Use these links to rapidly review the document
TABLE OF CONTENTS
Item 8. Financial Statements and Supplementary Data
PART IV

Table of Contents


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

Form 10-K

(Mark One)    

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

 
 
For the fiscal year ended December 31, 2015

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)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
 
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share   New York Stock Exchange
6.125% Notes due 2023   New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

       Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes o    No þ

       Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes o    No þ

       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 þ    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 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

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

Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
    (Do not check if a smaller reporting company)

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

       The aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of June 30, 2015, was approximately $1,504.4 million based upon the last sale price for the registrant's common stock on that date.

       The number of outstanding common shares of the registrant as of February 25, 2016 was 50,496,252.

DOCUMENTS INCORPORATED BY REFERENCE

       Portions of the registrants' definitive Proxy Statement for its 2016 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission, are incorporated by reference in this Annual Report on Form 10-K in response to Part III.

Table of Contents


TABLE OF CONTENTS

 
    
   Page
PART I
Item 1.   Business   1
Item 1A.   Risk Factors   22
Item 1B.   Unresolved Staff Comments   45
Item 2.   Properties   45
Item 3.   Legal Proceedings   46
Item 4.   Mine Safety Disclosures   46

PART II
Item 5.   Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   47
Item 6.   Selected Financial Data   53
Item 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations   55
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk   78
Item 8.   Financial Statements and Supplementary Data   80
Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   185
Item 9A.   Controls and Procedures   185
Item 9B.   Other Information   185

PART III
Item 10.   Directors, Executive Officers and Corporate Governance   186
Item 11.   Executive Compensation   186
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   186
Item 13.   Certain Relationships and Related Transactions, and Director Independence   187
Item 14.   Principal Accountant Fees and Services   187

PART IV
Item 15.   Exhibits and Financial Statement Schedules   188
Signatures   191

Table of Contents


CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS

       This Annual Report on Form 10-K contains forward-looking statements regarding the plans and objectives of management for future operations. Any such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including the factors discussed in Item 1A entitled "Risk Factors" in Part I of this Annual Report on Form 10-K and elsewhere in this Annual Report on Form 10-K. Other factors that could cause actual results to differ materially include changes in the economy and future changes in laws or regulations and conditions in our operating areas.

       We have based the forward-looking statements included in this Annual Report on Form 10-K on information available to us on the date of this Annual Report on Form 10-K, and we assume no obligation to update any such forward-looking statements, unless we are required to do so by applicable law. However, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.


 PART I

Item 1.    Business

ORGANIZATION

       Main Street Capital Corporation ("MSCC") is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse 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") and Main Street Capital II, LP ("MSC II" and, together with MSMF, 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

1

Table of Contents

allow the External Investment Manager to register as a registered investment adviser ("RIA") under Investment Advisers Act of 1940, as amended (the "Advisers Act"). 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 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 and Main Street Capital Partners, LLC, ("MSCP") are also direct wholly owned subsidiaries that have elected to be taxable entities. The Taxable Subsidiaries, MSCP 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" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries and, beginning April 1, 2013, MSCP.

       The following diagram depicts Main Street's organizational structure:

GRAPHIC

*
Each of the Taxable Subsidiaries is directly or indirectly wholly owned by MSCC.

**
Accounted for as a portfolio investment at fair value, as opposed to a consolidated subsidiary.

CORPORATE INFORMATION

       Our principal executive offices are located at 1300 Post Oak Boulevard, 8th floor, Houston, Texas 77056. We maintain a Web site on the Internet at www.mainstcapital.com. We make available free of charge on our Web site our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. You may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information regarding the Public Reference Room by calling the SEC at 1-800-SEC-0330. Information contained on our Web site is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider that information to be part of this Annual Report on Form 10-K.

2

Table of Contents

OVERVIEW OF OUR BUSINESS

       Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $15 million. Our private loan ("Private Loan") portfolio investments are primarily debt securities 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. We believe that our LMM investment strategy has limited correlation to the broader debt and equity markets.

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

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

       Our external asset management business is conducted through our 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 to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we provide management and other services to the External Investment Manager, as well as access to our employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, we began charging the External Investment Manager for these services.

3

Table of Contents

       Our portfolio investments are generally made through MSCC and the Funds. MSCC and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes (see "Regulation"). An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

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

       Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio.

       During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-publicly traded BDC whose registration statement on Form N-2 was declared effective by the SEC in June 2012, 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.

       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.

RECENT DEVELOPMENTS

       During January 2016, we fully exited our debt and equity investments in Southern RV, LLC, a four-location dealer of new and used recreational vehicles ("RV") and its affiliated real estate entity (together, "Southern RV") through a sale of Southern RV's assets and business. Southern RV has facilities in Tyler, TX, Bossier City, LA, Lafayette, LA, and Biloxi, MS and also engages in financing, parts sales and RV services. Southern RV's predecessor was originally founded in 2000 and offers its customers a variety of Travel Trailers, Fifth Wheels, Toy Haulers, Class A Motorhomes, and Class C Motorhomes from top-selling

4

Table of Contents

manufacturers. We made our initial investment in Southern RV in August 2013 and realized a gain of approximately $14.4 million on the exit of our equity investments in Southern RV.

       During February 2016, we led a new portfolio investment totaling $15.0 million of invested capital in UniRush, LLC ("UniRush") to fund UniRush's growth initiatives and refinance existing debt, with us funding $12.0 million of the investment. The investment in UniRush consisted of first-lien, senior secured term debt. In addition, we and our co-investor provided UniRush a $5.0 million delayed draw term loan facility to support its future growth opportunities. Headquartered in Cincinnati, Ohio and founded in 2003, UniRush is a leading provider of prepaid debit card solutions branded under the "RushCard" and "Rapid PayCard". RushCard was one of the first prepaid, reloadable Visa debit card programs, and provides financial services for the more than 65 million individuals in the United States who cannot or choose not to establish a traditional banking relationship. Rapid PayCard is a provider of prepaid, payroll debit cards for employers as an alternative to issuing paper checks to employees.

       During February 2016, we declared regular monthly dividends of $0.180 per share for each of April, May and June 2016. These regular monthly dividends equal a total of $0.540 per share for the second quarter of 2016. The second quarter 2016 regular monthly dividends represent a 2.9% increase from the dividends declared for the second quarter of 2015. Including the dividends declared for the second quarter of 2016, we will have paid $16.960 per share in cumulative dividends since our October 2007 initial public offering.

BUSINESS STRATEGIES

       Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and realizing capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We have adopted the following business strategies to achieve our investment objective:

5

Table of Contents

INVESTMENT CRITERIA

       Our investment team has identified the following investment criteria that it believes are important in evaluating prospective portfolio companies. Our investment team uses these criteria in evaluating investment opportunities. However, not all of these criteria have been, or will be, met in connection with each of our investments:

INVESTMENT PORTFOLIO

       The Investment Portfolio, as used herein, refers to all of our investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager, but excludes all "Marketable securities

6

Table of Contents

and idle funds investments". Our LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments that we originate on a collaborative basis with other investment funds, and are often referred to in the debt markets as "club deals." Our Other Portfolio investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

       Historically, we have made LMM debt investments principally in the form of single tranche debt. Single tranche debt financing involves issuing one debt security that blends the risk and return profiles of both first-lien secured and subordinated debt. We believe that single tranche debt is more appropriate for many LMM companies given their size in order to reduce structural complexity and potential conflicts among creditors.

       Our LMM debt investments generally have a term of five to seven years from the original investment date, with limited required amortization prior to maturity, and provide for monthly or quarterly payment of interest at fixed interest rates generally between 10% and 14% per annum, payable currently in cash. In some instances, we have provided floating interest rates for our single tranche debt securities. In addition, certain LMM debt investments may have a form of interest that is not paid currently but is accrued and added to the loan balance and paid at maturity. We refer to this form of interest as payment-in-kind, or PIK, interest. We typically structure our LMM debt investments with the maximum seniority and collateral that we can reasonably obtain while seeking to achieve our total return target. In most cases, our LMM debt investment will be collateralized by a first priority lien on substantially all the assets of the portfolio company. In addition to seeking a senior lien position in the capital structure of our LMM portfolio companies, we seek to limit the downside potential of our LMM debt investments by negotiating covenants that are designed to protect our LMM debt investments while affording our portfolio companies as much flexibility in managing their businesses as is reasonable. Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control or change of management provisions, key-man life insurance, guarantees, equity pledges, personal guaranties, where appropriate, and put rights. In addition, we typically seek board representation or observation rights in all of our LMM portfolio companies.

       While we will continue to focus our LMM debt investments primarily on single tranche debt investments, we also anticipate structuring some of our debt investments as mezzanine loans. We anticipate that these mezzanine loans will be primarily junior secured or unsecured, subordinated loans that provide for relatively high fixed interest rates payable currently in cash that will provide us with significant interest income plus the additional opportunity for income and gains through PIK interest and equity warrants and other similar equity instruments issued in conjunction with these mezzanine loans. These loans typically will have interest-only payments in the early years, with amortization of principal deferred to the later years of the mezzanine loan term. Typically, our mezzanine loans will have maturities of three to five years. We will generally target fixed interest rates of 12% to 14%, payable currently in cash for our mezzanine loan investments with higher targeted total returns from equity warrants or PIK interest.

       We also pursue debt investments in Middle Market companies. Our Middle Market portfolio investments primarily consist of direct investments or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and

7

Table of Contents

seven years from the original investment date. The debt investments in our Middle Market portfolio have rights and protections that are similar to those in our LMM debt investments, which may include affirmative and negative covenants, default penalties, lien protection, change of control provisions, guarantees and equity pledges. The Middle Market debt investments generally have floating interest rates at LIBOR plus a margin, and are typically subject to LIBOR floors.

       Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments which have been originated through strategic relationships with other investment funds on a collaborative basis. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien and typically have a term of between three and seven years from the original investment date.

       In connection with a portion of our LMM debt investments, we have historically received equity warrants to establish or increase our equity interest in the LMM portfolio company. Warrants we receive in connection with a LMM debt investment typically require only a nominal cost to exercise, and thus, as a LMM portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We typically structure the warrants to provide provisions protecting our rights as a minority-interest holder, as well as secured or unsecured put rights, or rights to sell such securities back to the LMM portfolio company, upon the occurrence of specified events. In certain cases, we also may obtain registration rights in connection with these equity interests, which may include demand and "piggyback" registration rights.

       We also will seek to make direct equity investments in situations where it is appropriate to align our interests with key management and stockholders of our LMM portfolio companies, and to allow for participation in the appreciation in the equity values of our LMM portfolio companies. We usually make our direct equity investments in connection with debt investments. In addition, we may have both equity warrants and direct equity positions in some of our LMM portfolio companies. We seek to maintain fully diluted equity positions in our LMM portfolio companies of 5% to 50%, and may have controlling equity interests in some instances. We have a value orientation toward our direct equity investments and have traditionally been able to purchase our equity investments at reasonable valuations.

INVESTMENT PROCESS

       Our investment committee is responsible for all aspects of our LMM investment process. The current members of our investment committee are Vincent D. Foster, our Chairman and Chief Executive Officer, Dwayne L. Hyzak, our President, Chief Operating Officer and Senior Managing Director, Curtis L. Hartman, our Vice Chairman, Chief Credit Officer and Senior Managing Director, and David Magdol, our Vice Chairman, Chief Investment Officer and Senior Managing Director.

       Our credit committee is responsible for all aspects of our Middle Market portfolio investment process. The current members of our credit committee are Messrs. Foster, Hartman and Rodger A. Stout, our Executive Vice President.

       Investment process responsibility for each Private Loan portfolio investment is delegated to either the investment committee or the credit committee based upon the nature of the investment and the manner in which it was originated. Similarly, the investment processes for each Private Loan portfolio investment, from origination to close and to eventual exit, will follow the processes for our LMM portfolio investments or our Middle Market portfolio investments as outlined below, or a combination thereof.

       Our investment strategy involves a "team" approach, whereby potential transactions are screened by several members of our investment team before being presented to the investment committee or the credit

8

Table of Contents

committee, as applicable. Our investment committee and credit committee each meet on an as needed basis depending on transaction volume. We generally categorize our investment process into seven distinct stages:

       Deal generation and origination is maximized through long-standing and extensive relationships with industry contacts, brokers, commercial and investment bankers, entrepreneurs, service providers such as lawyers, financial advisors, accountants and current and former portfolio companies and investors. Our investment team has focused its deal generation and origination efforts on LMM and Middle Market companies, and we have developed a reputation as a knowledgeable, reliable and active source of capital and assistance in these markets.

       During the screening process, if a transaction initially meets our investment criteria, we will perform preliminary due diligence, taking into consideration some or all of the following information:

       Upon successful screening of a proposed LMM transaction, the investment team makes a recommendation to our investment committee. If our investment committee concurs with moving forward on the proposed LMM transaction, we typically issue a non-binding term sheet to the company. For Middle Market portfolio investments, the initial term sheet is typically issued by the borrower, through the syndicating bank, and is screened by the investment team which makes a recommendation to our credit committee.

       For proposed LMM transactions, the non-binding term sheet will include the key economic terms based upon our analysis performed during the screening process as well as a proposed timeline and our qualitative expectation for the transaction. While the term sheet for LMM investments is non-binding, we typically receive an expense deposit in order to move the transaction to the due diligence phase. Upon execution of a term sheet, we begin our formal due diligence process.

       For proposed Middle Market transactions, the initial term sheet will include key economic terms and other conditions proposed by the borrower and its representatives and the proposed timeline for the investment, which are reviewed by our investment team to determine if such terms and conditions are in agreement with our investment objectives.

       Due diligence on a proposed LMM investment is performed by a minimum of two of our investment professionals, whom we refer to collectively as the investment team, and certain external resources, who together conduct due diligence to understand the relationships among the prospective portfolio company's

9

Table of Contents

business plan, operations and financial performance. Our LMM due diligence review includes some or all of the following:

       Due diligence on a proposed Middle Market investment is generally performed on materials and information obtained from certain external resources and assessed internally by a minimum of two of our investment professionals, who work to understand the relationships among the prospective portfolio company's business plan, operations and financial performance using the accumulated due diligence information. Our Middle Market due diligence review includes some or all of the following:

       During the due diligence process, significant attention is given to sensitivity analyses and how the company might be expected to perform given downside, base-case and upside scenarios. In certain cases, we may decide not to make an investment based on the results of the diligence process.

       Upon completion of a satisfactory due diligence review of a proposed LMM portfolio investment, the investment team presents the findings and a recommendation to our investment committee. The presentation contains information which can include, but is not limited to, the following:

10

Table of Contents

       Upon completion of a satisfactory due diligence review of a proposed Middle Market portfolio investment, the investment team presents the findings and a recommendation to our credit committee. The presentation contains information which can include, but is not limited to, the following:

       If any adjustments to the transaction terms or structures are proposed by the investment committee or credit committee, as applicable, such changes are made and applicable analyses are updated prior to approval of the transaction. Approval for the transaction must be made by the affirmative vote from a majority of the members of the investment committee or credit committee, as applicable, with the committee member managing the transaction, if any, abstaining from the vote. Upon receipt of transaction approval, we will re-confirm regulatory compliance, process and finalize all required legal documents, and fund the investment.

       We continuously monitor the status and progress of the portfolio companies. We generally offer managerial assistance to our portfolio companies, giving them access to our investment experience, direct industry expertise and contacts. The same investment team that was involved in the investment process will continue its involvement in the portfolio company post-investment. This provides for continuity of knowledge and allows the investment team to maintain a strong business relationship with key management of our portfolio companies for post-investment assistance and monitoring purposes. As part of the monitoring process of LMM portfolio investments, the investment team will analyze monthly and quarterly financial statements versus the previous periods and year, review financial projections, meet and discuss issues or opportunities with management, attend board meetings and review all compliance certificates and covenants. While we maintain limited involvement in the ordinary course operations of our LMM portfolio companies, we maintain a higher level of involvement in non-ordinary course financing or strategic activities and any non-performing scenarios. We also monitor the performance of our Middle Market portfolio investments; however, due to the larger size and higher sophistication level of these Middle Market companies in comparison to our LMM portfolio companies, it is not necessary or practical to have as much direct management interface.

       We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including, but not limited to, each investment's expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons

11

Table of Contents

to competitors and other industry participants, the portfolio company's future outlook and other factors that are deemed to be significant to the portfolio company.

       All new LMM portfolio investments receive an initial Investment Rating of 3.

       While we generally exit most investments through the refinancing or repayment of our debt and redemption of our equity positions, we typically assist our LMM portfolio companies in developing and planning exit opportunities, including any sale or merger of our portfolio companies. We may also assist in the structure, timing, execution and transition of the exit strategy. The refinancing or repayment of Middle Market debt investments typically does not require our assistance due to the additional resources available to these larger, Middle Market companies.

DETERMINATION OF NET ASSET VALUE AND INVESTMENT PORTFOLIO VALUATION PROCESS

       We determine the net asset value per share of our common stock on a quarterly basis. The net asset value per share is equal to our total assets minus liabilities and any noncontrolling interests outstanding divided by the total number of shares of common stock outstanding.

       We are required to report our investments at fair value. As a result, the most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We follow the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("Codification" or "ASC") 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

       We determine in good faith the fair value of our Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by our Board of Directors and in accordance with the 1940 Act. Our valuation policies and processes are intended to provide a consistent basis for determining the fair value of our Investment Portfolio. See "Note B.1. — Valuation of the Investment Portfolio" in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

12

Table of Contents

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

       As described below, we undertake a multi-step valuation process each quarter in connection with determining the fair value of our investments, with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements. In addition, the Audit Committee of our Board of Directors periodically evaluates the performance and methodologies of the financial advisory services firm that we consult in connection with valuing our LLM portfolio company investments.

       Determination of fair value involves subjective judgments and estimates. The notes to our financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial results and financial condition.

COMPETITION

       We compete for investments with a number of investment funds (including private equity funds, mezzanine funds, BDCs, and SBICs), as well as traditional financial services companies such as commercial banks and other sources of financing. Many of the entities that compete with us are larger and have more resources available to them. We believe we are able to be competitive with these entities primarily on the basis of our focus toward the underserved LMM, the experience and contacts of our management team, our responsive and efficient investment analysis and decision-making processes, our comprehensive suite of customized financing solutions and the investment terms we offer.

       We believe that some of our competitors make senior secured loans, junior secured loans and subordinated debt investments with interest rates and returns that are comparable to or lower than the rates and returns that we target. Therefore, we do not seek to compete primarily on the interest rates and returns that we offer to potential portfolio companies. For additional information concerning the competitive risks we

13

Table of Contents

face, see "Risk Factors — Risks Related to Our Business and Structure — We may face increasing competition for investment opportunities".

EMPLOYEES

       As of December 31, 2015, we had 50 employees. These employees include investment and portfolio management professionals, operations professionals and administrative staff. As necessary, we will hire additional investment professionals and administrative personnel. All of our employees are located in our Houston, Texas office.

REGULATION

       We have elected to be regulated as a BDC under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates, principal underwriters and affiliates of those affiliates or underwriters. The 1940 Act requires that a majority of the members of the board of directors of a BDC be persons other than "interested persons," as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved by a majority of our outstanding voting securities.

       The 1940 Act defines "a majority of the outstanding voting securities" as the lesser of (i) 67% or more of the voting securities present at a meeting if the holders of more than 50% of our outstanding voting securities are present or represented by proxy or (ii) more than 50% of our outstanding voting securities.

       Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company's total assets. The principal categories of qualifying assets relevant to our business are any of the following:

14

Table of Contents

       In addition, a BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) above.

       An eligible portfolio company is defined in the 1940 Act as any issuer which:

       As noted above, a BDC must be operated for the purpose of making investments in the type of securities described in (1), (2) or (3) above under the heading entitled "— Qualifying Assets." In addition, BDCs must generally offer to make available to such issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where we purchase such securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the BDC, through its directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.

       Pending investment in "qualifying assets," as described above, our investments may consist of cash, cash equivalents, U.S. government securities and high quality debt securities maturing in one year or less from time of investment therein, so that 70% of our assets are qualifying assets.

       We are permitted, under specified conditions, to issue multiple classes of debt and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 200% of all debt and/or senior stock immediately after each such issuance. In addition, while any senior securities remain outstanding (other than senior securities representing indebtedness issued in consideration of a privately arranged loan which is not intended to be publicly distributed), we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage. For a discussion of the risks associated with leverage, see "Risk Factors — Risks Relating to Our Business and Structure," including, without limitation, "— Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us."

15

Table of Contents

       We have previously received an exemptive order from the SEC to exclude debt securities issued by MSMF and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to Main Street. The exemptive order provides for the exclusion of all debt securities issued by the Funds, including the $225.0 million of currently outstanding debt, related to their participation in the SBIC program. This exemptive order provides us with expanded capacity and flexibility in obtaining future sources of capital for our investment and operational objectives.

       We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, warrants, options or rights to acquire our common stock, at a price below the current net asset value of the common stock if our board of directors determines that such sale is in our best interests and that of our stockholders, and our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price which, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount). We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2015 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, and we do not currently expect to seek such approval at our 2016 annual meeting of stockholders for the same reason. Our stockholders have previously approved a proposal that authorizes us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. We may also make rights offerings to our stockholders at prices per share less than the net asset value per share, subject to applicable requirements of the 1940 Act. See "Risk Factors — Risks Relating to Our Business and Structure — Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock."

       We have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to the code may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such investments are made in accordance with the code's requirements. You may read and copy the code of ethics at the SEC's Public Reference Room located at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the code of ethics is available on the EDGAR Database on the SEC's Web site at http://www.sec.gov.

       We vote proxies relating to our portfolio securities in a manner in which we believe is consistent with the best interest of our stockholders. We review on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held by us. Although we generally vote against proposals that we expect would have a negative impact on our portfolio securities, we may vote for such a proposal if there exists compelling long-term reasons to do so.

       Our proxy voting decisions are made by the investment team which is responsible for monitoring each of our investments. To ensure that our vote is not the product of a conflict of interest, we require that: (i) anyone involved in the decision-making process to disclose to our chief compliance officer any potential conflict of which he or she is aware and any contact that he or she has had with any interested party regarding a proxy vote and (ii) employees involved in the decision making process or vote administration are prohibited from revealing how we intend to vote on a proposal in order to reduce any attempted influence from interested parties.

16

Table of Contents

       Stockholders may obtain information, without charge, regarding how we voted proxies with respect to our portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, 1300 Post Oak Boulevard, 8th floor, Houston, Texas 77056.

       We are also prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our Board of Directors who are not interested persons and, in some cases, prior approval by the SEC.

       We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office.

       We are required to adopt and implement written policies and procedures reasonably designed to prevent violation of the federal securities laws, review these policies and procedures annually for their adequacy and the effectiveness of their implementation, and to designate a chief compliance officer to be responsible for administering the policies and procedures.

       We may be periodically examined by the SEC for compliance with the 1940 Act.

       Each of the Funds is licensed by the SBA to operate as a SBIC under Section 301(c) of the Small Business Investment Act of 1958. MSMF obtained its SBIC license in 2002. MSC II obtained its license in 2006.

       SBICs are designed to stimulate the flow of private equity capital to eligible small businesses. Under SBIC regulations, SBICs may make loans to eligible small businesses, invest in the equity securities of such businesses and provide them with consulting and advisory services. Each of the Funds has typically invested in secured debt, acquired warrants and/or made equity investments in qualifying small businesses.

       Under present SBIC regulations, eligible small businesses generally include businesses that (together with their affiliates) have a tangible net worth not exceeding $19.5 million and have average annual net income after U.S. federal income taxes not exceeding $6.5 million (average net income to be computed without benefit of any carryover loss) for the two most recent fiscal years. In addition, an SBIC must devote 25% of its investment activity to "smaller" concerns as defined by the SBA. A smaller concern generally includes businesses that have a tangible net worth not exceeding $6 million and have average annual net income after U.S. federal income taxes not exceeding $2 million (average net income to be computed without benefit of any net carryover loss) for the two most recent fiscal years. SBIC regulations also provide alternative size standard criteria to determine eligibility for designation as an eligible small business or smaller concern, which criteria depend on the primary industry in which the business is engaged and are based on such factors as the number of employees and gross revenue. However, once an SBIC has invested in a company, it generally may continue to make follow on investments in the company, regardless of the size of the portfolio company at the time of the follow on investment, up to the time of the portfolio company's initial public offering.

       The SBA prohibits an SBIC from providing funds to small businesses for certain purposes, such as relending and investment outside the United States, to businesses engaged in a few prohibited industries, and to certain "passive" (non-operating) companies. In addition, without prior SBA approval, an SBIC may not invest an amount equal to more than approximately 30% of the SBIC's regulatory capital in any one portfolio company and its affiliates.

       The SBA places certain limitations on the financing terms of investments by SBICs in portfolio companies (such as limiting the permissible interest rate on debt securities held by an SBIC in a portfolio

17

Table of Contents

company). Included in such limitations are SBA regulations which allow an SBIC to exercise control over a small business for a period of seven years from the date on which the SBIC initially acquires its control position. This control period may be extended for an additional period of time with the SBA's prior written approval.

       The SBA restricts the ability of an SBIC to lend money to any of its officers, directors and employees or to invest in affiliates thereof. The SBA also prohibits, without prior SBA approval, a "change of control" of an SBIC or transfers that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of equity of a licensed SBIC. A "change of control" is any event which would result in the transfer of the power, direct or indirect, to direct the management and policies of an SBIC, whether through ownership, contractual arrangements or otherwise.

       An SBIC may generally have outstanding debentures guaranteed by the SBA in amounts up to twice the amount of the privately-raised funds of the SBIC(s). Debentures guaranteed by the SBA have a maturity of ten years, require semi-annual payments of interest, do not require any principal payments prior to maturity, and are not subject to prepayment penalties. As of December 31, 2015, we, through the Funds, had $225.0 million of outstanding SBA-guaranteed debentures, which had an annual weighted-average interest rate of approximately 4.2%.

       SBICs must invest idle funds that are not being used to make loans in investments permitted under SBIC regulations in the following limited types of securities: (i) direct obligations of, or obligations guaranteed as to principal and interest by, the United States government, which mature within 15 months from the date of the investment; (ii) repurchase agreements with federally insured institutions with a maturity of seven days or less (and the securities underlying the repurchase obligations must be direct obligations of or guaranteed by the federal government); (iii) certificates of deposit with a maturity of one year or less, issued by a federally insured institution; (iv) a deposit account in a federally insured institution that is subject to a withdrawal restriction of one year or less; (v) a checking account in a federally insured institution; or (vi) a reasonable petty cash fund.

       SBICs are periodically examined and audited by the SBA's staff to determine their compliance with SBIC regulations and are periodically required to file certain financial information and other documents with the SBA.

       Neither the SBA nor the U.S. government or any of its agencies or officers has approved any ownership interest to be issued by us or any obligation that we or any of our subsidiaries may incur.

       We are subject to the reporting and disclosure requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), including the filing of quarterly, annual and current reports, proxy statements and other required items. In addition, we are subject to the Sarbanes-Oxley Act of 2002, which imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. For example:

18

Table of Contents

       The New York Stock Exchange ("NYSE") has adopted corporate governance regulations that listed companies must comply with. We believe we are in compliance with such corporate governance listing standards. We intend to monitor our compliance with all future listing standards and to take all necessary actions to ensure that we stay in compliance.

       The External Investment Manager, which is wholly owned by us, is subject to regulation under the Advisers Act. The Advisers Act establishes, among other things, recordkeeping and reporting requirements, disclosure requirements, limitations on transactions between the adviser's account and an advisory client's account, limitations on transactions between the accounts of advisory clients, and general anti-fraud prohibitions. The External Investment Manager may be examined by the SEC from time to time for compliance with the Advisers Act.

       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 (the "Code"). MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders as dividends. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, in order to obtain RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our "investment company taxable income," which is generally our net ordinary taxable income plus the excess of realized net short-term capital gains over realized net long-term capital losses, and 90% of our tax exempt income (the "Annual Distribution Requirement").

       For any taxable year in which we qualify as a RIC and satisfy the Annual Distribution Requirement, we will not be subject to U.S. federal income tax on the portion of our income or capital gains we distribute (or are deemed to distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gains not distributed (or deemed distributed) to our stockholders.

       We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending December 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the "Excise Tax Avoidance Requirement"). Dividends declared and paid by us in a year will generally differ from taxable income for that year as such dividends may include the distribution of current year taxable income, exclude amounts carried over into the following year, and include the distribution of prior year taxable income carried over into and distributed in the current year. For amounts we carry over into the following year, we will be required to pay the 4% U.S. federal excise tax based on 98% of our annual taxable income and 98.2% of our capital gain net income in excess of distributions for the year.

       In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:

19

Table of Contents

       In order to comply with the 90% Income Test, we formed the Taxable Subsidiaries as wholly owned taxable subsidiaries, for the primary purpose of permitting us to own equity interests in portfolio companies which are "pass through" entities for tax purposes. Absent the taxable status of the Taxable Subsidiaries, a portion of the gross income from such portfolio companies would flow directly to us for purposes of the 90% Income Test. To the extent such income did not consist of income derived from securities, such as dividends and interest, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. The Taxable Subsidiaries are consolidated with Main Street for generally accepted accounting principles in the United States of America ("U.S. GAAP") purposes and are included in our consolidated financial statements, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated financial statements. The Taxable Subsidiaries are not consolidated with Main Street for income tax purposes and may generate income tax expense, or benefit, as a result of their ownership of the portfolio investments. The income tax expense, or benefit, if any, and any related tax assets and liabilities, are reflected in our consolidated financial statements.

       In order to comply with the 90% Income Test, the External Investment Manager and MSCP have elected to be taxable entities. Absent the taxable status of the External Investment Manager and MSCP, the gross income from the External Investment Manager and MSCP would flow directly to us for purposes of the 90% Income Test. Since such income would likely not consist of income derived from securities, such as dividends and interest, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. The External Investment Manager is accounted for as a portfolio investment for U.S. GAAP purposes. Beginning April 1, 2013, MSCP is consolidated with Main Street for U.S. GAAP purposes and included in our consolidated financial statements and any income tax expense, or benefit, and any related tax assets and liabilities of MSCP are reflected in our consolidated financial statements. The External Investment Manager and MSCP are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, as a result of their operating activities.

       We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants) and debt securities invested in at a discount to par, we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in income other amounts that we have not yet received in cash such as PIK interest, cumulative dividends or amounts that are received in non-cash compensation such as warrants or stock. Because any original issue discount or other amounts accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.

       Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements. However, under the 1940 Act, we are not permitted to make distributions to our stockholders in certain circumstances while our debt obligations and other senior securities are outstanding unless certain "asset coverage" tests are met. See "Regulation — Regulation as a

20

Table of Contents

Business Development Company — Senior Securities." Moreover, our ability to dispose of assets to meet our distribution requirements may be limited by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make such dispositions at times that, from an investment standpoint, are not advantageous.

       We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued private rulings indicating that this rule will apply even where the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. Under these rulings, if too many stockholders elect to receive their distributions in cash, each such stockholder would receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as (i) ordinary income (including any qualified dividend income that, in the case of a noncorporate stockholder, may be eligible for the same reduced maximum tax rate applicable to long-term capital gains to the extent such distribution is properly reported by us as qualified dividend income and such stockholder satisfies certain minimum holding period requirements with respect to our stock) or (ii) long-term capital gain (to the extent such distribution is properly reported as a capital gain dividend), to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

       If we fail to satisfy the 90% Income Test or the Diversification Tests for any taxable year, we may nevertheless continue to qualify as a RIC for such year if certain relief provisions are applicable (which may, among other things, require us to pay certain corporate-level U.S. federal taxes or to dispose of certain assets).

       If we were unable to qualify for treatment as a RIC and the foregoing relief provisions are not applicable, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would they be required to be made. If we were subject to tax on all of our taxable income at regular corporate rates, then distributions we make after being subject to such tax would be taxable to our stockholders and, provided certain holding period and other requirements were met, could qualify for treatment as "qualified dividend income" eligible for the maximum 20% rate (plus a 3.8% Medicare surtax, if applicable) applicable to qualified dividends to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate distributions would be eligible for the dividends-received deduction. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder's tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the nonqualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent 10 years, unless we made a special election to pay corporate-level tax on such built-in gain at the time of our requalification as a RIC.

21

Table of Contents

Item 1A.    Risk Factors

       Investing in our securities involves a number of significant risks. In addition to the other information contained in this Annual Report on Form 10-K, you should consider carefully the following information before making an investment in our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us might also impair our operations and performance. If any of the following events occur, our business, financial condition and results of operations could be materially and adversely affected. In such case, our net asset value, the trading price of our common stock and the value of our other securities could decline, and you may lose all or part of your investment.

RISKS RELATING TO ECONOMIC CONDITIONS

       The broader fundamentals of the United States economy remain mixed, and unemployment remains uncertain. In the event that the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements and an increase in defaults. In addition, a prolonged continuation of the current decline in oil and natural gas prices would adversely affect the credit quality of our debt investments and the underlying operating performance of our equity investments in energy related businesses. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by economic cycles, industry cycles or other conditions, which could also have a negative impact on our future results.

       Although we have been able to secure access to additional liquidity, including through the Credit Facility, periodic follow on equity offerings, public debt issuances and the leverage available through the SBIC program, the potential for volatility in the debt and equity capital markets provides no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all. Further, if the price of our common stock falls below our net asset value per share, we will be limited in our ability to sell new shares if we do not have stockholder authorization to sell shares at a price below net asset value per share. We do not currently have such stockholder authorization, and we do not intend to seek such stockholder authorization at our 2016 stockholder meeting.

RISKS RELATING TO OUR BUSINESS AND STRUCTURE

       Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value as determined by us with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of fair value and our valuation procedures. Typically, there is not a public market for the securities of the privately held LMM or Private Loan companies in which we have invested and will generally continue to invest. As a result, we value these securities quarterly at fair value based on inputs from management, a nationally recognized independent financial advisory services firm (on a rotational basis) and our audit committee with the oversight, review and approval of our Board of Directors. In addition, the market for investments in Middle Market companies is generally not a liquid market, and therefore, we primarily use a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs, which are reviewed by our audit committee with

22

Table of Contents

the oversight, review and approval of our Board of Directors. See "Note B.1. — Valuation of the Investment Portfolio" in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

       The determination of fair value and consequently, the amount of unrealized gains and losses in our portfolio, are to a certain degree, subjective and dependent on a valuation process approved by our Board of Directors. Certain factors that may be considered in determining the fair value of our investments include external events, such as private mergers, sales and acquisitions involving comparable companies. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Due to this uncertainty, our fair value determinations may cause our net asset value on a given date to materially understate or overstate the value that we may ultimately realize on one or more of our investments. As a result, investors purchasing our securities based on an overstated net asset value would pay a higher price than the value of our investments might warrant. Conversely, investors selling our securities during a period in which the net asset value understates the value of our investments may receive a lower price for their securities than the value of our investments might warrant.

       Our ability to achieve our investment objective of maximizing our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company, depends on our ability to effectively manage and deploy capital, which depends, in turn, on our investment team's ability to identify, evaluate and monitor, and our ability to finance and invest in, companies that meet our investment criteria.

       Accomplishing our investment objective on a cost-effective basis is largely a function of our investment team's handling of the investment process, its ability to provide competent, attentive and efficient services and our access to investments offering acceptable terms. In addition to monitoring the performance of our existing investments, members of our investment team are also called upon, from time to time, to provide managerial assistance to some of our portfolio companies. These demands on their time may distract them or slow the rate of investment.

       Even if we are able to grow and build upon our investment operations, any failure to manage our growth effectively could have a material adverse effect on our business, financial condition, results of operations and prospects. The results of our operations will depend on many factors, including the availability of opportunities for investment, readily accessible short and long-term funding alternatives in the financial markets and economic conditions. Furthermore, if we cannot successfully operate our business or implement our investment policies and strategies as described herein, it could negatively impact our ability to pay dividends.

       We compete for investments with other investment funds (including private equity funds, debt funds, mezzanine funds, CLOs, BDCs, and SBICs), as well as traditional financial services companies such as commercial banks and other sources of funding. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of capital and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments than we have. These characteristics could allow our competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than we are able to do. We may lose investment opportunities if we do not match our competitors' pricing, terms and structure. If we are forced to

23

Table of Contents

match our competitors' pricing, terms and structure, we may not be able to achieve acceptable returns on our investments or may bear substantial risk of capital loss. A significant part of our competitive advantage stems from the fact that the market for investments in LMM companies is underserved by traditional commercial banks and other financing sources. A significant increase in the number and/or the size of our competitors in this target market could force us to accept less attractive investment terms. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC.

       We depend on the members of our investment team, particularly Vincent D. Foster, Dwayne L. Hyzak, Curtis L. Hartman, David L. Magdol, Travis L. Haley, Nicholas T. Meserve, and Rodger A. Stout for the identification, review, final selection, structuring, closing and monitoring of our investments. These employees have significant investment expertise and relationships that we rely on to implement our business plan. Although we have entered into a non-compete agreement with Mr. Foster, we have no guarantee that he or any other employees will remain employed with us. If we lose the services of these individuals, we may not be able to operate our business as we expect, and our ability to compete could be harmed, which could cause our operating results to suffer.

       Our growth will require that we retain new investment and administrative personnel in a competitive market. Our ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors including, but not limited to, our ability to offer competitive wages, benefits and professional growth opportunities. Many of the entities, including investment funds (such as private equity funds and mezzanine funds) and traditional financial services companies, with which we compete for experienced personnel have greater resources than we have.

       The competitive environment for qualified personnel may require us to take certain measures to ensure that we are able to attract and retain experienced personnel. Such measures may include increasing the attractiveness of our overall compensation packages, altering the structure of our compensation packages through the use of additional forms of compensation, or other steps. The inability to attract and retain experienced personnel would have a material adverse effect on our business.

       We expect that members of our management team will maintain their relationships with intermediaries, financial institutions, investment bankers, commercial bankers, financial advisors, attorneys, accountants, consultants and other individuals within our network, and we will rely to a significant extent upon these relationships to provide us with potential investment opportunities. If our management team fails to maintain its existing relationships or develop new relationships with sources of investment opportunities, we will not be able to grow our Investment Portfolio. In addition, individuals with whom members of our management team have relationships are not obligated to provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.

       Our executive officers and employees, through the External Investment Manager, may manage other investment funds that operate in the same or a related line of business as we do. Accordingly, they may have obligations to such other entities, the fulfillment of which obligations may not be in the best interests of us or our stockholders. During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, which is the investment advisor to HMS Income, a non publicly-traded BDC whose registration statement on Form N-2 was declared effective by the SEC in June 2012, to provide certain investment

24

Table of Contents

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. We and the External Investment Manager agreed to waive all such fees from the effective date of HMS Adviser's registration statement on Form N-2 through December 31, 2013. As a result, as of December 31, 2013, neither we nor the External Investment Manager had received any base management fee or incentive fees under the investment sub-advisory agreement and neither was due any unpaid compensation for any base management fee or incentive fees under the investment sub-advisory agreement through December 31, 2013. The External Investment Manager began accruing such fees on January 1, 2014. The sub-advisory relationship requires us to commit resources to achieving HMS Income's investment objective, while such resources were previously solely devoted to achieving our investment objective. Our investment objective and investment strategies are very similar to those of HMS Income and it is likely that an investment appropriate for us or HMS Income would be appropriate for the other entity. As a result, we and HMS Income requested an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where our co-investing would otherwise be prohibited under the 1940 Act. The SEC granted the exemptive order in April 2014, and we have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. As a consequence, it may be more difficult for us to maintain or increase the size of our Investment Portfolio in the future. Although we will endeavor to allocate investment opportunities in a fair and equitable manner, including in accordance with the conditions set forth in the exemptive order issued by the SEC when relying on such order, we may face conflicts in allocating investment opportunities between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide an incentive to allocate opportunities to HMS Income instead of us. We have implemented an allocation policy to ensure the equitable distribution of investment opportunities and, as a result, may be unable to participate in certain investments based upon such allocation policy.

       Our business will require capital to operate and grow. We may acquire such additional capital from the following sources:

25

Table of Contents

       The Funds, our wholly owned subsidiaries, are licensed to act as SBICs and are regulated by the SBA. The SBA also places certain limitations on the financing terms of investments by SBICs in portfolio companies and prohibits SBICs from providing funds for certain purposes or to businesses in a few prohibited industries. Compliance with SBA requirements may cause the Funds to forego attractive investment opportunities that are not permitted under SBA regulations.

       Further, the SBA regulations require that a licensed SBIC be periodically examined and audited by the SBA to determine its compliance with the relevant SBA regulations. The SBA prohibits, without prior SBA approval, a "change of control" of an SBIC or transfers that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of capital stock of a licensed SBIC. If the Funds fail to comply with applicable SBIC regulations, the SBA could, depending on the severity of the violation, limit or prohibit their use of SBIC debentures, declare outstanding SBIC debentures immediately due and payable, and/or limit them from making new investments. In addition, the SBA can revoke or suspend a license for willful or repeated violation of, or willful or repeated failure to observe, any provision of the Small Business Investment Act of 1958 or any rule or regulation promulgated thereunder. Such actions by the SBA would, in turn, negatively affect us.

       Borrowings, also known as leverage, magnify the potential for loss on investments in our indebtedness and gain or loss on investments in our equity capital. As we use leverage to partially finance our investments,

26

Table of Contents

you will experience increased risks of investing in our securities. We, through the Funds, issue debt securities guaranteed by the SBA and sold in the capital markets. As a result of its guarantee of the debt securities, the SBA has fixed dollar claims on the assets of the Funds that are superior to the claims of our securities holders. We may also borrow from banks and other lenders, including under our Credit Facility, and may issue debt securities or enter into other types of borrowing arrangements in the future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Capital Resources" for a discussion regarding our outstanding indebtedness. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any decrease in our income would cause net investment income to decline more sharply than it would have had we not leveraged our business. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to our securities. Use of leverage is generally considered a speculative investment technique.

       As of December 31, 2015, we, through the Funds, had $225.0 million of outstanding indebtedness guaranteed by the SBA, which had a weighted-average annualized interest cost of approximately 4.2%\. The debentures guaranteed by the SBA have a maturity of ten years, with a current weighted-average remaining maturity of 5.6 years as of December 31, 2015, and require semi-annual payments of interest. We will need to generate sufficient cash flow to make required interest payments on the debentures. If we are unable to meet the financial obligations under the debentures, the SBA, as a creditor, will have a superior claim to the assets of the Funds over our stockholders in the event we liquidate or the SBA exercises its remedies under such debentures as the result of a default by us.

       In addition, as of December 31, 2015, we had $291.0 million outstanding under our Credit Facility. Borrowings under the Credit Facility bear interest, subject to our election, on a per annum basis at a rate equal to the applicable LIBOR rate (0.24% as of December 31, 2015) plus (i) 1.875% (or the applicable base rate (Prime Rate of 3.50% as of December 31, 2015) plus 0.875%), as long as we maintain an investment grade rating and meet certain agreed upon excess collateral and maximum leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if we maintain an investment grade rating but do not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%) if we do not maintain an investment grade rating. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. If we are unable to meet the financial obligations under the Credit Facility, the Credit Facility lending group will have a superior claim to the assets of MSCC and its subsidiaries (excluding the assets of the Funds) over our stockholders in the event we liquidate or the lending group exercises its remedies under the Credit Facility as the result of a default by us.

       In April 2013, we issued $92.0 million in aggregate principal amount of 6.125% Notes due 2023 (the "6.125% Notes"). As of December 31, 2015, the outstanding balance of the 6.125% Notes was $90.7 million. The 6.125% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 6.125% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 6.125% Notes mature on April 1, 2023, and may be redeemed in whole or in part at any time or from time to time at our option on or after April 1, 2018. The 6.125% Notes bear interest at a rate of 6.125% per year.

       In November 2014, we issued $175.0 million in aggregate principal amount of 4.50% unsecured notes due 2019 (the "4.50% Notes" and, together with the 6.125% Notes, the "Notes") at an issue price of 99.53%. As of December 31, 2015, the outstanding balance of the 4.50% Notes was $175.0 million. 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 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

27

Table of Contents

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.


Assumed Return on Our Portfolio(1)
(net of expenses)

 
   (10.0)%   (5.0)%   0.0%   5.0%   10.0%  

Corresponding net return to common stockholder(2)

     (20.3)%     (11.5)%     (2.8)%     6.0%     14.8%  
(1)
Assumes $1,878.9 million in total assets, $781.7 million in debt outstanding, $1,070.9 million in net assets, and a weighted-average interest rate of 3.8%. Actual interest payments may be different.

(2)
In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2015 total assets of at least 1.6%.

       Our ability to achieve our investment objective may depend in part on our ability to access additional leverage on favorable terms by issuing debentures guaranteed by the SBA through the Funds, by borrowing from banks or insurance companies or by issuing other debt securities and there can be no assurance that such additional leverage can in fact be achieved.

       Substantially all of our assets are currently pledged as collateral under our Credit Facility or are subject to a superior claim over our stockholders by the SBA. If we default on our obligations under the Credit Facility or our SBA-guaranteed debentures, the lenders and/or the SBA may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claim. In such event, we may be forced to sell our investments to raise funds to repay our outstanding borrowings in order to avoid foreclosure and these forced sales may be at times and at prices we would not consider advantageous. Moreover, such deleveraging of our company could significantly impair our ability to effectively operate our business in the manner in which we have historically operated. As a result, we could be forced to curtail or cease new investment activities and lower or eliminate the dividends that we have historically paid to our stockholders. In addition, if the lenders exercise their right to sell the assets pledged under our Credit Facility, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under the Credit Facility.

       As a BDC, under the 1940 Act we generally are not permitted to incur indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). Legislation introduced in the U.S. House of Representatives during the 114th Congress proposed to modify this section of the 1940 Act and increase the amount of debt that BDCs may incur by modifying the asset coverage percentage from 200% to 150%. If such legislation is passed, we may be able to incur additional indebtedness in the future and, therefore, your risk of an investment in our securities may increase.

28

Table of Contents

       In addition, in December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by the President increased the amount of SBA-guaranteed debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million. This new legislation may allow us to issue additional SBIC debentures, subject to SBA approval, above the $225.0 million that we, through the Funds, have outstanding as of December 31, 2015. If we incur this additional indebtedness in the future, your risk of an investment in our securities may increase.

       Recent U.S. debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns, or a recession in the U.S. Although U.S. lawmakers passed legislation to raise the federal debt ceiling on multiple occasions, ratings agencies have lowered or threatened to lower the long-term sovereign credit rating on the United States. The impact of this or any further downgrades to the U.S. government's sovereign credit rating or its perceived creditworthiness could adversely affect the U.S. and global financial markets and economic conditions. Absent further quantitative easing by the Federal Reserve, these developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. In addition, disagreement over the federal budget has caused the U.S. federal government to shut down for periods of time. Continued adverse political and economic conditions could have a material adverse effect on our business, financial condition and results of operations.

       As a result of concerns about the accuracy of the calculation of LIBOR, a number of British Bankers' Association, or BBA, member banks entered into settlements with certain regulators and law enforcement agencies with respect to the alleged manipulation of LIBOR, and there are ongoing investigations by regulators and governmental authorities in various jurisdictions. Following a review of LIBOR conducted at the request of the U.K. government, on September 28, 2012, recommendations for reforming the setting and governing of LIBOR were released, which are referred to as the Wheatley Review. The Wheatley Review made a number of recommendations for changes with respect to LIBOR, including the introduction of S-5 statutory regulation of LIBOR, the transfer of responsibility for LIBOR from the BBA to an independent administrator, changes to the method of the compilation of lending rates and new regulatory oversight and enforcement mechanisms for rate-setting and a reduction in the number of currencies and tenors for which LIBOR is published. Based on the Wheatley Review and on a subsequent public and governmental consultation process, on March 25, 2013, the U.K. Financial Services Authority published final rules for the U.K. Financial Conduct Authority's regulation and supervision of LIBOR, which are referred to as the FCA Rules. In particular, the FCA Rules include requirements that (1) an independent LIBOR administrator monitor and survey LIBOR submissions to identify breaches of practice standards and/or potentially manipulative behavior, and (2) firms submitting data to LIBOR establish and maintain a clear conflicts of interest policy and appropriate systems and controls. The FCA Rules took effect on April 2, 2013, and on July 9, 2013, NYSE Euronext was chosen to serve as the independent LIBOR administrator commencing in 2014. It is uncertain what additional regulatory changes or what changes, if any, in the method of determining LIBOR may be required or made by the U.K. government or other governmental or regulatory authorities. Accordingly, uncertainty as to the nature of such changes may adversely affect the market for or value of any LIBOR-linked securities, loans, derivatives and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, derivatives and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations.

29

Table of Contents

       We could experience fluctuations in our quarterly operating results due to a number of factors, including our ability or inability to make investments in companies that meet our investment criteria, the interest rate payable on the debt securities we acquire, the level of portfolio dividend and fee income, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

       Our Board of Directors has the authority to modify or waive our current operating policies, investment criteria and strategies without prior notice and without stockholder approval. We cannot predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business, net asset value, operating results and value of our stock. However, the effects might be adverse, which could negatively impact our ability to pay interest and principal payments to holders of our debt instruments and dividends to our stockholders and cause our investors to lose all or part of their investment in us.

       To maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset diversification requirements:

       Failure to meet these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, and

30

Table of Contents

therefore will be illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. Moreover, if we fail to maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.

       We intend to pay distributions to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to pay a specified level of cash distributions, previously projected distributions for future periods, or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by, among other things, the impact of one or more of the risk factors described herein. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions. All distributions will be paid at the discretion of our Board of Directors and will depend on our earnings, our financial condition, maintenance of our RIC status, compliance with applicable BDC regulations, compliance with our debt covenants, each of the Funds' compliance with applicable SBIC regulations and such other factors as our Board of Directors may deem relevant from time to time. We cannot assure you that we will pay distributions to our stockholders in the future.

       When we make distributions, we will be required to determine the extent to which such distributions are paid out of current or accumulated earnings, recognized capital gains or capital. To the extent there is a return of capital, investors will be required to reduce their basis in our stock for federal tax purposes, which may result in higher tax liability when the shares are sold, even if they have not increased in value or have lost value. In addition, any return of capital will be net of any sales load and offering expenses associated with sales of shares of our common stock. In the future, our distributions may include a return of capital.

       We will include in income certain amounts that we have not yet received in cash, such as: (i) amortization of original issue discount, which may arise if we receive warrants in connection with the origination of a loan such that ascribing a value to the warrants creates original issue discount in the debt instrument, if we invest in a debt investment at a discount to the par value of the debt security or possibly in other circumstances; (ii) contractual payment-in-kind, or PIK, interest, which represents contractual interest added to the loan balance and due at the end of the loan term; (iii) contractual preferred dividends, which represents contractual dividends added to the preferred stock and due at the end of the preferred stock term, subject to adequate profitability at the portfolio company; or (iv) amortization of market discount, which is associated with loans purchased in the secondary market at a discount to par value. Such amortization of original issue discounts, increases in loan balances as a result of contractual PIK arrangements, cumulative preferred dividends, or amortization of market discount will be included in income before we receive the corresponding cash payments. We also may be required to include in income certain other amounts before we receive such amounts in cash. Investments structured with these features may represent a higher level of credit risk compared to investments generating income which must be paid in cash on a current basis. For the year ended December 31, 2015, (i) approximately 2.2% of our total investment income was attributable to PIK income not paid currently in cash, (ii) approximately 1.0% of our total investment income was attributable to amortization of original issue discount, (iii) approximately 1.0% of our total investment income was attributable to cumulative dividend income not paid currently in cash, and (iv) approximately 1.6% of our total investment income was attributable to amortization of market discount on loans purchased in the secondary market at a discount.

       Since, in certain cases, we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the annual distribution requirement necessary to maintain RIC tax

31

Table of Contents

treatment under the Code. Accordingly, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level income tax. For additional discussion regarding the tax implications of a RIC, please see "Business — Regulation — Taxation as a Regulated Investment Company."

       We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The IRS has issued private letter rulings providing that a dividend payable in stock or in cash at the election of the stockholders will be treated as a taxable dividend eligible for the dividends paid deduction provided that at least 20% of the total dividend is payable in cash and certain other requirements are satisfied. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain to the extent such dividend is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

       In order for us to continue to qualify for RIC tax treatment and to minimize corporate-level taxes, we will be required to distribute substantially all of our net ordinary taxable income and net capital gain income, including income from certain of our subsidiaries, which includes the income from the Funds. We will be partially dependent on the Funds for cash distributions to enable us to meet the RIC distribution requirements. The Funds may be limited by the Small Business Investment Act of 1958, and SBIC regulations governing SBICs, from making certain distributions to us that may be necessary to enable us to maintain our status as a RIC. We may have to request a waiver of the SBA's restrictions for the Funds to make certain distributions to maintain our eligibility for RIC status. We cannot assure you that the SBA will grant such waiver and if the Funds are unable to obtain a waiver, compliance with the SBIC regulations may result in loss of RIC tax treatment and a consequent imposition of an entity-level tax on us.

       In order to satisfy the requirements applicable to a RIC and to minimize corporate-level taxes, we intend to distribute to our stockholders substantially all of our net ordinary income and net capital gain income. We may carry forward excess undistributed taxable income into the next year, net of the 4% excise tax. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. As a BDC, we generally are required to meet an asset coverage ratio, as defined in the 1940 Act, of at least 200% immediately after each issuance of senior

32

Table of Contents

securities. This requirement limits the amount that we may borrow and may prohibit us from making distributions. Because we will continue to need capital to grow our Investment Portfolio, this limitation may prevent us from incurring debt and require us to raise additional equity at a time when it may be disadvantageous to do so.

       While we expect to be able to borrow and to issue additional debt and equity securities, we cannot assure you that debt and equity financing will be available to us on favorable terms, or at all. In addition, as a BDC, we generally are not permitted to issue equity securities priced below net asset value without stockholder approval. If additional funds are not available to us, we could be forced to curtail or cease new investment activities, and our net asset value could decline.

       The 1940 Act prohibits us from selling shares of our common stock at a price below the current net asset value per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below net asset value provided that our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock at a price below the then current net asset value per share at our 2015 annual meeting of stockholders. As such, we do not currently have such stockholder authorization, and we do not currently intend to seek the stockholder authorization to issue our common stock at a price below net asset value per share at our 2016 annual meeting of stockholders because our common stock price per share has been trading significantly above the current net asset value per share of our common stock. We may, however, seek such authorization at future annual or special meetings of stockholders. Our stockholders have previously approved a proposal to authorize us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. Any decision to sell shares of our common stock below the then current net asset value per share of our common stock or securities to subscribe to, convert to, or purchase shares of our common stock would be subject to the determination by our Board of Directors that such issuance is in our and our stockholders' best interests.

       If we were to sell shares of our common stock below net asset value per share, such sales would result in an immediate dilution to the net asset value per share. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and a proportionately greater decrease in a stockholder's interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. In addition, if we issue securities to subscribe to, convert to or purchase shares of common stock, the exercise or conversion of such securities would increase the number of outstanding shares of our common stock. Any such exercise would be dilutive on the voting power of existing stockholders, and could be dilutive with regard to dividends and our net asset value, and other economic aspects of the common stock.

       Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted; however, the example below illustrates the effect of dilution to existing stockholders resulting from the sale of common stock at prices below the net asset value of such shares.

33

Table of Contents

 
   Prior to Sale
Below NAV 		  Following Sale
Below NAV 		  Percentage
Change 		 

Reduction to NAV

                    

Total Shares Outstanding

     1,000,000     1,040,000     4.0%  

NAV per share

   $ 10.00   $ 9.98     (0.2)%  

Dilution to Existing Stockholder

                    

Shares Held by Stockholder A

     10,000     10,000 (1)   0.0%  

Percentage Held by Stockholder A

     1.00%     0.96%     (3.8)%  

Total Interest of Stockholder A in NAV

   $ 100,000   $ 99,808     (0.2)%  
(1)
Assumes that Stockholder A does not purchase additional shares in the sale of shares below NAV.

       We, the Funds, and our portfolio companies are subject to applicable local, state and federal laws and regulations, including, without limitation, federal immigration laws and regulations. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect. In addition, any change to the SBA's current debenture SBIC program could have a significant impact on our ability to obtain lower-cost leverage, through the Funds, and therefore, our ability to compete with other finance companies.

       Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth herein and may result in our investment focus shifting from the areas of expertise of our investment team to other types of investments in which our investment team may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.

       Terrorist acts, acts of war or natural disasters may disrupt our operations, as well as the operations of the businesses in which we invest. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities, military or security operations, or natural disasters could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact the businesses in which we invest directly or indirectly and, in turn, could have a material adverse impact on our business, operating results and financial condition. Losses from terrorist attacks and natural disasters are generally uninsurable.

       Our business is highly dependent on our and third parties' communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become

34

Table of Contents

disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:

RISKS RELATED TO OUR INVESTMENTS

       Investing in our portfolio companies involves a number of significant risks. Among other things, these companies:

       In addition, in the course of providing significant managerial assistance to certain of our portfolio companies, certain of our officers and directors may serve as directors on the boards of such companies. To the extent that litigation arises out of our investments in these companies, our officers and directors may be named as defendants in such litigation, which could result in an expenditure of funds (through our indemnification of such officers and directors) and the diversion of management time and resources.

       A prolonged continuation of the current decline in oil and natural gas prices would adversely affect (i) the credit quality of our debt investments and (ii) the underlying operating performance of our equity investments in energy-related businesses and in geographic areas which are more sensitive to the health of the

35

Table of Contents

oil and gas industries. A decrease in credit quality and the operating performance would, in turn, negatively affect the fair value of these investments, which would consequently negatively affect our net asset value. Should the current decline in oil and natural gas prices persist, it is likely that the ability of these investments to satisfy financial or operating covenants imposed by us or other lenders will be adversely affected, thereby negatively impacting their financial condition and their ability to satisfy their debt service and other obligations to us. Likewise, should the current decline in oil and natural gas prices persist, it is likely that our energy-related portfolio companies' and other affected companies' cash flow and profit generating capacities would also be adversely affected thereby negatively impacting their ability to pay us dividends or distributions on our equity investments.

       Our investments may include original issue discount and contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loan's term. To the extent original issue discount or PIK interest constitute a portion of our income, we are exposed to typical risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including the following:

       We invest, and will continue to invest in companies whose securities are not publicly traded, and whose securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of these investments may make it difficult for us to sell these investments when desired. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we had previously recorded these investments. As a result, we do not expect to achieve liquidity in our investments in the near-term. Our investments are usually subject to contractual or legal restrictions on resale or are otherwise illiquid because there is usually no established trading market for such investments. The illiquidity of most of our investments may make it difficult for us to dispose of them at a favorable price, and, as a result, we may suffer losses.

       We may not have the funds or ability to make additional investments in our portfolio companies. After our initial investment in a portfolio company, we may be called upon from time to time to provide additional funds to such company or have the opportunity to increase our investment through the extension of additional loans, the exercise of a warrant to purchase equity securities, or the funding of additional equity investments. There is no assurance that we will make, or will have sufficient funds to make, follow-on investments. Any decisions not to make a follow-on investment or any inability on our part to make such an investment may have a negative impact on a portfolio company in need of such an investment, may result in a missed opportunity for us to increase our participation in a successful operation or may reduce the expected yield on the investment.

36

Table of Contents

       We invest primarily in the secured term debt of LMM, Private Loan and Middle Market companies and equity issued by LMM companies. Our portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt in which we invest. By their terms, such debt instruments may entitle the holders to receive payment of interest or principal on or before the dates on which we are entitled to receive payments with respect to the debt instruments in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

       Even though we may have structured certain of our investments as secured loans, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, and based upon principles of equitable subordination as defined by existing case law, a bankruptcy court could subordinate all or a portion of our claim to that of other creditors and transfer any lien securing such subordinated claim to the bankruptcy estate. The principles of equitable subordination defined by case law have generally indicated that a claim may be subordinated only if its holder is guilty of misconduct or where the senior loan is re-characterized as an equity investment and the senior lender has actually provided significant managerial assistance to the bankrupt debtor. We may also be subject to lender liability claims for actions taken by us with respect to a borrower's business or instances where we exercise control over the borrower. It is possible that we could become subject to a lender's liability claim, including as a result of actions taken in rendering significant managerial assistance or actions to compel and collect payments from the borrower outside the ordinary course of business.

       Certain loans that we make are secured by a second priority security interest in the same collateral pledged by a portfolio company to secure senior debt owed by the portfolio company to commercial banks or other traditional lenders. Often the senior lender has procured covenants from the portfolio company prohibiting the incurrence of additional secured debt without the senior lender's consent. Prior to and as a condition of permitting the portfolio company to borrow money from us secured by the same collateral pledged to the senior lender, the senior lender will require assurances that it will control the disposition of any collateral in the event of bankruptcy or other default. In many such cases, the senior lender will require us to enter into an "intercreditor agreement" prior to permitting the portfolio company to borrow from us. Typically the intercreditor agreements we are requested to execute expressly subordinate our debt instruments to those held by the senior lender and further provide that the senior lender shall control: (1) the commencement of foreclosure or other proceedings to liquidate and collect on the collateral; (2) the nature, timing and conduct of foreclosure or other collection proceedings; (3) the amendment of any collateral document; (4) the release of the security interests in respect of any collateral; and (5) the waiver of defaults under any security agreement. Because of the control we may cede to senior lenders under intercreditor agreements we may enter, we may be unable to realize the proceeds of any collateral securing some of our loans.

37

Table of Contents

       Finally, the value of the collateral securing our debt investment will ultimately depend on market and economic conditions, the availability of buyers and other factors. Therefore, there can be no assurance that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured by our first or second priority liens. There is also a risk that such collateral securing our investments will decrease in value over time, will be difficult to sell in a timely manner, will be difficult to appraise and will fluctuate in value based upon the success of the portfolio company and market conditions. If such proceeds are not sufficient to repay amounts outstanding under the loan obligations secured by our second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the company's remaining assets, if any.

       We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. To the extent that we assume large positions in the securities of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market's assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. Beyond our RIC asset diversification requirements, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies.

       We do not, and do not expect to, control the decision making in many of our portfolio companies, even though we may have board representation or board observation rights, and our debt agreements may contain certain restrictive covenants. As a result, we are subject to the risk that a portfolio company in which we invest will make business decisions with which we disagree and the management of such company, as representatives of the holders of their common equity, will take risks or otherwise act in ways that do not serve our interests as debt investors. Due to the lack of liquidity for our investments in non-traded companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like or at an appropriate valuation. As a result, a portfolio company may make decisions that would decrease the value of our portfolio holdings.

       A portfolio company's failure to satisfy financial or operating covenants imposed by us or other lenders could lead to non-payment of interest and other defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company's ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.

       As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at the fair value as determined in good faith by our Board of Directors. Decreases in the market values or fair values of our investments will be recorded as unrealized depreciation. Any unrealized depreciation in our portfolio could be an indication of a portfolio company's inability to meet its repayment obligations to us with respect to affected loans or a potential impairment of the value of affected equity investments. This could result in realized losses in the future and ultimately in reductions of our income and gains available for distribution in future periods.

38

Table of Contents

       We are subject to the risk that the investments we make in our portfolio companies may be repaid prior to maturity. When this occurs, we will generally reinvest these proceeds in temporary investments, pending their future investment in new portfolio companies. These temporary investments will typically have substantially lower yields than the debt being prepaid and we could experience significant delays in reinvesting these amounts. Any future investment in a new portfolio company may also be at lower yields than the debt that was repaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us. Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market price of our securities.

       Some of our debt investments will bear interest at variable rates and may be negatively affected by changes in market interest rates. An increase in market interest rates would increase the interest costs and reduce the cash flows of our portfolio companies that have variable rate debt instruments, a situation which could reduce the value of the investment. The value of our investments could also be reduced from an increase in market interest rates as rates available to investors could make an investment in our securities less attractive than alternative investments. In addition, an increase in interest rates would make it more expensive for us to use debt to finance our investments. As a result, a significant increase in market interest rates could increase our cost of capital, which would reduce our net investment income. Conversely, decreases in market interest rates could negatively impact the interest income from our variable rate debt investments. A decrease in market interest rates may also have an adverse impact on our returns by requiring us to accept lower yields on our debt investments and by increasing the risk that our portfolio companies will prepay our debt investments, resulting in the need to redeploy capital at potentially lower rates.

       Certain investments that we have made in the past and may make in the future include warrants or other equity securities. Investments in equity securities involve a number of significant risks, including the risk of further dilution as a result of additional issuances, inability to access additional capital and failure to pay current distributions. Investments in preferred securities involve special risks, such as the risk of deferred distributions, credit risk, illiquidity and limited voting rights. In addition, we may from time to time make non-control, equity investments in portfolio companies. Our goal is ultimately to realize gains upon our disposition of such equity interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience. We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests. We often seek puts or similar rights to give us the right to sell our equity securities back to the portfolio company issuer; however, we may be unable to exercise these put rights for the consideration provided in our investment documents if the issuer is in financial distress.

       Marketable securities and idle funds investments can include, among other things, secured and unsecured debt investments, independently rated debt investments, diversified bond funds and publicly traded debt and equity securities. Many of these investments in debt obligations are, or would be if rated, below investment grade quality. Indebtedness of below investment grade quality is regarded as having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal, similar to our portfolio investments in our portfolio companies. See "— Our investments in portfolio companies involve higher levels

39

Table of Contents

of risk, and we could lose all or part of our investment." Many of these Marketable securities and idle funds investments are purchased through over the counter or other markets and are therefore liquid at the time of purchase but may subsequently become illiquid due to events relating to the issuer of the securities, market events, economic conditions or investor perceptions. See "— The lack of liquidity in our investments may adversely affect our business" for a description of risks related to holding illiquid investments. In addition, domestic and foreign markets are complex and interrelated, so that events in one sector of the world markets or economy, or in one geographical region, can reverberate and have materially negative consequences for other market, economic or regional sectors in a manner that may not be foreseen and which may materially affect the market price of our Marketable securities and idle funds investments. Other risks that our portfolio investments are subject to are also applicable to these Marketable securities and idle funds investments.

       Our investments in foreign securities may involve significant risks in addition to the risks inherent in investments in U.S. securities. Our investment strategy contemplates potential investments in debt securities of foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in securities of U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the U.S., higher transaction costs, less government supervision of exchanges, brokers and issuers, less developed bankruptcy laws, difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

       Although most of our investments will be U.S. dollar denominated, any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments.

RISKS RELATING TO OUR SECURITIES

       Shares of closed-end investment companies, including BDCs, may trade at a discount to net asset value. This characteristic of closed-end investment companies and BDCs is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our common stock will trade at, above or below net asset value. In addition, if our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board of Directors makes certain determinations. See "— Risks Relating to Our Business and Structure — Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock" for a discussion related to us issuing shares of our common stock below net asset value.

       Delays in investing the net proceeds raised in an offering or from exiting an investment or other capital may cause our performance to be worse than that of other fully invested BDCs or other lenders or investors pursuing comparable investment strategies. We cannot assure you that we will be able to identify any investments that meet our investment objective or that any investment that we make will produce a positive return. We may be unable to invest the net proceeds of any offering or from exiting an investment or other

40

Table of Contents

capital on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating results.

       We anticipate that, depending on market conditions and the amount of the capital, it may take us a substantial period of time to invest substantially all the capital in securities meeting our investment objective. During this period, we will invest the capital primarily in Marketable securities and idle funds investments, which may produce returns that are significantly lower than the returns which we expect to achieve when our portfolio is fully invested in securities meeting our investment objective. As a result, any distributions that we pay during such period may be substantially lower than the distributions that we may be able to pay when our portfolio is fully invested in securities meeting our investment objective. In addition, until such time as the net proceeds of any offering or from exiting an investment or other capital are invested in new securities meeting our investment objective, the market price for our securities may decline. Thus, the initial return on your investment may be lower than when, if ever, our portfolio is fully invested in securities meeting our investment objective.

       The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and a higher risk of volatility or loss of principal. Our investments in portfolio companies involve higher levels of risk, and therefore, an investment in our securities may not be suitable for someone with lower risk tolerance.

       Fluctuations in the trading prices of our securities may adversely affect the liquidity of the trading market for our securities and, if we seek to raise capital through future securities offerings, our ability to raise such capital. The market price and liquidity of the market for our securities may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

41

Table of Contents

       The Maryland General Corporation Law and our articles of incorporation and bylaws contain provisions that may have the effect of discouraging, delaying or making difficult a change in control of our company or the removal of our incumbent directors. The existence of these provisions, among others, may have a negative impact on the price of our common stock and may discourage third-party bids for ownership of our company. These provisions may prevent any premiums being offered to you for our common stock.

       The Notes are not secured by any of our assets or any of the assets of our subsidiaries and rank equally in right of payment with all of our existing and future unsubordinated, unsecured indebtedness. As a result, the Notes are effectively subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes. As of December 31, 2015, we had $291.0 million outstanding under the Credit Facility out of $555.0 million in commitments. The indebtedness under the Credit Facility is senior to the Notes to the extent of the value of the assets securing such indebtedness.

       The Notes are obligations exclusively of Main Street Capital Corporation and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Notes, and the Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. In addition, several of our subsidiaries, specifically the Funds, maintain significant indebtedness and as a result the Notes are structurally subordinated to the indebtedness of these subsidiaries. For example, as of December 31, 2015, the Funds had collectively issued $225.0 million of SBA-guaranteed debentures, which are included in our consolidated financial statements. The assets of such subsidiaries are not directly available to satisfy the claims of our creditors, including holders of the Notes. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources" for more detail on the SBA-guaranteed debentures.

       Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of other creditors of our subsidiaries have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims. Consequently, the Notes are structurally subordinated to all indebtedness, including the SBA-guaranteed debentures, and other liabilities of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish. In addition, our subsidiaries may incur substantial additional indebtedness in the future, all of which would be structurally senior to the Notes.

42

Table of Contents

       The Notes may or may not have an established trading market. If a trading market in the Notes is developed, it may not be maintained. If the Notes are traded after their initial issuance, they may trade at a discount to their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, our financial condition or other relevant factors. Accordingly, we cannot assure you that a liquid trading market has been or will develop for the Notes, that you will be able to sell your Notes at a particular time or that the price you receive when you sell will be favorable. To the extent an active trading market does not develop or is not maintained, the liquidity and trading price for the Notes may be harmed. Accordingly, you may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.

       Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the Notes. These credit ratings may not reflect the potential impact of risks relating to the structure or marketing of the Notes. Credit ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. We undertake no obligation to maintain our credit ratings or to advise holders of Notes of any changes in our credit ratings. The 4.50% Notes are currently rated by Standard & Poor's Ratings Services. There can be no assurance that our credit ratings will remain for any given period of time or that such credit ratings will not be lowered or withdrawn entirely by the rating agency if in their judgment future circumstances relating to the basis of the credit ratings, such as adverse changes in our company, so warrant. The conditions of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, which could have an adverse effect on the market prices of the Notes.

       The indentures under which the Notes were issued offer limited protection to holders of the Notes. The terms of the indentures and the Notes do not restrict our or any of our subsidiaries' ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have an adverse impact on investments in the Notes. In particular, the terms of the indentures and the Notes do not place any restrictions on our or our subsidiaries' ability to:

43

Table of Contents

       Furthermore, the terms of the indentures and the Notes do not protect holders of the Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, if any, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow or liquidity.

       Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Notes may have important consequences for you as a holder of the Notes, including making it more difficult for us to satisfy our obligations with respect to the Notes or negatively affecting the trading value of the Notes.

       Other debt we issue or incur in the future could contain more protections for its holders than the indentures and the Notes, including additional covenants and events of default. For example, the indentures under which the Notes are issued do not contain cross-default provisions that are contained in the Credit Facility. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of the Notes.

       The 4.50% Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option. The 6.125% Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option, on or after April 1, 2018. We may choose to redeem the Notes at times when prevailing interest rates are lower than the interest rate paid on the Notes. In this circumstance, you may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the Notes being redeemed.

       We may not be able to repurchase the 4.50% Notes upon certain change in control events described in the indenture under which the 4.50% Notes were issued (each, a "Change of Control Repurchase Event") because we may not have sufficient funds. Upon a Change of Control Repurchase Event, holders of the 4.50% Notes may require us to repurchase for cash some or all of the 4.50% Notes at a repurchase price equal to 100% of the aggregate principal amount of the 4.50% Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date. The terms of our Credit Facility provide that certain change of control events will constitute an event of default thereunder entitling the lenders to accelerate any indebtedness outstanding under our Credit Facility at that time and to terminate the Credit Facility. In addition, the occurrence of a Change of Control Repurchase Event enabling the holders of the 4.50% Notes to require the mandatory purchase of the 4.50% Notes would constitute an event of default under our Credit Facility entitling the lenders to accelerate any indebtedness outstanding under our Credit Facility at that time and to terminate the Credit Facility. Our and our subsidiaries' future financing facilities may contain similar restrictions and provisions. Our failure to purchase such tendered 4.50% Notes upon the occurrence of such Change of Control Repurchase Event would cause an event of default under the indenture governing the 4.50% Notes and a cross-default under the agreements governing certain of our other indebtedness, which

44

Table of Contents

may result in the acceleration of such indebtedness requiring us to repay that indebtedness immediately. If a Change of Control Repurchase Event were to occur, we may not have sufficient funds to repay any such accelerated indebtedness.

       As of December 31, 2015, we had approximately $781.7 million of indebtedness, including $291.0 million outstanding under the Credit Facility, $225.0 million outstanding from SBA-guaranteed debentures, approximately $90.7 million of the 6.125% Notes and $175.0 million of the 4.50% Notes outstanding. Any default under the agreements governing our indebtedness, including a default under the Credit Facility, under the Notes or under other indebtedness to which we may be a party that is not waived by the required lenders or debt holders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal, premium, if any, and interest on the Notes and substantially decrease the market value of the Notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under the Credit Facility or other debt we may incur in the future could elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. Our ability to generate sufficient cash flow in the future is, to some extent, subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us under the Credit Facility or otherwise, in an amount sufficient to enable us to meet our payment obligations under the Notes and our other debt and to fund other liquidity needs.

       If our operating performance declines and we are not able to generate sufficient cash flow to service our debt obligations, we may in the future need to refinance or restructure our debt, including the Notes, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required lenders under the Credit Facility or the required holders of the Notes or other debt that we may incur in the future to avoid being in default. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under the Notes and our other debt. If we breach our covenants under the Credit Facility, the Notes or other debt and seek a waiver, we may not be able to obtain a waiver from the required lenders or debt holders. If this occurs, we would be in default under the Credit Facility, the Notes or other debt, the lenders or debt holders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations could proceed against the collateral securing the debt. Because the Credit Facility has, and any future credit facilities will likely have, customary cross-default provisions, if the indebtedness under the Notes, the Credit Facility or under any future credit facility is accelerated, we may be unable to repay or finance the amounts due.

Item 1B.    Unresolved Staff Comments

       None.

Item 2.    Properties

       We do not own any real estate or other physical properties materially important to our operations. Currently, we lease office space in Houston, Texas for our corporate headquarters.

45

Table of Contents

Item 3.    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 4.    Mine Safety Disclosures

       Not applicable.

46

Table of Contents


PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

PRICE RANGE OF COMMON STOCK, HOLDERS AND DISTRIBUTIONS

       Our common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "MAIN." Prior to October 14, 2010, our common stock was traded on the NASDAQ Global Select Market under the same symbol "MAIN." Our common stock began trading on the NASDAQ Global Select Market on October 5, 2007. Prior to that date, there was no established public trading market for our common stock.

       The following table sets forth, for each fiscal quarter during 2015 and 2014, the range of high and low closing prices of our common stock as reported on the NYSE.

 
   High   Low  

Fiscal year 2015

              

Fourth quarter

   $ 32.28   $ 27.69  

Third quarter

   $ 33.08   $ 26.38  

Second quarter

   $ 32.59   $ 30.47  

First quarter

   $ 31.47   $ 27.87  

Fiscal year 2014

              

Fourth quarter

   $ 32.68   $ 27.48  

Third quarter

   $ 32.87   $ 30.38  

Second quarter

   $ 33.54   $ 29.55  

First quarter

   $ 35.69   $ 32.23  

Fiscal year 2013

              

       On February 25, 2016 the last sale price of our common stock on the NYSE was $28.12 per share, and there were approximately 200 holders of record of the common stock which did not include stockholders for whom shares are held in "nominee" or "street name."

       Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from net asset value per share or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value per share will decrease. It is not possible to predict whether our common stock will trade at, above, or below net asset value per share. Since our IPO in October 2007, our shares of common stock have traded at prices both less than and exceeding our net asset value per share.

       We currently pay regular monthly dividends and semi-annual supplemental dividends to our stockholders. Our monthly dividends, if any, will be determined by our Board of Directors on a quarterly basis. Our semi-annual supplemental dividends, if any, will be determined by our Board of Directors based upon our undistributed taxable income. The following table summarizes our dividends declared to date:

47

Table of Contents

Date Declared
 
Record Date
 
Payment Date
 
Amount(1)
 

Fiscal year 2016

                

February 23, 2016

   May 20, 2016   June 15, 2016   $ 0.180  

February 23, 2016

   April 21, 2016   May 16, 2016   $ 0.180  

February 23, 2016

   March 21, 2016   April 15, 2016   $ 0.180  

November 3, 2015

   February 22, 2016   March 15, 2016   $ 0.180  

November 3, 2015

   January 22, 2016   February 17, 2016   $ 0.180  

November 3, 2015

   December 30, 2015   January 15, 2016   $ 0.180 (2)
​ ​ ​ ​ ​ ​ ​ ​ ​

          $ 1.080  
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

Fiscal year 2015

                

October 20, 2015

   December 17, 2015   December 24, 2015   $ 0.275 (2)

August 3, 2015

   November 20, 2015   December 14, 2015   $ 0.180 (2)

August 3, 2015

   October 21, 2015   November 16, 2015   $ 0.180 (2)

August 3, 2015

   September 21, 2015   October 15, 2015   $ 0.180 (2)

May 5, 2015

   August 20, 2015   September 15, 2015   $ 0.175 (2)

May 5, 2015

   July 21, 2015   August 14, 2015   $ 0.175 (2)

May 5, 2015

   July 1, 2015   July 15, 2015   $ 0.175 (2)

April 22, 2015

   June 18, 2015   June 25, 2015   $ 0.275 (2)

February 24, 2015

   May 20, 2015   June 15, 2015   $ 0.175 (2)

February 24, 2015

   April 21, 2015   May 15, 2015   $ 0.175 (2)

February 24, 2015

   March 20, 2015   April 15, 2015   $ 0.175 (2)

November 6, 2014

   February 20, 2015   March 16, 2015   $ 0.170 (2)

November 6, 2014

   January 21, 2015   February 13, 2015   $ 0.170 (2)

November 6, 2014

   December 31, 2014   January 15, 2015   $ 0.170 (3)
​ ​ ​ ​ ​ ​ ​ ​ ​

Total

           $ 2.650  
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

Fiscal year 2014

                

October 23, 2014

   December 18, 2014   December 24, 2014   $ 0.275 (3)

August 4, 2014

   November 20, 2014   December 15, 2014   $ 0.170 (3)

August 4, 2014

   October 20, 2014   November 14, 2014   $ 0.170 (3)

August 4, 2014

   September 19, 2014   October 15, 2014   $ 0.170 (3)

May 6, 2014

   August 20, 2014   September 15, 2014   $ 0.165 (3)

May 6, 2014

   July 21, 2014   August 15, 2014   $ 0.165 (3)

May 6, 2014

   June 30, 2014   July 15, 2014   $ 0.165 (3)

April 21, 2014

   June 20, 2014   June 25, 2014   $ 0.275 (3)

February 26, 2014

   May 21, 2014   June 16, 2014   $ 0.165 (3)

February 26, 2014

   April 20, 2014   May 15, 2014   $ 0.165 (3)

February 26, 2014

   March 21, 2014   April 15, 2014   $ 0.165 (3)

November 6, 2013

   February 20, 2014   March 14, 2014   $ 0.165 (3)

November 6, 2013

   January 21, 2014   February 14, 2014   $ 0.165 (3)

November 6, 2013

   December 30, 2013   January 15, 2014   $ 0.165 (4)
​ ​ ​ ​ ​ ​ ​ ​ ​

Total

           $ 2.545  
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

Fiscal year 2013

                

November 20, 2013

   December 19, 2013   December 24, 2013   $ 0.250 (4)

August 6, 2013

   November 21, 2013   December 16, 2013   $ 0.160 (4)

August 6, 2013

   October 21, 2013   November 15, 2013   $ 0.160 (4)

August 6, 2013

   September 20, 2013   October 15, 2013   $ 0.160 (4)

May 13, 2013

   July 22, 2013   July 26, 2013   $ 0.200 (4)

May 8, 2013

   May 21, 2013   September 16, 2013   $ 0.155 (4)

May 8, 2013

   July 17, 2013   August 15, 2013   $ 0.155 (4)

May 8, 2013

   June 18, 2013   July 15, 2013   $ 0.155 (4)

March 5, 2013

   May 21, 2013   June 14, 2013   $ 0.155 (4)

March 5, 2013

   April 19, 2013   May 15, 2013   $ 0.155 (4)

March 5, 2013

   March 21, 2013   April 15, 2013   $ 0.155 (4)

November 6, 2012

   February 21, 2013   March 15, 2013   $ 0.150 (4)

November 6, 2012

   January 18, 2013   February 15, 2013   $ 0.150 (4)

November 6, 2012

   January 4, 2013   January 23, 2013   $ 0.350 (4)

November 6, 2012

   December 20, 2012   January 15, 2013   $ 0.150 (5)
​ ​ ​ ​ ​ ​ ​ ​ ​

Total

           $ 2.660  
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

48

Table of Contents

 
    
    
  
Amount(1)
 

Fiscal year 2012

                

Total

           $ 1.710 (5),(6)
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

Fiscal year 2011

                

Total

           $ 1.560 (6)
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

Fiscal year 2010

                

Total

           $ 1.500 (7)
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

Fiscal year 2009

                

Total

           $ 1.500 (8),(9)
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

Fiscal year 2008

                

Total

           $ 1.425 (9)
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

Fiscal year 2007

                

Total

           $ 0.330 (10)
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​

Cumulative dividends declared or paid

           $ 16.960  
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
The determination of the tax attributes of Main Street's distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the tax rate applicable to "qualified dividend income" from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations.

(2)
These dividends attributable to fiscal year 2015 were comprised of ordinary income of $2.325 per share, long term capital gain of $0.231 per share, and qualified dividend income of $0.105 per share, and included dividends with a record date during fiscal year 2015, including the dividend declared and accrued as of December 31, 2015 and paid on January 15, 2016, pursuant to the Code.

(3)
These dividends attributable to fiscal year 2014 were comprised of ordinary income of $2.083 per share, long term capital gain of $0.419 per share, and qualified dividend income of $0.048 per share, and included dividends with a record date during fiscal year 2014, including the dividend declared and accrued as of December 31, 2014 and paid on January 15, 2015, pursuant to the Code.

(4)
These dividends attributable to fiscal year 2013 were comprised of ordinary income of $1.872 per share, long term capital gain of $0.346 per share, and qualified dividend income of $0.457 per share, and included dividends with a record date during fiscal year 2013, including the dividend declared and accrued as of December 31, 2013 and paid on January 15, 2014, pursuant to the Code.

(5)
These dividends attributable to fiscal year 2012 were comprised of ordinary income of $0.923 per share, long term capital gain of $0.748 per share, and qualified dividend income of $0.054 per share, and included dividends with a record date during fiscal year 2012, including the dividend declared and accrued as of December 31, 2012 and paid on January 15, 2013, pursuant to the Code.

(6)
These dividends attributable to fiscal year 2011 were comprised of ordinary income of $1.253 per share, long term capital gain of $0.373 per share, and qualified dividend income of $0.069 per share, and included dividends with a record date during fiscal year 2011, including the dividend declared and accrued as of December 31, 2011 and paid on January 16, 2012, pursuant to the Code.

(7)
These dividends attributable to fiscal year 2010 were comprised of ordinary income of $1.220 per share, long term capital gain of $0.268 per share, and qualified dividend income of $0.012 per share.

(8)
These dividends attributable to fiscal year 2009 were comprised of ordinary income of $1.218 per share and long term capital gain of $0.157 per share and excluded the $0.125 paid on January 15, 2009 which had been declared and accrued as of December 31, 2008.

49

Table of Contents

(9)
These dividends attributable to fiscal year 2008 were comprised of ordinary income of $0.953 per share and long term capital gain of $0.597 per share, and included dividends with a record date during fiscal year 2008, including the $0.125 per share dividend declared and accrued as of December 31, 2008 and paid on January 15, 2009, pursuant to the Code.

(10)
This quarterly dividend attributable to fiscal year 2007 was comprised of ordinary income of $0.105 per share and long term capital gain of $0.225 per share.

       In accordance with the IRC sections 871(k) and 881(e), the following percentages represent the portion of our dividends that constitute interest-related dividends and short-term capital gains dividends for non-U.S. residents and foreign corporations. These percentages should be combined with the long-term capital gains discussed above to derive the total dividends which are exempt from United States withholding tax.

Payment Dates
  Interest-Related Dividends and
Short-Term Capital Gain
Dividends 		 

From 2/13/2015 to 5/15/2015

     69.29 %

6/15/2015

     71.51 %

From 6/25/2015 to 1/15/2016

     75.79 %

       To the extent non-U.S. resident taxes were withheld on ordinary dividends distributed, this information may be considered in connection with any claims for refund of such taxes to be filed by the non-U.S. resident shareholder with the Internal Revenue Service.

       To obtain and maintain RIC tax treatment, we must, among other things, distribute at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. We will be subject to a 4% nondeductible U.S. federal excise tax on certain undistributed taxable income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary taxable income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending December 31 in that calendar year and (3) any income recognized, but not distributed, in preceding years (the "Excise Tax Avoidance Requirement"). Dividends declared and paid by us in a year will generally differ from taxable income for that year, as such dividends may include the distribution of current year taxable income, less amounts carried over into the following year, and the distribution of prior year taxable income carried over into and distributed in the current year. For amounts we carry over into the following year, we will be required to pay a 4% U.S. federal excise tax on the amount by which 98% of our annual ordinary taxable income and 98.2% of capital gains exceeds our distributions for the year. We may retain for investment some or all of our net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) and treat such amounts as deemed distributions to our stockholders. If we do this, our stockholders will be treated as if they had received actual distributions of the capital gains we retained and then reinvested the net after-tax proceeds in our common stock. In general, our stockholders also would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to their allocable shares of the tax we paid on the capital gains deemed distributed to them. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we may be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

       We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The IRS has issued private letter rulings providing that a dividend payable in stock or in cash at the election of the stockholders will be treated as a taxable dividend eligible for the dividends paid deduction provided that at least 20% of the total dividend is payable in cash and certain other requirements are satisfied. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain to the extent such dividend is properly reported as a capital gain dividend), to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S.

50

Table of Contents

stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

       We have adopted a dividend reinvestment plan ("DRIP") that provides for the reinvestment of dividends on behalf of our stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our stockholders who have not "opted out" of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly-issued shares will be valued based upon the final closing price of MSCC's common stock on a valuation date determined for each dividend by our Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other costs.

SALES OF UNREGISTERED SECURITIES

       During the year ended December 31, 2015, we issued a total of 636,079 shares of our common stock under the DRIP. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The aggregate value of the shares of our common stock issued under the DRIP during 2015 was approximately $19.4 million.

PURCHASES OF EQUITY SECURITIES

       None.

51

Table of Contents

STOCK PERFORMANCE GRAPH

       The following graph compares the stockholder return on our common stock from October 5, 2007 to December 31, 2015 with the S&P 500 Index, the Russell 2000 Index, the KBW Regional Bank Index and the Main Street Peer Group index (as defined below). This comparison assumes $100.00 was invested on October 5, 2007 (the date our common stock began to trade in connection with our initial public offering) in our common stock and in the comparison groups and assumes the reinvestment of all cash dividends prior to any tax effect. The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of our common stock.


COMPARISON OF STOCKHOLDER RETURN(1)
Among Main Street Capital Corporation, the S&P 500 Index, the Russell 2000 Index, the KBW Regional Bank Index, and the Main Street Peer Group(2)
(For the Period October 5, 2007 to December 31, 2015)

GRAPHIC

(1)
Total return includes reinvestment of dividends through December 31, 2015.

(2)
The Main Street Peer Group is composed of American Capital, Ltd., Apollo Investment Corporation, Ares Capital Corporation, BlackRock Capital Investment Corporation, Capitala Finance Corp., Fifth Street Finance Corp., Fifth Street Senior Floating Rate Corp., FS Investment Corporation, Gladstone Investment Corporation, Golub Capital BDC, Inc., Hercules Technology Growth Capital, Inc., Medallion Financial Corp., Medley Capital Corporation, MVC Capital, Inc., New Mountain Finance Corporation, PennantPark Investment Corporation, Prospect Capital Corporation, Solar Capital Ltd., TCP Capital Corp., THL Credit, Inc., TICC Capital Corp., Triangle Capital Corporation and TPG Specialty Lending, Inc.

52

Table of Contents

Item 6.    Selected Financial Data

       The selected financial and other data as of and for the years ended December 31, 2015, 2014, 2013, 2012 and 2011 have been derived from consolidated financial statements that have been audited by Grant Thornton LLP, an independent registered public accounting firm. You should read this selected financial and other data in conjunction with our "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes included in this Annual Report on Form 10-K.

 
   Years Ended December 31,  
 
   2015   2014   2013   2012   2011  
 
   (dollars in thousands, except per share amounts)
  

Statement of operations data:

                                

Investment income:

                                

Total interest, fee and dividend income

   $ 163,603   $ 139,939   $ 115,158   $ 88,858   $ 65,045  

Interest from idle funds and other

     986     824     1,339     1,662     1,195  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total investment income

     164,589     140,763     116,497     90,520     66,240  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Expenses:

                                

Interest

     (32,115 )   (23,589 )   (20,238 )   (15,631 )   (13,518 )

Compensation

     (14,852 )   (12,337 )   (8,560 )    —      —  

General and administrative

     (8,621 )   (7,134 )   (4,877 )   (2,330 )   (2,483 )

Share-based compensation

     (6,262 )   (4,215 )   (4,210 )   (2,565 )   (2,047 )

Expenses charged to the External Investment Manager

     4,335     2,048      —      —      —  

Expenses reimbursed to MSCP

      —      —     (3,189 )   (10,669 )   (8,915 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total expenses

     (57,515 )   (45,227 )   (41,074 )   (31,195 )   (26,963 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net investment income

     107,074     95,536     75,423     59,325     39,277  

Total net realized gain (loss) from investments

     (21,316 )   23,206     7,277     16,479     2,639  

Total net realized loss from SBIC debentures

      —      —     (4,775 )    —      —  

Total net change in unrealized appreciation (depreciation) from investments

     10,871     (776 )   14,503     44,464     34,989  

Total net change in unrealized appreciation (depreciation) from SBIC debentures and investment in the Internal Investment Manager

     (879 )   (10,931 )   4,392     (5,004 )   (6,511 )

Income tax benefit (provision)

     8,687     (6,287 )   35     (10,820 )   (6,288 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net increase in net assets resulting from operations

     104,437     100,748     96,855     104,444     64,106  

Noncontrolling interest

      —      —      —     (54 )   (1,139 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

   $ 104,437   $ 100,748   $ 96,855   $ 104,390   $ 62,967  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net investment income per share — basic and diluted

   $ 2.18   $ 2.20   $ 2.06   $ 2.01   $ 1.69  

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

   $ 2.13   $ 2.31   $ 2.65   $ 3.53   $ 2.76  

Weighted average shares outstanding — basic and diluted

     49,071,492     43,522,397     36,617,850     29,540,114     22,850,299  

53

Table of Contents


 
   As of December 31,  
 
   2015   2014   2013   2012   2011  
 
   (dollars in thousands)
  

Balance sheet data:

                                

Assets:

                                

Total portfolio investments at fair value

   $ 1,799,996   $ 1,563,330   $ 1,286,188   $ 924,431   $ 658,093  

Marketable securities and idle funds investments

     3,693     9,067     13,301     28,535     26,242  

Cash and cash equivalents

     20,331     60,432     34,701     63,517     42,650  

Interest receivable and other assets

     37,638     46,406     16,054     14,580     6,539  

Deferred financing costs, net of accumulated amortization          

     13,267     14,550     9,931     5,162     4,168  

Deferred tax asset, net

     4,003      —      —      —      —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total assets

   $ 1,878,928   $ 1,693,785   $ 1,360,175   $ 1,036,225   $ 737,692  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Liabilities and net assets:

                                

Credit facility

   $ 291,000   $ 218,000   $ 237,000   $ 132,000   $ 107,000  

SBIC debentures at fair value(1)

     223,660     222,781     187,050     211,467     201,887  

4.50% Notes

     175,000     175,000      —      —      —  

6.125% Notes

     90,738     90,823     90,882      —      —  

Dividend payable

     9,074     7,663     6,577     5,188     2,856  

Interest payable

     3,959     4,848     2,556     3,562     3,984  

Accounts payable and other liabilities

     12,292     10,701     10,549     8,593     7,001  

Payable for securities purchased

     2,311     14,773     27,088     20,661      —  

Deferred tax liability, net

      —     9,214     5,940     11,778     3,776  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total liabilities

     808,034     753,803     567,642     393,249     326,504  

Total net asset value

     1,070,894     939,982     792,533     642,976     405,711  

Noncontrolling interest

      —      —      —      —     5,477  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total liabilities and net assets                

   $ 1,878,928   $ 1,693,785   $ 1,360,175   $ 1,036,225   $ 737,692  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other data:

                                

Weighted average effective yield on LMM debt investments(2)

     12.2%     13.2%     14.7%     14.3%     14.8%  

Number of LMM portfolio companies

     71     66     62     56     54  

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

     8.0%     7.8%     7.8%     8.0%     9.5%  

Number of Middle Market portfolio companies

     86     86     92     79     57  

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

     9.5%     10.1%     11.3%     14.8%      —  

Number of Private Loan portfolio companies

     40     31     15     9      —  

Expense ratios (as percentage of average net assets):          

                                

Total expenses, including income tax expense

     4.6%     5.8%     5.8%     8.2% (3)   9.8% (3)

Operating expenses

     5.5%     5.1%     5.8%     6.1% (3)   8.0% (3)

Operating expenses, excluding interest expense               

     2.4%     2.4%     3.0%     3.0% (3)   4.0% (3)
(1)
SBIC debentures for December 31, 2015, 2014, 2013, 2012 and 2011 are $225,000, $225,000, $200,200, $225,000 and $220,000 at par, respectively, with par of $75,200 for December 31, 2015, 2014 and 2013, $100,000 for December 31, 2012, and $95,000 for December 31, 2011 recorded at fair value of $73,860, $72,981, $62,050, $86,467 and 76,887, as of December 31, 2015, 2014, 2013, 2012 and 2011, respectively.

(2)
Weighted-average effective yield is calculated based on our debt investments at the end of each period and includes amortization of deferred debt origination fees and accretion of original issue discount, but excludes liquidation fees payable upon repayment and any debt investments on non-accrual status.

(3)
Ratios are net of amounts attributable to MSC II non-controlling interest.

54

Table of Contents

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

       The following discussion should be read in conjunction with our financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K.

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

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 diverse 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") and Main Street Capital II, LP ("MSC II" and, together with MSMF, 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 ("RIA") under Investment Advisers Act of 1940, as amended (the "Advisers Act"). 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 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 and Main Street Capital Partners, LLC, ("MSCP") are also direct wholly owned

55

Table of Contents

subsidiaries that have elected to be taxable entities. The Taxable Subsidiaries, MSCP 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" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries and, beginning April 1, 2013, MSCP.

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 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. We believe that our LMM investment strategy has limited correlation to the broader debt and equity markets.

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

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

       Our external asset management business is conducted through our External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and

56

Table of Contents

may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we provide management and other services to the External Investment Manager, as well as access to our employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, we began charging the External Investment Manager for these services. Our total expenses for the years ended December 31, 2015 and 2014 are net of expenses charged to the External Investment Manager of $4.3 million and $2.0 million, respectively. The total contribution of the External Investment Manager to our net investment income consists of the combination of the expenses charged to the External Investment Manager and dividend income from the External Investment Manager. For the years ended December 31, 2015 and 2014, the total contribution to our net investment income was $6.5 million and $2.5 million, respectively.

       The following tables provide a summary of our investments in the LMM, Middle Market and Private Loan portfolios as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
   As of December 31, 2015  
 
   LMM(a)   Middle Market   Private Loan  
 
   (dollars in millions)
  

Number of portfolio companies

     71     86     40  

Fair value

   $ 862.7   $ 586.9   $ 248.3  

Cost

   $ 685.6   $ 637.2   $ 268.6  

% of portfolio at cost — debt

     70.4%     98.3%     94.3%  

% of portfolio at cost — equity

     29.6%     1.7%     5.7%  

% of debt investments at cost secured by first priority lien

     91.8%     86.6%     87.3%  

Weighted-average annual effective yield(b)

     12.2%     8.0%     9.5%  

Average EBITDA(c)

   $ 6.0   $ 98.8   $ 13.1  
(a)
At December 31, 2015, we had equity ownership in approximately 96% 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, 2015, 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, three Middle Market portfolio companies and six 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.

57

Table of Contents

 
   As of December 31, 2014  
 
   LMM(a)   Middle Market   Private Loan  
 
   (dollars in millions)
  

Number of portfolio companies

     66     86     31  

Fair value

   $ 733.2   $ 542.7   $ 213.0  

Cost

   $ 599.4   $ 561.8   $ 224.0  

% of portfolio at cost — debt

     71.5%     99.8%     95.6%  

% of portfolio at cost — equity

     28.5%     0.2%     4.4%  

% of debt investments at cost secured by first priority lien

     89.6%     85.1%     87.8%  

Weighted-average annual effective yield(b)

     13.2%     7.8%     10.1%  

Average EBITDA(c)

   $ 5.0   $ 77.2   $ 18.1  
(a)
At December 31, 2014, we had equity ownership in approximately 95% of our LMM portfolio companies, and our average fully diluted equity ownership in those portfolio companies was approximately 35%.

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2014, 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 two LMM portfolio companies, one Middle Market portfolio company and five Private Loan portfolio companies as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

       As of December 31, 2015, we had Other Portfolio investments in ten companies, collectively totaling approximately $74.8 million in fair value and approximately $75.2 million in cost basis and which comprised approximately 4.2% of our Investment Portfolio (as defined in "— Critical Accounting Policies — Basis of Presentation" below) at fair value. As of December 31, 2014, we had Other Portfolio investments in six companies, collectively totaling approximately $58.9 million in fair value and approximately $56.2 million in cost basis and which comprised approximately 3.8% of our Investment Portfolio at fair value.

       As previously discussed, the External Investment Manager is a wholly owned subsidiary that is treated as a portfolio investment. As of December 31, 2015, there was no cost basis in this investment and the investment had a fair value of $27.3 million, which comprised 1.5% of our Investment Portfolio at fair value. As of December 31, 2014, there was no cost basis in this investment and the investment had a fair value of $15.6 million, which comprised 1.0% 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 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

58

Table of Contents

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 both of the years ended December 31, 2015 and 2014, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4%.

       The total investment return on our shares of common stock for the years ended December 31, 2015 and 2014 was 8.49% and (3.09%), respectively. Total investment return is based on the purchase of our 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 and assumes reinvestment of dividends at prices obtained by our dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.

       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-publicly traded BDC whose registration statement on Form N-2 was declared effective by the SEC in June 2012, 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. Beginning January 1, 2015, the External Investment Manager conditionally agreed to waive a limited amount of the base management fee and incentive fees otherwise earned during the year ended December 31, 2015. During the years ended December 31, 2015 and 2014, the External Investment Manager earned $7.8 million and $2.8 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

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

CRITICAL ACCOUNTING POLICIES

       Our financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). For each of the periods presented herein, our consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment

59

Table of Contents

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, but excludes all "Marketable securities and idle funds investments". "Marketable securities and idle funds investments" are classified as financial instruments and are reported separately on our consolidated balance sheets and consolidated schedules of investments due to the nature of such investments. Our results of operations and cash flows for the years ended December 31, 2015, 2014 and 2013 and financial position as of December 31, 2015 and 2014, are presented on a consolidated basis. The effects of all intercompany transactions between us and our consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform to the current presentation, including reclassifying the expenses charged to the External Investment Manager.

       Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and Accounting Standards Codification ("Codification" or "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. Beginning April 1, 2013, our consolidated financial statements also include the financial position and operating results for MSCP, as the wholly owned subsidiary provides all of its services directly or indirectly to us or our portfolio companies. For all periods up to and including the period ending March 31, 2013, MSCP was accounted for as a portfolio investment. 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 December 31, 2015 and 2014, our Investment Portfolio valued at fair value represented approximately 96% and 92% of our total assets, respectively. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures ("ASC 820"). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See "Note B.1. — Valuation of the Investment Portfolio" in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

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

       Our Board of Directors has the final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio and our valuation procedures, consistent

60

Table of Contents

with 1940 Act requirements. We believe our Investment Portfolio as of December 31, 2015 and 2014 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 fully impaired, 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 interest income over the life of the financing.

       We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2015, 2014 and 2013 (i) approximately 2.2%, 3.3% and 4.3% respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0%, 1.3% and 1.2%, 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.

61

Table of Contents

       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 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) fifteenth day of the ninth month following the close of the year which generated such taxable income.

       The Taxable Subsidiaries 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.

       As noted above, beginning April 1, 2013, MSCC's wholly owned subsidiary MSCP is included in our consolidated financial statements for financing reporting purposes. For tax purposes, MSCP has elected to be treated as a taxable entity, and therefore is not consolidated with MSCC 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 taxable income, or loss, of MSCP 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 our consolidated financial statements.

       The Taxable Subsidiaries and MSCP 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 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 against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

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

62

Table of Contents

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 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 our External Investment Manager. We have entered into an agreement to provide the External Investment Manager with asset management service support in connection with its asset management business generally, and specifically for its relationship with HMS Income. Through this agreement, we provide management and other services to the External Investment Manager, as well as access to our employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, we began charging the External Investment Manager for these services. Our total expenses for the years ended December 31, 2015 and 2014 are net of expenses charged to the External Investment Manager of $4.3 million and $2.0 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 charged to the External Investment Manager and dividend income from the External Investment Manager. For the years ended December 31, 2015 and 2014, the total contribution to our net investment income was $6.5 million and $2.5 million, respectively.

       The following tables summarize the composition of our total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio

63

Table of Contents

investments and Private Loan portfolio investments as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  December 31, 2015   December 31, 2014  

First lien debt

     75.8%     75.7%  

Equity

     13.5%     11.6%  

Second lien debt

     8.7%     10.0%  

Equity warrants

     0.9%     1.5%  

Other

     1.1%     1.2%  
​ ​ ​ ​ ​ ​ ​ ​

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

 

Fair Value:
  December 31, 2015   December 31, 2014  

First lien debt

     66.1%     66.9%  

Equity

     24.9%     21.9%  

Second lien debt

     7.7%     9.2%  

Equity warrants

     0.6%     1.0%  

Other

     0.7%     1.0%  
​ ​ ​ ​ ​ ​ ​ ​

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

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

PORTFOLIO ASSET QUALITY

       We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into 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.

64

Table of Contents

       The following table shows the distribution of our LMM portfolio investments on the 1 to 5 investment rating scale at fair value as of December 31, 2015 and 2014:

 
   As of December 31, 2015   As of December 31, 2014  
Investment Rating
  Investments at
Fair Value 		  Percentage of
Total Portfolio 		  Investments at
Fair Value 		  Percentage of
Total Portfolio 		 
 
   (dollars in thousands)
  

1

   $ 332,606     38.6%   $ 287,693     39.2%  

2

     143,268     16.6%     133,266     18.2%  

3

     277,160     32.1%     239,100     32.6%  

4

     107,926     12.5%     61,475     8.4%  

5

     1,750     0.2%     11,657     1.6%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 862,710     100.0%   $ 733,191     100.0%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

       Based upon our investment rating system, the weighted-average rating of our LMM portfolio was approximately 2.2 as of both December 31, 2015 and 2014.

       As of December 31, 2015, our total Investment Portfolio had six investments on non-accrual status, which comprised approximately 0.4% of its fair value and 3.7% of its cost. As of December 31, 2014, our total Investment Portfolio had five investments on non-accrual status, which comprised approximately 1.7% of its fair value and 4.7% 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 and an increase in defaults. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by economic cycles or other conditions, which could also have a negative impact on our future results.

DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

 
   Twelve Months
Ended
December 31, 		  Net Change  
 
   2015   2014   Amount   %  
 
   (dollars in thousands)
  

Total investment income

   $ 164,589   $ 140,763   $ 23,826     17%  

Total expenses

     (57,515 )   (45,227 )   (12,288 )   27%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net investment income

     107,074     95,536     11,538     12%  

Net realized gain (loss) from investments

     (21,316 )   23,206     (44,522 )      

Net change in net unrealized appreciation (depreciation) from:

                          

Portfolio investments

     11,048     (824 )   11,872        

SBIC debentures and marketable securities and idle funds

     (1,056 )   (10,883 )   9,827        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total net change in net unrealized appreciation (depreciation)

     9,992     (11,707 )   21,699        

Income tax benefit (provision)

     8,687     (6,287 )   14,974        
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net increase in net assets resulting from operations

   $ 104,437   $ 100,748   $ 3,689     4%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

65

Table of Contents


 
   Twelve Months
Ended
December 31, 		  Net Change  
 
   2015   2014   Amount   %  
 
   (dollars in thousands, except per share amounts)
  

Net investment income

   $ 107,074   $ 95,536   $ 11,538     12%  

Share-based compensation expense

     6,262     4,215     2,047     49%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Distributable net investment income(a)

   $ 113,336   $ 99,751   $ 13,585     14%  

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

  
$
2.31		  
$
2.29		  
$
0.02		    
1% 		 
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(a)
Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share based compensation expense which is non cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share based compensation does not require settlement in cash. However, distributable net investment income is a non U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

       For the year ended December 31, 2015, total investment income was $164.6 million, a 17% increase over the $140.8 million of total investment income for the corresponding period of 2014. This comparable period increase was principally attributable to (i) a $21.0 million net increase in interest income primarily related to higher average levels of portfolio debt investments, (ii) a $0.7 million net increase in fee income and (iii) a $2.0 million net increase in dividend income from Investment Portfolio equity investments. The $23.8 million increase in total investment income in the year ended December 31, 2015 includes a decrease of $1.7 million primarily related to a decrease in interest income due to lower accelerated prepayment and repricing activity for certain Investment Portfolio debt investments when compared to the same period in 2014 and a decrease of $1.6 million related to dividend income activity from portfolio companies that is considered to be less consistent on a recurring basis during the period when compared to the same period in 2014.

       For the year ended December 31, 2015, total expenses increased to $57.5 million from $45.2 million for the corresponding period of 2014. This comparable period increase in operating expenses was principally attributable to (i) a $8.5 million increase in interest expense, primarily due to a $7.3 million increase as a result of the issuance of our 4.50% Notes in November 2014 and an increase of $0.8 million related to interest on the Credit Facility due to the higher average balance outstanding in 2015, both when compared to the prior year, and (ii) a $2.5 million increase in compensation expense related to increases in the number of personnel, base compensation levels and incentive compensation accruals, (iii) a $2.0 million increase in share-based compensation expense and (iv) a $1.5 million increase in general and other administrative expenses, with these increases partially offset by a $2.3 million increase in the expenses charged to the External Investment Manager (see further discussion in "Overview"), in each case when compared to the prior year. For the years ended December 31, 2015 and 2014, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4%.

66

Table of Contents

       For the year ended December 31, 2015, distributable net investment income increased 14% to $113.3 million, or $2.31 per share, compared with $99.8 million, or $2.29 per share, in the corresponding period of 2014. The increase in distributable net investment income was primarily due to the higher level of total investment income, partially offset by higher operating expenses as discussed above. Distributable net investment income on a per share basis for the year ended December 31, 2015 reflects (i) a decrease of approximately $0.05 per share from the comparable period in 2014 attributable to the net decrease in the comparable levels of accelerated prepayment and repricing activity for certain Investment Portfolio debt investments as discussed above, (ii) a decrease of approximately $0.04 per share attributable to the decrease in the dividend income that is considered to be less consistent on a recurring basis as discussed above and (iii) a greater number of average shares outstanding compared to the corresponding period in 2014 primarily due to the April 2014 and March 2015 equity offerings, the shares issued through the ATM Program (as defined in "— Liquidity and Capital Resources — Capital Resources" below) and shares issued pursuant to our dividend reinvestment plan.

       Net investment income for the year ended December 31, 2015 was $107.1 million, or a 12% increase, compared to net investment income of $95.5 million for the corresponding period of 2014. 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.

       The net increase in net assets resulting from operations during the year ended December 31, 2015 was $104.4 million, or $2.13 per share, compared with $100.7 million, or $2.31 per share, during the year ended December 31, 2014. This increase from the prior year period was primarily the result of (i) a $11.5 million increase in net investment income as discussed above and (ii) a $21.7 million increase in net change in unrealized appreciation (depreciation) to net unrealized appreciation of $10.0 million for the year ended December 31, 2015 and (iii) a $15.0 million increase due to the change in the income tax benefit (provision) from the prior year period to an income tax benefit of $8.7 million for the year ended December 31, 2015, with these changes partially offset by a $44.5 million decrease due to the change in the net realized gain (loss) from investments from a net realized gain of $23.2 million during the year ended December 31, 2014 to a net realized loss of $21.3 million for the year ended December 31, 2015. The net realized loss of $21.3 million for the year ended December 31, 2015 was primarily the result of (i) the net realized losses relating to the restructure of two Private Loan investments totaling $13.8 million and two Middle Market investments totaling $9.1 million, (ii) the net realized loss on the exit of a Private Loan investment of $4.7 million and (iii) the exits of several Marketable securities and idle funds investments of $1.4 million, partially offset by the net realized gains on the exits of three LMM investments totaling $5.4 million and from an Other Portfolio investment of $2.5 million.

67

Table of Contents

       The following table provides a summary of the total net unrealized appreciation of $10.0 million for the year ended December 31, 2015:

 
   Twelve Months Ended December 31, 2015  
 
   LMM(a)   MM   PL   Other(b)   Total  
 
   (dollars in millions)
  

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

   $ (5.0 ) $ 6.9   $ 13.1   $ (2.6 ) $ 12.4  

Net change in unrealized appreciation (depreciation) relating to portfolio investments

     48.4     (38.1 )   (22.8 )   11.2     (1.3 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

   $ 43.4   $ (31.2 ) $ (9.7 ) $ 8.6   $ 11.1  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net change in unrealized depreciation relating to marketable securities

                             (0.2 )

Unrealized depreciation relating to SBIC debentures(c)

                             (0.9 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total net change in unrealized appreciation (depreciation)

                           $ 10.0  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(a)
LMM includes unrealized appreciation on 36 LMM portfolio investments and unrealized depreciation on 21 LMM portfolio investments.

(b)
Other includes $11.7 million of unrealized appreciation relating to the External Investment Manager, offset by $0.5 million of net unrealized depreciation relating to the Other Portfolio.

(c)
Relates to unrealized depreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis.

       The income tax benefit for the year ended December 31, 2015 of $8.7 million principally consisted of a deferred tax benefit of $11.7 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, partially offset by other current taxes of $3.0 million, which includes $1.8 million related to accruals for U.S. federal income, state and other taxes and $1.2 million for excise taxes.

68

Table of Contents

 
   Twelve Months
Ended
December 31, 		  Net Change  
 
   2014   2013   Amount   %  
 
   (dollars in thousands)
  

Total investment income

   $ 140,763   $ 116,497   $ 24,266     21%  

Total expenses

     (45,227 )   (41,074 )   (4,153 )   10%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net investment income

     95,536     75,423     20,113     27%  

Net realized gain (loss) from investments

     23,206     7,277     15,929     219%  

Net realized loss from SBIC debentures

     —     (4,775 )   4,775        

Net change in net unrealized appreciation (depreciation) from:

                          

Portfolio investments

     (824 )   16,155     (16,979 )      

SBIC debentures and marketable securities and idle funds

     (10,883 )   2,740     (13,623 )      
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total net change in net unrealized appreciation (depreciation)

     (11,707 )   18,895     (30,602 )      

Income tax benefit (provision)

     (6,287 )   35     (6,322 )      
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net increase in net assets resulting from operations

   $ 100,748   $ 96,855   $ 3,893     4%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

 
   Twelve Months
Ended
December 31, 		  Net Change  
 
   2014   2013   Amount   %  
 
   (dollars in thousands, except per share amounts)
  

Net investment income

   $ 95,536   $ 75,423   $ 20,113     27%  

Share-based compensation expense

     4,215     4,210     5     0%  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Distributable net investment income(a)

   $ 99,751   $ 79,633   $ 20,118     25%  

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

  
$
2.29		  
$
2.17		  
$
0.12		    
6% 		 
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(a)
Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share based compensation expense which is non cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share based compensation does not require settlement in cash. However, distributable net investment income is a non U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

       For the year ended December 31, 2014, total investment income was $140.8 million, a 21% increase over the $116.5 million of total investment income for the corresponding period of 2013. This comparable period increase was principally attributable to (i) a $15.9 million increase in interest income from higher average levels of portfolio debt investments, (ii) an $8.1 million increase in dividend income from Investment Portfolio equity investments and (iii) a $0.8 million increase in fee income from higher origination activity

69

Table of Contents

and refinancing and prepayment activity, partially offset by a $0.6 million decrease in interest and dividend income due to a lower level of Marketable securities and idle funds investments. The $24.3 million increase in total investment income in the year ended December 31, 2014 includes a $1.3 million net decrease in investment income related to accelerated prepayment and repricing activity for certain Investment Portfolio debt investments and Marketable securities and idle funds investments and $1.6 million of unusual dividend income.

       For the year ended December 31, 2014, total expenses increased to $45.2 million from $41.1 million for the corresponding period of 2013. This comparable period increase in operating expenses was principally attributable to (i) a $3.4 million increase in interest expense, primarily as a result of (a) the issuance of our 6.125% Notes due 2023 (the "6.125% Notes") in April 2013, (b) the issuance of our 4.50% Notes due 2019 (the "4.50% Notes") in November 2014 and (c) a higher average outstanding balance on our credit facility ("Credit Facility") when compared to prior year, partially offset by a decrease in interest expense from our SBIC debentures due to a lower average interest rate, in both cases when compared to the prior year, (ii) a $1.0 million increase in compensation expense related to increases in the number of personnel, base compensation and other incentive compensation accruals and (iii) a $1.8 million increase related to other general and administrative expenses, partially offset by (i) a $2.0 million decrease in expenses related to the expenses charged to the External Investment Manager (see further discussion in "Overview"), in each case when compared to the prior year. Share-based compensation expense was $4.2 million for 2014, which is unchanged from 2013, due to the net effect of the non-recurring accelerated vesting of restricted stock of our retired Executive Vice Chairman in 2013, which resulted in additional share-based compensation expense of $1.3 million in the prior year, which was offset by an increase of $1.3 million related to non-cash amortization for the vesting of restricted share grants in 2014. For the year ended December 31, 2014, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4% compared to 1.7% for the year ended December 31, 2013 (the prior year comparison excluding the effect of the accelerated vesting as discussed above). Including the effect of the accelerated vesting of restricted stock, the ratio would have been 1.8% for the year ended December 31, 2013.

       Distributable net investment income increased 25% to $99.8 million, or $2.29 per share, compared with $79.6 million, or $2.17 per share, in the corresponding period of 2013. The increase in distributable net investment income was primarily due to the higher level of total investment income partially offset by higher operating expenses, due to the changes discussed above. Distributable net investment income on a per share basis for the year ended December 31, 2014 reflects (i) a decrease of approximately $0.06 per share from the comparable period in 2013 attributable to the net decrease in the comparable levels of accelerated prepayment and repricing activity for certain investment portfolio debt investments, (ii) approximately $0.04 per share attributable to the unusual dividend income as discussed above and (iii) a greater number of average shares outstanding compared to the corresponding period in 2013 primarily due to the August 2013 and April 2014 follow-on equity offerings.

       Net investment income for the year ended December 31, 2014 was $95.5 million, or a 27% increase, compared to net investment income of $75.4 million for the corresponding period of 2013. 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.

       The net increase in net assets resulting from operations during the year ended December 31, 2014 was $100.7 million, or $2.31 per share, compared with $96.9 million, or $2.65 per share, during the year ended

70

Table of Contents

December 31, 2013. This increase from the prior year was primarily the result of (i) a $20.1 million increase in net investment income and (ii) a $15.9 million increase in the net realized gain (loss) from investments and (iii) the $4.8 million decrease in the net realized loss from SBIC debentures, partially offset by (i) a $30.6 million decrease in net change in unrealized appreciation (depreciation) to $11.7 million of net unrealized depreciation for the year ended December 31, 2014 compared to $18.9 million of net unrealized appreciation in the prior year and (ii) a $6.3 million increase in the income tax provision from the prior year. The net realized gain from investments of $23.2 million during the year ended December 31, 2014 was primarily attributable to (i) $27.1 million of realized gains recognized on the exits of four LMM portfolio investments in 2014 and (ii) net realized gains on several Middle Market investments totaling $2.0 million, partially offset by a net realized loss of $6.5 million in conjunction with a change in control transaction involving a LMM portfolio company in the second quarter of 2014.

       The following table provides a summary of the total net change in unrealized depreciation of $11.7 million for the year ended December 31, 2014:

 
   Twelve Months Ended December 31, 2014  
 
   LMM(a)   MM   PL   Other(b)   Total  
 
   (dollars in millions)
  

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

   $ (16.0 ) $ (3.5 ) $ (0.9 ) $ (0.3 ) $ (20.7 )

Net change in unrealized appreciation (depreciation) relating to portfolio investments

     33.7     (18.7 )   (9.9 )   14.8     19.9  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

   $ 17.7   $ (22.2 ) $ (10.8 ) $ 14.5   $ (0.8 )
                       

Net change in unrealized depreciation relating to marketable securities

                             —  

Unrealized depreciation relating to SBIC debentures(c)

                             (10.9 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total net change in unrealized depreciation

                           $ (11.7 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(a)
LMM includes unrealized appreciation on 39 LMM portfolio investments and unrealized depreciation on 12 LMM portfolio investments.

(b)
Other includes $14.5 million of unrealized appreciation relating to the External Investment Manager and $0.3 million of net unrealized appreciation relating to the Other Portfolio.

(c)
Relates to unrealized depreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis.

       The income tax provision for the year ended December 31, 2014 of $6.3 million principally consisted of deferred taxes of $3.3 million, which is primarily the result of the impact on deferred taxes related to the utilization of net operating losses and net unrealized appreciation on our portfolio investments held in our Taxable Subsidiaries, and other taxes of $3.0 million, which includes a $1.4 million accrual for excise tax on our estimated spillover taxable income and $1.6 million related to accruals for state and other taxes.

       For the year ended December 31, 2015, we experienced a net decrease in cash and cash equivalents in the amount of $40.1 million, which is the net result of $131.4 million of cash used for our operating activities and $91.3 million of cash provided by financing activities.

71

Table of Contents

       During the period, we used $131.4 million of cash for our operating activities, which resulted primarily from (i) cash flows we generated from the operating profits earned through our operating activities totaling $101.8 million, which is our $113.3 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $8.9 million, payment-in-kind interest income of $3.6 million, cumulative dividends of $1.6 million and the amortization expense for deferred financing costs of $2.6 million, (ii) cash uses totaling $848.0 million which primarily resulted from (a) the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2014, which together total $838.4 million, (b) the funding of new Marketable securities and idle funds investments totaling $5.8 million, (c) $2.3 million related to decreases in payables and accruals and (d) increases in other assets of $1.5 million, and (iii) cash proceeds totaling $614.8 million from (a) $605.3 million in cash proceeds from the repayments of debt investments and sales of equity investments in portfolio companies and (b) $9.5 million of cash proceeds from the sale of Marketable securities and idle funds investments.

       During the year ended December 31, 2015, $91.3 million in cash was provided by financing activities, which principally consisted of (i) $132.0 million in net cash proceeds from a public equity offering in March 2015 and through equity issuances under the ATM Program in the fourth quarter of 2015 and (ii) $73.0 million in net cash proceeds from the Credit Facility, partially offset by (iii) $110.7 million in cash dividends paid to stockholders and (iv) $3.0 million for payment of deferred loan costs, SBIC debenture fees and other costs.

       For the year ended December 31, 2014, we experienced a net increase in cash and cash equivalents in the amount of $25.7 million, which is the net result of $190.9 million of cash used for our operating activities and $216.6 million provided by financing activities.

       During the period, we used $190.9 million of cash for our operating activities, which resulted primarily from (i) cash flows we generated from the ordinary operating profits earned through our operating activities totaling $84.5 million, which is our $99.8 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $10.5 million, payment-in-kind interest income of $4.7 million, cumulative dividends of $1.8 million and the amortization expense for deferred financing costs of $1.7 million, (ii) cash uses totaling $858.2 million from (a) the funding of new portfolio company investments and settlement of accruals for portfolio investments existing as of December 31, 2013, which together total $831.2 million, (b) the funding of new Marketable securities and idle funds investments and settlement of accruals for Marketable securities and idle funds investments existing as of December 31, 2013, which together total $22.7 million and (c) increases in other assets of $4.3 million, and (iii) cash proceeds totaling $582.8 million from (a) $554.7 million in cash proceeds from the repayments of debt investments and sales of equity investments in portfolio companies, (b) $27.0 million of cash proceeds from the sale of Marketable securities and idle funds investments and (c) $1.1 million related to increases in payables and accruals.

       During 2014, $216.6 million in cash was provided by financing activities, which principally consisted of (i) $175.0 million in proceeds from the issuance of the 4.50% Notes in November 2014, (ii) $139.7 million in net cash proceeds from a follow-on public equity offering in April 2014 and (iii) $24.8 million in cash proceeds from the issuance of SBIC debentures, partially offset by (i) $95.9 million in cash dividends paid to stockholders, (ii) $19.0 million in net cash repayments of the Credit Facility, (iii) $6.4 million in loan costs associated with our SBIC debentures, the 4.50% Notes and the Credit Facility and (iv) $1.5 million in other costs.

       As of December 31, 2015, we had $20.3 million in cash and cash equivalents, $3.7 million in Marketable securities and idle funds investments and $264.0 million of unused capacity under the Credit Facility, which we maintain to support our investment and operating activities. As of December 31, 2015, our net asset value totaled $1,070.9 million, or $21.24 per share.

72

Table of Contents

       The Credit Facility, which provides additional liquidity to support our investment and operational activities, provides for commitments from a diversified group of fourteen lenders. The Credit Facility was amended during 2015 to change the total commitments to $555.0 million, increase the accordion feature of the Credit Facility from $650.0 million to $750.0 million, increase the amount of unsecured debt we are permitted to incur, providing us additional financial flexibility in our capital structure, decrease the interest rate to the rates described below and to extend the maturity one year to September 2020. The accordion feature allows Main Street to increase the total commitments under the facility 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 (0.24% as of December 31, 2015) plus (i) 1.875% (or the applicable base rate (Prime Rate of 3.50% as of December 31, 2015) plus 0.875%), as long as we maintain an investment grade rating and meet certain agreed upon excess collateral and maximum leverage requirements, (ii) 2.0% (or the applicable base rate plus 1.0%) if we maintain an investment grade rating but do not meet certain excess collateral and maximum leverage requirements or (iii) 2.25% (or the applicable base rate plus 1.25%), if we do not maintain an investment grade rating. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. The Credit Facility contains certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining an asset coverage ratio of at least 1.5 to 1.0, and (iv) maintaining a minimum tangible net worth. The Credit Facility is provided on a revolving basis through its final maturity date in September 2020, and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval. As of December 31, 2015, we had $291.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 2.1% 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. In addition, in December 2015, the 2016 omnibus spending bill approved by Congress and signed into law by the President increased the amount of SBA-guaranteed debentures that affiliated SBIC funds can have outstanding from $225.0 million to $350.0 million. This new legislation may allow us to issue additional SBIC debentures, subject to SBA approval, above the $225.0 million that we, through the Funds, have outstanding as of December 31, 2015. 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 semi-annually. 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. On December 31, 2015, through our two wholly owned SBICs, we had $225.0 million of outstanding SBIC debentures guaranteed by the SBA, which bear a weighted-average annual fixed interest rate of approximately 4.2%, paid semi-annually, and mature ten years from issuance. The first maturity related to our SBIC debentures does not occur until 2017, and the remaining weighted-average duration is approximately 5.6 years as of December 31, 2015.

       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 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

73

Table of Contents

accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2015, 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 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 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 semi-annually 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 December 31, 2015, 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 April 2014, we completed a follow-on public equity offering of 4,600,000 shares of common stock, including the underwriters' full exercise of their option to purchase 600,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by us, of approximately $139.7 million.

       During March 2015, we completed a follow-on public equity offering of 4,370,000 shares of common stock, including the underwriters' full exercise of their option to purchase 570,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by us, of approximately $127.8 million.

       During November 2015, we entered into a program (the "ATM Program") with underwriters through which we could sell, by means of at-the-market offerings from time to time, up to 1,000,000 shares of our common stock. During the fourth quarter of 2015, we sold 140,568 shares of our common stock at a weighted-average price of $31.98 per share and raised $4.5 million of gross proceeds under the ATM Program. Net proceeds were $4.3 million after commissions to the underwriter on shares sold and offering costs. As of December 31, 2015, 859,432 shares were available for sale under the ATM Program.

       We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, the liquidation of Marketable securities and idle funds investments, and a combination of future 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

74

Table of Contents

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 shares of our common stock below the then current net asset value per share of our common stock at our 2015 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, and we do not currently expect to seek such approval at our 2016 annual meeting of stockholders for the same reason. 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 spillover 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 recent public equity and historical debt offerings, our $555.0 million Credit Facility, and the available leverage through the SBIC program, 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 ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-9 supersedes the revenue recognition requirements under ASC Topic 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. The FASB tentatively decided to defer the effective date of the new revenue standard for public entities under U.S. GAAP for one year. If finalized, 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 are currently evaluating the impact the adoption of this new accounting standard will have on our consolidated financial statements.

75

Table of Contents

       In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The impact of the adoption of this new accounting standard on our consolidated financial statements is currently being evaluated.

       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 impact of the adoption of this new accounting standard on our consolidated financial statements is currently being evaluated.

       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 financial statements upon adoption.

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

       We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At December 31, 2015, we had a total of $144.3 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) nine investments with capital commitments that had not been fully called.

76

Table of Contents

       As of December 31, 2015, the future fixed commitments for cash payments in connection with our SBIC debentures and the 4.50% Notes and the 6.125% Notes for each of the next five years and thereafter are as follows:

 
   2016   2017   2018   2019   2020 and
thereafter 		  Total  
 
   (dollars in thousands)
  

SBIC debentures

   $ —   $ 15,000   $ 10,200   $ 20,000   $ 179,800   $ 225,000  

Interest due on SBIC debentures

     9,446     9,423     8,130     7,807     17,601     52,407  

Notes 6.125%

     —     —     —     —     90,738     90,738  

Interest due on 6.125% Notes

     4,168     5,558     5,558     5,558     19,452     40,294  

4.50% Notes

     —     —     —     175,000     —     175,000  

Interest due on 4.50% Notes

     7,875     7,875     7,875     7,875     —     31,500  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 21,489   $ 37,856   $ 31,763   $ 216,240   $ 307,591   $ 614,939  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

       As of December 31, 2015, we had $291.0 million in borrowings outstanding under our Credit Facility, and the Credit Facility is currently scheduled to mature in September 2020. The Credit Facility contains two, one-year extension options which could extend the maturity to September 2022. See further discussion of the Credit Facility terms in "— Liquidity and Capital Resources — Capital Resources".

       As discussed further above, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of our Investment Portfolio. At December 31, 2015, we had a receivable of $2.0 million due from the External Investment Manager which included approximately $1.3 million primarily related to operating expenses incurred by us as required to support the External Investment Manager's business, along with dividends declared but not paid by the External Investment Manager of approximately $0.7 million.

       In June 2013, our board of directors approved and adopted the Deferred Compensation Plan for Non-Employee Directors (the "2013 Deferred Compensation Plan") for the non-employee members of our board of directors, which allowed the directors at their option to defer all or a portion of the fees paid for their services as directors and have such deferred fees paid in shares of our common stock within 90 days after the participant's end of service as a director. As of December 31, 2015, $1.1 million of directors' fees had been deferred under this plan. These deferred fees represented 34,645 shares of our common shares. These shares will not be issued or included as outstanding on the consolidated statement of changes in net assets until each applicable participant's end of service as a director, but are included in operating expenses and weighted-average shares outstanding on our consolidated statement of operations as earned.

       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 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, 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.

       During January 2016, we fully exited our debt and equity investments in Southern RV, LLC, a four-location dealer of new and used recreational vehicles ("RV") and its affiliated real estate entity (together,

77

Table of Contents

"Southern RV") through a sale of Southern RV's assets and business. Southern RV has facilities in Tyler, TX, Bossier City, LA, Lafayette, LA, and Biloxi, MS and also engages in financing, parts sales and RV services. Southern RV's predecessor was originally founded in 2000 and offers its customers a variety of Travel Trailers, Fifth Wheels, Toy Haulers, Class A Motorhomes, and Class C Motorhomes from top-selling manufacturers. We made our initial investment in Southern RV in August 2013 and realized a gain of approximately $14.4 million on the exit of our equity investments in Southern RV.

       During February 2016, we led a new portfolio investment totaling $15.0 million of invested capital in UniRush, LLC ("UniRush") to fund UniRush's growth initiatives and refinance existing debt, with us funding $12.0 million of the investment. The investment in UniRush consisted of first-lien, senior secured term debt. In addition, we and our co-investor provided UniRush a $5.0 million delayed draw term loan facility to support its future growth opportunities. Headquartered in Cincinnati, Ohio and founded in 2003, UniRush is a leading provider of prepaid debit card solutions branded under the "RushCard" and "Rapid PayCard". RushCard was one of the first prepaid, reloadable Visa debit card programs, and provides financial services for the more than 65 million individuals in the United States who cannot or choose not to establish a traditional banking relationship. Rapid PayCard is a provider of prepaid, payroll debit cards for employers as an alternative to issuing paper checks to employees.

       During February 2016, we declared regular monthly dividends of $0.180 per share for each of April, May and June 2016. These regular monthly dividends equal a total of $0.540 per share for the second quarter of 2016. The second quarter 2016 regular monthly dividends represent a 2.9% increase from the dividends declared for the second quarter of 2015. Including the dividends declared for the second quarter of 2016, we will have paid $16.960 per share in cumulative dividends since our October 2007 initial public offering.

Item 7A.    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 and Marketable securities and idle funds 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 of any debt investments that 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 December 31, 2015, approximately 60% of our debt investment portfolio (at cost) bore interest at floating rates, 98% of which were subject to contractual minimum interest rates. As of December 31, 2015, none of our Marketable securities and idle funds investments (at cost) bore interest at floating 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 and our 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 December 31, 2015, 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 due

78

Table of Contents

to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of December 31, 2015.


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)
  

50

   $ 871   $ (1,455 ) $ (584 ) $ (0.01 )

100

     4,566     (2,910 )   1,656     0.03  

150

     8,714     (4,365 )   4,349     0.09  

200

     12,867     (5,820 )   7,047     0.14  

300

     21,172     (8,730 )   12,442     0.25  

400

     29,497     (11,640 )   17,857     0.35  

500

     37,842     (14,550 )   23,292     0.46  

       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).

79

Table of Contents

Item 8.    Financial Statements and Supplementary Data


Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

   81

Consolidated Balance Sheets as of December 31, 2015 and 2014

   83

Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014, and 2013

   84

Consolidated Statements of Changes in Net Assets for the Years Ended December 31, 2015, 2014, and 2013

   85

Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013

   86

Consolidated Schedules of Investments as of December 31, 2015 and 2014

   87

Notes to Consolidated Financial Statements

   136

80

Table of Contents


Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders' of
Main Street Capital Corporation

       We have audited the accompanying consolidated balance sheets of Main Street Capital Corporation (a Maryland corporation) and subsidiaries (the "Company"), including the consolidated schedule of investments, as of December 31, 2015 and 2014 and the related consolidated statements of operations, changes in net assets and cash flows for each of three years in the period ended December 31, 2015 and the financial highlights (see Note I) for each of the five years in the period ended December 31, 2015. These financial statements and financial highlights are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

       We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included verification by confirmation of securities as of December 31, 2015 and 2014, by correspondence with the portfolio companies and custodians, or by other appropriate auditing procedures where replies where not received. We believe that our audits provide a reasonable basis for our opinion.

       In our opinion, the consolidated financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Main Street Capital Corporation and subsidiaries as of December 31, 2015 and 2014 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, and the financial highlights for each of the five years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

       We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2015, based on criteria established in the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 26, 2016, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ GRANT THORNTON LLP

Dallas, Texas
February 26, 2016

81

Table of Contents


 Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders' of
Main Street Capital Corporation

       We have audited internal control over financial reporting of Main Street Capital Corporation (a Maryland corporation) and subsidiaries (the "Company") as of December 31, 2015, based on criteria established in the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

       We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

       A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

       Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

       In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in the 2013 Internal Control — Integrated Framework issued by COSO.

       We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company, including the consolidated schedule of investments, as of December 31, 2015 and 2014, and the related consolidated statements of operations, changes in net assets and cash flows, for each of the three years in the period ended December 31, 2015 and the financial highlights (see Note I) for each of the five years in the period ended December 31, 2015, and our report dated February 26, 2016, expressed an unqualified opinion on those financial statements.

/s/ GRANT THORNTON LLP

Dallas, Texas
February 26, 2016

82

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Balance Sheets

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

 
   December 31,
2015 		  December 31,
2014 		 

ASSETS

  

Portfolio investments at fair value:

    
 		    
 		  

Control investments (cost: $387,727 and $342,847 as of December 31, 2015 and 2014, respectively)

   $ 555,011   $ 469,846  

Affiliate investments (cost: $333,728 and $266,243 as of December 31, 2015 and 2014, respectively)

     350,519     278,675  

Non-Control/Non-Affiliate investments (cost: $945,187 and $832,312 as of December 31, 2015 and 2014, respectively)

     894,466     814,809  
​ ​ ​ ​ ​ ​ ​ ​

Total portfolio investments (cost: $1,666,642 and $1,441,402 as of December 31, 2015 and 2014, respectively)

     1,799,996     1,563,330  

Marketable securities and idle funds investments (cost: $5,407 and $10,604 as of December 31, 2015 and 2014, respectively)

     3,693     9,067  
​ ​ ​ ​ ​ ​ ​ ​

Total investments (cost: $1,672,049 and $1,452,006 as of December 31, 2015 and 2014, respectively)

     1,803,689     1,572,397  

Cash and cash equivalents

    
20,331		    
60,432		  

Interest receivable and other assets

     27,737     23,273  

Receivable for securities sold

     9,901     23,133  

Deferred financing costs (net of accumulated amortization of $8,965 and $6,462 as of December 31, 2015 and 2014, respectively)

     13,267     14,550  

Deferred tax asset, net

     4,003     —  
​ ​ ​ ​ ​ ​ ​ ​

Total assets

   $ 1,878,928   $ 1,693,785  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

LIABILITIES

  

Credit facility

  
$
291,000		  
$
218,000		  

SBIC debentures (par: $225,000 as of December 31, 2015 and 2014, par of $75,200 is recorded at a fair value of $73,860 and $72,981 as of December 31, 2015 and 2014, respectively)

     223,660     222,781  

4.50% Notes

     175,000     175,000  

6.125% Notes

     90,738     90,823  

Dividend payable

     9,074     7,663  

Interest payable

     3,959     4,848  

Accounts payable and other liabilities

     12,292     10,701  

Payable for securities purchased

     2,311     14,773  

Deferred tax liability, net

     —     9,214  
​ ​ ​ ​ ​ ​ ​ ​

Total liabilities

     808,034     753,803  

Commitments and contingencies (Note N)

    
 		    
 		  

NET ASSETS

    
 		    
 		  

Common stock, $0.01 par value per share (150,000,000 shares authorized; 50,413,744 and 45,079,150 shares issued and outstanding as of December 31, 2015 and 2014, respectively)

    
504		    
451		  

Additional paid-in capital

     1,011,467     853,606  

Accumulated net investment income, net of cumulative dividends of $417,347 and $293,789 as of December 31, 2015 and 2014, respectively

     7,181     23,665  

Accumulated net realized gain from investments (accumulated net realized gain from investments of $19,005 before cumulative dividends of $68,658 as of December 31, 2015 and accumulated net realized gain from investments of $40,321 before cumulative dividends of $60,777 as of December 31, 2014)

     (49,653 )   (20,456 )

Net unrealized appreciation, net of income taxes

     101,395     82,716  
​ ​ ​ ​ ​ ​ ​ ​

Total net assets

     1,070,894     939,982  
​ ​ ​ ​ ​ ​ ​ ​

Total liabilities and net assets

   $ 1,878,928   $ 1,693,785  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

NET ASSET VALUE PER SHARE

   $ 21.24   $ 20.85  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

   

The accompanying notes are an integral part of these financial statements

83

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Operations

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

 
   Twelve Months Ended December 31,  
 
   2015   2014   2013  

INVESTMENT INCOME:

                    

Interest, fee and dividend income:

                    

Control investments

   $ 49,832   $ 40,122   $ 34,502  

Affiliate investments

     27,200     26,151     23,573  

Non-Control/Non-Affiliate investments

     86,571     73,666     57,083  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Interest, fee and dividend income

     163,603     139,939     115,158  

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

     986     824     1,339  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total investment income

     164,589     140,763     116,497  

EXPENSES:

                    

Interest

     (32,115 )   (23,589 )   (20,238 )

Compensation

     (14,852 )   (12,337 )   (8,560 )

General and administrative

     (8,621 )   (7,134 )   (4,877 )

Share-based compensation

     (6,262 )   (4,215 )   (4,210 )

Expenses charged to the External Investment Manager

     4,335     2,048     —  

Expenses reimbursed to MSCP

     —     —     (3,189 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total expenses

     (57,515 )   (45,227 )   (41,074 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NET INVESTMENT INCOME

     107,074     95,536     75,423  

NET REALIZED GAIN (LOSS):

    
 		    
 		    
 		  

Control investments

     (582 )   (10 )   8,669  

Affiliate investments

     5,827     12,019     981  

Non-Control/Non-Affiliate investments

     (25,147 )   11,257     (2,705 )

Marketable securities and idle funds investments

     (1,414 )   (60 )   332  

SBIC debentures

     —     —     (4,775 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total net realized gain (loss)

     (21,316 )   23,206     2,502  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION):

                    

Portfolio investments

     11,048     (824 )   16,155  

Marketable securities and idle funds investments

     (177 )   48     (1,652 )

SBIC debentures

     (879 )   (10,931 )   4,392  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total net change in unrealized appreciation (depreciation)

     9,992     (11,707 )   18,895  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

INCOME TAXES:

                    

Federal and state income, excise and other taxes

     (2,964 )   (3,013 )   (3,556 )

Deferred taxes

     11,651     (3,274 )   3,591  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Income tax benefit (provision)

     8,687     (6,287 )   35  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

   $ 104,437   $ 100,748   $ 96,855  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NET INVESTMENT INCOME PER SHARE — BASIC AND DILUTED

   $ 2.18   $ 2.20   $ 2.06  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

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

   $ 2.13   $ 2.31   $ 2.65  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

DIVIDENDS PAID PER SHARE:

                    

Regular monthly dividends

   $ 2.100   $ 1.995   $ 1.860  

Supplemental dividends

     0.550     0.550   $ 0.800  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total dividends

   $ 2.650   $ 2.545   $ 2.660  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC AND DILUTED

     49,071,492     43,522,397     36,617,850  

   

The accompanying notes are an integral part of these financial statements

84

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Changes in Net Assets

(dollars in thousands, except shares)

 
   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, 2012

     34,589,484   $ 346   $ 544,136   $ 35,869   $ (19,155 ) $ 81,780   $ 642,976  

Public offering of common stock, net of offering costs

     4,600,000     46     131,407     —     —     —     131,453  

Share-based compensation

     —     —     4,210     —     —     —     4,210  

Purchase of vested stock for employee payroll tax withholding

     (62,025 )   (1 )   (1,764 )   —     —     —     (1,765 )

Dividend reinvestment

     433,218     4     13,622     —     —     —     13,626  

Issuance of restricted stock, net of forfeited shares

     273,802     3     (3 )   —     —     —     —  

Consolidation of Internal Investment Manager

     —     —     2,037     —     —     —     2,037  

Issuances of common stock

     18,125     —     578     —     —     —     578  

Other

     —     —     758     —     —     —     758  

Dividends to stockholders

     —     —     —     (83,739 )   (14,456 )   —     (98,195 )

Net increase resulting from operations

     —     —     —     70,648     7,277     18,930     96,855  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balances at December 31, 2013

     39,852,604   $ 398   $ 694,981   $ 22,778   $ (26,334 ) $ 100,710   $ 792,533  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balances at December 31, 2013

     39,852,604   $ 398   $ 694,981   $ 22,778   $ (26,334 ) $ 100,710   $ 792,533  

Public offering of common stock, net of offering costs

     4,600,000     46     139,651     —     —     —     139,697  

Share-based compensation

     —     —     4,215     —     —     —     4,215  

Purchase of vested stock for employee payroll tax withholding

     (46,955 )   —     (1,495 )   —     —     —     (1,495 )

Dividend reinvestment

     468,417     5     14,951     —     —     —     14,956  

Amortization of directors' deferred compensation

     —     —     297     —     —     —     297  

Issuance of restricted stock, net of forfeited shares

     205,084     2     (2 )   —     —     —     —  

Tax benefit related to vesting of restricted shares

     —     —     1,008     —     —     —     1,008  

Dividends to stockholders

     —     —     —     (94,649 )   (17,328 )   —     (111,977 )

Net increase (loss) resulting from operations

     —     —     —     95,536     23,206     (17,994 )   100,748  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balances at December 31, 2014

     45,079,150   $ 451   $ 853,606   $ 23,665   $ (20,456 ) $ 82,716   $ 939,982  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balances at December 31, 2014

     45,079,150   $ 451   $ 853,606   $ 23,665   $ (20,456 ) $ 82,716   $ 939,982  

Public offering of common stock, net of offering costs

     4,510,568     46     132,003     —     —     —     132,049  

Share-based compensation

     —     —     6,262     —     —     —     6,262  

Purchase of vested stock for employee payroll tax withholding

     (54,840 )   (1 )   (1,739 )   —     —     —     (1,740 )

Dividend reinvestment

     636,079     6     19,348     —     —     —     19,354  

Amortization of directors' deferred compensation

     —     —     423     —     —     —     423  

Issuance of restricted stock, net of forfeited shares

     242,787     2     (2 )   —     —     —     —  

Other

     —     —     1,566     —     —     —     1,566  

Dividends to stockholders

     —     —     —     (123,558 )   (7,881 )   —     (131,439 )

Net increase (loss) resulting from operations

     —     —     —     107,074     (21,316 )   18,679     104,437  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balances at December 31, 2015

     50,413,744   $ 504   $ 1,011,467   $ 7,181   $ (49,653 ) $ 101,395   $ 1,070,894  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

   

The accompanying notes are an integral part of these financial statements

85

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(dollars in thousands)

 
   Twelve Months Ended December 31,  
 
   2015   2014   2013  

CASH FLOWS FROM OPERATING ACTIVITIES

                    

Net increase in net assets resulting from operations

   $ 104,437   $ 100,748   $ 96,855  

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

                    

Investments in portfolio companies

     (838,441 )   (831,192 )   (767,457 )

Proceeds from sales and repayments of debt investments in portfolio companies

     570,454     512,084     446,042  

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

     34,780     42,585     18,991  

Investments in marketable securities and idle funds investments           

     (5,767 )   (22,691 )   (54,011 )

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

     9,529     26,958     51,662  

Net change in net unrealized appreciation

     (9,992 )   11,707     (18,895 )

Net realized (gain) loss

     21,316     (23,206 )   (2,502 )

Accretion of unearned income

     (8,940 )   (10,491 )   (10,881 )

Payment-in-kind interest

     (3,624 )   (4,685 )   (5,041 )

Cumulative dividends

     (1,607 )   (1,815 )   (1,377 )

Share-based compensation expense

     6,262     4,215     4,210  

Amortization of deferred financing costs

     2,553     1,740     1,519  

Deferred tax (benefit) provision

     (11,651 )   3,274     (3,591 )

Changes in other assets and liabilities:

                    

Interest receivable and other assets

     (3,220 )   (6,686 )   87  

Interest payable

     (889 )   2,292     (1,006 )

Accounts payable and other liabilities

     1,639     1,817     1,177  

Deferred fees and other

     1,769     2,428     3,512  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net cash used in operating activities

     (131,392 )   (190,918 )   (240,706 )

CASH FLOWS FROM FINANCING ACTIVITIES

    
 		    
 		    
 		  

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

     132,049     139,697     131,453  

Proceeds from public offering of 6.125% Notes

     —     —     92,000  

Repurchases of 6.125% Notes

     (85 )   (59 )   (1,108 )

Proceeds from public offering of 4.50% Notes

     —     175,000     —  

Dividends paid

     (110,673 )   (95,935 )   (83,180 )

Proceeds from issuance of SBIC debentures

     —     24,800     39,000  

Repayments of SBIC debentures

     —     —     (63,800 )

Proceeds from credit facility

     534,000     491,000     460,000  

Repayments on credit facility

     (461,000 )   (510,000 )   (355,000 )

Payment of deferred loan costs and SBIC debenture fees

     (1,260 )   (6,359 )   (6,288 )

Other

     (1,740 )   (1,495 )   (1,187 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net cash provided by financing activities

     91,291     216,649     211,890  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net increase (decrease) in cash and cash equivalents

     (40,101 )   25,731     (28,816 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

     60,432     34,701     63,517  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 20,331   $ 60,432   $ 34,701  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Supplemental cash flow disclosures:

                    

Interest paid

   $ 30,450   $ 19,559   $ 19,760  

Taxes paid

   $ 2,687   $ 4,152   $ 2,431  

Non-cash financing activities:

                    

Shares issued pursuant to the DRIP

   $ 19,354   $ 14,956   $ 13,627  

   

The accompanying notes are an integral part of these financial statements

86

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments

December 31, 2015
(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

                        

     

5.00% Current / 5.00% PIK Secured Debt (Maturity — July 22, 2020)

   $ 21,554   $ 21,554   $ 20,380  

     

Preferred Member Units (4,500,000 units; 12% cumulative)

           4,394     2,000  

     

Member Units (45 units)

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

                  25,949     22,380  

                           

AmeriTech College, LLC

  

For-Profit Nursing and Healthcare College

                        

     

10% Secured Debt (Maturity — May 15, 2016)

     514     514     514  

     

10% Secured Debt (Maturity — November 30, 2019)

     489     489     489  

     

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

     3,025     3,025     3,025  

     

Preferred Member Units (294 units; 5%)(8)

           2,291     2,291  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,319     6,319  

                           

ASC Interests, LLC

  

Recreational and Educational Shooting Facility

                        

     

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

     2,500     2,470     2,500  

     

Member Units (1,500 units)(8)

           1,500     2,230  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  3,970     4,730  

                           

Bond-Coat, Inc.

  

Casing and Tubing Coating Services

                        

     

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

     11,596     11,521     11,596  

     

Common Stock (57,508 shares)

           6,350     9,140  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  17,871     20,736  

                           

Café Brazil, LLC

  

Casual Restaurant Group

                        

     

Member Units (1,233 units)(8)

           1,742     7,330  

                           

CBT Nuggets, LLC

  

Produces and Sells IT Training Certification Videos

                        

     

Member Units (416 units)(8)

           1,300     42,120  

                           

CMS Minerals LLC

  

Oil & Gas Exploration & Production

                        

     

Preferred Member Units (458 units)(8)

           2,967     6,914  

                           

Datacom, LLC

  

Technology and Telecommunications Provider

                        

     

10.5% Secured Debt (Maturity — May 31, 2019)

     11,205     11,122     10,970  

     

Class A Preferred Member Units (15% cumulative)(8)

           1,181     1,181  

     

Class B Preferred Member Units (6,453 units)

           6,030     5,079  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  18,333     17,230  

                           

87

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

Garreco, LLC

  

Manufacturer and Supplier of Dental Products

                        

     

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

     5,800     5,739     5,739  

     

Member Units (1,200 units)

           1,200     1,270  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,939     7,009  

                           

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)

     16,122     15,988     15,988  

     

Member Units (5,879 units)

           13,065     15,580  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  29,053     31,568  

                           

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     13,770  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  3,757     14,547  

                           

Harrison Hydra-Gen, Ltd.

  

Manufacturer of Hydraulic Generators

                        

     

9% Secured Debt (Maturity — January 8, 2016)

     5,010     5,010     5,010  

     

Preferred Stock (8% cumulative)(8)

           1,361     1,361  

     

Common Stock (107,456 shares)

           718     2,600  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,089     8,971  

                           

Hawthorne Customs and Dispatch Services, LLC

  

Facilitator of Import Logistics, Brokerage, and Warehousing

                        

     

Member Units (500 units)(8)

           589     460  

     

Member Units (Wallisville Real Estate, LLC) (588,210 units)(8)

           1,215     2,220  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  1,804     2,680  

                           

HW Temps LLC

  

Temporary Staffing Solutions

                        

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity July 2, 2020)(9)

     9,976     9,884     9,884  

     

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

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

                  13,826     13,826  

                           

Hydratec, Inc.

  

Designer and Installer of Micro-Irrigation Systems

                        

     

Common Stock (7,095 shares)(8)

           7,095     14,950  

                           

88

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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)

     11,350     11,281     11,350  

     

Member Units (5,400 units)

           5,606     6,440  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,887     17,790  

                           

Indianapolis Aviation Partners, LLC

  

Fixed Base Operator

                        

     

15% Secured Debt (Maturity — January 15, 2016)

     3,100     3,095     3,100  

     

Warrants (1,046 equivalent units)

           1,129     2,540  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,224     5,640  

                           

Jensen Jewelers of Idaho, LLC

  

Retail Jewelry Store

                        

     

Prime Plus 6.75% (Floor 2.00%), Current Coupon 10.25%, Secured Debt (Maturity — November 14, 2016)(9)

     4,055     4,028     4,055  

     

Member Units (627 units)(8)

           811     4,750  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,839     8,805  

                           

Lamb's Venture, LLC

  

Aftermarket Automotive Services Chain

                        

     

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

     7,962     7,961     7,962  

     

Preferred Equity (non-voting)

           328     328  

     

Member Units (742 units)

           5,273     4,690  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity — October 1, 2025)

     919     919     919  

     

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

           625     1,240  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  15,106     15,139  

                           

Lighting Unlimited, LLC

  

Commercial and Residential Lighting Products and Design Services

                        

     

8% Secured Debt (Maturity — August 22, 2016)

     1,514     1,514     1,514  

     

Preferred Equity (non-voting)

           434     430  

     

Warrants (71 equivalent units)

           54     40  

     

Member Units (700 units)(8)

           100     350  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,102     2,334  

                           

Marine Shelters Holdings, LLC (LoneStar Marine Shelters)

  

Fabricator of Marine and Industrial Shelters

                        

     

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

     9,053     8,967     8,870  

     

Preferred Member Units (3,810 units)

           5,352     4,881  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  14,319     13,751  

                           

MH Corbin Holding LLC

  

Manufacturer and distributor of traffic safety products

                        

     

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

     14,000     13,869     13,869  

     

Preferred Member Units (4,000 shares)

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

                  19,869     19,869  

                           

89

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(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 (2,829 units)

           1,244     2,580  

     

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

     881     881     881  

     

Member Units (Mid — Columbia Real Estate, LLC) (250 units)(8)

           250     550  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,025     9,661  

                           

MSC Adviser I, LLC(16)

  

Third Party Investment Advisory Services

                        

     

Member Units (Fully diluted 100.0%)(8)

           —     27,272  

                           

Mystic Logistics Holdings, LLC

  

Logistics and Distribution Services Provider for Large Volume Mailers

                        

     

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

     9,448     9,282     9,448  

     

Common Stock (5,873 shares)(8)

           2,720     5,970  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,002     15,418  

                           

NAPCO Precast, LLC

  

Precast Concrete Manufacturing

                        

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — January 31, 2016)(9)

     625     625     625  

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — February 1, 2016)(9)

     3,380     3,379     3,380  

     

18% Secured Debt (Maturity — February 1, 2016)

     4,924     4,923     4,924  

     

Member Units (2,955 units)(8)

           2,975     8,590  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  11,902     17,519  

                           

NRI Clinical Research, LLC

  

Clinical Research Service Provider

                        

     

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

     4,617     4,539     4,539  

     

Warrants (251,723 equivalent units)

           252     340  

     

Member Units (1,454,167 units)

           765     1,342  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,556     6,221  

                           

NRP Jones, LLC

  

Manufacturer of Hoses, Fittings and Assemblies

                        

     

12% Secured Debt (Maturity — December 22, 2016)

     13,224     12,948     12,948  

     

Warrants (14,331 equivalent units)

           817     450  

     

Member Units (50,877 units)

           2,900     1,480  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,665     14,878  

                           

OMi Holdings, Inc.

  

Manufacturer of Overhead Cranes

                        

     

Common Stock (1,500 shares)

           1,080     13,640  

                           

90

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

Pegasus Research Group, LLC (Televerde)

  

Provider of Telemarketing and Data Services

                        

     

Member Units (460 units)(8)

           1,290     6,840  

                           

PPL RVs, Inc.

  

Recreational Vehicle Dealer

                        

     

11.1% Secured Debt (Maturity — July 1, 2016)

     9,710     9,710     9,710  

     

Common Stock (1,962 shares)

           2,150     9,770  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  11,860     19,480  

                           

Principle Environmental, LLC

  

Noise Abatement Service Provider

                        

     

12% Secured Debt (Maturity — April 30, 2017)

     4,060     4,039     4,060  

     

12% Current / 2% PIK Secured Debt (Maturity — April 30, 2017)

     3,310     3,309     3,310  

     

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

           4,663     6,060  

     

Warrants (1,036 equivalent units)

           1,200     310  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,211     13,740  

                           

Quality Lease Service, LLC

  

Provider of Rigsite Accommodation Unit Rentals and Related Services

                        

     

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

     6,538     6,538     6,538  

     

Member Units (1,000 units)

           568     2,638  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,106     9,176  

                           

River Aggregates, LLC

  

Processor of Construction Aggregates

                        

     

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

     750     556     556  

     

Member Units (1,150 units)(8)

           1,150     3,830  

     

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

           369     2,360  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,075     6,746  

                           

SoftTouch Medical Holdings LLC

  

Home Provider of Pediatric Durable Medical Equipment

                        

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — October 31, 2019)(9)

     8,075     8,010     8,010  

     

Member Units (4,450 units)(8)

           4,930     5,710  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,940     13,720  

                           

Southern RV, LLC

  

Recreational Vehicle Dealer

                        

     

13% Secured Debt (Maturity — August 8, 2018)

     11,400     11,296     11,400  

     

Member Units (1,680 units)(8)

           1,680     15,100  

     

13% Secured Debt (Southern RV Real Estate, LLC) (Maturity — August 8, 2018)

     3,250     3,220     3,250  

     

Member Units (Southern RV Real Estate, LLC) (480 units)

           480     1,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,676     30,950  

                           

91

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(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     2,921     2,921  

     

Series A Preferred Units (2,500 units; 10% Cumulative)

           2,500     690  

     

Warrants (1,424 equivalent units)

           1,096     —  

     

Member Units (MPI Real Estate Holdings, LLC) (100% Fully diluted)(8)

           2,300     2,230  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,817     5,841  

                           

Travis Acquisition LLC

  

Manufacturer of Aluminum Trailers

                        

     

12% Secured Debt (Maturity — August 30, 2018)

     3,513     3,471     3,513  

     

Member Units (7,282 units)

           7,100     14,480  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  10,571     17,993  

                           

Uvalco Supply, LLC

  

Farm and Ranch Supply Store

                        

     

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

     1,314     1,314     1,314  

     

Member Units (2,011 units)(8)

           3,843     5,460  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,157     6,774  

                           

Vision Interests, Inc.

  

Manufacturer / Installer of Commercial Signage

                        

     

13% Secured Debt (Maturity — December 23, 2016)

     3,071     3,052     3,052  

     

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

           3,000     3,550  

     

Common Stock (1,126,242 shares)

           3,706     210  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,758     6,812  

                           

Ziegler's NYPD, LLC

  

Casual Restaurant Group

                        

     

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

     1,000     992     992  

     

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

     500     500     500  

     

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

     2,750     2,750     2,750  

     

Warrants (587 equivalent units)

           600     50  

     

Preferred Member Units (10,072 units)

           2,834     3,400  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,676     7,692  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Control Investments (30.8% of total investments at fair value)

   $ 387,727   $ 555,011  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

92

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(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

  

 

                    

     

11% Secured Debt (Maturity — November 7, 2019)

   $ 12,960   $ 12,611   $ 12,790  

     

Warrants (42 equivalent units)

           259     490  

     

Member Units (186 units)

           1,200     2,020  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  14,070     15,300  

                           

Boss Industries, LLC

  

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

  

 

                    

     

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

           2,246     2,586  

                           

Bridge Capital Solutions Corporation

  

Financial Services and Cash Flow Solutions Provider

  

 

                    

     

13% Secured Debt (Maturity — April 18, 2017)

     7,000     6,890     6,890  

     

Warrants (22 equivalent shares)

           200     1,300  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,090     8,190  

                           

Buca C, LLC

  

Casual Restaurant Group

  

 

                    

     

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

     25,530     25,299     25,299  

     

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

           3,711     3,711  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  29,010     29,010  

                           

CAI Software LLC

  

Provider of Specialized Enterprise Resource Planning Software

  

 

                    

     

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

     4,661     4,624     4,661  

     

Member Units (65,356 units)

           654     1,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,278     5,661  

                           

Condit Exhibits, LLC

  

Tradeshow Exhibits / Custom Displays Provider

  

 

                    

     

Member Units (3,936 units)(8)

           100     1,010  

                           

Congruent Credit Opportunities Funds(12)(13)

  

Investment Partnership

  

 

                    

     

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

           6,612     2,834  

     

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

           12,020     12,024  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  18,632     14,858  

                           

Daseke, Inc.

  

Specialty Transportation Provider

  

 

                    

     

12% Current / 2.5% PIK Secured Debt (Maturity — July 31, 2018)

     21,253     21,003     21,253  

     

Common Stock (19,467 shares)

           5,213     22,660  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  26,216     43,913  

                           

93

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

Dos Rios Partners(12)(13)

  

Investment Partnership

  

 

                    

     

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

           3,104     2,031  

     

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

           986     648  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,090     2,679  

                           

East Teak Fine Hardwoods, Inc.

  

Distributor of Hardwood Products

  

 

                    

     

Common Stock (6,250 shares)(8)

           480     860  

                           

East West Copolymer & Rubber, LLC

  

Manufacturer of Synthetic Rubbers

  

 

                    

     

12% Secured Debt (Maturity — October 17, 2019)

     9,600     9,463     9,463  

     

Warrants (2,510,790 equivalent units)

           50     50  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,513     9,513  

                           

EIG Traverse Co-Investment, L.P.(12)(13)

  

Investment Partnership

  

 

                    

     

LP Interests (Fully diluted 6.6%)(8)

           4,755     4,755  

                           

Freeport Financial Funds(12)(13)

  

Investment Partnership

  

 

                    

     

LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.9%)(8)

           5,974     6,045  

     

LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.4%)

           2,077     2,077  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,051     8,122  

                           

Gault Financial, LLC (RMB Capital, LLC)

  

Purchases and Manages Liquidation of Distressed Assets

  

 

                    

     

10% Secured Debt (Maturity — November 21, 2016)

     13,046     12,896     10,930  

     

Warrants (29,025 equivalent units)

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

                  13,296     10,930  

                           

Glowpoint, Inc.

  

Provider of Cloud Managed Video Collaboration Services

  

 

                    

     

8% Secured Debt (Maturity — October 18, 2018)

     400     397     397  

     

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

     9,000     8,929     8,929  

     

Common Stock (7,711,517 shares)

           3,958     3,840  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,284     13,166  

                           

Guerdon Modular Holdings, Inc.

  

Multi-Family and Commercial Modular Construction Company

  

 

                    

     

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

     10,400     10,280     10,280  

     

Common Stock (170,577 shares)

           2,983     1,990  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,263     12,270  

                           

Houston Plating and Coatings, LLC

  

Provider of Plating and Industrial Coating Services

  

 

                    

     

Member Units (248,082 units)(8)

           996     8,440  

                           

I-45 SLF LLC(12)(13)

  

Investment Partnership

  

 

                    

     

Member units (Fully diluted 20.0%; 24.4% profits interest)

           7,200     7,200  

                           

94

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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, 2017)

     6,000     5,853     5,853  

     

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

           2,302     2,302  

     

Warrants (31,928 equivalent units)

           459     —  

     

Member Units (14,732 units)

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

                  8,615     8,155  

                           

KBK Industries, LLC

  

Manufacturer of Specialty Oilfield and Industrial Products

  

 

                    

     

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

     5,900     5,875     5,900  

     

Member Units (250 units)(8)

           341     3,680  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,216     9,580  

                           

L.F. Manufacturing Holdings, LLC(10)

  

Manufacturer of Fiberglass Products

  

 

                    

     

Member Units (2,179,001 units)(8)

           2,019     1,485  

                           

MPS Denver, LLC

  

Specialty Card Printing

  

 

                    

     

Member Units (13,800 units)

           1,130     1,130  

                           

OnAsset Intelligence, Inc.

  

Provider of Transportation Monitoring / Tracking Products and Services

  

 

                    

     

12% PIK Secured Debt (Maturity — December 31, 2015)(17)

     4,006     4,006     4,006  

     

Preferred Stock (912 shares; 7% cumulative)(8)

           1,981     1,380  

     

Warrants (5,333 equivalent shares)

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

                  7,906     5,386  

                           

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     3,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  1,844     3,673  

                           

PCI Holding Company, Inc.

  

Manufacturer of Industrial Gas Generating Systems

  

 

                    

     

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

           2,762     4,887  

                           

Radial Drilling Services Inc.

  

Oil and Gas Lateral Drilling Technology Provider

  

 

                    

     

12% Secured Debt (Maturity — November 22, 2016)(14)

     4,200     3,941     1,500  

     

Warrants (316 equivalent shares)

           758     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,699     1,500  

                           

95

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(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)(18)

     30,785     30,281     250  

     

Preferred Member Units (250 units)

           2,500     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  32,781     250  

                           

Samba Holdings, Inc.

  

Provider of Intelligent Driver Record Monitoring Software and Services

  

 

                    

     

12.5% Secured Debt (Maturity — November 17, 2016)

     24,662     24,553     24,662  

     

Common Stock (170,963 shares)

           2,087     30,220  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  26,640     54,882  

                           

Tin Roof Acquisition Company

  

Casual Restaurant Group

  

 

                    

     

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

     13,994     13,807     13,807  

     

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

           2,477     2,477  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,284     16,284  

                           

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)

     2,826     2,826     2,812  

     

LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50% / 1.00% PIK, Current Coupon Plus PIK 10.50%, Secured Debt (Maturity — January 13, 2019)(9)

     1,261     1,261     1,255  

     

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

     641     641     638  

     

Preferred Stock (4,935,377 shares)

           4,935     5,540  

     

Common Stock (705,054 shares)

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

                  9,663     10,245  

                           

Universal Wellhead Services Holdings, LLC(10)

  

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

  

 

                    

     

Class A Preferred Units (4,000,000 units; 4.5% cumulative)(8)

           4,000     3,000  

                           

Volusion, LLC

  

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

  

 

                    

     

10.5% Secured Debt (Maturity — January 26, 2020)

     17,500     16,199     16,199  

     

Preferred Member Units (4,876,670 units)

           14,000     14,000  

     

Warrants (950,618 equivalent units)

           1,400     1,400  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  31,599     31,599  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Affiliate Investments (19.4% of total investments at fair value)

   $ 333,728   $ 350,519  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

96

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(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)

                    

                           

AccuMED, Corp.(10)

  

Medical Device Contract Manufacturer

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — October 29, 2020)(9)

   $ 9,750   $ 9,648   $ 9,648  

                           

Adams Publishing Group, LLC(10)

  

Local Newspaper Operator

                        

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity — November 3, 2020)(9)

     9,506     9,329     9,328  

                           

Ahead, LLC(10)

  

IT Infrastructure Value Added Reseller

                        

     

LIBOR Plus 6.50%, Current Coupon 6.76%, Secured Debt (Maturity — November 2, 2020)

     15,000     14,562     14,625  

                           

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)

     10,150     10,080     10,008  

                           

AM General LLC(11)

  

Specialty Vehicle Manufacturer

                        

     

LIBOR Plus 9.00% (Floor 1.25%), Current Coupon 10.25%, Secured Debt (Maturity — March 22, 2018)(9)

     2,256     2,221     1,867  

                           

AM3 Pinnacle Corporation(10)

  

Provider of Comprehensive Internet, TV and Voice Services for Multi- Dwelling Unit Properties

                        

     

Common Stock (60,240 shares)

           2,000     —  

                           

American Seafoods Group, LLC(11)

  

Catcher-Processor of Alaskan Pollock

                        

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — August 19, 2021)(9)

     9,975     9,963     9,892  

                           

AMF Bowling Centers, Inc.(11)

  

Bowling Alley Operator

                        

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — September 18, 2021)(9)

     7,907     7,802     7,835  

                           

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)

     2,306     2,306     2,179  

     

Member Units (440,620 units)

           4,928     3,250  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,234     5,429  

                           

97

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(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)

     11,314     11,108     10,946  

                           

Apex Linen Service, Inc.

  

Industrial Launderers

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — October 30, 2022)(9)

     1,600     1,600     1,600  

     

13% Secured Debt (Maturity — October 30, 2022)

     12,000     11,926     11,926  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,526     13,526  

                           

Applied Products, Inc.(10)

  

Adhesives Distributor

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — September 30, 2019)(9)

     5,813     5,759     5,683  

                           

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)

     9,540     9,429     9,429  

                           

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)

     7,854     7,585     6,716  

                           

ATS Workholding, Inc.(10)

  

Manufacturer of Machine Cutting Tools and Accessories

                        

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — March 10, 2019)(9)

     6,492     6,452     6,230  

                           

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 14, 2021)(9)

     14,925     14,647     14,701  

                           

Barfly Ventures, LLC(10)

  

Casual Restaurant Group

                        

     

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

     4,121     4,042     4,042  

     

Warrants (1 equivalent share)

           473     473  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,515     4,515  

                           

Berry Aviation, Inc.(10)

  

Airline Charter Service Operator

                        

     

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

     5,627     5,578     5,578  

     

Common Stock (553 shares)

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

                  5,978     5,978  

                           

98

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

Bioventus LLC(10)

  

Production of Orthopedic Healing Products

                        

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.00%, Secured Debt (Maturity — April 10, 2020)(9)

     5,000     4,917     4,925  

                           

Blackbrush Oil and Gas LP(11)

  

Oil & Gas Exploration

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — July 30, 2021)(9)

     4,000     3,975     3,230  

                           

Blackhawk Specialty Tools LLC(11)

  

Oilfield Equipment & Services

                        

     

LIBOR Plus 5.25% (Floor 1.25%), Current Coupon 6.50%, Secured Debt (Maturity — August 1, 2019)(9)

     5,892     5,866     5,450  

                           

Blue Bird Body Company(11)

  

School Bus Manufacturer

                        

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — June 26, 2020)(9)

     4,702     4,646     4,669  

                           

Bluestem Brands, Inc.(11)(13)

  

Multi-Channel Retailer of General Merchandise

                        

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — November 6, 2020)(9)

     13,632     13,358     12,780  

                           

Brainworks Software, LLC(10)

  

Advertising Sales and Newspaper Circulation Software

                        

     

Prime Plus 7.25% (Floor 3.25%), Current Coupon 10.75%, Secured Debt (Maturity — July 22, 2019)(9)

     626     620     620  

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — July 22, 2019)(9)

     6,185     6,126     6,012  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,746     6,632  

                           

Brightwood Capital Fund III, LP(12)(13)

  

Investment Partnership

                        

     

LP Interests (Fully diluted 1.6%)(8)

           11,250     11,125  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

  

Construction Services Provider

                        

     

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

     2,500     2,500     2,438  

                           

Calloway Laboratories, Inc.(10)

  

Health Care Testing Facilities

                        

     

17% PIK Secured Debt (Maturity — September 30, 2016)(14)

     7,324     7,275     —  

     

Warrants (125,000 equivalent shares)

           17     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,292     —  

                           

Cengage Learning Acquisitions, Inc.(11)

  

Provider of Educational Print and Digital Services

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — March 31, 2020)(9)

     9,720     9,672     9,502  

                           

99

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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)

     5,230     4,544     3,687  

                           

CGSC of Delaware Holdings Corp.(11)(13)

  

Insurance Brokerage Firm

                        

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — October 16, 2020)(9)

     2,000     1,979     1,900  

                           

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     14,065     10,031  

                           

Clarius ASIG, LLC(10)

  

Prints & Advertising Film Financing

                        

     

15% PIK Secured Debt (Maturity — September 14, 2014)(17)

     620     620     620  

                           

Clarius BIGS, LLC(10)

  

Prints & Advertising Film Financing

                        

     

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

     3,386     3,386     563  

                           

Compact Power Equipment, Inc.

  

Equipment / Tool Rental

                        

     

12% Secured Debt (Maturity — October 1, 2017)

     4,100     4,090     4,100  

     

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

           1,079     2,930  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,169     7,030  

                           

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)

     14,751     14,395     13,998  

                           

Covenant Surgical Partners, Inc.(11)

  

Ambulatory Surgical Centers

                        

     

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

     800     800     780  

                           

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)

     10,168     10,009     10,118  

                           

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)

     8,227     8,197     8,145  

                           

Darr Equipment LP(10)

  

Heavy Equipment Dealer

                        

     

11.75% Current / 2% PIK Secured Debt (Maturity - April 15, 2020)

     20,706     20,178     19,688  

     

Warrants (915,734 equivalent units)

           474     410  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  20,652     20,098  

                           

100

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

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)

     8,667     8,588     8,580  

                           

Digity Media LLC(11)

  

Radio Station Operator

                        

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — February 8, 2019)(9)

     6,588     6,539     6,506  

                           

Drilling Info Holdings, Inc.

  

Information Services for the Oil and Gas Industry

                        

     

Common Stock (3,788,865 shares)

           1,335     9,920  

                           

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     5,579     5,492  

                           

EIG Fund Investments(12)(13)

  

Investment Partnership

                        

     

LP Interests (EIG Global Private Debt fund-A, L.P.) (Fully diluted 0.5%)

           718     718  

                           

EnCap Energy Fund Investments(12)(13)

  

Investment Partnership

                        

     

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

           3,762     2,765  

     

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

           2,194     1,056  

     

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

           3,075     3,826  

     

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

           692     692  

     

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

           7,350     10,738  

     

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

           464     892  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  17,537     19,969  

                           

Energy and Exploration Partners, LLC(11)

  

Oil & Gas Exploration & Production

                        

     

8.75% Secured Debt (Maturity — January 23, 2016)(14)

     221     221     221  

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity — January 22, 2019)(9)(14)

     9,390     9,048     2,371  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,269     2,592  

                           

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     6,838     4,673  

                           

Extreme Reach, Inc.(11)

  

Integrated TV and Video Advertising Platform

                        

     

LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity — February 7, 2020)(9)

     8,875     8,866     8,731  

                           

101

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(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)

     11,333     11,004     10,086  

                           

Fram Group Holdings, Inc.(11)

  

Manufacturer of Automotive Maintenance Products

                        

     

LIBOR Plus 5.50% (Floor 1.50%), Current Coupon 7.00%, Secured Debt (Maturity — July 29, 2017)(9)

     9,652     9,547     7,275  

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity — January 29, 2018)(9)

     700     699     350  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  10,246     7,625  

                           

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)

     3,960     3,901     3,742  

     

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

     800     786     792  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,687     4,534  

                           

Grace Hill, LLC(10)

  

Online Training Tools for the Multi-Family Housing Industry

                        

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — August 15, 2019)(9)

     9,450     9,361     9,450  

                           

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)

     7,849     7,783     7,783  

                           

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)

     4,863     4,816     4,668  

     

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

     2,000     1,942     1,860  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,758     6,528  

                           

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)

     9,875     9,797     9,529  

                           

Guitar Center, Inc.(11)

  

Musical Instruments Retailer

                        

     

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

     11,000     10,442     9,240  

                           

Halcon Resources Corporation(11)

  

Oil & Gas Exploration & Production

                        

     

9.75% Unsecured Debt (Maturity — July 15, 2020)

     6,925     6,382     2,008  

                           

102

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(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)

     5,344     5,294     5,294  

                           

Horizon Global Corporation(11)

  

Auto Parts Manufacturer

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — June 30, 2021)(9)

     9,750     9,568     9,677  

                           

Hostway Corporation(11)

  

Managed Services and Hosting Provider

                        

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — December 13, 2019)(9)

     11,179     11,105     11,067  

                           

Hunter Defense Technologies, Inc.(11)

  

Provider of Military and Commercial Shelters and Systems

                        

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — August 5, 2019)(9)

     6,414     6,366     6,350  

                           

ICON Health & Fitness, Inc.(11)

  

Producer of Fitness Products

                        

     

11.875% Secured Debt (Maturity — October 15, 2016)

     6,956     6,907     6,608  

                           

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)

     8,110     8,030     7,502  

                           

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)

     7,125     6,759     6,697  

                           

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)

     5,000     5,000     5,000  

                           

Infinity Acquisition Finance Corp.(11)

  

Application Software for Capital Markets

                        

     

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

     4,000     4,000     3,440  

                           

Inn of the Mountain Gods Resort and Casino(11)

  

Hotel & Casino Owner & Operator

                        

     

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

     3,851     3,708     3,562  

                           

Insurance Technologies, LLC(10)

  

Illustration and Sales-automation Platforms

                        

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — December 1, 2019)(9)

     4,804     4,759     4,759  

                           

103

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

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)

     9,938     9,782     9,883  

                           

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)

     15,026     14,986     14,446  

                           

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)

     9,887     9,718     7,942  

                           

irth Solutions, LLC

  

Provider of Damage Prevention Information Technology Services

                        

     

Member Units (27,893 units)

           1,441     1,441  

                           

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)

     4,357     4,337     4,188  

                           

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)

     14,805     14,711     14,703  

                           

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)

     14,566     14,230     13,765  

                           

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)

     5,875     5,821     5,831  

                           

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)

     6,303     6,268     6,271  

                           

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)

     4,729     4,699     4,699  

                           

104

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

Lansing Trade Group LLC(11)

  

Commodity Merchandiser

                        

     

9.25% Unsecured Debt (Maturity — February 15, 2019)

     6,000     6,000     5,625  

                           

Larchmont Resources, LLC(11)

  

Oil & Gas Exploration & Production

                        

     

LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 9.75%, Secured Debt (Maturity — August 7, 2019)(9)

     7,807     7,508     5,543  

                           

Leadrock Properties, LLC

  

Real Estate Investment

                        

     

10% Secured Debt (Maturity — May 4, 2026)

     1,440     1,416     1,416  

                           

Legendary Pictures Funding, LLC(10)

  

Producer of TV, Film, and Comic Content

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — April 22, 2020)(9)

     7,500     7,372     7,425  

                           

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

  

Investment Partnership

                        

     

LP Interests (Fully diluted 2.3%)

           2,500     4,875  

                           

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)

           188     188  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  501     501  

                           

MediMedia USA, Inc.(11)

  

Provider of Healthcare Media and Marketing

                        

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity — November 20, 2018)(9)

     7,772     7,714     7,422  

                           

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)

     15,583     15,483     15,583  

                           

Milk Specialties Company(11)

  

Processor of Nutrition Products

                        

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — November 9, 2018)(9)

     792     789     792  

                           

Minute Key, Inc.

  

Operator of Automated Key Duplication Kiosks

                        

     

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

     14,186     13,817     13,817  

     

Warrants (1,437,409 equivalent units)

           280     280  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  14,097     14,097  

                           

Miramax Film NY, LLC(11)

  

Motion Picture Producer and Distributor

                        

     

Member Units (500,000 units)(8)

           864     864  

                           

105

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

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)

     14,957     14,827     14,266  

                           

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)

     9,788     9,635     9,703  

                           

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)

     997     835     733  

                           

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)

     9,676     9,607     9,603  

                           

Novitex Intermediate, LLC(11)

  

Provider of Document Management Services

                        

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity — July 7, 2020)(9)

     8,692     8,532     8,192  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)

  

Estrogen-Deficiency Drug Manufacturer and Distributor

                        

     

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

     5,071     5,071     3,780  

                           

Panolam Industries International, Inc.(11)

  

Decorative Laminate Manufacturer

                        

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — August 23, 2017)(9)

     9,472     9,429     9,424  

                           

Paris Presents Incorporated(11)

  

Branded Cosmetic and Bath Accessories

                        

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — December 31, 2021)(9)

     2,000     1,965     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     7,369     7,200  

                           

Permian Holdings, Inc.(11)

  

Storage Tank Manufacturer

                        

     

10.5% Secured Debt (Maturity — January 15, 2018)

     2,755     2,738     1,047  

                           

Pernix Therapeutics Holdings, Inc.(10)

  

Pharmaceutical Royalty

                        

     

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

     3,818     3,818     3,777  

                           

106

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(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)

     15,000     14,663     14,712  

                           

Point.360(10)

  

Fully Integrated Provider of Digital Media Services

                        

     

Warrants (65,463 equivalent shares)

           69     9  

     

Common Stock (163,658 shares)

           273     144  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  342     153  

                           

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)

     4,411     3,734     3,749  

                           

PT Network, LLC(10)

  

Provider of Outpatient Physical Therapy and Sports Medicine Services

                        

     

LIBOR Plus 7.75% (Floor 1.50%), Current Coupon 9.25%, Secured Debt (Maturity — November 1, 2018)(9)

     12,047     11,954     11,771  

                           

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)

     11,389     11,303     11,332  

                           

Raley's(11)

  

Family-owned supermarket chain in California

                        

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — May 18, 2022)(9)

     5,094     4,999     5,069  

                           

RCHP, Inc.(11)

  

Regional Non-Urban Hospital Owner/Operator

                        

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — April 23, 2019)(9)

     5,448     5,426     5,448  

     

LIBOR Plus 10.25% (Floor 1.00%), Current Coupon 11.25%, Secured Debt (Maturity — October 23, 2019)(9)

     4,000     3,954     3,953  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,380     9,401  

                           

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     2,975     2,835  

                           

107

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

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)

     3,950     3,851     1,534  

                           

RLJ Entertainment, Inc.(10)

  

Movie and TV Programming Licensee and Distributor

                        

     

LIBOR Plus 8.75% (Floor 0.25%), Current Coupon 9.16%, Secured Debt (Maturity — September 11, 2019)(9)

     9,354     9,353     9,203  

                           

RM Bidder, LLC(10)

  

Acquisition Vehicle

                        

     

Warrants (327,532 equivalent unis)

           425     363  

     

Member Units (2,779 units)

           46     45  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  471     408  

                           

SAExploration, Inc.(10)(13)

  

Geophysical Services Provider

                        

     

Common Stock (6,472 shares)

           65     27  

                           

Sage Automotive Interiors, Inc(11)

  

Automotive Textiles Manufacturer

                        

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 8, 2021)(9)

     3,000     2,974     2,970  

                           

Salient Partners L.P.(11)

  

Provider of Asset Management Services

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — June 9, 2021)(9)

     7,388     7,251     7,240  

                           

Sotera Defense Solutions, Inc.(11)

  

Defense Industry Intelligence Services

                        

     

LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 9.00%, Secured Debt (Maturity — April 21, 2017)(9)

     10,119     9,886     9,360  

                           

Stardust Finance Holdings, Inc.(11)

  

Manufacturer of Diversified Building Products

                        

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — March 13, 2022)(9)

     12,406     12,239     12,065  

                           

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)

     4,887     4,836     4,762  

                           

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     4,647     4,124  

                           

108

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

Targus Group International(11)

  

Distributor of Protective Cases for Mobile Devices

                        

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 1.00% PIK, Current Coupon Plus PIK 12.00%, Secured Debt (Maturity — May 24, 2016)(9)(14)

     4,258     4,263     3,119  

                           

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)

     7,975     7,961     7,935  

     

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

     2,500     2,484     2,487  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  10,445     10,422  

                           

Templar Energy LLC(11)

  

Oil & Gas Exploration & Production

                        

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — November 25, 2020)(9)

     4,000     3,962     485  

                           

The Tennis Channel, Inc.(10)

  

Television-Based Sports Broadcasting

                        

     

Warrants (114,316 equivalent shares)

           235     301  

                           

The Topps Company, Inc.(11)

  

Trading Cards & Confectionary

                        

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — October 2, 2018)(9)

     1,960     1,948     1,923  

                           

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)

     4,963     4,545     3,387  

                           

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)

     8,700     8,638     8,613  

                           

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)

     7,369     7,341     7,295  

                           

Valley Healthcare Group, LLC

  

Provider of Durable Medical Equipment

                        

     

LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.00%, Secured Debt (Maturity — December 29, 2020)(9)

     10,400     10,297     10,297  

                           

Vantage Oncology, LLC(11)

  

Outpatient Radiation Oncology Treatment Centers

                        

     

9.5% Secured Debt (Maturity — June 15, 2017)

     12,050     11,938     10,182  

                           

109

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

Virtex Enterprises, LP(10)

  

Specialty, Full-Service Provider of Complex Electronic Manufacturing Services

                        

     

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

     1,667     1,516     1,516  

     

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

           333     512  

     

Warrants (11 equivalent units)

           186     135  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,035     2,163  

                           

Vision Solutions, Inc.(11)

  

Provider of Information Availability Software

                        

     

LIBOR Plus 8.00% (Floor 1.50%), Current Coupon 9.50%, Secured Debt (Maturity — July 23, 2017)(9)

     5,000     4,987     4,750  

                           

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     4,901     4,303  

                           

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)

     1,540     1,524     1,475  

                           

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)

     6,435     6,381     6,210  

                           

YP Holdings LLC(11)

  

Online and Offline Advertising Operator

                        

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity — June 4, 2018)(9)

     2,455     2,435     2,382  

                           

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 (49.6% of total investments at fair value)

   $ 945,187   $ 894,466  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Portfolio Investments, December 31, 2015

   $ 1,666,642   $ 1,799,996  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

110

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2015
(dollars in thousands)

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

Marketable Securities and Idle Funds Investments

              

                           

PennantPark Investment Corporation(13)(15)

  

Business Development Company

  

 

                    

     

Common Stock (343,149 shares)(8)

         $ 3,629   $ 2,121  

                           

Other Marketable Securities and Idle Funds Investments(13)(15)

  

Investments in Marketable Securities and Diversified, Registered Bond Funds

               1,778     1,572  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Marketable Securities and Idle Funds Investments (0.2% of total investments at fair value)

   $ 5,407   $ 3,693  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Investments, December 31, 2015

   $ 1,672,049   $ 1,803,689  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(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. Variable rate loans bear interest at a rate that may be determined by reference to either LIBOR (which can include one-, two-, three- or six-month LIBOR) or Prime, at the borrower's option, which rates reset periodically based on the terms of the loan agreement.

(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)
Marketable securities and idle fund investments.

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

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

(18)
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.

111

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments

December 31, 2014
(dollars in thousands)

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

Control Investments(5)

  

 

  

 

                    

                           

ASC Interests, LLC

  

Recreational and Educational Shooting Facility

                        

     

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

   $ 3,000   $ 2,954   $ 3,000  

     

Member Units (1,500 units)(8)

           1,500     1,970  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,454     4,970  

                           

Bond-Coat, Inc.

  

Casing and Tubing Coating Services

                        

     

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

     13,570     13,446     13,570  

     

Common Stock (57,508 shares)

           6,350     11,210  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  19,796     24,780  

                           

Café Brazil, LLC

  

Casual Restaurant Group

                        

     

Member Units (1,233 units)(8)

           1,742     6,980  

                           

California Healthcare Medical Billing, Inc.

  

Outsourced Billing and Revenue Cycle Management

                        

     

9% Secured Debt (Maturity — October 17, 2016)

     8,703     8,568     8,703  

     

Warrants (466,947 equivalent shares)

           1,193     3,480  

     

Common Stock (207,789 shares)

           1,177     1,460  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  10,938     13,643  

                           

CBT Nuggets, LLC

  

Produces and Sells IT Training Certification Videos

                        

     

Member Units (416 units)(8)

           1,300     27,200  

                           

Ceres Management, LLC (Lambs Tire & Automotive)

  

Aftermarket Automotive Services Chain

                        

     

14% Secured Debt (Maturity — May 31, 2018)

     3,916     3,916     3,916  

     

Class B Member Units (12% cumulative)(8)

           4,048     4,048  

     

Member Units (5,460 units)

           5,273     2,510  

     

9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity — October 1, 2025)

     968     968     968  

     

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

           625     1,240  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  14,830     12,682  

                           

Datacom, LLC

  

Technology and Telecommunications Provider

                        

     

10.5% Secured Debt (Maturity — May 31, 2019)

     11,205     11,103     11,103  

     

Preferred Member Units (6,453 units)

           6,030     6,030  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  17,133     17,133  

                           

Garreco, LLC

  

Manufacturer and Supplier of Dental Products

                        

     

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

     5,400     5,320     5,320  

     

Member Units (1,200 units)(8)

           1,200     1,360  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,520     6,680  

                           

112

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

GRT Rubber Technologies LLC

  

Engineered Rubber Product Manufacturer

                        

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — December 19, 2019)(9)

     16,750     16,585     16,585  

     

Member Units (5,879 units)

           13,065     13,065  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  29,650     29,650  

                           

Gulf Manufacturing, LLC

  

Manufacturer of Specialty Fabricated Industrial Piping Products

                        

     

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

     744     744     744  

     

Member Units (438 units)(8)

           2,980     16,540  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  3,724     17,284  

                           

Harrison Hydra-Gen, Ltd.

  

Manufacturer of Hydraulic Generators

                        

     

12% Secured Debt (Maturity — June 4, 2015)

     5,487     5,409     5,487  

     

Preferred Stock (8% cumulative)(8)

           1,260     1,260  

     

Common Stock (105,880 shares)

           718     1,830  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,387     8,577  

                           

Hawthorne Customs and Dispatch Services, LLC

  

Facilitator of Import Logistics, Brokerage, and Warehousing

                        

     

Member Units (500 units)(8)

           589     370  

     

Member Units (Wallisville Real Estate, LLC) (588,210 units)(8)

           1,215     2,220  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  1,804     2,590  

                           

Hydratec, Inc.

  

Designer and Installer of Micro-Irrigation Systems

                        

     

Common Stock (7,095 shares)(8)

           7,095     13,720  

                           

IDX Broker, LLC

  

Provider of Marketing and CRM Tools for the Real Estate Industry

                        

     

LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity — November 18, 2018)(9)

     125     125     125  

     

12.5% Secured Debt (Maturity — November 18, 2018)

     10,571     10,483     10,571  

     

Member Units (5,029 units)

           5,029     5,450  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  15,637     16,146  

                           

Impact Telecom, Inc.

  

Telecommunications Services Provider

                        

     

LIBOR Plus 6.50% (Floor 2.00%), Current Coupon 8.50%, Secured Debt (Maturity — May 31, 2018)(9)

     1,575     1,569     1,569  

     

13% Secured Debt (Maturity — May 31, 2018)

     22,500     15,515     15,515  

     

Warrants (5,516,667 equivalent shares)

           8,000     4,160  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  25,084     21,244  

                           

113

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(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, 2015)

     3,100     3,100     3,100  

     

Warrants (1,046 equivalent units)

           1,129     2,540  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,229     5,640  

                           

Jensen Jewelers of Idaho, LLC

  

Retail Jewelry Store

                        

     

Prime Plus 6.75% (Floor 3.25%), Current Coupon 10.00%, Secured Debt (Maturity — November 14, 2016)(9)

     3,655     3,618     3,655  

     

Member Units (627 units)(8)

           811     3,580  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,429     7,235  

                           

Lighting Unlimited, LLC

  

Commercial and Residential Lighting Products and Design Services

                        

     

8% Secured Debt (Maturity — August 22, 2015)

     1,550     1,550     1,550  

     

Preferred Equity (non-voting)

           439     439  

     

Warrants (71 equivalent units)

           54     40  

     

Member Units (700 units)(8)

           100     360  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,143     2,389  

                           

Marine Shelters Holdings, LLC (LoneStar Marine Shelters)

  

Fabricator of Marine and Industrial Shelters

                        

     

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

     10,250     10,112     10,112  

     

Preferred Member Units (2,669 units)

           3,750     3,750  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,862     13,862  

                           

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 (2,829 units)(8)

           1,244     10,180  

     

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

     927     927     927  

     

Member Units (Mid — Columbia Real Estate, LLC) (250 units)(8)

           250     550  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,071     17,307  

                           

MSC Adviser I, LLC(16)

  

Third Party Investment Advisory Services

                        

     

Member Units (Fully diluted 100.0%)(8)

           —     15,580  

                           

Mystic Logistics, Inc

  

Logistics and Distribution Services Provider for Large Volume Mailers

                        

     

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

     10,000     9,790     9,790  

     

Common Stock (5,873 shares)

           2,720     2,720  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,510     12,510  

                           

114

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

NAPCO Precast, LLC

  

Precast Concrete Manufacturing

                        

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — September 1, 2015)(9)

     625     615     625  

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — February 1, 2016)(9)

     2,923     2,915     2,923  

     

18% Secured Debt (Maturity — February 1, 2016)

     4,468     4,440     4,468  

     

Member Units (2,955 units)(8)

           2,975     7,560  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  10,945     15,576  

                           

NRI Clinical Research, LLC

  

Clinical Research Service Provider

                        

     

14% Secured Debt (Maturity — September 8, 2016)

     4,889     4,779     4,779  

     

Warrants (251,723 equivalent units)

           252     160  

     

Member Units (671,233 units)

           671     722  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,702     5,661  

                           

NRP Jones, LLC

  

Manufacturer of Hoses, Fittings and Assemblies

                        

     

12% Secured Debt (Maturity — December 22, 2016)

     12,100     11,590     11,590  

     

Warrants (14,331 equivalent units)

           817     970  

     

Member Units (50,877 units)(8)

           2,900     3,190  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  15,307     15,750  

                           

OMi Holdings, Inc.

  

Manufacturer of Overhead Cranes

                        

     

Common Stock (1,500 shares)(8)

           1,080     13,420  

                           

Pegasus Research Group, LLC (Televerde)

  

Provider of Telemarketing and Data Services

                        

     

Member Units (460 units)(8)

           1,290     5,860  

                           

PPL RVs, Inc.

  

Recreational Vehicle Dealer

                        

     

11.1% Secured Debt (Maturity — June 10, 2015)

     7,860     7,848     7,860  

     

Common Stock (1,961 shares)

           2,150     8,160  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,998     16,020  

                           

Principle Environmental, LLC

  

Noise Abatement Service Provider

                        

     

12% Secured Debt (Maturity — April 30, 2017)

     4,060     3,813     4,060  

     

12% Current / 2% PIK Secured Debt (Maturity — April 30, 2017)

     3,244     3,227     3,244  

     

Preferred Member Units (19,631 units)

           4,663     11,830  

     

Warrants (1,036 equivalent units)

           1,200     720  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  12,903     19,854  

                           

River Aggregates, LLC

  

Processor of Construction Aggregates

                        

     

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

     750     468     468  

     

12% Secured Debt (Maturity — June 30, 2018)

     500     500     500  

     

Member Units (1,150 units)(8)

           1,150     2,570  

     

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

           369     369  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,487     3,907  

                           

115

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

SoftTouch Medical Holdings, LLC

  

Home Provider of Pediatric Durable Medical Equipment

                        

     

LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity — October 31, 2019)(9)

     8,500     8,417     8,417  

     

Member Units (4,526 units)

           5,015     5,015  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,432     13,432  

                           

Southern RV, LLC

  

Recreational Vehicle Dealer

                        

     

13% Secured Debt (Maturity — August 8, 2018)

     11,400     11,266     11,400  

     

Member Units (1,680 units)(8)

           1,680     4,920  

     

13% Secured Debt (Southern RV Real Estate, LLC) (Maturity — August 8, 2018)

     3,250     3,212     3,250  

     

Member Units (Southern RV Real Estate, LLC) (480 units)

           480     470  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,638     20,040  

                           

The MPI Group, LLC

  

Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                        

     

9% Secured Debt (Maturity — October 8, 2018)

     2,724     2,724     2,724  

     

Series A Preferred Units (2,500 units; 10% Cumulative)

           2,500     980  

     

Warrants (1,424 equivalent units)

           1,096     —  

     

Member Units (MPI Real Estate Holdings, LLC) (100% Fully diluted)(8)

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

                  8,620     6,004  

                           

Travis Acquisition LLC

  

Manufacturer of Aluminum Trailers

                        

     

12% Secured Debt (Maturity — August 30, 2018)

     4,693     4,617     4,693  

     

Member Units (7,282 units)

           7,100     13,650  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  11,717     18,343  

                           

Uvalco Supply, LLC

  

Farm and Ranch Supply Store

                        

     

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

     1,802     1,802     1,802  

     

Member Units (1,006 units)(8)

           1,113     3,500  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,915     5,302  

                           

Vision Interests, Inc.

  

Manufacturer / Installer of Commercial Signage

                        

     

13% Secured Debt (Maturity — December 23, 2016)

     3,204     3,169     3,154  

     

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

           3,000     3,250  

     

Common Stock (1,126,242 shares)

           3,706     100  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,875     6,504  

                           

Ziegler's NYPD, LLC

  

Casual Restaurant Group

                        

     

Prime Plus 2.00% (Floor 7.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 1, 2018)(9)

     1,500     1,491     1,491  

     

9% Current / 9% PIK Secured Debt (Maturity — October 1, 2018)

     5,509     5,509     4,880  

     

Warrants (587 equivalent units)

           600     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,600     6,371  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Control Investments (29.9% of total investments at fair value)

   $ 342,847   $ 469,846  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

116

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(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

  

 

                    

     

11% Secured Debt (Maturity — November 7, 2019)

   $ 6,800   $ 6,465   $ 6,465  

     

Warrants (42 equivalent units)

           259     259  

     

Member Units (186 units)

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

                  7,924     7,924  

                           

Boss Industries, LLC

  

Manufacturer and Distributor of Air, Power and Other Industrial Equipment

  

 

                    

     

Preferred Member Units (2,242 units)

           2,000     2,000  

                           

Bridge Capital Solutions Corporation

  

Financial Services and Cash Flow Solutions Provider

  

 

                    

     

13% Secured Debt (Maturity — April 18, 2017)

     6,000     5,837     5,837  

     

Warrants (19 equivalent shares)

           200     710  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,037     6,547  

                           

Brightwood Capital Fund III, LP(12)(13)

  

Investment Partnership

  

 

                    

     

LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 9.1%)(8)

           8,448     8,448  

                           

CAI Software LLC

  

Provider of Specialized Enterprise Resource Planning Software

  

 

                    

     

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

     5,400     5,348     5,348  

     

Member Units (65,356 units)

           654     654  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,002     6,002  

                           

Condit Exhibits, LLC

  

Tradeshow Exhibits / Custom Displays Provider

  

 

                    

     

Member Units (3,936 units)(8)

           100     610  

                           

Congruent Credit Opportunities Funds(12)(13)

  

Investment Partnership

  

 

                    

     

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

           18,575     18,378  

     

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

           7,734     7,734  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  26,309     26,112  

                           

Daseke, Inc.

  

Specialty Transportation Provider

  

 

                    

     

12% Current / 2.5% PIK Secured Debt (Maturity — July 31, 2018)

     20,723     20,403     20,723  

     

Common Stock (19,467 shares)

           5,213     13,780  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  25,616     34,503  

                           

117

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Dos Rios Partners(12)(13)

  

Investment Partnership

                        

     

LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)(8)

           2,325     2,325  

     

LP Interests (Dos Rios Partners — A, LP) (Fully diluted 6.4%)(8)

           738     738  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  3,063     3,063  

                           

East Teak Fine Hardwoods, Inc.

  

Distributor of Hardwood Products

                        

     

Common Stock (5,000 shares)(8)

           480     860  

                           

East West Copolymer & Rubber, LLC

  

Manufacturer of Synthetic Rubbers

                        

     

12% Secured Debt (Maturity — October 17, 2019)

     9,600     9,436     9,436  

     

Warrants (1,823,278 equivalent units)

           50     50  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,486     9,486  

                           

Freeport Financial SBIC Fund LP(12)(13)

  

Investment Partnership

  

 

                    

     

LP Interests (Fully diluted 9.9%)(8)

           4,677     4,677  

                           

Gault Financial, LLC (RMB Capital, LLC)

  

Purchases and Manages Liquidation of Distressed Assets

  

 

                    

     

10% Secured Debt (Maturity — November 21, 2016)

     13,046     12,749     10,782  

     

Warrants (29,025 equivalent units)

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

                  13,149     10,782  

                           

Glowpoint, Inc.

  

Provider of Cloud Managed Video Collaboration Services

  

 

                    

     

8% Secured Debt (Maturity — October 18, 2018)

     400     396     396  

     

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

     9,000     8,909     8,909  

     

Common Stock (7,711,517 shares)

           3,958     8,480  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,263     17,785  

                           

Guerdon Modular Holdings, Inc.

  

Multi-Family and Commercial Modular Construction Company

  

 

                    

     

11% Secured Debt (Maturity — August 13, 2019)

     11,200     11,044     11,044  

     

Common Stock (213,221 shares)

           2,400     2,400  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,444     13,444  

                           

Houston Plating and Coatings, LLC

  

Provider of Plating and Industrial Coating Services

  

 

                    

     

Member Units (248,082 units)(8)

           996     11,470  

                           

Indianhead Pipeline Services, LLC

  

Provider of Pipeline Support Services

  

 

                    

     

12% Secured Debt (Maturity — February 6, 2017)

     6,900     6,625     6,625  

     

Preferred Member Units (28,905 units; 8% cumulative)(8)

           1,960     1,960  

     

Warrants (38,193 equivalent units)

           459     —  

     

Member Units (14,732 units)

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

                  9,045     8,585  

                           

118

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

irth Solutions, LLC

  

Provider of Damage Prevention Information Technology Services

  

 

                    

     

Member Units (128 units)(8)

           624     3,960  

                           

KBK Industries, LLC

  

Specialty Manufacturer of Oilfield and Industrial Products

  

 

                    

     

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

     8,250     8,198     8,250  

     

Member Units (250 units)(8)

           341     6,120  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  8,539     14,370  

                           

L.F. Manufacturing Holdings, LLC(10)

  

Manufacturer of Fiberglass Products

                        

     

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

           2,019     2,374  

                           

MPS Denver, LLC

  

Specialty Card Printing

  

 

                    

     

Member Units (13,800 units)

           1,130     1,130  

                           

OnAsset Intelligence, Inc.

  

Provider of Transportation Monitoring / Tracking Products and Services

                        

     

12% PIK Secured Debt (Maturity — March 31, 2015)

     3,553     3,553     3,553  

     

Preferred Stock (912 shares; 7% cumulative)(8)

           1,947     2,700  

     

Warrants (5,333 equivalent shares)

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

                  7,419     6,253  

                           

OPI International Ltd.(13)

  

Provider of Man Camp and Industrial Storage Services

                        

     

Common Stock (20,766,317 shares)

           1,371     4,971  

                           

PCI Holding Company, Inc.

  

Manufacturer of Industrial Gas Generating Systems

                        

     

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

           2,259     4,430  

                           

Quality Lease and Rental Holdings, LLC

  

Provider of Rigsite Accommodation Unit Rentals and Related Services

  

 

                    

     

8% Secured Debt (Maturity — October 1, 2014)(14)(18)

     157     157     157  

     

12% Secured Debt (Maturity — January 8, 2018)(14)(18)

     36,577     36,073     11,500  

     

Preferred Member Units (Rocaciea, LLC) (250 units)

           2,500     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  38,730     11,657  

                           

Radial Drilling Services Inc.

  

Oil and Gas Technology Provider

                        

     

12% Secured Debt (Maturity — November 22, 2016)

     4,200     3,792     3,792  

     

Warrants (316 equivalent shares)

           758     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  4,550     3,792  

                           

119

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Samba Holdings, Inc.

  

Provider of Intelligent Driver Record Monitoring Software and Services

  

 

                    

     

12.5% Secured Debt (Maturity — November 17, 2016)

     26,418     26,188     26,418  

     

Common Stock (170,963 shares)

           2,087     6,030  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  28,275     32,448  

                           

SYNEO, LLC

  

Manufacturer of Automation Machines, Specialty Cutting Tools and Punches

  

 

                    

     

12% Secured Debt (Maturity — July 13, 2016)

     2,700     2,674     2,674  

     

Member Units (1,177 units)(8)

           1,097     801  

     

10% Secured Debt (Leadrock Properties, LLC) (Maturity — May 4, 2026)

     1,440     1,415     1,415  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,186     4,890  

                           

Tin Roof Acquisition Company

  

Casual Restaurant Group

  

 

                    

     

12% Secured Debt (Maturity — November 30, 2018)

     14,100     13,861     13,861  

     

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

           2,241     2,241  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  16,102     16,102  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Affiliate Investments (17.7% of total investments at fair value)

   $ 266,243   $ 278,675  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

120

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(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)

  

 

                    

                           

Accuvant Finance, LLC(11)

  

Cyber Security Value Added Reseller

                        

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity — October 22, 2020)(9)

   $ 5,597   $ 5,546   $ 5,583  

                           

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)

     6,000     5,937     5,888  

                           

AM General LLC(11)

  

Specialty Vehicle Manufacturer

                        

     

LIBOR Plus 9.00% (Floor 1.25%), Current Coupon 10.25%, Secured Debt (Maturity — March 22, 2018)(9)

     2,550     2,496     2,282  

                           

AM3 Pinnacle Corporation(10)

  

Provider of Comprehensive Internet, TV and Voice Services for Multi- Dwelling Unit Properties

                        

     

10% Secured Debt (Maturity — October 22, 2018)

     21,002     20,863     20,863  

     

Common Stock (60,240 shares)

           2,000     1,840  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  22,863     22,703  

                           

AmeriTech College, LLC

  

For-Profit Nursing and Healthcare College

                        

     

10% Secured Debt (Maturity — November 30, 2019)

     979     979     979  

     

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

     6,050     6,050     6,050  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,029     7,029  

                           

AMF Bowling Centers, Inc.(11)

  

Bowling Alley Operator

                        

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — September 18, 2021)(9)

     4,988     4,915     4,913  

                           

Anchor Hocking, LLC(11)

  

Household Products Manufacturer

                        

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75% / 1.75% PIK, Current Coupon Plus PIK 9.50%, Secured Debt (Maturity — May 21, 2020)(9)

     10,916     10,842     6,559  

                           

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)

     6,930     6,744     6,930  

                           

121

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Applied Products, Inc.(10)

  

Adhesives Distributor

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — September 30, 2019)(9)

     6,236     6,170     6,170  

                           

Aptean, Inc.(11)

  

Enterprise Application Software Provider

                        

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity — February 26, 2020)(9)

     7,667     7,642     7,450  

                           

Artel, LLC(11)

  

Land-Based and Commercial Satellite Provider

                        

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — November 27, 2017)(9)

     4,594     4,549     4,548  

                           

ATS Workholding, Inc.(10)

  

Manufacturer of Machine Cutting Tools and Accessories

                        

     

LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity — March 10, 2019)(9)

     6,558     6,506     6,506  

                           

Beers Enterprises, Inc.(10)

  

Provider of Broadcast Video Transport Services

                        

     

Prime Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — March 19, 2019)(9)

     6,263     6,210     6,210  

                           

Bioventus LLC(10)

  

Production of Orthopedic Healing Products

                        

     

LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.00%, Secured Debt (Maturity — April 10, 2020)(9)

     5,000     4,903     4,987  

                           

Blackbrush Oil and Gas LP(11)

  

Oil & Gas Exploration

                        

     

LIBOR Plus 6.50%, (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — July 30, 2021)(9)

     4,000     3,971     3,320  

                           

Blackhawk Specialty Tools LLC(11)

  

Oilfield Equipment & Services

                        

     

LIBOR Plus 5.25% (Floor 1.25%), Current Coupon 6.50%, Secured Debt (Maturity — August 1, 2019)(9)

     6,224     6,189     6,131  

                           

Blue Bird Body Company(11)

  

School Bus Manufacturer

                        

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — June 26, 2020)(9)

     11,500     11,339     11,443  

                           

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)

     7,500     7,213     7,237  

                           

122

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Brainworks Software, LLC(10)

  

Advertising Sales and Production and Newspaper Circulation Software

                        

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — July 22, 2019)(9)

     6,263     6,182     6,182  

                           

Brasa Holdings Inc.(11)

  

Upscale Full Service Restaurants

                        

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity — January 20, 2020)(9)

     2,143     2,128     2,121  

                           

Brundage-Bone Concrete Pumping, Inc.(11)

  

Construction Services Provider

                        

     

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

     2,500     2,500     2,556  

                           

Calloway Laboratories, Inc.(10)

  

Health Care Testing Facilities

                        

     

12% PIK Secured Debt (Maturity — September 30, 2015)(14)

     7,225     7,176     2,878  

     

Warrants (125,000 equivalent shares)

           17     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  7,193     2,878  

                           

Cedar Bay Generation Company LP(11)

  

Coal-Fired Cogeneration Plant

                        

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity — April 23, 2020)(9)

     2,476     2,457     2,458  

                           

Cengage Learning Acquisitions, Inc.(11)

  

Provider of Educational Print and Digital Services

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — March 31, 2020)(9)

     4,000     3,990     3,975  

                           

CGSC of Delaware Holdings Corp.(11)(13)

  

Insurance Brokerage Firm

                        

     

LIBOR Plus 7.00% (Floor 1.25%), Current Coupon 8.25%, Secured Debt (Maturity — October 16, 2020)(9)

     2,000     1,975     1,780  

                           

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)

     4,938     4,900     4,822  

                           

CHI Overhead Doors, Inc.(11)

  

Manufacturer of Overhead Garage Doors

                        

     

LIBOR Plus 9.50%, (Floor 1.50%), Current Coupon 11.00%, Secured Debt (Maturity — September 18, 2019)(9)

     2,500     2,467     2,475  

                           

123

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Clarius ASIG, LLC(10)

  

Prints & Advertising Film Financing

                        

     

12% PIK Secured Debt (Maturity — September 14, 2014)(17)

     2,723     2,663     2,723  

                           

Clarius BIGS, LLC(10)

  

Prints & Advertising Film Financing

                        

     

12% PIK Secured Debt (Maturity — January 5, 2015)(14)

     4,400     4,285     1,848  

                           

Compact Power Equipment, Inc.

  

Equipment / Tool Rental

                        

     

12% Secured Debt (Maturity — October 1, 2017)

     4,100     4,085     4,100  

     

Series A Preferred Stock (4,298,435 shares; 8% cumulative)(8)

           1,079     2,401  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  5,164     6,501  

                           

Covenant Surgical Partners, Inc.(11)

  

Ambulatory Surgical Centers

                        

     

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

     2,000     2,000     2,020  

                           

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)

     10,000     9,800     9,850  

                           

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)

     7,109     7,050     7,037  

                           

Darr Equipment LP(10)

  

Heavy Equipment Dealer

                        

     

11.75% Current / 2% PIK Secured Debt (Maturity — April 15, 2020)

     20,291     19,676     19,676  

     

Warrants (915,734 equivalent units)

           474     474  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  20,150     20,150  

                           

Digity Media LLC(11)

  

Radio Station Operator

                        

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity — February 10, 2019)(9)

     7,406     7,335     7,387  

                           

Drilling Info, Inc.

  

Information Services for the Oil and Gas Industry

                        

     

Common Stock (3,788,865 shares)

           1,335     9,920  

                           

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     5,570     5,570  

                           

124

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

EnCap Energy Fund Investments(12)(13)

  

Investment Partnership

                        

     

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

           3,430     3,240  

     

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

           1,561     1,325  

     

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

           1,654     1,477  

     

LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 1.0%)(8)

           4,586     4,567  

     

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

           184     184  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  11,415     10,793  

                           

Energy and Exploration Partners, LLC(11)

  

Oil & Gas Exploration & Production

                        

     

LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.75%, Secured Debt (Maturity — January 22, 2019)(9)

     9,461     9,054     6,788  

                           

e-Rewards, Inc.(11)

  

Provider of Digital Data Collection

                        

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — October 29, 2018)(9)

     12,687     12,518     12,560  

                           

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

  

Technology-based Performance Support Solutions

                        

     

LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.25%, Secured Debt (Maturity — April 28, 2022)(9)

     3,000     2,979     2,845  

                           

FC Operating, LLC(10)

  

Christian Specialty Retail Stores

                        

     

LIBOR Plus 10.75% (Floor 1.25%), Current Coupon 12.00%, Secured Debt (Maturity — November 14, 2017)(9)

     5,400     5,330     4,132  

                           

FishNet Security, Inc.(11)

  

Information Technology Value-Added Reseller

                        

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity — November 30, 2017)(9)

     7,840     7,791     7,840  

                           

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 30, 2020)(9)

     4,938     4,746     4,728  

                           

125

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Fram Group Holdings, Inc.(11)

  

Manufacturer of Automotive Maintenance Products

                        

     

LIBOR Plus 5.00% (Floor 1.50%), Current Coupon 6.50%, Secured Debt (Maturity — July 29, 2017)(9)

     5,935     5,928     5,907  

     

LIBOR Plus 9.00% (Floor 1.50%), Current Coupon 10.50%, Secured Debt (Maturity — January 29, 2018)(9)

     700     698     684  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,626     6,591  

                           

GI KBS Merger Sub LLC(11)

  

Outsourced Janitorial Services to Retail/Grocery Customers

                        

     

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

     800     784     796  

                           

Grace Hill, LLC(10)

  

Online Training Tools for the Multi-Family Housing Industry

                        

     

LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.25%, Secured Debt (Maturity — August 15, 2019)(9)

     9,546     9,436     9,436  

                           

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)

     4,913     4,846     4,775  

     

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

     2,000     1,925     1,920  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,771     6,695  

                           

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)

     9,975     9,882     9,825  

                           

Guitar Center, Inc.(11)

  

Musical Instruments Retailer

                        

     

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

     7,000     6,817     6,020  

                           

Halcon Resources Corporation(11)(13)

  

Oil & Gas Exploration & Production

                        

     

9.75% Unsecured Debt (Maturity — July 15, 2020)

     6,925     6,335     5,194  

                           

Hostway Corporation(11)

  

Managed Services and Hosting Provider

                        

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — December 13, 2019)(9)

     9,750     9,671     9,652  

     

LIBOR Plus 8.75% (Floor 1.25%), Current Coupon 10.00%, Secured Debt (Maturity — December 11, 2020)(9)

     5,000     4,917     4,950  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  14,588     14,602  

                           

126

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Hunter Defense Technologies, Inc.(11)

  

Provider of Military and Commercial Shelters and Systems

                        

     

LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity — August 5, 2019)(9)

     9,875     9,783     9,752  

                           

ICON Health & Fitness, Inc.(11)

  

Producer of Fitness Products

                        

     

11.875% Secured Debt (Maturity — October 15, 2016)

     4,385     4,323     4,122  

                           

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)

     10,029     9,905     9,277  

                           

Infinity Acquisition Finance Corp.(11)

  

Application Software for Capital Markets

                        

     

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

     4,000     4,000     3,620  

                           

Inn of the Mountain Gods Resort and Casino(11)

  

Hotel & Casino Owner & Operator

                        

     

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

     3,851     3,687     3,697  

                           

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)

     9,987     9,789     9,288  

                           

Jackson Hewitt Tax Service Inc.(11)

  

Tax Preparation Service Provider

                        

     

LIBOR Plus 8.50% (Floor 1.50%), Current Coupon 10.00%, Secured Debt (Maturity — October 16, 2017)(9)

     4,509     4,396     4,509  

                           

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)

     9,950     9,853     9,838  

                           

John Deere Landscapes LLC(10)

  

Distributor of Landscaping Supplies

                        

     

LIBOR Plus 4.00% (Floor 1.00%), Current Coupon 5.00%, Secured Debt (Maturity — December 23, 2019)(9)

     8,573     8,193     8,193  

                           

127

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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)

     4,726     4,668     4,702  

                           

Lansing Trade Group LLC(11)

  

Commodity Merchandiser

                        

     

9.25% Unsecured Debt (Maturity — February 15, 2019)

     6,000     6,000     5,610  

                           

Larchmont Resources, LLC(11)

  

Oil & Gas Exploration & Production

                        

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity — August 7, 2019)(9)

     6,895     6,842     6,636  

                           

LKCM Distribution Holdings, L.P.

  

Distributor of Industrial Process Equipment

                        

     

12% Current / 2.5% PIK Secured Debt (Maturity — December 23, 2018)

     16,417     16,278     16,417  

                           

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

  

Investment Partnership

                        

     

LP Interests (Fully diluted 2.3%)(8)

           2,250     5,764  

                           

MAH Merger Corporation(11)

  

Sports-Themed Casual Dining Chain

                        

     

LIBOR Plus 4.50% (Floor 1.25%), Current Coupon 5.75%, Secured Debt (Maturity — July 19, 2019)(9)

     7,258     7,198     7,276  

                           

MediMedia USA, Inc.(11)

  

Provider of Healthcare Media and Marketing

                        

     

LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.00%, Secured Debt (Maturity — November 20, 2018)(9)

     5,411     5,292     5,289  

                           

Messenger, LLC(10)

  

Supplier of Specialty Stationary and Related Products to the Funeral Industry

                        

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — December 5, 2019)(9)

     13,639     13,518     13,518  

                           

Milk Specialties Company(11)

  

Processor of Nutrition Products

                        

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity — November 9, 2018)(9)

     7,847     7,806     7,670  

                           

Minute Key, Inc.

  

Operator of Automated Key Duplication Kiosks

                        

     

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

     4,023     3,985     3,985  

                           

128

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Miramax Film NY, LLC(11)

  

Motion Picture Producer and Distributor

                        

     

Class B Units (12% cumulative)(8)

           792     792  

                           

Modern VideoFilm, Inc.(10)

  

Post-Production Film Studio

                        

     

LIBOR Plus 3.50% (Floor 1.50%), Current Coupon 5.00% / 8.50% PIK, Current Coupon Plus PIK 13.50%, Secured Debt (Maturity — September 25, 2017)(9)(14)

     6,302     6,119     1,954  

     

Warrants (1,375 equivalent shares)

           151     1  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  6,270     1,955  

                           

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)

     12,193     12,053     11,964  

                           

MP Assets Corporation(11)

  

Manufacturer of Battery Components

                        

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity — December 19, 2019)(9)

     4,416     4,378     4,394  

                           

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)

     14,925     14,649     14,776  

                           

Nice-Pak Products, Inc.(11)

  

Pre-Moistened Wipes Manufacturer

                        

     

LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity — June 18, 2015)(9)

     12,541     12,518     12,478  

                           

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)

     7,426     7,361     7,305  

                           

Novitex Intermediate, LLC(11)

  

Provider of Document Management Services

                        

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity — July 7, 2020)(9)

     5,985     5,929     5,746  

                           

Ospemifene Royalty Sub LLC (QuatRx)(10)

  

Estrogen-Deficiency Drug Manufacturer and Distributor

                        

     

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

     5,205     5,205     5,205  

                           

Panolam Industries International, Inc.(11)

  

Decorative Laminate Manufacturer

                        

     

LIBOR Plus 6.50% (Floor 1.25%), Current Coupon 7.75%, Secured Debt (Maturity — August 23, 2017)(9)

     6,994     6,949     6,889  

                           

129

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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)

     6,226     6,078     6,108  

                           

Permian Holdings, Inc.(11)

  

Storage Tank Manufacturer

                        

     

10.5% Secured Debt (Maturity — January 15, 2018)

     2,755     2,728     2,066  

                           

Pernix Therapeutics Holdings, Inc.(10)(13)

  

Pharmaceutical Royalty — Anti-Migraine

                        

     

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

     4,000     4,000     4,000  

                           

PeroxyChem LLC(11)

  

Chemical Manufacturer

                        

     

LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity — February 28, 2020)(9)

     8,933     8,774     8,843  

                           

Philadelphia Energy Solutions Refining and Marketing LLC(11)

  

Oil & Gas Refiner

                        

     

LIBOR Plus 5.00% (Floor 1.25%), Current Coupon 6.25%, Secured Debt (Maturity — April 4, 2018)(9)

     2,948     2,917     2,785  

                           

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)

     15,000     14,628     14,825  

                           

Polyconcept Financial B.V.(11)

  

Promotional Products to Corporations and Consumers

                        

     

LIBOR Plus 4.75% (Floor 1.25%), Current Coupon 6.00%, Secured Debt (Maturity — June 28, 2019)(9)

     4,325     4,311     4,309  

                           

Primesight Limited(10)(13)

  

Outdoor Advertising Operator

                        

     

10% Secured Debt (Maturity — October 22, 2016)

     8,869     8,806     8,284  

                           

Printpack Holdings, Inc.(11)

  

Manufacturer of Flexible and Rigid Packaging

                        

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — May 29, 2020)(9)

     5,468     5,417     5,450  

                           

PT Network, LLC(10)

  

Provider of Outpatient Physical Therapy and Sports Medicine Services

                        

     

LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity — November 1, 2018)(9)

     11,946     11,828     11,828  

                           

130

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

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)

     10,000     9,905     9,825  

                           

RCHP, Inc.(11)

  

Regional Non-Urban Hospital Owner/Operator

                        

     

LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity — October 23, 2019)(9)

     4,000     3,945     3,990  

                           

Recorded Books Inc.(11)

  

Audiobook and Digital Content Publisher

                        

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity — January 31, 2020)(9)

     12,031     11,925     11,941  

                           

Relativity Media, LLC(10)

  

Full-Scale Film and Television Production and Distribution

                        

     

10% Secured Debt (Maturity — May 30, 2015)

     5,787     5,772     5,801  

     

15% PIK Secured Debt (Maturity — May 30, 2015)

     7,410     7,347     7,558  

     

Class A Units (260,194 units)

           292     1,086  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  13,411     14,445  

                           

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     2,972     2,880  

                           

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)

     3,990     3,876     3,219  

                           

RLJ Entertainment, Inc.(10)

  

Movie and TV Programming Licensee and Distributor

                        

     

LIBOR Plus 8.75% (Floor 0.25%), Current Coupon 9.00%, Secured Debt (Maturity — September 11, 2019)(9)

     11,399     11,318     11,318  

                           

SAExploration, Inc.(10)(13)

  

Geophysical Services Provider

                        

     

Common Stock (6,472 shares)(8)

           65     27  

                           

Sage Automotive Interiors, Inc(11)

  

Automotive Textiles Manufacturer

                        

     

LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity — October 8, 2021)(9)

     3,000     2,971     2,985  

                           

131

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Sagittarius Restaurants LLC (d/b/a Del Taco)(11)

  

Mexican/American QSR Restaurant Chain

                        

     

LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity — October 1, 2018)(9)

     4,591     4,572     4,562  

                           

SCE Partners, LLC(10)

  

Hotel & Casino Operator

                        

     

LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.25%, Secured Debt (Maturity — August 14, 2019)(9)

     7,481     7,421     7,519  

                           

Sotera Defense Solutions, Inc.(11)

  

Defense Industry Intelligence Services

                        

     

LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 9.00%, Secured Debt (Maturity — April 21, 2017)(9)

     10,984     10,564     10,160  

                           

Symphony Teleca Services, Inc.(11)

  

Outsourced Product Development

                        

     

LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 5.75%, Secured Debt (Maturity — August 7, 2019)(9)

     14,000     13,870     13,930  

                           

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)

     6,913     6,798     6,822  

                           

Targus Group International(11)

  

Distributor of Protective Cases for Mobile Devices

                        

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 1.00% PIK, Current Coupon Plus PIK 12.00%, Secured Debt (Maturity — May 24, 2016)(9)

     4,288     4,299     3,495  

                           

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)

     6,830     6,813     6,796  

     

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

     2,500     2,480     2,512  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  9,293     9,308  

                           

Templar Energy LLC(11)

  

Oil & Gas Exploration & Production

                        

     

LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.50%, Secured Debt (Maturity — November 25, 2020)(9)

     5,000     4,945     3,615  

                           

The Tennis Channel, Inc.(10)

  

Television-Based Sports Broadcasting

                        

     

Warrants (114,316 equivalent shares)

           235     301  

                           

132

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

The Topps Company, Inc.(11)

  

Trading Cards & Confectionary

                        

     

LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.25%, Secured Debt (Maturity — October 2, 2018)(9)

     1,980     1,964     1,930  

                           

Therakos, Inc.(11)

  

Immune System Disease Treatment

                        

     

LIBOR Plus 5.75% (Floor 1.25%), Current Coupon 7.00%, Secured Debt (Maturity — December 27, 2017)(9)

     6,278     6,178     6,255  

                           

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)

     5,000     4,511     4,625  

                           

Travel Leaders Group, LLC(11)

  

Travel Agency Network Provider

                        

     

LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity — December 5, 2018)(9)

     12,445     12,305     12,445  

                           

UniTek Global Services, Inc.(11)

  

Provider of Outsourced Infrastructure Services

                        

     

LIBOR Plus 9.50% (Floor 1.50%), Current Coupon 11.00% / 4.00% PIK, Current Coupon Plus PIK 15.00%, Secured Debt (Maturity — April 15, 2018)(9)(14)

     10,776     10,173     7,942  

     

5% Current / 2.25% PIK Secured Debt (Maturity — August 13, 2019)(14)

     640     640     640  

     

Warrants (267,302 equivalent shares)

           449     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  11,262     8,582  

                           

Universal Fiber Systems, LLC(10)

  

Manufacturer of Synthetic Fibers

                        

     

LIBOR Plus 4.25% (Floor 1.00%), Current Coupon 5.25%, Secured Debt (Maturity — January 31, 2019)(9)

     5,094     5,084     5,082  

                           

Universal Wellhead Services Holdings, LLC(10)

  

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

                        

     

Class A Preferred Units (4,000,000 units)

           4,000     4,000  

                           

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)

     7,444     7,410     7,332  

                           

133

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Vantage Oncology, LLC(11)

  

Outpatient Radiation Oncology Treatment Centers

                        

     

9.5% Secured Debt (Maturity — June 5, 2017)

     7,000     7,000     6,790  

                           

Virtex Enterprises, LP(10)

  

Specialty, Full-Service Provider of Complex Electronic Manufacturing Services

                        

     

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

     1,667     1,479     1,479  

     

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

           344     344  

     

Warrants (11 equivalent units)

           186     186  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

                  2,009     2,009  

                           

Vision Solutions, Inc.(11)

  

Provider of Information Availability Software

                        

     

LIBOR Plus 8.00% (Floor 1.50%), Current Coupon 9.50%, Secured Debt (Maturity — July 23, 2017)(9)

     5,000     4,941     4,872  

                           

Western Dental Services, Inc.(11)

  

Dental Care Services

                        

     

LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity — November 1, 2018)(9)

     5,395     5,391     5,153  

                           

Wilton Brands LLC(11)

  

Specialty Housewares Retailer

                        

     

LIBOR Plus 6.25% (Floor 1.25%), Current Coupon 7.50%, Secured Debt (Maturity — August 30, 2018)(9)

     1,750     1,727     1,636  

                           

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)

     6,500     6,437     6,533  

                           

Zilliant Incorporated

  

Price Optimization and Margin Management Solutions

                        

     

Warrants (952,500 equivalent shares)

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

Subtotal Non-Control/Non-Affiliate Investments (51.8% of total investments at fair value)

   $ 832,312   $ 814,809  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Portfolio Investments, December 31, 2014

   $ 1,441,402   $ 1,563,330  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

134

Table of Contents


MAIN STREET CAPITAL CORPORATION

Consolidated Schedule Of Investments — (Continued)

December 31, 2014
(dollars in thousands)

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

Marketable Securities and Idle Funds Investments

              

                           

Solar Senior Capital Ltd.(13)(15)

  

Business Development Company

                        

     

Common Stock (39,000 shares)(8)

         $ 742   $ 584  

                           

Other Marketable Securities and Idle Funds Investments(13)(15)

  

Investments in Marketable Securities and Diversified, Registered Bond Funds

                        

                  9,862     8,483  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Subtotal Marketable Securities and Idle Funds Investments (0.6% of total investments at fair value)

   $ 10,604   $ 9,067  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Investments, December 31, 2014

   $ 1,452,006   $ 1,572,397  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(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. Variable rate loans bear interest at a rate that may be determined by reference to either LIBOR (which can include one-, two-, three- or six-month LIBOR) or Prime, at the borrower's option, which rates reset periodically based on the terms of the loan agreement.

(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)
Marketable securities and idle fund investments.

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

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

(18)
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.

135

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 diverse 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") and Main Street Capital II, LP ("MSC II" and, together with MSMF, 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 ("RIA") under Investment Advisers Act of 1940, as amended (the "Advisers Act"). 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 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 and Main Street Capital Partners, LLC, ("MSCP") are also direct wholly owned subsidiaries that have elected to be taxable entities. The Taxable Subsidiaries, MSCP 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 and, beginning April 1, 2013, MSCP (as discussed further below).

136

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2.    Basis of Presentation

       Main Street's 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, but excludes all "Marketable securities and idle funds investments" (see Note C — Fair Value Hierarchy for Investments and Debentures — Portfolio Composition — Portfolio Investment Composition for additional discussion of Main Street's Investment Portfolio and definitions for the terms LMM, Middle Market, Private Loan and Other Portfolio). "Marketable securities and idle funds investments" are classified as financial instruments and are reported separately on Main Street's consolidated balance sheets and consolidated schedules of investments due to the nature of such investments (see Note B.11.). Main Street's results of operations and cash flows for the years ended December 31, 2015, 2014 and 2013 and financial position as of December 31, 2015 and 2014, are presented on a consolidated basis. The effects of all intercompany transactions between Main Street and its consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform to the current presentation, including reclassifying the expenses charged to the External Investment Manager.

       Under regulations pursuant to Article 6 of Regulation S-X applicable to BDCs and Accounting Standards Codification ("Codification" or "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. Beginning April 1, 2013, MSCC's consolidated financial statements also include the financial position and operating results for MSCP, as the wholly owned subsidiary provides all of its services directly or indirectly to Main Street or its portfolio companies. For all periods up to and including the period ending March 31, 2013, MSCP was accounted for as a portfolio investment. Main Street has determined that all of its portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, Main Street's Investment Portfolio is carried on the consolidated balance sheet at fair value, as discussed further in Note B, with any adjustments to fair value recognized as "Net Change in Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."

       Main Street classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) "Control Investments" are defined as investments in which Main Street owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) "Affiliate Investments" are defined as investments in which Main Street owns between 5% and 25% of the voting securities and does not have rights to maintain greater than 50% of the board representation, and (c) "Non-Control/Non-Affiliate Investments" are defined as investments that are neither Control Investments nor Affiliate Investments.

137

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 the 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 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 private, 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 which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street's portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Middle Market portfolio investments or Private Loan portfolio investments, including investments which may be managed by third parties. Main Street's portfolio investments may be subject to restrictions on resale.

       LMM investments and Other Portfolio investments generally have no established trading market while Middle Market securities generally have established markets that are not active. Private Loan investments may include investments which have no established trading market or have established markets that are not active. Main Street determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by its Board of Directors and in accordance with the 1940 Act. Main Street's valuation policies and processes are intended to provide a consistent basis for determining the fair value of Main Street's Investment Portfolio.

       For LMM portfolio investments, Main Street generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology ("Waterfall") for its LMM equity investments and an income approach using a yield-to-maturity model ("Yield-to-Maturity") for its LMM debt investments. For Middle Market portfolio investments, Main Street primarily uses quoted prices in the valuation process. Main Street determines the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Middle Market and Private Loan portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, Main Street generally calculates the fair value of the investment primarily based on the net asset value ("NAV") of the fund. 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.

138

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       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 using the enterprise value over the portfolio company's securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, private companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, Main Street analyzes various factors including the portfolio company's historical and projected financial results. 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 the 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 investments. Main Street's estimate of the expected repayment date of its debt securities is generally the legal 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.

139

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       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 fair value for known factors that would significantly affect that fund's NAV 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 may consider whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of Main Street's investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market participants, or other uncertainties surrounding Main Street's ability to realize the full NAV of its interests in the investment fund.

       Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations 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 its independent financial advisory services firm in arriving at Main Street's determination of fair value on its investments in a total of 54 LMM portfolio companies for the year ended December 31, 2015, representing approximately 87% of the total LMM portfolio at fair value as of December 31, 2015, and on a total of 52 LMM portfolio companies for the year ended December 31, 2014, representing approximately 83% of the total LMM portfolio at fair value as of December 31, 2014. Excluding investments in new LMM portfolio companies which have not been in the Investment Portfolio for at least twelve months subsequent to the initial investment as of December 31, 2015 and 2014, as applicable, and investments in the LMM portfolio companies that were not reviewed because their equity is publicly traded, the percentage of the LMM portfolio reviewed by the independent financial advisory services firm for the years ended December 31, 2015 and 2014 was 98% and 99% of the total LMM portfolio at fair value as of December 31, 2015 and 2014, 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. The Company does not generally consult with any financial advisory services firms in connection with determining the fair value of its Middle Market debt investments. Because 99% and 98% of the Middle Market portfolio investments as of December 31, 2015 and 2014, respectively, were valued using third party

140

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

quotes or other independent pricing services, we do not generally consult with any financial advisory services firms in connection with determining the fair value of our Middle Market investments.

       For valuation purposes, all of Main Street's Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.

       In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations 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 its independent financial advisory services firm in arriving at its determination of fair value on its investments in a total of 16 Private Loan portfolio companies for the year ended December 31, 2015, representing approximately 49% of the total Private Loan portfolio at fair value as of December 31, 2015. 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 most recent investment decision as of December 31, 2015 and its investments in the Private Loan portfolio companies that were not reviewed because the investment is publicly traded or quoted by banks, the percentage of the Private Loan portfolio reviewed by its independent financial advisory services firm for the year ended December 31, 2015 was 95% of the total Private Loan portfolio at fair value as of December 31, 2015.

       For valuation purposes, all of Main Street's Other Portfolio investments are non-control investments. Main Street's Other Portfolio investments comprised approximately 4.2% and 3.8%, respectively, of Main Street's Investment Portfolio at fair value as of December 31, 2015 and 2014. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street generally determines the fair value of its investments using the NAV valuation method. For Other Portfolio debt investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Other Portfolio debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method. For 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

141

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 the value associated with Main Street's ability to control the capital structure of the company, as well as the timing of a potential exit.

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

       Main Street uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its LMM portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM portfolio company and the investments held therein.

       The Board of Directors of Main Street has the final responsibility for overseeing, reviewing and approving, in good faith, Main Street's determination of the fair value for its Investment Portfolio, as well as its valuation procedures, consistent with 1940 Act requirements. Main Street believes its Investment Portfolio as of December 31, 2015 and 2014 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 accounting principles generally accepted in the United States of America 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 financial statements include investments in the Investment Portfolio whose values have been estimated by Main Street with the oversight, review and approval by Main Street's Board of Directors in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ significantly from the values that would have been determined had a readily available market for the investments existed, and it is reasonably possible that the differences could be material.

3.    Cash and Cash Equivalents

       Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.

       At December 31, 2015, cash balances totaling $17.5 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.

142

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4.    Marketable Securities and Idle Funds Investments

       Marketable securities and idle funds investments include intermediate-term secured debt investments, independently rated debt investments and publicly traded debt and equity investments. See the "Consolidated Schedule of Investments" for more information on Marketable securities and idle funds investments.

5.    Interest, Dividend and Fee Income (Structuring and Advisory Services)

       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 fully impaired, sold or written off, Main Street removes it from non-accrual status.

       Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-in-kind ("PIK") interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the PIK interest and cumulative dividends in cash. Main Street stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2015, 2014 and 2013, (i) approximately 2.2%, 3.3% and 4.3%, respectively, of Main Street's total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0%, 1.3% and 1.2%, respectively, of Main Street's total investment income was attributable to cumulative dividend income not paid currently in cash.

       As of December 31, 2015, Main Street's total Investment Portfolio had six investments on non-accrual status, which comprised approximately 0.4% of its fair value and 3.7% of its cost. As of December 31, 2014, Main Street's total Investment Portfolio had five investments on non-accrual status, which comprised approximately 1.7% of its fair value and 4.7% of its cost.

       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 interest income over the life of the financing.

143

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       A presentation of the investment income Main Street received from its Investment Portfolio in each of the periods presented is as follows:

 
   Twelve Months Ended December 31,  
 
   2015   2014   2013  
 
   (dollars in thousands)
  

Interest, fee and dividend income:

                    

Interest income

   $ 131,333   $ 110,362   $ 94,546  

Dividend income

     24,266     22,235     14,124  

Fee income

     8,004     7,342     6,488  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total interest, fee and dividend income

   $ 163,603   $ 139,939   $ 115,158  

6.    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.11.). 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 investment credit facility (the "Credit Facility", as discussed further in Note G) and its notes (as discussed further in Note H). These costs have been capitalized and are amortized into interest expense over the term of the individual instrument.

7.    Unearned Income — Debt Origination Fees and Original Issue Discount and Discounts/Premiums to Par Value

       Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into interest income based on the effective interest method over the life of the financing.

       In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, "nominal cost equity") that are valued as part of the negotiation process with the particular portfolio company. When Main Street receives nominal cost equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest 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 below in Note B.9.), 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

144

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

collected the interest income. For the years ended December 31, 2015, 2014 and 2013, approximately 2.6%, 3.1% and 3.3%, respectively, of Main Street's total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.

8.    Share-Based Compensation

       Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718, Compensation — Stock Compensation. Accordingly, for restricted stock awards, Main Street measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

9.    Income Taxes

       MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary 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) fifteenth day of the ninth month following the close of the year which generated such taxable income.

       The Taxable Subsidiaries 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.

       As noted above, beginning April 1, 2013, MSCC's wholly owned subsidiary MSCP is included in Main Street's consolidated financial statements for financing reporting purposes. For tax purposes, MSCP has elected to be treated as a taxable entity, and therefore is not consolidated with MSCC 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 taxable income, or loss, of MSCP 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 and MSCP 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 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 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.

145

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (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.

10.  Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

       Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net change in unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

11.  Fair Value of Financial Instruments

       Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short term nature of these instruments. Marketable securities and idle funds investments may include investments in certificates of deposit, U.S. government agency securities, independently rated debt investments, diversified bond funds and publicly traded debt and equity investments and the fair value determination for these investments under the provisions of ASC 820 generally consists of Level 1 and 2 observable inputs, similar in nature to those discussed further in Note C.

       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 (the "Acquired Debentures") 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.

12.  Earnings per Share

       Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. In accordance with ASC 260, Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Main Street's equity compensation plans are participating securities and are included in the basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings per share and basic earnings per share amounts.

13.  Recently Issued or Adopted Accounting Standards

       In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-9 supersedes the revenue recognition requirements under ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The

146

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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. The FASB tentatively decided to defer the effective date of the new revenue standard for public entities under U.S. GAAP for one year. If finalized, 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 is currently evaluating the impact the adoption of this new accounting standard will have on its financial statements.

       In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be applied retrospectively to each prior period presented. The impact of the adoption of this new accounting standard on Main Street's consolidated financial statements is currently being evaluated.

       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 impact of the adoption of this new accounting standard on Main Street's consolidated financial statements is currently being evaluated.

       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 financial statements upon adoption.

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

       ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Main Street accounts for its investments at fair value.

Fair Value Hierarchy

       In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the

147

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

       As of December 31, 2015 and 2014, all except for one of Main Street's LMM portfolio investments consisted of illiquid securities issued by private companies. The remaining investment was a publicly traded equity security. As a result, the fair value determination for the LMM portfolio investments primarily consisted of unobservable inputs. The fair value determination for the publicly traded equity security consisted of observable inputs in non-active markets for which sufficient observable inputs were available to determine the fair value. As a result, all of Main Street's LMM portfolio investments were categorized as Level 3 as of December 31, 2015 and 2014, except for the one publicly traded equity security which was categorized as Level 2.

       As of December 31, 2015 and 2014, Main Street's Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments.

148

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Middle Market portfolio investments were categorized as Level 3 as of December 31, 2015 and 2014.

       As of December 31, 2015 and 2014, Main Street's Private Loan portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Private Loan portfolio investments were categorized as Level 3 as of December 31, 2015 and 2014.

       As of December 31, 2015 and 2014, Main Street's Other Portfolio investments consisted of illiquid securities issued by private companies. The fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street's Other Portfolio investments were categorized as Level 3 as of December 31, 2015 and 2014.

       As of December 31, 2015 and 2014, Main Street's Marketable securities and idle funds investments consisted primarily of investments in publicly traded debt and equity investments. The fair value determination for these investments consisted of a combination of observable inputs in active markets for which sufficient observable inputs were available to determine the fair value of these investments. As a result, all of Main Street's Marketable securities and idle funds investments were categorized as Level 1 as of December 31, 2015 and 2014.

       The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs:

149

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (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.

       The following tables provide a summary of the significant unobservable inputs used to fair value Main Street's Level 3 portfolio investments as of December 31, 2015 and 2014:

Type of Investment
  Fair Value as of
December 31,
2015
(in thousands) 		  Valuation Technique   Significant
Unobservable Inputs 		  Range(3)   Weighted
Average(3) 		  Median(3)  

Equity investments

   $ 530,612  

Discounted cash flow

  

Weighted-average cost of capital

   10.5% - 25.1%     13.4 %   13.9 %

       

Market comparable / Enterprise Value

  

EBITDA multiple(1)

   4.0x - 8.5x(2)     7.0x     5.5x  

Debt investments

  
$
628,492		  

Discounted cash flow

  

Risk adjusted discount factor

  

8.1% - 15.3%(2)

    
11.9
%		  
11.9
%

           

Expected principal recovery percentage

   16.6% - 100.0%     99.7 %   100.0 %

Debt investments

  
$
637,052		  

Market approach

  

Third party quote

  

12.1 - 100.1

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

Total Level 3 investments

   $ 1,796,156                          
(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 18.8x and the range for risk adjusted discount factor is 6.7% - 29.6%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

150

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Type of Investment
  Fair Value as of
December 31,
2014
(in thousands) 		  Valuation Technique   Significant
Unobservable Inputs 		  Range(3)   Weighted
Average(3) 		  Median(3)  

Equity investments

   $ 407,569  

Discounted cash flow

  

Weighted average cost of capital

   11.4% - 23.4%     13.9 %   14.3 %

       

Market comparable / Enterprise Value

  

EBITDA multiple(1)

   4.0x - 7.8x(2)     6.4x     5.2x  

Debt investments

   $ 557,604  

Discounted cash flow

  

Risk adjusted discount factor

   7.5% - 15.8%(2)     12.1 %   11.1 %

           

Expected principal recovery percentage

   42.0% - 100.0%     99.3 %   100.0 %

Debt investments

   $ 589,677  

Market approach

  

Third party quote

   60.1 - 102.3              
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total Level 3 investments

   $ 1,554,850                          
(1)
EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)
Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 17.5x and the range for risk adjusted discount factor is 6.0% - 32.0%.

(3)
Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

       The following tables provide a summary of changes in fair value of Main Street's Level 3 portfolio investments for the years ended December 31, 2015 and 2014 (amounts in thousands):

Type of
Investment
  Fair Value
as of
December 31,
2014 		  Transfers
Into Level 3
Hierarchy 		  Redemptions/
Repayments 		  New
Investments 		  Net
Changes
from
Unrealized
to Realized 		  Net
Unrealized
Appreciation
(Depreciation) 		  Other(1)   Fair Value
as of
December 31,
2015 		 

Debt

     1,147,281     —     (598,076 )   759,778     27,080     (59,269 )   (11,250 )   1,265,544  

Equity

     391,933     —     (18,172 )   80,746     (7,958 )   62,994     10,423     519,966  

Equity Warrant

     15,636     —     (9,723 )   2,153     2,153     2     425     10,646  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

    1,554,850     —     (625,971 )   842,677     21,275     3,727     (402 )   1,796,156  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Includes the impact of non-cash conversions.

Type of
Investment
  Fair Value
as of
December 31,
2013 		  Transfers
Into Level 3
Hierarchy 		  Redemptions/
Repayments(1) 		  New
Investments(1) 		  Net
Changes
from
Unrealized
to Realized 		  Net
Unrealized
Appreciation
(Depreciation) 		  Other(1)   Fair Value
as of
December 31,
2014 		 

Debt

   $ 897,568   $ 55,102   $ (525,138 ) $ 753,965   $ 8,071   $ (36,590 ) $ (5,697 ) $ 1,147,281  

Equity

     270,764     —     (16,460 )   72,289     (5,212 )   65,515     5,037     391,933  

Equity Warrant

     36,558     —     (1,537 )   1,080     (13,113 )   (7,435 )   83     15,636  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

  $ 1,204,890   $ 55,102   $ (543,135 ) $ 827,334   $ (10,254 ) $ 21,490   $ (577 ) $ 1,554,850  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Includes the impact of non-cash conversions.

       As of December 31, 2015 and 2014, 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

151

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 Yield-to-Maturity valuation inputs in isolation would result in a significantly lower (higher) fair value measurement.

       The following tables provide a summary of the significant unobservable inputs used to fair value Main Street's Level 3 SBIC debentures as of December 31, 2015 and 2014 (amounts in thousands):

Type of Instrument
  Fair Value
as of
December 31, 2015 		  Valuation Technique   Significant
Unobservable Inputs 		  Range   Weighted
Average 		 

SBIC debentures

   $ 73,860   Discounted cash flow   Estimated market interest rates   4.1% - 5.8%     4.9 %

 

Type of Instrument
  Fair Value
as of
December 31, 2014 		  Valuation Technique   Significant
Unobservable Inputs 		  Range   Weighted Average  

SBIC debentures

   $ 72,981   Discounted cash flow   Estimated market interest rates   4.6% - 6.0%     5.3 %

       The following tables provide a summary of changes for the Level 3 SBIC debentures recorded at fair value for the years ended December 31, 2015 and 2014 (amounts in thousands):

Type of Instrument
  Fair Value
as of
December 31,
2014 		  Repayments   New SBIC
Debentures 		  Net
Unrealized
(Appreciation)
Depreciation 		  Fair Value
as of
December 31,
2015 		 

SBIC debentures at fair value

   $ 72,981   $ —   $ —   $ 879   $ 73,860  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Type of Instrument
  Fair Value
as of
December 31,
2013 		  Repayments   New SBIC
Debentures 		  Net
Unrealized
(Appreciation)
Depreciation 		  Fair Value
as of
December 31,
2014 		 

SBIC debentures at fair value

   $ 62,050   $ —   $ —   $ 10,931   $ 72,981  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

152

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       At December 31, 2015 and 2014, Main Street's investments and SBIC debentures at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:

 
    
   Fair Value Measurements  
 
    
   (in thousands)
  
At December 31, 2015
  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

   $ 862,710   $ —   $ 3,840   $ 858,870  

Middle Market portfolio investments

     586,900     —     —     586,900  

Private Loan portfolio investments

     248,313     —     —     248,313  

Other Portfolio investments

     74,801     —     —     74,801  

External Investment Manager

     27,272     —     —     27,272  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total portfolio investments

     1,799,996     —     3,840     1,796,156  

Marketable securities and idle funds investments

     3,693     3,693     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total investments

   $ 1,803,689   $ 3,693   $ 3,840   $ 1,796,156  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

SBIC debentures at fair value

   $ 73,860   $ —   $ —   $ 73,860  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

 

 
    
   Fair Value Measurements  
 
    
   (in thousands)
  
At December 31, 2014
  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

   $ 733,191   $ —   $ 8,480   $ 724,711  

Middle Market portfolio investments

     542,688     —     —     542,688  

Private Loan portfolio investments

     213,015     —     —     213,015  

Other Portfolio investments

     58,856     —     —     58,856  

External Investment Manager

     15,580     —     —     15,580  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total portfolio investments

     1,563,330     —     8,480     1,554,850  

Marketable securities and idle funds investments

     9,067     9,067     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total investments

   $ 1,572,397   $ 9,067   $ 8,480   $ 1,554,850  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

SBIC debentures at fair value

   $ 72,981   $ —   $ —   $ 72,981  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Investment Portfolio Composition

       Main Street's lower middle market ("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 ("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

153

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 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.

       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 has entered into an agreement to provide the External Investment Manager with asset management service support 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 provides management and other services to the External Investment Manager, as well as access to Main Street's employees, infrastructure, business relationships, management expertise and capital raising capabilities. In the first quarter of 2014, Main Street began charging the External Investment Manager the cost for these services. Main Street's total expenses for the years ended December 31, 2015 and 2014 are net of expenses charged to the External Investment Manager of $4.3 million and $2.0 million, respectively.

       Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio companies. For the years ended December 31, 2015, 2014 and 2013, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

154

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       The following tables provide a summary of Main Street's investments in the LMM, Middle Market and Private Loan portfolios as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager which are discussed further below):

 
   As of December 31, 2015  
 
   LMM(a)   Middle
Market 		  Private
Loan 		 
 
   (dollars in millions)
  

Number of portfolio companies

     71     86     40  

Fair value

   $ 862.7   $ 586.9   $ 248.3  

Cost

   $ 685.6   $ 637.2   $ 268.6  

% of portfolio at cost — debt

     70.4 %   98.3 %   94.3 %

% of portfolio at cost — equity

     29.6 %   1.7 %   5.7 %

% of debt investments at cost secured by first priority lien

     91.8 %   86.6 %   87.3 %

Weighted-average annual effective yield(b)

     12.2 %   8.0 %   9.5 %

Average EBITDA(c)

   $ 6.0   $ 98.8   $ 13.1  
(a)
At December 31, 2015, Main Street had equity ownership in approximately 96% 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, 2015, 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, three Middle Market portfolio companies and six Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

 
   As of December 31, 2014  
 
   LMM(a)   Middle
Market 		  Private
Loan 		 
 
   (dollars in millions)
  

Number of portfolio companies

     66     86     31  

Fair value

   $ 733.2   $ 542.7   $ 213.0  

Cost

   $ 599.4   $ 561.8   $ 224.0  

% of portfolio at cost — debt

     71.5 %   99.8 %   95.6 %

% of portfolio at cost — equity

     28.5 %   0.2 %   4.4 %

% of debt investments at cost secured by first priority lien

     89.6 %   85.1 %   87.8 %

Weighted-average annual effective yield(b)

     13.2 %   7.8 %   10.1 %

Average EBITDA(c)

   $ 5.0   $ 77.2   $ 18.1  
(a)
At December 31, 2014, Main Street had equity ownership in approximately 95% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 35%.

155

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(b)
The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2014, 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 two LMM portfolio companies, one Middle Market portfolio company and five Private Loan portfolio companies as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

       As of December 31, 2015, Main Street had Other Portfolio investments in ten companies, collectively totaling approximately $74.8 million in fair value and approximately $75.2 million in cost basis and which comprised approximately 4.2% of Main Street's Investment Portfolio at fair value. As of December 31, 2014, Main Street had Other Portfolio investments in six companies, collectively totaling approximately $58.9 million in fair value and approximately $56.2 million in cost basis and which comprised approximately 3.8% of Main Street's Investment Portfolio at fair value.

       As discussed further in Note A.1., Main Street holds an investment in the External Investment Manager, a wholly owned subsidiary that is treated as a portfolio investment. As of December 31, 2015, there was no cost basis in this investment and the investment had a fair value of $27.3 million, which comprised 1.5% of Main Street's Investment Portfolio at fair value. As of December 31, 2014, there was no cost basis in this investment and the investment had a fair value of $15.6 million, which comprised 1.0% of Main Street's Investment Portfolio at fair value.

       The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  December 31,
2015 		  December 31,
2014 		 

First lien debt

     75.8%     75.7%  

Equity

     13.5%     11.6%  

Second lien debt

     8.7%     10.0%  

Equity warrants

     0.9%     1.5%  

Other

     1.1%     1.2%  
​ ​ ​ ​ ​ ​ ​ ​

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

 

Fair Value:
  December 31,
2015 		  December 31,
2014 		 

First lien debt

     66.1%     66.9%  

Equity

     24.9%     21.9%  

Second lien debt

     7.7%     9.2%  

Equity warrants

     0.6%     1.0%  

Other

     0.7%     1.0%  
​ ​ ​ ​ ​ ​ ​ ​

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

156

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       The following tables summarize the composition of Main Street's total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

Cost:
  December 31,
2015 		  December 31,
2014 		 

Southwest

     33.4%     29.6%  

Northeast

     18.3%     19.9%  

Midwest

     16.7%     13.5%  

West

     14.6%     18.7%  

Southeast

     13.5%     15.4%  

Canada

     2.2%     0.7%  

Other Non-United States

     1.3%     2.2%  
​ ​ ​ ​ ​ ​ ​ ​

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

 

Fair Value:
  December 31,
2015 		  December 31,
2014 		 

Southwest

     36.7%     33.7%  

Northeast

     16.3%     18.3%  

West

     16.1%     20.4%  

Midwest

     15.1%     12.7%  

Southeast

     12.6%     12.4%  

Canada

     2.0%     0.6%  

Other Non-United States

     1.2%     1.9%  
​ ​ ​ ​ ​ ​ ​ ​

    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 as of

157

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2015 and 2014 (this information excludes the Other Portfolio investments and the External Investment Manager).

Cost:
  December 31,
2015 		  December 31,
2014 		 

Hotels, Restaurants & Leisure

     7.9%     5.6%  

Energy Equipment & Services

     7.3%     8.3%  

Machinery

     5.7%     6.5%  

Media

     5.6%     8.3%  

IT Services

     5.1%     5.9%  

Specialty Retail

     5.1%     4.7%  

Construction & Engineering

     4.6%     5.3%  

Software

     4.5%     5.4%  

Electronic Equipment, Instruments & Components

     4.3%     3.0%  

Health Care Providers & Services

     4.1%     4.9%  

Diversified Consumer Services

     3.7%     2.9%  

Commercial Services & Supplies

     3.3%     1.0%  

Internet Software & Services

     3.1%     1.9%  

Health Care Equipment & Supplies

     3.1%     2.1%  

Diversified Telecommunication Services

     2.9%     4.0%  

Auto Components

     2.7%     2.3%  

Food Products

     2.4%     1.8%  

Diversified Financial Services

     2.3%     1.0%  

Oil, Gas & Consumable Fuels

     2.1%     2.5%  

Pharmaceuticals

     1.9%     1.8%  

Building Products

     1.9%     1.1%  

Professional Services

     1.9%     1.1%  

Road & Rail

     1.6%     1.8%  

Leisure Equipment & Products

     1.1%     0.5%  

Air Freight & Logistics

     1.1%     0.9%  

Aerospace & Defense

     1.0%     1.2%  

Distributors

     0.7%     1.0%  

Chemicals

     0.6%     1.3%  

Textiles, Apparel & Luxury Goods

     0.6%     1.3%  

Trading Companies & Distributors

     0.0%     1.2%  

Other(1)

     7.8%     9.4%  
​ ​ ​ ​ ​ ​ ​ ​

    100.0%     100.0%  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

158

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value:
  December 31,
2015 		  December 31,
2014 		 

Hotels, Restaurants & Leisure

     7.8%     5.6%  

Machinery

     7.0%     8.1%  

Energy Equipment & Services

     6.0%     7.9%  

Specialty Retail

     6.0%     4.9%  

Software

     5.9%     5.5%  

Diversified Consumer Services

     5.7%     4.4%  

Media

     5.1%     7.7%  

Construction & Engineering

     5.1%     5.5%  

IT Services

     4.6%     5.4%  

Electronic Equipment, Instruments & Components

     3.7%     2.5%  

Health Care Providers & Services

     3.3%     4.4%  

Commercial Services & Supplies

     3.1%     1.0%  

Internet Software & Services

     2.9%     2.3%  

Health Care Equipment & Supplies

     2.9%     1.9%  

Auto Components

     2.8%     2.5%  

Diversified Telecommunication Services

     2.7%     3.8%  

Road & Rail

     2.6%     2.3%  

Diversified Financial Services

     2.2%     1.0%  

Food Products

     2.1%     1.6%  

Pharmaceuticals

     1.7%     1.7%  

Professional Services

     1.7%     1.0%  

Building Products

     1.6%     0.9%  

Air Freight & Logistics

     1.3%     0.8%  

Oil, Gas & Consumable Fuels

     1.2%     1.9%  

Leisure Equipment & Products

     1.1%     0.4%  

Aerospace & Defense

     0.9%     1.1%  

Distributors

     0.6%     1.0%  

Chemicals

     0.6%     1.2%  

Paper & Forest Products

     0.6%     1.2%  

Textiles, Apparel & Luxury Goods

     0.4%     1.2%  

Trading Companies & Distributors

     0.0%     1.1%  

Other(1)

     6.8%     8.2%  
​ ​ ​ ​ ​ ​ ​ ​

    100.0%     100.0%  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
(1)
Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

       At December 31, 2015 and 2014, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

159

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Unconsolidated Significant Subsidiaries

       Main Street's investments are generally in small and mid-sized companies in a variety of industries. In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, Main Street must determine which of its unconsolidated controlled portfolio companies are considered "significant subsidiaries", if any. In evaluating these investments, there are three tests utilized to determine if any of Main Street's Control Investments (as defined in Note A, including those 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) are considered significant subsidiaries (including portfolio companies): 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 (including portfolio companies 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 an unconsolidated subsidiary (including portfolio companies) in an annual report if any of the three tests exceeds 10% of Main Street's total amounts and summarized financial information in a quarterly report if any of the three tests exceeds 20% of Main Street's total amounts.

       As of December 31, 2015, Main Street had no single investment that represented greater than 10% of its total Investment Portfolio at fair value and no single investment whose total assets represented greater than 10% of its total assets. After performing the income test for the year ended December 31, 2015, excluding investments which were fully exited after December 31, 2015, Main Street determined that its income from two of its Control Investments individually generated more than 10% of its total income, primarily due to the unrealized appreciation that was recognized on the investments during the year ended December 31, 2015. As such, the wholly owned External Investment Manager was considered a significant subsidiary at the 10% level as of December 31, 2015 (see further discussion and summarized financial information in Note D). 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 10% level as of December 31, 2015.

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

 
   2015   2014  
 
   (dollars in thousands)
  

Balance Sheet Data

              

Current Assets

   $ 4,499   $ 4,958  

Noncurrent Assets

     16,749     14,102  

Current Liabilities

     15,490     12,912  

Noncurrent Liabilities

     —     —  

 

 
   Twelve Months Ended
December 31, 		 
 
   2015   2014   2013  
 
   (dollars in thousands)
  

Summary of Operations

                    

Total Revenue

   $ 33,924   $ 25,645   $ 18,071  

Gross Profit

     29,352     21,196     14,453  

Income from Operations

     12,099     8,687     5,132  

Net Income

     12,343     10,100     5,134  

160

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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-publicly traded BDC whose registration statement on Form N-2 was declared effective by the SEC in June 2012, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow it to own a registered investment adviser, Main Street assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on MSCC's ability to meet the source-of-income requirement necessary for it to maintain its RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. 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. Beginning January 1, 2015, the External Investment Manager conditionally agreed to waive a limited amount of the base management fee and incentive fees otherwise earned during the year ended December 31, 2015. During the years ended December 31, 2015 and 2014, the External Investment Manager earned $7.8 million and $2.8 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

       The investment in the External Investment Manager is accounted for using fair value accounting, with the fair value determined by Main Street and approved, in good faith, by Main Street's Board of Directors. Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach (see further discussion in Note B.1.). Any change in fair value of the investment in the External Investment Manager is recognized on Main Street's consolidated 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 provides services to the External Investment Manager and charges the expenses necessary to perform these services to the External Investment Manager generally based on a combination of the direct time spent, new investment origination activity and assets under management, depending on the nature of the expense. For the years ended December 31, 2015 and 2014, Main Street charged $4.3 million and $2.0 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 charged to the External Investment Manager and dividend income from the External Investment Manager. For the years ended December 31, 2015 and 2014, the total contribution to Main Street's net investment income was $6.5 million and $2.5 million, respectively.

161

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       Summarized financial information from the separate financial statements of the External Investment Manager as of December 31, 2015 and 2014 and for the year ended December 31, 2014 is as follows:

 
   As of
December 31, 		 
 
   2015   2014  
 
   (dollars in thousands)
  

Cash

   $ 31   $ 130  

Accounts receivable — HMS Income

     2,262     1,120  
​ ​ ​ ​ ​ ​ ​ ​

Total assets

   $ 2,293   $ 1,250  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

Accounts payable to MSCC and its subsidiaries

   $ 1,333   $ 699  

Dividend payable to MSCC

     677     253  

Taxes payable

     283     298  

Equity

     —     —  
​ ​ ​ ​ ​ ​ ​ ​

Total liabilities and equity

   $ 2,293   $ 1,250  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

 
   Twelve Months
Ended December 31, 		 
 
   2015   2014  
 
   (dollars in thousands)
  

Management fee income

   $ 7,767   $ 2,795  

Expenses allocated from MSCC or its subsidiaries:

              

Salaries, share-based compensation and other personnel costs

     (3,005 )   (1,479 )

Other G&A expenses

     (1,330 )   (569 )
​ ​ ​ ​ ​ ​ ​ ​

Total allocated expenses

     (4,335 )   (2,048 )

Other direct G&A expenses

     —     (2 )
​ ​ ​ ​ ​ ​ ​ ​

Total expenses

     (4,335 )   (2,050 )

Pre-tax income

     3,432     745  

Tax expense

     (1,235 )   (298 )
​ ​ ​ ​ ​ ​ ​ ​

Net income

   $ 2,197   $ 447  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

NOTE E — DEFERRED FINANCING COSTS

       Deferred financing costs balances as of December 31, 2015 and 2014 are as follows (amounts in thousands):

 
   As of December 31,  
 
   2015   2014  

Credit Facility Fees

   $ 8,467   $ 7,208  

SBIC debenture leverage fees

     5,000     5,000  

4.50% Notes

     3,668     3,668  

6.125% Notes

     3,049     3,088  

SBIC debenture commitment fees

     2,048     2,048  
​ ​ ​ ​ ​ ​ ​ ​

Subtotal

     22,232     21,012  

Accumulated amortization

     (8,965 )   (6,462 )
​ ​ ​ ​ ​ ​ ​ ​

Net deferred financing costs balance

   $ 13,267   $ 14,550  
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

162

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       Estimated aggregate amortization expense for each of the five years succeeding December 31, 2015 and thereafter is as follows (amounts in thousands):

Years Ended December 31,
  Estimated
Amortization 		 

2016

   $ 2,569  

2017

   $ 2,569  

2018

   $ 2,569  

2019

   $ 2,506  

2020

   $ 1,532  

2021 and thereafter

   $ 1,522  

NOTE F — SBIC DEBENTURES

       SBIC debentures payable were $225.0 million at both December 31, 2015 and 2014. SBIC debentures provide for interest to be paid semi-annually, with principal due at the applicable 10-year maturity date of each debenture. The weighted-average annual interest rate on the SBIC debentures was 4.2% as of both December 31, 2015 and 2014. The first principal maturity due under the existing SBIC debentures is in 2017, and the remaining weighted-average duration as of December 31, 2015 was approximately 5.6 years. For the years ended December 31, 2015, 2014 and 2013, Main Street recognized interest expense attributable to the SBIC debentures of $9.9 million, $9.5 million and $10.3 million, respectively. Main Street has incurred upfront leverage and other miscellaneous fees of approximately 3.4% of the debenture principal amount. In accordance with SBA regulations, the Funds are precluded from incurring additional non-SBIC debt without the prior approval of the SBA. The Funds are subject to annual compliance examinations by the SBA. There have been no historical findings resulting from these examinations.

       As of December 31, 2015, the recorded value of the SBIC debentures was $223.7 million which consisted of (i) $73.9 million recorded at fair value, or $1.3 million less than the $75.2 million face value of the SBIC debentures held in MSC II, and (ii) $149.8 million reported at face value and held in MSMF. As of December 31, 2015, 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 $211.8 million, or $13.2 million less than the $225.0 million face value of the SBIC debentures.

163

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       The maturity dates and fixed interest rates for Main Street's SBIC Debentures as of December 31, 2015 and 2014 are summarized in the following table:

Maturity Date
  Fixed
Interest
Rate 		  December 31,
2015 		  December 31,
2014 		 

9/1/2017

     6.43%     15,000,000     15,000,000  

3/1/2018

     6.38%     10,200,000     10,200,000  

9/1/2019

     4.95%     20,000,000     20,000,000  

3/1/2020

     4.51%     10,000,000     10,000,000  

9/1/2020

     3.50%     35,000,000     35,000,000  

9/1/2020

     3.93%     10,000,000     10,000,000  

3/1/2021

     4.37%     10,000,000     10,000,000  

3/1/2021

     4.60%     20,000,000     20,000,000  

9/1/2021

     3.39%     10,000,000     10,000,000  

9/1/2022

     2.53%     5,000,000     5,000,000  

3/1/2023

     3.16%     16,000,000     16,000,000  

3/1/2024

     3.95%     8,000,000     8,000,000  

3/1/2024

     3.95%     12,000,000     12,000,000  

3/1/2024

     3.95%     11,400,000     11,400,000  

3/1/2024

     3.95%     7,600,000     7,600,000  

3/1/2024

     3.55%     24,800,000     24,800,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Ending Balance

           225,000,000     225,000,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NOTE G — CREDIT FACILITY

       Main Street maintains the Credit Facility to provide additional liquidity to support its investment and operational activities. The Credit Facility provides for commitments from a diversified group of fourteen lenders and was amended during 2015 to change the total commitments to $555.0 million, increase the accordion feature of the Credit Facility from $650.0 million to $750.0 million, increase the amount of unsecured debt Main Street is permitted to incur, providing us additional financial flexibility in our capital structure, decrease the interest rate to the rates described below and to extend the maturity one year to September 2020. The accordion feature allows Main Street to increase the total commitments under the facility 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 (0.24%) as of December 31, 2015) plus (i) 1.875% (or the applicable base rate (Prime Rate of 3.50% as of December 31, 2015) 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 2020, 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.

164

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       At December 31, 2015, Main Street had $291.0 million in borrowings outstanding under the Credit Facility. As of December 31, 2015, 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 $7.7 million, $6.9 million and $5.6 million, respectively, for the years ended December 31, 2015, 2014 and 2013. As of December 31, 2015, the interest rate on the Credit Facility was 2.1%. The average interest rate for the year ended December 31, 2015 was 2.2%. Main Street was in compliance with all financial covenants of the Credit Facility.

NOTE H — 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 December 31, 2015, the outstanding balance of the 6.125% Notes was $90.7 million. As of December 31, 2015, if Main Street had adopted the fair value option under ASC 825 for the 6.125% Notes, Main Street estimates the fair value would be approximately $91.7 million. Main Street recognized interest expense related to the 6.125% Notes, including amortization of deferred loan costs, of $5.9 million, $5.9 million and $4.4 million for each of the years ended December 31, 2015, 2014 and 2013, respectively.

       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.

       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

165

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 semi-annually 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 December 31, 2015, the outstanding balance of the 4.50% Notes was $175.0 million. As of December 31, 2015, 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 $179.1 million. Main Street recognized interest expense related to the 4.50% Notes, including amortization of deferred loan costs, of $8.6 million and $1.3 million for the years ended December 31, 2015 and 2014, respectively.

       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.

166

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE I — FINANCIAL HIGHLIGHTS

 
   Twelve Months Ended December 31,  
Per Share Data:
  2015   2014   2013   2012   2011  

NAV at the beginning of the period

   $ 20.85   $ 19.89   $ 18.59   $ 15.19   $ 13.06  

Net investment income(1)(3)

     2.18     2.20     2.06     2.01     1.69  

Net realized gain (loss)(1)(2)(3)

     (0.43 )   0.53     0.07     0.55     0.11  

Net change in net unrealized appreciation(1)(2)(3)

     0.20     (0.27 )   0.52     1.34     1.23  

Income tax benefit (provision)(1)(2)(3)

     0.18     (0.15 )   —     (0.37 )   (0.27 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net increase in net assets resulting from operations(1)(3)

     2.13     2.31     2.65     3.53     2.76  

Dividends paid to stockholders from net investment income

     (2.49 )   (2.17 )   (2.29 )   (1.17 )   (1.46 )

Distributions from capital gains

     (0.16 )   (0.38 )   (0.37 )   (0.54 )   (0.10 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total dividends paid

     (2.65 )   (2.55 )   (2.66 )   (1.71 )   (1.56 )

Impact of the net change in monthly dividends declared prior to the end of the period and paid in the subsequent period

     (0.01 )   (0.01 )   (0.02 )   (0.02 )   (0.14 )

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

     0.74     1.07     1.13     1.33     0.74  

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

     0.12     0.12     0.13     0.07     0.05  

Other(4)

     0.06     0.02     0.07     0.20     0.28  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NAV at the end of the period

   $ 21.24   $ 20.85   $ 19.89   $ 18.59   $ 15.19  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Market value at the end of the period

   $ 29.08   $ 29.24   $ 32.69   $ 30.51   $ 21.24  

Shares outstanding at the end of the period

     50,413,744     45,079,150     39,852,604     34,589,484     26,714,384  
(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)
Per share amounts are net of the amounts attributable to the noncontrolling equity interests in MSC II for the periods prior to the completion of the acquisition of MSC II during the first quarter of 2012.

(4)
Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

167

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
   Twelve Months Ended December 31,  
 
   2015   2014   2013   2012   2011  
 
   (dollars in thousands)
  

NAV at end of period

   $ 1,070,894   $ 939,982   $ 792,533   $ 642,976   $ 405,711  

Average NAV

   $ 1,055,313   $ 885,568   $ 706,056   $ 512,156   $ 327,386  

Average outstanding debt

   $ 759,396   $ 575,524   $ 444,331   $ 322,154   $ 277,692  

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

     4.63%     5.82%     5.82%     8.18%     9.82%  

Ratio of operating expenses to average NAV(1)(3)

     5.45%     5.11%     5.82%     6.07%     7.96%  

Ratio of operating expenses, excluding interest expense, to average NAV(1)(3)

     2.41%     2.44%     2.95%     3.03%     4.01%  

Ratio of net investment income to average NAV(1)

     10.15%     10.79%     10.68%     11.57%     11.76%  

Portfolio turnover ratio

     25.37%     35.71%     36.10%     56.22%     30.82%  

Total investment return(4)

     8.49%     –3.09%     16.68%     53.60%     26.95%  

Total return based on change in NAV(5)

     11.11%     12.71%     15.06%     25.73%     25.64%  
(1)
Ratios are net of the amounts attributable to the noncontrolling equity interests in MSC II for the periods prior to the completion of the acquisition of MSC II during the first quarter of 2012.

(2)
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 net operating 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.

(3)
Operating expenses include compensation, general and administrative and share-based compensation expenses, net of expenses charged 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.

NOTE J — DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

       During 2015, Main Street paid supplemental dividends of $0.275 per share in each of June and December 2015, regular monthly dividends of $0.170 per share for each month of January through March 2015, regular monthly dividends of $0.175 per share for each month of April through September 2015, and regular monthly dividends of $0.180 per share for each month of October through December 2015, with such dividends totaling $130.0 million, or $2.650 per share. The 2015 regular monthly dividends, which total $102.4 million, or $2.10 per share, represent a 5.3% increase from the monthly dividends paid per share for the year ended 2014. For tax purposes, the 2015 dividends, which included the effects of accrued dividends, total $2.66 per share and were comprised of (i) ordinary income totaling approximately $2.325 per share, (ii) long term capital gain totaling approximately $0.231 per share, and (iii) qualified dividend income totaling approximately $0.105 per share. As of December 31, 2015, Main Street estimates that it has generated undistributed taxable income of approximately $38.8 million, or $0.77 per share, that will be carried forward toward distributions to be paid in 2016. For the years ended December 31, 2014 and 2013,

168

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Main Street paid total monthly dividends of approximately $110.9 million, or $2.545 per share, and $96.8 million, or $2.66 per share, respectively.

       Ordinary dividend distributions from a RIC do not qualify for the reduced maximum tax rate on qualified dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for dividends will generally include both ordinary income and capital gains but may also include qualified dividends or return of capital. The tax character of distributions paid for the years ended December 31, 2015, 2014 and 2013 was as follows:

 
   Twelve Months Ended December 31,  
 
   2015   2014   2013  
 
   (dollars in thousands)
  

Ordinary income(1)

   $ 114,975   $ 91,369   $ 68,630  

Qualified dividends

     5,179     2,106     17,058  

Distributions of long term capital gains

     11,285     18,502     12,507  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Distributions on tax basis

   $ 131,439   $ 111,977   $ 98,195  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
The years ended December 31, 2015 and 2014 include $1.5 million and $1.2 million, respectively, that was reported as compensation for services for tax purposes in accordance with Section 83 of the Code.

       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 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) fifteenth day of the ninth month following the close of the year which generated such taxable income.

169

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (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 years ended December 31, 2015, 2014 and 2013.

 
   Twelve Months Ended December 31,  
 
   2015   2014   2013  
 
   (estimated, dollars in thousands)
  

Net increase in net assets resulting from operations

   $ 104,437   $ 100,748   $ 96,855  

Book tax difference share-based compensation expense

     1,006     4,215     4,210  

Net change in net unrealized appreciation

     (9,992 )   11,707     (18,895 )

Income tax provision (benefit)

     (8,687 )   6,287     (35 )

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

     32,323     (7,721 )   (437 )

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

     3,397     (1,667 )   9,128  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Estimated taxable income(1)

     122,484     113,569     90,826  

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

     38,638     37,046     44,415  

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

     (38,757 )   (46,301 )   (43,622 )

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

     9,074     7,663     6,576  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total distributions accrued or paid to common stockholders

   $ 131,439   $ 111,977   $ 98,195  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(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 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.

       As noted above, beginning April 1, 2013, MSCC's wholly owned subsidiary MSCP is included in Main Street's consolidated financial statements for financing reporting purposes. For tax purposes, MSCP has elected to be treated as a taxable entity, and therefore is not consolidated with MSCC 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 taxable income, or loss, of MSCP 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 income tax expense, or benefit, and the related tax assets and liabilities generated by the Taxable Subsidiaries and the MSCP, if any, are reflected in Main Street's consolidated statement of operations. Main

170

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Street's provision for income taxes was comprised of the following for the years ended December 31, 2015, 2014 and 2013 (amounts in thousands):

 
   Twelve Months Ended
December 31, 		 
 
   2015   2014   2013  

Current tax expense:

                    

Federal

   $ 607   $ 734   $ 1,153  

State

     1,181     847     591  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total current tax expense

     1,788     1,581     1,744  

Deferred tax expense (benefit):

                    

Federal

     (10,781 )   2,515     (2,822 )

State

     (870 )   759     (769 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total deferred tax expense (benefit)

     (11,651 )   3,274     (3,591 )

Excise tax

     1,176     1,432     1,812  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total income tax provision (benefit)

   $ (8,687 ) $ 6,287   $ (35 )
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

       As of December 31, 2015, the cost of investments for U.S. federal income tax purposes was $1,663.8 million, with such investments having a gross unrealized appreciation of $283.9 million and gross unrealized depreciation of $144.0 million.

       The net deferred tax asset at December 31, 2015 was $4.0 million compared to a net deferred tax liability of $9.2 million as of December 31, 2014, which was primarily related to net loss carryforwards (primarily resulting from historical realized losses on portfolio investments held by the Taxable Subsidiaries), offset by net unrealized appreciation of portfolio investments held by the Taxable Subsidiaries, basis differences of portfolio investments held by the Taxable Subsidiaries which are "pass-through" entities for tax purposes and excess deductions resulting from the restricted stock plans (see further discussion in Note M). As of December 31, 2015, the Taxable Subsidiaries had a capital loss carryforward of $8.0 million. For U.S. federal income tax purposes, the capital loss carryforward will expire in 2020. The timing and manner in which Main Street will utilize any net loss carryforwards in any year, or in total, may be limited in the future under the provisions of the Code.

       In accordance with the realization requirements of ASC 718, Compensation — Stock Compensation, Main Street uses tax law ordering when determining when tax benefits related to equity compensation greater than equity compensation recognized for financial reporting should be realized. For the years ended December 31, 2015 Main Street recognized no increase in paid-in-capital due to tax deductions related to equity compensation greater than equity compensation recognized for financial reporting compared to a $1.0 million increase for the period ended December 31, 2014. Paid-in capital increases of $1.8 million will be recognized in future periods when such tax benefits are ultimately realized by reducing taxes payable.

       Management believes that the realization of the deferred tax assets is more likely than not based on expectations as to future taxable income and scheduled reversals of temporary differences. Accordingly, Main Street did not record a valuation allowance related to its deferred tax assets at December 31, 2015 and 2014.

171

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the significant components of net deferred tax assets and liabilities as of December 31, 2015 and 2014 (amounts in thousands):

 
   Years Ended
December 31, 		 
 
   2015   2014  

Deferred tax assets:

              

Net operating loss carryforwards

   $ 23,508   $ 11,066  

Net basis differences in portfolio investments

     —     657  

Other

     2,423     —  
​ ​ ​ ​ ​ ​ ​ ​

Total deferred tax assets

     25,931     11,723  
​ ​ ​ ​ ​ ​ ​ ​

Deferred tax liabilities:

              

Net unrealized appreciation of portfolio investments

     (19,482 )   (20,820 )

Net basis differences in portfolio investments

     (2,446 )   —  

Other

     —     (117 )
​ ​ ​ ​ ​ ​ ​ ​

Total deferred tax liabilities

     (21,928 )   (20,937 )
​ ​ ​ ​ ​ ​ ​ ​

Total net deferred tax assets (liabilities)

   $ 4,003   $ (9,214 )
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​

       For U.S. federal income tax purposes, the net loss carryforwards expire in various years from 2029 through 2035. The timing and manner in which Main Street will utilize any net loss carryforwards in any year, or in total, may be limited in the future under the provisions of the Code.

NOTE K — COMMON STOCK

       During November 2015, Main Street entered into a program (the "ATM Program") with underwriters through which it could sell, by means of at-the-market offerings from time to time, up to 1,000,000 shares of our common stock. During the fourth quarter of 2015, Main Street sold 140,568 shares of our common stock at a weighted-average price of $31.98 per share and raised $4.5 million of gross proceeds under the ATM Program. Net proceeds were $4.3 million after commissions to the underwriter on shares sold and offering costs. As of December 31, 2015, 859,432 shares were available for sale under the ATM Program.

       During March 2015, Main Street completed a follow-on public equity offering of 4,370,000 shares of common stock, including the underwriters' full exercise of their option to purchase 570,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $127.8 million.

       During April 2014, Main Street completed a follow-on public equity offering of 4,600,000 shares of common stock, including the underwriters' full exercise of their option to purchase 600,000 additional shares, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $139.7 million.

       During August 2013, Main Street completed a follow-on public equity offering of 4,600,000 shares of common stock, including the underwriters' full exercise of their option to purchase 600,000 additional shares, at a price to the public of $29.75 per share, resulting in total net proceeds, including exercise of the underwriters' option to purchase additional shares and after deducting underwriting discounts and estimated offering expenses payable by Main Street, of approximately $131.5 million.

172

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE L — DIVIDEND REINVESTMENT PLAN ("DRIP")

       Main Street's DRIP provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Main Street declares a cash dividend, the company's stockholders who have not "opted out" of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common stock or through open market purchases of common stock. Newly issued shares will be valued based upon the final closing price of MSCC's common stock on the valuation date determined for each dividend by Main Street's Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased, before any associated brokerage or other costs. Main Street's DRIP is administered by its transfer agent on behalf of Main Street's record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street's DRIP but may provide a similar dividend reinvestment plan for their clients.

       For the year ended December 31, 2015, $19.4 million of the total $130.0 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 636,079 newly issued shares and with the purchase of 3,131 shares of common stock in the open market. For the year ended December 31, 2014, $17.4 million of the total $110.9 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 468,417 newly issued shares and with the purchase of 85,754 shares of common stock in the open market. For the year ended December 31, 2013, $17.5 million of the total $96.8 million in dividends paid to stockholders represented DRIP participation. During this period, the DRIP participation requirements were satisfied with the issuance of 433,218 newly issued shares and with the purchase of 134,659 shares of common stock in the open market. The shares disclosed above relate only to Main Street's DRIP and exclude any activity related to broker-managed dividend reinvestment plans.

NOTE M — 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. 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 2015 Equity and Incentive Plan, net of shares forfeited, and the remaining shares of restricted stock available for issuance as of December 31, 2015.

Restricted stock authorized under the plan

     3,000,000  

Less net restricted stock granted during:

        

Year ended December 31, 2015

     (900 )
​ ​ ​ ​ ​

Restricted stock available for issuance as of December 31, 2015

     2,999,100  
​ ​ ​ ​ ​
​ ​ ​ ​ ​
​ ​ ​ ​ ​
(1)
Shares indicated are net of forfeited shares

       As of December 31, 2015, the following table summarizes the restricted stock issued to Main Street's independent directors and the remaining shares of restricted stock available for issuance pursuant to the Main

173

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 )
​ ​ ​ ​ ​

Restricted stock available for issuance as of December 31, 2015

     293,194  
​ ​ ​ ​ ​
​ ​ ​ ​ ​
​ ​ ​ ​ ​

       For the years ended December 31, 2015, 2014 and 2013, Main Street recognized total share-based compensation expense of $6.3 million, $4.2 million and $4.2 million, respectively, related to the restricted stock issued to Main Street employees and independent directors. As of December 31, 2015, there was $12.2 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 2.1 years as of December 31, 2015.

174

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE N — COMMITMENTS AND CONTINGENCIES

       At December 31, 2015, Main Street had the following outstanding firm commitments (in thousands):

 
   Amount  

Investments with equity capital commitments that have not yet funded:

        

Encap Energy Fund Investments

    
 		  

EnCap Energy Capital Fund VIII, L.P. 

   $ 967  

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

     193  

EnCap Energy Capital Fund IX, L.P. 

     1,925  

EnCap Energy Capital Fund X, L.P. 

     9,308  

EnCap Flatrock Midstream Fund II, L.P. 

     7,442  

EnCap Flatrock Midstream Fund III, L.P. 

     7,036  
​ ​ ​ ​ ​

  $ 26,871  

Congruent Credit Opportunities Funds

    
 		  

Congruent Credit Opportunities Fund II, LP

   $ 8,488  

Congruent Credit Opportunities Fund III, LP

     17,980  
​ ​ ​ ​ ​

  $ 26,468  

Freeport Fund Investments

    
 		  

Freeport First Lien Loan Fund III LP

   $ 10,423  

Freeport Financial SBIC Fund LP

     1,375  
​ ​ ​ ​ ​

  $ 11,798  

I-45 SLF LLC

   $ 9,800  

Dos Rios Partners

    
 		  

Dos Rios Partners, LP

   $ 4,486  

Dos Rios Partners — A, LP

     1,424  
​ ​ ​ ​ ​

  $ 5,910  

EIG Traverse Co-Investment, L.P. 

  
$
5,245		  

EIG Fund Investments

  
$
4,283		  

Brightwood Capital Fund III, LP

  
$
3,750		  

LKCM Headwater Investments I, L.P. 

  
$
2,500 		 
​ ​ ​ ​ ​

Total equity commitments

   $ 96,625  

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

    
 		  

Volusion, LLC

  
$
7,000		  

Barfly Ventures, LLC

     4,594  

PT Network, LLC

     3,033  

Apex Linen Service, Inc. 

     2,997  

Buca C, LLC

     2,670  

Hojeij Branded Foods, LLC

     2,143  

Applied Products, Inc. 

     2,000  

Mid-Columbia Lumber Products, LLC

     2,000  

Minute Key, Inc. 

     2,000  

Glowpoint, Inc. 

     1,600  

Datacom, LLC

     1,800  

LaMi Products, LLC

     1,521  

Guerdon Modular Holdings, Inc. 

     1,600  

IDX Broker, LLC

     1,500  

Subsea Global Solutions, LLC

     1,078  

Messenger, LLC

     1,417  

Arcus Hunting LLC

     2,393  

Ceres Management, LLC (Lambs Tire & Automotive)

     1,000  

AccuMED, Corp. 

     875  

HW Temps LLC

     800  

Mystic Logistics, Inc. 

     800  

Jackmont Hospitality, Inc. 

     667  

Vision Interests, Inc. 

     524  

Insurance Technologies, LLC

     522  

Jensen Jewelers of Idaho, LLC

     500  

UniTek Global Services, Inc. 

     483  

Brainworks Software, LLC

     111  
​ ​ ​ ​ ​

Total loan commitments

   $ 47,628  
​ ​ ​ ​ ​

Total commitments

   $ 144,253  
​ ​ ​ ​ ​
​ ​ ​ ​ ​
​ ​ ​ ​ ​

175

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       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 O — SELECTED QUARTERLY DATA (UNAUDITED)

 
   2015  
 
   (dollars in thousands,
except per share amounts) 		 
 
   Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4  

Total investment income

   $ 37,179   $ 41,308   $ 42,608   $ 43,493  

Net investment income

   $ 23,491   $ 27,201   $ 27,861   $ 28,520  

Net increase in net assets resulting from operations

   $ 35,424   $ 40,802   $ 20,668   $ 7,543  

Net investment income per share-basic and diluted

   $ 0.51   $ 0.55   $ 0.56   $ 0.57  

Net increase in net assets resulting from operations per share-basic and diluted

   $ 0.77   $ 0.82   $ 0.41   $ 0.15  

 

 
   2014  
 
   (dollars in thousands,
except per share amounts) 		 
 
   Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4  

Total investment income

   $ 30,776   $ 34,877   $ 36,351   $ 38,759  

Net investment income

   $ 20,739   $ 23,578   $ 24,887   $ 26,332  

Net increase in net assets resulting from operations

   $ 27,234   $ 29,950   $ 21,569   $ 21,995  

Net investment income per share-basic and diluted

   $ 0.52   $ 0.53   $ 0.55   $ 0.59  

Net increase in net assets resulting from operations per share-basic and diluted

   $ 0.68   $ 0.68   $ 0.48   $ 0.49  

 

 
   2013  
 
   (dollars in thousands,
except per share amounts) 		 
 
   Qtr. 1   Qtr. 2   Qtr. 3   Qtr. 4  

Total investment income

   $ 25,644   $ 27,800   $ 29,659   $ 33,394  

Net investment income

   $ 17,283   $ 17,833   $ 17,477   $ 22,830  

Net increase in net assets resulting from operations

   $ 23,629   $ 24,004   $ 28,054   $ 21,168  

Net investment income per share-basic and diluted

   $ 0.50   $ 0.51   $ 0.47   $ 0.57  

Net increase in net assets resulting from operations share-basic and diluted

   $ 0.68   $ 0.69   $ 0.76   $ 0.53  

NOTE P — RELATED PARTY TRANSACTIONS

       As discussed further in Note D, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of Main Street's Investment Portfolio. At December 31, 2015, Main Street had a receivable of $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 as

176

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

required to support the External Investment Manager's business, along with dividends declared but not paid by the External Investment Manager of approximately $0.7 million.

       In June 2013, our board of directors approved and adopted the Deferred Compensation Plan for Non-Employee Directors (the "2013 Deferred Compensation Plan") for the non-employee members of our board of directors, which allowed the directors at their option to defer all or a portion of the fees paid for their services as directors and have such deferred fees paid in shares of our common stock within 90 days after the participant's end of service as a director. As of December 31, 2015, $1.1 million of directors' fees had been deferred under this plan. These deferred fees represented 34,645 shares of Main Street common shares. These shares will not be issued or included as outstanding on the consolidated statement of changes in net assets until each applicable participant's end of service as a director, but are included in operating expenses and weighted-average shares outstanding on Main Street's consolidated statement of operations as earned.

       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 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, 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.

NOTE Q — SUBSEQUENT EVENTS

       During January 2016, Main Street fully exited its debt and equity investments in Southern RV, LLC, a four-location dealer of new and used recreational vehicles ("RV") and its affiliated real estate entity (together, "Southern RV") through a sale of Southern RV's assets and business. Southern RV has facilities in Tyler, TX, Bossier City, LA, Lafayette, LA, and Biloxi, MS and also engages in financing, parts sales and RV services. Southern RV's predecessor was originally founded in 2000 and offers its customers a variety of Travel Trailers, Fifth Wheels, Toy Haulers, Class A Motorhomes, and Class C Motorhomes from top-selling manufacturers. Main Street made its initial investment in Southern RV in August 2013 and realized a gain of approximately $14.4 million on the exit of its equity investments in Southern RV. The Southern RV investments triggered the annual summarized balance sheet and income statement information requirement imposed by Rule 4-08(g) of Regulation S-X for the year ended December 31, 2015 (as discussed further above in Note C), but Main Street is not including such information in this Annual Report on Form 10-K as it would not be meaningful to the Company's investors due to the fact that the Company no longer holds any investments in Southern RV.

       During February 2016, Main Street led a new portfolio investment totaling $15.0 million of invested capital in UniRush, LLC ("UniRush") to fund UniRush's growth initiatives and refinance existing debt, with Main Street funding $12.0 million of the investment. The investment in UniRush consisted of first-lien, senior secured term debt. In addition, Main Street and its co-investor provided UniRush a $5.0 million delayed draw term loan facility to support its future growth opportunities. Headquartered in Cincinnati, Ohio and founded in 2003, UniRush is a leading provider of prepaid debit card solutions branded under the "RushCard" and "Rapid PayCard". RushCard was one of the first prepaid, reloadable Visa debit card programs, and provides financial services for the more than 65 million individuals in the United States who cannot or choose not to establish a traditional banking relationship. Rapid PayCard is a provider of prepaid, payroll debit cards for employers as an alternative to issuing paper checks to employees.

177

Table of Contents


MAIN STREET CAPITAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

       During February 2016, Main Street declared regular monthly dividends of $0.180 per share for each of April, May and June 2016. These regular monthly dividends equal a total of $0.540 per share for the second quarter of 2016. The second quarter 2016 regular monthly dividends represent a 2.9% increase from the dividends declared for the second quarter of 2015. Including the dividends declared for the second quarter of 2016, Main Street will have paid $16.960 per share in cumulative dividends since its October 2007 initial public offering.

178

Table of Contents

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders'
Main Street Capital Corporation

       We have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) the consolidated financial statements of Main Street Capital Corporation (a Maryland corporation) and subsidiaries (the "Company") referred to in our report dated February 26, 2016, which is included in the annual report on Form 10-K. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(2), which is the responsibility of the Company's management. In our opinion, this financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/ GRANT THORNTON LLP

Dallas, Texas
February 26, 2016

179

Table of Contents


Schedule 12-14

MAIN STREET CAPITAL CORPORATION

Consolidated Schedule of Investments in and Advances to Affiliates
December 31, 2015
(dollars in thousands)

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2) 		  December 31,
2014 Value 		  Gross
Additions(3) 		  Gross
Reductions(4) 		  December 31,
2015
Fair Value 		 

Control Investments

                                    

                                   

Majority-owned investments

                                    

                                   

Café Brazil, LLC

   Member Units   $ 1,070   $ 6,980   $ 350   $ —   $ 7,330  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

GRT Rubber Technologies LLC

   LIBOR Plus 9.00% (Floor 1.00%)     1,783     16,585     32     629     15,988  

  Member Units     82     13,065     2,515     —     15,580  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Hydratec, Inc.

   Common Stock     2,207     13,720     1,230     —     14,950  

  9% Secured Debt     4     —     500     500     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

IDX Broker, LLC

   LIBOR Plus 6.50% (Floor 1.50%)     11     125     —     125     —  

  12.5% Secured Debt     1,455     10,571     798     19     11,350  

  Member Units     —     5,450     990     —     6,440  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Jensen Jewelers of Idaho, LLC

   Prime Plus 6.75% (Floor 2.00%)     458     3,655     1,010     610     4,055  

  Member Units     1,036     3,580     1,170     —     4,750  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Lamb's Venture, LLC

   11% Secured Debt     641     3,916     4,424     378     7,962  

  Class B Member Units     376     4,048     704     4,424     328  

  Member Units     —     2,510     2,180     —     4,690  

  9.5% Secured Debt     72     968     —     49     919  

  Member Units     91     1,240     —     —     1,240  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Lighting Unlimited, LLC

   8% Secured Debt     123     1,550     —     36     1,514  

  Preferred Equity     —     439     —     9     430  

  Warrants     —     40     —     —     40  

  Member Units     120     360     —     10     350  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Mid-Columbia Lumber

   10% Secured Debt     177     1,750     —     —     1,750  

Products, LLC

   12% Secured Debt     474     3,900     —     —     3,900  

  Member Units     (56 )   10,180     —     7,600     2,580  

  9.5% Secured Debt     87     927     —     46     881  

  Member Units     22     550     —     —     550  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

MSC Adviser I, LLC

   Member Units     2,197     15,580     11,692     —     27,272  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Mystic Logistics Holdings, LLC

   12% Secured Debt     1,240     9,790     210     552     9,448  

  Common Stock     112     2,720     3,250     —     5,970  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NRP Jones, LLC

   12% Secured Debt     1,839     11,590     1,534     176     12,948  

  Warrants     —     970     —     520     450  

  Member Units     —     3,190     —     1,710     1,480  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

PPL RVs, Inc.

   11.1% Secured Debt     1,141     7,860     2,112     262     9,710  

  Common Stock     —     8,160     1,610     —     9,770  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Principle Environmental, LLC

   12% Secured Debt     721     4,060     227     227     4,060  

  12% Current / 2% PIK Secured Debt     476     3,244     82     16     3,310  

  Preferred Member Units     262     11,830     —     5,770     6,060  

  Warrants     —     720     —     410     310  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Quality Lease Service, LLC

   8% PIK Secured Debt     288     —     6,538     —     6,538  

  Member Units     —     —     2,638     —     2,638  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Southern RV, LLC

   13% Secured Debt     1,533     11,400     30     30     11,400  

  Member Units     982     4,920     10,180     —     15,100  

  13% Secured Debt     437     3,250     9     9     3,250  

  Member Units     —     470     730     —     1,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

The MPI Group, LLC

   9% Secured Debt     379     2,724     197     —     2,921  

  Series A Preferred Units     —     980     —     290     690  

  Warrants     —     —     —     —     —  

  Member Units     —     2,300     —     70     2,230  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

180

Table of Contents

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2) 		  December 31,
2014 Value 		  Gross
Additions(3) 		  Gross
Reductions(4) 		  December 31,
2015
Fair Value 		 

Travis Acquisition LLC

   12% Secured Debt     635     4,693     33     1,213     3,513  

  Member Units     —     13,650     830     —     14,480  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Uvalco Supply, LLC

   9% Secured Debt     137     1,802     —     488     1,314  

  Member Units     179     3,500     2,730     770     5,460  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Vision Interests, Inc.

   13% Secured Debt     433     3,154     31     133     3,052  

  Series A Preferred Stock     —     3,250     300     —     3,550  

  Common Stock     —     100     110     —     210  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Ziegler's NYPD, LLC

   6.5% Secured Debt     92     1,491     1     500     992  

  12% Secured Debt     56     —     500     —     500  

  14% Secured Debt     394     4,880     629     2,759     2,750  

  Warrants     —     —     50     —     50  

  Member units     —     —     3,400     —     3,400  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other controlled investments

                                    

                                   

Access Media Holdings, LLC

   5.00% Current / 5.00% PIK Secured Debt     553     —     21,554     1,174     20,380  

  Preferred Member Units     —     —     4,394     2,394     2,000  

  Member Units     —     —     1     1     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

AmeriTech College, LLC

   10% Secured Debt     2     —     514     —     514  

  10% Secured Debt     67     979     —     490     489  

  10% Secured Debt     409     6,050     —     3,025     3,025  

  Preferred Member Units     5     —     2,291     —     2,291  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

ASC Interests, LLC

   11% Secured Debt     327     3,000     16     516     2,500  

  Member Units     89     1,970     260     —     2,230  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Bond-Coat, Inc.

   12% Secured Debt     1,480     13,570     49     2,023     11,596  

  Common Stock     —     11,210     —     2,070     9,140  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

California Healthcare Medical

   9% Secured Debt     361     8,703     135     8,838     —  

Billing, Inc.

   Warrants     —     3,480     —     3,480     —  

  Common Stock     —     1,460     —     1,460     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

CBT Nuggets, LLC

   Member Units     4,765     27,200     14,920     —     42,120  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

CMS Minerals LLC

   Preferred Member Units     1,923     —     7,672     758     6,914  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Datacom, LLC

   10.5% Secured Debt     1,271     11,103     19     152     10,970  

  8% Secured Debt     21     —     900     900     —  

  Preferred Member Units     54     6,030     1,181     951     6,260  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Garreco, LLC

   14% Secured Debt     832     5,320     419     —     5,739  

  Member Units     (45 )   1,360     —     90     1,270  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Gulf Manufacturing, LLC

   9% PIK Secured Debt     69     744     33     —     777  

  Member Units     543     16,540     —     2,770     13,770  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Harrison Hydra-Gen, Ltd.

   9% Secured Debt     661     5,487     78     555     5,010  

  Preferred Stock     101     1,260     101     —     1,361  

  Common Stock     —     1,830     770     —     2,600  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Hawthorne Customs and Dispatch

   Member Units     47     370     90     —     460  

Services, LLC

   Member Units     291     2,220     —     —     2,220  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

HW Temps LLC

   LIBOR Plus 9.50% (Floor 1.00%)     642     —     9,884     —     9,884  

  Preferred Member Units     299     —     3,942     —     3,942  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Impact Telecom, Inc.

   LIBOR Plus 6.50% (Floor 2.00%)     153     1,569     1     1,570     —  

  13% Secured Debt     3,321     15,515     378     15,893     —  

  Warrants     —     4,160     3,440     7,600     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Indianapolis Aviation Partners, LLC

   15% Secured Debt     566     3,100     —     —     3,100  

  Warrants     —     2,540     —     —     2,540  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Marine Shelters Holdings, LLC

   12% PIK Secured Debt     1,209     10,112     458     1,700     8,870  

(LoneStar Marine Shelters)

   Preferred Member Units     —     3,750     1,602     471     4,881  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

MH Corbin Holding LLC

   10% Secured Debt     487     —     13,869     —     13,869  

  Preferred Member Units     47     —     6,000     —     6,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

NAPCO Precast, LLC

   Prime Plus 2.00% (Floor 7.00%)     67     625     10     10     625  

  Prime Plus 2.00% (Floor 7.00%)     281     2,923     464     7     3,380  

  18% Secured Debt     856     4,468     482     26     4,924  

  Member Units     1,016     7,560     1,030     —     8,590  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

181

Table of Contents

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2) 		  December 31,
2014 Value 		  Gross
Additions(3) 		  Gross
Reductions(4) 		  December 31,
2015
Fair Value 		 

NRI Clinical Research, LLC

   14% Secured Debt     769     4,779     31     271     4,539  

  Warrants     —     160     180     —     340  

  Member Units     —     722     620     —     1,342  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

OMi Holdings, Inc.

   Common Stock     —     13,420     220     —     13,640  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Pegasus Research Group, LLC (Televerde)

   Member Units     444     5,860     980     —     6,840  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

River Aggregates, LLC

   Zero Coupon Secured Debt     89     468     88     —     556  

  12% Secure Debt     16     500     —     500     —  

  Member Units     268     2,570     1,260     —     3,830  

  Member Units     —     369     1,991     —     2,360  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

SoftTouch Medical Holdings LLC

   LIBOR Plus 9.00% (Floor 1.00%)     963     8,417     18     425     8,010  

  Member Units     796     5,015     780     85     5,710  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other

                                    

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

         (49 )   (7,029 )   —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

      $ 49,832   $ 469,846   $ 168,681   $ 90,545   $ 555,011  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

182

Table of Contents

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2) 		  December 31,
2014 Value 		  Gross
Additions(3) 		  Gross
Reductions(4) 		  December 31,
2015
Fair Value 		 

Affiliate Investments

                                    

                                   

AFG Capital Group, LLC

   11% Secured Debt   $ 1,458   $ 6,465   $ 6,325   $ —   $ 12,790  

  Warrants     —     259     231     —     490  

  Member Units     —     1,200     820     —     2,020  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Boss Industries, LLC

   Preferred Member Units     287     2,000     586     —     2,586  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Bridge Capital Solutions

   13% Secured Debt     957     5,837     1,053     —     6,890  

Corporation

   Warrants     —     710     590     —     1,300  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Buca C, LLC

   LIBOR Plus 7.25% (Floor 1.00%)     1,367     —     25,299     —     25,299  

  Preferred Member Units     111     —     3,711     —     3,711  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

CAI Software LLC

   12% Secured Debt     644     5,348     52     739     4,661  

  Member Units     —     654     346     —     1,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Condit Exhibits, LLC

   Member Units     23     610     400     —     1,010  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Congruent Credit Opportunities

   LP Interests (Fund II, LP)     1,331     18,378     —     15,544     2,834  

Funds

   LP Interests (Fund III, LP)     374     7,734     4,369     79     12,024  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Daseke, Inc.

   12% Current / 2.5% PIK Secured Debt     3,165     20,723     600     70     21,253  

  Common Stock     —     13,780     8,880     —     22,660  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Dos Rios Partners

   LP Interests (Fund)     —     2,325     779     1,073     2,031  

  LP Interests (Fund A)     —     738     248     338     648  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

East Teak Fine Hardwoods, Inc.

   Common Stock     66     860     —     —     860  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

East West Copolymer &

   12% Secured Debt     1,242     9,436     27     —     9,463  

Rubber, LLC

   Warrants     —     50     —     —     50  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

EIG Traverse Co-Investment, L.P.(12)

   LP Interests     50     —     4,755     —     4,755  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Freeport Financial SBIC Fund LP

   LP Interests     —     —     2,077     —     2,077  

  LP Interests     592     4,677     1,368     —     6,045  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Gault Financial, LLC (RMB

   10% Secured Debt     1,525     10,782     148     —     10,930  

Capital, LLC)

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

Glowpoint, Inc.

   8% Secured Debt     19     396     614     613     397  

  12% Secured Debt     1,120     8,909     20     —     8,929  

  Common Stock     —     8,480     158     4,798     3,840  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Guerdon Modular Holdings, Inc.

   13% Secured Debt     1,397     11,044     36     800     10,280  

  Common Stock     —     2,400     583     993     1,990  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Houston Plating and Coatings, LLC

   Member Units     230     11,470     —     3,030     8,440  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

I-45 SLF LLC(12)

   Member Units     —     —     7,200     —     7,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Indianhead Pipeline Services, LLC

   12% Secured Debt     908     6,625     128     900     5,853  

  Preferred Member Units     52     1,960     342     —     2,302  

  Warrants     —     —     —     —     —  

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

KBK Industries, LLC

   12.5% Secured Debt     920     8,250     27     2,377     5,900  

  Member Units     159     6,120     —     2,440     3,680  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

L.F. Manufacturing Holdings, LLC

   Member Units     140     2,374     —     889     1,485  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

MPS Denver, LLC

   Member Units     —     1,130     —     —     1,130  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

OnAsset Intelligence, Inc.

   12% PIK Secured Debt     454     3,553     453     —     4,006  

  Preferred Stock     34     2,700     34     1,354     1,380  

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

OPI International Ltd.

   10% Unsecured Debt     22     —     473     —     473  

  Common Stock     —     4,971     —     1,771     3,200  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

PCI Holding Company, Inc.

   Preferred Stock     503     4,430     503     46     4,887  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Radial Drilling Services Inc.

   12% Secured Debt     531     3,792     149     2,441     1,500  

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

183

Table of Contents

Company
 
Investments(1)
  Amount of
Interest or
Dividends
Credited to
Income(2) 		  December 31,
2014 Value 		  Gross
Additions(3) 		  Gross
Reductions(4) 		  December 31,
2015
Fair Value 		 

Rocaceia, LLC (Quality Lease and

   12% Secured Debt     —     11,500     300     11,550     250  

Rental Holdings, LLC)

   8% Secured Debt     —     157     —     157     —  

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

Samba Holdings, Inc.

   12.5% Secured Debt     3,418     26,418     121     1,877     24,662  

  Common Stock     —     6,030     24,190     —     30,220  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

SYNEO, LLC

   12% Secured Debt     182     2,674     26     2,700     —  

  Member Units     (27 )   801     —     801     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Tin Roof Acquisition Company

   12% Secured Debt     1,864     13,861     52     106     13,807  

  Class C Preferred Stock     236     2,241     236     —     2,477  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

UniTek Global Services, Inc.

   LIBOR Plus 7.50% (Floor 1.00%)     100     —     2,826     14     2,812  

  LIBOR Plus 8.50% (Floor 1.00%)1.00% PIK     24     —     1,524     269     1,255  

  15% PIK Unsecured Debt     —     —     641     3     638  

  Warrants     —     —     449     449     —  

  Common Stock     —     —     —     —     —  

  Preferred Stock     —     —     5,540     —     5,540  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Universal Wellhead Services Holdings, LLC

   Class A Units     194     —     4,000     1,000     3,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Volusion, LLC

   10.5% Secured Debt     1,579     —     16,199     —     16,199  

  Warrants     —     —     1,400     —     1,400  

  Preferred Member Units     —     —     14,000     —     14,000  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Other

                                    

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

         (51 )   13,823     —     —     —  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

      $ 27,200   $ 278,675   $ 144,888   $ 59,221   $ 350,519  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(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, Non-Control, Non-Affiliate and Affiliate categories during the period, any income or investments balances related to the time period it was in the category other than the one shown at period-end is included in "Amounts to or 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.

184

Table of Contents

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

       Not applicable.

Item 9A.    Controls and Procedures

       (a)  Evaluation of Disclosure Controls and Procedures.    As of the end of the period covered by this annual report on Form 10-K, our Chief Executive Officer, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934). Based upon this evaluation, our Chief Executive Officer, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer concluded that our disclosure controls and procedures are effective to allow timely decisions regarding required disclosure of any material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934.

       (b)  Management's Report on Internal Control Over Financial Reporting.    The management of Main Street Capital Corporation and its subsidiaries (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the Company's evaluation under the framework in Internal Control — Integrated Framework, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2015. Grant Thornton, LLP, the Company's independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company's internal control over financial reporting as of December 31, 2015, as stated in its report which is included herein.

       (c)  Attestation Report of the Registered Public Accounting Firm.    Our independent registered public accounting firm, Grant Thornton LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting, which is set forth above under the heading "Reports of Independent Registered Public Accounting Firm" in Item 8.

       (d)  Changes in Internal Control over Financial Reporting.    There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) that occurred during our most recently completed fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.    Other Information

       None.

185

Table of Contents


 PART III

Item 10.    Directors, Executive Officers and Corporate Governance

       The information required by this Item will be contained in the definitive proxy statement relating to our 2016 annual meeting of stockholders (the "Proxy Statement") under the headings "Election of Directors," "Corporate Governance," "Executive Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance," to be filed with the Securities and Exchange Commission on or prior to April 30, 2016, and is incorporated herein by reference.

       We have adopted a code of business conduct and ethics that applies to directors, officers and employees of Main Street. This code of ethics is published on our Web site at www.mainstcapital.com. We intend to disclose any future amendments to, or waivers from, this code of conduct within four business days of the waiver or amendment through a Web site posting.

Item 11.    Executive Compensation

       The information required by this Item will be contained in the Proxy Statement under the headings "Compensation of Executive Officers," "Compensation of Directors," "Compensation Discussion and Analysis," "Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report," to be filed with the Securities and Exchange Commission on or prior to April 30, 2016, and is incorporated herein by reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

       The following table provides information regarding our equity compensation plans as of December 31, 2015:

Plan Category
  Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights 		  Weighted-Average Exercise
Price of Outstanding
Options, Warrants and
Rights 		  Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column)(1) 		 

Equity compensation plans approved by security holders

     —   $ —     3,292,294  

Equity compensation plans not approved by security holders

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

Total

     —   $ —     3,292,294  
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
All of our equity compensation plans have been approved by our stockholders. As of December 31, 2015, we had issued 7,706 shares of restricted stock pursuant to our current equity compensation plans, of which no shares had vested and no shares were forfeited. Pursuant to each of our equity compensation plans, if any award issued thereunder shall for any reason expire or otherwise terminate or be forfeited, in whole or in part, the shares of stock not acquired under such award shall revert to and again become available for issuance under such plan.

       The other information required by this Item will be contained in the Proxy Statement under the heading "Security Ownership of Certain Beneficial Owners and Management," to be filed with the Securities and Exchange Commission on or prior to April 30, 2016, and is incorporated herein by reference.

186

Table of Contents

Item 13.    Certain Relationships and Related Transactions, and Director Independence

       The information required by this Item will be contained in the Proxy Statement under the headings "Certain Relationships and Related Party Transactions" and "Corporate Governance," to be filed with the Securities and Exchange Commission on or prior to April 30, 2016, and is incorporated herein by reference.

Item 14.    Principal Accountant Fees and Services

       The information required by this Item will be contained in the Proxy Statement under the heading "Ratification of Appointment of Independent Registered Public Accounting Firm for Year Ending December 31, 2016," to be filed with the Securities and Exchange Commission on or prior to April 30, 2016, and is incorporated herein by reference.

187

Table of Contents


PART IV

Item 15.    Exhibits and Consolidated Financial Statement Schedules

       The following documents are filed or incorporated by reference as part of this Annual Report:

1.    Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

     81  

Consolidated Balance Sheets as of December 31, 2015 and 2014

     83  

Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013

     84  

Consolidated Statements of Changes in Net Assets for the Years Ended December 31, 2015, 2014 and 2013

     85  

Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013

     86  

Consolidated Schedules of Investments as of December 31, 2015 and 2014

    87  

Notes to Consolidated Financial Statements

     136  

2.    Consolidated Financial Statement Schedule

Report of Independent Registered Public Accounting Firm

     179  

Schedule of Investments in and Advances to Affiliates for the Year Ended December 31, 2015

     180  

3.    Exhibits

       The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC:

Exhibit Number
 
Description
    3.1*   Articles of Amendment and Restatement of Main Street Capital Corporation (previously filed as Exhibit (a) to Main Street Capital Corporation's Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on August 15, 2007 (Reg. No. 333-142879))
    3.2*   Amended and Restated Bylaws of Main Street Capital Corporation (previously filed as Exhibit 3.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on March 6, 2013 (File No. 1-33723))
    4.1*   Form of Common Stock Certificate (previously filed as Exhibit (d) to Main Street Capital Corporation's Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on August 15, 2007 (Reg. No. 333-142879))
    4.2*   Dividend Reinvestment Plan (previously filed as Exhibit (e) to Main Street Capital Corporation's Post-Effective Amendment No. 8 to the Registration Statement on Form N-2 filed on May 7, 2014 (Reg. No. 333-183555))
    4.3*   Main Street Mezzanine Fund, LP SBIC debentures guaranteed by the SBA (previously filed as Exhibit (f)(1) to Main Street Capital Corporation's Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed on June 22, 2007 (Reg. No. 333-142879))
    4.4*   Main Street Capital II, LP SBIC debentures guaranteed by the SBA (see Exhibit (f)(1) to Pre-Effective Amendment No. 1 to Form N-2 of Main Street Capital Corporation filed with the SEC on June 22, 2007 for a substantially identical copy of the form of debentures)
    4.5*   Form of Indenture between Main Street Capital Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(6) to Main Street Capital Corporation's Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on March 28, 2013 (Reg. No. 333-183555))

188

Table of Contents

Exhibit Number
 
Description
    4.6*   Form of First Supplemental Indenture relating to the 6.125% Notes due 2023, between Main Street Capital Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(8) to Main Street Capital Corporation's Post-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on March 28, 2013 (Reg. No. 333-183555))
    4.7*   Form of 6.125% Notes due 2023 (incorporated by reference to Exhibit 4.6)
    4.8*   Form of Second Supplemental Indenture relating to the 4.50% Notes due 2019, between Main Street Capital Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(10) to Main Street Capital Corporation's Post-Effective Amendment No. 9 to the Registration Statement on Form N-2 filed on November 4, 2014 (Reg. No. 333-183555))
    4.9*   Form of 4.50% Notes due 2019 (incorporated by reference to Exhibit 4.8)
  10.1*   Second Amended and Restated Credit Agreement dated September 27, 2013 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on October 1, 2013 (File No. 1-33723))
  10.2*   Second Amended and Restated General Security Agreement dated September 27, 2013 (previously filed as Exhibit 10.2 to Main Street Capital Corporation's Current Report on Form 8-K filed on October 1, 2013 (File No. 1-33723))
  10.3*   Second Amended and Restated Equity Pledge Agreement dated September 27, 2013 (previously filed as Exhibit 10.3 to Main Street Capital Corporation's Current Report on Form 8-K filed on October 1, 2013 (File No. 1-33723))
  10.4*   Amended and Restated Custodial Agreement dated September 20, 2010 (previously filed as Exhibit 10.3 to Main Street Capital Corporation's Current Report on Form 8-K filed September 21, 2010 (File No. 1-33723))
  10.5*   Third Amendment to Amended and Restated Credit Agreement and First Amendment to Amended and Restated Custodial Agreement dated November 21, 2011 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed November 22, 2011 (File No. 1-33723))
  10.6*   First Amendment to Second Amended and Restated Credit Agreement dated June 27, 2014 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on July 1, 2014 (File No. 1-33723))
  10.7*   Second Amendment to Second Amended and Restated Credit Agreement dated September 25, 2014 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on September 30, 2014 (File No. 1-33723))
  10.8*   Third Amendment to Second Amended and Restated Credit Agreement dated October 22, 2014 (previously filed as Exhibit (k)(6) to Main Street Capital Corporation's Post-Effective Amendment No. 9 to the Registration Statement on Form N-2 filed on November 4, 2014 (Reg. No. 333-183555))
  10.9*   Supplement and Joinder Agreement dated December 11, 2014 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on December 12, 2014 (File No. 1-33723))
  10.10*   Fourth Amendment to Second Amended and Restated Credit Agreement dated April 29, 2015 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on April 30, 2015 (File No. 1-33723))
  10.11*   Fifth Amendment to Second Amended and Restated Credit Agreement and First Amendment to Security Agreement dated November 20, 2015 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on November 24, 2015 (File No. 1-33723))

189

Table of Contents

Exhibit Number
 
Description
  10.12*†   Main Street Capital Corporation 2015 Equity and Incentive Plan (previously filed as Exhibit 4.4 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))
  10.13*†   Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan (previously filed as Exhibit 4.5 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))
  10.14*   Custodian Agreement (previously filed as Exhibit (j) to Main Street Capital Corporation's Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No. 333-142879))
  10.15*†   Form of Confidentiality and Non-Compete Agreement by and between Main Street Capital Corporation and Vincent D. Foster (previously filed as Exhibit (k)(12) to Main Street Capital Corporation's Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No. 333-142879))
  10.16*†   Form of Indemnification Agreement by and between Main Street Capital Corporation and each executive officer and director (previously filed as Exhibit (k)(13) to Main Street Capital Corporation's Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No. 333-142879))
  10.17*   Investment Sub-Advisory Agreement dated May 31, 2012 by and among HMS Adviser, LP, Main Street Capital Partners, LLC, Main Street Capital Corporation and HMS Income Fund, Inc. (previously filed as Exhibit (g)(2) to HMS Income Fund, Inc.'s Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on May 31, 2012 (Reg. No. 333-178548))
  10.18*   Assignment and Assumption of Investment Sub-Advisory Agreement dated December 31, 2013 by and among MSC Adviser I, LLC, HMS Adviser, LP, Main Street Capital Partners, LLC, Main Street Capital Corporation and HMS Income Fund, Inc. (previously filed as Exhibit 10.14 to Main Street Capital Corporation's Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 28, 2014 (File No. 1-33723))
  10.19*†   Main Street Capital Corporation Deferred Compensation Plan Adoption Agreement and Plan Document (previously filed as Exhibit 4.1 to Main Street Capital Corporation's Registration Statement on Form S-8 filed on December 18, 2015 (File No. 333-208643))
  12.1   Computation of Ratios of Earnings to Fixed Charges
  14.1*   Code of Business Conduct and Ethics (previously filed as Exhibit 14.1 to Main Street Capital Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 filed on August 3, 2012 (File No. 1-33723))
  21.1   List of Subsidiaries
  23   Consent of Grant Thornton, LLP, independent registered public accounting firm
  31.1   Rule 13a - 14(a)/15d - 14(a) certification of Chief Executive Officer
  31.2   Rule 13a - 14(a)/15d - 14(a) certification of Chief Financial Officer
  32.1   Section 1350 certification of Chief Executive Officer
  32.2   Section 1350 certification of Chief Financial Officer
*
Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference.

†
Management contract or compensatory plan or arrangement.

190

Table of Contents


SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) 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

 
 
By:
 
/s/ VINCENT D. FOSTER
 Vincent D. Foster
Chairman and Chief Executive Officer

Date: February 26, 2016

       Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature
 
Title
 
Date

 
 
 
 
 
/s/ VINCENT D. FOSTER
 Vincent D. Foster		   Chairman and Chief Executive Officer
(principal executive officer)		   February 26, 2016

/s/ BRENT D. SMITH
 Brent D. Smith
 
Chief Financial Officer and Treasurer
(principal financial officer)
 
February 26, 2016

/s/ SHANNON D. MARTIN
 Shannon D. Martin
 
Vice President, Chief Accounting Officer
(principal accounting officer)
 
February 26, 2016

/s/ JOSEPH E. CANON
 Joseph E. Canon
 
Director
 
February 26, 2016

/s/ MICHAEL APPLING JR.
 Michael Appling Jr.
 
Director
 
February 26, 2016

/s/ ARTHUR L. FRENCH
 Arthur L. French
 
Director
 
February 26, 2016

/s/ J. KEVIN GRIFFIN
 J. Kevin Griffin
 
Director
 
February 26, 2016

/s/ JOHN E. JACKSON
 John E. Jackson
 
Director
 
February 26, 2016

/s/ BRIAN E. LANE
 Brian E. Lane
 
Director
 
February 26, 2016

/s/ STEVEN B. SOLCHER
 Steven B. Solcher
 
Director
 
February 26, 2016

191

Table of Contents


EXHIBIT INDEX

Exhibit
Number
 
Description
12.1   Computation of Ratio of Earnings to Fixed Charges
21.1   List of Subsidiaries
23   Consent of Grant Thornton LLP, independent registered public accounting firm
31.1   Rule 13a - 14(a)/15d - 14(a) certification of Chief Executive Officer
31.2   Rule 13a - 14(a)/15d - 14(a) certification of Chief Financial Officer
32.1   Section 1350 certification of Chief Executive Officer
32.2   Section 1350 certification of Chief Financial Officer