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HomeMy WebLinkAbout2014 02 27 Regular 603 Crescent Direct Lending CRESCENT Crescent Direct Lending Presentation to: The City of Winter Springs General Employees Pension February 27, 2074 CRESCENT Table of Contents I. Crescent Capital Group Firm Overview II. Crescent Direct Lending - Executive Summary - Why Crescent Direct Lending - Direct Lending Market Opportunity - Sourcing / Underwriting / Portfolio Management Ill. Exhibits A. Prior Portfolio Investments & Asset Composition B. Select Case Studies C. Active Pipeline 2 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Notice to Prospective Investors The information contained in this presentation is being furnished on a confidential basis for the purpose of providing certain information about Crescent Capital Group and its predecessor entities (the "Firm"). This presentation contains confidential information and may not be copied, nor may it be transferred to any other third party without our prior written consent, and shall be returned at our request. This presentation contains information which has been derived from a number of sources. While the information is believed to be reliable, no representation is made herein by the Firm's general partners or investment advisors as to the accuracy or completeness of such information. Nothing in this presentation constitutes an offer to sell or the solicitation of an offer to buy securities. The information in these materials is provided solely as reference material with respect to Crescent Capital Group, its people and advisory services business, as an independent asset management company.Any offer to sell or solicitation of an offer to buy a security may only be made by a separate private placement memorandum with respect to that security. Footnotes contain important information about the definition of terms used herein, the composition of the portfolios presented and related performance information as well as unrealized investment valuations and should be carefully reviewed. Market data and information included herein is based on various published and unpublished sources considered to be reliable,but has not been independently verified and there is no guarantee of its accuracy or completeness. Performance information contained herein is based in significant part on unrealized investment valuations which may not be achieved. Past performance does not guarantee future results. Legal,tax and regulatory changes,as well as judicial decisions,both within and outside of the United States,could have an adverse impact on Crescent Capital Group and its investments.Instability in the securities markets may increase the risk inherent in Crescent Capital Group's investments in that the ability of issuers to refinance or redeem portfolio securities held by Crescent Capital Group may depend on their ability to sell new securities in the market. Future periods of uncertainty in the U.S. economy and the economies of other countries of issuers of securities and loans in which Crescent Capital Group may invest,and the possibility of increased volatility,default rates and deterioration in financial markets,may adversely affect the value of Crescent Capital Group's investments. All information is current as of September 30,2013 unless otherwise noted. See appendix for Certain Risk Factors. 3 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT CRESCENT I. Crescent Capital Group Firm Overview CONFIDENTIAL-DO NOT DISTRIBUTE Crescent Capital Group Overview • Leading investment advisor in corporate credit with over $13.5 billion of assets and commitments under management • Formed in 1991 - over 20 years of experience in leveraged credit investing — 1991 to 1995 - Employee-owned credit platform focused on bank loans, high yield, mezzanine and distressed debt — 1995 to 2010 - Joined TCW to become TCW's Leveraged Finance Group — January 2011 - Spun-out from TCW to become Crescent Capital Group LP, an employee-owned independent registered investment advisor • Investment strategies built upon detailed credit research and focused on capital preservation • Long-standing sourcing relationships provide competitive advantage orld-Class Experience and Capabilities 5 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Our Platform • Assets and commitments under management of over $13.5 billion • Extensive experience managing debt investments in several strategies through multiple credit and market cycles Ed European Specialty Capital Markets Special Situations Direct Lending Lending Presence Global Global North America North America Europe Privately Strategy Below Investment Negotiated Middle Market Lower Middle Market Descripti Grade Corporate Mezzanine Debt Distressed Debt Senior Secured Debt Middle-Market Debt on Loans and Bonds with Equity Participation Senior Secured Private U.S. Senior Private European Typical Floating Rate Private Debt with Public and Private Secured, Senior Senior Secured, Securities Debt; Equity Component Distressed Debt Unitranche and Second Unitranche,Second Fixed Rate Bonds Lien Loans Lien and Subordinated Loans Separate Account Separate Account Legal Commingled Closed-End Limited Closed-End Limited Closed-End Limited Structure Vehicle Partnership Partnership Closed End Limited Partnership CLO and CBO Partnership Focus on Current Income and Principal Preservation 6 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Dynamic Organization • Management Committee oversees over 100 employees • Investment Team — Over 60 team members — Two Co-Founders/Managing Partners;18 Managing Directors; 13 Senior Vice Presidents; 8 Vice Presidents • Operations Team — Over 40 team members — Pursues highest standards with respect to compliance and risk management — Seeks to provide best-in-class legal, human resources, finance/accounting and investor relations Strategies Capital Markets Direct Lending European Mezzanine Special Situations Specialty Lending 28 Team Members 7 Team Members 5 Team Members 21 Team Members 4 Team Members Operations Investor Relations Finance& Legal& HR&Admin Accounting Compliance 8 Team Members 10 Team Members 4 Team Members 24 Team Members Information is current as of October 15.2013. 7 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Representative Multi-Employer and Public Pension Fund Client List Anne Arundel County Retirement System Indiana Area UFCW Arizona State Retirement System International Brotherhood of Teamsters Pension Fund City of Pittsburgh Comprehensive Muncipal Pension Trust Fund International Union of Operating Engineers Local 4 Pension Fund Employees' Retirement System of Baltimore County International Painters and Allied Trades Industry Pension Fund Florida State Board of Administration Laborers National Pension Fund Indiana Public Employees Retirement System Massachusetts Laborers Annuity Fund Illinois State Board of Investment Michigan Carpenters Pension Fund Los Angeles City Employees Retirement System Mid-Jersey Trucking 701 Pension Fund Manchester Employees'Contributory Retirement System NECA-IBEW Pension Trust Fund Manhattan&Bronx Surface Transit Operating Authority New England Teamsters Pension Fund Maryland State Retirement and Pension System Retail Food Employers and UFCW Local 711 Pension Plan Massachusetts Pension Reserves Investment Management Rocky Mountain UFCW Unions&Employers Pension Plan MBTA Retirement Fund San Francisco Culinary Bartenders and Service Employees Pension Trust and Metropolitan Transportation Authority of New York City So.California Carpenters Pension Trust Michigan Department of Treasury Southern California IBEW-NECA Pension Trust Oklahoma Police Pension&Retirement System Southern California Operating Engineers Trust Funds,Local#12 Orange County Employees Retirement System Southern California Pipe Trades Retirement Fund San Jose Police&Fire So.Calif.UFCW Unions and Food Employers Joint Pension Trust South Carolina Retirement System United Food&Commercial Workers,Atlanta State-Boston Retirement System United Food&Commercial Workers,Locals#1059,#1099,Central Ohio State of Oregon Treasury UFCW International Union Employees'Pension Plan Teachers' Retirement System of Louisiana UFCW Northern California Employers'Joint Pension Plan Texas County and District Retirement System Western Conference of Teamsters Pension Trust Fund Construction Industry and Laborers Joint Pension Trust Western Pennsylvania Teamsters and Employers Pension Fund Desert States Employers and UFCW Unions Pension Plan Inclusion on this list should not be considered an endorsement of the investment advisor or services rendered. 8 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT CRESCENT II. Crescent Direct Lending CONFIDENTIAL-DO NOT DISTRIBUTE Crescent Direct Lending Executive Summary' • Formed January 2005 - senior team with over 100 years of combined investment experience with 80% of Experienced senior principals formerly FleetBoston Financial professionals Investment • Between 2005-2010 invested approximately$225mm of senior secured loan commitments in 25 private US Team Lower Middle-Market companies • Proven track record through 2008/2009 credit cycle • Invest in senior secured debt of private U.S. Lower Middle-Market companies Investment • Primary focus on private equity-backed companies Strategy • Portfolio comprised of senior secured first lien,second lien and unitranche investments • "Credit focused" preservation of capital investment strategy • Nationwide network of sponsor, intermediary and other referral relationships to sponsor-backed, Lower Strong Middle-Market companies Sourcing • Over 4,200 leads since inception (average 400-500 per year)with significant recurring deal flow Capabilities • Origination teams led by senior investment professionals who originate, underwrite and manage portfolio investments Low Credit • No payment defaults since inception in January 2005 • 100%of loan investments with positive IRRs Loss History • Low annual loan loss rate(less than 20bps/year)2 Strong • Gross realized unlevered senior loan IRR3 of 9.8%vs.S&P LCD Senior Leveraged Loan Index of approximately 5.4%January 2005- March 2013 Investment • Almost 2X senior loan market index returns Returns t • 100%of prior fund loan investments fully-realized 1. All historical references to Crescent's direct lending team and track record prior to June 2012 are based on Crescent principals while at their previous investment firm,HighPaint Capital.Management.LLC,from January 2005-May 2012. Gross unlevered IRR's are after realized losses,but before management fees,from January 2005-March 2013.Net returns after management fees will be lower. 2. $3.2 million cumulative realized loan losses on$224.1 million cumulative loan commitments between January 2005-March 2013. 3. Gross IRKS are before management fees and include unrealized investments.Actual Gross IRRs when fully-realized may be less. Net IRRs after management fees will be lower.The grass IRR calculations are made on the basis of the actual timing of investment inflows and outflows,aggregated at least monthly and annualizing the resulting return. An IRR is a function of the length of time from the initial investment to ultimate realization and fora given dollar amount realized,the IRR will decrease as the investment holding period increases.The gross IRR calculation measures investment-level returns and does not reflect the deduction of fees and expenses,or timing differentials between investor cash flows and investment cash flows. The net IRR for an investor will be reduced by the annual management fee,the incentive fee and by any other expenses that are Incurred In the management of an account,and the difference between gross IRR and net IRR can be substantial. 10 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Crescent Direct Lending Senior Investment Team John Bowman-Managing Director and Member Investment Committee(Industry:26 yrs) • HighPoint Capital Management-President(2005-May 2012) • FleetBoston Financial(1998-2003)-Boston Head of High Yield and Mezzanine Loan Structuring • Donaldson,Lufkin&Jenrette(1994-1998)-Senior Vice President Leveraged Finance • Lehman Brothers,Drexel Burnham,State Street Bank,Kidder Peabody(1984-1992)-Investment Banking-Leveraged Finance • M.B.A.Harvard/B.S.Business Northeastern Scott Carpenter- Managing Director and Member Investment Committee(Industry:23 yrs) • HighPoint Capital Management-Executive Vice President(2005-May 2012) • Bank of America Business Capital/Fleet Capital(2000-2004)-Northeast Head of Business Development • Fleet Bank(1996-1998)-VP of Originations&Portfolio Manager and PNC Business Credit 0998-2000)-Vice President&Office Head i (opened Boston office) • Joan Fabrics 0990-1996)-Vice President of Finance and International Sales Manager • Bank of Boston(1982-1985)and Bank of New England(1985-1990)-Vice President,Loan Originations and Portfolio Manager • B.A.Economics Tufts Mike Rogers-Managing Director(Industry:28 yrs) • HighPoint Capital Management-Managing Director(2008-May 2012) • Bank of America Securities,LLC(2004-2008)-Relationship Manager • Fleet Securities 0997-2004)-Co-Head of Loan Structuring and Syndications • Fleet Bank 0988-1997)-Multiple Lending and Management roles,including team leader in Fleet's loan workout group during early 1990s • Manufacturers Hanover Trust Company 0984-1988)-Lending Officer • A.B.History Holy Cross Jonathan Cignetti-Senior Vice President(Industry:12 yrs) • HighPoint Capital Management-Director(2005-May 2012) • Fidelity Research&Management Company(2004)-Bank/High Yield bond Research Associate • FleetBoston Financial(2000-2004)-Associate Leveraged Finance • B.S.Finance Babson Jake Garmey-Senior Vice President(Industry:14 yrs) • HighPoint Capital Management-Managing Director(2005-May 2012) MCG Capital Corporation(1998-2005)-Vice President senior/mezzanine lending-MCG grew from$200 million to$900 million in assets during this period-several Board representation roles F • Lehman Brothers 0994-1997)-Credit Analyst • M.B.A.Georgetown/B.A.Economics Hobart 11 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Summary Track Record & Loan Loss Experience' • January 2005-March 2013 -Gross realized unlevered IRRs of 9.8% vs. senior loan market returns of approximately 5.4% 1,2 • Consistent return profile with no payment defaults and 100% of loans with positive IRRs ($$Millions) Date Date Amount Yield Value at 3/31/13 Equity Return Equity Investment Invested Realized Invested at Close ls) Realized Unrealized Total Multiple Gross IRR Realized Investments Vertex Fasteners 08/04/05 08/29/08 $ 2.5 7.4% $ 3.1 $ - $ 3.1 1.26x 9.2% Hamer 09/01/05 09/19/11 12.7 7.2% 15.5 - 15.5 1.22x 8.6% Antaya Technologies 09/22/05 03/01/07 2.8 8.8% 3.2 - 3.2 1.13x 11.0% Action Legal/IVIZE/AMFS 01/03/06 12/17/10 13.1 11.3% 15.0 - 15.0 1.15x 4.8% National Display 04/21/06 05/03/10 16.6 9.9% 20.5 - 20.5 1.23x 10.7% Solidscape 06/08/06 03/31/08 7.0 10.9% 8.0 - 8.0 1.14x 13.0% Wearwell 06/29/06 09/26/07 5.4 12.6% 6.3 - 6.3 1.18x 16.7% Double ECompany 09/18/06 05/07/10 5.6 11.3% 7.4 - 7.4 1.32x 9.8% JSI Store Fixtures 09/22/06 12/28/07 7.5 11.0% 8.6 - 8.6 1.15x 14.7% Gateway EnviroServices 12/28/06 08/19/09 4.0 9.8% 4.8 - 4.8 1.20x 8.9% MilesTek Corporation 01/23/07 01/20/12 3.3 12.0% 4.3 - 4.3 1.34x 9.5% Winchester Electronics 04/16/07 07/25/12 7.5 9.1% 10.0 - 10.0 1.33x 7.5% Belt Power 08/10/07 08/14/09 6.1 11.1% 7.1 - 7.1 1.17x 9.9% Utrecht Art Supplies 08/30/07 10/31/11 8.5 12.4% 11.4 - 11.4 1.34x 8.7% Titan Fitness 12/31/07 06/30/11 4.0 9.8% 5.5 - 5.5 1.36x 11.0% Fairchild 01/24/08 11/17/11 7.5 9.5% 9.5 - 9.5 1.27x 9.8% Insource 01/29/08 07/30/12 12.0 9.3% 17.0 - 17.0 1.42x 11.0% Connect-Air 03/06/08 11/15/11 8.5 8.4% 10.9 - 10.9 1.28x 10.9% The Outsource Group 03/31/08 01/21/11 13.6 9.1% 17.1 - 17.1 1.26x 10.6% MooreCo 04/30/08 09/30/10 8.4 8.0% 9.5 - 9.5 1.13x 7.1% Precision Manufacturing Group 06/05/08 11/22/11 9.0 9.0% 12.2 - 12.2 1.35x 11.9% Copernicus Group 10/08/08 02/09/11 8.3 10.4% 10.3 - 10.3 1.25x 13.3% Thorne 06/23/10 02/01/12 12.0 8.2% 13.7 - 13.7 1.14x 10.2% Laze Spot 09/01/10 05/25/12 12.3 8.0% 14.1 - 14.1 1.15x 10.2% Mallet 09/29/10 03/13/13 8.3 9.4% 10.0 - 10.0 1.20x 10.5% Total Realized Investments $ 206.1 9.6% $ 254.8 $ - $ 254.8 1.24x 9.8% 'Gross IRR on Realized Loans 9.8%I 1. All historical references to Crescents direct lending team and track record prior to Juno 2012 arc bawd on Crescent principals while at their previous investment firm,HighPoint Capital Management,LLC,from January 2005-May 2012. Gross unlevered'RR's are after realized losses,but before management fees,from January 2005-March 2013.Net returns after management fees will be lower. 2 Market returns based on S&P LCD Senior Leveraged Loan Index from January 2005-March 2013. 3 Includes upfront fees amortized over three years. 12 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT /MLET Illustrative Transaction: Mallet & Company Transaction Overview Investment Rationale Business: Manufacturer of products for food industry • Dominant market position - in business since 1939 Date: September 2010 • Stable end markets (baking industry) • Stable historical volume and gross profit Sponsor: ICV Capital Partners($300mm fund) performance during credit downturns Investment: $2.0mm Revolver • Long-standing and diverse customer relationships $8.Omm Senior Secured Term Loan (10+year relationship with top 20 customers) • Strong management team and equity sponsor Pricing: L+675/2% Libor Floor Conservative capital structure-over-equitized •Coupon/Yield: 8.75% (9.4%Yield at Close)1 transaction Cap. Structure: 2.9x Senior Debt Investment Multiple 3.1x Total Debt Multiple 55% Equity Capitalization Highlights • The Company is the dominant provider of release agents (65% market share), ingredients, and oiling and greasing machines (85% market share)to the baking industry- in business since 1939 • LTM revenue and EBITDA of$39mm and $5.6mm, respectively at underwrite • Mallet's ability to generate free cash flow allowed the company to delever through pay-downs on the facilities (net senior leverage of 1.4x and 1.5x, respectively as of 12/31/12) • Refinanced out on March 13, 2013 1. Includes upfront fees amortized over three years. The case study included on page 13 of this presentation represent prior investments while at HighPoint Capital Management,LLC and are an illustrative sampling of the types of investments which can be made by Crescent Direct Lending. Past investments are not indicative of future opportunities. 13 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Who We Are - Why Crescent Direct Lending •Top of the "Capital Preservation Focus"- senior secured loans to Lower Middle-Market and Middle-Market companies Capital Typically first lien loans (including unitranche) or second lien loans secured by company collateral •Structure Focus • Higher recoveries in default than unsecured or mezzanine assets Strong Strong sourcing capabilities (average 400-500 leads/year) provides foundation for highly select •Sourcing Allows credit model and "credit first" mentality for Credit • Selectivity Deep, longstanding lower middle-market private equity firm relationships established since 2005 • Historically funded less than 5%of all transactions reviewed •Highly Select Focus on recurring revenue business models with strong management, sponsorship, and long track record of proven financial results Credit Screen Avoid story credits,turnarounds,cyclical, technology, fashion-driven and event risk borrowers •• Careful evaluation of management teams and private equity sponsors • Conservative senior and total leverage multiples-typically less levered than broadly syndicated Conservative loans Investment Structure investments with strong covenant package protection(not "covenant lite") •Structuring • Underwrite with multiple cushions to provide downside protection • Weekly, monthly, quarterly and annual reporting systems in place Strong Portfolio • We seek to identify problems early and influence corrective action Management • Significant "in-house" experience on identifying and restructuring problem credits 14 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Summary Term Sheet: Unlevered Direct Lending Fund' Investment Objective: High current income with strong preservation of capital from investments in senior secured loans of private U.S. Lower Middle-Market companies Targeted Fund Size: $300mm Investment Period: 2.5 years Term of Partnership: 5 years; two optional one-year extensions Management Fees: Based on invested capital, using the following commitment schedule: Less than $10mm: 1.00% $10mm or greater but less than $15mm: 0.95% $15mm or greater but less than $25mm: 0.90% $25mm or greater: 0.85% Incentive Fees: None Targeted Net Return:2 7.5% - 10% Geography: Primarily U.S. borrowers Legal Counsel: Dechert LLP Auditors: Ernst & Young LLP 1. Neither Crescent Capital Group,nor its affiliates,partners.employees,agents or representatives(collectively,"CCG")make any representation or warranty,express or implied,as to the accuracy or completeness of the information contained herein,and nothing contained herein shall be relied upon as a promise or a representation as to past or future performance.Past performance is not indicative of future results 2. The information herein includes targeted yields and internal rates of returns("IRR"),which are based on a variety of factors and assumptions and involves significant elements of subjective judgment and analysis. Targeted yields and IRRS are being presented because they provide insight into the level of risk that the manager is likely to seek with respect to the relevant product. The targeted yields and IRRS area measure of relative risk of a portfolio of investments,with higher targets reflecting greater risk,and are not intended to be promissory in nature. Targeted yields and IRRS are estimates based on riety of assumptions regarding,among other things,current and future asset yields for such investments and projected cash flows related thereto.current and future market and economic conditions,prevailing and future interest rates, including the cost of use of leverage,where applicable,historical and future credit performance for such investments,and other factors outside of CCG's control. The targeted yields and IRRS are subject to uncertainties and are based upon assumptions which may prove to be invalid and may change without notice. Other foreseeable and unforeseeable events,which were not taken into account,may occur. Investors should not rely upon the targeted yields or IRRS in making an investment decision. Although CCG believes there is a sound basis for such targets,no representations are made as to the accuracy of such targets,and there can be no assurance that such targets will be realized or achieved.Additional information concerning the assumptions used in connection with the target returns is available upon request. 15 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Summary Term Sheet: Levered Direct Lending Fund' Investment Objective: High current income with strong preservation of capital from investments in senior secured loans of private U.S. Lower Middle-Market companies Targeted Equity: $150mm Leverage Utilized: $150mm (1.0x)2 Total Fund Size: $300mm of Total Capital Investment Period: 2.5 years Term of Partnership: 5 years; two optional one-year extensions Management Fees: 1.35% of invested equity capital Preferred Return: 7.0% Incentive Fees: 10.0% Targeted Net Return:3 12.0% - 13.0% Geography: Primarily U.S. borrowers Legal Counsel: Dechert LLP Auditors: Ernst & Young LLP 1. Neither Crescent Capital Group,nor its affiliates,partners.employees,agents or representatives(collectively,"CCG")make any representation or warranty,express or implied,as to the accuracy or completeness of the information contained herein,and nothing contained herein shall be relied upon as a promise or a representation as to past or future performance.Past performance is not indicative of future results. 2. Leverage utilized will vary with market conditions and terms of the Fund's leverage facility. 3. The information herein includes targeted yields and internal rates of returns(`IRR"),which are based on a variety of factors and assumptions and involves significant elements of subjective judgment and analysis. Targeted yields and IRRS are being presented because they provide insight into the level of risk that the manager is likely to seek with respect to the relevant product. The targeted yields and IRKS are a measure of relative risk of a portfolio of investments,with higher targets reflecting greater risk,and are not intended to be promissory in nature. Targeted yields and IRRS are estimates based on a variety of assumptions regarding,among other things,current and future asset yields for such investments and projected cash flows related thereto,current and future market and economic conditions,prevailing and future interest rates, including the cost of use of leverage,where applicable,historical and future credit performance for such investments,and other factors outside of CCG's control. The targeted yields and IRRS are subject to uncertainties and are based upon assumptions which may prove to be invalid and may change without notice, Other foreseeable and unforeseeable events,which were not taken into account,may occur. Investors should not rely upon the targeted yields or IRRS in making an investment decision. Although CCG believes there is a sound basis for such targets,no representations are made as to the accuracy of such targets,and there can be no assurance that such targets will be realized or achieved.Additional information concerning the assumptions used in connection with the target returns is available upon request. 16 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Direct Lending Opportunity - Why We Focus on Lower Middle-Market • Middle-Market direct lending is typically less competitive and offers significant yield premiums to broadly syndicated loans • Middle-Market opportunity created by bank consolidation and increased regulation (Basel Ill / increased regulation regarding leveraged loans)forcing banks to focus on larger companies — We believe Lower Middle-Market is the least efficient segment of Middle-Market lending • We believe Lower Middle-Market offers better yields and reduced risk (better structures and covenants) than Upper Middle-Market Lower Middle-Market/ Middle-Market Competitive Landscape (Non-Bank)'•2 $50mm EBITDA GE Capital Ares Upper Golub Solar Middle New entrants/ Market Carlyle NewStar transitional player risk NXT Madison (e.g. hedge funds) $25mmEBITDA Prospect FifthStreet Maranon S15mm EBITDA Monroe Crescent Direct Lower Lending Focus Middle Deerpath Market Abacus Saratoga 1. Represents select competitors of Crescent Direct Lending for illustrative purposes. 2. Several Middle-Market lenders were dislocated during economic downturn including Allied,Cratos,Dymas,First Light,Friedberg Milstein,MFC,ML Capital,Patriot,and Tygris 17 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Senior Secured Loans Provide Strong Preservation of Capital Strong recovery rates vs. unsecured / subordinated asset classes Default Recovery by Asset Class (1987 - 2011) (1) High 100% - A 80.7% 80% 60% 56.5% Recovery R to 41.7% 40% 23.1% 20% Low of o ■ Sr.Secured Sr.Secured Sr. Unsecured Sr. Other Loans Bonds Bonds Subordinated Subordinated Bonds Bonds Priority in High < > Low Capital Structure Source:Standard&Poor's. Average of mean and median discounted recovery rates on defaulted recovery rates on defaulted bank debt and bonds 1987-2011. 18 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Middle Market Yield Premium • Middle-Market loans provide an attractive yield premium to broadly syndicated loans over an extended period of time LIBOR Floor + Spread +OID (3-yr) —Middle Market 12.0% —Large Corp. 10 a% s.0% c — *%f 4.N0 2.0% — 00% / Source Thomson Reuters LPC 19 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Average Debt Multiples: Large Corporate vs. Middle Market • Middle-Market loans are generally less leveraged and have better structures (covenants) than broadly syndicated loans I Large Corporate LBO Loans Middle Market LBO Loans 8.Ox 8.Ox 6.2x 6.Ox 6.Ox b.bx - 5.3x 5.4x 5 2x 5.3x 4.9x 4.7x 4.7x 4.5x 4.7x 4.5x 4.2x 4.3x 4.Ox 4.0x . 4.0x —IM ■ ■ �_ � 3.3x i i 2.Ox 3 7x 4.1x 2.Ox 4.Ox 3.3x 3.4x 3.2x 3.5x O.Ox O.Ox 2005 2006 2007 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 2010 2011 2012 •FLD/EBITDA ❑SLD/EBITDA •Other Sr Debt/EBITDA OSub Debt/EBITDA •FLD/EBITDA ❑SLD/EBITDA •Other Sr Debt/EBITDA OSub Debt/EBITDA Large Corporate is$50M or more of EBITDA,Middle-Market is less than$50MM of EBITDA Total Sources/adjusted Pro Forma Trailing EBITDA Source:Standard and Poor's LCD 20 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Sourcing Overview and Capabilities • Established lender to Lower Middle-Market companies nationwide — Significant network of sponsor, intermediary and other referral relationships — Market to approximately 500 sponsors with 150 priority relationships — Generated over 4,200 financing leads since 2005 inception — Over 100 Sponsors have show us five or more deal opportunities — Funded deals with 22 different private equity sponsors in prior fund • Nationwide calling effort by region across broad referral source network — Senior, credit-trained investment professionals lead regional calling efforts — Priority sponsor coverage strategy focused on high quality sponsors and repeat deal flow — Use of industry associations / conferences to efficiently cover multiple sponsor relationships • Combination with Crescent enhances deal flow and provides significant West Coast presence — Generated over 800 leads since joining Crescent in June 2012 21 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Nationwide Lower Middle-Market Sponsor Coverage • Nationwide sourcing capability with enhanced West coast coverage as part of Crescent Northeast&Mid-Atlantict')(255 Mid-West(75 Sponsors) Sponsors) Prairie Capital(Double E) - Argosy Partners/Anvil Capital(Precision) Audax Group(Winchester) Nip - Castle Island Partners(MilesTek) - Commonwealth(Antaya) _ DFW Capital Partners(Copernicus) Gemini Investors(Gateway) n� ,t tv* - Hampshire Equity(Fairchild) �� 515 - ICV Capital Partners(Mallet) c*�.� - Riverside Partners(National Display)ip ui RI - Sterling(Lazer Spot)'� - TopSpin Partners(Utrecht) NJ - Tuckerman Capital(Hamer;Solidscape) - Watermill Ventures(Vertex Fasteners)mg likle:,, * � DE - Webster Capital(MooreCo) IV� MD - WestView Capital(Titan,Thorne),„ 7174.10. Dc - Wincove Capital(Connect-Air) lila-in �u South-East(109 Sponsors) ' i* - Colville Capital(Insource) Gen Cap America(Belt Power) West(96 Sponsors) - Champlain Capital(JSI Store Fixtures) ia. - ClearLight Partners(Outsource) *Denotes location of lower middle-market portfolio company from predecessor fund. (1)Note that Northeast&Mid-Atlantic includes New York which has 113 sponsors. 22 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Select Target Financial Sponsor Relationships' Northeast Northeast(continued) Midwest Southeast Southwest \Akst Coast Audax Group Polaris Ventures Arbor Private Investment Co. Atlanta Equity Investors,LLC 21st Century Group Alpine Investors Beekman Group LLC,The Pouschine Cook Capital Baird Capital BB&T Capital Partners Ancor Capital Partners,L.L.C. Bertram Capital Partners Brynwood Partners RFE Investment Partners Beecken,Petty,O'Keefe&Ca Boyne Capital Blue Sage Capital Bison Capital Bunker Hill Capital Riverside Company,The Blue Point Capital Carousel Capital Capital Southwest Corporation Brentwood Associates Castanea Partners Riverside Partners Capital for Business,Inc. Copeley Capital CapStreet Group Celerity Partners Centre Partners RLJ Equity Partners,LLC Chicago Growth Partners EDG Capital CHB Capital Partners Century Park Capital Charles bank Capital Saw Mill Capital Frontenac Partners Falfurrias Capital Partners CIC Partners,LP Champlain Capital Partners Clearview Capital Sentinel Capital Partners High Street Capital Gen Cap America Cotton Creek Capital Clearlight Partners Corinthian Capital SFW Capital Partners Huron Capital Partners H.I.G.Capital Insight Ecpity Creo Capital Partners DFW Capital Partners Southfield Capital Industrial Opportunity Partners Harbert Management Group McCarthy Capital Crescendo Capital Founders Ecpity,Inc. Stonebridge Partners Kirtland Capital Partners Harren Equity Partners LLC New Capital Partners Encore Consumer Capital Fulham&Company Summer Street Capital Lake Capital HealthEdge Investment Partners Parallel Investment Partners Fundamental Capital Gemini Investors Summit Partners Lasalle Capital Group,L.P. KLH Capital,L.P. Rock Hill Capital Genstar Capital General Catalyst Partners Tengram Capital Partners Linsalata Capital LINX Partners Satori Capital,L.L.C. GESD Capital Partners Generation Partners Topspin Partners LP Prairie Capital Mangrove Equity Partners,LLC SunTx Capital Partners Golden Gate Capital Great Point Partners Tuckerman Capital Primus Venture Partners Msouth Equity Partners Transition Capital Partners Hancock Park Grey Mountain Partners Wafra Partners LLC Prospect Partners LLC Navigation Capital Partners Trinity Hunt Partners KCB Management Gridiron Capital Watenrill Ventures Shorekew Industries Palm Beach Capital Partners Wingate Partners Mainsail Partners Halyard Capital Wellspring Capital Siker Oak Seances Pamlico Capital Marlin Equity Partners Hammond Kennedy,Whitney&Ca Weston Presidio Swboda Collins LLC Pine Tree Equity Partners,LLC Nogales Investors Hastings Equity Partners WestView Capital Partners Thompson Street Capital Quad-C Management Rigel Associates Heritage Partners Valor Ecpity Partners Relativity Capital Seidler Equity Partners High Road Capital Partners Mid-Atlantic Waud Capital Partners Ridgemont Ecpity Partners Serent Capital Housatonic Partners Wynnchurch Capital River Associates Investments Sserica International ICV Capital Partners Argosy Partners Riser Capital,Inc. Triton Pacific JMH Capital Arlington Capital Partners Source Capital VMG Equity Partners Kamylon Capital Blackstreet Capital Summit Park Capital Wedbush,Inc. Kinderhook Industries Calvert Street Capital Trisest Partners,L.P. Windjammer Capital Lineage Capital Eureka Growth Capital Westshore Capital Partners Long Point Capital Incline Equity Partners Mercury Capital Partners Inverness Graham Monitor Clipper Group Meridian Ventures Monomoy Capital Partners Milestone Capital MVC Capital Riserarch Capital Parthenon Capital 1. Represents select existing and target sponsor relationships. 23 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Disciplined Credit Underwriting Investment Process Crescent Direct Lending employs a proven sourcing and investment process Investment & • Transaction Sourcing Sponsors Commercial CCG / Other Review 400-500 hundred transactions Banks annually sourced from private equity sponsors and financial intermediaries • Initial Review by Transaction Initial Review Teams Provide thoughtful, timely feedback to sponsors and intermediaries regarding level of interest and key diligence items "Round Table" • "Round Table" Reviews Thoroughly assess investment thesis and structure the transaction with Credit senior partners and the deal team Committee Approval. • Committee Approval Process Unanimous vote required Capital Commitment <5%of transactions received 24 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Portfolio Monitoring - Weekly, Monthly, Quarterly, and Annual Reporting Procedures • Weekly and monthly financial reporting by our borrowers through electronic flash reports provides "early warning" approach to portfolio monitoring — Flash reports reviewed weekly during pipeline meetings — Monthly tear sheet credit analysis including forward-looking covenant default risk analysis • All credits rated initially at close and reviewed (formal write-ups) quarterly for covenant compliance and possible ratings changes — Quarterly ratings recommendations circulated to Investment Committee • Senior investment principals responsible for generating monthly (electronic) and quarterly (write-ups) reporting to Managing Director of Portfolio Management — Weekly Portfolio Flash Update (new portfolio company financials received) — Monthly Portfolio Flash Report • Quarterly valuations and annual valuations (reviewed by Ernst & Young) on all Direct Lending investments — Low quarterly valuation volatility for private senior debt asset class 25 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT CRESCENT III. Exhibits A. Prior Portfolio Investments & Asset Composition B. Select Case Studies C. Active Pipeline CONFIDENTIAL-DO NOT DISTRIBUTE Exhibit A - Prior Fund Portfolio Composition Crescent Direct Lending has historically employed a CDL Cumulative Portfolio conservative senior secured lending strategy Junior(Utrecht), • Primarily a senior secured first lien and second lien lender 1.2% • Below market senior leverage multiples and disciplined 2nd Lien,21.1% approach to total leverage multiples - Cumulative investments 2005-2010' at 2.5x Senior Debt/ EBITDA and 3.4x Total Debt/EBITDA multiples - Significantly below overall Middle-Market senior/total leverage multiples - Average initial portfolio yields at closing of 9.6%(coupon plus fees amortized over three years) 1st Lien,77.7% CDL Senior Leverage Multiples vs. Market1'2 CDL Total Leverage Multiples vs. Market1'2 4.5x - 4.0x 6.0x - 5.6x 4.Ox - 3.7x 3.4x 3.6x 5.Ox - 4.7x 4.7x 4.5x 3.5x - 3.1x 3.Ox - 1.9x 2.4x 2.7x 2.7x 3.Sx 3.4x 2.5x 2.5x 4.Ox - 3.8x 3.6x 3.7x 2.5x - 2.7x 3.0x 3.Ox - 2.6x 2.0x - 1.5x - 1.Ox 2.Ox - 1.Ox - 1.0x - 0.5x - O.Ox O.Ox , 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 •Middle Market •Crescent Direct Lending •Middle Market •Crescent Direct Lending 1. Represents Crescent Direct Lending principals'prior portfolio investments from calendar 2005-2010 while at HighPoint Capital Management,LLC. No predecessor portfolio investments were made after calendar 2010. 2. Market multiples represent Standard&Pours LCD(Middle-Market senior and total leverage multiples). 27 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Exhibit A - Prior Fund Investment Summary' • Attractive loan portfolio with significant yields and conservative multiples at underwrite LTM Financials Net Debt/EBITDA Equity Funding Original at Close at Close Pricing Portfolio Company Business Sponsor Date Loan Revenue EBITDA Senior Total Coupon Only Incl.Floors Action Legal/IVIZE' Litigation document services Mt.Auburn Partners 1/3/08 $88 $23.7 $6.0 2.4x Al x L+71 9 L+994 AMFS' Prodder of medical expert eatnesses Nit.Auburn Partners 5/24/07 4.4 4.5 2.0 1.9x 1.9x L+750 L+750 Antaya Technologies Electrical components&equipment to auto industry Commonwealth 9/22/05 2.8 1 00 25 09x 09x L+507 L+507 Belt Power Distributor conveyer belt parts Food Service Industry Gen Cap America 8/I 907 6.1 14.9 21 2.8x 4.9x L+525 L+525 Connect-Air Electronic cable and cable assembly prodder Wincoke Capital 3/66 as 26.2 3.4 2.3x 3.5x L+600 L+875 Copernicus Independent Institutional IRB DFW Capital Partners 1078 a3 1 5.9 8.2 2.Ox 41x L+707 L+975 Double E Company Manufacturer Web Conversion Components Prairie Capital 9/1 8/06 5.6 1 9.1 28 2.7x 44x L+550 L+550 Fairchild Industrial Industrial Controls Manufacturer Hampshire 7/24/09 7.5 1 9.2 6.2 1.0x 2.7x L+650 L+925 Gateway EndroSerdces Construction and Debris Recycler Gemini Investors 1 2/28/06 4.0 401 as 2.8x 3.7x L+488 L+488 Hamer' Manufacturer plastic bag filling equipment Tuckerman Capital 9/7/07 12.7 1 7.0 48 2.0< 2.Ox L+407 L+675 Insource On-premise staffing contract services Colville Capital 1/29 12.0 45.9 88 2.6x 4.3x L+700 L+975 JSI Store Fixtures Manufacturer high end grocery store fixtures Champlain Capital 9/22/06 7.5 14.8 3.3 2.6x 2.6x L+51 3 L+51 3 Lazer Spot Outs curced distribution yard management services Sterling 9/1/10 12.3 600 105 2.4x 3.6x L+550 L+700 Mallet Release agents,ingredients,and machines to baking industry ICV Partners 9/29/1 0 83 39.0 5.6 2.9x 3.1x L+650 L+825 MilesTek Corporation Distributor of cables&assemblies Castle Island Partners 1/23/07 3.3 14.8 25 2.6x 3.4x L+60Q L+60Q MooreCo Manufacturer of furniture products Webster Capital 4/30/08 8.4 44.6 7.1 3.2x 3.9x L+425 L+425 National Display LCD fiat panel monitors for hospitals Riverside Partners 98 007 166 11 5.0 16.3 2.7x 40, L+648 L+648 Precision Manufacturer of bellows and assemblies Argosy&Anvil 6/5 90 1 5.0 3.9 2.3x 3.5x L+550 L+8C0 Solidscape Manufacturer Rapid Prototyping Systems Tuckerman Capital 6/8/06 7.0 1 2.1 42 1.4x 3.7x L+525 L+525 The Outsource Group Healthcare-only collections company ClearLight Partners 3/31 13.6 59.1 12.0 3.4x 3.7x L+550 L+850 Thorne Manufacturer of nutraceutical dietary supplements WestView Capital 6/23/1 0 12.0 29.8 4.6 2.3x 23x L+550 L+725 Titan Fitness Gold's Gym fitness clubs WestView Capital 1 2/31/07 40 184 3.0 3.2x 40< L+625 L+9C0 Utrecht Art Supplies Specialty retailer college fine art supplies TopS pin 8/30/07 as 48.8 S0 3.4x 3.4x L+634 L+634 Vertex Fasteners Master distributor industrial fasteners Watermill Ventures 8/4/05 25 47.5 47 1.9x 42x L+350 L+350 Wearwell(Tenn Mat) Manufacturer industrial floor padding n/a 6/29/06 5.4 27.3 49 3.0c 3.1x L+675 L+675 Winchester Electronics° Manufacturer electrical connectisty sdutions Audax Group 5/8/07 7.5 95.1 12.2 2.9x 3.9x L+550 L+675 Total Fundingss $206.1 Weighted Average(07S and Exited) $399 $68 2.5x 3.4x L+581 L+725 1. Represents historical investments by Crescent's direct lending team while at their previous investment firm,HighPoint Capital Management,LLC from January 2005-May 2012. 2. AMFS was a division of Action Legal/Ivize. 3. Original Hamer loan of$4.0 million on 9/1/05,refinanced to$10.0 million on 9/7/07. 4. Original Winchester loan of$5.0 million on 4/16/07,plus add-on of Kings on 5/8/07 of$2.5 million. Leverage calculations are pro forma for Audax$2.5 million. 5. Excludes$18.0 million unfunded Revolver commitments at close. 28 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT The OU OU CE up Exhibit B - Illustrative Transaction: The Outsource Group (TOG) Transaction Overview Investment Rationale Business: Healthcare-only collections company • Growing end markets that exhibit low correlations to Date: March 2008 economic cycles • Niche target markets (less competitive, better Sponsor: ClearLight Partners($600mm fund) pricing) • Stable, growing unit financial performance Investment: $3.3mm Acquisition line $11.7mm Senior Secured Term Loan • Minimal customer concentration (top ten customers represented less than 30%of total) Pricing: L+500/3.25% Libor Floor • Strong free cash flow characteristics Coupon/Yield: 8.25% (9.1%Yield at Close)(1) • Structural enhancement which limited future senior leverage to 3.25x Cap. Structure: 3.4x Senior Debt Investment Multiple • Strong management team and equity sponsor 3.7x Total Debt Multiple 41% Equity Capitalization Highlights • Provider of outsourced collection services for the healthcare industry on a contingency basis (Company does not purchase receivables) • Grew the company by making 7 add-on acquisitions, increasing revenue and EBITDA from $45.7MM and $9.3MM, respectively, at close to $103MM and $22.5MM, respectively • By January 2011, TOG's senior leverage decreased significantly from 3.4x to 2.3x resulting in a refinancing exit 1. Includes upfront fees amortized over three years. The case studies included on pages 29-30 of this presentation represent prior investments while at HighPoint Capital Management.LLC and are an illustrative sampling of the types of investments which can be made by Crescent Direct Lending. Past investments are not indicative of future opportunities. 29 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT ,WEARWELL. • S You're in ood company: 9 P Y Exhibit B - Illustrative Transaction: Wearwell Transaction Overview Investment Rationale Business: Manufacturer industrial floor padding • Market leader Date: June 2006 • Stable historical financial profile (in business since 1950) Sponsor: Unsponsored (Gen Cap America) • Compelling market dynamics (shift of manufacturing facilities to southeast) Investment: $5.4mm Second Lien Loan • Demonstrated strong ability to manage through Pricing: L+675 2000-2002 economic recession • Strong free cash flow dynamics, with low capital Coupon/Yield: 11.9% (12.6% Yield at Close)' expenditure requirements Cap. Structure: 3.0x Senior Debt Investment Multiple • Strong management team 3.2x Total Debt Multiple 42% Equity Capitalization Highlights • A leading manufacturer, assembler and distributor of specialty industrial matting products sold primarily to U.S. manufacturing operations (over 2,000 SKUs of matting products) • Second lien investment at L+675 was 325bps above first lien Revolver/Term Loan A provided by SunTrust (L+350 loan) • In June 2007, Wearwell had de-levered sufficiently(2.5x) where the first lien lender(SunTrust Bank) refinanced our debt 1. Includes upfront fees amortized over three years. The case studies included on pages 29-30 of this presentation represent prior investments while at HighPoint Capital Management.LLC and are an illustrative sampling of the types of investments which can be made by Crescent Direct Lending. Past investments are not indicative of future opportunities. 30 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Exhibit C - Current Active Pipeline Crescent Direct Lending Pipeline Date Senior Total Total CDL Deal Receivec Company State Description Sponsor Revenue EBITDA Lvg. Lvg. Facility $ Stage 12/23/2013 AAMP* FL Manufacturor/distributor of audio accessories into auto-after marketing Audax Group $77.3 $14.0 3.7x 3.7x $19.5 $4.4 Approval/000e mentation 12/23/2013 SCT Holdings,Inc.* FL Supplier of engine and transmission calibration software and products Global Environment $43.4 $13.7 2.6x 2.6x $40.0 $17.0 Mandate (Acquisition of Bullydog) Fund 2/5/2014 Thibaut NJ Designer and global distributor of high-end branded wallpapers,fabrics,and Southfield Capital $32.0 $5.3 4.Ox 4.0x $25.0 $25.0 Preliminary Term furnishings. Management Sheet 2/5/2014 Thibaut NJ Designer and global distributor of high-end branded wallpapers,fabrics,and Svoboda Collins $32.0 $5.3 4.0x 4.0x $25.0 $25.0 Preliminary Term furnishings. LLC Sheet 2/4/2014 Eptam Plastics NH Machine plastic components New Heritage $.0 $8.1 4.0x 4.0x $33.5 $33.5 Preliminary Term Capital Sheet 2/4/2014 Xtend Healthcare' TN Health care revenue cycle management business. WestView Capital $40.0 $11.0 3.8x 3.8x $45.0 $22.5 Preliminary Term Partners Sheet 1/31/2014 Harvey Tool MA Cutting tool provider TBD $28.3 $9.7 4.0x 5.0x $45.0 $25.0 Preliminary Term Sheet 1/29/2014 Wind River Enviironmental MA Provider of septic and grease management services. RFE Investment $40.6 $5.3 4.0x 4.0x $25.0 $25.0 Preliminary Term Partners Sheet 1/29/2014 Wind River Environmental MA Provider of septic and grease management services. Audax Group $40.0 $5.3 4.0x 4.0x $25.0 $25.0 Preliminary Term Sheet 1/24/2014 Eptam Plastics/Nand erveer NH Machined plastic components Gemini Investments $35.0 $8.1 4.0x 4.0x $33.5 $33.5 Preliminary Term Sheet 1/24/2014 Eptam Plastics NH Machined plastic components Clearview Capital, $25.0 $6.0 4.0x 4.0x $24.5 $24.5 Preliminary Term LLC Sheet 1/24/2014 Eptam Plastics NH Machined plastic components Saw Mill Capital $25.0 $6.0 4.0x 4.0x $24.5 $24.5 Preliminary Term Sheet 1/24/2014 Eptam Plastics NH Machined plastic components Littlejohn Capital $25.0 $6.0 4.0x 4.0x $24.5 $24.5 Preliminary Term Sheet 1/17/2014 Harvey Tool MA Cutting tool provider BB&T Capital $28.3 $9.7 4.0x 5.0x $45.0 $25.0 Preliminary Term Partners Sheet 1/14/2014 Thibaut NJ Designer and global distributor of high-end branded wallpapers,fabrics,and TBD $32.0 $5.3 4,00 4.0x. $25.0 $25.0 Preliminary Term furnishings. Sheet 1/9/2014 Scale-Tronlx* NT Medical Scales Med Opportunity $16.5 $6.5 3.25x 5.Ox $24.0 $24.0 Preliminary Term Partners,LLC Sheet 1/6/2014 James Perse Enterprises' CA Branded apparel,home furnishings and accessories. No Sponsor $105.8 $20.0 2.0x 2.0x $40.0 $20.0 Preliminary Term Sheet 12/19/2013 Beneco' AZ Benefits provider to contractors working on prevailing wage contracts Alpine Investors LP $11.7 $6.3 3.5x 3.5x $22.0 $22.0 Preliminary Term Sheet 12/12/2013 Harvey Tool MA Cutting tool provider TBD $28.3 $9.7 4.0x 5.0x $45.0 $25.0 Preliminary Term Sheet 12/11/2013 Eptam Plastics NH Machined plastic components TBD $25.0 $6.0 4.0x 4.0x. $24.5 $24.5 Preliminary Term Sheet 12/10/2013 Van Pool Transportation* MA Regional Provider of transportatin services for special needs children Fort Point Capital $20.6 $5.3 3.10 3.1x $16.5 $21.0 Preliminary Term Sheet Denotes Portfolio Company or Under LOI 31 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Exhibit C - Current Active Pipeline Continued Date Senior Total Total CDL Deal Receivec Company State Description Sponsor Revenue EBITDA Lvg. Lvg. Facility $ Stage 11/25/2013 Project Sites' NY Clinical trials service organization DFW Capital $17.8 $6.8 3.Ox 4.Ox $30.0 $10.0 Preliminary Term Partners Sheet 1/22/2014 Onesource Water,LLC' CT Installs,rents,and services bottle-less water cooler stations to SMES HV Capital $22.4 $9.3 1.1x 4.4x $25.0 $10.0 Pre-Clear Investors Discussion 2/10/2014 Dexter Axle' IN Manufactures axles,brakes and hubs for the industrial and utility trailer and TBD $300.0 $60.0 4.24x 4.24x Book recreational vehicle industry 2/10/2014 Rand Worldwide' US& Software distributor and service provider. Ampersand $90.0 $8.0 Book CA Ventures 2/7/2014 Interior Logic AZ Provides value-added design center and interior finish solutions to the MSouth Equity $65.0 $12.0 3.Ox 3.8x $36.0 $10.0 Book residential home construction industry Partners 2/7/2014 Ontario Drive&Gear Canada Manufactures the world's only extreme terrain vehicle TBD $571 $101 Book 2/4/2014 Children's Choice CA Image Orthodontics and Children's Choice Pediatric(14 locations) Gauge Capital $15.0 $5.8 2.10 3.40 $15.7 Book 2/4/2014 Joyce/Dayton OH Manufacturer of screw jacks,linear actuators,motion control ClearLight Partners $37.0 $10.8 $35.0 $25.0 Book LLC 2/4/2014 Knowledgepoint 360' NJ Healthcare information,communication and advisory. ABRY Partners $122.0 $26.0 3.Ox 4.5x $117.0 $15.0 Book 1/28/2014 Pennant Foods LLC' CA Top 10 Wendy's franchisee in So CA and Eastern TN Brockway Moran& $125.0 $10.0 3.0x 4.0x $30.0 $30.0 Book Partners 1/27/2014 GPS Products Inc. Canada Manufacturer and distributor of classroom furniture components Southfield Capital $15.9 $5.6 3.5x 3.5x $20.0 $20.0 Book Advisors 1/9/2014 Pipeline Supply&Service TX Distributor of consumables to energy industry Texas Broad Street Energy TBD $278.7 $56.0 3.7x 4.8x $310.0 $10.0 Book (65) 1/9/2014 Response Team' IL Mitigation and restoration services to buildings damaged by water,wind,fire, Goense&Co $76.8 $11.6 4.25x 4.25x $49.5 $15.0 Book etc. 1/9/2014 Seastar' IL Steering systems for recreational boats American Securities $236.4 $46.2 4.3x 4.3x $225.0 $10.0 Book Capital partners 11/21/2013 Arteriocyte' MA Cellular therapy health care business DW Healthcare $16.0 $4.5 4.Ox 4.Ox $18.0 $18.0 Book Partners 2/7/2014 3D printing business' 3D printing business McCarthy Capital $30.0 $9.0 3.Ox 3.Ox $30.0 $30.0 Lead Corporation 2/7/2014 Mattress manufacturer Mattress manufacturer New Heritage $200.0 $30.0 Lead Capital 2/7/2014 Telecom Business MA Telecom Business McCarthy Capital $35.0 $8.0 Lead Corporation 1/29/2014 Specialty Brands of Branded dry food company American Capital $.0 $21.0 2.2x 2.2x $46.2 $30.0 Lead America' 1/9/2014 MRI Software Software applications for RE industry Vista Equity $82.1 $33.0 4,60 6.5x $230.0 Lead Partners 'Denotes Portfolio Company or Under LOI 32 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT Certain Risk Factors Nature of Debt Securities. Debt and structured equity investments in highly Interest Rate Fluctuations. Interest rate fluctuations may negatively impact leveraged companies involve a high degree of risk with no certainty of any return of Crescent Funds' investment opportunities and the rate of return on invested capital. The debt securities in which Crescent Funds and strategies ("Crescent capital. An increase in interest rates would make it more expensive for portfolio Funds")invest may be unsecured and subordinated to substantial amounts of senior companies to finance operations and indirectly affect the credit quality of debt, all or a portion which may be secured, may not be protected by financial Crescent Funds'investments. covenants or limitations on additional debt,may have limited liquidity and may not Lack of Diversification and Reliance on Portfolio Company Management.Crescent be rated by a credit rating agency. Funds may invest in a limited number of investments and may be concentrated in Competitive Debt Environment. Crescent Funds compete with the public debt and only a few industries. Therefore,the aggregate return of Crescent Funds may be equity markets and with other investors for suitable investment opportunities. There adversely affected by the negative performance of a relatively few investments. can be no assurance that Crescent Funds will be able to locate and complete The manager monitors portfolio company performance;however,it is primarily the investments,fully invest its committed capital or satisfy its rate of return objectives. responsibility of portfolio company management to operate a portfolio company on Foreign Investments. Investments in non-U.S.companies involve risks not typically a day to day basis and there is no assurance that such management will perform in associated with the more developed U.S.capital markets,including risks relating to accordance with Crescent Funds'expectations. currency exchange, differences between the U.S. and foreign securities markets, Dependence Upon Key Personnel. Decisions with respect to the investments and differences in corporate and creditors'rights laws and economic,and political risks. management of Crescent Funds will be made exclusively by the Crescent management team. Investors generally have no right to take part in the Financial Markets. Instability in the securities markets may increase the risk inherent management of Crescent Funds and do not have an opportunity to evaluate the in Crescent Funds'investments in that the ability of portfolio companies to refinance specific investments made by mezzanine funds or their terms. The success of or redeem debt and structured equity securities held by Crescent Funds may Crescent Funds depends significantly upon the skill and expertise of the principal depend on their ability to sell new securities in the market. members of the Crescent management team. The departure of any of those principal members could have a material adverse effect on mezzanine funds. No Assurance of Investment Return. There can be no assurance that Crescent Funds will be able to generate returns for its investors or that the returns will be Conflicts of Interest. Crescent and its affiliates manage multiple funds and commensurate with the risks of investing in the type of companies and transactions accounts. Key personnel will devote some business time to managing those other described herein. Accordingly, an investment in Crescent Funds should only be funds and accounts. Obligations to certain funds and accounts could in certain considered by persons who can afford a loss of their entire investment. Past circumstances adversely affect the price paid or received for investments by activities or investment return results of investment entities associated with the Crescent Funds or the size or the portion of investments purchased by other Crescent management team or its principal members, including their prior funds, Crescent Funds. provide no assurance of future success or return results. The fees and expenses No Market for Interests in Crescent Funds and Restrictions on Transfer. Crescent charged in connection with an investment in Crescent Funds may be higher than the Funds' interests ("Interests") have not been registered under the United States fees and expenses of other investment alternatives and may offset profits. Securities Act of 1933,as amended(the"1933 Act"),the securities laws of any state Use of Leverage. Certain Crescent Funds may leverage the cost of its investments. or the securities laws of any other jurisdiction, and, therefore, cannot be resold To the extent Crescent Funds purchases securities with borrowed funds, its net unless they are subsequently registered under the 1933 Act and other applicable assets will tend to increase or decrease at a greater rate than if borrowed funds are securities laws or an exemption from registration is available. It is not not used. If the interest expense on borrowings were to exceed the net return on contemplated that registration of Interests under the 1933 Act or other securities the portfolio of securities purchased with borrowed funds,Crescent Funds'use of laws will ever be effected. There is no public market for the Interests,and none is leverage would result in a lower rate of return than if Crescent Funds were not expected to develop. An investor in a Crescent Fund is generally not permitted to leveraged. Overall,the use of leverage,while providing the opportunity for higher assign its Interests without the prior written consent of Crescent, and any such returns,also increases volatility and the risk of loss. assignment is subject to the terms and conditions of the operative documents of No Regulatory Approval. The Crescent Funds have not been approved or the relevant Crescent Funds Investors must be prepared to bear the risks of disapproved by any securities regulatory authority of any state, by the Securities owning their Interests for an extended period of time and the risk of loss of the and Exchange Commission,or any similar authority in another jurisdiction. entire investment. 33 I CONFIDENTIAL-DO NOT DISTRIBUTE CRESCENT