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: December 31, 2021


Item 1. Reports to Stockholders.

 

(a)

The Report to Shareholders is attached herewith.

 

(b)

Not applicable.


LOGO

 

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

Apollo Tactical Income Fund Inc. (NYSE: AIF)

Annual Report

December 31, 2021

 

Important Information on Paperless Delivery

As permitted by new regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website, www.apollofunds.com, and you will be notified by mail each time a report is posted and provided with a web-site link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a Fund electronically at any time by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-877-864-4834.

You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports; if you invest directly with a Fund, you can call 1-877-864-4834. Your election to receive paper reports applies to all funds held within the Fund complex.


TABLE OF CONTENTS

 

Manager Commentary (unaudited)      1  
Financial Data and Fund Performance   

Apollo Senior Floating Rate Fund Inc. (unaudited)

     3  

Apollo Tactical Income Fund Inc. (unaudited)

     5  
Schedules of Investments   

Apollo Senior Floating Rate Fund Inc.

     7  

Apollo Tactical Income Fund Inc.

     13  
Statements of Assets and Liabilities      20  
Statements of Operations      21  
Statements of Changes in Net Assets   

Apollo Senior Floating Rate Fund Inc.

     22  

Apollo Tactical Income Fund Inc.

     23  
Statements of Cash Flows   

Apollo Senior Floating Rate Fund Inc.

     24  

Apollo Tactical Income Fund Inc.

     25  
Financial Highlights   

Apollo Senior Floating Rate Fund Inc.

     26  

Apollo Tactical Income Fund Inc.

     27  
Notes to Financial Statements      28  
Report of Independent Registered Public Accounting Firm      46  
Fund Investment Objectives, Policies and Risks (unaudited)      47  
Additional Information (unaudited)      61  
Directors and Officers (unaudited)      63  
Important Information About This Report      65  

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

As of December 31, 2021 (unaudited)

 

Dear Shareholders,

We would like to start by saying thank you for your interest in Apollo Senior Floating Rate Fund Inc. and 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 year started out strong on the heels of historic volatility and uncertainty, and the energetic tone persisted throughout the duration of 2021, with record supply of leveraged loans meeting record demand. Improved fundamentals, loose monetary policy, and accommodating market conditions drew more borrowers to the leveraged loan primary market than ever before. At the same time, unprecedented collateralized loan obligation (“CLO”) issuance and a surge in retail demand easily absorbed the supply. Altogether, the favorable backdrop provided for a post-pandemic rebound with the S&P/LSTA Leveraged Loan Index up 5.2% for the year. That said, performance was not consistent throughout the year as COVID headlines created brief periods of volatility and market conditions also evolved. The year started with hardly any net new supply of leveraged loans following the pandemic and the average bid price was around 96. By the fourth quarter, there was record new issuance of leveraged loans and the average bid price reached into the mid-98s. Unsurprisingly, the strength of the rally declined as the year progressed.

After primary markets virtually shut down in 2020, we saw $615 billion of new loan supply in 2021, which is 22% higher than the previous record of $503 billion set in 2017. As a result, the loan asset class grew by 12% in 2021 to $1.35 trillion, the most on record. The primary driver for the surge in supply was the unprecedented pace of mergers and acquisitions (“M&A”) and leveraged buyout (“LBO”) transactions that took place over the year. Since deal making stalled while cash balances swelled during the pandemic, we saw a flurry of activity once markets reopened. Not only did we see a record number of borrowers in the primary loan market to raise M&A related financing, but the average size of these transactions increased as well. In 2021, we saw $331 billion of M&A related volume (20% higher than the previous record of $275 billion in 2018) from 436 borrowers (compared to 421 in 2018 and the previous record of 427 in 2007). Sponsored companies accounted for 73% of deal related activity, reaching another record of $240 billion. Favorable market conditions and strong demand also led to $260 billion of opportunistic refinancing activity and dividend recapitalizations. Additionally, there was a push in November and December from issuers who wanted to price deals based on the London Interbank Offered Rate (“LIBOR”) (which can no longer be used for new issues in 2022), which accelerated the calendar and contributed to overall supply.

While loan issuance soared, so did demand. The most notable driver of demand in the loan market came from the remarkable CLO issuance we saw in 2021. For context, CLO issuance set a new record in each quarter throughout the year. Full year CLO issuance totaled $186.7 billion, which was 45% higher than the previous record of $128.9 billion in 2018 (and actually surpassed this record before the end of the third quarter). In addition to CLO demand, there were inflows to loan funds of nearly $45 billion as impending rate hikes drew investors to floating rate products. To put this in context, the $45 billion of inflows in 2021 equates to nearly 50% of loan fund assets under management at the end of 2021. Not only is the market seeing inflows to loan funds, but we also continue to see other retail funds increasing their allocations to loans. A diversified lender base has also helped to create liquidity in the secondary market as we’ve seen a strong desire to execute loan trades on a portfolio level (as is customary in the high-yield bond market), which compels dealers to make markets on a wider selection of loans, which in turn increases competition and improves trading efficiency.

We expect M&A and LBO-related activity to remain elevated to start the new year with new loan supply continuing to be robust. Accordingly, demand is also expected to be supportive given the healthy CLO pipeline and number of open warehouses, while rate hikes should continue to attract inflows from retail investors looking for floating rate exposure. Corporate fundamentals have improved significantly this year and issuers have pushed out the near-term maturities following a wave of refinancing activity. Accordingly, we expect the default rate to remain near historic lows. While repricing risk is a concern given levels are approaching par in secondary trading, opportunistic activity may be impacted by complexities related to the LIBOR transition and having to reprice with a different underlying rate. The LIBOR transition may also impact demand to the extent that CLO managers will look to reduce basis risk and prefer to hold more legacy LIBOR-based loans when possible. That said, newer deals will likely prefer term loans based on the Secured Overnight Financing Rate (“SOFR”) and it will be interesting to see if this nuance creates opportunity. Overall, the economic backdrop and supply/demand technical is supportive for loans in the new year.

Despite the overwhelmingly positive momentum, 2021 was also colored by periods of volatility due to a number of different macro factors that continue to impact markets today and will remain important themes in 2022. While people are learning to live with COVID and another lockdown in the US is unlikely, variant risk still remains. In particular, fourth quarter performance lagged relative to the rest of the year due to concerns over the COVID Omicron variant and the impact from resulting labor shortages. Additionally, inflation and supply chain constraints will continue to weigh on certain sectors which may negatively impact earnings and increase leverage. Political and economic uncertainty in

 

Annual Report  |  1


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Manager Commentary (continued)

As of December 31, 2021 (unaudited)

 

China along with volatility in energy prices may also disrupt markets. That said, balance sheets are strong and the market is open, so companies can focus on growth and continue to create opportunity in leveraged capital markets.

We appreciate your interest and support in the Funds. If you have any questions about the Funds, please call 1-877-864-4834, or visit our website at www.apollofunds.com.

Sincerely,

Apollo Credit Management, LLC

 

2  |  Annual Report


Apollo Senior Floating Rate Fund Inc.

Financial Data

December 31, 2021 (unaudited)

 

 

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

Loans

      97.4%

High-Yield Bonds

      1.5%

Equity/Other

      1.1%
Portfolio Characteristics(a)

Weighted Average Floating-Rate Spread

      4.29%

Weighted Average Fixed-Rate Coupon

      7.33%

Weighted Average Maturity (in years) (floating assets)

      5.17

Weighted Average Maturity (in years) (fixed assets)

      3.36

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

      2.27

Weighted Average Modified Duration (in years)(e)

      4.31

Average Position Size by Issuer(f)

    $ 4,040,692

Number of Issuers(f)

      97

Weighted Average S&P Rating(g)

      B

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

      3,003
Credit Quality(b)

BB

      6.3%

B

      74.0%

CCC+ or Lower

      10.3%

Not Rated

      9.4%
Top 5 Industries (as % of Current Market Value of
Investment Securities)
(c)

Services: Business

      14.2%

Healthcare & Pharmaceuticals

      11.9%

High Tech Industries

      11.2%

Telecommunications

      10.1%

Banking, Finance, Insurance & Real Estate

      6.5%

Total

      53.9%
Top 10 Issuers (as % of Current Market Value of
Investment Securities)
(d)

Intelsat Jackson Holdings S.A.

      5.8%

The Edelman Financial Center, LLC

      2.6%

DTI Holdco, Inc.

      2.3%

DCert Buyer, Inc.

      2.3%

Gainwell Acquisition Corporation

      2.2%

Garda World Security Corporation

      2.1%

Allied Universal Holdco, LLC

      2.1%

Peraton Corporation

      2.0%

Polaris Newco, LLC

      1.9%

Asurion, LLC

      1.9%

Total

      25.2%
 

 

(a) 

Averages based on par value of investment securities, except for the weighted average modified duration, which is based on market value.

(b) 

Credit quality is calculated as a percentage of fair value of investment securities at December 31, 2021. The quality ratings reflected were issued by S&P Global Ratings (“S&P”), an internationally 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 Investors Service (“Moody’s”), an internationally recognized statistical rating organization.

(d) 

Holdings are subject to change and are provided for informational purposes only.

(e) 

Excludes equity investments and warrants and includes fixed and floating rate assets.

(f) 

Excludes equity investments and warrants.

(g) 

Excludes securities with no rating or non-performing defaulted securities as of December 31, 2021.

 

Annual Report  |  3


Apollo Senior Floating Rate Fund Inc.

Fund Performance

December 31, 2021 (unaudited)

 

Apollo Senior Floating Rate Fund Inc. (“AFT”) returned 8.38% on a net asset value per share basis and 19.04% on a market price per share basis for the year ending December 31, 2021, outperforming the S&P/LSTA Leveraged Loan Index, which returned 5.20% for the year. As of December 31, 2021, AFT held 97.4% of its fair value of investment securities in first and second lien leveraged loans, 1.5% in high-yield bonds and 1.1% in equities and other securities. Outperformance in AFT relative to the index was driven mostly through credit selection as a number of idiosyncratic opportunities and events resulted in excess returns. Additionally, AFT was overweight CCC credits relative to the index, which also outperformed over the year.

 

 

Performance Comparison
     YTD   5 Yr   10 Yr   Since
Inception
(d)

AFT - Market Price

       19.04 %(a)       5.97 %(a)(b)       7.63 %(a)(b)       5.35 %(a)(b)

AFT - NAV

       8.38 %(a)       5.61 %(a)(b)       6.79 %(a)(b)       6.00 %(a)(b)

S&P/LSTA Leveraged Loan Index(c)

       5.20 %       4.27 %(b)       4.69 %(b)       4.22 %(b)

 

Distributions(e)

Current Monthly Distribution (per share)

     $ 0.085

Current Distribution Rate at Market Price(f)

       6.33 %

Current Distribution Rate at NAV(f)

       6.20 %

 

 

LOGO

 

(a) 

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.

(b) 

Annualized.

(c) 

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.

(d) 

Inception date February 23, 2011.

(e) 

All or a portion of the Fund’s distributions may be comprised of ordinary income, capital gains and/or return of capital. Refer to Note 7 in the Notes to the Financial Statements.

(f) 

Distribution rates represent the latest declared regular distribution, annualized, relative to the most recent month-end market price and NAV. Special distributions are not included in the calculation.

 

4  |  Annual Report


Apollo Tactical Income Fund Inc.

Financial Data

December 31, 2021 (unaudited)

 

 

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

Loans

      73.9%

High-Yield Bonds

      18.3%

Structured Products

      6.7%

Equity/Other

      1.1%
Portfolio Characteristics(a)

Weighted Average Floating-Rate Spread

      4.74%

Weighted Average Fixed-Rate Coupon

      5.75%

Weighted Average Maturity (in years)
(floating assets)

      5.69

Weighted Average Maturity (in years)
(fixed assets)

      5.83

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

      3.49

Weighted Average Modified Duration (in years)(e)

      4.28

Average Position Size by Issuer(f)

    $ 3,709,245

Number of Issuers(f)

      100

Weighted Average S&P Rating(g)

      B

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

      3,021
Credit Quality(b)

A

      1.1%

BBB

      0.8%

BB

      12.7%

B

      58.8%

CCC+ or Lower

      13.3%

Not Rated

      13.3%
Top 5 Industries (as % of Current Market Value of
Investment Securities)
(c)

Healthcare & Pharmaceuticals

      12.8%

Telecommunications

      10.8%

High Tech Industries

      9.8%

Services: Business

      6.7%

Aerospace & Defense

      5.3%

Total

      45.4%
Top 10 Issuers (as % of Current Market Value of
Investment Securities)
(d)

Intelsat Jackson Holdings S.A.

      6.2%

United Airlines, Inc.

      2.4%

Gainwell Acquisition Corporation

      2.4%

DCert Buyer, Inc.

      2.3%

Peraton Corporation

      2.1%

LBM Acquisition, LLC

      2.1%

DTI Holdco, Inc.

      2.0%

McGraw-Hill Education, Inc.

      2.0%

LABL, Inc.

      2.0%

Asurion, LLC

      1.9%

Total

      25.4%
 

 

(a) 

Averages based on par value of investment securities, except for the weighted average modified duration, which is based on market value.

(b) 

Credit quality is calculated as a percentage of fair value of investment securities at December 31, 2021. The quality ratings reflected were issued by S&P, an internationally 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, an internationally recognized statistical rating organization. The Top 5 Industries table above excludes Structured Products which represents 6.7% of the portfolio as of December 31, 2021.

(d) 

Holdings are subject to change and are provided for informational purposes only.

(e) 

Excludes equity investments and warrants and includes fixed and floating rate assets.

(f) 

Excludes equity investments and warrants.

(g) 

Excludes securities with no rating or non-performing defaulted securities as of December 31, 2021.

 

Annual Report  |  5


Apollo Tactical Income Fund Inc.

Fund Performance

December 31, 2021 (unaudited)

 

Apollo Tactical Income Fund Inc. (“AIF”) returned 8.44% on a net asset value per share basis and 12.86% on a market price per share basis for the year ending December 31, 2021, outperforming the S&P/LSTA Leveraged Loan Index, which returned 5.20% for the year. As of December 31, 2021, AIF held 73.9% of its fair value of investment securities in first and second lien leveraged loans, 18.3% in high-yield bonds, 6.7% in collateralized loan obligations (“CLOs”), and 1.1% in equities and other securities. In addition to credit selection, which also contributed to most of the outperformance in AIF, the fund’s allocation to CLOs also helped to enhance returns relative to the index (which does not contain CLOs). Additionally, AIF was also overweight CCC credits which helped to improve performance.

 

 

Performance Comparison
     YTD   5 Yr   Since
Inception
(d)

AIF - Market Price

       12.86 %(a)       8.06 %(a)(b)       5.62 %(a)(b)

AIF - NAV

       8.44 %(a)       7.39 %(a)(b)       7.09 %(a)(b)

S&P/LSTA Leveraged Loan Index(c)

       5.20 %       4.27 %(b)       4.08 %(b)

 

Distributions(e)

Current Monthly Distribution (per share)

     $ 0.090

Current Distribution Rate at Market Price(f)

       7.05 %

Current Distribution Rate at NAV(f)

       6.53 %

 

 

LOGO

 

(a) 

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.

(b) 

Annualized.

(c) 

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.

(d) 

Inception date February 25, 2013.

(e) 

All or a portion of the Fund’s distributions may be comprised of ordinary income, capital gains and/or return of capital. Refer to Note 7 in the Notes to the Financial Statements.

(f) 

Distribution rates represent the latest declared regular distribution, annualized, relative to the most recent month-end market price and NAV. Special distributions are not included in the calculation.

 

6  |  Annual Report


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments

December 31, 2021

 

     Principal
Amount  ($)
    

Value ($)

 

Senior Loans - 147.1%(a)

 

AEROSPACE & DEFENSE - 8.8%  

Bleriot US Bidco Inc.

     

First Lien Term Loan B, (3M LIBOR + 4.00%, 0.00% Floor), 4.22%, 10/30/26(c)

     5,280,768        5,283,408  

Dynasty Acquisition Co., Inc.

     

First Lien Term Loan, (3M LIBOR + 3.50%, 0.00% Floor), 3.72%, 04/06/26(c)

     1,736,298        1,694,141  

First Lien Term Loan B, (3M LIBOR + 3.50%, 0.00% Floor), 3.72%, 04/06/26(c)

     3,229,514        3,151,102  

Peraton Corporation

     

First Lien Term Loan B, (1M LIBOR + 3.75%, 0.75% Floor), 4.50%, 02/01/28(c)

     7,743,465        7,760,036  

Vertex Aerospace Services Corp.

     

First Lien Term Loan, (LIBOR + 4.00%, 0.75% Floor), 4.75%, 12/06/28(b)(c)

     4,651,282        4,650,119  
     

 

 

 
        22,538,806  
     

 

 

 
BANKING, FINANCE, INSURANCE & REAL ESTATE - 9.1%  

Apex Group Treasury, LLC

     

First Lien Term Loan, (3M LIBOR + 3.75%, 0.50% Floor), 4.25%, 07/27/28(c)

     4,472,662        4,471,276  

Asurion, LLC

     

Second Lien Term Loan B3, (1M LIBOR + 5.25%, 0.00% Floor), 5.35%, 01/31/28(c)

     3,396,944        3,411,805  

Second Lien Term Loan B4, (1M LIBOR + 5.25%, 0.00% Floor), 5.35%, 01/20/29(b)(c)

     3,742,888        3,732,370  

The Edelman Financial Center, LLC

     

First Lien Term Loan B, (1M LIBOR + 3.50%, 0.75% Floor), 4.25%, 04/07/28(c)

     5,262,231        5,265,862  

Second Lien Term Loan, (1M LIBOR + 6.75%, 0.00% Floor), 6.85%, 07/20/26(b)(c)

     4,931,380        4,959,637  

Washington Prime Group, L.P.

     

First Lien Term Loan, (1M LIBOR + 5.00%, 0.75% Floor), 5.75%, 10/20/25(c)

     1,500,000        1,518,000  
     

 

 

 
        23,358,950  
     

 

 

 
BEVERAGE, FOOD & TOBACCO - 3.0%  

IRB Holding Corporation

     

First Lien Term Loan B, (3M LIBOR + 3.25%, 1.00% Floor), 4.25%, 12/15/27(c)

     3,713,133        3,718,350  

Primary Products Finance LLC

     

First Lien Term Loan, (LIBOR + 4.00%, 0.50% Floor), 4.50%, 10/25/28(b)(c)

     3,843,318        3,853,733  
     

 

 

 
        7,572,083  
     

 

 

 
     Principal
Amount  ($)
    

Value ($)

 
CAPITAL EQUIPMENT - 4.2%  

Madison Safety & Flow LLC

     

First Lien Term Loan, (SOFR + 3.75, 0.05% Floor), 3.80%, 12/14/28(b)(c)

     3,333,334        3,337,501  

Pro Mach Group, Inc.

     

First Lien Term Loan B, (3M LIBOR + 4.00%, 1.00% Floor), 5.00%, 08/31/28(c)

     1,978,416        1,987,754  

Safe Fleet Holdings, LLC

     

First Lien Term Loan, (1M LIBOR + 3.00%, 1.00% Floor), 4.00%, 02/03/25(c)

     3,995,277        3,981,732  

Second Lien Term Loan, (1M LIBOR + 6.75%, 1.00% Floor), 7.75%, 02/02/26(c)

     1,403,846        1,399,466  
     

 

 

 
        10,706,453  
     

 

 

 
CHEMICALS, PLASTICS, & RUBBER - 7.7%  

Archroma Finance SARL (Luxembourg)

     

First Lien Term Loan B2, (1M LIBOR + 4.25%, 0.00% Floor), 4.35%, 08/12/24(c)(e)

     3,915,098        3,892,273  

Geon Performance Solutions, LLC

     

First Lien Term Loan B, (3M LIBOR + 4.75%, 0.75% Floor), 5.50%, 08/18/28(b)(c)

     2,834,027        2,862,368  

LSF11 A5 Holdco, LLC

     

First Lien Term Loan, (3M LIBOR + 3.75%, 0.50% Floor), 4.25%, 10/15/28(c)

     7,058,530        7,061,459  

Luxembourg Investment Company 428 SARL (Luxembourg)

     

First Lien Term Loan B, (SOFR + 5.00%, 0.50% Floor), 5.50%, 10/20/28(b)(c)(e)

     4,359,375        4,348,476  

W.R. Grace Holdings, LLC

     

First Lien Term Loan B, (3M LIBOR + 3.75%, 0.50% Floor), 4.25%, 09/22/28(c)

     1,450,236        1,454,587  
     

 

 

 
        19,619,163  
     

 

 

 
CONSTRUCTION & BUILDING - 5.0%  

Associated Asphalt Partners, LLC

     

First Lien Term Loan B, (1M LIBOR + 5.25%, 1.00% Floor), 6.25%, 04/05/24(c)

     6,741,568        5,949,434  

Illuminate Merger Sub Corp.

     

First Lien Term Loan B, (3M LIBOR + 3.50%, 0.50% Floor), 4.00%, 07/21/28(c)

     3,829,787        3,805,257  

Madison IAQ LLC

     

First Lien Term Loan, (6M LIBOR + 3.25%, 0.50% Floor), 3.75%, 06/21/28(b)(c)

     2,992,481        2,993,723  
     

 

 

 
        12,748,414  
     

 

 

 
 

 

See accompanying Notes to Financial Statements.  |  7


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

     Principal
Amount  ($)
    

Value ($)

 

Senior Loans(a) (continued)

 

CONSUMER GOODS: DURABLE - 0.9%  

Mattress Firm, Inc.

     

First Lien Term Loan B, (6M LIBOR + 4.25%, 0.75% Floor), 5.00%, 09/25/28(c)

     2,322,537        2,309,473  
     

 

 

 
CONSUMER GOODS: NON-DURABLE - 0.9%  

ABG Intermediate Holdings 2 LLC

     

First Lien Term Loan, (SOFR + 3.50%, 0.15% Floor), 3.71%, 12/21/28(b)(c)

     523,410        521,448  

Second Lien Term Loan, (SOFR + 6.00%, 0.00% Floor), 6.06%, 12/20/29(b)(c)

     1,710,576        1,719,129  
     

 

 

 
        2,240,577  
     

 

 

 
CONTAINERS, PACKAGING & GLASS - 8.6%  

Anchor Glass Container Corp.

     

First Lien Term Loan, (3M LIBOR + 2.75%, 1.00% Floor), 3.75%, 12/07/23(c)

     3,572,301        3,101,668  

First Lien Term Loan, (3M LIBOR + 5.00%, 1.00% Floor), 6.00%, 12/07/23(c)

     979,432        846,391  

Berlin Packaging LLC

     

First Lien Term Loan B, (1M LIBOR + 3.75%, 0.50% Floor), 4.25%, 03/11/28(c)

     4,354,064        4,354,609  

LABL, Inc.

     

First Lien Term Loan, (3M LIBOR + 5.00%, 0.50% Floor), 5.50%, 10/29/28(c)

     5,268,293        5,268,846  

MAR Bidco SARL (Luxembourg)

     

First Lien Term Loan, (3M LIBOR + 4.25%, 0.50% Floor), 4.75%, 07/07/28(c)(e)

     2,828,646        2,833,356  

Trident TPI Holdings, Inc.

     

First Lien Delayed Draw Term Loan B3, (3M LIBOR + 4.00%, 0.50% Floor), 4.50%, 09/15/28(c)

     303,783        304,020  

First Lien Term Loan B3, (3M LIBOR + 4.00%, 0.50% Floor), 4.50%, 09/15/28(c)

     5,314,321        5,318,466  
     

 

 

 
        22,027,356  
     

 

 

 
ENERGY: OIL & GAS - 0.8%  

Freeport LNG Investments, LLLP

     

First Lien Term Loan B, (LIBOR + 3.50%, 0.50% Floor), 4.00%, 12/21/28(c)

     2,125,560        2,107,960  
     

 

 

 
ENVIRONMENTAL INDUSTRIES - 1.7%  

Dispatch Acquisition Holdings, LLC

     

First Lien Term Loan B, (3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 03/27/28(c)

     2,985,000        2,986,866  

Trugreen Limited Partnership

     

First Lien Term Loan, (1M LIBOR + 4.00%, 0.75% Floor), 4.75%, 11/02/27(c)

     1,468,492        1,472,067  
     

 

 

 
        4,458,933  
     

 

 

 
     Principal
Amount  ($)
    

Value ($)

 
FOREST PRODUCTS & PAPER - 1.0%  

Spa US Holdco, Inc. (Finland)

     

First Lien Term Loan B, (3M LIBOR + 4.00%, 0.75% Floor), 4.75%, 02/04/28(c)(e)

     2,690,531        2,697,257  
     

 

 

 
HEALTHCARE & PHARMACEUTICALS - 18.0%  

Azurity Pharmaceuticals, Inc.

     

First Lien Term Loan B, (3M LIBOR + 6.00%, 0.75% Floor), 6.75%, 09/20/27(b)(c)

     2,142,856        2,109,813  

CHG Healthcare Services, Inc.

     

First Lien Term Loan, (3M LIBOR + 3.50%, 0.50% Floor), 4.00%, 09/29/28(b)(c)

     3,970,910        3,976,370  

Curia Global, Inc.

     

First Lien Term Loan, (3M LIBOR + 3.75%, 0.75% Floor), 4.50%, 08/30/26(c)

     1,474,690        1,478,377  

Endo Luxembourg Finance Company I SARL

     

First Lien Term Loan, (3M LIBOR + 5.00%, 0.75% Floor), 5.75%, 03/27/28(c)

     6,229,088        6,074,544  

Gainwell Acquisition Corporation

     

First Lien Term Loan B, (3M LIBOR + 4.00%, 0.75% Floor), 4.75%, 10/01/27(c)

     8,651,268        8,684,791  

Loire Finco Luxembourg SARL (United Kingdom)

     

First Lien Term Loan B, (1M LIBOR + 3.75%, 0.75% Floor), 4.50%, 04/21/27(c)(e)

     1,985,037        1,980,075  

LSCS Holdings, Inc.

     

First Lien Term Loan, (LIBOR + 4.50%, 0.50% Floor), 5.00%, 11/23/28(b)(c)

     2,041,884        2,044,947  

Maravai Intermediate Holdings LLC

     

First Lien Term Loan B, (1M LIBOR + 3.75%, 1.00% Floor), 4.75%, 10/19/27(c)

     2,909,438        2,925,804  

Medline Borrower, LP

     

First Lien Term Loan B, (1M LIBOR + 3.25%, 0.50% Floor), 3.75%, 10/23/28(c)

     2,933,075        2,935,729  

MPH Acquisition Holdings, LLC

     

First Lien Term Loan B, (3M LIBOR + 4.25%, 0.50% Floor), 4.75%, 09/01/28(c)

     1,626,044        1,591,499  

Pacira Biosciences, Inc.

     

First Lien Term Loan, (SOFR + 7.00%, 0.75% Floor), 7.75%, 12/07/26(c)(d)

     1,956,016        1,936,456  

Phoenix Newco, Inc.

     

First Lien Term Loan, (1M LIBOR + 3.50%, 0.50% Floor), 4.00%, 11/15/28(c)

     2,425,898        2,429,245  

Resonetics, LLC

     

First Lien Term Loan, (3M LIBOR + 4.00%, 0.75% Floor), 4.75%, 04/28/28(c)

     3,990,000        3,994,988  
 

 

8  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

     Principal
Amount  ($)
    

Value ($)

 

Senior Loans(a) (continued)

 

HEALTHCARE & PHARMACEUTICALS (continued)  

Sunshine Luxembourg VII SARL (Luxembourg)

     

First Lien Term Loan B3, (3M LIBOR + 3.75%, 0.75% Floor), 4.50%, 10/01/26(c)(e)

     2,860,735        2,875,339  

Women’s Care Holdings, Inc.

     

First Lien Term Loan, (3M LIBOR + 4.50%, 0.75% Floor), 5.25%, 01/15/28(c)

     1,097,089        1,096,815  
     

 

 

 
        46,134,792  
     

 

 

 
HIGH TECH INDUSTRIES - 16.5%  

Atlas CC Acquisition Corp.

     

First Lien Term Loan B, (3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 05/25/28(c)

     3,223,753        3,235,084  

First Lien Term Loan C, (3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 05/25/28(c)

     655,679        657,983  

DCert Buyer, Inc.

     

First Lien Term Loan, (1M LIBOR + 4.00%, 0.00% Floor), 4.10%, 10/16/26(c)

     6,460,833        6,456,795  

Second Lien Term Loan, (1M LIBOR + 7.00%, 0.00% Floor), 7.10%, 02/19/29(c)

     2,427,401        2,437,511  

Electronics for Imaging, Inc.

     

First Lien Term Loan, (1M LIBOR + 5.00%, 0.00% Floor), 5.10%, 07/23/26(c)

     2,992,366        2,932,519  

Flexera Software LLC

     

First Lien Term Loan B, (3M/6M LIBOR + 3.75%, 0.75% Floor), 4.50%, 03/03/28(c)

     6,464,710        6,477,284  

Greeneden U.S. Holdings II, LLC

     

First Lien Term Loan, (1M LIBOR + 4.00%, 0.75% Floor), 4.75%, 12/01/27(c)

     2,221,102        2,231,519  

Imperva, Inc.

     

First Lien Term Loan, (3M LIBOR + 4.00%, 1.00% Floor), 5.00%, 01/12/26(c)

     4,680,926        4,680,552  

Ivanti Software, Inc.

     

First Lien Term Loan B, (3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 12/01/27(c)

     4,891,559        4,905,304  

Riverbed Technology, Inc.

     

First Lien Exit Term Loan, (2.00% PIK), (3M LIBOR + 8.00%, 1.00% Floor), 9.00%, 12/07/26(c)(f)

     814,924        798,964  

Sovos Compliance, LLC

     

First Lien Term Loan, (1M LIBOR + 4.50%, 0.50% Floor), 5.00%, 08/11/28(c)

     2,131,849        2,140,014  

UKG, Inc.

     

First Lien Term Loan, (1M LIBOR + 3.75%, 0.00% Floor), 3.85%, 05/04/26(c)

     2,992,347        2,987,409  

First Lien Term Loan, (1M LIBOR + 3.25%, 0.50% Floor), 3.75%, 05/04/26(c)

     1,271,524        1,267,016  
     Principal
Amount  ($)
    

Value ($)

 
HIGH TECH INDUSTRIES (continued)  

VS Buyer, LLC

     

First Lien Term Loan, (1M LIBOR + 3.00%, 0.00% Floor), 3.09%, 02/28/27(b)(c)

     1,196,954        1,193,962  
     

 

 

 
        42,401,916  
     

 

 

 
HOTEL, GAMING & LEISURE - 3.3%  

Caesars Resort Collection, LLC

     

First Lien Term Loan B1, (1M LIBOR + 3.50%, 0.00% Floor), 3.60%, 07/21/25(c)

     4,297,965        4,306,561  

The Enterprise Development Authority

     

First Lien Term Loan, (1M LIBOR + 4.25%, 0.75% Floor), 5.00%, 02/28/28(c)

     2,093,656        2,094,535  

Varsity Brands Holding Co., Inc.

     

First Lien Term Loan, (1M LIBOR + 3.50%, 1.00% Floor), 4.50%, 12/16/24(c)

     1,988,357        1,954,804  
     

 

 

 
        8,355,900  
     

 

 

 
MEDIA: ADVERTISING, PRINTING & PUBLISHING - 4.2%  

Advantage Sales & Marketing Inc.

     

First Lien Term Loan B1, (3M LIBOR + 4.50%, 0.75% Floor), 5.25%, 10/28/27(c)

     4,686,681        4,697,811  

F & W Media, Inc.

     

First Lien Term Loan B1, (LIBOR + 6.50%, 1.50% Floor), 0.00%, 05/24/22(c)(d)(g)(j)

     347,024         

First Lien Term Loan B2, (LIBOR + 10.00%, 1.50% Floor), 0.00%, 05/24/22(c)(d)(g)(j)

     1,076,345         

McGraw-Hill Education, Inc.

     

First Lien Term Loan, (1M LIBOR + 4.75%, 0.50% Floor), 5.25%, 07/28/28(c)

     6,146,249        6,128,026  
     

 

 

 
        10,825,837  
     

 

 

 
MEDIA: BROADCASTING & SUBSCRIPTION - 4.2%  

Anuvu Holdings 2, LLC

     

First Lien Delayed Draw Term Loan, (3M LIBOR + 7.00%, 1.00% Floor), 8.00%, 09/25/23(c)(d)

     60,351        58,842  

First Lien Term Loan, (3M LIBOR + 8.00%, 1.00% Floor), 9.00%, 03/24/25(c)

     2,479,047        2,474,919  

First Lien Term Loan, (6.75% PIK), (3M LIBOR + 8.25%, 1.00% Floor), 9.25%, 03/23/26(c)(f)

     1,939,784        1,648,817  

Univision Communications Inc.

     

First Lien Term Loan, (1M LIBOR + 2.75%, 1.00% Floor), 3.75%, 03/15/24(b)(c)

     3,400,000        3,405,304  

William Morris Endeavor Entertainment, LLC

     

First Lien Term Loan B, (1M LIBOR + 2.75%, 0.00% Floor), 2.86%, 05/18/25(c)

     3,322,560        3,259,016  
     

 

 

 
        10,846,898  
     

 

 

 
 

 

See accompanying Notes to Financial Statements.  |  9


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

     Principal
Amount  ($)
    

Value ($)

 

Senior Loans(a) (continued)

 

RETAIL - 4.5%              

Charming Charlie, LLC

     

First Lien Delayed Draw Term Loan, 0.00%, 05/28/22(d)(g)(h)(j)

     196,013        27,528  

First Lien Term Loan A, (LIBOR + 5.00%, 1.00% Floor), 0.00%, 04/24/23(c)(d)(g)(j)

     868,743         

First Lien Term Loan B, (LIBOR + 1.00%, 1.00% Floor), 0.00%, 04/24/23(c)(d)(g)(j)

     1,063,663         

First Lien Vendor Term Loan, 0.00%, 05/15/20(d)(g)(h)(j)

     35,263        4,952  

Empire Today, LLC

     

First Lien Term Loan, (3M LIBOR + 5.00%, 0.75% Floor), 5.75%, 03/24/28(c)

     2,761,726        2,718,575  

Petco Health and Wellness Company, Inc.

     

First Lien Term Loan, (3M LIBOR + 3.25%, 0.75% Floor), 4.00%, 03/03/28(c)

     3,996,061        3,996,361  

PetSmart, Inc.

     

First Lien Term Loan, (6M LIBOR + 3.75%, 0.75% Floor), 4.50%, 02/11/28(c)

     4,786,788        4,800,263  
     

 

 

 
        11,547,679  
     

 

 

 
SERVICES: BUSINESS - 21.5%  

Allied Universal Holdco LLC

     

First Lien Term Loan, (3M LIBOR + 3.75%, 0.50% Floor), 4.25%, 05/12/28(c)

     7,998,135        7,982,179  

CareStream Health, Inc.

     

First Lien Term Loan, (6M LIBOR + 6.75%, 1.00% Floor), 7.75%, 05/08/23(b)(c)

     121,839        122,423  

Second Lien Term Loan, (8.0% PIK), (6M LIBOR + 12.50%, 1.00% Floor), 13.50%, 08/08/23(c)(d)(f)

     2,529,544        2,080,550  

Deerfield Dakota Holding, LLC

     

First Lien Term Loan, (1M LIBOR + 3.75%, 1.00% Floor), 4.75%, 04/09/27(c)

     4,334,407        4,344,918  

DTI Holdco, Inc.

     

First Lien Term Loan B, (3M LIBOR + 4.75%, 1.00% Floor), 5.75%, 09/29/23(c)

     9,116,261        8,981,431  

Electro Rent Corp.

     

First Lien Term Loan, (3M LIBOR + 5.00%, 1.00% Floor), 6.00%, 01/31/24(c)

     2,796,072        2,803,510  

Endure Digital, Inc.

     

First Lien Term Loan B, (6M LIBOR + 3.50%, 0.75% Floor), 4.25%, 02/10/28(c)

     3,860,912        3,833,769  

Ensemble RCM, LLC

     

First Lien Term Loan, (3M LIBOR + 3.75%, 0.00% Floor), 3.88%, 08/03/26(c)

     4,345,780        4,349,843  

eResearchTechnology, Inc.

     

First Lien Term Loan B, (1M LIBOR + 4.50%, 1.00% Floor), 5.50%, 02/04/27(c)

     1,128,950        1,134,205  
     Principal
Amount  ($)
    

Value ($)

 
SERVICES: BUSINESS (continued)  

Garda World Security Corporation (Canada)

     

First Lien Term Loan B2, (1M LIBOR + 4.25%, 0.00% Floor), 4.36%,
10/30/26(c)(e)

     8,115,963        8,115,152  

Ingenovis Health, Inc.

     

First Lien Term Loan B, (3M LIBOR + 3.75%, 0.75% Floor), 4.50%,
03/06/28(b)(c)

     3,993,960        3,996,476  

Solera, LLC

     

First Lien Term Loan B, (3M LIBOR + 4.00%, 0.50% Floor), 4.50%, 06/02/28(c)

     3,695,151        3,699,567  

Second Lien Term Loan, (1M LIBOR + 8.00%, 1.00% Floor), 9.00%, 06/04/29(c)

     3,510,563        3,567,610  
     

 

 

 
        55,011,633  
     

 

 

 
SERVICES: CONSUMER - 0.9%              

2U, Inc.

     

First Lien Term Loan, (1M LIBOR + 5.75%, 0.75% Floor), 6.50%, 12/30/24(c)

     2,437,750        2,431,656  
     

 

 

 
TELECOMMUNICATIONS - 14.4%  

Flight Bidco, Inc.

     

First Lien Term Loan, (1M LIBOR + 3.50%, 0.00% Floor), 3.60%, 07/23/25(c)

     3,742,042        3,704,622  

Frontier Communications Holdings, LLC

     

First Lien Term Loan B, (3M LIBOR + 3.75%, 0.75% Floor), 4.50%, 05/01/28(c)

     2,238,639        2,240,318  

Intelsat Jackson Holdings S.A. (Luxembourg)

     

First Lien DIP Term Loan, (3M LIBOR + 4.75%, 1.00% Floor), 5.75%, 07/13/22(c)(e)

     3,595,469        3,601,096  

First Lien Exit Term Loan A, (LIBOR + 2.75%, 0.00% Floor), 2.75%, 12/07/22(b)(c)(d)(e)

     3,700,000        3,681,500  

First Lien Exit Term Loan B, (LIBOR + 4.25%, 0.50% Floor), 4.75%, 12/08/28(b)(c)(d)(e)

     3,700,000        3,672,250  

First Lien Term Loan, (Prime + 5.50%, 2.00% Floor), 8.75%, 01/02/24(c)(e)(g)

     5,444,878        5,449,125  

First Lien Term Loan B, (Prime + 4.75%, 2.00% Floor), 8.00%, 11/27/23(c)(e)(g)

     1,188,001        1,188,244  

First Lien Term Loan B5, 8.63%, 01/02/24(e)(g)(h)

     4,984,426        4,991,429  

Orbcomm, Inc.

     

First Lien Term Loan, (1M/3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 09/01/28(c)

     1,620,938        1,622,964  

U.S. TelePacific Corp.

     

First Lien Term Loan B, (6M LIBOR + 6.00%, 1.00% Floor), 7.00%, 05/02/23(c)

     5,765,795        4,358,422  

Zacapa SARL (Luxembourg)

     

First Lien Term Loan B, (3M LIBOR + 4.50%, 0.00% Floor), 4.72%,
07/02/25(c)(e)

     2,408,865        2,416,393  
     

 

 

 
        36,926,363  
     

 

 

 
 

 

10  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

     Principal
Amount  ($)
    

Value ($)

 

Senior Loans(a) (continued)

 

TRANSPORTATION: CONSUMER - 5.7%  

The Hertz Corporation

     

First Lien Term Loan B, (1M LIBOR + 3.25%, 0.50% Floor), 3.75%, 06/30/28(c)

     3,231,507        3,238,471  

First Lien Term Loan C, (1M LIBOR + 3.25%, 0.50% Floor), 3.75%, 06/30/28(c)

     612,075        613,394  

Travel Leaders Group, LLC

     

First Lien Term Loan B, (1M LIBOR + 4.00%, 0.00% Floor), 4.10%, 01/25/24(c)

     3,976,781        3,648,299  

United Airlines, Inc.

     

First Lien Term Loan B, (3M LIBOR + 3.75%, 0.75% Floor), 4.50%, 04/21/28(c)

     6,999,639        7,040,587  
     

 

 

 
        14,540,751  
     

 

 

 
WHOLESALE - 2.2%              

LBM Acquisition, LLC

     

First Lien Term Loan B, (3M LIBOR + 3.75%, 0.75% Floor), 4.50%, 12/17/27(b)(c)

     5,568,500        5,527,182  
     

 

 

 

Total Senior Loans
(Cost $381,316,673)

        376,936,032  
     

 

 

 

Corporate Notes and Bonds - 2.3%

 

AEROSPACE & DEFENSE - 0.4%  

Transdigm, Inc. 8.00%, 12/15/25(h)(i)

     1,068,000        1,128,059  
     

 

 

 
BANKING, FINANCE, INSURANCE & REAL ESTATE - 0.3%  

KCF Puerto Rico, LLC 0.00%, 06/28/28(d)(j)

     1,328,370        768,411  
     

 

 

 
ENERGY: OIL & GAS - 0.8%              

Moss Creek Resources Holdings, Inc.
7.50%, 01/15/26(h)(i)

     834,000        780,657  

10.50%, 05/15/27(h)(i)

     1,187,000        1,198,609  
     

 

 

 
        1,979,266  
     

 

 

 
METALS & MINING - 0.0%              

ERP Iron Ore, LLC

     

LIBOR + 8.00%, 0.00%,
12/31/19(d)(g)(j)

     18,879         

Magnetation, LLC / Mag Finance Corp.
0.00%, 05/15/18(d)(g)(h)(i)(j)

     639,000         
     

 

 

 
         
     

 

 

 
TELECOMMUNICATIONS - 0.8%              

Frontier Communications Holdings, LLC 5.00%, 05/01/28(h)(i)

     2,000,000        2,063,620  
     

 

 

 

Total Corporate Notes and Bonds
(Cost $4,948,510)

        5,939,356  
     

 

 

 

 

     Quantity     

Value ($)

 

Common Stocks - 1.1%

     
AUTOMOTIVE - 0.1%              

APC Parent, Inc.(d)(j)

     241,972        114,671  
     

 

 

 
ENERGY: OIL & GAS - 0.0%              

RDV Resources, Inc.(d)(j)

     28,252         
     

 

 

 
HIGH TECH INDUSTRIES - 0.2%              

Riverbed Holdings, Inc.(j)

     32,644        435,252  
     

 

 

 
MEDIA: ADVERTISING, PRINTING & PUBLISHING - 0.0%  

Acosta, Inc.(d)(j)

     3,133        25,399  

F & W Media, Inc.(d)(j)

     9,511         
     

 

 

 
        25,399  
     

 

 

 
MEDIA: BROADCASTING & SUBSCRIPTION - 0.8%  

Anuvu Corp.(d)(j)

     108,418        2,161,855  
     

 

 

 
RETAIL - 0.0%              

Charming Charlie, LLC(d)(j)

     8,890,519         
     

 

 

 

Total Common Stocks
(Cost $4,570,541)

        2,737,177  
     

 

 

 

Preferred Stocks - 0.6%

     
BANKING, FINANCE, INSURANCE & REAL ESTATE - 0.4%  

Somers Group Holdings Ltd. (Bermuda)
(LIBOR + 6.68%, 1.00% Floor),
7.68%(d)(e)

     37,863        960,774  
     

 

 

 
HIGH TECH INDUSTRIES - 0.2%              

Riverbed Holdings, Inc.

     22,342        435,669  
     

 

 

 
MEDIA: ADVERTISING, PRINTING & PUBLISHING - 0.0%  

Acosta, Inc., (14.50% PIK)(d)(f)(h)

     3,353        156,027  
     

 

 

 

Total Preferred Stocks
(Cost $1,644,912)

        1,552,470  
     

 

 

 

Warrants - 0.0%

     
SERVICES: BUSINESS - 0.0%              

CareStream Health, Inc.(d)(j)

     47         
     

 

 

 

Total Warrants
(Cost $0)

         
     

 

 

 

Total Investments-151.1%

        387,165,035  

(Cost of $392,480,636)

     

Other Assets & Liabilities, Net-(0.4)%

        (1,064,787

Loan Outstanding-(50.7)%(k)(l)

        (129,899,409
     

 

 

 

Net Assets (Applicable to Common
Shares)-100.0%

 

     256,200,839  
     

 

 

 
 

 

See accompanying Notes to Financial Statements.  |  11


Apollo Senior Floating Rate Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

(a) 

“Senior Loans” are senior, secured loans made to companies whose debt is below investment grade as well as investments with similar economic characteristics. Senior Loans typically hold a first lien priority and, unless otherwise indicated, are required to pay interest at floating rates that are periodically reset by reference to a base lending rate plus a spread. In some instances, the rates shown represent the weighted average rate as of December 31, 2021. Senior Loans are generally not registered under the Securities Act of 1933 (the “1933 Act”) and often incorporate 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.

(b) 

All or a portion of this Senior Loan position has not settled. Full contract rates do not take effect until settlement date and therefore are subject to change.

(c) 

The interest rate on this Senior Loan is subject to a base lending rate plus a spread. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) or the Secured Overnight Financing Rate (“SOFR”) and secondarily the prime rate offered by one or more major U.S. banks (“Prime”). The interest rate is subject to a minimum floor, which may be less than or greater than the prevailing period end LIBOR/SOFR/Prime rate. As of December 31, 2021, the 1, 2, 3 and 6 month LIBOR rates were 0.10%, 0.15%, 0.21% and 0.34%, respectively, the 30, 90 and 180 day average SOFR rates were 0.05%, 0.05% and 0.05%, respectively, and the Prime lending rate was 3.25%. Senior Loans may contain multiple contracts of the same issuer which may be subject to base lending rates of LIBOR, SOFR and Prime (“Variable”) in addition to the stated spread.

(d) 

Fair Value Level 3 security.

(e) 

Foreign issuer traded in U.S. dollars.

(f) 

Represents a payment-in-kind (“PIK”) security, which may pay interest in additional principal amount/share quantity.

(g) 

Issuer filed for bankruptcy and/or is in default of principal and/or interest payments.

(h) 

Fixed rate 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 December 31, 2021, these securities amounted to $5,170,945, or 2.0% of net assets.

(j) 

Non-income producing asset.

(k) 

The Fund has granted a security interest in substantially all of its assets in the event of default under the credit facility.

(l) 

Principal of $130,000,000 less unamortized deferred financing costs of $100,591.

 

12  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Schedule of Investments

December 31, 2021

 

     Principal
Amount ($)
    

Value ($)

 

Senior Loans - 113.0%(a)

     
AEROSPACE & DEFENSE - 6.4%  

Dynasty Acquisition Co., Inc.

     

First Lien Term Loan, (3M LIBOR + 3.50%, 0.00% Floor), 3.72%, 04/06/26(c)

     1,038,781        1,013,560  

First Lien Term Loan B, (3M LIBOR + 3.50%, 0.00% Floor), 3.72%, 04/06/26(c)

     1,932,133        1,885,221  

Peraton Corporation

     

First Lien Term Loan B, (1M LIBOR + 3.75%, 0.75% Floor), 4.50%, 02/01/28(c)

     7,743,465        7,760,036  

Vertex Aerospace Services Corp.

     

First Lien Term Loan, (LIBOR + 4.00%, 0.75% Floor), 4.75%, 12/06/28(b)(c)

     4,651,282        4,650,119  
     

 

 

 
        15,308,936  
     

 

 

 
BANKING, FINANCE, INSURANCE & REAL ESTATE - 5.7%  

Apex Group Treasury, LLC

     

First Lien Term Loan, (3M LIBOR + 3.75%, 0.50% Floor), 4.25%, 07/27/28(b)(c)

     498,750        498,596  

Asurion, LLC

     

First Lien Term Loan B9, (1M LIBOR + 3.25%, 0.00% Floor), 3.35%, 07/31/27(c)

     1,994,975        1,985,249  

Second Lien Term Loan B3, (1M LIBOR + 5.25%, 0.00% Floor), 5.35%, 01/31/28(c)

     2,102,870        2,112,070  

Second Lien Term Loan B4, (1M LIBOR + 5.25%, 0.00% Floor), 5.35%, 01/20/29(b)(c)

     3,036,961        3,028,427  

The Edelman Financial Center, LLC

     

First Lien Term Loan B, (1M LIBOR + 3.50%, 0.75% Floor), 4.25%, 04/07/28(c)

     2,128,538        2,130,007  

Second Lien Term Loan, (1M LIBOR + 6.75%, 0.00% Floor), 6.85%, 07/20/26(b)(c)

     2,428,369        2,442,284  

Washington Prime Group, L.P.

     

First Lien Term Loan, (1M LIBOR + 5.00%, 0.75% Floor), 5.75%, 10/20/25(c)

     1,500,000        1,518,000  
     

 

 

 
        13,714,633  
     

 

 

 
BEVERAGE, FOOD & TOBACCO - 2.5%  

Primary Products Finance LLC

     

First Lien Term Loan, (LIBOR + 4.00%, 0.50% Floor), 4.50%, 10/25/28(b)(c)

     3,843,318        3,853,734  

Ultimate Baked Goods Midco LLC

     

First Lien Revolving Term Loan, (1M/3M LIBOR + 6.25%, 1.00% Floor) 7.25%, 08/13/27(c)(d)

     130,541        127,329  

First Lien Term Loan, (1M LIBOR + 6.25%, 1.00% Floor), 7.25%, 08/13/27(c)(d)

     2,051,351        2,000,683  
     

 

 

 
        5,981,746  
     

 

 

 
     Principal
Amount ($)
    

Value ($)

 
CAPITAL EQUIPMENT - 3.9%  

Madison Safety & Flow LLC

     

First Lien Term Loan, (SOFR + 3.75%, 0.05% Floor) 3.80%, 12/14/28(b)(c)

     3,333,332        3,337,499  

Pro Mach Group, Inc.

     

First Lien Term Loan B, (3M LIBOR + 4.00%, 1.00% Floor), 5.00%, 08/31/28(c)

     1,978,416        1,987,754  

Safe Fleet Holdings, LLC

     

First Lien Term Loan, (1M LIBOR + 3.00%, 1.00% Floor), 4.00%, 02/03/25(c)

     2,709,646        2,700,460  

Second Lien Term Loan, (1M LIBOR + 6.75%, 1.00% Floor), 7.75%, 02/02/26(c)

     1,403,846        1,399,466  
     

 

 

 
        9,425,179  
     

 

 

 
CHEMICALS, PLASTICS, & RUBBER - 6.0%  

Geon Performance Solutions, LLC

     

First Lien Term Loan B, (3M LIBOR + 4.75%, 0.75% Floor), 5.50%, 08/18/28(b)(c)

     2,834,027        2,862,368  

LSF11 A5 Holdco, LLC

     

First Lien Term Loan, (3M LIBOR + 3.75%, 0.50% Floor), 4.25%, 10/15/28(c)

     5,609,254        5,611,581  

Luxembourg Investment Company 428 SARL (Luxembourg)

     

First Lien Term Loan B, (SOFR + 5.00%, 0.50% Floor) 5.50%, 10/20/28(b)(c)(e)

     4,359,375        4,348,476  

W.R. Grace Holdings, LLC

     

First Lien Term Loan B, (3M LIBOR + 3.75%, 0.50% Floor), 4.25%, 09/22/28(c)

     1,450,236        1,454,587  
     

 

 

 
        14,277,012  
     

 

 

 
CONSTRUCTION & BUILDING - 3.2%  

Associated Asphalt Partners, LLC

     

First Lien Term Loan B, (1M LIBOR + 5.25%, 1.00% Floor), 6.25%, 04/05/24(c)

     6,528,327        5,761,249  

Madison IAQ LLC

     

First Lien Term Loan, (6M LIBOR + 3.25%, 0.50% Floor), 3.75%, 06/21/28(b)(c)

     1,994,987        1,995,815  
     

 

 

 
        7,757,064  
     

 

 

 
CONSUMER GOODS: DURABLE - 1.0%  

Mattress Firm, Inc.

     

First Lien Term Loan B, (6M LIBOR + 4.25%, 0.75% Floor), 5.00%, 09/25/28(c)

     2,322,537        2,309,473  
     

 

 

 
CONSUMER GOODS: NON-DURABLE - 1.0%  

ABG Intermediate Holdings 2 LLC

     

First Lien Term Loan, (SOFR + 3.50%, 0.15% Floor), 3.71%, 12/21/28(b)(c)

     523,410        521,447  
 

 

See accompanying Notes to Financial Statements.  |  13


Apollo Tactical Income Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

     Principal
Amount ($)
    

Value ($)

 

Senior Loans(a) (continued)

     
CONSUMER GOODS: NON-DURABLE (continued)  

ABG Intermediate Holdings 2 LLC

     

Second Lien Term Loan, (SOFR + 6.00%, 0.00% Floor), 6.06%, 12/20/29(b)(c)

     1,710,576        1,719,129  
     

 

 

 
        2,240,576  
     

 

 

 
CONTAINERS, PACKAGING & GLASS - 6.1%  

Anchor Glass Container Corp.

     

First Lien Term Loan, (3M LIBOR + 2.75%, 1.00% Floor), 3.75%, 12/07/23(c)

     3,405,322        2,956,688  

First Lien Term Loan, (3M LIBOR + 5.00%, 1.00% Floor), 6.00%, 12/07/23(c)

     910,786        787,069  

LABL, Inc.

     

First Lien Term Loan, (3M LIBOR + 5.00%, 0.50% Floor), 5.50%, 10/29/28(b)(c)

     5,268,293        5,268,846  

Trident TPI Holdings, Inc.

     

First Lien Delayed Draw Term Loan B3, (3M LIBOR + 4.00%, 0.50% Floor), 4.50%, 09/15/28(c)

     303,783        304,020  

First Lien Term Loan B3, (3M LIBOR + 4.00%, 0.50% Floor), 4.50%, 09/15/28(c)

     5,314,321        5,318,467  
     

 

 

 
        14,635,090  
     

 

 

 
ENERGY: OIL & GAS - 0.9%  

Freeport LNG Investments, LLLP

     

First Lien Term Loan B, (LIBOR + 3.50%, 0.50% Floor), 4.00%, 12/21/28(c)

     2,125,560        2,107,960  
     

 

 

 
ENVIRONMENTAL INDUSTRIES - 1.9%  

Dispatch Acquisition Holdings, LLC

     

First Lien Term Loan B, (3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 03/27/28(c)

     2,985,000        2,986,866  

Trugreen Limited Partnership

     

First Lien Term Loan, (1M LIBOR + 4.00%, 0.75% Floor), 4.75%, 11/02/27(c)

     1,468,492        1,472,067  
     

 

 

 
        4,458,933  
     

 

 

 
FOREST PRODUCTS & PAPER - 1.1%  

Spa US Holdco, Inc. (Finland)

     

First Lien Term Loan B, (3M LIBOR + 4.00%, 0.75% Floor), 4.75%, 02/04/28(c)(e)

     2,690,531        2,697,257  
     

 

 

 
HEALTHCARE & PHARMACEUTICALS - 16.0%  

Azurity Pharmaceuticals, Inc.

     

First Lien Term Loan B, (3M LIBOR + 6.00%, 0.75% Floor), 6.75%, 09/20/27(c)

     2,714,284        2,672,430  

Endo Luxembourg Finance Company I SARL

     

First Lien Term Loan, (3M LIBOR + 5.00%, 0.75% Floor), 5.75%, 03/27/28(c)

     7,197,581        7,019,008  
     Principal
Amount ($)
    

Value ($)

 
HEALTHCARE & PHARMACEUTICALS (continued)  

Gainwell Acquisition Corporation

     

First Lien Term Loan B, (3M LIBOR + 4.00%, 0.75% Floor), 4.75%, 10/01/27(c)

     8,651,268        8,684,791  

Inovalon Holdings, Inc.

     

First Lien Term Loan, (LIBOR + 6.25%, 0.75% Floor), 7.00%, 11/24/28(c)(d)

     6,179,577        6,025,088  

Second Lien Term Loan, (LIBOR + 10.50%, 0.75 Floor), 11.25%, 11/24/33(c)(d)

     100,000        97,000  

LSCS Holdings, Inc.

     

First Lien Term Loan, (LIBOR + 4.50%, 0.50% Floor), 5.00%, 11/23/28(b)(c)

     2,041,884        2,044,947  

Maravai Intermediate Holdings LLC

     

First Lien Term Loan B, (1M LIBOR + 3.75%, 1.00% Floor), 4.75%, 10/19/27(c)

     2,909,438        2,925,804  

MPH Acquisition Holdings, LLC

     

First Lien Term Loan B, (3M LIBOR + 4.25%, 0.50% Floor), 4.75%, 09/01/28(c)

     1,490,541        1,458,874  

Pacira Biosciences, Inc.

     

First Lien Term Loan, (SOFR + 7.00%, 0.75% Floor), 7.75%, 12/07/26(c)(d)

     1,956,016        1,936,456  

Resonetics, LLC

     

First Lien Term Loan, (3M LIBOR + 4.00%, 0.75% Floor), 4.75%, 04/28/28(c)

     4,239,375        4,244,674  

Women’s Care Holdings, Inc.

     

First Lien Term Loan, (3M LIBOR + 4.50%, 0.75% Floor), 5.25%, 01/15/28(c)

     1,097,089        1,096,815  
     

 

 

 
        38,205,887  
     

 

 

 
HIGH TECH INDUSTRIES - 13.7%  

Atlas CC Acquisition Corp.

     

First Lien Term Loan B, (3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 05/25/28(c)

     3,223,753        3,235,085  

First Lien Term Loan C, (3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 05/25/28(c)

     655,679        657,983  

DCert Buyer, Inc.

     

First Lien Term Loan, (1M LIBOR + 4.00%, 0.00% Floor), 4.10%, 10/16/26(c)

     4,465,909        4,463,118  

Second Lien Term Loan, (1M LIBOR + 7.00%, 0.00% Floor), 7.10%, 02/19/29(c)

     3,933,068        3,949,449  

Electronics for Imaging, Inc.

     

First Lien Term Loan, (1M LIBOR + 5.00%, 0.00% Floor), 5.10%, 07/23/26(c)

     1,994,911        1,955,013  

Flexera Software LLC

     

First Lien Term Loan B, (3M/6M LIBOR + 3.75%, 0.75% Floor), 4.50%, 03/03/28(c)

     4,959,151        4,968,797  
 

 

14  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

     Principal
Amount ($)
    

Value ($)

 

Senior Loans(a) (continued)

     
HIGH TECH INDUSTRIES (continued)  

Imperva, Inc.

     

First Lien Term Loan, (3M LIBOR + 4.00%, 1.00% Floor), 5.00%, 01/12/26(b)(c)

     3,834,733        3,834,426  

Ivanti Software, Inc.

     

First Lien Term Loan B, (3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 12/01/27(c)

     4,891,559        4,905,304  

Riverbed Technology, Inc.

     

First Lien Exit Term Loan, (2.00% PIK), (3M LIBOR + 8.00%, 1.00% Floor), 9.00%, 12/07/26(c)(f)

     727,611        713,360  

Sovos Compliance, LLC

     

First Lien Term Loan, (1M LIBOR + 4.50%, 0.50% Floor), 5.00%, 08/11/28(c)

     2,131,849        2,140,014  

UKG, Inc.

     

First Lien Term Loan, (1M LIBOR + 3.25%, 0.50% Floor), 3.75%, 05/04/26(c)

     1,271,524        1,267,016  

VS Buyer, LLC

     

First Lien Term Loan, (1M LIBOR + 3.00%, 0.00% Floor), 3.09%, 02/28/27(b)(c)

     797,970        795,975  
     

 

 

 
        32,885,540  
     

 

 

 
HOTEL, GAMING & LEISURE - 3.0%  

Caesars Resort Collection, LLC

     

First Lien Term Loan B1, (1M LIBOR + 3.50%, 0.00% Floor), 3.60%, 07/21/25(c)

     3,219,928        3,226,368  

The Enterprise Development Authority

     

First Lien Term Loan, (1M LIBOR + 4.25%, 0.75% Floor), 5.00%, 02/28/28(c)

     2,093,656        2,094,535  

Varsity Brands Holding Co., Inc.

     

First Lien Term Loan, (1M LIBOR + 3.50%, 1.00% Floor), 4.50%, 12/16/24(c)

     1,988,357        1,954,804  
     

 

 

 
        7,275,707  
     

 

 

 
MEDIA: ADVERTISING, PRINTING & PUBLISHING - 3.5%  

Advantage Sales & Marketing Inc.

     

First Lien Term Loan B1, (3M LIBOR + 4.50%, 0.75% Floor), 5.25%, 10/28/27(c)

     2,343,341        2,348,907  

F & W Media, Inc.

     

First Lien Term Loan B1, (LIBOR + 6.50%, 1.50% Floor), 0.00%, 05/24/22(c)(d)(g)(j)

     347,024         

First Lien Term Loan B2, (LIBOR + 10.00%, 1.50% Floor), 0.00%, 05/24/22(c)(d)(g)(j)

     1,076,345         

McGraw-Hill Education, Inc.

     

First Lien Term Loan, (1M LIBOR + 4.75%, 0.50% Floor), 5.25%, 07/28/28(c)

     6,146,249        6,128,025  
     

 

 

 
        8,476,932  
     

 

 

 
     Principal
Amount ($)
    

Value ($)

 
MEDIA: BROADCASTING & SUBSCRIPTION - 2.1%  

Anuvu Holdings 2, LLC

     

First Lien Delayed Draw Term Loan, (3M LIBOR + 7.00%, 1.00% Floor), 8.00%, 09/25/23(c)(d)

     57,117        55,689  

First Lien Term Loan, (3M LIBOR + 8.00%, 1.00% Floor), 9.00%, 03/24/25(c)

     2,346,207        2,342,301  

First Lien Term Loan, (6.75% PIK), (3M LIBOR + 8.25%, 1.00% Floor), 9.25%, 03/23/26(c)(f)

     1,835,841        1,560,465  

William Morris Endeavor Entertainment, LLC

     

First Lien Term Loan B, (1M LIBOR + 2.75%, 0.00% Floor), 2.86%, 05/18/25(c)

     1,176,453        1,153,953  
     

 

 

 
        5,112,408  
     

 

 

 
RETAIL - 3.0%  

Charming Charlie, LLC

     

First Lien Delayed Draw Term Loan, 0.00%, 05/28/22(d)(g)(h)(j)

     59,069        8,296  

First Lien Term Loan A, (LIBOR + 5.00%, 1.00% Floor), 0.00%, 04/24/23(c)(d)(g)(j)

     261,799         

First Lien Term Loan B, (LIBOR + 1.00%, 1.00% Floor), 0.00%, 04/24/23(c)(d)(g)(j)

     320,539         

First Lien Vendor Term Loan, 0.00%, 05/15/20(d)(g)(h)(j)

     10,627        1,492  

Empire Today, LLC

     

First Lien Term Loan, (3M LIBOR + 5.00%, 0.75% Floor), 5.75%, 03/24/28(c)

     2,761,726        2,718,574  

PetSmart, Inc.

     

First Lien Term Loan, (6M LIBOR + 3.75%, 0.75% Floor), 4.50%, 02/11/28(c)

     4,451,629        4,464,161  
     

 

 

 
        7,192,523  
     

 

 

 
SERVICES: BUSINESS - 9.4%  

Allied Universal Holdco LLC

     

First Lien Term Loan, (3M LIBOR + 3.75%, 0.50% Floor), 4.25%, 05/12/28(c)

     3,087,198        3,081,039  

CareStream Health, Inc.

     

First Lien Term Loan, (6M LIBOR + 6.75%, 1.00% Floor), 7.75%, 05/08/23(b)(c)

     56,852        57,125  

Second Lien Term Loan, (8.00% PIK), (6M LIBOR + 12.50%, 1.00% Floor), 13.50%, 08/08/23(c)(d)(f)

     1,180,326        970,818  

Deerfield Dakota Holding, LLC

     

First Lien Term Loan, (1M LIBOR + 3.75%, 1.00% Floor), 4.75%, 04/09/27(c)

     926,631        928,878  

DTI Holdco, Inc.

     

First Lien Term Loan B, (3M LIBOR + 4.75%, 1.00% Floor), 5.75%, 09/29/23(c)

     7,599,584        7,487,186  
 

 

See accompanying Notes to Financial Statements.  |  15


Apollo Tactical Income Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

     Principal
Amount ($)
    

Value ($)

 

Senior Loans(a) (continued)

     
SERVICES: BUSINESS (continued)  

Endure Digital, Inc.

     

First Lien Term Loan B, (6M LIBOR + 3.50%, 0.75% Floor), 4.25%, 02/10/28(c)

     3,860,912        3,833,770  

eResearchTechnology, Inc.

     

First Lien Term Loan B, (1M LIBOR + 4.50%, 1.00% Floor), 5.50%, 02/04/27(c)

     1,128,950        1,134,205  

Solera, LLC

     

First Lien Term Loan B, (3M LIBOR + 4.00%, 0.50% Floor), 4.50%, 06/02/28(c)

     1,600,401        1,602,314  

Second Lien Term Loan, (1M LIBOR + 8.00%, 1.00% Floor), 9.00%, 06/04/29(c)

     3,268,689        3,321,805  
     

 

 

 
        22,417,140  
     

 

 

 
SERVICES: CONSUMER - 1.3%  

Mavis Tire Express Services Corp.

     

First Lien Term Loan B, (1M LIBOR + 4.00%, 0.75% Floor), 4.75%, 05/04/28(b)(c)

     2,992,481        2,999,035  
     

 

 

 
TELECOMMUNICATIONS - 14.1%  

Flight Bidco, Inc.

     

First Lien Term Loan, (1M LIBOR + 3.50%, 0.00% Floor), 3.60%, 07/23/25(c)

     3,425,310        3,391,057  

Intelsat Jackson Holdings S.A. (Luxembourg)

     

First Lien DIP Term Loan, (3M LIBOR + 4.75%, 1.00% Floor), 5.75%, 07/13/22(c)(e)

     3,636,873        3,642,565  

First Lien Exit Term Loan A, (LIBOR + 2.75%, 0.00% Floor), 2.75%, 12/07/22(b)(c)(d)(e)

     3,500,000        3,482,500  

First Lien Exit Term Loan B, (LIBOR + 4.25%, 0.50% Floor), 4.75%, 12/08/28(b)(c)(d)(e)

     3,500,000        3,473,750  

First Lien Term Loan, (Prime + 5.50%, 2.00% Floor), 8.75%, 01/02/24(c)(e)(g)

     5,735,607        5,740,080  

First Lien Term Loan B, (Prime + 4.75%, 2.00% Floor), 8.00%, 11/27/23(c)(e)(g)

     1,188,001        1,188,244  

First Lien Term Loan B5, 8.63%, 01/02/24(e)(g)(h)

     5,056,202        5,063,306  

Orbcomm, Inc.

     

First Lien Term Loan, (1M/3M LIBOR + 4.25%, 0.75% Floor), 5.00%, 09/01/28(c)

     1,620,938        1,622,964  

U.S. TelePacific Corp.

     

First Lien Term Loan B, (6M LIBOR + 6.00%, 1.00% Floor), 7.00%, 05/02/23(c)

     5,765,795        4,358,423  

Zacapa SARL (Luxembourg)

     

First Lien Term Loan B, (3M LIBOR + 4.50%, 0.00% Floor), 4.72%, 07/02/25(c)(e)

     1,665,208        1,670,412  
     

 

 

 
        33,633,301  
     

 

 

 
     Principal
Amount ($)
    

Value ($)

 
TRANSPORTATION: CONSUMER - 5.2%  

The Hertz Corporation

     

First Lien Term Loan B, (1M LIBOR + 3.25%, 0.50% Floor), 3.75%, 06/30/28(c)

     3,231,507        3,238,471  

First Lien Term Loan C, (1M LIBOR + 3.25%, 0.50% Floor), 3.75%, 06/30/28(c)

     612,075        613,394  

Travel Leaders Group, LLC

     

First Lien Term Loan B, (1M LIBOR + 4.00%, 0.00% Floor), 4.10%, 01/25/24(c)

     3,976,781        3,648,299  

United Airlines, Inc.

     

First Lien Term Loan B, (3M LIBOR + 3.75%, 0.75% Floor), 4.50%, 04/21/28(c)

     4,915,389        4,944,145  
     

 

 

 
        12,444,309  
     

 

 

 
WHOLESALE - 2.0%  

LBM Acquisition, LLC

     

First Lien Term Loan B, (3M LIBOR + 3.75%, 0.75% Floor), 4.50%, 12/17/27(b)(c)

     4,771,578        4,736,172  
     

 

 

 

Total Senior Loans
(Cost $273,894,721)

        270,292,813  
     

 

 

 

Corporate Notes and Bonds - 28.0%

 

AEROSPACE & DEFENSE - 1.8%  

Transdigm, Inc.
8.00%, 12/15/25(h)(i)

     1,068,000        1,128,059  

6.25%, 03/15/26(h)(i)

     3,000,000        3,121,920  
     

 

 

 
        4,249,979  
     

 

 

 
AUTOMOTIVE - 1.4%  

Carvana Co.
5.88%, 10/01/28(h)(i)

     1,000,000        997,655  

4.88%, 09/01/29(h)(i)

     2,527,000        2,410,632  
     

 

 

 
        3,408,287  
     

 

 

 
BANKING, FINANCE, INSURANCE & REAL ESTATE - 1.1%  

Alliant Holdings Intermediate, LLC 5.88%, 11/01/29(h)(i)

     2,000,000        2,037,640  

KCF Puerto Rico, LLC
0.00%, 06/28/28(d)(j)

     1,226,187        709,303  
     

 

 

 
        2,746,943  
     

 

 

 
BEVERAGE, FOOD & TOBACCO - 0.9%  

JBS, S.A.
5.50%, 01/15/30(h)(i)

     2,000,000        2,178,360  
     

 

 

 
CAPITAL EQUIPMENT - 0.9%  

Clark Equipment Company (Republic of Korea)
5.88%, 06/01/25(e)(h)(i)

     2,000,000        2,083,370  
     

 

 

 
CHEMICALS, PLASTICS, & RUBBER - 1.3%  

LSF11 A5 HoldCo, LLC
6.63%, 10/15/29(h)(i)

     1,000,000        986,405  

W.R. Grace & Co.
4.88%, 06/15/27(h)(i)

     2,000,000        2,056,760  
     

 

 

 
        3,043,165  
     

 

 

 
 

 

16  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

     Principal
Amount ($)
    

Value ($)

 

Corporate Notes and Bonds (continued)

 

CONTAINERS, PACKAGING & GLASS - 0.9%  

LABL, Inc.

     

5.88%, 11/01/28(h)(i)

     1,000,000        1,032,500  

8.25%, 11/01/29(h)(i)

     1,000,000        1,007,425  
     

 

 

 
        2,039,925  
     

 

 

 
ENERGY: OIL & GAS - 1.2%  

Moss Creek Resources Holdings, Inc.

     

7.50%, 01/15/26(h)(i)

     836,000        782,530  

10.50%, 05/15/27(h)(i)

     2,089,000        2,109,430  
     

 

 

 
        2,891,960  
     

 

 

 
HEALTHCARE & PHARMACEUTICALS - 3.5%  

Bausch Health Companies, Inc. 5.00%, 01/30/28(h)(i)

     2,000,000        1,843,150  

Encompass Health Corp.

     

4.75%, 02/01/30(h)

     3,651,000        3,765,915  

4.63%, 04/01/31(h)

     1,349,000        1,374,652  

RP Escrow Issuer, LLC

     

5.25%, 12/15/25(h)(i)

     1,463,000        1,477,732  
     

 

 

 
        8,461,449  
     

 

 

 
HIGH TECH INDUSTRIES - 0.9%  

SS&C Technologies, Inc.

     

5.50%, 09/30/27(h)(i)

     2,000,000        2,092,410  
     

 

 

 
HOTEL, GAMING & LEISURE - 1.7%  

Churchill Downs, Inc.

     

5.50%, 04/01/27(h)(i)

     2,000,000        2,062,000  

Life Time, Inc.

     

5.75%, 01/15/26(h)(i)

     2,000,000        2,072,350  
     

 

 

 
        4,134,350  
     

 

 

 
MEDIA: ADVERTISING, PRINTING & PUBLISHING - 2.3%  

Advantage Sales & Marketing Inc. 6.50%, 11/15/28(h)(i)

     2,121,000        2,225,279  

McGraw-Hill Education, Inc.

     

5.75%, 08/01/28(h)(i)

     1,280,000        1,269,139  

Outfront Media Capital, LLC

     

5.00%, 08/15/27(h)(i)

     2,000,000        2,049,080  
     

 

 

 
        5,543,498  
     

 

 

 
MEDIA: BROADCASTING & SUBSCRIPTION - 2.1%  

CSC Holdings, LLC
5.75%, 01/15/30(h)(i)

     5,000,000        4,991,075  
     

 

 

 
METALS & MINING - 0.0%  

ERP Iron Ore, LLC

     

LIBOR + 8.00%, 0.00%,
12/31/19(d)(g)(j)

     86,775         

Magnetation, LLC / Mag Finance Corp.

     

0.00%, 05/15/18(d)(g)(h)(i)(j)

     2,937,000         
     

 

 

 
         
     

 

 

 
RETAIL - 0.9%  

PetSmart, Inc.
7.75%, 02/15/29(h)(i)

     2,000,000        2,176,030  
     

 

 

 
     Principal
Amount ($)
    

Value ($)

 
SERVICES: BUSINESS - 0.9%  

II-VI Incorporated
5.00%, 12/15/29(h)(i)

     2,000,000        2,046,600  
     

 

 

 
SERVICES: CONSUMER - 0.8%  

Mavis Tire Express Services Corp. 6.50%, 05/15/29(h)(i)

     2,000,000        1,967,190  
     

 

 

 
TELECOMMUNICATIONS - 2.5%  

Lumen Technologies, Inc.
4.00%, 02/15/27(h)(i)

     3,000,000        3,047,400  

4.25%, 07/01/28(h)(i)

     3,000,000        2,974,860  
     

 

 

 
        6,022,260  
     

 

 

 
TRANSPORTATION: CONSUMER - 1.7%  

United Airlines Holdings, Inc. 5.88%, 10/15/27(h)

     3,613,200        3,964,636  
     

 

 

 
WHOLESALE - 1.2%  

LBM Acquisition, LLC
6.25%, 01/15/29(h)(i)

     2,952,000        2,922,952  
     

 

 

 

Total Corporate Notes and Bonds
(Cost $64,995,555)

        66,964,439  
     

 

 

 

Structured Products - 10.2%(m)

 

Anchorage Capital CLO, Ltd. (Cayman Islands)

     

2015-6A, Class ER, 6.47%, 07/15/30(e)(i)(n)

     4,400,000        4,253,858  

Churchill Middle Market CLO, Ltd. (Cayman Islands)

     

2021-1A E, Class E, 8.29%, 10/24/33(e)(i)(n)

     4,000,000        3,912,956  

Fortress Credit BSL CLO, Ltd. (Cayman Islands)

     

2021-3 Class E, 7.18%,
07/20/34(e)(i)(n)

     3,000,000        2,880,114  

Fortress Credit Opportunities CLO, Ltd. (Cayman Islands)

     

2018-11A, Class E, 7.27%, 04/15/31(e)(i)(n)

     4,000,000        3,811,476  

Golub Capital Partners CLO, Ltd. (Cayman Islands)

     

2021-55A, Class E, 6.65%, 07/20/34(e)(i)(n)

     2,000,000        1,918,064  

KKR Financial CLO, Ltd. (Cayman Islands)

     

2017, Class ER, 7.51%,
04/15/34(e)(i)(n)

     2,750,000        2,736,217  

TIAA Churchill Middle Market CLO, Ltd. (Cayman Islands)

     

2016-1A, Class ER, 8.10%, 10/20/30(e)(i)(n)

     5,000,000        4,982,760  
     

 

 

 

Total Structured Products
(Cost $24,691,991)

        24,495,445  
     

 

 

 
 

 

See accompanying Notes to Financial Statements.  |  17


Apollo Tactical Income Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

     Quantity     

Value ($)

 

Common Stocks - 1.1%

 

AUTOMOTIVE - 0.0%  

APC Parent, Inc.(d)(j)

     241,972        114,671  
     

 

 

 
ENERGY: OIL & GAS - 0.0%  

RDV Resources, Inc.(d)(j)

     7,743         
     

 

 

 
HIGH TECH INDUSTRIES - 0.2%  

Riverbed Holdings, Inc.(j)

     29,146        388,612  
     

 

 

 
MEDIA: ADVERTISING, PRINTING & PUBLISHING - 0.0%  

Acosta, Inc.(d)(j)

     3,133        25,399  

F & W Media, Inc.(d)(j)

     9,511         
     

 

 

 
        25,399  
     

 

 

 
MEDIA: BROADCASTING & SUBSCRIPTION - 0.9%  

Anuvu Corp.(d)(j)

     102,608        2,046,003  
     

 

 

 
RETAIL - 0.0%  

Charming Charlie, LLC(d)(j)

     2,679,190         
     

 

 

 

Total Common Stocks
(Cost $4,160,333)

        2,574,685  
     

 

 

 
     Quantity     

Value ($)

 

Preferred Stocks - 0.6%

 

BANKING, FINANCE, INSURANCE & REAL ESTATE - 0.4%  

Somers Group Holdings Ltd. (Bermuda)

     

(LIBOR + 6.68%, 1.00% Floor),
7.68%(d)(e)

     37,863        960,774  
     

 

 

 
HIGH TECH INDUSTRIES - 0.1%  

Riverbed Holdings, Inc.

     19,948        388,986  
     

 

 

 
MEDIA: ADVERTISING, PRINTING & PUBLISHING - 0.1%  

Acosta, Inc.,

     

(14.5% PIK), 0.00%(d)(f)(h)

     3,353        156,028  
     

 

 

 

Total Preferred Stocks
(Cost $1,586,309)

        1,505,788  
     

 

 

 

Warrants - 0.0%

 

SERVICES: BUSINESS - 0.0%  

CareStream Health, Inc.(d)(j)

     22         
     

 

 

 

Total Warrants
(Cost $0)

         
     

 

 

 

Total Investments-152.9%

        365,833,170  

(Cost of $369,328,909)

     

Other Assets & Liabilities,
Net-(2.4)%

 

     (5,678,181

Loan Outstanding-(50.5)%(k)(l)

        (120,927,969
     

 

 

 

Net Assets (Applicable to Common Shares)-100.0%

        239,227,020  
     

 

 

 
 

 

18  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Schedule of Investments (continued)

December 31, 2021

 

(a) 

“Senior Loans” are senior, secured loans made to companies whose debt is below investment grade as well as investments with similar economic characteristics. Senior Loans typically hold a first lien priority and, unless otherwise indicated, are required to pay interest at floating rates that are periodically reset by reference to a base lending rate plus a spread. In some instances, the rates shown represent the weighted average rate as of December 31, 2021. Senior Loans are generally not registered under the Securities Act of 1933 (the “1933 Act”) and often incorporate 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.

(b) 

All or a portion of this Senior Loan position has not settled. Full contract rates do not take effect until settlement date and therefore are subject to change.

(c) 

The interest rate on this Senior Loan is subject to a base lending rate plus a spread. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) or the Secured Overnight Financing Rate (“SOFR”) and secondarily the prime rate offered by one or more major U.S. banks (“Prime”). The interest rate is subject to a minimum floor, which may be less than or greater than the prevailing period end LIBOR/SOFR/Prime rate. As of December 31, 2021, the 1, 2, 3 and 6 month LIBOR rates were 0.10%, 0.15%, 0.21% and 0.34%, respectively, the 30, 90 and 180 day average SOFR rates were 0.05%, 0.05% and 0.05%, respectively, and the Prime lending rate was 3.25%. Senior Loans may contain multiple contracts of the same issuer which may be subject to base lending rates of LIBOR, SOFR and Prime (“Variable”) in addition to the stated spread.

(d) 

Fair Value Level 3 security.

(e) 

Foreign issuer traded in U.S. dollars.

(f) 

Represents a payment-in-kind (“PIK”) security, which may pay interest in additional principal amount/share quantity.

(g) 

Issuer filed for bankruptcy and/or is in default of principal and/or interest payments.

(h) 

Fixed rate 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 December 31, 2021, these securities amounted to $81,645,379, or 34.1% of net assets.

(j) 

Non-income producing asset.

(k) 

The Fund has granted a security interest in substantially all of its assets in the event of default under the credit facility.

(l) 

Principal of $121,000,000 less unamortized deferred financing costs of $72,031.

(m) 

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.

(n) 

Floating rate asset. The interest rate shown reflects the rate in effect at December 31, 2021.

 

See accompanying Notes to Financial Statements.  |  19


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Statements of Assets and Liabilities

December 31, 2021

 

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

Assets:

       

Investment securities at fair value (cost $392,480,636 and $369,328,909, respectively)

   $ 387,165,035        $ 365,833,170  

Cash and cash equivalents

     26,201,080          18,531,435  

Interest receivable

     871,365          2,194,500  

Receivable for investment securities sold

     31,404,429          27,338,335  

Net unrealized appreciation on unfunded loan commitments (Note 9)

     7,511          7,544  

Receivable from affiliate

     62,759          213,399  

Prepaid expenses

     137,037          137,165  
  

 

 

      

 

 

 

Total assets

   $ 445,849,216        $ 414,255,548  
  

 

 

      

 

 

 

Liabilities:

       

Borrowings under credit facility (principal $130,000,000 and $121,000,000, respectively, less unamortized deferred financing costs of $100,591 and $72,031, respectively) (Note 8)

   $ 129,899,409        $ 120,927,969  

Payable for investment securities purchased

     59,133,109          53,513,573  

Interest payable

     83,880          82,274  

Investment advisory fee payable

     327,768          305,390  

Other payables and accrued expenses

     204,211          199,322  
  

 

 

      

 

 

 

Total liabilities

   $ 189,648,377        $ 175,028,528  
  

 

 

      

 

 

 

Commitments and Contingencies (Note 9)

       

Net Assets (Applicable to Common Shareholders)

   $ 256,200,839        $ 239,227,020  
  

 

 

      

 

 

 

Net Assets Consist of:

       

Paid-in capital ($0.001 par value, 999,998,466 and 1,000,000,000 common shares authorized, respectively, and 15,573,575 and 14,464,026 issued and outstanding, respectively) (Note 6)

   $ 295,515,991        $ 275,434,361  

Total accumulated loss

     (39,315,152        (36,207,341
  

 

 

      

 

 

 

Net Assets (Applicable to Common Shareholders)

   $ 256,200,839        $ 239,227,020  
  

 

 

      

 

 

 

Number of Common Shares Outstanding

     15,573,575          14,464,026  

Net Asset Value, per Common Share

   $ 16.45        $ 16.54  

 

20  |  See accompanying Notes to Financial Statements.


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Statements of Operations

For the Year Ended December 31, 2021

 

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

Investment Income:

       

Interest

   $ 19,833,883        $ 19,668,572  

Dividends (net of withholding taxes of $107,486 and $99,218, respectively)

     1,022,427          947,938  
  

 

 

      

 

 

 

Total investment income

     20,856,310          20,616,510  
  

 

 

      

 

 

 

Expenses:

       

Investment advisory fee (Note 3)

     3,857,083          3,578,216  

Interest and commitment fee expense (Note 8)

     1,186,304          1,168,325  

Professional fees

     128,820          128,820  

Legal fees

     376,310          387,316  

Administrative services of the Adviser (Note 3)

     846,784          864,157  

Fund administration and accounting services (Note 3)

     216,635          206,631  

Insurance expense

     329,898          329,898  

Amortization of deferred financing costs (Note 8)

     169,126          186,456  

Board of Directors fees (Note 3)

     153,000          157,000  

Other operating expenses

     232,428          226,367  
  

 

 

      

 

 

 

Total expenses

     7,496,388          7,233,186  

Less: Expense waiver (Note 3)

     (62,759        (213,399
  

 

 

      

 

 

 

Net expenses

     7,433,629          7,019,787  
  

 

 

      

 

 

 

Net Investment Income

     13,422,681          13,596,723  
  

 

 

      

 

 

 

Net Realized and Unrealized Gain/(Loss) on Investments

       

Net realized gain on investments

     8,519,152          9,474,722  

Net change in unrealized depreciation on investments and unfunded loan commitments (Note 9)

     (2,193,025        (4,687,659
  

 

 

      

 

 

 

Net realized and unrealized gain on investments

     6,326,127          4,787,063  
  

 

 

      

 

 

 

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

   $ 19,748,808        $ 18,383,786  
  

 

 

      

 

 

 

 

See accompanying Notes to Financial Statements.  |  21


Apollo Senior Floating Rate Fund Inc.

Statements of Changes in Net Assets

 

     

For the
Year Ended
December 31, 2021

       For the
Year Ended
December 31, 2020
 

Increase/(Decrease) in Net Assets from:

       

Operations

       

Net investment income

   $ 13,422,681        $ 15,243,667  

Net realized gain/(loss) on investments

     8,519,152          (16,813,877

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

     (2,193,025        5,166,187  
  

 

 

      

 

 

 

Net increase in net assets from operations

     19,748,808          3,595,977  
  

 

 

      

 

 

 

Distributions to Common Shareholders

       

From net investment income

     (13,989,900        (15,868,950

Return of capital

     (1,100,440         
  

 

 

      

 

 

 

Total distributions to common shareholders

     (15,090,340        (15,868,950
  

 

 

      

 

 

 

Capital transactions from Common Shares

       

Reinvestment of dividends

     8,416           
  

 

 

      

 

 

 

Total increase/(decrease) in net assets

   $ 4,666,884        $ (12,272,973

Net Assets Applicable to Common Shares

       

Beginning of year

     251,533,955          263,806,928  
  

 

 

      

 

 

 

End of year

   $ 256,200,839        $ 251,533,955  
  

 

 

      

 

 

 

 

22  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Statements of Changes in Net Assets

 

     

For the
Year Ended
December 31, 2021

       For the
Year Ended
December 31, 2020
 

Increase/(Decrease) in Net Assets from:

       

Operations

       

Net investment income

   $ 13,596,723        $ 14,816,639  

Net realized gain/(loss) on investments

     9,474,722          (14,550,431

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

     (4,687,659        6,636,493  
  

 

 

      

 

 

 

Net increase in net assets from operations

     18,383,786          6,902,701  
  

 

 

      

 

 

 

Distributions to Common Shareholders

       

From net investment income

     (14,244,987        (15,375,260

Return of capital

     (190,110         
  

 

 

      

 

 

 

Total distributions to common shareholders

     (14,435,097        (15,375,260
  

 

 

      

 

 

 

Total increase/(decrease) in net assets

   $ 3,948,689        $ (8,472,559

Net Assets Applicable to Common Shares

       

Beginning of year

     235,278,331          243,750,890  
  

 

 

      

 

 

 

End of year

   $ 239,227,020        $ 235,278,331  
  

 

 

      

 

 

 

 

See accompanying Notes to Financial Statements.  |  23


Apollo Senior Floating Rate Fund Inc.

Statement of Cash Flows

For the Year Ended December 31, 2021

 

 

Cash Flows from Operating Activities:

          

Net increase in net assets from operations

     $ 19,748,808  

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

    

Net realized gain on investments

       (8,519,152

Net change in unrealized depreciation on investments and unfunded loan commitments

       2,193,025  

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

       (1,349,439

Purchase of investment securities

       (450,330,230

Proceeds from disposition of investment securities and principal paydowns

       467,347,356  

Payment-in-kind interest

       (290,234

Amortization of deferred financing costs

       169,126  

Changes in Operating Assets and Liabilities:

    

Increase in interest receivable

       (40,250

Increase in receivable from affiliate

       (62,759

Increase in prepaid expenses

       (9,958

Increase in interest payable

       80,450  

Increase in investment advisory fee payable

       12,260  

Increase in other payables and accrued expenses

       45,970  
    

 

 

 

Net cash flows provided by operating activities

       28,994,973  
    

 

 

 

Cash Flows from Financing Activities:

    

Deferred financing costs paid

       (242,113

Proceeds from borrowings under the credit facility

       9,000,000  

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

       (16,623,657
    

 

 

 

Net cash flows used in financing activities

       (7,865,770
    

 

 

 

Net Increase in Cash and Cash Equivalents

       21,129,203  

Cash and cash equivalents, beginning of year

       5,071,877  
    

 

 

 

Cash and cash equivalents, end of year

     $ 26,201,080  
    

 

 

 

Supplemental Disclosure of Cash Flow Information

    

Cash paid during the year for interest and commitment fee

     $ 1,105,854  
    

 

 

 

Supplemental Disclosure of Non-Cash Financing Activity

    

Value of common shares issued as reinvestment of dividends to common shareholders

     $ 8,416  
    

 

 

 

 

24  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Statement of Cash Flows

For the Year Ended December 31, 2021

 

 

Cash Flows from Operating Activities:

        

Net increase in net assets from operations

   $ 18,383,786  

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

  

Net realized gain on investments

     (9,474,722

Net change in unrealized depreciation on investments and unfunded loan commitments

     4,687,659  

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

     (1,009,861

Purchase of investment securities

     (474,710,113

Proceeds from disposition of investment securities and principal paydowns

     482,841,836  

Payment-in-kind interest

     (178,790

Amortization of deferred financing costs

     186,456  

Changes in Operating Assets and Liabilities:

  

Increase in interest receivable

     (214,716

Increase in receivable from affiliate

     (213,399

Increase in prepaid expenses

     (10,086

Increase in interest payable

     79,156  

Increase in investment advisory fee payable

     13,499  

Increase in other payables and accrued expenses

     2,528  
  

 

 

 

Net cash flows provided by operating activities

     20,383,233  
  

 

 

 

Cash Flows from Financing Activities:

  

Deferred financing costs paid

     (78,675

Proceeds from borrowings under the credit facility

     11,000,000  

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

     (15,910,428
  

 

 

 

Net cash flows used in financing activities

     (4,989,103
  

 

 

 

Net Increase in Cash and Cash Equivalents

     15,394,130  

Cash and cash equivalents, beginning of year

     3,137,305  
  

 

 

 

Cash and cash equivalents, end of year

   $ 18,531,435  
  

 

 

 

Supplemental Disclosure of Cash Flow Information

  

Cash paid during the year for interest and commitment fee

   $ 1,089,169  

 

See accompanying Notes to Financial Statements.  |  25


Apollo Senior Floating Rate Fund Inc.

Financial Highlights

For a Common Share Outstanding

 

Per Common Share Operating Performance:  

For the Year
Ended
December 31,
2021

    For the Year
Ended
December 31,
2020
    For the Year
Ended
December 31,
2019
    For the Year
Ended
December 31,
2018
    For the Year
Ended
December 31,
2017
 

Net Asset Value, Beginning of Year

  $ 16.15     $ 16.94     $ 16.34     $ 17.86     $ 18.07  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from Investment Operations:

         

Net investment income(a)

    0.86       0.98       1.21       1.25       1.13  

Net realized and unrealized gain/(loss) on investments and unfunded loan commitments

    0.41       (0.75     0.59       (1.51     (0.18
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    1.27       0.23       1.80       (0.26     0.95  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less Distributions Paid to Common Shareholders from:

         

Net investment income

    (0.90     (1.02     (1.20     (1.26     (1.16

Return of capital

    (0.07                        
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions paid to Common Shareholders

    (0.97     (1.02     (1.20     (1.26     (1.16
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Asset Value, End of Year

  $ 16.45     $ 16.15     $ 16.94     $ 16.34     $ 17.86  

Market Value, End of Year

  $ 16.11     $ 14.40     $ 15.14     $ 14.39     $ 16.22  

Total return based on net asset value(b)

    8.38     2.99     12.35     (0.98 )%      5.80

Total return based on market value(b)

    19.04     2.75     14.02     (3.98 )%      (0.22 )% 

Ratios to Average Net Assets Applicable to Common Shareholders:

         

Ratio of total expenses to average net assets

    2.91     3.12     4.01     3.84     3.33

Ratio of net expenses to average net assets

    2.89     3.12     4.01     3.84     3.33

Ratio of net investment income to average net assets

    5.22     6.37     7.23     7.10     6.24

Supplemental Data:

         

Portfolio turnover rate

    123.3     93.6     101.2     122.4     102.2

Net assets at end of year (000’s)

  $ 256,201     $ 251,534     $ 263,807     $ 254,427     $ 278,070  

Senior Securities:

         

Principal loan outstanding (in 000’s)

  $ 130,000     $ 121,000     $ 141,000     $ 141,000     $ 141,000  

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

  $ 2,971     $ 3,079     $ 2,871     $ 2,804     $ 2,972  

 

(a) 

Based on the weighted average outstanding shares.

(b) 

Total return based on net asset value and total return based on market value assuming all distributions reinvested at reinvestment rate.

(c) 

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.

 

26  |  See accompanying Notes to Financial Statements.


Apollo Tactical Income Fund Inc.

Financial Highlights

For a Common Share Outstanding

 

Per Common Share Operating Performance:  

For the Year
Ended
December 31,
2021

    For the Year
Ended
December 31,
2020
    For the Year
Ended
December 31,
2019
    For the Year
Ended
December 31,
2018
    For the Year
Ended
December 31,
2017
 

Net Asset Value, Beginning of Year

  $ 16.27     $ 16.85     $ 16.07     $ 17.44     $ 17.18  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from Investment Operations:

         

Net investment income(a)

    0.94       1.02       1.25       1.33       1.27  

Net realized and unrealized gain/(loss) on investments and unfunded loan commitments

    0.33       (0.54     0.77       (1.38     0.28  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    1.27       0.48       2.02       (0.05     1.55  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less Distributions Paid to Common Shareholders from:

         

Net investment income

    (0.99     (1.06     (1.24     (1.32     (1.29

Return of capital

    (0.01                        
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total distributions paid to Common Shareholders

    (1.00     (1.06     (1.24     (1.32     (1.29
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Asset Value, End of Year

  $ 16.54     $ 16.27     $ 16.85     $ 16.07     $ 17.44  

Market Value, End of Year

  $ 15.32     $ 14.48     $ 15.10     $ 13.77     $ 15.75  

Total return based on net asset value(b)

    8.44     4.71     13.97     0.47     9.87

Total return based on market value(b)

    12.86     3.99     19.20     (4.67 )%      10.47

Ratios to Average Net Assets Applicable to Common Shareholders:

         

Ratio of total expenses to average net assets

    3.01     3.16     4.03     3.85     3.53

Ratio of net expenses to average net assets

    2.92     3.16     4.03     3.85     3.53

Ratio of net investment income to average net assets

    5.66     6.72     7.53     7.65     7.27

Supplemental Data:

         

Portfolio turnover rate

    137.5     96.4     112.3     130.9     111.8

Net assets at end of year (000’s)

  $ 239,227     $ 235,278     $ 243,751     $ 232,432     $ 252,265  

Senior Securities:

         

Principal loan outstanding (in 000’s)

  $ 121,000     $ 110,000     $ 126,500     $ 126,500     $ 138,000  

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

  $ 2,977     $ 3,139     $ 2,927     $ 2,837     $ 2,828  

 

(a) 

Based on the weighted average outstanding shares.

(b) 

Total return based on net asset value and total return based on market value assuming all distributions reinvested at reinvestment rate.

(c) 

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.

 

See accompanying Notes to Financial Statements.  |  27


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements

December 31, 2021

 

Note 1. Organization and Operation

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 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, Inc. (“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”) or the Secured Overnight Financing Rate (“SOFR”), 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.

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

 

28  |  Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

December 31, 2021

 

management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

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.

 

Annual Report  |  29


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

December 31, 2021

 

The valuation techniques used by the Funds to measure fair value at December 31, 2021 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. Summaries of the Funds’ investments categorized in the fair value hierarchy as of December 31, 2021 are as follows:

 

Apollo Senior Floating Rate Fund Inc.
    Total Fair Value at
December 31, 2021
  Level 1
Quoted Price
  Level 2
Significant
Observable
Inputs
  Level 3
Significant
Unobservable
Inputs
               

Assets:

               

Cash and Cash Equivalents

    $ 26,201,080     $ 26,201,080     $     $

Senior Loans

      376,936,032             365,473,954       11,462,078

Corporate Notes and Bonds

      5,939,356             5,170,945       768,411

Common Stocks

      2,737,177             435,252       2,301,925

Preferred Stocks

      1,552,470           435,669       1,116,801

Warrants

                       

Unrealized appreciation on Unfunded Loan Commitments

      17,060             17,060      
   

 

 

     

 

 

     

 

 

     

 

 

 

Total Assets

    $ 413,383,175     $ 26,201,080     $ 371,532,880     $ 15,649,215
   

 

 

     

 

 

     

 

 

     

 

 

 

Liabilities:

               

Unrealized depreciation on Unfunded Loan Commitments

      (9,549 )             (8,128 )       (1,421 )
   

 

 

     

 

 

     

 

 

     

 

 

 

Total Liabilities

      (9,549 )             (8,128 )       (1,421 )
   

 

 

     

 

 

     

 

 

     

 

 

 
    $ 413,373,626     $ 26,201,080     $ 371,524,752     $ 15,647,794
   

 

 

     

 

 

     

 

 

     

 

 

 

The following is a reconciliation of Level 3 holdings for which significant unobservable inputs were used in determining fair value as of December 31, 2021:

 

Apollo Senior Floating Rate Fund Inc.
    Total  

Senior

Loans

  Corporate
Notes
and
Bonds
  Common
Stocks
  Preferred
Stocks
  Warrants   Unfunded
Loan
Commitments

Total Fair Value, beginning of year

    $ 19,227,669     $ 13,735,856     $     $ 5,318,468     $ 136,991     $ 36,354     $

Purchases, including capitalized PIK

      14,123,199       11,819,316             2,303,883                  

Sales/Paydowns

      (23,438,959 )       (13,770,590 )             (9,668,369 )                  

Accretion/(amortization) of discounts/ (premiums)

      28,217       28,217                              

Net realized gain/(loss)

      4,374,749       (2,021,554 )             6,447,329             (51,026 )      

Change in net unrealized appreciation/ (depreciation)

      372,145       1,670,833       768,411       (2,099,386 )       19,036       14,672       (1,421 )

Transfers into Level 3

      960,774                         960,774            

Transfers out of Level 3

                                         
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Fair Value, end of year

    $ 15,647,794     $ 11,462,078     $ 768,411     $ 2,301,925     $ 1,116,801     $     $ (1,421 )
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

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 above. The net change in unrealized appreciation/(depreciation) attributable to Level 3 investments still held at December 31, 2021 was $658,554.

 

30  |  Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

December 31, 2021

 

The following table provides quantitative measures used to determine the fair values of the Level 3 investments as of December 31, 2021:

 

Apollo Senior Floating Rate Fund Inc.    
Assets/Liabilities   Fair Value at
December 31, 2021
  Valuation Technique(s)(a)   Unobservable Input(s)   Range of
Unobservable
Input(s) Utilized
  Weighted Average
Unobservable Input(s)

Senior Loans

    $  1,936,456  

Independent pricing service and/or broker quotes

  Vendor and/or broker quotes   N/A   N/A
      2,080,550  

Guideline Public Company(b)

  TEV | EBITDA Multiple(b)   3.4x-3.8x   3.6x
      32,480  

Recoverability(c)

  Estimated Proceeds(c)   $843k   $843k
       

Recoverability(c)

  Estimated Proceeds(c)   $—   $—
      58,842  

Discounted Cash Flow(d)

  Discount Rate(d)   9.69%-10.69%
  10.19%
      7,353,750  

Transaction Approach (e)

  Cost (e)   N/A   N/A

Corporate Notes and Bonds

      768,411  

Recoverability (c)

Discounted Cash Flow (d)

 

Estimated Proceeds (c)

Discount Rate (d)

  $53.9m

0.60%

  $53.9m

0.60%

       

Recoverability(c)

  Estimated Proceeds(c)   $—   $—

Common Stocks

      25,399  

Guideline Public Company(b)

  TEV | EBITDA Multiple(b)   7.0x   7.0x
       

Recoverability(c)

  Estimated Proceeds(c)   $843k   $843k
       

Recoverability(c)

  Estimated Proceeds(c)   $—   $—
      114,671  

Recoverability(c)

  Estimated Proceeds(c)   $0.47   $0.47
      2,161,855  

Guideline Public Company(b)

  TEV | EBITDA Multiple(b)   4.25x-4.50x   4.38x

Preferred Stock

      156,027  

Guideline Public Company(b)

  TEV | EBITDA Multiple(b)   7.0x   7.0x
      960,774  

Discounted Cash Flow(d)

  Discount Rate(d)   8.15%-8.65%   8.40%

Warrants

       

Guideline Public Company(b)

 

TEV | EBITDA Multiple(b)

  3.4x-3.8x
  3.6x

Unfunded Loan Commitments

      (1,421 )  

Discounted Cash Flow(d)

  Discount Rate(d)   9.69%-10.69%   10.19%
       

Transaction Approach (e)

 

Cost (e)

  N/A   N/A
   

 

 

         

Total Fair Value

    $ 15,647,794        
   

 

 

         
           

 

(a)

For the assets which have multiple valuation techniques, the Fund may rely on the techniques individually or in aggregate based on a weight ranging from 0-100%.

(b) 

The Fund utilized a guideline public company method to fair value this security. The significant unobservable inputs used in the valuation model were total enterprise value (“TEV”) 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.

(c) 

The Fund utilized a recoverability approach to fair value these securities, specifically a liquidation analysis. There are various, company specific inputs used in the valuation analysis that relate to the liquidation value of a company’s assets. The significant unobservable input used in the valuation model was estimated proceeds. Significant increases or decreases in the input 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.

(e) 

The Fund utilized a recent transaction, specifically purchase price, to fair value this security.

 

Annual Report  |  31


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

December 31, 2021

 

Apollo Tactical Income Fund Inc.
    Total Fair
Value at
December 31,
2021
  Level 1
Quoted
Price
  Level 2
Significant
Observable
Inputs
  Level 3
Significant
Unobservable
Inputs
               

Assets:

               

Cash and Cash Equivalents

    $ 18,531,435     $ 18,531,435     $     $

Senior Loans

      270,292,813             252,113,712       18,179,101

Corporate Notes and Bonds

      66,964,439             66,255,136       709,303

Structured Products

      24,495,445             24,495,445      

Common Stocks

      2,574,685             388,612       2,186,073

Preferred Stocks

      1,505,788             388,986       1,116,802

Warrants

                       

Unrealized appreciation on Unfunded Loan Commitments

      17,107             17,060       47
   

 

 

     

 

 

     

 

 

     

 

 

 

Total Assets

    $ 384,381,712     $ 18,531,435     $ 343,658,951     $ 22,191,326
   

 

 

     

 

 

     

 

 

     

 

 

 

Liabilities:

               

Unrealized depreciation on Unfunded Loan Commitments

      (9,564 )             (8,219 )       (1,345 )
   

 

 

     

 

 

     

 

 

     

 

 

 

Total Liabilities

      (9,564 )             (8,219 )       (1,345 )
   

 

 

     

 

 

     

 

 

     

 

 

 
    $ 384,372,148     $ 18,531,435     $ 343,650,732     $ 22,189,981
   

 

 

     

 

 

     

 

 

     

 

 

 

The following is a reconciliation of Level 3 holdings for which significant unobservable inputs were used in determining fair value as of December 31, 2021:

 

Apollo Tactical Income Fund Inc.
    Total   Senior
Loans
  Corporate
Notes and
Bonds
  Structured
Product
  Common
Stocks
  Preferred
Stocks
  Warrants   Unfunded
Loan
Commitments
                               

Total Fair Value, beginning of year

    $ 16,676,751     $ 9,221,275     $     $ 2,329,420     $ 4,966,102     $ 136,991     $ 22,963     $

Purchases, including capitalized PIK

      21,731,692       19,551,272                   2,180,420                  

Sales/Paydowns

      (21,575,077 )       (10,192,121 )             (2,425,000 )       (8,957,956 )                  

Accretion/(amortization) of discounts/ (premiums)

      22,908       21,548             1,360                        

Net realized gain/(loss)

      4,984,531       (1,967,097 )             (41,679 )       7,040,214             (46,907 )      

Change in net unrealized appreciation/ (depreciation)

      (611,598 )       1,544,224       709,303       135,899       (3,042,707 )       19,037       23,944       (1,298 )

Transfers into Level 3

      960,774                               960,774            

Transfers out of Level 3

                                               
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

Total Fair Value, end of year

    $ 22,189,981     $ 18,179,101     $ 709,303     $     $ 2,186,073     $ 1,116,802     $     $ (1,298 )
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

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 above. The net change in unrealized appreciation/(depreciation) attributable to Level 3 investments still held at December 31, 2021 was $610,810.

 

32  |  Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

December 31, 2021

 

The following table provides quantitative measures used to determine the fair values of the Level 3 investments as of December 31, 2021:

 

Apollo Tactical Income Fund Inc.    
Assets /Liabilities   Fair Value at
December 31, 2021
  Valuation Technique(s)(a)   Unobservable Input(s)   Range of
Unobservable
Input(s) Utilized
  Weighted Average
Unobservable Input(s)

Senior Loans

    $ 1,936,456  

Independent pricing service and/or broker quotes

  Vendor and/or broker quotes   N/A   N/A
      970,818  

Guideline Public Company(b)

  TEV | EBITDA Multiple(b)   3.4x-3.8x   3.6x
      9,788  

Recoverability(c)

  Estimated Proceeds(c)   $843k   $843k
       

Recoverability(c)

  Estimated Proceeds(c)   $—   $—
      55,689  

Discounted Cash Flow(d)

  Discount Rate(d)   9.69%-10.69%   10.19%
      127,329  

Discounted Cash Flow(d)

  Discount Rate(d)   8.03%-9.11%   8.57%
      2,000,683  

Discounted Cash Flow(d)

  Discount Rate(d)   7.94%-9.23%   8.58%
      13,078,338  

Transaction Approach(e)

  Cost(e)   N/A   N/A

Corporate Notes and Bonds

      709,303  

Recoverability(c)

Discounted Cash Flow(d)

 

Estimated Proceeds(c)

Discount Rate(d)

  $53.9m

0.60%

  $53.9m

0.60%

       

Recoverability(c)

  Estimated Proceeds(c)   $—   $—

Common Stocks

      25,399  

Guideline Public Company(b)

  TEV | EBITDA Multiple(b)   7.0x   7.0x
       

Recoverability(c)

  Estimated Proceeds(c)   $843k   $843k
       

Recoverability(c)

  Estimated Proceeds(c)   $—   $—
      114,671  

Recoverability(c)

  Estimated Proceeds(c)   $0.47   $0.47
      2,046,003  

Guideline Public Company(b)

  TEV | EBITDA Multiple(b)   4.25x-4.50x   4.38x

Preferred Stock

      156,028  

Guideline Public Company(b)

  TEV | EBITDA Multiple(b)   7.0x   7.0x
      960,774  

Discounted Cash Flow(d)

  Discount Rate(d)   8.15%-8.65%   8.40%

Warrants

       

Guideline Public Company(b)

 

TEV | EBITDA Multiple(b)

  3.4x-3.8x   3.6x

Unfunded Loan Commitments

      (1,345 )  

Discounted Cash Flow(d)

  Discount Rate(d)   9.69%-10.69%   10.19%
      47  

Discounted Cash Flow(d)

  Discount Rate(d)   8.03%-9.11%   8.57%
       

Transaction Approach(e)

 

Cost(e)

  N/A   N/A
   

 

 

         

Total Fair Value

    $ 22,189,981        
   

 

 

         
           

 

(a) 

For the assets which have multiple valuation techniques, the Fund may rely on the techniques individually or in aggregate based on a weight ranging from 0-100%.

(b) 

The Fund utilized a guideline public company method to fair value this security. The significant unobservable inputs used in the valuation model were total enterprise value (“TEV”) 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.

(c) 

The Fund utilized a recoverability approach to fair value these securities, specifically a liquidation analysis. There are various, company specific inputs used in the valuation analysis that relate to the liquidation value of a company’s assets. The significant unobservable input used in the valuation model was estimated proceeds. Significant increases or decreases in the input 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.

(e) 

The Fund utilized a recent transaction, specifically purchase price, to fair value this security.

 

Annual Report  |  33


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

December 31, 2021

 

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 December 31, 2021, 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 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. Dividend income from equity investments is recorded on the ex-dividend date. The Funds record dividend income and accrue interest income from private investments pursuant to the terms of the respective investment.

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 maintain their status 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, 2021, AFT and AIF did not record a U.S. federal excise tax provision. The Funds did not pay any excise tax during 2021 related to the 2020 tax year. No federal income tax provision or excise tax provision is required for the year ended December 31, 2021.

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 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, 2018 to 2021. The statute of limitations on AIF’s federal and state fillings remains open for the years ended December 31, 2018 to 2021.

 

34  |  Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

December 31, 2021

 

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.

On October 28, 2020, the SEC adopted new regulations governing the use of derivatives by registered investment companies (“Rule 18f-4”). The new rule will also impact a fund’s use of unfunded commitment agreements and reverse repurchase agreements. The Funds will be required to implement and comply with Rule 18f-4 by August 19, 2022. Once implemented, Rule 18f-4 will impose limits on the amount of derivatives a fund can enter into, eliminate the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, treat derivatives as senior securities and require funds whose use of derivatives is more than a limited specified exposure amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. In addition, a fund entering into an unfunded commitment agreement generally must determine, at the time it enters into such agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all of its unfunded commitment agreements as they come due. Additionally, a fund entering into reverse repurchase agreements or other similar financing transactions, must either (i) comply with the asset coverage requirements of Section 18 (combining the aggregate amount of indebtedness associated with all reverse repurchase agreements or similar financing with the aggregate amount of any other senior securities representing indebtedness when calculating the relevant asset coverage ratio) or (ii) treats all reverse repurchase agreements or similar financing transactions as derivatives transactions for all purposes under Rule 18f-4.

 

Annual Report  |  35


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

December 31, 2021

 

Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which was subsequently amended in January 2021 by ASU 2021-01. The guidance is intended to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting, through various optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. These ASUs are effective from March 12, 2020 through December 31, 2022. The Funds have evaluated this guidance and determined that it does not have a material impact on the accompanying financial statements; however, the Funds are still evaluating the potential impact to future financial statements.

SEC Disclosure Update and Simplification

In December 2020, the SEC adopted Rule 2a-5. The rule establishes a consistent, principles-based framework for boards of directors to use in creating their own specific processes in order to determine fair values in good faith. The effective date for compliance with Rule 2a-5 is September 8, 2022. The Funds are evaluating the potential impact that the rule will have on the Funds’ financial statements.

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 year ended December 31, 2021, the Adviser earned fees of $3,857,083 and $3,578,216 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. 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 year ended December 31, 2021, the Adviser provided services under these agreements totaling $846,784 and $864,157 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 $96,000 and $96,000 for AFT and AIF, respectively, of remuneration for officers of the Funds. During the year ended December 31, 2021, the Funds accrued voluntary expense waivers totaling $62,759 and $213,399 for AFT and AIF, respectively. These amounts are reflected in receivable from affiliate in the Statements of Assets and Liabilities. This waiver is completely voluntary by the Adviser and can be discontinued by the Adviser at any time without notice.

 

36  |  Annual Report


Apollo Senior Floating Rate Fund Inc.

Apollo Tactical Income Fund Inc.

Notes to Financial Statements (continued)

December 31, 2021

 

Each Fund has entered into separate agreements with U.S. Bancorp Fund Services, LLC, d/b/a U.S. Bank Global Fund Services, to provide accounting and administrative services, as well as separate agreements with U.S. Bank National Association to provide custodial services (together, “U.S. Bank”). Under the terms of the agreements, U.S. Bank is responsible for providing services necessary in the daily operations of the Funds such as maintaining the Funds’ books and records, calculating the Funds’ NAVs, settling all portfolio trades, preparing regulatory filings and acting as the corporate secretary. Each Fund has also entered into separate agreements with American Stock Transfer & Trust Company, LLC (“AST”), to serve as the Fund’s transfer agent, dividend disbursing agent and reinvestment plan administrator. U.S. Bank and AST provided services totaling $216,635 and $206,631 for AFT and AIF, respectively, for the year ended December 31, 2021, which are included in fund administration and accounting services in the Statements of Operation