SOLAR CAPITAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)(continued)
June 30, 2018
(in
thousands, except share amounts)
As of June 30, 2018 and December 31, 2017, the Company had sufficient cash
available and/or liquid securities available to fund its commitments as well as the commitments to SSLP disclosed in Note 12, SSLP II disclosed in Note 13 and Solar Life Science Program LLC (LSJV) disclosed in Note 14.
Note 12. Senior Secured Unitranche Loan Program LLC
On September 2, 2014, the Company entered into a limited liability company agreement with an affiliate (the Investor) of a
fund managed by Pacific Investment Management Company LLC (PIMCO) to
co-invest
in middle market senior secured unitranche loans sourced by the same origination platform used by the Company. Initial
funding commitments to the unitranche strategy total $600,000, consisting of direct equity investments and
co-investment
commitments as described below. The joint venture vehicle known as the SSLP is
structured as an unconsolidated Delaware limited liability company. The Company and the Investor initially made equity commitments to the SSLP of $300,000 and $43,250, respectively. All portfolio decisions and generally all other decisions in
respect of the SSLP must be approved by an investment committee of the SSLP consisting of representatives of the Company and PIMCO (with approval from a representative of each required).
On October 15, 2015, the Company entered into an amended and restated limited liability company agreement for its SSLP to add Voya
Investment Management LLC (Voya), part of Voya Financial, Inc. (NYSE: VOYA), as a partner in SSLP in place of the investor that was previously the Companys partner in SSLP, though this investor may still
co-invest
up to $300,000 of equity in unitranche loans alongside SSLP. This joint venture is expected to invest primarily in senior secured loans, including unitranche loans, primarily to middle market companies
predominantly owned by private equity sponsors or entrepreneurs, consistent with the Companys core origination and underwriting mandate. In addition to the Companys prior equity commitment of $300,000 to SSLP, Voya has made an initial
equity commitment of $25,000 to SSLP, with the ability to upsize.
On November 2, 2015, the Company assigned $125,000 of its $300,000
commitment to SSLP II, a Delaware limited liability company.
On November 25, 2015, SSLP commenced operations. On June 30, 2016,
SSLP as transferor and SSLP
2016-1,
LLC, a newly formed wholly owned subsidiary of SSLP, as borrower entered into a $200,000 senior secured revolving credit facility (the SSLP Facility) with Wells
Fargo Bank, NA acting as administrative agent. Solar Capital Ltd. acts as servicer under the SSLP Facility. The SSLP Facility is scheduled to mature on June 30, 2021. The SSLP Facility generally bears interest at a rate of LIBOR plus 2.50%.
SSLP and SSLP
2016-1,
LLC, as applicable, have made certain customary representations and warranties, and are required to comply with various covenants, including leverage restrictions, reporting requirements
and other customary requirements for similar credit facilities. The SSLP Facility also includes usual and customary events of default for credit facilities of this nature. There were $54,848 and $74,248 of borrowings outstanding as of June 30,
2018 and December 31, 2017, respectively. As of June 30, 2018 and December 31, 2017, the Company and Voya had contributed combined equity capital in the amount of $114,393 and $102,533, respectively. Of the $114,392 of contributed
equity capital at June 30, 2018, the Company contributed $29,884 in the form of investments and $70,209 in the form of cash and Voya contributed $14,299 in the form of cash. As of June 30, 2018, the Company and Voyas remaining
commitments to SSLP totaled $74,907 and $10,701, respectively. The Company, along with Voya, controls the funding of SSLP and SSLP may not call the unfunded commitments without approval of both the Company and Voya.
As of June 30, 2018 and December 31, 2017, SSLP had total assets of $171,716 and $179,241, respectively. For the same periods,
SSLPs portfolio consisted of floating rate senior secured loans to 9 and 10 different
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