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

FORM 10-Q

(Mark One)    

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

For the quarterly period ended March 31, 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, 8th 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 May 4, 2017 was 55,922,561.

   

Table of Contents


TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Item 1.

  

Consolidated Financial Statements

    

 

Consolidated Balance Sheets—March 31, 2017 (unaudited) and December 31, 2016

   1

 

Consolidated Statements of Operations (unaudited)—Three months ended March 31, 2017 and 2016

   2

 

Consolidated Statements of Changes in Net Assets (unaudited)—Three months ended March 31, 2017 and 2016

   3

 

Consolidated Statements of Cash Flows (unaudited)—Three months ended March 31, 2017 and 2016

   4

 

Consolidated Schedule of Investments (unaudited)—March 31, 2017

   5

 

Consolidated Schedule of Investments—December 31, 2016

   34

 

Notes to Consolidated Financial Statements (unaudited)

   63

 

Consolidated Financial Statement Schedule

   110

 

Consolidated Schedule of Investments in and Advances to Affiliates (unaudited)—Three months ended March 31, 2017

   110

Item 2.

  

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

   115

Item 3.

  

Quantitative and Qualitative Disclosures about Market Risk

   135

Item 4.

  

Controls and Procedures

   136

PART II
OTHER INFORMATION

Item 1.

  

Legal Proceedings

  
137

Item 1A.

  

Risk Factors

   137

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

   137

Item 6.

  

Exhibits

   137

 

Signatures

   138

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

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

 
   March 31, 2017   December 31, 2016  
 
   (Unaudited)
    
  

ASSETS

              

Portfolio investments at fair value:

    
 		    
 		  

Control investments (cost: $491,749 and $439,674 as of March 31, 2017 and December 31, 2016, respectively)

   $ 658,239   $ 594,282  

Affiliate investments (cost: $373,895 and $394,699 as of March 31, 2017 and December 31, 2016, respectively)

     329,024     375,948  

Non-Control/Non-Affiliate investments (cost: $1,010,832 and $1,037,510 as of March 31, 2017 and December 31, 2016, respectively)

     992,115     1,026,676  
​ ​ ​ ​ ​ ​ ​ ​

Total investments (cost: $1,876,476 and $1,871,883 as of March 31, 2017 and December 31, 2016, respectively)

     1,979,378     1,996,906  

Cash and cash equivalents

     33,605     24,480  

Interest receivable and other assets

     37,560     35,133  

Receivable for securities sold

     8,604     1,990  

Deferred financing costs (net of accumulated amortization of $12,205 and $11,547 as of March 31, 2017 and December 31, 2016, respectively)

    12,603     12,645  

Deferred tax asset, net

     4,739     9,125  
​ ​ ​ ​ ​ ​ ​ ​

Total assets

   $ 2,076,489   $ 2,080,279  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

LIABILITIES

    
 		    
 		  

Credit facility

  
$
288,000		  
$
343,000		  

SBIC debentures (par: $240,200 and $240,000 as of March 31, 2017 and December 31, 2016, respectively. Par of $50,000 and $75,200 is recorded at a fair value of $49,155 and $74,803 as of March 31, 2017 and December 31, 2016, respectively)

     239,355     239,603  

4.50% Notes

     175,000     175,000  

6.125% Notes

     90,655     90,655  

Accounts payable and other liabilities

     11,758     14,205  

Payable for securities purchased

     14,064     2,184  

Interest payable

     3,471     4,103  

Dividend payable

     10,252     10,048  
​ ​ ​ ​ ​ ​ ​ ​

Total liabilities

     832,555     878,798  

Commitments and contingencies (Note M)

              

NET ASSETS

    
 		    
 		  

Common stock, $0.01 par value per share (150,000,000 shares authorized; 55,423,375 and 54,312,444 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively)

    
554		    
543		  

Additional paid-in capital

     1,185,478     1,143,883  

Accumulated net investment income, net of cumulative dividends of $532,336 and $521,297 as of March 31, 2017 and December 31, 2016, respectively

     33,943     19,033  

Accumulated net realized gain from investments (accumulated net realized gain from investments of $75,959 before cumulative dividends of $126,845 as of March 31, 2017 and accumulated net realized gain from investments of $48,394 before cumulative dividends of $107,281 as of December 31, 2016)

     (50,886 )   (58,887 )

Net unrealized appreciation, net of income taxes

     74,845     96,909  
​ ​ ​ ​ ​ ​ ​ ​

Total net assets

     1,243,934     1,201,481  
​ ​ ​ ​ ​ ​ ​ ​

Total liabilities and net assets

   $ 2,076,489   $ 2,080,279  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

NET ASSET VALUE PER SHARE

  
$
22.44		  
$
22.10 		 
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

   

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

1

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

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

(Unaudited)

 
   Three Months Ended
March 31, 		 
 
   2017   2016  

INVESTMENT INCOME:

              

Interest, fee and dividend income:

              

Control investments

   $ 12,988   $ 12,615  

Affiliate investments

     9,899     8,523  

Non-Control/Non-Affiliate investments

     25,002     20,737  
​ ​ ​ ​ ​ ​ ​ ​

Interest, fee and dividend income

     47,889     41,875  

Interest, fee and dividend income from marketable securities and idle funds investments

     —     131  
​ ​ ​ ​ ​ ​ ​ ​

Total investment income

     47,889     42,006  

EXPENSES:

              

Interest

     (8,608 )   (8,182 )

Compensation

     (4,430 )   (3,820 )

General and administrative

     (2,940 )   (2,405 )

Share-based compensation

     (2,269 )   (1,589 )

Expenses allocated to the External Investment Manager

     1,524     1,154  
​ ​ ​ ​ ​ ​ ​ ​

Total expenses

     (16,723 )   (14,842 )
​ ​ ​ ​ ​ ​ ​ ​

NET INVESTMENT INCOME

     31,166     27,164  

NET REALIZED GAIN (LOSS):

    
 		    
 		  

Control investments

     (682 )   14,358  

Affiliate investments

     22,930     —  

Non-Control/Non-Affiliate investments

     5,317     818  

Marketable securities and idle funds investments

     —     (1,573 )

SBIC debentures

     (5,217 )   —  
​ ​ ​ ​ ​ ​ ​ ​

Total net realized gain

     22,348     13,603  
​ ​ ​ ​ ​ ​ ​ ​

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):

    
 		    
 		  

Portfolio investments

     (22,091 )   (27,529 )

Marketable securities and idle funds investments

     —     1,457  

SBIC debentures

     5,665     (146 )
​ ​ ​ ​ ​ ​ ​ ​

Total net change in unrealized depreciation

     (16,426 )   (26,218 )
​ ​ ​ ​ ​ ​ ​ ​

INCOME TAXES:

    
 		    
 		  

Federal and state income, excise and other taxes

     (1,252 )   (370 )

Deferred taxes

     (4,386 )   2,633  
​ ​ ​ ​ ​ ​ ​ ​

Income tax benefit (provision)

     (5,638 )   2,263  
​ ​ ​ ​ ​ ​ ​ ​

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  
$
31,450		  
$
16,812 		 
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED

  
$
0.57		  
$
0.54 		 
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

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

   $ 0.57   $ 0.33  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

DIVIDENDS PAID PER SHARE:

              

Regular monthly dividends

   $ 0.555   $ 0.540  

Supplemental dividends

     —     —  
​ ​ ​ ​ ​ ​ ​ ​

Total dividends

   $ 0.555   $ 0.540  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED

    
55,125,170		    
50,549,780		  

   

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

2

Table of Contents


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 		   
  
 
    
   Accumulated
Net Investment
Income, Net
of Dividends 		   
  
 
   Number of
Shares 		  Par
Value 		  Additional
Paid-In
Capital 		  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

    
321,714		    
3		    
9,778		    
—		    
—		    
—		    
9,781		  

Share-based compensation

     —     —     1,589     —     —     —     1,589  

Dividend reinvestment

     113,631     1     3,255     —     —     —     3,256  

Amortization of directors' deferred compensation

     —     —     144     —     —     —     144  

Issuance of restricted stock, net of forfeited shares

     (3,089 )   —     —     —     —     —     —  

Dividends to stockholders

     —     —     —     (27,284 )   —     —     (27,284 )

Cumulative-effect to retained earnings for excess tax benefit

     —     —     —     —     —     1,806     1,806  

Net increase (decrease) resulting from operations

     —     —     —     27,164     13,603     (23,955 )   16,812  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balances at March 31, 2016

     50,846,000   $ 508   $ 1,026,233   $ 7,061   $ (36,050 ) $ 79,246   $ 1,076,998  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   

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

3

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)

 
   Three Months Ended
March 31, 		 
 
   2017   2016  

CASH FLOWS FROM OPERATING ACTIVITIES

              

Net increase in net assets resulting from operations

   $ 31,450   $ 16,812  

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

              

Investments in portfolio companies

     (186,922 )   (113,945 )

Proceeds from sales and repayments of debt investments in portfolio companies               

     184,487     69,028  

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

     37,041     21,891  

Proceeds from sales and repayments of marketable securities and idle funds investments

     —     559  

Net change in net unrealized depreciation

     16,426     26,218  

Net realized gain

     (22,348 )   (13,603 )

Accretion of unearned income

     (4,703 )   (1,921 )

Payment-in-kind interest

     (1,607 )   (1,303 )

Cumulative dividends

     (877 )   (321 )

Share-based compensation expense

     2,269     1,589  

Amortization of deferred financing costs

     658     644  

Deferred tax (benefit) provision

     4,386     (2,633 )

Changes in other assets and liabilities:

              

Interest receivable and other assets

     (2,175 )   (2,390 )

Interest payable

     (632 )   1,226  

Accounts payable and other liabilities

     (2,284 )   (6,269 )

Deferred fees and other

     597     632  
​ ​ ​ ​ ​ ​ ​ ​

Net cash provided by (used in) operating activities

     55,766     (3,786 )

CASH FLOWS FROM FINANCING ACTIVITIES

    
 		    
 		  

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

     37,711     9,781  

Dividends paid

     (28,593 )   (23,990 )

Proceeds from issuance of SBIC debentures

     25,400     —  

Repayments of SBIC debentures

     (25,200 )   —  

Proceeds from credit facility

     83,000     70,000  

Repayments on credit facility

     (138,000 )   (55,000 )

Payment of deferred loan costs and SBIC debenture fees

     (616 )   —  

Purchases of vested stock for employee payroll tax withholding

     (343 )   —  

Other

     —     (113 )
​ ​ ​ ​ ​ ​ ​ ​

Net cash provided by (used in) financing activities

     (46,641 )   678  
​ ​ ​ ​ ​ ​ ​ ​

Net increase (decrease) in cash and cash equivalents

     9,125     (3,108 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

     24,480     20,331  
​ ​ ​ ​ ​ ​ ​ ​

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 33,605   $ 17,223  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

Supplemental cash flow disclosures:

              

Interest paid

   $ 8,552   $ 6,282  

Taxes paid

   $ 1,677   $ 1,172  

Non-cash financing activities:

              

Shares issued pursuant to the DRIP

   $ 1,806   $ 3,256  

   

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

4

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

March 31, 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)

   $ 22,946   $ 22,946   $ 19,470  

     

Preferred Member Units (6,750,000 units; 12% cumulative)

           6,644     220  

     

Member Units (45 units)

           1     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  29,591     19,690  

                           

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 (2,936 units)

           6,191     2,810  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  10,219     6,838  

                           

ASC Interests, LLC

  

Recreational and Educational Shooting Facility

                        

     

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

     2,050     2,036     2,050  

     

Member Units (1,500 units)(8)

           1,500     2,740  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  3,536     4,790  

                           

Bond-Coat, Inc.

  

Casing and Tubing Coating Services

                        

     

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

     11,596     11,566     11,596  

     

Common Stock (57,508 shares)

           6,350     7,600  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  17,916     19,196  

                           

Café Brazil, LLC

  

Casual Restaurant Group

                        

     

Member Units (1,233 units)(8)

           1,742     5,900  

                           

CBT Nuggets, LLC

  

Produces and Sells IT Training Certification Videos

                        

     

Member Units (416 units)(8)

           1,300     60,620  

                           

Charps, LLC

  

Pipeline Maintenance and Construction

                        

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity—February 3, 2022)(9)

     800     781     781  

     

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

     18,400     18,220     18,220  

     

Preferred Member Units (1,600 units)

           400     400  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  19,401     19,401  

                           

5

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

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     397     397  

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—December 20, 2021)(9)

     14,080     13,946     13,946  

     

Member Units (717 units)

           7,280     7,280  

     

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

     1,198     1,186     1,186  

     

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

           210     210  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  23,019     23,019  

                           

CMS Minerals Investments

  

Oil & Gas Exploration & Production

                        

     

Preferred Member Units (CMS Minerals LLC) (458 units)(8)

           2,009     3,271  

     

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

           3,716     3,120  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,725     6,391  

                           

Datacom, LLC

  

Technology and Telecommunications Provider

                        

     

8% Secured Debt (Maturity—May 30, 2017)

     1,080     1,080     1,080  

     

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

     11,867     11,811     11,490  

     

Class A Preferred Member Units (15% cumulative)

           1,181     1,419  

     

Class B Preferred Member Units (6,453 units)

           6,030     1,861  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  20,102     15,850  

                           

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     23,856     24,080  

     

Member Units (8,619 units)(8)

           14,844     22,080  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  38,700     46,160  

                           

Garreco, LLC

  

Manufacturer and Supplier of Dental Products

                        

     

LIBOR Plus 12.00% (Floor 1.00%), Current Coupon 13.15%, Secured Debt (Maturity—March 31, 2020)(9)

     6,025     5,969     5,969  

     

Member Units (1,200 units)

           1,200     1,470  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,169     7,439  

                           

6

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

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)

     13,065     12,986     13,065  

     

Member Units (5,879 units)(8)

           13,065     20,310  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  26,051     33,375  

                           

Gulf Manufacturing, LLC

  

Manufacturer of Specialty Fabricated Industrial Piping Products

                        

     

9% PIK Secured Debt (Ashland Capital IX, LLC) (Maturity—June 30, 2017)

     777     777     777  

     

Member Units (438 units)(8)

           2,980     9,190  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  3,757     9,967  

                           

Gulf Publishing Holdings, LLC

  

Energy Industry Focused Media and Publishing

                        

     

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

     10,000     9,915     9,915  

     

Member Units (3,124 units)

           3,124     3,460  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,039     13,375  

                           

Harborside Holdings, LLC

  

Real Estate Holding Company

                        

     

Member units (100 units)

           6,056     9,400  

                           

Harrison Hydra-Gen, Ltd.

  

Manufacturer of Hydraulic Generators

                        

     

Common Stock (107,456 shares)(8)

           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 14.00%, Secured Debt (Maturity July 2, 2020)(9)

     9,976     9,904     9,904  

     

Preferred Member Units (3,200 units)(8)

           3,942     3,940  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,846     13,844  

                           

Hydratec, Inc.

  

Designer and Installer of Micro-Irrigation Systems

                        

     

Common Stock (7,095 shares)(8)

           7,095     15,640  

                           

7

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

IDX Broker, LLC

  

Provider of Marketing and CRM Tools for the Real Estate Industry

                        

     

12.5% Secured Debt (Maturity—November 15, 2018)

     10,650     10,610     10,650  

     

Member Units (5,400 units)(8)

           5,606     8,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,216     18,850  

                           

Indianapolis Aviation Partners, LLC

  

Fixed Base Operator

                        

     

15% Secured Debt (Maturity—April 15, 2017)

     3,100     3,100     3,100  

     

Warrants (1,046 equivalent units)

           1,129     2,710  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,229     5,810  

                           

Jensen Jewelers of Idaho, LLC

  

Retail Jewelry Store

                        

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 10.50%, Secured Debt (Maturity—November 14, 2019)(9)

     3,905     3,850     3,905  

     

Member Units (627 units)(8)

           811     4,460  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,661     8,365  

                           

Lamb Ventures, LLC

  

Aftermarket Automotive Services Chain

                        

     

LIBOR Plus 5.75%, Current Coupon 6.56%, Secured Debt (Maturity May 30, 2018)

     305     305     305  

     

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     6,190  

     

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

     432     428     428  

     

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

           625     960  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  14,610     15,862  

                           

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)

     13,125     13,030     13,030  

     

Preferred Member Units (4,000 shares)

           6,000     6,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  19,030     19,030  

                           

8

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

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     1,980  

     

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

     825     825     825  

     

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

           790     1,220  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,075     9,675  

                           

MSC Adviser I, LLC(16)

  

Third Party Investment Advisory Services

                        

     

Member Units (Fully diluted 100.0%)(8)

           —     33,472  

                           

Mystic Logistics Holdings, LLC

  

Logistics and Distribution Services Provider for Large Volume Mailers

                        

     

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

     9,164     9,051     9,164  

     

Common Stock (5,873 shares)

           2,720     6,170  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  11,771     15,334  

                           

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     2,695     2,713  

     

18% Secured Debt (Maturity—February 1, 2019)

     3,952     3,925     3,952  

     

Member Units (2,955 units)(8)

           2,975     10,920  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,595     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)

     400     400     400  

     

14% Secured Debt (Maturity—September 8, 2017)

     4,261     4,239     4,261  

     

Warrants (251,723 equivalent units)

           252     680  

     

Member Units (500,000 units)

           765     2,462  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,656     7,803  

                           

NRP Jones, LLC

  

Manufacturer of Hoses, Fittings and Assemblies

                        

     

8% Current / 4% PIK Secured Debt (Maturity—December 22, 2016)(17)

     14,054     14,054     14,054  

     

Warrants (14,331 equivalent units)

           817     130  

     

Member Units (50,877 units)

           2,900     410  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  17,771     14,594  

                           

9

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

NuStep, LLC

  

Designer, Manufacturer and Distributor of Fitness Equipment

                        

     

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

     20,600     20,394     20,394  

     

Preferred Member Units (406 units)

           10,200     10,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  30,594     30,594  

                           

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     8,440  

                           

PPL RVs, Inc.

  

Recreational Vehicle Dealer

                        

     

LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 8.05%, Secured Debt (Maturity—November 15, 2021)(9)

     18,000     17,834     17,834  

     

Common Stock (1,962 shares)(8)

           2,150     11,780  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  19,984     29,614  

                           

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)

     3,394     3,394     3,394  

     

Preferred Member Units (19,631 units)

           4,600     6,260  

     

Warrants (1,036 equivalent units)

           1,200     320  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,254     14,034  

                           

Quality Lease Service, LLC

  

Provider of Rigsite Accommodation Unit Rentals and Related Services

                        

     

8% PIK Secured Debt (Maturity—June 8, 2020)

     7,204     7,204     7,204  

     

Member Units (1,000 units)

           2,168     4,239  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,372     11,443  

                           

River Aggregates, LLC

  

Processor of Construction Aggregates

                        

     

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

     750     646     646  

     

Member Units (1,150 units)(8)

           1,150     4,600  

     

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

           369     2,510  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,165     7,756  

                           

10

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

Portfolio Company(1)
   Business Description
   Type of Investment(2)(3)
   Principal(4)
   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 10.00%, Secured Debt (Maturity—October 31, 2019)(9)

     7,140     7,099     7,140  

     

Member Units (4,450 units)(8)

           4,930     9,170  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,029     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; 10% Cumulative)

           2,500     —  

     

Warrants (1,424 equivalent units)

           1,096     —  

     

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

           2,300     2,390  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,818     5,312  

                           

Uvalco Supply, LLC

  

Farm and Ranch Supply Store

                        

     

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

     756     756     756  

     

Member Units (1,867 units)(8)

           3,579     4,307  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,335     5,063  

                           

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)

           600     240  

     

Preferred Member Units (10,072 units)

           2,834     4,100  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,478     8,384  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Control Investments (33.3% of total investments at fair value)

   $ 491,749   $ 658,239  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

11

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Affiliate Investments(6)

  

 

  

 

                    

                           

AFG Capital Group, LLC

  

Provider of Rent-to-Own Financing Solutions and Services

                        

     

Warrants (42 equivalent units)

         $ 259   $ 690  

     

Member Units (186 units)(8)

           1,200     2,850  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  1,459     3,540  

                           

Barfly Ventures, LLC(10)

  

Casual Restaurant Group

                        

     

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

     7,796     7,667     7,635  

     

Options (2 equivalent units)

           397     490  

     

Warrant (1 equivalent unit)

           473     280  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,537     8,405  

                           

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% Secured Debt (Maturity—April 8, 2021)

     4,027     3,992     3,992  

     

Member Units (800,000 units)

           800     800  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,589     5,589  

                           

Boss Industries, LLC

  

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

                        

     

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

           2,473     2,920  

                           

Bridge Capital Solutions Corporation

  

Financial Services and Cash Flow Solutions Provider

                        

     

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

     7,500     5,673     5,673  

     

Warrants (63 equivalent shares)

           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  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,796     11,043  

                           

Buca C, LLC

  

Casual Restaurant Group

                        

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—June 30, 2020)(9)

     21,204     21,058     21,058  

     

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

           3,995     3,990  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  25,053     25,048  

                           

12

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

CAI Software LLC

  

Provider of Specialized Enterprise Resource Planning Software

                        

     

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

     3,483     3,463     3,483  

     

Member Units (65,356 units)(8)

           654     2,580  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,117     6,063  

                           

CapFusion, LLC(13)

  

Non-Bank Lender to Small Businesses

                        

     

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

     14,400     13,252     13,252  

     

Warrants (1,600 equivalent units)

           1,200     1,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  14,452     14,452  

                           

Chandler Signs Holdings, LLC(10)

  

Sign Manufacturer

                        

     

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

     4,500     4,463     4,500  

     

Class A Units (1,500,000 units)(8)

           1,500     3,240  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,963     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     1,377  

     

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     5,629  

     

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

           1,904     1,651  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,900     7,280  

                           

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     750  

                           

East West Copolymer & Rubber, LLC

  

Manufacturer of Synthetic Rubbers

                        

     

12% Current / 2% PIK Secured Debt (Maturity—October 17, 2019)(14)

     9,699     9,591     2,240  

     

Warrants (2,510,790 equivalent units)

           50     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,641     2,240  

                           

13

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

EIG Fund Investments(12)(13)

  

Investment Partnership

                        

     

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

           1,565     1,466  

     

LP Interests (EIG Traverse Co-Investment, L.P.) (Fully diluted 22.2%)(8)

           9,805     9,973  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  11,370     11,439  

                           

Freeport Financial Funds(12)(13)

  

Investment Partnership

                        

     

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

           5,974     5,675  

     

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

           7,559     7,507  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,533     13,182  

                           

Gault Financial, LLC (RMB Capital, LLC)

  

Purchases and Manages Collection of Healthcare and other Business Receivables

                        

     

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

     12,900     12,900     11,950  

     

Warrants (29,032 equivalent units)

           400     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,300     11,950  

                           

Glowpoint, Inc.

  

Provider of Cloud Managed Video Collaboration Services

                        

     

12% Secured Debt (Maturity—October 18, 2018)

     9,000     8,957     3,010  

     

Common Stock (7,711,517 shares)

           3,958     2,270  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,915     5,280  

                           

Guerdon Modular Holdings, Inc.

  

Multi-Family and Commercial Modular Construction Company

                        

     

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

     10,708     10,603     10,603  

     

Preferred Stock (404,998 shares)

           1,140     1,140  

     

Common Stock (212,033 shares)

           2,983     80  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  14,726     11,823  

                           

Hawk Ridge Systems, LLC(13)

  

Value-Added Reseller of Engineering Design and Manufacturing Solutions

                        

     

10% Secured Debt (Maturity—December 2, 2021)

     10,000     9,905     9,905  

     

Preferred Member Units (226 units)(8)

           2,850     2,850  

     

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

           150     150  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,905     12,905  

                           

Houston Plating and Coatings, LLC

  

Provider of Plating and Industrial Coating Services

                        

     

Member Units (265,756 units)

           1,429     4,230  

                           

I-45 SLF LLC(12)(13)

  

Investment Partnership

                        

     

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

           15,200     15,907  

                           

14

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Indianhead Pipeline Services, LLC

  

Provider of Pipeline Support Services

                        

     

12% Secured Debt (Maturity—February 6, 2018)

     5,417     5,417     5,417  

     

Preferred Member Units (33,819 units; 8% cumulative)(8)

           2,437     2,775  

     

Warrants (31,928 equivalent units)

           459     —  

     

Member Units (14,732 units)

           1     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,314     8,192  

                           

KBK Industries, LLC

  

Manufacturer of Specialty Oilfield and Industrial Products

                        

     

10% Secured Debt (Maturity—September 28, 2017)

     1,175     1,175     1,175  

     

12.5% Secured Debt (Maturity—September 28, 2017)

     5,900     5,892     5,892  

     

Member Units (250 units)

           341     2,780  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,408     9,847  

                           

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)

     4,654     4,654     4,654  

     

Preferred Stock (912 shares; 7% cumulative)

           1,981     —  

     

Warrants (5,333 equivalent shares)

           1,919     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,554     4,654  

                           

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     380  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  1,844     853  

                           

PCI Holding Company, Inc.

  

Manufacturer of Industrial Gas Generating Systems

                        

     

12% Secured Debt (Maturity—March 31, 2019)

     13,000     12,908     13,000  

     

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

           3,551     5,540  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,459     18,540  

                           

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  

                           

15

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Tin Roof Acquisition Company

  

Casual Restaurant Group

                        

     

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

     13,342     13,232     13,232  

     

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

           2,807     2,807  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,039     16,039  

                           

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     5,011     5,021  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—January 13, 2019)(9)

     826     826     826  

     

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

     773     773     773  

     

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

           6,248     6,620  

     

Common Stock (705,054 shares)

           —     2,810  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,858     16,050  

                           

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; 14% cumulative)

           717     720  

     

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

           4,000     610  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,717     1,330  

                           

Valley Healthcare Group, LLC

  

Provider of Durable Medical Equipment

                        

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.28%, Secured Debt (Maturity—December 29, 2020)(9)

     12,856     12,750     12,750  

     

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

           1,600     1,600  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  14,350     14,350  

                           

Volusion, LLC

  

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

                        

     

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

     17,500     15,439     15,439  

     

Preferred Member Units (4,876,670 units)

           14,000     14,000  

     

Warrants (1,831,355 equivalent units)

           2,576     2,450  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  32,015     31,889  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Affiliate Investments (16.6% of total investments at fair value)

   $ 373,895   $ 329,024  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

16

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

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)

   $ 7,589   $ 7,478   $ 7,589  

                           

ADS Tactical, Inc.(10)

  

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

                        

     

LIBOR Plus 7.50% (Floor 0.75%), Current Coupon 8.50%, Secured Debt (Maturity—December 31, 2022)(9)

     11,500     11,258     11,258  

                           

Ahead, LLC(10)

  

IT Infrastructure Value Added Reseller

                        

     

LIBOR Plus 6.50%, Current Coupon 7.65%, Secured Debt (Maturity—November 2, 2020)

     14,063     13,742     13,922  

                           

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     14,710     14,826  

                           

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)

     7,313     7,216     7,276  

                           

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)

     11,018     10,242     11,018  

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity—June 6, 2022)(9)

     3,714     3,573     3,573  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,815     14,591  

                           

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)

     2,271     2,271     2,226  

     

Member Units (440,620 units)

           4,928     3,305  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,199     5,531  

                           

17

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

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)

     7,190     7,086     7,258  

                           

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     14,340     14,340  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,740     16,740  

                           

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)

     13,912     13,773     13,912  

                           

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)

     7,330     7,215     7,330  

                           

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)

     9,250     9,083     9,227  

                           

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     6,149     5,659  

                           

ATX Networks Corp.(11)(13)

  

Provider of Radio Frequency Management Equipment

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.15%, Secured Debt (Maturity—June 11, 2021)(9)

     9,765     9,620     9,668  

                           

Berry Aviation, Inc.(10)

  

Airline Charter Service Operator

                        

     

12.00% Current / 1.75% PIK Secured Debt (Maturity—January 30, 2020)

     5,627     5,590     5,627  

     

Common Stock (553 shares)

           400     820  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,990     6,447  

                           

18

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Binswanger Enterprises, LLC(10)

  

Glass Repair and Installation Service Provider

                        

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.06%, Secured Debt (Maturity—March 9, 2022)(9)

     15,460     15,155     15,155  

     

Member Units (1,050,000 units)

           1,050     1,050  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,205     16,205  

                           

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)

     12,692     12,466     10,471  

                           

Brainworks Software, LLC(10)

  

Advertising Sales and Newspaper Circulation Software

                        

     

Prime Plus 9.25% (Floor 3.25%), Current Coupon 13.25%, Secured Debt (Maturity—July 22, 2019)(9)

     6,733     6,688     6,491  

                           

Brightwood Capital Fund Investments(12)(13)

  

Investment Partnership

                        

     

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

           12,000     10,271  

     

LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.9%)

           500     500  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,500     10,771  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

  

Construction Services Provider

                        

     

10.375% Secured Debt (Maturity—September 1, 2021)

     3,000     2,986     3,150  

                           

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)

     7,967     7,922     7,969  

                           

CDHA Management, LLC(10)

  

Dental Services

                        

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity—December 5, 2021)(9)

     4,227     4,154     4,154  

                           

Cengage Learning Acquisitions, Inc.(11)

  

Provider of Educational Print and Digital Services

                        

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity—June 7, 2023)(9)

     9,459     8,854     9,049  

                           

19

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Cenveo Corporation(11)

  

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

                        

     

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

     15,130     13,073     12,482  

                           

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     14,160     9,134  

                           

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     4,097     4,100  

     

Series A Preferred Stock (4,298,435 shares)

           1,079     4,580  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,176     8,680  

                           

Construction Supply Investments, LLC(10)(13)

  

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     8,418     8,418  

     

Member Units (20,000 units)

           2,000     2,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  10,418     10,418  

                           

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)

     7,900     7,132     7,900  

                           

Covenant Surgical Partners, Inc.(11)

  

Ambulatory Surgical Centers

                        

     

8.75% Secured Debt (Maturity—August 1, 2019)

     2,800     2,744     2,660  

                           

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     9,096     9,011  

                           

20

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Darr Equipment LP(10)

  

Heavy Equipment Dealer

                        

     

12% Current / 2% PIK Secured Debt (Maturity—April 15, 2020)

     21,236     20,828     20,879  

     

Warrants (915,734 equivalent units)

           474     10  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  21,302     20,889  

                           

Digital River, Inc.(11)

  

Provider of Outsourced e-Commerce Solutions and Services

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.63%, Secured Debt (Maturity—February 12, 2021)(9)

     15,184     15,091     15,260  

                           

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)

     7,530     7,385     7,454  

                           

Drilling Info Holdings, Inc.

  

Information Services for the Oil and Gas Industry

                        

     

Common Stock (3,788,865 shares)

           1,335     10,100  

                           

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     5,592     5,625  

                           

EnCap Energy Fund Investments(12)(13)

  

Investment Partnership

                        

     

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

           3,791     2,225  

     

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

           2,200     1,413  

     

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

           3,908     3,696  

     

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

           3,353     3,353  

     

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

           8,757     9,983  

     

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

           2,715     2,716  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  24,724     23,386  

                           

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     6,862     4,888  

                           

21

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Flavors Holdings Inc.(11)

  

Global Provider of Flavoring and Sweetening Products and Solutions

                        

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.90%, Secured Debt (Maturity—April 3, 2020)(9)

     13,661     13,056     11,800  

                           

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)

     6,900     6,812     6,814  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity—April 29, 2022)(9)

     3,800     3,642     3,648  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  10,454     10,462  

                           

Grace Hill, LLC(10)

  

Online Training Tools for the Multi-Family Housing Industry

                        

     

Prime Plus 5.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity—August 15, 2019)(9)

     883     873     883  

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.36%, Secured Debt (Maturity—August 15, 2019)(9)

     11,494     11,421     11,494  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,294     12,377  

                           

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)

     7,547     7,502     7,547  

                           

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)

     4,800     4,780     3,456  

     

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

     2,000     1,967     300  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,747     3,756  

                           

GST Autoleather, Inc.(11)

  

Automotive Leather Manufacturer

                        

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.65%, Secured Debt (Maturity—July 10, 2020)(9)

     14,305     14,188     14,001  

                           

Guitar Center, Inc.(11)

  

Musical Instruments Retailer

                        

     

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

     15,625     14,863     13,125  

                           

22

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

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)

     5,776     5,732     5,776  

                           

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 8.30%, Secured Debt (Maturity—January 28, 2021)(9)

     8,524     7,972     7,928  

                           

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)

     10,426     10,370     10,215  

                           

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)

     9,400     8,960     8,742  

                           

iEnergizer Limited(11)(13)

  

Provider of Business Outsourcing Solutions

                        

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity—May 1, 2019)(9)

     13,128     12,726     13,079  

                           

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)

     3,646     3,490     3,673  

                           

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)

     8,688     8,673     8,688  

                           

Industrial Services Acquisition, LLC(10)

  

Industrial Cleaning Services

                        

     

11.25% Current / 0.75% PIK Unsecured Debt (Maturity— December 17, 2022)

     4,527     4,444     4,444  

     

Member Units (Industrial Services Investments, LLC) (900,000 units)

           900     810  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,344     5,254  

                           

23

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Infinity Acquisition Finance Corp.(11)

  

Application Software for Capital Markets

                        

     

7.25% Unsecured Debt (Maturity—August 1, 2022)

     5,700     5,378     5,216  

                           

Inn of the Mountain Gods Resort and Casino(11)

  

Hotel & Casino Owner & Operator

                        

     

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

     6,249     5,941     5,624  

                           

Intertain Group Limited(11)(13)

  

Business-to-Consumer Online Gaming Operator

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity—April 8, 2022)(9)

     4,301     4,243     4,344  

                           

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)

     16,918     16,909     16,833  

                           

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)

     9,787     9,653     9,566  

                           

irth Solutions, LLC

  

Provider of Damage Prevention Information Technology Services

                        

     

Member Units (27,893 units)

           1,441     1,920  

                           

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)

     4,473     4,457     4,473  

                           

Joerns Healthcare, LLC(11)

  

Manufacturer and Distributor of Health Care Equipment & Supplies

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.05% / 0.50% PIK, Current Coupon Plus PIK 7.55%, Secured Debt (Maturity—May 9, 2020)(9)

     14,617     14,493     13,156  

                           

24

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

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)

     5,248     5,236     5,221  

                           

LaMi Products, LLC(10)

  

General Merchandise Distribution

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.62%, Secured Debt (Maturity—September 16, 2020)(9)

     11,044     10,971     11,044  

                           

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)

     2,316     2,316     2,308  

     

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

           353     954  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,669     3,262  

                           

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

  

Investment Partnership

                        

     

LP Interests (Fully diluted 2.3%)

           2,500     3,967  

                           

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)

     8,515     8,386     8,515  

                           

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)

           132     132  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  445     445  

                           

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     14,331     14,403  

                           

25

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Minute Key, Inc.

  

Operator of Automated Key Duplication Kiosks

                        

     

10% Current / 2% PIK Secured Debt (Maturity—September 19, 2019)

     15,778     15,505     15,505  

     

Warrants (1,437,409 equivalent units)

           280     800  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  15,785     16,305  

                           

Mood Media Corporation(11)(13)

  

Provider of Electronic Equipment

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.15%, Secured Debt (Maturity—May 1, 2019)(9)

     14,767     14,623     14,700  

                           

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)

     14,850     14,610     14,775  

                           

NNE Partners, LLC(10)

  

Oil & Gas Exploration & Production

                        

     

LIBOR Plus 8.00%, Current Coupon 9.07%, Secured Debt (Maturity—March 2, 2022)

     7,292     7,220     7,220  

                           

North American Lifting Holdings, Inc.(11)

  

Crane Service Provider

                        

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.65%, Secured Debt (Maturity—November 27, 2020)(9)

     7,805     6,792     7,370  

                           

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)

     4,091     4,035     4,070  

                           

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     1,779  

                           

Pardus Oil and Gas, LLC(11)

  

Oil & Gas Exploration & Production

                        

     

13% PIK Secured Debt (Maturity—November 12, 2021)

     1,928     1,928     1,809  

     

5% PIK Secured Debt (Maturity—May 13, 2022)

     1,004     1,004     489  

     

Member Units (2,472 units)

           2,472     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,404     2,298  

                           

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     1,970     1,960  

                           

26

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Parq Holdings Limited Partnership(11)(13)

  

Hotel & Casino Operator

                        

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity—December 17, 2020)(9)

     7,500     7,399     7,481  

                           

Permian Holdco 2, Inc.(11)

  

Storage Tank Manufacturer

                        

     

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

     205     205     205  

     

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

           799     799  

     

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

           —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  1,004     1,004  

                           

Pernix Therapeutics Holdings, Inc.(10)

  

Pharmaceutical Royalty

                        

     

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

     3,214     3,214     1,151  

                           

Pike Corporation(11)

  

Construction and Maintenance Services for Electric Transmission and Distribution Infrastructure

                        

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity—September 10, 2024)(9)

     3,000     2,970     3,053  

                           

Point.360(10)

  

Fully Integrated Provider of Digital Media Services

                        

     

Warrants (65,463 equivalent shares)

           69     —  

     

Common Stock (163,658 shares)

           273     34  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  342     34  

                           

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—December 22, 2021)(9)

     6,956     6,815     6,815  

                           

Prowler Acquisition Corp.(11)

  

Specialty Distributor to the Energy Sector

                        

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.65%, Secured Debt (Maturity—January 28, 2020)(9)

     10,706     8,942     8,832  

                           

27

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

PT Network, LLC(10)

  

Provider of Outpatient Physical Therapy and Sports Medicine Services

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.55%, Secured Debt (Maturity—November 30, 2021)(9)

     17,700     17,465     17,465  

                           

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)

     11,245     11,176     10,908  

                           

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)

     4,160     4,093     4,197  

                           

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)

     13,125     12,754     13,141  

                           

Renaissance Learning, Inc.(11)

  

Technology-based K-12 Learning Solutions

                        

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.15%, Secured Debt (Maturity—April 11, 2022)(9)

     3,000     2,979     2,999  

                           

RGL Reservoir Operations Inc.(11)(13)

  

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     3,830     1,036  

                           

RM Bidder, LLC(10)

  

Scripted and Unscripted TV and Digital Programming Provider

                        

     

Warrants (327,532 equivalent units)

           425     —  

     

Member Units (2,779 units)

           46     33  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  471     33  

                           

SAExploration, Inc.(10)(13)

  

Geophysical Services Provider

                        

     

Common Stock (50 shares)

           65     —  

                           

SAFETY Investment Holdings, LLC

  

Provider of Intelligent Driver Record Monitoring Software and Services

                        

     

Member Units (2,000,000 units)

           2,000     2,000  

                           

28

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

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     10,554     10,379  

                           

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)

     5,456     5,388     5,469  

                           

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     12,212     12,212  

                           

SG Acquisition Inc.(11)

  

Finance and Insurance Services to the Automotive Industry

                        

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity—March 30, 2024)(9)

     4,875     4,729     4,802  

                           

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)

     13,337     13,254     13,387  

     

9% Secured Debt (Maturity—October 31, 2020)

     3,000     2,805     2,790  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,059     16,177  

                           

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     9,682     10,167  

                           

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)

     7,429     7,365     7,397  

                           

Synagro Infrastructure Company, Inc(11)

  

Waste Management Services

                        

     

LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.40%, Secured Debt (Maturity—August 22, 2020)(9)

     4,714     4,662     4,348  

                           

29

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Targus International, LLC(11)

  

Distributor of Protective Cases for Mobile Devices

                        

     

15% PIK Secured Debt (Maturity—December 31, 2019)

     1,182     1,182     1,182  

     

Common Stock (Targus Cayman HoldCo Limited) (249,614 shares)(13)

           2,555     440  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  3,737     1,622  

                           

TE Holdings, LLC(11)

  

Oil & Gas Exploration & Production

                        

     

Member Units (97,048 units)

           970     691  

                           

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)

     7,602     7,594     7,607  

     

LIBOR Plus 7.50% (Floor 1.25%), Current Coupon 8.75%, Secured Debt (Maturity—June 10, 2019)(9)

     10,500     10,447     10,526  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  18,041     18,133  

                           

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)

     14,922     14,778     14,922  

                           

TOMS Shoes, LLC(11)

  

Global Designer, Distributor, and Retailer of Casual Footwear

                        

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.55%, Secured Debt (Maturity—October 30, 2020)(9)

     4,900     4,573     3,315  

                           

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)

     20,564     20,201     20,564  

                           

Turning Point Brands, Inc.(10)(13)

  

Marketer/Distributor of Tobacco Products

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.15%, Secured Debt (Maturity—May 17, 2022)(9)

     8,500     8,417     8,479  

                           

30

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

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)

     6,419     6,299     6,299  

                           

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)

     8,356     8,197     8,418  

                           

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)

     11,484     11,411     11,427  

                           

U.S. TelePacific Corp.(10)

  

Provider of Communications and Managed Services

                        

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.62%, Secured Debt (Maturity—February 24, 2021)(9)

     7,500     7,383     7,500  

                           

VCVH Holding Corp. (Verisk)(11)

  

Healthcare Technology Services Focused on Revenue Maximization

                        

     

LIBOR Plus 9.25% (Floor 1.00%), Current Coupon 10.40%, Secured Debt (Maturity—June 1, 2024)(9)

     1,500     1,465     1,489  

                           

VIP Cinema Holdings, Inc.(11)

  

Supplier of Luxury Seating to the Cinema Industry

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity—March 1, 2023)(9)

     10,000     9,951     10,118  

                           

Virtex Enterprises, LP(10)

  

Specialty, Full-Service Provider of Complex Electronic Manufacturing Services

                        

     

12% Secured Debt (Maturity—December 27, 2018)

     1,667     1,571     1,571  

     

Preferred Class A Units (14 units; 5% cumulative)(8)

           333     773  

     

Warrants (11 equivalent units)

           186     351  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,090     2,695  

                           

31

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

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

Vistar Media, Inc.(10)

  

Operator of Digital Out-of-Home Advertising Platform

                        

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.06%, Secured Debt (Maturity—February 16, 2022)(9)

     4,500     4,089     4,089  

     

Warrants (64,025 equivalent shares)

           331     331  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,420     4,420  

                           

Wellnext, LLC(10)

  

Manufacturer of Supplements and Vitamins

                        

     

LIBOR Plus 9.00% (Floor 0.50%), Current Coupon 10.00%, Secured Debt (Maturity—May 23, 2021)(9)

     9,994     9,908     9,994  

                           

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     4,903     4,891  

                           

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)

     1,147     1,142     1,120  

                           

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)

     6,354     6,312     6,354  

                           

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)

     14,785     14,438     14,756  

                           

Zilliant Incorporated

  

Price Optimization and Margin Management Solutions

                        

     

Preferred Stock (186,777 shares)

           154     260  

     

Warrants (952,500 equivalent shares)

           1,071     1,190  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  1,225     1,450  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Non-Control/Non-Affiliate Investments (50.1% of total investments at fair value)

         $ 1,010,832   $ 992,115  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Portfolio Investments, March 31, 2017

         $ 1,876,476   $ 1,979,378  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(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.

32

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

March 31, 2017

(dollars in thousands)

(Unaudited)

(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, 2017. As noted in this schedule, 62% (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.

33

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments

December 31, 2016

(dollars in thousands)

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)

   $ 22,664   $ 22,664   $ 19,700  

     

Preferred Member Units (6,581,250 units; 12% cumulative)

           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  

                           

34

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MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

     11,713     11,651     11,049  

     

Class A Preferred Member Units (15% cumulative)

           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  

                           

35

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

     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  

                           

36

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

           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)

           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  

                           

37

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

           252     680  

     

Member Units (1,454,167 units)

           765     2,462  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,445     7,603  

                           

NRP Jones, LLC

  

Manufacturer of Hoses, Fittings and Assemblies

                        

     

6% Current / 6% PIK Secured Debt (Maturity—December 22, 2016)(17)

     13,915     13,915     13,915  

     

Warrants (14,331 equivalent units)

           817     130  

     

Member Units (50,877 units)

           2,900     410  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  17,632     14,455  

                           

38

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

     3,378     3,378     3,378  

     

Preferred Member Units (19,631 units)

           4,663     5,370  

     

Warrants (1,036 equivalent units)

           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)

     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  

                           

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  

                           

39

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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; 10% Cumulative)

           2,500     —  

     

Warrants (1,424 equivalent units)

           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)

           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  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

40

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

Affiliate Investments(6)

  

 

  

 

                    

                           

AFG Capital Group, LLC

  

Provider of Rent-to-Own Financing Solutions and Services

                        

     

Warrants (42 equivalent units)

         $ 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)

           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)

           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)

           3,937     4,660  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  26,441     27,331  

                           

                           

41

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

           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)

     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  

                           

42

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

East West Copolymer & Rubber, LLC

  

Manufacturer of Synthetic Rubbers

                        

     

12% Current / 2% PIK Secured Debt (Maturity—October 17, 2019)

     9,699     9,591     8,630  

     

Warrants (2,510,790 equivalent units)

           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)

           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)

           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)

     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  

                           

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  

                           

43

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

           2,339     2,677  

     

Warrants (31,928 equivalent units)

           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)

     4,519     4,519     4,519  

     

Preferred Stock (912 shares; 7% cumulative)

           1,981     —  

     

Warrants (5,333 equivalent shares)

           1,919     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,419     4,519  

                           

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)

           3,379     5,370  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,277     18,370  

                           

44

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

           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)

     745     745     745  

     

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

           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; 14% cumulative)

           717     720  

     

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

           4,000     610  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,717     1,330  

                           

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)

           2,576     2,576  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  31,874     31,874  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Affiliate Investments (18.8% of total investments at fair value)

   $ 394,699   $ 375,948  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

45

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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  

                           

46

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

  

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  

                           

47

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

Berry Aviation, Inc.(10)

  

Airline Charter Service Operator

                        

     

12.00% Current / 1.75% PIK 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  

                           

48

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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  

                           

49

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

Darr Equipment LP(10)

  

Heavy Equipment Dealer

                        

     

12% Current / 2% PIK Secured Debt (Maturity—April 15, 2020)

     21,130     20,697     20,748  

     

Warrants (915,734 equivalent units)

           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  

                           

50

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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  

                           

51

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

           369     1,530  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,750     9,145  

                           

iEnergizer Limited(11)(13)

  

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  

                           

52

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

     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)

  

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)

     4,445     4,429     4,445  

53

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

     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)

     8,593     8,457     8,593  

                           

54

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

     15,700     15,404     15,404  

     

Warrants (1,437,409 equivalent units)

           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  

                           

55

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

     1,869     1,869     1,869  

     

5% PIK Secured Debt (Maturity—May 13, 2022)

     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)

  

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)

     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)

  

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  

                           

56

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

           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  

                           

57

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

  

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)

           425     300  

     

Member Units (2,779 units)

           46     44  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  471     344  

                           

SAExploration, Inc.(10)(13)

  

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  

                           

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

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)

     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  

                           

59

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

     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)

           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  

                           

60

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

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)

           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  

                           

61

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments (Continued)

December 31, 2016

(dollars in thousands)

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

Zilliant Incorporated

  

Price Optimization and Margin Management Solutions

                        

     

Preferred Stock (186,777 shares)

           154     260  

     

Warrants (952,500 equivalent shares)

           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.

62

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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 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. The External Investment Manager is also a direct wholly owned subsidiary that has elected to be a taxable entity. The Taxable Subsidiaries and the External Investment Manager are each taxed at their normal corporate tax rates based on their taxable income.

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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.

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"). 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, 2017 and 2016, and financial position as of March 31, 2017 and December 31, 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.

        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, 2017 and 2016 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, 2016. 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 the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 946, Financial Services—Investment Companies ("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

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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 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

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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 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

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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, 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

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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 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, and on a total of 11 LMM portfolio companies for the three months ended March 31, 2016, representing approximately 18% of the total LMM portfolio at fair value as of March 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 March 31, 2017 and 2016, as applicable, and its investments in the LMM portfolio companies that were not reviewed because their equity is publicly traded 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, 2017 and 2016 was 18% and 19% of the total LMM portfolio at fair value as of March 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-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 March 31, 2017 and December 31, 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.

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        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 9 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, and on a total of 10 Private Loan portfolio companies for the three months ended March 31, 2016, representing approximately 36% of the total Private Loan portfolio at fair value as of March 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 as of March 31, 2017 and 2016, as applicable, and 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, 2017 and 2016 was 44% and 51% of the total Private Loan portfolio at fair value as of March 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 5.4% and 5.0%, respectively, of Main Street's Investment Portfolio at fair value as of March 31, 2017 and December 31, 2016. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For 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

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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 March 31, 2017 and December 31, 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 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,

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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, 2017, cash balances totaling $29.9 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 March 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 2.7% 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.8. 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

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arrears are no longer collectible. For the three months ended March 31, 2017 and 2016, (i) approximately 3.4% and 3.1%, respectively, of Main Street's total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.8% and 0.8%, 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.

        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, 		 
 
   2017   2016  
 
   (dollars in
thousands)
  

Interest, fee and dividend income:

              

Interest income

   $ 38,463   $ 32,182  

Dividend income

     6,982     7,629  

Fee income

     2,444     2,064  
​ ​ ​ ​ ​ ​ ​ ​

Total interest, fee and dividend income

   $ 47,889   $ 41,875  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

5.     Deferred Financing Costs

        Deferred financing costs include SBIC debenture commitment fees and SBIC debenture leverage fees on the SBIC debentures which are not accounted for under the fair value option under ASC 825 (as discussed further in Note B.10.). These fees are approximately 3.4% of the total commitment and draw amounts, as applicable. These deferred financing costs have been capitalized and are being amortized into interest expense over the ten year term of each debenture agreement.

        Deferred financing costs also 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). These costs have been capitalized and are amortized into interest expense over the term of the individual instrument.

6.     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.

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NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        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 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.8. 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, 2017 and 2016, approximately 3.5% 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.

7.     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.12.). 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

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NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 has 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. The company 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 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.

8.     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-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. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

        The Taxable Subsidiaries 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.

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NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        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.

9.     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.

10.   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.

11.   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.

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(Unaudited)

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

12.   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 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 Main Street's consolidated financial statements as none of its investments are measured through the use of the practical expedient.

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(Unaudited)

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        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. 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 Note B.7.

        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 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.

        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

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(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

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:

        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.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

        As of March 31, 2017 and 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 March 31, 2017 and December 31, 2016, except for the one publicly traded equity security which was categorized as Level 2.

        As of March 31, 2017 and December 31, 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 March 31, 2017 and December 31, 2016.

        As of March 31, 2017 and December 31, 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 March 31, 2017 and December 31, 2016.

        As of March 31, 2017 and December 31, 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 March 31, 2017 and December 31, 2016.

        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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(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

        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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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

        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, 2017 and December 31, 2016:

Type of
Investment
  Fair Value
as of
March 31,
2017
(in thousands) 		  Valuation Technique   Significant Unobservable Inputs   Range(3)   Weighted
Average(3) 		  Median(3)  

Equity investments

   $ 579,449   Discounted cash flow   Weighted-average cost of capital   10.1% - 22.7%     12.7%     13.3%  

        Market comparable / Enterprise Value   EBITDA multiple(1)   4.5x - 8.5x(2)     7.1x     6.0x  

Debt investments

   $ 818,956   Discounted cash flow   Risk adjusted discount factor   7.4% - 16.0%(2)     11.4%     11.1%  

            Expected principal recovery percentage   3.0% - 100.0%     99.8%     100.0%  

Debt investments

   $ 578,703   Market approach   Third-party quote   15.0 - 105.0              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Level 3 investments

   $ 1,977,108                          
(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 3.5x - 17.5x and the range for risk adjusted discount factor is 4.8% - 43.0%.

(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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(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

        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, 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 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.
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 March 31,
2016 		 

Debt

   $ 1,265,544   $ —   $ (70,061 ) $ 101,465   $ 4,510   $ (11,905 ) $ (2,556 ) $ 1,286,997  

Equity

     519,966     —     (5,987 )   16,959     (16,816 )   (1,035 )   2,556     515,643  

Equity Warrant

     10,646     —     —     2,819     —     (1,044 )   —     12,421  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  $ 1,796,156   $ —   $ (76,048 ) $ 121,243   $ (12,306 ) $ (13,984 ) $ —   $ 1,815,061  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Includes the impact of non-cash conversions.

        As of March 31, 2017 and December 31, 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.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

        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, 2017 and December 31, 2016 (amounts in thousands):

Type of
Instrument
  Fair Value as of
March 31, 2017 		  Valuation Technique   Significant Unobservable Inputs   Range   Weighted Average  

SBIC debentures

   $ 49,155   Discounted cash flow   Estimated market interest rates   4.2% - 5.2%     4.5 %

 

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 %

        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, 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
March 31, 2017 		 

SBIC debentures at fair value

   $ 74,803   $ (25,200 ) $ 5,217   $ —   $ (5,665 ) $ 49,155  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

Type of
Instrument
  Fair Value as of
December 31, 2015 		  Repayments   New SBIC
Debentures 		  Net
Unrealized
(Appreciation)
Depreciation 		  Fair Value as of
March 31, 2016 		 

SBIC debentures at fair value

   $ 73,860   $ —   $ —   $ 146   $ 74,006  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

        At March 31, 2017 and December 31, 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 March 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

   $ 886,559   $ —   $ 2,270   $ 884,289  

Middle Market portfolio investments

     568,796     —     —     568,796  

Private Loan portfolio investments

     384,220     —     —     384,220  

Other Portfolio investments

     106,331     —     —     106,331  

External Investment Manager

     33,472     —     —     33,472  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total portfolio investments

     1,979,378     —     2,270     1,977,108  

Marketable securities and idle funds investments

     —     —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total investments

   $ 1,979,378   $ —   $ 2,270   $ 1,977,108  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

SBIC debentures at fair value

   $ 49,155   $ —   $ —   $ 49,155  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

 
    
   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  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

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 $15 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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

relationships, management expertise and capital raising capabilities. In the first quarter of 2014, Main Street began allocating cost to the External Investment Manager pursuant to the sharing agreement. Main Street's total expenses for the three months ended March 31, 2017 and 2016 are net of expenses allocated to the External Investment Manager of $1.5 million and $1.2 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, 2017 and 2016, 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, 2017 and December 31, 2016 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

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

Number of portfolio companies

     73     69     49  

Fair value

   $ 886.6   $ 568.8   $ 384.2  

Cost

   $ 772.1   $ 588.9   $ 403.7  

% of portfolio at cost—debt

     67.6%     96.9%     94.0%  

% of portfolio at cost—equity

     32.4%     3.1%     6.0%  

% of debt investments at cost secured by first priority lien

     96.1%     88.8%     90.2%  

Weighted-average annual effective yield(b)

     12.2%     8.6%     9.6%  

Average EBITDA(c)

   $ 4.6   $ 95.5   $ 24.8  
(a)
At March 31, 2017, 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 37%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 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 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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

 
   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 total investments at cost—debt

     69.1%     97.2%     93.5%  

% of total investments 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. 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 March 31, 2017, Main Street had Other Portfolio investments in ten companies, collectively totaling approximately $106.3 million in fair value and approximately $111.8 million in cost basis and which comprised approximately 5.4% 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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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

        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, 2017, there was no cost basis in this investment and the investment had a fair value of approximately $33.5 million, which comprised approximately 1.7% 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 March 31, 2017 and December 31, 2016 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31, 2017   December 31, 2016  

First lien debt

     76.6%     76.1%  

Equity

     15.6%     14.5%  

Second lien debt

     6.2%     7.7%  

Equity warrants

     1.0%     1.1%  

Other

     0.6%     0.6%  
​ ​ ​ ​ ​ ​ ​ ​

    100.0%     100.0%  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

 

Fair Value:
  March 31, 2017   December 31, 2016  

First lien debt

     69.6%     68.7%  

Equity

     23.2%     22.6%  

Second lien debt

     5.8%     7.2%  

Equity warrants

     0.8%     0.9%  

Other

     0.6%     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 March 31, 2017 and December 31, 2016 (this information excludes the Other

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

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, 2017   December 31, 2016  

Southwest

     28.3%     29.7%  

Midwest

     23.4%     23.0%  

West

     15.9%     16.1%  

Northeast

     15.2%     14.8%  

Southeast

     14.1%     13.1%  

Canada

     1.4%     1.7%  

Other Non-United States

     1.7%     1.6%  
​ ​ ​ ​ ​ ​ ​ ​

    100.0%     100.0%  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

 

Fair Value:
  March 31, 2017   December 31, 2016  

Southwest

     28.6%     31.0%  

Midwest

     22.1%     21.2%  

West

     18.4%     18.3%  

Northeast

     14.4%     13.9%  

Southeast

     13.6%     12.7%  

Canada

     1.2%     1.4%  

Other Non-United States

     1.7%     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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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

as of March 31, 2017 and December 31, 2016 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31, 2017   December 31, 2016  

Energy Equipment & Services

     7.7%     7.5%  

Hotels, Restaurants & Leisure

     6.7%     6.5%  

Construction & Engineering

     6.3%     5.3%  

Media

     6.0%     5.7%  

Machinery

     5.8%     5.6%  

Commercial Services & Supplies

     4.9%     5.0%  

Electronic Equipment, Instruments & Components

     4.5%     4.5%  

Specialty Retail

     3.9%     4.4%  

Diversified Consumer Services

     3.5%     2.8%  

Diversified Telecommunication Services

     3.3%     3.3%  

IT Services

     3.1%     3.9%  

Leisure Equipment & Products

     3.1%     0.9%  

Internet Software & Services

     3.0%     3.6%  

Auto Components

     2.8%     3.0%  

Health Care Providers & Services

     2.8%     3.0%  

Diversified Financial Services

     2.4%     2.3%  

Health Care Equipment & Supplies

     2.3%     2.3%  

Software

     2.2%     2.6%  

Computers & Peripherals

     2.2%     2.2%  

Food Products

     2.1%     2.6%  

Building Products

     2.1%     2.1%  

Communications Equipment

     1.7%     2.3%  

Oil, Gas & Consumable Fuels

     1.6%     1.2%  

Aerospace & Defense

     1.6%     0.9%  

Professional Services

     1.3%     1.4%  

Consumer Finance

     1.0%     1.5%  

Air Freight & Logistics

     1.0%     1.0%  

Real Estate Management & Development

     1.0%     0.7%  

Distributors

     0.9%     1.1%  

Road & Rail

     0.0%     1.5%  

Other(1)

     9.2%     9.3%  
​ ​ ​ ​ ​ ​ ​ ​

    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)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

Fair Value:
  March 31, 2017   December 31, 2016  

Machinery

     7.0%     6.7%  

Hotels, Restaurants & Leisure

     6.8%     6.5%  

Construction & Engineering

     6.5%     5.6%  

Diversified Consumer Services

     6.4%     5.5%  

Energy Equipment & Services

     6.1%     5.8%  

Media

     5.6%     5.2%  

Commercial Services & Supplies

     4.8%     5.0%  

Specialty Retail

     4.1%     4.6%  

Electronic Equipment, Instruments & Components

     4.0%     3.9%  

IT Services

     3.1%     3.7%  

Leisure Equipment & Products

     3.0%     0.9%  

Internet Software & Services

     2.9%     3.5%  

Auto Components

     2.7%     2.9%  

Health Care Providers & Services

     2.6%     2.9%  

Diversified Telecommunication Services

     2.6%     2.5%  

Diversified Financial Services

     2.5%     2.3%  

Computers & Peripherals

     2.5%     2.3%  

Health Care Equipment & Supplies

     2.4%     2.4%  

Software

     2.3%     2.6%  

Food Products

     2.0%     2.4%  

Building Products

     2.0%     1.9%  

Communications Equipment

     1.7%     2.3%  

Aerospace & Defense

     1.5%     0.8%  

Oil, Gas & Consumable Fuels

     1.4%     1.1%  

Professional Services

     1.3%     1.3%  

Air Freight & Logistics

     1.2%     1.1%  

Real Estate Management & Development

     1.2%     0.7%  

Construction Materials

     1.0%     1.0%  

Consumer Finance

     0.9%     1.3%  

Distributors

     0.9%     1.1%  

Road & Rail

     0.0%     2.5%  

Other(1)

     7.0%     7.7%  
​ ​ ​ ​ ​ ​ ​ ​

    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, 2017 and December 31, 2016, 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)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)

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 controlled portfolio companies 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, 2017 and December 31, 2016, 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. 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. After performing the income test for the three months ended March 31, 2016, excluding investments which were fully exited after March 31, 2016, Main Street determined that its income from two of its Control Investments individually generated more than 20% of Main Street's total income, primarily due to the unrealized appreciation that was recognized on the investments during the three months ended March 31, 2016. As such, GRT Rubber Technologies, LLC was considered a significant subsidiary at the 20% level as of March 31, 2016. Additionally, CBT Nuggets, LLC, an unconsolidated portfolio company that was a Control Investment, but which was not majority-owned by Main Street, was also considered a significant subsidiary at the 20% level as of March 31, 2016.

        The following table shows the summarized financial information for CBT Nuggets, LLC:

 
   As of
March 31, 		  As of
December 31, 		 
 
   2017   2016  
 
   (dollars in
thousands)
  

Balance Sheet Data

              

Current Assets

   $ 10,789   $ 7,275  

Noncurrent Assets

     12,266     13,610  

Current Liabilities

     18,201     17,883  

Noncurrent Liabilities

     —     —  

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION (Continued)


 
   Three Months
Ended
March 31, 		 
 
   2017   2016  
 
   (dollars in
thousands)
  

Summary of Operations

              

Total Revenue

   $ 10,356   $ 9,080  

Gross Profit

     9,218     7,882  

Income from Operations

     3,524     3,135  

Net Income

     3,853     3,264  

        The following table shows the summarized financial information for GRT Rubber Technologies LLC:

 
   As of
March 31, 		  As of
December 31, 		 
 
   2017   2016  
 
   (dollars in
thousands)
  

Balance Sheet Data

              

Current Assets

   $ 9,308   $ 8,326  

Noncurrent Assets

     31,209     32,106  

Current Liabilities

     4,408     2,941  

Noncurrent Liabilities

     18,250     18,562  

 

 
   Three Months
Ended
March 31, 		 
 
   2017   2016  
 
   (dollars in
thousands)
  

Summary of Operations

              

Total Revenue

   $ 6,931   $ 7,000  

Gross Profit

     1,553     1,694  

Income from Operations

     402     613  

Net Income

     (211 )   (61 )

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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE D—EXTERNAL INVESTMENT MANAGER (Continued)

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. Based upon several fee waiver agreements with HMS Income and HMS Adviser, the External Investment Manager did not begin accruing the base management fee and incentive fees, if any, until January 1, 2014. The External Investment Manager has conditionally agreed to waive a limited amount of the incentive fees otherwise earned. During the three months ended March 31, 2017 and 2016, the External Investment Manager earned $2.6 million and $2.3 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 statement of operations in "Net Change in Unrealized Appreciation (Depreciation)—Portfolio investments."

        The External Investment Manager has elected, for tax purposes, to be treated as a taxable entity, is not consolidated with Main Street for income tax purposes and 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 External Investment Manager has elected to be treated as a taxable entity to enable it to receive fee income and to allow MSCC to continue to comply with the "source-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. 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, 2017 and 2016, Main Street allocated $1.5 million and $1.2 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 dividend income from the External Investment Manager. For the three months ended March 31, 2017 and 2016, the total contribution to Main Street's net investment income was $2.2 million and $1.9 million, respectively.

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(Unaudited)

NOTE D—EXTERNAL INVESTMENT MANAGER (Continued)

        Summarized financial information from the separate financial statements of the External Investment Manager as of March 31, 2017 and December 31, 2016 and for the three months ended March 31, 2017 and 2016 is as follows:

 
   As of
March 31, 		  As of
December 31, 		 
 
   2017   2016  
 
   (dollars in thousands)
  

Cash

   $ —   $ —  

Accounts receivable—HMS Income

     2,588     2,496  
​ ​ ​ ​ ​ ​ ​ ​

Total assets

   $ 2,588   $ 2,496  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

Accounts payable to MSCC and its subsidiaries

   $ 1,350   $ 1,635  

Dividend payable to MSCC

     694     719  

Taxes payable

     544     142  

Equity

     —     —  
​ ​ ​ ​ ​ ​ ​ ​

Total liabilities and equity

   $ 2,588   $ 2,496  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

 

 
   Three Months
Ended
March 31, 		 
 
   2017   2016  

Management fee income

   $ 2,620   $ 2,251  

Expenses allocated from MSCC or its subsidiaries:

              

Salaries, share-based compensation and other personnel costs

     (919 )   (728 )

Other G&A expenses

     (605 )   (426 )
​ ​ ​ ​ ​ ​ ​ ​

Total allocated expenses

     (1,524 )   (1,154 )
​ ​ ​ ​ ​ ​ ​ ​

Pre-tax income

     1,096     1,097  

Tax expense

    
(402
)		  
(399
)
​ ​ ​ ​ ​ ​ ​ ​

Net income

   $ 694   $ 698  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

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 $240.2 million and $240.0 million at March 31, 2017 and December 31, 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 three months ended March 31, 2017, Main Street issued $25.4 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 $109.8 million of additional capacity under Main Street's SBIC licenses as of March 31, 2017. As a result of this prepayment, Main Street recognized a realized loss of $5.2 million due to the previously recognized gain recorded as a result of recording the

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(Unaudited)

NOTE E—SBIC DEBENTURES (Continued)

MSC II debentures at fair value on the date of the acquisition 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 3.8% and 4.1% as of March 31, 2017 and December 31, 2016, respectively. The first principal maturity due under the existing SBIC debentures is in 2019 and the weighted-average remaining duration as of March 31, 2017 was approximately 5.7 years. For each of the three months ended March 31, 2017 and 2016, Main Street recognized interest expense attributable to the SBIC debentures of $2.5 million. 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, 2017, the recorded value of the SBIC debentures was $239.4 million which consisted of (i) $49.2 million recorded at fair value, or $0.8 million less than the $50.0 million par value of the SBIC debentures issued in MSC II, (ii) $149.8 million recorded at par value and held in MSMF and (iii) $40.4 million recorded at par value and held in MSC III. As of March 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 $228.4 million, or $11.8 million less than the $240.2 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 $555.0 million from a diversified group of fourteen lenders and matures in September 2021. The Credit Facility also 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 (0.98% as of March 31, 2017) plus (i) 1.875% (or the applicable base rate (Prime Rate of 4.00% as of March 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 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

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE F—CREDIT FACILITY (Continued)

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, 2017, Main Street had $288.0 million in borrowings outstanding under the Credit Facility. As of March 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 loan costs, of $2.5 million and $2.1 million, respectively, for the three months ended March 31, 2017 and 2016. As of March 31, 2017, the interest rate on the Credit Facility was 2.7%. The average interest rate for the three months ended March 31, 2017 was 2.7%. As of March 31, 2017, 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 by Main Street, 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 March 31, 2017, the outstanding balance of the 6.125% Notes was $90.7 million. As of March 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 $94.3 million. Main Street recognized interest expense related to the 6.125% Notes, including amortization of deferred loan costs, of $1.5 million for each of the three months ended March 31, 2017 and 2016.

        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, 2017, Main Street was in compliance with these covenants.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE G—NOTES (Continued)

        In November 2014, Main Street issued $175.0 million in aggregate principal amount of 4.50% unsecured notes due 2019 (the "4.50% Notes") at an issue price of 99.53%. The 4.50% 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 4.50% 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 4.50% Notes 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 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, resulting from the issue price and after underwriting discounts and estimated offering expenses payable by us, were approximately $171.2 million. Main Street may from time to time repurchase the 4.50% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2017, the outstanding balance of the 4.50% Notes was $175.0 million. As of March 31, 2017, if Main Street had adopted the fair value option under ASC 825 for the 4.50% Notes, Main Street estimates its fair value would be approximately $176.1 million. Main Street recognized interest expense related to the 4.50% Notes, including amortization of deferred loan costs, of $2.1 million for each of the three months ended March 31, 2017 and 2016.

        The indenture governing the 4.50% Notes (the "4.50% 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 4.50% 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 4.50% Notes Indenture. As of March 31, 2017, Main Street was in compliance with these covenants.

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(Unaudited)

NOTE H—FINANCIAL HIGHLIGHTS

 
   Three Months Ended
March 31, 		 
 
   2017   2016  

Per Share Data:

              

NAV at the beginning of the period

   $ 22.10   $ 21.24  

Net investment income(1)

     0.57     0.54  

Net realized gain (loss)(1)(2)

     0.41     0.27  

Net change in net unrealized depreciation(1)(2)

     (0.30 )   (0.52 )

Income tax benefit (provision)(1)(2)

     (0.11 )   0.04  
​ ​ ​ ​ ​ ​ ​ ​

Net increase in net assets resulting from operations(1)

     0.57     0.33  

Dividends paid from net investment income

     (0.21 )   (0.54 )

Distributions from capital gains

     (0.35 )   —  
​ ​ ​ ​ ​ ​ ​ ​

Total dividends paid

     (0.56 )   (0.54 )

Accretive effect of stock offerings (issuing shares above NAV per share)

     0.26     0.06  

Accretive effect of DRIP issuance (issuing shares above NAV per share)

     0.01     0.02  

Other(3)

     0.06     0.07  
​ ​ ​ ​ ​ ​ ​ ​

NAV at the end of the period

   $ 22.44   $ 21.18  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

Market value at the end of the period

   $ 38.27   $ 31.35  

Shares outstanding at the end of the period

     55,423,375     50,846,000  
(1)
Based on weighted-average number of common shares outstanding for the period.

(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

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(Unaudited)

NOTE H—FINANCIAL HIGHLIGHTS (Continued)

 
   Three Months Ended
March 31, 		 
 
   2017   2016  
 
   (dollars in thousands)
  

NAV at end of period

   $ 1,243,934   $ 1,076,998  

Average NAV

   $ 1,222,708   $ 1,073,946  

Average outstanding debt

   $ 825,155   $ 772,183  

Ratio of total expenses, including income tax expense, to average NAV(1)(2)

     1.83%     1.17%  

Ratio of operating expenses to average NAV(2)(3)

     1.37%     1.38%  

Ratio of operating expenses, excluding interest expense, to average NAV(2)(3)

     0.66%     0.62%  

Ratio of net investment income to average NAV(2)

     2.55%     2.53%  

Portfolio turnover ratio(2)

     8.97%     5.03%  

Total investment return(2)(4)

     5.64%     9.85%  

Total return based on change in NAV(2)(5)

     2.62%     1.57%  
(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 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.

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(Unaudited)

NOTE I—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

        Main Street paid regular monthly dividends of $0.185 per share for each month of January through March 2017, totaling $30.4 million, or $0.555 per share, for the three months ended March 31, 2017. The first quarter 2017 regular monthly dividends represent a 2.8% increase from the regular monthly dividends paid per share for the first quarter of 2016. For the three months ended March 31, 2016, Main Street paid total regular monthly dividends of $27.2 million, or $0.540 per share.

        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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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE I—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME (Continued)

        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, 2017 and 2016.

 
   Three Months Ended
March 31, 		 
 
   2017   2016  
 
   (estimated, dollars in
thousands)
  

Net increase in net assets resulting from operations

   $ 31,450   $ 16,812  

Book tax difference from share-based compensation expense

     1,265     1,589  

Net change in net unrealized depreciation

     16,426     26,218  

Income tax provision (benefit)

     5,638     (2,263 )

Pre-tax book (income) loss not consolidated for tax purposes

     (6,468 )   (12,365 )

Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains (losses) and changes in estimates

     4,373     (561 )
​ ​ ​ ​ ​ ​ ​ ​

Estimated taxable income(1)

     52,684     29,430  

Taxable income earned in prior year and carried forward for distribution in current year

     42,362     29,683  

Taxable income earned prior to period end and carried forward for distribution next period

     (74,695 )   (40,942 )

Dividend payable as of period end and paid in the following period

     10,252     9,113  
​ ​ ​ ​ ​ ​ ​ ​

Total distributions accrued or paid to common stockholders

   $ 30,603   $ 27,284  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
(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-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. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in Main Street's consolidated financial statements.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE I—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME (Continued)

        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. 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, as well as 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 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 financial statements. For the three months ended March 31, 2016, Main Street recognized a net income tax benefit of $2.3 million, principally consisting of a deferred tax benefit of $2.6 million which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries including changes in net operating loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book-tax differences, partially offset by a $0.4 million provision for other current taxes which is primarily related to a $0.3 million provision for current U.S. federal income and state taxes, and a $0.1 million accrual for excise tax on Main Street's estimated spillover taxable income.

        The net deferred tax asset at March 31, 2017 and December 31, 2016 was $4.7 million and $9.1 million, respectively, 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.7.). During the quarter ended March 31, 2017, the Taxable Subsidiaries utilized capital loss carryforwards totaling approximately $8.0 million. As of March 31, 2017, for U.S. federal income tax purposes, the Taxable Subsidiaries had a capital loss carryforward of $6.6 million which, if unused, will expire in taxable year 2021. At March 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.

NOTE J—COMMON STOCK

        During 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 three months ended March 31, 2017, Main Street sold 1,035,286 shares of its common stock at a weighted-average price of $36.86 per share and raised $38.2 million of gross proceeds under the ATM Program. Net proceeds were $37.7 million after commissions to the selling agents on shares sold and offering costs. As of March 31, 2017, 499,500 shares were available for sale under the ATM Program.

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Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE J—COMMON STOCK (Continued)

        During the year ended December 31, 2016, Main Street 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 were not included in shares issued and outstanding on the face of the consolidated balance sheet, but were 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.

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, 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. For the three months ended March 31, 2016, $3.3 million of the total $27.2 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 113,631 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

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE L—SHARE-BASED COMPENSATION (Continued)

Equity and Incentive Plan, net of shares forfeited, if any, and the remaining shares of restricted stock available for issuance as of March 31, 2017.

Restricted stock authorized under the plan

     3,000,000  

Less restricted stock granted, net of forfeited shares, during:

        

Year ended December 31, 2015

     (900 )

Year ended December 31, 2016

     (260,514 )

Three months ended March 31, 2017

     2,771  
​ ​ ​ ​ ​

Restricted stock available for issuance as of March 31, 2017

     2,741,357  
​ ​ ​ ​ ​
​ ​ ​ ​ ​
​ ​ ​ ​ ​

        As of March 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 )
​ ​ ​ ​ ​

Restricted stock available for issuance as of March 31, 2017

     286,446  
​ ​ ​ ​ ​
​ ​ ​ ​ ​
​ ​ ​ ​ ​

        For the three months ended March 31, 2017 and 2016, Main Street recognized total share-based compensation expense of $2.3 million and $1.6 million, respectively, related to the restricted stock issued to Main Street employees and non-employee directors.

        As of March 31, 2017, there was $9.7 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 1.5 years as of March 31, 2017.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE M—COMMITMENTS AND CONTINGENCIES

        At March 31, 2017, 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. 

   $ 510  

EnCap Energy Capital Fund VIII Co-Investors, L.P. 

     27  

EnCap Energy Capital Fund IX, L.P. 

     1,093  

EnCap Energy Capital Fund X, L.P. 

     6,789  

EnCap Flatrock Midstream Fund II, L.P. 

     5,502  

EnCap Flatrock Midstream Fund III, L.P. 

     4,785  
​ ​ ​ ​ ​

  $ 18,706  

Freeport Fund Investments

    
 		  

Freeport First Lien Loan Fund III LP

   $ 6,539  

Freeport Financial SBIC Fund LP

     1,375  
​ ​ ​ ​ ​

  $ 7,914  

Brightwood Capital Fund Investments

    
 		  

Brightwood Capital Fund III, LP

   $ 3,000  

Brightwood Capital Fund IV, LP

     4,500  
​ ​ ​ ​ ​

  $ 7,500  

I-45 SLF LLC

  
$
1,800		  

EIG Fund Investments

  
$
3,595		  

LKCM Headwater Investments I, L.P. 

  
$
2,500		  

Dos Rios Partners

    
 		  

Dos Rios Partners, LP

   $ 1,594  

Dos Rios Partners - A, LP

     506  
​ ​ ​ ​ ​

  $ 2,100  
​ ​ ​ ​ ​

Total equity commitments

   $ 64,734  

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE M—COMMITMENTS AND CONTINGENCIES (Continued)


Investments with commitments to fund revolving loans that have not been fully drawn or
term loans with additional commitments not yet funded:
   
  

NNE Partners, LLC

   $ 10,208  

PT Network, LLC

     8,775  

Arcus Hunting LLC

     4,336  

CDHA Management, LLC

     3,523  

Charps, LLC

     3,200  

Strike, LLC

     2,500  

Mid-Columbia Lumber Products, LLC

     2,000  

Hojeij Branded Foods, LLC

     1,643  

CapFusion, LLC

     1,600  

Hawk Ridge Systems, LLC

     1,600  

Subsea Global Solutions, LLC

     1,428  

Messenger, LLC

     1,417  

LaMi Products, LLC

     1,397  

Gamber-Johnson Holdings, LLC

     1,200  

NuStep, LLC

     1,200  

Barfly Ventures, LLC

     919  

Apex Linen Service, Inc. 

     800  

Mystic Logistics Holdings, LLC

     800  

Grace Hill, LLC

     776  

Lamb Ventures, LLC

     695  

Pardus Oil and Gas, LLC

     663  

NRI Clinical Research, LLC

     600  

Jackmont Hospitality, Inc. 

     593  

PPC/SHIFT LLC

     500  

Jensen Jewelers of Idaho, LLC

     500  

UniTek Global Services, Inc. 

     483  

Permian Holdco 2, Inc. 

     116  
​ ​ ​ ​ ​

Total loan commitments

   $ 53,472  
​ ​ ​ ​ ​

Total commitments

   $ 118,206  
​ ​ ​ ​ ​
​ ​ ​ ​ ​
​ ​ ​ ​ ​

        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 March 31, 2017.

        Main Street has an operating lease for its office space in Houston, Texas. Total rent expense incurred by Main Street for each of the three months ended March 31, 2017 and 2016 was $0.1 million.

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE M—COMMITMENTS AND CONTINGENCIES (Continued)

        The following table shows future minimum payments under Main Street's operating lease as of March 31, 2017:

For the Years Ended December 31,
  Amount  

2017

   $ 46  

2018

     683  

2019

     749  

2020

     763  

2021

     777  

Thereafter

     4,959  
​ ​ ​ ​ ​

Total

   $ 7,977  
​ ​ ​ ​ ​
​ ​ ​ ​ ​
​ ​ ​ ​ ​

        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, 2017, Main Street had a receivable of approximately $2.0 million due from the External Investment Manager which included approximately $1.3 million related primarily to operating expenses incurred by MSCC or its subsidiaries required to support the External Investment Manager's business and approximately $0.7 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 March 31, 2017, $2.8 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, $1.7 million was deferred into phantom Main Street stock units, representing 55,938 shares of Main Street's common stock. Including phantom stock units issued through dividend reinvestment, the phantom stock units outstanding as of

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MAIN STREET CAPITAL CORPORATION

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

NOTE N—RELATED PARTY TRANSACTIONS (Continued)

March 31, 2017 represented 65,882 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 statement 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 statement of operations as earned.

NOTE O—SUBSEQUENT EVENTS

        During April 2017, Main Street declared a semi-annual supplemental cash dividend of $0.275 per share payable in June 2017. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that Main Street declared for the second quarter of 2017 of $0.185 per share for each of April, May and June 2017.

        In May 2017, Main Street declared regular monthly dividends of $0.185 per share for each month of July, August and September of 2017. These regular monthly dividends equal a total of $0.555 per share for the third quarter of 2017 and represent a 2.8% increase from the regular monthly dividends declared for the third quarter of 2016. Including the semi-annual supplemental dividend declared for June 2017 and the regular monthly dividends declared for the second and third quarters of 2017, Main Street will have paid $20.545 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
Three Months Ended March 31, 2017
(dollars in thousands)
(unaudited)

Company
 
Investment(1)
  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

  
$
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 Investments

   Preferred Member Units     51     3,682     —     411     3,271  

  Member Units     63     3,381     —     261     3,120  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Gamber-Johnson Holdings, LLC

   LIBOR Plus 11.00% (Floor 1.00%)     735     23,846     234     —     24,080  

  Member Units     170     18,920     3,160     —     22,080  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

GRT Rubber Technologies LLC

   LIBOR Plus 9.00% (Floor 1.00%)     334     13,274     8     217     13,065  

  Member Units     127     20,310     —     —     20,310  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Harborside Holdings, LLC

   Member Units     —     —     9,400     —     9,400  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Hydratec, Inc.

   Common Stock     480     15,640     —     —     15,640  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

IDX Broker, LLC

   12.5% Secured Debt     344     10,950     7     307     10,650  

  Member Units     68     7,040     1,160     —     8,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Jensen Jewelers of Idaho, LLC

   Prime Plus 6.75% (Floor 2.00%)     108     4,055     4     154     3,905  

  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     40     5,990     200     —     6,190  

  9.5% Secured Debt     32     1,170     428     1,170     428  

  Member Units     407     1,340     —     380     960  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Lighting Unlimited, LLC

   8% Secured Debt     29     1,514     —     1,514     —  

  Preferred Equity     —     410     24     434     —  

  Warrants     —     —     54     54     —  

  Member Units     —     —     100     100     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Mid-Columbia Lumber Products, LLC

   10% Secured Debt     44     1,750     —     —     1,750  

  12% Secured Debt     117     3,900     —     —     3,900  

  Member Units     2     2,480     —     500     1,980  

  9.5% Secured Debt     20     836     —     11     825  

  Member Units     9     600     620     —     1,220  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

MSC Adviser I, LLC

   Member Units     695     30,617     2,855     —     33,472  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Mystic Logistics Holdings, LLC

   12% Secured Debt     286     9,176     11     23     9,164  

  Common Stock     —     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  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Table of Contents

Company
 
Investment(1)
  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 		 

Principle Environmental, LLC

   12% Secured Debt     122     4,060     —     —     4,060  

  12% Current / 2% PIK Secured Debt     118     3,378     16     —     3,394  

  Preferred Member Units     —     5,370     953     63     6,260  

  Warrants     —     270     50     —     320  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Quality Lease Service, LLC

   8% PIK Secured Debt     136     7,068     136     —     7,204  

  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     35     2,300     90     —     2,390  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Uvalco Supply, LLC

   9% Secured Debt     18     872     —     116     756  

  Member Units     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 Holdings, LLC

  

5% Current / 5% PIK Secured Debt

    
563		    
19,700		    
282		    
512		    
19,470		  

  Preferred Member Units     —     240     169     189     220  

  Member Units     —     —     —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Ameritech College Operations, LLC

   10% Secured Debt     13     514     —     —     514  

  13% Secured Debt     16     489     —     —     489  

  13% Secured Debt     98     3,025     —     —     3,025  

  Preferred Member Units     —     2,291     3,900     3,381     2,810  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

ASC Interests, LLC

   11% Secured Debt     60     2,100     3     53     2,050  

  Member Units     —     2,680     60     —     2,740  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Bond-Coat, Inc.

   12% Secured Debt     357     11,596     9     9     11,596  

  Common Stock     —     6,660     940     —     7,600  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

CBT Nuggets, LLC

   Member Units     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     313     11,049     441     —     11,490  

  Class A Preferred Member Units     —     1,368     51     —     1,419  

  Class B Preferred Member Units     —     1,529     332     —     1,861  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Garreco, LLC

   LIBOR Plus 12.00% (Floor 1.00%)     189     5,219     975     225     5,969  

  Member Units     —     1,150     320     —     1,470  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Gulf Manufacturing, LLC

   9% PIK Secured Debt     17     777     —     —     777  

  Member Units     139     8,770     420     —     9,190  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Gulf Publishing Holdings, LLC

   12.5% Secured Debt     316     9,911     4     —     9,915  

  Member Units     —     3,124     336     —     3,460  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Harrison Hydra-Gen, Ltd.

   Common Stock     —     3,120     —     320     2,800  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Hawthorne Customs and Dispatch Services, LLC

   Member Units     —     280     —     —     280  

  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  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Table of Contents

Company
 
Investment(1)
  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 		 

Indianapolis Aviation Partners, LLC

   15% Secured Debt     156     3,100     —     —     3,100  

  Warrants     —     2,649     61     —     2,710  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Marine Shelters Holdings, LLC

   12% PIK Secured Debt     —     9,387     —     9,387     —  

  Preferred Member Units     —     —     100     100     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

MH Corbin Holding LLC

   10% Secured Debt     335     13,197     8     175     13,030  

  Preferred Member Units     35     6,000     —     —     6,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NAPCO Precast, LLC

   Prime Plus 2.00% (Floor 7.00%)     63     2,713     2     2     2,713  

  18% Secured Debt     181     3,952     3     3     3,952  

  Member Units     29     10,920     —     —     10,920  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NRI Clinical Research, LLC

   LIBOR Plus 6.50% (Floor 1.50%)     10     200     200     —     400  

  14% Secured Debt     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     60     8,620     —     180     8,440  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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 Holdings LLC

   LIBOR Plus 9.00% (Floor 1.00%)     182     7,140     4     4     7,140  

  Member Units     155     9,170     —     —     9,170  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other

                                    

Amounts related to investments transferred to or from other 1940 Act classification during the period

         —     —     —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

      $ 12,988   $ 594,282   $ 85,423   $ 21,466   $ 658,239  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Affiliate Investments

                                    

AFG Capital Group, LLC

  

Warrants

  
$
—		  
$
670		  
$
20		  
$
—		  
$
690		  

  Member Units     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 Services, LLC

   LIBOR Plus 9.50% (Floor 1.00%)     21     797     —     —     797  

  15% Secured Debt     152     3,991     1     —     3,992  

  Member Units     —     800     —     —     800  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Boss Industries, LLC

   Preferred Member Units     89     2,800     120     —     2,920  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Bridge Capital Solutions Corporation

   13% Secured Debt     307     5,610     63     —     5,673  

  Warrants     —     3,370     —     —     3,370  

  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%)     494     22,671     21     1,634     21,058  

  Preferred Member Units     57     4,660     58     728     3,990  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

CAI Software LLC

   12% Secured Debt     110     3,683     3     203     3,483  

  Member Units     30     2,480     100     —     2,580  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

CapFusion, LLC

   13% Secured Debt     518     13,202     50     —     13,252  

  Warrants     —     1,200     —     —     1,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Chandler Signs Holdings, LLC

   12% Secured Debt     137     4,500     2     2     4,500  

  Class A Units     63     3,240     —     —     3,240  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Company
 
Investment(1)
  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 		 

Condit Exhibits, LLC

   Member Units     11     1,840     —     —     1,840  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Congruent Credit Opportunities Funds

   LP Interests (Fund II)     —     1,518     —     141     1,377  

  LP Interests (Fund III)     320     16,181     2,396     —     18,577  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Daseke, Inc.

   12% Current / 2.5% PIK Secured Debt     676     21,799     255     22,054     —  

  Common Stock     —     24,063     —     24,063     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Dos Rios Partners

   LP Interests (Dos Rios Partners, LP)     —     4,925     704     —     5,629  

  LP Interests (Dos Rios Partners—A, LP)     —     1,444     207     —     1,651  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Dos Rios Stone Products LLC

   Class A Units     —     2,070     —     —     2,070  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

East Teak Fine Hardwoods, Inc.

   Common Stock     29     860     —     110     750  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

East West Copolymer & Rubber, LLC

   12% Current / 2% PIK Secured Debt     —     8,630     —     6,390     2,240  

  Warrants     —     —     —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

EIG Fund Investments

   LP Interests (EIG Global Private Debt fund-A, L.P.)     45     2,804     352     1,690     1,466  

  LP Interests (EIG Traverse Co-Investment, L.P.)     263     9,905     68     —     9,973  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Freeport Financial Fund Investments

   LP Interests (Freeport Financial SBIC     102     5,620     55     —     5,675  

  Fund LP)                                

  LP Interests (Freeport First Lien Loan     195     4,763     2,796     52     7,507  

  Fund III LP)                                
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Gault Financial, LLC (RMB Capital, LLC)

   10.5% Secured Debt     326     11,079     1,017     146     11,950  

  Warrants     —     —     —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Glowpoint, Inc.

   12% Secured Debt     274     3,997     9     996     3,010  

  Common Stock     —     2,080     190     —     2,270  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Guerdon Modular Holdings, Inc.

   13% Secured Debt     357     10,594     9     —     10,603  

  Preferred Stock     —     1,140     —     —     1,140  

  Common Stock     —     80     —     —     80  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Hawk Ridge Systems, LLC

   10% Secured Debt     255     9,901     4     —     9,905  

  Preferred Member Units     150     2,850     —     —     2,850  

  Preferred Member Units     —     150     —     —     150  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Houston Plating and Coatings, LLC

   Member Units     1     4,000     230     —     4,230  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

I-45 SLF LLC

   Member Units     691     14,586     1,321     —     15,907  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Indianhead Pipeline Services, LLC

   12% Secured Debt     727     5,079     563     225     5,417  

  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 Intelligence, Inc.

   12% PIK Secured Debt     136     4,519     135     —     4,654  

  Preferred Stock     —     —     —     —     —  

  Warrants     —     —     —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

OPI International Ltd.

   10% Unsecured Debt     12     473     —     —     473  

  Common Stock     —     1,600     —     1,220     380  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

PCI Holding Company, Inc.

   12% Secured Debt     400     13,000     10     10     13,000  

  Preferred Stock     172     5,370     170     —     5,540  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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Company
 
Investment(1)
  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 		 

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

   12% Secured Debt     —     250     —     —     250  

  Preferred Member Units     —     —     —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Tin Roof Acquisition Company

   12% Secured Debt     417     13,385     16     169     13,232  

  Class C Preferred Stock     68     2,738     69     —     2,807  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

UniTek Global Services, Inc.

   LIBOR Plus 7.50% (Floor 1.00%)     113     5,021     1     1     5,021  

  LIBOR Plus 8.50% (Floor 1.00%)     22     824     2     —     826  

  15% PIK Unsecured Debt     30     745     28     —     773  

  Preferred Stock     434     6,410     434     224     6,620  

  Common Stock     —     3,010     —     200     2,810  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Universal Wellhead Services Holdings, LLC

   Preferred Member Units     —     720     —     —     720  

  Member Units     —     610     —     —     610  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Valley Healthcare Group, LLC

   LIBOR Plus 12.50% (Floor 0.50%)     433     12,844     6     100     12,750  

  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     —     2,576     —     126     2,450  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other

                                    

Amounts related to investments transferred to or from other 1940 Act classification during the period

         —     —     —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

      $ 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."

(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.

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The information in this section contains forward-looking statements that involve risks and uncertainties. Please see "Risk Factors" and "Cautionary Statement Concerning Forward-Looking Statements" in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (the "SEC") on February 24, 2017, for a discussion of the uncertainties, risks and assumptions associated with these statements. You should read the following discussion in conjunction with the consolidated financial statements and related notes and other financial information included in the Annual Report on Form 10-K for the year ended December 31, 2016.

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. The External Investment Manager is also a direct wholly owned subsidiary that has elected to

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be a taxable entity. The Taxable Subsidiaries and the External Investment Manager are each taxed at their normal corporate tax rates based on their taxable income.

        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 $15 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 more 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, 2017 and December 31, 2016 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

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

Number of portfolio companies

     73     69     49  

Fair value

   $ 886.6   $ 568.8   $ 384.2  

Cost

   $ 772.1   $ 588.9   $ 403.7  

% of portfolio at cost—debt

     67.6%     96.9%     94.0%  

% of portfolio at cost—equity

     32.4%     3.1%     6.0%  

% of debt investments at cost secured by first priority lien

     96.1%     88.8%     90.2%  

Weighted-average annual effective yield(b)

     12.2%     8.6%     9.6%  

Average EBITDA(c)

   $ 4.6   $ 95.5   $ 24.8  
(a)
At March 31, 2017, 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 37%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 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 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, and those portfolio companies whose primary purpose is to own real estate.

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Table of Contents

 
   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. 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 March 31, 2017, we had Other Portfolio investments in ten companies, collectively totaling approximately $106.3 million in fair value and approximately $111.8 million in cost basis and which comprised approximately 5.4% 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 March 31, 2017, there was no cost basis in this investment and the investment had a fair value of approximately $33.5 million, which comprised approximately 1.7% 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 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

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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, 2017 and 2016, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.6% and 1.4%, respectively, on an annualized basis.

        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. Based upon several fee waiver agreements with HMS Income and HMS Adviser, the External Investment Manager did not begin accruing the base management fee and incentive fees, if any, until January 1, 2014. The External Investment Manager has conditionally agreed to waive a limited amount of the incentive fees otherwise earned. During the three months ended March 31, 2017 and 2016, the External Investment Manager earned $2.6 million and $2.3 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.

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

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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, 2017 and 2016, and financial position as of March 31, 2017 and December 31, 2016, are presented on a consolidated basis. The effects of all intercompany transactions between us and our consolidated subsidiaries have been eliminated in consolidation.

        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, 2017 and 2016 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, 2016. 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 Accounting Standards Codification ("ASC") 946, Financial Services—Investment Companies ("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 March 31, 2017 and December 31, 2016, our Investment Portfolio valued at fair value represented approximately 95% and 96% of our total assets, respectively. 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"

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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, 2017 and December 31, 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

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PIK interest and dividends in arrears are no longer collectible. For the three months ended March 31, 2017 and 2016, (i) approximately 3.4% and 3.1%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.8% and 0.8%, 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-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. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in our consolidated financial statements.

        The Taxable Subsidiaries 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

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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 $15 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 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. In the first quarter of 2014, we began allocating costs to the External Investment Manager pursuant to the sharing agreement. Our total expenses for the three months ended March 31, 2017 and 2016 are net of expenses allocated to the External Investment Manager of $1.5 million and $1.2 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 dividend income from the External Investment

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Manager. For the three months ended March 31, 2017 and 2016, the total contribution to our net investment income was $2.2 million and $1.9 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, 2017 and December 31, 2016 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  March 31,
2017 		  December 31,
2016 		 

First lien debt

     76.6%     76.1%  

Equity

     15.6%     14.5%  

Second lien debt

     6.2%     7.7%  

Equity warrants

     1.0%     1.1%  

Other

     0.6%     0.6%  
​ ​ ​ ​ ​ ​ ​ ​

    100.0%     100.0%  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

 

Fair Value:
  March 31,
2017 		  December 31,
2016 		 

First lien debt

     69.6%     68.7%  

Equity

     23.2%     22.6%  

Second lien debt

     5.8%     7.2%  

Equity warrants

     0.8%     0.9%  

Other

     0.6%     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" contained in our Form 10-K for the fiscal year ended December 31, 2016 and "Risk Factors" below 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 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.

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        The following table shows the distribution of our LMM portfolio investments on the 1 to 5 investment rating scale at fair value as of March 31, 2017 and December 31, 2016:

 
   As of March 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

   $ 241,988     27.3%   $ 253,420     28.4%  

2

     195,294     22.0%     258,085     28.9%  

3

     354,367     40.0%     294,807     33.0%  

4

     82,485     9.3%     75,433     8.5%  

5

     12,425     1.4%     10,847     1.2%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 886,559     100.0%   $ 892,592     100.0%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

        Based upon our investment rating system, the weighted-average rating of our LMM portfolio was approximately 2.4 and 2.3 as of March 31, 2017 and December 31, 2016, respectively.

        As of March 31, 2017, our total Investment Portfolio had five investments on non-accrual status, which comprised approximately 0.2% of its fair value and 2.7% 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 and to difficulty in maintaining historical dividend payment rates 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

 
   Three Months Ended
March 31, 		  Net Change  
 
   2017   2016   Amount   %  
 
   (dollars in thousands)
  

Total investment income

   $ 47,889   $ 42,006   $ 5,883     14%  

Total expenses

     (16,723 )   (14,842 )   (1,881 )   13%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net investment income

     31,166     27,164     4,002     15%  

Net realized gain from investments

     27,565     13,603     13,962        

Net realized loss from SBIC debentures

     (5,217 )   —     (5,217 )      

Net change in net unrealized appreciation (depreciation) from:

                          

Portfolio investments

     (22,091 )   (27,529 )   5,438        

SBIC debentures and marketable securities and idle funds

     5,665     1,311     4,354        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total net change in net unrealized depreciation

     (16,426 )   (26,218 )   9,792        

Income tax benefit (provision)

     (5,638 )   2,263     (7,901 )      
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net increase in net assets resulting from operations

   $ 31,450   $ 16,812   $ 14,638     87%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

 
   Three Months Ended
March 31, 		  Net Change  
 
   2017   2016   Amount   %  
 
   (dollars in thousands, except per share
amounts)
  

Net investment income

   $ 31,166   $ 27,164   $ 4,002     15%  

Share-based compensation expense

     2,269     1,589     680     43%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Distributable net investment income(a)

   $ 33,435   $ 28,753   $ 4,682     16%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net investment income per share—Basic and diluted

   $ 0.57   $ 0.54   $ 0.03     6%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

   $ 0.61   $ 0.57   $ 0.04     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 three months ended March 31, 2017, total investment income was $47.9 million, a 14% increase over the $42.0 million of total investment income for the corresponding period of 2016. This comparable period increase was principally attributable to (i) a $6.3 million increase in interest income primarily related to higher average levels of portfolio debt investments and increased activities involving

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existing Investment Portfolio debt investments and (ii) a $0.4 million increase in fee income, partially offset by a $0.6 million decrease in dividend income from Investment Portfolio equity investments. The $5.9 million increase in total investment income in the three months ended March 31, 2017 includes an increase of $2.7 million related to higher accelerated prepayment, repricing and other activity for certain Investment Portfolio debt investments when compared to the same period in 2016.

        For the three months ended March 31, 2017, total expenses increased to $16.7 million from $14.8 million for the corresponding period of 2016. This comparable period increase in operating expenses was principally attributable to (i) a $0.7 million increase in share-based compensation expense, (ii) a $0.6 million increase in compensation expense related to increases in the number of personnel, base compensation levels and incentive compensation accruals, (iii) a $0.5 million increase in general and administrative expenses, primarily 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, and (iv) a $0.4 million increase in interest expense, primarily due to the higher average interest rate and balance outstanding on our Credit Facility in the three months ended March 31, 2017, with these increases partially offset by a $0.4 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 three months ended March 31, 2017, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.6% on an annualized basis, compared to 1.4% on an annualized basis for the three months ended March 31, 2016 and 1.5% for the year ended December 31, 2016.

        Net investment income for the three months ended March 31, 2017 was $31.2 million, or a 15% increase, compared to net investment income of $27.2 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 as discussed above.

        For the three months ended March 31, 2017, distributable net investment income increased 16% to $33.4 million, or $0.61 per share, compared with $28.8 million, or $0.57 per share, in the corresponding period of 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 three months ended March 31, 2017 reflects (i) an increase of approximately $0.05 per share from the comparable period in 2016 attributable to the net increase 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 2016 primarily due to shares issued through the ATM Program (as defined in "—Liquidity and Capital Resources—Capital Resources" below).

        The net increase in net assets resulting from operations during the three months ended March 31, 2017 was $31.5 million, or $0.57 per share, compared with $16.8 million, or $0.33 per share, during the three months ended March 31, 2016. This $14.6 million increase from the same period in the prior year was primarily the result of (i) a $14.0 million increase in the net realized gain (loss) from investments, (ii) a $9.8 million improvement in net change in unrealized appreciation (depreciation) from portfolio investments and SBIC debentures, including accounting reversals relating to realized gains (losses), from net unrealized depreciation of $26.2 million for the three months ended March 31, 2016 to a net

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unrealized depreciation of $16.4 million for the three months ended March 31, 2017, and (iii) a $4.0 million increase in net investment income as discussed above, partially offset by (i) 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 and (ii) a $7.9 million increase in the income tax provision from an income tax benefit of $2.3 million for the three months ended March 31, 2016 to an income tax provision of $5.6 million for the three months ended March 31, 2017. The net realized gain from investments of $27.6 million for the three months ended March 31, 2017 was primarily the result of (i) the net realized gain of $22.3 million on the exit of two LMM investments, (ii) the realized gain of $2.6 million on the exit of one Private Loan investment and (iii) the net realized gain of $2.5 million due to activity in our Other 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 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.

        The following table provides a summary of the total net unrealized depreciation of $16.4 million for the three months ended March 31, 2017:

 
   Three Months Ended March 31, 2017  
 
   LMM(a)   Middle Market   Private Loan   Other(b)   Total  
 
   (dollars in millions)
  

Accounting reversals of net unrealized appreciation recognized in prior periods due to net realized gains recognized during period

   $ (20.0 ) $ (1.8 ) $ (1.4 ) $ (1.1 ) $ (24.3 )

Net unrealized appreciation (depreciation) relating to portfolio investments

     2.2     (2.0 )   (3.3 )   5.3     2.2  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total net change in unrealized appreciation (depreciation) relating to portfolio investments

   $ (17.8 ) $ (3.8 ) $ (4.7 ) $ 4.2   $ (22.1 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net unrealized appreciation relating to SBIC debentures(c)

                             5.7  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total net change in unrealized depreciation

                           $ (16.4 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(a)
LMM includes unrealized appreciation on 22 LMM portfolio investments and unrealized depreciation on 15 LMM portfolio investments.

(b)
Other includes $2.9 million of unrealized appreciation relating to the External Investment Manager and $2.4 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, partially offset by $0.3 million of current period unrealized depreciation on the remaining SBIC debentures.

        The income tax provision for the three months ended March 31, 2017 of $5.6 million principally consisted of a deferred tax provision of $4.4 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in net operating loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary book-tax differences, as well as other current tax expense of $1.3 million related to (i) a $0.9 million

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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.

        For the three months ended March 31, 2017, we experienced a net increase in cash and cash equivalents in the amount of approximately $9.1 million, which is the result of approximately $55.8 million of cash provided by our operating activities and approximately $46.6 million of cash used by financing activities.

        During the period, we generated $55.8 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 $26.9 million, which is our $33.4 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $4.7 million, payment-in-kind interest income of $1.6 million, cumulative dividends of $0.9 million and the amortization expense for deferred financing costs of $0.7 million, (ii) cash uses totaling $192.6 million consisting of (a) $186.9 million from the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2016, (b) $4.1 million related to decreases in payables and accruals and (c) $1.6 million related to increases in other assets and (iii) cash proceeds totaling $221.5 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, 2017, $46.6 million in cash was used in financing activities, which principally consisted of (i) $28.6 million in cash dividends paid to stockholders, (ii) $55.0 million in net repayments on the Credit Facility, (iii) $25.2 million in repayment of SBIC debentures, (iv) $0.6 million for payment of deferred loan costs, SBIC debenture fees and other costs and (v) $0.3 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements upon the vesting of such restricted stock, partially offset by (i) $37.7 million in net cash proceeds from the ATM Program (described below) and (ii) $25.4 million in cash proceeds from issuance of SBIC debentures.

        As of March 31, 2017, we had $33.6 million in cash and cash equivalents and $267.0 million of unused capacity under the Credit Facility, which we maintain to support our investment and operating activities. As of March 31, 2017, our net asset value totaled $1,243.9 million, or $22.44 per share.

        The Credit Facility, which provides additional liquidity to support our investment and operational activities, provides for commitments of $555.0 million from a diversified group of fourteen lenders and matures in September 2021. The Credit Facility also 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 (0.98% as of March 31, 2017) plus (i) 1.875% (or the applicable base rate (Prime Rate of 4.00% as of March 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

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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, 2017, we had $288.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 2.7% and we were in compliance with all financial covenants of the Credit Facility.

        Due to each of the Funds' status as a licensed SBIC, we have the ability to issue, through the Funds, debentures guaranteed by the SBA at favorable interest rates and favorable terms and conditions up to a maximum amount of $350.0 million through our three existing SBIC licenses. During the three months ended March 31, 2017, we issued $25.4 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 $109.8 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. 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. On March 31, 2017, through our three wholly owned SBICs, we had $240.2 million of outstanding SBIC debentures guaranteed by the SBA, which bear a weighted-average annual fixed interest rate of approximately 3.8%, 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 5.7 years as of March 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 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 March 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") at an issue price of 99.53%. The 4.50% 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 4.50% Notes; effectively subordinated to

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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 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 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 in accordance with the 1940 Act and the rules promulgated thereunder. As of March 31, 2017, the outstanding balance of the 4.50% Notes was $175.0 million.

        The indenture governing the 4.50% Notes (the "4.50% 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 4.50% 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 4.50% Notes Indenture.

        During 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 three months ended March 31, 2017, we sold 1,035,286 shares of our common stock at a weighted-average price of $36.86 per share and raised $38.2 million of gross proceeds under the ATM Program. Net proceeds were $37.7 million after commissions to the selling agents on shares sold and offering costs. As of March 31, 2017, 499,500 shares were available for sale under the ATM Program.

        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 were not included in shares issued and outstanding on the face of the consolidated balance sheet, but were 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.

        We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents 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. The composition of Marketable securities and idle funds investments will vary in a given period based upon, among other things, changes in market conditions, the underlying fundamentals in our Marketable securities and idle funds investments, our outlook regarding future LMM, Middle Market and Private Loan portfolio investment needs, and any regulatory requirements applicable to us.

        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

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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 current 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

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with deliverables and separate units of account previously identified. As a result, we expect timing of our revenue recognition to remain the same.

        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 "Note B.7.—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.

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        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, 2017, we had a total of $118.2 million in outstanding commitments comprised of (i) 27 investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) eight investments with equity capital commitments that had not been fully called.

        As of March 31, 2017, the future fixed commitments for cash payments in connection with our SBIC debentures, the 4.50% Notes, the 6.125% Notes and rent obligations under our office lease for each of the next five years and thereafter are as follows:

 
   2017   2018   2019   2020   2021   Thereafter   Total  

SBIC debentures

   $ —   $ —   $ 20,000   $ 55,000   $ 40,000   $ 125,200   $ 240,200  

Interest due on SBIC debentures

     5,014     9,228     9,228     8,033     5,484     14,388     51,375  

Notes 6.125%

     —     —     —     —     —     90,655     90,655  

Interest due on 6.125% Notes

     4,165     5,553     5,553     5,553     5,553     6,939     33,316  

4.50% Notes

     —     —     175,000     —     —     —     175,000  

Interest due on 4.50% Notes

     7,875     7,875     7,875     —     —     —     23,625  

Operating Lease Obligation(1)

     46     683     749     763     777     4,959     7,977  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 17,100   $ 23,339   $ 218,405   $ 69,349   $ 51,814   $ 242,141   $ 622,148  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(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, 2017, we had $288.0 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, 2017, we had a receivable of approximately $2.0 million due from the External Investment Manager which included approximately $1.3 million primarily related to operating expenses incurred by us required to support the External Investment Manager's business and approximately $0.7 million of dividends declared but not paid by the External Investment Manager.

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        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 March 31, 2017, $2.8 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, $1.7 million was deferred into phantom Main Street stock units, representing 55,938 shares of our common stock. Including phantom stock units issued through dividend reinvestment, the phantom stock units outstanding as of March 31, 2017 represented 65,882 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 statement 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 statement of operations as earned.

        During April 2017, we declared a semi-annual supplemental cash dividend of $0.275 per share payable in June 2017. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the second quarter of 2017 of $0.185 per share for each of April, May and June 2017.

        In May 2017, we declared regular monthly dividends of $0.185 per share for each month of July, August and September of 2017. These regular monthly dividends equal a total of $0.555 per share for the third quarter of 2017 and represent a 2.8% increase from the regular monthly dividends declared for the third quarter of 2016. Including the semi-annual supplemental dividend declared for June 2017 and the regular monthly dividends declared for the second and third quarters of 2017, we will have paid $20.545 per share in cumulative dividends since our October 2007 initial public offering.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

        We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. Our investment income will be affected by changes in various interest rates, including LIBOR and prime rates, to the extent that any debt investments include floating interest rates. The majority of our debt investments are made with either fixed interest rates or floating rates that are subject to contractual minimum interest rates for the term of the investment. As of March 31, 2017, approximately 65% of our debt investment portfolio (at cost) bore interest at floating rates, 98% of which were subject to contractual minimum interest rates. Our interest expense will be affected by changes in the published LIBOR rate in connection with our Credit Facility; however, the interest rates on our outstanding SBIC debentures, 4.50% Notes and 6.125% Notes, which comprise the majority of our outstanding debt, are fixed for the life of such debt. As of March 31, 2017, we had not entered into any interest rate hedging arrangements. The following table shows the approximate annualized increase or decrease in the components of net investment income

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due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of March 31, 2017.

Basis Point Change   Increase in
Interest
Income 		  Increase in
Interest
Expense 		  Increase
(Decrease) in Net
Investment
Income 		  Increase
(Decrease) in Net
Investment
Income per
Share 		 
 
   (dollars in thousands)
    
  
25   $ 2,207   $ (720 ) $ 1,487   $ 0.03  
50     4,556     (1,440 )   3,116     0.06  
100     9,333     (2,880 )   6,453     0.12  
150     14,163     (4,320 )   9,843     0.18  
200     19,006     (5,760 )   13,246     0.24  
300     28,692     (8,640 )   20,052     0.36  
400     38,406     (11,520 )   26,886     0.49  

        The hypothetical results would also be impacted by the changes in the amount of debt outstanding under our Credit Facility (with an increase (decrease) in the debt outstanding under the Credit Facility resulting in an (increase) decrease in the hypothetical interest expense).

Item 4.    Controls and Procedures

        As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chairman and Chief Executive Officer, our President, our Chief Financial Officer, our Chief Compliance Officer and our Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934). Based on that evaluation, our Chairman and Chief Executive Officer, our President, our Chief Financial Officer, our Chief Compliance Officer and our Chief Accounting Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them of material information relating to us that is required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934. There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1.    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.

Item 1A.    Risk Factors

        There have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016 that we filed with the SEC on February 24, 2017, and as updated in our registration statement on Form N-2 filed on April 26, 2017.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

        During the three months ended March 31, 2017, we issued 48,675 shares of our common stock under our dividend reinvestment plan. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended. The aggregate value of the shares of common stock issued during the three months ended March 31, 2017 under the dividend reinvestment plan was approximately $1.8 million.

Item 6.    Exhibits

        Listed below are the exhibits which are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):

Exhibit
Number 		  Description of Exhibit
  31.1   Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

 
31.2
 
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

 
32.1
 
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 
32.2
 
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    Main Street Capital Corporation

Date: May 5, 2017
 
/s/ VINCENT D. FOSTER
 Vincent D. Foster
 Chairman and Chief Executive Officer
(principal executive officer)

Date: May 5, 2017
 
/s/ BRENT D. SMITH
 Brent D. Smith
 Chief Financial Officer and Treasurer
(principal financial officer)

Date: May 5, 2017
 
/s/ SHANNON D. MARTIN
 Shannon D. Martin
 Vice President and Chief Accounting Officer
(principal accounting officer)

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EXHIBIT INDEX

Exhibit
Number 		  Description of Exhibit
  31.1   Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

 
31.2
 
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

 
32.1
 
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 
32.2
 
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

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