Apollo Tactical Income Fund Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number            811-22591                        

                                     Apollo Tactical Income Fund Inc.                                    

(Exact name of registrant as specified in charter)

9 West 57th Street

                                                     New York, New York 10019                                                     

(Address of principal executive offices) (Zip code)

Joseph Moroney, President

9 West 57th Street

                                                     New York, New York 10019                                                     

(Name and address of agent for service)

Registrant’s telephone number, including area code:  (212) 515-3200

Date of fiscal year end:  December 31

Date of reporting period:  June 30, 2016


Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.


LOGO

 

 

  Apollo Senior Floating Rate Fund Inc. (NYSE: AFT)   Apollo Tactical Income Fund Inc. (NYSE: AIF)

 

 

 

Semi-Annual Report

June 30, 2016

(unaudited)


 

TABLE OF CONTENTS

 

Manager Commentary

     4   

Financial Data

  

Apollo Senior Floating Rate Fund Inc.

     5   

Apollo Tactical Income Fund Inc.

     6   

Schedule of Investments

  

Apollo Senior Floating Rate Fund Inc.

     7   

Apollo Tactical Income Fund Inc.

     16   

Statements of Assets and Liabilities

     25   

Statements of Operations

     26   

Statements of Changes in Net Assets

  

Apollo Senior Floating Rate Fund Inc.

     27   

Apollo Tactical Income Fund Inc.

     28   

Statement of Cash Flows

  

Apollo Senior Floating Rate Fund Inc.

     29   

Apollo Tactical Income Fund Inc.

     30   

Financial Highlights

  

Apollo Senior Floating Rate Fund Inc.

     31   

Apollo Tactical Income Fund Inc.

     32   

Notes to Financial Statements

     33   

Additional Information

     48   

Important Information About This Report

     51   

Economic and market conditions change frequently.

There is no assurance that the trends described in this report will continue or commence.

 

 

 

This report, including the financial information herein, is transmitted to shareholders of the Funds for their information. It is not a prospectus. Past performance results shown in this report should not be considered a representation of future performance. Statements and other information herein are as dated and are subject to change.


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Manager Commentary (unaudited)

As of June 30, 2016

Dear Shareholders,

We would like to start by saying thank you for your interest in the Apollo Senior Floating Rate Fund Inc. and the Apollo Tactical Income Fund Inc. (the “Funds”). We appreciate the trust and confidence you have placed with us through your investment in the Funds.

The beginning of 2016 started off much like 2015 had ended for the corporate credit markets, with both leveraged loans and high yield bonds continuing to move lower. This same move lower marked the end of the year prior for very similar reasons, primarily continued weakness in commodity prices and the negative impact this was having on retail demand for loans and bonds. Most of January and the first half of February looked very much like the months that had preceded them with regular selling by credit managers in the secondary market and a frozen primary market marked by equity and commodity price volatility. In mid-February, this dynamic reversed as commodity prices stabilized, equities began to move higher and managers of loan and high yield funds in particular saw inflows to mutual funds. After steadily climbing over the back half of 2015 and into 2016, average yields in the high yield market hit a high of 10.5% in mid-February. This peak, combined with the previously mentioned coinciding factors in equities and commodities, ended up being the point at which capital was committed to the loan and bond markets in enough size to eventually reverse nearly all of the move lower that began in early June 2015. The market movements subsequent to this have been substantial. Since the 2016 lows for high yield, on February 11, and for the loan market, on February 17, these markets are up +15.8%1 and +6.1%2 through June 30, respectively.

While this steady improvement has been almost entirely one-directional and lacking in any real volatility, aside from the short-lived period of volatility created by the United Kingdom’s referendum to exit European Union membership (“Brexit”) in late June, it was not without opportunity as it relates to investing on behalf of the Funds. There was a backup in the capital markets early this year created by market volatility that caused the forward calendar of deals scheduled to be syndicated to balloon. As conditions eased, dealers competed to bring substantial financings of many kinds to market, and the pricing and structure for most of these deals represented attractive investment opportunities relative to almost any period in the year preceding. Pricing for loans across the ratings spectrum widened compared to similar credits priced over most of 2015, with generally better terms and call protection as well. These represented opportunities for the Funds to refinance into what we believe are better credit profiles for businesses at greater rates of return, with enhanced lender protection. After the anemic totals of loan issuance in January and February, issuance increased fairly steadily into the summer with June’s institutional loan new-issuance volume of $73.0 billion the third highest on record, and sixth consecutive monthly increase in a row. While the most attractive pricing and terms of the early part of the rally have diminished, this kind of supply is important for the Fund’s ability to optimize their positionings and investments and has been healthy in the process of portfolio management.

As it relates to aforementioned Brexit, both the volatility and opportunity this created for the Funds was short-lived. Though we were able to add at the margin to existing positions that we liked at lower levels given initial selling on the event, this selling occurred over only a brief period of time and there was a substantial amount of demand waiting for it which limited the move lower in prices. Over the two weeks that followed, inflows into high yield funds in particular were historically high, and the reversal in any move lower in prices did not take long to play out. If anything, the broader reaction to the event as an immediate buying opportunity suggests a broader theme that we see as only beginning, which is that of a global search for yield in an environment of declining returns increasingly focused on the United States. While we feel the Funds are set up quite well to take advantage of increased demand, we are cognizant that it may create certain distortions in the capital markets and will remain focused on what this may bring.

We appreciate your interest and support in the Funds. If you have any questions about the Funds, please call 1-888-301-3838, or visit our website at www.agmfunds.com.

Sincerely,

Apollo Credit Management, LLC

1JPMorgan Domestic High Yield Index, June 30, 2016

2S&P/LSTA Leveraged Loan Total Return Index, June 30, 2016

 

4  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Financial Data

As of June 30, 2016 (unaudited)

 

   Portfolio Composition (as % of Current Market  
   Value of Investment Securities)  
  

Loans

     93.1%   

High Yield Bonds

     5.9%   

Equity/Other

     1.0%   
  
   Portfolio Characteristics (a)  
  

Weighted Average Floating-Rate Spread

     4.79%   

Weighted Average Fixed-Rate Coupon

     8.23%   

Weighted Average Maturity (in years) (floating assets)

     4.69   

Weighted Average Maturity (in years) (fixed assets)

     5.36   

Weighted Average Modified Duration (in years)

  

(fixed assets)

     3.63   

Average Position Size

   $ 2,068,715   

Number of Positions

     201   

Weighted Average S&P Rating

     B   

Weighted Average Rating Factor (Moody’s)(h)

     2,925   
  
   Credit Quality (b)  
  

BBB

     1.3%   

BB

     12.2%   

B

     68.0%   

CCC+ or Lower

     13.5%   

Not Rated

     5.0%   
          
   Top 5 Industries (as % of Current Market Value of  
   Investment Securities) (c)  
  

High Tech Industries

     12.1%   

Healthcare & Pharmaceuticals

     10.2%   

Banking, Finance, Insurance & Real Estate

     10.0%   

Media: Broadcasting & Subscription

     9.6%   

Services: Business

     8.3%   

Total

     50.2%   
   Top 10 Issuers (as % of Current Market Value of  
   Investment Securities) (d)  
  

Scientific Games International, Inc.

     1.5%   

Amwins Group, LLC

     1.5%   

BWay Intermediate Company, Inc.

     1.4%   

Asurion, LLC

     1.4%   

Valeant Pharmaceuticals International, Inc.

     1.4%   

NVA Holdings, Inc.

     1.4%   

First Data Corp.

     1.3%   

DAE Aviation Holdings, Inc.

     1.3%   

NVLX Acquisition, LLC

     1.3%   

Kronos, Inc.

     1.3%   

Total

     13.8%   

 

   Performance Comparison  
    
     Six Months
Ended
June 30,
2016
   

Since  

Inception  
on February 23,  
2011, to  

June 30,  
2016  

 
    

AFT - Market Price

     8.10%(e)        2.63%(e)(f)   

AFT - NAV

     7.39%(e)        5.55%(e)(f)   

S&P/LSTA Leveraged Loan Index (g)

     4.51%        3.54%(f)   
 

 

(a) Averages based on par value of investment securities, except for the weighted average modified duration, which is based on market value. The weighted average rating factor per Moody’s Investors Service (“Moody’s”) excludes securities with no rating or in default as of June 30, 2016.
(b) Credit quality is calculated as a percentage of fair value of investment securities at June 30, 2016. The quality ratings reflected were issued by Standard & Poor’s Ratings Group (“S&P”), a nationally recognized statistical rating organization. Credit quality ratings reflect the rating agency’s opinion of the credit quality of the underlying positions in the Fund’s portfolio and not that of the Fund itself. Credit quality ratings are subject to change.
(c) The industry classifications reported are from widely recognized market indexes or rating group indexes, and/or as defined by Fund management, with the primary source being Moody’s, a nationally recognized statistical rating organization.
(d) Holdings are subject to change and are provided for informational purposes only.
(e) Performance reflects total return assuming all distributions were reinvested at the dividend reinvestment rate. Past performance does not necessarily indicate how the Fund will perform in the future. The performance information provided does not reflect the deduction of taxes that a shareholder would pay on distributions received from the Fund.
(f) Annualized.
(g) The S&P/LSTA Leveraged Loan Index is a broad index designed to reflect the performance of the U.S. dollar facilities in the leveraged loan market.
(h) Excludes securities with no rating or in default as of June 30, 2016.

 

Semi-Annual Report  |  5


Apollo Tactical Income Fund Inc.

Financial Data

As of June 30, 2016 (unaudited)

 

   Portfolio Composition (as % of Current Market  
   Value of Investment Securities)  
  

Loans

     73.6%   

High Yield Bonds

     15.3%   

Structured Products

     10.0%   

Equity/Other

     1.1%   
  
   Portfolio Characteristics (a)  
  

Weighted Average Floating-Rate Spread

     5.38%   

Weighted Average Fixed-Rate Coupon

     7.55%   

Weighted Average Maturity (in years) (floating assets)

     5.67   

Weighted Average Maturity (in years) (fixed assets)

     5.22   

Weighted Average Modified Duration (in years) (fixed assets)

     3.75   

Average Position Size

   $ 2,023,004   

Number of Positions

     199   

Weighted Average S&P Rating

     B   

Weighted Average Rating Factor (Moody’s)(h)

     2,995   
  
   Credit Quality (b)  

BBB

     0.8%   

BB

     16.5%   

B

     54.2%   

CCC+ or Lower

     17.0%   

Not Rated

     11.5%   
  
   Top 5 Industries (as % of Current Market Value of  
   Investment Securities) (c)  
  

High Tech Industries

     10.2%   

Healthcare & Pharmaceuticals

     8.9%   

Media: Broadcasting & Subscription

     8.2%   

Retail

     8.0%   

Banking, Finance, Insurance & Real Estate

     7.6%   

Total

     42.9%   
   Top 10 Issuers (as % of Current Market Value of  
   Investment Securities) (d)  
  

Anchorage Capital CLO, Ltd.

     1.9%   

OCP CLO. Ltd.

     1.8%   

Land O’ Lakes Capital Trust I

     1.4%   

Laureate Education, Inc.

     1.4%   

Riverbed Technology, Inc.

     1.4%   

Valeant Pharmaceuticals International, Inc.

     1.4%   

Onex Carestream Finance, L.P.

     1.4%   

TPC Group, Inc. (Texas Petrochemical)

     1.3%   

EIG Investors Corp.

     1.3%   

Pike Corp.

     1.2%   

Total

     14.5%   

 

   Performance Comparison  
    
    

Six Months

Ended
June 30,
2016

   

Since  

Inception  
on February 25,  
2013, to  

June 30,  

2016  

 
    

AIF - Market Price

           9.29%(e)                -0.72%(e)(f)   

AIF - NAV

           6.72%(e)                4.22%(e)(f)   

S&P/LSTA Leveraged Loan Index (g)

           4.51%                2.80%(f)   
 

 

(a) Averages based on par value of investment securities, except for the weighted average modified duration, which is based on market value. The weighted average rating factor per Moody’s excludes securities with no rating or in default as of June 30, 2016.
(b) Credit quality is calculated as a percentage of fair value of investment securities at June 30, 2016. The quality ratings reflected were issued by S&P, a nationally recognized statistical rating organization. Credit quality ratings reflect the rating agency’s opinion of the credit quality of the underlying positions in the Fund’s portfolio and not that of the Fund itself. Credit quality ratings are subject to change.
(c) The industry classifications reported are from widely recognized market indexes or rating group indexes, and/or as defined by Fund management, with the primary source being Moody’s, a nationally recognized statistical rating organization. The Top 5 Industries table above excludes Structured Products which represent 10.0% of the portfolio as of June 30, 2016.
(d) Holdings are subject to change and are provided for informational purposes only.
(e) Performance reflects total return assuming all distributions were reinvested at the dividend reinvestment rate. Past performance does not necessarily indicate how the Fund will perform in the future. The performance information provided does not reflect the deduction of taxes that a shareholder would pay on distributions received from the Fund.
(f) Annualized.
(g) The S&P/LSTA Leveraged Loan Index is a broad index designed to reflect the performance of the U.S. dollar facilities in the leveraged loan market.
(h) Excludes securities with no rating or in default as of June 30, 2016.

 

6  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments

June 30, 2016 (unaudited)

 

    

Principal   

 Amount ($) 

 

    

 Value ($)

 

     

Senior Loans - 134.1%(a)

       

AEROSPACE & DEFENSE - 5.0%

  

    

Camp International Holding Co.

       

2013 First Lien Replacement

Term Loan, (LIBOR + 3.75%,

1.00% Floor), 4.75%,
05/31/19(b)

     2,381,107             2,374,416     

2013 Second Lien Replacement

       

Term Loan, (LIBOR + 7.25%,

       

1.00% Floor), 8.25%,
11/29/19(b)

     1,000,000             980,000     

DAE Aviation Holdings, Inc.

       

Initial Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

07/07/22(b)

     5,072,257             5,069,898     

Photonis Technologies SAS

       

(France)

First Lien Initial Dollar Term

Loan, (LIBOR + 7.50%, 1.00%

Floor), 8.50%, 09/18/19(b)(c)

     1,897,815             1,698,544     

TASC, Inc.

       

First Lien New Term Loan,

(LIBOR + 6.00%, 1.00% Floor),

7.00%, 05/22/20(b)

     521,575             522,879     

First Lien Term Loan, (LIBOR +

6.00%, 1.00% Floor), 7.00%,

05/22/20(b)

     1,433,344             1,436,927     

Second Lien Term Loan,

12.00%, 05/21/21(d)

     1,637,357             1,649,637     
     

 

 

   
              13,732,301     
     

 

 

   

AUTOMOTIVE - 2.7%

       

American Tire Distributors, Inc.

       

Initial Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

09/01/21(b)

     3,989,899             3,865,235     

KAR Auction Services, Inc.

       

Tranche B-3 Term Loan, (LIBOR

+ 3.50%, 0.75% Floor), 4.25%,

03/09/23(b)

     997,500             1,002,069     

U.S. Farathane, LLC

       

Term Loan B-2, (LIBOR + 4.75%,

1.00% Floor), 5.75%,
12/23/21(b)(e)

     2,349,737             2,352,674     
     

 

 

   
        7,219,978     
     

 

 

   

BANKING, FINANCE, INSURANCE & REAL ESTATE - 12.9%

  

 

Alliant Holdings I, LLC

       

Initial Term Loan, (LIBOR +

3.50%, 1.00% Floor), 4.50%,

08/12/22(b)

     1,705,979             1,684,654     

Amwins Group, LLC

       

First Lien Term Loan, (LIBOR +

3.75%, 1.00% Floor), 4.75%,

09/06/19(b)

     4,053,215             4,055,383     

Second Lien Term Loan, (LIBOR + 8.50%, 1.00% Floor), 9.50%, 09/04/20(b)

     1,764,500             1,768,911     
    

Principal   

 Amount ($) 

 

    

 Value ($) 

 

     

BANKING, FINANCE, INSURANCE & REAL ESTATE (continued)

  

 

AqGen Island Intermediate

       

Holdings, Inc.

First Lien Term Loan, (LIBOR +

4.50%, 1.00% Floor), 5.50%,

12/05/22(b)

     2,469,136             2,439,815     

Asurion, LLC

       

Incremental Tranche B-1 Term

Loan, (LIBOR + 3.75%, 1.25%

Floor), 5.00%, 05/24/19(b)

     4,336,273             4,321,834     

Second Lien Term Loan, (LIBOR

+ 7.50%, 1.00% Floor), 8.50%,

03/03/21(b)

     1,399,109             1,352,938     

First Data Corp.

       

2021 New Dollar Term Loan,

(LIBOR + 4.00%, 0.00% Floor),

4.44%, 03/24/21(b)

     5,302,959             5,294,130     

Global Payments, Inc.

       

Initial Term Loan, (LIBOR +

3.50%, 0.00% Floor), 3.94%,

04/22/23(b)

     1,096,639             1,105,412     

Hyperion Insurance Group, Ltd.

       

(United Kingdom)

Initial Term Loan, (LIBOR +

4.50%, 1.00% Floor), 5.50%,

04/29/22(b)(c)

     488,528             464,102     

iStar, Inc.

       

Term Loan, (LIBOR + 4.50%,

1.00% Floor), 5.50%,

07/01/20(b)(f)

     1,398,773             1,400,521     

Jefferies Finance, LLC (JFIN

       

Co-Issuer Corp.)

Term Loan, (LIBOR + 3.50%,

1.00% Floor), 4.50%,

05/14/20(b)(e)

     1,506,522             1,491,456     

Medical Card System, Inc.

       

Term Loan, (LIBOR + 0.50%,

1.00% Floor), 1.50%,

05/31/19(b)(e)(g)

     5,323,315             3,064,118     

MMM Holdings, Inc.

       

MMM Term Loan, (LIBOR +

8.25%, 1.50% Floor), 9.75%,

12/12/17(b)(e)

     638,237             488,251     

MPH Acquisition Holdings, LLC

       

Initial Term Loan, (LIBOR +

4.00%, 1.00% Floor), 5.00%,

06/07/23(b)

     3,759,494             3,774,532     

MSO of Puerto Rico, Inc.

       

MSO Term Loan, (LIBOR +

8.25%, 1.50% Floor), 9.75%,

12/12/17(b)(e)

     463,995             354,956     

Sedgwick Claims Management

       

Services, Inc.

Term Loan, (LIBOR + 4.25%,

1.00% Floor), 5.25%, 03/01/21(b)

     1,933,981             1,938,816     
 

 

See accompanying Notes to Financial Statements.  |  7


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

June 30, 2016 (unaudited)

 

    

Principal
Amount ($)

 

    

Value ($)

 

      

Senior Loans(a) (continued)

  

     

BANKING, FINANCE, INSURANCE & REAL ESTATE (continued)

  

  

Walter Investment Management
Corp.

        

Tranche B Term Loan, (LIBOR +

3.75%, 1.00% Floor), 4.75%,

12/18/20(b)

     363,523             292,485      
     

 

 

    
        35,292,314      
     

 

 

    

BEVERAGE, FOOD & TOBACCO - 4.8%

  

     

AdvancePierre Foods, Inc.

        

Effective Date Loan, (LIBOR +

3.75%, 1.00% Floor), 4.75%,

06/02/23(b)

     2,189,189             2,186,452      

The Chef’s Warehouse, Inc.

        

Delayed Draw Term Loan,

(LIBOR + 4.75%, 1.00% Floor),

5.75%, 06/22/22(b)

     52,575             52,444      

Term Loan, (LIBOR + 4.75%,

1.00% Floor), 5.75%, 06/22/22(b)

     1,145,384             1,142,520      

Dole Food Company, Inc.

        

Tranche B Term Loan, (LIBOR +

3.50%, 1.00% Floor), 4.50%,

11/01/18(b)(f)

     1,336,386             1,333,673      

NBTY, Inc.

        

Dollar Term Loan B, (LIBOR +

4.00%, 1.00% Floor), 5.00%,

05/05/23(b)

     3,051,903             3,033,378      

PFS Holding Corp.

        

First Lien Term Loan, (LIBOR +

3.50%, 1.00% Floor), 4.50%,

01/31/21(b)

     2,745,439             2,476,386      

Winebow Holdings, Inc. (The

        

Vintner Group, Inc.)

First Lien Term Loan, (LIBOR +

3.75%, 1.00% Floor), 4.75%,

07/01/21(b)

     992,405             967,595      

Second Lien Term Loan, (LIBOR + 7.50%, 1.00% Floor), 8.50%, 01/02/22(b)

     2,260,897             2,012,198      
     

 

 

    
              13,204,646      
     

 

 

    

CAPITAL EQUIPMENT - 1.2%

        

MTS Systems Corp.

        

Term Loan B, (LIBOR + 4.25%,

0.75% Floor), 5.00%,

06/28/23(b)(f)

     3,333,333             3,328,133      
     

 

 

    

CHEMICALS, PLASTICS & RUBBER - 3.0%

  

     

The Chemours Co.

        

Tranche B Term Loan, (LIBOR +

3.00%, 0.75% Floor), 3.75%,

05/12/22(b)

     568,988             551,777      

MacDermid, Inc. (Platform

        

Specialty Products Corp.)

Tranche B-2 Term Loan, (LIBOR

+ 4.50%, 1.00% Floor), 5.50%,

06/07/20(b)

     739,124             731,042      
    

Principal
Amount ($)

 

    

Value ($)

 

      

CHEMICALS, PLASTICS & RUBBER (continued)

  

  

MacDermid, Inc. (Platform
Specialty Products Corp.)
(continued)

        

Tranche B-3 Term Loan, (LIBOR + 4.50%, 1.00% Floor), 5.50%, 06/07/20(b)

     1,122,173             1,109,829      

Magnetation, LLC / Mag Finance

Corp.

        

Term Loan (12.00% PIK),

12.00%, 07/07/16(d)(e)(g)(h)

     263,692             606      

Nexeo Solutions, LLC

        

Initial Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

06/09/23(b)

     1,076,336             1,077,009      

PetroChoice Holdings, Inc.

        

First Lien Initial Term Loan,

(LIBOR + 5.00%, 1.00% Floor),

6.00%, 08/19/22(b)(e)

     1,007,425             997,351      

PQ Corp.

        

Tranche B-1 Term Loan, (LIBOR + 4.75%, 1.00% Floor), 5.75%, 11/04/22(b)

     1,268,428             1,270,889      

Styrolution US Holding, LLC

        

First Lien Dollar Tranche B-1

Term Loan, (LIBOR + 5.50%,

1.00% Floor), 6.50%, 11/07/19(b)

     2,559,467             2,562,666      
     

 

 

    
              8,301,169      
     

 

 

    

CONSTRUCTION & BUILDING - 1.1%

  

  

Infiltrator Water Technologies, LLC

        

First Lien Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

05/27/22(b)

     2,849,324             2,850,520      
     

 

 

    

CONSUMER GOODS: DURABLE - 0.1%

  

  

Britax US Holdings, Inc.

        

Initial Dollar Term Loan, (LIBOR

+ 3.50%, 1.00% Floor), 4.50%,

10/15/20(b)

     456,534             376,641      
     

 

 

    

CONSUMER GOODS: NON-DURABLE - 2.1%

  

  

ABG Intermediate Holdings 2, LLC

        

First Lien Term Loan, (LIBOR +

4.50%, 1.00% Floor), 5.50%,

05/27/21(b)

     3,341,749             3,299,977      

Nine West Holdings, Inc.

        

Unsecured Initial Term Loan,

(LIBOR + 5.25%, 1.00% Floor),

6.25%, 01/08/20(b)

     239,923             57,582      

Polyconcept Investments B.V.

        

Term Loan, (LIBOR + 4.75%,

1.25% Floor), 6.00%, 06/28/19(b)

     2,491,519             2,466,604      
     

 

 

    
        5,824,163      
     

 

 

    

CONTAINERS, PACKAGING & GLASS - 4.4%

  

  

BWay Intermediate Company, Inc.

        

Initial Term Loan, (LIBOR +

4.50%, 1.00% Floor), 5.52%,

08/14/20(b)

     5,716,934             5,706,214      
 

 

8  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

June 30, 2016 (unaudited)

 

    

Principal  
 Amount ($) 

 

    

 Value ($)

 

     

Senior Loans(a) (continued)

  

    

CONTAINERS, PACKAGING & GLASS (continued)

  

 

Hoover Group, Inc.

       

Initial Term Loan, (LIBOR +

6.75%, 1.00% Floor), 7.75%,

01/28/21(b)(e)

     1,473,083             1,369,968     

NVLX Acquisition, LLC

       

First Lien Term Loan, (LIBOR +

5.00%, 1.00% Floor), 6.00%,

12/05/21(b)

     5,024,918             5,045,018     
     

 

 

   
              12,121,200     
     

 

 

   

ENERGY: OIL & GAS - 6.7%

  

    

American Energy - Marcellus, LLC

       

First Lien Initial Term Loan,

(LIBOR + 4.25%, 1.00% Floor),

5.25%, 08/04/20(b)

     2,712,161             1,464,567     

Azure Midstream Energy, LLC

       

Term Loan, (LIBOR + 6.50%,

1.00% Floor), 7.50%,
11/15/18(b)

     498,651             330,356     

BlackBrush Oil & Gas, L.P.

       

Closing Date Second Lien Term

Loan, (LIBOR + 6.50%, 1.00%

Floor), 7.50%, 07/30/21(b)(f)

     3,363,109             3,358,905     

Chelsea Petroleum Products I, LLC

       

Tranche B Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

10/28/22(b)

     1,727,942             1,702,023     

Chief Exploration & Development,
LLC

       

Second Lien Term Loan, (LIBOR

+ 6.50%, 1.00% Floor), 7.50%,
05/16/21(b)

     1,950,784             1,769,732     

Drillships Financing Holding, Inc.

       

Tranche B-1 Term Loan, (LIBOR
+ 5.00%, 1.00% Floor), 6.00%,

03/31/21(b)

     997,436             397,977     

EMG Utica, LLC

       

Term Loan, (LIBOR + 3.75%,

1.00% Floor), 4.75%,
03/27/20(b)

     2,181,024             2,080,151     

HGIM Corp.

       

Term Loan A, (LIBOR + 4.25%,

1.00% Floor), 5.25%,

06/18/18(b)

     3,722,011             2,844,230     

Sheridan Investment Partners I, LLC

       

Tranche B-2 Term Loan, (LIBOR

+ 3.50%, 0.75% Floor), 4.25%,

10/01/19(b)

     276,621             163,035     

Sheridan Production Partners I-A, L.P.

       

Tranche B-2 Term Loan, (LIBOR + 3.50%, 0.75% Floor), 4.25%,

10/01/19(b)

     36,654             21,603     

Sheridan Production Partners I-M, L.P.

       

Tranche B-2 Term Loan, (LIBOR

+ 3.50%, 0.75% Floor), 4.25%,

10/01/19(b)

     22,389             13,196     
    

Principal  
Amount ($) 

 

    

 Value ($)

 

     

ENERGY: OIL & GAS (continued)

  

    

Southcross Energy Partners, L.P.

       

Initial Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

08/04/21(b)

     1,565,494             1,293,490     

Southcross Holdings Borrower LP

       

Tranche B Term Loan (5.50%

PIK), 9.00%, 04/13/23(d)(g)

     115,058             98,374     

Sprint Industrial Holdings, LLC

       

First Lien Term Loan, (LIBOR +

5.75%, 1.25% Floor), 7.00%,

05/14/19(b)(e)

     2,592,741             1,970,483     

W3 Co.

       

First Lien Term Loan, (LIBOR +

4.50%, 1.25% Floor), 5.75%,

03/13/20(b)

     908,416             714,242     
     

 

 

   
              18,222,364     
     

 

 

   

ENVIRONMENTAL INDUSTRIES - 1.0%

  

    

Emerald 2, Ltd. (United Kingdom)

       

Facility B-1 Term Loan, (LIBOR +

4.00%, 1.00% Floor), 4.63%,

05/14/21(b)(c)

     2,901,337             2,703,088     
     

 

 

   

FOREST PRODUCTS & PAPER - 1.5%

  

    

Caraustar Industries, Inc.

       

Incremental Term Loan, (LIBOR

+ 6.75%, 1.25% Floor), 8.00%,

05/01/19(b)

     1,830,906             1,830,219     

Term Loan, (LIBOR + 6.75%,

1.25% Floor), 8.00%, 05/01/19(b)

     2,247,659             2,244,388     
     

 

 

   
        4,074,607     
     

 

 

   

HEALTHCARE & PHARMACEUTICALS - 13.6%

  

    

Alvogen Pharma US, Inc.

       

First Lien Term Loan, (LIBOR +

5.00%, 1.00% Floor), 6.00%,

04/01/22(b)

     2,926,858             2,903,077     

CHG Healthcare Services, Inc.

       

First Lien Term Loan, (LIBOR +

3.75%, 1.00% Floor), 4.75%,

06/07/23(b)(f)

     548,842             549,701     

Concentra, Inc.

       

Second Lien Initial Term Loan,

(LIBOR + 8.00%, 1.00% Floor),

9.00%, 06/01/23(b)

     1,000,000             990,000     

ExamWorks Group, Inc.

       

Term Loan B, (LIBOR + 3.75%,

1.00% Floor), 4.75%,

08/31/23(b)(f)

     1,488,722             1,489,191     

HCR ManorCare, Inc.

       

Initial Term Loan, (LIBOR +

3.50%, 1.50% Floor), 5.00%,

04/06/18(b)

     2,083,684             1,708,621     

InVentiv Health, Inc.

       

Term Loan B-3, (LIBOR + 6.25%,

1.50% Floor), 7.75%, 05/15/18(b)

     723,864             722,507     

Lanai Holdings II, Inc.

       

First Lien Term Loan B, (LIBOR

+ 4.75%, 1.00% Floor), 5.75%,

08/29/22(b)(f)

     2,731,706             2,697,560     
 

 

See accompanying Notes to Financial Statements.  |  9


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

June 30, 2016 (unaudited)

 

    

Principal
Amount ($)

 

    

Value ($)

 

     

Senior Loans(a) (continued)

  

    

HEALTHCARE & PHARMACEUTICALS (continued)

  

 

Lanai Holdings III, Inc.

       

Second Lien Initial Term Loan,

(LIBOR + 8.50%, 1.00% Floor),

9.50%, 08/28/23(b)(e)(f)

     869,565             856,522     

Nmsc Holdings, Inc.

       

First Lien Term Loan B, (LIBOR

+ 5.00%, 1.00% Floor), 6.00%,

04/19/23(b)

     561,524             564,332     

Opal Acquisition, Inc.

       

Term Loan B, (LIBOR + 4.00%,

1.00% Floor), 5.00%, 11/27/20(b)

     3,499,213             3,074,934     

Premier Dental Services, Inc.

       

New Term Loan, (LIBOR +

6.50%, 1.00% Floor), 7.50%,

11/01/18(b)(e)

     4,728,833             4,563,324     

Smile Brands Group, Inc.

       

Term Loan B (1.50% PIK),

(LIBOR + 7.75%, 1.25% Floor),

9.00%, 08/16/19(b)(g)

     3,618,767             3,169,443     

Steward Health Care System, LLC

       

Term Loan, (LIBOR + 5.50%,

1.25% Floor), 6.75%,

04/10/20(b)(e)

     2,734,634             2,707,287     

Surgery Center Holdings, Inc.

       

First Lien Initial Term Loan,

(LIBOR + 4.25%, 1.00% Floor),

5.25%, 11/03/20(b)

     3,678,202             3,669,006     

U.S. Renal Care, Inc.

       

Term Loan B, (LIBOR + 4.25%,

1.00% Floor), 5.25%, 12/30/22(b)

     3,756,189             3,756,207     

Second Lien Term Loan, (LIBOR

+ 8.00%, 1.00% Floor), 9.00%,

12/29/23(b)

     1,025,000             1,009,625     

Valeant Pharmaceuticals

       

International, Inc. (Canada)

Tranche B Term Loan Series

C-2, (LIBOR + 4.00%, 0.75%

Floor), 4.75%, 12/11/19(b)(c)

     1,543,406             1,502,892     

Tranche B Term Loan Series

D-2, (LIBOR + 3.75%, 0.75%

Floor), 4.50%, 02/13/19(b)(c)

     530,561             517,132     

Tranche B Term Loan Series

E-1, (LIBOR + 4.00%, 0.75%

Floor), 4.75%, 08/05/20(b)(c)(f)

     660,640             642,628     
     

 

 

   
              37,093,989     
     

 

 

   

HIGH TECH INDUSTRIES - 16.9%

  

 

Deltek, Inc.

       

First Lien Term Loan, (LIBOR +

4.00%, 1.00% Floor), 5.00%,

06/25/22(b)

     2,672,290             2,669,378     

Second Lien Term Loan, (LIBOR

+ 8.50%, 1.00% Floor), 9.50%,

06/26/23(b)

     1,724,528             1,747,162     

Flexera Software, LLC

       

Second Lien Term Loan, (LIBOR

+ 7.00%, 1.00% Floor), 8.00%,

04/02/21(b)

     1,999,281             1,929,306     
    

Principal
Amount ($)

 

    

Value ($)

 

     

HIGH TECH INDUSTRIES (continued)

  

    

Informatica Corp.

       

Dollar Term Loan, (LIBOR +

       

3.50%, 1.00% Floor), 4.50%,

       

08/05/22(b)

     2,992,462             2,919,790     

Kronos, Inc.

       

Second Lien Initial Term Loan,

       

(LIBOR + 8.50%, 1.25% Floor),

       

9.75%, 04/30/20(b)

     4,998,571             5,044,408     

Landslide Holdings, Inc. (Crimson
Acquisition Corp.)

       

First Lien New Term Loan,

       

(LIBOR + 4.00%, 1.00% Floor),

       

5.00%, 02/25/20(b)

     2,940,979             2,929,950     

Second Lien Term Loan, (LIBOR

       

+ 7.25%, 1.00% Floor), 8.25%,

       

02/25/21(b)(e)

     610,438             595,178     

Lanyon Solutions, Inc. (Lanyon,
Inc.)

       

First Lien Term Loan, (LIBOR +

       

4.50%, 1.00% Floor), 5.50%,

       

11/13/20(b)

     1,435,886             1,425,713     

MSC.Software Corp.

       

First Lien Initial Term Loan,

       

(LIBOR + 4.00%, 1.00% Floor),

       

5.00%, 05/29/20(b)

     1,754,200             1,666,490     

ON Semiconductor Corp.

       

First Lien Term Loan B, (LIBOR

       

+ 4.50%, 0.75% Floor), 5.25%,

       

03/31/23(b)

     3,096,210             3,113,951     

Riverbed Technology, Inc.

       

Term Loan B, (LIBOR + 4.00%,

       

1.00% Floor), 5.00%, 04/25/22(b)

     3,439,865             3,443,924     

RP Crown Parent, LLC

       

First Lien New Term Loan,

       

(LIBOR + 5.00%, 1.00% Floor),

       

6.00%, 12/21/18(b)

     2,231,861             2,105,616     

Second Lien Term Loan, (LIBOR

       

+ 10.0%, 1.25% Floor), 11.25%,

       

12/21/19(b)(f)

     1,250,000             1,042,712     

Sophia, L.P.

       

Closing Date Term Loan, (LIBOR

       

+ 3.75%, 1.00% Floor), 4.75%,

       

09/30/22(b)

     2,982,462             2,952,638     

TIBCO Software, Inc.

       

Term Loan, (LIBOR + 5.50%,

       

1.00% Floor), 6.50%,

       

12/04/20(b)(f)

     3,300,520             3,034,416     

VF Holdings Corp.

       

Term Loan B, (LIBOR + 3.75%,

       

1.00% Floor), 4.75%, 06/30/23(b)

     1,475,728             1,472,504     

Vision Solutions, Inc.

       

Term Loan, (LIBOR + 6.50%,

       

1.00% Floor), 7.50%,

       

06/16/22(b)(e)

     4,000,000             3,980,000     

Western Digital Corp.

       

Term Loan B, (LIBOR + 5.50%,

       

0.75% Floor), 6.25%, 04/29/23(b)

     4,000,000             4,021,880     
     

 

 

   
              46,095,016     
     

 

 

   
 

 

10  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

June 30, 2016 (unaudited)

 

    

Principal
Amount ($)

 

    

Value ($)

 

     

Senior Loans(a) (continued)

  

    

HOTEL, GAMING & LEISURE - 7.3%

  

 

CDS U.S. Intermediate Holdings,
Inc.

       

First Lien Initial Term Loan,

       

(LIBOR + 4.00%, 1.00% Floor),

       

5.00%, 07/08/22(b)

     880,907             859,712     

Delta 2 (Lux) S.a.r.l. (Luxembourg)

       

Facility B-3 Term Loan (USD),

       

(LIBOR + 3.75%, 1.00% Floor),

       

4.75%, 07/30/21(b)(c)

     5,105,263             4,924,179     

Diamond Resorts Corp.

       

Term Loan, (LIBOR + 4.50%,

       

1.00% Floor), 5.50%, 05/09/21(b)

     2,488,546             2,490,886     

Equinox Holdings, Inc.

       

First Lien New Initial Term Loan,

       

(LIBOR + 3.75%, 1.25% Floor),

       

5.00%, 01/31/20(b)

     3,692,210             3,687,595     

Everi Payments, Inc.

       

Term Loan B, (LIBOR + 5.25%,

       

1.00% Floor), 6.25%, 12/18/20(b)

     1,361,763             1,264,166     

The Intertain Group, Ltd. (The
Intertain Group Finance, LLC)
(Canada)

       

Initial Term Loan B, (LIBOR +

       

6.50%, 1.00% Floor), 7.50%,

       

04/08/22(b)(c)(e)

     747,069             746,135     

Scientific Games International, Inc.

       

Initial Term Loan B-2, (LIBOR +

       

5.00%, 1.00% Floor), 6.00%,

       

10/01/21(b)

     3,498,223             3,454,932     

Initial Term Loan, (LIBOR +

       

5.00%, 1.00% Floor), 6.00%,

       

10/18/20(b)

     2,493,606             2,466,339     
     

 

 

   
              19,893,944     
     

 

 

   

MEDIA: ADVERTISING, PRINTING & PUBLISHING - 2.2%

  

 

ALM Media, LLC

       

First Lien Term Loan B, (LIBOR

       

+ 4.50%, 1.00% Floor), 5.50%,

       

07/31/20(b)

     3,555,131             3,412,926     

F & W Media, Inc.

       

Initial Term Loan, (LIBOR +

       

7.50%, 1.25% Floor), 8.75%,

       

06/30/19(b)

     3,135,887             2,587,107     
     

 

 

   
        6,000,033     
     

 

 

   

MEDIA: BROADCASTING & SUBSCRIPTION - 11.0%

  

 

Emmis Operating Co.

       

Term Loan, (LIBOR + 6.00%,

       

1.00% Floor), 7.00%, 06/10/21(b)

     1,437,553             1,225,514     

Hargray Communications Group,
Inc. (HCP Acquisition, LLC)

       

Initial Term Loan, (LIBOR +

       

4.25%, 1.00% Floor), 5.25%,

       

06/26/19(b)

     4,154,513             4,159,706     
    

Principal
Amount ($)

 

    

Value ($)

 

     

MEDIA: BROADCASTING & SUBSCRIPTION (continued)

  

 

Hemisphere Media Holdings, LLC
(Intermedia Espanol, Inc.)

       

New Term Loan B, (LIBOR +

       

4.00%, 1.00% Floor), 5.00%,

       

07/30/20(b)

     2,437,329             2,425,143     

Intelsat Jackson Holdings S.A.
(Luxembourg)

       

Tranche B-2 Term Loan, (LIBOR

       

+ 2.75%, 1.00% Floor), 3.75%,

       

06/30/19(b)(c)(f)

     4,635,849             4,234,848     

Neptune Finco Corp.

       

Initial Term Loan, (LIBOR +

       

4.00%, 1.00% Floor), 5.00%,

       

10/09/22(b)

     4,050,012             4,064,188     

Numericable U.S., LLC

       

Term Loan B-7, (LIBOR + 4.25%,

       

0.75% Floor), 5.00%, 01/15/24(b)

     3,155,128             3,138,043     

SESAC Holdco II, LLC

       

First Lien Term Loan, (LIBOR +

       

4.25%, 1.00% Floor), 5.25%,

       

02/07/19(b)

     1,945,359             1,945,359     

Telecommunications Management,
LLC

       

First Lien Initial Term Loan,

       

(LIBOR + 3.75%, 1.00% Floor),

       

4.75%, 04/30/20(b)

     1,199,800             1,139,810     

Second Lien Initial Term Loan,

       

(LIBOR + 8.00%, 1.00% Floor),

       

9.00%, 10/30/20(b)(e)

     710,475             682,056     

WideOpenWest Finance, LLC
Replacement Term Loan B,

       

(LIBOR + 3.50%, 1.00% Floor),

       

4.50%, 04/01/19(b)(f)

     1,994,949             1,992,316     

William Morris Endeavor
Entertainment, LLC (IMG

       

Worldwide Holdings, LLC)

       

First Lien Term Loan, (LIBOR +

       

4.25%, 1.00% Floor), 5.25%,

       

05/06/21(b)(f)

     4,970,609             4,960,668     
     

 

 

   
              29,967,651     
     

 

 

   

METALS & MINING - 0.2%

  

 

Global Brass and Copper, Inc.

       

Term Loan B, (LIBOR + 4.25%,

       

1.00% Floor), 5.25%,

       

06/16/23(b)(f)

     596,026             596,026     
     

 

 

   

RETAIL - 10.2%

  

 

Academy, Ltd.

       

Initial Term Loan, (LIBOR +

       

4.00%, 1.00% Floor), 5.00%,

       

07/01/22(b)(f)

     4,145,736             3,917,720     

Albertson’s, LLC

       

Term Loan B-6, (LIBOR + 3.75%,

       

1.00% Floor), 4.75%, 06/22/23(b)

     1,851,243             1,851,011     

Belk, Inc.

       

Closing Date First Lien Term

       

Loan, (LIBOR + 4.75%, 1.00%

       

Floor), 5.75%, 12/12/22(b)

     921,028             739,701     
 

 

See accompanying Notes to Financial Statements.  |  11


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

June 30, 2016 (unaudited)

 

    

Principal
Amount ($)

 

    

Value ($)

 

     

Senior Loans(a) (continued)

  

    

RETAIL (continued)

  

    

Charming Charlie, LLC

       

Initial Term Loan, (LIBOR +

       

8.00%, 1.00% Floor), 9.00%,

       

12/24/19(b)

     3,717,687             2,602,381     

David’s Bridal, Inc.

       

Initial Term Loan, (LIBOR +

       

4.00%, 1.25% Floor), 5.25%,

       

10/11/19(b)

     2,000,000             1,800,000     

J. Crew Group, Inc.

       

Initial Term Loan, (LIBOR +

       

3.00%, 1.00% Floor), 4.00%,

       

03/05/21(b)(f)

     1,500,000             1,033,597     

J.C. Penney Corp., Inc.

       

2016 Term Loan, (LIBOR +

       

4.25%, 1.00% Floor), 5.25%,

       

06/23/23(b)(f)

     2,813,333             2,794,878     

Mattress Holding Corp.

       

Initial Term Loan, (LIBOR +

       

5.25%, 1.00% Floor), 6.25%,

       

10/20/21(b)

     2,595,566             2,543,655     

2016 Incremental Term Loan,

       

(LIBOR + 5.25%, 1.00% Floor),

       

6.25%, 10/20/21(b)

     1,190,549             1,165,994     

The Neiman Marcus Group, Inc.

       

Other Term Loan, (LIBOR +

       

3.25%, 1.00% Floor), 4.25%,

       

10/25/20(b)(f)

     2,500,000             2,251,987     

Petco Animal Supplies, Inc.

       

Tranche B-1 Term Loan, (LIBOR

       

+ 4.00%, 1.00% Floor), 5.00%,

       

01/26/23(b)

     2,319,188             2,311,523     

Tranche B-2 Term Loan, (LIBOR

       

+ 4.25%, 0.00% Floor), 4.73%,

       

01/26/23(b)

     1,608,871             1,602,982     

PetSmart, Inc.

       

Tranche B-1 Term Loan, (LIBOR

       

+ 3.25%, 1.00% Floor), 4.25%,

       

03/11/22(b)

     1,000,000             997,130     

Sears Roebuck Acceptance Corp.
(KMART Corp.)

       

2015 Term Loan, (LIBOR +

       

4.50%, 1.00% Floor), 5.50%,

       

06/30/18(b)

     1,719,062             1,642,418     

Vince, LLC (Vince Intermediate
Holding, LLC)

       

Term Loan B, (LIBOR + 4.75%,

       

1.00% Floor), 5.75%,

       

11/27/19(b)(e)

     514,815             489,074     
     

 

 

   
              27,744,051     
     

 

 

   

SERVICES: BUSINESS - 12.0%

  

    

Americold Realty Operating
Partnership, L.P.

       

Term Loan B, (LIBOR + 5.50%,

       

1.00% Floor), 6.50%,

       

12/01/22(b)(f)

     3,203,165             3,223,185     
    

Principal
Amount ($)

 

    

Value ($)

 

     

SERVICES: BUSINESS (continued)

  

    

Carecore National, LLC

       

Term Loan, (LIBOR + 4.50%,

       

1.00% Floor), 5.50%, 03/05/21(b)

     1,373,148             1,273,595     

EIG Investors Corp.

       

Term Loan, (LIBOR + 5.48%,

       

1.00% Floor), 6.48%, 11/09/19(b)

     2,922,543             2,795,895     

Term Loan, (LIBOR + 5.00%,

       

1.00% Floor), 6.00%,

       

02/09/23(b)(e)

     1,980,000             1,861,200     

Evergreen Skills Lux S.a.r.l.

       

First Lien Initial Term Loan,

       

(LIBOR + 4.75%, 1.00% Floor),

       

5.75%, 04/28/21(b)

     2,076,797             1,656,245     

Second Lien Initial Term Loan,

       

(LIBOR + 8.25%, 1.00% Floor),

       

9.25%, 04/28/22(b)

     1,000,000             475,000     

Explorer Holdings, Inc.

       

Initial Term Loan, (LIBOR +

       

5.00%, 1.00% Floor), 6.00%,

       

05/02/23(b)

     500,000             501,250     

GCA Services Group, Inc.

       

First Lien Term Loan, (LIBOR +

       

4.75%, 1.00% Floor), 5.75%,

       

03/01/23(b)

     1,362,103             1,367,211     

IBC Capital, Ltd.

       

First Lien Initial Term Loan,

       

(LIBOR + 3.75%, 1.00% Floor),

       

4.75%, 09/09/21(b)

     3,923,803             3,802,813     

Infogroup, Inc.

       

Term Loan B, (LIBOR + 5.50%,

       

1.50% Floor), 7.00%, 05/28/18(b)

     1,167,455             1,133,161     

Netsmart Technologies, Inc.

       

First Lien Term Loan, (LIBOR +

       

4.75%, 1.00% Floor), 5.75%,

       

04/19/23(b)(e)

     586,047             585,314     

Onex Carestream Finance, L.P.

       

2013 First Lien Term Loan,

       

(LIBOR + 4.00%, 1.00% Floor),

       

5.00%, 06/07/19(b)(f)

     1,971,014             1,892,174     

Second Lien Term Loan, (LIBOR

       

+ 8.50%, 1.00% Floor), 9.50%,

       

12/07/19(b)

     2,415,389             2,198,004     

Packers Holdings, LLC

       

Term Loan B, (LIBOR + 4.00%,

       

1.00% Floor), 4.00%, 12/02/21(b)

     989,975             988,124     

SGS Cayman, L.P.

       

Initial Cayman Term Loan,

       

(LIBOR + 5.00%, 1.00% Floor),

       

6.00%, 04/23/21(b)

     426,076             425,011     

SMG

       

Term Loan B, (LIBOR + 3.50%,

       

1.00% Floor), 4.50%,

       

02/27/20(b)(f)

     3,156,339             3,081,376     

Solera, LLC (Solera Finance, Inc.)

       

Dollar Term Loan, (LIBOR +

       

4.75%, 1.00% Floor), 5.75%,

       

03/03/23(b)(f)

     3,744,262             3,747,763     
 

 

12  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

June 30, 2016 (unaudited)

 

    

Principal
Amount ($)

 

    

Value ($)

 

     

Senior Loans(a) (continued)

  

    

SERVICES: BUSINESS (continued)

  

 

Sutherland Global Services, Inc.

       

Initial U.S. Term Loan, (LIBOR +

       

5.00%, 1.00% Floor), 6.00%,

       

04/23/21(b)

     1,830,386             1,825,810     
     

 

 

   
        32,833,131     
     

 

 

   

SERVICES: CONSUMER - 3.8%

  

 

Laureate Education, Inc.

       

2018 New Series Extended Term

       

Loan, (LIBOR + 3.75%, 1.25%

       

Floor), 5.00%, 06/15/18(b)

     5,135,048             4,989,547     

NVA Holdings, Inc.

       

First Lien Incremental Term Loan

       

B-1, (LIBOR + 4.50%, 1.00%

       

Floor), 5.50%, 08/14/21(b)

     852,918             853,984     

First Lien Term Loan, (LIBOR +

       

3.75%, 1.00% Floor), 4.75%,

       

08/14/21(b)

     3,156,565             3,148,673     

Second Lien Term Loan, (LIBOR

       

+ 7.00%, 1.00% Floor), 8.00%,

       

08/14/22(b)

     1,391,776             1,379,598     
     

 

 

   
        10,371,802     
     

 

 

   

TELECOMMUNICATIONS - 5.4%

  

 

Avaya, Inc.

       

Term Loan B-3, (LIBOR + 4.50%,

       

0.00% Floor), 5.13%,

       

10/26/17(b)(f)

     1,601,294             1,247,672     

Ciena Corp.

       

2016 Term Loan, (LIBOR +

       

3.50%, 0.75% Floor), 4.25%,

       

04/25/21(b)(e)

     590,674             591,412     

Global Tel*Link Corp.

       

First Lien Term Loan, (LIBOR +

       

3.75%, 1.25% Floor), 5.00%,

       

05/23/20(b)

     5,396,800             4,887,477     

Grande Communications
Networks, LLC

       

Initial Term Loan, (LIBOR +

       

3.50%, 1.00% Floor), 4.50%,

       

05/29/20(b)

     2,980,454             2,939,473     

LTS Buyer, LLC (Sidera Networks,
Inc.)

       

Second Lien Term Loan, (LIBOR

       

+ 6.75%, 1.25% Floor), 8.00%,

       

04/12/21(b)

     1,500,000             1,485,000     

Securus Technologies Holdings,
Inc.

       

First Lien Initial Term Loan,

       

(LIBOR + 3.50%, 1.25% Floor),

       

4.75%, 04/30/20(b)

     986,295             935,136     

Second Lien Initial Term Loan,

       

(LIBOR + 7.75%, 1.25% Floor),

       

9.00%, 04/30/21(b)

     2,800,000             2,524,662     
     

 

 

   
              14,610,832     
     

 

 

   
    

Principal
Amount ($)

 

    

Value ($)

 

     

TRANSPORTATION: CARGO - 1.3%

  

 

Carrix, Inc.

       

Term Loan, (LIBOR + 3.50%,

       

1.00% Floor), 4.50%, 01/07/19(b)

     3,847,770             3,645,762     
     

 

 

   

TRANSPORTATION: CONSUMER - 0.6%

  

 

Travel Leaders Group, LLC

       

Additional Tranche B Term Loan,

       

(LIBOR + 6.00%, 1.00% Floor),

       

7.00%, 12/07/20(b)

     1,736,779             1,723,753     
     

 

 

   

UTILITIES: ELECTRIC - 3.1%

  

 

EFS Cogen Holdings I, LLC

       

Term Loan B, (LIBOR + 4.25%,

       

1.00% Floor), 5.25%,

       

06/28/23(b)(f)

     2,620,253             2,630,079     

Granite Acquisition, Inc.

       

Second Lien Term Loan B,

       

(LIBOR + 7.25%, 1.00% Floor),

       

8.25%, 12/19/22(b)

     1,112,864             1,054,577     

Pike Corp.

       

First Lien Initial Term Loan,

       

(LIBOR + 4.50%, 1.00% Floor),

       

5.50%, 12/22/21(b)

     2,134,220             2,132,887     

Second Lien Initial Term Loan,

       

(LIBOR + 8.50%, 1.00% Floor),

       

9.50%, 06/22/22(b)

     2,500,000             2,518,750     
     

 

 

   
        8,336,293     
     

 

 

   

Total Senior Loans

       

(Cost $376,576,839)

        366,163,407     
     

 

 

   

Corporate Notes and Bonds - 8.6%(d)

  

    

AUTOMOTIVE - 0.2%

  

 

American Tire Distributors, Inc.

       

10.25%, 03/01/22(i)

     600,000             529,500     
     

 

 

   

CHEMICALS, PLASTICS & RUBBER - 0.0%

  

 

Magnetation, LLC / Mag Finance
Corp.

       

11.00%, 05/15/18(e)(h)(i)(j)

     639,000                 
     

 

 

   

CONTAINERS, PACKAGING & GLASS - 0.8%

  

 

Reynolds Group Holdings, Inc.

       

6.88%, 02/15/21

     1,996,000             2,055,880     
     

 

 

   

HEALTHCARE & PHARMACEUTICALS - 1.0%

  

 

Valeant Pharmaceuticals

       

International, Inc. (Canada)

       

7.50%, 07/15/21(c)(i)

     3,200,000                   2,838,000     
     

 

 

   

HIGH TECH INDUSTRIES - 0.6%

  

 

Riverbed Technology, Inc.

       

8.88%, 03/01/23(i)

     1,500,000             1,560,000     
     

 

 

   

MEDIA: ADVERTISING, PRINTING & PUBLISHING - 0.3%

  

 

Acosta, Inc.

       

7.75%, 10/01/22(i)

     1,000,000             882,500     
     

 

 

   
 

 

See accompanying Notes to Financial Statements.  |  13


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

June 30, 2016 (unaudited)

 

    

Principal
Amount ($)

 

    

Value ($)

 

     

Corporate Notes and Bonds(d)   (continued)

  

 

MEDIA: BROADCASTING & SUBSCRIPTION - 2.9%

  

 

Columbus International, Inc.

       

(Barbados)

       

7.38%, 03/30/21(c)(i)

     1,285,000             1,361,779     

Neptune Finco Corp.

       

10.13%, 01/15/23(i)

     105,000             117,862     

10.88%, 10/15/25(i)

     293,000             335,667     

Numericable-SFR S.A. (France)

       

7.38%, 05/01/26(c)(i)

     2,233,000             2,210,670     

Radio One, Inc.

       

7.38%, 04/15/22(i)

     1,516,000             1,455,360     

9.25%, 02/15/20(i)

     1,484,000             1,320,760     

WideOpenWest Finance, LLC

       

10.25%, 07/15/19

     1,000,000             1,040,000     
     

 

 

   
        7,842,098     
     

 

 

   

MEDIA: DIVERSIFIED & PRODUCTION - 1.0%

  

 

SiTV, Inc.

       

10.38%, 07/01/19(i)

     3,420,000             2,650,500     
     

 

 

   

RETAIL - 1.1%

       

JC PENNEY Corp., Inc.

       

5.88%, 07/01/23(i)

     1,000,000             1,008,750     

Jo-Ann Stores, Inc.

       

8.13%, 03/15/19(i)

     2,000,000             1,925,000     
     

 

 

   
        2,933,750     
     

 

 

   

TELECOMMUNICATIONS - 0.7%

       

Altice Financing S.A. (Luxembourg)

       

7.50%, 05/15/26(c)(i)

     2,076,000             2,039,670     
     

 

 

   

Total Corporate Notes and

       

Bonds

       

(Cost $25,232,371)

            23,331,898     
     

 

 

   

 

    

Share
Quantity

 

    

Value ($)

 

     

Common Stocks - 0.0%

       

BANKING, FINANCE, INSURANCE & REAL ESTATE - 0.0%

  

 

Medical Card System, Inc.(e)(h)

     936,317                 

ENERGY: OIL & GAS - 0.0%

       

Southcross Holdings Borrower GP

       

LLC(e)(h)

     129                 

Southcross Holdings Borrower LP,

       

Class A-II(e)(h)

     129             50,310     
     

 

 

   
                  50,310     
     

 

 

   

Total Common Stock

       

(Cost $58,050)

        50,310     
     

 

 

   
    

Share
Quantity

 

    

Value ($)

 

     

Preferred Stock - 1.5%

       

BANKING, FINANCE, INSURANCE & REAL ESTATE - 1.5%

  

 

Watford Holdings, Ltd. (Bermuda)

       

8.50%(c)(e)(i)

     160,000             3,992,960     
     

 

 

   

Total Preferred Stock

       

(Cost $3,920,000)

        3,992,960     
     

 

 

   

Warrants - 0.0%

       

BANKING, FINANCE, INSURANCE & REAL ESTATE - 0.0%

  

 

Medical Card System, Inc.

       

07/26/18(e)(h)(i)

     54,913                 
     

 

 

   

Total Warrants

       

(Cost $ — )

            
     

 

 

   

Total Investments - 144.2%

        393,538,575     

(Cost of $405,787,260)(k)

       

Other Assets & Liabilities,
Net-5.1%

        14,069,561     

Loan Outstanding-(49.3)%(l)(m)

        (134,620,923  
     

 

 

   

Net Assets (Applicable to
Common Shares)-100.0%

   

           272,987,213     
     

 

 

   
 

 

14  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

June 30, 2016 (unaudited)

 

 

 

(a) “Senior Loans” are senior, secured loans made to companies whose debt is rated below investment grade and investments with similar characteristics. Senior Loans typically hold a first lien priority and pay interest at rates that are determined periodically on the basis of a floating base lending rate plus a spread. Unless otherwise identified, all Senior Loans carry a variable rate of interest. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily the prime rate offered by one or more major U.S. banks and the certificate of deposit rate used by commercial lenders. The rates shown represent the weighted average rate at June 30, 2016. Senior Loans are generally not registered under the Securities Act of 1933 (the “1933 Act”) and often contain certain restrictions on resale and cannot be sold publicly. Senior Loans often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual maturity may be substantially less than the stated maturity shown.

 

     Senior Loan assets may have additional unfunded loan commitments. As of June 30, 2016, the Fund had unfunded loan commitments, which could be extended at the option of the borrower, pursuant to the following loan agreements:

 

Borrower    Unfunded Loan
Commitments
      

The Chef’s Warehouse, Inc.

   $ 135,532      

Mitel Networks Corp.

     5,700,000      
  

 

 

    

Total unfunded loan commitments

   $         5,835,532      
  

 

 

    

 

(b)  The interest rate on this Senior Loan is subject to a base rate plus 1 month or 3 month LIBOR, which at June 30, 2016, was 0.47% and 0.65%, respectively. As the interest rate is subject to a minimum LIBOR floor which was greater than the 1 month or 3 month LIBOR rate at June 30, 2016, the prevailing rate in effect at June 30, 2016, was the base rate plus the LIBOR floor, except as otherwise indicated.
(c) Foreign issuer traded in U.S. dollars.
(d) Fixed rate asset.
(e) Fair Value Level 3 security. All remaining securities are categorized as Level 2.
(f)  All or a portion of this Senior Loan position has not settled. Full contract rates do not take effect until settlement date, therefore, are subject to change.
(g)  Represents a payment-in-kind (“PIK”) security, which may pay interest in additional principal amount.
(h)  Non-income producing asset.
(i) Securities exempt from registration pursuant to Rule 144A under the 1933 Act. These securities may only be resold in transactions exempt from registration to qualified institutional buyers. At June 30, 2016, these securities amounted to $24,228,978, or 8.9% of net assets.
(j) The issuer is in default of its payment obligations as of May 5, 2015, as such, income is no longer being accrued. The issuer paid a cash dividend to all shareholders on record as of January 6, 2016, which was recorded as a cost basis adjustment.
(k) The aggregate cost of securities for federal income tax purposes was $405,954,907. Cost for U.S. federal income tax purposes differs from book basis primarily due to the deferral of losses from wash sales. Unrealized appreciation and depreciation on investments were as follows:

 

Gross unrealized appreciation

    $     2,607,720        

Gross unrealized depreciation

     (15,024,052)       
  

 

 

    

Net unrealized depreciation

    $   (12,416,332)       
  

 

 

    

 

(l) The Fund has granted a security interest in substantially all of its assets in the event of default under the credit facility.
(m) Principal $135,250,000 less unamortized deferred financing costs of $629,077.

 

See accompanying Notes to Financial Statements.  |  15


Apollo Tactical Income Fund Inc.

Schedule of Investments

June 30, 2016 (unaudited)

 

    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

Senior Loans - 113.6%(a)

  

    

AEROSPACE & DEFENSE - 4.5%

  

    

Camp International Holding Co.

       

2013 Second Lien Replacement

Term Loan, (LIBOR + 7.25%,

1.00% Floor), 8.25%, 11/29/19(b)

     1,350,000             1,323,000     

DAE Aviation Holdings, Inc.

       

Initial Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

07/07/22(b)

     3,985,763             3,983,910     

Photonis Technologies SAS
(France)

       

First Lien Initial Dollar Term

Loan, (LIBOR + 7.50%, 1.00%

Floor), 8.50%, 09/18/19(b)(c)

     1,897,815             1,698,544     

TASC, Inc.

       

First Lien New Term Loan,

(LIBOR + 6.00%, 1.00% Floor),

7.00%, 05/22/20(b)

     521,575             522,879     

First Lien Term Loan, (LIBOR +

6.00%, 1.00% Floor), 7.00%,

05/22/20(b)

     1,433,344             1,436,927     

Second Lien Term Loan,

12.00%, 05/21/21(d)

     1,637,357             1,649,637     
     

 

 

   
        10,614,897     
     

 

 

   

AUTOMOTIVE - 1.3%

  

    

American Tire Distributors, Inc.

       

Initial Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

09/01/21(b)

     797,980             773,047     

U.S. Farathane, LLC

       

Term Loan B-2, (LIBOR + 4.75%,

1.00% Floor), 5.75%,

12/23/21(b)(e)

     2,349,737             2,352,674     
     

 

 

   
        3,125,721     
     

 

 

   

BANKING, FINANCE, INSURANCE & REAL ESTATE - 9.2%

  

 

AqGen Island Intermediate
Holdings, Inc.

       

First Lien Term Loan, (LIBOR +

4.50%, 1.00% Floor), 5.50%,

12/05/22(b)

     2,469,136             2,439,815     

Asurion, LLC

       

Incremental Tranche B-4 Term

Loan, (LIBOR + 4.00%, 1.00%

Floor), 5.00%, 08/04/22(b)

     993,655             981,979     

Second Lien Term Loan, (LIBOR

+ 7.50%, 1.00% Floor), 8.50%,

03/03/21(b)

     2,000,000             1,934,000     

First Data Corp.

       

Dollar Term Loan, (LIBOR +

3.75%, 1.00% Floor), 4.75%,

07/08/22(b)

     1,750,000             1,737,969     

Hyperion Insurance Group, Ltd.
(United Kingdom)

       

Initial Term Loan, (LIBOR +

4.50%, 1.00% Floor), 5.50%,

04/29/22(b)(c)

     488,528             464,102     
    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

BANKING, FINANCE, INSURANCE & REAL ESTATE (continued)

  

 

iStar, Inc.

       

Term Loan, (LIBOR + 4.50%,

1.00% Floor), 5.50%,

07/01/20(b)(f)

     1,398,773             1,400,521     

Jefferies Finance, LLC (JFIN
Co-Issuer Corp.)

       

Term Loan, (LIBOR + 3.50%,

1.00% Floor), 4.50%,

05/14/20(b)(e)

     1,506,522             1,491,456     

Medical Card System, Inc.

       

Term Loan, (LIBOR + 0.50%,

1.00% Floor), 1.50%,

05/31/19(b)(e)(g)

     4,913,829             2,828,416     

MMM Holdings, Inc.

       

MMM Term Loan, (LIBOR +

8.25%, 1.50% Floor), 9.75%,

12/12/17(b)(e)

     1,100,171             841,631     

MPH Acquisition Holdings, LLC

       

Initial Term Loan, (LIBOR +

4.00%, 1.00% Floor), 5.00%,

06/07/23(b)

     3,759,494             3,774,532     

MSO of Puerto Rico, Inc.

       

MSO Term Loan, (LIBOR +

8.25%, 1.50% Floor), 9.75%,

12/12/17(b)(e)

     799,818             611,861     

Sedgwick Claims Management
Services, Inc.

       

Term Loan, (LIBOR + 4.25%,

1.00% Floor), 5.25%, 03/01/21(b)

     1,933,981             1,938,816     

SquareTwo Financial Corp.

       

Term Loan, (10.50% PIK)

(LIBOR + 9.50%, 1.00% Floor),

10.50%, 05/24/19(b)(e)(g)

     173,034             173,034     

Term Loan, (11.00% PIK)

(LIBOR +10.00%, 1.00% Floor),

11.00%, 05/16/49(b)(e)(g)

     1,720,550             851,301     
     

 

 

   
        21,469,433     
     

 

 

   

BEVERAGE, FOOD & TOBACCO - 3.3%

  

    

The Chef’s Warehouse, Inc.

       

Delayed Draw Term Loan,

(LIBOR + 4.75%, 1.00% Floor),

5.75%, 06/22/22(b)

     52,575             52,444     

Term Loan, (LIBOR + 4.75%,

1.00% Floor), 5.75%, 06/22/22(b)

     1,145,384             1,142,520     

NBTY, Inc.

       

Dollar Term Loan B, (LIBOR +

4.00%, 1.00% Floor), 5.00%,

05/05/23(b)

     3,051,903             3,033,378     

PFS Holding Corp.

       

Second Lien Term Loan, (LIBOR

+ 7.25%, 1.00% Floor), 8.25%,

01/31/22(b)

     499,800             356,732     

Winebow Holdings, Inc. (The
Vintner Group, Inc.)

       

First Lien Term Loan, (LIBOR +

3.75%, 1.00% Floor), 4.75%,

07/01/21(b)

     992,405             967,595     
 

 

16  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Schedule of Investments  (continued)

June 30, 2016 (unaudited)

 

    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

Senior Loans(a) (continued)

  

    

BEVERAGE, FOOD & TOBACCO (continued)

  

    

Winebow Holdings, Inc. (The

       

Vintner Group, Inc.) (continued)

Second Lien Term Loan, (LIBOR

+ 7.50%, 1.00% Floor), 8.50%,

01/02/22(b)

     2,505,795             2,230,158     
     

 

 

   
        7,782,827     
     

 

 

   

CAPITAL EQUIPMENT - 1.4%

  

    

MTS Systems Corp.

       

Term Loan B, (LIBOR + 4.25%,

0.75% Floor), 5.00%,

06/28/23(b)(f)

     3,333,333             3,328,133     
     

 

 

   

CHEMICALS, PLASTICS & RUBBER - 3.1%

  

    

The Chemours Co.

       

Tranche B Term Loan, (LIBOR +

3.00%, 0.75% Floor), 3.75%,

05/12/22(b)

     489,310             474,508     

MacDermid, Inc. (Platform
Specialty Products Corp.)

       

Tranche B-2 Term Loan, (LIBOR

+ 4.50%, 1.00% Floor), 5.50%,

06/07/20(b)

     491,752             486,375     

Tranche B-3 Term Loan, (LIBOR

+ 4.50%, 1.00% Floor), 5.50%,

06/07/20(b)

     872,802             863,201     

Magnetation, LLC / Mag Finance
Corp.

       

Term Loan (12.00% PIK),

12.00%, 07/07/16(d)(e)(g)(h)

     1,212,029             2,788     

Nexeo Solutions, LLC

       

Initial Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

06/09/23(b)

     1,076,336             1,077,009     

PetroChoice Holdings, Inc.

       

First Lien Initial Term Loan,

(LIBOR + 5.00%, 1.00% Floor),

6.00%, 08/19/22(b)(e)

     1,007,425             997,351     

PQ Corp.

       

Tranche B-1 Term Loan, (LIBOR

+ 4.75%, 1.00% Floor), 5.75%,

11/04/22(b)

     1,268,428             1,270,889     

Styrolution US Holding, LLC

       

First Lien Dollar Tranche B-1

Term Loan, (LIBOR + 5.50%,

1.00% Floor), 6.50%, 11/07/19(b)

     1,994,937             1,997,430     
     

 

 

   
            7,169,551     
     

 

 

   

CONSUMER GOODS: NON-DURABLE - 2.4%

  

    

ABG Intermediate Holdings 2, LLC

       

First Lien Term Loan, (LIBOR +

4.50%, 1.00% Floor), 5.50%,

05/27/21(b)

     3,341,749             3,299,977     

Nine West Holdings, Inc.

       

Unsecured Initial Term Loan,

(LIBOR + 5.25%, 1.00% Floor),

6.25%, 01/08/20(b)

     658,474             158,034     

 

    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

CONSUMER GOODS: NON-DURABLE (continued)

  

    

Polyconcept Investments B.V.

       

Term Loan, (LIBOR + 4.75%,

1.25% Floor), 6.00%, 06/28/19(b)

     2,186,105             2,164,244     
     

 

 

   
        5,622,255     
     

 

 

   

CONTAINERS, PACKAGING & GLASS - 3.3%

  

    

BWay Intermediate Company, Inc.

       

Initial Term Loan, (LIBOR +

4.50%, 1.00% Floor), 5.52%,

08/14/20(b)

     3,883,202             3,875,921     

Hoover Group, Inc.

       

Initial Term Loan, (LIBOR +

6.75%, 1.00% Floor), 7.75%,

01/28/21(b)(e)

     765,555             711,967     

NVLX Acquisition, LLC

       

First Lien Term Loan, (LIBOR +

5.00%, 1.00% Floor), 6.00%,

12/05/21(b)

     3,192,069                 3,204,837     
     

 

 

   
        7,792,725     
     

 

 

   

ENERGY: OIL & GAS - 6.1%

  

    

American Energy - Marcellus, LLC

       

First Lien Initial Term Loan,

(LIBOR + 4.25%, 1.00% Floor),

5.25%, 08/04/20(b)

     1,383,515             747,098     

Azure Midstream Energy, LLC

       

Term Loan, (LIBOR + 6.50%,

1.00% Floor), 7.50%, 11/15/18(b)

     498,651             330,356     

BlackBrush Oil & Gas, L.P.

       

Closing Date Second Lien Term

Loan, (LIBOR + 6.50%, 1.00%

Floor), 7.50%, 07/30/21(b)(f)

     3,363,109             3,358,905     

Chelsea Petroleum Products I, LLC

       

Tranche B Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

10/28/22(b)

     1,727,942             1,702,023     

Chief Exploration & Development, LLC

       

Second Lien Term Loan, (LIBOR

+ 6.50%, 1.00% Floor), 7.50%,

05/16/21(b)

     2,926,177             2,654,598     

Drillships Financing Holding, Inc.

       

Tranche B-1 Term Loan, (LIBOR

+ 5.00%, 1.00% Floor), 6.00%,

03/31/21(b)

     997,436             397,977     

HGIM Corp.

       

Term Loan A, (LIBOR + 4.25%,

1.00% Floor), 5.25%,

06/18/18(b)

     554,325             423,596     

Sheridan Investment Partners I, LLC

       

Tranche B-2 Term Loan, (LIBOR

+ 3.50%, 0.75% Floor), 4.25%,

10/01/19(b)

     276,621             163,035     

Sheridan Production Partners I-A, L.P.

       

Tranche B-2 Term Loan, (LIBOR

+ 3.50%, 0.75% Floor), 4.25%,

10/01/19(b)

     36,655             21,603     
 

 

See accompanying Notes to Financial Statements.  |  17


Apollo Tactical Income Fund Inc.

Schedule of Investments  (continued)

June 30, 2016 (unaudited)

 

    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

Senior Loans(a) (continued)

  

    

ENERGY: OIL & GAS (continued)

  

    

Sheridan Production Partners I-M, L.P.

       

Tranche B-2 Term Loan, (LIBOR

+ 3.50%, 0.75% Floor), 4.25%,

10/01/19(b)

     22,389             13,196     

Southcross Energy Partners, L.P.

       

Initial Term Loan, (LIBOR +

4.25%, 1.00% Floor), 5.25%,

08/04/21(b)

     1,565,494             1,293,490     

Southcross Holdings Borrower LP

       

Tranche B Term Loan (5.50%

PIK), 9.00%, 04/13/23(d)(g)

     115,058             98,374     

Sprint Industrial Holdings, LLC

       

First Lien Term Loan, (LIBOR +

5.75%, 1.25% Floor), 7.00%,

05/14/19(b)(e)

     2,592,741             1,970,483     

Targa Resources Corp.

       

Term Loan, (LIBOR + 4.75%,

1.00% Floor), 5.75%, 02/27/22(b)

     371,251             369,395     

W3 Co.

       

First Lien Term Loan, (LIBOR +

4.50%, 1.25% Floor), 5.75%,

03/13/20(b)

     1,089,956             856,978     
     

 

 

   
            14,401,107     
     

 

 

   

ENVIRONMENTAL INDUSTRIES - 1.1%

  

    

Emerald 2, Ltd. (United Kingdom)

       

Facility B-1 Term Loan, (LIBOR +

4.00%, 1.00% Floor), 5.00%,

05/14/21(b)(c)

     2,901,337             2,703,088     
     

 

 

   

FOREST PRODUCTS & PAPER - 1.3%

  

    

Caraustar Industries, Inc.

       

Incremental Term Loan, (LIBOR

+ 6.75%, 1.25% Floor), 8.00%,

05/01/19(b)

     1,331,568             1,331,069     

Term Loan, (LIBOR + 6.75%,

1.25% Floor), 8.00%, 05/01/19(b)

     1,699,372             1,696,900     
     

 

 

   
        3,027,969     
     

 

 

   

HEALTHCARE & PHARMACEUTICALS - 11.8%

  

    

Alvogen Pharma US, Inc.

       

First Lien Term Loan, (LIBOR +

5.00%, 1.00% Floor), 6.00%,

04/01/22(b)

     2,117,778             2,100,571     

CHG Healthcare Services, Inc.

       

First Lien Term Loan, (LIBOR +

3.75%, 1.00% Floor), 4.75%,

06/07/23(b)(f)

     548,842             549,701     

ExamWorks Group, Inc.

       

Term Loan B, (LIBOR + 3.75%,

1.00% Floor), 4.75%,

08/31/23(b)(f)

     1,488,722             1,489,191     

HCR ManorCare, Inc.

       

Initial Term Loan, (LIBOR +

3.50%, 1.50% Floor), 5.00%,

04/06/18(b)

     2,083,684             1,708,621     
    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

HEALTHCARE & PHARMACEUTICALS (continued)

  

 

Lanai Holdings II, Inc.

       

First Lien Term Loan B, (LIBOR

+ 4.75%, 1.00% Floor), 5.75%,

08/29/22(b)(f)

     2,731,706             2,697,560     

Lanai Holdings III, Inc.

       

Second Lien Initial Term Loan,

(LIBOR + 8.50%, 1.00% Floor),

9.50%, 08/28/23(b)(e)(f)

     869,565             856,522     

Nmsc Holdings, Inc.

       

First Lien Term Loan B, (LIBOR

+ 5.00%, 1.00% Floor), 6.00%,

04/19/23(b)

     561,524             564,332     

Opal Acquisition, Inc.

       

Term Loan B, (LIBOR + 4.00%,

1.00% Floor), 5.00%, 11/27/20(b)

     3,499,213             3,074,934     

Premier Dental Services, Inc.

       

New Term Loan, (LIBOR +

6.50%, 1.00% Floor), 7.50%,

11/01/18(b)(e)

     3,363,933             3,246,195     

Smile Brands Group, Inc.

       

Term Loan B (1.50% PIK),

(LIBOR + 7.75%, 1.25% Floor),

9.00%, 08/16/19(b)(g)

     3,618,767             3,169,443     

Steward Health Care System, LLC

       

Term Loan, (LIBOR + 5.50%,

1.25% Floor), 6.75%,

04/10/20(b)(e)

     1,263,406             1,250,772     

Surgery Center Holdings, Inc.

       

First Lien Initial Term Loan,

(LIBOR + 4.25%, 1.00% Floor),

5.25%, 11/03/20(b)

     1,994,937             1,989,949     

U.S. Renal Care, Inc.

       

Term Loan B, (LIBOR + 4.25%,

1.00% Floor), 5.25%, 12/30/22(b)

     2,947,434             2,947,449     

Valeant Pharmaceuticals

       

International, Inc. (Canada)

Tranche B Term Loan Series

D-2, (LIBOR + 3.75%, 0.75%

Floor), 4.50%, 02/13/19(b)(c)(f)

     2,182,058             2,126,830     
     

 

 

   
            27,772,070     
     

 

 

   

HIGH TECH INDUSTRIES - 14.0%

  

    

Deltek, Inc.

       

Second Lien Term Loan, (LIBOR

+ 8.50%, 1.00% Floor), 9.50%,

06/26/23(b)

     1,124,528             1,139,287     

Flexera Software, LLC

       

Second Lien Term Loan, (LIBOR

+ 7.00%, 1.00% Floor), 8.00%,

04/02/21(b)

     2,000,000             1,930,000     

Landslide Holdings, Inc. (Crimson Acquisition Corp.)

       

First Lien New Term Loan,

(LIBOR + 4.00%, 1.00% Floor),

5.00%, 02/25/20(b)

     997,449             993,709     
 

 

18  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Schedule of Investments  (continued)

June 30, 2016 (unaudited)

 

    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

Senior Loans(a) (continued)

  

    

HIGH TECH INDUSTRIES (continued)

  

 

Landslide Holdings, Inc. (Crimson

       

Acquisition Corp.) (continued)

       

Second Lien Term Loan, (LIBOR

       

+ 7.25%, 1.00% Floor), 8.25%,

       

02/25/21(b)(e)

     1,823,726             1,778,132     

Lanyon Solutions, Inc. (Lanyon, Inc.)

       

First Lien Term Loan, (LIBOR +

       

4.50%, 1.00% Floor), 5.50%,

       

11/13/20(b)

     573,885             569,819     

Second Lien Term Loan, (LIBOR

       

+ 8.50%, 1.00% Floor), 9.50%,

       

11/15/21(b)

     2,219,037             2,182,977     

MSC.Software Corp.

       

First Lien Initial Term Loan,

       

(LIBOR + 4.00%, 1.00% Floor),

       

5.00%, 05/29/20(b)

     882,980             838,831     

Second Lien Initial Term Loan,

       

(LIBOR + 7.50%, 1.00% Floor),

       

8.50%, 05/31/21(b)(e)

     2,550,000             2,167,500     

ON Semiconductor Corp.

       

First Lien Term Loan B, (LIBOR

       

+ 4.50%, 0.75% Floor), 5.25%,

       

03/31/23(b)

     3,096,210             3,113,951     

Riverbed Technology, Inc.

       

Term Loan B, (LIBOR + 4.00%,

       

1.00% Floor), 5.00%, 04/25/22(b)

     3,430,055             3,434,101     

RP Crown Parent, LLC

       

First Lien New Term Loan,

       

(LIBOR + 5.00%, 1.00% Floor),

       

6.00%, 12/21/18(b)(f)

     2,231,861             2,105,616     

Second Lien Term Loan, (LIBOR

       

+ 10.0%, 1.25% Floor), 11.25%,

       

12/21/19(b)(f)

     1,250,000             1,042,712     

TIBCO Software, Inc.

       

Term Loan, (LIBOR + 5.50%,

       

1.00% Floor), 6.50%,

       

12/04/20(b)(f)

     3,300,520             3,034,416     

VF Holdings Corp.

       

Term Loan B, (LIBOR + 3.75%,

       

1.00% Floor), 4.75%,

       

06/30/23(b)(f)

     1,475,728             1,472,504     

Vision Solutions, Inc.

       

Term Loan, (LIBOR + 6.50%,

       

1.00% Floor), 7.50%,

       

06/16/22(b)(e)

     4,000,000             3,980,000     

Western Digital Corp.

       

Term Loan B, (LIBOR + 5.50%,

       

0.75% Floor), 6.25%, 04/29/23(b)

     3,000,000             3,016,410     
     

 

 

   
            32,799,965     
     

 

 

   

HOTEL, GAMING & LEISURE - 5.5%

  

    

CDS U.S. Intermediate Holdings, Inc.

       

First Lien Initial Term Loan,

       

(LIBOR + 4.00%, 1.00% Floor),

       

5.00%, 07/08/22(b)

     880,907             859,712     
    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

HOTEL, GAMING & LEISURE (continued)

  

 

Delta 2 (Lux) S.a.r.l. (Luxembourg)

       

Facility B3 Term Loan (USD),

       

(LIBOR + 3.75%, 1.00% Floor),

       

4.75%, 07/30/21(b)(c)(f)

     3,000,000             2,893,590     

Second Lien, (LIBOR + 6.75%,

       

1.00% Floor), 7.75%,

       

07/29/22(b)(c)(f)

     1,000,000             953,750     

Diamond Resorts Corp.

       

Term Loan, (LIBOR + 4.50%,

       

1.00% Floor), 5.50%, 05/09/21(b)

     2,488,546             2,490,886     

Everi Payments, Inc.

       

Term Loan B, (LIBOR + 5.25%,

       

1.00% Floor), 6.25%, 12/18/20(b)

     1,059,284             983,365     

The Intertain Group, Ltd. (The Intertain Group Finance, LLC) (Canada)

       

Initial Term Loan B, (LIBOR +

       

6.50%, 1.00% Floor), 7.50%,

       

04/08/22(b)(c)(e)

     747,069             746,135     

Scientific Games International, Inc.

       

Initial Term Loan, (LIBOR +

       

5.00%, 1.00% Floor), 6.00%,

       

10/18/20(b)

     3,979,592             3,936,075     
     

 

 

   
            12,863,513     
     

 

 

   

MEDIA: ADVERTISING, PRINTING & PUBLISHING - 2.6%

  

 

ALM Media, LLC

       

First Lien Term Loan B, (LIBOR

       

+ 4.50%, 1.00% Floor), 5.50%,

       

07/31/20(b)

     3,555,131             3,412,926     

F & W Media, Inc.

       

Initial Term Loan, (LIBOR +

       

7.50%, 1.25% Floor), 8.75%,

       

06/30/19(b)

     3,135,887             2,587,107     
     

 

 

   
        6,000,033     
     

 

 

   

MEDIA: BROADCASTING & SUBSCRIPTION - 8.4%

  

 

Emmis Operating Co.

       

Term Loan, (LIBOR + 6.00%,

       

1.00% Floor), 7.00%, 06/10/21(b)

     1,437,553             1,225,514     

Hemisphere Media Holdings, LLC

       

(Intermedia Espanol, Inc.)

       

New Term Loan B, (LIBOR +

       

4.00%, 1.00% Floor), 5.00%,

       

07/30/20(b)

     2,437,329             2,425,143     

Intelsat Jackson Holdings S.A. (Luxembourg)

       

Tranche B-2 Term Loan, (LIBOR

       

+ 2.75%, 1.00% Floor), 3.75%,

       

06/30/19(b)(c)(f)

     3,817,620             3,487,396     

Neptune Finco Corp.

       

Initial Term Loan, (LIBOR +

       

4.00%, 1.00% Floor), 5.00%,

       

10/09/22(b)

     2,050,012             2,057,188     

Numericable U.S., LLC

       

Term Loan B-7, (LIBOR + 4.25%,

       

0.75% Floor), 5.00%, 01/15/24(b)

     3,567,146             3,547,830     
 

 

See accompanying Notes to Financial Statements.  |  19


Apollo Tactical Income Fund Inc.

Schedule of Investments  (continued)

June 30, 2016 (unaudited)

 

    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

Senior Loans(a) (continued)

  

    

MEDIA: BROADCASTING & SUBSCRIPTION (continued)

  

 

SESAC Holdco II, LLC

       

First Lien Term Loan, (LIBOR +

       

4.25%, 1.00% Floor), 5.25%,

       

02/07/19(b)

     1,933,172             1,933,172     

Telecommunications Management, LLC

       

Second Lien Initial Term Loan,

       

(LIBOR + 8.00%, 1.00% Floor),

       

9.00%, 10/30/20(b)(e)

     1,065,712             1,023,083     

William Morris Endeavor

       

Entertainment, LLC (IMG

       

Worldwide Holdings, LLC)

       

First Lien Term Loan, (LIBOR +

       

4.25%, 1.00% Floor), 5.25%,

       

05/06/21(b)(f)

     3,985,126             3,977,156     
     

 

 

   
            19,676,482     
     

 

 

   

METALS & MINING - 0.2%

  

    

Global Brass and Copper, Inc.

       

Term Loan B, (LIBOR + 4.25%,

       

1.00% Floor), 5.25%,

       

06/16/23(b)(f)

     596,026             596,026     
     

 

 

   

RETAIL - 10.7%

  

    

Academy, Ltd.

       

Initial Term Loan, (LIBOR +

       

4.00%, 1.00% Floor), 5.00%,

       

07/01/22(b)(f)

     4,112,679             3,886,482     

Albertson’s, LLC

       

Term Loan B-6, (LIBOR + 3.75%,

       

1.00% Floor), 4.75%, 06/22/23(b)

     2,920,611             2,920,246     

Belk, Inc.

       

Closing Date First Lien Term

       

Loan, (LIBOR + 4.75%, 1.00%

       

Floor), 5.75%, 12/12/22(b)

     921,028             739,701     

Charming Charlie, LLC

       

Initial Term Loan, (LIBOR +

       

8.00%, 1.00% Floor), 9.00%,

       

12/24/19(b)

     1,120,338             784,237     

David’s Bridal, Inc.

       

Initial Term Loan, (LIBOR +

       

4.00%, 1.25% Floor), 5.25%,

       

10/11/19(b)

     2,000,000             1,800,000     

J. Crew Group, Inc.

       

Initial Term Loan, (LIBOR +

       

3.00%, 1.00% Floor), 4.00%,

       

03/05/21(b)(f)

     1,500,000             1,033,597     

J.C. Penney Corp., Inc.

       

2016 Term Loan, (LIBOR +

       

4.25%, 1.00% Floor), 5.25%,

       

06/23/23(b)

     1,813,333             1,801,438     

Mattress Holding Corp.

       

Initial Term Loan, (LIBOR +

       

5.25%, 1.00% Floor), 6.25%,

       

10/20/21(b)

     2,595,566             2,543,655     

2016 Incremental Term Loan,

       

(LIBOR + 5.25%, 1.00% Floor),

       

6.25%, 10/20/21(b)

     1,190,549             1,165,994     
    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

RETAIL (continued)

  

    

The Neiman Marcus Group, Inc.

       

Other Term Loan, (LIBOR +

       

3.25%, 1.00% Floor), 4.25%,

       

10/25/20(b)(f)

     2,500,000             2,251,987     

Petco Animal Supplies, Inc.

       

Tranche B-1 Term Loan, (LIBOR

       

+ 4.00%, 1.00% Floor), 5.00%,

       

01/26/23(b)

     2,319,188             2,311,523     

Tranche B-2 Term Loan, (LIBOR

       

+ 4.25%, 0.00% Floor), 4.73%,

       

01/26/23(b)

     1,608,871             1,602,982     

Sears Roebuck Acceptance Corp. (KMART Corp.)

       

2015 Term Loan, (LIBOR +

       

4.50%, 1.00% Floor), 5.50%,

       

06/30/18(b)

     1,806,779             1,726,224     

Vince, LLC (Vince Intermediate Holding, LLC)

       

Term Loan B, (LIBOR + 4.75%,

       

1.00% Floor), 5.75%,

       

11/27/19(b)(e)

     514,815             489,074     
     

 

 

   
            25,057,140     
     

 

 

   

SERVICES: BUSINESS - 11.4%

  

    

Americold Realty Operating
Partnership, L.P.

       

Term Loan B, (LIBOR + 5.50%,

       

1.00% Floor), 6.50%,

       

12/01/22(b)(f)

     3,203,165             3,223,185     

Carecore National, LLC

       

Term Loan, (LIBOR + 4.50%,

       

1.00% Floor), 5.50%, 03/05/21(b)

     971,723             901,273     

EIG Investors Corp.

       

Term Loan, (LIBOR + 5.48%,

       

1.00% Floor), 6.48%,

       

11/09/19(b)(f)

     1,950,866             1,866,325     

Term Loan, (LIBOR + 5.00%,

       

1.00% Floor), 6.00%,

       

02/09/23(b)(e)(f)

     2,970,000             2,791,800     

Evergreen Skills Lux S.a.r.l.

       

First Lien Initial Term Loan,

       

(LIBOR + 4.75%, 1.00% Floor),

       

5.75%, 04/28/21(b)

     1,230,665             981,455     

Second Lien Initial Term Loan,

       

(LIBOR + 8.25%, 1.00% Floor),

       

9.25%, 04/28/22(b)

     1,000,000             475,000     

Explorer Holdings, Inc.

       

Initial Term Loan, (LIBOR +

       

5.00%, 1.00% Floor), 6.00%,

       

05/02/23(b)

     500,000             501,250     

GCA Services Group, Inc.

       

First Lien Term Loan, (LIBOR +

       

4.75%, 1.00% Floor), 5.75%,

       

03/01/23(b)

     1,362,103             1,367,211     

Infogroup, Inc.

       

Term Loan B, (LIBOR + 5.50%,

       

1.50% Floor), 7.00%, 05/28/18(b)

     1,126,687             1,093,591     
 

 

20  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Schedule of Investments  (continued)

June 30, 2016 (unaudited)

 

    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

Senior Loans(a) (continued)

  

    

SERVICES: BUSINESS (continued)

  

 

Netsmart Technologies, Inc.

       

First Lien Term Loan, (LIBOR +

       

4.75%, 1.00% Floor), 5.75%,

       

04/19/23(b)(e)

     586,047             585,314     

Onex Carestream Finance, L.P.

       

Second Lien Term Loan, (LIBOR

       

+ 8.50%, 1.00% Floor), 9.50%,

       

12/07/19(b)

     5,448,718             4,958,334     

SGS Cayman, L.P.

       

Initial Cayman Term Loan,

       

(LIBOR + 5.00%, 1.00% Floor),

       

6.00%, 04/23/21(b)

     426,076             425,011     

SMG

       

2014 Second Lien Term Loan,

       

(LIBOR + 8.25%, 1.00% Floor),

       

9.25%, 02/27/21(b)(e)

     2,458,634             2,366,435     

Solera, LLC (Solera Finance, Inc.)

       

Dollar Term Loan, (LIBOR +

       

4.75%, 1.00% Floor), 5.75%,

       

03/03/23(b)

     3,327,341             3,330,452     

Sutherland Global Services, Inc.

       

Initial U.S.Term Loan, (LIBOR +

       

5.00%, 1.00% Floor), 6.00%,

       

04/23/21(b)

     1,830,386             1,825,810     
     

 

 

   
            26,692,446     
     

 

 

   

SERVICES: CONSUMER - 2.4%

  

    

Laureate Education, Inc.

       

2018 New Series Extended Term

       

Loan, (LIBOR + 3.75%, 1.25%

       

Floor), 5.00%, 06/15/18(b)

     4,274,993             4,153,861     

NVA Holdings, Inc.

       

Second Lien Term Loan, (LIBOR

       

+ 7.00%, 1.00% Floor), 8.00%,

       

08/14/22(b)

     1,391,776             1,379,598     
     

 

 

   
        5,533,459     
     

 

 

   

TELECOMMUNICATIONS - 3.7%

  

    

Avaya, Inc.

       

Term Loan B-3, (LIBOR + 4.50%,

       

0.00% Floor), 5.13%,

       

10/26/17(b)(f)

     5,000,000             3,895,825     

Global Tel*Link Corp.

       

First Lien Term Loan, (LIBOR +

       

3.75%, 1.25% Floor), 5.00%,

       

05/23/20(b)

     1,173,404             1,062,664     

Securus Technologies Holdings, Inc.

       

Second Lien Initial Term Loan,

       

(LIBOR + 7.75%, 1.25% Floor),

       

9.00%, 04/30/21(b)

     4,000,000             3,606,660     
     

 

 

   
        8,565,149     
     

 

 

   

TRANSPORTATION: CARGO - 1.6%

  

    

Carrix, Inc.

       

Term Loan, (LIBOR + 3.50%,

       

1.00% Floor), 4.50%, 01/07/19(b)

     3,847,770             3,645,762     
     

 

 

   
    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

TRANSPORTATION: CONSUMER - 0.7%

  

    

Travel Leaders Group, LLC

       

Additional Tranche B Term Loan,

       

(LIBOR + 6.00%, 1.00% Floor),

       

7.00%, 12/07/20(b)

     1,736,779             1,723,753     
     

 

 

   

UTILITIES: ELECTRIC - 3.6%

EFS Cogen Holdings I, LLC

       

Term Loan B, (LIBOR + 4.25%,

       

1.00% Floor), 5.25%,

       

06/28/23(b)(f)

     2,620,253             2,630,079     

Granite Acquisition, Inc.

       

Second Lien Term Loan B,

       

(LIBOR + 7.25%, 1.00% Floor),

       

8.25%, 12/19/22(b)

     1,112,864             1,054,577     

Pike Corp.

       

First Lien Initial Term Loan,

       

(LIBOR + 4.50%, 1.00% Floor),

       

5.50%, 12/22/21(b)

     2,134,220             2,132,887     

Second Lien Initial Term Loan,

       

(LIBOR + 8.50%, 1.00% Floor),

       

9.50%, 06/22/22(b)

     2,500,000             2,518,750     
     

 

 

   
        8,336,293     
     

 

 

   

Total Senior Loans
(Cost $276,249,331)

            266,299,797     
     

 

 

   

Corporate Notes and Bonds - 23.6%(d)

AUTOMOTIVE - 0.6%

American Tire Distributors, Inc.

       

10.25%, 03/01/22(i)

     1,628,000             1,436,710     
     

 

 

   

BANKING, FINANCE, INSURANCE & REAL ESTATE - 0.8%

National Financial Partners Corp.

       

9.00%, 07/15/21(i)

     2,000,000             1,935,000     
     

 

 

   

BEVERAGE, FOOD & TOBACCO - 2.2%

Land O’Lakes Capital Trust I

       

7.45%, 03/15/28(i)

     4,719,000             5,131,912     
     

 

 

   

CAPITAL EQUIPMENT - 0.6%

Optimas OE Solutions Holding, LLC

       

8.63%, 06/01/21(i)

     2,000,000             1,410,000     
     

 

 

   

CHEMICALS, PLASTICS & RUBBER - 2.0%

Magnetation, LLC / Mag Finance Corp.

       

11.00%, 05/15/18(e)(h)(i)(j)

     2,937,000                 

TPC Group, Inc. (Texas Petrochemical)

       

8.75%, 12/15/20(i)

     5,966,000             4,698,225     
     

 

 

   
        4,698,225     
     

 

 

   

CONSTRUCTION & BUILDING - 0.9%

GCP Applied Technologies, Inc.

       

9.50%, 02/01/23(i)

     1,946,000             2,179,520     
     

 

 

   

CONSUMER GOODS: NON-DURABLE - 1.1%

American Greetings Corp.

       

7.38%, 12/01/21

     2,529,000             2,633,321     
     

 

 

   
 

 

See accompanying Notes to Financial Statements.  |  21


Apollo Tactical Income Fund Inc.

Schedule of Investments  (continued)

June 30, 2016 (unaudited)

 

    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

Corporate Notes and Bonds(d) (continued)

  

 

CONTAINERS, PACKAGING & GLASS - 0.4%

  

 

Reynolds Group Holdings, Inc.

       

6.88%, 02/15/21

     996,000             1,025,880     
     

 

 

   

ENERGY: OIL & GAS - 2.6%

  

    

Northern Oil and Gas, Inc.

       

8.00%, 06/01/20

     1,519,000             1,154,440     

Northern Tier Energy, LLC /

       

Northern Tier

       

7.13%, 11/15/20

     1,804,000             1,844,590     

Sidewinder Drilling, Inc.

       

9.75%, 11/15/19(i)

     6,000,000             360,000     

Summit Midstream Holdings, LLC / Summit Midstream Finance Corp.

       

7.50%, 07/01/21

     2,700,000             2,605,500     
     

 

 

   
        5,964,530     
     

 

 

   

HEALTHCARE & PHARMACEUTICALS - 1.9%

  

    

Team Health Holdings Inc.

       

7.25%, 12/15/23(i)

     1,473,000             1,579,969     

Valeant Pharmaceuticals

       

International, Inc. (Canada)

       

7.50%, 07/15/21(c)(i)

     3,200,000             2,838,000     
     

 

 

   
        4,417,969     
     

 

 

   

HIGH TECH INDUSTRIES - 1.7%

  

    

Cimpress NV (Netherlands)

       

7.00%, 04/01/22(c)(i)

     2,391,000             2,379,045     

Riverbed Technology, Inc.

       

8.88%, 03/01/23(i)

     1,500,000             1,560,000     
     

 

 

   
        3,939,045     
     

 

 

   

MEDIA: ADVERTISING, PRINTING & PUBLISHING - 0.4%

  

 

Acosta, Inc.

       

7.75%, 10/01/22(i)

     1,000,000             882,500     
     

 

 

   

MEDIA: BROADCASTING & SUBSCRIPTION - 4.3%

  

 

Columbus International, Inc. (Barbados)

       

7.38%, 03/30/21(c)(i)

     3,285,000             3,481,279     

Neptune Finco Corp.

       

10.13%, 01/15/23(i)

     317,000             355,832     

10.88%, 10/15/25(i)

     877,000             1,004,709     

Numericable-SFR S.A. (France)

       

7.38%, 05/01/26(c)(i)

     1,233,000             1,220,670     

Radio One, Inc.

       

7.38%, 04/15/22(i)

     882,000             846,720     

9.25%, 02/15/20(i)

     2,484,000             2,210,760     

WideOpenWest Finance, LLC

       

10.25%, 07/15/19

     1,000,000             1,040,000     
     

 

 

   
            10,159,970     
     

 

 

   

MEDIA: DIVERSIFIED & PRODUCTION - 1.1%

  

    

SiTV, Inc.

       

10.38%, 07/01/19(i)

     3,420,000             2,650,500     
     

 

 

   

RETAIL - 1.7%

  

    

JC Penney Corp., Inc.

       

5.88%, 07/01/23(i)

     1,000,000             1,008,750     
    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

RETAIL (continued)

  

 

Jo-Ann Stores, Inc.

       

8.13%, 03/15/19(i)

     3,000,000             2,887,500     
     

 

 

   
        3,896,250     
     

 

 

   

SERVICES: CONSUMER - 0.4%

  

    

Laureate Education, Inc.

       

10.00%, 09/01/19(i)

     1,000,000             880,000     
     

 

 

   

TELECOMMUNICATIONS - 0.9%

  

    

Altice Financing S.A. (Luxembourg)

       

7.50%, 05/15/26(c)(i)

     2,076,000             2,039,670     
     

 

 

   

Total Corporate Notes and Bonds
(Cost $66,781,790)

            55,281,002     
     

 

 

   

Structured Products - 15.4%(k)

  

    

ACAS CLO, Ltd. (Cayman Islands)

       

Series 2016-1A, Class D1,

       

9.19%, 04/15/25(c)(e)(i)(l)

     2,000,000             1,939,650     

Anchorage Capital CLO, Ltd.
(Cayman Islands)

       

Series 2015-6A, Class E2,

       

7.46%, 04/15/27(c)(e)(i)(l)

     4,400,000             4,034,567     

Series 2015-7A, Class E2,

       

7.73%, 10/15/27(c)(e)(i)(l)

     3,000,000             2,829,237     

Atlas Senior Loan Fund, Ltd.
(Cayman Islands)

       

Series 2012-1A, Class B3L,

       

8.13%, 08/15/24(c)(i)(l)

     5,000,000             3,925,000     

Carlyle Global Market Strategies CLO, Ltd. (Cayman Islands)

       

Series 2014-5A, Class E, 6.54%,

       

10/16/25(c)(e)(i)(l)

     1,000,000             735,000     

ECP CLO, Ltd. (Cayman Islands)

       

Series 2014-6A, Class D2,

       

7.18%, 07/15/26(c)(i)(l)

     4,000,000             2,626,630     

Ivy Hill Middle Market Credit Fund, Ltd.
(Cayman Islands)

       

Series 10A, Class D2, 7.93%,

       

07/18/27(c)(i)(l)

     2,350,000             1,955,670     

JFIN CLO, Ltd. (Cayman Islands)

       

Series 2013-1I, Class E, 6.63%,

       

01/20/25(c)(e)(l)

     2,000,000             1,013,710     

Series 2015-1A, Class E, 5.65%,

       

03/15/26(c)(i)(l)

     4,500,000             2,773,283     

NXT Capital CLO, LLC
(Cayman Islands)

       

Series 2014-1A, Class E, 6.14%,

       

04/23/26(c)(i)(l)

     5,000,000             3,842,645     

NZCG Funding, Ltd. (Cayman Islands)

       

Series 2015-2A, Class D, 6.93%,

       

04/27/27(c)(e)(i)(l)

     1,500,000             1,307,740     

OCP CLO, Ltd. (Cayman Islands)

       

Series 2014-5A, Class E, 5.89%,

       

04/26/26(c)(i)(l)

     3,000,000             1,548,617     

Series 2016-11A, Class D2,

       

9.64%, 04/26/28(c)(e)(i)(l)

     5,000,000             5,009,625     
 

 

22  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Schedule of Investments  (continued)

June 30, 2016 (unaudited)

 

    

Principal   
 Amount ($) 

 

    

 Value ($) 

 

     

Structured Products(k) (continued)

  

 

Teachers Insurance and Annuity

       

Association of America CLO, Ltd.

       

(Cayman Islands)

       

Series 2016-1A, Class E2,

       

10.69%, 07/20/28(c)(e)(i)(l)

     2,500,000         2,481,887     
     

 

 

   

Total Structured Products
(Cost $43,126,021)

            36,023,261     
     

 

 

   
       
    

Share
Quantity

 

    

Value ($)

 

     

Common Stocks - 0.0%

       

BANKING, FINANCE, INSURANCE & REAL ESTATE - 0.0%

  

 

Medical Card System, Inc.(e)(h)

     864,292             

ENERGY: OIL & GAS - 0.0%

  

 

Southcross Holdings Borrower

       

GP LLC(e)(h)

     129             

Southcross Holdings Borrower

       

LP, Class A-II(e)(h)

     129         50,310     
     

 

 

   
        50,310     
     

 

 

   

Total Common Stock
(Cost $58,050)

        50,310     
     

 

 

   

Preferred Stock - 1.7%

BANKING, FINANCE, INSURANCE & REAL ESTATE - 1.7%

SquareTwo Financial Corp.

       

11.63%,(e)

     2,647             

Watford Holdings, Ltd. (Bermuda)

       

8.50%,(c)(e)(i)

     160,000         3,992,960     
     

 

 

   
        3,992,960     
     

 

 

   

Total Preferred Stock
(Cost $4,906,669)

        3,992,960     
     

 

 

   
    

Share
Quantity

 

    

 Value ($) 

 

     

Warrants - 0.0%

       

BANKING, FINANCE, INSURANCE & REAL ESTATE - 0.0%

  

 

Medical Card System, Inc.

       

07/26/18(e)(h)(i)

     50,689             
     

 

 

   

Total Warrants
(Cost $ — )

            
     

 

 

   

Total Investments-154.3%

        361,647,330     

(Cost of $391,121,861) (m)

       

Other Assets & Liabilities,
Net-4.6%

        10,695,555     

Loan Outstanding-(58.9)%(n)(o)

        (137,963,299  
     

 

 

   

Net Assets -100.0%

            234,379,586     
     

 

 

   
     

 

 

   
 

 

See accompanying Notes to Financial Statements.  |  23


Apollo Tactical Income Fund Inc.

Schedule of Investments  (continued)

June 30, 2016 (unaudited)

 

 

(a)  “Senior Loans” are senior, secured loans made to companies whose debt is rated below investment grade and investments with similar characteristics. Senior Loans typically hold a first lien priority and pay interest at rates that are determined periodically on the basis of a floating base lending rate plus a spread. Unless otherwise identified, all Senior Loans carry a variable rate of interest. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and secondarily the prime rate offered by one or more major U.S. banks and the certificate of deposit rate used by commercial lenders. The rates shown represent the weighted average rate at June 30, 2016. Senior Loans are generally not registered under the Securities Act of 1933 (the “1933 Act”) and often contain certain restrictions on resale and cannot be sold publicly. Senior Loans often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual maturity may be substantially less than the stated maturity shown.

 

  Senior Loan assets may have additional unfunded loan commitments. As of June 30, 2016, the Fund had unfunded loan commitments, which could be extended at the option of the borrower, pursuant to the following loan agreements:

 

Borrower   

Unfunded Loan

Commitments

      

The Chef’s Warehouse, Inc.

       $    135,532          

Mitel Networks Corp.

     5,240,000          

SquareTwo Financial Corp.

     173,034          
  

 

 

    

Total unfunded loan commitments

       $ 5,548,566          
  

 

 

    

 

(b)  The interest rate on this Senior Loan is subject to a base rate plus 1 month or 3 month LIBOR, which at June 30, 2016, was 0.47% and 0.65%, respectively. As the interest rate is subject to a minimum LIBOR floor which was greater than the 1 month or 3 month LIBOR rate at June 30, 2016, the prevailing rate in effect at June 30, 2016, was the base rate plus the LIBOR floor, except as otherwise indicated.
(c) Foreign issuer traded in U.S. dollars.
(d) Fixed rate asset.
(e) Fair Value Level 3 security. All remaining securities are categorized as Level 2.
(f) All or a portion of this Senior Loan position has not settled. Full contract rates do not take effect until settlement date, therefore, are subject to change.
(g) Represents a payment-in-kind (“PIK”) security, which may pay interest in additional principal amount.
(h) Non-income producing asset.
(i) Securities exempt from registration pursuant to Rule 144A under the 1933 Act. These securities may only be resold in transactions exempt from registration to qualified institutional buyers. At June 30, 2016, these securities amounted to $83,979,782, or 35.8% of net assets.
(j) The issuer is in default of its payment obligations as of May 5, 2015, as such, income is no longer being accrued. The issuer paid a cash dividend to all shareholders on record as of January 6, 2016, which was recorded as a cost basis adjustment.
(k) Structured Products include collateralized loan obligations (“CLOs”). A CLO typically takes the form of a financing company (generally called a special purpose vehicle or “SPV”), created to reapportion the risk and return characteristics of a pool of assets. While the assets underlying CLOs are often Senior Loans or corporate notes and bonds, the assets may also include (i) subordinated loans; (ii) debt tranches of other CLOs; and (iii) equity securities incidental to investments in Senior Loans. The Fund may invest in lower tranches of CLOs, which typically experience a lower recovery, greater risk of loss or deferral or non-payment of interest than more senior tranches of the CLO. A key feature of the CLO structure is the prioritization of the cash flows from a pool of debt securities among the several classes of the CLO. The SPV is a company founded for the purpose of securitizing payment claims arising out of this asset pool. On this basis, marketable securities are issued by the SPV and the redemption of these securities typically takes place at maturity out of the cash flow generated by the collected claims.
(l) Floating rate asset. The interest rate shown reflects the rate in effect at June 30, 2016.
(m) The aggregate cost of securities for federal income tax purposes was $391,327,232. Cost for U.S. federal income tax purposes differs from book basis primarily due to the deferral of losses from wash sales. Unrealized appreciation and depreciation on investments were as follows:

 

Gross unrealized appreciation

    $ 3,562,940       

Gross unrealized depreciation

     (33,242,842)      
  

 

 

    

Net unrealized depreciation

    $   (29,679,902)      
  

 

 

    

 

(n)  The Fund has granted a security interest in substantially all of its assets in the event of default under the credit facility.
(o)  Principal $138,000,000 less unamortized deferred financing costs of $36,701.

 

24  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Statements of Assets and Liabilities

June 30, 2016 (unaudited)

 

     

Apollo

Senior

Floating Rate
Fund Inc.

  

Apollo

Tactical

Income

Fund Inc.

Assets:          

Investment securities at fair value (cost $405,787,260 and $391,121,861, respectively)

     $ 393,538,575        $ 361,647,330  

Cash and cash equivalents

       8,544,964          12,807,716  

Interest and dividends receivable

       2,339,173          3,229,547  

Receivable for investment securities sold

       35,276,463          27,042,415  

Unrealized appreciation on unfunded transactions (Note 9)

       1,016          4,356  

Prepaid expenses

       229,280          229,586  
    

 

 

      

 

 

 

Total assets

     $ 439,929,471        $ 404,960,950  
    

 

 

      

 

 

 

Liabilities:

         

Borrowings under credit facility (principal $135,250,000 and $138,000,000, respectively, less unamortized deferred financing costs of $629,077 and $36,701, respectively) (Note 8)

     $ 134,620,923        $ 137,963,299  

Payable for investment securities purchased

       31,164,696          31,437,021  

Interest payable

       325,850          440,067  

Distributions payable to common shareholders

       59,581          45,660  

Investment advisory fee payable

       335,726          306,851  

Other payables and accrued expenses due to affiliates

       148,539          148,313  

Other payables and accrued expenses

       286,943          240,153  
    

 

 

      

 

 

 

Total liabilities

       166,942,258          170,581,364  
    

 

 

      

 

 

 

Commitments and Contingencies (Note 9)

         

Net Assets (Applicable to Common Shareholders)

     $ 272,987,213        $ 234,379,586  
    

 

 

      

 

 

 

Net Assets Consist of:

         

Paid-in capital ($0.001 par value, 999,998,466 and 1,000,000,000 common shares authorized, respectively, and 15,573,061 and 14,464,026 issued and outstanding, respectively) (Note 6)

     $ 296,701,729        $ 275,624,557  

Undistributed net investment income

       1,740,518          1,179,969  

Accumulated net realized loss from investments

       (13,207,365 )        (12,954,765 )

Net unrealized depreciation on investments and unfunded transactions

       (12,247,669 )        (29,470,175 )
    

 

 

      

 

 

 

Net Assets (Applicable to Common Shareholders)

     $ 272,987,213        $ 234,379,586  
    

 

 

      

 

 

 

Number of Common Shares Outstanding

       15,573,061          14,464,026  

Net Asset Value, per Common Share

     $ 17.53        $ 16.20  

 

See accompanying Notes to Financial Statements.  |  25


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Statements of Operations

For the Six Months Ended June 30, 2016 (unaudited)

 

      Apollo
Senior
Floating Rate
Fund Inc.
        Apollo
Tactical
Income
Fund Inc.
    

 

Investment Income:

             

Interest

     $ 13,967,326          $ 14,788,301    

Dividends

       170,000            170,000    
    

 

 

        

 

 

   

Total investment income

       14,137,326            14,958,301    
    

 

 

        

 

 

   

Expenses:

             

Investment advisory fee (Note 3)

       2,041,898            1,816,357    

Interest and commitment fee expense (Note 8)

       1,271,179            1,120,291    

Professional fees

       185,719            176,667    

Administrative services of the Adviser (Note 3)

       301,788            289,606    

Fund administration and accounting services (Note 3)

       131,215            126,078    

Insurance expense

       166,435            166,435    

Amortization of deferred financing costs (Note 8)

       69,435            21,793    

Board of Directors fees (Note 3)

       53,691            54,132    

Other operating expenses (Note 3)

       69,859            63,774    
    

 

 

        

 

 

   

Total expenses

       4,291,219            3,835,133    

Expense reimbursement waived by the Adviser (Note 3)

                     
    

 

 

        

 

 

   

Net expenses

       4,291,219            3,835,133    
    

 

 

        

 

 

   

Net Investment Income

       9,846,107            11,123,168    
    

 

 

        

 

 

   

Net Realized and Unrealized Gain/Loss on Investments

             

Net realized loss on investments

       (5,474,977 )          (8,978,983 )  

Net change in unrealized appreciation/(depreciation) on investments and unfunded transactions (Note 9)

       13,707,411            11,393,937    
    

 

 

        

 

 

   

Net realized and unrealized gain on investments

       8,232,434            2,414,954    
    

 

 

        

 

 

   

Net Increase in Net Assets, Applicable to Common Shareholders, Resulting From Operations

     $ 18,078,541          $ 13,538,122    
    

 

 

        

 

 

   

 

26  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Statements of Changes in Net Assets

 

      Six Months
Ended
June 30, 2016
(unaudited)
       

Year    

Ended    
December 31,    
2015    

Increase/(Decrease) in Net Assets from:

           

Operations

           

Net investment income

     $ 9,846,107          $ 18,983,488  

Net realized loss on investments

       (5,474,977 )          (4,222,202 )

Net change in unrealized appreciation/(depreciation) on investments and unfunded transactions

       13,707,411            (17,211,938 )
    

 

 

        

 

 

 

Net increase/(decrease) in net assets from operations

       18,078,541            (2,450,652 )
    

 

 

        

 

 

 

Distributions to Common Shareholders

           

From net investment income

       (8,529,366 )          (19,103,474 )
    

 

 

        

 

 

 

Total distributions to common shareholders

       (8,529,366 )          (19,103,474 )
    

 

 

        

 

 

 

Total increase/(decrease) in net assets

     $ 9,549,175          $ (21,554,126 )

Net Assets Applicable to Common Shares

           

Beginning of period

       263,438,038            284,992,164  
    

 

 

        

 

 

 

End of period

     $ 272,987,213          $ 263,438,038  
    

 

 

        

 

 

 

Undistributed net investment income

     $ 1,740,518          $ 421,196  
    

 

 

        

 

 

 

 

See accompanying Notes to Financial Statements.  |  27


Apollo Tactical Income Fund Inc.

Statements of Changes in Net Assets

 

      Six Months
Ended
June 30, 2016
(unaudited)
       

Year    

Ended    
December 31,    
2015    

Increase/(Decrease) in Net Assets from:

           

Operations

           

Net investment income

     $ 11,123,168          $ 21,341,121  

Net realized loss on investments

       (8,978,983 )          (3,938,152 )

Net change in unrealized appreciation/(depreciation) on investments and unfunded transactions

       11,393,937            (27,305,029 )
    

 

 

        

 

 

 

Net increase/(decrease) in net assets from operations

       13,538,122            (9,902,060 )
    

 

 

        

 

 

 

Distributions to Common Shareholders

           

From net investment income

       (10,153,747 )          (22,324,878 )

From realized gains on investments

                  (205,727 )
    

 

 

        

 

 

 

Total distributions to common shareholders

       (10,153,747 )          (22,530,605 )
    

 

 

        

 

 

 

Total increase/(decrease) in net assets

     $ 3,384,375          $ (32,432,665 )

Net Assets Applicable to Common Shares

           

Beginning of period

       230,995,211            263,427,876  
    

 

 

        

 

 

 

End of period

     $ 234,379,586          $ 230,995,211  
    

 

 

        

 

 

 

Undistributed net investment income

     $ 1,179,969          $ 210,201  
    

 

 

        

 

 

 

 

28  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Statement of Cash Flows

For the Six Months Ended June 30, 2016 (unaudited)

 

 

Cash Flows from Operating Activities:

  

Net increase in net assets from operations

   $ 18,078,541   

Adjustments to Reconcile Net Increase in Net Assets from Operations to Net Cash Flows Used by Operating Activities:

  

Net realized loss on investments

     5,474,977   

Net change in unrealized (appreciation)/depreciation on investments and unfunded transactions

     (13,707,411

Net amortization/(accretion) of premium/(discount)

     (931,396

Purchase of investment securities

     (244,152,544

Proceeds from disposition of investment securities and principal paydowns

     232,169,023   

Payment-in-kind interest

     (36,500

Amortization of deferred financing costs

     69,435   

Changes in Operating Assets and Liabilities:

  

Increase in interest and dividends receivable

     (116,982

Increase in prepaid expenses

     (150,476

Decrease in interest payable

     (8,346

Decrease in investment advisory fee payable

     (17,622

Increase in other payables and accrued expenses due to affiliates

     144,676   

Increase in other payables and accrued expenses

     10,077   
  

 

 

 

Net cash flows used in operating activities

     (3,174,548
  

 

 

 

Cash Flows from Financing Activities:

  

Proceeds from borrowing

     135,250,000   

Repayment of credit facility

     (149,269,000

Deferred financing costs

     (659,807

Distributions paid to common shareholders (net of change in distributions payable to common shareholders)

     (8,573,878
  

 

 

 

Net cash flows used in financing activities

     (23,252,685
  

 

 

 

Net Decrease in Cash and Cash Equivalents

     (26,427,233

Cash and cash equivalents, beginning of period

     34,972,197   
  

 

 

 

Cash and cash equivalents, end of period

   $ 8,544,964   
  

 

 

 

Supplemental Disclosure of Cash Flow Information

  

Cash paid during the period for interest

   $ 1,279,525   
  

 

 

 

 

See accompanying Notes to Financial Statements.  |  29


Apollo Tactical Income Fund Inc.

Statement of Cash Flows

For the Six Months Ended June 30, 2016 (unaudited)

 

 

Cash Flows from Operating Activities:

  

Net increase in net assets from operations

   $ 13,538,122   

Adjustments to Reconcile Net Increase in Net Assets from Operations to Net Cash Flows Provided by Operating Activities:

  

Net realized loss on investments

     8,978,983   

Net change in unrealized (appreciation)/depreciation on investments and unfunded transactions

     (11,393,937

Net amortization/(accretion) of premium/(discount)

     (1,091,589

Purchase of investment securities

     (196,223,386

Proceeds from disposition of investment securities and principal paydowns

     194,386,480   

Payment-in-kind interest

     (64,418

Amortization of deferred financing costs

     21,793   

Changes in Operating Assets and Liabilities:

  

Decrease in interest and dividends receivable

     454,608   

Increase in prepaid expenses

     (150,673

Increase in interest payable

     91,233   

Decrease in investment advisory fee payable

     (12,334

Increase in other payables and accrued expenses due to affiliates

     142,695   

Decrease in other payables and accrued liabilities

     (10,878
  

 

 

 

Net cash flows provided by operating activities

     8,666,699   
  

 

 

 

Cash Flows from Financing Activities:

  

Deferred financing costs

     (45,406

Distributions paid to common shareholders (net of change in distributions payable to common shareholders)

     (10,210,840
  

 

 

 

Net cash flows used in financing activities

     (10,256,246
  

 

 

 

Net Decrease in Cash and Cash Equivalents

     (1,589,547

Cash and cash equivalents, beginning of period

     14,397,263   
  

 

 

 

Cash and cash equivalents, end of period

   $ 12,807,716   
  

 

 

 

Supplemental Disclosure of Cash Flow Information

  

Cash paid during the period for interest

   $ 1,029,058   
  

 

 

 

 

30  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Financial Highlights

For a Common Share Outstanding throughout the Period

 

Per Common Share
Operating Performance:
  

For the

Six Months
Ended
June 30,
2016
(unaudited)

        

For the

Year

Ended
December 31,
2015

       

For the

Year

Ended

December 31,

2014

       

For the

Year

Ended

December 31,
2013

        

For the

Year

Ended

December 31,
2012

        

For the

Period

Ended

December 31,

2011(a)

 

Net Asset Value, Beginning of Period

  

 

$    16.92

     

 

$    18.30

    

 

$    19.12

    

 

$    18.73

     

 

$    17.68

     

 

$    19.10(b)

  
  

 

     

 

    

 

    

 

     

 

     

 

Income from Investment Operations:

                                 

Net investment income(c)

            0.63               1.22              1.18              1.34               1.39               1.00   

Net realized and unrealized gain/(loss) on investments

            0.53              (1.37)             (0.75)              0.35               1.10              (1.46)   

Distributions from net investment income to Series A Preferred Shareholders

              —                  —             (0.02)            (0.04)             (0.05)              (0.02)   
  

 

     

 

    

 

    

 

     

 

     

 

Total from investment operations

           1.16              (0.15)              0.41              1.65               2.44              (0.48)   
  

 

     

 

    

 

    

 

     

 

     

 

Less Distributions Paid to Common Shareholders from:

                                 

Net investment income

          (0.55)              (1.23)            (1.23)             (1.26)              (1.38)              (0.88)   

Net realized gain on investments

              —                  —               —                 —              (0.01)              (0.02)   
  

 

     

 

    

 

    

 

     

 

     

 

Total distributions paid to Common Shareholders

          (0.55)              (1.23)            (1.23)             (1.26)              (1.39)              (0.90)   
  

 

     

 

    

 

    

 

     

 

     

 

Common Share offering charges to paid-in capital

              —                    —                   —                   —                    —                (0.04)     

Net Asset Value, End of Period

   $    17.53       $    16.92      $    18.30      $    19.12       $    18.73       $    17.68   

Market Value, End of Period

   $    15.80       $    15.15      $    16.63      $    18.10       $    18.77       $    16.01   

Total return based on net asset value(d)

           7.39%(e)              (0.52)%              2.63%              9.19%             14.23%              (2.43)%(e)   

Total return based on market value(d)

           8.10%(e)                (1.98)%              (1.48)%                3.14%               26.41%              (15.62)%(e)     

Ratios to Average Net Assets Applicable to Common Shareholders:

                                 

Ratio of total expenses to average net assets

           3.25%(f)               3.01%              3.07%              3.00%               3.21%               2.99%(f)   

Ratio of net expenses to average net assets

           3.25%(f)               3.01%              3.07%              3.00%               3.18%               2.88%(f)   

Ratio of net investment income to average net assets

           7.46%(f)               6.71%              6.22%(g)              7.03%(g)               7.51%(g)               6.49%(f)(g)   

Ratio of net investment income to average net assets net of distributions to Series A Preferred Shareholders

              —                  —              6.13%              6.80%               7.25%               6.33%(f)   

Supplemental Data:

                                 

Portfolio turnover rate

           60.3%(e)               66.1%             80.0%              72.0%               66.6%               41.5%(e)   

Net assets at end of period (000’s)

   $272,987         $263,438        $284,992        $297,731         $290,822         $273,650     

Senior Securities:

                                 

Total Series A Preferred Shares outstanding

              —                  —                 —            1,534             1,534             1,534   

Liquidation and market value per Series A Preferred Shares

              —                  —                 —      $  20,000       $  20,000       $  20,000   

Asset coverage per share(h)

              —                  —                 —      $294,078       $289,574       $278,380   

Principal loan outstanding (in 000’s)

   $135,250       $149,269      $149,269      $122,705       $122,705       $122,705   

Asset coverage per $1,000 of loan outstanding

   $    3,018(i)       $    2,765(i)      $    2,909(i)      $    3,676(j)       $    3,620(j)       $    3,480(j)   

 

 

(a)  From February 23, 2011 (commencement of operations), to December 31, 2011.
(b)  Net of sales load of $0.90 per share of initial offering.
(c)  Based on weighted average outstanding shares.
(d)  Total return based on net asset value and total return based on market value assuming all distributions reinvested at reinvestment rate.
(e)  Not annualized.
(f)  Annualized.
(g)  Net investment income ratio does not reflect payment to preferred shareholders.
(h)  Calculated by subtracting the Fund’s total liabilities (not including the Series A Preferred Shares and borrowings outstanding) from the Fund’s total assets, and dividing this by the number of Series A Preferred Shares outstanding.
(i)  Calculated by subtracting the Fund’s total liabilities (not including the borrowings outstanding) from the Fund’s total assets, and dividing this by the amount of borrowings outstanding.
(j)  Calculated by subtracting the Fund’s total liabilities (not including the Series A Preferred Shares and borrowings outstanding) from the Fund’s total assets, and dividing this by the amount of borrowings outstanding.

 

See accompanying Notes to Financial Statements.  |  31


Apollo Tactical Income Fund Inc.

Financial Highlights

For a Common Share Outstanding throughout the Period

 

  Per Common Share Operating Performance:   

For the

Six Months

Ended
June 30,

2016

(unaudited)

   

For the

Year

Ended

December 31,
2015

   

For the

Year

Ended

December 31,

2014

   

For the

Period

Ended

December 31,

2013(a)

 

Net Asset Value, Beginning of Period

     $    15.97               $    18.21            $    19.51           $    19.10(b)     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from Investment Operations:

        

Net investment income(c)

     0.77               1.48            1.50           1.03         

Net realized and unrealized gain/(loss) on investments

     0.16               (2.16)            (1.14)          0.39         
  

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

     0.93               (0.68)            0.36           1.42         
  

 

 

   

 

 

   

 

 

   

 

 

 

Less Distributions Paid to Common Shareholders from:

        

Net investment income

     (0.70)              (1.55)            (1.50)          (0.96)        

Net realized gain on investments

     —               (0.01)            (0.16)          (0.01)        
  

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions paid to Common Shareholders

     (0.70)              (1.56)            (1.66)          (0.97)        
  

 

 

   

 

 

   

 

 

   

 

 

 

Common share offering charges to paid-in capital

     —               —             —            (0.04)        

 

   

 

 

   

 

 

   

 

 

 

Net Asset Value, End of Period

     $    16.20               $    15.97             $    18.21            $    19.51         

Market Value, End of Period

     $    14.43               $    13.89             $    15.96            $    18.00         

Total return based on net asset value(d)

     6.72%(e)        (2.91)%        2.63%        7.94%(e)   

Total return based on market value(d)

     9.29%(e)        (3.65)%        (2.51)%        (4.90)%(e)   

Ratios to Average Net Assets Applicable to Common Shareholders:

        

Ratio of total expenses to average net assets

     3.39%(f)        2.97%        2.90%        2.58%(f)   

Ratio of net expenses to average net assets

     3.39%(f)        2.97%        2.90%        2.55%(f)   

Ratio of net investment income to average net assets

     9.84%(f)        8.22%        7.63%        6.38%(f)   

Supplemental Data:

        

Portfolio turnover rate

     58.6%(e)        67.6%        78.7%        72.4%(e)   

Net assets at end of period (000’s)

     $234,380               $230,995           $263,428            $282,177         

Senior Securities:

        

Principal loan outstanding (in 000’s)

     $138,000               $138,000           $138,000            $138,000         

Asset coverage per $1,000 of loan outstanding(g)

     $    2,698               $    2,674           $    2,909            $    3,045         

 

 

(a)  From February 25, 2013 (commencement of operations), to December 31, 2013.
(b)  Net of sales load of $0.90 per share of initial offering.
(c)  Based on weighted average outstanding shares.
(d)  Total return based on net asset value and total return based on market value assuming all distributions reinvested at reinvestment rate.
(e)  Not annualized.
(f)  Annualized.
(g)  Calculated by subtracting the Fund’s total liabilities (not including the borrowings outstanding) from the Fund’s total assets, and dividing this by the amount of borrowings outstanding.

 

32  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements

June 30, 2016 (unaudited)

Note 1. Organization and Operations

Apollo Senior Floating Rate Fund Inc. (“AFT”) and Apollo Tactical Income Fund Inc. (“AIF”) (individually, a “Fund” or, together, the “Funds”) are corporations organized under the laws of the State of Maryland and registered with the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940 (the “Investment Company Act”) as non-diversified, closed-end management investment companies. AFT and AIF commenced operations on February 23, 2011, and February 25, 2013, respectively. Prior to that, the Funds had no operations other than matters relating to their organization and the sale and issuance of 5,236 shares of common stock in each Fund to Apollo Credit Management, LLC (the “Adviser”) at a price of $19.10 per share. The Adviser serves as the Funds’ investment adviser and is an affiliate of Apollo Global Management, LLC (“AGM”). The Funds’ common shares are listed on the New York Stock Exchange (“NYSE”) and trade under the symbols “AFT” and “AIF”, respectively.

Investment Objective

AFT’s investment objective is to seek current income and preservation of capital. AFT seeks to achieve its investment objective by investing primarily in senior, secured loans made to companies whose debt is rated below investment grade (“Senior Loans”) and investments with similar characteristics. Senior Loans typically hold a first lien priority and pay interest at rates that are determined periodically on the basis of a floating base lending rate plus a spread. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”), and secondarily the prime rate offered by one or more major U.S. banks and the certificate of deposit rate used by commercial lenders. Senior Loans are typically made to U.S. and, to a limited extent, non-U.S. corporations, partnerships and other business entities (“Borrower(s)”) that operate in various industries and geographical regions. AFT seeks to generate current income and preservation of capital through a disciplined approach to credit selection and under normal market conditions will invest at least 80% of its managed assets in floating rate Senior Loans and investments with similar economic characteristics. This policy and AFT’s investment objective are not fundamental and may be changed by the board of directors of AFT with at least 60 days’ prior written notice provided to shareholders. Part of AFT’s investment objective is to seek preservation of capital. AFT’s ability to achieve capital preservation may be limited by its investment in credit instruments that have speculative characteristics. There can be no assurance that AFT will achieve its investment objective.

AIF’s primary investment objective is to seek current income with a secondary objective of preservation of capital. AIF seeks to achieve its investment objectives primarily by allocating its assets among different types of credit instruments based on absolute and relative value considerations and its analysis of the credit markets. This ability to dynamically allocate AIF’s assets may result in AIF’s portfolio becoming concentrated in a particular type of credit instrument (such as Senior Loans or high yield corporate bonds) and substantially less invested in other types of credit instruments. Under normal market conditions, at least 80% of AIF’s managed assets will be invested in credit instruments and investments with similar economic characteristics. For purposes of this policy, “credit instruments” will include Senior Loans, subordinated loans, high yield corporate bonds, notes, bills, debentures, distressed securities, mezzanine securities, structured products (including, without limitation, collateralized debt obligations (“CDOs”), collateralized loan obligations (“CLOs”) and asset-backed securities), bank loans, corporate loans, convertible and preferred securities, government and municipal obligations, mortgage-backed securities, repurchase agreements, and other fixed-income instruments of a similar nature that may be represented by derivatives such as options, forwards, futures contracts or swap agreements. This policy and AIF’s investment objectives are not fundamental and may be changed by the board of directors of AIF (together with the board of directors of AFT, the “Board of Directors” or “Board”) with at least 60 days’ prior written notice provided to shareholders. AIF will seek to preserve capital to the extent consistent with its primary investment objective. AIF’s ability to achieve capital preservation may be limited by its investment in credit instruments that have speculative characteristics. There can be no assurance that AIF will achieve its investment objectives.

The Funds are classified as “non-diversified” under the Investment Company Act. As a result, each Fund can invest a greater portion of its assets in obligations of a single issuer than a “diversified” fund. Each Fund may therefore be more susceptible than a diversified fund to being adversely affected by any single corporate, economic, political or regulatory occurrence.

Note 2. Significant Accounting Policies

The Funds are investment companies that follow the accounting and reporting guidance of Accounting Standards Codification Topic 946 applicable to investment companies. The Funds’ financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates and these differences could be material.

 

Semi-Annual Report  |  33


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

Fund Valuation

Each Fund’s net asset value (“NAV”) per share will be determined daily generally as of 4:00 pm on each day that the NYSE is open for trading, or at other times as determined by the Board. The NAV of each Fund’s common shares is the total assets of the Fund (including all securities, cash and other assets) minus the sum of the Fund’s total liabilities (including accrued expenses, dividends payable, borrowings and the liquidation value of any preferred stock) divided by the total number of common shares of the Fund outstanding.

Security Valuation

The Funds value their investments primarily using the mean of the bid and ask prices provided by a nationally recognized security pricing service or broker. Senior Loans, corporate notes and bonds, common stock, structured products, preferred stock and warrants are priced based on valuations provided by an approved independent pricing service or broker, if available. If market or broker quotations are not available, or a price is not available from an independent pricing service or broker, or if the price provided by the independent pricing service or broker is believed to be unreliable, the security will be fair valued pursuant to procedures adopted by the Board. In general, the fair value of a security is the amount that the Funds might reasonably expect to receive upon the sale of an asset or pay to transfer a liability in an orderly transaction between willing market participants at the reporting date. Fair value procedures generally take into account any factors deemed relevant, which may include, among others, (i) the nature and pricing history of the security, (ii) the liquidity or illiquidity of the market for the particular security, (iii) recent purchases or sales transactions for the particular security or similar securities and (iv) press releases and other information published about the issuer. In these cases, a Fund’s NAV will reflect the affected portfolio securities’ fair value as determined in the judgment of the Board or its designee instead of being determined by the market. Using a fair value pricing methodology to value securities may result in a value that is different from a security’s most recent sale price and from the prices used by other investment companies to calculate their NAV. Determination of fair value is uncertain because it involves subjective judgments and estimates. There can be no assurance that a Fund’s valuation of a security will not differ from the amount that it realizes upon the sale of such security.

Fair Value Measurements

Each Fund has performed an analysis of all existing investments to determine the significance and character of all inputs to their fair value determination. The levels of fair value inputs used to measure the Funds’ investments are characterized into a fair value hierarchy. The three levels of the fair value hierarchy are described below:

Level 1 — Quoted unadjusted prices for identical assets and liabilities in active markets to which the Funds have access at the date of measurement;

Level 2 — Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, but are valued based on executed trades, broker quotations that constitute an executable price, and alternative pricing sources supported by observable inputs which, in each case, are either directly or indirectly observable for the asset in connection with market data at the measurement date; and

Level 3 — Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. In certain cases, investments classified within Level 3 may include securities for which the Funds have obtained indicative quotes from broker-dealers that do not necessarily represent prices the broker may be willing to trade on, as such quotes can be subject to material management judgment. Unobservable inputs are those inputs that reflect the Funds’ own assumptions that market participants would use to price the asset or liability based on the best available information.

At the end of each reporting period, management evaluates the Level 2 and Level 3 assets, if any, for changes in liquidity, including but not limited to: whether a broker is willing to execute at the quoted price, the depth and consistency of prices from independent pricing services, and the existence of contemporaneous, observable trades in the market.

 

34  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

The valuation techniques used by the Funds to measure fair value at June 30, 2016, maximized the use of observable inputs and minimized the use of unobservable inputs. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Transfers into and out of the levels are recognized at the value at the end of the period. Summaries of the Funds’ investments categorized in the fair value hierarchy as of June 30, 2016, are as follows:

 

  Apollo Senior Floating Rate Fund Inc.                        
                     
  Assets   

Total Fair Value at
June 30,

2016

   Level 1
Quoted Price
   Level 2
Significant
Observable
Inputs
   Level 3
Significant
Unobservable
Inputs
   
                     

 

Cash and Cash Equivalents

       $  8,544,964          $8,544,964          $                —          $              —    

Senior Loans

       366,163,407                   336,416,042          29,747,365    

Corporate Notes and Bonds

       23,331,898                   23,331,898             

Common Stock

       50,310                            50,310    

Preferred Stock

       3,992,960                            3,992,960    

Warrants

                                     

Unrealized appreciation on Unfunded Loan Commitments

       1,016                   1,016             
    

 

 

      

 

 

      

 

 

      

 

 

   

Total Assets

       $402,084,555          $8,544,964          $359,748,956          $33,790,635    
    

 

 

      

 

 

      

 

 

      

 

 

   

The following is a reconciliation of Level 3 holdings for which significant unobservable inputs were used in determining fair value as of June 30, 2016:

 

  Apollo Senior Floating Rate Fund Inc.                                       
              
    

Total Fair

Value

    Senior Loans     Corporate
Notes
and Bonds
    Common
Stock
     Preferred
Stock
     Warrants  
              

Fair Value, beginning of period

   $ 36,863,012      $ 33,001,459      $         35,465      $       $ 3,826,088       $   

Purchases, including capitalized PIK

     5,441,974        5,441,974                                 

Sales

     (15,486,891     (15,486,891                              

Accretion/(amortization) of discounts/(premiums)

     273,324        273,324                                 

Net realized gain/(loss)

     (1,696,462     (1,696,462                              

Change in net unrealized appreciation/(depreciation)

     1,942,640        1,811,233        (35,465             166,872           

Transfers into Level 3

     19,043,799        18,993,489               50,310                   

Transfers out of Level 3

     (12,590,761     (12,590,761                              
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Fair Value, end of period

   $ 33,790,635      $ 29,747,365      $      $         50,310       $ 3,992,960       $             —   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Assets were transferred from Level 2 to Level 3 or from Level 3 to Level 2 as a result of changes in levels of liquid market observability when subject to various criteria as discussed previously. There were no transfers between Level 1 and Level 2 fair value measurement during the period shown. The net change in unrealized appreciation/(depreciation) attributable to Level 3 investments still held at June 30, 2016, was $198,916 for AFT.

 

Semi-Annual Report  |  35


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

The following table provides quantitative measures used to determine the fair values of the Level 3 investments as of June 30, 2016:

 

  Apollo Senior Floating Rate Fund Inc.                  
             
  Assets   

Fair Value at

June 30,

2016

     Valuation Technique(s)    Unobservable Input(s)   

Range of
Unobservable

Input(s) Utilized

       
             

Senior Loans

     $26,682,641      

Independent pricing service
and/or broker quotes

   Vendor and/or broker quotes      N/A     
     3,064,118      

Market comparable
approach(a)

   Total enterprise
value/EBITDA(a)
     6.75x     
     606      

Recoverability(b)

   Recovery %(b)      6.77%     

Corporate Notes and Bonds

          

Recoverability(b)

   Recovery %(b)      6.77%     

Common Stock

          

Market comparable
approach(a)

   Total enterprise
value/EBITDA(a)
     6.75x     
     50,310      

Independent pricing service
and/or broker quotes

   Vendor and/or
broker quotes
     N/A     

Preferred Stock

     3,992,960      

Discounted cash flow(c)

   Discount rate(c)      8.51%     
  

 

 

            

Total Fair Value

     $33,790,635              
  

 

 

            
             

 

(a)  The Fund utilized a market comparable approach to fair value this security. The significant unobservable inputs used in the valuation model were total enterprise value and earnings before interest, taxes, depreciation and amortization (“EBITDA”) based on comparable multiples for a similar investment with similar risks. Significant increases or decreases in either of these inputs in isolation may result in a significantly higher or lower fair value measurement.
(b)  The Fund utilized a recoverability approach to fair value this security, specifically a liquidation analysis. There are various, company-specific inputs used in the valuation analysis that relate to the liquidation value of the company’s assets, which were estimated by a third-party financial advisor as part of restructuring proceedings. The estimated fair value of the recoverable assets after deducting expenses was approximately 6.77% of the book value of the assets.
(c)  The Fund utilized a discounted cash flow model to fair value this security. The significant unobservable input used in the valuation model was the discount rate, which was determined based on the market rates an investor would expect for a similar investment with similar risks. The discount rate was applied to present value the projected cash flows in the valuation model. Significant increases in the discount rate may significantly lower the fair value of an investment; conversely, significant decreases in the discount rate may significantly increase the fair value of an investment.

 

  Apollo Tactical Income Fund Inc.                    
                   
  Assets   

Total Fair Value

at

June 30,

2016

   Level 1
Quoted Price
   Level 2
Significant
Observable
Inputs
  

Level 3
Significant

Unobservable

Inputs

                   

Cash and Cash Equivalents

       $  12,807,716          $12,807,716          $                —          $                —  

Senior Loans

       266,299,797                   232,185,873          34,113,924  

Corporate Notes and Bonds

       55,281,002                   55,281,002           

Structured Products

       36,023,261                   16,671,845          19,351,416  

Common Stock

       50,310                            50,310  

Preferred Stock

       3,992,960                            3,992,960  

Warrants

                                   

Unrealized appreciation on Unfunded Loan Commitments

       4,356                   1,016          3,340  
    

 

 

      

 

 

      

 

 

      

 

 

 

Total Assets

       $374,459,402          $12,807,716          $304,139,736          $57,511,950  
    

 

 

      

 

 

      

 

 

      

 

 

 
                   

 

36  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

The following is a reconciliation of Level 3 holdings for which significant unobservable inputs were used in determining fair value as of June 30, 2016:

 

  Apollo Tactical Income Fund Inc.                                        
                
    

Total Fair

Value

    Senior Loans    

Corporate

Notes
and Bonds

   

Structured

Products

   

Common

Stock

    

Preferred

Stock

     Unfunded
Loan
Commitments
 
                

Total Fair Value, beginning of period

   $ 61,610,980      $ 31,028,040      $ 2,833,003      $ 23,923,849      $       $ 3,826,088       $   

Purchases, including capitalized PIK

     4,376,576        4,376,576                                        

Sales

     (13,824,753     (9,601,853            (4,222,900                       

Accretion/(amortization) of discounts/ (premiums)

     299,207        246,265        (1,233     54,175                          

Net realized gain/(loss)

     (3,432,717     (1,540,709            (1,892,008                       

Change in net unrealized appreciation/ (depreciation)

     (1,280,779     953,806        (2,471,770     70,313                166,872           

Transfers into Level 3

     30,567,437        19,039,883               11,473,904        50,310                 3,340   

Transfers out of Level 3

     (20,804,001     (10,388,084     (360,000     (10,055,917                       
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Total Fair Value, end of period

   $ 57,511,950      $ 34,113,924      $      $ 19,351,416      $ 50,310       $ 3,992,960       $ 3,340   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Assets were transferred from Level 2 to Level 3 or from Level 3 to Level 2 as a result of changes in levels of liquid market observability when subject to various criteria as discussed previously. There were no transfers between Level 1 and Level 2 fair value measurement during the period shown. The net change in unrealized appreciation/(depreciation) attributable to Level 3 investments still held at June 30, 2016, was $(454,221) for AIF.

The following table provides quantitative measures used to determine the fair values of the Level 3 investments as of June 30, 2016:

 

  Apollo Tactical Income Fund Inc.                              
             

  Assets

 

  

Fair Value at
June 30,
2016

 

    

Valuation Technique(s)

 

  

Unobservable Input(s)

 

  

Range of
Unobservable
Input(s) Utilized

 

       
             

 

Senior Loans

  

 

$

 

  30,258,385

 

  

  

 

Independent pricing service
and/or broker quotes

  

 

Vendor and/or

broker quotes

  

 

 

 

N/A

 

  

 
     2,828,416      

Market comparable approach(a)

  

Total enterprise value/EBITDA(a)

     6.75x     
     2,788      

Recoverability(b)

  

Recovery %(b)

     6.77%     
     1,024,335      

Market comparable approach(c)

  

ERP Multiple(c)

     0.47x     

Corporate Notes and Bonds

          

Recoverability(b)

  

Recovery %(b)

     6.77%     

Structured Products

     19,351,416      

Independent pricing service
and/or broker quotes

  

Vendor and/or

broker quotes

     N/A     

Common Stock

          

Market comparable
approach(a)

  

Total enterprise value/EBITDA(a)

     6.75x     
     50,310      

Independent pricing service
and/or broker quotes

  

Vendor and/or

broker quotes

     N/A     

Preferred Stock

     3,992,960      

Discounted cash flow(d)

  

Discount rate(d)

     8.51%     

Unfunded Loan Commitments

     3,340      

Independent pricing service
and/or broker quotes

  

Vendor and/or

broker quotes

     N/A     
  

 

 

            

Total Fair Value

   $ 57,511,950              
  

 

 

            

 

(a)  The Fund utilized a market comparable approach to fair value this security. The significant unobservable inputs used in the valuation model were

 

Semi-Annual Report  |  37


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

 

total enterprise value and EBITDA based on comparable multiples for a similar investment with similar risks. Significant increases or decreases in either of these inputs in isolation may result in a significantly higher or lower fair value measurement.

(b)  The Fund utilized a recoverability approach to fair value this security, specifically a liquidation analysis. There are various, company-specific inputs used in the valuation analysis that relate to the liquidation value of the company’s assets, which were estimated by a third-party financial advisor as part of restructuring proceedings. The estimated fair value of the recoverable assets after deducting expenses was approximately 6.77% of the book value of the assets.
(c)  The Fund utilized a market comparable approach to fair value this security. The significant unobservable inputs used in the valuation model were total enterprise value and Estimated Remaining Proceeds (“ERP”) based on comparable multiples for a similar investment with similar risks. Significant increases or decreases in either of these inputs in isolation may result in a significantly higher or lower fair value measurement.
(d)  The Fund utilized a discounted cash flow model to fair value this security. The significant unobservable input used in the valuation model was the discount rate, which was determined based on the market rates an investor would expect for a similar investment with similar risks. The discount rate was applied to present value the projected cash flows in the valuation model. Significant increases in the discount rate may significantly lower the fair value of an investment; conversely, significant decreases in the discount rate may significantly increase the fair value of an investment.

Cash and Cash Equivalents

Cash and cash equivalents of the Funds consist of cash held in bank accounts and liquid investments with maturities, at the date of acquisition, not exceeding 90 days that, at times, may exceed federally insured limits. As of June 30, 2016, cash and cash equivalents were comprised of cash deposited with U.S. financial institutions in which carrying value approximated fair value and are considered to be Level 1 in the fair value hierarchy.

Industry Classifications

The industry classifications of the Funds’ investments, as presented in the accompanying Schedules of Investments, represent management’s belief as to the most meaningful presentation of the classification of such investments. For Fund compliance purposes, the Funds’ industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, with the primary source being Moody’s, and/or as defined by the Funds’ management. These definitions may not apply for purposes of this report, which may combine industry sub-classifications.

Fair Value of Financial Instruments

The fair value of the Funds’ assets and liabilities that qualify as financial instruments under U.S. GAAP approximates the carrying amounts presented in the accompanying Statements of Assets and Liabilities.

Securities Transactions and Investment Income

Securities transactions of the Funds are recorded on the trade date for financial reporting purposes. Cost is determined based on consideration given, and the unrealized appreciation/(depreciation) on investment securities is the difference between fair value determined in compliance with the valuation policy approved by the Board and the cost. Realized gains and losses from securities transactions and foreign currency transactions, if any, are recorded on the basis of identified cost and stated separately in the Statements of Operations. Interest and dividend income is recorded on the accrual basis and includes the accretion of original issue discounts and amortization of premiums where applicable using the effective interest rate method over the lives of the respective debt securities.

The Funds hold investments that have designated payment-in-kind (“PIK”) interest. PIK interest is included in interest income and reflected as a receivable in accrued interest up to the payment date. On payment dates, the Funds capitalize the accrued interest receivable as an additional investment and mark it at the fair value associated with the position.

U.S. Federal Income Tax Status

The Funds intend to qualify each year as regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and will distribute substantially all of their net investment income and net capital gains, if any, for their tax years. The Funds may elect to incur excise tax if it is deemed prudent by the Board from a cash management perspective or in the best interest of shareholders due to other facts and circumstances. For the year ended December 31, 2015, AFT and AIF did not record a U.S. federal excise tax provision. During 2016, excise tax of $2,581 was paid by AFT relating to the 2015 tax year, and excise tax of $347 was paid by AIF relating to the 2014 tax year. No federal income tax or excise tax provision is required for the six months ended June 30, 2016.

The Funds have followed the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Funds to determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Funds have determined that there was no material effect on the financial statements from following this authoritative guidance. In the

 

38  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

normal course of business, the Funds are subject to examination by federal, state and local jurisdictions, where applicable, for tax years for which applicable statutes of limitations have not expired. The statute of limitations on AFT’s federal and state tax filings remains open for the years ended December 31, 2012 to 2015. The statute of limitations on AIF’s federal and state fillings remains open for the years ended December 31, 2013 to 2015.

Distributions to Common Shareholders

The Funds intend to make regular monthly cash distributions of all or a portion of their net investment income available to common shareholders. The Funds intend to pay common shareholders at least annually all or substantially all of their capital gains and net investment income after the payment of dividends and interest owed with respect to outstanding preferred shares and/or notes or other forms of leverage utilized by the Funds, although for cash management purposes, the Funds may elect to retain distributable amounts and pay excise tax as described above. If the Funds make a long-term capital gain distribution, they will be required to allocate such gain between the common shares and any preferred shares issued by the Funds in proportion to the total dividends paid to each class for the year in which the income is realized.

The distributions for any full or partial year might not be made in equal amounts, and one distribution may be larger than the other. The Funds will make a distribution only if authorized by the Board and declared by the Funds out of assets legally available for these distributions. The Funds may pay a special distribution at the end of each calendar year, if necessary, to comply with U.S. federal income tax requirements. This distribution policy may, under certain circumstances, have certain adverse consequences to the Funds and their shareholders because it may result in a return of capital to shareholders, which would reduce the Funds’ NAV and, over time, potentially increase the Funds’ expense ratios. If the Funds distribute a return of capital, it means that the Funds are returning to shareholders a portion of their investment rather than making a distribution that is funded from the Funds’ earned income or other profits. The Board may elect to change AFT’s or AIF’s distribution policy at any time.

Asset Segregation

In accordance with the Investment Company Act and various SEC and SEC staff interpretive positions, a Fund may “set aside” liquid assets (often referred to as “asset segregation”), or engage in measures in accordance with SEC or Staff guidance, to “cover” open positions with respect to certain kinds of financial instruments that could otherwise be considered “senior securities” as defined in Section 18(g) of the Investment Company Act. With respect to certain derivative contracts that are contractually required to cash settle, for example, a Fund is permitted to set aside liquid assets in an amount equal to the Fund’s daily marked-to-market net obligations (i.e., the Fund’s daily net liability) under the contracts, if any, rather than such contracts’ full notional value. In other circumstances, a Fund may be required to set aside liquid assets equal to such a financial instrument’s full notional value, or enter into appropriate offsetting transactions, while the position is open. Each Fund reserves the right to modify its asset segregation policies in the future to comply with any changes in the positions from time to time announced by the SEC or its staff regarding asset segregation. These segregation and coverage requirements could result in a Fund maintaining securities positions that it would otherwise liquidate, segregating assets at a time when it might be disadvantageous to do so or otherwise restricting portfolio management. Such segregation and coverage requirements will not limit or offset losses on related positions.

Note 3. Investment Advisory, Administration and Other Agreements with Affiliates

Investment Advisory Fee

The Adviser provides certain investment advisory, management and administrative services to the Funds pursuant to investment advisory and management agreements with each of the Funds. For its services, each Fund pays the Adviser monthly at the annual rate of 1.0% of the average daily value of the Fund’s managed assets. Managed assets are defined as the total assets of a Fund (including any assets attributable to any preferred shares that may be issued or to money borrowed or notes issued by the Fund) minus the sum of the Fund’s accrued liabilities, including accrued interest and accumulated dividends (other than liabilities for money borrowed (including the liquidation preference of preferred shares) or notes issued). The Adviser may elect from time to time, in its sole discretion, to waive its receipt of the advisory fee from a Fund. If the Adviser elects to waive its compensation, such action may have a positive effect on the Fund’s performance or yield. The Adviser is under no obligation to waive its fees, may elect not to do so, may decide to waive its compensation periodically or may decide to waive its compensation on only one of the Funds at any given time. For the six months ended June 30, 2016, the Adviser earned fees of $2,041,898 and $1,816,357 from AFT and AIF, respectively.

Administrative Services and Expense Reimbursements

The Funds and the Adviser have entered into Administrative Services and Expense Reimbursement Agreements pursuant to which the Adviser provides certain administrative services, personnel and facilities to the Funds and performs operational services necessary for the operation of the Funds not otherwise provided by other service providers of the Funds.

 

Semi-Annual Report  |  39


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

These services may include, without limitation, certain bookkeeping and recordkeeping services, compliance and legal services, investor relations assistance, and accounting and auditing support. Pursuant to these agreements, the Funds will reimburse the Adviser at cost, at the Adviser’s request, for certain costs and expenses incurred by the Adviser that are necessary for the administration and operation of the Funds. In addition, the Adviser or one of its affiliates may pay certain expenses on behalf of the Funds and then allocate these expenses to the Funds for reimbursement. For the six months ended June 30, 2016, the Adviser provided services under these agreements totaling $301,788 and $289,606 for AFT and AIF, respectively, which is shown in the Statements of Operations as administrative services of the Adviser. Included in these amounts is approximately $41,000 and $41,000 for AFT and AIF, respectively, of remuneration for officers of the Funds. The Adviser did not waive the right to expense reimbursements and investment advisory fees for either Fund during the six months ended June 30, 2016.

Each Fund has also entered into an Administration and Accounting Services Agreement (the “Administration Agreements”) with BNY Mellon Investment Servicing (US) Inc. (“BNYMIS”). Under the Administration Agreements, BNYMIS provides certain administrative services necessary for the operation of the Funds, including maintaining the Funds’ books and records, providing accounting services and preparing regulatory filings. The Funds pay BNYMIS for these services. The Bank of New York Mellon (“BNY Mellon”) serves as the Funds’ custodian. BNYMIS serves as the Funds’ transfer agent. BNY Mellon and BNYMIS provided services totaling $131,215 and $126,078 for AFT and AIF, respectively, for the six months ended June 30, 2016, which are included in fund administration and accounting services in the Statements of Operations.

Board of Directors Fees

Effective January 1, 2016, on an annual basis, AFT and AIF pay each member of the Board who is not an “interested person” (as defined in the Investment Company Act) of the Funds an annual retainer of $16,000 per Fund, plus $2,000 for each in-person Board meeting of a single Fund ($3,000, or $1,500 per Fund, for a joint meeting of both Funds), plus $1,000 for attendance at telephonic board meetings of a single Fund or participation in special committee meetings of a single Fund not held in conjunction with regularly scheduled Board meetings ($1,500, or $750 per Fund, for a joint meeting of both Funds). In addition, the chairman of the audit committee receives $5,000 per year from each Fund. The Funds also reimbursed independent Board members for travel and out-of-pocket expenses incurred in connection with such meetings, and the Funds split the cost of such expenses for meetings involving both AFT and AIF. Included in the Statements of Operations in Board of Directors fees for the six months ended June 30, 2016, is $53,691 and $54,132 of expenses related to the Board for each of AFT and AIF, respectively.

Note 4. Investment Transactions

For the six months ended June 30, 2016, the cost of investment purchases and proceeds from sales of securities and principal paydowns were as follows:

 

  Fund    Purchases      Sales  
     

Apollo Senior Floating Rate Fund Inc.

   $ 240,381,622       $ 258,992,931   

Apollo Tactical Income Fund Inc.

 

    

 

210,030,630

 

  

 

    

 

212,332,277

 

  

 

Note 5. Risks

Senior Loans

Senior Loans are usually rated below investment grade and may also be unrated. As a result, the risks associated with Senior Loans are similar to the risks of below investment grade fixed income instruments, although Senior Loans are senior and secured, in contrast to other below investment grade fixed income instruments, which are often subordinated or unsecured. Investments in Senior Loans rated below investment grade are considered speculative because of the credit risk of their issuers. Such issuers are considered more likely than investment grade issuers to default on their payments of interest and principal owed to the Funds, and such defaults could reduce the Funds’ NAV and income distributions. An economic downturn would generally lead to a higher non-payment rate, and a Senior Loan may lose significant market value before a default occurs. Moreover, any specific collateral used to secure a Senior Loan may decline in value or become illiquid, which would adversely affect the Senior Loan’s value. Senior Loans are subject to a number of risks, including liquidity risk and the risk of investing in below investment grade fixed income instruments.

Senior Loans are subject to the risk of non-payment of scheduled interest or principal. Such non-payment would result in a reduction of income to the Funds, a reduction in the value of the investment and a potential decrease in the NAV of the Funds. There can be no assurance that the liquidation of any collateral securing a Senior Loan would satisfy the Borrower’s obligation in the event of non-payment of scheduled interest or principal payments, or that the collateral could be

 

40  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

readily liquidated. In the event of bankruptcy or insolvency of a Borrower, the Funds could experience delays or limitations with respect to their ability to realize the benefits of the collateral securing a Senior Loan. The collateral securing a Senior Loan may lose all or substantially all of its value in the event of the bankruptcy or insolvency of a Borrower. Some Senior Loans are subject to the risk that a court, pursuant to fraudulent conveyance or other similar laws, could subordinate such Senior Loans to presently existing or future indebtedness of the Borrower or take other action detrimental to the holders of Senior Loans including, in certain circumstances, invalidating such Senior Loans or causing interest previously paid to be refunded to the Borrower.

There may be less readily available and reliable information about most Senior Loans than is the case for many other types of securities, including securities issued in transactions registered under the Securities Act of 1933 (the “1933 Act”) or registered under the Securities Exchange Act of 1934. As a result, the Adviser will rely primarily on its own evaluation of a Borrower’s credit quality, rather than on any available independent sources. Therefore, the Funds will be particularly dependent on the analytical abilities of the Adviser.

In general, the secondary trading market for Senior Loans is not well developed. No active trading market may exist for certain Senior Loans, which may make it difficult to value them. Illiquidity and adverse market conditions may mean that the Funds may not be able to sell Senior Loans quickly or at a fair price. To the extent that a secondary market does exist for certain Senior Loans, the market for them may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.

Senior Loans are generally not registered under the 1933 Act and often contain certain restrictions on resale and cannot be sold publicly. Senior Loans often require prepayments from excess cash flow or permit the Borrower to repay at its election. The degree to which Borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual maturity may be substantially less than the stated maturity shown on the Schedule of Investments.

The Funds may acquire Senior Loans through assignments or participations. The purchaser of an assignment typically succeeds to all the rights and obligations of the assigning institution and becomes a lender under the credit agreement with respect to the debt obligation; however, the purchaser’s rights can be more restricted than those of the assigning institution, and the Funds may not be able to unilaterally enforce all rights and remedies under the loan and with regard to any associated collateral. In general, a participation is a contractual relationship only with the institution participating out the interest, not with the Borrower. Sellers of participations typically include banks, broker-dealers and other financial and lending institutions. In purchasing participations, the Funds generally will have no right to enforce compliance by the Borrower with the terms of the loan agreement against the Borrower, and the Funds may not directly benefit from the collateral supporting the debt obligation in which they have purchased the participation. As a result, the Funds will be exposed to the credit risk of both the Borrower and the institution selling the participation. Further, in purchasing participations in lending syndicates, the Funds will not be able to conduct the due diligence on the Borrower or the quality of the Senior Loan with respect to which they are buying a participation that the Funds would otherwise conduct if they were investing directly in the Senior Loan, which may result in the Funds being exposed to greater credit or fraud risk with respect to the Borrower or the Senior Loan.

Corporate Bonds

The Funds may invest in a wide variety of bonds of varying maturities issued by U.S. and foreign corporations, other business entities, governments and municipalities and other issuers. Corporate bonds are issued with varying features and may differ in the way that interest is calculated, the amount and frequency of payments, the type of collateral, if any, and the presence of special features (e.g., conversion rights, call rights or other rights of the issuer). The Funds’ investments in corporate bonds may include, but are not limited to, senior, junior, secured and unsecured bonds, notes and other debt securities, and may be fixed rate, variable rate or floating rate, among other things.

The Adviser expects most of the corporate bonds in which the Funds invest will be high yield bonds (commonly referred to as “junk” bonds). An issuer of corporate bonds typically pays the investor a fixed rate of interest and must repay the amount borrowed on or before maturity. The investment return of corporate bonds reflects interest on the security and changes in the market value of the security. The market value of a corporate bond generally may be expected to rise and fall inversely with interest rates. The value of intermediate and longer-term corporate bonds normally fluctuates more in response to changes in interest rates than does the value of shorter-term corporate bonds. The market value of a corporate bond also may be affected by investors’ perceptions of the creditworthiness of the issuer, the issuer’s performance and perceptions of the issuer in the marketplace.

 

Semi-Annual Report  |  41


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

Subordinated Loans

Subordinated loans generally are subject to similar risks as those associated with investments in Senior Loans, except that such loans are subordinated in payment and/or lower in lien priority to first lien holders. In the event of default on a subordinated loan, the first priority lien holder has first claim to the underlying collateral of the loan. Subordinated loans are subject to the additional risk that the cash flow of the Borrower and property securing the loan or debt, if any, may be insufficient to meet scheduled payments after giving effect to the senior unsecured or senior secured obligations of the Borrower. This risk is generally higher for subordinated unsecured loans or debt that are not backed by a security interest in any specific collateral. Subordinated loans generally have greater price volatility than Senior Loans and may be less liquid.

Structured Products

Investments in structured products involve risks, including credit risk and market risk. When the Funds’ investments in structured products (such as CDOs, CLOs and asset-backed securities) are based upon the movement of one or more factors, including currency exchange rates, interest rates, reference bonds (or loans) or stock indices, depending on the factor used and the use of multipliers or deflators, changes in interest rates and movement of any factor may cause significant price fluctuations. Additionally, changes in the reference instrument or security may cause the interest rate on a structured product to be reduced to zero and any further changes in the reference instrument may then reduce the principal amount payable on maturity of the structured product. Structured products may be less liquid than other types of securities and more volatile than the reference instrument or security underlying the product.

The Funds may have the right to receive payments only from the structured product and generally do not have direct rights against the issuer or the entity that sold the assets to be securitized. While certain structured products enable the investor to acquire interests in a pool of securities without the brokerage and other expenses associated with directly holding the same securities, investors in structured products generally pay their share of the structured product’s administrative and other expenses. Although it is difficult to predict whether the prices of indices and securities underlying structured products will rise or fall, these prices (and, therefore, the prices of structured products) will be influenced by the same types of political and economic events that generally affect issuers of securities and capital markets. If the issuer of a structured product uses shorter-term financing to purchase longer-term securities, the issuer may be forced to sell its securities at below market prices if it experiences difficulty in obtaining short-term financing, which may adversely affect the value of the structured products owned by the Funds.

Certain structured products may be thinly traded or have a limited trading market. CLOs are typically privately offered and sold. As a result, investments in CLOs may be characterized by the Funds as illiquid securities. CLOs carry additional risks, including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments, (ii) the quality of the collateral may decline in value or default, (iii) the possibility that the investments in CLOs are subordinate to other classes or tranches of the CLOs and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results.

Brexit Risk

In a referendum held on June 23, 2016, citizens of the United Kingdom voted to leave the European Union (the “EU”), creating economic and political uncertainty in its wake. Consequently, the United Kingdom government may, pursuant to the Treaty of Lisbon (the “Treaty”), give notice of its withdrawal and enter into negotiations with the EU Council to agree to terms for the United Kingdom’s withdrawal from the EU. The Treaty provides for a two-year negotiation period, which may be shortened or extended by agreement of the parties. During, and possibly after, this period there is likely to be considerable uncertainty as to the position of the United Kingdom and the arrangements that will apply to its relationships with the EU and other countries following its anticipated withdrawal. This uncertainty may affect other countries in the EU, or elsewhere, if they are considered to be impacted by these events.

The United Kingdom has one of the largest economies in Europe, and member countries of the EU are substantial trading partners of the United Kingdom. The City of London’s economy is dominated by financial services, some of which may have to move outside of the United Kingdom post-referendum (e.g., currency trading, international settlement). Under the referendum, banks may be forced to move staff and comply with two separate sets of rules or lose business to banks in Europe. Furthermore, the referendum creates the potential for decreased trade, the possibility of capital outflows, devaluation of the pound sterling, the cost of higher corporate bond spreads due to uncertainty, and the risk that all the above could damage business and consumer spending as well as foreign direct investment. As a result of the referendum, the British economy and its currency may be negatively impacted by changes to its economic and political relations with the EU.

 

42  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

The impact of the referendum in the near- and long-term is still unknown and could have additional adverse effects on economies, financial markets and asset valuations around the world.

Note 6. Common Shares

Common share transactions were as follows:

 

  Apollo Senior Floating Rate Fund Inc.                                 
            
     Six Months Ended June 30,           Year Ended December 31,  
     2016           2015  
            
     Shares      Amount           Shares      Amount  
            

Common shares outstanding, beginning of period

     15,573,061       $ 296,704,310          15,573,061       $ 296,705,488   

Common shares issued as reinvestment of dividends

                                

Permanent differences reclassified (primarily non-deductible expenses)

             (2,581               (1,178
  

 

 

    

 

 

     

 

 

    

 

 

 

Common shares outstanding, end of period

     15,573,061       $ 296,701,729          15,573,061       $ 296,704,310   
  

 

 

    

 

 

     

 

 

    

 

 

 

 

  Apollo Tactical Income Fund Inc.                                 
            
     Six Months Ended June 30,           Year Ended December 31,  
     2016           2015  
            
     Shares      Amount           Shares      Amount  
            

Common shares outstanding, beginning of period

     14,464,026       $ 275,624,904          14,464,026       $ 275,625,794   

Common shares issued as reinvestment of dividends

                                

Permanent differences reclassified (primarily non-deductible expenses)

             (347               (890
  

 

 

    

 

 

     

 

 

    

 

 

 

Common shares outstanding, end of period

     14,464,026       $ 275,624,557          14,464,026       $ 275,624,904   
  

 

 

    

 

 

     

 

 

    

 

 

 

Dividends declared on common shares with a record date of January 1, 2016, or later through the date of this report were as follows:

 

  Apollo Senior Floating Rate Fund Inc.                                      
             
                                        Value of new   
  Dividend                     Per                 Common  
  Declaration   Ex-Dividend     Record     Payment     Share     Gross     Cash     Shares  
  Date   Date     Date     Date     Amount     Distribution     Distribution     Issued  
             

December 23, 2015

    January 14, 2016        January 19, 2016        January 29, 2016        $0.0977        $1,521,488        $1,521,488          

January 29, 2016

    February 12, 2016        February 17, 2016        February 29, 2016        $0.0900        $1,401,575        $1,401,575          

February 24, 2016

    March 16, 2016        March 18, 2016        March 31, 2016        $0.0900        $1,401,575        $1,401,575          

March 24, 2016

    April 15, 2016        April 19, 2016        April 29, 2016        $0.0900        $1,401,575        $1,401,575          

April 28, 2016

    May 16, 2016        May 18, 2016        May 31, 2016        $0.0900        $1,401,575        $1,401,575          

May 20, 2016

    June 16, 2016        June 20, 2016        June 30, 2016        $0.0900        $1,401,575        $1,401,575          

June 27, 2016

    July 15, 2016        July 19, 2016        July 29, 2016        $0.0900        $1,401,575        $1,401,575          

July 29, 2016*

    August 17, 2016        August 19, 2016        August 31, 2016        $0.0900        $1,401,575       

August 17, 2016*

    September 16, 2016        September 20, 2016        September 30, 2016        $0.0900         

* Declared subsequent to June 30, 2016.

 

  

         

 

Semi-Annual Report  |  43


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

  Apollo Tactical Income Fund Inc.                                      
             
                                        Value of new   
  Dividend                     Per                 Common  
  Declaration   Ex-Dividend     Record     Payment     Share     Gross     Cash     Shares  
  Date   Date     Date     Date     Amount     Distribution     Distribution     Issued  
             

December 23, 2015

    January 14, 2016        January 19, 2016        January 29, 2016        $0.1170        $1,692,291        $1,692,291          

January 29, 2016

    February 12, 2016        February 17, 2016        February 29, 2016        $0.1170        $1,692,291        $1,692,291          

February 24, 2016

    March 16, 2016        March 18, 2016        March 31, 2016        $0.1170        $1,692,291        $1,692,291          

March 24, 2016

    April 15, 2016        April 19, 2016        April 29, 2016        $0.1170        $1,692,291        $1,692,291          

April 28, 2016

    May 16, 2016        May 18, 2016        May 31, 2016        $0.1170        $1,692,291        $1,692,291          

May 20, 2016

    June 16, 2016        June 20, 2016        June 30, 2016        $0.1170        $1,692,291        $1,692,291          

June 27, 2016

    July 15, 2016        July 19, 2016        July 29, 2016        $0.1170        $1,692,291        $1,692,291          

July 29, 2016*

    August 17, 2016        August 19, 2016        August 31, 2016        $0.1170        $1,692,291       

August 17, 2016*

    September 16, 2016        September 20, 2016        September 30, 2016        $0.1170         

* Declared subsequent to June 30, 2016.

 

  

         

Note 7. Federal Tax Information

The timing and character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from U.S. GAAP. As a result, net investment income/(loss) and net realized gain/(loss) on investment transactions for a reporting period may differ significantly from distributions during such period.

The tax character of distributions paid by AFT during the fiscal year ended December 31, 2015, was as follows:

 

  Apollo Senior Floating Rate Fund Inc.      
 
  Distributions paid from Ordinary Income: *   2015  
 

Common Shareholders

  $ 19,103,474   

Preferred Shareholders

      
 

 

 

 

Total Distributions

  $ 19,103,474   
 

 

 

 

* For tax purposes, short-term capital gains distributions, if any, are considered ordinary income distributions.

The tax character of distributions paid by AIF during the fiscal year ended December 31, 2015, was as follows:

 

  Apollo Tactical Income Fund Inc.       
  
  Distributions paid from Ordinary Income: *    2015  
  

Common Shareholders

   $ 22,401,648   
  

 

 

 

Total Distributions

   $ 22,401,648   
  

 

 

 

* For tax purposes, short-term capital gains distributions, if any, are considered ordinary income distributions.

 

  Distributions paid from Long-Term Gains:    2015  
  

Common Shareholders

   $ 128,957   
  

 

 

 

Total Distributions

   $ 128,957   
  

 

 

 

As of December 31, 2015, the most recent tax year end, the components of distributable earnings on a tax basis were as follows:

 

  Fund    Undistributed
Ordinary
Income
   Undistributed
Long-Term
Capital
Gains
   Net
Unrealized
Appreciation/
(Depreciation)*
  Accumulated 
Capital and  
Other Losses 
                  

Apollo Senior Floating Rate Fund Inc.

     $ 584,808        $        $ (26,167,872 )     $ (7,683,208)    

Apollo Tactical Income Fund Inc.

       465,451                   (41,227,989 )       (3,867,155)    

* Any differences between book basis and tax basis net unrealized appreciation/(depreciation) are primarily due to the deferral of losses from wash sales and defaulted security interest adjustments.

 

44  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

For federal income tax purposes, capital loss carryforwards are available to offset future capital gains. As of December 31, 2015, long-term capital loss carryforwards totaled $7,683,208 for AFT and $3,867,155 for AIF, which may be carried forward for an unlimited period.

Unrealized appreciation/(depreciation) and basis of investments for U.S. federal income tax purposes at June 30, 2016, were as follows:

 

     Apollo Senior
Floating Rate
Fund Inc.
   

Apollo
Tactical
Income

Fund Inc.

 
    

Federal tax basis, cost

   $ 405,954,907      $ 391,327,232   
  

 

 

   

 

 

 

Unrealized appreciation

   $ 2,607,720      $ 3,562,940   

Unrealized depreciation

     (15,024,052     (33,242,842
  

 

 

   

 

 

 

Net unrealized appreciation/(depreciation)*

   $ (12,416,332   $ (29,679,902
  

 

 

   

 

 

 

* Any differences between book basis and tax basis net unrealized appreciation/(depreciation) are primarily due to the deferral of losses from wash sales.

Note 8. Credit Agreements and Preferred Shares

The Funds utilize leverage and may utilize leverage to the maximum extent permitted by law for investment and other general corporate purposes. The Funds may obtain leverage by issuing preferred shares and/or notes and may also borrow funds from banks and other financial institutions. The Funds may also gain leverage synthetically through swaps and other derivatives. The use of leverage to purchase additional securities creates an opportunity for increased common share dividends, but also creates risks for common shareholders, including increased variability of the Funds’ net income, distributions and/or NAV in relation to market changes. Leverage is a speculative technique that exposes the Funds to greater risk and increased costs than if it were not implemented. Increases and decreases in the value of the Funds’ portfolios will be magnified due to the use of leverage. In particular, leverage may magnify interest rate risk, which is the risk that the prices of portfolio securities will fall (or rise) if market interest rates for those types of securities rise (or fall). As a result, leverage may cause greater changes in the Funds’ NAV, which will be borne entirely by the Funds’ common shareholders. If the Funds issue preferred shares and/or notes or engage in other borrowings, they will have to pay dividends on their shares or interest on their notes or borrowings, which will increase expenses and may reduce the Funds’ return. These dividend payments or interest expenses (which will be borne entirely by the common shareholders) may be greater than the Funds’ return on the underlying investments. The Funds’ leveraging strategy may not be successful.

Apollo Senior Floating Rate Fund Inc.

On May 11, 2016, AFT entered into a $150,000,000 credit facility (the “New Credit Facility”) with Sumitomo Mitsui Banking Corporation (“SMBC”) as lender. Under the terms of the New Credit Facility, AFT may borrow a single term loan not to exceed $112,500,000 (the “Term Loan”) and may borrow up to an additional $37,500,000 on a revolving basis (the “Revolving Loans”). AFT has granted a security interest in substantially all of its assets in the event of default under the New Credit Facility. AFT may borrow on a revolving basis until May 11, 2019. Any loans outstanding under the New Credit Facility must be repaid in full on May 11, 2019. The Fund will pay SMBC a quarterly commitment fee equal to 0.15% per annum on the average daily amount of available commitments. As of June 30, 2016, $14,750,000 of the available revolving credit remains undrawn. As of June 30, 2016, AFT has $135,250,000 principal outstanding under the New Credit Facility, which is comprised of a Term Loan of $112,500,000 and a Revolving Loan of $22,750,000, both of which bear interest at a rate of three-month LIBOR plus 1.05%.

Prior to May 11, 2016, AFT had a credit facility with JPMorgan Chase Bank, N.A. (“JPM”) as lender and administrative agent. The loan under the credit facility was to be repaid in full no later than May 15, 2016. On May 11, 2016, AFT repaid the outstanding loan balance of $149,269,000 and terminated the credit facility with JPM.

For the six months ended June 30, 2016, the average daily principal loan balance outstanding on days where borrowings existed was approximately $145,341,000, the weighted average annual interest rate was 1.74% and the interest expense, which is included on the Statements of Operations in interest expense, was $1,271,179.

The fair value of AFT’s borrowings under the New Credit Facility approximates the carrying amount presented in the accompanying Statements of Assets and Liabilities based on a yield analysis and remaining maturities for which AFT has determined would be categorized as Level 2 in the fair-value hierarchy.

 

Semi-Annual Report  |  45


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

The New Credit Facility contains certain customary affirmative and negative covenants, including limitations on debt, liens and restricted payments, as well as certain portfolio limitations and customary prepayment provisions, including a requirement to prepay loans or take certain other actions if certain asset value tests are not met. As of June 30, 2016, AFT was not aware of any instances of non-compliance related to the New Credit Facility.

In connection with AFT’s entry into the New Credit Facility, certain debt financing costs were incurred by AFT and are shown net of the principal amount in the Statements of Assets and Liabilities. The deferred financing costs are amortized over the life of the credit facility. The amortization of the deferred financing costs is included in the Statements of Operations.

Apollo Tactical Income Fund Inc.

On April 22, 2016, AIF entered into a $138,000,000 revolving credit facility with JPM as lender and administrative agent. AIF has granted a security interest in substantially all of its assets in the event of default under the credit facility. AIF may borrow on a revolving basis until April 21, 2017. Any loans outstanding under the credit facility must be repaid in full on April 21, 2017. The loans bear interest at a rate of three-month LIBOR plus 1.00%. As of June 30, 2016, AIF has $138,000,000 principal outstanding, which is the maximum commitment amount under the credit facility.

Prior to April 22, 2016, AIF had a $138,000,000 revolving credit facility with JPM as lender and administrative agent that expired on April 22, 2016. The loans bore interest at a rate of three-month LIBOR plus 1.00%.

For the six months ended June 30, 2016, the average daily principal loan balance outstanding on days where borrowings existed was $138,000,000, the weighted average annual interest rate was 1.60% and the interest expense, which is included on the Statements of Operations in interest expense, was $1,120,291.

The fair value of AIF’s borrowings under the credit facility approximates the carrying amount presented in the accompanying Statements of Assets and Liabilities based on a yield analysis and remaining maturities for which AIF has determined would be categorized as Level 2 in the fair-value hierarchy.

The credit facility contains certain customary affirmative and negative covenants, including limitations on debt, liens and restricted payments, as well as certain portfolio limitations and customary prepayment provisions, including a requirement to prepay loans or take certain other actions if certain asset value tests are not met. As of June 30, 2016, AIF was not aware of any instances of non-compliance related to the credit facility.

In connection with AIF’s entry into the credit facility, certain debt financing costs were incurred by AIF and are shown net of the principal amount in the Statements of Assets and Liabilities. The deferred financing costs are amortized over the life of the credit facility. The amortization of the deferred financing costs is included in the Statements of Operations.

Note 9. General Commitments and Contingencies

As of June 30, 2016, the Funds had unfunded loan commitments outstanding, which could be extended at the option of the borrower, as detailed below:

 

     Borrower    AFT      AIF  
   The Chefs’ Warehouse, Inc.    $ 135,532       $ 135,532   
   Mitel Networks Corp.*      5,700,000         5,240,000   
   SquareTwo Financial Corp.**         173,034   
     

 

 

    

 

 

 
   Total unfunded loan commitments    $ 5,835,532       $ 5,548,566   
     

 

 

    

 

 

 

 

* The loan commitment for Mitel Networks bridge loan was subsequently cancelled on July 8, 2016.
** Square Two Financial Corp. was held in AIF only.

Unfunded loan commitments are marked to market on the relevant day of the valuation in accordance with the Funds’ valuation policies. Any related unrealized appreciation/(depreciation) on unfunded loan commitments is recorded on the Statements of Assets and Liabilities and the Statements of Operations. For the six months ended June 30, 2016, AFT and AIF recorded a net change in unrealized appreciation on unfunded transactions totaling $1,016 and $4,356, respectively.

 

46  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

June 30, 2016 (unaudited)

 

Note 10. Indemnification

The Funds each have a variety of indemnification obligations under contracts with their service providers. The Funds’ maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. Based upon historical experience, the risk of loss from such claims is currently considered remote; however, there can be no assurance that losses will not occur or if claims are made against the Funds the losses will not be material.

Note 11. Subsequent Event

Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events that would require disclosure in or adjustments to the financial statements.

 

Semi-Annual Report  |  47


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Additional Information

June 30, 2016 (unaudited)

Dividend Reinvestment Plan

Unless a shareholder specifically elects to receive common stock of the Funds as set forth below, all net investment income dividends and all capital gains distributions declared by the Board will be payable in cash.

A shareholder may elect to have net investment income dividends and capital gains distributions reinvested in common stock of the Funds. To exercise this option, such shareholder must notify BNYMIS, the plan administrator and the Funds’ transfer agent and registrar, in writing so that such notice is received by the plan administrator not less than 10 days prior to the record date fixed by the Board for the net investment income dividend and/or capital gains distribution involved.

The plan administrator will set up an account for shares acquired pursuant to the plan for each shareholder that elects to receive dividends and distributions in additional shares of common stock of the Funds (each a “Participant”). The plan administrator may hold each Participant’s shares, together with the shares of other Participants, in non-certificated form in the plan administrator’s name or that of its nominee.

The shares are acquired by the plan administrator for a participant’s account, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized shares of common stock from the Funds (“Newly Issued Shares”) or (ii) by purchase of outstanding shares of common stock on the open market (“Open-Market Purchases”) on the NYSE or elsewhere. If, on the dividend payment date, the NAV per share of the common stock is equal to or less than the market price per share of the common stock plus estimated brokerage commissions (such condition being referred to as “market premium”), the plan administrator will invest the dividend amount in Newly Issued Shares on behalf of the Participant. The number of Newly Issued Shares of common stock to be credited to the Participant’s account will be determined by dividing the dollar amount of the dividend by the NAV per share on the date the shares are issued, unless the NAV is less than 95% of the then current market price per share, in which case the dollar amount of the dividend will be divided by 95% of the then current market price per share. If, on the dividend payment date, the NAV per share is greater than the market value (such condition being referred to as “market discount”), the plan administrator will invest the dividend amount in shares acquired on behalf of the Participant in Open-Market Purchases.

The plan administrator’s service fee, if any, and expenses for administering the plan will be paid for by the Funds. If a Participant elects by written notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the Participant’s account and remit the proceeds to the Participant, the plan administrator is authorized to deduct a $15 transaction fee plus a 5¢ per share brokerage commission from the proceeds.

Shareholders who receive dividends in the form of stock are subject to the same federal, state and local tax consequences as are shareholders who elect to receive their dividends in cash. A shareholder’s basis for determining gain or loss upon the sale of stock received in a dividend from the Funds will be equal to the total dollar amount of the dividend payable to the shareholders. Any stock received in a dividend will have a new holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. shareholder’s account.

Participants may terminate their accounts under the plan by notifying the plan administrator via its website at bnymellon.com/shareowner, by filling out the transaction request form located at the bottom of the Participant’s statement and sending it to the plan administrator at P.O. Box 30170, College Station, TX 77842 or by calling the plan administrator at 800-331-1710.

The plan may be terminated by the Funds upon notice in writing mailed to each Participant at least 30 days prior to any record date for the payment of any dividend or distribution by the Funds. All correspondence, including requests for additional information, concerning the plan should be directed to the plan administrator by mail at P.O. Box 30170, College Station, TX 77842.

 

48  |  Semi-Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Additional Information (continued)

June 30, 2016 (unaudited)

 

Approval of the Investment Advisory and Management Agreements for AFT and AIF

At a meeting of the Boards of Directors (together, the “Board” or the “Directors”) of Apollo Senior Floating Rate Fund Inc. (“AFT”) and Apollo Tactical Income Fund Inc. (“AIF”) (each, a “Fund” and together, the “Funds”) held on February 23, 2016, the Directors met in person to consider the approval of the Investment Advisory and Management Agreement between AFT and Apollo Credit Management, LLC (the “Adviser”) and the Investment Advisory and Management Agreement between AIF and the Adviser (each, an “Advisory Agreement” and together, the “Advisory Agreements”) for an additional one-year term. While the meetings occurred at the same time, the Directors considered each Advisory Agreement separately.

The Board has the responsibility under the Investment Company Act of 1940, as amended (the “1940 Act”), to approve annual renewal of each Fund’s Advisory Agreement at meetings of the Board called for the purpose of voting on such renewal. The Board generally receives, reviews and evaluates information concerning the services and personnel of the Adviser and its affiliates at quarterly meetings of the Board. While particular emphasis might be placed on information concerning the investment performance of each Fund, each Fund’s fees and expenses in comparison with other funds’ fees and expenses and the Adviser’s profitability at the meeting at which the renewal of the Advisory Agreements is considered, the process of evaluating each Fund’s investment advisory and management arrangements is an ongoing one.

In preparation for their review of the Advisory Agreements, all of the Directors who are not “interested persons,” as defined in the 1940 Act (the “Independent Directors”), of the Funds present at the meeting met with their independent counsel in an executive session. In considering whether to approve the Advisory Agreements, the Directors, including the Independent Directors, reviewed materials provided in advance of the meeting by the Adviser and counsel to the Independent Directors and other materials which included, among other things: (i) information concerning the services rendered to each Fund by the Adviser; (ii) information concerning the revenues generated and expenses incurred by the Adviser from the operation of each Fund; and (iii) a memorandum outlining the legal duties of the Board under the 1940 Act. The Board also reviewed information prepared by Strategic Insight, a third party service provider, which included information in respect of each Fund comparing (1) the Fund’s performance with that of a group of comparable funds selected by Strategic Insight (the “Peer Group”) and with a broader group of funds (the “Morningstar Category”) and (2) the Fund’s contractual and net management fees and total net expenses with those of its Peer Group and Morningstar Category.

Counsel to the Independent Directors discussed the factors outlined by the federal courts as relevant to a board’s consideration of the approval of an investment advisory agreement and referred the Directors to the materials provided in connection with the meeting. The Directors also received information regarding each Fund’s operations, expenses and performance periodically throughout the year.

The nature, extent and quality of services provided by the Adviser. Representatives of the Adviser discussed the nature, extent and quality of the services provided by the Adviser to each Fund, including the Adviser’s expertise in managing loan portfolios, the integrated platform of the Adviser and its affiliates and the benefits, resources and opportunities of the platform that the Adviser is able to access. Fund management discussed the size and experience of the Adviser’s staff, the experience of its key personnel in providing investment management services, the systems used by the Adviser’s personnel and the ability of the Adviser to attract and retain capable personnel. Representatives of the Adviser discussed the reputation, compliance history, compliance program and financial condition of the Adviser. They discussed the terms of each Advisory Agreement and the Adviser’s responsibilities with respect to each Fund.

Investment performance of the Funds and the Adviser. Representatives of the Adviser reviewed with the Board the performance of each Fund. Fund management discussed each Fund’s stock price and its yield. Representatives of the Adviser compared each Fund’s yield (based on the ratio of net investment income to average net assets) to the average yield of certain of its peer funds identified by the Adviser for each calendar year since the Fund’s inception. Fund management then discussed each Fund’s investment performance as compared to the performance of relevant reference indexes (the “Benchmarks”) for various periods. On a net asset value basis, AFT outperformed one Benchmark and underperformed the other Benchmark for the one-year period ended December 31, 2015, outperformed the Benchmarks for the periods from inception to December 31, 2015, December 31, 2014, December 31, 2013 and December 31, 2012 and underperformed the Benchmarks for the period from inception to December 31, 2011. On a net asset value basis, AIF underperformed the Benchmarks for the one-year period ended December 31, 2015 and outperformed the Benchmarks for the periods from inception to December 31, 2015, December 31, 2014 and December 31, 2013. On a market value basis, AFT and AIF each underperformed the Benchmarks for all periods. Representatives of the Adviser next reviewed each Fund’s investment performance as compared to that of its Peer Group and Morningstar Category for various annual periods ended December 31, 2015. Each Fund ranked above the medians of its Peer Group and Morningstar Category for the various annual periods.

 

Semi-Annual Report  |  49


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Additional Information (continued)

June 30, 2016 (unaudited)

 

Cost of services provided and profits realized by the Adviser and its affiliates from the relationship with the Funds. The Directors received information from the Adviser regarding the profitability of each Fund to the Adviser and its affiliate and the methodology used by the Adviser in allocating its costs regarding the operations of the Funds and calculating profitability. In addition, the Directors considered whether any direct or indirect collateral benefits inured to the Adviser as a result of its affiliation with the Funds. It was noted that each Fund has entered into an Administrative Services and Reimbursement Agreement with the Adviser pursuant to which the Adviser provides the Fund with certain personnel and services not otherwise provided under the relevant Advisory Agreement, which services are required for the operations of the Fund, and the Fund generally reimburses the Adviser on an at cost basis for such services.

The extent to which economies of scale would be realized as the Funds grow and whether fee levels would reflect such economies of scale. The Directors considered the extent to which economies of scale are relevant for the Funds. It was noted that, because each Fund is a closed-end fund, any increase in asset levels generally would have to come from material appreciation through investment performance. It was also noted that an investment objective of each Fund is to seek current income and that much of each Fund’s realized income is expected to be distributed to its shareholders through monthly dividends.

Comparison of services rendered and fees paid to those under other investment advisory contracts, such as contracts of the same and other investment advisers or other clients. The Board discussed the net management fee and net expense ratio comparisons set forth in the Strategic Insight report with representatives of the Adviser. For each Fund, the Fund’s contractual management fee was within the range of those of its Peer Group funds. Each Fund’s net total expense ratio at both managed and common asset levels ranked in the fourth quartile of its Peer Group and Morningstar Category. In considering the comparison of services rendered to and fees paid by each Fund to those under other investment advisory contracts, the Directors were aware of the nature of the investment strategies of each Fund and the fact that the relevant comparison funds may have investment strategies, restrictions and leverage different from those of the Fund. In regard to compensation paid to the Adviser with respect to other funds or accounts, the Adviser stated that none of the other funds or accounts advised by it or any of its affiliates are comparable to either Fund with respect to investment strategies.

Conclusion. After consideration of the factors discussed above, the Directors, including the Independent Directors, unanimously voted to approve each Advisory Agreement for an additional one-year term.

Shareholder Meeting Results

On May 19, 2016, AFT held its Annual Meeting of Shareholders for the purpose of electing Directors of AFT. The proposal was approved by AFT’s shareholders and the results of the voting are as follows:

 

  NAME    FOR      WITHHELD              
           

Glenn N. Marchak

     12,849,882         970,953         

Todd J. Slotkin

     12,849,882         970,953         

On May 19, 2016, AIF held its Annual Meeting of Shareholders for the election of Directors. The proposal was approved by AIF’s shareholders and the results of the voting are as follows:

 

  NAME    FOR      WITHHELD              
           

Glenn N. Marchak

     12,077,412         615,662         

Todd J. Slotkin

     12,077,412         615,662         

Robert L. Borden, Barry Cohen, Carl J. Rickertsen and Elliot Stein, Jr. continue to serve in their capacities as Directors of the Funds.

 

50  |  Semi-Annual Report


Important Information About This Report

 

 

Investment Adviser

Apollo Credit Management, LLC

9 West 57th Street

New York, NY 10019

Administrator

BNY Mellon Investment Servicing (US) Inc.

4400 Computer Drive

Westborough, MA 01581

Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

P.O. Box 30170

College Station, TX 77842

Custodian

The Bank of New York Mellon

One Wall Street

New York, NY 10286

Independent Registered Public

Accounting Firm

Deloitte & Touche LLP

30 Rockefeller Plaza

New York, NY 10112

Fund Counsel

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

This report has been prepared for shareholders of Apollo Senior Floating Rate Fund Inc. and Apollo Tactical Income Fund Inc. (the “Funds”). The Funds mail one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 1-888-301-3838 and additional reports will be sent to you.

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to their portfolio securities, and the Funds’ proxy voting records for the most recent period ended June 30, 2016 are available (i) without charge, upon request, by calling 1-888-301-3838 and (ii) on the SEC’s website at http://www.sec.gov.

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and also may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the Public Reference Room may be obtained by calling 1-800-SEC-0330.

 

 

Semi-Annual Report  |  51


Important Information About This Report  (continued)

 

Privacy Policy

We recognize and respect your privacy expectations, whether you are a visitor to our website, a potential shareholder, a current shareholder or even a former shareholder.

Collection of Information. We may collect nonpublic personal information about you from the following sources:

 

   

Account applications and other forms, which may include your name, address and social security number, written and electronic correspondence and telephone contacts;

   

Website information, including any information captured through our use of “cookies”; and

   

Account history, including information about the transactions and balances in your accounts with us or our affiliates.

Disclosure of Information. We may share the information we collect with our affiliates and nonaffiliated third parties for our everyday business purposes, such as to process your transactions, maintain your investments in the Funds, and to respond to court orders and legal investigations. We also provide such information to our affiliates, attorneys, banks, auditors, securities brokers and service providers as may be necessary to facilitate the acceptance and management of your account or your investments in the Funds and to enable them to perform services on our behalf. We may also provide your name, address, telephone number, social security number or financial condition information to affiliates or nonaffiliated third parties, such as broker-dealers, engaged in marketing activities on our behalf, such as the solicitation of your investment in future funds managed by Apollo. We do not sell your personal information to third parties for their independent use.

Confidentiality and Security of Information. We restrict access to nonpublic personal information about you to our employees and agents who need to know such information to provide products or services to you. We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information, although you should be aware that data protection cannot be guaranteed.

Opt-Out Notice. We reserve the right to disclose nonpublic personal information about you to a nonaffiliated third party as discussed above. If you wish to limit the distribution of your personal information with our affiliates and nonaffiliated third parties, as described herein, you may do so by:

 

   

Calling us at 1-888-301-3838; or.

   

Writing us at the following address:.

Apollo Global Management, LLC

c/o: Apollo Senior Floating Rate Fund Inc., Apollo Tactical Income Fund Inc.

9 West 57th Street, 43rd Floor, New York, New York 10019

Attn: Cindy Z. Michel

The ability to opt-out of disclosure of nonpublic personal information about you may not apply to arrangements necessary to effect or administer a transaction in shares of a Fund or maintain or service your account.

If you choose to write to us, your request should include your name, address, telephone number and account number(s) to which the opt-out applies and the extent to which your personal information shall be withheld. If you are a joint account owner we will apply those instructions to the entire account. If you have accounts or relationships with our affiliates, you may receive multiple privacy policies from them, and will need to separately notify those companies of your privacy choices for those accounts or relationships.

Please understand that if you limit our sharing or our affiliated companies’ use of personal information, you and any joint account holder(s) may not receive information about our affiliated companies’ products and services, including products or services that could help you manage your financial resources and achieve your investment objectives.

If your shares are held in “street name” at a bank or brokerage, we do not have access to your personal information and you should refer to your bank’s or broker’s privacy policies for a statement of the treatment of your personal information.

 

52  |  Semi-Annual Report


 

 

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LOGO

9 West 57th Street, New York, NY 10019

1-888-301-3838 • www.agmfunds.com

6/30/16

 


Item 2. Code of Ethics.

Not applicable to this filing.

Item 3. Audit Committee Financial Expert.

Not applicable to this filing.

Item 4. Principal Accountant Fees and Services.

Not applicable to this filing.

Item 5. Audit Committee of Listed Registrants.

Not applicable to this filing.

Item 6. Investments.

 

(a)

Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this Form.

 

(b)

Not applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to this filing.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Greg Obenshain departed from Apollo Global Management, LLC effective March 31, 2016 and no longer serves as a portfolio manager of the registrant. Joseph Moroney, Bret Leas and James Vanek continue to be primarily responsible for the day-to-day management of the registrant.


Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

None in the reporting period.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors implemented since the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

Item 11. Controls and Procedures.

 

  (a)

The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

 

  (b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d))) that occurred during the registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

 

  (a)(1)

Not applicable.

 

  (a)(2)

Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

 

  (a)(3)

Not applicable.

 

  (b)

Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant)

 

                            Apollo Tactical Income Fund Inc.

  

By (Signature and Title)

 

        /s/ Joseph Moroney

  
 

        Joseph Moroney, President

  
 

        (principal executive officer)

  

Date

 

    August 25, 2016

  

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)

 

        /s/ Joseph Moroney

 
 

        Joseph Moroney, President

 
 

        (principal executive officer)

 

Date

 

    August 25, 2016

 

By (Signature and Title)

 

        /s/ Frank Marra

 
 

        Frank Marra, Treasurer and Chief Financial Officer

 
 

        (principal financial officer)

 

Date

 

    August 25, 2016