| Page |
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| Part I. |
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| Item 1. | Business | 4 |
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| Item 1A. | Risk Factors | 29 |
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| Item 1B. | Unresolved Staff Comments | 74 |
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| Item 1C. | Cybersecurity | 74 |
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| Item 2. | Properties | 76 |
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| Item 3. | Legal Proceedings | 76 |
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| Item 4. | Mine Safety Disclosures | 76 |
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| Part II. |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 77 |
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| Item 6. | Reserved | 82 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 82 |
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| Item 7A. | Quantitative and Qualitative Disclosure about Market Risk | 104 |
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| Item 8. | Consolidated Financial Statements and Supplementary Data | 106 |
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| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 177 |
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| Item 9A. | Controls and Procedures | 177 |
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| Item 9B. | Other Information | 178 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 178 |
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| Part III. | | |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 178 |
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| Item 11. | Executive Compensation | 183 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 184 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 186 |
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| Item 14. | Principal Accounting Fees and Services | 186 |
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| Part IV. | | |
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| Item 15. | Exhibits and Financial Statements | 187 |
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| Signatures | | 191 |
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PART I
In this annual report on Form 10-K, except as otherwise indicated, the terms:
| ● | “we,” “us,” “our,” the “Company” and “WhiteHorse Finance” refer (unless the context otherwise requires) to WhiteHorse Finance, Inc., a Delaware corporation, and its consolidated subsidiaries, WhiteHorse Credit (as defined below) and WhiteHorse California (as defined below); |
| ● | “H.I.G. Capital” refers (unless the context otherwise requires), collectively, to H.I.G. Capital, L.L.C., a Delaware limited liability company, and its affiliates. H.I.G. Capital employs all of WhiteHorse Finance’s investment professionals, as well as those of WhiteHorse Advisers (as defined below), WhiteHorse Administration (as defined below) and their respective affiliates; |
| ● | “WhiteHorse Credit” refers to WhiteHorse Finance Credit I, LLC, a special purpose Delaware limited liability company and a wholly owned subsidiary of WhiteHorse Finance; |
| ● | “WhiteHorse California” refers to WhiteHorse Finance (CA), LLC, a special purpose Delaware limited liability company and a wholly owned subsidiary of WhiteHorse Credit; |
| ● | “WhiteHorse Advisers” and the “Investment Adviser” refer to H.I.G. WhiteHorse Advisers, LLC, a Delaware limited liability company and an affiliate of H.I.G. Capital; |
| ● | “WhiteHorse Administration” and the “Administrator” refer to H.I.G. WhiteHorse Administration, LLC, a Delaware limited liability company and an affiliate of H.I.G. Capital; |
| ● | “5.375% 2025 Notes” refer to the $40 million aggregate principal amount of 5.375% unsecured notes due 2025 privately issued on October 20, 2020 to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended; |
| ● | “2025 Note Purchase Agreement” refers to the note purchase agreement, dated October 20, 2020, governing the issuance and sale of the 5.375% 2025 Notes; |
| ● | “5.375% 2026 Notes” refer to the $10 million aggregate principal amount of 5.375% unsecured notes due 2026 privately issued on December 4, 2020 to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended; |
| ● | “2026 Note Purchase Agreement” refers to the note purchase agreement, dated December 4, 2020, governing the issuance and sale of the 5.375% 2026 Notes; |
| ● | “5.625% 2027 Notes” refer to the $10 million aggregate principal amount of 5.625% unsecured notes due 2027 privately issued on December 4, 2020 to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended; |
| ● | “2027 Note Purchase Agreement” refers to the note purchase agreement, dated December 4, 2020, governing the issuance and sale of the 5.625% 2027 Notes; |
| ● | “4.250% 2028 Notes” refer to the $25 million aggregate principal amount of 4.25% unsecured notes due 2028 privately issued on December 6, 2021 to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended; |
| ● | “2028 Note Purchase Agreement” refers to the note purchase agreement, dated December 6, 2021, governing the issuance and sale of the 4.25% 2028 Notes; |
| ● | “4.000% 2026 Notes” refer to the $75 million aggregate principal amount of 4.00% unsecured notes due 2026 issued on November 24, 2021; |
| ● | “7.875% 2028 Notes” refer to the $34.5 million aggregate principal amount of 7.875% unsecured notes due 2028 issued August 24, 2023; |
| ● | “6.000% 2023 Notes” refer to the $30 million aggregate principal amount of 6.00% unsecured notes due 2023 privately issued on August 7, 2018 to qualified institutional investors in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended; |
| ● | “Public Notes” refers (unless the context otherwise requires) collectively to the 7.875% 2028 Notes and the 4.000% 2026 Notes; |
| ● | “Private Notes” refers (unless the context otherwise requires) collectively to the 6.000% 2023 Notes, the 5.375% 2025 Notes, the 5.375% 2026 Notes, the 5.625% 2027 Notes and the 4.250% 2028 Notes; |
| ● | “2020 Notes” refer to the $30 million senior notes issued on July 23, 2013 and fully redeemed by us on August 9, 2018; |
| ● | “2025 Public Notes” refer to the $35 million aggregate principal amount of 6.50% unsecured notes due 2025 issued on November 13, 2018 and fully redeemed by us on December 17, 2021; and |
| ● | “Credit Facility” refers to the $335 million secured revolving credit facility between WhiteHorse Credit, as borrower, and the “Lender”, which refers, collectively, to JPMorgan Chase Bank, N.A., together with any additional lenders that may join the Credit Facility in the future. |
We were formed on December 28, 2011 and commenced operations on January 1, 2012. On December 4, 2012, we converted from a Delaware limited liability company into a Delaware corporation. In this conversion, WhiteHorse Finance, Inc. succeeded to the business of WhiteHorse Finance, LLC, and the members of WhiteHorse Finance, LLC became stockholders of WhiteHorse Finance, Inc. In this annual report on Form 10-K, we refer to these transactions as the “BDC Conversion,” and, where applicable, “shares” refer to our units prior to the BDC Conversion and to shares of common stock in our corporation afterward.
