.50%)             1,728     12,844     31     1,190     11,685  

  Preferred Member Units                 1,600             1,600  

Volusion, LLC

  11.5% Secured Debt             2,659     15,298     668     766     15,200  

  Preferred Member Units                 14,000             14,000  

  Warrants         (496 )       2,576         496     2,080  

Other

                                               

Amounts related to investments transferred to or from other 1940 Act classification during the period

        (1,077 )   (3,582 )   1,615     24,321              

      $ 8,044   $ (11,329 ) $ 37,509   $ 375,948   $ 100,290   $ 113,063   $ 338,854  

Total Non-Control/Non-Affiliate investments

      $ 7,879   $ (9,751 ) $ 105,470                          

Total Portfolio Investments

      $ 16,182   $ 42,545   $ 205,741                          

(1)
The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.

(2)
Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in "Amounts from investments transferred from other 1940 Act classifications during the period."

(3)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.

(4)
Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

F-118


Table of Contents


Schedule 12-14


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments In and Advances to Affiliates
December 31, 2016
(dollars in thousands)

Company
 
Investment(1)
  Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2015
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2016
Fair Value
 

Control Investments

                                               

Majority-owned investments

                                               

Café Brazil, LLC

  Member Units   $   $ (1,290 ) $ 429   $ 7,330   $   $ 1,290   $ 6,040  

Clad-Rex Steel, LLC

  LIBOR Plus 9.50%             5         396         396  

  LIBOR Plus 9.50%             192         13,941         13,941  

  Member Units                     7,280         7,280  

  10% Secured Debt             4         1,190         1,190  

  Member Units                     210         210  

CMS Minerals Investments

  Member Units         (448 )   178         4,083     702     3,381  

  Preferred Member Units         (2,369 )   1,239     6,914         3,232     3,682  

Gamber-Johnson Holdings, LLC

  LIBOR Plus 11.00% (Floor 1.00%)             1,551         23,846         23,846  

  Member Units         4,076     404         18,920         18,920  

GRT Rubber Technologies LLC

  LIBOR Plus 9.00% (Floor 1.00%)         86     1,465     15,988     134     2,848     13,274  

  Member Units         4,730     949     15,580     4,730         20,310  

Hydratec, Inc.

  Common Stock         690     1,631     14,950     690         15,640  

IDX Broker, LLC

  12.5% Secured Debt         (23 )   1,460     11,350     23     423     10,950  

  Member Units         600     136     6,440     600         7,040  

Jensen Jewelers of Idaho, LLC

  Prime Plus 6.75% (Floor 2.00%)         32     475     4,055     500     500     4,055  

  Member Units         (290 )   209     4,750         290     4,460  

Lamb Ventures, LLC

  LIBOR Plus 5.75%             7         351     351      

  11% Secured Debt             869     7,962         305     7,657  

  Preferred Equity                 328     72         400  

  Member Units         1,300     90     4,690     1,300         5,990  

  9.5% Secured Debt             86     919     300     49     1,170  

  Member Units         100     362     1,240     100         1,340  

Lighting Unlimited, LLC

  8% Secured Debt             123     1,514             1,514  

  Preferred Equity         (20 )       430         20     410  

  Warrants         (40 )       40         40      

  Member Units         (350 )   (81 )   350         350      

Mid-Columbia Lumber

  10% Secured Debt             178     1,750             1,750  

Products, LLC

  12% Secured Debt             476     3,900             3,900  

  Member Units         (666 )   5     2,580     566     666     2,480  

  9.5% Secured Debt             83     881         45     836  

  Member Units         50     23     550     50         600  

MSC Adviser I, LLC

  Member Units         3,345     2,829     27,272     3,345         30,617  

Mystic Logistics Holdings, LLC

  12% Secured Debt         (42 )   1,184     9,448     42     314     9,176  

  Common Stock         (190 )       5,970         190     5,780  

NRP Jones, LLC

  6% Current / 6% PIK Secured Debt             1,921     12,948     967         13,915  

  Warrants         (320 )       450         320     130  

  Member Units         (1,070 )       1,480         1,070     410  

PPL RVs, Inc.

  11.1% Secured Debt             913     9,710         9,710      

  LIBOR Plus 7.00% (Floor 0.50%)             234         17,826         17,826  

  Common Stock         2,010     261     9,770     2,010         11,780  

Principle Environmental, LLC

  12% Secured Debt         (21 )   516     4,060     21     21     4,060  

  12% Current / 2% PIK Secured Debt         (1 )   473     3,310     69     1     3,378  

  Preferred Member Units         (690 )       6,060         690     5,370  

  Warrants         (40 )       310         40     270  

Quality Lease Service, LLC

  8% PIK Secured Debt             530     6,538     530         7,068  

  Member Units                 2,638     550         3,188  

Southern RV, LLC

  13% Secured Debt         (104 )   157     11,400     104     11,504      

  Member Units     13,918     (13,420 )   957     15,100         15,100      

  13% Secured Debt         (720 )   45     3,250     30     3,280      

  Member Units     440     (30 )       1,200         1,200      

The MPI Group, LLC

  9% Secured Debt             269     2,921     1         2,922  

  Series A Preferred Units         (690 )       690         690      

  Warrants                              

  Member Units         70     129     2,230     70         2,300  

                                               

F-119


Table of Contents

Company
 
Investment(1)
  Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2015
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2016
Fair Value
 
Travis Acquisition LLC   12% Secured Debt         (43 )   340     3,513     43     3,556      

  Member Units     17,862     (7,380 )   2,812     14,480         14,480      

Uvalco Supply, LLC

  9% Secured Debt             97     1,314         442     872  

  Member Units         (820 )   120     5,460         820     4,640  

Vision Interests, Inc.

  13% Secured Debt             412     3,052     19     257     2,814  

  Series A Preferred Stock         (550 )       3,550         550     3,000  

  Common Stock         (210 )       210         210      

Ziegler's NYPD, LLC

  6.5% Secured Debt             68     992     2         994  

  12% Secured Debt             46     500         200     300  

  14% Secured Debt             391     2,750             2,750  

  Warrants         190         50     190         240  

  Preferred Member Units         700         3,400     700         4,100  

Other controlled investments

                                               

Access Media Holdings, LLC

  5.00% Current / 5.00% PIK Secured Debt         (1,790 )   2,270     20,380     1,110     1,790     19,700  

  Preferred Member Units         (3,841 )       2,000     2,081     3,841     240  

  Member Units                              

Ameritech College Operations, LLC

  10% Secured Debt             52     514             514  

  13% Secured Debt             315     3,025             3,025  

  13% Secured Debt             51     489             489  

  Preferred Member Units             (5 )   2,291             2,291  

ASC Interests, LLC

  11% Secured Debt         (14 )   271     2,500     14     414     2,100  

  Member Units         450     95     2,230     450         2,680  

Bond-Coat, Inc.

  12% Secured Debt         (35 )   1,450     11,596     35     35     11,596  

  Common Stock         (2,480 )       9,140         2,480     6,660  

CBT Nuggets, LLC

  Member Units         13,360     7,425     42,120     13,360         55,480  

Datacom, LLC

  8% Secured Debt             53         900         900  

  5.25% Current / 5.25% PIK Secured Debt         (450 )   1,193     10,970     529     450     11,049  

  Class A Preferred Member Units         188         1,181     187         1,368  

  Class B Preferred Member Units         (3,550 )       5,079         3,550     1,529  

Garreco, LLC

  14% Secured Debt             838     5,739     30     550     5,219  

  Member Units         (120 )       1,270         120     1,150  

Gulf Manufacturing, LLC

  9% PIK Secured Debt             71     777             777  

  Member Units         (5,000 )   51     13,770         5,000     8,770  

Gulf Publishing Holdings, LLC

  12.5% Secured Debt             969         9,911         9,911  

  Member Units             62         3,124         3,124  

Harrison Hydra-Gen, Ltd.

  9% Secured Debt             9     5,010         5,010      

  Preferred Stock             2     1,361     2     1,363      

  Common Stock         520     69     2,600     520         3,120  

Hawthorne Customs and Dispatch

  Member Units         (180 )       460         180     280  

Services, LLC

  Member Units         (180 )   188     2,220         180     2,040  

HW Temps LLC

  LIBOR Plus 13% (Floor 1.00%)             1,172     9,884     816     200     10,500  

  Preferred Member Units         (2 )   389     3,942         2     3,940  

Indianapolis Aviation Partners, LLC

  15% Secured Debt         (5 )   636     3,100     5     5     3,100  

  Warrants         109         2,540     109         2,649  

Marine Shelters Holdings, LLC

  12% PIK Secured Debt         (430 )   895     8,870     947     430     9,387  

  Preferred Member Units         (4,881 )       4,881         4,881      

MH Corbin Holding LLC

  10% Secured Debt             1,409     13,869     28     700     13,197  

  Preferred Member Units             140     6,000             6,000  

NAPCO Precast, LLC

  Prime Plus 2.00% (Floor 7.00%)         19     283     4,005         1,292     2,713  

  18% Secured Debt         28     794     4,924         972     3,952  

  Member Units         2,330     687     8,590     2,330         10,920  

NRI Clinical Research, LLC

  LIBOR Plus 6.50% (Floor 1.50%)             8         200         200  

  14% Secured Debt         33     683     4,539     78     356     4,261  

  Warrants         340         340     340         680  

  Member Units         1,120         1,342     1,120         2,462  

OMi Holdings, Inc.

  Common Stock         (560 )   480     13,640         560     13,080  

Pegasus Research Group, LLC

  Member Units         1,780     243     6,840     1,780         8,620  

River Aggregates, LLC

  Zero Coupon Secured Debt             71     556     71         627  

  Member Units         770     460     3,830     770         4,600  

  Member Units         150         2,360     150         2,510  

SoftTouch Medical Holdings LLC

  LIBOR Plus 9.00% (Floor 1.00%)         45     793     8,010     65     935     7,140  

  Member Units         3,460     397     5,710     3,460         9,170  

                                               

F-120


Table of Contents

Company
 
Investment(1)
  Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2015
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2016
Fair Value
 
Other                                                

Amounts related to investments transferred to or from other 1940 Act classification during the period

                                 

      $ 32,220   $ (12,674 ) $ 52,221   $ 555,011   $ 150,323   $ 111,052   $ 594,282  

Affiliate Investments

                                               

AFG Capital Group, LLC

  11% Secured Debt   $   $ (179 ) $ 1,313   $ 12,790   $ 349   $ 13,139   $  

  Warrants         180         490     180         670  

  Member Units         730     40     2,020     730         2,750  

Barfly Ventures, LLC

  12% Secured Debt         (33 )   1,053     4,042     1,818     33     5,827  

  Options         93             490         490  

  Warrants         (193 )       473         193     280  

BBB Tank Services, LLC

  LIBOR Plus 9.50% (Floor 1.00%)             22         797         797  

  15% Secured Debt             439         3,991         3,991  

  Member Units                     800         800  

Boss Industries, LLC

  Preferred Member Units         34     264     2,586     214         2,800  

Bridge Capital Solutions Corporation

  13% Secured Debt             1,293     6,890     5,720     7,000     5,610  

  Warrants         138         1,300     2,070         3,370  

  13% Secured Debt         9     73         1,000         1,000  

  Preferred Member Units             44         1,000         1,000  

Buca C, LLC

  LIBOR Plus 7.25% (Floor 1.00%)         167     2,087     25,299     531     3,159     22,671  

  Preferred Member Units         723     226     3,711     949         4,660  

CAI Software LLC

  12% Secured Debt         (13 )   507     4,661     14     992     3,683  

  Member Units         1,480     102     1,000     1,480         2,480  

CapFusion, LLC

  13% Secured Debt             1,547         13,202         13,202  

  Warrants                     1,200         1,200  

Chandler Signs Holdings, LLC

  12% Secured Debt         39     595         4,500         4,500  

  Class A Units         1,740     149         3,240         3,240  

Condit Exhibits, LLC

  Member Units         830     175     1,010     830         1,840  

Congruent Credit Opportunities

  LP Interests (Fund II)         (434 )   400     2,834         1,316     1,518  

Funds

  LP Interests (Fund III)         423     1,115     12,024     4,157         16,181  

Daseke, Inc.

  12% Current / 2.5% PIK Secured Debt         (84 )   3,252     21,253     629     83     21,799  

  Common Stock         1,403         22,660     1,403         24,063  

Dos Rios Partners

  LP Interests (Dos Rios Partners, LP)         2         2,031     2,894         4,925  

  LP Interests (Dos Rios Partners—A, LP)         (122 )       648     918     122     1,444  

Dos Rios Stone Products LLC

  Class A Units         70     57         2,070         2,070  

East Teak Fine Hardwoods, Inc.

  Common Stock             41     860             860  

East West Copolymer &

  12% Current / 2% PIK Secured Debt         (961 )   1,302     9,463     127     960     8,630  

Rubber, LLC

  Warrants         (50 )       50         50      

EIG Fund Investments

  LP Interests             243     718     2,086         2,804  

EIG Traverse Co-Investment, L.P.

  LP Interests         100     1,175     4,755     5,150         9,905  

Freeport Financial Fund Investments

  LP Interests (Freeport Financial SBIC Fund LP)         (425 )   398     6,045         425     5,620  

  LP Interests (Freeport First Lien Loan Fund III LP)             478     2,077     2,686         4,763  

Gault Financial, LLC (RMB

  10% Secured Debt             1,532     10,930     149         11,079  

Capital, LLC)

  Warrants                              

Glowpoint, Inc.

  8% Secured Debt             21     397     1     398      

  12% Secured Debt         (4,951 )   1,125     8,929     22     4,954     3,997  

  Common Stock         (1,760 )       3,840         1,760     2,080  

Guerdon Modular Holdings, Inc.

  9% Current / 4% PIK Secured Debt             1,463     10,280     1,274     960     10,594  

  Preferred Stock                     1,140         1,140  

  Common Stock         (1,910 )       1,990         1,910     80  

Hawk Ridge Systems, LLC

  10% Secured Debt             184         9,901         9,901  

  Preferred Member Units             28         2,850         2,850  

  Preferred Member Units                     150         150  

Houston Plating and Coatings, LLC

  Member Units         (4,873 )   (22 )   8,440     433     4,873     4,000  

I-45 SLF LLC

  Member Units         386     1,964     7,200     7,386         14,586  

Indianhead Pipeline Services, LLC

  12% Secured Debt             1,548     5,853     126     900     5,079  

  Preferred Member Units         338     37     2,302     375         2,677  

  Warrants                              

  Member Units                              

F-121


Table of Contents

Company
 
Investment(1)
  Amount of
Realized
Gain/(Loss)
  Amount of
Unrealized
Gain/(Loss)
  Amount of
Interest,
Fees or
Dividends
Credited to
Income(2)
  December 31,
2015
Fair Value
  Gross
Additions(3)
  Gross
Reductions(4)
  December 31,
2016
Fair Value
 

KBK Industries, LLC

  10% Secured Debt             51         1,550     300     1,250  

  12.5% Secured Debt         (25 )   763     5,900     14     25     5,889  

  Member Units         (900 )   (8 )   3,680         900     2,780  

L.F. Manufacturing Holdings, LLC

  Member Units         (105 )       1,485         105     1,380  

MPS Denver, LLC

  Member Units     (1,254 )           1,130     124     1,254      

OnAsset Intelligence, Inc.

  12% PIK Secured Debt             512     4,006     513         4,519  

  Preferred Stock         (1,380 )       1,380         1,380      

  Warrants                              

OPI International Ltd.

  10% Unsecured Debt             48     473             473  

  Common Stock         (1,600 )       3,200         1,600     1,600  

PCI Holding Company, Inc.

  12% Secured Debt         102     1,354         13,000         13,000  

  Preferred Stock         (134 )   617     4,887     617     134     5,370  

Radial Drilling Services Inc.

  12% Secured Debt     (1,433 )   2,441     20     1,500     2,461     3,961      

  Warrants     (760 )   758             758     758      

Rocaceia, LLC (Quality Lease and

  12% Secured Debt                 250             250  

Rental Holdings, LLC)

  Preferred Member Units     (2 )                        

Samba Holdings, Inc.

  12.5% Secured Debt         (110 )   1,100     24,662     110     24,772      

  Common Stock     28,707     (28,133 )       30,220         30,220      

Tin Roof Acquisition Company

  12% Secured Debt             1,735     13,807     62     484     13,385  

  Class C Preferred Stock             262     2,477     261         2,738  

UniTek Global Services, Inc.

  LIBOR Plus 7.50% (Floor 1.00%)         25     254     2,812     2,209         5,021  

  LIBOR Plus 8.50% (Floor 1.00%)         6     108     1,255     16     447     824  

  15% PIK Unsecured Debt         3     113     638     107         745  

  Preferred Stock         (8 )   878     5,540     878     8     6,410  

  Common Stock         3,010             3,010         3,010  

Universal Wellhead Services

  Member Units         (3,390 )           4,000     3,390     610  

Holdings, LLC

  Preferred Member Units     (91 )   1,003         3,000     1,811     4,091     720  

Valley Healthcare Group, LLC

  LIBOR Plus 12.50% (Floor 0.50%)             1,519     10,297     2,647     100     12,844  

  Preferred Member Units                     1,600         1,600  

Volusion, LLC

  11.5% Secured Debt             2,451     16,199         901     15,298  

  Preferred Member Units                 14,000             14,000  

  Warrants                 1,400     1,176         2,576  

Other

                                               

Amounts related to investments transferred to or from other 1940 Act classification during the period

                (345 )   (15,530 )            

      $ 25,167   $ (35,540 ) $ 37,702   $ 350,519   $ 127,956   $ 118,057   $ 375,948  

Total Non-Control/Non-Affiliate investments

      $ (26,317 ) $ 39,909   $ 88,242                          

Total Portfolio Investments

      $ 31,070   $ (8,305 ) $ 178,165                          

(1)
The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.

(2)
Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in "Amounts from investments transferred from other 1940 Act classifications during the period."

(3)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.

(4)
Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

F-122


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