Edgar Filing: Main Street Capital CORP

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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: to

Commission File Number: 001-33723

Main Street Capital Corporation
(Exact name of registrant as specified in its charter)


Maryland (State or other jurisdiction of incorporation or organization)		41-2230745 (I.R.S. Employer Identification No.)
1300 Post Oak Boulevard, 8^th floor Houston, TX (Address of principal executive offices)		77056 (Zip Code)

(713) 350-6000
(Registrant's telephone number including area code)

n/a
(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (do not check if smaller reporting company)		Smaller reporting company o Emerging growth company o

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

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

The number of shares outstanding of the issuer's common stock as of August 3, 2017 was 56,810,793.

Table of Contents

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION


Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets—June 30, 2017 (unaudited) and December 31, 2016	1
	Consolidated Statements of Operations (unaudited)—Three and six months ended June 30, 2017 and 2016	2
	Consolidated Statements of Changes in Net Assets (unaudited)—Six months ended June 30, 2017 and 2016	3
	Consolidated Statements of Cash Flows (unaudited)—Six months ended June 30, 2017 and 2016	4
	Consolidated Schedule of Investments (unaudited)—June 30, 2017	5
	Consolidated Schedule of Investments—December 31, 2016	36
	Notes to Consolidated Financial Statements (unaudited)	67
	Consolidated Financial Statement Schedule	112
	Consolidated Schedules of Investments in and Advances to Affiliates (unaudited)—Six months ended June 30, 2017 and 2016	112
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	122
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	146
Item 4.	Controls and Procedures	147

PART II
OTHER INFORMATION


Item 1.	Legal Proceedings	148
Item 1A.	Risk Factors	148
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	148
Item 6.	Exhibits	148
	Signatures	149

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

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

	June 30, 2017			December 31, 2016

	(Unaudited)
ASSETS

Portfolio investments at fair value:
Control investments (cost: $497,623 and $439,674 as of June 30, 2017 and December 31, 2016, respectively)	$	671,713		$	594,282
Affiliate investments (cost: $415,997 and $394,699 as of June 30, 2017 and December 31, 2016, respectively)		368,488			375,948
Non-Control/Non-Affiliate investments (cost: $1,058,628 and $1,037,510 as of June 30, 2017 and December 31, 2016, respectively)		1,036,745			1,026,676

Total investments (cost: $1,972,248 and $1,871,883 as of June 30, 2017 and December 31, 2016, respectively)		2,076,946			1,996,906

Cash and cash equivalents		21,799			24,480
Interest receivable and other assets		34,897			35,133
Receivable for securities sold		23,851			1,990
Deferred financing costs (net of accumulated amortization of $5,094 and $4,598 as of June 30, 2017 and December 31, 2016, respectively)		4,222			4,718
Deferred tax asset, net		3,003			9,125

Total assets	$	2,164,718		$	2,072,352



LIABILITIES
Credit facility	$	303,000		$	343,000
SBIC debentures (par: $261,200 and $240,000 as of June 30, 2017 and December 31, 2016, respectively)		255,663			235,686
4.50% Notes (par: $175,000 as of both June 30, 2017 and December 31, 2016)		173,254			172,893
6.125% Notes (par: $90,655 as of both June 30, 2017 and December 31, 2016)		88,905			88,752
Accounts payable and other liabilities		10,821			14,205
Payable for securities purchased		36,032			2,184
Interest payable		3,814			4,103
Dividend payable		10,484			10,048

Total liabilities		881,973			870,871

Commitments and contingencies (Note M)
NET ASSETS

Common stock, $0.01 par value per share (150,000,000 shares authorized; 56,672,496 and 54,312,444 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively)		567			543
Additional paid-in capital		1,228,185			1,143,883
Accumulated net investment income, net of cumulative dividends of $576,222 and $521,297 as of June 30, 2017 and December 31, 2016, respectively		22,751			19,033
Accumulated net realized gain from investments (accumulated net realized gain from investments of $86,943 before cumulative dividends of $129,701 as of June 30, 2017 and accumulated net realized gain from investments of $48,394 before cumulative dividends of $107,281 as of December 31, 2016)		(42,758	)		(58,887	)
Net unrealized appreciation, net of income taxes		74,000			96,909

Total net assets		1,282,745			1,201,481

Total liabilities and net assets	$	2,164,718		$	2,072,352



NET ASSET VALUE PER SHARE	$	22.62		$	22.10

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

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

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

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,

	2017			2016			2017			2016
INVESTMENT INCOME:
Interest, fee and dividend income:
Control investments	$	14,590		$	12,957		$	27,576		$	25,572
Affiliate investments		9,568			8,952			19,468			17,476
Non-Control/Non-Affiliate investments		26,113			20,956			51,116			41,693

Interest, fee and dividend income		50,271			42,865			98,160			84,741
Interest, fee and dividend income from marketable securities and idle funds investments		—			37			—			168

Total investment income		50,271			42,902			98,160			84,909
EXPENSES:
Interest		(8,793	)		(8,255	)		(17,400	)		(16,437	)
Compensation		(4,555	)		(3,952	)		(8,985	)		(7,772	)
General and administrative		(3,060	)		(2,157	)		(6,000	)		(4,562	)
Share-based compensation		(2,798	)		(2,251	)		(5,067	)		(3,840	)
Expenses allocated to the External Investment Manager		1,628			1,361			3,152			2,515

Total expenses		(17,578	)		(15,254	)		(34,300	)		(30,096	)

NET INVESTMENT INCOME		32,693			27,648			63,860			54,813
NET REALIZED GAIN (LOSS):
Control investments		3,789			—			3,108			14,358
Affiliate investments		(115	)		28,707			22,816			28,707
Non-Control/Non-Affiliate investments		7,307			(13,237	)		12,625			(12,419	)
Marketable securities and idle funds investments		—			(13	)		—			(1,586	)
SBIC debentures		—			—			(5,217	)		—

Total net realized gain		10,981			15,457			33,332			29,060

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):
Portfolio investments		1,365			(10,585	)		(20,726	)		(38,114	)
Marketable securities and idle funds investments		—			37			—			1,494
SBIC debentures		(36	)		127			5,629			(19	)

Total net change in unrealized appreciation (depreciation)		1,329			(10,421	)		(15,097	)		(36,639	)

INCOME TAXES:
Federal and state income, excise and other taxes		(438	)		(1,098	)		(1,690	)		(1,468	)
Deferred taxes		(1,736	)		(675	)		(6,122	)		1,958

Income tax benefit (provision)		(2,174	)		(1,773	)		(7,812	)		490

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	42,829		$	30,911		$	74,283		$	47,724



NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED	$	0.58		$	0.54		$	1.15		$	1.07



NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED	$	0.76		$	0.60		$	1.33		$	0.94



DIVIDENDS PAID PER SHARE:
Regular monthly dividends	$	0.555		$	0.540		$	1.110		$	1.080
Supplemental dividends		0.275			0.275			0.275			0.275

Total dividends	$	0.830		$	0.815		$	1.385		$	1.355



WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED		56,166,782			51,441,371			55,648,854			50,995,575

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)

	Common Stock												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			Accumulated Net Investment Income, Net of Dividends									Total Net Asset Value
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		1,225,757			12			38,642			—			—			—			38,654
Share-based compensation		—			—			3,840			—			—			—			3,840
Purchase of vested stock for employee payroll tax withholding		(80,750	)		(1	)		(2,592	)		—			—			—			(2,593	)
Dividend reinvestment		255,391			3			7,811			—			—			—			7,814
Amortization of directors' deferred compensation		—			—			301			—			—			—			301
Issuance of restricted stock, net of forfeited shares		260,668			3			(3	)		—			—			—			—
Dividends to stockholders		—			—			—			(39,883	)		(29,445	)		—			(69,328	)
Cumulative-effect to retained earnings for excess tax benefit		—			—			—			—			—			1,806			1,806
Net increase (decrease) resulting from operations		—			—			—			54,813			29,060			(36,149	)		47,724

Balances at June 30, 2016		52,074,810		$	521		$	1,059,466		$	22,111		$	(50,038	)	$	67,052		$	1,099,112



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		2,104,424			22			78,412			—			—			—			78,434
Share-based compensation		—			—			5,067			—			—			—			5,067
Purchase of vested stock for employee payroll tax withholding		(113,371	)		(1	)		(4,346	)		—			—			—			(4,347	)
Investment through issuance of unregistered shares		11,464			—			442			—			—			—			442
Dividend reinvestment		115,807			1			4,403			—			—			—			4,404
Amortization of directors' deferred compensation		—			—			326			—			—			—			326
Issuance of restricted stock, net of forfeited shares		225,152			2			(2	)		—			—			—			—
Dividends to stockholders		—			—			—			(54,925	)		(22,420	)		—			(77,345	)
Net increase (decrease) resulting from operations		—			—			—			58,643			38,549			(22,909	)		74,283

Balances at June 30, 2017		56,698,333		$	567		$	1,228,185		$	22,751		$	(42,758	)	$	74,000		$	1,282,745

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

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)

	Six Months Ended June 30,

	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	74,283		$	47,724
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Investments in portfolio companies		(471,548	)		(303,049	)
Proceeds from sales and repayments of debt investments in portfolio companies		380,005			167,809
Proceeds from sales and return of capital of equity investments in portfolio companies		54,352			48,952
Proceeds from sales and repayments of marketable securities and idle funds investments		—			2,129
Net change in net unrealized depreciation		15,097			36,639
Net realized gain		(33,332	)		(29,060	)
Accretion of unearned income		(9,091	)		(4,189	)
Payment-in-kind interest		(3,125	)		(3,042	)
Cumulative dividends		(1,789	)		(638	)
Share-based compensation expense		5,067			3,840
Amortization of deferred financing costs		1,324			1,288
Deferred tax (benefit) provision		6,122			(1,958	)
Changes in other assets and liabilities:
Interest receivable and other assets		420			(1,825	)
Interest payable		(289	)		1,432
Accounts payable and other liabilities		(3,058	)		(2,774	)
Deferred fees and other		1,224			1,362

Net cash provided by (used in) operating activities		15,662			(35,360	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from public offering of common stock, net of offering costs		78,434			38,654
Dividends paid		(72,505	)		(61,225	)
Proceeds from issuance of SBIC debentures		46,400			—
Repayments of SBIC debentures		(25,200	)		—
Proceeds from credit facility		251,000			203,000
Repayments on credit facility		(291,000	)		(144,000	)
Payment of deferred loan costs and SBIC debenture fees		(1,125	)		(30	)
Purchases of vested stock for employee payroll tax withholding		(4,347	)		(2,593	)
Other		—			(83	)

Net cash provided by (used in) financing activities		(18,343	)		33,723

Net decrease in cash and cash equivalents		(2,681	)		(1,637	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		24,480			20,331

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	21,799		$	18,694



Supplemental cash flow disclosures:
Interest paid	$	16,304		$	13,646
Taxes paid	$	2,785		$	1,575
Non-cash financing activities:
Shares issued pursuant to the DRIP	$	4,404		$	7,814

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

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

June 30, 2017

(dollars in thousands)

(Unaudited)

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


Control Investments(5)

Access Media Holdings, LLC(10)	Private Cable Operator
		5% Current / 5% PIK Secured Debt (Maturity—July 22, 2020)	$	23,234	$	23,234	$	19,450
		Preferred Member Units (7,339,500 units; 12% cumulative)				7,233		270
		Member Units (45 units)				1		—

						30,468		19,720

Ameritech College Operations, LLC	For-Profit Nursing and Healthcare College
		13% Secured Debt (Maturity—November 30, 2019)		1,004		1,004		1,004
		13% Secured Debt (Maturity—January 31, 2020)		3,025		3,025		3,025
		Preferred Member Units (2,936 units)				6,191		2,910

						10,220		6,939

ASC Interests, LLC	Recreational and Educational Shooting Facility
		11% Secured Debt (Maturity—July 31, 2018)		2,000		1,989		2,000
		Member Units (1,500 units)(8)				1,500		2,320

						3,489		4,320

Bond-Coat, Inc.	Casing and Tubing Coating Services
		12% Secured Debt (Maturity—December 28, 2017)		11,596		11,576		11,596
		Common Stock (57,508 shares)				6,350		7,830

						17,926		19,426

Café Brazil, LLC	Casual Restaurant Group
		Member Units (1,233 units)(8)				1,742		5,390

CBT Nuggets, LLC	Produces and Sells IT Training Certification Videos
		Member Units (416 units)(8)				1,300		65,910

Charps, LLC	Pipeline Maintenance and Construction
		12% Secured Debt (Maturity—February 3, 2022)		18,400		18,209		18,209
		Preferred Member Units (1,600 units)				400		400

						18,609		18,609

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Clad-Rex Steel, LLC	Specialty Manufacturer of Vinyl-Clad Metal
		LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.55%, Secured Debt (Maturity—December 20, 2021)(9)	14,080	13,949	13,949
		Member Units (717 units)(8)		7,280	7,830
		10% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity—December 20, 2036)	1,193	1,181	1,181
		Member Units (Clad-Rex Steel RE Investor, LLC) (800 units)		210	210

				22,620	23,170

CMS Minerals Investments	Oil & Gas Exploration & Production
		Member Units (CMS Minerals II, LLC) (100 units)(8)		3,641	2,628

Datacom, LLC	Technology and Telecommunications Provider
		8% Secured Debt (Maturity—May 30, 2018)	1,080	1,080	1,080
		5.25% Current / 5.25% PIK Secured Debt (Maturity—May 30, 2019)	12,024	11,974	11,653
		Class A Preferred Member Units (15% cumulative)		1,181	1,472
		Class B Preferred Member Units (6,453 units)		6,030	211

				20,265	14,416

Gamber-Johnson Holdings, LLC	Manufacturer of Ruggedized Computer Mounting Systems
		LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.05%, Secured Debt (Maturity—June 24, 2021)(9)	23,880	23,668	23,880
		Member Units (8,619 units)(8)		14,844	22,080

				38,512	45,960

Garreco, LLC	Manufacturer and Supplier of Dental Products
		LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.15%, Secured Debt (Maturity—March 31, 2020)(9)	5,844	5,794	5,794
		Member Units (1,200 units)		1,200	1,830

				6,994	7,624

GRT Rubber Technologies LLC	Manufacturer of Engineered Rubber Products
		LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.05%, Secured Debt (Maturity—December 19, 2019)(9)	12,409	12,340	12,409
		Member Units (5,879 units)(8)		13,065	20,680

				25,405	33,089

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Gulf Manufacturing, LLC	Manufacturer of Specialty Fabricated Industrial Piping Products
		9% PIK Secured Debt (Ashland Capital IX, LLC) (Maturity—June 30, 2017)(17)	777	777	777
		Member Units (438 units)(8)		2,980	10,470

				3,757	11,247

Gulf Publishing Holdings, LLC	Energy Industry Focused Media and Publishing
		12.5% Secured Debt (Maturity—April 29, 2021)	12,800	12,692	12,692
		Member Units (3,681 units)		3,681	4,330

				16,373	17,022

Harborside Holdings, LLC	Real Estate Holding Company
		Member units (100 units)		6,206	9,400

Harrison Hydra-Gen, Ltd.	Manufacturer of Hydraulic Generators
		Common Stock (107,456 shares)		718	2,800

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 14.05%, Secured Debt (Maturity July 2, 2020)(9)	9,976	9,909	9,909
		Preferred Member Units (3,200 units)		3,942	3,940

				13,851	13,849

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
		11.5% Secured Debt (Maturity—November 15, 2018)	10,350	10,317	10,350
		Member Units (5,400 units)(8)		5,606	8,630

				15,923	18,980

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Jensen Jewelers of Idaho, LLC	Retail Jewelry Store
		Prime Plus 6.75% (Floor 2.00%), Current Coupon 10.75%, Secured Debt (Maturity—November 14, 2019)(9)	3,755	3,707	3,755
		Member Units (627 units)(8)		811	4,460

				4,518	8,215

KBK Industries, LLC	Manufacturer of Specialty Oilfield and Industrial Products
		10% Secured Debt (Maturity—September 28, 2017)	940	940	940
		12.5% Secured Debt (Maturity—September 28, 2017)	5,900	5,896	5,900
		Member Units (325 units)		783	3,990

				7,619	10,830

Lamb Ventures, LLC	Aftermarket Automotive Services Chain
		LIBOR Plus 5.75%, Current Coupon 6.83%, Secured Debt (Maturity May 30, 2018)	190	190	190
		11% Secured Debt (Maturity—May 31, 2018)	7,579	7,579	7,579
		Preferred Equity (non-voting)		400	400
		Member Units (742 units)(8)		5,273	6,330
		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	590

				14,495	15,521

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	—

MH Corbin Holding LLC	Manufacturer and Distributor of Traffic Safety Products
		10% Secured Debt (Maturity—August 31, 2020)	12,950	12,862	12,862
		Preferred Member Units (4,000 shares)		6,000	6,000

				18,862	18,862

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


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	980
		9.5% Secured Debt (Mid-Columbia Real Estate, LLC) (Maturity—May 13, 2025)	814	814	814
		Member Units (Mid-Columbia Real Estate, LLC) (500 units)(8)		790	1,290

				9,064	8,734

MSC Adviser I, LLC(16)	Third Party Investment Advisory Services
		Member Units (Fully diluted 100.0%)(8)		—	37,104

Mystic Logistics Holdings, LLC	Logistics and Distribution Services Provider for Large Volume Mailers
		12% Secured Debt (Maturity—August 15, 2019)	8,032	7,938	8,032
		Common Stock (5,873 shares)		2,720	6,590

				10,658	14,622

NAPCO Precast, LLC	Precast Concrete Manufacturing
		LIBOR Plus 8.50%, Current Coupon 9.70%, Secured Debt (Maturity—May 31, 2019)	10,475	10,438	10,438
		Member Units (2,955 units)(8)		2,975	11,100

				13,413	21,538

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)	400	400	400
		14% Secured Debt (Maturity—September 8, 2017)	4,205	4,194	4,205
		Warrants (251,723 equivalent units; Expiration—September 8, 2021; Strike price—$0.01 per unit)		252	680
		Member Units (500,000 units)		765	2,461

				5,611	7,746

NRP Jones, LLC	Manufacturer of Hoses, Fittings and Assemblies
		8% Current / 4% PIK Secured Debt (Maturity—December 22, 2016)(17)	14,197	14,197	14,197
		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

				17,914	14,737

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


NuStep, LLC	Designer, Manufacturer and Distributor of Fitness Equipment
		12% Secured Debt (Maturity—January 31, 2022)	20,600	20,402	20,402
		Preferred Member Units (406 units)		10,200	10,200

				30,602	30,602

OMi Holdings, Inc.	Manufacturer of Overhead Cranes
		Common Stock (1,500 shares)(8)		1,080	12,740

Pegasus Research Group, LLC	Provider of Telemarketing and Data Services
		Member Units (460 units)		1,290	8,230

PPL RVs, Inc.	Recreational Vehicle Dealer
		LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 8.15%, Secured Debt (Maturity—November 15, 2021)(9)	18,000	17,841	18,000
		Common Stock (1,962 shares)(8)		2,150	11,780

				19,991	29,780

Principle Environmental, LLC	Noise Abatement Service Provider
		12% Secured Debt (Maturity—April 30, 2017)(17)	4,060	4,060	4,060
		12% Current / 2% PIK Secured Debt (Maturity—April 30, 2017)(17)	3,412	3,412	3,412
		Preferred Member Units (19,631 units)		4,600	6,610
		Warrants (1,018 equivalent units; Expiration—January 31, 2021; Strike price—$0.01 per unit)		1,200	340

				13,272	14,422

Quality Lease Service, LLC	Provider of Rigsite Accommodation Unit Rentals and Related Services
		8% PIK Secured Debt (Maturity—June 8, 2020)	7,341	7,341	7,341
		Member Units (1,000 units)		2,318	4,387

				9,659	11,728

River Aggregates, LLC	Processor of Construction Aggregates
		Zero Coupon Secured Debt (Maturity—June 30, 2018)	750	666	666
		Member Units (1,150 units)(8)		1,150	4,410
		Member Units (RA Properties, LLC) (1,500 units)		369	2,510

				2,185	7,586

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

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


SoftTouch Medical Holdings LLC	Provider of In-Home Pediatric Durable Medical Equipment
		LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.05%, Secured Debt (Maturity—October 31, 2019)(9)	7,140		7,103		7,140
		Member Units (4,450 units)(8)			4,930		9,540

					12,033		16,680

The MPI Group, LLC	Manufacturer of Custom Hollow Metal Doors, Frames and Accessories
		9% Secured Debt (Maturity—October 2, 2018)	2,924		2,923		2,620
		Series A Preferred Units (2,500 units; 10% Cumulative)			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		2,390

					8,819		5,010

Uvalco Supply, LLC	Farm and Ranch Supply Store
		9% Secured Debt (Maturity—January 1, 2019)	636		636		636
		Member Units (1,867 units)(8)			3,579		4,306

					4,215		4,942

Vision Interests, Inc.	Manufacturer / Installer of Commercial Signage
		13% Secured Debt (Maturity—December 23, 2018)	2,814		2,790		2,790
		Series A Preferred Stock (3,000,000 shares)			3,000		3,000
		Common Stock (1,126,242 shares)			3,706		—

					9,496		5,790

Ziegler's NYPD, LLC	Casual Restaurant Group
		6.5% Secured Debt (Maturity—October 1, 2019)	1,000		995		995
		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		210
		Preferred Member Units (10,072 units)			2,834		3,580

					7,479		7,835

Subtotal Control Investments (32.3% of total investments at fair value)				$	497,623	$	671,713

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

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


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	$	690
		Member Units (186 units)(8)			1,200		2,850

					1,459		3,540

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 10.55%, Secured Debt (Maturity—April 8, 2021)(9)	800		797		797
		15% Secured Debt (Maturity—April 8, 2021)	4,027		3,994		3,994
		Member Units (800,000 units)			800		800

					5,591		5,591

Barfly Ventures, LLC(10)	Casual Restaurant Group
		12% Secured Debt (Maturity—August 31, 2020)	7,796		7,675		7,796
		Options (2 equivalent units)			397		590
		Warrant (1 equivalent unit; Expiration—August 31, 2025; Strike price—$1.00 per unit)			473		330

					8,545		8,716

Boccella Precast Products LLC	Manufacturer of Precast Hollow Core Concrete
		LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.30%, Secured Debt (Maturity—June 30, 2022)(9)	16,400		16,216		16,216
		Member Units (2,160,000 units)			2,160		2,160

					18,376		18,376

Boss Industries, LLC	Manufacturer and Distributor of Air, Power and Other Industrial Equipment
		Preferred Member Units (2,242 units)(8)			2,519		3,320

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Bridge Capital Solutions Corporation	Financial Services and Cash Flow Solutions Provider
		13% Secured Debt (Maturity—July 25, 2021)	7,500	5,740	5,740
		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

				9,863	11,110

Buca C, LLC	Casual Restaurant Group
		LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.33%, Secured Debt (Maturity—June 30, 2020)(9)	21,204	21,068	21,068
		Preferred Member Units (6 units; 6% cumulative)(8)		4,053	4,048

				25,121	25,116

CAI Software LLC	Provider of Specialized Enterprise Resource Planning Software
		12% Secured Debt (Maturity—October 10, 2019)	3,483	3,464	3,483
		Member Units (65,356 units)(8)		654	2,820

				4,118	6,303

CapFusion, LLC(13)	Non-Bank Lender to Small Businesses
		13% Secured Debt (Maturity—March 25, 2021)	14,400	13,304	13,304
		Warrants (1,600 equivalent units; Expiration—March 24, 2026; Strike price—$0.01 per unit)		1,200	1,200

				14,504	14,504

Chandler Signs Holdings, LLC(10)	Sign Manufacturer
		12% Secured Debt (Maturity—July 4, 2021)	4,500	4,464	4,500
		Class A Units (1,500,000 units)(8)		1,500	2,910

				5,964	7,410

Condit Exhibits, LLC	Tradeshow Exhibits / Custom Displays Provider
		Member Units (3,936 units)(8)		100	1,840

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Congruent Credit Opportunities Funds(12)(13)	Investment Partnership
		LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)		5,730	1,377
		LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)		17,869	18,577

				23,599	19,954

Dos Rios Partners(12)(13)	Investment Partnership
		LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)		5,996	5,369
		LP Interests (Dos Rios Partners—A, LP) (Fully diluted 6.4%)		1,904	1,573

				7,900	6,942

Dos Rios Stone Products LLC(10)	Limestone and Sandstone Dimension Cut Stone Mining Quarries
		Class A Units (2,000,000 units)(8)		2,000	1,870

East Teak Fine Hardwoods, Inc.	Distributor of Hardwood Products
		Common Stock (6,250 shares)(8)		480	630

East West Copolymer & Rubber, LLC	Manufacturer of Synthetic Rubbers
		12% Current / 2% PIK Secured Debt (Maturity—October 17, 2019)(14)(15)	9,699	9,591	3,000
		Warrants (2,510,790 equivalent units; Expiration—October 15, 2024; Strike price—$0.01 per unit)		50	—

				9,641	3,000

EIG Fund Investments(12)(13)	Investment Partnership
		LP Interests (EIG Global Private Debt Fund—A, L.P.) (Fully diluted 11.1%)(8)		793	694
		LP Interests (EIG Traverse Co-Investment, L.P.) (Fully diluted 22.2%)(8)		9,805	10,409

				10,598	11,103

Freeport Financial Funds(12)(13)	Investment Partnership
		LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.3%)(8)		5,974	5,519
		LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.0%)(8)		7,559	7,507

				13,533	13,026

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Gault Financial, LLC (RMB Capital, LLC)	Purchases and Manages Collection of Healthcare and other Business Receivables
		10.5% Secured Debt (Maturity—January 1, 2019)	12,720	12,720	11,770
		Warrants (29,032 equivalent units; Expiration—February 9, 2022; Strike price—$0.01 per unit)		400	—

				13,120	11,770

Glowpoint, Inc.	Provider of Cloud Managed Video Collaboration Services
		12% Secured Debt (Maturity—October 18, 2018)	9,000	8,963	2,700
		Common Stock (7,711,517 shares)		3,958	2,170

				12,921	4,870

Guerdon Modular Holdings, Inc.	Multi-Family and Commercial Modular Construction Company
		13% Secured Debt (Maturity—August 13, 2019)	10,708	10,612	10,612
		Preferred Stock (404,998 shares)		1,140	1,140
		Common Stock (212,033 shares)		2,983	80

				14,735	11,832

Hawk Ridge Systems, LLC(13)	Value-Added Reseller of Engineering Design and Manufacturing Solutions
		10% Secured Debt (Maturity—December 2, 2021)	10,000	9,909	9,909
		Preferred Member Units (226 units)(8)		2,850	2,850
		Preferred Member Units (HRS Services, ULC) (226 units)(8)		150	150

				12,909	12,909

Houston Plating and Coatings, LLC	Provider of Plating and Industrial Coating Services
		8% Unsecured Convertible Debt (Maturity—May 1, 2022)	3,000	3,000	3,000
		Member Units (315,756 units)		2,179	4,980

				5,179	7,980

I-45 SLF LLC(12)(13)	Investment Partnership
		Member Units (Fully diluted 20.0%; 24.4% profits interest)(8)		16,200	17,165

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


Indianhead Pipeline Services, LLC	Provider of Pipeline Support Services
		12% Secured Debt (Maturity—February 6, 2018)	5,192	5,192	5,192
		Preferred Member Units (33,819 units; 8% cumulative)(8)		2,537	2,875
		Warrants (31,928 equivalent units; Expiration—August 6, 2022; Strike price—$0.001 per unit)		459	—
		Member Units (14,732 units)		1	—

				8,189	8,067

L.F. Manufacturing Holdings, LLC(10)	Manufacturer of Fiberglass Products
		Member Units (2,179,001 units)		2,019	1,380

Meisler Operating LLC	Provider of Short-term Trailer and Container Rental
		LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.72%, Secured Debt (Maturity—June 7, 2022)(9)	16,800	16,618	16,618
		Member Units (Milton Meisler Holdings LLC) (32,000 units)		3,200	3,200

				19,818	19,818

OnAsset Intelligence, Inc.	Provider of Transportation Monitoring / Tracking Products and Services
		12% PIK Secured Debt (Maturity—June 30, 2021)	4,796	4,796	4,796
		10% PIK Unsecured Debt (Maturity—June 30, 2021)	45	45	45
		Preferred Stock (912 shares; 7% cumulative)		1,981	—
		Warrants (5,333 equivalent shares; Expiration—April 18, 2021; Strike price—$0.01 per share)		1,919	—

				8,741	4,841

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)	13,300	13,218	13,300
		Preferred Stock (1,740,000 shares)		1,740	2,610
		Preferred Stock (1,500,000 shares; 20% cumulative)(8)		3,733	4,870

				18,691	20,780

Table of Contents

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

June 30, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)	Business Description	Type of Investment(2)(3)


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)	13,175	13,081	13,081
		Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)		2,878	2,878

				15,959	15,959

UniTek Global Services, Inc.(11)	Provider of Outsourced Infrastructure Services
		LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.65%, Secured Debt (Maturity—January 13, 2019)(9)	8,535	8,527	8,535
		LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.65% / 1.00% PIK, Current Coupon Plus PIK 10.65%, Secured Debt (Maturity—January 13, 2019)(9)	137	137	137
		15% PIK Unsecured Debt (Maturity—July 13, 2019)	802	802	802
		Preferred Stock (2,596,567 shares; 19% cumulative)(8)