UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2020

☐	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 814-00878

Garrison Capital Inc.

(Exact name of registrant as specified in its charter)

Delaware

90-0900145

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1270 Avenue of the Americas, Suite 804

New York, New York 10020

(Address of principal executive offices)

(Registrant’s telephone number, including area code): (212) 372-9508

1290 Avenue of the Americas, Suite 914

New York, New York 10104

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

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

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	GARS	The Nasdaq Stock Market LLC

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☐ No ☐

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

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

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

As of August 6, 2020 the Registrant had 16,049,352 shares of common stock, $0.001 par value, outstanding.

Table of Contents

		Page
Part I.	Financial Information

Item 1.	Financial Statements	1

	Consolidated Statements of Financial Condition as of June 30, 2020 (unaudited) and December 31, 2019	1

	Consolidated Schedules of Investments as of June 30, 2020 (unaudited) and December 31, 2019	2

	Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2020 and June 30, 2019	20

	Consolidated Statements of Changes in Net Assets (unaudited) for the three and six months ended June 30, 2020 and June 30, 2019	21

	Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2020 and June 30, 2019	22

	Notes to Consolidated Financial Statements (unaudited)	23

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	70

Item 4.	Controls and Procedures	70

Part II.	Other Information

Item 1.	Legal Proceedings	71

Item 1A.	Risk Factors	71

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78

Item 3.	Defaults Upon Senior Securities	78

Item 4.	Mine Safety Disclosures	78

Item 5.	Other Information	78

Item 6.	Exhibits	78

Garrison Capital Inc. and Subsidiaries

Consolidated Statements of Financial Condition

($ in thousands, except share and per share amounts)

Part I. Financial Information

Item 1. Financial Statements

	June 30, 2020			December 31, 2019
	(unaudited)
Assets
Cash	$	8,531		$	1,251
Restricted cash		7,955			39,056
Due from counterparties		219			1,413
Investments, at fair value
Non-control/non-affiliate investments (amortized cost of $380,164 and $433,940, respectively)		348,024			417,401
Non-control/affiliate investments (amortized cost of $3,623 and $3,663, respectively)		741			1,472
Accrued interest receivable		2,172			2,887
Other assets		646			969
Total assets	$	368,288		$	464,449

Liabilities
Due to counterparties	$	—		$	9,413
Debt (Note 4)		266,211			313,750
Management fee payable (Note 5)		143			1,516
Administrator fee payable (Note 5)		—			—
Accrued interest payable		732			1,734
Accrued expenses and other payables		575			1,483
Total liabilities	$	267,661		$	327,896

Commitments and contingencies (Note 9)

Net assets
Common stock, par value $0.001 per share, 100,000,000 shares authorized, 16,758,779 shares issued and 16,049,352 shares outstanding as of both June 30, 2020 and December 31, 2019	$	17		$	17
Paid-in-capital in excess of par		249,124			249,124
Total distributable earnings/(loss)		(148,514	)		(112,588	)
Total net assets		100,627			136,553
Total liabilities and net assets	$	368,288		$	464,449

Shares of common stock outstanding		16,049,352			16,049,352
Net asset value per share	$	6.27		$	8.51

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments

June 30, 2020 (unaudited)

($ in thousands, except share amounts)

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Equity Investments
Aerospace and Defense
New Constellis Borrower LLC, Common Stock*	N/A	N/A	N/A	N/A		30,342	$	1,035	$	—		—	%
								1,035		—		—
Building Products
Valterra Products Holdings, LLC, Class A LLC Units	N/A	N/A	N/A	N/A		185,847		186		1,124		1.12
Valterra Products Holdings, LLC, Class B LLC Units	N/A	N/A	N/A	N/A		20,650		21		125		0.12
								207		1,249		1.24

Commercial Services and Supplies
Faraday Holdings, LLC, LLC Units	N/A	N/A	N/A	N/A		2,752		140		628		0.62
								140		628		0.62

Diversified Financial Services
Prosper Marketplace Inc., Series B Preferred Stock⁽¹⁾⁽²⁾	N/A	N/A	N/A	N/A		912,865		551		320		0.32
								551		320		0.32

Diversified Telecommunication Services
Fusion Connect, Inc., Common Stock*	N/A	N/A	N/A	N/A		121,871		2,602		2,147		2.13
								2,602		2,147		2.13

Healthcare Equipment and Services
Juniper TGX Investment Partners, LLC, LLC Units	N/A	N/A	N/A	N/A		3,146		671		1,945		1.93
								671		1,945		1.93

Household Products and Durables
Oneida Group Inc., Common Stock	N/A	N/A	N/A	N/A		1,085,565		4,160		795		0.79
								4,160		795		0.79

Internet Software and Services
Emtec Global Services Holdings, LLC, Preferred Stock	N/A	N/A	N/A	N/A		319,357		—		—		—
								—		—		—

Total Equity Investments							$	9,366	$	7,084		7.03	%

Debt Investments
Aerospace and Defense
McNally Industries, LLC, Term Loan	1.50%	5.75%	7.25%	8/9/2024		6,822	$	6,739	$	6,754		6.71	%
McNally Industries, LLC, Delayed Draw Term Loan	1.50%	5.75%	7.25%	8/9/2024		50		49		49		0.05
McNally Industries, LLC, Revolver	1.50%	5.75%	7.25%	8/9/2024		44		44		43		0.04
New Constellis Borrower LLC, Term Loan*⁽⁵⁾	1.00%	11.00%	12.00%	3/27/2025		481		481		78		0.08
Novetta Solutions LLC, Term Loan*	1.00%	5.00%	6.00%	10/17/2022		1,954		1,929		1,898		1.89
Peraton Corp. (fka MHVC Acquisition Corp.), Initial Term Loan (First Lien)*	1.00%	5.25%	6.25%	4/29/2024		1,309		1,306		1,247		1.24
								10,548		10,069		8.59

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

June 30, 2020 (unaudited)

($ in thousands, except share amounts)

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Air Freight and Logistics
Gruden Acquisition, Inc., Term Loan (First Lien)*	1.00%	5.50%	6.50%	8/18/2022		2,427	$	2,414	$	2,239		2.23	%
Kane is Able, Inc., Term Loan*	1.50%	7.00%	8.50%	3/13/2024		6,463		6,358		6,398		6.36
								8,772		8,637		8.59
Auto Components
Challenge Mfg. Company, LLC, Term Loan B*	1.00%	8.50%	9.50%	4/20/2022		7,244		7,211		7,099		7.06
GC EOS Buyer, Inc., Initial Term Loan (First Lien)*	1.08%	4.50%	5.58%	8/1/2025		3,439		3,432		2,925		2.91
Holley Purchaser, Inc., Term Loan*	0.76%	5.00%	5.76%	10/24/2025		6,521		6,442		5,314		5.28
Shipston Equity Holdings, LLC, Term Loan*⁽³⁾⁽⁴⁾	1.44%	10.28%	11.72% PIK	9/28/2023		6,368		6,330		6,050		6.01
Winter Park Intermediate, Inc., Initial Term Loan (First Lien)*	0.71%	4.75%	5.46%	4/4/2025		2,611		2,590		2,354		2.34
								26,005		23,742		23.60

Building Products
CPG International LLC (fka CPG International Inc.), New Term Loan*	1.00%	3.75%	4.75%	5/5/2024		742		726		733		0.73
Global Integrated Flooring Systems Inc. (Camino Systems, Inc.), Term Loan⁽³⁾	1.44%	8.25%	4.84% Cash 4.85% PIK	2/15/2023		6,804		6,734		6,260		6.22
Janus International Group, LLC, Tranche B-2 Term Loan*	1.07%	4.50%	5.57%	2/12/2025		2,205		2,179		2,072		2.06
								9,639		9,065		9.01

Chemicals
Ascensus Specialties LLC, Term Loan (First Lien)*	0.17%	4.75%	4.92%	9/24/2026		1,712		1,705		1,670		1.66
Q Holding Company (fka Lexington Precision Corporation), Term B Loan (2019)*	1.00%	5.00%	6.00%	12/29/2023		2,391		2,381		2,080		2.07
								4,086		3,750		3.73

Commercial Services and Supplies
Allied Universal Holdco LLC (f/k/a USAGM Holdco, LLC), Initial Term Loan*	0.17%	4.25%	4.42%	7/10/2026		1,284		1,278		1,245		1.24
DMT Solutions Global Corporation, Initial Term Loan*	2.20%	6.00%	8.20%	7/2/2024		6,564		6,433		6,088		6.05
Interior Logic Group Inc., Initial Term Loan*	0.17%	4.00%	4.17%	5/30/2025		6,413		6,390		5,787		5.75
Staples, Inc., 2019 Refinancing New Term B-1 Loan*	0.69%	5.00%	5.69%	4/16/2026		2,970		2,946		2,562		2.55
USS Ultimate Holdings, Inc., Initial Term Loan (First Lien)*	1.00%	3.75%	4.75%	8/25/2024		1,281		1,270		1,200		1.19
VIP Cinema Holdings, Inc., Roll-Up Loan*⁽⁵⁾	3.25%	7.00%	10.25%	8/7/2020		593		593		34		0.03
VIP Cinema Holdings, Inc., DIP Loan*	3.25%	7.00%	10.25%	8/7/2020		197		197		176		0.17
								19,107		17,092		16.98

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

June 30, 2020 (unaudited)

($ in thousands, except share amounts)

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Construction and Engineering
Brand Energy & Infrastructure Services, Inc., Term Loan*	1.20%	4.25%	5.45%	6/21/2024		1,968	$	1,914	$	1,796		1.78	%
GeoStabilization International LLC, Term Loan*	0.17%	5.25%	5.42%	12/19/2025		3,307		3,281		3,141		3.12
QualTek USA, LLC, Tranche B Term Loan*	1.00%	6.25%	7.25%	7/18/2025		5,735		5,654		5,114		5.08
								10,849		10,051		9.98

Containers and Packaging
Ball Metalpack Finco LLC, Term Loan*	0.36%	4.50%	4.86%	7/31/2025		540		538		494		0.49
Klockner Pentaplast of America, Inc., Term Loan*⁽¹⁾	1.00%	4.25%	5.25%	6/30/2022		4,559		4,483		4,256		4.23
								5,021		4,750		4.72
Diversified Financial Services
Acrisure, LLC, 2017-2 Refinancing Term Loan (First Lien)*	0.18%	3.50%	3.68%	2/16/2027		1,477		1,468		1,392		1.38
AIS Holdco, LLC, Term Loan*	0.76%	5.00%	5.76%	8/15/2025		2,596		2,587		2,207		2.19
PlanMember Financial Corporation, Term Loan*⁽¹⁾	3.00%	5.00%	8.00%	6/21/2024		1,069		1,061		1,059		1.05
								5,116		4,658		4.62

Diversified Telecommunication Services
Fusion Connect, Inc., 1/20 Take Back Second Out*⁽³⁾	2.00%	8.00%	3.00% Cash 7.00% PIK	7/14/2025		2,862		2,862		1,860		1.85
KORE Wireless Group Inc., Term B Loan*	0.31%	5.50%	5.81%	12/20/2024		8,136		8,075		7,485		7.44
Onvoy, LLC, Term Loan*	1.00%	4.50%	5.50%	2/12/2024		2,938		2,933		2,764		2.75
U.S. Telepacific Corp., Term Loan B*	1.07%	5.00%	6.07%	5/2/2023		7,190		7,158		5,636		5.60
								21,028		17,745		17.64

Electrical Equipment
Energy Acquisition LP, Initial Term Loan (First Lien)*	0.17%	4.25%	4.42%	6/26/2025		4,912		4,898		3,832		3.81
Luminii LLC, Revolver*	1.45%	6.25%	7.70%	4/11/2023		515		517		507		0.50
Luminii LLC, Term Loan*	1.45%	6.25%	7.70%	4/11/2023		7,171		7,123		7,071		7.03
Verifone Systems, Inc., Term Loan*	0.38%	4.00%	4.38%	8/20/2025		1,970		1,970		1,636		1.63
								14,508		13,046		12.97

Energy Equipment and Services
BJ Services, LLC, Term Loan*	1.50%	7.00%	8.50%	1/3/2023		6,362		6,322		6,311		6.27
NGS US FinCo, LLC, Term Loan*	1.00%	4.25%	5.25%	10/1/2025		2,670		2,660		2,403		2.39
								8,982		8,714		8.66

Food Products
Mother's Market & Kitchen, Inc, Term Loan*⁽⁴⁾	1.25%	5.50%	6.75%	7/26/2023		7,048		6,983		6,978		6.93
								6,983		6,978		6.93

See accompanying notes to consolidated financial statements.

Garrison Capital Inc. and Subsidiaries

Consolidated Schedule of Investments - (continued)

June 30, 2020 (unaudited)

($ in thousands, except share amounts)

Security Description	Base Rate	Spread	All In Rate	Maturity	Par / Shares		Cost		Fair Value		% of Net Assets
Non-Control/Non-Affiliate Investments
Debt Investments (continued)
Healthcare Equipment and Services
AC Merger Sub, Inc. (Analogic), Term Loan*	1.00%	5.25%	6.25%	6/24/2024		3,574	$	3,550	$	3,520		3.50	%
ActivStyle, Inc., Term Loan*	1.44%	7.50%	8.94%	7/9/2020		9,457		9,456		9,457		9.40
AG Parent Holdings, LLC, Initial Term Loan (First Lien)*	0.18%	5.00%	5.18%	7/31/2026		1,336		1,324		1,310		1.30
Community Care Health Network, LLC, Term Loan*	0.17%	4.75%	4.92%	2/18/2025		1,372		1,369		1,230		1.22
LifeScan Global Corp., Term Loan*	1.75%	6.00%	7.75%	10/1/2024		3,365		3,278		3,020		3.00
Maxor Acquisition, Inc., Revolver*	3.25%	4.50%	7.75%	11/22/2022		292		292		287		0.29
Maxor Acquisition, Inc., Term Loan*	1.00%	5.50%	6.50%	11/22/2023		8,536		8,488		8,365		8.31
SSC (Lux) Limited Sarl (Surgical Specialties), Term Loan*⁽¹⁾	1.07%	5.00%	6.07%	5/6/2025		4,363		4,328		3,840		3.82
Theragenics Corporation, Term Loan*	1.00%	8.00%	9.00%	5/31/2024		8,438		8,422		8,311		8.26
								40,507		39,340		39.10

Hotels, Restaurants and Leisure
CircusTrix Holdings, LLC, Term Loan B*⁽³⁾	1.00%	5.50%	6.50% PIK	12/16/2021		6,068		6,045		4,854		4.82
								6,045		4,854		4.82

Household Products and Durables
Brown Jordan International Inc., Term Loan*	1.00%	5.00%	6.00%	1/31/2023		5,669		5,650		4,819		4.79
CR Brands, Inc., Term Loan	1.00%	11.25%	12.25%	7/31/2020		7,244		7,244		6,877		6.83
NBG Acquisition Inc., Term Loan*	1.45%	5.50%	6.95%	4/26/2024		5,564

Garrison Capital Inc. 10-Q